Joyce Sportswear Co. v. State Bd. of Tax Com'rs

• Decision Date: 04 September 1997
• Docket Number: No. 45T10-9609-TA-00112,45T10-9609-TA-00112
• Citation: 684 N.E.2d 1189
• Parties: JOYCE SPORTSWEAR CO., Petitioner, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.
• Court: Indiana Tax Court

Page 1189

684 N.E.2d 1189

JOYCE SPORTSWEAR CO., Petitioner, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.

No. 45T10-9609-TA-00112.

Tax Court of Indiana.

Sept. 4, 1997.

Timothy R. Sendak, Sendak, Neff, Rominger & Stanko, Crown Point, for Petitioner.

Jeffrey A. Modisitt, Attorney General, Marilyn S. Meighen, Deputy Attorney General, Indianapolis, for Respondent.

FISHER, Judge.

Joyce Sportswear Co. (Joyce) appeals a final determination of the State Board of Tax Commissioners (State Board) increasing the March 1, 1989 assessment for property it owns. Both the State Board and Joyce have moved for summary judgment. Joyce raises four issues for this summary judgment proceeding. This Court consolidates and restates the issues as follows: 1) whether the Lake County Board of Review's assessment of Joyce's property was invalid; 2) whether the State Board has the authority in a taxpayer-initiated petition for review to assess property more than three years prior to its final determination, and 3) the effect of Joyce's motion to withdraw its petition for review during the pendency of proceedings before the State Board.

For the reasons stated below, this Court DENIES Joyce's Motion for Summary Judgment and GRANTS the State Board's Motion for Summary Judgment.

FACTS AND PROCEDURAL HISTORY

Joyce Sportswear is a manufacturer of women's apparel. Its manufacturing facilities are located in Gary, Indiana. In 1990, the Calumet Township Assessor (township assessor) assessed the facility as of March 1, 1989 and valued the land and the improvements at $233,970. On March 16, 1990, Joyce appealed this assessment to the Lake County Board of Review (BOR). During the pendency of this appeal, the township assessor filed a petition to correct error with the BOR. ¹ In that petition, the township assessor stated that some errors were made in the assessment and that the assessment should have been $236,570. On April 16, 1992, the BOR issued its decision: for the tax years 1989 and 1990, the BOR concurred with the original findings of the township assessor, but for the tax year 1991, the BOR increased the total assessment from $233,970 to $236,570.

Joyce appealed to the State Board on May 15, 1992. A State Board hearing officer held a hearing. ² That hearing officer subsequently left the State Board's employ; consequently a second State Board hearing officer heard the case on September 12, 1995, more than three years after Joyce filed its petition for review with the State Board. On October 6, 1995, the hearing officer notified Joyce that she would recommend an increase in the assessment to her supervisor. Subsequently, Joyce moved to withdraw its petition; the State Board denied that motion on November 8, 1995. On August 16, 1996, the State Board issued its final determination, assessing the total value of the property at $318,260 as of March 1, 1989. Joyce filed this original tax appeal.

ANALYSIS AND OPINION

Standard of Review

The State Board is accorded great deference when it acts within the scope of its authority. Bender v. State Bd. of Tax Comm'rs, 676 N.E.2d 1113, 1114 (Ind.Tax Ct.1997). Accordingly, this Court will not reverse a final determination of the State Board unless it is unsupported by substantial evidence, constitutes an abuse of discretion, is arbitrary and capricious, or exceeds statutory authority. Id.

On March 24, 1997, Joyce filed a motion for summary judgment, which was followed by the State Board's own motion for summary judgment on April 23. Summary judgment is appropriate only when no genuine issues of material fact exist and a party is entitled to judgment as a matter of law. IND.TRIAL RULE 56(C). Cross motions for summary judgment do not alter this standard. Roehl Transp., Inc. v. Department of State Revenue, 653 N.E.2d 539, 541 (Ind.Tax Ct.1995). A hearing on the cross motions was held before this Court on July 21, 1997.

Discussion

Joyce argues that because the BOR assessed its property differently for different years, the BOR's assessment is invalid and void. The State Board argues that the BOR had this authority, and that, in any event, the State Board had the authority to issue a final determination with respect to all of the tax years in question.

Ordinarily, Joyce's contention would be moot. The State Board assessed the property as of March 1, 1989, i.e., assessed the property at the same value for the tax years in question. See Williams v. State Bd. of Tax Comm'rs, 648 N.E.2d 713, 715 (Ind.Tax Ct.1995). In taxpayer-initiated original tax appeals, this Court's jurisdiction only allows this Court to review a "final determination of the department of state revenue or the state board of tax commissioners." IND.CODE ANN. § 33-3-5-11(a) (West 1996). With respect to property taxation, assessment errors made by lower taxation authorities are to be corrected by the State Board, not this Court. See County Bd. of Review v. Kranz, 224 Ind. 358, 66 N.E.2d 896, 897 (1946) (explaining that agencies should be given opportunity to correct errors before courts).

