IN THE SUPREME COURT OF MISSISSIPPI NO. 2017-CA-00804-SCT NRG WHOLESALE GENERATION LP f/k/a GENON WHOLESALE GENERATION, LP

v. LORI P. KERR, IN THE OFFICIAL CAPACITIES OF TAX ASSESSOR AND COLLECTOR OF CHOCTAW COUNTY

, MISSISSIPPI, AND CHOCTAW COUNTY

, MISSISSIPPI

DATE OF JUDGMENT: 03/27/2017 TRIAL JUDGE: HON. GEORGE M. MITCHELL, JR. TRIAL COURT ATTORNEYS: SHELDON G. ALSTON PETER J. CROSSETT PAUL H. STEPHENSON, III PEYTON D. PROSPERE KASEY CAROL BURNEY LOUIS G. FULLER W I LLIAM F. GOODMAN, JR. SCOTT FULLER SINGLEY COURT FROM W HICH APPEALED: CHOCTAW COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: JOSEPH ANTHONY SCLAFANI SHELDON G. ALSTON PETER J. CROSSETT ATTORNEYS FOR APPELLEES: PAUL H. STEPHENSON, III PEYTON D. PROSPERE KASEY CAROLBURNEY NATURE OF THE CASE: CIVIL - REAL PROPERTY/OTHER DISPOSITION: AFFIRMED - 12/06/2018 MOTION FOR REHEARING FILED: MANDATE ISSUED: BEFORE WALLER, C.J., CHAMBERLIN AND ISHEE, JJ. ISHEE, JUSTICE, FOR THE COURT:¶1. The m ain issue presented by t h i s c a s e i s w h e t h e r N RG W holesale Generation’s

prof f ered expert used an acceptable m ethod to determ ine t he “true value” o f its p ower plant in com puting ad valorem tax. NRG ’s expert used a m ixture of the sales-com parison approach, the incom e a

pproach, and the cost approach to determ ine the t r u e v a l u e o f the
f acility

. Lori P. Kerr, the tax assessor f or Choctaw County , and Choctaw County , Mississippi (collectively , th e “ C o unty ” ), contend that Mississippi law m a ndates a trended historical costless-depreciation a

pproach to c alculate the true value of industrial personal property

. 1 The circuit court f

ound in f avor of the County and excluded NRG’s prof f ered e xpert testim ony . NRG claim s the circuit court abused its discretion. ¶2. NRG also a rgues that the circuit court erred in deny ing i ts m otion to change venue. NRG asserts that, because m any of the jurors knew the county of f icials nam ed as def

endants in this case, a f

air trial in Choctaw County was im possible. ¶3. We h o l d t h a t t h e M i s s i s s i p p i Departm ent of Revenue (the “DOR”) regul a t i o n controlled and that NRG’s expert applied an unacceptable m ethod to determ ine true value. Theref ore, the circuit c ourt did not err in excluding NRG’s prof f ered expert testim ony . Additionally , because NRG was af f orded a f air and im

partial jury , the circuit court did not abuse its discretion in d eny ing the m otion to change venue. W e a f f i rm t he judgm ent of the circuit court.
FACTS AND PROCEDURAL HISTORY

1 N R G ’ s p o w er p lan t is classif ied as in d u stri a l p e r s o n al p ro p erty f o r tax atio n p u rp o ses. T h e classif

icatio n is n o t in d isp u t e.

2¶4. NRG owns a power plant located in Choctaw County

. In calculating t he ad valorem

tax, the Choctaw County T ax Assessor determ ined that the t rue value of the f acil i t y w as $467,213,070. Having itself appraised the true value of the f acility at $110,000,000, NRG appeared bef

ore the C hoctaw County Board of S upervisors ( the “Board”) i n protest. Upon reconsideration, the Board discovered a calculation error and f ound t hat the true value of the
f acility was actually $ 559,974,970, o r $92,761,900 m ore than t h e t a x assessor’s initial valuation. NRG appealed. ¶5. NRG designated M a rk R. Sim zy k a s its valuation e xpert and subm itted his report. In cal c u l a t i n g t he true value of the f acility , Sim zy

