# Opposition Brief — Castlewood, Inc. v. Anderson County

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1510%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1998
- **Citation:** 525 U.S. 949

## Text

< | Supreme Court, U.S,
rat & D
No. 98-361 ge
In The OFFICE OF THE reel
Supreme Court of the United States
o

October Term, 1997
CASTLEWOOD, INC.,

Petitioner,
VS.

ANDERSON COUNTY, TENNESSEE, PATSY STAIR,
TRUSTEE, OWEN K. RICHARDSON, TAX ASSESSOR,
CITY OF OAK RIDGE, TENNESSEE and TENNESSEE
STATE B“ ARD OF EQUALIZATION,

Respondents.

On Petition for Writ of Certiorari to the
Supreme Court of the State of Tennessee

RESPONDENTS’ BRIEF IN OPPOSITION

DAVID A. STUART
Counsel of Record
STUART & VAN RIPER

; Attorney for Respondents
sel:
— Anderson County, Tennessee,
DAVID S. CLARK Patsy Stair, Trustee, and
County Attorney for Respondents Owen K. Richardson,
DAVID S. CLARK & ASSOCIATES /@* Assessor”
ANDERSON COUNTY 300 Market Street
166 Fairbanks Rd. Clinton, TN 37716
Oak Bridge, TN 37830 (423) 457-6414

(423) 482-3933

148803 @ Counsel Press LLC
FORMERLY LUTZ APPELLATE SERVICES
(800) 274-3321 + (800) 359-6859

——

AN SRR EE ALO TOE np 8 ALES TOS TO gs AN Te . . RRO LIE TAE DA TLEPE NEI SELON ES OER IIE THD ESA ILE I SEMA.

_ Tt “ 4 _ ;
Sea rr ’ I AOI 3 oT a Me PO en et i ea PED

QUESTION PRESENTED

Anderson County does not agree that the petitioner has
presented the question fairly. The appropriate question in this
case may be stated as follows:

Whether the Constitutional and Statutory law of the State
of Tennessee, as construed by the Tennessee Supreme Court,
relative to the classification and assessment of condominium
property for real property ad valorem tax purposes, is in
violation of the Equal Protection Clause of the Fourteenth
Amendment to the Constitution of the United States, because
it provides that two or more condominium units under common
ownership in the same structure and used as rental apartments,
should be classified as industrial or commercial property, and
assessed at 40% of appraised value, while single condominium
units, used as owner-occupied residences or as rental property,
should be classified as residential property, and assessed at 25%
of appraised value.

il

TABLE OF CONTENTS

Page
fo | ee prereerary rey arr er ee i
Se Oe CN bcs ose eign 64 Ce ee ee il
Sete OF CRE AMIIOIITIOS 5 io occ cc hos Cesee cess iil
mente Count PIOCOOUINS (8 skis sess duces ieee tebes ]
Reasons for Denying the Writ ...... oc cc ccc ncsesss 1
I. There Is No Legitimate Equal Protection Issue
Under The Facts In This Cate. 2.066.620 605: ]
II. There Is No Conflict Between The Decision Of
The Tennessee Supreme Court In This Case And
Any Other State Court Of Last Resort, Any United
States Court Of Appeals, Or Any Relevant
Decisions OF This COG. cee cs siie ces: 6
Ill. The Petition Should Be Denied Since It
Improperly Seeks Review By The Supreme Court
Of The Correctness Of An Interpretation Of State
Law By The State’s Highest Court. ......... 9
IV. The Equal Protection Issue Should Not Be
Considered As It Was Not Squarely Briefed And
Argued At Any Time When The Case Was On
Appeal, But Nonetheless Was Addressed By The
Tennessee Supreme Court In Its Opinion. .... 11

Comcteeiene Co i ecu awk 103 08 13

il

TABLE OF CITED AUTHORITIES

Cases:

Addington v. Texas, 441 U.S. 418, 99 S. Ct. 1804, 60
Mem Oe BOA TENEEE ook ices

Allegheny Pittsburgh Coal Co. v. County of Webster
County, West Virginia, 488 U.S. 336, 109 S. Ct. 633,
POP an ee Me OR EIOEO).,.. 22... ees

Brown-Forman Co. y. Kentucky, 217 U.S. 563 at 573, 54
hn tiee GE, 20 a. CL SIO (1910) .....-.......

