672 S.E.2d 150
JUSTICE BENJAMIN dissents and reserves the right to file a dissenting opinion.
Davis, Justice: (See footnote 1)
The appellant herein and petitioner below, the Foster Foundation (hereinafter
“the Foundation”), appeals an order entered September 6, 2007, by the Circuit Court of
Cabell County. In that order, the circuit court affirmed the decision of the appellee herein
and respondent below, the Cabell County Commission (hereinafter “the County
Commission” or “the Commission”) sitting as the Board of Equalization and Review
(hereinafter “the Board”), which had assigned an assessed value to the Foster Foundation's
Woodlands Retirement Community (hereinafter “the Woodlands”) of $29,759,000.00 for
the 2007 tax year. On appeal to this Court, the Foundation contends that the procedure for
challenging tax assessments and the burden of proof imposed upon taxpayers violate due
process and that neither the Board nor the circuit court properly considered the unique
nature of the Woodlands as a tax-exempt corporation in obtaining its assessed value. Upon
a review of the parties' arguments, the record designated for appellate consideration, and
the pertinent authorities, we affirm the decision of the Cabell County Circuit Court.
conclusions of law are reviewed de novo.” Syl. pt. 4, Burgess v. Porterfield, 196 W. Va.
178, 469 S.E.2d 114 (1996). Accord Syl. pt. 2, Walker v. West Virginia Ethics Comm'n, 201
W. Va. 108, 492 S.E.2d 167 (1997) (“In reviewing challenges to the findings and
conclusions of the circuit court, we apply a two-prong deferential standard of review. We
review the final order and the ultimate disposition under an abuse of discretion standard,
and we review the circuit court's underlying factual findings under a clearly erroneous
standard. Questions of law are subject to a de novo review.”).
With respect to the questions of law raised by the Foundation concerning the
constitutionality of the governing statutes, we employ a de novo standard of review:
“[i]nterpreting a statute or an administrative rule or regulation presents a purely legal
question subject to de novo review.” Syl. pt. 1, Appalachian Power Co. v. State Tax Dep't
of West Virginia, 195 W. Va. 573, 466 S.E.2d 424 (1995). Accord Syl. pt. 1, Chrystal R.M.
v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415 (1995) (“Where the issue on an appeal
from the circuit court is clearly a question of law or involving an interpretation of a statute,
we apply a de novo standard of review.”). (See footnote 10)
Finally, we utilize a plainly wrong standard to review the Foundation's
assignment of error challenging the assessed value of its property:
“'[a]n assessment made by a board of review and equalization and approved by the circuit court will not be reversed when supported by substantial evidence unless plainly wrong.' Syl. pt. 1, West Penn Power Co. v. Board of Review and Equalization, 112 W. Va. 442, 164 S.E. 862 (1932).” Syl. pt. 3, Western Pocahontas Properties, Ltd. v. County Comm'n of Wetzel County, 189 W. Va. 322, 431 S.E.2d 661 (1993).
Syl. pt. 4, In re Petition of Maple Meadow Mining Co. for Relief from Real Prop. Assessment
For the Tax Year 1992, 191 W. Va. 519, 446 S.E.2d 912 (1994). But see In re Tax
Assessment Against Am. Bituminous Power Partners, L.P., 208 W. Va. 250, 255, 539 S.E.2d
757, 762 (2000) (“[J]udicial review of a decision of a board of equalization and review
regarding a challenged tax-assessment valuation is limited to roughly the same scope
permitted under the West Virginia Administrative Procedures Act, W. Va. Code. ch. 29A.
In such circumstances, a circuit court is primarily discharging an appellate function little
different from that undertaken by this Court; consequently, our review of a circuit court's
ruling in proceedings under [W. Va. Code] § 11-3-25 is de novo.” (footnote and citation
omitted)). (See footnote 11)
In light of these standards, we proceed to consider the parties' arguments.
In West Virginia, a taxpayer aggrieved by what he/she believes to be an
erroneous tax assessment may file a protest with the assessor “for information regarding the
classification and taxability of his[/her] property.” W. Va. Code § 11-3-24a (1961) (Repl.
Vol. 2008). Then “[t]he assessor shall decide the question by either sustaining the protest
and making proper corrections, or by stating, in writing if requested, the reasons for his
refusal.” Id. In the case sub judice, it is not apparent that the Foster Foundation applied to
the Assessor for relief from its assessment of the Woodlands property, but the Assessor did
review, correct, and reduce its initial assessment.
Instead, the Foster Foundation pursued relief from the allegedly erroneous
assessment by filing an application for review thereof with the County Commission, which
is responsible for reviewing challenges regarding the amount of property tax assessments.
The Legislature requires all county commissions to annually sit as a board of equalization
and review “for the purpose of reviewing and equalizing the assessment made by the
assessor.” W. Va. Code § 11-3-24 (1979) (Repl. Vol. 2008). It is this dual role of the
Cabell County Commission in the instant case, as both the County Commission and the
Board of Equalization and Review, to which the Foundation objects and upon which it
bases its due process claim. The statute establishing this dual function of county
commissions and describing the commissions's duties, W. Va. Code § 11-3-24, provides,
in pertinent part:
The county commission shall annually . . . meet for the
purpose of reviewing and equalizing the assessment made by
the assessor. . . . At the first meeting, the assessor shall submit
the property books for the current year, which shall be
complete in every particular, except that the levies shall not be
extended. The assessor and his assistants shall attend and
render every assistance possible in connection with the value
of property assessed by them. The commission shall proceed
to examine and review the personal property and the
description and value of real estate liable to assessment which
was omitted by the assessor. They shall correct all errors in the
names of persons, in the description and valuation of property,
and they shall cause to be done whatever else may be necessary
to make the valuation comply with the provisions of this
chapter. But in no case shall any question of classification or
taxability be considered or reviewed. If the commission
determine[s] that any property or interest is assessed at more or
less than its true and actual value, it shall fix it at the true and
actual value. . . .