k f irst determ ined t he v alue of the f acility under the sales-com

parison a pproach, the incom e approach, a nd the cost approach. 2 He then reconciled the three results, f i nding the true value of

the f acility to be $180,000,000. ¶6. Af ter the close of discovery , the Count y m o v e d t o exclude S im zy k’s expert testim ony . The C ounty argued that Sim zy k utilized m ethods f

or determ ining the true value o f industrial personal property dif

f erent f rom the m ethod m andated by state law and reg u lation. NRG countered that, since the c ircuit court m ust hear NRG’s t ax appeal anew, Sim zy k’s appraisal would a ssist in d e term ining the true value o f the f acility

. NRG asser t e d t h a t the County

2 T h e s ales-c o m

p a r i so n ap p ro ach d eterm in es v alu e b y an aly z in g “recen t sales o f co m p arab l e p ro p erty ” ; S im zy k d id n o t f

in d su f f icien t co m

p arab le-sales d ata t o v alu e th e f acility

. T h e in co m e a

p p ro a ch relies o n estim ates o f g r o ss in co m e, “ co n sid er[ i n g ] risk , av ailab ility o f f

in an cin g , an d cu r

r en t m ark et co n d itio n s ” ; S im zy k d eterm in ed th e v alu e o f th e f acility u n d er th e sales-co m p ariso n ap p ro ach t o b e $ 1 6 7 ,3 0 0 ,0 0 0

. V alu e u n d er th e co st ap p ro ach is d eterm in ed b y calcu latin g th e “am o u n t cu rren tly req u ired to erect o r co n stru ct a n e w p l an t o f eq u al u t ility , ” less p h y sical d eterio rat i o n , f u n ctio n al o b so lescen ce, an d eco n o m ic o b so lescen c e; S i m zy k f o u n d t h e f

acil i t y u n d er th e co st ap p ro ach to b e $ 2 0 7 ,4 0 0 ,0 0 0

. 3ignored the clear language of Mississippi Code Section 27-35-50 ( Rev. 2017), w hich def ines “true value” as encom

passing all approaches to value. ¶7. In its order granting the C ounty ’s m otion to e x clude S im z y k ’s expert t estim ony , the circuit c ourt noted that no DOR regulations allowed a taxpay er to use a m ethod other than the one prescribed by state law a nd regulation. Allowing Sim zy k to testif y t o a n appraisal based on a m ethod other than the m ethod p r e scribed by the DOR would contradict the guidelines established f o r expert witnesses, such as Daubert v . M e r r e l l Dow Pharm acuticals, Inc. , 509 U.S. 579, 582, 1 13 S. Ct. 2786, 125 L

. Ed. 2d 469 (1993) and
K u m h o T ire C o ., L td . v. C a rm ich a el , 5 2 6 U

. S

. 1 3 7 , 1 4 5 , 1 1 9 S

. C t. 1 1 6 7 , 1 4 3 L

. E d

. 2 d
2 3 8 ( 1 9 9 9 ). NRG’s petition t o this Court f or perm ission to f

i le an interlocutory appeal was denied. ¶8. Trial was s et and a ninety -one person venire was em paneled. W h en a s k e d b y the circuit court, seventy -two m em bers of the v e n i r e adm itted they knew the tax assessor. Following the court’s voir dire exam ination, NRG m oved f or a c hange of venue, contending that m ost of the venire k new the tax assessor. I n r e s p o n s e , t h e County pointed out that knowing a party is dif

f erent f rom being b i a s e d. The circuit court took the m otion under advisem ent t o be renewed at the close of voir dire. Upon renewal, the circuit court overruled
NR G ’ s mo t i o n f

o r a change of v enue. The circuit court concluded that a m ajority of the venire could be f

air and that those who could not w ere t o be st r u c k f o r c a u s e . 3 A twelvem em ber jury with two a lternates w as sworn in. Af t er a f our-day t rial, t he jury f

ound f or the

3 E v ery p ro sp ectiv e j u r o r N R G m o v ed to b e str u c k f o r cau se w as ex clu d ed b y th e circu i t co u rt. 4County

. The circuit court entered judgm e nt o n M arch 27, 2 017, awarding t h e County

