CVS Corp. v. Monroe Cnty. Assessor

83 N.E.3d 1286

CVS CORPORATION, Petitioner,

v.MONROE COUNTY ASSESSOR, Respondent.

Cause No. 49T10-1605-TA-00011.

Tax Court of Indiana.

September 29, 2017

ATTORNEY FOR PETITIONER: PAUL M. JONES, JR., PAUL JONES LAW, LLC, Indianapolis, IN

ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR., ATTORNEY GENERAL OF INDIANA, WINSTON LIN, GREGORY P. GADSON, DEPUTY ATTORNEYS GENERAL, Indianapolis, IN

ATTORNEYS FOR AMICUS CURIAE: MARILYN S. MEIGHEN, MARJORIE K. RICE, BRIAN A. CUSIMANO, MONROE COUNTY BOARD OF COMMISSIONERS, Bloomington, IN

WENTWORTH, J.

The CVS Corporation ("CVS") challenges the Indiana Board of Tax Review's final determination upholding the Monroe County Assessor's assessments of its real property for the 2011 through 2013 tax years. Upon review, the Court affirms the Indiana Board's final determination.

FACTS AND PROCEDURAL HISTORY

The property at issue is a CVS store near Ellettsville, Indiana. (See Cert. Admin. R. at 693-97.) The Assessor originally determined the assessed value of the property as $1,401,700 for 2011; $1,391,600 for 2012; and $1,401,300 for 2013. (Cert. Admin. R. at 693-94.) Believing those values to be too high, CVS appealed them to the Monroe County Property Tax Assessment Board of Appeals ("PTABOA"). The PTABOA affirmed all of the assessments, and CVS appealed to the Indiana Board.

The parties agreed to an expedited review procedure before the Indiana Board based on stipulated evidence. (Cert. Admin. R. at 53-54, 71-72.) See also 52 IND. ADMIN. CODE 2-6-3(b) (2014) (listing expedited review procedures). The stipulated evidence consisted of the property record card, the 14^th edition of The Appraisal of Real Estate, the 2014-2015 Uniform Standards of Professional Appraisal Practice ("USPAP"), the parties' USPAP-compliant appraisal reports from certified appraisers, a report from the Assessor reviewing CVS's appraisal report, and the Indiana Board's records of two previous cases involving Monroe County CVS stores. (Cert. Admin. R. at 78-79, 157-58, 706-07.)

CVS's appraisal report, prepared by Sara Coers (the "Coers Report"), calculated the property's value using the sales-comparison and income approaches that incorporated a combination of national and regional data. (Cert. Admin. R. at 157-58, 222-75.) The Coers Report did not value the property using the cost approach, but rather used that approach only to calculate market rents under the income approach. (Cert. Admin. R. at 211-21, 224-26.) Ultimately, the Coers Report valued the property at $1,060,000 for 2011; $1,070,000 for 2012; and $1,130,000 for 2013. (Cert. Admin. R. at 275.)

The Assessor's appraisal report, prepared by Wayne Johnson (the "Johnson Report"), used all three approaches to value the property based exclusively on local data. (Cert. Admin. R. at 706-07, 845-46.) The Johnson Report reconciled the results of each approach, valuing the property at $1,475,000 for 2011; $1,500,000 for 2012; and $1,550,000 for 2013. (Cert. Admin. R. at 793, 819, 844-46.) The Assessor asked the Indiana Board to increase each years' assessed values to match the values contained in the Johnson Report. (Cert. Admin. R. at 1855.)

The Assessor also submitted a review of the Coers Report that criticized its choice of comparable properties and the methodology it employed. (See Cert. Admin. R. at 928-29.) It also criticized the Coers Report's underlying interpretations of Indiana's market value-in-use standard for valuing the property and asserted that the scope of comparable data should be limited to "national pharmacies."¹ (See Cert. Admin. R. at 928-29, 931, 933-34, 951-54.)

On March 28, 2016, the Indiana Board issued its final determination. As a threshold issue, it determined under Indiana Code § 6-1.1-15-17.2 that the Assessor bore the burden of proving the assessments were correct because the property's 2011 assessment increased more than 5% over the 2010 assessment. (See Cert. Admin. R. at 101 ¶ 58.) Furthermore, upon reviewing the stipulated evidence, the Indiana Board concluded that while each of the competing appraisals had shortcomings that detracted from their reliability, neither appraisal's flaws obliterated its probative weight completely. (See generally Cert. Admin. R. at 103-10 ¶¶ 64-89.)

