Maricopa County v. Chatwin, 1

• Decision Date: 13 July 1972
• Docket Number: No. 1,CA-CIV,1
• Citation: 17 Ariz.App. 576,499 P.2d 190
• Parties: COUNTY OF MARICOPA, a political subdivision of the State of Arizona, et al., Petitioners, v. The Honorable Kenneth C. CHATWIN, Judge of the Superior Court, Maricopa County, Respondent; and FIRST NATIONAL BANK OF ARIZONA, a national banking association, Real Party in Interest. 1882.
• Court: Arizona Court of Appeals

Page 190

499 P.2d 190

17 Ariz.App. 576

COUNTY OF MARICOPA, a political subdivision of the State of Arizona, et al., Petitioners, v. The Honorable Kenneth C. CHATWIN, Judge of the Superior Court, Maricopa County, Respondent; and FIRST NATIONAL BANK OF ARIZONA, a national banking association, Real Party in Interest.

No. 1 CA-CIV 1882.

Court of Appeals of Arizona, Division 1, Department B.

July 13, 1972.

Beer & Kalyna by Olgerd W. Kalyna, Phoenix, for petitioners.

Streich, Lang, Weeks, Cardon & French by Dan M. Durrant, Phoenix, for real party in interest.

HAIRE, Chief Judge, Division 1.

In this special action proceeding, the petitioning governmental authorities contend that the trial court should be prohibited from proceeding further in an action brought by the respondent taxpayer seeking certain tax relief by way of 'mandamus and/or declaratory judgment'. In the event that this Court does not see fit to prohibit further proceedings in the trial court, petitioners alternatively request relief from a discovery order entered by the trial court relating to certain interrogatories propounded by the respondent taxpayer.

On July 2, 1971 the respondent taxpayer (First National Bank of Arizona) filed in the Maricopa County Superior Court its complaint consisting of five separate counts. In general, the first count complained of an assessment as of January 1, 1971 of the taxpayer's uncompleted downtown Phoenix office building, contending that an uncompleted building has no value until complete and ready for occupancy, and further contending that the assessor had failed to assess and include on the tax rolls other uncompleted structures similarly situated. The taxpayer further alleged that such treatment was 'unlawful and discriminatory'. This first count also alleged that the taxpayer had appealed the assessor's above-mentioned action to the Maricopa County Board of Supervisors sitting as a Board of Equalization and to the Arizona State Board of Property Tax Appeals, but that the taxpayer had not 'obtained the relief to which it was entitled.'

The second count complained that the assessor had classified as 'commercial' or 'Class 3' the land forming the subjacent support for taxpayer's uncompleted building, and that this land should have been classified as 'other real property' or 'Class 4' property as defined in A.R.S. § 42-136. ¹ Again the taxpayer alleges unconstitutional discriminatory practices in connection with the above-mentioned classification.

Count III alleges as an alternative to Count I that if the uncompleted building is subject to assessment, it also should be assessed as Class 4 property rather than as Class 3 property.

Count IV complains that the assessor made the above-mentioned assessment late, and alleges that the failure to have completed the assessments on January 1, 1971 resulted in certain unconstitutional discrimination against plaintiff.

These first four counts all requested mandatory injunctive relief against the assessor in the nature of mandamus. The fifth count sought declaratory judgment relief based upon the first four counts in the event the court should determine that mandamus was not an appropriate remedy.

In the trial court the defendant governmental authorities moved to dismiss the taxpayer's complaint on the grounds that by reason of A.R.S. § 42-204, subsec. B (Supp.1971-72) ² the trial court had no jurisdiction to grant the extraordinary relief requested; that classification of property could only be tested pursuant to an appeal under A.R.S. § 42-146, subsec. A (Supp.1971-72); and that before plaintiff could appeal to the courts under any circumstances the tax must be paid under protest. Although we do not agree in full with petitioners' contentions, we are of the opinion that the trial court erred in refusing to dismiss the taxpayer's complaint.

The laws of the State of Arizona relating to the procedures and remedies available to a taxpayer for the purpose of raising questions concerning the classification or valuation of his property, or for the purpose of raising any other questions concerning the legality of an assessment or tax imposed upon his property, have been in a state of change in Arizona during the past few years, primarily because of the enactment of new legislation and numerous and frequent amendment of these new enactments. A discussion of the fundamental changes wrought in the Arizona Ad valorem property tax structure as a result of the Arizona Supreme Court's 1963 decision in Southern Pacific Company v. Cochise County, 92 Ariz. 395, 377 P.2d 770 (1963), is set forth in this Court's opinion in Burns v. Herberger, 17 Ariz.App. 462, 498 P.2d 536 (filed June 29, 1972), and will not be repeated in detail here. Suffice it to say that because of these numerous and frequent changes in legislative enactments, most of the older decisions of the appellate courts of this state relating to remedies available to the dissatisfied taxpayer have been rendered obsolete and even recent decisions must be closely scrutinized so as to be considered in view of the statutes in existence at the time and governing the particular issue at the time the dispute arose.

