Safeway Inc. v. Maricopa County
| Decision Date | 13 August 2009 |
| Docket Number | 1 CA-TX 07-0004 |
| Parties | SAFEWAY INC., a corporation, Plaintiff-Appellee, v. MARICOPA COUNTY, Defendant-Appellant. |
| Court | Arizona Court of Appeals |
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24
(Not for Publication-Rule 28, Arizona Rules of Civil Appellate Procedure)
The Honorable Thomas Dunevant, III, Judge
The Honorable Mark W. Armstrong, Judge
AFFIRMED
Mooney Wright & Moore PLLC
Mesa
By Jim L. Wright
Paul J. Mooney
Attorneys for Plaintiff-Appellee
Law Office of Jerry A. Fries
Phoenix
By Jerry A. Fries
Attorneys for Defendant-Appellant
¶1 This is a property tax case. Maricopa County (the "County") challenges the tax court's grant of summary judgment to Safeway, Inc. ("Taxpayer" or "Safeway") holding that the County erroneously collected double taxes for Taxpayer's supermarket walk-in coolers for the 2000 tax year. Finding no genuine issue of material fact or legal error, we affirm the judgment.
¶2 Taxpayer is a corporation operating Safeway stores throughout Maricopa County. The Maricopa County Assessor ("Assessor") identified and measured the improvements on Taxpayer's properties and listed these components and the real property on the real property tax roll. The Assessor lists the information on a data collection form.
¶3 The cost listed on the real property tax roll included "the cost of built-in refrigerators, cold rooms and ancillary cooling equipment in the interior component 'HA'."1 The listing enabled the appraiser to identify the appropriate "model number" for a particular property. A property's model number-in this case Model 112 for supermarkets--affects its value. Once the Assessor lists a property as a "Model 112" property on the tax rolls, he or she is in essence listing real property containing walk-in coolers even though the words "walk-in coolers" do not appear on the assessor's collection form. The Assessor issued anotice of value, based upon the cost approach and including the cost of the walk-in coolers.2
¶4 For tax year 2000, Taxpayer reported the cost of walk-in cooler components-including prefabricated panels, compressors, and coils-on the business personal property renditions it submitted to the Assessor. It paid personal and real property taxes assessed against stores where the walk-in coolers were located, including both owned and leased stores.
¶5 Taxpayers have a statutory duty to accurately report personal property. See Arizona Revised Statutes ("A.R.S.") section 42-15053(A), (C) (2006).3 Once an assessor requests a list of property or a taxpayer voluntarily files a list, there is a duty to correctly report all personal property subject to taxation. Aleasco, Inc. v. Maricopa County, 177 Ariz. 291, 295, 867 P.2d 861, 865 (Tax. Ct. 1994).
¶6 Ronald P. Gibbs ("Gibbs"), who was working for theArizona Department of Revenue (the "Department"), sent a memo to all county assessors on October 14, 1992, advising them to take "whatever steps are needed" to avoid taxing walk-in coolers as personal property and real property. He told the assessors and their personal property sections to advise taxpayers not to report walk-in coolers on the personal property tax renditions for convenience stores. He testified that the same approach applies to supermarkets like Taxpayer.
¶7 In a memo dated March 14, 2000, the Department advised Arizona's county assessors that the "DOR construction Cost System... includes the cost of built-in refrigerators, cold rooms and ancillary cooling equipment in the interior component 'HA'." Meanwhile, the cost model applied to real property components included a walk-in cooler value which was attributed in valuing the real property. To "correct" this problem, the Marshall and Swift valuation service used by the Department of Revenue issued a new component code in 2000 that excluded the cost of walk-in coolers and refrigerators. Because this new "HANC" value did not take effect until the 2002 tax year, a potential double taxation issue remained for the 1998-2001 tax years.
¶8 On July 30, 2001, Taxpayer filed a notice of claim with the County, pursuant to A.R.S. § 42-16254(A) (Supp. 2008), alleging improper assessment of personal property taxes at its stores. The County assigned Wayne Mumphrey ("Mumphrey"), an assessor, toresearch the tax records to determine which tax parcels had been valued using the cost model with the HA component developed by the Department and using figures supplied by Marshall and Swift. Mumphrey assumed that if the valuation did not reflect a cost approach, it was based on an income approach to value.
