IN THE SUPREME COURT OF TENNESSEE
AT NASHVILLE
BETTY CORLEW THOMAS, ) FOR PUBLICATION
)
) FILED: MARCH 17, 1997
Petitioner-Appellant, )
) DAVIDSON COUNTY
v. )
) HON. C. ALLEN HIGH,
STATE BOARD OF EQUALIZATION; ) CHANCELLOR
KELSEY JONES, Executive Secretary )
State Board of Equalization; ) NO. 01-S-01-9601-CH-00002
HELEN JAMES, Administrative Law )
Judge, State Board of Equalization; )
METROPOLITAN GOVERNMENT OF )
NASHVILLE AND DAVIDSON COUNTY;
PHIL BREDESEN, Mayor, Metropolitan )
Government of Nashville and
)
)
FILED
Davidson County; )
METROPOLITAN BOARD OF EQUALIZATION ) March 17, 1997
FOR NASHVILLE AND DAVIDSON COUNTY; )
JO ANN NORTH, Assessor of Property, ) Cecil W. Crowson
Metropolitan Government of ) Appellate Court Clerk
Nashville and Davidson County; and )
CHARLIE CARDWELL, Trustee, )
Metropolitan Government of )
Nashville and Davidson County, )
)
Respondents-Appellees. )
For Appellant: For Appellees:
JOSEPH H. JOHNSTON JOHN KNOX WALKUP
Nashville, TN Attorney General and Reporter
CHRISTINE LAPPS
Assistant Attorney General
Nashville, TN
OPINION
REVERSED AND REMANDED BIRCH, C.J.
This cause chronicles the efforts of Betty Corlew Thomas,
the appellant, to challenge the valuation placed on her home by the
Tax Assessor for Metropolitan Nashville-Davidson County. In the
initial stages, Thomas proceeded without a lawyer; it was during
this period of self-representation that the administrative judge,
employed by the state board of equalization (“state board”),
dismissed her appeal.1 Thomas challenged this action, but in the
process, she skipped two of the administrative steps that she could
have taken and sought judicial review in the Chancery Court.
Finding that Thomas had failed to exhaust her administrative
remedies, the trial court dismissed her appeal. The Court of
Appeals affirmed the trial court’s judgment.
Before this Court, Thomas contends first that she was not
required by applicable statutes to exhaust her administrative
remedies in order to obtain judicial review of the dismissal of her
appeal. Second, and alternatively, she insists that even if
exhaustion were ordinarily required, exhaustion was excused in her
case because the pertinent issue was primarily one of law. Third,
Thomas asserts that she was deprived of her due process rights
because the state board’s printed notice failed to inform her that
the consequence of non-payment of the undisputed portion of the
property tax by the due date would be dismissal of her appeal.
Because the statute does not require Thomas to exhaust
her administrative remedies and because the state board provided
1
As is discussed in more detail infra, Thomas’s appeal to the
state board of equalization was dismissed because she did not pay
the undisputed portion of her property tax when due.
2
her inconsistent and misleading information regarding certain
aspects of the administrative appeal process, we reverse the
judgment of the Court of Appeals and remand the cause to the state
board for a hearing to determine the proper valuation of her
property for the year 1993.
I
The procedure prescribed for the appeal of the property
tax valuation of one’s real estate by the assessor is a tedious
one. It is better understood if we enumerate the steps in the
process first and then detail the events that occurred in this
case.
By statute, an aggrieved taxpayer may appeal the
assessor’s valuation of property to the county board of
equalization. Tenn. Code Ann. § 67-5-1402. Unless modified by the
state board, the county board of equalization’s determination is
final. Tenn. Code Ann. § 67-5-1411.
Pursuant to statutory authority, the state board has
established a three-step procedure to consider and dispose of
appeals like that of Thomas’s, The first step provides the
dissatisfied taxpayer with a hearing before an administrative
judge. After due consideration, the administrative judge makes a
recommendation to the assessment appeals commission. A taxpayer
wishing to contest this recommendation may petition the commission.
If the taxpayer is unsuccessful and the recommendation of the
3
administrative judge is accepted, the taxpayer may appeal the
commission’s decision to the state board; however, the statute also
provides that the decision of the commission is subject to judicial
review, Tenn. Code Ann. § 67-5-1502(k), as is any decision of the
state board. Tenn. Code Ann. § 67-5-1511.
Early in 1993, Thomas was informed that the valuation of
her residence for property tax purposes was $205,000 for the 1993
tax year.2 Thomas appealed this valuation to the Metropolitan
Board of Equalization for Nashville and Davidson County3 and
asserted that as of January 1, 1993, the valuation of her property
should have been $100,000. The Metropolitan Board of Equalization
refused to grant Thomas relief. Subsequently, in September of
1993, she appealed to the state board.
