Lee Trace LLC v. Raynes

• Citation: 232 W.Va. 183,751 S.E.2d 703
• Decision Date: 21 October 2013
• Docket Number: Nos. 12–0638,12–0992.,s. 12–0638
• Parties: LEE TRACE LLC, Petitioner v. Gearl RAYNES, Assessor for Berkeley County, West Virginia, Berkeley County Council Sitting As Board of Review and Equalization, and Berkeley County Council, Respondents. Lee Trace LLC, Petitioner v. Gearl Raynes, Assessor for Berkeley County, West Virginia, Berkeley County Council Sitting As Board of Review and Equalization, and Berkeley County Council, Respondents.
• Court: Supreme Court of West Virginia

232 W.Va. 183

751 S.E.2d 703

LEE TRACE LLC, Petitioner

v.Gearl RAYNES, Assessor for Berkeley County, West Virginia, Berkeley County Council Sitting As Board of Review and Equalization, and Berkeley County Council, Respondents.

Lee Trace LLC, Petitioner

v.Gearl Raynes, Assessor for Berkeley County, West Virginia, Berkeley County Council Sitting As Board of Review and Equalization, and Berkeley County Council, Respondents.

Nos. 12–0638, 12–0992.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 4, 2013.

Decided Oct. 21, 2013.

Syllabus by the Court

1. “ ‘This Court reviews the circuit court's final order and ultimate disposition under an abuse of discretion standard. We review challenges to findings of fact under a clearly erroneous standard; conclusions of law are reviewed de novo.’ Syllabus Point 4, Burgess v. Porterfield, 196 W.Va. 178, 469 S.E.2d 114 (1996).” Syllabus Point 1, In re: Tax Assessment of Foster Foundation's Woodlands Retirement Community, 223 W.Va. 14, 672 S.E.2d 150 (2008).

2. “ ‘An assessment made by a board of review and equalization and approved by the circuit court will not be reversed when supported by substantial evidence unless plainly wrong.’ Syllabus Point 1, West Penn Power Co. v. Board of Review and Equalization, 112 W.Va. 442, 164 S.E. 862 (1932) (other internal citations omitted).' Syllabus Point 3, In re: Tax Assessment of Foster Foundation's Woodlands Retirement Community, 223 W.Va. 14, 672 S.E.2d 150 (2008).” Syllabus Point 2, Mountain America, LLC v. Huffman, 224 W.Va. 669, 687 S.E.2d 768 (2009).

3. “Title 110, Series 1P of the West Virginia Code of State Rules confers upon the State Tax Commissioner discretion in choosing and applying the most accurate method of appraising commercial and industrial properties. The exercise of such discretion will not be disturbed upon judicial review absent a showing of abuse of discretion.” Syllabus Point 5, In re Tax Assessment Against American Bituminous Power Partners, L.P., 208 W.Va. 250, 539 S.E.2d 757 (2000).

Thomas Moore Lawson, Esq., Lawson and Silek, P.L.C., Winchester, VA, for Petitioner.

Michael D. Thompson, Esq., Thompson & Pardo, PLLC, Charles Town, WV, for Respondent Assessor Gearl Raynes.

Norwood Bentley, Esq., Martinsburg, WV, for Respondent Council and Board of Review and Equalization.

PER CURIAM:

These consolidated cases are before the Court upon two separate appeals of Lee Trace LLC, Petitioner, from a March 23, 2012, order of the Circuit Court of Berkeley County affirming the Board of Review and Equalization's determination that Lee Trace's challenge to the 2010 tax assessment for apartment property located at Hood Circle, Martinsburg, West Virginia, was not timely filed, and a July 24, 2012, order of the Circuit Court of Berkeley County granting, in part, and denying, in part, Lee Trace's petition for appeal of the Board of Review and Equalization's ruling setting the 2011 assessment value for the same property at $6,551,735.

In the first appeal, Lee Trace contends that the January 5, 2010, assessment letter did not inform it of its right to appeal the 2010 assessment as expressly required by W. Va.Code § 11–3–2a. In the second appeal, which pertains to the 2011 assessment, Lee Trace contends that the circuit court erred in averaging the Assessor's “hybrid” income approach assessment with the 2010 cost approach assessment; 2) the circuit court erred in according a presumption of correctness to the Assessor when the Assessor admitted that she had not performed an assessment compliant with legislative rules; 3) the circuit court erred in finding that the Assessor was not required to consider an income approach to value; 4) the circuit court ignored evidence of the property's value submitted by Lee Trace and improperly relied on evidence that was not relevant to the property's value; and 5) the circuit court set an assessment that violated its equal protection rights. Upon reviewing the petitions, the responses, the submitted appendices, and the arguments of counsel, this Court concludes that the circuit court's orders pertaining to both the 2010 and 2011 assessments should be reversed for the reasons set forth more fully below, and the cases remanded for further proceedings consistent with this Opinion.

