State Ex Rel. Kan. City Power & Light Co v. The Honorable Gerald D. Mcbeth

• Decision Date: 21 September 2010
• Docket Number: SC 90694.,No. SC 90693,SC 90693
• Parties: STATE ex rel. KANSAS CITY POWER & LIGHT CO., Relator, v. The Honorable Gerald D. McBETH, Respondent. State ex rel. Lisa Pope, in her official capacity as Platte County Assessor, Relator, v. The Honorable Gerald D. McBeth, Respondent.
• Court: Missouri Supreme Court

322 S.W.3d 525

STATE ex rel. KANSAS CITY POWER & LIGHT CO., Relator,

v.The Honorable Gerald D. McBETH, Respondent.

State ex rel. Lisa Pope, in her official capacity as Platte County Assessor, Relator,

v.The Honorable Gerald D. McBeth, Respondent.

Supreme Court of Missouri,En Banc. STATE ex rel. KANSAS CITY POWER & LIGHT CO., Relator,

v.The Honorable Gerald D. McBETH, Respondent.

State ex rel. Lisa Pope, in her official capacity as Platte County Assessor, Relator,

v.The Honorable Gerald D. McBeth, Respondent. Nos. SC 90693, SC 90694. Sept. 21, 2010.

COPYRIGHT MATERIAL OMITTED.

Todd P. Graves and Edward D. Greim, Graves Bartle Marcus & Garrett PC, Kansas City, James W. Farley, Law Office of James W. Farley, Platte City, William G. Riggins and Heather Humphrey, Kansas City Power & Light Co., Kansas City, for KCPL.

John R. Shank and Ryan J. Springer, Gunn, Shank & Stover PC, Kansas City, for assessor.

Edward D. Robertson Jr., Mary D. Winter and Anthony L. DeWitt, Bartimus, Frickleton, Robertson & Gorny PC, Jefferson City, and Gary L. Myers, Law Offices of Gary L. Myers, St. Joseph, for the school district and taxpayers.

WILLIAM RAY PRICE, JR., Chief Justice.

I. Introduction

West Platte R-2 School District and two individual taxpayers in Platte County (collectively “plaintiffs”) filed suit against the Platte County assessor, Lisa Pope, over her property tax assessment of two power plants owned by Kansas City Power & Light Co. (“KCPL”). KCPL intervened, and the assessor and KCPL filed motions to dismiss, arguing that the plaintiffs lacked standing to challenge the valuation of another's property. The Honorable Gerald D. McBeth (“respondent”) overruled both motions. The assessor and KCPL applied to this Court to prohibit the respondent from proceeding, and preliminary writs in prohibition issued.

The preliminary writs of prohibition are made permanent.

II. Facts and Procedural History

In 2006, KCPL began an environmental retrofit of a coal-fired electricity generating plant known as Iatan I. The same year, KCPL began construction of a second facility known as Iatan II. Iatan I was temporarily offline due to the retrofit from fall 2008 until spring 2009. Iatan II is projected to be in service in fall 2010. Both plants are located in Platte County. In the underlying lawsuit, the school district and two taxpayers brought suit seeking a declaratory judgment as to the laws applicable to the ad valorem tax assessment of the two plants and a writ of mandamus compelling the Platte County assessor to comply with the applicable law.

Missouri law requires KCPL, as a public utility, to file a report with the county assessor describing its local property situated in the county and the “true value in money thereof.” ¹ The required form contains three columns to be completed: one for the taxpayer to provide the “company's original cost”; a second for the assessor to provide an estimate of the “market value” of the property; and a third for the assessor to provide an “assessment” value on which the tax is levied. ² Pursuant to the statute, KCPL completed the required form by filling in the original cost column, which consisted mainly of KCPL's construction costs for the two plants. ³ It attested that “the foregoing is a true, full and complete description and valuation of the property.” The assessor estimated the market value at approximately 50 percent of the sum total of the original construction costs reported by KCPL. The Iatan I property was categorized as “distributable property,” which is taxed for the benefit of all Missouri counties in which KCPL owns property, rather than as “local property,” which is taxed for local benefit only.

The plaintiffs disputed the assessment and filed suit, claiming a loss in tax revenue due to the assessor's undervaluation of the KCPL property. In counts I and II, the plaintiffs alleged that the assessor violated a ministerial duty by failing to assess KCPL's reported construction costs as the “true value in money” of its property and to apply that figure when calculating the tax due. ⁴ In counts III and IV, they alleged that the assessor violated a ministerial duty by failing to assess the entire Iatan I plant as “local property” for the benefit of the local school district because the plant was not generating electricity during the period it was offline due to the retrofit. ⁵

After KCPL intervened, the assessor and KCPL filed motions to dismiss, which were overruled by the respondent. They then filed petitions for a writ of prohibition to prevent further proceedings against them. Preliminary writs issued. These writ petitions are the subject of the current proceeding.

