Marion County Auditor v. State of Indiana , 2015 Ind. Tax LEXIS 26 ( 2015 )

ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
ADRIANA KATZEN GREGORY F. ZOELLER
DAVID J. LICHTENBERGER ATTORNEY GENERAL OF INDIANA
OFFICE OF CORPORATION COUNSEL JESSICA E. REAGAN
Indianapolis, IN DEPUTY ATTORNEY GENERAL
Indianapolis, IN
_____________________________________________________________________
IN THE
INDIANA TAX COURT
_____________________________________________________________________
May 22 2015, 2:10 pm
MARION COUNTY AUDITOR, )
)
Petitioner, )
)
v. ) Cause No. 49T10-1406-TA-25
)
STATE OF INDIANA, )
)
Respondent. )
______________________________________________________________________
ORDER ON RESPONDENT’S MOTION TO DISMISS
FOR PUBLICATION
May 22, 2015
WENTWORTH, J.
The Marion County Auditor has filed an appeal with this Court challenging the
constitutionality of Indiana Code § 6-1.1-15-12. In response, the State of Indiana has
moved to dismiss the Auditor’s appeal on three alternative grounds: 1) the Court lacks
subject matter jurisdiction, 2) the Court lacks personal jurisdiction, or 3) the Auditor has
failed to state a claim upon which relief can be granted. Being duly advised in all
matters, the Court grants the State’s motion.
BACKGROUND
Grandville Cooperative, Inc. owns a multi-family cooperative apartment complex
in Indianapolis, Indiana. In November of 2012, Grandville filed several Petitions for
Correction of an Error (Forms 133) claiming that for the 2010, 2011, and 2012 tax years,
the Marion County Auditor failed to provide it with the homestead deductions to which it
was lawfully entitled. (See Cert. Admin. R. at 2-3, 12-13, 22-23.)
The Auditor referred Grandville’s Forms 133 to the Marion County Property Tax
Assessment Board of Appeals (PTABOA) for resolution. (See Cert. Admin. R. at 4, 14,
24 (indicating that both the Auditor and the Marion County Assessor believed that
Grandville’s property did not qualify as a homestead).) See also IND. CODE § 6-1.1-15-
12(d) (2012) (stating that when both a county assessor and an auditor do not approve a
taxpayer’s Form 133 claim, the matter shall be referred to the county PTABOA for
resolution). After conducting a hearing on the matter, the PTABOA found that
Grandville’s property did in fact qualify as a homestead and reversed the determination
of the Auditor. (See Cert. Admin. R. at 9, 19, 29.)
The Auditor subsequently appealed the PTABOA’s decision by filing Grandville’s
Forms 133 with the Indiana Board of Tax Review. (See Cert. Admin. R. at 1, 2, 5, 10,
12, 15, 20, 22, 25, 30.) On April 24, 2014, however, the Indiana Board dismissed the
Auditor’s appeal on the basis that Indiana Code § 6-1.1-15-12 did not provide her with
standing to challenge the PTABOA’s determination with the Indiana Board. (See Cert.
Admin. R. at 61-63.)
The Auditor appealed to the Court on June 6, 2014, naming Grandville as the
respondent. The Auditor’s petition requested that the Court: (1) declare Indiana Code §
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6-1.1-15-12 unconstitutional and (2) either remand the case to the Indiana Board to be
heard on the merits or review and reverse the PTABOA’s decision that Grandville’s
property qualified as a homestead on its own. (See Pet’r V. Pet. Judicial Review (“Pet’r
Pet.”) at 5 ¶ 28.)
On August 27, 2014, the Auditor and Grandville notified the Court that they had
reached a settlement. The Court subsequently granted the parties sixty days to finalize
their settlement and file a stipulation of dismissal. On October 30, 2014, however, the
Auditor amended her petition (with leave of Court) substituting the State of Indiana for
Grandville as the respondent in the appeal. The amended petition sought only a
declaration from the Court that “Indiana Code § 6-1.1-15-12 . . . violates the Indiana
Constitution by failing to provide [the Auditor] with an avenue of judicial review for an
administrative tax determination.” (See Pet’r Resp. Respt’s Mot. Dismiss (“Pet’r Resp.”)
at 1.)
On November 24, 2014, the State moved to dismiss the Auditor’s appeal
pursuant to Indiana Trial Rules 12(B)(1), 12(B)(2), and 12(B)(6). The Court conducted a
hearing on the State’s motion on March 27, 2015. Additional facts will be supplied as
necessary.
