Lane v. Supervisor of Assessments of Montgomery Co. , 447 Md. 454 ( 2016 )

Ann Lane v. Supervisor of Assessments of Montgomery County, No. 41, September Term
2015
TAXATION — STATUTORY CONSTRUCTION — MARYLAND TAX COURT —
ADMISSIBILITY OF EVIDENCE — The Maryland Tax Court may rely on sales of
comparable properties occurring after the date of finality for determining the value of the
subject property. The “date of finality” is a point of assessment from which tax assessors
determine the value of property as of that date. Md. Code Ann., Tax-Prop. (“TP”) § 8-
104(b)(2). The Tax Court reviews assessments de novo and may alter the valuation to
reflect the full cash value of the property. Md. Code Ann., Tax-Gen. (“TG”) §§ 13-523;
13-528. The Tax Court does not violate TP § 8-104(b)(2) by considering sales of
comparable properties occurring reasonably soon after the date of finality when
determining the value of property on the date of finality.
TAXATION — MARYLAND TAX COURT — ARTICLE 15 OF THE MARYLAND
DECLARATION OF RIGHTS — UNIFORMITY OF ASSESSMENTS — The Tax
Court’s valuation of Petitioner’s property did not violate Article 15 of the Maryland
Declaration of Rights, requiring uniformity of assessments, because the Tax Court assessed
the value of Petitioner’s property at its full cash value. The Tax Court did not violate
Article 15 by relying upon evidence of sales that were not considered by the Property Tax
Assessment Appeal Board for Montgomery County because the Tax Court reviews
assessments de novo. TG § 13-523.
TAXATION — MARYLAND TAX COURT — SUFFICIENCY OF THE
EVIDENCE — The Tax Court’s decision was supported by sufficient evidence. The Tax
Court, after considering evidence presented by both parties, discredited Petitioner’s
evidence and properly relied upon the Supervisor’s evidence of sales of comparable
properties.
Circuit Court for Montgomery County IN THE COURT OF APPEALS
Case No. 369661-V OF MARYLAND
Argued: January 7, 2016
No. 41
September Term, 2015
ANN LANE
v.
SUPERVISOR OF ASSESSMENTS
OF MONTGOMERY COUNTY
Barbera, C.J.,
*Battaglia
Greene
Adkins
McDonald
Watts
Raker, Irma S. (Retired,
Specially Assigned),
JJ.
Opinion by Barbera, C.J.
Battaglia and Watts, JJ., dissent.
Filed: May 3, 2016
*Battaglia, J., now retired, participated in the
hearing and conference of the case while an
active member of this Court; after being recalled
pursuant to the Constitution, Article IV, Section
3A, she also participated in the decision and
adoption of this opinion.
Maryland law requires that, unless exempted, all real property in the State be
assessed for property tax purposes. The assessment is calculated by reference to the value
on the “date of finality,” which is defined as “January 1, immediately before the 1st taxable
year to which the assessment based on the new value is applicable.” Md. Code Ann., Tax-
Prop. (“TP”) § 8-104(b)(1) (2009, 2012 Repl. Vol.). This case presents the question of
whether the Tax Property Article prohibits the Maryland Tax Court from taking into
account sales of comparable properties that occur after the date of finality in determining
the value of a property on the date of finality.
The Tax Court did not believe itself so constrained and, as we shall see, valued the
property by relying on sales of comparable properties that occurred several months after
the date of finality. The Court of Special Appeals found no error with the Tax Court’s
reliance on that evidence and neither do we.
I.
Real Property Taxation in Maryland
“Unless otherwise exempted by statute, all property located in the State is subject
to assessment and property tax and is taxable to the owner of the property.” State Dep’t of
Assessments & Taxation v. Andrecs, 444 Md. 585, 590 (2015). “Calculation of a property
assessment begins with a determination of the property’s value[,]” and, in accordance with
the dictates of Article 15 of the Maryland Declaration of Rights, the rules for such
calculation must be “uniform.”1 Id. at 591; see also 589-90 (discussing same).
1
Article 15 of the Maryland Declaration of Rights provides:
That the levying of taxes by the poll is grievous and oppressive and ought to
The value of real property is determined by the State Department of Taxation and
Assessment or its local Supervisor of Assessments “once in every 3-year cycle based on
an exterior physical inspection of the real property.” TP § 8-104(b)(1). “[T]he value of
the real property shall be its value on the date of finality,” TP § 8-102(a), and, for purposes
of real property assessed under TP § 8-104(b)(1), the “date of finality” is the “January 1
immediately before the 1st taxable year to which the assessment based on the new value is
applicable,” TP § 8-104(b)(2). See also TP § 1-101(oo) (explaining that the taxable year
begins on July 1).
The Tax Property Article does not prescribe a specific methodology for valuation.
Respondent Supervisor of Assessments of Montgomery County (“Supervisor”) advises us
that, since 1992, the State Department of Assessments and Taxation and its local assessors
have followed the practice of considering sales after the date of finality to value property
as of the date of finality when those sales are reasonably close in time and otherwise
comparable to the subject property.
II.
be prohibited; that paupers ought not to be assessed for the support of the
government; that the General Assembly shall, by uniform rules, provide for
the separate assessment, classification and sub-classification of land,
improvements on land and personal property, as it may deem proper; and all
taxes thereafter provided to be levied by the State for the support of the
general State Government, and by the Counties and by the City of Baltimore
for their respective purposes, shall be uniform within each class or sub-class
of land, improvements on land and personal property which the respective
taxing powers may have directed to be subjected to the tax levy; yet fines,
duties or taxes may properly and justly be imposed, or laid with a political
view for the good government and benefit of the community.