III. Standard of Review

This Court has jurisdiction to issue original remedial writs. Mo. Const. art. V, § 4. “Prohibition is a discretionary writ that may be issued to prevent an abuse of judicial discretion [or] to avoid irreparable harm to a party.” State ex rel. Broadway-Washington Assoc. v. Manners, 186 S.W.3d 272, 274 (Mo. banc 2006). For example, “prohibition may be appropriate to prevent unnecessary, inconvenient, and expensive litigation.” State ex rel. Linthicum v. Calvin, 57 S.W.3d 855, 857 (Mo. banc 2001). Prohibition will lie if the plaintiff's petition “does not state a viable theory of recovery, and relator was entitled to be dismissed from the suit as a matter of law.” State ex rel. Barthelette v. Sanders, 756 S.W.2d 536, 539 (Mo. banc 1988).

IV. Analysis

In support of their petitions, KCPL and the assessor argue, in pertinent part, that (1) the plaintiffs lack standing to challenge the valuation or assessment of another's property; (2) an assessor is not under a ministerial duty to value property according to a company's reported costs; and (3) an assessor is not under a ministerial duty to assess a temporarily offline power plant as “local property.”

A. Standing

In their first point, KCPL and the assessor argue that the plaintiffs lack standing to challenge the valuation or assessment of another's property. The question of whether a party has standing is a threshold issue that this Court reviews de novo. Comm. for Educ. Equality v. State, 294 S.W.3d 477, 484 (Mo. banc 2009).

1. Standing for Declaratory Judgment

The longstanding rule in Missouri is that individual taxpayer plaintiffs lack standing to challenge other taxpayers' property tax assessments, as they are not injured personally by others' assessment calculations. Id.; see also W.R. Grace & Co. v. Hughlett, 729 S.W.2d 203, 206-7 (Mo. banc 1987) (finding that a plaintiff did not have standing to challenge excused tax obligations of others). Furthermore, neither a city nor a school district has standing to appeal or seek review of another's assessment by a county board of equalization. City of Richmond Heights v. Bd. of Equalization, 586 S.W.2d 338, 341-42 (Mo. banc 1979); State ex rel. St. Francois County Sch. Dist. v. Lalumondier, 518 S.W.2d 638, 643 (Mo.1975); see also Bartlett v. Ross, 891 S.W.2d 114, 116-17 (Mo. banc 1995) (holding, following Lalumondier, that just as school districts may not appeal an administrative decision, they may not appeal a refund judgment, absent a statute); State ex rel. Brentwood Sch. Dist. v. State Tax Comm'n, 589 S.W.2d 613, 614 (Mo. banc 1979) (holding that school districts do not have sufficient standing to appeal a tax assessment, following Lalumondier, and that they have no right to intervene in such an appeal because the county in which such districts are located represents whatever interests or rights the school districts may have).

In counts I and III of their petition, which seek declaratory relief, the plaintiffs allege that the assessor failed to comply with her legal duty to calculate the true value in money of KCPL's property and to assess the entire Iatan I plant as local property. These allegations-and extensive argument on this issue in the plaintiffs' briefs-reveal that the request for declaratory relief is, at least in part, a challenge to the past assessment of KCPL's property. To the extent that the declaratory judgment action constitutes a challenge to past assessments, the plaintiffs lack standing. Whether the taxpaying property owner is a corporation or a next-door neighbor (and the plaintiff a school district or an individual taxpayer), the principle that a third party is not permitted to challenge another's property tax assessment applies equally.

However, to the extent that the plaintiffs merely seek a declaration of their rights and the assessor's duties under the utility taxation statutes, they do have standing. By statute, Missouri courts “have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.” § 527.010. A declaratory judgment is open to any person “whose rights, status, or other legal relations are affected by a statute.” § 527.020. Moreover, the declaratory judgment statutes are “to be liberally construed,” § 527.120, and administered to “terminate the controversy or remove an uncertainty.” § 527.050. Rule 87 reinforces the provisions of the declaratory judgment statutes, providing that “anyone may obtain such relief in any instance in which it will terminate a controversy or remove an uncertainty.” Rule 87.02(d).

In the context of an action for declaratory judgment, Missouri courts require the plaintiff to have a legally protectable interest at stake in the outcome of the litigation. Ste. Genevieve Sch. Dist. R-II v. Bd. of Aldermen, 66 S.W.3d 6, 10 (Mo. banc 2002). A legally protectable interest exists if the plaintiff is directly and adversely affected by the action in question or if the plaintiff's interest is conferred by statute. Id. Under Missouri law, school districts threatened with imminent unlawful deprivation of their funding have standing to seek declaratory judgment regarding a statutory interpretation that would lead to the deprivation. State ex rel. Sch. Dist. of Independence v. Jones, 653...