Wright v. Banks

• Decision Date: 21 November 2013
• Docket Number: No. 11–1768.,11–1768.
• Citation: 753 S.E.2d 100,232 W.Va. 602
• Parties: Charles R. WRIGHT and Linda D. Wright, Petitioners Below, Petitioners v. Angela BANKS, Assessor of Jefferson County, Respondent Below, Respondent.
• Court: West Virginia Supreme Court

232 W.Va. 602

753 S.E.2d 100

Charles R. WRIGHT and Linda D. Wright, Petitioners Below, Petitioners

v.Angela BANKS, Assessor of Jefferson County, Respondent Below, Respondent.

No. 11–1768.

Supreme Court of Appeals of West Virginia.

Submitted Oct. 2, 2013.

Decided Nov. 21, 2013.

Syllabus by the Court

“ ‘ ‘An assessment made by a board of review and equalization and approved by the circuit court will not be reversed when supported by substantial evidence unless plainly wrong.’ Syllabus Point 1, West Penn Power Co. v. Board of Review and Equalization, 112 W.Va. 442, 164 S.E. 862 (1932) (other internal citations omitted).' Syllabus Point 3, In re: Tax Assessment of Foster Foundation's Woodlands Retirement Community, 223 W.Va. 14, 672 S.E.2d 150 (2008).” Syllabus Point 2, Mountain America, LLC v. Huffman, 224 W.Va. 669, 687 S.E.2d 768 (2009).

Charles R. Wright, Ranson, WV, pro se.

Stephanie F. Grove, Esq., Assistant Prosecuting Attorney, Charles Town, WV, for Respondent.

PER CURIAM:

Petitioners Charles and Linda Wright appeal an order by the Circuit Court of Jefferson County affirming the decision of the Jefferson County Board of Equalization and Review (“Board of Review”). The Wrights purchased a house on June 23, 2010, for $234,000.00. Six months later, on December 30, 2010, the Jefferson County Assessor (“Assessor”) appraised the property and found its fair market value was $355,200.00. The Wrights appealed the Assessor's valuation of their property to the Board of Review. The Board of Review ruled in favor of the Assessor and upheld the $355,200.00 valuation. Thereafter, the circuit court affirmed the Board of Review's order.

On appeal, the Wrights argue that the circuit court erred by failing to apply previous rulings of this Court which have held that the price paid for real estate in a recent arm's length transaction is a substantial indicator of the property's true and actual value. Additionally, the Wrights argue that the circuit court erred by accepting the Assessor's conclusion that the $234,000.00 purchase price the Wrights paid for the property was an “anomaly.” The Wrights argue that their purchase of the property was in an arm's length transaction on the open real estate market. They assert that the Assessor did not investigate or analyze their sale or present any evidence that the sale was an “anomaly.”

After review, we find that the circuit court was plainly wrong by failing to consider the June 23, 2010, purchase price of the property. The circuit court's order states that the Wrights “did not offer any competent evidence” in opposition to the Assessor's testimony that the true and actual value of the property was $355,200.00. However, the record shows that the Wrights presented undisputed evidence that their property was purchased in a recent arm's length transaction on the open market for $234,000.00. This Court has held that the price paid for real estate in a recent arm's length transaction is a substantial indication of its true and actual value. Crouch v. County Court of Wyoming County, 116 W.Va. 476, 477, 181 S.E. 819, 819 (1935). Further, this Court has stated that “the price paid for a parcel of land in a recent arm's length transaction is an indicator of market value on a par with the testimony of a qualified appraiser.” Kline v. McCloud, 174 W.Va. 369, 373, 326 S.E.2d 715, 719 (1985). Because the circuit court failed to consider the purchase price of the Wrights' property, we reverse the circuit court's order affirming the Board of Review.

I. Factual & Procedural Background

David and Irene Park listed their two-story house for sale in December 2009 for $229,995.00.¹ On June 23, 2010, the Wrights purchased the house from the Parks for $234,000.00. It is undisputed that this was an open market sale. In December 2010, the Wrights were informed by the Assessor that their property was being valued at $355,200.00 for the 2011 tax year. The property was assessed for ad valorem tax based upon the $355,200.00 valuation. The Wrights filed a timely appeal of this assessment to the Board of Review.

The Board of Review held a hearing on February 10, 2011. June Bowers, a senior appraiser for the Assessor's Office, testified at this hearing that the property was properly valued at $355,200.00.² Ms. Bowers stated that a valuation is made after collecting information on the house including its age, the quality of the construction material used and the house's “amenities.” However, Ms. Bowers testified that she had not been inside the Wright's house and she did not offer any testimony about the specific interior “amenities” of the Wrights' house.³ She noted that the Wrights' house was a “model home” and “in my experience every model home that I've been in does have the higher quality amenities in it. It's got the extras and the bells and whistles that other places wouldn't.”

