Hertig v. Department of Revenue

• Court: Oregon Tax Court
• Decided: August 30, 2012
• Docket: TC-MD 120346C
• Status: Unpublished

Opinion

IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax

DAVID HERTIG, ) ) Plaintiff, ) TC-MD 120346C ) v. ) ) DEPARTMENT OF REVENUE, ) State of Oregon, ) ) Defendant. ) DECISION OF DISMISSAL

This matter is before the court on Defendant’s Motion to Dismiss (Motion), filed

May 29, 2012, requesting dismissal of Plaintiff’s Complaint because Plaintiff failed to name the

proper Defendant, or, alternatively, because Plaintiff requests “a correction to maximum assessed

value (MAV) for a prior tax year that is beyond the court’s reach * * *.” (Def’s Mot at 1.) The

court held a case management conference (CMC) on August 6, 2012, during which the parties

discussed Defendant’s Motion. David Hertig appeared on his own behalf and Douglas M. Adair

appeared on behalf of Defendant. The record closed at the conclusion of the CMC. This matter

is now ready for decision.

I. STATEMENT OF FACTS

Plaintiff filed his Complaint on April 18, 2012, requesting an adjustment of the MAV “to

[an] accurate level” for property identified as Account R138781 (subject property) for tax years

“2008, 2009, 2010, 2011.” (Ptf’s Compl at 1.) Plaintiff states that Defendant’s assessment is

incorrect because the “[MAV] has not been adjusted to reflect erroneous tax assessment (2008

assessment).” (Id.) Specifically, Plaintiff notes that a fire occurred in 2008, following which,

repairs were made to restore the property to its pre-damaged state. (Id. at 2.) According to

Plaintiff, the 2008 repairs did not result in additional space being added to the subject property;

DECISION OF DISMISSAL TC-MD 120346C 1 Defendant’s subsequent assessment of the subject property, however, “overstated [the residence]

by 1284 sq ft, and one full bathroom that never existed on this property.” (Id.) Plaintiff notes

that “[i]n 2008, a tax assessment was performed on [the subject] property, as there was fire

damage being repaired[] * * * [and][t]he “taxable value [increased] from $86,650 to $141,230[]”

from the prior year. (Id.) Plaintiff then asserts that “[s]ince 2008, the property has been taxed on

an assessment that was inaccurate.” (Id.) Plaintiff, therefore, asks the court to “adjust the

taxable assessed value, or maximum assessed value of this property * * * [and return] the

property [] to the 2008 value[.]” (Id.) Plaintiff requests that “the annual 3% increase in value *

* * [] be applied for the last 3 years[,]” presumably after the adjustments he requests are made to

the 2008 MAV and AV. (Id.)

Plaintiff provides property tax statements for tax years 2008-09, 2009-10, and 2010-11

showing assessed values (AV) of $86,650, $141,230, and $145,460, respectively. (Ptf’s add’l

docs at 1-3, May 4, 2012.) Plaintiff also provides a Multnomah Board of Property Tax Appeals

(BOPTA) Order, dated March 19, 2012, demonstrating a sustained roll AV of $149,820 for the

2011-12 tax year.1 (Ptf’s Compl at 3.) For each of the tax years at issue, the MAV coincides

with the AV. (Ptf’s Compl at 3; Ptf’s add’l docs at 1-3, May 4, 2012.)

Defendant filed its Motion on May 29, 2012, requesting dismissal of Plaintiff’s appeal for

failure to name the proper defendant and because Plaintiff requests MAV adjustments “for a

prior tax year that is beyond the court’s reach * * *.” (Def’s Mot at 1.) In its Motion, Defendant

states that “[P]laintiff has not alleged (nor is it the case) that the department was responsible for

valuation or assessment of the subject property * * * [P]laintiff’s Complaint and the attached

documents demonstrate that Multnomah County was responsible for the valuation and

1 BOPTA did reduce the subject property’s “structures” RMV for the 2011-12 tax year. (Ptfs’ Compl at 3.)

DECISION OF DISMISSAL TC-MD 120346C 2 assessment of the subject property.” (Def’s Mot at 1.) Defendant cites ORS 305.560(1)(c)(A),

noting “[i]f the county is the party responsible for the appraisal, the county assessor shall be

named as defendant.” (Id.)