2
This Case
The case before us has its genesis in Petitioner Ann Lane’s appeal of her 2011 tax
assessment of the condominium she owns and occupies in Parc Somerset, a seventeen-
story building located on Wisconsin Avenue in Chevy Chase, Maryland. Parc Somerset is
the newest of three condominium buildings, all of which were built over a twenty-year
period and together comprise the Somerset House development. Condominiums in Parc
Somerset are the most desirable in the development. Certain condominiums in Parc
Somerset that are located directly above and below one another form a “stack,” meaning
that the units are exactly the same in design, layout, and size. Petitioner’s unit is located
on the tenth floor in the “03” stack. The “03” stack runs from floors three to twelve and
each of the “03” units measures 2,498 square feet.2
On December 28, 2010, the Supervisor notified Petitioner that her condominium
(“unit 1003”), would be assessed at a value of $2,130,000, representing “the new market
value effective January 1, 2011.” The Notice stated that the “new market value is based
upon market data available prior to this date.” The assessment, which was determined by
using a computer-assisted mass appraisal technique, was approximately 11 percent higher
than the previous assessment of Petitioner’s property.
Petitioner, believing the assessment to be incorrect, availed herself of her
administrative rights of appeal. She appealed first to the Supervisor, who issued a Final
2
The units on the floors below and above the “03” stack are not part of the stack because
those units differ in layout and size.
3
Notice of Assessment in August 2011, making no change to the assessment. Petitioner
appealed that decision to the Property Tax Assessment Appeal Board for Montgomery
County (“PTAAB”). At that juncture, Petitioner’s appeal was consolidated with those of
nine other Parc Somerset condominium owners, including the owners of units 803 and 703.
The PTAAB reduced the assessment for unit 803 to $1,840,000 and the assessment for unit
703 to $1,830,000 but left standing the assessment of Petitioner’s property.3
Petitioner appealed the decision of the PTAAB to the Maryland Tax Court. She
presented two arguments in support of a reduction in the assessed value of her
condominium. She argued first that the correct value of her condominium was $1,649,000
plus a $20,000 floor premium for a total value of $1,669,000. In support of that value,
Petitioner relied on two items of evidence: the affidavit of a real estate broker attesting to
a $10,000 floor premium for units in Parc Somerset; and an appraisal of unit 803, which
valued that condominium at $1,649,000 as of January 3, 2011, and was conducted on behalf
of a mortgage company to assist the owners of unit 803 in refinancing their mortgage.
Petitioner alternatively argued that, because the PTAAB had valued unit 703 at $1,830,000
and unit 803 at $1,840,000, her property should be valued, at the most, at $1,860,000,
3
Petitioner states in her brief that the PTAAB “specifically rejected” post-January 1, 2011,
sales of comparable units in Parc Somerset as evidence of the value of the subject
condominiums on that date. The record of the hearing before the PTAAB is not before us,
nor is it necessary that it be before us because, as the Tax General Article provides, the
subsequent appeal to the Tax Court was de novo. Md. Code Ann., Tax-Gen. § 13-523
(1988, 2010 Repl. Vol.). The record before the Tax Court includes the written decisions
of the PTAAB reflecting that it reduced the assessments of units 803 and 703. The record
before the Tax Court does not reflect what became of the appeals of the remaining seven
condominium owners whose appeals were consolidated with that of Petitioner, before the
PTAAB.
4
accounting for a $10,000 premium that the PTAAB appeared to have accorded to each
additional floor.
Leonard Nichols, a real estate appraiser and hearing specialist, was present at the
hearing on behalf of the Supervisor and was accepted by the Tax Court as an expert witness.
Mr. Nichols informed the Tax Court that, in his view, the value of Petitioner’s property
was $2,130,000. Mr. Nichols testified that he arrived at that valuation by reliance on the
sales of three comparable condominium units in Parc Somerset. All of those units
measured 2,441 square feet and were sold in May 2011.4 When comparing these sales to
unit 1003, Mr. Nichols made adjustments for variations between the subject property and
comparable properties.
The first comparable sale was of unit 207, which sold for $2,200,000; to that amount
Mr. Nichols added $35,000 for the difference in square footage, $80,000 as a floor
premium,5 and $15,000 for land adjustments. Based on that information, Mr. Nichols
concluded that the market value for unit 1003 was $2,330,000.
The second comparable sale upon which Mr. Nichols relied was of unit 507, which
sold for $2,075,000; to that amount he added $35,000 for the difference in square footage,
4
The record is not entirely clear about the dates on which the three properties were sold.
Mr. Nichols testified that each of the three condominiums “sold” on a specific date in May
2011; he later clarified his testimony to say that the three dates he mentioned in connection
with the sales were the dates on which the sales were recorded. We shall operate here
under the assumption that the sales in fact occurred in May 2011, as both Petitioner and
the Supervisor state as much in their briefs before us.
5
Both parties accorded a $10,000 per floor premium to the units in Parc Somerset and, as
reflected by its ultimate valuation of Petitioner’s unit, so too did the Tax Court.
5
$50,000 as a floor premium, and $15,000 for land adjustments. Based on that information,
Mr. Nichols concluded that the market value for unit 1003 was $2,175,000.
The third comparable sale was of unit 707 which sold for $1,995,000; Mr. Nichols
added $35,000 for the difference in square footage, $30,000 as a floor premium, and
$15,000 for land adjustments. Based on this third comparable unit, Mr. Nichols valued
unit 1003 at $2,075,000.
Mr. Nichols further testified that no sales of units in Parc Somerset occurred during
2010. He added that he had chosen not to rely upon sales from the other two buildings in
the Somerset House development because those units were in older, less desirable buildings
and therefore were not comparable to units in Parc Somerset.
Petitioner objected to Mr. Nichols’s testimony, arguing that the sales were not of
comparable units and, even so, occurred more than four months after January 1, 2011, the
“date of finality.” In the discussion that followed, Mr. Nichols noted that the common
practice at the Tax Court is to submit sales occurring within the first half of the year after
the date of finality and that he excluded comparable properties sold in September and
December of 2011 as “too far beyond the date of finality.” The court overruled Petitioner’s
objection, stating that it is the “policy” of the Tax Court to accept evidence of sales
occurring shortly after the date of finality, “[e]specially when there’s nothing else, when
there are no other sales.”
