Prospect 34, LLC v. Gunnison Cnty. Bd. of Cnty. Comm'rs

• Citation: 363 P.3d 819
• Decision Date: 05 November 2015
• Docket Number: Court of Appeals No. 14CA1350
• Parties: PROSPECT 34, LLC and Prospect Development Company, Inc., Petitioners–Appellants, v. GUNNISON COUNTY BOARD OF COUNTY COMMISSIONERS, Respondent–Appellee, and Board of Assessment Appeals, Appellee, and Reserve Metropolitan District No. 2, a political subdivision of the State of Colorado, Intervenor.
• Court: Court of Appeals of Colorado

363 P.3d 819

PROSPECT 34, LLC and Prospect Development Company, Inc., Petitioners–Appellants,

v.GUNNISON COUNTY BOARD OF COUNTY COMMISSIONERS, Respondent–Appellee,andBoard of Assessment Appeals, Appellee,

and

Reserve Metropolitan District No. 2, a political subdivision of the State of Colorado, Intervenor.

Court of Appeals No. 14CA1350

Colorado Court of Appeals, Div. III.

Announced November 5, 2015

Seter & Vander Wall P.C., Kim J. Seter, Elizabeth A. Dauer, Greenwood Village, Colorado; Diamond McCarthy LLP, Michael J. Yoder, Dallas, Texas, for Petitioners–Appellants.

David Baumgarten, County Attorney, Gunnison, Colorado, for Respondent–Appellee.

Bailey & Peterson, P.C., James S. Bailey, Jr., Randall M. Livingston, Denver, Colorado, for Intervenors.

Opinion by JUDGE WEBB

¶ 1 Just what does "shall not exceed" mean in the mill levy provision of Reserve Metropolitan District No. 2's (RMD2) service plan? According to Prospect Development Company, Inc., and Prospect 34, LLC (together, Prospect), this phrase means what it says—the maximum mill levy that RMD2 can assess on Prospect's real property.¹ Not surprisingly, when RMD2 taxed Prospect at a higher rate, Prospect petitioned the Gunnison County Board of County Commissioners (BOCC) to abate the excess taxes. After the BOCC denied the petition, Prospect appealed to the Board of Assessment Appeals (BAA).

¶ 2 Instead of reaching the merits of this issue, the BAA resolved it against Prospect on the basis of the court's order denying a summary judgment motion on this issue in a parallel district court action involving RMD2 and Prospect, among other parties. Because this order is not a final determination of the issue, we conclude that the BAA abused its discretion. Turning to the merits, we address a novel question of statutory interpretation and further conclude that under the Special District Act, the excess mill levy is illegal. For these reasons, we reverse and remand for the BAA to order the BOCC to grant the petition and abate the excess taxes.

I. Background

¶ 3 RMD2 is a special district located entirely within the town of Mt. Crested Butte (Town) in Gunnison County. RMD2's service plan—a document statutorily required to organize a special district—states that RMD2's mill levy "shall not exceed 50 mills, subject to Gallagher Adjustments," and that any levy beyond 50 mills requires Town approval. The Town adopted the service plan in 2000. The Gunnison County District Court organized RMD2 in 2001.

¶ 4 By 2013, the mill levy totaled 52.676 mills, including the Gallagher Adjustment of 2.676 mills. Then the RMD2 board approved certifying to the BOCC 55.676 mills, 3.000 mills in excess of the cap in the 2000 service plan. Although the maximum mill levy provision in the service plan had never been increased, the BOCC levied 55.676 mills on December 21, 2012.

¶ 5 The Town council protested the mill levy increase, noting that it "does not consent to any increase above 50 mills ‘gallagherized’ in the mill levy...." Reserve Metropolitan District No. 1² (RMD1), the Town, and the Town council sued in Gunnison County Court to enjoin the excess mill levy and for a declaratory judgment that the excess mill levy was void. The court denied the council's motion for summary judgment on this issue. That action remains pending.

¶ 6 The BAA did not independently examine the legality of the excess mill levy. Rather, the BAA order stated, in pertinent part:

Judge Patrick determined that the 3.000 mills were levied legally, notwithstanding the mill levy cap in the Service Plan. The Board declines to re-analyze Judge Patrick's determination. As the tax has been determined to be legal, Petitioners are not entitled to an abatement/refund of taxes.

Then the order relied solely on the denial of summary judgment to conclude that "the 3.000 mills were levied legally."

II. Preservation and Standard of Review

¶ 7 The parties do not dispute preservation of the issues on appeal. An appellate court may set aside a BAA order only if the BAA abused its discretion or if the order was arbitrary and capricious, based on clearly erroneous facts, unsupported by substantial evidence, or otherwise contrary to law. Boulder Cty. Bd. of Comm'rs v. HealthSouth Corp., 246 P.3d 948, 951 (Colo.2011). But appellate review of statutory interpretation is de novo. Boulder Country Club v. Boulder Cty. Bd. of Comm'rs, 97 P.3d 119, 120 (Colo.App.2003).³

III. Discussion

A. Does the BAA's power to order taxes abated under section 39–10–114(1)(a)(I)(A) extend to Prospect's assertion that the tax exceeded the maximum mill levy allowed in the RMD2 service plan?

