Programmed Land, Inc. v. O'CONNOR
| Decision Date | 07 December 1999 |
| Docket Number | No. CX-99-777, No. C7-99-1210. |
| Citation | 602 N.W.2d 895 |
| Parties | PROGRAMMED LAND, INC., et al., Respondents, v. Patrick O'CONNOR, in his capacity as Treasurer and Auditor for Hennepin County, et al., Appellants; and Harold Christian, individually, and on behalf of all others similarly situated, Respondent, v. Thomas Novak, in his capacity as Treasurer and Auditor for Dakota County, et al, Appellants. |
| Court | Minnesota Court of Appeals |
Alan L. Kildow, John J. Steffenhagen, Sonya R. Braunschweig, Larkin, Hoffman, Daly & Lindgren, Ltd., Bloomington, MN; and Robert A. Hill, Robert Hill & Associates, Ltd., Minneapolis, MN; and Keith E. Simons, Keith E. Simons, P.A., Hopkins, MN (for respondents).
Amy Klobuchar, Hennepin County Attorney, Robert T. Rudy, Senior Assistant County Attorney, Mark K. Maher, Assistant County Attorney, Minneapolis, MN (for appellants Hennepin County, et al.).
James C. Backstrom, Dakota County Attorney, Jay R. Stassen, Assistant County Attorney, Hastings, MN (for appellants Dakota County, et al.).
Considered and decided by SCHUMACHER, Presiding Judge, RANDALL, Judge, and FOLEY1, Judge.
These consolidated cases are based on the miscalculation of property taxes by both Hennepin and Dakota Counties and the subsequent overpayment of taxes by owners of commercial and industrial properties. Hennepin County was denied summary judgment by the district court. In Dakota County, the case went to trial on stipulated facts, and the property owner was awarded judgment. Both counties appeal and argue that: (1) Minnesota Statutes chapter 278 provides the exclusive remedy by which property owners can recover overpayments; and (2) the statute of limitations for this remedy has passed. The counties argue the claims of constitutional violations and equitable relief are invalid. We affirm the decisions made by both the Dakota and Hennepin County district courts.
Each of the Hennepin County respondents is an owner of commercial or industrial property. Appellants are Hennepin County governmental officials and entities. Appellant Patrick O'Connor is the treasurer and auditor for Hennepin County. Appellant Hennepin County Board of Commissioners is the county's legislative and executive body that levies taxes on commercial, industrial, and utility property in Hennepin County.
Hennepin County respondents' tax payments are based on Hennepin County's yearly assessments of property classified as 3a under Minn.Stat. § 273.13, subd. 24 (1998). Respondents allege the inaccurate calculation of their yearly tax from 1987 to 1998, when respondents filed their complaint, resulted in the overpayment of property taxes of approximately $2,300 per respondent each year. Respondents, who relied on the accuracy of their property tax bills and paid the full amounts within the time prescribed by law, were not informed of the errors in the application of the tax rate.
Upon learning of the mistake in their tax bills, respondents informed appellants about the overpayment and requested reimbursement. Appellants refused to repay respondents. In July 1998, respondents filed an amended complaint charging: (1) overpayment pursuant to Minn.Stat. § 276.19 (1998); (2) recovery of money paid by mistake; (3) recovery of money had and received; (4) breach of contract; (5) unjust enrichment; (6) recovery of excess taxes collected pursuant to Minn.Stat. § 275.26 (1998); (7) abatement of property tax pursuant to Minn.Stat. § 375.192 (1998); (8) violation of the Equal Protection Clause; (9) violation of the Due Process Clause of both the state and federal constitutions; and (10) violation of the Minnesota Constitution's Uniformity Clause.
In December 1998, the Hennepin County district court denied a motion to transfer this case to the Minnesota Tax Court. The supreme court also denied this request. Hennepin County moved for summary judgment, which was denied by the Hennepin County district court on April 19, 1999. At the same time, the Hennepin County district court granted respondents' motion to certify this case as a class action.
Respondent Harold Christian is an owner of commercial vacant land located in Dakota County. Originally, the suit included four individual owners, but the parties stipulated they would proceed to trial only on Christian's claim. The appellants are Thomas Novak, Dakota County Treasurer/Auditor, and Dakota County Board of Commissioners, the legislative body that levies that portion of the annual property taxes required for county expenditures on all non-exempt real property in Dakota County. The parties stipulated to findings of fact and proceeded with a bench trial.