The Tax Court considered both parties’ evidence concerning comparable units. The
Tax Court decided that the Supervisor’s evidence offered through Mr. Nichols provided a
more accurate measure than that offered by Petitioner in determining the value of
6
Petitioner’s condominium as of January 1, 2011. The Tax Court found that unit 707 was
the “best indicator of [the] value” of Petitioner’s property and agreed with Mr. Nichols’s
adjustments in comparing unit 707 to unit 1003. The Tax Court reasoned that Petitioner’s
evidence concerning the January 3, 2011, refinancing appraisal of unit 803 was a less
accurate indicator of the value of Petitioner’s unit, given a lending bank’s interest in
seeking a low appraisal. The Tax Court further noted that the appraisal of unit 803 was
based upon sales from the two older buildings in the Somerset House development and had
not included appropriate adjustments for unit 803, based on its location in the newer, more
desirable Parc Somerset building. Evidently relying most heavily upon the Supervisor’s
third comparable sale, the Tax Court reduced the assessment of Petitioner’s property from
$2,130,000 to $2,075,000.
Petitioner filed a petition for judicial review in the Circuit Court for Montgomery
County. After hearing from the parties, the Circuit Court ruled that the Tax Court had
committed legal error in considering the Supervisor’s evidence of the post-“date of
finality” sales of units in Parc Somerset and, consequently, the decision of the Tax Court
was arbitrary and capricious. The Circuit Court ordered a remand to the Tax Court for the
assessment to be reconsidered and “reduce[d].”
The Supervisor appealed to the Court of Special Appeals, which reversed the
judgment of the Circuit Court and affirmed the Tax Court’s decision. Supervisor of
Assessments of Montgomery Cty. v. Lane, 222 Md. App. 107 (2015). We granted
Petitioner’s petition for a writ of certiorari to consider the following questions:
1. Whether evidence of sales consummated subsequent to the date of finality is
7
admissible in property tax assessment cases?
2. Does the record lack substantial evidence to support the Tax Court’s
determination of assessed value where the Tax Court relied solely upon post-
date of finality sales of units that differ from the subject property in location,
layout, and size, and effectively imposed a $290,000 premium over the
assessed value determined by the Property Tax Assessment Appeals Board
for Montgomery County for an identical unit two floors below?
We answer yes to the first question and no to the second question. We therefore affirm
the judgment of the Court of Special Appeals.
III.
“An appeal before the Tax Court shall be heard de novo and conducted in a manner
similar to a proceeding in a court of general jurisdiction sitting without a jury.” Md. Code
Ann., Tax-Gen. (“TG”) § 13-523 (1988, 2010 Repl. Vol.). Though denominated a “court,”
the Tax Court is an administrative agency and, as such, “is subject to the same standards
of judicial review as other administrative agencies.” Frey v. Comptroller of Treasury, 422
Md. 111, 136 (2011). We look through the decisions of the Circuit Court and the Court of
Special Appeals to review the decision of the agency directly. Comptroller of the Treasury
v. Science Applications Int’l Corp., 405 Md. 185, 192 (2008). We affirm the decision of
the Tax Court “unless that decision is not supported by substantial evidence appearing in
the record or is erroneous as a matter of law.” Supervisor of Assessments v. Stellar GT,
406 Md. 658, 669 (2008). This Court accords great deference to “the Tax Court’s
interpretation of the tax laws, but reviews its application of case law without special
deference.” Andrecs, 444 Md. at 604.
IV.
8
Petitioner claims that the Tax Court erred as a matter of law in relying upon evidence
of sales of comparable units in Parc Somerset that post-dated January 1, 2011. She
interprets TP § 8-104(b)(2) as prohibiting the Tax Court from considering any evidence
arising after the date of finality when assessing property as of that date. She makes two
arguments in support of that position: (1) the plain language of TP § 8-104(b)(2) precludes
the Tax Court’s consideration of comparable sales occurring after January 1, 2011; and (2)
consideration of such evidence violates the “uniformity” requirement of Article 15 of the
Declaration of Rights. The Supervisor counters that the statutory language does not
indicate, one way or the other, how property must be valued as of the date of finality;
consequently, the Tax Court may consider probative evidence when assessing the value of
the subject property as of January 1, 2011, including evidence of sales of comparable
properties occurring reasonably soon after the date of finality. The Supervisor adds that
relying on such evidence does not run afoul of Article 15. We conclude that the Supervisor
has the better part of the argument.
(a)
Petitioner’s first argument is one of statutory interpretation. Her argument for why
the “plain language” of TP § 8-104(b)(2) does not allow for consideration of post-“date of
finality” sales of comparable units rests on the definition of “finality.” Petitioner quotes
Merriam-Webster’s definition of “finality” as possessing “the character or condition of
being final, settled, irrevocable, or complete.” She argues, based on that definition, that
TP § 8-104(b)(2) precludes reliance upon evidence of sales occurring after the date of
finality when assessing the value of property on that date. Petitioner maintains that
9
interpreting TP § 8-104(b)(2) to allow reliance on sales occurring within “a reasonable
period of time thereafter” would permit the vagaries of individual decision-makers to
determine what constitutes “a reasonable period of time.” Petitioner argues that a “bright-
line rule that [TP §] 8-104 prohibits the use of sales occurring after the date of finality is
consistent with the principle that ‘[i]n case of doubt, tax statutes are construed most
strongly against the government, and in favor of the citizen.”’ (Quoting Comptroller of
Treasury v. Clyde’s of Chevy Chase, Inc., 377 Md. 471, 484 (2003)).
We agree with Petitioner that the meaning of the phrase “date of finality” is that
real property is to be assessed by reference to its value on January 1 of the relevant tax
year. This meaning is fully consistent, moreover, with other provisions of the Tax Property
Article. We, however, do not agree with Petitioner that the plain meaning of that phrase
forecloses consideration of evidence that is relevant to determining the value of a subject
property on the date of finality. Indeed, neither TP § 8-104 nor, as far as we can discern,
any other provision of Title 8 of the Tax Property Article prescribes how the property’s
value, on the date of finality, is to be calculated.
Whenever confronted with a question of statutory interpretation, we turn to the well-
settled rules for that process. Those rules require us to ascertain the intent of the General
Assembly. Green v. Church of Jesus Christ of Latter-Day Saints, 430 Md. 119, 135 (2013).
