CROMWELL LOUISVILLE ASSOCIATES, LIMITED PARTNERSHIP V. 204. RAYMOND CLUTTER V. COMMONWEALTH OF KENTUCKY
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RENDERED : SEPTEMBER 23, 2010
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2008-SC-000644-DG
CROMWELL LOUISVILLE ASSOCIATES,
LIMITED PARTNERSHIP
V.
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APPELLANT
ON REVIEW FROM COURT OF APPEALS
CASE NO . 2007-CA-001128-MR
JEFFERSON CIRCUIT COURT NO . 05-CI-002545
COMMONWEALTH OF KENTUCKY,
JEFFERSON COUNTY PROPERTY
VALUATION ADMINISTRATOR
APPELLEE
OPINION OF THE COURT BY JUSTICE SCOTT
AFFIRMING
I. Introduction
This is an appeal from an opinion of the Court of Appeals reversing the
Jefferson Circuit Court, which in turn reversed the Kentucky Board of Tax
Appeals . The Board of Tax Appeals dismissed Appellant's challenge to the
Jefferson County Property Valuation Administrator's (PVA) 2001 property value
assessment as untimely under KRS 133 .120.
Because Appellant, Cromwell Louisville Associates, Limited Partnership,
failed to comply with the administrative procedures mandated by KRS 133.120,
we hold that the trial court erroneously reversed the Board of Tax Appeals'
decision. We, therefore, affirm the decision of the Court of Appeals and remand
as
this matter to the trial court with instructions that the court dismiss this
action in accordance with the decision of the Board of Tax Appeals .
II. Background
Because the parties stipulated most of the relevant facts and this case
centers on statutory interpretation, we find a lengthy recitation of the facts
unnecessary. This case originated from an administrative appeal based on the
PVA's alleged overvaluation of Appellant's two commercial lots for the 2001 tax
year. According to Appellant, the PVA valued its property at $3,040,600 for the
1998, 1999, and 2000 tax years. This amount ballooned to $7,733,640 for the
2001 tax year .' During the time the property was in receivership, the receiver
paid an allegedly inflated 2001 property tax.2
Appellant first contested the PVA's 2001 tax assessment on April 30,
2002, claiming that the PVA drastically overvalued its property.3 A conference
between Appellant's counsel and a PVA representative failed to produce an
agreeable solution regarding the 2001 tax assessment . Appellant subsequently
filed an appeal to the Jefferson County Board of Assessment Appeals; however,
the Board declined to address the 2001 tax assessment . Consequently,
Appellant appealed the decision to the Kentucky Board of Tax Appeals .
1 That assessment figure was the same for the 2002 and 2003 tax years .
The receiver, CB Commercial-Nicklies, Inc., paid the $94,153.20 2001 tax in
January 2002 .
2
3 Appellant apparently regained control of the property sometime after the receiver
paid the 2001 property tax and before April 29, 2002; although the precise time is
unclear.
During the pendency of the administrative appeal to the Kentucky Board
of Tax Appeals, both parties agreed that if the Board found in Appellant's favor,
the stipulated amount that Appellant overpaid in state and local tax for 2001
was $67,327 .80 . 4 Ultimately, the Kentucky Board of Tax Appeals declined to
rule on Appellant's challenge to the 2001 assessment, finding that KRS
133 .120 required Appellant to challenge the 2001 assessment during the 2001
inspection period . 5
4 The parties reached a settlement for the 2002 and 2003 tax years . For those tax
years, the fair cash value of the property was reduced to $2,100,000 . These tax
years are not before us.
5For a contextual frame, we briefly detail the steps a taxpayer undertakes when
seeking to challenge a property assessment:
Notice : "If the property valuation administrator assesses any property at a greater
value than that listed by the taxpayer or assesses unlisted property, the property
valuation administrator shall serve notice on the taxpayer of such action . The
notice shall be given by first-class mail or as provided in the Kentucky Rules of Civil
Procedure." KRS 132 .450(4)
Step 1 : Conference with the PVA or its deputy during the inspection period. KRS
133.120(1)(a)
a. Inspection period held the first thirteen (13) days of May, beginning with a
Monday. KRS 133 .045(1)
b. During the week prior to the inspection period, the PVA shall publish, once, a
display type advertisement containing, inter alia,
i . dates of the inspection period
ii. the "fact that any taxpayer desiring to appeal an assessment shall first
request a conference with the property valuation administrator to be
held prior to or during the inspection period ." KRS 133 .045(2)(d)
(emphasis added) .
iii. Instructions on the manner in which an aggrieved taxpayer may file an
appeal after the conference .
