Wаlmart Inc., Appellant, vs. Winona County, Respondent, Martin County, Respondent
A19-1877 A19-1878
STATE OF MINNESOTA IN SUPREME COURT
August 18, 2021
Thissen, J. Took no part, Anderson, J.
Court of Appeals. Filed: August 18, 2021 Office of Appellate Courts
Marc J. Manderscheid, Andrew M. Carlson, Taft Stettinius & Hollister LLP, Minneapolis, Minnesota; and
Karin Sonneman, Winona County Attorney, Paul Ellison, Assistant County Attorney, Winona, Minnesota; and
Terry W. Viesselman, Martin County Attorney, Fairmont, Minnesota, for respondents.
Mahesha P. Subbaraman, Subbaraman PLLC, Minneapolis, Minnesota, for amicus curiae Alliance Property Consultants, Inc.
Diana L. Longrie, Longrie Law Office, Maplewood, Minnesota, for amicus curiae Chambers Self-Storage Oakdale, LLC.
James C. Backstrom, Dakota County Attorney, Suzanne W. Schrader, Assistant County Attorney, Hastings, Minnesota; and
Michael O. Freeman, Hennepin County Attorney, Sara L. Bruggeman, Assistant County Attorney, Minneapolis, Minnesota; and
Peter J. Orput, Washington County Attorney, James Zuleger, Assistant County Attorney, Stillwater, Minnesota, for amicus curiae Minnesota County Attorneys Association.
S Y L L A B U S
Appellant‘s constitutional claims asserting discrimination in the tax assessments of its properties that violates the Equal Protection Clause,
Affirmed.
O P I N I O N
THISSEN, Justice.
Appellant Walmart, Inc. owns real property improved with a Walmart Supercenter store in respondents Martin County and Winona County (the Counties). In this consolidated appeal, Walmart claims that, for tax purposes, the Counties overvalued the properties, or unfairly or unequally assessed the value of the properties as compared with other similarly situated properties. Walmart alleges that the Counties engaged in willful, intentional, unlawful, or systematic discrimination in their tax assessments and asserts that such discrimination violates the Equal Protection Clause and Walmart‘s right to uniformity in taxation. See
Walmart contends that it may proceed with its constitutional claims independent of the statutory remedy in
FACTS
Walmart owns real property improved by Supercenter stores in Fairmont (Martin County) and Winona (Winona County) (the Properties). Walmart alleges that, for tax years 2013 through 2018, the Counties “willfully, intentionally, and unlawfully” discriminated against the company by placing an assessed value greater than market value on the Properties or by unfairly or unequally assessing the value of the Properties as compared with other similarly situated properties. Specifically, Walmart alleges in each complaint:
The . . . County Assessor‘s 2013 through 2018 valuations and assessments of [Walmart‘s] Real Property intentionally and systematically discriminated against [Walmart‘s] Real Property as compared to similarly situated properties of the same class in the same taxing district, resulting in prohibited unequal assessments as evidenced by the Comparison Chart . . . . These disparities and discriminatory, unequal assessments are the result of valuing [Walmart‘s] Real Property at substantially more than its actual, fair market value or, in the alternative, valuing similar properties at substantially less than their actual, fair market value.