The clerk of the county commission shall publish notice
of the time, place and general purpose of the meeting as a Class
II legal advertisement . . . and the publication area for such
publication shall be the county involved. . . .
If any person fails to apply for relief at this meeting, he
shall have waived his right to ask for correction in his
assessment list for the current year, and shall not thereafter be
permitted to question the correctness of his list as finally fixed
by the county commission, except on appeal to the circuit
court. . . .
With respect to this statutory scheme, the Foster Foundation argues that the
tribunal for hearing taxpayer appeals is not impartial and thus denies appealing taxpayers
constitutionally guaranteed due process of law. See U.S. Const. amend. XIV, § 1 (“[N]or
shall any State deprive any person of life, liberty, or property, without due process of
law[.]”); W. Va. Const. art. III, § 10 (“No person shall be deprived of life, liberty, or
property, without due process of law, and the judgment of his peers.”). See also Syl. pt. 2, State ex rel. Ellis v. Kelly, 145 W. Va. 70, 112 S.E.2d 641 (1960) (“Due process of law,
within the meaning of the State and Federal constitutional provisions, extends to actions of
administrative officers and tribunals, as well as to the judicial branches of the
governments.”). In this regard, the Foundation suggests that because the County
Commission, which is the beneficiary of the county's tax revenues and has a direct financial
interest in tax appeals cases, also sits as the Board of Equalization of Review to hear and
decide taxpayers' appeals challenging the assessed value of their property, it is not an
impartial hearing tribunal. Such impartiality, claims the Foundation, constituted a denial
of due process by depriving it of the opportunity to receive a fair hearing before a neutral
and impartial body. See, e.g., Concrete Pipe & Prods. of California, Inc. v. Construction
Laborers Pension Trust for S. California, 508 U.S. 602, 617, 113 S. Ct. 2264, 2277, 124
L. Ed. 2d 539 (1993) (“[D]ue process requires a 'neutral and detached judge in the first
instance[.]'” (quoting Ward v. Village of Monroeville, 409 U.S. 57, 61-62, 93 S. Ct. 80, 84,
34 L. Ed. 2d 267 (1972))). In further support of its argument, the Foundation references
the duty of county commissions to “supervise the general management of the fiscal affairs
and business of each county.” W. Va. Code § 7-1-5 (1980) (Repl. Vol. 2006). See also W. Va. Const. art. IX, § 11 (“[C]ounty commissions . . . shall . . . have the superintendence
and administration of the . . . fiscal affairs of their counties[.]”). The Foundation argues
that, because the County Commission is unquestionably interested in maximizing its
revenue, through tax assessments and otherwise, taxpayers challenging tax assessments will
not have a hearing by an impartial tribunal when the County Commission sits as the Board. See Rawl Sales & Processing Co. v. County Comm'n of Mingo County, 191 W. Va. 127, 133,
443 S.E.2d 595, 601 (1994) (Neely, J., dissenting) (“[T]he county commission lacks
expertise in property evaluation but is extraordinarily knowledgeable about the
government's need for money, an ingrained bias that is particularly harmful to non-voting
entities.”).
The Commission responds that the appeals procedure does not create a
conflict of interest and does not unconstitutionally deny appealing taxpayers due process
of law. With regard to the tax year in issue in this case, 2007, the Commission asserts that,
in Cabell County, over 27,000 pieces of property had increased assessment values; of those,
only twenty-one property owners requested a hearing on their assessments, and all except
one of those property owners either had their dispute resolved, did not appear for the
hearing, or received a lower assessment. The Woodlands received a lower tax assessment.
Although the Commission concedes that there might appear to be a conflict of interest, the
pecuniary interest of the Commission in tax revenues is slight: for every one dollar in ad
valorem tax revenue, the County Commission receives sixteen cents while the Cabell
County Board of Education receives sixty-seven cents. Thus, argues the Commission, it
has no real incentive to artificially inflate tax assessments. The Commission finally
contends that the Legislature has designated the County Commission to sit as the Board of
Equalization and Review to hear tax appeals; if this practice is determined to be
unconstitutional, the Commission suggests that chaos will result until the Legislature can
appoint another, independent body.
We must determine, then, whether W. Va. Code § 11-3-24 is constitutional
insofar as it requires county commissions to sit as boards of equalization and review for the
purpose of hearing and deciding appeals of taxpayers' property tax assessments. Our prior
decisions have repeatedly counseled that statutes are presumed to be constitutional.
“In considering the constitutionality of a legislative enactment, courts must exercise due restraint, in recognition of the principle of the separation of powers in government among the judicial, legislative and executive branches. Every reasonable construction must be resorted to by the courts in order to sustain constitutionality, and any reasonable doubt must be resolved in favor of the constitutionality of the legislative enactment in question. Courts are not concerned with questions relating to legislative policy. The general powers of the legislature, within constitutional limits, are almost plenary. In considering the constitutionality of an act of the legislature, the negation of legislative power must appear beyond reasonable doubt.” Syl. pt. 1, State ex rel. Appalachian Power Company v. Gainer, 149 W. Va. 740, 143 S.E.2d 351 (1965).
Syl. pt. 1, Louk v. Cormier, 218 W. Va. 81, 622 S.E.2d 788. Thus,
“'[w]hen the constitutionality of a statute is questioned every reasonable construction of the statute must be resorted to by a court in order to sustain constitutionality, and any doubt must be resolved in favor of the constitutionality of the legislative enactment.' Point 3, Syllabus, Willis v. O'Brien, 151 W. Va. 628[, 153 S.E.2d 178 (1967)].” Syllabus Point 1, State ex rel. Haden v. Calco Awning & Window Corp., 153 W. Va. 524, 170 S.E.2d 362 (1969).
Syl. pt. 1, U.S. Steel Mining Co., LLC v. Helton, 219 W. Va. 1, 631 S.E.2d 559 (2005), cert.
denied, 547 U.S. 1179, 126 S. Ct. 2355, 165 L. Ed. 2d 279 (2006).