I.FACTUAL AND PROCEDURAL BACKGROUND

A. No. 12–0638

Lee Trace owns real property located at 15000 Hood Circle, Martinsburg, West Virginia 25403, consisting of approximately 17.02 acres. The instant appeal involves the 2010 real estate tax assessment of the property. In 2008, an apartment complex was constructed on the property. The property was appraised and assessed by the Berkeley County Assessor's Office as land only for the tax year 2009, as construction on the apartment complex was not yet complete as of the July 1, 2008, statutory assessment date. However, by July 1, 2009, the statutory assessment date for tax year 2010, construction of the apartment buildings and other structures was complete, and the assessed value of the property for tax year 2010 reflected a completed project. Lee Trace listed the face amount of fire insurance carried on the “ Application for Review of Property Assessment” dated February 10, 2011, as $17,000,000.00. On the same document, Lee Trace declared the cost of construction of the apartment complex on the property to be $12,927,378.00. On January 5, 2010, the Assessor issued a Notice of Increase in Assessment informing Lee Trace that the property had increased in value to $7,895,530.00 for the 2010 tax year. The notice provided, in pertinent part, the following:

Dear Taxpayer:

In accordance with Chapter 11, Article 3, Section 2A of the West Virginia Code, I am herewith notifying you that your current property assessment for the forthcoming year is $7,895,530

Your property assessment previously was $677,050

The difference between current and previous is $7,218,480

This represents an increase in the assessed value.

...

If you believe an adjustment in the assessed value is necessary, you should contact the County Commission sitting as a Board of Review and Equalization.

Lee Trace completed an “Application for Relief Based on Improper Notice Pursuant to West Virginia Code § 11–3–2a and for Relief from Clerical Errors Pursuant to West Virginia Code § 11–3–27” dated December 21, 2010. It asserted that the notice it received was insufficient because it failed to advise Lee Trace, LLC of its right to appear and seek an adjustment, and that the Assessor committed clerical errors by using different standards for appraising similar area properties and by failing to use income information in the appraisal.

Counsel for Lee Trace appeared at the Berkeley County Council Meeting on February 3, 2011. The council subsequently advised Lee Trace's counsel, by letter dated February 24, 2011, that it found that the owner of Lee Trace, Robert Cocker, was given adequate notice for the filing of the review and equalization application, but Mr. Cocker failed to timely file his request. The letter stated that the council was without jurisdiction to consider the application, having adjourned sine die in February of 2010.

Lee Trace filed a petition for appeal with the Circuit Court of Berkeley County on March 18, 2011. On March 23, 2012, the circuit court entered its Order Substituting Party, Denying Part of the Petition, and Setting a Hearing. The circuit court opined that the notice was sufficient because W.Va.Code § 11–3–2a does not require that a particular date be given as a deadline, and because the notice referenced the appropriate code section, therein directing Lee Trace to the explanation of process. The circuit court reasoned that “[a]ll persons are presumed to know the law.” State v. McCoy, 107 W.Va. 163, 172, 148 S.E. 127, 130 (1929). The circuit court also found that the time for challenging the assessment was not extended because of clerical mistake, because Lee Trace challenged the assessment based on the method used, not “an unintentional or inadvertent act” as described in W.Va.Code § 11–3–27. The circuit court found that Lee Trace did not challenge the assessment at the proper time, and had waived its right to seek correction. The circuit court affirmed the Board of Review and Equalization's ruling with respect to the 2010 assessment. Because Lee Trace had also challenged its 2011 assessment in the appeal to the circuit court, the court set a hearing to address the remaining issues. The circuit court entered an order on April 16, 2012, clarifying that its previous order regarding the 2010 assessment was a final order for purposes of appeal.¹

B. No. 12–0992

For the 2011 tax year, the Assessor assessed the property at a value of $7,593,430.00 using a cost approach analysis to determine the value. Lee Trace filed an application for review of the 2011 assessment, which was received by the council on February 17, 2011, and attended a hearing with the Board of Review and Equalization on February 22, 2011. Lee Trace sought to adjust the 2011 assessment by using the income approach, thus reducing the tax assessed value of the property. Deputy Assessor Tamera Edgar (hereinafter referred to as “Ms. Edgar” or “the Assessor”) confirmed at that hearing before the Board of Review and Equalization that some other apartment complexes in the area had assessments reduced by the Board upon consideration of income when taxpayers specifically requested it, but that the income approach was not used to assess Lee Trace's property because the data was not available to develop a “cap rate” used in the calculation due to the lack of any comparable sales in Berkeley County for the period in question. Thus, it was not possible for her to meet the specific requirements pertinent to performance of an income approach provided for in Legislative Rule § 110–1P–2.

At the hearing, the Board of Review and Equalization asked the Assessor to provide it with a value that took into account the income of the property....