As an alternative ground for dismissal, Defendant states “[P]laintiff [] seeks correction of

the 2008 adjustments to MAV[,]” and notes that, pursuant to ORS 305.153, exception MAV is

typically calculated based upon the RMV for the exception property at issue; thus, a correction to

the erroneous MAV would first necessitate a “correction of the related RMV or correction of the

classification of work performed that resulted in a potential exception event.” (Id. at 2.)

Defendant cautions that changes to RMV can be made no more than two tax years prior to the

current tax year, therefore, “the 2008 tax year has long passed, and an appeal filed * * * during

the 2011-12 tax year [] cannot reach back to the 2008 tax year under ORS 305.288.” (Id.)

On August 6, 2012, the parties participated in a CMC, during which the parties indicated

they were ready to formally address the concerns raised in Defendant’s Motion. At the CMC,

Plaintiff revealed he purchased the subject property in October of 2011; according to Plaintiff, he

did not hold an ownership interest in the subject property before October 2011, or pay property

taxes for the subject property for any year prior to the 2011-12 tax year. Moreover, Plaintiff did

not provide evidence showing, nor did he assert, that the prior owner of the subject property filed

an appeal to BOPTA or the Tax Court during the years at issue. In response, Defendant asserted

at the CMC that Plaintiff was not statutorily “aggrieved” and, therefore, lacked standing to bring

an appeal for any tax year prior to 2011-12. At the conclusion of the proceeding, the court

closed the record and indicated to the parties that a decision would be forthcoming.

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DECISION OF DISMISSAL TC-MD 120346C 3 II. ANALYSIS

Defendant asserts two arguments in support of its Motion: first, that Plaintiff failed to

name the proper defendant as required by ORS 305.560(1)(c)(A);2 and second, that Plaintiff

lacks standing to properly file the present appeal because he attempts to challenge a correction to

the roll value for tax year 2008-09, which is outside the statutory review period permitted to the

court under ORS 305.288 or any other statute. Defendant asserts that either of these two theories

would be sufficient to warrant dismissal of Plaintiff’s appeal. A third issue was raised during the

CMC when Plaintiff disclosed that he purchased the subject property in October 2011, and did

not hold ownership of, or an obligation to pay taxes for, the subject property as of the assessment

dates for tax years 2008-09, 2009-10, and 2010-11.

A. Proper defendant under ORS 305.560(1)(c)(A)

The typical method of property tax appeal is brought pursuant to ORS 305.275, which

permits the taxpayer to appeal when he is “aggrieved by * * * an act, omission, order or

determination of * * * [the] county assessor or other county official * * *.” ORS 305.275(1)(a).

To do so, the taxpayer must file an appeal from a BOPTA Order “within 30 days after the * * *

date of mailing of the order[.]” ORS 305.280(4). Here, Plaintiff appeals from a BOPTA Order,

mailed on March 23, 2012, sustaining the MAV of $149,820 for tax year 2011-12. (Ptf’s Compl

at 3.) Plaintiff timely appealed that BOPTA Order when he submitted his Complaint to the court

with his filing fee on April 13, 2012, within the 30 day period required for an appeal brought

under ORS 305.275. (Id. at 1.) However, in his Complaint, Plaintiff names the Department as

the sole defendant; of importance, Plaintiff does not name the Multnomah County Assessor

(Multnomah County) as a co-defendant. (Id.)

2 All references to the Oregon Revised Statutes (ORS) are to the 2009 edition.

DECISION OF DISMISSAL TC-MD 120346C 4 Under ORS 305.560(1)(c)(A), appeals relating to the “value of property for ad valorem

property tax purposes [where] the county has made the appraisal, the complaint shall be entitled

* * * [with] the county assessor as defendant.” ORS 305.560(1)(c)(A). A discussion was held at

the August 6, 2012, CMC, wherein Plaintiff acknowledged he failed to name the proper

defendant for this appeal. To cure this, Tax Court Rule (TCR) 23 sets out the method for

amending a Complaint, stating that once a responsive pleading has been filed, “a party may

amend the pleading only by leave of the court or by written consent of the adverse party[.]”