With specific respect to legislative enactments pertaining to taxation, we have
held that “[s]tatutes governing the imposition of taxes are generally construed against the
government and in favor of the taxpayer. However, statutes establishing administrative
procedures for collection and assessment of taxes will be construed in favor of the
government.” Syl. pt. 1, Calhoun County Assessor v. Consolidated Gas Supply Corp., 178
W. Va. 230, 358 S.E.2d 791 (1987) (emphasis added). Insofar as the challenged statute
establishes the procedure that taxpayers must follow to contest their assessed taxes, W. Va.
Code § 11-3-24 must be construed in favor of the government, represented here by the
Commission. Nevertheless, the Foundation may overcome this presumption and establish
that W. Va. Code § 11-3-24 is unconstitutional if it satisfies the burden of proof reiterated
in Syllabus point 1 of Schmehl v. Helton, 222 W. Va. 98, 662 S.E.2d 697 (2008):
“'To establish that a taxing statute, valid on its face, is
so unreasonable or arbitrary as to amount to a denial of due
process of law when applied in a particular case, the taxpayer
must prove by clear and cogent[ (See footnote 13) ] evidence facts establishing
unreasonableness or arbitrariness.' Point 4, Syllabus, Norfolk
and Western Railway Company v. Field, 143 W. Va. 219[, 100
S.E.2d 796 (1957)].” Syllabus Point 2, State ex rel. Haden v.
Calco Awning [& Window Corp.], 153 W. Va. 524, 170 S.E.2d
362 (1969).
(Footnote added). Here, however, the Foster Foundation does not argue that W. Va. Code
§ 11-3-24 is unconstitutional as applied; rather, the Foundation argues only that this statute
is unconstitutional, which questions the statute's facial constitutionality.
In this regard, the Foundation argues that W. Va. Code § 11-3-24 is
unconstitutional because the County Commission, sitting as the Board of Equalization and
Review, is an impartial tribunal to hear taxpayers' appeals insofar as the Commission is the
entity responsible for administering the fiscal affairs of Cabell County and the tax revenue
at issue provides the funding for such fiscal affairs. See W. Va. Const. art. IX, § 11
(establishing duty of county commissions over county's fiscal affairs); W. Va. Code § 7-1-5
(same). Although the Foundation makes this assertion, it does not offer specific proof of
the Commission's, or the Commissioners', partiality. Rather, the Foundation contends
generally that “[t]he County Commission has an impermissible conflict of interest in
serving as both a decision maker on the Foster Foundation's appeal of an excessive tax
assessment and a beneficiary of an increased tax revenue resulting from a higher assessed
value of Woodlands” without providing factual support therefor. Appellant's Br. at p. 9.
Before this Court, the Foundation similarly avers that
[t]he County Commission's interest in maximizing revenue is
at odds with granting reductions in the assessment values of
real property (regardless of validity of claims) because it would
directly result in a reduction of the tax base.
For example, the Foster Foundation believes its
assessment was excessive by approximately $14,859,000. Had
the Foster Foundation been successful before the County
Commission, the County's tax base would have been reduced
by approximately $200,000 annually. In every contested
valuation there is an inherent conflict between the County
Commission's inconsistent roles as the overseer of the county
finances and as the tribunal for hearing individual tax appeals.
This conflict is magnified as the amount in controversy
increases.
Appellant's Br. at pp. 9-10. In making these assertions, though, the Foundation does not
present any specific evidence to suggest how the county commissioners, themselves,
directly benefitted from these funds or to indicate the commissioners had a direct, pecuniary
interest in such revenue. In fact, the applicable statutory law establishes that county
commissioners' salaries are set by the Legislature, not by the commissioners, themselves. See W. Va. Code § 7-1-5 (discussing compensation of county commissioners); W. Va.
Code § 7-7-4 (2006) (Repl. Vol. 2006) (defining amount of compensation of county
commissioners).
W. Va. Code § 11-3-24 sets forth the procedure by which a county
commission sits as a board of equalization and review to finalize the assessments rendered
by the county assessor, discusses how those assessments are to be reviewed, and permits
aggrieved taxpayers to apply for relief from such assessments. Insofar as we have not
previously determined the constitutionality of such a review process, it is instructive to look
to decisions of other jurisdictions for guidance.
When faced with cases questioning the impartiality of a hearing tribunal, the
United States Supreme Court generally has found a hearing tribunal to be partial when there
exists a direct pecuniary interest in the outcome of the litigation. See Tumey v. Ohio, 273
U.S. 510, 523, 47 S. Ct. 437, 441, 71 L. Ed. 749 (1927) (finding mayor serving as judge
was not impartial decision maker where mayor received additional compensation from fees
and costs he levied against violators of prohibition laws, citing mayor's “direct, personal,
substantial pecuniary interest” in generation of such revenue). See also Concerned Citizens
of S. Ohio, Inc. v. Pine Creek Conservancy Dist., 429 U.S. 651, 652, 97 S. Ct. 828, 829, 51
L. Ed. 2d 116 (1977) (per curiam) (remanding case for full consideration of issues,
including plaintiffs' claim that conservancy court did not provide “hearing before . . .
impartial judicial officer” where judges of conservancy court decided whether conservancy
districts should be formed and such judges received special compensation for work
performed in conjunction with such conservancy courts); Gibson v. Berryhill, 411 U.S. 564,
579, 93 S. Ct. 1689, 1698, 36 L. Ed. 2d 488 (1973) (reiterating that “[i]t is sufficiently clear
from our cases that those with substantial pecuniary interest in legal proceedings should not
adjudicate these disputes” (citation omitted)); Ward v. Village of Monroeville, 409 U.S. 57,
58, 93 S. Ct. 80, 82, 34 L. Ed. 2d 267 (1972) (determining that mayor, sitting as judge over
traffic offenses and imposing fines therefor, was not impartial where mayor also was
responsible for accounting for village revenues which were derived, in large part, from
“fines, forfeitures, costs and fees imposed by him in his mayor's court”).