$533,827.80 together with 8 percent interest per y ear. NRG tim ely appealed.
DISCUSSION
I. Ex p ert Testim ony ¶9. This Court reviews the adm ission or exclusion of expert testim ony

f or an abuse of discretion. B ut t his m atter involves an alleged departure f rom the proper legal standard f or determ ination of value, which is a question of law; “[ i]t is well-settled that questions of law

are to be reviewed de novo.” Madison HMA, Inc. v. S t. Dom inic-Jackson M

em ’l Hosp. , 35 So. 3d 1209, 1215 (Miss. 2010).
A. Legal Standard for Valuation ¶10. Taxation f

alls within the purview of the Legislature. The Mississippi Constitution provides, All property not exem

pt f rom ad valorem taxation shall be t axed a t its assessed value. Property shall be assessed f or taxes under general laws, and b y unif orm rules, and in proportion to its true value . . . . The Legislature shall provide, by general laws, the m ethod by which the true value of taxable property

shall be ascertained . . . . The assessed value of property shall be a percentage of i ts true value . . . . Miss. Const. art. 4, § 112. F rom this authority , the statute def ines true value as “includ[ ing], but

. . . not lim ited to, m arket value, cash value, actual cash value, proper value a n d value f or the purposes of appraisal f or a d valorem taxation .” Miss. Code Ann. § 27-35-50(1) (Rev. 2017). The county tax assessor a scertains the t rue v alue o f a p r o perty by “consider[ ing] whenever possible t he incom e c apitalization approach t o value, the cost approach to value,

5and the m a rket data approach to value, as s uch approaches are determ ined by the D epartm ent

of Revenue.” M iss. C o d e A n n . § 27-35-50(2) (Rev. 2 017). But Section 27-35-50(2) provides,
For d i f f ering ty pes of categories of property , dif f ering approaches m ay be appropriate. The c hoice of the particular v aluation approach or approaches to be used s hould be m ade by the [ tax] a s s essor upon a consideration of the category or nature of the property , the approaches to v a l u e f or which the highest quality

data is available, and the current use of the property

. Id. ¶11. Also, the Legislature granted to the DOR the “power to adopt, am end or repeal” tax regulations. Miss. Code Ann. § 27-35-50(6) (Rev. 2017). For i ndustrial personal property , Original acquisition cost new, i ncluding all cost a ssociated with installing the equipm ent in place f

or production, w ill be the b ase f or all industrial property

. The industry will be classed by utilizing Marshall Valuation Service’s m anual s h o wing the average lif

e category f

or the industry

. The base c ost will b e m ultiplied by the appropriate inf lation f a ctor f urnished by the [ DOR] ( f r om Marshall Valuation Service) based on the age o f t he item

. This calculation will be m ultiplied by

the appropriate percent good depreciation f actor (again based on age) that is provided annually by the [ DOR].
35-VI Miss. C ode R. § 2.08.104 (W est, We s t l a w through S ept. 2018). The DOR also

m aintains the Mississippi Appraisal Manual, which “represents the Mississippi D epartm ent of Revenue’s guidelines f or the valuation of real and personal property ” and “serve[ s] a s a

com prehensive r ef

erence guide f

or the p roperty tax assessors and a ppraisers.” D epartm ent of Revenue Of

f ic e o f P roperty Tax, Mississippi Appraisal Manual , Pref ace, https://www.dor.m s.gov/Docum ents/Introduction.pdf ( last visited O ct. 11, 20 18). The Manual states, “[ r]eplacem ent cost new less depreciation is t he pref erred m e tho d f

or determ ining personal p roperty costs in industries,” because insuf f icient s ales or m arket

6com

parisons exist to use the m arket com p arison approach, a nd the incom e a pproach is i m p r a c t i c a l b e c a

u s e of the Departm ent’s inability to obtain accurate incom e inf orm ation fr o m industries. Departm ent of Revenue Of

f ice of Property Tax, Mississippi Appraisal Manual, Chapter XI Personal Property , (Nov. 2015), https://www.dor.m s.gov/Docum ents/Chpt11_PersonalProperty .pdf

