In re Lyerla
| Decision Date | 17 October 2014 |
| Docket Number | 109,970,109,971.,109,579,109,577,109,578 |
| Citation | 336 P.3d 882,50 Kan.App.2d 1012 |
| Parties | In the Matter of PROTEST Appeals OF LYERLA, Kathy L. Liv. Trust, et al., for Tax Year 2011 in Johnson County, Kansas. |
| Court | Kansas Court of Appeals |
R. Scott Beeler and Carrie E. Josserand, of Lathrop & Gage LLP, of Overland Park, and Linda Terrill, of Property Tax Law Group, LLC, of Leawood, for appellant taxpayers.
Kathryn D. Myers, assistant county counselor, of Olathe, for appellee Board of Johnson County Commissioners.
Before POWELL, P.J., LEBEN and ARNOLD–BURGER, JJ.
Five taxpayers who appealed tax valuations to the Court of Tax Appeals saw their appeals dismissed by that body because their appeal notices had been signed by non-attorneys. In addition, even though the Court of Tax Appeals ultimately concluded that it had no jurisdiction to hear the appeals, it ruled in some of the cases that the contractual agreements between the taxpayers and those they hired to represent them before the Court of Tax Appeals (an attorney and a tax-appraisal firm) were void as against public policy.
The taxpayers have appealed to this court, arguing that the Court of Tax Appeals should neither have dismissed their appeals nor addressed the validity of their contractual arrangements with the attorney and tax-consulting firm. We agree. Any problem with the signature on the appeal notices would have been a correctable matter, not a jurisdictional hurdle that should have prevented the Court of Tax Appeals from considering the appeals. And the Court of Tax Appeals has no statutory authority to determine the validity of contractual arrangements between a taxpayer and a third party the taxpayer hires to represent it. We therefore reverse the decision of the Court of Tax Appeals and remand these appeals for further proceedings.
Five separate tax appeals, all from Johnson County, have been consolidated into one appeal. In all five cases, the taxpayers appealed real-property valuations, and the Court of Tax Appeals dismissed the appeals for lack of subject-matter jurisdiction. All of the taxpayers are corporations, trusts, or some other form of artificial entity, i.e., they are not individuals owning property in their own name. And the notices of appeal for all the taxpayers were filed by non-attorneys who had been hired to assist with the tax appeals but who were not otherwise employees or owners of the taxpayers.
Three of the taxpayers—the Kathy L. Lyerla Living Trust, MBS Barkley 1031, LLC, and ACDC Investments, LLC—filed their appeals in the small-claims division of the Court of Tax Appeals. The other taxpayers—Flik, Inc., and THF College Boulevard, L.L.C.—filed their appeals in the regular division of the Court of Tax Appeals.
Flik and THF College Boulevard hired tax consultants (Property Tax Services, Inc., and Hollrah and Fricke, Inc., respectively) to handle their tax appeals. Non-attorney employees of those companies signed and filed the notices of appeal.
The other taxpayers all hired J.W. Chatham & Associates, Inc., a tax-consulting firm, to handle their tax appeals, and a non-attorney employee of Chatham signed and filed the notices of appeal for those taxpayers. When the taxpayers didn't get any relief from their tax assessments from the small-claims division, they each pursued a further appeal to the regular division. Attorney Linda Terrill filed a notice of appeal in the regular division for each taxpayer.
That summarizes the relevant history for the appeals of Flik and THF College Boulevard. But quite a bit more took place in the appeals involving the Lyerla Living Trust, MBS Barkley 1031, and ACDC Investments.
In the appeal by the Lyerla Living Trust, Johnson County and Terrill reached an agreement to a reduced appraised value and submitted a proposed order reflecting that agreement. But the Court of Tax Appeals refused to consider the merits of any of these taxpayers' appeals or to accept the parties' agreement on the proper valuation for the property in the Lyerla case because it concluded that a non-attorney cannot sign the notice of appeal for a corporate or artificial entity. Based on that ruling, the Court of Tax Appeals concluded that none of the taxpayers had filed a timely appeal.
The process leading to that ruling began when the Court of Tax Appeals issued an initial order on August 23, 2012, asking that these taxpayers show cause why their cases should not be dismissed for lack of jurisdiction. The orders said that the Court of Tax Appeals sought to determine the identity of the real party in interest in each case and whether the Court could properly exercise subject matter jurisdiction. On August 31, 2012, the Court of Tax Appeals asked Terrill to provide the contracts between Chatham and the taxpayers. It then held an extensive hearing (resulting in a 226–page transcript) on September 18, 2012. Most of the hearing focused on the taxpayers' relationships with Chatham and Terrill.
The Court of Tax Appeals issued an order of more than 80 pages in each taxpayer's case on October 11, 2012. It concluded that it had no subject-matter jurisdiction because the appeal notices weren't properly signed. But the orders also made several other conclusions:
The taxpayers responded on October 29, 2012, with a request for reconsideration and a motion to strike at least those portions of the order that addressed issues involving attorney-ethics rules and the contractual relationship between the taxpayers, Chatham, and Terrill. The Court of Tax Appeals granted reconsideration, but on February 20, 2013, it issued a 175–page order in each case that reached the same basic conclusions as the earlier order.
Some of the conclusions went further than the initial order. For example, the Court of Tax Appeals now concluded that Terrill had actually violated several of the attorney-ethics rules, not merely appeared to have violated them. In addition, the court made extensive factual findings about why it did not find the testimony of Jerry Chatham or the representations made by Terrill at the September 18 hearing credible.
We must note one other procedural item specific to these appeals. After the initial order of the Court of Tax Appeals, the taxpayers filed a motion on November 2, 2012, seeking the disqualification of each of the judges on the Court of Tax Appeals. The motion generally alleged bias against Chatham and Terrill “and thus a bias against Taxpayer.” In support, Terrill submitted an affidavit stating that two members of the Court of Tax Appeals had filed an ethical complaint against her on October 4, 2012, before the court had reached its decision, alleging she had committed “possible violations” of ethics rules. The Court of Tax Appeals denied the recusal motion in an order issued November 27, 2012. That court found no legal basis for recusal. It also concluded that it was an independent body with no mechanism to provide substitute judges; accordingly, it concluded that the rule of necessity would require its judges to hear the appeals even if there were some valid basis for disqualification.
That completes the procedural background we find necessary to frame the issues we must decide. We should also note, though, that the 2014 Kansas Legislature has made changes to the statutes governing the Court of Tax Appeals. In fact, even the name of that tribunal has been changed—reverting back to its former name, the Board of Tax Appeals. See L.2014, ch. 141. None of the parties to this appeal have filed anything with our court suggesting that these legislative changes should have any impact on the issues now before us. We have not considered those legislative changes and accordingly express no opinion on what impact, if any, they may have on remand.
The starting point for our analysis is whether the Court of Tax Appeals was correct in dismissing the appeals for lack of subject-matter jurisdiction. Since there are some differences in the statutory provisions regarding the court's small-claims division and its regular division, we will discuss separately the appeals that began in each division.
For the appeals of MBS Barkley 1031, ACDC Investments, and the Kathy L. Lyerla Living Trust, which began in the small-claims division, we conclude that jurisdiction was proper based on our separate decision today in In re Tax Appeal of Rakestraw Brothers, 50 Kan.App.2d ––––, 337 P.3d 62, 2014 WL 5304972 () (2014). As we explain in greater detail there, a statute...
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