Step 2: Appeal to County Board of Assessments . KRS 133 .120(2)(a)
a. No later than one workday following the conclusion of the inspection period
The Jefferson Circuit Court thereafter reversed, finding that KRS
133 .120 did not require the conference and appeal in the same year. The Court
of Appeals then reversed, construing KRS 133 .120 as requiring Appellant to
contest the 2001 property assessment in 2001 . Consequently, the court found
that Appellant failed to comply with the mandatory administrative appeals
procedures, preventing it from seeking a refund under KRS 134.590 for
overpayment of taxes.
We also hold Appellant did not comply with the statutory requirements
contained in KRS 133 .120 and, therefore, affirm the Court of Appeals.
III. Analysis
As Benjamin Franklin stated, "in this world nothing can be said to be
certain, except death and taxes ." Experience-and we might add, agecertainly confirm his wit and wisdom. In this Commonwealth, taxpayers can
certainly expect annual property assessments, with taxes due near the end of
every year. KRS 134 .01 S . However, in this case, what is less certain is the
applicable time period each taxpayer has to challenge this annual assessment.
Kentucky provides a statutorily codified right to inspect the real property
tax rolls during the first thirteen days of May. KRS 133.045(l) . In the case of
Step 3: Appeal to the Kentucky Board of Tax Appeals. KRS 133 .120(10)
Step 4: Appeal to the appropriate County Circuit Court . KRS 13B, KRS 131 .370
Step 5: Appeal to the Kentucky Court of Appeals as a matter of right .
Step 6: Seek discretionary review in the Supreme Court of Kentucky.
an overvalued property assessment, the General Assembly authorized a refund
of the resulting overpaid taxes . IRS 134 .590 . Notably, the refund provision
contains an important condition precedent: a taxpayer must exhaust the
administrative remedy procedures before seeking a refund . IRS 134 .590(2),
(6) . With this framework in mind, we turn to Appellant's arguments .
Appellant's arguments hinge on the applicable time period in which a
taxpayer must protest the PVA's property assessment. Appellant contends that
h.RS 133 .120(l)(a)'s reference to the "inspection period," defined by IRS
133.045(1), restricts only the period of days, not the year, the initial conference
and subsequent appeal challenging the property assessment can occur. KRS
133 :120(1)(a) reads:
Any taxpayer desiring to appeal an assessment on real property
made by the property valuation administrator shall first request a
conference with the property valuation administrator or his or her
designated deputy. The conference shall be held prior to or during
the inspection period provided for in R.RS 133 .045 .
IRS 133 .045(1) provides:
The real property tax roll being prepared by the property valuation
administrator for the current year, shall be open for inspection in
the property valuation administrator's office for thirteen (13) days
beginning on the first Monday in May of each year and shall be
open for inspection for six (6) days each week, one (1) of which
shall be Saturday . . .
(emphasis added) . According to Appellant, the applicable year restriction for
the initial conference and appeal is the two year statute of limitations found in
KRS 134 .590, the ad valorem refund statute . That statute reads, in pertinent
part:
(2) No state government agency shall authorize a refund unless
each taxpayer individually applies for a refund within two (2) years
from the date the taxpayer paid the tax. Each claim or application
for a refund shall be in writing and state the specific grounds upon
which it is based. Denials of refund claims or applications may be
protested and appealed in accordance with KRS 131 .110 and
131 .340 . No state government agency shall refund ad valorem
taxes, except those held unconstitutional, unless the taxpayer has
properly followed the administrative remedy procedures
established through the protest provisions of KRS 131 .110, the
appeal provisions of KRS 133.120, the correction provisions of KRS
133 .110 and 133 .130, or other administrative remedy procedures.
(6) No refund shall be made unless each taxpayer individually
applies within two (2) years from the date payment was made . If
the amount of taxes due is in litigation, the taxpayer shall
individually apply for refund within two (2) years from the date the
amount due is finally determined . Each claim or application for a
refund shall be in writing and state the specific grounds upon
which it is based. No refund for ad valorem taxes, except those held
unconstitutional, shall be made unless the taxpayer has properly
followed the administrative remedy procedures established through
the protest provisions ofKRS 131 .110, the appeal provisions ofKRS
133.120, the correction provisions ofKRS 133.110 and 133.130, or
other administrative remedy procedures.
KRS 134 .590(2), (6) (emphasis added) .
Appellant synthesizes these three statutes by contending that a taxpayer
is in compliance with all the administrative procedures relating to assessment
appeals, if he requests the initial conference (KRS 133 .120(1)(a)) during the
first thirteen days of May (KRS 133 .045(1)), and within two years of paying the
disputed taxes (KRS 134 .590(2), (6)) . Thus, Appellant contends it complied
with all applicable statutes for the 2001 property assessment by requesting an
initial KRS 133.120(1)(a) conference the next year on April 30, 2002 .
Furthermore, Appellant claims that if we do not reverse the Court of Appeals,
taxpayers will only have thirteen days, during the inspection period, to
challenge improper property tax assessments .