Walmart attached an “Unequal Assessment and Lack of Uniformity Chart” for each property that allegedly “demonstrate[d]
Walmart filed its complaints in district court in May 2019. The Counties moved to dismiss Walmart‘s complaints under Rule 12.02(e) of the Minnesota Rules of Civil Procedure. The district courts in Martin County and Winona County concluded thаt Walmart‘s complaints challenged its property tax assessments and thus were subject to
Walmart appealed both orders. In a consolidated appeal, the court of appeals affirmed. Walmart Inc. v. Winona Cnty., Nos. A19-1877, 19-1878, 2020 WL 3956251, at *1 (Minn. App. July 13, 2020). The court of appeals agreed with the district courts that Walmart‘s claims fell within the scope of
ANALYSIS
This case comes to us from the court of appeals after the district courts granted the Counties’ motions to dismiss Walmart‘s complaint for failure to state a claim under
The central question in this case is as follows: Do Walmart‘s claims that the Counties willfully, intentionally, and unlawfully discriminated against the company in violation of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and the Uniformity in
We begin with an overview of the statutory route to challenge a property tax assessment. Chapter 278 provides a mechanism for taxpayers to challenge assessments levied on their properties based on one of five enumerated grounds: (1) the property tax was partially, unfairly, or unequally assessed; (2) the assessed property was overvalued; (3) the property tax is illegal; (4) the taxpayer already paid the tax; or (5) the property is exempt from property tax. See
We therefore turn to the question of whether Walmart‘s claim that the Counties violated the company‘s rights to equal protection and uniform taxation by assessing the Properties differently than other similarly situated properties falls within the scope of one of the five enumerated statutory categories set forth in
In Programmed Land, and later in Odunlade v. City of Minneapolis, 823 N.W.2d 638, 647 (Minn. 2012), we opened the door (albeit in dicta) to the possibility that, if a taxpayer‘s claim of an unfair or unequal assessment is framed as a violation of constitutional rights, the taxpayer could challenge the assessment independently of the procedures set forth in chapter 278. Importantly, we did not recognize in Programmed Land or Odunlade an independent basis for asserting constitutional claims outside of chapter 278. Rather, we simply declined to answer whether taxpayers “may proceed independently under either [constitutional] theory” because we concluded that the alleged assessment errors at issuе in those cases did not violate either constitutional provision. Programmed Land, 633 N.W.2d at 530; see Odunlade, 823 N.W.2d at 647 (“We need not, and do not, decide whether chapter 278 precludes [taxpayers‘] constitutional claims because we conclude that these claims fail as a matter of law.“) Today, we answer that question.
We start our analysis by considering how a taxpayer proves an unfair or unequal assessment claim under
We have also stated that “a taxpayer will not meet the evidentiary burden of establishing a violation of rights protected under the federal or state constitution, unless he can demonstrate that the disparity about which he complains resulted from the intentional or arbitrary or systematic undervaluation of other properties.” United Nat‘l Corp., 299 N.W.2d at 76 (emphasis added).6 And while we have not found in our decisions “any support for the claim that a dual standard, one constitutional and the other statutory, should be applied” in unfair or unequal assessment cases, we have also never definitively decided that a taxpayer must show intentional, arbitrary, or systematic undervaluation of other properties to prove a chapter 278 claim of unfair and unequal assessment, or whether a simple error by the assessor will suffice. Id. at 77–78 (declining to decide whether, under
What is clear, however, is that to the extent that the requisite showing of the taxing authority‘s intent may differ between the statutory remedy and constitutional claims, the proof required to establish the narrower constitutional claim is properly characterized as a subset of the proof required to establish a broader claim encompassed by
We return, then, to the central question before us: Does Walmart‘s claim that the Counties violated the company‘s equal protection and uniform taxation rights by assessing its Properties differently from other similarly situated properties fall within the scope of the “unfair or unequal” category in
The Counties’ answer to this question is straightforward: Walmart‘s complaints allege that, for discriminatory reasons, the Counties intentionally assessed properties comparable to Walmart‘s properties at substantially less than their fair market value while valuing Walmart‘s properties closer to their fair market value. But once stripped of their constitutional garb, the Counties assert, Walmart‘s claims are simply that the Counties assessed Walmart‘s properties unfairly or unequally as compared with other properties. That is one of the grounds for a property tax challenge enumerated in
We agree with the Counties. The plain language of
Further, the statute does not prohibit a taxpayer from bringing an equal protection or uniformity in taxation challenge under chapter 278. As noted above, the test for whether an assessment violates the statutory prohibition on “unfair or unequal assessments” in
[t]he taxpayer benefited because chapter 278 prоvided a means to object to property taxes without first having to default and then answer in delinquent tax proceedings, and the state benefited because, by providing a cause of action without having to default, chapter 278 limited or prevented tax delinquency and enforced the prompt collection of taxes, ensuring a reliable stream of revenue . . . .
With these objectives in mind, we have declined to undermine the Legislature‘s intent “by allowing a significant number of tax grievances to be free of the chapter 278 filing limitation and, consequently, actionable years after the taxes were due.” Id. at 526. We have also noted that no right to appeal from an assessment existed at common law; it is a purely statutory right and, accordingly, requires strict compliance. See Ewert v. City of Winthrop, 278 N.W.2d 545, 550 (Minn. 1979); Vill. of Edina v. Joseph, 119 N.W.2d 809, 816 (Minn. 1962) (explaining that appeals from tax assessments, “their course, and the time and manner in which they are to be allowed and perfected are of statutory origin“).
