ATTORNEYS FOR PETITIONER: ATTORNEY FOR RESPONDENT:
JAMES F. BEATTY JOHN C. SLATTEN
JESSICA L. FINDLEY MARION COUNTY ASSESSOR’S
DONALD D. LEVENHAGEN OFFICE
KATHRYN MERRITT-THRASHER Indianapolis, IN
MEGAN M. PIAZZA
LANDMAN BEATTY, LAWYERS
Indianapolis, IN
IN THE
INDIANA TAX COURT
Jan 20 2015, 3:19 pm
LAKEVIEW TERRACE )
COOPERATIVE, INC., )
)
Petitioner, )
)
v. ) Cause No. 49T10-1406-TA-40
)
JOSEPH P. O’CONNOR, MARION )
COUNTY ASSESSOR, )
)
Respondent. )
ORDER ON RESPONDENT’S MOTION TO DISMISS
MEMORANDUM DECISION
January 20, 2015
WENTWORTH, J.
Joseph P. O’Connor in his official capacity as the Marion County Assessor has
moved to dismiss Lakeview Terrace Cooperative, Inc.’s appeal, claiming that the Court
lacks subject matter jurisdiction. The Court grants the Assessor’s motion.
FACTS AND PROCEDURAL HISTORY
The events giving rise to this matter commenced several years ago. On April 22,
2005, Lakeview Terrace filed an Application for Property Tax Exemption with the
Assessor, claiming that its 340-unit multi-family cooperative apartment complex and
personal property were exempt from property taxation because they were owned,
occupied, and exclusively used for the charitable purpose of providing affordable
housing to low-income persons. (See Cert. Admin. R. at 251-384.) The Marion County
Property Tax Assessment Board of Appeals (PTABOA) granted Lakeview Terrace’s
exemption application. (See Cert. Admin. R. at 235-50.) Lakeview Terrace’s property
remained exempt from property tax for the next four years. (See, e.g., Cert. Admin. R.
at 434-69.)
In 2009, this Court issued a decision in which it held that the provision of
affordable housing to low-income persons was not a per se charitable purpose. See
Jamestown Homes of Mishawaka, Inc. v. St. Joseph Cnty. Assessor, 909 N.E.2d 1138,
1144 (Ind. Tax Ct. 2009), review denied. As a result, the PTABOA questioned several
of its prior exemption determinations, including Lakeview Terrace’s. (See Cert. Admin.
R. at 748-49, 757-58.) On January 31, 2011, the PTABOA sent Lakeview Terrace a
letter requesting that it complete a four-page worksheet “to help [the PTABOA] better
understand the services [that Lakeview Terrace] provides to [its] tenants.” (See Cert.
Admin. R. at 470-76.) The PTABOA explained that it would use the worksheet to review
Lakeview Terrace’s exemption status and that it may hold a hearing. (See Cert. Admin.
R. at 470.) Lakeview Terrace completed and returned the worksheet to the PTABOA as
requested. On March 8, 2011, after conducting a hearing, the PTABOA revoked
Lakeview Terrace’s exemption for the 2010 tax year. (See Cert. Admin. R. at 477-94.)
On April 5, 2011, Lakeview Terrace appealed to the Indiana Board of Tax
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Review, alleging that the PTABOA lacked the statutory authority to revoke its 2010
exemption. (See, e.g., Cert. Admin. R. at 3-6, 9-10.) Alternatively, Lakeview Terrace
alleged that the PTABOA’s exemption revocation was untimely and ignored the fact that
its property had been owned, occupied, and exclusively used for charitable purposes
since 2005. (See, e.g., Cert. Admin. R. at 10-14.) On September 16, 2011, Lakeview
Terrace filed a Motion for Summary Judgment, asserting that the PTABOA’s unilateral
revocation of its exemption was improper not only because it lacked the statutory
authority to do so but also because it was untimely. (See Cert. Admin. R. at 388-402.)
On January 17, 2014, after conducting a hearing, the Indiana Board issued an order
denying Lakeview Terrace’s Motion for Summary Judgment. (See Cert. Admin. R. at
577-88.)
