Metro. Associates v. City of Milwaukee

• Decision Date: 25 March 2011
• Docket Number: No. 2009AP524.,2009AP524.
• Citation: 796 N.W.2d 717,2011 WI 20,332 Wis.2d 85
• Parties: METROPOLITAN ASSOCIATES, a Wisconsin Limited Partnership, on behalf of itself and all other persons and entities who filed an objection to the 2008 assessment of any parcel of real or personal property in the City of Milwaukee, Plaintiff–Respondent–Petitioner,v.CITY OF MILWAUKEE, a Wisconsin Municipal Corporation, Defendant–Appellant.
• Court: Wisconsin Supreme Court

332 Wis.2d 85

796 N.W.2d 717

2011 WI 20

METROPOLITAN ASSOCIATES, a Wisconsin Limited Partnership, on behalf of itself and all other persons and entities who filed an objection to the 2008 assessment of any parcel of real or personal property in the City of Milwaukee, Plaintiff–Respondent–Petitioner,

v.CITY OF MILWAUKEE, a Wisconsin Municipal Corporation, Defendant–Appellant.

No. 2009AP524.

Supreme Court of Wisconsin.

Argued Oct. 7, 2010.Decided March 25, 2011.

OPINION TEXT STARTS HEREWest CodenotesHeld UnconstitutionalW.S.A. 70.47(7)(c), 70.47(8)(d), 70.47(8)(j), 70.47(13), 70.47(16)(a), 70.47(16)(c), 73.03(2a), 74.37(4)(c), 74.37(4)(d).

For the plaintiff-respondent-petitioner there were briefs by Alan Marcuvitz, Robert L. Gordon, Andrea H. Roschke and Michael Best & Friedrich, LLP, Milwaukee, and oral argument by Robert L. Gordon.For the defendant-appellant there were briefs by Grant F. Langley, city attorney and Vincent D. Moschella, deputy city attorney, Milwaukee, and oral argument by Vincent D. Moschella.There was an amicus brief by Maureen A. McGinnity, Foley & Lardner LLP, Milwaukee, John T. Barry, Quarles & Brady LLP, Milwaukee and Douglas A. Pessefall, Whyte Hirschboeck Dudek, S.C., Milwaukee, on behalf of State Bar of Wisconsin Taxation Section Board of Directors.MICHAEL J. GABLEMAN, J.

This is a review of a published decision of the court of appeals reversing the circuit court order granting summary judgment to Metropolitan Associates.¹ Metropolitan Associates challenges the procedure taxpayers must follow in order to dispute municipal property tax assessments. After a taxpayer receives his or her annual property tax assessment, the taxpayer may challenge that assessment before the Board of Review for the municipality where the taxed property is located. ² If the taxpayer remains unsatisfied after the Board of Review makes its determination, the taxpayer may seek review of that decision in the circuit court.³

¶ 2 Prior to 2008, a taxpayer could choose between two types of review in the circuit court: common law certiorari review or statutory de novo review pursuant to Wis. Stat. § 74.37. Common law certiorari review is a limited review of the record made before the Board of Review, while de novo review is an entirely independent circuit court action in which the circuit court creates its own record and gives no deference to the Board of Review's determination.

¶ 3 In 2008, the legislature passed 2007 Wis. Act 86 (“Act 86”) which allows municipalities to pass an ordinance opting out of de novo review. Taxpayers in these “opt out” municipalities are restricted to a new form of circuit court review referred to as “enhanced certiorari review.” ⁴ This enhanced certiorari review is broader in scope than traditional certiorari review but narrower in scope than de novo review. Act 86 also requires opt out municipalities to grant their taxpayers additional rights during their initial Board of Review hearing.

¶ 4 In 2009, the circuit court for Milwaukee County, the Honorable Jean DiMotto presiding, found that Act 86 unconstitutionally denied taxpayers residing in opt out municipalities equal protection of the laws by depriving those taxpayers of access to de novo review without a rational basis for doing so. The court of appeals reversed. It held that the treatment taxpayers received in opt out municipalities under Act 86 was not significantly different than the treatment taxpayers received in all other municipalities.

¶ 5 We conclude that the treatment taxpayers in opt out municipalities receive under Act 86 is significantly different than the treatment all other taxpayers receive, and we conclude that this difference in treatment lacks a rational basis. Accordingly, we reverse the court of appeals and hold that all of Act 86's modifications to Wis. Stat. §§ 70.47, 73.03, and 74.37 are unconstitutional.

I. BACKGROUND

¶ 6 Property in Wisconsin is taxed by a method of assessment set forth in Wis. Stat. ch. 70. Assessors, who are either elected or appointed, must value all taxable real and personal property within their taxation district on an annual basis.⁵ Wis. Stat. §§ 70.05, 70.10, 70.29, 70.32(1)- (2). Property owners who disagree with an assessment may file an objection before the local Board of Review. Wis. Stat. §§ 70.07, 70.075, 70.47.

