Indiana Board of Tax Review may not “ride in on a white horse to save the day” for Assessor who failed to prove his case

Indiana Board of Tax Review may not “ride in on a white horse to save the day” for Assessor who failed to prove his case

Name: CVS Corporation #2519-01 v. Lake County Assessor and CVS Corporation #0434-01 v. Lake County Assessor

Date Issued: May 22, 2020

Property Type: Retail pharmacy

Assessment Years: 2007 – 2014, 2012 – 2016

Synopsis: In Indiana property tax appeals, taxpayers and assessors alike are responsible for developing their cases, making their legal arguments, and producing evidence to support those arguments. This is a long-established principle. See Blesich v. Lake County Assessor, 46 N.E.3d 14, 17 (Ind. Tax Ct. 2015) (“This Court has repeatedly reminded litigants that when they present evidence to the Indiana Board, it is their duty to walk the Indiana Board through every element of their analysis.”) (citation omitted).

The Indiana Tax Court reaffirmed this principle in two virtually identical opinions issued on May 22d involving CVS stores. The Court reversed the Indiana Board of Tax Review (IBTR), which abused its discretion, acted contrary to law, and exceeded its statutory authority in vacating its orders reversing the voluntary dismissals by CVS of its appeals. Three months before the administrative hearing, CVS moved to voluntarily dismiss its appeals, which the IBTR granted two days later. The Assessor asked the IBTR to reverse this decision, asserting it would discourage negotiations. The request was granted, and a hearing on the merits was conducted. CVS appealed following issuance of the IBTR’s final determination.

The standard for voluntary dismissals. First, the Tax Court explained that the IBTR has the authority to dismiss a case upon motion of a party and applies the same standard as applied to voluntary dismissals under Indiana Trial Rule 41(A). (citing 52 IAC 2-1-2.1, 2-10-2(b)). Under Trial Rule 41(A), voluntary dismissal is proper unless the adverse party (i) has incurred substantial expense or (ii) will suffer legal prejudice from the dismissal. (citing Joyce Sportswear Co. v. State Bd. of Tax Comm’rs, 684 N.E.2d 1189, 1193 (Ind. Tax Ct. 1997), review denied). The “essential purpose” of this standard, the Court noted, “is to eliminate the evils that result from an absolute right of a plaintiff to take a voluntary nonsuit before the pronouncement of judgment and after the defendant has incurred substantial expense or acquired substantial rights.” (citing Marion County Assessor v. Stutz Bus. Ctr., 132 N.E.3d 85, 89 (Ind. Tax Ct. 2019)).

Assessor failed to analyze Trial Rule 41(A), IBTR relies on “inferences” of substantial expense. The IBTR elected to analyze the Trial Rule 41(A) standard, even though – as the Board conceded – the Assessor “provided no analysis” of the rule. The Assessor, moreover, provided no evidence as to the cost of his appraisal. Lacking proof of actual cost, the IBTR found the Assessor made a minimal showing he incurred a substantial expense because the “typical cost” of an appraisal is substantial. The Court rejected the IBTR’s inference for three reasons:

1. No foundation for the inference, only speculation. Observing the IBTR was “unschooled by its own observations that the Assessor’s expense evidence was inadequate,” the Court reasoned the IBTR’s “inferential conclusion lacks an evidentiary underpinning and is thus nothing more than speculation.” With no evidence of actual cost, there was “no foundation for concluding that the expense was substantial.”

2. IBTR admitted no evidence of cost; “indirect claims” do not support finding of substantial expense. The IBTR “explicitly stated” that the Assessor’s allegations of cost were unsupported. “The Indiana Board is not authorized to ride in on a white horse to save the day when the Assessor fails to provide relevant evidence, legal authority, or persuasive argument for his cause.”  The IBTR “must cleave to its statutory mandate that, as the trier of fact, it must assign relevance and weight to the evidence before it.” (citing Madison Cty. Assessor v. Sedd Realty Co., 125 N.E.2d 676, 680-81 (Ind. Tax Ct. 2019) (emphasis in original)). By relying on “indirect claims to be facts and making arguments for the Assessor,” the IBTR exceeded its authority.

3. “Advanced stage” of litigation did not support finding of substantial expense. The Assessor provided no “analysis in relation to any relevant case law to show the case had reached such an advanced stage that dismissal would be improper.”

Assessor suffered a “missed opportunity,” not the loss of a legal right.  A party shows legal prejudice “when actual legal rights are threatened or when monetary or other burdens appear to be extreme or unreasonable.” (citing Stutz, 132 N.E.3d at 91) (citations omitted). Here, the Assessor – as the IBTR readily acknowledged – “failed to articulate any specific legal prejudice.” The IBTR elected to “fill in the gap” by identifying “possible claims of legal prejudice.” (citing record, emphasis in opinion). Under Ind. Code § 6-1.1-9-4, the Assessor has three years from an assessment date to assess allegedly undervalued property. At the time CVS filed its appeals, this three-year period had expired: the IBTR “conjured up a new legal right for the Assessor to seek an increased assessed value” on appeal. The IBTR provided no legal authority for this purported “right to seek an increased assessed value in a taxpayer-initiated appeal.” The IBTR “exceeded its statutory authority as trier of fact by making arguments and inferences not made by the Assessor to make his case for him.” (citing Hometowne Assocs. v. Maley, 839 N.E.2d 269, 280 (Ind. Tax Ct. 2005, Ind. Code § 6-1.5-4-1)). The Assessor “suffered merely a missed opportunity.” The IBTR exceeded its statutory authority in making the Assessor’s case for him.

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