Court Opinion

ID: 1072287
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:48:40.217885+00
Date Added: 2024-06-11T13:18:19.092358
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                             AT NASHVILLE
   On Remand from the Supreme Court of Tennessee on Opinion on Petition to
                      Rehear Filed December 8, 2000

IN THE MATTER OF ALL ASSESSMENTS, REVIEW OF AD VALOREM
 ASSESSMENTS OF PUBLIC UTILITY COMPANIES FOR TAX YEAR
                          1998

      A Direct Appeal of Administrative Proceedings of the Tennessee State Board of
                                      Equalization

                     No. M2000-03014-COA-RM-CV - Filed April 11, 2001

On remand from the Supreme Court, this Court was instructed to consider the factual issue of
whether the action of the Board of Equalization reducing the appraised value of public utility
tangible personal property for tax year 1998 caused the ratio of such property’s appraised value to
its market value to be equal to the ratio for tangible personal property within each local jurisdiction
that is appraised and assessed by local taxing authorities. We find that there is substantial and
material evidence to support the Board’s action in reducing the appraised value for the tax year 1998
and that it resulted in an equal ratio for locally assessed personal property.

Tenn.R.App.P. 12; Direct Review of Administrative Proceedings by the Court of Appeals;
            Order of the Tennessee State Board of Equalization Affirmed

W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which ALAN E. HIGHERS,
J. and HOLLY KIRBY LILLARD, J., joined.

Jeffrey D. Moseley, Franklin, For Appellant, Williamson County
Donnie E. Wilson, Robert B. Rolwing, Memphis, For Appellant, Shelby County
Jean Dyer Harrison, Nashville, Co-Counsel, Williamson County
Paul D. Krivacka, James Charles, Nashville, For Appellant Metropolitan Government of Nashville
and Davidson County

Paul G. Summers, Attorney General and Reporter, Jimmy G. Creecy, Chief Special Counsel,
Nashville, For Appellee, Tennessee State Board of Equalization
T. Arthur Scott, Jr., Suzanne S. Cook, Kingsport, for Appellee, Appalachian power Company and
Kingsport Power Company
James W. McBride, Washington, D.C., Stephen D. Goodwin, Memphis, Brigid M. Carpenter,
Nashville for Appellee, Coalition of Public Utilities
                                                    OPINION

         This issue comes to us on remand from the Tennessee Supreme Court in a case we originally
decided on August 20, 1999.1 That case involved a direct appeal from an order of the Tennessee
State Board of Equalization (the “Board” or “Appellees”) which granted equalization relief to all
centrally-assessed taxpayers on the basis of a settlement agreement (the “BellSouth Settlement”)
between the Metropolitan Government of Nashville and Davidson County, Shelby County, and
Williamson County (collectively, “Petitioners” or “Appellants”) and BellSouth Telecommunications,
Inc. (“BellSouth”). The BellSouth Settlement, in turn, had its roots in the settlement resolution of
a federal lawsuit filed by various railroad and air carriers against the Board. The federal action dealt
with whether centrally and locally assessed commercial and industrial property was being assessed
at the same ratio of appraised value to fair market value. Under the settlement in that case, the Board
agreed to reduce the plaintiffs’ personal property tax valuations for the tax years at issue as well as
future tax years.

         The end result of the BellSouth Settlement was that the Board, in order to comply with its
statutory mandate to “[t]ake whatever steps. . .are necessary to effect the equalization of
assessments,” granted a 15% reduction in personal property valuations for the 1998 tax year to all
public utilities and common carriers. See T.C.A. § 67-5-1501(b)(3) (1998). Appellants herein,
Metropolitan Government of Nashville and Davidson County, Shelby County, and Williamson
County, appealed the Board’s decision to this Court. We reversed the Board’s actions, and held that
the Board was not authorized to reduce the valuation of taxable property below the fair market value
of that property absent legislative authorization. See In re: All Assessments, C.A. No. 01A01-9812-
BC-00642, slip op. at 13 (Tenn. Ct. App. Aug. 20, 1999). On appeal, the Tennessee Supreme Court
reversed, holding that the Board did have the legal authority to reduce the appraised value. See In
re All Assessments, 2000 WL 1710174, at *7 (Tenn. 2000). On a Petition to Rehear filed by
Metropolitan Government of Nashville and Davidson County, Shelby County, and Williamson
County, the Supreme Court remanded this case to us for determination of whether there was a factual
basis for the Board’s actions in reducing the appraised value. Specifically, the Court charges us with
determining:

                  whether the Board’s action in reducing the appraised value of public
                  utility tangible personal property for tax year 1998 caused the ratio of
                  such property’s appraised value to its fair market value to be equal to
                  such ratio for tangible personal property within each local jurisdiction
                  that is appraised and assessed by local taxing authorities.

In re All Assessments, 2000 WL 1800643, at *1 (Tenn. 2000).

         1
           A detailed account of the facts in this case can be found in the “Factual and Procedural Background” portion
of the opinio n of the Te nnessee Su preme C ourt. See In re A ll Assessm ents, 2000 WL 1 710174, at *2 (Tenn. 2000).

                                                         -2-
        Our analysis of the Board’s action is governed by T.C.A. § 4-5-322(h) (1998), which sets out
the standard of review of administrative proceedings as follows:

               (h) The court may affirm the decision of the agency or remand the
               case for further proceedings. The court may reverse or modify the
               decision if the rights of the petitioner have been prejudiced because
               the administrative findings, inferences, conclusions or decisions are:

                       (1) In violation of constitutional or statutory provisions;
                       (2) In excess of the statutory authority of the agency;
                       (3) Made upon unlawful procedure;
                       (4) Arbitrary or capricious or characterized by abuse of
               discretion or clearly unwarranted exercise of discretion; or
                       (5) Unsupported by evidence which is both substantial and
               material in the light of the entire record.