In general, errors made by lower taxation authorities do not deprive the State Board of authority to review assessments. See Dawkins v. State Bd. of Tax Comm'rs, 659 N.E.2d 706, 708 (Ind.Tax Ct.1995). However, errors that render the assessment itself invalid may have the effect of depriving the State Board of authority to assess property because of the statutory scheme under which the State Board reviews assessments. See Lakeview Country Club, Inc. v. State Bd. of Tax Comm'rs, 565 N.E.2d 392, 395 (Ind.Tax Ct.1991).

Under IND.CODE ANN. § 6-1.1-15-3(a) (West Supp.1996), a taxpayer may file a petition for review of a BOR assessment with the State Board. However, when the taxpayer does so, the State Board is free to "assess the property in question, correcting any errors which may have been made." IND.CODE ANN. § 6-1.1-15-4(a) (West Supp.1996). In Lakeview Country Club, the court dealt with the extent of the State Board's power under section 6-1.1-15-4 to correct errors in assessment. The court concluded that the State Board may only correct an error in the assessment if there was a valid assessment in the first place. Lakeview Country Club, 565 N.E.2d at 395. If the original assessment is invalid, then the State Board may only assess property if doing so would not run afoul of the restrictions on its authority to sua sponte assess property under IND.CODE ANN. § 6-1.1-14-10 (West 1989). Lakeview Country Club, 565 N.E.2d at 395; see also Dawkins, 659 N.E.2d at 708 (BOR failed to comply with statutory procedures for assessment, but because State Board complied with the restrictions placed on its section 6-1.1-14-10 power, State Board could properly assess property sua sponte). Those restrictions include a three-year limitation on its authority to assess property for any given year. See IND.CODE ANN. §§ 6-1.1-9-4, 6-1.1-14-11 (West 1989). Proper notice and a hearing prior to a sua sponte assessment are also required. See id. § 6-1.1-14-11.

The clear import of the Lakeview Country Club holding is that the State Board may not cure a failure on the part of lower taxation authorities to comply with the statutory prerequisites to a valid assessment by way of its ability to correct any assessment error in taxpayer-initiated petitions. The State Board's power under section 6-1.1-15-4 is limited to correcting errors in the assessment process itself. Any other rule would allow the State Board to validate an otherwise invalid assessment and circumvent the statutory protections afforded taxpayers.

Because the State Board made its final determination pursuant to section 6-1.1-15-4, this Court will examine whether the BOR's assessment was valid. Joyce challenges the "jurisdiction" of the BOR to assess different values for different years in between general assessments. See IND.CODE ANN. § 6-1.1-4-4 (West Supp.1996) (currently providing for general assessment every four years). Even if this were error, ³ it would be of no avail to Joyce. In this case, the assessment of Joyce's property was properly before the BOR. The statutory prerequisites for the BOR's ability to assess Joyce's property had been satisfied: Joyce filed a petition for review triggering the BOR's ability to assess its property. See IND.CODE ANN. § 6-1.1-15-2.1(b) (West Supp.1996). Therefore, the BOR's assessment of Joyce's property was not invalid, and any error in the assessment was correctable by the State Board.

Joyce next argues that the State Board may only assess its property for the three years prior to the State Board's final determination. The State Board argues that the three-year limitation applicable to its power to assess property sua sponte does not apply where the State Board assesses property in the course of taxpayer-initiated petitions. In Lakeview Country Club, 565 N.E.2d at 395 n. 3, this Court expressly reserved that question and will now face it squarely.

As this Court observed in Lakeview Country Club, there is no express time limitation on the State Board's authority to assess property in the course of a taxpayer-initiated petition. This contrasts with the three-year limitation on the State Board's authority to assess property sua sponte. Because there is no express time limitation in the statute itself, Joyce calls upon this Court to extend the statutory protections afforded taxpayers when the State Board chooses to exercise its authority to sua sponte assess property.

"When faced with a question of statutory interpretation, this Court looks first to the plain language of the statute. Where the language is unambiguous, this Court has no power to construe the statute for the purpose of limiting or extending its operation." Cooper Indus., Inc. v. Department of State Revenue, 673 N.E.2d 1209, 1211 (Ind.Tax Ct.1996) (emphasis added and internal quotation marks omitted). Section 6-1.1-9-4(a) states,

Real property may be assessed, or its assessed value increased, for a...