Pan Pacific v. Multnomah Co.

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IN THE MAGISTRATE DIVISION OF THE OREGON TAX COURT Property Tax PAN PACIFIC RETAIL PROPERTIES INC., Plaintiff, v. MULTNOMAH COUNTY ASSESSOR, Defendant. ) ) ) ) ) ) ) ) ) No. 000968C DECISION Plaintiff s appeal seeks a value reduction for the 1999-00 tax year. The appeal was filed directly with this court without a prior appeal to the County Board of Property Tax Appeals (board). The case management conference scheduled for October 18, 2000, was converted to a hearing to explore the issues of good and sufficient cause and estoppel. Plaintiff was represented by Todd Liebow, MAI. Mr. Roger Shirley, General Manager of plaintiff s Oregon properties, testified for the plaintiff. Defendant appeared through Messrs. Sanderman and Feinstein, both of whom are appraisers with the county assessor s office. STATEMENT OF FACTS The subject property is a commercial building in Gresham, Oregon, owned and operated by the plaintiff and occupied by several commercial tenants (a restaurant, an athletic club and a grocery store). Tenant improvements were made to at least a portion of the property at a cost, according to Mr. Shirley, of just under $500,000. The county increased the real market value of the buildings from the previous tax year by roughly $2.5 M, from $2,390,900 to $4,878,600, as reflected on the annual property tax statement. The tax statement was mailed by the assessor s office to plaintiff s corporate DECISION 1 headquarters in Vista, California, in mid-October, 1999. Corporate headquarters forwarded the tax statement to Mr. Shirley in Oregon in late October or early November. Mr. Shirley noticed the significant increase in value and phoned the assessor s office at the number appearing on the tax statement to inquire about the change. He eventually spoke with Mr. Feinstein, who explained that the increase was due to a reevaluation triggered by the tenant improvements. Mr. Feinstein followed up with a written explanation in a document identified at the top as a Memo. (Ptf s Complaint, at 3). The Memo is dated November 23, 1999, and reads in its entirety as follows: The 1999 roll value for the above property in Gresham was reevaluated and exception value applied based upon tenants, Gold s Gym and Chang s Mongolian Grill improvements that had not previously been noted in the county records. The value was based upon an Estimated Income Approach and also a Marshall & Swift calculated Cost Approach. Also noticed was the 2/1/98 sale of the subject property for $6,185,000 in Book/Page 98/024887. Id. The evidence is conflicting as to whether the Memo was sent unsolicited or at the request of Mr. Shirley. After speaking with the county, and receiving its Memo in the latter part of November, Mr. Shirley contacted his corporate headquarters in California and asked them how the company would like him to proceed in challenging the value. Mr. Shirley wanted to know if the company had a formal process for appealing property tax values. Mr. Shirley testified that by the time he got an answer from headquarters the deadline for appealing to the county board had passed. When asked how long it took to get a response from headquarters, Mr. Shirley testified that there was a five-week delay between his inquiry and the response from headquarters. Of course the relevant time period overlaps the Christmas holidays. Mr. Shirley was advised by headquarters to contact the local tax consultant knowledgeable in this area and pay that person to pursue the appeal. Mr. Shirley then hired Mr. Liebow to look into the matter. It would appear that DECISION 2 Mr. Liebow acted promptly, but he was not hired until early or mid-January. The board deadline was December 31. Mr. Liebow contends that although the letter from the county to Mr. Shirley in November is labeled a Memo, it is in truth more appropriately characterized as legal advice and was taken as such by Mr. Shirley. Mr. Liebow notes that the words Multnomah County Appraisal Division appear at the upper right hand corner and he argues that the tenor of the document creates the impression of finality, which, he says, led Mr. Shirley to conclude there was no point in appealing. COURT'S ANALYSIS Because plaintiff did not pursue the statutory right of appeal by petitioning the county board before appealing to the court, plaintiff must either satisfy the provisions of ORS 305.288 or prevail on its estoppel claim. Seifert v. Dept. of Rev., 14 OTR 401 (1998). Since plaintiff has placed primary reliance on the estoppel argument, the court will begin with that issue. Estoppel There are three factors that must be established to succeed in a claim of estoppel: (1) misleading conduct (2) good faith reliance on that conduct, and (3) injury to the party claiming estoppel. Society of St. Vincent DePaul v. Dept. of Rev., 14 OTR 47, 50 (1996); Sayles v. Dept. of Rev., 13 OTR 324, 328 (1995); Portland Adventist Hospital v. Dept. of Rev., 8 OTR 381 (1980). A taxpayer claiming estoppel against the state must show "proof positive" that they were misled by the state. Johnson v. Tax Commission, 248 Or 460, 463-464, 435 P2d 302 (1967). Mr. Liebow argues that Mr. Feinstein s November 23, 1999, Memo is misleading DECISION 3 and that Mr. Shirley reasonably relied upon that misinformation to his detriment, missing the opportunity to appeal to the board. Specifically, plaintiff contends: Roger Shirley, General Manager of Oregon Properties for the taxpayer, testified that he had relied upon the assessor s response to his inquiry as an authoritative statement that the Assessor s value change was an appropriate implementation of the directives of our current tax law, under Measure 50; and further Mr. Shirley testified that he reasonably concluded that the Assessor s response led him to believe * * * there was no opportunity for remedy. (Memorandum of Todd Liebow, October 30, 2000, at 2.) In support of the estoppel claim, Mr. Liebow relies on Liquid Air, Inc. v. Dept. of Rev., 8 OTR 159, 168 (1979). Liquid Air is a good case for plaintiff to rely on because it involved written correspondence from the county in the form of a value notice that the court found to be misleading. However, for the reasons set forth below, it is not controlling in this case. The Liquid Air case involved an omitted