Case Title: Poddar v. Dept. of Rev.

Citation: 

Docket Number: S44343

State: oregon

Court: Oregon Supreme Court

Date: 1999-07-15T00:00:00Z

Document:
FILED: MAY 27, 1999 

IN THE SUPREME COURT OF THE STATE OF OREGON

BHAGWATI P. PODDAR,

Petitioner,

	v.

DEPARTMENT OF REVENUE,

State of Oregon,

Respondent,

	and

CLATSOP COUNTY,

Intervenor.

(OTC 3773; SC S44343)

	Appeal from Tax Court's Judgment of Dismissal dated June 6,
1997.

	Carl N. Byers, Judge.

	Submitted on the record June 19, 1998.

	Bhagwati P. Poddar, petitioner pro se, filed the brief.

	Rochelle Nedeau, Assistant Attorney General, Salem, filed
the brief for respondent.  With her on the brief was Hardy Myers,
Attorney General.

	Blair J. Henningsgaard, Astoria, filed the brief for
intervenor.

	Before Carson, Chief Justice, and Gillette, Van Hoomissen,
Durham, and Leeson, Justices.*

	DURHAM, J.

	The judgment of the Tax Court is reversed, and the case is
remanded to that court for further proceedings.

	*Kulongoski and Riggs, JJ., did not participate in the
consideration or decision of this case.  

	DURHAM, J.

	Taxpayer appeals a judgment entered after the Oregon
Tax Court dismissed his amended complaint for failure to state a
claim.  Taxpayer contends that, although his amended complaint
challenged the assessed value of only some of the improvements on
his property, his amended complaint is sufficient.  Taxpayer
further challenges discovery orders issued by the Tax Court.  We
review for errors of law.  ORS 305.445.(1)  We conclude that
taxpayer's amended complaint states a claim.  We also conclude
that the Tax Court committed no error regarding the discovery
orders.  Accordingly, we reverse the judgment and remand the case
to the Tax Court for further proceedings.

	Taxpayer seeks relief from alleged assessment errors
made by the Clatsop County Assessor in tax year 1993-94. 
Taxpayer sought review of the assessments from the county board
of equalization(2) and the Department of Revenue (department), both
of which affirmed the assessor's action. 

	In January 1995, taxpayer filed a complaint in the Tax
Court against the department.(3)  Taxpayer alleged that the
assessor erred in assigning valuations to several structures on
one piece of property:  a partially completed residence, an older
residence, a machine shed, a greenhouse, and a barn/garage. 
According to taxpayer, the assessor overvalued his property by
$103,872.  In January 1996, the department requested inspection
of taxpayer's property.  At that time, taxpayer had completed his
residence.  Taxpayer objected on relevancy grounds to an
inspection of his completed residence, arguing that the sole
issue was the percentage of completion at the time of the 1993-94
assessment.  He maintained that the department could not
determine the value of the partially completed residence by
inspecting the completed residence.  He also asserted a
constitutional right to privacy.  The department moved to compel
inspection, and the Tax Court allowed the motion.

	On April 8, 1996, taxpayer filed a notice of appeal
with this court, seeking to challenge the constitutionality of
the order compelling inspection.  Two days later, representatives
from the assessor's office attempted to inspect the property, but
taxpayer denied them access.  In June 1996, this court dismissed
taxpayer's appeal for lack of jurisdiction.

	On January 6, 1997, the Tax Court issued a second order
allowing inspection.  According to taxpayer, in an effort to
protect the privacy of his residence from an inspection under
that discovery order, taxpayer, on January 16, 1997, moved for
leave to file an amended complaint that taxpayer asserted would
remove from controversy the percentage of completion and
valuation of the new residence as of July 1, 1993, and accept the
assessor's valuation.  On January 22, 1997, representatives of
the assessor's office again tried to inspect the property. 
Taxpayer provided access to the interior of the old residence and
the machine shed, but denied access to the interior of the new
residence, the greenhouse, and the barn/garage.  