In its response the PVA adopts the Court of Appeals' reasoning. It avers
that the only reasonable reading of the assessment appeal procedures defined
in KRS 133 .120, which references KRS 133.045's current year language, leads
to the conclusion that each tax year stands on its own . Additionally, the PVA
argues that KRS 134 .590 is not a substitute for KRS 133.120 . Consequently,
the PVA argues that Appellant's failure to properly perfect its appeal of the
2001 tax bill in 2001 is fatal.
A. Statutory Construction : Plain Language of the Statute
When interpreting a statute we adhere to the general and oft-repeated
maxim that, "[o]ur main objective is to construe the statute in accordance with
its plain language and in order to effectuate the legislative intent." Cabinetfor
Families and Children v. Cummings, 163 S.W.3d 425, 430 (Ky. 2005) .
A simple reading of KRS 133.120(1)(a)'s explicit reference to KRS 133.045
reveals the plain language requiring the taxpayer to request a conference
during the inspection period. The inspection period, KRS 133 .045(1), is
explicitly framed in terms of the current year. Only the present year's tax roll is
available for examination during the inspection period . As the Board of Tax
Appeals appropriately stated, the taxpayer must request a conference during
the inspection period for the "current year" tax rolls. Thus, in construing the
statute's plain language to effectuate the legislative intent, we are unable to
hold that the General Assembly intended the inspection period to be limited to
only the stated period of days, and not the year, in which a taxpayer must
appeal an unresolved property assessment.
The above conclusion is bolstered when considering Appellant's
argument that the Court of Appeals' decision limits taxpayers to thirteen days
to challenge an improper property tax. 6 Appellant's argument ignores KRS
133 .120(9), a provision that allows a taxpayer, while disputing the assessment,
to pay the property taxes based on his estimate of the property's value (claimed
value), pending the resolution of the disputed property valuation. If the
valuation is more than the claimed value, the taxpayer pays the difference plus
the tax interest rate. The crucial factor within this provision is claimed value
provision.
Pursuant to KRS 133 .120(1) (d), the taxpayer presents the claimed value
of his property at the KRS 133.120(1)(a) conference. Consequently, in order for
this claimed value option to be available, the assessment conference must be
held during the same year; if the conference did not occur until the next tax
6 Notably, the inspection period for the 2001 tax year ended on June 29, 2001 .
This extension was presumably pursuant to the second sentence of KRS
133 .045(1), which allows the Department of Revenue to order a reasonable
extension of time for the inspection period of the tax roll.
year, the taxpayer would have no claimed value figure to use when paying
taxes while disputing the property valuation .
Therefore, we conclude that the plain meaning of KRS 133 .120(1) (a), with
its reference to the inspection period, mandates that the taxpayer request the
conference during the current tax year.
B. Statutory Interpretation : Avoid Absurd Results
We have long held "that a statute must not be interpreted so as to bring
about an absurd or unreasonable result." George v. Alcoholic Beverage Control
Bd., 421 S .W.2d 569, 571 (Ky. 1967) . Appellant's contention that KRS 133 .120
does not restrict the conference to the current tax year would bring, about such
an absurd result. When interpreting the statute without a year limit, the initial
conference may occur during the first thirteen days of any May.7 Based on this
reading, a taxpayer could theoretically request a conference with the PVA years
after the assessment in question, so long as it is within the inspection period .
Furthermore, under the compulsory language of KRS 133.120, the PVA would
have no choice but to attend and explain "the procedures followed in deriving
the assessed value for the taxpayer's property." KRS 133 Thus, as is
.
.120(1)(c)
evident in the above logic, construing the statute's timeframe for the conference
to a period of days without a limitation to the current year produces an absurd
result, something this Court has declined to allow. See Floyd v. Gray, 657
S .W .2d 936, 941 (Ky. 1983) (Leibson, J ., dissenting) ("We should not suppose
7 The inspection period defined by KRS 133.045(l) .
that the legislature intended to be intentionally illogical, nor should we
interpret the statute to bring about an obviously illogical result.") .
C . IRS 134 .590's Statute of Limitations Inapplicable
Appellant's proposed solution to the above quandary resulting from
construing the inspection period without a current year limitation is to import
the statute of limitations from the refund statute, KRS 134.590. Disregarding
the plain language of the statute and trying to take part of another statute to
extend the time line only perpetuates the absurdity. KRS 133.120 and
134 .590 apply to patently different situations : the former is applicable to
administrative proceedings for challenging the PVA's assessment of property
value, while the latter provides for refunds of ad valorem or unconstitutional
taxes .$ We recognize the fundamental distinction between a statute elucidating
all mandatory administrative procedures relating to the initial assessment and
the statute of limitations for applying for a refund, the ultimate remedy.
Consequently, we decline Appellant's invitation to misconstrue the
administrative procedures relating to the assessment statute .