To prevail on its argument that
Walmart first argues that an independent remedy for equal protection and uniformity in taxation violations is appropriate because the standard for proving that a property tax assessment violates either of these constitutional provisions is different from the standard for proving a statutory violation under
Once again, nothing in chapter 278 prevents a taxpayer from challenging an assessment as unfair or unequal simply because the government acted intentionally, arbitrarily, or systematically in imposing the tax.8 Further, the remedies that Walmart seeks in its complaints—a reduction in the assessed value of its Properties and a return of its alleged overpayments made from 2013 through 2018—are the same remedies that Walmart would receive had it prevailed in a challenge brought under
Next, Walmart argues that the Legislature could not have meant for constitutional claims to be addressed under chapter 278 because
But Walmart‘s argument ignores the plain language of chapter 278. Although the statute permits taxpayers to bring their claims in tax court, it also provides taxpayers with the option of proceeding in district court, which has jurisdiction to decide constitutional questions. See
All tax matters over which the tax court has jurisdiction should be filed with the tax court. If any party raises a constitutional issue, the tax court should stay the proceedings and refer the constitutional question to the district court. The district court may either decide the constitutional issue or refer the matter back to the tax court which will then have subject matter jurisdiction to rule initially on the constitutional issue. If the tax court should declare any matter unconstitutional and no appeal is taken to this court, that ruling shall only be the law of the particular case involved.
Erie Mining Co., 343 N.W.2d at 264. Consequently, the alleged statutory inconsistency that Walmart identifies is easily reconcilable and provides no basis for discerning a legislative intent to allow constitutional claims to be asserted independently of chapter 278.10
The language of
Walmart‘s reliance on Knick v. Township of Scott, Pa., ___ U.S. ___, 139 S. Ct. 2162 (2019), is also misplaced. Walmart claims that, under Knick, requiring property owners to meet the 1-year limitations window in
Knick is also distinguishable for other reasons. It turned on a close analysis of when the right to compensation under the Takings Clause of the Fifth Amendment to the United States Constitution first attaches, id., ___ U.S. at ___, 139 S. Ct at 2170–71, which is not at issue in this case. And Knick is an exhaustion of state remedies case. See id., ___ U.S. at ___, 139 S. Ct. at 2172–73. The Supreme Court‘s concern about the so-called “preclusion trap” was that the exhaustion requirement essentially took away the power of the federal courts to provide constitutional relief. Id., ___ U.S. at ___, 139 S. Ct. at 2167. The case before us is not about whether a claimant must exhaust certain remedies before proceeding in a federal forum. It is about the contours of the state remedy itself. Walmart‘s concern seems to be that a tax court‘s conclusion that the taxpayer failed to establish that an assessment was unfair or unequal under the statute will be dispositive of a claim that an assessment violates the equal protection and uniform taxation clauses. That may be so, but it is also not a concern here, when the constitutional claim is a subset of the statutory claim and, as such, resolution of the statutory claim also resolves the constitutional claim.
CONCLUSION
For the foregoing reasons, the decision of the court of appeals is affirmed.
Affirmed.
ANDERSON, J., took no part in the consideration or decision of this case.
Notes
Subdivision 1(a) provides:
Any person having personal property, or any estate, right, title, or interest in or lien upon any parcel of land, who claims that such property has been partiаlly, unfairly, or unequally assessed in comparison with other property in the (1) city, or (2) county, or (3) in the case of a county containing a city of the first class, the portion of the county excluding the first class city, or that the parcel has been assessed at a valuation greater than its real or actual value, or that the tax levied against the same is illegal, in whole or in part, or has been paid, or that the property is exempt from the tax so levied, may have the validity of the claim, defense, or objection determined by the district court of the county in which the tax is levied or by the Tax Court by serving one copy of a petition for such determination upon the county auditor, one copy on the county attorney, onе copy on the county treasurer, and three copies on the county assessor. The county assessor shall immediately forward one copy of the petition to the appropriate governmental authority in a home rule charter or statutory city or town in which the property is located if that city or town employs its own certified assessor. A copy of the petition shall also be forwarded by the assessor to the school board of the school district in which the property is located.