DISCUSSION AND ANALYSIS
I. SUBJECT MATTER JURISDICTION
The State first argues that this Court lacks subject matter jurisdiction over the
Auditor’s appeal and that the case must therefore be dismissed pursuant to Trial Rule
12(B)(1). (See Resp’t Mot. Dismiss ¶¶ 12-17, 20-21.) The State is mistaken.
Subject matter jurisdiction “refers only to the power of a court to hear and decide
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a particular class of cases.” Pivarnik v. N. Indiana Pub. Serv. Co., 636 N.E.2d 131, 137
(Ind. 1994) (emphasis added and citations omitted). “[S]ubject matter jurisdiction does
not depend upon the sufficiency or correctness of the averments in the complaint, the
stating of a good cause of action, the validity of the demand, or the plaintiff’s right to
relief.” In re Adoption of H.S., 483 N.E.2d 777, 780 (Ind. Ct. App. 1985) (citations
omitted). Rather, “[t]he only relevant inquiry in determining whether any court has []
subject matter jurisdiction is to ask whether the kind of claim which the plaintiff
advances falls within the general scope of the authority conferred upon such court by
the constitution or by statute.” Pivarnik, 636 N.E.2d at 137 (emphasis added).
The Tax Court has exclusive subject matter jurisdiction over all “original tax
appeals.” IND. CODE §§ 33-26-3-1, -3 (2015). A case is an original tax appeal if it: 1)
arises under the tax laws of Indiana and 2) is an initial appeal of a final determination
made by the Indiana Board. See I.C. § 33-26-3-1.
Here, the Auditor’s appeal arises under the tax laws of Indiana because it
implicates the collection of property tax under Indiana Code § 6-1.1-15-12. See, e.g.,
State v. Sproles, 672 N.E.2d 1353, 1357 (Ind. 1996) (explaining that a case “arises
under” Indiana's tax laws if it principally involves either the collection of a tax or
defenses to that collection). Moreover, the Auditor received a final determination from
the Indiana Board when, on April 24, 2014, the Indiana Board dismissed her appeal.
The State’s claim that this Court lacks subject matter jurisdiction over the Auditor’s
appeal is therefore without merit, and its Trial Rule 12(B)(1) motion is DENIED.
II. PERSONAL JURISDICTION
Next, the State argues that the Auditor’s appeal must be dismissed pursuant to
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Trial Rule 12(B)(2) because the Court lacks personal jurisdiction. (Resp’t Mot. Dismiss
¶ 18.) More specifically, it argues that “[p]ursuant to Indiana Tax Court Rule 4(B),
neither the State nor the Auditor is a proper party to [this appeal].”1 (See Resp’t Mot.
Dismiss ¶ 17.)
“Personal jurisdiction is the court's power to bring a person into its adjudicative
process and render a valid judgment over a person.” Brockman v. Kravic, 779 N.E.2d
1250, 1254 (Ind. Ct. App. 2002). Whether the Auditor has standing to bring her appeal,
or whether she improperly named the State as the respondent, does not, however,
implicate the Court’s personal jurisdiction. See, e.g., McPeek v. McCardle, 888 N.E.2d
171, 173 (Ind. 2008) (explaining that an allegation that a party lacks standing to file an
appeal is properly filed under Trial Rule 12(B)(6) for failure to state a claim upon which
relief can be granted, not for lack of personal jurisdiction under Trial Rule 12(B)(2));
Musgrave v. State Bd. of Tax Comm’rs, 658 N.E.2d 135, 138-39 n.5 (Ind. Tax Ct. 1995)
(stating that the issue of standing does not implicate the Court’s personal jurisdiction);
Indiana Model Co. v. State Bd. of Tax Comm’rs, 639 N.E.2d 695, 698 (Ind. Tax Ct.
1994) (explaining generally that the Tax Court acquires personal jurisdiction over a
party through the service of summons); Harp v. Indiana Dep’t of Highways, 585 N.E.2d
652, 659 (Ind. Ct. App. 1992) (stating that failure to name the proper party as the
defendant in a complaint does not implicate a court’s personal jurisdiction).
Consequently, the State’s Trial Rule 12(B)(2) motion is also DENIED.
1
Tax Court Rule 4(B) provides that when a taxpayer initiates an original tax appeal challenging
an Indiana Board final determination, she shall name the county assessor as the respondent.
Ind. Tax Ct. Rule 4(B)(2). It also provides that if a government official or entity initiates the
appeal, it shall name the taxpayer who was the party to the proceeding before the Indiana
Board as the respondent. Tax Ct. R. 4(B)(3).
