MJB Motels LLC v. Cnty. of Jefferson Bd. of Equalization
No. 22SC798
The Supreme Court of the State of Colorado
May 30, 2023
2023 CO 26
JUSTICE MÁRQUEZ
ADVANCE SHEET HEADNOTE.
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ADVANCE SHEET HEADNOTE
May 30, 2023
2023 CO 26
No. 22SC798, MJB Motels LLC v. Cnty. of Jefferson Bd. of Equalization—Property—Taxation—COVID-19.
Section
On this appeal from a district court order, the supreme court now holds that COVID-19 was not a “detrimental[] act of nature,” and the public health orders issued in response were not “regulations restricting . . . the use of the land” under section
Attorneys for Petitioners:
Law Offices of James P. Bick, Jr PC
James P. Bick, Jr.
Chesterfield, Missouri
Hutchinson Black and Cook, LLC
Glen F. Gordon
Matthew A. Simonsen
Boulder, Colorado
Attorneys for Respondents:
Jefferson County Attorney‘s Office
Amber J. Munck, Assistant County Attorney
Jason W. Soronson, Assistant County Attorney
Golden, Colorado
Attorneys for Amici Curiae Assessor for Larimer County; Assessors and Boards of Equalization for Adams County, Arapahoe County, Boulder County, El Paso County, Mesa County, Routt County, Eagle County, Weld County, the City and County of Broomfield, and the City and County of Denver; and Colorado Assessor‘s Association:
Adams County Attorney‘s Office
Meredith P. Van Horn, Assistant County Attorney
Brighton, Colorado
Arapahoe County Attorney‘s Office
Ronald A. Carl, County Attorney
Benjamin P. Swartzendruber, Assistant County Attorney
Littleton Colorado
Boulder County Attorney‘s Office
Michael A. Koertje, Assistant County Attorney
Boulder, Colorado
Office of the City & County Attorney of the City & County of Broomfield
Patricia W. Gilbert, Deputy City and County Attorney
Broomfield, Colorado
Denver City Attorney‘s Office
Charles T. Solomon, Assistant County Attorney
Paige A. Arrants, Assistant County Attorney
Denver, Colorado
Kathryn L. Schroeder
Pueblo West, Colorado
El Paso County Attorney‘s Office
Steven Klaffky, Senior Assistant County Attorney
Larimer County Attorney‘s Office
David P. Ayraud, Deputy County Attorney
Fort Collins, Colorado
Mesa County Attorney‘s Office
Andrea Nina Atencio, Chief Deputy County Attorney—Civil Division
John R. Rhoads, Assistant County Attorney II
Grand Junction, Colorado
Routt County Attorney‘s Office
Erick Knaus, County Attorney
Lynaia M. South, Senior Assistant County Attorney
Steamboat Springs, Colorado
Eagle County Attorney‘s Office
Christina C. Hooper, Senior Assistant County Attorney
Eagle, Colorado
Weld County Attorney‘s Office
Karin McDougal, Assistant County Attorney
Greeley, Colorado
Attorneys for Amicus Curiae Colorado Property Tax Administrator:
Philip J. Weiser, Attorney General
Robert H. Dodd, First Assistant Attorney General
John H. Ridge, Senior Assistant Attorney General
Jessica E. Ross, Assistant Attorney General
Denver, Colorado
JUSTICE MÁRQUEZ delivered the Opinion of the Court, in which CHIEF JUSTICE BOATRIGHT, JUSTICE HOOD, JUSTICE GABRIEL, JUSTICE HART, JUSTICE SAMOUR, and JUSTICE BERKENKOTTER joined.
JUSTICE MÁRQUEZ delivered the Opinion of the Court.
¶1 This is one of several cases filed in Colorado in which commercial property owners have sued to compel the county assessor to revalue their properties and lower their property tax assessments for the 2020 tax year to account for the economic impacts of the COVID-19 pandemic. This case concerns the valuation of hundreds of parcels of commercial real property located in Jefferson County. The taxpayers here—and in the other cases—contend that the pandemic and various state and local public health orders issued in response were “unusual conditions” that required revaluation of their properties under section
¶2 We accepted jurisdiction under section
¶3 In this case and in Hunter Douglas, we consider whether the COVID-19 pandemic and the public health orders issued in response constituted “unusual conditions” for purposes of section
Equalization to correct the Assessor‘s valuations. Accordingly, we affirm the order of the district court dismissing the complaint for failure to state a claim.
