Present: Carrico, C.J., Compton, Stephenson, Lacy, Hassell and
Koontz, JJ., and Poff, Senior Justice
LEE GARDENS ARLINGTON LIMITED PARTNERSHIP
OPINION BY
v. Record No. 950305 SENIOR JUSTICE RICHARD H. POFF
November 3, 1995
ARLINGTON COUNTY BOARD, ET AL.
FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
Benjamin N.A. Kendrick, Judge
This is a taxpayer's appeal from a judgment upholding a tax
assessment of Sheffield Court Apartments, a large garden
apartment complex owned by Lee Gardens Arlington Limited
Partnership (Lee Gardens, or the taxpayer).
On January 16, 1992, the property was valued at $33,719,278.
The County Board of Arlington County (the County) approved a
partial exemption for rehabilitation which reduced the assessed
value to $24,539,900. In October, based upon a review of a
three-year history of Sheffield Court's report of operating
income and expense and a redetermination of its net operating
income, the County raised the January assessment to $26,896,600.
In December 1993, Lee Gardens filed an application under
Code §§ 58.1-3984 and -3987 to correct the revised assessment and
to require a refund of overpayment. Lee Gardens alleged that the
1992 assessment "does not reflect the fair market value of the
property [and] . . . is not uniform in its application." The
County filed a counterclaim asking the court to increase the
assessment to $28,139,800 "based on actual net operating income
. . . data . . . not received . . . until after the 1992
assessment was made."
During discovery, Lee Gardens requested disclosure of tax
assessment worksheets used by the County, and the County filed a
request for disclosure of certain taxpayer records. The trial
court denied the taxpayer's request and, in part, the County's
request.
As its final witness at trial, Lee Gardens introduced George
Byrne, a private tax consultant, and asked the court to qualify
him as an expert in valuation of commercial real estate and
review of assessments. Byrne was not licensed as an appraiser,
and the court ruled that he was ineligible to testify as an
expert witness.
Lee Gardens moved for a continuance. The court denied the
motion. The taxpayer moved for nonsuit, and the County moved to
strike the taxpayer's evidence. The court denied Lee Gardens'
motion and granted the County's motion to strike the evidence.
Thereupon, the County nonsuited its counterclaim.
We awarded Lee Gardens an appeal, and we will consider the
three questions raised by its assignments of error.
I
First, we address the question whether the trial court erred
in denying the taxpayer's discovery request.
The assessment formula employed here is called
"capitalization of net operating income". Under that formula,
operating expenses are subtracted from operating income, and a
capitalization rate is applied to the difference to determine the
assessment. As operating income remains constant, the quantum of
the assessment will vary according to changes in the operating-
expense factor.
In its application of the assessment formula, the County
created a set of "guidelines" of income and expenses. The set
includes different guidelines for different types of taxable
properties. Thomas Rice, director of the County's department of
assessments, testified that the guidelines were used as "the
first indication on the value"; that the appraisal staff
"examines each of the indications of value produced by those
guidelines . . . the experience of the property, its history as
reported"; that the staff "has the latitude of adjusting those
guideline numbers . . . to reflect the operation of the
particular property"; and that, absent such "historical . . .
information, the last resort for the county is to rely on the
guidelines".
Rice said that the guidelines were not applied to Sheffield
Court because its history of operation showed "higher rent" and
"lower expenses" than those "indicated by the guidelines", and
that no apartment complex with a history of income and expenses
like those of Sheffield Court had been assessed by applying the
guidelines. As appears from the County's response to a request
for admissions, approximately 40 percent of 1992 appraisals of
large garden apartment complexes did not apply the guidelines.
Rice testified further that the guidelines were not applied when
actual expenses were historically higher than the guidelines.