Tennessee Code Annotated § 67-5-1512(b)(1)(B) provides
that it is a “condition for appeal” that the undisputed portion of
the property tax be paid by the delinquent date and that no
delinquent taxes accrue on the property. Because the 1993 property
taxes were not delinquent until March 1, 1994, the state board did
not require Thomas to pay the undisputed portion of the tax when
she filed her appeal in September 1993. When she filed her appeal,
2
This is the value of the property that was ascertained by the
assessor pursuant to Tenn. Code Ann. §§ 67-5-601 and -602. Such
valuations are determined from “evidence of [the property’s] sound,
intrinsic and immediate value, for purposes of sale between a
willing seller and a willing buyer. . . .” Tenn. Code Ann. § 67-5-
601. As Thomas’s property is residential, it is then assessed at
25% of its value. Tenn. Code Ann. § 67-5-801(a)(3). This assessed
value is then used to determine the amount of the property tax due.
3
This is the correct title of the county board of equalization
for Metropolitan Nashville-Davidson County.
4
Thomas received written information about her appeal. Included in
the information was the following notice:
NOTICE REGARDING PAYMENT OF TAXES
WHILE AN APPEAL IS PENDING.
The law requires that you pay
at least the undisputed portion of
your taxes prior to the delinquency
date in order to file an appeal. By
so doing you avoid the usual penalty
and interest for delinquent taxes.
When a final certificate of
assessment is issued by the Board of
Equalization or Assessment Appeals
Commission, the taxpayer will
receive a refund of any overpayment
or will owe the amount of any
underpayment of taxes, along with
interest at the rate provided by
law. (Emphasis added)
On February 10, 1994, Thomas was notified that her appeal
would be heard on March 11, 1994. At the hearing on March 11,
1994, the administrative judge dismissed Thomas’s appeal because
she had not paid the undisputed portion of her property tax.
Thomas immediately paid the undisputed portion of the
tax. On March 30, 1994, Thomas filed a timely petition for
reconsideration and explained that she had not paid her 1993
property tax earlier because she had received “misleading
information” from employees of the state board.4
On March 31, 1994, the administrative judge found that
Thomas had been fully informed of the requirement that the
undisputed portion of the tax be paid prior to the due date (March
4
The substance of this “misleading information” is not
expressed clearly in the record.
5
1) in order to keep her appeal alive. On this basis, the
administrative judge denied Thomas’s petition for reconsideration.
Specifically, the administrative judge relied on the written
“instructions accompanying all appeal forms obtained from the State
Board of Equalization” and quoted the notice regarding the payment
of taxes while an appeal is pending. The order denying Thomas’s
motion for reconsideration stated that Thomas could appeal both the
administrative judge’s dismissal and the denial of the petition for
reconsideration to the assessment appeals commission within fifteen
days. Thomas did not appeal the administrative judge’s decision to
the assessment appeals commission or to the state board.
On June 9, 1994, the assessment appeals commission of the
state board issued a final certificate dismissing Thomas’s appeal
and affirming the valuation of the property as previously
determined by the county board of equalization. This “Official
Certificate of the Assessment Appeals Commission Relative to 1993
Property Assessments” included the following provisions:
In accordance with the provisions of
Tennessee Code Annotated Section 67-
5-1512 and Section 4-5-314, the
Assessment Appeals Commission hereby
certifies the ad valorem assessment
for the property described below.
The assessment is predicated on the
recommendations of the State Board
of Equalization’s Administrative
Judge and constitutes the final
judgment of the Commission.
. . . .
Any party dissatisfied with this
decision is entitled to judicial
review, proceedings for which are
instituted by filing a petition in
Chancery Court within (60) days of
6
the date of this certificate.
(Emphasis added)
On July 19, 1994, Thomas, with the assistance of counsel,
filed a petition for judicial review in the Chancery Court of
Davidson County pursuant to Tenn. Code Ann. § 67-5-1511. In her
petition, Thomas prayed:
That the Orders denying Petitioner a
hearing for her alleged failure to
comply within [sic] T.C.A. Section
67-5-1512(b)(1)(B) be vacated and
the matter remanded to the
Respondents State Board of
Equalization, Kelsie Jones and Helen
James, for a full hearing on the
merits on the grounds that these
Respondents have denied Petitioner
Due Process guaranteed under the
14th Amendment.
The state board moved to dismiss Thomas’s petition,
contending that “the plaintiff has failed to exhaust her
administrative remedies in this matter” and that the trial court,
therefore, lacked subject matter jurisdiction pursuant to Rule
12.02(1) and 12.02(6) of the Tennessee Rules of Civil Procedure.
On October 31, 1994, the trial court concluded that “the
Plaintiff failed to exhaust her remedies at the administrative
level” and granted the state board’s motion to dismiss Thomas’s
petition. The Court of Appeals affirmed.