The Indiana Board identified the central flaw in the Johnson Report as the relative lack of physical similarity between the properties it used as comparables and the CVS property. (Cert. Admin. R. at 103-04 ¶¶ 65-66, 69, 106 ¶ 73, 106-07 ¶ 77.) Regarding the Coers Report, the Indiana Board questioned its adjustments to comparable properties, its failure to relate those adjustments to the Ellettsville market or the CVS property, and its omission of the cost approach to value the property in contradiction to its own data. (Cert. Admin. R. at 108-10 ¶¶ 80, 85-88.) In the end, the Indiana Board found the Johnson Report more persuasive than the Coers Report, explaining "that Coers' lack of accounting for the local market detracts more from the reliability of [Coers'] opinions than Johnson's problems with physical comparability do from his." (Cert. Admin. R. at 111 ¶ 91.) Nonetheless, the Indiana Board determined that "[t]aken as a whole, the evidence better supports the current assessments than it does the values from Johnson's appraisal" and did not change the original assessments. (Cert. Admin. R. at 111 ¶ 93.)

CVS initiated this original tax appeal on May 11, 2016. The Court heard the parties' oral arguments on February 10, 2017. Additional facts will be supplied as necessary.

STANDARD OF REVIEW

The party seeking to overturn a final determination of the Indiana Board bears the burden of demonstrating its invalidity. Osolo Twp. Assessor v. Elkhart Maple Lane Assocs., 789 N.E.2d 109, 111 (Ind. Tax Ct. 2003). CVS must therefore demonstrate that the Indiana Board's final determination is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to constitutional right, power, privilege, or immunity; in excess of or short of statutory jurisdiction, authority, or limitations; without observance of procedure required by law; or unsupported by substantial or reliable evidence. See IND. CODE § 33-26-6-6(e)(1)-(5) (2017).

ANALYSIS

On appeal, CVS argues that the Indiana Board's final determination should be reversed for three reasons. First, CVS claims the final determination is contrary to law because the Indiana Board affirmed the assessments instead of determining that the property's 2011 value must revert to its 2010 assessed value under Indiana Code § 6-1.1-15-17.2. (Pet'r Br. at 5-6.) Second, CVS claims the final determination is not supported by substantial evidence because the Indiana Board did not select either appraisals' value determination. (Pet'r Br. at 3-4.) Third, CVS claims that the Indiana Board abused its discretion and was arbitrary and capricious because it found the Johnson Report more persuasive, contrary to the Indiana Board's previous decisions affirmed by this Court, involving similar properties, similar facts, similar arguments, and the same attorneys and appraisers.² (Pet'r Br. at 7-10). See also Monroe Cnty. Assessor v. SCP 2002 E19 LLC 6697, 77 N.E.3d 270, 271-72 (Ind. Tax Ct. 2017) (discussing the Indiana Board's administrative determination), appeal filed (Ind. 2017) (" CVS 2"); Monroe Cnty. Assessor v. SCP 2007-C-26-002, LLC, 62 N.E.3d 478, 479-80 (Ind. Tax Ct. 2016) (discussing the Indiana Board's administrative determination), review denied (" CVS 1").

I. Reversion

CVS first claims the final determination is contrary to law because the Indiana Board did not change the original 2011 assessment to equal the 2010 assessment as required by Indiana Code § 6-1.1-15-17.2(b). (Pet'r Br. at 4-6.) Indiana Code § 6-1.1-15-17.2 provides that if a property's assessment increases by more than 5% from one year to the next, the assessor

has the burden of proving that the assessment is correct ... in any appeals taken to the Indiana board of tax review or to the Indiana tax court. If a county assessor or township assessor fails to meet the burden of proof under this section, the taxpayer may introduce evidence to prove the correct assessment. If neither the assessing official nor the taxpayer meets the burden of proof under this section, the assessment reverts to the assessment for the prior tax year[.]

IND. CODE § 6-1.1-15-17.2(b) (2014). Compare with IND. CODE § 6-1.1-15-1(l) (2011) (indicating that the taxpayer generally bears the burden of demonstrating that a property tax assessment is incorrect) (amended 2012). The statute states two requirements that must be met before the reversion remedy must be applied: 1) the assessment must have increased at least 5% over the prior year, and 2) the burden to prove the property's correct assessed value has not been met by either party. I.C. § 6-1.1-15-17.2(a), (b).

Here, neither party disputes that the 2011 assessment was more than 5% above the 2010 assessment. (Pet'r Br. at 3; Resp't Br. at 8.) CVS contends that the reversion remedy must be applied because the Indiana Board concluded neither party met its burden of proof. (Pet'r Br. at 5-6; see also Cert. Admin. R. at 111 ¶ 93.)

The final determination acknowledges, contrary to CVS's claim that neither party made a prima facie case, that although both appraisal reports were flawed, both had some probative weight. (Cert. Admin. R. at 104-108 ¶¶ 68, 72, 76-77, 83, 110 ¶ 89; see also Pet'r Br. at 6.) The Indiana Board weighed the relative persuasiveness of each appraisal to determine that the totality of the evidence proved the assessments were correct. (Cert. Admin. R. at 109-11 ¶¶ 87, 89, 93.) Indeed, CVS admitted during oral argument that the Indiana Board had found that the Assessor met its burden of proof. (Oral Arg. Tr. at 34 ("CVS does agree that the [Indiana Board] was saying [ ] that the burden was met by the Assessor").) As a result, the reversion remedy cannot be applied because the final determination did not find the...