Lannie v. Bd. of Cnty. Comm'rs of Eagle Cnty.

• Decision Date: 07 May 2020
• Docket Number: Court of Appeals No. 17CA1971
• Citation: 471 P.3d 1207
• Parties: Paul Anthony LANNIE and Donna Dean Lannie, Petitioners-Appellants, v. BOARD OF COUNTY COMMISSIONERS OF EAGLE COUNTY, Colorado; and Board of Equalization of Eagle County, Colorado, Respondents-Appellees, and Board of Assessment Appeals, State of Colorado, Appellee.
• Court: Colorado Court of Appeals

471 P.3d 1207

Paul Anthony LANNIE and Donna Dean Lannie, Petitioners-Appellants,

v. BOARD OF COUNTY COMMISSIONERS OF EAGLE COUNTY, Colorado; and Board of Equalization of Eagle County, Colorado, Respondents-Appellees,andBoard of Assessment Appeals, State of Colorado, Appellee.

Court of Appeals No. 17CA1971

Colorado Court of Appeals, Division II.

Announced May 7, 2020

Ryley Carlock & Applewhite, F. Brittin Clayton III, Denver, Colorado, for Petitioners-Appellants

Bryan R. Treu, County Attorney, Christina C. Hooper, Assistant County Attorney, Eagle, Colorado, for Respondents-Appellees

Philip J. Weiser, Attorney General, Emmy A. Langley, Assistant Solicitor General, Katie Allison, Assistant Attorney General, Denver, Colorado, for Appellee

Opinion by JUDGE TOW

¶ 1 In Colorado, residential land is taxed at a significantly lower rate than vacant land. See Colo. Const. art. X, § 3 ; § 39-1-104.2, C.R.S. 2019. This variance in the tax rate has spawned a plethora of cases in which taxpayers with combinations of residential and vacant parcels have sought to have the vacant land reclassified as "residential land," which requires a showing that (1) the vacant parcel is contiguous with the residential parcel; (2) the parcels are under common ownership; and (3) the parcels are used as a unit. § 39-1-102(14.4)(a), C.R.S. 2019. Divisions of this court have come to differing conclusions as to the meaning of each of these criteria.

¶ 2 In Mook v. Board of County Commissioners , 2020 CO 12, 457 P.3d 568, our supreme court addressed three such cases, each of which involved a dispute over one of the three requirements: Mook v. Board of County Commissioners , 2018 WL 2066712 (Colo. App. No. 17CA0437, May 3, 2018) (not published pursuant to C.A.R. 35(e) ) (contiguity); Kelly v. Board of County Commissioners , 2018 COA 81M, 459 P.3d 621 (common ownership); and Hogan v. Board of County Commissioners , 2018 COA 86, 459 P.3d 629 (used as a unit). The supreme court affirmed the divisions' judgments in Mook and Hogan , reversed the division's judgment in Kelly , and provided guidance on each of the three criteria. In the wake of Mook , several cases, including this one, were remanded for reconsideration in light of the court's decision.

¶ 3 This case involves two of the three criteria — whether the parcels were under common ownership and whether they were used as a unit. To resolve the first issue, we must answer a question left open in Mook : Does "common ownership" under the tax code require that identical parties hold record title to each contiguous parcel? We answer that question "yes." Because the parcels were not under common ownership during two of the three tax years at issue in this case, we affirm the decision of the Board of Assessment Appeals (BAA) for those two years. We reverse the decision of the BAA for the third tax year and remand the matter for consideration of whether the parcels were used as a unit under the analysis announced in Mook .

I. Background

¶ 4 Petitioners, Paul Anthony Lannie and his wife Donna Dean Lannie,¹ own two contiguous parcels of land in Eagle County, Colorado — one with a home on it (the residential parcel) and an adjacent one that is undeveloped (the subject parcel). For tax years 2014 and 2015, Paul held title to the subject parcel solely in his name, while he and Donna held title to the residential parcel as joint tenants. By the time of the valuation for tax year 2016, Paul conveyed the subject parcel to himself and Donna as joint tenants.

¶ 5 The county assessor classified the subject parcel as vacant land. The Lannies appealed the classification for the 2014 and 2015 tax years to the Board of County Commissioners of Eagle County and the classification for 2016 to the Board of Equalization of Eagle County (collectively, the County). After the County upheld the assessor's classification, the Lannies appealed to the BAA. The BAA held a consolidated hearing and thereafter entered two orders upholding the County's rulings. The BAA concluded that the subject parcel was not used as a unit in conjunction with the improvements on the residential parcel for any of the tax years in question, and further concluded that, for tax years 2014 and 2015, the parcels were not under common ownership.

¶ 6 The Lannies appealed to this court, and a different division affirmed the BAA's orders. See Lannie v. Bd. of Cty. Comm'rs , 2018 WL 6570775 (Colo. App. No. 17CA1971, Dec. 13, 2018) (not published pursuant to C.A.R. 35(e) ) ( Lannie I ). Specifically, the division agreed with the BAA that the parcels were not used as a unit. As a result, the division did not address the issue of common ownership. As noted, the supreme court vacated that decision and remanded for reconsideration in light of Mook . Lannie v. Bd. of Assessment Appeals , 2020 WL 1260153 (Colo. No. 19SC56, Mar. 16, 2020) (unpublished order). We thus address both whether the parcels were under common ownership and whether they were used as a unit.