On January 29, 2014, Lakeview Terrace filed a Petition for Rehearing with the
Indiana Board. (See Cert. Admin. R. at 589-96, 609-32.) The Indiana Board treated
Lakeview Terrace’s Petition for Rehearing as a Motion to Reconsider and on April 24,
2014, affirmed its denial of Lakeview Terrace’s Motion for Summary Judgment. (See
Cert. Admin. R. at 597-98, 635-46.) The Indiana Board explained that Indiana Code §
6-1.1-11-1 et seq. authorized the PTABOA’s exemption revocation and that the
revocation was both timely and in compliance with all applicable notice requirements.
(See Cert. Admin. R. at 635-46.)
On June 9, 2014, Lakeview Terrace appealed to this Court. On August 15, 2014,
the Assessor filed a Motion to Dismiss for Lack of Jurisdiction. The Court held a
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hearing on October 29, 2014.1 Additional facts will be supplied as necessary.
STANDARD OF REVIEW
When this Court rules on a motion to dismiss for lack of subject matter
jurisdiction, it may consider the petition, the motion, and any supporting affidavits or
evidence. Garwood v. Indiana Dep’t of State Revenue, 998 N.E.2d 314, 317 (Ind. Tax
Ct. 2013). The Court may also weigh the evidence to determine the existence of
requisite jurisdictional facts, resolve factual disputes, and devise procedures to ferret
out the facts pertinent to jurisdiction. Id. at 317-18.
LAW
Subject matter jurisdiction, the power of a court to hear and determine a
particular class of cases, can only be conferred upon a court by the Indiana Constitution
or by statute. See In re Adoption of O.R., 16 N.E.3d 965, 970-71 (Ind. 2014); K.S. v.
State, 849 N.E.2d 538, 540 (Ind. 2006); State v. Sproles, 672 N.E.2d 1353, 1356 (Ind.
1996). The Tax Court has subject matter jurisdiction over all “original tax appeals” and
its territorial jurisdiction spans the entire state. IND. CODE §§ 33-26-3-1, -3 (2015); Ind.
Tax Court Rule 13.
A case is an original tax appeal if it “arises under the tax laws of Indiana” and it
“is an initial appeal of a final determination” made by the Indiana Board. I.C. § 33-26-3-
1
During the hearing, the Court also considered the motions to dismiss for lack of jurisdiction
that were filed in ten companion cases. (See Order, Sept. 29, 2014 (setting a consolidated
hearing for cause numbers: 49T10-1406-TA-35 (Grandville Coop., Inc. v. Marion Cnty.
Assessor), 49T10-1406-TA-36 (Harvard Square Coop., Inc. v. Marion Cnty. Assessor), 49T10-
1406-TA-37 (Riley-Roberts Park, LP v. Marion Cnty. Assessor), 49T10-1406-TA-38 (Yorktown
Homes S., Inc. v. Marion Cnty. Assessor), 49T10-1406-TA-39 (Troy Manor Coop., Inc. v. Marion
Cnty. Assessor), 49T10-1406-TA-40 (Lakeview Terrace Coop., Inc. v. Marion Cnty. Assessor),
49T10-1406-TA-41 (Mayfield Green Coop., Inc. v. Marion Cnty. Assessor), 49T10-1406-TA-42
(Three Fountains W., Inc. v. Marion Cnty. Assessor), 49T10-1406-TA-43 (Southwood Coop.,
Inc. v. Marion Cnty. Assessor), 49T10-1406-TA-44 (Three Fountains Coop., Inc. v. Marion Cnty.
Assessor), and 49T10-1406-TA-45 (Retreat Coop., Inc. v. Marion Cnty. Assessor).)
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1. With respect to the first requirement, a case arises under Indiana’s tax laws “if (1) ‘an
Indiana tax statute creates the right of action,’ or (2) ‘the case principally involves
collection of a tax or defenses to that collection.’” State ex rel. Zoeller v. Aisin USA
Mfg., Inc., 946 N.E.2d 1148, 1152 (Ind. 2011) (citation omitted). The parties do not
dispute that this case arises under Indiana’s property tax laws.
The second requirement, that a case be an initial appeal of the Indiana Board’s
final determination, includes the exhaustion of administrative remedies requirement.
See State Bd. of Tax Comm’rs v. Ispat Inland, Inc., 784 N.E.2d 477, 482 (Ind. 2003).
