U.S. Oil Co. Inc. v. City of Milwaukee

• Decision Date: 28 December 2010
• Docket Number: No. 2009AP2260.,2009AP2260.
• Citation: U.S. Oil Co. Inc. v. City of Milwaukee, 331 Wis.2d 407, 794 N.W.2d 904, 2011 WI App 4 (Wis. App. 2010)
• Parties: U.S. OIL CO., INC., Plaintiff–Respondent,State of Wisconsin, Involuntary–Plaintiff,v.CITY OF MILWAUKEE, Defendant–Appellant.
• Court: Wisconsin Court of Appeals

331 Wis.2d 407

794 N.W.2d 904

2011 WI App 4

U.S. OIL CO., INC., Plaintiff–Respondent,State of Wisconsin, Involuntary–Plaintiff,

v.CITY OF MILWAUKEE, Defendant–Appellant.

No. 2009AP2260.

Court of Appeals of Wisconsin.

Oral Argument Nov. 10, 2010.Opinion Filed Dec. 28, 2010.

On behalf of the defendant-appellant, the cause was submitted on the briefs of Amy R. Seibel of Seibel Law Offices LLC, of Milwaukee, and Grant F. Langley, Milwaukee City Attorney, and Vincent D. Moschella, Milwaukee Deputy City Attorney, with oral argument by Amy R. Seibel.On behalf of the plaintiff-respondent, the cause was submitted on the brief of Joseph A. Pickart and Ross A. Anderson of Whyte Hirschboeck Dudek S.C., of Milwaukee, with oral argument by Joseph A. Pickart.Before CURLEY, P.J., KESSLER and BRENNAN, JJ.CURLEY, P.J.

[331 Wis.2d 412] ¶ 1 The City of Milwaukee appeals a judgment vacating its $14 million tax assessments of U.S. Oil's property for 2004 and 2005 as excessive under the Wisconsin Constitution's Uniformity Clause.The City initially assessed the property—consisting of three oil terminals at the Granville Terminal Complex—at about $6 million for each of these tax years, relying on a 2002 sale of the subject property.When U.S. Oil challenged these assessments in front of the City's Board of Review, the City reassessed the property at over $14 million for each year, this time using an “income” assessment approach instead of the “sales” approach.Even though the City possessed income information for U.S. Oil by March 2006, and even though it could have—for at least seven months thereafter—imputed that information to similarly reassess the other properties at the Granville Terminal Complex for 2004 and 2005, the City chose not to do so.For tax years 2004 and 2005, all of the other properties at the Granville Terminal Complex remained assessed according to the “sales” approach.As a result, U.S. Oil's per-barrel assessments for those years more than doubled all of the others.

[331 Wis.2d 413] ¶ 2We conclude that the $14 million reassessments violate the Uniformity Clause.By assessing U.S. Oil—and only U.S. Oil—using the “income” approach when it could have similarly reassessed all comparable properties, the City created a situation in which “ ‘other comparable properties were assessed significantly below fair market value, thus amounting to a discriminatory assessment of [U.S. Oil's] property.’ ”SeeAllright Props., Inc. v. City of Milwaukee,2009 WI App 46, ¶ 52, 317 Wis.2d 228, 767 N.W.2d 567(citation omitted).Furthermore, we are not persuaded by the City's contentions that U.S. Oil's uniformity claim should have been dismissed on procedural grounds.U.S. Oil did not fail to exhaust its administrative remedies.It also did not fail to rebut the statutory presumption of correctness that applies to all property tax assessments.SeeWis. Stat. § 70.49(2)(2007–08).¹Additionally, we agree with the trial court that the appropriate remedy in this case was to reinstate the initial $6 million assessments.We therefore affirm.

I.Background.

¶ 3This case concerns three oil terminals—North, South, and Central (“the property”)—owned by U.S. Oil located at the Granville Terminal Complex on Milwaukee's northwest side.Also located at the Granville Terminal Complex are terminals owned and/or operated by Flint Hills, Mobil/Citgo, Marathon Oil, and BP Amoco.The City initially assessed the property on January 1, 2004, and January 1, 2005, at just over $6 million for each year, or approximately $8.99 per barrel.²It arrived at these figures by using a “sales” assessment approach based primarily on a recent sale of the subject property, specifically, the 2002 sale of U.S. Oil's Central terminal.

¶ 4 Compared with assessments of other companies' terminals at the Granville Terminal Complex, the initial U.S. Oil assessments were unremarkable.Indeed, for tax years 2004 and 2005, the City assessed all of the properties at the Granville Terminal Complex between $8.00 and $11.10 per barrel.The assessments of the other terminals at the Granville Terminal Complex all relied primarily on the sale of a comparable property, namely, the 2002 sale of U.S. Oil's Central terminal.

¶ 5 Despite the fact that its assessments were in the same range as the assessments of comparable terminals, U.S. Oil, pursuant to Wis. Stat. § 70.47, filed objections with the City challenging the 2004 and 2005 assessments as excessive.After the City of Milwaukee Board of Assessors affirmed the initial assessments, U.S. Oil then appealed to the City of Milwaukee Board of Review.

