Peretti v. State Dept. of Revenue

Peretti v. State Dept. of Revenue, 2016 MT 105 (May 10, 2016) (McGrath, C.J.) (5-0, rev’d)

Issue: (1) Whether the district court erred in reversing the State Tax Appeal Board’s valuation order; (2) whether the district court erred in awarding administrative trial costs to the taxpayers; and (3) whether the district court erred in ordering DOR to return all taxes paid under protest. 

Short Answer: (1) Yes; (2) yes; and (3) yes.

Reversed with instructions to reinstate the STAB valuation order

Facts: Perettis own Flathead Lake property with lake frontage. DOR appraised the property in 2012, based on market value in July 2008, and Perettis appealed to the county board. The county board reduced the appraised values from $1,356,201 to $1,192,500 for the land, and $166,980 to $125,000 for the improvements. Perettis appealed to the state board (STAB), requesting a further reduction to $900,000 for the land and $60,000 for improvements.

STAB conducted an evidentiary hearing in September 2013. Perettis presented testimony from a rel estate appraiser and a computer modeler. DOR presented testimony from is appraiser, and submitted a post-hearing rebuttal to Peretti’s modeler.

STAB issued findings and conclusions in November 2013, finding that DOR’s evidence was more persuasive than Perettis’. Specifically, it found the Perettis’ appraiser to be less credible than DOR’s, and found the computer modeler’s testimony to be inaccurate and not credible. It upheld the county board’s valuation.

Procedural Posture & Holding: Perettis petitioned for judicial review. After briefing, the district court reversed the STAB decision, disagreeing with its weighing of the evidence and its determinations of witness credibility. The state appeals, and the Supreme Court reverses.

Reasoning: (1) The district court’s decision rests on its re-weighing the evidence and re-determining the credibility of witnesses. A district court sitting in judicial review of a STAB decision may not do either of those things. Administrative findings of fact may not be disturbed on judicial review if they are supported by substantial evidence in the record, which does not mean a lack of evidence supporting a contrary result.

Because the Court reverses on issue 1, it reverses on issues 2 and 3, and orders reinstatement of the STAB order.