Matonovich v. State Board of Tax Commissioners

• Decision Date: 01 April 1998
• Docket Number: 49T10-9809-TA-00111
• Parties: JOHN S. MATONOVICH et al., Petitioners, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.
• Court: Indiana Tax Court

JOHN S. MATONOVICH et al., Petitioners, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.

No. 49T10-9809-TA-00111

Tax Court of Indiana

April 1, 1998

NOT FOR PUBLICATION

ATTORNEYS FOR PETITIONERS: KATHRYN D. SCHMIDT JOSEPH E COSTANZA KEVIN E. STEELE BURKE COSTANZA & CUPPY

ATTORNEYS FOR RESPONDENT: JEFFREY A. MODISETT Attorney General of Indiana ANGELA L. MANSFIELD Deputy Attorney General

ORDER ON MOTION FOR A PRELIMINARY INJUNCTION

Thomas G. Fisher, Judge, Indiana Tax Court

John Matonovich and other township assessors (hereinafter referred to collectively as Petitioners) in Lake County have filed an original tax appeal challenging an order of the State Board of Tax Commissioners (State Board) requiring a reassessment of all real property in Lake County.^[1] The Petitioners have moved the Court to enjoin portions of that order pending the outcome of this original tax appeal.

BACKGROUND

A division of the State Board, the Division of Tax Review^[2] studied the need to reassess real property in Lake County. In its study, the Division of Tax Review concluded that there was a need to conduct a reassessment of all real property in Lake County due to an endemic problem with the uniformity of assessments within classes of property. On, in response to the study, the State Board issued a Reassessment Resolution and Order. In the Reassessment Resolution and Order, the State Board found sufficient cause to hold hearings regarding the reassessment of all real property in Lake County.^[3] On May 19 and 20 1998, the State Board conducted those hearings.

On August 14, 1998, after considering the evidence presented at the hearings as well as supplemental evidence, the State Board ordered the reassessment of all real property in Lake County as of March 1, 2000 pursuant to the State Board’s authority under section 6-1.1-4-9. In its order, the State Board stated that it would hire a contractor to conduct and oversee the reassessment. The contractor would be paid out of the Lake County Reassessment Fund.^[4] In addition, the State Board ordered Lake County assessing officials to submit a statement detailing what assistance they could make available to the contractor hired by the State Board.

On September 11, 1998, the Petitioners filed this original tax appeal challenging the State Board’s reassessment order. Although the Petitioners do not dispute that the State Board has the authority to order a reassessment of all real property within Lake County, the Petitioners contend that portions of the State Board’s reassessment order are unlawful. Specifically, the Petitioners contend that the State Board’s order will unlawfully infringe upon the Petitioners’ duty to conduct the reassessment specified in the reassessment order. The Petitioners also contend that to the extent that the order requires that the data collection for the reassessment will be used for the March 1, 2001 state-wide general reassessment,^[5] the order is unlawful because it will infringe upon the Petitioners’ duty to conduct the 2001 general reassessment. The Petitioners have moved this Court to enjoin the State Board from hiring a contractor to conduct and oversee the Lake County reassessment pending the outcome of this original tax appeal. On October 7, 1998, this Court held a hearing on the Petitioners’ motion, and now the Court issues its decision.

ANALYSIS AND OPINION

The Petitioners have moved this Court for injunctive relief pursuant to Ind. Code § 33-3-5-11 (1998) and Trial Rule 65. As the party seeking the extraordinary remedy of a preliminary injunction, the Petitioners bear the burden of proving entitlement to that remedy. See Keller v Department of State Revenue, 530 N.E.2d 787, 790 (Ind. Tax Ct. 1988).

At the outset of its analysis, the Court notes that the Petitioners are not seeking to enjoin the collection of a tax. This puts the Petitioners’ motion outside of the ambit of section 33-3-5-11 because that statutory provision on its face only applies to petitions to enjoin the collection of a tax. However, the Court holds that its power to enjoin the actions of parties before the Court is not limited by section 33-3-5-11. In Sproles v. State, 672 N.E.2d 1353, 1359 (Ind. 1996), the Indiana Supreme Court explained that section 33-3-5-11 was enacted in order to allow the Indiana Tax Court to enjoin the collection of taxes, an authority specifically withheld from circuit and superior courts before the creation of the Indiana Tax Court. See id. It therefore follows that the General Assembly did not enact section 33-3-5-11 in order to limit this Court’s authority to issue injunctions when necessary to afford the parties before the Court complete and meaningful relief.