We give the words their “natural and ordinary meaning.” Montgomery County v. Phillips,
445 Md. 55, 62 (2015) (internal quotation marks omitted). We avoid construing words in
insolation; rather, we analyze the text within the larger statutory scheme in which it
belongs. Frey, 422 Md. at 182. And, “[w]e neither add nor delete words to a clear and
10
unambiguous statute to give it a meaning not reflected by the words the [General
Assembly] used or engage in forced or subtle interpretation in an attempt to extend or limit
the statute’s meaning.” Phillips, 445 Md. at 62 (alterations in original) (internal quotation
marks omitted).
The statutory scheme of the Tax Property Article reflects the General Assembly’s
intent to have the “full cash value” of the subject real property be assessed as of the date of
finality.6 “Full cash value” is the equivalent of fair market value. See Shell Oil Co. v.
Supervisor of Assessments of Prince George’s Cty., 278 Md. 659, 667-69 (1976). The fair
market value of the property is the value “a willing purchaser would pay to a willing seller
in the open market.” Weil v. Supervisor of Assessments of Washington Cty., 266 Md. 238,
246 (1972) (internal quotation marks omitted). “Thus, for purposes of measuring full cash
value, the assessor should assume that a willing buyer and a willing seller wish to engage
in a hypothetical sale of the property to be assessed.” St. Leonard Shores Joint Venture v.
Supervisor of Assessments of Calvert Cty., 307 Md. 441, 446 (1986).
Sales of comparable properties occurring reasonably soon after the date of finality
are relevant to an accurate assessment of the valuation of property as of that date; there is,
therefore, no good reason why such probative evidence should not be considered. See
Supervisor of Assessments of Anne Arundel Cty. v. Southgate Harbor, 279 Md. 586, 593
6
See TP § 1-101(qq) (defining “value” as “full cash value”); TP § 8-102(a) (“[T]he value
of real property shall be its value on the date of finality.”); TP § 8-104(b)(2) (providing
that the “date of finality” is “January 1 immediately before the 1st taxable year to which
the assessment based on the new value is applicable); see also State Dep’t of Assessments
& Taxation v. Andrecs, 444 Md. 585, 591 (2015) (“Calculation of a property assessment
begins with a determination of the property’s value.”).
11
(1977) (“Because valuation is not an exact science many, many methods have been used
in attempting to determine fair market value.”); State Dep’t of Assessments & Taxation v.
Greyhound Comput. Co., 271 Md. 575, 591 (1974) (“It has long been established that
assessors have reasonable latitude in selecting any proper method of valuation that results
in assessment at full cash value.”). Moreover, nothing in the Tax Property Article, the
legislative history of TP § 8-104(b)(2), or cases construing it suggests a contrary
conclusion.
We pointed out earlier in this opinion that the Tax Court reviews the appeal “de
novo” and conducts the hearing “similar to a proceeding in a court of general jurisdiction
sitting without a jury.” TG § 13-523. The Tax Court has the “full power to hear, try,
determine, or remand any matter” and, “[i]n exercising these powers, the Tax Court may
reassess or reclassify, abate, modify, change or alter any valuation[.]” TG § 13-528.
Inherent in those powers is the discretion to decide what evidence is relevant to the matter
at issue and accord to that evidence the weight it deserves. See TG § 13-524 (“The Tax
Court is not bound by the technical rules of evidence.”).
Because valuation “is not an exact science,” we have held that “assessors have
reasonable latitude in selecting a method of valuation that arrives at full cash value.” St.
Leonard Shores Joint Venture, 307 Md. at 448. The Tax Court, as the determiner of the
value of Petitioner’s condominium, had the responsibility to decide the relevance of the
evidence presented, discard that which the court deemed irrelevant, and accord to that
which is relevant the weight it deserved. The Tax Court considered as most relevant to
assessing the value of Petitioner’s unit the three sales of other units in Parc Somerset, all
12
of which were sold in May 2011.
In Hance v. State Roads Commission of Maryland, 221 Md. 164, 170-71 (1959), we
reviewed the admissibility of evidence to determine the fair market value of property
condemned by eminent domain, as of March 4, 1959, the date of the government
condemnation. The trial court had excluded evidence of a comparable property sold a few
weeks after the taking, “apparently on the sole ground that this sale was made subsequent
to the taking.” Id. at 173. We held that evidence of that sale should have been admitted
because such evidence is relevant to determining the market value of the property as of the
date of the taking. Id. at 175-76.
Petitioner argues that Hance is distinguishable because a condemnation proceeding
does not have a “date of finality” similar to an assessment proceeding. We conclude,
however, that a court in a condemnation proceeding, such as in Hance, is similar to an
assessment proceeding before the Tax Court because both courts are assessing the value of
property as of a certain date. Indeed, this is not the first tax assessment case in which a
condemnation case has guided our analysis. See Shell Oil Co., 278 Md. at 665-68 (“Current
zoning was an entirely proper factor for the assessor to consider in reaching his
determination as to fair market value just as this is a proper factor to be considered in an
eminent domain proceeding.”). Hance confirms that evidence of sales of comparable
properties occurring after an assessment date may be relevant to the property’s fair market
value as of the date of assessment and therefore are admissible.
The conclusion we reach here is in line with that of our sister state courts, which
have admitted evidence of comparable property sales occurring after the tax assessment
13
date. See In re Application of Rosewell, 458 N.E.2d 121, 125-26 (Ill. App. Ct. 1983)
(holding that evidence occurring after the tax assessment date, including the “sale of
property during the tax year in question[,] is a ‘relevant factor’ in considering the validity
of an assessment”); Almax Builders, Inc. v. City of Perth Amboy, 1 N.J. Tax 31, 37-38 (N.J.
Tax Ct. 1980) (holding that a sale of property after the tax assessment date is admissible
“[s]o long as a proffered sale is not remote” because “[o]ne cannot deny the logic of the
equal rational probative value of a sale which occurs one day after the assessment date
compared to its occurrence one day prior to such date” and any “weight to be accorded
such sale or sales [remains with] the factfinder”); People ex rel. Four Park Ave. Corp. v.