However, when no such pecuniary interest is present, the United States
Supreme Court typically has found the tribunal to satisfy the requirements of due process. See Dugan v. Ohio, 277 U.S. 61, 65, 48 S. Ct. 439, 440, 72 L. Ed. 784 (1928) (ruling that
mayor serving as judge had relationship too remote with city finances to warrant
presumption of bias in prohibition law cases over which he presided and imposed fines
where mayor received fixed salary, did not receive additional compensation from fines he
imposed as judge, and was not solely responsible for expenditure of town's revenue). Cf.
Concrete Pipe & Prods. of California, Inc. v. Construction Laborers Pension Trust for S.
California, 508 U.S. at 618-20, 113 S. Ct. at 2277-78, 124 L. Ed. 2d 539 (declining to find
denial of due process where “initial determination [wa]s made by a party acting in an
enforcement capacity” and losing party was thereafter entitled to subsequent adjudicatory
proceeding before arbitrator).
While the Foundation makes broad assertions of a pecuniary conflict of
interest in the case sub judice, the Foundation has not proved the Cabell County
Commissioners' partiality or that their dual role as members of the Board of Equalization
and Review was compromised by this alleged divided loyalty. There is no indication in the
facts of the case presently before us that any of the Cabell County Commissioners received
additional compensation for upholding the Assessor's tax assessments or that the County
Commission, itself, benefitted from this revenue. Thus, having reviewed the statute at issue
herein and the parties' arguments regarding its constitutionality, we conclude that W. Va.
Code § 11-3-24 is valid on its face. Accordingly, we hold that W. Va. Code § 11-3-24
(1979) (Repl. Vol. 2008), which establishes the procedure by which a county commission
sits as a board of equalization and review and decides taxpayers' challenges to their
property tax assessments, is facially constitutional. Therefore, because the Foundation has
not presented evidence to prove that it was denied due process when the Commission sat
as the Board of Equalization and Review to hear and decide its appeal of the Woodlands
property's tax assessment, the Foundation has not sustained its burden of proving that
W. Va. Code § 11-3-24 is unconstitutional.
[a]n objection to any assessment may be sustained only upon the presentation of competent evidence, such as that equivalent to testimony of qualified appraisers, that the property has been under- or over-valued by the tax commissioner and wrongly assessed by the assessor. The objecting party, whether it be the taxpayer, the tax commissioner or another third party, must show by a preponderance of the evidence that the assessment is incorrect.
(Emphasis added). The Killen case, however, appears to be an isolated instance (See footnote 18) of
employing the preponderance of the evidence standard in tax assessment cases and is an
aberration in this Court's line of cases on this subject. (See footnote 19) The discussion in the Killen opinion adopting this standard does not cite any authority for this departure from the
Court's previous holdings, and does not expressly overrule or modify such prior opinions.
The very next year, this Court returned to the clear and convincing burden of
proof in the case of In re Tax Assessments Against Pocahontas Land Co., 172 W. Va. 53,
303 S.E.2d 691 (1983), by again adopting this standard in a syllabus point: “It is a general
rule that valuations for taxation purposes fixed by an assessing officer are presumed to be
correct. The burden of showing an assessment to be erroneous is, of course, upon the
taxpayer, and proof of such fact must be clear.” Syl. pt. 7, id. (emphasis added). The clear
and convincing burden of proof subsequently was reiterated in Syllabus point 2 of Western
Pocahontas Properties, Ltd. v. County Commission of Wetzel County, 189 W. Va. 322, 431
S.E.2d 661 (1993): “As a general rule, there is a presumption that valuations for taxation
purposes fixed by an assessor are correct. . . . The burden is on the taxpayer challenging
the assessment to demonstrate by clear and convincing evidence that the tax assessment is
erroneous.” (Emphasis added).
Therefore, it is apparent from this survey of our prior decisions that the
prevailing burden of proof to be borne by a taxpayer appealing his/her tax assessment is the
clear and convincing burden of proof. Accordingly, in order to rectify the conflict created
by our contrary opinions, we hold that a taxpayer challenging an assessor's tax assessment
must prove by clear and convincing evidence that such tax assessment is erroneous. To the
extent our prior decisions in Killen v. Logan County Commission, 170 W. Va. 602, 295
S.E.2d 689 (1982), and Eastern American Energy Corp. v. Thorn, 189 W. Va. 75, 428
S.E.2d 56 (1993) (per curiam), are inconsistent with this holding, they are expressly
overruled. (See footnote 20)
Having determined the burden of proof applicable to the Foundation's appeal of the Woodlands' tax assessment, we return now to the parties' arguments regarding the constitutionality thereof. The Foundation contends that the burden of proof of a taxpayer in a case challenging a tax assessment is unconstitutional and violative of due process because neither the Assessor nor the County Commission have a correspondingly heavy burden of proof. In this regard, the Foundation states that the Assessor's initial assessment was presumed to be correct and that it was required to prove that the Assessor's initial assessment was incorrect by clear and convincing evidence. To meet this standard, the County Commission notified the Foundation as to the evidence required, by letter dated January 24, 2007, as follows: “Please be advised it will be necessary for you to present 'Clear and convincing evidence', which by definition means 'formal appraisals and/or expert testimony by qualified people', to prove that the assessment is in fact erroneous.” (See footnote 21) (Emphasis in original). Thus, the Foundation claims that it was required to employ a certified real estate appraiser and to submit his formal report and testimony. By contrast, the Assessor was not required to submit any specific evidence, is not required to be licensed, (See footnote 22) and submitted only oral testimony during the Board's hearing. Furthermore, the Foundation contends that, during the circuit court proceedings, the County Commission did not provide any evidence to support its assessment. This disparity in the evidence required of each party, asserts the Foundation, denied it of due process.