Thus, the failure to exhaust administrative remedies, like failing to obtain a final
determination from the Indiana Board, generally deprives the Court of subject matter
jurisdiction.2 See id. at 482-83. Nonetheless, the failure to exhaust administrative
remedies is not fatal to obtaining jurisdiction when extraordinary circumstances
establish that doing so would be futile, would cause irreparable harm, or where the
relevant statute is alleged to be void on its face. Id. at 483. Moreover, the exhaustion
of administrative remedies requirement may not be appropriate if “an agency’s action is
challenged as being ultra vires and void.” Indiana Dep’t of Envtl. Mgmt. v. Twin Eagle
LLC, 798 N.E.2d 839, 844 (Ind. 2003) (citation omitted).
ANALYSIS
I.
The Assessor claims that the Court does not have subject matter jurisdiction over
this matter because Lakeview Terrace seeks the review of an Indiana Board
2
The Indiana Supreme Court recently held that the exhaustion of administrative remedies
requirement is a procedural error that does not implicate a trial court’s subject matter jurisdiction
under the Administrative Orders and Procedures Act (AOPA). See First Am. Title Ins. Co. v.
Robertson, 19 N.E.3d 757, 760-61 (Ind. 2014), aff’g in part 990 N.E.2d 9, 12-13 (Ind. Ct. App.
2013). The holding in that case, however, does not affect the outcome of this decision.
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interlocutory order, not an Indiana Board final determination. (See Resp’t Br. Supp.
Mot. Dismiss Lack Jurisdiction at 1-3.) Lakeview Terrace, on the other hand, contends
that the Court does have subject matter jurisdiction because the Indiana Board created
a final determination when it issued an order on a procedural issue that terminated the
litigation between the parties. (See Br. Supp. Pet’r Resp. Resp’t Mot. Dismiss (“Pet’r
Br.”) at 3; Hr’g Tr. at 11-13.) Lakeview Terrace cites the decision in Whetzel v.
Department of Local Government Finance, 761 N.E.2d 904 (Ind. Tax Ct. 2002) as
support for its position. (See Pet’r Br. at 3.)
As explained in Whetzel, “‘[a] final determination is an order that determines the
rights of, or imposes obligations on, the parties as a consummation of the administrative
process.’” Whetzel v. Dep’t of Local Gov’t Fin., 761 N.E.2d 904, 906 (Ind. Tax Ct. 2002)
(internal quotation marks, brackets, and citation omitted) (emphasis added). In
Whetzel, the State Board of Tax Commissioners found that it lacked the statutory
authority to determine whether a late payment penalty on property taxes was properly
assessed. See id. at 906-07. The Court held that even though the State Board’s
finding resolved the procedural issue, but not the underlying substantive issue, it
constituted a final determination because at that point there were no other issues for the
State Board to resolve. See id. at 907. In other words, the State Board’s resolution of
the procedural issue terminated the administrative process because it prevented it from
reaching the underlying substantive issue of whether the late payment penalty was
properly assessed in the first place. See id.
In this case, however, the Indiana Board’s Order determining that the PTABOA
had the statutory authority to review and revoke Lakeview Terrace’s exemption for the
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2010 tax year did not end the administrative process. Indeed, there is still an
outstanding substantive issue for the Indiana Board to decide: whether Lakeview
Terrace’s property was owned, occupied, and used for charitable purposes during the
2010 tax year. (See, e.g., Cert. Admin. R. at 558 (where Lakeview Terrace states that
“the eligibility of [its property] for an exemption is not at issue in the Motion for Summary
Judgment”), 579 (where the Indiana Board acknowledges that Lakeview Terrace “has
not sought summary judgment regarding the issue of whether [Lakeview Terrace’s]
property was owned, used, and occupied for a charitable purpose”).) Thus, the Indiana
Board’s resolution of the procedural issue in this case, unlike the State Board’s
resolution of the procedural issue in Whetzel, did not conclude the administrative
process because there is a pending issue for the Indiana Board to resolve.
Consequently, Lakeview Terrace has appealed an Indiana Board interlocutory order,
not an Indiana Board final determination.
II.
