Marion Cnty. Assessor v. Kohl's Ind., LP, 20T-TA-00010

Case DateOctober 26, 2021
CourtTax Court of Indiana


KOHL'S INDIANA, LP, Respondent.

No. 20T-TA-00010

Tax Court of Indiana

October 26, 2021





The Marion County Assessor appeals the Indiana Board of Tax Review's final determination that reduced the assessments of the department store leased by Kohl's Indiana, LP ("Kohls LP") during the 2011 through 2014 tax years.[1] Upon review, the Court affirms the Indiana Board's final determination.



In 1996, Fashion Mall Commons II, LLC entered into a build-to-suit lease with Kohl's Department Stores, Inc. ("Kohls Stores") to construct the subject property - a single-story, 94, 699 square foot retail building situated on a 6.22-acre parcel within the Fashion Mall Commons shopping center in Indianapolis, Indiana. (See Cert. Admin. R. at 948, 1159-1238.) Approximately six years later, Kohls Stores assigned its interest in the lease to Kohls LP, which assumed all of Kohls Stores' obligations. (See Cert. Admin. R. at 1246-54.)

For the 2011 tax year, the property was assessed at $6, 016, 300, representing an increase of more than 20% from the prior year's assessment. (See Cert. Admin. R. at 1094-95, 1963.) That same year, Fashion Mall Commons II sold the property and assigned its interest in the lease to Arloma Corporation and James Huck, LLC for $15.3 million. (See Cert. Admin. R. at 924, 1153-55, 1255-62.) Over the next two years, the property's assessments continued to increase, and the property continued to change hands. Specifically, the assessment was increased to $7, 793, 500 in 2012 and $7, 902, 300 in 2013. (Cert. Admin. R. at 1096-99.) In November 2013, Arloma and James Huck, LLC sold the property and assigned their interest in the lease to James Huck Real Estate, LLC. (See Cert. Admin. R. 924, 1156-58, 1263-75.) For the 2014 tax year, the property's assessment remained at $7, 902, 300. (Cert. Admin. R. at 1100-01.)

Believing the 2011 through 2014 assessments to be too high, Kohls LP and Kohls Stores sought review first with the Marion County Property Tax Assessment Board of Appeals (the "PTABOA") and then with the Indiana Board. (See, e.g., Cert. Admin. R. at 1-46.) After the Indiana Board implemented an Appeal Management Plan in November


of 2018, a variety of procedural and discovery issues arose between the parties. (See, e.g., Cert. Admin. R. at 54-58, 1841 ¶ 4 (explaining that the pretrial issues in this case nearly overshadowed the hearing on the merits).) Specifically, approximately three weeks before the administrative hearing, the parties' discovery issues culminated in the filing of the Assessor's 1) motion to quash the deposition of, and subpoena duces tecum directed to, his expert witness; 2) requests to issue four subpoenas duces tecum directed to party and non-party witnesses; and 3) motion to compel Kohls LP to produce appraisals related to the 2011 and 2013 sales of the subject property. (See Cert. Admin. R. at 82-198, 431-58.) While the Indiana Board's administrative law judge (the "ALJ") denied the Assessor's motion to quash and his requests to issue the four subpoenas duces tecum, he ordered Kohls LP's counsel to attempt to determine whether the appraisals that the Assessor sought actually existed. (See Cert. Admin. R. at 300, 649-50.) Kohls LP's counsel subsequently confirmed that the appraisals did not exist. (See Cert. Admin. R. at 1844-45 ¶ 12.)

On the morning of the administrative hearing, the Assessor filed a 12(B)(6) motion to dismiss for lack of standing, claiming Kohls LP could not seek review of the property's assessments because it did not own the property, it was not a taxpayer, and it was not authorized to seek review under the terms of its lease. (See, e.g., Cert. Admin. R. at 705-908, 1819-20.) During the hearing, the ALJ advised the parties that he would rule on the motion after it was fully briefed, and the Assessor agreed that he bore the burden of proof pursuant to Indiana Code § 6-1.1-15-17.2.[2] (See Cert. Admin. R. at 1946-58.)


In presenting his case-in-chief, the Assessor claimed, among other things, that his assessments that ranged from $6 to $7.9 million during the years at issue should not be reduced any further because in 2011, the property sold in an arm's length transaction for $15.3 million. (See, e.g., Cert. Admin. R. at 1790-95 (asserting that that the 2011 sales price "alone provides sufficient support to sustain" the assessments).) To support his claim, the Assessor offered 25 separate exhibits and the testimony of three witnesses. (See, e.g., Cert. Admin. R. at Record Contents, 1937, 1963, 2147.)