The County Commission replies that this Court has previously placed the
burden on complaining taxpayers to demonstrate that their assessments are incorrect by
clear and convincing evidence. Citing In Re: Tax Assessment Against Am. Bituminous
Power Partners, L.P., 208 W. Va. 250, 539 S.E.2d 757. The Commission explains that it
advised taxpayers of the types of evidence they would be required to submit to prevent
them from simply complaining that the tax assessments were too high without any other
proof. The Commission concludes its argument by stating that other decisions of this Court
have held that the Assessor's valuations are presumed to be correct and will not be
overturned absent an abuse of discretion. Citing Western Pocahontas Props., Ltd. v. County
Comm'n of Wetzel County, 189 W. Va. 322, 431 S.E.2d 661; In Re: Tax Assessments Against
Pocahontas Land Co., 172 W. Va. 53, 303 S.E.2d 691; Killen v. Logan County Comm'n, 170
W. Va. 602, 295 S.E.2d 689.
On this point, the Foundation complains that the clear and convincing burden
of proof it is required to sustain is unconstitutional. However, the Foundation's argument
also challenges its corresponding burden of persuasion insofar as it complains that neither
the Assessor nor the Commission was required to present evidence of a specific type to
prove the correctness of their assessments. Requiring the party bringing a claim for relief
to bear the burden of persuasion, however, is consistent with our jurisprudence. “It is a
well-established rule of law that in civil actions the party seeking relief must prove his right
thereto[.]” Boury v. Hamm, 156 W. Va. 44, 52, 190 S.E.2d 13, 18 (1972). Therefore,
when a plaintiff comes into court in a civil action he must, to
justify a verdict in his favor, establish his case . . . . The burden
of proof, meaning the duty to establish the truth of the claim
. . ., rests upon him from the beginning, and does not shift, as
does the duty of presenting all the evidence bearing on the
issue as the case progresses.
Burk v. Huntington Dev. & Gas Co., 133 W. Va. 817, 830, 58 S.E.2d 574, 581 (1950), modified on other grounds, Foster v. City of Keyser, 202 W. Va. 1, 501 S.E.2d 165 (1997).
Moreover,
[a]s a general matter, the burden of proof consists of two components: burden of production and burden of persuasion. The burden of persuasion requires the party upon whom it is placed, to convince the trier of fact . . . on a given issue. When a party has the burden of persuasion on an issue, that burden does not shift. The burden of production merely requires a party to present some evidence to rebut evidence proffered by the party having the burden of persuasion. The term burden of production is also used to refer to either party presenting some evidence on a matter.
Mayhew v. Mayhew, 205 W. Va. 490, 497 n.15, 519 S.E.2d 188, 195 n.15 (1999) (citations
omitted). Cf. id., 205 W. Va. at 498 n.18, 519 S.E.2d at 196 n.18 (“As a general matter, our
cases have permitted the burden of persuasion to shift to the defendant when the defendant
alleges an affirmative defense.” (citations omitted)).
Thus, as the party seeking relief from the allegedly erroneous tax assessment,
the Foundation bears the burden of proving its entitlement to relief. See Boury, 156 W. Va.
at 52, 190 S.E.2d at 18. To sustain this burden, the Foundation must present clear and
convincing evidence. The burden of persuasion rests with the Foundation to prove that its
tax assessment was erroneous; it does not lie with the Assessor or the Commission nor does
it shift thereto. Therefore, we must determine whether it is constitutional to require an
aggrieved taxpayer to prove his/her claim for relief from an erroneous tax assessment by
clear and convincing evidence.
When requested to review constitutional challenges to the burden of proof
applicable in a given case, the United States Supreme Court has reminded parties that “[i]n
every case the onus probandi lies on the party who wishes to support his case by a particular
fact which lies more peculiarly within his knowledge, or of which he is supposed to be
cognizant.” Concrete Pipe, 508 U.S. at 626, 113 S. Ct. at 2281, 124 L. Ed. 2d 539 (internal
quotations and citations omitted). Consequently, the Court has admonished that, “[o]utside
the criminal law area, where special concerns attend, the locus of the burden of persuasion
is normally not an issue of federal constitutional moment.” Lavine v. Milne, 424 U.S. 577,
585, 96 S. Ct. 1010, 1016, 47 L. Ed. 2d 249 (1976) (footnote omitted). That said, the
constitutional issue before us is one we have not yet decided. Despite the reluctance of the
high Court to decide such matters, we nevertheless will consider the merits of the parties'
arguments insofar as this question is a “controlling issue in the resolution of the case.” Syl.
pt. 2, in part, Louk v. Cormier, 218 W. Va. 81, 622 S.E.2d 788. Absent our own prior
precedent to guide our determination of this issue, we will look to decisions from other
jurisdictions.
Only three jurisdictions_Illinois, Michigan, and the United States Court of
Appeals for the Ninth Circuit_ have addressed the constitutionality of a taxpayer's burden
of proof in tax assessment cases. Of those courts' decisions, only one involves an
assessment of taxes on real property, such as those which are at issue in the case sub judice. See LaGrange State Bank No. 1713 v. DuPage County Bd. of Review, 79 Ill. App. 3d 474,
398 N.E.2d 992, 35 Ill. Dec. 42 (1979). In LaGrange, the taxpayer was required to satisfy
a clear and convincing burden of proof in challenging its real property tax assessment. The
court reviewed numerous evidentiary errors raised by the taxpayer, including the lower
tribunal's admission of inadmissible hearsay evidence and the consideration of ex parte
evidence, and concluded that the taxpayer had not been denied due process. Id., 79
Ill. App. 3d at 481-82, 398 N.E.2d at 998-99, 35 Ill. Dec. at 48-49. Although the court did
not specifically find the clear and convincing burden of proof to be constitutional, many of
the evidentiary errors raised by the taxpayer therein and decided by the court mirror the
arguments voiced by the Foster Foundation in support of its position that the clear and
convincing burden of proof is unconstitutional.