TCR 23 A. The court may give leave to amend a Complaint to add an additional defendant even

when the period of time to file an appeal has expired, in effect extending the statutorily set

statute of limitations for the action, but only under specific circumstances:

“An amendment changing the party against whom a claim is asserted relates back if * * * within the period provided by law for commencing the action against the party to be brought in by amendment, such party (1) has received such notice of the institution of the action * * * and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party brought in by amendment.”

TCR 23 C (emphasis added).3 Here, Plaintiff does not argue that Multnomah County had either

actual or constructive notice of this action by April 22, 2012, the last day provided for bringing

the original appeal and a mere four days after Plaintiff filed his appeal. As a result, Plaintiff

cannot enjoy a “relation back” to the original filing, under TCR 23 C, to bring in Multnomah

County as a defendant.

As Defendant notes, Multnomah County is the proper defendant in this appeal pursuant to

ORS 305.560(1)(c)(A); the Department of Revenue does not actively assess or value the subject

3 The Preface to the Magistrate Division Rules incorporates the use of TCR when “circumstances arise that are not covered by a Magistrate Division rule, rules of the Regular Division of the Tax Court may be used as a guide to the extent relevant.” This is one such occasion and, as a result, TCR 23 C may guide the issue.

DECISION OF DISMISSAL TC-MD 120346C 5 property, and is not, therefore, the proper defendant. Plaintiff cannot utilize TCR 23 to cure the

defect. Without a properly named defendant, this appeal must be dismissed.

B. Plaintiff’s ownership of the subject property

As ORS 305.275(1)(a) states, to bring an appeal to the Tax Court, a plaintiff must be

“aggrieved” by a defendant’s action. See Paris v. Dept. of Rev., 19 OTR 519, 521 (2008). “[I]f a

taxpayer is not ‘aggrieved’ within the meaning of ORS 305.275, then that taxpayer does not have

standing to appeal.” Greenleaf v. Lane County Assessor, TC-MD 110485N at 2 (Jan 30, 2012).

To be aggrieved, the defendant’s erroneous action “must affect the property of the person

making the appeal or property for which the person making the appeal holds an interest that

obligates the person to pay taxes imposed on the property.” ORS 305.275(1)(b); see also Zervis

v. Dept. of Rev. (Zervis), TC 4836 at 4 (2010).

At the August 6, 2012, CMC, Plaintiff disclosed that he purchased the subject property in

October 2011. Plaintiff subsequently filed this appeal from a 2011-2012 BOPTA Order,

requesting a reduction in MAV for the subject property based upon an error that he states

occurred during a 2008 assessment.4 (Ptf’s Compl at 1-2.) Plaintiff does not claim to have held

an ownership interest in the subject property, nor does he assert he was he obligated to the pay

the taxes for the property, prior to his 2011 purchase; however, the parties agree that any

assessment error that led to the MAV at issue occurred prior to 2011. (Ptf’s Compl at 2; Def’s

Mot at 2.) Moreover, Plaintiff does not assert that the prior owner of the subject property

appealed the assessment error within the period of time permitted under ORS 305.275.

4 Typically, MAV increases steadily each year, but is capped at a rate of a three percent increase annually. ORS 308.146. One exception to this rule arises when improvements are added, which generates an “exception value”; in this scenario, the new MAV is determined by multiplying the improvement RMV (less the RMV of “retirements from the property tax account[,]”) by the “ratio, not greater than 1.00, of the average [MAV] over the average [RMV] for the assessment year.” ORS 308.153(1)-(2)(a); see ORS 308.146(3). This number is then added to 103 percent of the subject property’s pre-improvement MAV to create the new MAV. ORS 308.153(1)

DECISION OF DISMISSAL TC-MD 120346C 6 Unfortunately for Plaintiff, “the facts and actions taken in the first year a property goes on the

rolls can have continuing effect[,] * * * unless a timely appeal of any allegedly incorrect action is

taken, the initial actions of the assessor are immune from attack by taxpayers * * *.” Roberge v.

