Nicolynn Properties LLC v. Dept. of Rev.

320 December 30, 2013 No. 41

IN THE OREGON TAX COURT

REGULAR DIVISION

NICOLYNN PROPERTIES LLC,

Plaintiff,

v.

DEPARTMENT OF REVENUE,

Defendant.

(TC 5172)

Plaintiff (taxpayer) appealed from a Magistrate Division decision as to prop-

erty tax. Defendant Department of Revenue (the department) answered with a

motion for summary judgment on the ground that taxpayer’s appeal was time-

barred, as had been ruled in the Magistrate Division. Taxpayer argued that the

county assessor had failed to follow the statutory steps of ORS 311.223(1) and

(2) that the statute says “shall” be taken before any notice is given to a taxpayer

under ORS 311.223(2), including correction of the roll. Taxpayer also argued that

the notice ultimately given by the county was not compliant with the require-

ments of ORS 311.223(2) and further argued in opposition to summary judgment

that the department, in the record it had made, had not established that there

was no question of material fact before the court. Granting the department’s

motion, the court ruled that taxpayer’s appeal was time-barred, and that factual

issues asserted by taxpayer were not material because they were premised on an

incorrect reading of the statutes as to measurement of the statute of limitations,

but that while taxpayer was barred from proceeding under appeal provisions

stated in ORS 311.223, the court would potentially be able to address some of

taxpayer’s claims under ORS 305.288 if taxpayer could show that it qualified

under that statute. The case was therefore continued for potential consideration

of the applicability of ORS 305.288.

Oral argument on Defendant’s Motion for Summary

Judgment was held July 24, 2013, in the courtroom of the

Oregon Tax Court, Salem.

Cary B. Stephens, Barnhisel Willis Barlow & Stephens

PC, Corvallis, filed a response and argued the cause for

Plaintiff (taxpayer).

Douglas M. Adair, Senior Assistant Attorney General,

Department of Justice, Salem, filed the motion and argued

the cause for Defendant Department of Revenue (the

department).

Decision rendered December 30, 2013.

HENRY C. BREITHAUPT, Judge.

Cite as 21 OTR 320 (2013) 321

I. INTRODUCTION

In this property tax case, Plaintiff (taxpayer)

asserts that summary judgment should not be granted to

Defendant (the department) because questions of material

fact remain to be decided in order to determine if taxpayer’s

complaint was timely filed in this court.

II. FACTS

The facts about which the parties agree or have

otherwise been established in the record are these. By

notices dated March 3, 2012, the Department of Assessment

of Benton County (the county) gave to taxpayer and taxpayer

received Notices of Intent to Add Value Due to A Clerical

Error. The notices related to the years 2006 through 2011.

The notices were given pursuant to ORS 311.205 to 311.208

and informed taxpayer of a right to appear and show cause

under ORS 311.219.

Under date of April 10, 2012, taxpayer’s counsel filed

a written appearance with the county setting forth reasons

why additional value should not be added to the assessments

for the years in question. Under date of May 1, 2012, the

county, on letterhead of the division of “Finance, Auditing

& Tax Collection,” informed taxpayer of the amounts of tax

due for the years in question and to which tax statements in

future years those additional amounts would be added. The

notice was sent to the last known address of taxpayer and

sent by certified mail. Taxpayer received the May 1, 2012,

notice. The notice informed taxpayer that if it did not agree

with the assessments, it could appeal to the Magistrate

Division of this court within 90 days of the notice.

Taxpayer filed a complaint in the Magistrate

Division of this court on September 18, 2012, naming as

defendants the county and the Department of Revenue.

The complaint related to and challenged the actions of the

county. The department moved to dismiss the complaint on

the ground that it was not filed within the time allowed by

statute. The magistrate handling the matter granted that

motion and from that decision taxpayer appeals to this divi-

sion of the court.

322 Nicolynn Properties LLC v. Dept. of Rev.

III. ISSUE

Is the complaint of taxpayer filed in the Magistrate

Division time-barred?