	On February 6, 1997, the Tax Court, over the
department's objection, allowed taxpayer's motion to amend his
complaint.  Taxpayer's amended complaint alleged that the
assessor erred in valuing only the old residence, the machine
shed, and the greenhouse.  The total overvaluation, according to
the amended complaint, was $30,370.  The department moved to
dismiss or, alternatively, to strike the amended complaint under
Tax Court Rule (TCR) 21 A(8) and TCR 21 E(1).(4)  The department
contended that taxpayer's amended complaint failed to state a
claim, because a complaint that challenges the valuation of only
some improvements to real property fails to allege all the
ultimate facts needed for an appeal of the "roll value" of the
improvements, i.e., the assessed value of the improvements that
ORS 308.215(1)(f) requires the assessor to place on the
assessment roll.   

	The Tax Court granted the motion to dismiss.  The order
of dismissal stated that taxpayer acknowledged that his amended
complaint was intended to avoid inspection of his residence.  The
Tax Court also concluded that the department's right to defend
against taxpayer's action outweighed taxpayer's constitutional
right of privacy.  The court gave taxpayer 30 days to amend his
complaint.  Taxpayer did not file a second amended complaint, but
instead informed the court that he intended to appeal the
dismissal to this court.  On June 6, 1997, the Tax Court issued a
judgment of dismissal, and this appeal followed.

	Taxpayer raises three assignments of error.  We first
address his third assignment of error, in which taxpayer
challenges the dismissal of his amended complaint.  The
department argued, and the Tax Court agreed, that the complaint
failed to state a claim based on ORS 308.215(1), which provides,
in part:

		"The assessor shall prepare the assessment roll in
the following form:

		"* * * * *

		"(1) * * *  For each parcel of real property, the
assessor shall set down in the assessment roll
according to the best information the assessor can
obtain:

		"* * * * *

		"(e) The assessed value, maximum assessed value
and real market value of the land, excluding all
buildings, structures, improvements and timber thereon. 

		"(f) The assessed value, maximum assessed value
and real market value of all buildings, structures and
improvements thereon."

(Emphasis added.)  The Tax Court interpreted the emphasized
wording as follows:

	"Where there are multiple buildings, structures, and
improvements for a single account, the statute requires
the assessor to enter a single improvement value on the
roll.  The assessor may, as he has done here for
administrative purposes, assign a value to each of the
improvements.  However, the only assessed value for tax
purposes is the value placed on the assessment roll.

		"Because the statutes require land and
improvements to be separately addressed, a taxpayer may
elect to appeal either or both.  Nepom v. Dept. of
Revenue, 272 Or 249, 536 P2d 496 (1975).  However, the
statutes do not contemplate or allow a taxpayer to
appeal only part of an assessed value.  To appeal the
assessed value of any improvements within a single
account, the taxpayer must allege that the assessed
value is in error and a lesser value is correct. 
Plaintiff's Amended Complaint fails to do this and
therefore fails to state a claim."

	Taxpayer argues that ORS 308.215 is silent about the
issues that a taxpayer may appeal and that the Tax Court
misinterpreted that statute.  He also points to TCR 12, which
provides:

		"A.  All pleadings shall be liberally construed
with a view of substantial justice between the
parties.

		"B.  The court shall, in every stage of an
action, disregard any error or defect in the
pleadings or proceedings which does not affect the
substantial rights of the adverse party."  

He notes that his amended complaint alleged the total assessed
value, the assessed value with respect to each improvement, the
contested improvements, and their correct values.  Taxpayer
argues that, liberally construed, those allegations are
sufficient to state a claim.  

	Taxpayer's claim is based on ORS 309.100 (1993), which
provided, in part:

		"(1) The owner or an owner of any taxable
property * * * may petition to the board of
equalization for reduction of the real market or
assessed value placed upon the property by the county
assessor.  Petitions filed under this subsection
shall be for the reduction of the real market or
assessed value of property as of July 1 * * *.

