v. Bd. of Cty. Comm'rs , 2020 COA 77 ( 2020 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
May 7, 2020
2020COA77
No. 17CA1971, Lannie v. Bd. of Cty. Comm’rs — Taxation —
Property Tax — Residential Land
A division of the court of appeals answers a question left open
in Mook v. Board of County Commissioners, 2020 CO 12 — whether,
for purposes of classifying vacant property as residential land for
tax classification, the phrase “common ownership” refers to
identical ownership or merely overlapping ownership. The division
concludes that identical ownership is required.
COLORADO COURT OF APPEALS 2020COA77
Court of Appeals No. 17CA1971
Board of Assessment Appeals Case Nos. 68965 & 69093
Paul Anthony Lannie and Donna Dean Lannie,
Petitioners-Appellants,
v.
Board of County Commissioners of Eagle County, Colorado; and Board of
Equalization of Eagle County, Colorado,
Respondents-Appellees,
and
Board of Assessment Appeals, State of Colorado,
Appellee.
ORDER AFFIRMED IN PART, REVERSED IN PART,
AND CASE REMANDED WITH DIRECTIONS
Division II
Opinion by JUDGE TOW
Dailey and Vogt*, JJ., concur
Announced May 7, 2020
Ryley Carlock & Applewhite, F. Brittin Clayton III, Denver, Colorado, for
Petitioners-Appellants
Bryan R. Treu, County Attorney, Christina C. Hooper, Assistant County
Attorney, Eagle, Colorado, for Respondents-Appellees
Philip J. Weiser, Attorney General, Emmy A. Langley, Assistant Solicitor
General, Katie Allison, Assistant Attorney General, Denver, Colorado, for
Appellee
*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2019.
¶1 In Colorado, residential land is taxed at a significantly lower
rate than vacant land. See Colo. Const. art. X, § 3; § 39-1-104.2,
C.R.S. 2019. This variance in the tax rate has spawned a plethora
of cases in which taxpayers with combinations of residential and
vacant parcels have sought to have the vacant land reclassified as
“residential land,” which requires a showing that (1) the vacant
parcel is contiguous with the residential parcel; (2) the parcels are
under common ownership; and (3) the parcels are used as a unit.
§ 39-1-102(14.4)(a), C.R.S. 2019. Divisions of this court have come
to differing conclusions as to the meaning of each of these criteria.
¶2 In Mook v. Board of County Commissioners, 2020 CO 12, our
supreme court addressed three such cases, each of which involved
a dispute over one of the three requirements: Mook v. Board of
County Commissioners, (Colo. App. No. 17CA0437, May 3, 2018)
(not published pursuant to C.A.R. 35(e)) (contiguity); Kelly v. Board
of County Commissioners, 2018 COA 81M (common ownership); and
Hogan v. Board of County Commissioners, 2018 COA 86 (used as a
unit). The supreme court affirmed the divisions’ judgments in Mook
and Hogan, reversed the division’s judgment in Kelly, and provided
guidance on each of the three criteria. In the wake of Mook, several
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cases, including this one, were remanded for reconsideration in
light of the court’s decision.
¶3 This case involves two of the three criteria — whether the
parcels were under common ownership and whether they were used
as a unit. To resolve the first issue, we must answer a question left
open in Mook: Does “common ownership” under the tax code
require that identical parties hold record title to each contiguous
parcel? We answer that question “yes.” Because the parcels were
not under common ownership during two of the three tax years at
issue in this case, we affirm the decision of the Board of
Assessment Appeals (BAA) for those two years. We reverse the
decision of the BAA for the third tax year and remand the matter for
consideration of whether the parcels were used as a unit under the
analysis announced in Mook.
I. Background
¶4 Petitioners, Paul Anthony Lannie and his wife Donna Dean
Lannie,1 own two contiguous parcels of land in Eagle County,
Colorado — one with a home on it (the residential parcel) and an
1Because they share the same surname, we will refer to Paul and
Donna by their first names. We mean no disrespect in doing so.
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adjacent one that is undeveloped (the subject parcel). For tax years
2014 and 2015, Paul held title to the subject parcel solely in his
name, while he and Donna held title to the residential parcel as
joint tenants. By the time of the valuation for tax year 2016, Paul
conveyed the subject parcel to himself and Donna as joint tenants.
