IRC Cliff Lake, LLC v. Cnty. of Dakota

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IRC Cliff Lake, L.L.C., Petitioner, v. County of Dakota, Respondent, SUP II Diffley Marketplace, LLC et al., Intervenors.

No. 19HA-CV-21-1252

Tax Court of Minnesota, Regular Division, Dakota County

June 6, 2023

This matter came before the Honorable Jane N. Bowman, Chief Judge of the Minnesota Tax Court, on Petitioner's motion to compel.

Gauri S. Samant, Laura J. Wagner, and Thomas R. Wilhelmy Fredrikson &Byron, P.A., represent Petitioner IRC Cliff Lake, L.L.C.

Suzanne W. Schrader, Assistant County Attorney, represents Respondent Dakota County.

Gregory N. Arenson, Parker Daniels Kirbort LLC, represents Intervenors SUP II Diffley Marketplace, LLC and SUP II Diffley Marketplace II, LLC.

Kyle P. Hahn and Creig Andreasen, Gurstel Law Firm, P.C. represent Intervenors Great Bear PA Investment, LLC and Great Bear DSP Investment, LLC.

ORDER ON MOTION TO COMPEL DISCOVERY

This matter concerns the market value of an income-producing property located at 1960 Cliff Lake Road, Eagan, Minnesota. By way of a motion to compel, Petitioner IRC Cliff Lake ("IRC") seeks certain income and expense information concerning various third-party properties, including Intervenors'. Intervenors oppose the motion; the County states it will comply with an order requiring production, but asks that any information produced not be subject to dissemination restrictions exceeding those that already apply to the requested income and expense information.

Now, therefore, upon all the files, records, and proceedings herein, the court makes the following:

ORDER

1. Petitioner's motion to compel is denied without prejudice.

2. The parties shall jointly contact the Court Administrator to set up a pretrial conference call to schedule the outstanding deadlines.

IT IS SO ORDERED.

MEMORANDUM

JANE N. BOWMAN, CHIEF JUDGE

I. Introduction

The Minnesota Government Data Practices Act ("Act") defines certain real-property income and expense information maintained by assessors as "income property assessment data" and protects such data from public dissemination by classifying it as "private or nonpublic." Minn. Stat. § 13.51, subd. 2 (2022). Minnesota law also provides, however, that "[a]ssessor's records ... shall be made available" to a property tax petitioner and "shall not be excluded from discovery or admissible evidence on the grounds that the[y] ... are confidential or classified as private." Minn. Stat. § 278.05, subd. 3 (2022). Thus, although Minnesota law protects income property assessment data as private, it simultaneously mandates the disclosure of assessor's records despite their possible status as private. To the extent that "income property assessment data" and "assessor's records" refer to the same items, the two statutes are in conflict.

We hold that the term "assessor's records" refers to all materials in an assessor's possession pertaining to the subject property, inclusive of any information about separate properties even if qualifying as "income property assessment data." "Assessor's records" does not extend to information about separate properties unless that information is contained within "assessor's records" for the subject property.

II. Factual and Procedural Background

A. IRC's Motion to Compel Discovery

By means of formal, written discovery and a subsequent motion to compel,^[1] Petitioner IRC:

seeks to compel [from the County] discovery of the unredacted and confidential versions of ACE Sheets^[2] relating to the sale of 13 multi-tenant retail properties as well as income, expense, and lease/rental data relating to 5 multi-tenant retail properties [all owned by third parties].^[3]

IRC argues it is entitled to these two categories of data-(1) ACE Sheets and (2) income and expense information for third-party properties-because it notified each record owner of its requests to the County, although a copy of the notice was not initially provided to the court.^[4] While the County produced public portions of the requested documents, it redacted certain income property assessment data.^[5] The County redacted the materials as constituting "income property assessment data" protected from public dissemination by Minnesota Statutes section 13.51, subd. 2, that it may not disclose to IRC without a court order.^[6] See G&I IX OIC LLC (G&I Oracle) v. Cnty. of Hennepin, 979 N.W.2d 52, 62 (Minn. 2022) ("[A]s guardian of ... nonpublic income property assessment data, the County is required by section 13.51 to object to their disclosure."). The County contended that this court may not order disclosure until after the court completes the balancing test found in Minn. Stat. § 13.03, subd. 6 (2022).^[7] See Minn. Stat. § 13.51, subd. 4 ("Upon request by a party to a responsible authority . for legal discovery of income property assessment data, . the requesting party shall notify the owner of record of the property."); 1300 Nicollet, LLC v. Cnty. of Hennepin, No. A22-0671, 2023 WL 3486678 (Minn. May 17, 2023) (noting the balancing test must be employed after objection by a county).