II. Standard of Review

¶ 7 In reviewing BAA decisions that classify property for tax purposes, we defer to the BAA's factual findings but review its legal conclusions de novo. See Ziegler v. Park Cty. Bd. of Cty. Comm'rs , 2020 CO 13, ¶ 11, 457 P.3d 584. When a statute concerns property tax, we also owe deference to, but are not bound by, the interpretation of the statute by the BAA and by the Property Tax Administrator in the Assessors' Reference Library (ARL). See Mook , ¶ 47.

¶ 8 We review the interpretation of a statute de novo, seeking "to effectuate the intent of the General Assembly by looking to the plain meaning of the language used, considered within the context of the statute as a whole." Id. at ¶ 24 (quoting Bly v. Story , 241 P.3d 529, 533 (Colo. 2010) ). In so doing, we construe any undefined term "in accordance with its ordinary or natural meaning." Id. (quoting Cowen v. People , 2018 CO 96, ¶ 14, 431 P.3d 215 ). Applying the plain meaning of the language requires us to "give consistent effect to all parts of a statute, and construe each provision in harmony with the overall statutory design." Larrieu v. Best Buy Stores, L.P. , 2013 CO 38, ¶ 12, 303 P.3d 558 (citing In re Miranda , 2012 CO 69, ¶ 9, 289 P.3d 957 ).

III. Analysis

A. Common Ownership

1. Applicable Law

¶ 9 The tax code does not define the term "common ownership." It does, however, direct that "[o]wnership of real property shall be ascertained by the assessor from the records of the county clerk and recorder ...." § 39-5-102(1), C.R.S. 2019. "Thus, according to the plain language of the tax code, assessors must rely on county records to determine whether properties are held under ‘common ownership.’ " Mook , ¶ 80.

¶ 10 In Kelly , record title to the residential parcel was held by a qualified personal residence trust, while record title to the subject parcel was held by a revocable family trust. Kelly , ¶ 4. The same person (Kelly) was settlor, trustee, and beneficiary of both trusts. Id. Before the supreme court, Kelly argued that because she held "overlapping equity ownership and control" of both properties, they were under common ownership. Mook , ¶ 79. The supreme court rejected this argument, holding that the record of legal title was conclusive. Id. at ¶ 86. In doing so, however, the court explicitly declined to consider the issue of whether overlapping legal title would suffice, or rather whether identical ownership is required. Id. at ¶ 86 n.7.

2. Analysis

¶ 11 Here, there are overlapping legal title interests in the parcels for tax years 2014 and 2015.² During those tax years, because Paul Lannie was a record titleholder of both properties — one held in his name alone and one held jointly with Donna — we turn to the question left open in Mook .

¶ 12 The BAA urges us to adopt its interpretation of the term, which is that common ownership requires identical record title owners. The BAA posits that this interpretation was established in Sullivan v. Board of Equalization , 971 P.2d 675 (Colo. App. 1998). But the BAA reads Sullivan too broadly. There, the sole owner of the subject parcel was the taxpayer, while the taxpayer's wife was the sole owner of the residential property. Id. at 676. In other words, there was no overlapping legal title as there is here. Furthermore, the taxpayer in Sullivan conceded the lack of common ownership and, thus, the appellate court did not address that issue. Id. For this reason, while we generally afford deference to statutory interpretation by the agency charged with administering the statute, see Mook , ¶ 47, because the BAA misapplied the holding in Sullivan , we do not defer to its construction in this context. See El Paso Cty. Bd. of Equalization v. Craddock , 850 P.2d 702, 704-05 (Colo. 1993) ("Courts, of course, must interpret the law and are not bound by an agency decision that misapplies or misconstrues the law.").

¶ 13 Nevertheless, for the following reasons, we conclude that the statute requires identical ownership.

¶ 14 First, as noted, the supreme court observed that section 39-5-102(1) requires the assessor to rely on county records. Mook , ¶ 80. When doing so, the supreme court discussed its earlier decision in Hinsdale County Board of Equalization v. HDH Partnership , 2019 CO 22, 438 P.3d 742. Mook , ¶¶ 80-84. In Hinsdale , the supreme court invoked the same statutory language when it held that "assessors must value and tax separate parcels of real property and assess taxes on the parcel owner as determined by the county's real property records." Hinsdale , ¶ 22. The court further noted that "Colorado's tax statutes reflect the legislature's intent to levy property tax on the record fee owner of real property." Id. ¶ 15 The court in Mook reiterated that "the party holding record title to the property is the fee owner responsible for property taxes." Mook , ¶ 81 (quoting Hinsdale , ¶ 25 ). The court then rejected Kelly's argument that assessors could look to record title to determine...