		"* * * * *

		"(3) Each petition for the reduction of the real
market or assessed value of a particular property
shall:

		"* * * * *

		"(b) State the facts and the grounds upon which
the petition is made."

	According to the department, ORS 309.100 allows a
taxpayer to petition for reduction in the real market or assessed
values "placed on the roll."  The department observes that, under
ORS 308.215(1)(f), the valuation that the assessor must "place on
the roll" for improvements is that of "all buildings, structures
and improvements."  The department argues that that phrase means
a single number that represents the value of the total of all
improvements.  The department contends that, because taxpayers
may challenge the assessed values "placed on the roll" and
because what must be "placed on the roll" is a total valuation of
improvements, a complaint that challenges the valuation of
improvements fails to state a claim, unless it challenges the
total valuation of all improvements together.  

	The department's argument is not well taken.  Because
the task at hand requires us to construe a statute, we are guided
by the principles set out in PGE v. Bureau of Labor and
Industries, 317 Or 606, 610-12, 859 P2d 1143 (1993) (articulating
methodology for statutory construction).  

	In this instance, the context of the statute --
specifically its earlier formulation -- proves particularly
instructive.  ORS 309.100(1) (1989) provided:  

		"The owner or an owner of any taxable property or
the person in whose name the property is assessed, may
petition to the board for reduction and equalization of
the true cash value placed upon the property by the
county assessor on the roll submitted to the board in
accordance with ORS 309.060."

That version of the statute afforded at least some support for
the department's argument that the objective of any taxpayer's
petition was the reduction of the true cash value placed on the
property by the county assessor on the roll submitted to the
board under ORS 309.060.

	In 1991, the legislature amended ORS 309.100(1).  Or
Laws 1991, ch 459, § 196.  The amendment removed from the statute
the phrase "on the roll submitted to the board in accordance with
ORS 309.060."  Under ORS 309.100(1) (1993), which was in effect
at the time of the assessment at issue here, a taxpayer could
petition for a reduction in the "value placed upon the property
by the county assessor."  The legislature's removal of the
reference to property "on the roll" in ORS 309.100(1) undermines
the department's argument.  We conclude that the text and context
of ORS 309.100(1) is clear:  a party bringing a challenge under
ORS 309.100(1) need not challenge the total valuation placed on
all improvements to state a claim. 

	Moreover, we are not persuaded that taxpayer's
complaint fails to state a claim challenging the total valuation
placed on all improvements.  Taxpayer's complaint sets out the
total assessed value of all improvements, the assessed value of
each improvement, and, with regard to the structures for which he
challenges the valuation, a proposed value.  The complaint,
liberally construed, TCR 12 A, alleges that taxpayer challenges
the total assessed value of the improvements in an amount equal
to the difference between the assessed value of three of the
structures and the lower values that he contends are correct. 
Put another way, taxpayer does allege that he is dissatisfied
with the total valuation assigned by the assessor to the
improvements on his property, but instead of alleging that the
assessor overvalued the property by $103,872 -- as he alleged in
his original complaint challenging the valuation of each
improvement -- he alleges in his amended complaint that the
assessor overvalued the property by $30,370.  Under either
reading of the complaint, taxpayer seeks a reduction in the total
assessed valuation assigned to his improvements.  

	Nepom is not to the contrary.  In Nepom, the taxpayer
contested the valuation assigned to the improvements on her land. 
However, after reducing the valuation assigned to the
improvements, the Tax Court added the amount of that reduction to
the valuation assigned to her land.  Taxpayer appealed, arguing
that the Tax Court had no authority to increase the valuation
assigned to the land, because she had challenged only the
valuation assigned to the improvements.  This court reversed,
stating:

"In the instant case we see no valid reason why
the parties by stipulation or by attacking only one
of the valuations cannot raise the one specific issue
on an appeal.  Our statutes specifically require the
assessor to separate the value of the land and
improvements on the assessment roll."