¶5 The county assessor classified the subject parcel as vacant
land. The Lannies appealed the classification for the 2014 and
2015 tax years to the Board of County Commissioners of Eagle
County and the classification for 2016 to the Board of Equalization
of Eagle County (collectively, the County). After the County upheld
the assessor’s classification, the Lannies appealed to the BAA. The
BAA held a consolidated hearing and thereafter entered two orders
upholding the County’s rulings. The BAA concluded that the
subject parcel was not used as a unit in conjunction with the
improvements on the residential parcel for any of the tax years in
question, and further concluded that, for tax years 2014 and 2015,
the parcels were not under common ownership.
¶6 The Lannies appealed to this court, and a different division
affirmed the BAA’s orders. See Lannie v. Bd. of Cty. Comm’rs, (Colo.
App. No. 17CA1971, Dec. 13, 2018) (not published pursuant to
3
C.A.R. 35(e)) (Lannie I). Specifically, the division agreed with the
BAA that the parcels were not used as a unit. As a result, the
division did not address the issue of common ownership. As noted,
the supreme court vacated that decision and remanded for
reconsideration in light of Mook. Lannie v. Bd. of Assessment
Appeals, (Colo. No. 19SC56, Mar. 16, 2020) (unpublished order).
We thus address both whether the parcels were under common
ownership and whether they were used as a unit.
II. Standard of Review
¶7 In reviewing BAA decisions that classify property for tax
purposes, we defer to the BAA’s factual findings but review its legal
conclusions de novo. See Ziegler v. Park Cty. Bd. of Cty. Comm’rs,
2020 CO 13, ¶ 11. When a statute concerns property tax, we also
owe deference to, but are not bound by, the interpretation of the
statute by the BAA and by the Property Tax Administrator in the
Assessors’ Reference Library (ARL). See Mook, ¶ 47.
¶8 We review the interpretation of a statute de novo, seeking “to
effectuate the intent of the General Assembly by looking to the plain
meaning of the language used, considered within the context of the
statute as a whole.” Id. at ¶ 24 (quoting Bly v. Story, 241 P.3d 529,
4
533 (Colo. 2010)). In so doing, we construe any undefined term “in
accordance with its ordinary or natural meaning.” Id. (quoting
Cowen v. People, 2018 CO 96, ¶ 14). Applying the plain meaning of
the language requires us to “give consistent effect to all parts of a
statute, and construe each provision in harmony with the overall
statutory design.” Larrieu v. Best Buy Stores, L.P., 2013 CO 38,
¶ 12 (citing In re Miranda, 2012 CO 69, ¶ 9).
III. Analysis
A. Common Ownership
1. Applicable Law
¶9 The tax code does not define the term “common ownership.” It
does, however, direct that “[o]wnership of real property shall be
ascertained by the assessor from the records of the county clerk
and recorder . . . .” § 39-5-102(1), C.R.S. 2019. “Thus, according to
the plain language of the tax code, assessors must rely on county
records to determine whether properties are held under ‘common
ownership.’” Mook, ¶ 80.
¶ 10 In Kelly, record title to the residential parcel was held by a
qualified personal residence trust, while record title to the subject
parcel was held by a revocable family trust. Kelly, ¶ 4. The same
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person (Kelly) was settlor, trustee, and beneficiary of both trusts.
Id. Before the supreme court, Kelly argued that because she held
“overlapping equity ownership and control” of both properties, they
were under common ownership. Mook, ¶ 79. The supreme court
rejected this argument, holding that the record of legal title was
conclusive. Id. at ¶ 86. In doing so, however, the court explicitly
declined to consider the issue of whether overlapping legal title
would suffice, or rather whether identical ownership is required. Id.
at ¶ 86 n.7.
2. Analysis
¶ 11 Here, there are overlapping legal title interests in the parcels
for tax years 2014 and 2015.2 During those tax years, because
Paul Lannie was a record titleholder of both properties — one held
in his name alone and one held jointly with Donna — we turn to the
question left open in Mook.
¶ 12 The BAA urges us to adopt its interpretation of the term,
which is that common ownership requires identical record title
2 There is no dispute that the parcels were under common
ownership for tax year 2016. The discussion of common ownership,
therefore, is limited to tax years 2014 and 2015.
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owners. The BAA posits that this interpretation was established in
Sullivan v. Board of Equalization, 971 P.2d 675 (Colo. App. 1998).
But the BAA reads Sullivan too broadly. There, the sole owner of
the subject parcel was the taxpayer, while the taxpayer’s wife was
the sole owner of the residential property. Id. at 676. In other
words, there was no overlapping legal title as there is here.
Furthermore, the taxpayer in Sullivan conceded the lack of common
ownership and, thus, the appellate court did not address that issue.