In re Murchison, 349 U.S. 133, 75 S. Ct. 623, 99 L. Ed.
I de ea

Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356,
35 L. Ed. 2d 351, 93 S. Ct. 1001 i oe | STR

Louisville & N.R.R. vs. Public Service Commission, 493
F. Supp. 162 (M.D. Tenn. 1978), aff'd, 631 F.2d 426
(6th Cir. 1980), cert. denied, 450 U.S. 959, 67 L. Ed.
2d 384, 101 S. Ct. 1418 SOMEEE As eT Sock

Nordlinger v. Hahn, 505 U.S. 1, 112 S. Ct. 2326, 120 L.
I on Cee ee

Re Ee PO EOS EE OG DEW Sb CE Oke KK KR

Page

10

7,8

10

iv

Table of Cited Authorities

Page
United States Constitution:
Pomtennts Asm ia oi 5 i hes ea OK i, 9
Rule:
Supeeine Cott Bale iO i cc Reise. | .
Other Authority:

Article II, § 28 of the Constitution of Tennessee .... 1, 2, 4, 9

l
STATE COURT PROCEEDINGS

The petitioner is incorrect in its assertion that the Tennessee
Court of Appeals made any reference to an equal protection
issue. The only constitutional issue addressed by that court was
the construction and interpretation of Article iI, § 28 of the
Constitution of Tennessee.

The Tennessee Supreme Court noted that the Tennessee
Court of Appeals did not address the equal protection issue.
See Opinion, Pet. App. A, p. 2a, n.1:

The Court of Appeals did not consider the
federal constitutional issue but it is asserted on this
appeal.

Contrary to the assertions of the petitioner, Pet. at 8, the
reference to “fundamental fairness” in the Opinion of the
Tennessee Court of Appeals, Pet. App. C, 15a, is not part of an
equal protection analysis. It is instead a part of the reasoning
process of that court in resolving the question of constitutional
and statutory construction relative to the classification and
assessment of condominium property, and in carrying out the
intent of the framers of Article Il, § 28, of the Constitution of
Tennessee.

REASONS FOR DENYING THE WRIT
I.

THERE IS NO LEGITIMATE EQUAL PROTECTION
ISSUE UNDER THE FACTS IN THIS CASE.

There is no compelling reason to grant the petition in this
case, because there is no substantial equal protection issue
presented by the decision of the Tennessee Supreme Court.

2

Where taxation is concerned, and no specific
federal right, apart from equal protection, is
imperiled, the States have large leeway in making
classifications and drawing lines which in their
judgment produces a reasonable system of taxation.

Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356 at 359,
35 L. Ed. 2d 351, 93 S. Ct. 1001 (1973). Moreover, when the
equal protection issue arises with regard to classification, if
the classification is neither capricious nor arbitrary, and rests
upon some reasonable consideration of difference or policy,
there is no denial of the equal protection of the law. Brown-
Forman Co. v. Kentucky, 217 U.S. 563 at 573, 54 L. Ed. 883,
30 S. Ct. 578 (1910).

Considering all the circumstances in this case, there is no
colorable equal protection issue arising from the interpretation
and construction of the constitutional and statutory law of the
state by the Tennessee Supreme Court regarding the
classification and assessment of condominium property for real
property ad valorem tax purposes. Under Tennessee law as
established by the decision of the state’s highest court, similarly
situated condominium owners are treated exactly alike. The
owners of single condominium units pay taxes based upon an
assessment of 25% of the appraised value. Owners of two or
more condominium units in the same structure who rent or lease
their units to others for use as apartments pay taxes based upon
an assessment of 40% of the appraised value.

