Paradigm Bend LLC v. Deschutes County Assessor

• Court: Oregon Tax Court
• Writing for the Court: ALLISON R. BOOMER MAGISTRATE, JUDGE
• Decision Date: 13 August 2018
• Docket Number: 180093N
• Citation: Paradigm Bend LLC v. Deschutes County Assessor, 180093N (Or. Tax Aug 13, 2018)
• Parties: PARADIGM BEND LLC, Plaintiff, v. DESCHUTES COUNTY ASSESSOR, Defendant.

PARADIGM BEND LLC, Plaintiff,
v.
DESCHUTES COUNTY ASSESSOR, Defendant.

No. 180093N

Tax Court of Oregon, Magistrate Division, Income Tax

August 13, 2018

ORDER

ALLISON R. BOOMER MAGISTRATE, JUDGE

This matter came before the court on Plaintiff's Motion to Dismiss Defendant's Counterclaim (Motion), filed June 6, 2018. Defendant filed its Response to Plaintiff's Motion on June 14, 2018. Plaintiff filed its Reply to Defendant's Response on June 27, 2018. The matter is now ready for the court's determination.

A. Procedural History

Plaintiff's original complaint challenged the 2017-18 real market value of Account 244195, which is one of several accounts composing a multi-family apartment building. (See Ptf's Compl at 1; Ptf's Mot at 1.) Defendant's original answer asserted an affirmative defense and a counterclaim:

"AFFIRMATIVE DEFENSE [:] A. Unit of Property Valuation. To the extent that any claim asserted by plaintiff is based upon value determinations which fail to account for value(s) of components of the unit of property, plaintiff is barred from relief due to operation of ORS 305.287

"COUNTERCLAIM [:] Defendant Assessor reserves all right to establish upon sufficient evidence presented herein value(s) greater than the roll value(s) at issue in this proceeding (and in an amount not exceeding $27, 000 000) including but not limited to value(s) established pursuant to ORS 305.287."

(Answer at 2.) At the initial case management conference, Defendant agreed to file an amended answer identifying the additional accounts at issue under ORS 305.287 and attaching property tax statements for each of those accounts. Plaintiff agreed to file a response alleging a total real market value for the economic unit of property at issue. (See Journal Entry, May 2, 2018.)

In its Amended Answer, Defendant retained its affirmative defense, but amended its counterclaim to include Accounts 244195 (Building A), 274478 (Building B), and 274479 (Buildings C and D) for the 2017-18 tax year. (Am Answer at 2.) Plaintiff filed its First Amended Complaint alleging real market values for the additional accounts. Defendant's Second Amended Answer re-alleged the affirmative defense and counterclaim contained in its prior answers. The following chart sets forth the tax roll values, BOPTA^[1] values, and parties' requested values:

Account 244195 (Building A)	Account 274478 (Building B)	Account 274479 (Buildings C & D)	Total
Tax Roll	$9, 042, 920.00	$7, 986, 860.00	$8, 530, 165.00	$25, 559, 945.00
BOPTA	$9, 042, 920	None	None	N/A
Plaintiff	$7, 841, 100	$6, 969, 867	$7, 405, 483	$22, 216, 450
Defendant	$9, 529, 400	$8, 470, 600	$8, 538, 680	$26, 538, 680

B. Parties' Arguments on the Motion

Plaintiff makes three arguments in support of its request that the court dismiss Defendant's counterclaim: (1) Defendant lacks standing to pursue its counterclaim because it is not aggrieved by a BOPTA Order; (2) Defendant failed to timely file its own appeal challenging a BOPTA Order; (3) Defendant's request for relief under ORS 305.287 may not be asserted in the form of a counterclaim. Defendant maintains that its request for relief under ORS 305.287 is a permissible counterclaim under Oregon Supreme Court and Oregon Tax Court precedent. Each argument is described in more detail below.

1. Standing

Plaintiff argues that Defendant lacks standing under ORS 305.275(1)(a) or (4) because it is not aggrieved by and affected by a BOPTA order or an act of the Department of Revenue with respect to any of the accounts at issue. (Ptf's Mot at 2-3 (citing Wynne v. Dept. of Rev., 9 OTR 378, 378-80 (1984) (holding that the assessor was not aggrieved when BOPTA sustained the value on the tax rolls, thereby depriving the Department of Revenue of jurisdiction to hear the appeal under ORS 305.275); Bear Creek Plaza v. Dept. of Rev., 12 OTR 272, 274 (1992) (holding that the "assessor may appeal from an order of a board of equalization only if the order changes the value set by the assessor"); and Lane County Assessor v. Berkman, TC-MD 070313C, WL 2176060 (Or Tax M Div, July 20, 2007) (holding that the assessor lacked standing to appeal to the tax court when BOPTA adopted the assessor's recommended value)).) Plaintiff notes that the Regular Division of this court has employed similar principles to determine whether a defendant is aggrieved by a decision of the Magistrate Division on appeal. (Ptf's Mot at 4 (citing Village at Main Street Phase II, LLC II v. Dept. of Rev., 22 OTR 52, 56 (2015), vacated on other grounds, 360 Or. 738, 387 P.3d 374 (2016); and Work v. Dept. of Rev., 22 OTR 396, 414 (2017)).)