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III. FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
Finally, the State argues that the Auditor does not have standing to bring her
appeal. (See Resp’t Mot. Dismiss ¶ 29.) As a result, the State asks that the Auditor’s
petition be dismissed under Trial Rule 12(B)(6) for failure to state a claim upon which
relief can be granted.2
The judicial doctrine of standing focuses on whether the complaining party in a
lawsuit is the proper person to invoke the court’s power. Bielski v. Zorn, 627 N.E.2d
880, 888 (Ind. Tax Ct. 1994). More specifically, it “insure[s] that the party before the
court has a substantive right to enforce the claim that is being made in the litigation.”
Pence v. State, 652 N.E.2d 486, 487 (Ind. 1995). A party’s standing to sue is conferred
through either statutory or common law authority. See In re Guardianship of A.J.A., 991
N.E.2d 110, 112-13 (Ind. 2013); Schloss v. City of Indianapolis, 553 N.E.2d 1204, 1206
(Ind. 1990) (explaining that under the latter, a plaintiff must demonstrate a personal
stake in the outcome of the lawsuit and that she has sustained or is in immediate
danger of sustaining, some direct injury as a result of the conduct at issue). See also
Ohio Valley Associated Builders & Contractors v. Kuempel, 949 N.E.2d 582, 587 (Ohio
Ct. App. 2011) (stating that standing “does not flow from the common-law ‘personal
stake’ doctrine alone[; i]t also may be conferred by a specific statutory grant of authority”
2
Alternatively, the State has argued that the Auditor’s case must be dismissed under Trial Rule
12(B)(6) because there is a general constitutional bar prohibiting declaratory judgments against
the State. (See Resp’t Mot. Dismiss ¶¶ 30-34.) During the hearing, the Auditor responded to
this argument by moving to amend her petition (again) to substitute a state official for the State
as the named respondent. (See Hr’g Tr. at 29-32 (citing, inter alia, State v. LaRue’s, Inc., 154
N.E.2d 708, 712 (Ind. 1958) for the proposition that while an action for declaratory judgment
cannot be brought against the State, it can be brought against state officials as individuals in
their official capacity).) Given the Court’s disposition of the standing issue, however, it does not
need to address the State’s alternative argument and it denies the Auditor’s motion.
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(internal quotations and citations omitted).)
Indiana Code § 6-1.1-15-12 permits only taxpayers to appeal to the Indiana
Board from a PTABOA determination on a Form 133. I.C. § 6-1.1-15-12(e). See also
Musgrave, 658 N.E.2d at 141. Consequently, the Auditor lacks statutory standing to
appeal the PTABOA’s determination on Grandville’s Forms 133 to the Indiana Board
and, ultimately, to this Court. The Auditor acknowledges as much. (See Pet’r Pet. at 3
¶ 18.)
Despite the lack of statutory standing, the Auditor urges the Court not to dismiss
her case because she has “traditional standing” in that she has been “aggrieved” (i.e.,
she has suffered an injury). (See Hr’g Tr. at 21.) Specifically, she states:
Under [Indiana Code § 6-1.1-15-12] . . . [a] taxpayer can appeal [a]
PTABOA [Form 133 decision] to the Indiana Board of Tax Review. If
a taxpayer remains unsatisfied after th[is] administrative review
process[], he or she may seek judicial review with the Indiana Tax
Court. From there, [he or she may] go to the Indiana Supreme
Court, and then, of course . . . may petition the United States
Supreme Court for certiorari. However, [Indiana Code § 6-1.1-15-12]
does not provide a similar remedy to [county auditors and assessors
across the State] nor does it provide [them] with a direct avenue for
judicial review of a PTABOA determination, effectively foreclosing
[them] from judicial review of an administrative tax determination . . .
[A]s a result . . . [Indiana Code § 6-1.1-15-12] is invalid under the
Indiana Constitution. . . . Th[is] issue before the Court affects all
county auditors across the State and is likely to recur. Thus, this
Court should . . . address the merits of [my] claims[.]
(Pet’r Resp. to Resp’t Mot. Dismiss (“Pet’r Resp.”) at 1-2 (internal citations omitted).)
(See also Hr’g Tr. at 18-21.) The Auditor claims the following cases support her
position: State ex rel. Attorney General v. Lake Superior Court, 820 N.E.2d 1240 (Ind.