This is in accordance with the intent of the applicable
provision of Article II, § 28 of the Constitution of Tennessee,
relative to the classification and assessment of industrial and
commercial property on the one hand, and residential or farm
property on the other, with multi-unit income-producing
residential properties to be taxed at a higher rate than owner-

a taints Tinie CR eel

oo anche Sa or acl ete Be Sale Si

3

occupied residences and farms. Snow v. City of Memphis, 527
S.W. 2d 55 (Tenn. 1975); Louisville & N.R.R. vs. Public Service
Commission, 493 F. Supp. 162 (M.D. Tenn. 1978), aff'd, 631
F.2d 426 (6th Cir. 1980), cert. denied, 450 U.S. 959, 67 L. Ed.
2d 384, 101 S. Ct. 1418 (1981). The Tennessee Supreme Court
has reaffirmed that this is the public policy of the state in the
decision now under attack by the petitioner.

The state’s constitutional and statutory system for
classification and assessment clearly has a rational basis in that
it taxes income producing property at a higher rate by applying
a higher assessment to the appraised value. Under the facts of
this case, where the petitioner constructed some 86
condominium units, in multiple structures of more than two
(2) units each, and leases or rents 80 of the units to others for
profit in the same way units are rented in apartment complexes,
it is not a violation of the rights of the landlord to tax the rental
units as industrial or commercial property.

Contrary to the assertion of the petitioner, the taxing
authority does not examine the ownership of the units to
determine how to classify the property for assessment purposes.
Rather, the taxing authority looks to the use of the units.
Ownership is relevant only to this extent: if the owner of two
(2) or more units in the same structure rents or leases them to
others, the same are being used as rental apartments, i.e., income
producing property, and are to be classified and assessed as
industrial and commercial property. In exactly the same way,
the owners of multi-unit rental residential apartments are
classified and assessed taxes on their income producing
properties at the industrial and commercial rate. This is in
accordance with the state constitutional mandate:

Real Property shall be classified into four (4)
subclassifications and assessed as follows:

4

(a) Public Utility Property, to be assessed at
fifty-five (S5%) percent of its value;

(b) Industrial and Commercial Property, to be
assessed at forty (40%) percent of its value;

(c) Residential Property, to be assessed at
twenty-five (25%) percent of its value, provided that
residential property containing two (2) or more
rental units is hereby defined as industrial and
commercial property [emphasis added]; and

(d) Farm Property, to be assessed at twenty-five
(25%) of its value. ;

See Constitution of Tennessee, Article II, § 28; Pet. App. D,
p. 22a.

The petitioner complains that it is illogical to tax the owner
of multiple single-family residence rental properties based on
a residential classification while at the same time taxing the
owner of multiple rental condominium units in the same
structure based on an industrial or commercial classification.
Pet. at 10. It can be argued with greater force that it is illogical
to have two identical multi-unit apartment buildings side by
side, of equal value, and identical in appearance and total value,
with one legally constituted as traditional apartments, and one
legally constituted as condominiums, with each condominium
being under common ownership for use as rental property, yet
with the income-producing apartment property being taxed at
40% of the appraised value and the income-producing
condominium property being taxed at 25% of appraised value.
While there may be logical arguments on both sides of the
equation, the classification approved by the Tennessee Supreme
Court in this case is consistent with the intent of the state

se A NSE tik NN ir NR SAS ‘

5

constitution that multi-unit income producing residential
property be classified as industrial or commercial.

The Tennessee Supreme Court has articulated a rational
basis for the difference in treatment, and there is clearly support
for that conclusion in the constitution, statutes, and case law of
the state. The decision of the Tennessee Supreme Court in this
case is the definitive statement of the state’s policy on the
classification and assessment of multi-unit income producing
condominium properties. There is nothing discriminatory about
either the classification system itself, or the determination that
multi-unit rental condominiums should be classified as
industrial or commercial. Even the petitioner does not argue
that there is no rational basis for taxing industrial and
commercial property at a higher rate than single family
residences and farms.