Id. For this reason, while we generally afford deference to statutory
interpretation by the agency charged with administering the
statute, see Mook, ¶ 47, because the BAA misapplied the holding in
Sullivan, we do not defer to its construction in this context. See El
Paso Cty. Bd. of Equalization v. Craddock, 850 P.2d 702, 704-05
(Colo. 1993) (“Courts, of course, must interpret the law and are not
bound by an agency decision that misapplies or misconstrues the
law.”).
¶ 13 Nevertheless, for the following reasons, we conclude that the
statute requires identical ownership.
¶ 14 First, as noted, the supreme court observed that section 39-5-
102(1) requires the assessor to rely on county records. Mook, ¶ 80.
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When doing so, the supreme court discussed its earlier decision in
Hinsdale County Board of Equalization v. HDH Partnership, 2019 CO
22. Mook, ¶¶ 80-84. In Hinsdale, the supreme court invoked the
same statutory language when it held that “assessors must value
and tax separate parcels of real property and assess taxes on the
parcel owner as determined by the county’s real property records.”
Hinsdale, ¶ 22. The court further noted that “Colorado’s tax
statutes reflect the legislature’s intent to levy property tax on the
record fee owner of real property.” Id.
¶ 15 The court in Mook reiterated that “the party holding record title
to the property is the fee owner responsible for property taxes.”
Mook, ¶ 81 (quoting Hinsdale, ¶ 25). The court then rejected Kelly’s
argument that assessors could look to record title to determine
ownership for purposes of tax liability, while taking a different
approach to determine ownership for purposes of tax classification.
Id. at ¶¶ 82-83. Noting that nothing in the statute suggested such
differing approaches to determining ownership, the court stated,
“[t]herefore, we won’t require assessors to use different standards
when classifying property and assessing taxes.” Id. at ¶ 83.
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¶ 16 Reading Hinsdale and Mook in conjunction with each other
leads to one conclusion: in the tax code, owner and taxpayer are
synonymous. Thus, having a common ownership means the
taxpayer for each parcel must be the same. For this to be the case,
the fee owners must be identical.
¶ 17 Second, we note that interpreting the phrase “common
ownership” to merely require overlapping ownership would lead to
absurd results. See Ziegler, ¶ 19. We acknowledge that, here, it is
the subject parcel that is solely held by one person who is also a
joint titleholder of the residential parcel; therefore, Paul’s assertion
that he is the common owner of both parcels is reasonable. Query,
however, what if the reverse were true? What if Paul solely owned
the residential parcel while he and Donna jointly owned the vacant
property? The overlap of ownership would be of the same nature
and degree, but the result (if treated as common ownership under
the tax code) would be that Donna would be entitled to pay the
residential tax rate on her property despite not owning a residence.
To put a finer point on it, what if Paul co-owned the vacant property
as one of a hundred co-owners, but only a one percent share of the
9
property? Would the other ninety-nine co-owners share the benefit
of Paul’s beneficial tax rate?
¶ 18 In our view, either scenario would be an absurd result, and
one we cannot conclude would be consistent with the legislature’s
intent. And, if “common ownership” is read to encompass mere
overlapping interest, there is no textual basis establishing any limit
on how large or small the overlap must be. Nor could we remedy
this omission under the guise of construing the statute by imposing
some limit such as “substantially overlapping.” See Trujillo v. Colo.
Div. of Ins., 2014 CO 17, ¶ 12 (“We do not add words to a statute.”).
¶ 19 Finally, we note that the phrase “common ownership” is not
foreign to real property law. Take, for example, the situation in
which a parcel is burdened by a prescriptive easement. Under the
doctrine of merger, if the two estates come “under common
ownership,” the easement is extinguished. Salazar v. Terry, 911
P.2d 1086, 1090-91 (Colo. 1996). However, for merger to occur,
there can be no other ownership interests in either estate. Brush
Creek Airport, L.L.C. v. Avion Park, L.L.C., 57 P.3d 738, 747-48
(Colo. App. 2002) (citing Restatement (Third) of Property: Servitudes
§ 7.5 cmt. d (Am. Law Inst. 2000)). In Westpac Aspen Investments,
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LLC v. Residences at Little Nell Development, LLC, 284 P.3d 131
(Colo. App. 2011), one party was the sole owner of the servient
estate and held title to the dominant estate in joint tenancy with
someone else. Id. at 136. A division of this court held that,
because the two lots were not owned in “completely identical
manner,” their co-ownership was insufficient to extinguish the
easement. Id. at 136-37.
¶ 20 For these reasons, we conclude that, for purposes of the tax
code, “common ownership” requires that the taxpayer(s) for the two
properties must be the same, and thus the parcels must have
identical record titleholders. Because the two parcels were not
under common ownership for tax years 2014 and 2015, we affirm
the BAA’s decision denying reclassification for those years.