The process to determine the valuation on the Wrights' property included a comparable sales analysis. The circuit court's order described how the Assessor used the collected data and the comparable sales approach to arrive at the assessment:

Next, all sales in the neighborhood for the taxable year are added into the equation, a process that is updated every year. All sales of an “arm's length” nature are considered by the Assessor. Unlike appraisals based upon “comparable sales” done in a real estate context where only similar properties of similar size and style are considered and compared by their total estimated market value, for tax purposes all arm's length sales are considered and converted into an average square-foot value for residential space.

(Emphasis added).

Ms. Bowers testified that she compared the Wrights' property to seven “comparable sales” in the neighborhood during the look-back period.⁴ She testified that these seven sales were “open market” arm's length transactions. Ms. Bowers stated that the price range for all arm's length transactions ranged from $210,000.00 for a smaller house (2,650 square feet), to a high of $350,000.00 for a larger house (4,296 square feet).

Ms. Bowers stated that she considered and excluded three sales during the look-back period because they were “foreclosure-related sales.” Similarly, Ms. Bowers stated that the sale of the Wrights' property, which occurred during the look-back period, “shouldn't be considered because it's an anomaly.” Mr. Wright questioned Ms. Bowers at this hearing and asked her to identify the three “foreclosure-related sales” that were omitted from consideration. Ms. Bowers stated that she did not have the data showing the specific sales information on the “foreclosure-related sales.”

Mr. Wright also testified at the Board of Review hearing. He argued that the best evidence of his property's value was the purchase price paid for the property during the look-back period. He testified that the sale was an open market arm's length transaction for $234,000.00. The Assessor did not present any evidence rebutting Mr. Wright's testimony that the sale occurred in a recent arm's length transaction on the open real estate market. Similarly, no evidence was presented showing that the sellers were under any pressure, compulsion, or duress to sell the property.

At the conclusion of the hearing, the Board of Review ruled in favor of the Assessor and approved the $355,200.00 valuation. Mr. Wright asked the Board to explain why it ruled in favor of the Assessor. Board of Review member Lyn Widmyer stated, “I'm going with what the Assessor said based on the information she's provided.” Another Board member, Frances Morgan, stated, “the winning argument for the Assessor for me is that this was a model home that rises above some of these other sales and so I will vote for the Assessor's recommendation.” ⁵ The Wrights appealed the Board of Review's ruling to the circuit court.

The circuit court denied the Wrights' appeal by order entered on November 15, 2011. The circuit court's order recited the testimony offered by Ms. Bowers and Mr. Wright before the Board of Review. The order notes that Mr. Wright “established that he had indeed purchased his house in June of 2010 for $234,000.00.” Despite its finding that the Wrights purchased the property in a recent transaction for $234,000.00, the circuit court nevertheless concluded:

Because the Petitioners [Wrights] did not offer any competent evidence to the contrary and certainly not the clear and convincing evidence it would be their burden to provide, the Court must assume that this appraised value is in line with the State Tax Department mandated range[.]

(Emphasis added). After entry of the circuit court's order affirming the Board of Review, the Wrights filed the present appeal.

II. Standard of Review

The Wrights ask this Court to reverse the circuit court's order adopting the Board of Review's ruling in favor of the assessor. This Court utilizes “a two-pronged inquiry” in reviewing tax assessment cases, i.e., whether the evidence supports the findings below and whether there was an error of law. Kline, supra, 174 W.Va. at 371, 326 S.E.2d at 717. This Court has stated that “ ‘ ‘[a]n assessment made by a board of review and equalization and approved by the circuit court will not be reversed when supported by substantial evidence unless plainly wrong.’ Syllabus Point 1, West Penn Power Co. v. Board of Review and Equalization, 112 W.Va. 442, 164 S.E. 862 (1932) (other internal citations omitted).' Syllabus Point 3, In re: Tax Assessment of Foster Foundation's Woodlands Retirement Community, 223 W.Va. 14, 672 S.E.2d 150 (2008).” Syllabus Point 2, Mountain America, LLC v. Huffman, 224 W.Va. 669, 687 S.E.2d 768 (2009).

We note that “[a]s a general rule, there is a presumption that valuation for taxation purposes fixed by an assessor are correct.... The burden is on the taxpayer challenging the assessments to demonstrate by clear and convincing evidence that the tax assessment is erroneous.” Mountain America, LLC, supra, 224...