As demonstrated by the Tennessee Supreme Court in its
discussion of the equal protection issue, there is an obvious
rational basis for the classification and assessment provisions
of the Constitution of Tennessee and the enabling statutes which
are at issue here, which is an intent to tax income producing
property at a higher rate than owner-occupied residences and
farms. Pet. App. A, 6a-8a. It is equally clear that the Tennessee
Supreme Court and Tennessee Court of Appeals have
harmonized the constitutional and statutory provisions relative
to the classification and assessment of property for tax purposes
with the state’s horizontal property act. At the same time, those
courts declined to read the horizontal property act as an
exception to the statutes on classification and assessment, or
as a vehicle for circumventing the constitutional and statutory
intent that multi-unit income producing apartments or
condominiums be taxed at the industrial and commercial rate.
Pet. App. A, 3a-5a; Pet. App. B, 13a-15a.

6

This precise issue was one of first impression in the
Tennessee courts. The Tennessee Supreme Court has now
clearly stated the law of the state on the property tax question,
and at the same time has demonstrated a rational basis for the
classification and assessment of the petitioner’s 80 rental
condominium units.

An owner ofa single family dwelling may rent the property
to another without losing the residential classification. The
owner of a single condominium is treated similarly. It is only
where multiple rental units under common ownership in the
same building are rented or leased to others that the properties
are assessed at the industrial and commercial rate. This
classification applies whether the units are apartments or rental
condominiums under common ownership. Such circumstances
fall clearly within the constitutional intent to classify income
producing property as commercial. Snow and Louisville &
N.R.R., supra, p. 3. There is a rational basis for the classification
and assessment method on the very face of the constitution and
statutes of the state, as construed by the state’s highest court.

Il.

THERE IS NO CONFLICT BETWEEN THE
DECISION OF THE TENNESSEE SUPREME COURT IN
THIS CASE AND ANY OTHER STATE COURT OF LAST
RESORT, ANY UNITED STATES COURT OF APPEALS,
OR ANY RELEVANT DECISIONS OF THIS COURT.

Consideration of this case by this Court would not resolve
any existing conflict among other courts. As conceded by the
petitioner, “[t]his Court has not addressed the simple issues
raised in this petition.” Pet. 21. Nor does the petitioner argue
that the decision of the Tennessee Supreme Court in this case
is in conflict with the decision of any other state court of last
resort or any United States court of appeals. In fact, none of
the considerations governing review on certiorari as set forth

SOFA ERIS HPL te sce a Pil A A eb loc, ,

5

in Rule 10 appear to be applicable in this case. Simply stated,
there are no compelling reasons to grant the petition in this
case.

While admitting on the one hand that this Court has not
addressed the issues raised in this petition, the petitioner argues
on the other that the decision of the Tennessee Supreme Court
violates the principles expressed in Allegheny Pittsburgh Coal
Co. v. County of Webster County, West Virginia, 488 U.S. 336,
109 S. Ct. 633, 102 L. Ed. 2d 688 (1989) and Nordlinger v.
Hahn, 505 U.S. 1, 112 S. Ct. 2326, 120 L. Ed. 2d 1 (1992).
However, it is manifest from the Opinions in those cases that
the outcome of the inquiry in each case was driven by factual
variations in light of the unique property, taxation, and
constitutional law of West Virginia and California, respectively.

In Allegheny Pittsburgh, the classification was an arbitrary
one invented entirely by the local tax assessor, which
discriminated against recent buyers of real estate, and had no
other basis for the classes or distinctions used in the
assessments. Conversely, in the instant case, each member of
every class is treated exactly alike, and the owners and renters
of multi unit-condominiums are classified and assessed exactly
like each other and like the owners and renters of multi-unit
apartments. This method more than meets the test that

the fairness of one’s allocable share of the total
property tax burden can only be meaningfully
evaluated by comparison with the share of others
similarly situated relative to their property holdings.

488 U.S. at 346.

Nordlinger is not authority for the proposition that
certiorari should be granted under the facts of this case; indeed

8

it is much to the contrary. There, a system almost as unfair and
oppressive as the “welcome stranger” assessments in Allegheny
Pittsburgh survived an equal protection challenge. Although
there is little factual similarity between California’s Proposition
13, which was at issue in Nordlinger, and the facts of this case,
it is instructive that the treatment of those taxpayers survived. '
The ultimate conclusion upon a comparison of A‘/egheny
Pittsburgh and Nordlinger is that the question in this case must
be resolved squarely outside anything resembling an equal
protection violation.