2. Timeliness

Plaintiff argues that Defendant's claims are not timely because an appeal from BOPTA must be made within 30 days from the date of the order under ORS 305.280(4). (Ptf's Mot at 5.)

3. Counterclaim

Plaintiff acknowledges that Defendant may, under ORS 305.287, seek a determination of the real market value of the unit of property, which includes more accounts than the one Plaintiff appealed. (Ptf's Mot at 7.) Plaintiff maintains that Defendant's affirmative defense achieves that purpose and Defendant may not assert a counterclaim under ORS 305.287. (See id.) The harm Plaintiff seeks to avoid is Defendant's ability "to wrest control of the case from the party that initiated it-the Plaintiff-and deprive it of the right to voluntarily dismiss anytime up to five days before trial." (Ptf's Mot at 6-7 (citing TCR^[2] 54 A(1)).)

4. Defendant's Response

Defendant maintains that its counterclaim is valid under Village at Main Street Phase II, LLC II v. Dept. of Rev. (Village II), 360 Or. 738 (2016), "wherein the Oregon Supreme Court held that the Assessor has a statutory right, pursuant to ORS 305.287, to pursue its counterclaim." (Def's Resp to Mot at 2.) Defendant notes that this court has stated that "relief requested through ORS 305.287 'can be thought of as a counterclaim.'" (Def's Resp to Mot at 2 (quoting Village II, 360 Or at 745-46).)

C. Analysis

The question before the court is whether to dismiss Defendant's counterclaim seeking relief under ORS 305.287. The court begins with the text of ORS 305.287:

"Whenever a party appeals the real market value of one or more components of a property tax account, or accounts that constitute a unit of property within the meaning of ORS 310.160(1), any other party to the appeal may seek a determination from the body or tribunal of the total real market value of the unit of property, the real market value of any or all of the other components of the tax account or the unit of property, or both."

The statute was enacted "to address [the] combined effect of Nepom and Measure 50[, ]"^[3] which together prevented undervaluation resulting from the appeal of a single component of property that could not later be corrected. Village at Main Street Phase II, LLC v. Dept. of Rev. (Village I), 356 Or. 164, 170, 175-76, 339 P.3d 428 (2014). The Supreme Court concluded that an opposing party may invoke ORS 305.287 at BOPTA, in the Magistrate Division, and in the Regular Division because each is an "appeal." Id. at 177-81. In addition, the court concluded that ORS 305.287 did not conflict with the 30-day statutory time limit on appeals from BOPTA:

"The Tax Court's reasoning appears to assume that ORS 305.287 independently authorizes an appeal, when the statute plainly does not do that. As we have explained ORS 305.287 states that, whenever a party appeals a real property valuation and challenges only one component of the valuation, other parties may 'seek a determination' as to other components. The statute neither requires nor authorizes other parties to file a separate notice of appeal to obtain that determination. Moreover, ORS 305.280(4) spells out a deadline for an appellant to file an appeal. It does not affect a respondent's time to respond to that appeal."

Id. at 181 (emphasis in original).

1. Aggrievement and timeliness

Plaintiff's challenges based on aggrievement under ORS 305.275 and timeliness under ORS 305.280(4) are not well taken. Each of those statutes, by its terms, applies to "appeals." As the Supreme Court in Village I explained, ORS 305.287 does not authorize an "appeal."^[4] Thus, neither statute applies to the relief requested under ORS 305.287.

With respect to the timing of Defendant's request for relief under ORS 305.287, it is evident from the plain text of the statute-"whenever a party appeals"-that the time for a party to request relief is in response to an appeal. There is no question that Defendant's request for relief under ORS 305.287 is timely because it was raised in its first responsive pleading. See TCR-MD^[5] 2 B ("Claims and affirmative defenses, e.g., an ORS 305.287 determination request or an allegation that plaintiff failed to timely file an appeal, must be alleged in a defendant's first filed pleading[.]"); see also TCR 21 (concerning the time and manner for presenting defenses).

2. Counterclaim vs. affirmative defense

Plaintiff maintains that ORS 305.287 does not constitute a counterclaim. Plaintiff acknowledges, however, that Defendant may request a determination under ORS 305.287 in the form of an affirmative defense. TCR 19 B provides a non-exhaustive list of affirmative defenses, including "any other matter constituting an avoidance or affirmative defense." Generally, an affirmative defense does not directly contradict the facts pleaded by the plaintiff, but rather presents a" new matter * * * consisting of a statement of facts different from those averred by the plaintiff and not embraced within the judicial inquiry into their truth." See Lasley v. Combined Transport,...