¶ 6 In preparation for the Board of Review appeal, the City assessor's office asked a new assessor, Daniel Furdek, to review the initial assessments of U.S. Oil's property.Furdek consequently relied on Board of Review subpoena power to obtain detailed financial information from U.S. Oil that the City had been unable to obtain earlier when preparing the initial $6 million assessments.This information included audits, financial statements, balance sheets, operating statements, auditor's opinions, gross income, and lease information.Equipped with this information, Furdek, in a report dated March 8, 2006, reassessed the property, this time relying on an “income” approach rather than the “sales” approach previously used to value the property.Based on the “income” approach, Furdek's reassessments of the property totaled over $14 million for each year—dividing out to $21.31 per barrel for 2004 and $21.64 per barrel for 2005.Although the reassessments more than doubled the initial assessments, the City did not notify U.S. Oil of its decision to reassess the property prior to the first Board of Review hearing.

¶ 7 The Board of Review conducted hearings regarding U.S. Oil's 2004 and 2005 assessments on May 17, June 6, and August 1, 2006.Only after the first hearing convened did U.S. Oil learn that the property had been reassessed at over $14 million for each tax year.At the June 6 hearing, counsel for U.S. Oil referenced a Uniformity Clause problem concerning the reassessments:

[U.S. OIL'S ATTORNEY]: ... An issue that will come up in this case is whether or not the assessor here is uniformly assessing these properties across the board.It is inherently unfair for the same property—a tank, a terminal—to be assessed in one method—under one method for one taxpayer and under a different method for a different taxpayer, even though they may be located all in the same vicinity.

Due to the fact that U.S. Oil did not learn of the City's reassessments until after the hearings convened, U.S. Oil was not in a position to mount a uniformity challenge.

¶ 8 Meanwhile, during the course of U.S. Oil's appeal to the Board of Review, BP Amoco, who also owned property at the Granville Terminal Complex, challenged its assessments for years 2003 through 2005.After U.S. Oil's Board of Review hearing, but before the Board issued a decision, Furdek concluded that BP Amoco was under-assessed for all three tax years.Because BP Amoco had a pending Board of Review appeal, the City had the ability to re-assess its property.However, it did not do so.Instead, Furdek informed BP Amoco that if it continued to pursue its Board of Review appeal, he would request that the Board increase its assessments based on the information he had learned while preparing for the U.S. Oil appeal.In other words, Furdek would impute the information from the U.S. Oil reassessments to BP Amoco's assessments to bring them to a level on par with U.S. Oil's $14 million reassessments.BP Amoco subsequently withdrew its appeal, and at no time did Furdek or the City ask the Board of Review to increase BP Amoco's assessments.

¶ 9 As with BP Amoco, the City could have also imputed the income information from the U.S. Oil reassessments to reassess all of the other properties at the Granville Terminal Complex for 2004 and 2005; it did not do so.The City had the new information by March 2006, and could have reassessed any of the properties at the Granville Terminal Complex until the end of October 2006, for tax year 2004 and until the end of January 2007, for tax year 2005.³Consequently, U.S. Oil remained the only terminal property owner in the City assessed under the “income” approach for tax years 2004 and 2005, resulting in substantially higher assessments of the property.

¶ 10 U.S. Oil consequently filed an action with regard to its 2004–2005 assessments in the trial court pursuant to Wis. Stat. § 74.37(3)(d).While its initial complaint did not reference the Uniformity Clause, U.S. Oil later amended its complaint to include such a claim.Following a court trial, the trial court issued a written decision containing numerous findings of fact and conclusions of law.Based on that decision, the trial court: (1) denied the City's motion to dismiss U.S. Oil's Uniformity Clause claim; (2) vacated the reassessments as excessive under the Uniformity Clause; (3) reinstated the initial, $6 million tax assessments; and (4) ordered the City to refund U.S. Oil the excessive taxes it paid for 2004 and 2005.The City now appeals.

II.Analysis.

Standard of Review

¶ 11 On appeal of an action challenging property tax assessments, we defer to the trial court's findings of fact.Allright,317 Wis.2d 228, ¶ 13, 767 N.W.2d 567.We will not overturn the trial court's findings unless they are “clearly erroneous,” that is, unless they are against the great weight and clear preponderance of the evidence.Bloomer Hous. Ltd. P'ship v. City of Bloomer,2002 WI App 252, ¶ 12, 257 Wis.2d 883, 653 N.W.2d 309;Wisconsin Auto Title Loans, Inc. v. Jones,2006 WI 53, ¶ 25, 290 Wis.2d 514, 714 N.W.2d 155.Where there is conflicting testimony, the fact finder—in this casethe trial court—is the ultimate arbiter of credibility, and we must accept any inferences drawn.SeeBloomer,257 Wis.2d 883, ¶ 12, 653 N.W.2d 309;see alsoSellers v. Sellers,201 Wis.2d...