Court Opinion

ID: 9849112
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:34:51.054413+00
Date Added: 2024-06-11T09:19:01.273281
License: Public Domain

STEWART, Associate Chief Justice,
separate opinion:
I concur with the majority opinion that the Utah State Tax Commission did not lose jurisdiction over Union Pacific Railroad Company’s appeal by failing to decide that appeal with a written decision within the statutory deadline specified in Utah Code Ann. § 59-2-1007(3). I agree that the “deadline” is directory only, not mandatory.
However, I do not agree that the various components of the valuation formulae that the Commission employs in computing a fair market value are properly characterized as “factual findings” and that all the Court needs to do is determine whether those findings are supported by substantial evidence, i.e., the opinion of a Commission expert that a particular formula or a variation of a formula is appropriate. For example, such issues as whether the Commission can properly use future projected earnings combined with a post annual average stock price to compute a capitalization rate under the income indicator is simply not a factual issue. In this case, there is no issue as to the accuracy of the empirical facts used to calculate the average stock price or the future price/earnings ratio. The issue the Court should decide but does not is the propriety of capitalizing earnings by using a past average stock price and projected future earnings to compute a price/earnings ratio as a tool for valuing a corporation.
The Counties contend that the Commission employed a “forward looking capitalization rate [that] was improperly used to discount historical earnings.” In my view, the Counties deserve an analysis of that issue. Instead, the Court offers the unfounded conclusion that this issue and several similar issues are inherently factual and that the “findings” should be sustained because the Commission’s expert witness testified that such an approach was appropriate.
The propriety of various valuation formu-lae, as raised in this case, cannot be addressed by “findings of fact,” as that term is ordinarily used. Whether the various valuation formulae the Commission employs in this case are appropriate does not depend upon the Commission’s findings of empirical data relevant to the formula employed. Rather, the propriety of the Commission’s formulae depends upon whether they are logical, reasonable, and produce valuations that comport with how similar businesses are usually valued and, most importantly, whether the methodology meets the standards im*556posed by Article XIII of the Utah Constitution.
For this Court to exercise its constitutional duty to assure compliance with Article XIII, it must evaluate Commission decisions to assure that they are based on methodologies and formulae that effectuate constitutional requirements. Of course this Court should not, nor could it, engage in a de novo review of the Commission’s rulings. Market valuations are concededly inherently judgmental and not subject to precise measurements, but valuation methods must be based on formu-lae that are reasonable, consistently applied within an industry, and based on realistic assumptions and conclusions.
The Commission has developed significant and substantial expertise in dealing with highly complicated matters of valuation, which, as the majority opinion points out, do indeed involve matters of opinion and judgment. For that reason, it is appropriate for this Court to defer to the Commission’s expertise, as long as the methodology rests on a reasonable and consistent application of sound principles for determining fair market value. It is hardly appropriate, however, for this Court to act as if the Commission’s methodology is an issue of fact whereby this Court all but abandons its constitutional and statutory responsibilities of judicial review by treating that which is not a factual inquiry as if it were.