IV. ANALYSIS

Measured from the May 1, 2012, date of the notice

of assessment given to taxpayer, the complaint of taxpayer

is time-barred. The actions of the county were taken under

ORS 311.205 to 311.208.1 ORS 311.205(3) provides that the

procedure both for action of an assessor and for dispute

and appeal of such action is as set forth in ORS 311.216 to

311.232. ORS 311.223(4) requires that an appeal be made

within 90 days of the date of the correction of the roll.

Oregon Administrative Rule (OAR) 150-311.223(4)

provides that the date of correction of the roll is the date

of notice given to the taxpayer under ORS 311.223(4). The

appeal of taxpayer in this case came more than 90 days after

the May 1, 2012, date of notice and therefore, applying the

department’s rule, more than 90 days after the correction of

the roll is considered to have occurred.

Taxpayer argues however that the county assessor

did not follow, or has not adequately shown that he did fol-

low, the statutory steps of ORS 311.223(1) and (2) that the

statute says “shall” be taken before any notice is given to the

taxpayer under ORS 311.223(2), including correction of the

roll. Taxpayer also argues that the notice ultimately given by

the county was not compliant with the requirements of ORS

311.223(2).

In opposition to the motion for summary judgment

based, as it is, on the defense of the bar of the statute of lim-

itations, taxpayer argues that the department, in the record

it has made, has not established that there is no question of

material fact. In particular, on the premise that the certain

steps that the statutes say the assessor “shall” take prior

to sending notice, taxpayer argues that there remain ques-

tions of fact as to whether, and when, the county corrected

1

Unless otherwise noted, all references to the Oregon Revised Statutes

(ORS) are to 2011.

Cite as 21 OTR 320 (2013) 323

the roll and whether it took the other actions listed in ORS

311.223 as required of it.

A question of fact as to when the roll was corrected,

or any other predicate step to the issuance of the notice

described in ORS 311.223(1), and identified by taxpayer,

would be material only in certain cases. Here, the question

would be material only if the statute of limitations on appeal

to this court did not begin to run until the step was taken.

The department asserts that whatever the proce-

dural or substantive problems may have been with what the

county assessor did or did not do, the court may only address

those matters if taxpayer brought them to the court by way

of an appeal within the time limited by the statute—within

90 days after the correction of the roll. Stated differently,

the department asserts that even if the steps identified by

taxpayer are not taken, the statute of limitations nonethe-

less begins to run. The department asserts that given this

application of the statutes, there are no material facts at

issue, even if the actual date of the correction of the roll has

not been established.

As to the measurement of the 90-day period, the

department invokes its rule OAR 150-311.223(4) which

provides:

“For purposes of ORS 311.223(4) and 311.229 the ‘roll is

corrected’ on the date the assessor sends the notice to the

taxpayer’s last known address by certified mail as required

in 311.223(2).”

Taxpayer does not challenge the validity of the

department’s rule. Therefore the only task remaining is to

construe the rule and determine its application in this case.

The court notes two points about this rule. First, in begin-

ning the time measurement period from the date of notice,

the rule does not begin the time measurement period any

earlier than the date of the notice. If the roll was corrected

before the date the notice was given, the rule does not count

the time period between roll correction and notice against

the taxpayer.

Second, taxpayer argues that a notice to a taxpayer

sent by certified mail to the last known address of taxpayer

324 Nicolynn Properties LLC v. Dept. of Rev.

is nonetheless not a starting point under the rule unless a

notice of an assessor states the date of the correction of the

roll.2 Taxpayer argues that, even after application of the

rule, a deficient notice is not sufficient to trigger the running

of the statute of limitations.

However, this reading inserts into the rule more

than is contained there. The rule only concerns what date is

the beginning of the time calculation called for by the stat-

ute. In doing so it does not purport to address what may or

may not be logically or legally required prior to that date or

what the effect of a deficiency in the notice itself may be.3

Instead the rule simply, but importantly, specifies as the

beginning date for calculation of time limitations, the date

on which a notice of adverse action is sent by certified mail

and last known address. There is no question of fact as to

the date on which that occurred in this case.