In more general terms, two other courts have concluded that placing the
burden of proof on the taxpayer is not violative of constitutional protections. The case of Wilcox v. Commissioner of Internal Revenue, 848 F.2d 1007 (9th Cir. 1988), involved a
deficiency in the taxpayer's federal income tax. In Wilcox, the court, without specifying
the burden of proof the taxpayer was required to satisfy, stated that “placing the burden of
proof on the taxpayer does not violate due process.” Id. at 1008 (citation omitted).
The other case involving the constitutionality of a taxpayer's burden of proof
is City of Troy v. Cleveland Pneumatic Tool Co., 109 Mich. App. 361, 311 N.W.2d 782
(1981). Like Wilcox, Cleveland Pneumatic, which also involved an assessment levied on
the taxpayer's personal property, did not identify the applicable burden of proof. Rather,
in clarifying a statute concerning the allocation of the burden of proof in tax appeals cases,
the court observed that recent legislative amendments require the appealing party, be it the
taxpayer or the taxing authority, to shoulder the burden of proof on appeal. The court
ultimately concluded that shifting the burden of proof to the appealing party is
constitutional so long as the party who bears the burden of proof has adequate notice of
such responsibility. Id., 109 Mich. App. at 371, 311 N.W.2d at 787.
From these authorities, it is apparent that there is no constitutional infirmity
to requiring a taxpayer to bear the burden of proof when challenging a tax assessment.
However, having gleaned little guidance as to the constitutionality of the clear and
convincing burden of proof from these other jurisdictions, we must look to analogous
decisions and bodies of law for further counsel.
In this Court's jurisprudence, we have repeatedly applied and upheld the clear
and convincing burden of proof in a variety of contexts. See, e.g., Syl. pt. 7, in part, In re
Abbigail Faye B., 222 W. Va. 466, 665 S.E.2d 300 (2008) (requiring, at hearing on petition
for infant guardianship based upon allegations of child abuse and neglect, “allegations of
child abuse and neglect must be proven by clear and convincing evidence” (emphasis
added)); Syl. pt. 3, in part, Schmehl v. Helton, 222 W. Va. 98, 662 S.E.2d 697 (“The burden
is on the person seeking to avoid . . . [personal] liability [for unpaid and unremitted sales
taxes] to show with clear and convincing evidence, giving due deference to the statute's
general authorization for the imposition of such liability, that it would be fundamentally
unfair and an arbitrary and capricious or unreasonable act to impose such liability.”
(emphasis added)); Syl. pt. 5, Smith v. Smith, 219 W. Va. 619, 639 S.E.2d 711 (2006) (“To
justify the reformation of a clear and unambiguous deed for mistake, the mistake must be
one of fact, not of law; the mistake must be mutual and common to both parties to the deed;
the unambiguous deed must fail to express the obvious intention of the parties; and the
mutual mistake must be proved by strong, clear and convincing evidence.” (emphasis
added)); McConaha v. Rust, 219 W. Va. 112, 119, 632 S.E.2d 52, 59 (2006) (noting that
party seeking to challenge settlement agreement reached in partition proceeding “must
allege and prove by clear and convincing evidence that an accident, mistake or fraud
occurred” (emphasis added) (citation omitted)); Syl. pt. 2, in part, State ex rel. Suriano v.
Gaughan, 198 W. Va. 339, 480 S.E.2d 548 (1996) (“Plaintiffs who are public officials or
public figures must prove by clear and convincing evidence that the defendants made their
defamatory statement with knowledge that it was false or with reckless disregard of whether
it was false or not.” (emphasis added)); Syl. pt. 1, in part, Lawyer Disciplinary Bd. v.
McGraw, 194 W. Va. 788, 461 S.E.2d 850 (1995) (“Rule 3.7 of the Rules of Lawyer
Disciplinary Procedure . . . requires the Office of Disciplinary Counsel to prove the
allegations of the formal charge [of lawyer misconduct] by clear and convincing evidence.”
(emphasis added)); Syl. pt. 3, in part, Shamblin v. Nationwide Mut. Ins. Co., 183 W. Va.
585, 396 S.E.2d 766 (1990) (“It will be the insurer's burden to prove by clear and
convincing evidence that it attempted in good faith to negotiate a settlement[.]” (emphasis
added)); Syl. pt. 3, in part, Everett v. Brown, 174 W. Va. 35, 321 S.E.2d 685 (1984)
(holding that when suit is brought to enforce promise, court should consider “the extent to
which the action or forbearance corroborates evidence of the making and terms of the
promise, or the making and terms are otherwise established by clear and convincing
evidence” (emphasis added)); Syl. pt. 1, in part, In the Interest of S.C., 168 W. Va. 366, 284
S.E.2d 867 (1981) (“W. Va. Code, 49-6-2(c) [1980], requires the State Department of
Welfare [now the Department of Health and Human Resources], in a child abuse or neglect
case, to prove 'conditions existing at the time of the filing of the petition . . . by clear and
convincing proof.'” (emphasis added)); Syl. pt. 1, Berkeley Dev. Corp. v. Hutzler, 159
W. Va. 844, 229 S.E.2d 732 (1976) (“The burden of proving an easement rests upon the
party claiming such right and must be established by clear and convincing proof.”
(emphasis added)); Syl. pt. 7, in part, State v. Johnson, 111 W. Va. 653, 164 S.E. 31 (1932)
(“The question as to whether or not a juror has been subjected to improper influence
affecting the verdict, is a fact primarily to be determined by the trial judge from the
circumstances, which must be clear and convincing to require a new trial[.]” (emphasis
added)).