The process of calculating, imposing, and collecting annual property taxes spans two calendar years. See Summit House Apart. Co. v. County of Hennepin, 253 N.W.2d 127, 129 (Minn. 1977) (stating that there is “a one-year lag between the assessment and the collectiоn of real estate taxes“). For example, taxes payable in 2020 are based on taxes assessed in 2019. The cycle begins on January 2 of the assessment year when the assessor places a value on the property. See
Taxpayers have several opportunities over a period of months to challenge the assessed value of the property. The property owner can seek relief directly from the assessor. The taxpayer can appeal in the spring of the assessment year to the local boards of appeal and equalization.
The court of appeals did not reach the question of whether taxpayers may pursue, independently of chapter 278, a claim that a tax assessment violates the taxpayer‘s rights to equal protection or uniformity in taxation. See Walmart, 2020 WL 3956251, at *7. The court instead determined that, even if an independent pathway were open for such a claim, Walmart failed to state such a claim under Rule 12.02(e). Id. In so ruling, the court of appeals erred in two ways.
First, the court of appeаls reasoned that Walmart‘s allegation that the Counties acted “willfully, intentionally and unlawfully” by overvaluing or unfairly or unequally assessing Walmart‘s properties was insufficient to state a claim. Id. at *8–9. We disagree. Minnesota is a notice-pleading state. Halva v. Minn. State Colls. & Univs., 953 N.W.2d 496, 500 (Minn. 2021); see
Notice-pleading permits a plaintiff to plead a claim ” ‘by way of a broad general statement which may express conclusions rather than . . . by a statement of facts sufficient to constitute a cause of action.’ ” Walsh, 851 N.W.2d at 602 (quoting N. States Power Co. v. Franklin, 122 N.W.2d 26, 29 (Minn. 1963)). “The functions of a pleading today are simply to give fair notice to the adverse party of the incident giving rise to the suit with sufficient clarity tо disclose the pleader‘s theory upon which his claim for relief is based.” Id. (quoting N. States Power Co., 122 N.W.2d at 29), 605 (explaining that “[t]he focus [of the pleading] is on the ‘incident’ rather than on the specific facts of the incident“). Walmart‘s complaint provides fair notice to the Counties of the incident giving rise to its claims and is sufficient to allow the Counties to understand the theory upon which its claims are based.
Second, the court of appeals incorrectly concluded that Walmart‘s allegation that the Counties’ conduct was an ” ‘intentional and willful failure to perform both [their] statutory and [their] common law duty’ ” to assess Walmart‘s property and similarly situated properties ” ‘upon a uniform basis’ ” was legally insufficient. Walmart, 2020 WL 3956251, at *9. The court of appeals deemed the conduсt of the Counties to be “at best[] ‘bureaucratic errors’ or ‘an erroneous or mistaken performance’ of the duties imposed on the county assessors” under the statute. Id. (citing our decision in Programmed Land where we determined that bureaucratic errors could not amount to a constitutional violation). This reasoning incorrectly reads adverse inferences against Walmart. See Walsh, 851 N.W.2d at 606 (“We accept the facts alleged in the complaint as true and construe all reasonable inferences in favor of the nonmoving party.“).
Walmart also asserts that because the tax court‘s jurisdiction is limited to “questions of law and fact arising under the tax laws of the state,”
In Benigni v. County of St. Louis, the taxpayer alleged that the local assessor engaged in a pattern of harassment and requested that the assessor be ordered to stop the harassment. 585 N.W.2d 51, 54 (Minn. 1998). We held that the tax court lacked the power to make such an order regarding a common law fraud claim. Id. at 54. Here, in contrast, the constitutional claims relate to tax assessments.
In Johnson v. County of Hennepin, No. 27-CV-14-07031, 2015 WL 2329349, at *2 (Minn. Tax Ct. May 12, 2015), a tax court decision from which we denied a petition for mandamus and a writ of certiorari, see Johnson v. County of Hennepin, A15-1339, Order at 6 (Minn. filed Oct. 23, 2015), the taxpayers alleged that the county violated their constitutional rights by secretly approaching the district cоurt to make an ex parte request to quash the taxpayer‘s petition. Unlike this case, the taxpayers in Johnson did not allege that the taxes imposed on their property were unconstitutional. They argued that the process of proceeding ex parte was unconstitutional, a claim that was beyond the jurisdiction of the tax court. See 2015 WL 2329349, at *2–3.
Walmart did not directly challenge the constitutionality of