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The Tale of 248 Erroneous Tax Assessment Cases:
Round Three, The Second Trial (2004-2006)

After having walked away from $34 million in assessment relief on appeal, the 144 West Creek plaintiff LLCs re-filed 159 lawsuits in December 2004. Some were later dismissed for various reasons. One hundred thirty (130) of these cases were later consolidated for trial, this time before resident Circuit Court Judge Timothy Sanner.

Against our vigorous defense, the plaintiffs steadfastly pursued their “one business park, one property” theory. At one point, after this theory had been attacked again and again by the County on demurrer, motions and in discovery disputes, Judge Sanner (somewhat wearily) remarked before ruling on a discovery motion that he wished he could just rule on the 144 parcels versus one business park issue and move on. However, the issue was not squarely presented for ruling until trial of the consolidated cases, which was held in November of 2006.

At trial, the plaintiffs presented valuation evidence from an appraiser as well as from representatives of the owners. All consistently told the same tale – that the parcels should be valued collectively as a portion of the business park – and all agreed on the proper value, to the penny, of each parcel’s value. These values, not surprisingly, added up to the $34.1 million purchase price for the business park in June of 2000. All faced vigorous cross-examination on the “one business park, one property” theory, the curious similarity of the appraiser’s and the owner’s opinions of value, and many other grounds. The plaintiffs also presented evidence from the Commissioner of the Revenue, who on cross-examination explained clearly how she was required to list each parcel separately on the land book, which then meant that the County had to assess each parcel separately.

There were bumps in the road for the County. The County’s contract appraiser, who was not used as an expert by either side, had developed one value ($75,000 per acre) based upon comparable sales, then applied that value to each of the 144 parcels. The Court was convinced this was an erroneous methodology.

However, the contract appraiser was not the assessor, and there was no evidence presented of how the County’s board of assessors or the court-appointed board of equalization had assessed the property. Many of the citizens who had served on these boards were elderly, most had no specific memory of what they did, many were unavailable, and one had died. Fortunately, during the 2000-2001 general reassessment process, some proposed assessments had been set at values inconsistent with the contract appraiser’s recommendation at each stage. This was most apparent in the northern one-third of the business park, which had been set at $35,000 per acre by the board of assessors. The contract appraiser had testified that he did not know what information the boards considered in making their assessments, and that he knew the boards had information he did not.

Therefore, the Court could find no “linkage” between the erroneous contract appraisal and the assessment by the board of assessors or the board of equalization, other than a frequent $75,000 per acre value in the southern two-thirds of the business park. Finding no “linkage” between the erroneous contract appraisal and the assessment in the northern one-third of the business park, the Court dismissed those 40 northern parcels on the County’s motion to strike because there was absolutely no proof of “manifest error in the manner of making the assessment.” Examining the evidence in the light most favorable to the plaintiffs, the Court overruled the remainder of the motion to strike.

In the County’s case-in-chief, only two witnesses were presented. One was an appraiser, William C. Harvey, II, MAI, who thoroughly criticized the plaintiffs’ appraisal. The other, Jay B. Call, III, MAI, presented his own opinion of value for the 144 parcels, which was consistent with the assessments.

Given this evidence, and the requirement that the Court give the County assessment a presumption of correctness and that manifest error be proven by a clear preponderance of the evidence, the Court ruled fully for the County. The Court ruled again that there was no evidence of the manner of the making of the assessment, but additionally, that the evidence presented of value presented by the plaintiffs was simply not credible, for many reasons. In his ruling, the Court rejected the “one business park, one property” theory. The Court relied in part on its common sense, by reasoning that if a hypothetical 100-acre parcel were purchased and split into 100 parcels, each parcel would be worth more than one percent of the purchase price, even with problems with access and a lack of infrastructure as argued by the plaintiffs.

Given this serious setback, the plaintiff LLCs appealed to the Virginia Supreme Court for the second time.

Next Time -
Round Four: The Second Appeal and the Supreme Court’s Opinion (2006-2008)

Tags: tax assessment, West Creek Business Park

This entry was posted on Tuesday, August 11th, 2009 at 3:45 am and is filed under assessment, development, tax. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.