Although the authority for the issuance of a preliminary injunction in this instance does not emanate from section 33-3-5-11, but rather the Court’s inherent authority, the Court finds the general principles animating that statutory provision helpful in its analysis of this case. Section 33-3-5-11 provides in pertinent part:

[T]he tax court may enjoin the collection of a tax pending the original tax appeal, if the tax court finds that:

(1) the issues raised by the original tax appeal are substantial;

(2) the petitioner has a reasonable opportunity to prevail in the original tax appeal; and

(3) the equitable considerations favoring enjoining the collection of the tax outweigh the state’s interests in collecting the tax pending the original tax appeal.

Obviously, the Court, in its consideration of the instant motion, must modify the third statutory prerequisite to some extent. In previous decisions, this Court has drawn from the general body of case law concerning preliminary injunctions when evaluating this statutory prerequisite. See Keller, 530 N.E.2d at 791; American Trucking Ass’ns v. State, 512 N.E.2d 920, 923 (Ind. Tax Ct. 1987). Under that body of case law, a court must consider whether the Petitioners will suffer irreparable harm if the injunction is not granted, balance the harm to the Petitioners if the petition is not granted with the harm to the respondent if the relief is granted, determine whether the public interest will be adversely affected, and determine whether the Petitioners can post sufficient security to cover costs and damages that the respondent may suffer if the respondent is wrongfully enjoined. See American Trucking Ass’ns, 512 N.E.2d at 923.

However, because this case involves a dispute between public servants acting in their official capacities,^[6] the Court finds that the public interest is the only relevant equitable consideration. Any interest that the parties have in these proceedings is for the benefit of the public they represent. Accordingly, the Court will evaluate any arguments made by the parties in that light.

The Substantiality of the Issues

This case involves how the reassessment of all real property in Lake County will be done and raises significant issues concerning the authority of the State Board and the autonomy of local elected officials. This is no trivial matter; this case will affect all real property owners in Lake County. The State Board appears to concede as much. At the hearing on the Petitioners’ motion, the State Board did not argue that the issues raised by this original tax appeal were not substantial. For these reasons, the Court finds that the first prerequisite for the issuance of a preliminary injunction has been met.

The Likelihood of Success on the Merits

This Court has defined a “reasonable opportunity to prevail” as a “tolerable, moderate, rational honest, or equitable chance of success on the merits.” Video Tape Exch. Coop of Am., Inc. v. Department of State Revenue, 512 N.E.2d 476, 477 (Ind. Tax Ct. 1986). This Court has not had the opportunity to evaluate this standard in the context of an original tax appeal from a final determination of the State Board.^[7] In cases involving a State Board final determination, a litigant will have to demonstrate that the State Board’s decision is unsupported by substantial evidence, is arbitrary or capricious, constitutes an abuse of discretion, or exceeds statutory authority in order to succeed. See King Industrial Corp. v. State Bd. of Tax Comm’rs, 699 N.E.2d 338, 339 (Ind. Tax Ct. 1998). Therefore, the Petitioners will have to show a reasonable likelihood of making that demonstration because the Petitioners cannot succeed on the merits without meeting the standard under which this Court may reverse final determinations of the State Board.

The Petitioners contend that the State Board does not have the statutory authority to hire a contractor to conduct the Lake County reassessment because the State Board itself does not have the authority to conduct the assessment. In the Petitioners’ view, this makes those portions of the State Board’s order providing for the hiring of a contractor to conduct that reassessment invalid. In response, the State Board argues that because it has been given wide latitude in determining when to order a reassessment, it has the discretion to choose the means by which a reassessment is to be accomplished. According to the State Board, this includes the authority to conduct the reassessment itself or select and employ persons to conduct the reassessment on its behalf.

Under section 6-1.1-4-9, the State Board has the unquestioned authority to order a county-wide reassessment. The State Board also has the authority to supervise such a reassessment.^[8] See Ind. Code § 6-1.1-35-1(3) (1998) (State Board has duty to “see that all property assessments are made in manner provided by law.”); see also Bielski v. Zorn, 627 N.E.2d 880, 886 (Ind. Tax Ct. 1994); cf. id. § 6-1.1-4-31(a) (State Board required to check conduct of general reassessment). The...