We also have determined that it is proper to place the burden of proof on the
plaintiff to prove his/her entitlement to relief. Perhaps most analogous to the taxpayer's
burden of proof in the case sub judice is the burden of proof borne by a plaintiff in a case
brought pursuant to the West Virginia Medical Professional Liability Act (hereinafter “the
MPLA”), W. Va. Code § 55-7B-1, et seq. Under the MPLA, a court may require a plaintiff
to provide evidence through expert testimony in support of his/her claim for relief. See W. Va. Code § 55-7B-7(a) (2003) (Supp. 2008) (“The applicable standard of care and a
defendant's failure to meet the standard of care, if at issue, shall be established in medical
professional liability cases by the plaintiff by testimony of one or more knowledgeable,
competent expert witnesses if required by the court[.]”). See also Syl. pt. 5, in part, Estate
of Fout-Iser ex rel. Fout-Iser v. Hahn, 220 W. Va. 673, 649 S.E.2d 246 (2007) (“When a
particular defendant's failure to meet the standard of care is at issue in medical malpractice
cases, the sufficiency and nature of proof required is governed by West Virginia Code § 55-
7B-7(a) (2003)[.]”); Syl. pt. 8, in part, McGraw v. St. Joseph's Hosp., 200 W. Va. 114, 488
S.E.2d 389 (1997) (“A trial court is vested with discretion under W. Va. Code § 55-7B-7
(1986) to require expert testimony in medical professional liability cases[.]”).
This Court has upheld this rather onerous burden because plaintiffs in medical
malpractice cases bear the burden of proving their claims. See, e.g., Syl. pt. 4, Hundley v.
Martinez, 151 W. Va. 977, 158 S.E.2d 159 (1967) (“In an action for damages against a
physician for negligence or want of skill in the treatment of an injury or disease, the burden
is on the plaintiff to prove such negligence or want of skill and that it resulted in injury to
the plaintiff.”); Syl. pt. 1, Schroeder v. Adkins, 149 W. Va. 400, 141 S.E.2d 352 (1965) (“In
an action for damages against a chiropodist, for negligence and want of skill in the
treatment of an injury or disease, the burden is on the plaintiff to prove such negligence or
want of skill and that it results in injury to the plaintiff.”); Syl. pt. 2, Roberts v. Gale, 149
W. Va. 166, 139 S.E.2d 272 (1964) (“It is the general rule that in medical malpractice cases
negligence or want of professional skill can be proved only by expert witnesses.”); Syl. pt.
2, White v. Moore, 134 W. Va. 806, 62 S.E.2d 122 (1950) (“In an action for damages
against a physician, for negligence and want of professional skill in the making of an
examination, or in the treatment of an injury or disease, the burden is on the plaintiff to
prove such negligence or want of skill, resulting in injury to the plaintiff.”); Syl. pt. 2, Dye
v. Corbin, 59 W. Va. 266, 53 S.E. 147 (1906) (“In an action for damages against a
physician, for negligence and want of skill in the treatment of an injury or disease, the
burden is on the plaintiff to prove such negligence or want of skill, resulting in injury to the
plaintiff.”), overruled on other grounds by Pleasants v. Alliance Corp., 209 W. Va. 39, 543
S.E.2d 320 (2000).
Requiring plaintiffs in medical malpractice cases to bear the burden of proof
is derived from our more general negligence jurisprudence placing the burden of proof on
plaintiffs to prove their claims of negligence. See, e.g., Syl. pt. 3, Keister v. Talbott, 182
W. Va. 745, 391 S.E.2d 895 (1990) (“Damages arising from the negligence of an attorney
are not presumed, and a plaintiff in a malpractice action has the burden of proving both his
loss and its causal connection to the attorney's negligence.”); Syl. pt. 2, Walton v. Given,
158 W. Va. 897, 215 S.E.2d 647 (1975) (“The burden is on the plaintiff to prove by a
preponderance of the evidence that the defendant was negligent and that such negligence
was the proximate cause of the injury.”); Syl. pt. 2, Smith v. Edward M. Rude Carrier Corp.,
151 W. Va. 322, 151 S.E.2d 738 (1966) (“The burden is on the plaintiff to establish a prima
facie case of negligence against the defendant in order to warrant jury consideration but
such showing may be made by circumstantial as well as direct evidence.”). Cf. Syl. pt. 6, Leftwich v. Wesco Corp., 146 W. Va. 196, 119 S.E.2d 401 (1961) (“Contributory negligence
on the part of the plaintiff is an affirmative defense. There is a presumption of ordinary
care in favor of the plaintiff, and where the defendant relies upon contributory negligence,
the burden of proof rests upon the defendant to show such negligence unless it is disclosed
by the plaintiff's evidence or may be fairly inferred by all of the evidence and
circumstances surrounding the case.”), overruled on other grounds by Bradley v.
Appalachian Power Co., 163 W. Va. 332, 256 S.E.2d 879 (1979).
This placement of the burden of proof also is consistent with the United States
Supreme Court's recognition that “[i]n every case the onus probandi lies on the party who
wishes to support his case by a particular fact which lies more peculiarly within his
knowledge, or of which he is supposed to be cognizant.” Concrete Pipe, 508 U.S. at 626,
113 S. Ct. at 2281, 124 L. Ed. 2d 539 (internal quotations and citations omitted).
Here, the Commission required the Foundation to present “'[c]lear and
convincing evidence', which by definition means 'formal appraisals and/or expert
testimony by qualified people', to prove that the assessment is in fact erroneous.”
(Emphasis omitted). Although the provisions of W. Va. Code § 11-3-24 do not specify the
precise type of evidence a taxpayer must present to meet its clear and convincing burden,
this Court, in Killen, suggested the type of evidence required to rebut the presumption of
the correctness of the assessor's assessment:
[a]n objection to any assessment may be sustained only upon the presentation of competent evidence, such as that equivalent to testimony of qualified appraisers, that the property has been under- or over-valued by the tax commissioner and wrongly assessed by the assessor.
Syl. pt. 8, in part, Killen v. Logan County Comm'n, 170 W. Va. 602, 295 S.E.2d 689
(emphasis added). The Foundation does not claim that it did not have notice of its burden
of proof or of the specific type of evidence required to satisfy this burden; rather, the
Foundation argues simply that the clear and convincing burden of proof is unfair. It is not
unreasonable or unfair, however, to require the party claiming to have superior knowledge
of the value of its own property to shoulder the burden of presenting such evidence to the
decision maker. See Concrete Pipe, 508 U.S. at 626, 113 S. Ct. at 2281, 124 L. Ed. 2d 539.