Nepom, 272 Or at 254.  The court in Nepom found support for its
holding in the statutory bifurcation of valuations for land and
for improvements now found at ORS 308.215(1)(e) and (f).  The
Nepom court did not suggest, let alone hold, that a party
bringing a challenge under ORS 309.100 must challenge the total
land valuation or total improvement valuation because of the
structure of ORS 308.215(1).  Rather, in Nepom, the court relied
on the unexceptional proposition that parties may stipulate to
some factual matters and dispute others.  The same proposition
applies here.  

	In Nepom, this court stated:

"We do not intend to indicate that evidence of
the total valuation is inadmissible for it may be
relevant to the value of the components."

272 Or at 256 n 4.  As in Nepom, the issue under taxpayer's third 
assignment of error is not the admissibility of evidence. 
Rather, it is the parameter of the dispute before the court. 
Taxpayer may have been motivated to amend his complaint to avoid
discovery with respect to certain structures.  However, in
determining the sufficiency of a pleading, we examine only the
pleading itself, not the pleader's motivation.  As in Nepom, we
see no reason why a taxpayer cannot state a claim by disputing
only part of the assessed valuation of the improvements to his
property.  See Bylund v. Dept. of Rev., 292 Or 582, 584, 641 P2d
577 (1982) (parties stipulated to all valuation issues except
one).  Of course, the taxing authority remains entitled to
inquire into the valuation of the balance of the property when a
taxpayer asserts such a claim.  We conclude that taxpayer's
complaint was sufficient to state a claim under ORS 309.100 and
that the Tax Court erred in dismissing taxpayer's complaint.

	In his first and second assignments of error, taxpayer
assigns error to the orders compelling the inspection of his
residence, arguing that the inspection would not lead to the
discovery of admissible evidence.  Taxpayer states two bases for
that argument.  First, under the amended complaint, the value of
his residence is no longer at issue and, accordingly, evidence of
its value would be irrelevant and hence inadmissible.  Second,
even if the value of the residence is at issue, the residence was
only partially complete during the 1993-94 tax year, and
inspection of the now-completed residence would not lead to the
discovery of any relevant evidence about the value of the
partially completed residence in 1993-94.  Taxpayer also contends
that there are less intrusive ways of discovering the percentage
of completion of his residence in tax year 1993-94, such as
examining building inspection records and a videotape.  

	TCR 36 B(1) states the pertinent standard for
discovery in this proceeding:

"For all forms of discovery, parties may inquire
regarding any matter, not privileged, which is
relevant to the claim or defense of the party seeking
discovery or to the claim or defense of any other
party, including the existence, description, nature,
custody, condition, and location of any books,
documents, or other tangible things, and the identity
and location of persons having knowledge of any
discoverable matter.  It is not ground for objection
that the information sought will be inadmissible at
the trial if the information sought appears
reasonably calculated to lead to the discovery of
admissible evidence."

	We agree with the department that an inspection of
taxpayer's residence appears reasonably calculated to lead to the
discovery of admissible evidence with regard to the other
structures, because, as we suggested in Nepom, "evidence of the
total valuation * * * may be relevant to the value of the
components."  272 Or at 256 n 4.  Moreover, we reject taxpayer's
argument that an inspection of the completed residence could not
lead to admissible evidence regarding the value of the incomplete
residence.  Although perhaps better evidence of value and the
percentage of completion may come from other sources, such as
those noted by taxpayer, an inspection of the completed residence
could provide information about materials and construction
techniques that would be admissible on the issue of the
correctness of the assessor's valuation of the incomplete
residence. 