Lilly, 37 N.Y.S.2d 733, 737 (N.Y. App. Div. 1942) (concluding that “[e]vidence of a sale
though made after the taxable status date is admissible at the hearing before the court even
though it could not have been before the tax assessors” because such evidence is “indicative
of [the property’s] full value”); Sabin v. Dep’t of Revenue, 528 P.2d 69, 71 (Or. 1974)
(concluding that “[a] sale of the property within a reasonable time of the assessment while
not conclusive, is very persuasive of market value[,]” applying “equally to transactions in
the assessed property before and after the valuation date”).
Petitioner argues that consideration of sales that occur after the date of finality
constitutes a retroactive assessment. For that argument, she points to Montgomery County
Board of Realtors, Inc. v. Montgomery County, 287 Md. 101 (1980), and Supervisor of
Assessments v. Stellar GT, 406 Md. 658 (2008). Neither case supports Petitioner’s
argument.
In Montgomery County Board of Realtors, the County imposed a tax on “the transfer
14
of real property” when the “taxable value of such property on the date of [conveyance]
exceeds the assessed valuation of that property.” 287 Md. at 103. The ordinance was
intended to prevent the owner/seller of property from “enjoy[ing] the use of the property
at a lesser tax burden than the sale reveals he should have borne.” Id. at 102. We
invalidated the County’s attempt to “reassess and tax real property after the date of
finality,” as it would “move forward the date of finality” and thereby directly conflict with
state law. Id. at 109-10. Montgomery County Board of Realtors does not address, much
less decide, what evidence the Tax Court may consider when assessing the value of
property as of the date of finality.
Stellar GT likewise is of no assistance to Petitioner. That case involved the
Supervisor of Assessments’ reassessment of a property upon its sale for a price that far
exceeded the assessment that had been determined on the date of finality at the outset of
the tax cycle. We recognized that TP § 8-104(c)(1) permits mid-cycle reassessments under
certain circumstances. We held, though, that the sale of the subject property is not one of
those circumstances, 406 Md. at 662, 673; consequently, the reassessment, based on the
sale price, amounted to a retroactive assessment, id. at 675. That case is not remotely like
the case before us. The Tax Court’s exercise of its legislative grant of authority to assess
de novo the value of a subject property on the date of finality does not amount to a
retroactive assessment.7 For the reasons we have discussed, we reject Petitioner’s
7
Petitioner also argued during oral argument before us that a taxpayer’s right to appeal
may be chilled if post-“date of finality” sales may be admitted because those sales may
support a greater assessment than originally assessed by the tax assessor. Our decision in
Abramson v. Montgomery County, 328 Md. 721 (1992), demonstrates the flaw in
15
construction of TP § 8-104(b)(2), and we hold that sales of comparable properties occurring
reasonably soon after the date of finality can be considered relevant by the Tax Court when
called upon to assess the value of the property on the date of finality.
(b)
We turn next to Petitioner’s argument that admitting sales evidence subsequent to
the date of finality violates the uniformity requirement of Article 15. The assessment of
property taxes must “be ‘uniform’ within each class or sub-class of property as those
classes are defined by the Legislature”; therefore, property must be “assessed based on an
equivalent proportion of the property’s actual value.” Andrecs, 444 Md. at 589. Judge
McDonald, writing for this Court in Andrecs, explained that there are two principles
attendant to the requirement of uniformity: “(1) that property taxes be based on actual
value and (2) that they be assessed based on an equivalent proportion of value within each
class or sub-class of property.” Id. Perfect uniformity in assessments is an impossibility
and therefore not required. Id. at 590.
Petitioner asserts that the Tax Court violated Article 15 by considering evidence that
Petitioner’s argument. In Abramson, the property owners of White Flint Mall, unhappy
with the Supervisor’s valuation of their property, took an appeal to the PTAAB. At the
hearing before the PTAAB, Montgomery County intervened and argued that the property
value was higher than that proposed by the Supervisor, but PTAAB affirmed the
Supervisor’s valuation. Id. at 725. Montgomery County appealed PTAAB’s decision to
the Tax Court, and the Tax Court, agreeing with the County’s valuation, increased the
property’s value for tax assessment. Id. at 725-26. The owners appealed the Tax Court’s
decision, arguing that Montgomery County lacked standing before the Tax Court. Id. at
726. We rejected the argument and held that, pursuant to TP § 14-512, “Montgomery
County could appeal to the Tax Court seeking an increase in [the owners’] property tax
assessment.” Id. at 723, 739.
16
differed from that which the PTAAB considered. We disagree. The Tax Court, as the de
novo arbiter of the value of Petitioner’s condominium, was entitled to consider whatever
evidence that, within reason, the court deemed relevant.
Petitioner also argues that the Tax Court violated the uniformity requirement of
Article 15 because the Tax Court failed to assess her property consistent with the PTAAB’s
assessments of virtually identical units, 803 and 703. The uniformity requirement is
violated when property within the same class or sub-class is not “assessed based on an
equivalent proportion of the property’s actual value.” Andrecs, 444 Md. at 589.
Accordingly, Article 15 “requires that the same standard of value or economic yardstick
must be used in making assessments within the same subclass.” Greyhound, 271 Md. at
590. In the present case, the Tax Court’s valuation of Petitioner’s property does not offend
uniformity principles because her property was assessed at its full cash value, which is the
“economic yardstick” used to assess all real property. See id.; see also Samet v. Supervisor
of Assessments of Balt. City, 290 Md. 357, 361 (1981) (explaining that an owner whose
property has been properly assessed according to the fair market value will not receive a
reduced assessment even when neighboring properties may have been assessed at a lesser
valuation). We hold that the Tax Court did not violate Article 15.
V.
When reviewing whether the Tax Court’s decision is supported by substantial
evidence, we evaluate “whether a reasoning mind reasonably could have reached the
factual conclusion the agency reached.” Frey, 422 Md. at 137 (internal quotation marks
omitted). The Tax Court resolves conflicts in evidence and draws reasonable inferences
17
when necessary. St. Leonard Shores Joint Venture, 307 Md. at 447. Petitioner argues that
the Tax Court’s decision is not supported by substantial evidence because the court relied
solely upon post-date of finality sales and consequently failed to consider Petitioner’s
evidence. We disagree.