Neither the statute nor the rule state or imply that

the notice given must be correct in all respects. The purpose

of the rule is obviously to specify a date easily known to

taxpayers and the government on which to start computing

the limitations period.4 The statute and rule focus on when

a notice is given and not on the substantive accuracy of the

2

It is not clear to the court whether taxpayer is also complaining that the

notice it received is inadequate because it was sent by the office of Finance,

Auditing & Tax Collection of the county rather than the Assessor’s Office. The

letter refers to a previous notice of action from the Assessor’s Office for the same

accounts and years. To the extent that taxpayer is attempting to benefit from

such complaints, its arguments are not well taken. Such minor discrepancies,

even if they existed, would not support a decision that this notice and the preced-

ing notice did not fairly put taxpayer on notice that adverse action had been taken

by the county and in respect of the taxation of identified property. The May 1,

2012, notice also clearly set forth the appeal time applicable to the adverse action.

3

The court’s reference to requirements prior to the date of notice addresses

several arguments of taxpayer regarding failure of the department to establish

when other actions that the statutes contemplate will occur prior to the date of

notice of adverse action that in fact occurred. An example of such a predicate

action is the provision by the assessor of a written statement to the tax collector

under ORS 311.223(1). Taxpayer asserts that the record does not establish when

this occurred.

4

The rule does not establish, as a matter of fact, when the roll was actu-

ally corrected. It only provides a date on which the roll is deemed to have been

corrected, solely for purposes of measuring appeal time. To the extent that the

actual date of roll correction would be important to a claim or defense, the parties

could, in a proceeding that was timely brought, litigate that question.

Cite as 21 OTR 320 (2013) 325

notice or the correctness of county action preceding giving of

notice.5

Taxpayer’s argument is that in order to trigger the

statute of limitations the notice triggering the start of the

limitations period must be free of procedural or substantive

defects. That position equates to a position that a notice that

has defects associated with it is void ab initio rather than

voidable if properly challenged. As was the case in Clifford

Parsons, Trustee v. Dept. of Rev., (Parsons Trust) 21 OTR

331 (2013) decided this day, the statutes here do not permit

that conclusion. To the contrary, the statutory scheme, as

in Parsons Trust, contemplates that there may be errors or

deficiencies in the action of the government or notice of that

action but provides a process for timely raising objections to

such actions.

The contrary proposition, advanced by taxpayer,

does not find support in the case law. Indeed, the depart-

ment’s position in this case is consistent with case law devel-

opments with respect to challenges to the content of tax

notices or alleged procedural defects occurring prior to the

giving of notice to a taxpayer of adverse action.

One case addressing such a question is Preble

v. Dept. of Rev., 331 Or 320, 14 P3d 613 (2000). In Preble,

the statute required a notice to the taxpayer of potential

adverse action. Further, the statute required that the notice

contain a certification that the assessment was not made for

the purpose of improperly extending the statute of limita-

tions. Notice was given to the taxpayer, but the notice did

not contain the statutorily described certification.

Our Supreme Court held that the statutorily

required certification was just that—required. Therefore

the court held that the notice was defective procedurally and

would, unless the department was barred by a time limita-

tion, have to be reissued with the required certification. An

examination of the factual background in Preble indicates

5

This case does not present facts where the government does not fairly put

a taxpayer on notice that an adverse action has been taken. Further, there is a

right to be heard about the action. Accordingly, the basic requirements of due

process have been met. Taxpayer here does not argue otherwise.

326 Nicolynn Properties LLC v. Dept. of Rev.

that the taxpayer brought its challenge to the adequacy

of the notice to the court within the time set by statute.6

Indeed, the opinions of this court and the Supreme Court

did not even mention any contention that the taxpayer had

not been timely in bringing its challenge to the adequacy of

the notice to this court.

