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Work v. Department of Revenue

Supreme Court of Oregon, En Banc

November 8, 2018

James R. WORK, Plaintiff-Appellant Cross-Respondent,
v.
DEPARTMENT OF REVENUE, Defendant-Respondent Cross-Appellant.

          Submitted on the briefs June 4, 2018.

          On appeal from the Oregon Tax Court (TC 5286). [*] Henry C. Breithaupt, Judge.

          James Work, Central Point, fled the brief pro se.

          Keith L. Kutler, Assistant Attorney General, Salem, fled the brief on behalf of defendant-respondent/cross-appellant. Also on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

         [363 Or. 746] Case Summary:

         Before the magistrate division, taxpayer and the county assessor entered into a stipulated agreement regarding the property values for taxpayer's home for six tax years. The magistrate accepted the stipulated values for two of those tax years. Taxpayer appealed to the regular division of the tax court by fling a complaint in the regular division of the tax court challenging the magistrate's decision not to accept the stipulated values for four tax years. The department did not appeal from the magistrate's decision but fled a motion in the regular division to dismiss taxpayer's complaint. The tax court granted the department's motion to dismiss but rejected the department's argument that no effect should be given to the magistrate's unchallenged decision to accept the stipulated values for two tax years. Taxpayer appealed to this court, and the department cross-appealed. Held: (1) On taxpayer's appeal, affirmed: Taxpayer did not address the reasons offered by the magistrate and the tax court for declining to give taxpayer relief as to the four tax years. Without a cogent explanation as to why the tax court erred, the Court declined to disturb the tax court's ruling; (2) On the department's cross-appeal, affirmed: A party dissatisfied with a separate part of the magistrate's decision must either appeal that part of the decision to the tax court, seek affirmative relief in some other manner, or come within a statutory exception to that limitation; here, taxpayer's complaint did not challenge the magistrate's ruling on the last two tax years, and the department had neither sought some form of affirmative relief from the magistrate's decision nor identified an applicable exception to that rule.

         The judgment of the Tax Court is affirmed.

         [363 Or. 747] KISTLER, J.

         In this property tax case, the magistrate granted taxpayer part of the relief that he requested. The magistrate accepted the property values that taxpayer requested for the two most recent tax years but did not accept the values that taxpayer requested for the first four tax years. Taxpayer appealed from the magistrate's decision by filing a timely complaint in the regular division of the tax court. The Department of Revenue (the department) did not appeal or seek any affirmative relief from the magistrate's decision. Instead, the department moved to dismiss the complaint that taxpayer had filed in the tax court. The tax court granted the department's motion, dismissed taxpayer's complaint, and entered a judgment that gave effect to the magistrate's decision.

         Taxpayer has appealed from the tax court's judgment to this court, and the department has cross-appealed. The primary question this case presents arises on the department's cross-appeal-whether the tax court erred in giving effect to the magistrate's decision granting taxpayer's requested relief for the two most recent tax years. For the reasons set out below, we affirm the tax court's judgment.

         The facts in this case are primarily procedural. To the extent that historical facts are relevant, we take them from taxpayer's complaint and assume that they are true since this case arises from the tax court's ruling dismissing the complaint. The complaint alleges that, as a result of a clerical error, taxpayer's house has been overvalued since 1996. Except for the three most recent tax years, it is unclear from taxpayer's complaint whether he believes that the clerical error affected the real market value of his house, its maximum assessed value, its assessed value, or all three values.[1]

         [363 Or. 748] Taxpayer did not take any steps to correct that clerical error until 2016 when he filed an appeal in the magistrate division of the tax court. His complaint alleges that, during an initial phone conference, the magistrate encouraged taxpayer and the county assessor to see if they could settle the dispute. After reaching a tentative agreement, taxpayer and the county assessor discussed their agreement with the magistrate during a second phone conference. The magistrate gave his "unconditional approval" to the agreement, and taxpayer and the county reduced their agreement to writing.

         As part of the agreement, taxpayer and the county assessor stipulated to the property's real market values, maximum assessed values, and assessed values for six tax years-the then-current tax year (2015-16) and the five preceding tax years (2010-11 to 2014-15). Except for the three most recent tax years, neither the agreement nor the complaint specifies which of the stipulated values represents a change from the values listed on the county's assessment and tax rolls. For each of the three most recent tax years, the agreement includes the following parenthetical: "(no change to RMV; MAV change only)." We infer from that parenthetical that the stipulated real market value for each of those three years is the same as the real market value listed on the rolls but that the stipulated maximum assessed value for each tax year is lower than the maximum assessed value listed on the rolls.