The Tax Court considered but discredited Petitioner’s evidence—an appraisal, for
refinancing purposes, of a unit in Park Somerset that was based on units in the older, less
desirable buildings in the Somerset House development. The Tax Court explained at the
hearing that, “even though the methodology of the appraisal” was professional, “it’s not
accurate at all.” The Tax Court reasoned that when Petitioner’s appraiser relied on “sales
from the other building[s],” the appraiser failed to make appropriate adjustments to account
for the desirability of the Parc Somerset building. The Tax Court concluded that the
Supervisor’s evidence was more accurate to the valuation of Petitioner’s property. In its
written decision, the Tax Court again summarized the evidence presented by both parties
and concluded that “based on the Assessor’s best comparable, a modicum of further relief
is warranted” thereby, again, crediting the Supervisor’s evidence as more probative of the
valuation.
We held earlier in this opinion that the Tax Court may consider the sale of
comparable properties occurring within a reasonable time after the date of finality to assess
the value of the property. As was its prerogative, the Tax Court relied in the present case
on such evidence to support its assessment. We see no error of fact or law in the Tax
Court’s doing so and therefore defer to that court’s decision. See Supervisor of Assessments
of Anne Arundel Cty. v. Hartge Yacht Yard, Inc., 379 Md. 452, 461 (2004) (explaining that,
18
when “the Tax Court’s decision is based on a factual determination, and there is no error
of law, the reviewing court may not reverse the Tax Court’s order if substantial evidence
of record supports the agency’s decision”). We therefore hold that the Tax Court’s
assessment of Petitioner’s property, relying upon the Supervisor’s post-date of finality
sales, was supported by substantial evidence in the record.
JUDGMENT OF THE COURT OF
SPECIAL APPEALS AFFIRMED.
COSTS TO BE PAID BY
PETITIONER.
19
Circuit Court for Montgomery County
Case No. 369661-V
Argued: January 7, 2016
IN THE COURT OF APPEALS
OF MARYLAND
No. 41
September Term, 2015
______________________________________
ANN LANE
v.
SUPERVISOR OF ASSESSMENTS OF
MONTGOMERY COUNTY
______________________________________
Barbera, C.J.
*Battaglia
Greene
Adkins
McDonald
Watts
Raker, Irma S. (Retired, Specially
Assigned),
JJ.
______________________________________
Dissenting Opinion by Watts, J., which
Battaglia, J., joins
______________________________________
Filed: May 3, 2016
*Battaglia, J., now retired, participated in the hearing
and conference of this case while an active member
of this Court; after being recalled pursuant to the
Constitution, Article IV, Section 3A, she also
participated in the decision and adoption of this
opinion.
Respectfully, I dissent. Although the Majority opinion is well written, I would hold
that Md. Code Ann., Tax-Prop. (1985, 2012 Repl. Vol.) (“TP”) § 8-104(b), by its plain
language, does not permit the Maryland Tax Court (“the Tax Court”) to take into
consideration sales of comparable properties that occur after the date of finality in
determining the value of a property on the date of finality.
Because this case turns on statutory interpretation, I reiterate the pertinent principles
of statutory interpretation as set forth in Hailes v. State, 442 Md. 488, 495-96, 113 A.3d
608, 612 (2015):
In interpreting a statute, a court first considers the statute’s language,
which the court applies where the statute’s language is unambiguous and
clearly consistent with the statute’s apparent purpose. Where the statute’s
language is ambiguous or not clearly consistent with the statute’s apparent
purpose, the court searches for the General Assembly’s intent in other
indicia, including the history of the statute or other relevant sources intrinsic
and extrinsic to the legislative process, in light of: (1) the structure of the
statute; (2) how the statute relates to other laws; (3) the statute’s general
purpose; and (4) the relative rationality and legal effect of various competing
constructions.
(Citations, internal quotation marks, and brackets omitted).
Examining the plain language of TP § 8-104(b), I would conclude that nothing in
TP § 8-104(b) permits the Tax Court to take into consideration events occurring after the
date of finality in determining the value of a property on the date of finality. TP § 8-
104(b)(1) provides that, “[n]otwithstanding a revaluation under subsection (c) of this
section, the [State] Department [of Assessments and Taxation (“SDAT”)] or supervisor [of
assessments for a county] shall value all real property once in every 3-year cycle based on
an exterior physical inspection of the real property.” TP § 8-102(a) provides that, with an
exception not relevant here, “the value of real property shall be its value on the date of
finality.” (Emphasis added). TP § 8-104(b)(2), in turn, states: “The date of finality for
real property that is valued under this subsection is the January 1 immediately before the
1st taxable year[1] to which the assessment based on the new value is applicable.” In other
words, pursuant to TP § 8-102(a), the value of a property “shall be its value on the date of
finality[,]” which, under TP § 8-104(b)(2), is January 1 of the relevant tax year.
Significantly, TP § 8-104(b)(2) makes no mention whatsoever of consideration of events
occurring after the date of finality as being relevant to determining the value of a property
on the date of finality. Rather, the date of finality is the date of finality—i.e., January 1 of
the relevant tax year—nothing more and nothing less.
TP § 8-104(b)(2)’s plain language comports with the commonsense understanding
of the term “finality.” Black’s Law Dictionary defines “finality” as “[t]he quality of being
complete and unchangeable.” Finality, Black’s Law Dictionary (10th ed. 2014). Similarly,
Merriam-Webster defines “finality” as “the quality or state of being final or finished and
not able to be changed” and as “the character or condition of being final, settled,
irrevocable, or complete[.]” Finality, Merriam-Webster (2015), http://www.merriam-
webster.com/dictionary/finality [http://perma.cc/3V8H-MYD7]. Simply put, something
has finality when it is complete, final, and finished. Thus, the date of finality for purposes
of real property assessment is January 1 of the relevant tax year; i.e., that is the date when
TP § 1-101(oo) defines “taxable year” as “July 1 to June 30, both inclusive, for
1
which the State, each county, municipal corporation, and taxing district of the State
computes, imposes, and collects property tax.”
