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
(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) , 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-220.127.116.11 - 110-1P-18.104.22.168. 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:
Highest and best use,
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-22.214.171.124. 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-126.96.36.199, 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-188.8.131.52.
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-184.108.40.206, 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-220.127.116.11 (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.