property assessment in 1977 concerning the 1974 tax year, where plaintiff failed in 1974 to file the annual personal property tax return and an application for a free port exemption. The county issued a notice in May 1974 stating that the assessed value of plaintiff s merchandise would be set at roughly one-half million dollars and that the resulting tax would be certified and collected unless the taxpayer immediately approved the county s value numbers. Approval would apparently forestall collection for several months until the usual fall tax billing. The county s number was fairly consistent with the assessed value for the three previous tax years after allowance for the free port exemption and in fact was arrived at by trending the assessed value for the previous year, which included the exemption. Id. at 163 and 170. When the county issued the omitted property notice in 1977 it was too late for plaintiff to apply to the DECISION 4 Director of the Department of Revenue for hardship relief under ORS 307.475. Id. at 162. Plaintiff s witness, the regional controller, successfully argued that he assumed the half million dollar figure in the 1974 value notice included the free port exemption, that the number seemed reasonable when compared to the inventory on the company books and allowing for an exemption of 65 percent of such inventory, and that the peremptory tone of the 1974 notice led him to conclude that if he did not immediately approve the assessment * * * the tax collector would forthwith proceed to collect the tax based on the assessment [rather than collecting it several months later in the normal course]. Liquid Air, 8 OTR at 164-65. The court found that the notice from the county assessor s office was misleading and that it prevented plaintiff from timely applying for hardship relief under ORS 307.475 (for failure to timely apply for the exemption in 1974). Liquid Air, 8 OTR at 170, 173-74. The reason that the Liquid Air case is not controlling in this case is because here Mr. Shirley did not rely on the county s Memo and consciously decide not to act. The evidence shows that neither the conversation between Mr. Shirley and Mr. Feinstein nor the follow-up Memo had the effect of dissauding Mr. Shirley from pursuing an appeal to the board. Whatever impressions Mr. Shirley may have been left with after communicating with the county, in the end he determined an appeal was in order and he contacted his corporate headquarters in November to inquire as to company policy related to pursuing such a course of action. This was well before the December 31 board deadline and only shortly after interacting with the county. It was the five week delay from headquarters that caused plaintiff to miss the deadline. Thus, the question of whether the county s communication was misleading is irrelevant because the requisite reliance is DECISION 5 missing. ORS 305.288 - Good and Sufficient Cause A taxpayer who fails to pursue the statutory right of appeal as set out in ORS 309.100 and 305.275 may nonetheless file an appeal with the Tax Court under ORS 305.288. However, there are limitations to the court s authority to grant relief. In the case of nonresidential property, which we deal with in this case, the taxpayer must show that there was a good reason for missing the board appeal process.1 The reason must rise to the level of good and sufficient cause , which is defined in the statute as an extraordinary circumstance that is beyond the control of the taxpayer, or the taxpayer s agent or representative, and that causes the taxpayer, agent or representative to fail to pursue the statutory right of appeal[]. ORS 305.288(5)(b)(A). Moreover, good and sufficient cause [d]oes not include inadvertence, oversight, lack of knowledge, hardship or reliance on misleading information provided by any person except an authorized tax official providing the relevant misleading information. ORS 305.288(5)(b)(B). Thus, the circumstances must be both extraordinary and beyond the taxpayer s control. The analysis generally considers whether the taxpayer knew that it had a right to appeal, and intended to appeal, but was prevented from doing so because of some extraordinary circumstances beyond its control. /// The court s earlier analysis under the estoppel issue applies with equal force to the good and sufficient cause analysis and similarly serves to defeat plaintiff s claim. Mr. 1 For residential property (e.g., a single-family dwelling, a condominium, or a multifamily dwelling of not more than four units) the case will be heard on the merits if the plaintiff alleges an error in value of at least 20 percent. ORS 305.288(1). DECISION 6 Shirley testified that after talking with the county and reading the Memo, he continued to be concerned about the increased assessment and felt an appeal was in order. However, by the time he heard back from headquarters the board deadline had passed. Again, there was a five week period involved in waiting for the response from California. It was the delay from corporate headquarters and not the information in the county Memo that caused plaintiff to miss the board appeal deadline. The delay was critical. CONCLUSION The court is not persuaded that the evidence demonstrates plaintiff failed to pursue the statutory right of appeal by petitioning the county board before the statutory deadline by reason of good and sufficient cause. ORS 305.288(3). Nor does the evidence show that plaintiff reasonably relied upon misleading information from the assessor s office and as a result opted not to appeal to the board. Accordingly, there is no estoppel. Since there is neither good and sufficient cause nor estoppel the court cannot proceed to the merits of the case. Plaintiff s Complaint is dismissed. Dated this _____ day of December, 2000. ________________________________________ DAN ROBINSON MAGISTRATE IF YOU WANT TO APPEAL THIS DECISION, FILE A COMPLAINT IN THE REGULAR DIVISION OF THE OREGON TAX COURT, FOURTH FLOOR, 1241 STATE ST., SALEM, OR 97310. YOUR COMPLAINT MUST BE SUBMITTED WITHIN 60 DAYS AFTER THE DATE OF THE DECISION OR THIS DECISION BECOMES FINAL AND CANNOT BE CHANGED. THIS DOCUMENT WAS SIGNED BY MAGISTRATE DAN ROBINSON ON DECEMBER 6, 2000. THE COURT FILED THIS DOCUMENT ON DECEMBER 6, 2000. DECISION 7

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