PARISIAN v. COBB CTY. BD. OF TAX ASSESSORS, A03A1069.

• Decision Date: 05 September 2003
• Docket Number: No. A03A1069.,A03A1069.
• Citation: 587 S.E.2d 771,263 Ga. App. 332
• Parties: PARISIAN, INC. v. COBB COUNTY BOARD OF TAX ASSESSORS.
• Court: Georgia Court of Appeals

587 S.E.2d 771

263 Ga. App. 332

PARISIAN, INC. v. COBB COUNTY BOARD OF TAX ASSESSORS.

No. A03A1069.

Court of Appeals of Georgia.

September 5, 2003.

Reconsideration Denied September 24, 2003.

Certiorari Denied January 20, 2004.

Webb, Tanner & Powell, Steven A. Pickens, Lawrenceville, Matthew P. Benson, for appellant.

Haynie, Litchfield & Crane, Douglas R. Haynie, H. Scott Gregory, Jr., Marietta, for appellee.

ELLINGTON, Judge.

Parisian, Inc. sued the Cobb County Board of Tax Assessors (BTA) primarily to seek injunctive relief from a scheduled four-year tax audit. Parisian appeals the grant of summary judgment to the BTA.¹ Because we find material issues of disputed fact that preclude summary adjudication, we reverse.

On summary judgment, this Court conducts a de novo review of the entire record to determine whether the trial court erred in its ruling. Rubin v. Cello Corp., 235 Ga.App. 250, 510 S.E.2d 541 (1998). Summary judgment is appropriate when the facts and evidence and reasonable inferences therefrom are considered in a light most favorable to the nonmovant and do not demonstrate the existence of a triable issue. Id. at 251, 510 S.E.2d 541. So considered, the evidence shows that the BTA reassessed Parisian's 2000 personal property tax return for its inventory in its Town Center Mall store in Cobb County after Glenn Heckman, an appraiser in the tax assessors' office, noticed a reduction in the value assigned by Parisian to its inventory for that tax year. Heckman decided to "roll[ ] over the prior year's, 1999's, inventory value." After adjusting the value of Parisian's personal property inventory back to the 1999 value, the BTA notified Parisian of its reassessment. In response, on July 7, 2000, Parisian timely filed an ad valorem tax appeal for tax year 2000 to challenge that reassessment. Over the next several months, Parisian and the BTA attempted to resolve the valuation issue. The quantity and wholesale cost of Parisian's personal property inventory were never in dispute. At issue was whether that inventory should be valued at its wholesale cost without reduction or should be valued at its wholesale cost less a percentage of markdowns, cash allowances, and vendor discounts that Parisian claimed reflect the inventory's true market value. To support its calculation of the inventory's actual value, Parisian submitted documentation to the BTA. An independent tax consultant and certified public accountant, Randy Ochs, provided a detailed analysis to explain the basis for valuing the inventory at less than wholesale cost. On October 19, 2000, Ochs explained to Heckman why Parisian's stock ledger system overstated the true value of the inventory. Ochs attached supporting documentation to his letter. Notwithstanding Parisian's explanations about discounts, markdowns, and allowances, Melvin R. Plunkett, the division manager of personal property in the tax assessors' office, rejected Parisian's analysis. Plunkett testified, "[i]t remained open as an open appeal, because we did not accept their reductions in inventory value." After negotiations on valuing the inventory foundered, Donald M. Barnhill, Parisian's national property tax director, contacted Plunkett directly in a final effort to settle the issue. Unable to resolve the impasse, Barnhill decided to appeal to the Board of Equalization (BOE). While Parisian's appeal to the BOE was pending, the BTA notified Parisian that it would have to undergo a four-year audit for tax years 2000, 1999, 1998, and 1997.

In addition to designating Parisian for the four-year audit, the BTA attempted to prevent the BOE from hearing Parisian's tax appeal. When the BOE scheduled a hearing date for February 28, 2001, Plunkett asked the BOE on February 13 to remove Parisian's appeal from the BOE's calendar, instructing them not to reschedule "until further notice from the Personal Property Division." The next day, Plunkett notified Parisian that "Cobb County has elected to suspend the BOE hearing until after the audit has been completed." Disregarding that letter, Parisian again requested a hearing date, and the BOE scheduled Parisian's appeal for May 22, 2001. On that date, Parisian's representatives were prepared to present the case when Plunkett, appearing on behalf of the BTA, asked the BOE to delay hearing the appeal until after the audit was completed. Thus, at the behest of the BTA, the BOE did not conduct a timely hearing on Parisian's appeal within the statutory period mandated by OCGA § 48-5-311(e)(6)(B).

