# FILED
March 17, 1997 Cecil W. Crowson Appellate Cou rt Clerk 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 ) Davidson County; ) METROPOLITAN BOARD OF EQUALIZATION ) FOR NASHVILLE AND DAVIDSON COUNTY; ) JO ANN NORTH, Assessor of Property, ) Metropolitan Government of ) 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.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 This cause chronicles the efforts of Betty Corlew Thomas, the appellant, to challenge the valuation placed on her home by the TaxAs sess or for Metropolitan Nashville-Davidson County. In the initial stages, Thomas proce eded w ithout a lawyer; it was during this period of self-representation that the administrative judge, employed by the state board of equalizat ion (“state board”), dismissed her appeal. 1 Thomas challeng ed t his action, but in the process, she skipped two of the administrative steps that she could have taken and sought jud icial review in the Chancery Court. F inding that Thomas had failed to exhaust her administra tiv e 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 applica bl e statutes to exhaust her administrative remedies in order to obtain judicial reviewof the dismissal of her appeal. Second, and alternatively, she insists that e ven if exhaustionwere 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 n on- payment of the undisputed portion of the property tax by the due date would be dismissal of her appeal.

Because the st atut e does not require Thomas to exhaust her administrative remedies and because the state board provided3

her inconsistent and misleading information regarding certain aspects of the administr ativ e 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 taxvaluation of one’s real estate by the ass essor 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.
Bystatute, 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 cou nty board of equalization’s determination is final. Tenn. Code Ann. § 67-5-1411.

Pursua nt to statutory authority, the state board has established a three-step procedure to consider and dispose of appeals like that of Thoma s’s, The first step provides the dissatisfied taxpayer with a hearing before an adminis tr ative judge. After due consideration, the administrative judge makes a
reco mmendationto the assessment appeals commission. A taxpayer wishing to contest this recommendation may petition the commission. If the taxpayer is unsuccessful and the recommendation o f th e2 This is the value of the property that was ascertained by the

assessor pursuant to Ten n. Co de Ann. §§ 67-5-601 and -602. Such valuations are determined from “evidence of [the property’s] sound, intrinsic and immediate value, for pu rposes 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 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.

Earlyin 1993, Thomas was informed that the valuation of her residence for property tax purposes was $205,000 for the 1993 taxyear. 2 Thomas appealed this valuation to the Metropolitan B oard of Equalization for Nashville and Davidson County 3 an d asserted that as of January1, 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 prope rty 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 March1, 1994, the state board did not require Thomas to p ay the undisputed portion of the tax when she filed her appeal in September 1993. When she filed her appeal,4 The substance of thi s “misleading information” is not

expressed clearly in the record. 5 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 . Whena final certificate of assessment is issued by the Board of Equalizationor 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)
OnFebruary10, 1994, Thomas was notified that her appeal would be he ard on Marc h 11, 1994. At the hearing on March 11, 1994, the administrative judge dismissed Thomas’s appeal beca use she had not paid the undisputed portion of her property tax.

Thomas immediately paid the undis p uted portion of the tax. On March 30, 1994, Thomas fil ed a tim ely petition for reconsideration and exp lai ned that she had not paid her 1993 propertytax earlier because she had received “m isle ading information” from employees of the state board. 4

OnMarch 31, 19 94, the administrative judge found that Thomas had been fully informed of the r equirement that the undisputed portion of the tax be paid prior to the due date (March6

1) in order to keep her appeal alive. On this basis, the administrative judge denied Thomas’s petition for reconsideration. Speci fically, the administrative judge relied on the writt e n “instructions accompanying all appeal forms obtained from the State Board of Equalization” and quoted the notice regarding the payment of taxes whil e an appeal is pending. The order denying Thomas’s motionfor reconsideration stated that Thomas could appeal boththe 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 “Offi cia l Certificate of the Assessment Appeals Commission Relative to 1993 Property Assessments” included the following provisions:

Inaccordance 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 .

. . . . Anyparty dissatisfied with this decision is entitled to judicial review , proceedings for which are instituted by filing a petition in ChanceryCourt within (60) days of7 the date of this certificate. (Emphasis added)
OnJuly 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 complywithin [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 m ov ed to dismiss Thomas’s petition,
c onte nding that “the plaintiff has failed to exhaust her administrative remedies in this matter” and that the trial court, therefore, lacked subject matter juris diction pursuant to Rule 12.02(1) and 12.02(6) of the Tennessee Rules of Civil Procedure.

OnOctober 31, 1994, the trial court concluded that “the Plaintiff failed to e xhau st her remedies at the administrative l eve l” and granted the state board’s motion to dismiss Thomas’s petition. The Court of Appeals affirmed.

II
Generallywhen a statute provides an administrative remedy, one must exhaust this administrative remedy pri or t o5 W hen not mandated by statute, exhaustion is a matter o f

judicial discretion. Reeves v. Olsen , 691 S.W.2d 527, 530 (Tenn. 1985). 8 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

premat ure interfere nce with agenc y processes, so that the agency may (1) function efficiently and have an opportunityto 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 indiscouraging frequent and deliberate flouting of the administrative process.
2 Am.Jur.2d Administrative Law § 505 (1994)(footnotes omitted).

InTennessee, exhaustion is not statutorily required unless the stat ute “by it s plain words” requires it. Reeves v. Olsen , 691 S.W.2d 527, 530 (Tenn. 1985). Although the statutes expresslygrant the board the authori ty to create the assessment appeals commission and to designate administrative judges to make preliminaryrecommendations, 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 recommendatio n of the hearing examiner is taken by either the propertyowner or . . .assessment appeals commissiondoes not adopt the recommendation9 of the hearing examiner, a hearing shall be scheduled. . . .

Tenn. Code Ann. § 67-5-1506. As for an appeal to the boa rd from the decision of the assessment appeals co mmis sion, the statute expresslyprovides 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 actionby 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

Neith er t he 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 notifyher that her appeal was subject to dismissal should she fail to paythe 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.6 Subdivision (b)(1)(C) does not apply in Davidson County. 1 0 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. It is int erest ing to note that the state board’s own notice interprets the statute as imposing the conditionon the fili ng of the appeal. By contrast, the state boardinterpreted the statute as imposing the condition on the maintenance of anappeal in its dismissal of Thomas’s appeal and in its arguments to this Court. The sta tute 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 entryof 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 actionwas 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).1 1 Accordingly, the decision of the Court of Appe als 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.

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_ ADOLPHO A. BIRCH, JR., Chief Justice

CONCUR: DROWOTA, ANDERSON, REID, JJ.