Alternatively, Lakeview Terrace contends that it does not need to obtain a final
determination from the Indiana Board given the extraordinary circumstances in this
case. (See Pet’r Br. at 3-5.) Lakeview Terrace specifically claims that the PTABOA
“went rogue” in reviewing its exemption because nothing under Indiana Code § 6-1.1-
11-1 et seq. or any other statute or regulation authorized the PTABOA to review and
revoke its exemption for the 2010 tax year. (See Pet’r Br. at 4-5; Hr’g Tr. at 14-15.) In
other words, Lakeview Terrace maintains that because the PTABOA’s review of its
exemption was ultra vires (i.e., beyond the scope of its statutory authority) and void, it
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need not exhaust its administrative remedies.3 (See Hr’g Tr. at 18-21, 29-30.)
The Indiana Supreme Court has explained that exhaustion may not be
appropriate “if an action is brought upon the theory that [an] agency lacks the
jurisdiction to act in a particular area[.]” Twin Eagle, 798 N.E.2d at 844 (citation
omitted). This is especially true when the resolution of the case depends on the
construction of a statute, which is a pure question of law reserved for judicial resolution.
See id. The question of whether Indiana Code § 6-1.1-11-1 et seq. authorized the
PTABOA’s review of Lakeview Terrace’s exemption for the 2010 tax year is a pure
question of law. Nonetheless, the mere fact that the disposition of an issue depends on
the resolution of a pure question of law does not create a per se exception to the
exhaustion of administrative remedies requirement. See id. Indeed, in Twin Eagle the
Indiana Supreme Court explained that even when challenging the constitutionality of a
statute that is beyond an agency’s power to determine, litigants might still need to
exhaust administrative remedies because the administrative process may resolve the
matter on other grounds. Id.; accord Sproles, 672 N.E.2d at 1360-61.
In this instance, requiring Lakeview Terrace to exhaust by acquiring a final
determination on the substantive issue may avoid premature litigation by providing an
3
Lakeview Terrace has also claimed that it would be futile to exhaust its administrative
remedies because it has already obtained a ruling from the Indiana Board regarding its
procedural claims. (See Br. Supp. Pet’r Resp. Resp’t Mot. Dismiss (“Pet’r Br.”) at 4; Hr’g Tr. at
27.) Obtaining a final determination from the Indiana Board on the substantive issue of whether
Lakeview Terrace’s property was owned, occupied, and used for charitable purposes during the
2010 tax year, however, would not be futile because it may curtail future litigation. See Johnson
v. Celebration Fireworks, Inc., 829 N.E.2d 979, 984 (Ind. 2005) (stating that to prevail on a claim
of futility a litigant “‘must show that the administrative agency was powerless to effect a remedy
or that it would have been impossible or fruitless and of no value under the circumstances’”
(citation omitted)). Lakeview Terrace has also claimed that it would suffer irreparable financial
harm if it had to exhaust its administrative remedies. (See Pet’r Br. at 4.) Nonetheless,
Lakeview Terrace explained during the hearing that a subsequent agreement with the Assessor
along with its potential eligibility for statutory interest has eliminated that harm. (See Hr’g Tr. at
27-29.)
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opportunity for the case to be resolved on grounds other than those currently before the
Court. In addition, it conserves the Court’s resources by allowing the Indiana Board to
develop an adequate record for judicial review on the fact sensitive issue of whether
Lakeview Terrace owned, occupied, and used its property for charitable purposes
during the 2010 tax year. The Court therefore finds that Lakeview Terrace must
exhaust its administrative remedies before the Court may address whether Indiana
Code § 6-1.1-11-1 et seq. authorized the PTABOA’s review and revocation of Lakeview
Terrace’s exemption for the 2010 tax year.
CONCLUSION
In challenging the Indiana Board’s interlocutory order, Lakeview Terrace’s appeal
falls into a class of cases that the Court does not have jurisdiction to hear. See Ispat
Inland, 784 N.E.2d at 482. To the extent that Lakeview Terrace has not established that
extraordinary circumstances excuse it from exhausting its administrative remedies, the
Court hereby GRANTS the Assessor’s Motion to Dismiss For Lack of Jurisdiction and
REMANDS the matter to the Indiana Board for action consistent with this opinion.
SO ORDERED this 20th day of January 2015.
________________________________
Martha Blood Wentworth
Judge, Indiana Tax Court
Distribution:
James F. Beatty, Jessica L. Findley, Donald D. Levenhagen, Kathryn Merritt-Thrasher,
Megan M. Piazza, John C. Slatten
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