Present: Hassell, C.J., Lacy, Keenan, Koontz, Lemons and
Agee, JJ., and Russell, S.J.
CITY OF MARTINSVILLE OPINION BY
SENIOR JUSTICE CHARLES S. RUSSELL
v. Record No. 040218 November 5, 2004
COMMONWEALTH BOULEVARD ASSOCIATES, LLC
FROM THE CIRCUIT COURT OF THE CITY OF MARTINSVILLE
Charles M. Stone, Judge
This appeal presents the question whether a taxpayer is
entitled to relief under Code § 58.1-3984 for real estate
taxes erroneously assessed during the interim between general
reassessments. More specifically, may the taxpayer challenge
an annual levy of taxes without showing that the previous
general reassessment, upon which the annual levy was based,
was erroneous? We answer the question in the affirmative.
The trial court decided the case on cross-motions for
summary judgment and the facts, except as to valuation, are
undisputed. Pursuant to Code § 58.1-3250,the City of
Martinsville (the City) conducts a general reassessment of the
real estate within the City every two years. Tax years run
from July 1 to the following June 30. See Code § 15.2-2500
(prescribing uniform fiscal year for localities from July 1 to
June 30). The annual levies are based upon valuations set by
the previous general reassessment. The subject of this appeal
is a tract of industrial land containing 22.829 acres improved
by a large manufacturing plant formerly owned by the Tultex
Corporation. The City conducted a general reassessment of
land on January 1, 1999 in which the property was assigned a
valuation of $12,408,700. At that time, the Tultex plant was
active. The January 1, 1999 assessment set the valuation that
would govern the annual levies of taxes from July 1, 1999 to
June 30, 2001.
On December 3, 1999, the Tultex Corporation filed for
Chapter 11 bankruptcy. About a year later, the present owner,
Commonwealth Boulevard Associates, LLC, (CBA) applied for a
bank loan to finance the purchase of the property subject to
the approval of the bankruptcy court. Pursuant to the
lender’s requirements, a professional appraisal was made in
which the property, by then vacant and “essentially gutted,”
was valued at a fair market value of $2,375,000 as of December
5, 2000. On January 4, 2001, CBA purchased the property from
the Tultex Corporation, with the approval of the bankruptcy
court, for $750,000.
Four days before the sale, on January 1, 2001, the City
had conducted its next general reassessment, which would
govern its annual real estate tax levies from July 1, 2001
until June 30, 2003. That assessment assigned a fair market
value of $4,128,386 to the former Tultex property. Id.
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From January 4, 2001, when CBA acquired the property
until June 30, 2001 when the new tax year began, the City
continued to base its levy on the 1999 general reassessment
valuation of $12,408,700. CBA paid the taxes for that period,
amounting to approximately $58,321.
CBA brought this suit for relief from an erroneous
assessment under Code § 58.1-3984. The trial court, in a
written opinion, agreed with CBA’s contention that the levy
for the first half of 2001 was based on an erroneous
assessment. The trial court granted summary judgment in CBA’s
favor and reduced the assessed valuation of the Tultex
property for that period to $2,375,000, based upon the
evidence of the independent appraisal made for the lender.
The trial court also ordered a refund of the taxes CBA had
paid for the first half of 2001. We awarded the City an
appeal.
The City contends that annual levies of taxes must be
based only on valuations established by the previous general
reassessment, and that, with certain exceptions not pertinent
here, a taxpayer seeking relief from taxes levied in the
interim must prove that the previous general reassessment was
erroneous when originally made. The City points out that CBA
made no contention that the 1999 general reassessment was
erroneous when made. Indeed, argues the City, in 1999 the
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Tultex plant was a going concern in full operation and the
$12,408,700 valuation was “entirely appropriate.” CBA
contended only that the annual levy for the first half of
2001, based on the 1999 valuation of $12.4 million, was
clearly erroneous based on the City’s own valuation of $4.1
million as of January 1, 2001 and the independent appraisal of
$2.3 million made the previous month.
Code § 58.1-3984(A) provides, in pertinent part,
Any person assessed with local taxes, aggrieved by
any such assessment, may . . . (a) within three
years from the last day of the tax year for which
any such assessment is made, [or] (b) within one
year from the date of the assessment, whichever
. . . is later, apply for relief to the circuit
court of the county or city wherein such assessment
was made.
The City argues that the term “assessment,” as used in
this section, refers only to the periodic general
reassessments upon which the annual levies of taxes are based.
We held, however, in Hoffman v. Augusta County, 206 Va. 799,
146 S.E.2d 249 (1966) that the word “assessment,” as used in
the tax laws, had two meanings. It could refer either to a
periodic general reassessment or to the annual levy of taxes
based upon that valuation. The General Assembly, we said, had
“made clear that the remedy provided by Code § 58-1145 [the
statutory predecessor of present Code § 58.1-3984] shall be
available to a landowner to attack an assessment in whichever
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of its two meanings the word is employed.” Id. 206 Va. at
802, 146 S.E.2d. at 251.
The City terms this language “dictum.” We do not agree.
It was essential to the holding in Hoffman and states a rule
to which we adhere. A taxpayer is entitled to relief under
Code § 58.1-3984 if he carries his burden of proving that in
either the general reassessment or in the annual levy of taxes
“the property in question is valued at more than its fair
market value or that the assessment is not uniform in its
application, or that the assessment is otherwise invalid or
illegal.” Code § 58.1-3984. The trial court correctly so
ruled.
The trial court, considering the conflicting evidence of
value, found that the property was valued for tax purposes at
more than its fair market value for the first half of 2001.
The trial court was thereupon empowered to “reduce the
assessment to what in its opinion, based on the evidence is
the fair market value of the property involved ” and also to
order repayment of the taxes already paid pursuant to the
erroneous assessment. Code § 58.1-3987. The evidence in the
record fully supports the court’s finding and we will affirm
the judgment.
Affirmed.
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