In the case sub judice, not only was the case litigated in
light of a question primarily of construction and interpretation
rather than an equal protection issue, but the facts which do
appear in the stipulation lend themselves to support a conclusion
that there is a rational basis for the result approved by the
Tennessee Court of Appeals and the Tennessee Supreme Court
in the decisions below.

The highest court in Tennessee has made an authoritative
interpretation of that state’s constitution and statutes relative
to the stipulated facts on the classification issue. Apparently
no other state has the same constitutional and statutory
provisions. While it may be true, as stated by the Tennessee
Court of Appeals, that “both parties’ positions are well
reasoned,” Pet. App. C, 15a, and that good arguments can be
made on both sides of the question of constitutional and
statutory construction, once that question is definitively
resolved by the state’s highest court, it virtually by definition
cannot be an equal protection violation, where, on the facts,
every member of each class is treated equally. The horizontal
property act has been harmonized with Article II, § 28 and the

1. Justice Stevens, in lone dissent, described the disparate tax
burden between new owners and the landed gentry in Nordlinger as
conferring “a privilege of a medieval character.” 120 L. Ed. 2d at 25.

9

implementing statutes to require the owners of multi-unit rental
condominiums in the same building to pay taxes at the industrial
or commercial rate, just like the owners of identical multi-unit
apartments. Similarly situated property owners are being treated
equally, and the classification rests upon the policy ground of
taxing multi-unit apartments or condominiums in the same
building under common ownership as income-producing
industrial or commercial property. The state constitutional and
statutory language, as construed by the state’s highest court,
easily passes muster under the equal protection clause on its
face. :

Ill.

THE PETITION SHOULD BE DENIED SINCE IT
IMPROPERLY SEEKS REVIEW BY THE SUPREME
COURT OF THE CORRECTNESS OF AN
INTERPRETATION OF STATE LAW BY THE STATE’S
HIGHEST COURT.

The petition in this case is liberally sprinkled with
assertions that the decision of the Tennessee Supreme Court is
contrary to the constitutional and statutory law of the state.’

2. See e.g., Pet. p. 3 (“This taxation scheme is without any basis
under Tennessee law. ...”), p. 9 (“This standard for determining and
assessing real property taxes is not authorized in the Tennessee
Constitution or the Tennessee Horizontal Property Act.”), p. 11 (“The
tax assessment scheme and classification adopted by the Tennessee
Supreme Court for residential condominium units violates the Fourteenth
Amendment because it fails to follow the dictates of Article II, Section
28 of the Tennessee Constitution and the Tennessee Horizontal Property
Act.”) (“Under Tennessee law, ownership is not a factor to be used in
classifying residential condominiums for tax purposes.”), p. 12 (“The
1992 Tax Assessment does not comply with the dictates of the Horizontal
Property Act.”), pp. 13-14 (“By considering the ownership in classifying

(Cont'd)

10

These arguments ignore the settled rule that a state’s highest
court is the ultimate authority as to the construction of its
constitution and statutes. Addington v. Texas, 441 U.S. 418, 99
S. Ct. 1804, 60 L. Ed. 2d 323 (1979); In re Murchison, 349
U.S. 133, 75 S. Ct. 623, 99 L. Ed. 2d 942 (1955).

Accordingly, to the extent the petition is founded upon an
argument that the decision of the Tennessee Supreme Court in
this case is not in accordance with Tennessee law, the same
does not present a reviewable issue to this Court. /d.

By arguing that the classification approved by the
Tennessee Supreme Court is not in accordance with Tennessee
law, the petitioner in this case reveals the deeper flaw in its
equal protection argument: once the classification is made, the
petitioner is treated exactly like all other owners of multi-unit
rental apartments or condominiums. The petitioner does not
argue that the classes themselves violate equal protection, but
simply argues that it has been erroneously classified.