To prevent the BTA from launching a four-year audit for what Parisian alleged constituted "vindictive prosecution," Parisian filed suit against the Cobb County BTA seeking injunctive relief and to obtain a writ of mandamus compelling the BOE to adjudicate its appeal.² Parisian sought not only to enjoin the BTA from conducting the four-year tax audit but also to prevent the BTA from using the accounting firm of Mendola & Associates, LLC (Mendola) for performing the audit. Parisian alleged, inter alia, that the BTA's decision to conduct the audit was a misuse and abuse of the auditing process in order to discourage Parisian from exercising its statutory right to appeal its 2000 tax assessment, and was calculated to punish and deter Parisian and other businesses from filing appeals. Parisian, a wholly owned subsidiary of Saks, Inc., also alleged that Mendola "cannot be impartial and unbiased" because of Mendola's prior history with Saks that had resulted in Mendola losing its auditing contract with Fulton County.

The BTA moved for summary judgment. The BTA asserted that its "sole reason for initiating the audit of Parisian, Inc. was to satisfy its statutory obligation to insure that all taxes due the state or the county were paid in full." The BTA argued that it had selected Parisian's account for audit after discovering that Parisian "claimed an abnormally large reduction in the value of its personal property returned and Cobb County was unable to verify the basis for the reduction." The BTA stated that "Mendola & Associates played absolutely no role whatsoever in deciding to initiate the audit against [Parisian]." The BTA asserted that the decision to audit was made "in good faith" and was "standard and routine" under the circumstances.

After finding no genuine issues of material fact, the trial court granted summary judgment to the BTA. Parisian appeals.

1. Parisian asserts that the trial court erred in granting summary judgment because the record contains undisputed evidence that the BTA did not have any audit selection criteria in place at the time that Parisian was designated for audit and there was evidence that the BTA decided to audit Parisian based upon an improper purpose, in violation of OCGA § 48-5-299(a). We agree.

In Fulton County Bd. of Assessors v. Saks Fifth Ave., 248 Ga.App. 836, 547 S.E.2d 620 (2001), this Court voiced concern about the delegation of unfettered discretion to an accounting firm under similar circumstances. We observed:

[t]his [C]ourt is troubled by the manner in which the Board and Mendola are conducting taxpayer audits. The record reflects that Mendola has contracts with 26 Georgia taxing authorities, plus other governmental entities, and conducts approximately 3,000 audits per year for taxing authorities performed by 25 employees. It is clear from the record in this case that the Board maintains no supervision over Mendola in the performance of its audits or in the handling of taxpayer's documents. Mendola maintains Board stationery and subpoenas of the Board and of 31 other Georgia counties.

Id. at 842-843, 547 S.E.2d 620. In urging legislative action or review by the appropriate government entities, we noted that "[t]he cavalier fashion in which taxpayer audits are being handled and the potential for abuse therein are causes for concern." Id. at 844, 547 S.E.2d 620.

Here, the evidence shows a similar pattern of unbridled delegated authority. At the time that Parisian was designated for the four-year audit, the BTA lacked any established written procedures for selecting a taxpayer for audit. The present and former chairs of the BTA testified that when Parisian was designated for audit the BTA had not yet approved any audit selection criteria and lacked written policies governing audits.³ Plunkett conceded that before the adoption of the written procedures for selecting taxpayers for audit, his office had only "piecemeal" procedures. Plunkett also admitted that when a taxpayer is designated for a four-year audit, the BTA itself does not have to approve that selection.

Other evidence shows that, using the BTA's letterhead, Mendola drafted the audit notification letter dated December 5, 2000, that informed Parisian about the impending four-year audit. Plunkett testified that Mendola drafted the letter, but Plunkett reviewed and signed it. The notification was...