. B. Ex c lusion of Ex pert Testim ony ¶12. NRG contends t he c ircuit court erred in e xcluding its prof f ered expert testim ony . I t
argues that, since t his appeal stem s f rom a tria l de n ovo i n the c ircuit court, the DOR regulations do n o t apply

. T h i s C ourt disagrees. NRG ignores well-established DOR regulations and m isinterprets its prof f ered authorities. ¶13. NRG cites Mississippi C ode Section 1 1-5 1

- 7 7

. 4 I t p r o v i d e s t hat “[ a]ny person aggrieved by a decision o f t he board of supervisors

. . . as to the assessm ent of taxes

. . . m ay

. . . appeal to the circuit court of the county .” Mi s s . C o d e A n n . § 11-51-77 (Rev. 2012). Further, “the controversy shall be t ried anew in the circuit court.” I d. NRG principally relies

on Lenoir v. Madison County , 641 So. 2d 1124, 1132 (Miss. 1994) f or its interpretation of Section 11-5 1

- 7 7

. In Lenoir , this Court held that t he requirem ent of f iling a bill of

e x c e p t i o n s w i th the c ircuit court to appeal the decision of the b oard of supervisors under Mississippi Code Section 1 1-51-75 was superseded by t he tim e l y f iling of a com

p laint with the circuit court under Section 11-51-77. Id. This Court observed that, under Section 11-51-

4 S ectio n 1 1 -5 1 -7 7 w as rew ritten in 2 0 1 8 to in co rp o rate n u m erical su b sectio n s. S ee M iss. C o d e A n n . § 1 1 -5 1 -7 7 (S u p p . 2 0 1 8 ). B ecau se N R G ap p e aled b e f o re th e ef f ectiv e d ate o f th e a m en d m e n t, all ref eren ces to S ectio n 1 1 -5 1

- 7 7 w ill b e cited w ith o u t th e n u m erical su b sectio n s. 777, “cases appealed to the circuit court f rom the board of supervisors are tried ‘anew.’ That is t o say , such cases a re tried ‘de novo’ b y the c ircuit c ourt.” Id. at 1128. In a trial de novo, “the proceedings of the board of supervisors a re not in issue, only the decision o f the board of supervisors is reviewed.” Id. ¶14. NRG is correct that Section 11- 5 7

- 7 7 a p p l i e s a nd that a tax appeal is tried in the circuit c ourt without c onsideration of the actions o f t he tax assessor or board o f s upervisors.
But NRG goes too f

ar in arguing that try ing the case anew would exc l u d e n o t only the proceedings of t he board of s upervisors, but also the underly ing subs t a n tive statutes and regulations. The Lenoir Court sim ply stated that a trial de novo requires a new trial by the circuit c o urt. Id. The circuit court reviews only the decision of the board of supervisors, not the board’s p roceedings. Id. Nowhere in Lenoir does the Court equate “ proceedings” with the underly ing law or regulations. ¶15. NRG also relies on Rebelwood, Ltd. v . Hinds County , 544 So. 2d 1356, 1360 (Miss. 1989). There, this Court cited Mississippi C ode Section 2 7-35-50(2) and d i s c u ssed the “three s t a tutorily -authorized approaches to value: the cost approach, the incom e capitalization a

pproach, and the m arket data or com petitive sales a

p proach.” Id. But NRG f ails to consider the rest of the statute, which continues that the D O R d e term ines the approach or approaches used and that, “f or dif f ering ty pes o f categories o f p roperty , dif f ering approaches m ay be appropriate.” Miss. Code. Ann. § 27-35-50(2). Rebelwood dealt with a f ederally subsidized apartm ent com plex, w hich is classif

ied a s Class II real property

. Rebelwood , 544 So. 2d at 1358. NRG’s f acility is classif

ie d a s a n i n dustrial personal

8property

. The e n t i rety of S ection 27-35-50(2) m akes clear that dif f erent classif

ications of property use dif f erent m ethods of

determ ining true value as determ ined by the DOR. ¶16. NRG also cites t h e R e b e l w o o d C o u r t’s observation: “Rarely is the day when a

com pete n t a p p r a i s a l m ay be based on a single approach.” But this approach is outdated.
Af ter Rebelwood , the Legislature enacted Mississippi Code S ection 2 7

