Title: City of Martinsville v. Commonwealth Blvd. Assoc.
Citation: N/A
Docket Number: 040218
State: Virginia
Issuer: Virginia Supreme Court
Date: November 5, 2004

Present:  Hassell, C.J., Lacy, Keenan, Koontz, Lemons and 
Agee, JJ., and Russell, S.J. 
 
CITY OF MARTINSVILLE 
            OPINION BY 
SENIOR JUSTICE CHARLES S. RUSSELL 
v.  Record No. 040218               November 5, 2004 
 
COMMONWEALTH BOULEVARD ASSOCIATES, LLC 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF MARTINSVILLE 
Charles M. Stone, Judge 
 
 
This appeal presents the question whether a taxpayer is 
entitled to relief under Code § 58.1-3984 for real estate 
taxes erroneously assessed during the interim between general 
reassessments.  More specifically, may the taxpayer challenge 
an annual levy of taxes without showing that the previous 
general reassessment, upon which the annual levy was based, 
was erroneous?  We answer the question in the affirmative. 
 
The trial court decided the case on cross-motions for 
summary judgment and the facts, except as to valuation, are 
undisputed.  Pursuant to Code § 58.1-3250,the City of 
Martinsville (the City) conducts a general reassessment of the 
real estate within the City every two years.  Tax years run 
from July 1 to the following June 30.  See Code § 15.2-2500 
(prescribing uniform fiscal year for localities from July 1 to 
June 30).  The annual levies are based upon valuations set by 
the previous general reassessment.  The subject of this appeal 
is a tract of industrial land containing 22.829 acres improved 
 
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by a large manufacturing plant formerly owned by the Tultex 
Corporation.  The City conducted a general reassessment of 
land on January 1, 1999 in which the property was assigned a 
valuation of $12,408,700.  At that time, the Tultex plant was 
active.  The January 1, 1999 assessment set the valuation that 
would govern the annual levies of taxes from July 1, 1999 to 
June 30, 2001. 
 
On December 3, 1999, the Tultex Corporation filed for 
Chapter 11 bankruptcy.  About a year later, the present owner, 
Commonwealth Boulevard Associates, LLC, (CBA) applied for a 
bank loan to finance the purchase of the property subject to 
the approval of the bankruptcy court.  Pursuant to the 
lender’s requirements, a professional appraisal was made in 
which the property, by then vacant and “essentially gutted,” 
was valued at a fair market value of $2,375,000 as of December 
5, 2000.  On January 4, 2001, CBA purchased the property from 
the Tultex Corporation, with the approval of the bankruptcy 
court, for $750,000. 
 
Four days before the sale, on January 1, 2001, the City 
had conducted its next general reassessment, which would 
govern its annual real estate tax levies from July 1, 2001 
until June 30, 2003.  That assessment assigned a fair market 
value of $4,128,386 to the former Tultex property.  Id. 
 
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From January 4, 2001, when CBA acquired the property 
until June 30, 2001 when the new tax year began, the City 
continued to base its levy on the 1999 general reassessment 
valuation of $12,408,700.  CBA paid the taxes for that period, 
amounting to approximately $58,321. 
CBA brought this suit for relief from an erroneous 
assessment under Code § 58.1-3984.  The trial court, in a 
written opinion, agreed with CBA’s contention that the levy 
for the first half of 2001 was based on an erroneous 
assessment.  The trial court granted summary judgment in CBA’s 
favor and reduced the assessed valuation of the Tultex 
property for that period to $2,375,000, based upon the 
evidence of the independent appraisal made for the lender.  
The trial court also ordered a refund of the taxes CBA had 
paid for the first half of 2001.  We awarded the City an 
appeal. 
 
The City contends that annual levies of taxes must be 
based only on valuations established by the previous general 
reassessment, and that, with certain exceptions not pertinent 
here, a taxpayer seeking relief from taxes levied in the 
interim must prove that the previous general reassessment was 
erroneous when originally made.  The City points out that CBA 
made no contention that the 1999 general reassessment was 
erroneous when made.  Indeed, argues the City, in 1999 the 
 
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Tultex plant was a going concern in full operation and the 
$12,408,700 valuation was “entirely appropriate.”  CBA 
contended only that the annual levy for the first half of 
2001, based on the 1999 valuation of $12.4 million, was 
clearly erroneous based on the City’s own valuation of $4.1 
million as of January 1, 2001 and the independent appraisal of 
$2.3 million made the previous month. 
 
Code § 58.1-3984(A) provides, in pertinent part, 
Any person assessed with local taxes, aggrieved by 
any such assessment, may . . . (a) within three 
years from the last day of the tax year for which 
any such assessment is made, [or] (b) within one 
year from the date of the assessment, whichever 
. . . is later, apply for relief to the circuit 
court of the county or city wherein such assessment 
was made. 
 
The City argues that the term “assessment,” as used in 
this section, refers only to the periodic general 
reassessments upon which the annual levies of taxes are based.  
We held, however, in Hoffman v. Augusta County, 206 Va. 799, 
146 S.E.2d 249 (1966) that the word “assessment,” as used in 
the tax laws, had two meanings.  It could refer either to a 
periodic general reassessment or to the annual levy of taxes 
based upon that valuation.  The General Assembly, we said, had 
“made clear that the remedy provided by Code § 58-1145 [the 
statutory predecessor of present Code § 58.1-3984] shall be 
available to a landowner to attack an assessment in whichever 
 
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of its two meanings the word is employed.”  Id. 206 Va. at 
802, 146 S.E.2d. at 251. 
The City terms this language “dictum.”  We do not agree.  
It was essential to the holding in Hoffman and states a rule 
to which we adhere.  A taxpayer is entitled to relief under 
Code § 58.1-3984 if he carries his burden of proving that in 
either the general reassessment or in the annual levy of taxes 
“the property in question is valued at more than its fair 
market value or that the assessment is not uniform in its 
application, or that the assessment is otherwise invalid or 
illegal.”  Code § 58.1-3984.  The trial court correctly so 
ruled. 
The trial court, considering the conflicting evidence of 
value, found that the property was valued for tax purposes at 
more than its fair market value for the first half of 2001.  
The trial court was thereupon empowered to “reduce the 
assessment to what in its opinion, based on the evidence is 
the fair market value of the property involved ” and also to 
order repayment of the taxes already paid pursuant to the 
erroneous assessment.  Code § 58.1-3987.  The evidence in the 
record fully supports the court’s finding and we will affirm 
the judgment. 
 
Affirmed.