I. Background
¶4 The
Each property tax levy shall be uniform upon all real and personal property . . . . The actual value of all real and personal property . . . shall be determined under general laws, which shall prescribe such methods and regulations as shall secure just and equalized valuations for assessments of all real and personal property.
¶5 Pursuant to this mandate, the General Assembly has enacted a statutory framework establishing a backward-looking, two-year reassessment cycle for property taxes in Colorado.
¶6 Generally, property valuations are calculated only once every two years. That is, the actual value for the first (odd-numbered) year carries over to the second (even-numbered) year of the biennial reassessment cycle.
¶7 The “unusual conditions” that require an assessor to reassess the actual value of a property are expressly limited to:
[1] the installation of an on-site improvement, [2] the ending of the economic life of an improvement with only salvage value remaining,
[3] the addition to or remodeling of a structure, [4] a change of use of the land, [5] the creation of a condominium ownership of real property as recognized in the “Condominium Ownership Act“, article 33 of title 38, C.R.S., [6] any new regulations restricting or increasing the use of the land, or a combination thereof, [7] the installation and operation of surface equipment relating to oil and gas wells on agricultural land, [8] any detrimental acts of nature, and [9] any damage due to accident, vandalism, fire, or explosion.
¶8 In interpreting section
¶9 Having outlined the constitutional and statutory authority that guides our inquiry, we now turn to the facts.
II. Facts and Procedural History
¶10 The petitioners in this case are taxpayers who own commercial real property located in Jefferson County. On December 10, 2020, the taxpayers sued the County of Jefferson Board of Equalization and the County of Jefferson Assessor, Scott Kersgaard, (collectively, “the County“) in Jefferson County District Court. The complaint alleges that beginning in March 2020, in response to the COVID-19 pandemic, Colorado state and local authorities began issuing numerous “executive orders and other regulations restricting the use and access to Plaintiffs’ properties.” According to the taxpayers, the pandemic and the related orders issued by the Governor, the Colorado Department of Public Health & Environment, and Jefferson County Public Health (collectively, “public health orders“) amounted to “unusual conditions” under section
¶11 The taxpayers’ complaint sought mandamus relief, declaratory relief, and de novo review of section
¶12 In June 2021, the County filed a motion to dismiss, arguing that (1) the taxpayers failed to state a claim for relief; (2) the COVID-19 pandemic and public health orders occurred after the statutory timeframe for consideration of an unusual condition for the 2020 tax year; and (3) the COVID-19 pandemic and related public health orders were not unusual conditions.
¶13 On September 23, 2021, the district court dismissed the taxpayers’ complaint on the ground that the pandemic and public health orders did not qualify as unusual conditions. The district court concluded that the COVID-19 pandemic was not a detrimental act of nature because unlike direct, tangible forces such as forest fires, landslides, and immediate erosion problems—the examples provided by the ARL—the pandemic‘s impacts on real property were “indirect and intangible.”
¶14 The district court further found that the public health orders did not qualify as regulations restricting the use of the land because the orders did not regulate the land itself. The court reasoned that, “[w]hile the practical effect of those regulations may have prevented Plaintiffs, in their capacities as owners of the improvements on the Subject properties, from using those improvements for a time, the ‘use of the land’ was never directly restricted.”
¶15 Having concluded as a matter of law that the pandemic and public health orders were not unusual conditions, the district court dismissed the taxpayers’ complaint without reaching the County‘s remaining arguments.