2005), cert. denied, 546 U.S. 927 (2005), State v. Sproles, 672 N.E.2d 1353 (Ind. 1996),
State ex rel. State Bd. of Tax Comm’rs v. Marion Superior Court, Civil Division, Room
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No. 5, 392 N.E.2d 1161 (Ind. 1979), and State Bd. of Tax Comm’rs v. Indianapolis
Lodge No. #17, Loyal Order of Moose, Inc., 200 N.E.2d 221 (Ind. 1964). (See, e.g.,
Pet’r Resp. at 3, 5-6; Hr’g Tr. at 21-22.) More specifically, she explains that under
Marion Superior Court, governmental officials have standing to challenge the
constitutionality of statutes in a court of law, and that Lake Superior Court and Sproles
merely clarify that a challenge to the constitutionality of a tax statute lies in the Tax
Court. (See Pet’r Resp. at 3, 5.) The Auditor also explains that under the Indianapolis
Lodge case, her constitutional right to judicial review of an administrative decision
cannot be denied. (Pet’r Resp. at 6.)
Determining whether an Indiana tax statute is unconstitutional is, indeed, an
issue that is within this Court’s exclusive purview. See, e.g., Sproles, 672 N.E.2d at
1357, 1362. Nonetheless, as a creature of statute, the Court’s jurisdiction is conferred
by statute. As such, the Court may only decide such an issue when a case containing
the claim is properly before it (i.e., when the case has been filed in compliance with all
statutory requirements). See id. at 1361 (explaining, for example, that a case is not
properly before the Tax Court if the litigant failed to exhaust administrative remedies
first). See also Packard v. Shoopman, 852 N.E.2d 927 (Ind. 2006), K.S. v. State, 849
N.E.2d 538 (Ind. 2006), Wayne Cnty. Prop. Tax Assessment Bd. of Appeals v. United
Ancient Order of Druids-Grove No. 29, 847 N.E.2d 924 (Ind. 2006) (all explaining that
certain types of legal error or procedural defects (if timely objected to) can prevent the
Tax Court from deciding the merits of a case). By its plain terms, Indiana Code § 6-1.1-
15-12 denies standing to the Auditor to appeal the PTABOA’s decision on Grandville’s
Forms 133 to this Court. Consequently, the fact that she is a governmental official who
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is challenging the constitutionality of a statute is of little significance here. See
Musgrave, 658 N.E.2d at 141 (stating that county and township governmental officials
have no common law right to appeal a PTABOA’s decision on a Form 133 to the
Indiana Board); In re Vistation of J.D.G., 756 N.E.2d 509, 511-12 (Ind. Ct. App. 2001)
(explaining that when a statute denies standing to a particular party, that party’s petition
must be denied as a matter of law).
Moreover, while the Auditor is correct in her assertion that orders of an
administrative body are constitutionally subject to judicial review, the Indiana Supreme
Court has explained that this is so “to meet the requirements of due process.” Warren
v. Indiana Tel. Co., 26 N.E.2d 399, 404 (Ind. 1940). Here, however, the Auditor has not
provided the Court with any argument as to how her due process rights have been
violated. (See Pet’r Resp.; Hr’g Tr.) See also, e.g., Perdue v. Gagano, 964 N.E.2d 825,
832 (Ind. 2012) (explaining that when a plaintiff makes a due process challenge, it must
first show that it has been deprived of a protected interest in either “property” or
“liberty”). The Court will not make the Auditor‘s case for her.
CONCLUSION
This Court is a creature of statute. As such, it may only determine the
constitutionality of Indiana Code § 6-1.1-15-12 when a case containing such a claim is
properly before it. Here, the Auditor does not have statutory or common law standing to
appeal the PTABOA’s decision on Grandville’s Forms 133 to this Court. Accordingly,
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the issue of whether Indiana Code § 6-1.1-15-12 is unconstitutional must be decided
another day.3 The State’s motion to dismiss the Auditor’s appeal pursuant to Trial Rule
12(B)(6) is hereby GRANTED.
SO ORDERED this 22nd day of May, 2015.
__________________________
Martha Blood Wentworth, Judge
Indiana Tax Court
Distribution:
Adriana Katzen, David J. Lichtenberger, Jessica E. Reagan, James F. Beatty, Jessica
L. Findley, Donald D. Levenhagen, Kathryn Merritt-Thrasher, and Megan M. Piazza.
3
The Auditor has asked the Court to declare Indiana Code § 6-1.1-15-12 unconstitutional but
that very statute bars the Court from deciding the issue. The irony of this situation is not lost on
the Court. Nonetheless, the Auditor’s remedy lies with the Indiana General Assembly.
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