Kohls LP objected to the admission of nearly all the Assessor's exhibits claiming that, among other things, they were not relevant, constituted hearsay, or were improperly withheld during discovery. (See, e.g., Cert. Admin. R. at 1978-79, 1982-83, 1991-93.) In addition, Kohls LP claimed that its appraisal and the testimony of its preparer demonstrated that the property's assessments should be reduced to $4, 050, 000 for the 2011 and 2012 tax years and $4, 100, 000 for the 2013 and 2014 tax years. (See, e.g., Cert. Admin. R. at 914-1031, 1773-86, 1974-75.)

On May 7, 2020, the Indiana Board issued its final determination that upheld the ALJ's rulings on all of the discovery issues, but denied the Assessor's motion to dismiss finding that Kohls LP had authority (i.e., standing) to appeal the assessments.[3] (See Cert. Admin. R. at 1843-49 ¶¶ 7-24, 1856-61 ¶¶ 48-60.) Also, the Indiana Board admitted most


of the Assessor's exhibits into evidence, excluding only a comparative sales grid and related data (Exhibit R-N), a certified administrative record from another administrative proceeding (Exhibit R-O), and a portion of the testimony from that proceeding (Exhibit R-O2). (See Cert. Admin. R. at 1851-56 ¶¶ 28-47.) Lastly, the Indiana Board found that the Kohls LP appraisal was the only probative evidence of the property's market value-in-use for each of the years at issue; thus, the Indiana Board reduced the assessments to $4, 050, 000 for the 2011 and 2012 tax years and to $4, 100, 000 for each of the 2013 and 2014 tax years. (See Cert. Admin. R. at 1883 ¶ 133.)

The Assessor initiated this original tax appeal on June 22, 2020. The Court conducted an oral argument on January 28, 2021. Additional facts will be supplied when necessary.


The party seeking to reverse an Indiana Board final determination bears the burden of demonstrating its invalidity. Lowe's Home Ctrs., Inc. v. Monroe Cnty. Assessor, 160 N.E.3d 263, 268 (Ind. Tax Ct. 2020). Consequently, the Assessor, bearing the burden of proof, must demonstrate to the Court that the Indiana Board's final determination in this matter is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to constitutional right, power, privilege, or immunity; in excess of or short of statutory jurisdiction, authority, or limitations; without observance of the procedure required by law; or unsupported by substantial or reliable evidence. Ind. Code § 33-26-6-6(e)(1)-(5) (2021).


On appeal, the Assessor contends that the Indiana Board's final determination


must be reversed because it constitutes an abuse of discretion. (See Oral Arg. Tr. at 4-5.) More specifically, the Assessor claims that neither the law nor the evidence supports the Indiana Board's finding that Kohls LP had standing to seek review of the property's assessments for the years at issue. (See, e.g., Pet'r Br. at 5-9.) The Assessor also claims that the Indiana Board abused its discretion when it reduced the property's assessments by millions of dollars each year. (See, e.g., Pet'r Br. at 9-27; Oral Arg. Tr. at 4-6.)

I. Standing

The Assessor claims that the Indiana Board's finding that Kohls LP had standing to seek review of the subject property's assessments contravenes several statutes and the actual terms of Kohls LP's lease. (See Pet'r Br. at 5-9; Pet'r Reply Br. at 2.) The Assessor also maintains that the Indiana Board reached this finding by improperly elevating a footnote in one of Kohls LP's briefs over the actual record evidence. (See Pet'r Reply Br. at 2; Oral Arg. Tr. at 10-14.)[4]

The judicial doctrine of standing focuses on whether the complaining party in a lawsuit is the proper person to invoke the court's power. Bielski v. Zorn, 627 N.E.2d 880, 888 (Ind. Tax Ct. 1994.) Specifically, the doctrine ensures that "the party before the court has a substantive right to enforce the claim that is being made in the litigation." Pence v. State, 652 N.E.2d 486, 487 (Ind. 1995). When the question is whether the complaining


party is the proper person to invoke an administrative review, as here, the judicial doctrine of standing does not apply. See, e.g., Huffman v. Office of Env't Adjudication, 811 N.E.2d 806, 809 (Ind. 2004). Rather, in the context of a property tax appeal, Indiana Code § 6-1.1-15-1 ("Section 15-1") and Indiana Code § 6-1.1-15-3 ("Section 15-3") controlled who may pursue an administrative proceeding before the PTABOA and the Indiana Board.

When Kohls LP sought review with the PTABOA in 2012, Section 15-1 provided that "[a] taxpayer may obtain a review by the county board of a county or township official's action with respect to . . . [t]he assessment of the taxpayer's tangible property." Ind. Code § 6-1.1-15-1(a)(1) (2012) (amended 2015) (repealed 2017).[5] In turn, the relevant version of Section 15-3 provided that "[a] taxpayer may obtain a review by the Indiana board of a county...

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