               In determining the substantiality of evidence, the court shall take into
               account whatever in the record fairly detracts from its weight, but the
               court shall not substitute its judgment for that of the agency as to the
               weight of the evidence on questions of fact.

(emphasis added). Although T.C.A. § 4-5-322 does not clearly define "substantial and material"
evidence, courts generally interpret the requirement as "something less than a preponderance of the
evidence, but more than a scintilla or glimmer." Wayne County v. Tennessee Solid Waste Disposal
Control Bd., 756 S.W.2d 274, 280 (Tenn. Ct. App. 1988)(citations omitted).

        T.C.A. § 67-5-1509 provides additional guidelines for determining if there was a factual basis
for the Board’s actions in this matter. That statute provides, in relevant part:

               (a) Upon its consideration of reports made to it, together with the
               evidence submitted therewith or other information available, the
               state board or the assessment appeals commission, if such has been
               created by the state board under § 67-5-1502, shall take whatever
               steps it deems are necessary to effect the assessment of property in
               accordance with the constitution of Tennessee and the laws of this
               state. The board shall by order or rule direct that commercial and
               industrial tangible personal property assessments be equalized using
               the appraisal ratios adopted by the board in each jurisdiction. Such
               equalization shall be available only to taxpayers who have filed the
               reporting schedule required by law.

T.C.A. § 67-5-1509(a) (1998)(emphasis added).

                                                 -3-
         While this Court may consider evidence in the record that detracts from its weight, the court
is not allowed to substitute its judgment for that of the agency concerning the weight of the evidence.
See T.C.A. § 4-5-322(h) (1998), McClellen v. Board of Regents of State University, 921 S.W.2d
684, 693 (Tenn. 1996); Pace v. Garbage Disposal Dist., 390 S.W.2d 461, 463 (Tenn. Ct. App.
1965). The evidence before the tribunal must be such relevant evidence as a reasonable mind might
accept as adequate to support a rational conclusion and such as to furnish a reasonably sound basis
for the action under consideration. See Pace, 390 S.W.2d at 463.

        Finally, we note that, although an agency is required to consider evidence admissible in a
court of law, agencies are not limited to such evidence. See T.C.A. § 4-5-313(1) (1998). T.C.A.
§ 4-5-313 provides, in part:

               § 4-5-313. Evidence; affidavits; notice

                       In contested cases:

                       (1) The agency shall admit and give probative effect to
               evidence admissible in a court, and when necessary to ascertain
               facts not reasonably susceptible to proof under the rules of court,
               evidence not admissible thereunder may be admitted if it is of a type
               commonly relied upon by reasonably prudent men in the conduct
               of their affairs. The agency shall give effect to the rules of privilege
               recognized by law and to agency statutes protecting the
               confidentiality of certain records and shall exclude evidence which in
               its judgment is irrelevant, immaterial or unduly repetitious.

(emphasis added).

       Based upon the above legal authorities, we find that the Board’s action was supported by
substantial and material evidence. We believe both the BellSouth Settlement and the settlement
entered in federal court between the Board and the railroad and air carriers constitute evidence upon
which the Board could properly decide that the 15% reduction in personal property assessments was
necessary. Either settlement agreement qualifies under the language of T.C.A. § 67-5-1509 as
“information” the Board was permitted to consider in “justly and equitably” equalizing assessments.
See T.C.A. 67-5-1509(a), (b).

        We hold, therefore, that the Board’s action in reducing certain public utility personal property
assessments for the tax year 1998 did cause the ratio of such property’s appraised value to its fair
market value to be equal to the ratio for tangible personal property within each local jurisdiction that
is appraised and assessed by local taxing authorities.

                                                  -4-
      Additionally, we note that in this Court’s original opinion we pointed out, concerning the
BellSouth Settlement, that the petitioners herein, Metropolitan Government of Nashville and
Davidson County, Shelby County, and Williamson County, along with the intervenors:

               joined in a compromise and settlement agreement with BellSouth in
               which BellSouth would dismiss its tax appeals for the 1994, 1995,
               and 1996 tax years but would be granted a fifteen percent reduction
               in the valuation of its personal property for tax years 1997 and 1998.
               The comptroller on behalf of the Board joined in the agreement and
               further agreed to conduct a declaratory proceeding to receive evidence
               on whether the locally assessed commercial and industrial personal
               property is being valued at full market value by virtue of the use of
               the form prescribed in T.C.A. § 67-5-903 (f).

In Re: All Assessments, C.A. No. 01A01-9812-BC-00642, slip op. at 4 (Tenn. Ct. App. Aug. 20,
1999). While not a part of the record in this case, we believe the result of the declaratory proceeding
reinforces the board’s action. The final decision and order in the declaratory proceeding before the
Tennessee State Board of Equalization affirmed the initial order of the administrative judge and
ruled “that Tenn. Code Ann. §67-5-903 undervalues locally assessed commercial and industrial
tangible personal property by a factor of 11.6% for property in reportable Group 1 and by 16.6% in
reportable Group 5.”

        Accordingly, the order of the Board of Equalization allowing a 15%reduction in the
valuations of tangible personal property for the 1998 tax year is affirmed. The case is remanded to
the Board for such further proceedings as may be necessary. Costs of the appeal are assessed against
Petitioners.

                                               __________________________________________
                                               W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.

                                                 -5-