In Anaconda Company v. Dept. of Rev., 278 Or 723,

565 P2d 1084 (1977) the statute in question, ORS 314.405(2)

(1973), required the department to hold a pre-assessment

conference within one year after giving notice of a proposed

deficiency. The department did not hold the conference and

the taxpayer argued that the failure to do so rendered the

assessment of a deficiency void. The Supreme Court held

that the mandatory language of the statute was to be given

effect and voided the assessment. It did so, however, in a con-

text where, as revealed in the opinion of the Supreme Court

and the records of this court, the taxpayer filed its complaint

in this court within the time allowed by statute after final

action by the department.7 This court also notes that the

decision in Anaconda discusses certain “mandatory” mat-

ters that may have more to do with proper public adminis-

tration of a law rather than protections of taxpayers in the

face of government action. As the Supreme Court said in

Anaconda: “Thus procedures designed to protect individuals

dealing with an agency more likely are meant to be ‘manda-

tory’ than provisions, equally obligatory, that are designed

to assure legally and fiscally correct public administration

in general, though the text or background of a particular

enactment may show otherwise.” 278 Or at 728. Similarly

the nature and extent of the disadvantage sought to be

avoided by the procedure can bear on the probable intent

with respect to noncompliance. See Childs v. Marion County,

6

The procedural history of the case as revealed in the opinions in this court

and the Supreme Court are not conclusive on this point, but it appears that the

taxpayer perfected his appeal in this court within the statutory time limit. That

time limit was measured from the issuance of the department decision that, as

with all cases litigated before the creation of the Magistrate Division, came after

an administrative procedure and hearing at the department and the issuance of

a decision by the department.

7

The opinion of the Supreme Court recites that the order of the department

was issued on August 11, 1975. The records of the Tax Court show that the appeal

of the taxpayer was filed on October 13, 1975, within the 60-day period then

allowed by statute for appeal of department orders. ORS 314.460 (1975).

Cite as 21 OTR 320 (2013) 327

163 Or 411, 97 P2d 955 (1940). Thus a holding setting aside

action for failure to comply with one protective requirement

of a statute does not necessarily mean that failure to comply

with other directives in the same or a similar statute will

necessarily lead to the same result. See, e.g., Childs, 163 Or

at 415; Equitable Savings & Loan Association v. State Tax

Commission, 3 OTR 1, aff’d 251 Or 70, 444 P2d 916 (1967).

Similar results occurred in Boardman Tree Farm

v. Morrow County Assessor, 20 OTR 361 (2011), where an

alleged defect in the procedural steps by a county prior to

notice of disqualification of a property from special assessment

was considered. However that consideration came in a context

where the taxpayer brought the challenge to the procedure

within the time limited by statute.8 In Boardman Tree Farm

the asserted defect in procedure was similar in character to

that which taxpayer asserts in this case, namely an asserted

failure by the government to take an action—an inspection—

which was a statutory predicate to the final decision to dis-

qualify the property from a favorable tax program. In this

case taxpayer asserts that the predicate action of actual roll

correction, and certain other steps, has not been shown to

have occurred.

In yet another special assessment disqualification

case, Eby v. Dept. of Rev., 15 OTR 247 (2000), a defective form

of notice was declared to be such, but again in the context of

a timely appeal to this court. In Eby, the statute required the

department give the taxpayer notice that the property had

been disqualified from special assessment. The record and

decisions in Eby, both in the Magistrate Division and this

division, establish that the taxpayer timely appealed the

disqualification decision of the assessor to the department.9

Following action by the department, the taxpayer timely

8

In Boardman Tree Farm the notice of disqualification was issued on August 7,

2009. The appeal to the Magistrate Division was filed on August 24, 1999, within

the statutory time limitation.

9

The stipulation of facts filed in the Magistrate Division indicates that the

notice of disqualification was sent June 6, 1997. The decision of the magistrate

indicates that the action was timely appealed to the department. The decision of

the magistrate also indicates that the department issued its opinion and order

on April 10, 1998, and the appeal to the Magistrate Division was filed on July 10,

1998, within the statutory time limit.

328 Nicolynn Properties LLC v. Dept. of Rev.

appealed to this court.10 Ultimately the Regular Division of

this court held that the notice was inoperative because it did

not contain statutorily required statements. The court con-

cluded that the purported disqualification had not legally

occurred. Eby thus stands in the line of several cases in

which challenges to notices or acts statutorily required prior

to the giving of notice by the government have been suc-

cessful, but only after a timely challenge to the government

action in the courts.