This court concluded that IRC must comply with section 13.51, subdivision 4.^[8] As such, this court ordered that IRC must, "provide the record owners of data with (a) notice pursuant to Minn. Stat. § 13.51, subdivision 4, that IRC Cliff Lake seeks discovery of their information cognizable as income property assessment data and (b) a copy of [the] Order," ^[9] which IRC did.^[10] The court also required the parties to file supplemental memoranda "addressing the scope of what constitutes 'assessors records'"; and set the matter for a continued hearing on March 3, 2023.^[11]

In response, two sets of Intervenors came forward with objections, SUP II Diffley Marketplace, LLC and SUP II Diffley Marketplace II, LLC (the "Diffley Intervenors"), and Great Bear PA Investment, LLC and Great Bear DSP Investment, LLC (the "Great Bear Intervenors").^[12] The court held the continued hearing, whereby it heard arguments from the parties and Intervenors concerning the scope of the term "assessor's records," and whether IRC should be allowed to obtain its requested discovery materials. The court also granted the Intervenors the opportunity to submit factual affidavits in support of their arguments; on March 10, 2023, the Diffley Intervenors did.^[13]

III. Pertinent Statutes

This case requires us to examine the relationship between two statutes. In 1980, the Legislature enacted a provision addressing "assessor's records," see Act of Apr. 3, 1980, ch. 443, § 3, 1980 Minn. Laws 270, 271 (codified at Minn. Stat. § 278.05, subd. 3 (2022)), which currently provides in part:

Assessor's records; evidence. Assessor's records ... shall be made available to the petitioner . and may be offered at the trial . and shall not be excluded from discovery or admissible evidence on the grounds that the[y] . are confidential or classified as private data on individuals..

Minn. Stat. § 278.05, subd. 3 (2022). We refer to this provision as "Subdivision 3."

One year later, in 1981, the Legislature added to the Data Practices Act a provision addressing assessor's data, see Act of May 29, 1981, ch. 311, § 30, 1981 Minn. Laws 1427, 1438 (codified as amended at Minn. Stat. § 13.51, subd. 2 (2022)), which classifies certain income, expense, and occupancy information "concerning income [producing] properties" as "private or nonpublic data." Minn. Stat. § 13.51, subd. 2. We refer to this provision as the "Assessor's Data Statute." Generally, a person may obtain protected income property assessment data from a county through discovery only if the person demonstrates that disclosure is warranted under the Act's two-part balancing test by showing: (1) that the data are discoverable under the rules of evidence and civil procedure; and, if so, (2) that "the benefit to the party seeking access to the data outweighs any harm to the confidentiality interests" of persons supplying, maintaining, or identified in the data. Minn. Stat. § 13.03, subd. 6 (setting forth the "Balancing Test")^[14]; EOP-Nicollet Mall, L.L.C. v. Cnty. of Hennepin, 723 N.W.2d 270, 272-76 (Minn. 2006) (holding that where petitioner sought protected assessor's data concerning third-party properties, application of the Act's Balancing Test was mandatory).

IV. Principal Issue Presented

Discovery requests for both "assessor's records" under Subdivision 3 and "income property assessment data" under the Assessor's Data Statute are subject to the Balancing Test. 1300 Nicollet, 2023 WL 3486678, at *6. Critically, however, Step 2 of the test is applied differently to assessor's records.

Under Subdivision 3, assessor's records "shall be made available to the petitioner" even if they are confidential. Minn. Stat. § 278.05, subd. 3 (emphasis added). Consequently, if assessor's records are found to be discoverable under the rules of evidence and civil procedure during Step 1, confidentiality may not justify nondisclosure during Step 2 (although it may be relevant to the issuance and terms of a protective order). 1300 Nicollet, 2023 WL 3486678, at *6. The text of Subdivision 3 effectively prohibits a court weighing confidentiality during Step 2. Under the Assessor's Data Statute, in contrast, requests for "income property assessment data" found to be discoverable during Step 1 may nevertheless be denied during Step 2 if the confidentiality interests of persons supplying, maintaining, or identified in the data outweigh the petitioner's interest in obtaining the data. EOP, 723 N.W.2d at 280. To the extent that "assessor's records" and "income property assessment data" refer to the same items, the two statutes are in conflict (because they require materially different applications of Step 2). The tension is well illustrated by the ...