¶ 8 Prospect first contends the BOCC must abate the excess mill levy under section 39–10–114(1)(a)(I)(A), C.R.S.2015. Prospect argues that the four specified grounds for abatement are not exclusive. Alternatively, it argues that the "irregularity in levying" ground encompasses illegal levies. RMD2 does not respond to Prospect's proposed statutory interpretation, but instead asserts that Prospect introduced no evidence to show that the mill levy was illegal or erroneous.

¶ 9 Section 39–10–114(1)(a)(I)(A) provides, as relevant here:

[I]f taxes have been levied erroneously or illegally, whether due to erroneous valuation for assessment, irregularity in levying, clerical error, or overvaluation, the treasurer shall report the amount thereof to the board of county commissioners, which shall proceed to abate such taxes in the manner provided by law.

In HealthSouth, 246 P.3d at 951–53, the supreme court defined three of these grounds but declined to address "irregularity in levying."

1. Statutory Construction

¶ 10 When construing a statute, the underlying goal is to "ascertain and effectuate the legislative intent, which is to be discerned ... from the plain and ordinary meaning" of the text. People v. Frazier, 77 P.3d 838, 839 (Colo.App.2003), aff'd, 90 P.3d 807 (Colo.2004).

¶ 11 The first step looks to the "commonly accepted meanings" of the words. Bodelson v. City of Littleton, 36 P.3d 214, 216 (Colo.App.2001). If the words are unambiguous, an appellate court gives effect to the words consistent with their commonly accepted meanings. See id. Otherwise, the court may consider "the statutory context, the consequences of a particular construction, and the legislative history." Miller v. Indus. Claim Appeals Office, 985 P.2d 94, 96 (Colo.App.1999).

2. Application

¶ 12 Recall, the BAA order did not accept or reject Prospect's proposed interpretation of section 39–10–114. For the following two reasons, we construe the statute rather than remanding for the BAA to do so.

¶ 13 First, as noted above, this court reviews statutory interpretations de novo. Boulder Country Club, 97 P.3d at 120. Second, when a division of this court has set aside the ruling of a tribunal but a decision on remand would be reviewed de novo, the division may decide the remaining issue in the interest of judicial economy. See Kirkmeyer v. Dep't of Local Affairs, 313 P.3d 562, 568 (Colo.App.2011) ("Thus, judicial economy would not be served by leaving its interpretation to the Board on remand, subject to our de novo review in a later appeal, and we decline to do so.").

a. Section 39–10–114(1)(a)(I)(A)'s four grounds for abatement are not necessarily exclusive.

¶ 14 Prospect's argument that the four bases for abatement within section 39–10–114(1)(a)(I)(A) are not the only possible grounds for abatement rests on the meaning of "whether." The ordinary meaning of this word is "a function word followed [usually] by correlative or or by or whether to indicate ... alternative conditions or possibilities.... [A] choice between alternatives." Webster's Third New International Dictionary 2603 (2002) (Webster's 2002 ).

¶ 15 Even so, most courts have concluded that "the word ‘whether,’ when preceded by a general term, is not a word of limitation." Uckun v. Minn. State Bd. of Med. Practice, 733 N.W.2d 778, 788 (Minn.Ct.App.2007). As well, "[t]he cases hold without exception that words following ‘whether’ do not restrict the meaning to any following terms; rather, they enlarge upon it." Galbreath v. Gulf Oil Corp., 294 F.Supp. 817, 824 (N.D.Ga.1968), aff'd, 413 F.2d 941 (5th Cir.1969) ; see also Cmty. Television of Utah, LLC v. Aereo, Inc., 997 F.Supp.2d 1191, 1200 (D.Utah 2014) ("The term ‘whether’ does not imply that the ensuing clause encompasses a limitation.").

¶ 16 These cases disfavor interpreting "whether" as an exclusory term. Nor does RMD2 explain why we should do so. But even if the four grounds for abatement listed in section 39–10–114(1)(a)(I)(A) are exclusive, Prospect's alternative interpretation provides a sufficient statutory basis to challenge the excess mill levy.

b. "Irregularity in levying" encompasses an unlawful or illegal mill levy.

¶ 17 Colorado courts have not defined "irregularity in levying." See HealthSouth, 246 P.3d at 951. The plain meaning of "irregularity" is "the quality or state of being irregular." Webster's 2002 at 1196. "Irregular" means "behaving without regard to established laws, customs, or moral principles." Id.

¶ 18 Several courts have pointed out that "irregularity" is not interchangeable with "illegality." See United States v. Richmond, 17 F.2d 28, 32 (3d Cir.1927) ; United States v. Salomon, 231 F. 461, 464 (E.D.La.1916), aff'd, 231 F. 928 (5th Cir.1916) ; City of Tampa v. Palmer, 89 Fla. 514, 105 So. 115, 117 (Fla.1925) ; Haen v. Haen, 210 Neb. 380, 314 N.W.2d 276, 277 (Neb.1982) ; see also Patterson v. Commonwealth, 3 Va.App. 1, 348 S.E.2d 285, 291 (Va.Ct.App.1986) ("The fact that transactions were ‘irregular’ is not synonymous with their being illegal, or amounting to embezzlement.").

¶ 19 And for purposes of injunctive relief, some tax cases distinguish between "irregularity" and "illegality": "If the former, an action in injunction will not lie; if the latter, such action will lie upon payment or offer of payment of the just amount of taxes due." Bunten v. Rock Springs Grazing Ass'n, 29 Wyo. 461, 215 P....