In this case, taxpayer has identified no case where

a challenge to government actions preceding an adverse

action, or the content of a notice of such action, was allowed

in a case brought after the time for appeal had expired.11

Indeed, if the law was as taxpayer here asserts,

the statutory time limits established by the legislature

would be rendered virtually meaningless. Taxpayers, like

taxpayer here, could allege procedural or substantive mis-

steps and, having only alleged them, and the reasons the

challenger believes them to be missteps, have potentially

unlimited time within which to challenge the action of the

government. Indeed, taxpayer here argues that the statute

of limitations as to bringing this matter to court has not

even yet begun to run. Why? Because alleged failure of the

government to follow procedural steps that taxpayer argues

are predicate requirements or conditions which must occur

before the statute of limitations on challenge to that action

begins to run.

But, of course, such a result would be based only on

the assertions of taxpayer and not on any determination by

the court that taxpayer’s position was correct. That view is

essentially one that renders the statement of time limits by

the legislature dependent upon the untested views of a tax-

payer as to the validity of government action.

10

See Eby, 15 OTR at 249.

11

In Clifford Parsons, Trustee v. Dept. of Rev., decided this day, the taxpayer

relied on Smith v. Dept. of Rev., 17 OTR 357 (2004) and Safley v. Jackson County

Assessor, TC-MD 030555E (Jan 28, 2000)(slip op). For the reasons discussed in

the opinion in that case, neither case supports the position of the taxpayer in that

case or this case.

Cite as 21 OTR 320 (2013) 329

And, of course, if that argument is good for the tax-

payer “goose,” it would be good for the government “gander.”

Time limits within which the government must, for exam-

ple, assess taxes would be indefinitely extended so long as

the government asserted that its actions were compliant

with statutory requirements. Only after litigation of that

contention, with the attendant expenditure of time and

money, would the matter be settled. However, the very same

decision would conclude the timeliness and substantive

challenge.

Such a construction of the statutes yields an unrea-

sonable result which the court will not attribute to the leg-

islature as its purpose. The legislature created a process

by which taxpayers may challenge government action and

argue that it is procedurally or substantively defective.

However the challenge must come within time limits. And

the time limits restrictions are to be resolved prior to consid-

eration of the case on the merits.

In this case, after application of a department rule

that is reasonable and unchallenged, the time limit for

appeal is 90 days from the date of the notice given to this

taxpayer. On this record, there is no question that the notice

was received or that it informed taxpayer of what adverse

action had been taken.12

In light of the foregoing, there are no material fac-

tual disputes that would preclude entry of summary judg-

ment in favor of the department. The factual issues asserted

by taxpayer are not material because they are premised on

an incorrect reading of the statutes as to measurement of

the statute of limitations.

The department, in the reply memorandum in sup-

port of its motion, acknowledged that even if taxpayer is

barred from proceeding under the appeal provisions stated

in ORS 311.223, this court would potentially be able to

12

Taxpayer argues that because of the wording of the March 3, 2012, notice

and the May 1, 2012, notice, it was not certain what, if any, action had been

taken. There is however no question that the May 1, 2012, notice stated precisely

what the economic consequences of the action taken by the county would be and

that disagreement with that result required an appeal within a specified time

period.

330 Nicolynn Properties LLC v. Dept. of Rev.

address taxpayer’s claims, at least for some years, under

ORS 305.288. The benefit of ORS 305.288 would be available

if taxpayer could show that it qualified under that statute.

The case will be continued for potential consider-

ation of the applicability of ORS 305.288. If taxpayer seeks

the benefit of that statute, it must do so by way of an amended

complaint raising the issue. Taxpayer must file any such

amended complaint within thirty days of the date of this

order or judgment will issue consistent with this order.

V. CONCLUSION

Now, therefore,

IT IS ORDERED that this matter is continued for

further consideration of the applicability of ORS 305.288;

and

IT IS FURTHER ORDERED that Plaintiff shall

file an amended complaint within thirty days from the date

of this order.