Montgomery Ward Development Corp. by Ad Valorem Tax, Inc. v. Cedar Rapids Bd. of Review, 91-637

• Decision Date: 17 June 1992
• Docket Number: No. 91-637,91-637
• Parties: MONTGOMERY WARD DEVELOPMENT CORP., By AD VALOREM TAX, INC., Its Authorized Agent, Appellant, v. CEDAR RAPIDS BOARD OF REVIEW, Appellee. . Filed
• Court: Iowa Supreme Court

Page 436

488 N.W.2d 436

MONTGOMERY WARD DEVELOPMENT CORP., By AD VALOREM TAX, INC., Its Authorized Agent, Appellant, v. CEDAR RAPIDS BOARD OF REVIEW, Appellee.

No. 91-637.

Supreme Court of Iowa.

Filed June 17, 1992.

Elizabeth L. Gracie and Mark R. Davis, O'Keefe, Ashenden, Lyons & Ward, Chicago, Ill., and Jeffrey A. Trannel of Hughes & Trannel, P.C., Dubuque, for appellant.

James H. Flitz, City Attys. Office, Cedar Rapids, for appellee.

Considered by SCHULTZ, P.J., and LAVORATO, NEUMAN, SNELL, and ANDREASEN, JJ.

SNELL, Justice.

The appellant, Montgomery Ward Development Corporation, filed suit in district court for the purpose of seeking judicial review of an adverse Cedar Rapids Board of Review determination concerning allegations of excessive property tax assessments. Ward's claims, as amended, maintain that property tax assessments on its Cedar Rapids holdings for tax years 1989 and 1990 were "more than the value authorized by law" (count I), as well as discriminatory, inequitable, and thus violative of the state and federal constitutions (count II). The district court granted the board's motion for summary judgment as to all claims except count I as it pertained to tax year 1989 on the basis that Ward had failed to exhaust its administrative remedies. Upon receipt of the summary judgment order, Ward voluntarily dismissed the balance of count I and instituted the present appeal, which challenges both the summary judgment ruling and the order of dismissal. We now affirm the district court in all respects.

I. Background Facts.

On May 3, 1989, Ward filed a petition of protest with the Cedar Rapids Board of Review objecting to their property's 1989 assessed value. The protest was submitted on a form petition that is designed and distributed by the board. The form petition sets forth six potential grounds for protest, each of which correspond with the six grounds for protest enumerated in Iowa Code section 441.37(1) (1991). The petition directs the taxpayer to "strike out the ground or grounds that do not apply." In addition, each of the six enumerated grounds are followed by at least two blank lines, which call for the petitioner to describe the particulars of their protest.

Ward did not strike out any ground from the petition. The only ground for which Ward supplied details relating to its particular protest was the second listed ground, which corresponds with the basis for protest described in Iowa Code section 441.37(1)(b). That section permits a taxpayer protest on the basis that the "property is assessed for more than the value authorized by law." On May 31, 1989, the board responded to Ward's protest as follows: "After careful consideration of the protest and information submitted, the board has found no basis for a change in the 1989 assessed value of $4,707,794 (commercial)."

Ward then appealed the board's denial to the district court pursuant to Iowa Code section 441.38. Ward's initial petition alleged only that the subject property was "assessed for more than the value authorized by law," which, like the protest lodged with the board, corresponds to the basis for protest detailed in Iowa Code section 441.37(1)(b).

In August 1990 the Iowa Department of Revenue and Finance published an assessment-sales ratio study for 1989. A ratio study is designed to evaluate assessment performance through a comparison of assessed values made for tax purposes with independent estimates of market value based either on sales prices or independent appraisals. In response to this information, Ward filed a motion for leave to amend its petition pending before the district court. The motion sought to add allegations that the subject property had been assessed for more than the value authorized by law for 1990. Also, it alleged that the assessments for both 1989 and 1990 were discriminatory, inequitable, and thus violative of the equal protection clause of the United States Constitution, the uniformity and equal protection clauses of the Iowa Constitution and subparagraph (a) of Iowa Code section 441.37(1) (count II). The district court sustained Ward's motion to amend.

On December 19, 1991, the board filed a motion for partial summary judgment, claiming that the district court lacked jurisdiction to hear count II altogether and count I as it relates to the 1990 tax year. The district court granted the board's motion in all respects on the basis that Ward had failed to exhaust its administrative remedies as required by Iowa Code section 441.38 prior to seeking judicial review. The court's ruling left only count I as it relates to the 1989 assessment year to be decided in the trial court.