As previously mentioned, plaintiff's complaint was filed in the Superior Court on July 2, 1971. Therefore the remedies available to plaintiff must be considered in light of the legislative framework existing at that time. ³

This framework sets forth basically three different approaches which a dissatisfied real property taxpayer might utilize in attempting to obtain relief from alleged wrongful action by the taxing authorities, with the approach to be utilized depending in part upon the legal questions which the taxpayer might seek to advance.

The first of these possible approaches might best be referred to as the 'administrative appeal' approach. Under A.R.S. §§ 42-221, 42-241.01, 42-245 and 42-146 (Supp.1971-72), provisions are made for a succession of administrative review procedures starting with an initial petition filed with the assessor, thence to the County Board of Equalization, and then administratively terminating with a review by the State Board of Property Tax Appeals. Under A.R.S. § 42-146, subsec. A, ⁴ any taxpayer dissatisfied with the valuation or classification of his property by the State Board of Property Tax Appeals may appeal to the Superior Court in the manner provided by A.R.S. § 42-151. Likewise, under the provisions of § 42-245, ⁵ an appeal to the Superior Court may be taken directly from the intermediate determination as to valuation or classification made by the County Board of Equalization, without the taxpayer being required to exhaust his administrative remedies by first appealing the determination made by the County Board of Equalization to the State Board of Property Tax Appeals.

The second approach which might be utilized by the dissatisfied taxpayer is that set forth in A.R.S. § 42-246, which reads as follows:

'Any person dissatisfied with the valuation or classification of his property as determined by the county assessor may, whether or not he files an appeal with the assessor, county board or state board, appeal to the superior court in the manner provided in § 42-151 on or before November 1.'

This approach might be characterized as the 'direct appeal' approach. It will be noted that under the provisions of this statute, a dissatisfied taxpayer may completely bypass all administrative remedies, and Appeal directly to the Superior Court 'in the manner provided in § 42-151 on or before November 1.'

The third approach is one which the Arizona Supreme Court has recently found to have existed at common law (see State Tax Commission v. Superior Court, 104 Ariz. 166, 450 P.2d 103 (1969)) and finds legislative approval in the provisions of A.R.S. § 42-204. ⁶ Under this approach the tax is paid under protest and an independent action is filed seeking a refund of the alleged overpayment. It is important to note that this statute (§ 42-204) does not designate this approach as an 'appeal', and it is not governed by the procedural provisions of A.R.S. § 42-151 et seq., nor is it entitled to the procedural advantages inherent in a § 42-151 appeal.

A fourth possible approach which is recognized by the courts, but which is not sanctioned by legislative enactment, is the injunctive or extraordinary remedy approach. Perhaps the statement that this approach is not sanctioned by legislative enactment is an understatement. A reading of A.R.S. § 42-204, subsec. B (quoted in footnote 2, Supra), indicates that the legislature has sought to expressly prohibit the use of this type of remedy, and for this reason and for policy reasons expressed in many of its decisions, the Arizona Supreme Court has narrowly limited the situations in which such extraordinary remedies might be utilized.

We have previously indicated in this opinion that the choice of the remedial avenue to be followed by a dissatisfied taxpayer is, to a large extent, dictated by a consideration of the legal issues which he wishes to advance. In this connection we have set forth in some detail the questions which the respondent First National Bank urged in the five counts of its complaint filed in the Superior Court, among which are claims of discrimination. The 'administrative appeal' and 'direct appeal' approaches present certain very definite advantages to the taxpayer. Some of the advantages are that under § 42-152, subsec. A the Superior Court is required to hear the appeal within 90 days. In addition, and of prime importance, the payment of the tax under protest is Not a prerequisite to the Filing of a § 42-151 appeal. This is evident from the express provisions of § 42-151, subsec. E, which reads as follows:

'E. All taxes levied and assessed against property on which an appeal Has been filed by the owner thereof Shall be paid under protest prior to the date the tax becomes delinquent. A receipt shall be given for the...