B. Used as a Unit
¶ 21 Because the parcels were under common ownership in tax
year 2016, we turn to whether the parcels were used as a unit
during that year.
1. Applicable Law
¶ 22 Like the term “common ownership,” the term “used as a unit”
is not defined in the tax code. However, the code requires the
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Property Tax Administrator to produce manuals, procedures, and
instructions to aid assessors in their valuation and assessment of
property taxes. § 39-2-109(1)(e), C.R.S. 2019. The product of this
requirement is the ARL, which assessors are required to follow.
Huddleston v. Grand Cty. Bd. of Equalization, 913 P.2d 15, 17-18
(Colo. 1996).
¶ 23 In Hogan, the taxpayers’ vacant lot next to their residential
parcel contained an unpaved driveway, and the taxpayers used the
parcel to walk their dog, park vehicles, and secure scenic views with
a privacy buffer. Hogan, ¶¶ 2, 28. The assessor concluded that
none of these uses satisfied the “used as a unit” requirement, in
part because they were not active uses of the property and because
the vacant parcel did not contain any residential improvements,
and the BAA agreed with the assessor. Mook, ¶ 46.
¶ 24 In affirming the division’s reversal of the BAA, the supreme
court rejected the BAA’s interpretation of “used as a unit,” and
provided “additional direction.” Id. at ¶ 63. To satisfy the “used as
a unit” requirement, “a landowner must use multiple parcels of land
together as a collective unit of residential property.” Id. at ¶ 77.
Contrary to what had been held in some earlier cases, (1) there is
12
no requirement that the vacant parcel itself contain a residential
improvement, id. at ¶¶ 59-62; (2) the primary purpose of the vacant
parcel should be for the support, enjoyment, or other non-
commercial activity of the occupant of the residence, id. at ¶ 72; (3)
the “used as a unit” requirement is the same for multi-parcel cases
as it is in the context of reclassifying a single parcel of land, id. at
¶¶ 68, 73-74; (4) in applying the third ARL guideline (would the
vacant parcel likely be conveyed with the residential parcel as a
unit?), the focus is to be on how the owner presently uses the land,
not on the owner’s potential future plans for use of the property, id.
at ¶¶ 53-55; and (5) while the vacant parcel must be used as an
integral part of the residence, its uses need not be “necessary” or
“essential,” and passive as well as active uses may satisfy the
requirement, id. at ¶¶ 50-52, 56-57.
2. Analysis
¶ 25 Paul testified at the hearing that he and Donna bought the
residential parcel as a vacation home, used it mainly during the ski
season, and planned to retire there. Shortly thereafter, he bought
the subject parcel to protect his views of the Gore Range and to add
a flat yard space where his grandchildren could play. The family
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enjoyed walking on the subject parcel and viewing wildlife there.
The subject parcel was kept in its natural condition until 2017,
when the Lannies sodded the flat area.
¶ 26 The county’s appraiser testified that she had seen no evidence
of walking, children playing, or trampled grass on the four
occasions when she visited the subject parcel. She did not consider
activities such as walking and wildlife viewing to meet the statutory
requirement that the parcel be used as a unit with the residence on
the adjoining parcel. The appraiser also opined that, given the
topography, any structure on the subject parcel would likely be
built on the lower portion of the lot and thus would not affect views
of the Gore Range from the Lannies’ residence.
¶ 27 Crediting the appraiser’s testimony over Paul’s, and citing
other maps and photographs in the record, the BAA found that the
Lannies had not shown that the subject parcel was used as a unit
in conjunction with the residential improvements on the residential
parcel. Although its orders indicate that the BAA was basing its
ruling on the persuasiveness of the various witnesses’ testimony, it
is not clear that the BAA was assessing that testimony under the
standards announced in Mook. Similarly, in affirming that ruling in
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Lannie I, we included language — e.g., that multi-parcel cases
should be treated differently from single-parcel cases — that is
inconsistent with Mook. In these circumstances, we conclude that
the BAA should reconsider the “used as a unit” issue under the
Mook standards set forth above. In reconsidering the issue, the
BAA may in its discretion order such additional testimony or
briefing as it deems necessary.
IV. Conclusion
¶ 28 The BAA’s order denying reclassification for the 2014 and
2015 tax years is affirmed. The order denying reclassification for
the 2016 tax year is reversed, and the case is remanded to the BAA
for reconsideration in accordance with this opinion.
JUDGE DAILEY and JUDGE VOGT concur.
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