Neither is it a denial of due process to impose more stringent standards upon a complaining
taxpayer in an attempt to prevent frivolous tax assessment challenges. See, e.g., Syl. pt. 6,
in part, Hinchman v. Gillette, 217 W. Va. 378, 618 S.E.2d 387 (2005) (upholding pre-suit
requirements of MPLA in recognition of statutory purpose of “preventing the making and
filing of frivolous medical malpractice claims and lawsuits”). Accordingly, we hold that
requiring a taxpayer challenging a property tax assessment in accordance with W. Va. Code
§ 11-3-24 (1979) (Repl. Vol. 2008) to prove by clear and convincing evidence that the
assessor's assessment is erroneous does not violate the constitutional due process
protections provided by section one of the Fourteenth Amendment to the United States
Constitution or by section ten of Article III of the West Virginia Constitution. Applying
this holding to the case sub judice, the circuit court did not err by requiring the Foundation
to prove by clear and convincing evidence that the Assessor's tax assessment of the
Woodlands property was erroneous, and the imposition of this burden of proof did not
deprive the Foundation of due process.
Title 110, Series 1P of the West Virginia Code of State Rules confers upon the State Tax Commissioner discretion in choosing and applying the most accurate method of appraising commercial and industrial properties. The exercise of such discretion will not be disturbed upon judicial review absent a showing of abuse of discretion.
Syl. pt. 5, In re Tax Assessment Against Am. Bituminous Power Partners, L.P., 208 W. Va. 250, 539 S.E.2d 757 (2000). Pursuant to W. Va. C.S.R. § 110-1P-2 (1991), factors that shall be considered in the appraisal of commercial property for ad valorem property tax purposes include:
The location of such property;
Its site characteristics;
The ease of alienation thereof, considering the state of
its title, the number of owners thereof, and the extent to which
the same may be the subject of either dominant or servient
easements;
The quantity of size of the property and the impact
which its sale may have upon the surrounding properties;
If purchased within the previous eight years, the
purchase price thereof and the date of each such purchase;
Recent sale of, or other transactions involving,
comparable property;
The value of such property to its owner;
The condition of such property;
The income, if any, which the property actually
produces and has produced within the next preceding three (3)
years; and
Any commonly accepted method of ascertaining the
market value of any such property, including techniques and
method peculiar to any particular species of property if such
technique or method is used uniformly and applied to all
property of like species.
W. Va. C.S.R. §§ 110-1P-2.1.1.1 - 110-1P-2.1.1.10. Improvements to and on the land also
are to be considered, W. Va. C.S.R. § 110-1P-2.1.2, (See footnote 28) as well as additional factors.
In addition to improvements, other important
considerations affecting the value of land . . . are:
Location,
Size,
Shape,
Topography,
Accessibility,
Present use,
Highest and best use,
Easements,
Zoning,
Availability of utility,
Income imputed to land and
Supply and demand for land of a particular type.
W. Va. C.S.R. §§ 110-1P-2.1.3 - 110-1P-2.1.3.12. Finally, “[e]ach of these factors should
be considered in the appraisal of a specific parcel. Some, however, may be given more
weight than others.” W. Va. C.S.R. § 110-1P-2.1.4.
While these criteria do not specifically reference a taxpayer's status as a
§ 501(c)(3) corporation as a factor to consider in appraising commercial property, these lists
do contain many factors that would take into account this unique status of the Woodlands
property. For example, the Foundation contends that the particular manner in which it uses
its property as a lifetime care retirement facility has not been adequately considered;
according to W. Va. C.S.R. § 110-1P-2.1.3.6, though, a commercial property's “[p]resent
use” is a factor to consider in its appraisal for purposes of taxation.
The Foundation additionally argues that no consideration was given to the fact
that, because it provides lifetime care for its residents, the property is encumbered by these
“life estates” (See footnote 29) such that a future purchaser likewise would be required to provide lifetime
care for the Woodlands' residents. Again, however, such a consideration is one of the
enumerated factors to consider in rendering a tax appraisal of commercial property: “[t]he
ease of alienation thereof, considering the state of its title [and] the number of owners
thereof.” W. Va. C.S.R. § 110-1P-2.1.1.3.
Lastly, the Foundation contends that because it is a not-for-profit corporation,
it may have incurred construction costs that cannot be recouped if the property is sold
because the cost of such improvements allegedly was greater than their market value and
that this factor should have been considered in reaching its assessed value. The appraisal
criteria take into account, however, “[t]he value of such property to its owner,” W. Va.
C.S.R. § 110-1P-2.1.1.7, suggesting that a particular parcel of property may be valued at
one amount by its owner while it may be valued differently by persons other than its owner.
Moreover, to the extent that the value of the Foundation's improvements to the Woodlands
property have been diminished by depreciation, this factor also is required to be considered
in appraising commercial property. See W. Va. C.S.R. § 110-1P-2.2.1.1 (“To determine fair
market value under th[e cost] approach, replacement cost of the improvements is reduced
by the amount of accrued depreciation and added to an estimated land value. In applying
the cost approach, the Tax Commissioner will consider three (3) types of depreciation:
physical deterioration, functional obsolescence, and economic obsolescence.”). Thus, these
factors, too, were all within the ambit of criteria required to be considered in appraising
commercial property for the purpose of taxation.
Having considered each of the arguments advanced by the Foster Foundation,
we conclude that the Foundation has not sustained its burden of proving by clear and
convincing evidence that its status as a § 501(c)(3) corporation was not adequately
considered in assessing taxes on its Woodlands property. Each of the unique characteristics
of the Woodlands was among the numerous factors required to be considered in rendering
a tax appraisal of commercial property. Therefore, we affirm the circuit court's ruling
upholding the Board's assessment of the Woodlands property in the amount of
$29,759,000.00 for the 2007 tax year.