II
Generally when a statute provides an administrative
remedy, one must exhaust this administrative remedy prior to
7
seeking relief from the courts.5 Bracey v. Woods, 571 S.W.2d 828,
829 (Tenn. 1978); Tennessee Enamel Mfg. Co. v. Hake, 183 Tenn. 615,
194 S.W.2d 468 (1946). The exhaustion doctrine serves to prevent
premature interference with agency
processes, so that the agency may
(1) function efficiently and have an
opportunity to correct its own
errors; (2) afford the parties and
the courts the benefit of its
experience and expertise without the
threat of litigious interruption;
and (3) compile a record which is
adequate for judicial review. In
addition, an agency has an interest
in discouraging frequent and
deliberate flouting of the
administrative process.
2 Am.Jur.2d Administrative Law § 505 (1994)(footnotes omitted).
In Tennessee, exhaustion is not statutorily required
unless the statute “by its plain words” requires it. Reeves v.
Olsen, 691 S.W.2d 527, 530 (Tenn. 1985). Although the statutes
expressly grant the board the authority to create the assessment
appeals commission and to designate administrative judges to make
preliminary recommendations, nothing in the statute expressly
requires the taxpayer to avail herself of these steps. Rather, the
statute providing for appeal to the assessment appeals commission
is worded permissively:
If an exception to the recommendation of the
hearing examiner is taken by either the
property owner or. . .assessment appeals
commission does not adopt the recommendation
5
When not mandated by statute, exhaustion is a matter of
judicial discretion. Reeves v. Olsen, 691 S.W.2d 527, 530 (Tenn.
1985).
8
of the hearing examiner, a hearing shall be
scheduled. . . .
Tenn. Code Ann. § 67-5-1506. As for an appeal to the board from
the decision of the assessment appeals commission, the statute
expressly provides that the “certificate of assessment or other
final certificate of [the assessment appeals commission’s] action”
is subject to judicial review in the same manner as is a final
action by the board. Tenn. Code Ann. § 67-5-1502(k). Thus, any
appeal to the board from an action of the assessment appeals
commission is clearly discretionary. In our view, Thomas was not
required to exhaust the administrative remedies internal to the
board. Thomas’s petition was properly before the trial court, and
the board’s motion to dismiss should have been denied.
III
Neither the trial court nor the Court of Appeals
addressed the propriety of the administrative judge’s dismissal of
Thomas’s appeal. However, the issue has been raised and briefed by
the parties, and we will address it. Tenn. R. App. P. 13(a).
Thomas insists that the state board failed to adequately
notify her that her appeal was subject to dismissal should she fail
to pay the undisputed portion of the tax by the due date. Because
the state board failed to notify her of these consequences, she
urges that the dismissal violated her due process rights under the
Fourteenth Amendment to the United States Constitution.
9
Tenn. Code Ann. § 67-5-1512(b)(1)(B) states:
Except as provided in subdivision
(b)(1)(C), it is a condition for
appeal that the undisputed portion
of the tax levied be paid before the
delinquent date of the tax and that
no delinquent taxes have accrued on
the property.6
The phrase “condition for appeal” could refer to either filing an
appeal or maintaining an appeal. I t i s i n t e r e s t i n g t o n o t e t h a t
t h e s t a t e b o a r d ’ s o w n n o t i c e i n t e r p r e t s t h e s t a t u t e a s i m p o s i n g t h e
c o n d i t i o n o n t h e f i l i n g o f t h e a p p e a l . B y c o n t r a s t , t h e s t a t e
b o a r d i n t e r p r e t e d t h e s t a t u t e a s i m p o s i n g t h e c o n d i t i o n o n t h e
m a i n t e n a n c e o f a n a p p e a l i n i t s d i s m i s s a l o f T h o m a s ’ s a p p e a l a n d i n
i t s a r g u m e n t s t o t h i s C o u r t . The statute is simply not clear.
Furthermore, the statute does not prevent the reinstatement of an
appeal when the taxpayer pays the undisputed portion of the tax in
a timely manner after the entry of an initial order dismissing the
appeal.
We do not find that the facts of this case rise to the
level of a constitutional due process violation. However, we do
find that, given the ambiguity of the statute, Thomas’s course of
action was entirely reasonable, and she should not be penalized for
it. When agencies undertake to provide information to parties to
administrative proceedings, that information should be complete and
accurate. Simmons v. Traughber, 791 S.W.2d 21, 24-25 (Tenn. 1990).
6
Subdivision (b)(1)(C) does not apply in Davidson County.
1 0
Accordingly, the decision of the Court of Appeals is
reversed. The cause is remanded to the state board of equalization
for a hearing to determine the proper valuation of Thomas’s
property. Costs are taxed to the respondents.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
A D O L P H O A . B I R C H , J R . , C h i e f J u s t i c e
C O N C U R : D R O W O T A , A N D E R S O N , R E I D , J J .
1 1
Thomas v. State Board of Equalization
Combined Opinion