Furthermore, the references to KRS 133 .120 within KRS 134 .590(2) and
(6) do not change the analysis; rather, it merely establishes a prerequisite to
applying for a refund, insuring taxpayers do not circumvent the administrative
procedures . Notably, KRS 133 .120(1) (a) does not refer to KRS 134 .590(2) or (6)
8 Although not dispositive, the title of each chapter is indicative of the clear
delineation between the chapters. KRS 133 is entitled, "Supervision, Equalization,
And Review Of Assessments ;" KRS 134 is entitled, "Payment, Collection, And
Refund Of Taxes."
for the time period within which a taxpayer must request a conference and
appeal. However, KRS 133 .120(1) (a) does explicitly reference KRS 133.045 for
the applicable time frame, which, as previously stated, unambiguously applies
a current year framework to the inspection period . We have oft-stated, "[w]e
are not at liberty to add or subtract from the legislative enactment."
Commonwealth v. Harrelson, 14 S .W.3d 541, 546 (Ky. 2000) . Accordingly, we
cannot subtract the reference to KRS 133 .045 from KRS 133 .120(1) (a), and
substitute KRS 134 .590(2) or (6) in its place.
D. Procedural Due Process
Appellant also contends that it has a constitutional right to a refund.
Appellant claims that it is entitled to obtain a pre-deprivation determination or,
alternatively, the Commonwealth must provide meaningful backward looking
relief to rectify any unconstitutional deprivation. McKesson Corp . v. Division of
Alcoholic Beverages and Tobacco, 496 U.S. 18 (1990) . Additionally, Appellant
contends that the Supreme Court of the United States has also held that states
may not "bait and switch" by holding out what plainly appears to be a postdeprivation remedy and then, after taxes are paid, declare no such remedy
exists. Reich v. Collins, 513 U.S. 106 (1994) . Appellant claims that this is
exactly what occurred when it was prevented from applying for a refund. We
disagree .
We addressed Appellant's first claim in regards to pre- and postdeprivation review above. As previously noted, KRS 133.120(9) permits the
taxpayer to pay property taxes based on the claimed value of his property,
pending a final valuation determination . Thus, there can be no deprivation for
taxes not yet paid . We also find Appellant's citation to Reich inapposite . In
that case, Georgia's tax refund statute clearly provided for refunds, yet the
Court found that Georgia reconfigured its scheme, unfairly, in midcourse to
prohibit taxpayers from receiving refunds for disputed taxes. Reich, 513 U .S.
at 110. In the present case, Appellant admits the statutory scheme governing
refunds has remained unchanged since 1992 . Thus, there is no "bait and
switch" in the refund statute. Appellant's claim of due process deprivation is
disingenuous, as we find that nothing unfairly constraining a taxpayer's right
to receive a refund . Simply put, the taxpayer must comply with the statutory
language, stated in KRS 134 .590, which requires the exhaustion of
administrative remedies before applying for a refund .
E. Other Assertions
The remainder of Appellant's arguments are alternative theories under
which KRS 134 .590's two year time frame is applicable to the assessment
appeal procedures of KRS 133 .120. Appellant's arguments however, collapse
with our finding that KRS 133 .120(1) (a)'s assessment conference and appeal
shall occur within the same tax year. Consequently, we succinctly discuss and
dismiss the remainder of Appellant's alternative arguments .
Appellant's general statutory construction argument again attempts to
combine two statutes that bear only a loose connection . We find this argument
unpersuasive for the reasons previously stated. Next, Appellant's argument
regarding the legislative history is unpersuasive, largely due to Appellant's
failure to include any legislative history supporting its assertions . Finally,
Appellant rehashes the argument that it exhausted its administrative remedies
under KRS 134 .590, entitling it to apply for a refund . As we found above,
Appellant failed to request the assessment conference pursuant to KRS
133.120(1)(a) during the same tax year, thereby failing to comply with KRS
133 .120. Consequently, Appellant cannot seek a refund under KRS 134 .590
as it did not exhaust its administrative remedies .
IV. Conclusion
For the above reasons, we affirm the Court of Appeals' decision and
remand this matter to the trial court with instructions that the court dismiss
this action in accordance with the decision of the Kentucky Board of Tax
Appeals .
Minton, C.J . ; Cunningham, Noble, Schroder, and Venters, JJ., concur .
Abramson, J., not sitting.
COUNSEL FOR APPELLANT:
Thomas J . Luber
Mitzi Denise Wyrick
Sara Christine Veeneman
Wyatt, Tarrant, Sv Combs, LLP
500 West Jefferson Street
Suite 2800
Louisville, KY 40202-2898
COUNSEL FOR APPELLEE:
Lawrence E. Osterhage
Jefferson County Attorney's Office
402 Republic Building
429 W. Muhammad Ali Blvd.
Louisville, KY 40202
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