In Dakota County, the assessor annually: (1) assigns a classification to each parcel of taxable real property; (2) calculates the market value of each parcel; (3) calculates the net tax capacity of each parcel by multiplying the market value by the class rate or rates set by the legislature; and (4) provides the Dakota County Treasurer/Auditor with the total net tax capacity for each statutory classification of property. However, the assessor does not provide the treasurer/auditor with information on the class rates applied to each parcel to calculate the net tax capacity. This information is public, and anyone can receive this information by contacting the Dakota County Assessor's Office.
Beginning in 1993, Christian's property was classified as class 3a commercial property pursuant to Minn.Stat. § 273.13, subd. 24 (Supp.1993). In 1994, the Dakota County Assessor's Office sought clarification from the Minnesota Department of Revenue on how to apply the tax rates for class 3a property to vacant land. The revenue department issued a letter stating that vacant land is classified as commercial and should receive a 3% class rate on the first $100,000 of market value for one commercial class parcel, per county, per taxpayer. The commercial or industrial properties that received the 3% class rate were identified in 1993 property tax statements as "commercial preferred" or "industrial preferred."
To provide the information needed by the treasurer/auditor to prepare property tax statements, the assessor calculates the net tax capacity of each parcel by multiplying the market value by the applicable class rate or rates, and then adds together the net taxable values for all parcels to obtain the total net taxable capacity in Dakota County for that year. Christian paid the full amount applied to his property in 1993. However, in calculating the net tax capacity for the property to prepare the 1993 statement, the assessor applied a rate greater than 5.06% of the market value of the property. This amount was incorrect and overstated. Christian was not provided the 3% tax rate for the first $100,000 of market value for any parcel of commercial property, and overpaid his 1993 taxes by $1,988.04.
Christian advised Dakota County of the 1993 error by filing a complaint in September 1997. The complaint contained substantially the same charges as the complaint later filed by other landowners in Hennepin County. Christian requested a refund, which Dakota County denied. Dakota County never notified Christian that any overpayment had occurred, nor did it provide Christian with any instructions on how to make a claim for the overpayment. However, in 1993, Christian received all notices and tax statements that Dakota County was required by statute to provide. Christian never filed a tax petition under Minnesota Statutes Chapter 278 for repayment of the 1993 taxes. However, he did file a petition under this chapter for the overpayment of 1994 taxes, which were refunded. After 1995, the Dakota County assessor correctly applied the 3% class rate.
The county filed a motion for summary judgment in district court, seeking dismissal of Christian's action and arguing that his failure to file a petition under chapter 278 for taxes payable in 1993 was a fatal flaw, depriving the district court of subject matter jurisdiction. In April 1998, the Dakota County district court denied this motion. After a trial on stipulated facts, the Dakota County district court ordered judgment for Christian in the amount of $1,988.04, plus prejudgment interest of $516.11 from October 15, 1993 through April 12, 1999. Judgment was entered on May 18, 1999.
Both Dakota and Hennepin Counties appealed from their respective district court decisions and the appeals were consolidated for argument and decision in this court.2
1. Did both the Hennepin and Dakota County district courts err by concluding that Minn.Stat. § 278.01 (1998) was not the exclusive remedy for contesting errors made when calculating respondents' property taxes?
2. Did the Hennepin County district court err by concluding that Minn.Stat. § 276.19 (1998) provides a remedy to recover overpayments? 3. Did the Hennepin County district court err by concluding that respondents could recover under their constitutional claims?
4. Did the Dakota County district court err by concluding Christian may recover in equity?
5. Can Hennepin County respondents recover through injunctive relief, declaratory judgment, or abatement?
A reviewing court is not bound by and need not give deference to a district court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n., 358 N.W.2d 639, 642 (Minn.1984). When a case was decided on stipulated facts, as was the claim brought in Dakota County, the only issue on appeal is whether the district court erred in its application of the law. Fingerhut Corp. v. Suburban Nat'l Bank, 460 N.W.2d 63, 65 (Minn.App.1990). However, if the appeal is from a denial of summary judgment, as is the appeal by Hennepin County, two questions are considered: (1) whether there are any genuine issues of material fact; and (2) whether the district court erred in its application of the law. Gleason v. Metropolitan...
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Programmed Land, Inc. v. O'CONNOR, No. CX-99-777
...278.01, subdivision 1 and could recover or proceed to seek recovery under common law and equitable theories. Programmed Land, Inc. v. O'Connor, 602 N.W.2d 895, 905 (Minn.App.1999),rev. granted (2000). The court reasoned that while all challenges to purported assessment errors must be brough......