Dept. of Rev., TC 5040 at 2 (2012).

Because Plaintiff is not aggrieved, this court cannot have jurisdiction over this appeal.

Zervis, TC 4836 at 4. As a result, the appeal must be dismissed.

C. Jurisdiction over the years at issue

The Oregon system of taxation utilizes “limited time periods within which both taxpayers

and governments may challenge the annually determined roll values for property and other

values that are a function of such roll values.” Georgia-Pacific Consumer Prods LP v. Clatsop

County Assessor, TC 4894 at 11 (2010). Despite this, there are select statutes that “provide

limited retrospective relief to taxpayers * * * who have not availed themselves of challenges in

the year of assessment * * *.” Id. ORS 305.288 is one such statute, offering a second method of

appeal, pursuant to which the court may authorize a change or correction to the assessment or tax

roll for “the current tax year or for either of the two tax years immediately preceding the current

tax year[.]” ORS 305.288(1), (3). ORS 306.115(5) defines the “current tax year” as “the tax

year in which the need for the change or correction is brought to the attention of the [court]

* * *.” ORS 306.115(5)

In its Motion, Defendant argues that Plaintiff’s request to correct the alleged error falls

outside the ambit of ORS 305.288. (Def’s Mot at 2.) Defendant notes that “an alleged error in

MAV generally requires correction of the related RMV * * * [and] [g]enerally valuation claims

must be first made to BOPTA in the current tax year or, at the latest, for the current or two prior

tax years pursuant to ORS 305.288.” (Def’s Mot at 2.) Further, Defendant asserts the present

DECISION OF DISMISSAL TC-MD 120346C 7 appeal, filed for the 2011-12 tax year, “cannot reach back to the 2008 tax year under ORS

305.288.” (Id.)

Although Plaintiff notes that “[i]n 2008, a tax assessment was performed on [the subject]

property,” a review of the tax statements provided by Plaintiff reveals that the County’s

adjustment to the subject property’s AV actually occurred in tax year 2009-10. (Ptf’s Compl at

2; Ptf’s add’l docs at 2, May 4, 2012.) As such, ORS 305.288 does not necessarily foreclose on

the possibility of Plaintiff’s requested relief. However, for reasons outlined above, Plaintiff’s

appeal fails on other grounds and a continued review of the possibility of potential success under

ORS 305.288 becomes an unnecessary exercise.5 Now, therefore,

IT IS THE DECISION OF THIS COURT that this matter be dismissed.

Dated this day of August 2012.

DAN ROBINSON MAGISTRATE

If you want to appeal this Decision, file a Complaint in the Regular Division of the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR 97301-2563; or by hand delivery to: Fourth Floor, 1241 State Street, Salem, OR. Your Complaint must be submitted within 60 days after the date of the Decision or this Decision becomes final and cannot be changed. This document was signed by Magistrate Dan Robinson on August 30, 2012. The Court filed and entered this document on August 30, 2012.

5 At the August 6 CMC, Defendant alluded to ORS 311.234(2), which offers a taxpayer some limited ability to request a correction to MAV calculated based on an incorrect square footage determination. ORS 311.234(2) states “the assessor may correct the [MAV] of the property for the current tax year if there is a demonstrated difference between the actual square footage of the property as of the assessment date for the current tax year and the square footage of the property as shown in the records of the assessor for the tax year.” 311.234(2). According to the statute, any such petition for correction must be made directly to the assessor and must be made no later than December 31 of the “current tax year.” ORS 311.234(2), (5); see also Norman v. Multnomah County Assessor, TC-MD 100557C at 1 (Oct 28, 2010). Plaintiff may elect to pursue a petition under ORS 311.234(2) for the 2012-13 tax year, provided he timely submits such a petition to the assessor; however, the change, if any, cannot retrospectively apply to the 2011-12 MAV for the subject property.

DECISION OF DISMISSAL TC-MD 120346C 8