(Cont’d)

the Units, the Tennessee Supreme Court improperly classified and
approved an unequal tax assessment scheme on absolutely identical
properties.”), p. 14 (“The decision by the Tennessee Supreme Court
approving the 1992 Tax Assessments based on this distinction violates
... Tennessee law... .”) (“The Tennessee Supreme Court’s argument
regarding the ‘constitutional intent’ of Article II, Section 28 ignores the
clear language of Article II, Section 28.”), pp. 18-19 (“The Tennessee
Supreme Court found that ownership of the property and whether the
property was income-producing to be determinative factors in the
classifying and assessing different taxes on identical condominium units
despite no legal authority to support this finding.”), p. 19 (“The 1992
Tax Assessment is improper. The Tennessee Supreme Court relied upon
factors that are not supported or mandated by the Tennessee Constitution
or applicable statutes.”) (“As set forth above, the Tennessee Supreme
Court’s decision fails to comply with Tennessee law and arbitrarily taxes
owners of absolutely identical condominium units differently.”).

Chee oe ee eee aa ae

1]

The petitioner does not argue that members of the same
class are receiving disparate treatment. It also does not argue
that the establishment of a higher rate of assessment for
industr: 4] or commercial property is a violation. The petitioner’s
argument is really a question of the appropriateness of the
classification it has been assigned. When viewed in this light,
the question purportedly presented for review in this case
€vaporates, leaving only a pure matter of state law.

IV.

THE EQUAL PROTECTION ISSUE SHOULD NOT BE
CONSIDERED AS IT WAS NOT SQUARELY BRIEFED
AND ARGUED AT ANY TIME WHEN THE CASE WAS
ON APPEAL, BUT NONETHELESS WAS ADDRESSED

BY THE TENNESSEE SUPREME COURT IN ITS
OPINION.

The equal protection issue in this case should not be
considered at this time because it was not squarely briefed or
argued while the case was being appealed from the trial court
to the intermediate appellate court and from that court to the
State supreme court, but rather, was never addressed in any of
the decisions of the courts below until the case was on second-

tier appellate review in the state’s high court. Pet. App. A, p.
2a, n. 1, pp. Sa-8a.?

This case was tried on a Stipulation of facts in the trial
court, and that stipulation was entered into at a time when the
focus of the litigation was upon questions regarding the

3. The petitioner did allege an equal protection violation in its
original complaint. However, that allegation appears with a laundry list
of other alleged state and federal constitutional violations, the remainder

of which were never pursued in the litigation. Pet. App. F, pp. 49a-50a,
Ti 14-17.

12

construction and interpretation of the Tennessee system of
classification and assessment as embodied in its constitution
and laws. If an equal protection issue arising from the
constitutional and statutory provisions for the classification and
assessment of condominium property in Tennessee is going to
be addressed by this Court, it should only be done in a case
where that was the primary issue being litigated from the outset
of the proceedings; rather than where it was not addressed by
any court until the case was on appeal. If this Court is inclined
to consider this issue, it would be better to do so only after it
has been more thoroughly developed in the courts of the state,
under the various factual variations which may arise from time
to time and from one condominium complex to the next, in
light of the fundamental question of construction and
interpretation which is now the settled law as articulated by
the state’s highest court.

13
CONCLUSION

For the foregoing reasons, and others which may appear to
the Court, the petition for writ of certiorari filed in this case
should be denied.

Respectfully submitted,

DAVID A. STUART

Counsel of Record

STUART & VAN RIPER

Attorney for Respondents
Anderson County, Tennessee,
Patsy Stair, Trustee, and

Owen K. Richardson, Tax Assessor
300 Market Street

Clinton, TN 37716

(423) 457-6414

Of Counsel:

DAVID S. CLARK

County Attorney for Respondents
DAVID S. CLARK & ASSOCIATES
ANDERSON COUNTY

166 Fairbanks Rd.

Oak Bridge, TN 37830

(423) 482-3933

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1510%3A2. Public record. Not legal advice.