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the assessment is to be complete, final, and finished, and the value of a property must be
the value that exists on January 1.
TP § 8-104(b)(2)’s plain language and meaning simply does not allow for
consideration of events occurring after January 1 for a determination of what a property’s
value is as of January 1. And this reading of TP § 8-104(b)(2) is entirely logical. If
something is to be final as of a certain date, that does not mean that something is somewhat
final as of that date and that events that occur months after that date can somehow be used
to justify a different result or to change what otherwise is meant to be final. Take, for
instance, the example of a student’s homework assignment. The teacher states that the
homework assignment must be finished as of January 1 and that her grade will be finalized
as of that same date, January 1. The student finishes the homework assignment and turns
it in on January 1. The teacher grades the homework assignment and returns it to the
student. The student believes that the homework assignment grade is final and thinks no
more of it. Months later, however, after having graded other assignments from other
students, the teacher adjusts the grade given to the student on the homework assignment
due on January 1, lowering the grade. Obviously, the student thinks such a result is unfair
because the grade given after she turned in the homework assignment has now been
adjusted against her, based on events that occurred after that assignment, namely, other
students having turned in other assignments. Such a result flies in the face of the ordinary
meaning of the term “final.”
Moreover, in addition to the circumstance that TP § 8-104(b)(2)’s plain language
and meaning do not provide for consideration of events occurring after January 1 in
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determining what a property’s value is as of January 1, TP § 8-104(b)(2)’s legislative
history is notably silent on the matter. Indeed, the Majority fails to identify any legislative
history supporting its interpretation of TP § 8-104(b)(2). Rather, the Majority simply
states: “Sales of comparable properties occurring reasonably soon after the date of finality
are relevant to an accurate assessment of the valuation of property as of that date; there is,
therefore, no good reason why such probative evidence should not be considered.” Maj.
Slip Op. at 11 (citations omitted).2 But such reasoning is circular, renders the term “date
of finality” essentially meaningless, and adds to TP § 8-104(b)(2) language that is not there,
thus violating one of the cardinal rules of statutory construction. See Montgomery Cnty.
v. Phillips, 445 Md. 55, 62, 124 A.3d 188, 192 (2015) (“[W]e neither add nor delete words
to a clear and unambiguous statute to give it a meaning not reflected by the words [that]
the General Assembly used or engage in forced or subtle interpretation in an attempt to
extend or limit the statute’s meaning.” (Citation and brackets omitted)); id. at 63, 124 A.3d
at 192 (“In construing a statute, we avoid a construction of the statute that is unreasonable,
illogical, or inconsistent with common sense.” (Citation and brackets omitted)); Doe v.
Montgomery Cnty. Bd. of Elections, 406 Md. 697, 712, 962 A.2d 342, 351 (2008) (“We
begin our analysis by first looking to the normal, plain meaning of the language of the
statute, reading the statute as a whole to ensure that no word, clause, sentence[,] or phrase
is rendered surplusage, superfluous, meaningless[,] or nugatory.” (Citations and internal
2
The Majority also relies on jurisprudence from the 1940s, 1970s, and 1980s, from
other jurisdictions. See Maj. Slip Op. at 13-14. The age and sparsity of the case law alone
from the other jurisdictions calls into question its persuasiveness in interpreting the
Maryland statute, TP § 8-104(b)(2).
-4-
quotation marks omitted)). In short, in my view, the Majority adds something to TP § 8-
104(b)(2) that is not there where the General Assembly has given no indication that it
intended to permit the Tax Court to consider events occurring after the date of finality in
determining a property’s value on the date of finality. And there is a good reason for not
considering sales occurring after the date of finality—namely, fairness to the taxpayer.
The Majority also holds that, because the Tax Court reviews appeals de novo, the
Tax Court “had the responsibility to decide the relevance of the evidence presented, discard
that which the court deemed irrelevant, and accord to that which is relevant the weight
[that] it deserved”; i.e., the Tax Court was permitted to consider the sales of comparable
properties occurring after the date of finality. Maj. Slip Op. at 12. However, such a holding
turns the concept of de novo review on its head. To be sure, “[a]n appeal before the Tax
Court shall be heard de novo and conducted in a manner similar to a proceeding in a court
of general jurisdiction sitting without a jury.” Md. Code Ann., Tax-Gen. (1988, 2010 Repl.
Vol.) § 13-523. However, the power of the Tax Court to hear appeals de novo does not
permit the Tax Court to override the plain language of TP § 8-104(b)(2) and take into
consideration evidence that occurs after the date of finality in contravention of TP § 8-
104(b)(2). Indeed, the Majority’s reasoning as to the Tax Court’s power to hear appeals
de novo is a red herring and has no correlation whatsoever with the Tax Court’s authority
as it relates to statutory interpretation. See, e.g., Phillips, 445 Md. at 61-62, 124 A.3d at
191-92 (When an appellate court reviews decisions of the Tax Court, the appellate court is
“under no statutory constraints in reversing a Tax Court order [that] is premised solely
upon an erroneous conclusion of law. . . . A reviewing court will not accord deference to
-5-
the [T]ax [C]ourt’s decision on a question of law[.]” (Citations and internal quotation
marks omitted)).
Furthermore, I disagree with the Majority’s use of condemnation cases to justify
exceeding the plain language of TP § 8-104(b)(2). Specifically, I disagree with the
Majority’s reading of Hance v. State Rds. Comm’n of Md., 221 Md. 164, 156 A.2d 644
(1959) as “confirm[ing] that evidence of sales of comparable properties occurring after an
assessment date may be relevant to the property’s fair market value as of the date of
assessment and therefore are admissible.” Maj. Slip Op. at 13. In my view, Hance, 221
Md. at 167, 156 A.2d at 644, is distinguishable and not persuasive in the context of this
property assessment case because, simply put, it is a condemnation case. In Hance, id. at
175, 156 A.2d at 650, we held that, in the context of a condemnation case, comparable
sales that “tak[e] place subsequent to the taking” may be considered in determining the
market value of the property as of the date of the taking. That the most recent information
about the values of comparable properties is admissible in condemnation cases is not
dispositive of the issue in this case.