¶16 The taxpayers appealed. The court of appeals filed a motion for determination of jurisdiction, requesting that this case and its three companion cases be referred to this court because they raise issues of significant public importance. See §§
III. Analysis
¶17 After setting forth the standards of review, we explain why the COVID-19 pandemic did not constitute a “detrimental act[] of nature.” See
A. Standards of Review
¶18 We review rulings on motions to dismiss de novo. Bly v. Story, 241 P.3d 529, 533 (Colo. 2010); Allen v. Steele, 252 P.3d 476, 481 (Colo. 2011). Under C.R.C.P. 12(b)(5), defendants may move to dismiss for “failure to state a claim upon which relief can be granted.” “[W]here the plaintiff‘s factual allegations cannot, as a matter of law, support a claim for relief,” the trial court properly grants a C.R.C.P. 12(b)(5) motion. Bly, 241 P.3d at 533. Factual allegations in a complaint “must be enough to raise a right to relief ‘above the speculative level,’ and provide ‘plausible grounds to infer‘” a situation giving rise to a cause of action. Warne v. Hall, 2016 CO 50, ¶ 9, 373 P.3d 588, 591 (citation omitted) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)).
¶19 We also review de novo questions of statutory interpretation. Jefferson Cnty. Bd. of Equalization v. Gerganoff, 241 P.3d 932, 935 (Colo. 2010). “We begin by looking to the express language of the statute, construing words and phrases according to grammar and common usage.”
B. Detrimental Act of Nature
¶20 The taxpayers first contend that the COVID-19 pandemic was a “detrimental act[] of nature” under section
¶21 We disagree. The exception in section
¶22 COVID-19 meets neither of these requirements. COVID-19 is “a respiratory disease caused by a novel coronavirus.” See In re Interrogatory on House Joint Resol. 20-1006, 2020 CO 23, ¶ 5, 500 P.3d 1053, 1056 (citing Colo. Exec. Order No. D 2020 003, at 1 (Mar. 11, 2020), https://www.colorado.gov/governor/sites/default/files/inline-files/D%202020%20003%20Declaring%20a%20Disaster%20Emergency_1.pdf [https://perma.cc/66FD-5MUY]). On March 11, 2020, the World Health Organization officially declared COVID-19 to be a pandemic. Id. at ¶ 8, 500 P.3d at 1057 (citing H.R.J. Res. 20-1006, 72d Gen. Assemb., 2d Reg. Sess., at 1 (Colo. 2020)). Whether COVID-19 is viewed as a virus or a pandemic, it did not resemble the natural events—earthquakes, floods, and tornados—that we consider acts of nature. See Act of nature, Black‘s Law Dictionary (11th ed. 2019).
¶23 Moreover, the COVID-19 pandemic was not “in or related to any real property.”
¶24 The Administrator‘s interpretation of the statute bolsters our conclusion. It lists as examples of “[d]etrimental acts of nature” forest fires, landslides, and immediate erosion problems. 3 ARL 1.10. These examples share three qualities. First, as the district court observed, they are “direct, tangible forces . . . capable of ‘diminish[ing] the use or availability of a parcel of land.‘” (Quoting 3 ARL 1.10.) Second, they affect properties in a limited geographic area. And third, their impact occurs in a defined window of time. As a virus, COVID-19 is different in all three respects: It does not directly affect the use or availability of real property, its impact is worldwide, and its duration has spanned years.
¶25 These differences are relevant to the practical application of section
¶26 The taxpayers contend that even if COVID-19 does not resemble the events listed in the ARL definition, the pandemic nevertheless “fits squarely within the ARL catchall provision” of “other natural occurrences that would diminish the use or availability of a parcel of land.” But just as this court cannot add unusual conditions to section
¶27 In light of the plain language of the statute, as well as the Tax Administrator‘s interpretation, we conclude that COVID-19 was not a “detrimental act[] of nature” for purposes of section
C. Regulations Restricting the Use of the Land
¶28 Next, the taxpayers contend that the public health orders issued in response to COVID-19 constituted regulations restricting the use of their land that triggered revaluation under section
orders significantly restricted the use of commercial land.” The taxpayers argue that the orders required them to shift their business operations because “[n]o customers were allowed to enter the properties“; the taxpayers “were not permitted to enter let alone use their property“; and “‘non-critical properties’ [could] not be used for any purpose.”