Lee Gardens argues on brief that use of actual expenses
lower than guidelines "results in a . . . higher assessment" and
that "this method . . . is not uniform in application." Lee
Gardens also contends that the County's use of actual expenses
higher than the guidelines "is directly relevant to the non-
uniformity basis of the taxpayer's claim." Consequently, Lee
Gardens reasons, the trial court committed reversible error when
it denied its discovery motion. That motion requested disclosure
of County "tax worksheets for all commercial properties whose
expenses exceeded those for the guidelines, and whose actual, or
stabilized, expenses were used to compute net operating income."
Under Code § 58.1-3, income and expense information
taxpayers provide tax officials is confidential, and any
disclosure made without a court order is a Class 2 misdemeanor.
Rule 4:1(b)(1) authorizes a trial court to order discovery
"regarding any matter, not privileged, which is relevant to the
subject matter involved", including any information "reasonably
calculated to lead to the discovery of admissible evidence."
With respect to the recipient of a discovery order, Rule 4:1(c)
empowers the court to "make any order which justice requires to
protect a party or person from . . . undue burden or expense,
including one . . . that . . . confidential . . . commercial
information not be disclosed".
The record shows that the County assesses "approximately
1000 parcels of real estate which are classified as apartment
properties", including "some 500 plus . . . apartment complexes"
with a total of "some 40,000 apartment units in Arlington
County". Lee Gardens' discovery request embraced not only
apartment properties, but "tax worksheets for all commercial
properties" in Arlington County.
"All taxes . . . shall be uniform upon the same class of
subjects". Va. Const. art. X, § 1. The constitutional mandate
requires uniformity in the assessment of "properties having like
characteristics and qualities, located in the same area." Smith
v. City of Covington, 205 Va. 104, 108, 135 S.E.2d 220, 223
(1964). Obviously, Lee Gardens' discovery request extends to a
"class of subjects" with "characteristics and qualities" unlike
apartment complexes and whose histories of income and expense are
unlike that experienced by Sheffield Court.
The trial court's order denying Lee Garden's request was
based upon the court's finding that the request was "overbroad,
burdensome and not reasonably calculated to lead to the discovery
of admissible evidence". Citing Rakes v. Fulcher, 210 Va. 542,
546, 172 S.E.2d 751, 755 (1970), Lee Gardens acknowledges on
brief that "[t]he granting or denying of a request for discovery
is a matter within the trial court's discretion and will be
reversed only if the action taken was improvident, and affected
substantial rights."
We are of opinion that the trial court's finding is
supported by the record and complies with the provisions of Rule
4:1. Consequently, we cannot say that the order denying Lee
Gardens' disclosure request was an abuse of the court's
discretion, and we will affirm the order denying that request.
II
Next, we consider whether a person unqualified to obtain an
appraiser's license can testify as an expert witness on real
estate valuation.
On voir dire, Byrne acknowledged that he was a tax
consultant under contract with Lee Gardens' attorney; that he was
being compensated for his testimony; that he would testify as to
the value of Sheffield Court; and that he did not have a Virginia
real estate appraiser's license. Asked if he was "qualified to
get a license", Byrne replied, "I don't have the course work."
Sustaining the County's objection, the trial court ruled that
Byrne "can't be qualified [as an expert witness] without a
license."
The question in issue is a matter of first impression in
this Court. However, the Attorney General of Virginia has issued
an opinion relevant to that issue. Op. Att'y Gen. 211 (1993).
Construing the applicable statutes in Chapter 20.1 of Title 54.1
of the Code, the Attorney General concluded that
it is unlawful [under Code § 54.1-2011(A)] for anyone,
including a licensed real estate broker, who does not
have a real estate appraiser's license to testify for
compensation about the value of real estate in any
court proceeding, unless permitted under applicable
statutory exceptions.
Id. at 212.
That conclusion was based, the Attorney General explained,
upon the "clear language" of § 54.1-2011(A) which provides that
"it shall be unlawful to engage in the appraisal of real estate
. . . for compensation" and upon the "plain language" of § 54.1-
2009 under which, the Attorney General said, "an 'appraisal'
includes any opinion or conclusion about the value of interest in
real property. An appraisal report may be either oral or
written. A broker's testimony in a . . . court proceeding,
therefore, clearly falls within this definition of an
'appraisal'."