Importantly, the statutes concerning eminent domain do not provide that the
valuation of the property taken must be done by the date of finality. Indeed, Md. Code
Ann., Real Prop. (1974, 2015 Repl. Vol.) § 12-103 expressly provides: “Unless an
applicable statute specifies a different time as of which the value is to be determined, the
value of the property sought to be condemned and of any adjacent property of the defendant
claimed to be affected by the taking shall be determined as of the date of the taking, if
taking has occurred, or as of the date of trial, if taking has not occurred.” Nonetheless, this
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Court has held that the “valuation date is not immutable” “because the date of valuation set
by statute cannot be used to deprive a property owner of the just compensation [that the
owner] is entitled to receive[.]” City of Baltimore v. Kelso Corp., 281 Md. 514, 519, 380
A.2d 216, 219 (1977). Thus, in Kelso Corp., id. at 519, 380 A.2d at 219, we held that, if
the property owner could “show that the City through fraud manipulated the date of
valuation to [the owner’s] detriment, the court can remedy the injustice by ignoring the
statutory date and allowing the jury to consider such factors as will allow the property
owner to receive just compensation free of any effect of the fraudulent device.”
In any event, in my view, the distinction between the purposes of condemnation and
routine property assessment renders Hance and similar condemnation cases inapplicable.
Condemnation occurs where the government takes a property through the power of eminent
domain. See Mayor and City Council of Balt. City v. Valsamaki, 397 Md. 222, 241, 916
A.2d 324, 335 (2007) (“Condemnation is a function of the State’s power of eminent
domain[, which] is defined as the inherent power of a governmental entity to take privately
owned property, esp[ecially] land, and convert it to public use, subject to reasonable
compensation for the taking.” (Citation, brackets, and internal quotation marks omitted)).
The goal in a condemnation case, however, is to try to give the property owner every
opportunity to establish the value of the property that is most favorable to the
property owner, i.e., to establish “reasonable compensation for the taking.” See id. at
243, 916 A.2d at 337 (“The Maryland Constitution provides that: ‘The General Assembly
shall enact no Law authorizing private property, to be taken for public use, without just
compensation, as agreed upon between the parties, or awarded by a Jury, being first paid
-7-
or tendered to the party entitled to such compensation.’” (Citations omitted)). By contrast,
in the context of property assessment, the purpose of property assessment is to assess
property based on the fair market value of a property at a particular time. Indeed, SDAT
or local authorities are to assess property taxes based on the “full cash value of property[,]”
TP § 1-101(qq), which is the equivalent of the fair market value of the property. And,
pursuant to TP § 8-104(b)(2)’s plain language, the fair market value is assessed as of the
date of finality.
Significantly, unlike in condemnation cases, in the context of property assessment,
TP § 8-102(a) and TP § 8-104(b)(2) expressly provide that the value of real property shall
be the value as on the date of finality, which is January 1 of the relevant tax year. In other
words, property assessment relies on the date of “finality,” not the date of taking, the date
of trial, or some other appropriate date. Through use of the term “date of finality,” the
General Assembly clearly expressed an intent that property owners have finality, i.e.,
certainty about the date on which the value of the property would be determined. In other
words, a property owner would know that, as of January 1 of the relevant tax year, his or
her property has a specific value for tax assessment purposes. The property owner would
then have the ability to rely on, or at least know, what the evidence would consist of, should
the property owner choose to appeal the Board’s decision or initial valuation.
By holding as the Majority does, however, property owners are placed in the
difficult position of spinning the wheel and gambling on appeal, as property values could
go up or down depending on “the sale of comparable properties occurring within a
reasonable time after the date of finality[.]” Maj. Slip Op. at 18. In my view, the Majority’s
-8-
holding will chill property owners’ willingness and ability to appeal the Board’s decision
or initial valuation because the property owners will not know what the valuation is based
on or what evidence will be used from after the date of finality. In some instances, a
property owner will accept whatever the initial valuation is, rather than risk an appeal that
could result in a higher valuation in light of the sale of comparable properties occurring
after the date of finality. Presumably, it is left to a property owner’s ability to read the
Majority’s opinion to assess the risk of an appeal. The Majority’s holding places the onus
on the property owner to locate sales of comparable properties “occurring reasonably soon
after the date of finality[,]” and then accurately predict which sales of comparable
properties SDAT or the Supervisor will utilize in reassessing the value of the property
owner’s property and which sales the Tax Court will find “relevant[.]” Maj. Slip Op. at
11. Additionally, what constitutes “occurring reasonably soon after the date of finality” is
not defined by the Majority and would be subject to varying interpretations by SDAT and
the Tax Court. This could not have been the General Assembly’s intent in enacting TP §
8-104(b)(2).
Moreover, I want to emphasize that the Notice of Assessment, dated December 28,
2010, issued by the Supervisor of Assessments for Montgomery County to Petitioner stated
that Petitioner’s property would be assessed at a value of $2,130,000, which represented
“the new market value effective January 1, 2011.” The Notice of Assessment expressly
stated that the “new market value is based upon market data available prior to this date.”
In other words, everything that was provided to Petitioner explicitly stated that the
assessment of her property was based upon market data available prior to the date of
-9-
finality, i.e., January 1, and that the assessment was effective as of the date of finality.
There was no other notice that was provided to Petitioner that stated otherwise, and there
was certainly nothing that was provided to Petitioner stating that the Supervisor could later
justify the assessment using market data occurring after the date of finality.
In sum, I would hold that TP § 8-104(b)(2) does not permit the Tax Court to take
into consideration sales of comparable properties that occur after the date of finality in
determining the value of a property on the date of finality, as such a holding is contrary to
TP § 8-104(b)(2)’s plain language, common sense, and the goal of giving property owners
finality with respect to property assessments. Accordingly, for the above reasons,
respectfully, I dissent.
Judge Battaglia has authorized me to state that she joins in this opinion.
- 10 -