It did not take an interlocutory appeal from this partial summary judgment ruling; instead, it unsuccessfully sought to postpone the trial and to have the district court reconsider its decision. Finally, on the morning of trial, Ward voluntarily moved to dismiss the sole remaining cause of action, count I as it pertains to the 1989 assessment year. The district court granted Ward's motion to dismiss. Ward now appeals and is seeking reversal of both the partial summary judgment and the order granting the voluntary dismissal of the balance of count I.

II. Disposition of the 1990 Claims.

Pursuant to our biennial system of real estate tax assessment, the year 1989 would have been an "assessment year" and 1990 an interim year. Iowa Code § 428.4. In an interim year, assessments of real estate are made only to the extent that the property was incorrectly valued in the assessment year, not listed in the assessment year, or experiences a change in value as of the assessment year. Id.

To the extent a taxpayer is dissatisfied with the assessor's valuation, the aggrieved taxpayer may lodge a protest with the appropriate board of review. Iowa Code § 441.37. To this end, Iowa Code section 441.37 establishes six grounds on which a property tax assessment may be contested by the taxpayer. These six grounds correspond with the bases for protest enumerated on the petition for protest distributed by the board.

Significantly, Iowa Code section 441.37 limits protests on the basis of the first five grounds to petitions filed with the board of review "on or after April 16, to and including May 5, of the year of assessment." Iowa Code § 441.37(1) (emphasis added). With regard to the sixth basis for protest, the Code states as follows:

In addition to the [first five grounds for protest], the property owner may protest annually to the board of review under the provisions of section 441.35, but such protest shall be in the same manner and upon the same terms as heretofore prescribed in this section.

Iowa Code § 441.37(1) (emphasis added). Iowa Code section 441.35 further elaborates upon an interim year protest as follows:

In any year after the year in which an assessment has been made of all the real estate in any taxing district, it shall be the duty of the board of review to meet as provided in section 441.33, and where it finds the same has changed in value, to revalue and reassess any part or all of the real estate contained in such taxing district, and in such a case it shall determine the actual value as of January 1, of the year of revaluation and reassessment and compute the taxable value thereof, and any aggrieved taxpayer may petition for a re-evaluation of the taxpayer's property, but no reduction or increase shall be made for prior years.

(Emphasis added.)

Upon receipt of a final determination by the board of review, taxpayers are then entitled to seek judicial review of board actions pursuant to Iowa Code section 441.38. However, "[n]o new grounds in addition to those set out in the protest to the board of review as provided in section 441.37 can be pleaded, but additional evidence to sustain those grounds may be introduced." Iowa Code § 441.38.

We have consistently held that under the statutory scheme outlined above, protests first initiated in an interim year are limited to a showing of change in property value as of the immediately preceding assessment year. Equitable Life Ins. Co. v. Board of Review, 252 N.W.2d 449, 450 (Iowa 1977); Grundon Holding v. Board of Review, 237 N.W.2d 755, 758 (Iowa 1976); James Black Dry Goods Co. v. Board of Review, 260 Iowa 1269, 151 N.W.2d 534, 538-40 (1967); Simmons Warehouse Co. v. Board of Review, 229 Iowa 191, 194, 294 N.W. 286, 288 (1940). Ward contends that because the statutory scheme precludes initiation of a protest in an interim year based on any ground except change in value as of the preceding assessment year, its 1989 (assessment year) protest must necessarily be deemed to effect a protest with respect to the 1990 interim year as well. To conclude otherwise, Ward argues, would result in the assessment of a property tax without "an opportunity to be heard upon the question of the validity of the tax" assessed in an interim year. Security Trust & Safety Vault Co. v. City of Lexington, 203 U.S. 323, 335, 27 S.Ct. 87, 90, 51 L.Ed. 204, 208-09 (1906) (concluding that due process dictates that taxpayers receive notice and an opportunity to be heard concerning the validity of a property tax assessment before the tax can be enforced). Accordingly, Ward maintains that the district court erroneously granted the board's motion for partial summary judgment as to interim year 1990 on the basis that Ward had failed to register a 1990 interim year protest with the board of review.

Our review of appeals taken from the action of the board of review are normally heard in equity wherein we review the record de novo. Iowa Code § 441.39. "However, even in an equity case we cannot find facts de novo in an appeal from summary judgment." Moser v. Thorp Sales Corp., 312 N.W.2d 881, 886 (Iowa 1981) (citing Lyon v. Willie, 288 N.W.2d 884, 894 (Iowa 1980)). "Therefore, on the issues adjudicated by the trial court in its partial summary judgment ... we review for correction of errors at law." Id. (citing...