¶29 We disagree that the public health orders were “regulations restricting . . . the use of the land” under section
¶30 The tax code reinforces this distinction between land and improvements located on the land. See, e.g.,
¶31 Because “‘land’ is given a technical meaning and is distinguished from ‘improvements‘” in the property tax code, this court has previously rejected the invitation to construe “land” in section
¶32 Here, because the public health orders regulated the operation of commercial activity on the land, and not the use of the land itself, they were not “regulations restricting . . . the use of the land” under section
(“Such a less intensive use of the land does not constitute a change in the use of the land for purposes of section
¶33 Further, to accept the taxpayers’ argument that the public health orders in this case were an unusual condition would lead to absurd results. If the COVID-19 orders were deemed regulations restricting the use of land because they required a temporary closure, then ordinary changes to fire codes affecting occupancy limits or even a routine public health order requiring the temporary closure of a particular restaurant would likewise amount to an unusual condition requiring revaluation of the property. Such an outcome defies legislative intent and is contrary to our holding in LaDuke.
¶34 Our conclusion today is bolstered by the ARL. As examples of “regulations increasing or decreasing the use of the land,” it lists “changes in zoning; creation of, or changes in, comprehensive land use policies; creation of land set-aside requirements for open space; creation of new flood zones; or any other governmental acts that would affect the ultimate use or disposition of a parcel of land.” 3 ARL 1.10. These examples, all involving changes to the categorization of the land, are intended to be permanent until and unless the land is subsequently recategorized. In contrast, the public health orders issued in response to COVID-19 were intended to be temporary. See, e.g., Colo. Exec. Order No. D 2020-011 (Mar. 20, 2020), https://www.colorado.gov/governor/sites/default/files/inline-files/D%202020%20011%20Ordering%20the%20Temporary%20Suspension%20of%20Certain%20Regulatory%20Statutes_0.pdf [https://perma.cc/R67X-3AD7] (“ordering the temporary suspension of certain regulatory statutes due to the presence” of COVID-19 (emphasis added)).
¶35 Indeed, we note that the public health orders at issue here were repeatedly clarified, amended, repealed, and re-enacted to adjust to the ever-fluctuating risks of COVID-19. If each such public health order amounted to a regulation restricting the use of land that triggered a mid-cycle revaluation, assessors would have had to revalue every affected property dozens of times in the past two years, a result the legislature could not have intended.
¶36 In sum, we conclude that the public health orders issued in response to COVID-19 did not constitute “regulations restricting . . . the use of the land” under section
D. Economic Conditions
¶37 Our conclusion that the COVID-19 pandemic did not constitute an unusual condition is also consistent with case law holding that changed economic conditions are not unusual conditions for purposes of section
¶39 Similarly, in LaDuke, this court reaffirmed that a change in economic conditions does not constitute an unusual condition for purposes of section
noting that “often there will be significant changes in the intensity of the use of commercial property” between the year the actual value is set and the year of the assessment. Id. at 610. But to take into account such changes would negate the reassessment system to which unusual conditions are a limited exception.
¶40 Our reasoning in LaDuke and Carrara Place applies with equal force here. The General Assembly did not list “economic conditions” as an unusual condition in section
¶41 Doing so would also undermine the advantages the legislature sought to achieve through the tax code it enacted. If we expanded “unusual conditions” in section
¶42 So here, for the reasons set forth in LaDuke and Carrara Place, the economic impacts of the COVID-19 pandemic are not an unusual condition.6
¶43 While the COVID-19 pandemic and public health orders did not trigger section
IV. Conclusion
¶44 Although COVID-19 has undoubtedly had negative, wide-ranging, and lasting impacts, it was not a “detrimental act[] of nature,” nor were the public health orders passed in response “regulations restricting . . . the use of the land” under section
Notes
- Whether the district court erred in concluding, as a matter of law, that the COVID-19 pandemic was not a detrimental act of nature as contemplated by
C.R.S. § 39-1-104(11)(b)(I) and therefore not an “unusual condition” thereunder. - Whether the district court erred in concluding, as a matter of law, that the various regulations imposed by the Governor and Public Health authorities in response to the pandemic were not regulations restricting or increasing the use of land as contemplated by
C.R.S. § 39-1-104(11)(b)(I) and therefore not an “unusual condition” thereunder. - Whether the district court erred in dismissing Taxpayers’ complaint on the basis of factual assumptions and speculation.