¶ 7 A Board of Review is a quasi-judicial body that hears evidence to adduce whether an assessor's valuation is correct. Nankin v. Vill. Of Shorewood, 2001 WI 92, ¶ 18, 245 Wis.2d 86, 630 N.W.2d 141. Its membership typically consists of lay citizens without legal or technical backgrounds. Wis. Stat. §§ 70.46(1), 70.99(10)(a); Nankin, 245 Wis.2d 86, ¶ 31, 630 N.W.2d 141; Rite–Hite Corp. v. Bd. of Review of Vill. of Brown Deer, 216 Wis.2d 189, 575 N.W.2d 721 (Ct.App.1997). After conducting a hearing, the Board of Review may adjust an assessment if it determines that the assessment is too high or too low. § 70.47(6), (9)(a).

¶ 8 We begin with an overview of the two traditional methods of obtaining judicial review of a Board of Review's decision available prior to the enactment of Act 86: certiorari review and de novo review. We then discuss how Wisconsin's process for challenging assessment decisions changed significantly in both 2001 and 2008—in 2001 it changed because of our Nankin decision, and in 2008 it changed because of Act 86.

A. Certiorari Review and De Novo Review

¶ 9 Certiorari review existed prior to the enactment of Act 86 ⁶ as a limited review in which the circuit court examined only the record made before the Board of Review. Nankin, 245 Wis.2d 86, ¶ 20, 630 N.W.2d 141. In certiorari review, a circuit court may not take its own evidence nor conduct its own factual inquiry. Id. The circuit court applying certiorari review must uphold the Board of Review's decision unless: (1) the Board acted outside its jurisdiction, (2) the Board acted in violation of the law, (3) the Board's action was arbitrary, oppressive or unreasonable, representing its will rather than its judgment, or (4) the evidence was such that the Board could not reasonably make the determination in question. Id. If the circuit court determines that the Board of Review's assessment is so deficient that it meets one of these four tests, the court must remand the matter to the Board of Review for a reassessment. Id. The taxpayer seeking certiorari review receives scheduling preference in the circuit court and does not have to pay the tax before filing. Wis. Stat. § 70.47(13).

¶ 10 De novo review, as it existed prior to the enactment of Act 86,⁷ is a more substantial form of review than certiorari review. The circuit court applying de novo review may receive evidence regardless of the record made before the Board of Review. Nankin, 245 Wis.2d 86, ¶ 25, 630 N.W.2d 141. While the circuit court conducting a de novo review gives no deference to the Board of Review's decision, the underlying assessment still carries a presumption of correctness. Id.; Wis. Stat. § 70.49(2). If a circuit court conducting de novo review determines that the Board of Review's assessment is incorrect, the circuit court may calculate the proper assessment without remanding it to the Board of Review for that purpose. Nankin, 245 Wis.2d 86, ¶ 25, 630 N.W.2d 141. In contrast to certiorari review, the de novo action is not given scheduling preference in the circuit court and the taxpayer must pay the tax before filing. Wis. Stat. § 74.37(2).

B. 2001: Nankin Invalidates Population–Based Thresholds on De Novo Actions

¶ 11 Prior to 2001, most property owners could obtain judicial review of a Board of Review's decision by filing an action in the circuit court seeking either certiorari review under Wis. Stat. § 70.47(13) or de novo review under Wis. Stat. § 74.37.⁸ Prior to 2001, however, property owners in counties with populations of 500,000 or more could file for only certiorari review and did not have access to de novo review.⁹ Wis. Stat. § 74.37(6).

¶ 12 In 2001, we considered in Nankin v. Village of Shorewood whether preventing taxpayers' access to de novo review solely based on the population of the county in which the property was located unconstitutionally denied those taxpayers equal protection of the laws.¹⁰ Nankin, 245 Wis.2d 86, ¶ 11, 630 N.W.2d 141. We applied a three-step analysis to guide our holding. First, we determined that the population-based threshold created a “distinct classification of citizens”—those owning property in Milwaukee County. Id., ¶ 13. Second, we determined that this population-based threshold caused taxpayers in Milwaukee County to be treated in a “significantly different” manner from all other taxpayers because the de novo review available in all other counties provided greater protections than the certiorari review available in Milwaukee County. Id., ¶ 14. Third, we determined that no rational basis existed for limiting access to de novo review solely because of the population of the county where the taxed property was located. Id., ¶ 15. As a result, we held that the population-based threshold violated the rights provided to taxpayers under the equal protection clause. Id., ¶ 46. The immediate effect of this holding was that both de novo and certiorari review became available to all property owners in Wisconsin regardless of the population of the county in which their property was located.

C. 2008 to Present: Legislature Allows Municipalities to Opt Out of De Novo Review

¶ 13 On March 13, 2008, seven years after our holding in Nankin, the Wisconsin Legislature passed Act 86. 2007 Wis. Act. 86. Act 86 allows municipalities to adopt an ordinance opting out of § 74.37 de novo review of Board of Review assessment decisions.

¶ 14 A municipality that passes an ordinance pursuant to Act 86 “opting out” of de novo review must give their taxpayers greater rights in their Board of Review proceedings than those taxpayers would receive if they lived in all other municipalities. 2007 Wis. Act. 86 §§ 1–3,...