- 3 5

- 5 0(4)(d). This

statute m andates that the tax assessor use only one prescribed m ethod, not a com bination of

m ethods, to determ ine the true val u e of af f ordable rental housing. Miss. Code. Ann. § 27-35-50(4)(d) (Rev. 2017). This Court upheld Section 27-35-50(4)(d) as c onstitutional in
Willow Bend Estates, LLC v . Hu m p h reys County Board o

f Supervisors , 166 So. 3d 494 (Miss. 2013). Like in W

illow Bend , NRG’s expert used a valuation m ethod dif f erent f rom the m andated approach. This Court held that the use of an approach other than the approach prescribed in the statute was not perm itted. Id. B ecause S ection 27-35-50 gives the DOR the exclusive a

uthority to determ ine the m ethod t o be used to calculate true value, the DOR’s regulation is m andatory

and binding, as was the statute in Willow Bend

. ¶17. Because t he DOR m andates th e u s e o f t he trended historical cost-less-depreciation approach to calculate the true value of property classif ied as industrial p ersonal property (like NRG’s f acility ) and because NRG’s expert did not use this m andated approach, the circuit court did not err in excluding NRG’s prof f ered expert testim ony . II. Denial of NRG’s Motion for a Change of Venue

9¶18. W h ether to grant a m otion f or a change of venue “lies within the discretion of the trial
court.” B ayer Corp. v. Reed , 9 3 2 S o . 2 d 7 8 6, 788 (Miss. 2006). This Court “will not overturn that decision unless the trial court abuses its discretion.” Id . ¶19. NRG argues that the circuit court erred in deny ing its m otion t o change venue because

a m ajority

of the ninety -one-person venire knew the tax assessor and the Board; theref ore, they were n o t a f

f o r d e d a f air and im

partial jury

. W e disagree. A s the c ircuit court noted, “there is a big dif

f erence” between m erely k nowing s om eone and h aving a direct connection with them

. ¶20. W h ile it is t rue that m any of the jurors stated they knew t he t ax a ssessor and the Board, this does not m ean t hat they were biased. This Court has held, “a person is not i ncom petent as a juror m erely

because he knows, or is a neighbor, or an intim ate acquaintance of , or on f riendly relations with, o ne o f t h e parties o r m e m bers of his f

am ily .” Harding v. Estate of Harding , 185 So. 2d 452, 453 (Miss. 1966). ¶21. “ [ U ] n d e r M i s s i s s i p p i l a w , any person not d isqualif i ed under M ississippi Cod e Annotated Section 13-5-1, who will m ake oath that he or she is im partial, is com

petent to sit

as a j uror.” Patton v

. State , 248 So. 3d 763, 767 (Miss. 2018) (quoting Archer v. State , 986
So. 2d 9 5 1, 958 (Miss. 2 0 08)). During voir dire, the circuit court struck every juror that said he or she could not be f

air and im partial. A dditionally , every juror NRG challenged f or cause

w a s d i s m issed by t he court. “ [ J]urors take their oaths and responsibilities seriously , and when a prospective juror a ssures the court that, de s p i t e t h e c ircum stance t hat raises som e

1 0question as to his q ualif ication, this will n ot af

f ect h is v erdict, t h i s prom ise is entitled to considerable def

erence.” Id. at 7 69 (quoting Scott v. Ball , 5 95 So. 2d 848, 849 (Miss. 1992)). ¶22. Because t he j urors testif i ed under oath that they could be f air a nd im partial, the circuit court did not err by

deny i ng NRG’s m otion to change venue.

CONCLUSION ¶23. This C ourt f

i nds that NRG’s prof

f ered expert testim ony used an inappropriate m ethod

to determ ine true val u e a n d t hat NRG was af f orded a f air and im

partial jury

. This Court theref ore af f irm s the judgm ent of

the circuit court. ¶24. AFFIRMED. WALLER, C.J., RANDOLPH AND KITCHENS, P.JJ., KING, COLEMAN, MAX W ELL, BEAM AND CHAMBERLIN, JJ., CONCUR.

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