Lucas Ranch, Inc. v. Montana Dept. of Revenue

Lucas Ranch, Inc. v. Montana Dept. of Revenue, 2015 MT 115 (April 28, 2015) (McGrath, C.J.; Rice, J., concurring; McKinnon, J., dissenting) (4-1, aff’d)

Issue: Whether the district court correctly interpreted § 15-7-111, MCA, governing revaluation of agricultural land.

Short Answer: Yes.

Affirmed

Facts: The Department of Revenue began reappraising Montana agricultural properties in 2009. Prior to that, it relied on self-reporting by landowners. During a six-year cycle, any increases in value from the previous cycle must be accounted for. The legislature provided for the phase-in of increases using the current full market value, as defined by regulation, and the value before reappraisal (VBR). If the increase was due to market changes, the Department uses the unadjusted 2002 base year value as the VBR; if the increase is due to non-market changes, the Department calculates a new VBR.

The Department reappraised Lucas Ranch in 2009 and concluded it had non-market changes due to land reclassification and required a new VBR. In February 2010, petitioners sought a declaratory judgment on behalf of Lucas Ranch and all similarly situated landowners that the Department improperly assessed their agricultural property and failed to properly phase in increases in value. Petitioners moved for class certification and the district court denied their motion. On appeal, this Court reversed and remanded.

Procedural Posture & Holding: After remand, the parties filed cross motions for summary judgment. The district court granted the Department’s motion, and Lucas Ranch appeals. The Supreme Court affirms.

Reasoning: Petitioners argue that the statute requires a six-year phase-in, that “reclassification” means changes from one class to another, not changes within agricultural use, and that even if it meant the latter, the Department did not adopt any rules to assess value and phase-in value. The Court finds that the plain language of the statute is unambiguous, and supports the district court’s interpretation.

Justice Rice’s Concurrence: Justice Rice concurs in the Court’s decision and points to additional sections of the statute that support the district court’s interpretation. He notes other conflicts in the statute, however, but finds them “ancillary to the issues as raised,” and says “resolution of these apparent conflicts will need to wait for another day.” ¶ 32.

Justice McKinnon’s Dissent: Justice McKinnon would hold that the Department’s calculated VBR and phase-in method for “new, remodeled, or reclassified property” is not supported by the plain language of the statute. In light of the conflicts in the statute, and the rule that tax statutes must be construed in the taxpayer’s favor, she dissents.