¶9 Mumphrey identified twenty parcels valued by the cost model for the 2000 tax year; the remainder he found to be "income driven" without reliance upon the cost model. In completing the assignment, Mumphrey determined whether the value of a store was significantly lower than the initial cost model value. Based upon Mumphrey's research, the County removed twenty coolers from the personal property tax rolls and granted Taxpayer a corresponding refund. The County declined to remove the walk-in coolers associated with the other parcels from the personal property tax roll.
¶10 In accordance with A.R.S. § 42-16254(F), Taxpayer unsuccessfully appealed the County's denial of relief as to the personal property valuation of twenty-three other walk-in coolers to the State Board of Equalization (the "Board"). This denial conflicted with the Board's determination for tax years prior to 2000, in which it held that walk-in coolers should be deducted from personal property tax rolls whether the associated real property had been valued based upon an income or a cost approach.
¶11 Taxpayer then appealed to the Arizona Tax Court, under A.R.S. § 42-16254(G), in an effort to correct the contestedassessments pursuant to A.R.S. § 42-16251 (2006). The complaint alleges that Taxpayer reported the walk-in coolers "as personal property when [they] should not have been reported at all" and as a result they were "taxed twice, both as real and as personal property."
¶12 The parties filed cross-motions for summary judgment. The tax court granted summary judgment to Taxpayer, distinguishing our decision on taxing walk-in coolers in Basha's v. Maricopa County, 1 CA-TX 04-0019 (memo dec., Dec. 20, 2005) ("Basha's"). In Basha's, we affirmed the tax court's conclusion that no objectively verifiable error existed as to whether the walk-in coolers were included in the valuation after the reductions on appeal. Id. at 55 28-29. In Basha's, the tax court had explained: "Because the court was not given sufficient information to determine whether the walk-in coolers were included [in the property valuation], the Court finds that it is not objectively verifiable that the coolers were double taxed."4
¶13 In this case, the tax court explained that Taxpayer had presented facts that were not introduced in Basha's and summary judgment for Taxpayer was warranted. Specifically, the tax court stated that Safeway had appealed the initial valuation not knowingof the double taxation issue and that while the valuation was reduced as part of the administrative appellate process, it was "impossible to know what, if any, method of valuation was used" to lower the valuation. The tax court also stated: "Plaintiff did not administratively appeal on the basis of the coolers, and the coolers were nowhere mentioned in any appellate decision." In ruling on one of the County's motions for reconsideration, the tax court explained that in both this case and Basha's, the taxpayers had presented evidence that the initial valuation was cost-based and included the coolers. However, in this case, unlike Basha's, there is no evidence that the income driven approach or any other method excluding the valuation of the coolers was employed during the administrative appeal process. Thus, it held that there was no evidence that the Board of Equalization calculated the property valuation on anything but the cost method assessment. The tax court also awarded Taxpayer its costs and attorneys' fees. This appeal followed.
¶14 Arizona law creates a presumption against double taxation. A.R.S. § 42-11003 (2006). Double taxation occurs when the same taxing authority taxes the same property twice for the same purpose during the same tax period. Lake Havasu City v. Mohave County, 138 Ariz. 552, 562, 675 P.2d 1371, 1381 (App. 1983)(citation omitted). Taxpayer brought this claim under the error correction statute, A.R.S. § 42-16251(3)(d), based upon its "misreporting... property if a statutory duty exists to report the property." Alternatively, it claims that the alleged double taxation of its walk-in coolers as both personal and real property is an "objectively verifiable" error demonstrated by "clear and convincing evidence." A.R.S. § 42-16251(3)(e).
¶15 We review the grant of summary judgment to Taxpayer de novo. Wilderness World, Inc. v. Dep't of Revenue, 182 Ariz. 196, 198, 895 P.2d 108, 110 (1995). Summary judgment is warranted "if the facts produced in support of the claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense." Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990).
¶16 As the party with the burden of proof at trial, Taxpayer was required to produce prima facie evidence in support of its ...
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