	Taxpayer further argues that inspection of his
residence would interfere with his right to privacy under Article
I, section 9, of the Oregon Constitution, and the Fourth
Amendment to the United States Constitution.(5) 

	We address plaintiff's state constitutional argument
first.  See State v. Moylett, 313 Or 540, 545, 836 P2d 1329
(1992) (setting out methodology); State v. Kennedy, 295 Or 260,
262, 666 P2d 1316 (1983) (same).  Article I, section 9, does not
erect an absolute barrier to the entry of government agents into
a citizen's home.  Rather, it permits searches of a home that are
not "unreasonable" and, subject to certain exceptions that are
not applicable here, requires that a judicial officer, rather
than an executive branch officer, determine in advance that
adequate factual and legal grounds justify entry into a home. 
See State v. Brown, 301 Or 268, 273, 721 P2d 1357 (1986) (Article
I, section 9, requires impartial approval of judicial officer
before most searches); State v. Quinn, 290 Or 383, 390, 623 P2d
630 (1981) (all persons are to be free of unreasonable searches;
decision to search is to be made by judicial, not executive,
branch).  We conclude that the Tax Court's correct determination
that TCR 36 B(1) justifies the entry requested here also
satisfies the requirements for entry into a home under Article I,
section 9.

	We also reject taxpayer's privacy claim under the
Fourth Amendment.  In resolving that claim, the Tax Court,
quoting Lora v. Board of Ed. of City of New York, 74 FRD 565, 576
(ED New York 1977), observed that "[t]he right of privacy is not
absolute.  It 'must be balanced against legitimate and weighty
competing private and state interests.'"  The Tax Court balanced
taxpayer's interest in privacy against the department's interest
in defending against taxpayer's complaint and concluded that,
because the property's value is directly at issue, the
department's ability to defend against the complaint seriously
would be impeded without access to the property.   We conclude
that the Tax Court correctly characterized the controlling
authorities and properly balanced the interests at stake under
the Fourth Amendment.  The Tax Court did not err in ordering
taxpayer to comply with the department's request for an
inspection of his residence.

	The judgment of the Tax Court is reversed, and the
case is remanded to that court for further proceedings.

1. 	ORS 305.445 was amended effective September 1, 1997. 
Or Laws 1995, ch 650, §§ 25, 116.  It now provides, in part:

	"The scope of the review of either a decision or order
of the tax court judge shall be limited to errors or
questions of law or lack of substantial evidence in the
record to support the tax court's decision or order."  

Before September 1, 1997, this court reviewed the facts in tax
cases de novo.  ORS 305.445 (1995).  Because this case presents
only issues of law, our review is the same under either version
of the statute.  

2. 	In 1997, the legislature changed the name of the
reviewing body, set out in ORS 309.100, from "board of
equalization" to "board of property tax appeals" and enacted
other statutory amendments.  Or Laws 1997, ch 541, §§ 223a to
241.  The 1997 amendments to ORS 309.100 do not affect our
analysis in this case.

3. 	Clatsop County intervened in the Tax Court but waived
appearance in this court.	

4. 	TCR 21 A(8) provides:

	"[T]he following defenses may at the option of the
pleader be made by motion to dismiss: * * * (8) failure
to state ultimate facts sufficient to constitute a
claim[.]"

TCR 21 E(1) provides:

"Upon motion made by a party before responding to
a pleading or, if no responsive pleading is permitted
by these rules, upon motion made by a party within ten
(10) days after the service of the pleading upon such
party or upon the court's own initiative at any time,
the court may order stricken: (1) any sham, frivolous,
or irrelevant pleading or defense or any pleading
containing more than one claim or defense not
separately stated[.]"

5. 	Article I, section 9, of the Oregon Constitution,
provides:

"No law shall violate the right of the people to
be secure in their persons, houses, papers, and
effects, against unreasonable search, or seizure; and
no warrant shall issue but upon probable cause,
supported by oath, or affirmation, and particularly
describing the place to be searched, and the person or
thing to be seized."

		The Fourth Amendment to the United States Constitution
provides:

"The right of the people to be secure in their
persons, houses, papers, and effects, against
unreasonable searches and seizures, shall not be
violated, and no Warrants shall issue, but upon
probable cause, supported by Oath or affirmation, and
particularly describing the place to be searched, and
the persons or things to be seized."