Lee Gardens contends that the statutory exception defined in
Code § 54.1-2010(3) "clearly applies to Mr. Byrne." That
subsection of the statute creates an exception for "[a]ny person
who, in the ordinary course of business, provides consulting
services . . . for a fee". Construing that language, the
Attorney General decided:
In ordinary usage, "consulting" is defined as
"providing professional or expert advice." Webster's
Ninth New Collegiate Dictionary 282 (1990). It is not
clear that this definition is broad enough to include
paid testimony in court, which goes beyond mere advice
to the property owner paying for the testimony. In
view of the rule of strict construction that applies to
exemptions from licensing statutes, therefore, it is my
opinion that § 54.1-2010(3) does not except a real
estate broker's testimony from the general prohibition
in § 54.1-2011(A).
Id. at 213.
In City of Winchester v. American Woodmark Corporation, 250
Va. ___, ___, ___ S.E.2d ___, ___ (1995), we said:
[W]e have repeatedly held that the General Assembly is
presumed to have knowledge of the Attorney General's
interpretation of statutes and the General Assembly's
failure to make corrective amendments evinces
legislative acquiescence in the Attorney General's
interpretation. Browning-Ferris, Inc. v. Commonwealth,
225 Va. 157, 161-62, 300 S.E.2d 603, 605-06 (1983);
Richard L. Deal and Assoc. v. Commonwealth, 224 Va.
618, 622, 299 S.E.2d 346, 348 (1983); Albemarle County
v. Marshall, 215 Va. 756, 762, 214 S.E.2d 146, 150
(1975).
The Attorney General's statutory analysis of the Code
Chapter entitled "Real Estate Appraisers" was published August
18, 1993. In 1994, the General Assembly amended Code § 8.01-
401.1 entitled "Opinion testimony by experts." Acts 1994, c.
328. Had the legislature intended to make "corrective
amendments" to Chapter 20.1 of Title 54.1 enacted in 1990, it
could have done so. It did not.
We share the Attorney General's analysis of the applicable
statutes, and we will affirm the trial court's ruling that Byrne
was ineligible to testify as an expert witness.
III
Finally, we must decide whether the trial court erred in
denying Lee Garden's motion for nonsuit.
"A party shall not be allowed to nonsuit a cause of action,
without the consent of the adverse party who has filed a
counterclaim, . . . unless the counterclaim . . . can remain
pending for independent adjudication by the court." Code § 8.01-
380(C). Absent the County's consent, the dispositive question is
whether the County's counterclaim seeking an increase in the
assessment could have remained pending on the docket for
independent adjudication after Lee Gardens' claim seeking a
decrease in assessment had been nonsuited.
Subsection B of Code § 58.1-3984 affords the commissioner of
revenue of a county or city the same right to initiate litigation
of a tax assessment as that afforded a taxpayer by subsection A
of that statute. Lee Gardens concedes on brief that, to increase
an under assessment, "the county's only recourse . . . is to
petition the Circuit Court for an increase in the assessment,
pursuant to sec. 58.1-3984(B)". The County did not pursue that
course. Instead, it chose to assert an under-assessment claim in
litigation initiated by the taxpayer's over-assessment claim.
Fair market value was the ultimate issue common to both
claims. The County's counterclaim could not remain pending on
the docket for an adjudication independent of an adjudication of
the taxpayer's nonsuited claim; an adjudication of one claim
would be an adjudication of both. Accordingly, we will uphold
the trial court's ruling that Lee Gardens was not entitled to
nonsuit its claim without the County's consent.
IV
Finding no merit in Lee Gardens' assignments of error, we
need not address the County's assignment of cross-error, and we
will affirm the judgment of the trial court.
Affirmed.