         When taxpayer and the county assessor presented the stipulated agreement to the magistrate, the magistrate departed from his earlier "unconditional approval" of their agreement. He told them that he lacked statutory authority to adjust the values on the rolls to conform to the stipulated values for the first three tax years (2010-11 to 2012-13). Having identified that problem, the magistrate asked taxpayer if he wished to adhere to the stipulated values for the last three tax years (2013-14 to 2015-16). Taxpayer said that he did.

         Given taxpayer's choice, the magistrate issued a written decision in which he explained that, because taxpayer had not challenged the values for his property by [363 Or. 749] appealing to the Board of Property Tax Appeals, the magistrate's authority to adjust the property values for taxpayer's home was limited by statute to the current tax year (2015-16) and the two immediately preceding tax years (2013-14 and 2014-15). See ORS 305.288(3).[2] The magistrate accordingly made no changes to the real market value, the maximum assessed value, or the assessed value on the rolls for the first three tax years (2010-11 to 2012-13).

         Turning to the three most recent tax years, the magistrate explained that taxpayer lacked standing to challenge the values for tax year 2013-14. He noted that, for that year, the parties had agreed to change only the property's maximum assessed value. However, the property's real market value, which the parties had not sought to change, was lower than the maximum assessed value. Because the assessed value (which is used to calculate the taxes owed) is the lower of the real market value or the maximum assessed value, any error in calculating the maximum assessed value did not affect the taxes owed for that year.

         The magistrate then turned to the remaining two tax years (2014-15 and 2015-16). After noting that ORS 305.288(3) authorized him to adjust the property values for those years, the magistrate accepted the stipulated maximum assessed value for each of those two years. Because the stipulated maximum assessed value for each year was lower than the real market value, the stipulated maximum assessed value provided the assessed value used to determine the taxes owed. The magistrate's decision directed that the values for the real property listed on the rolls for those two tax years should be adjusted accordingly.

         The Oregon tax statutes provide that "[a]ny party dissatisfied with a written decision of a magistrate may [363 Or. 750] appeal the decision to the judge of the tax court by filing a [timely] complaint in the regular division of the tax court." ORS 305.501(5)(a). Taxpayer was dissatisfied with the magistrate's decision because it did not adjust the values for the first three tax years to conform to the stipulated agreement, [3]and he appealed to the tax court by filing a complaint in the regular division. Pursuant to statute, taxpayer named the department as the defendant. See ORS 305.501(5)(c).[4]

         The department did not appeal from the magistrate's decision, although it could have done so pursuant to ORS 305.501(5)(b).[5] The department, however, appeared as a defendant in the proceeding that taxpayer had initiated in the tax court and moved to dismiss taxpayer's complaint. The department argued that, to the extent that taxpayer was relying on the stipulated agreement with the county assessor in the magistrate division, that agreement did not bind the department in the regular division. The department also argued that, to the extent that taxpayer was advancing a claim of error that did not depend on the stipulated agreement, taxpayer was seeking to adjust the maximum assessed values for his property in a way that the statutes and the constitution do not permit.

         The tax court granted the department's motion to dismiss. Work v. Dept. of Rev., 22 OTR 396 (2017). It agreed with the department that the stipulation between taxpayer and the county in the magistrate division did not bind the [363 Or. 751] department in the regular division. Id. at 403. It also agreed with the magistrate that the tax court (both the magistrate and regular divisions) lacked statutory authority to adjust the property values for the first three tax years. Id. at 404-06. Finally, the tax court concluded that taxpayer had no standing to contest the magistrate's decision regarding the two most recent tax years because, for those two years, the magistrate had given taxpayer everything he asked for. Id. at 407-08.

         During the hearing on the department's motion to dismiss, the department argued that, if the tax court dismissed taxpayer's complaint, the magistrate's decision accepting the stipulated values for the two most recent tax years should not be given any effect and the values for taxpayer's home for those two tax years should revert to the values on the tax and assessment rolls. The tax court disagreed. It reasoned that, if the department believed that that part of the magistrate's decision should not be given any effect, it should have appealed to the tax court from that part of the decision or, at a minimum, counterclaimed for affirmative relief once taxpayer appealed.[6]Id. at 410-11. The department, however, had neither appealed from the magistrate's decision nor sought affirmative relief from the part of the magistrate's decision with which it disagreed. Instead, it ...


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