Alaska Airlines, Inc. v. Dept. of Rev. ( 2021 )

IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
ALASKA AIRLINES, INC., )
)
Plaintiff, ) TC-MD 200363G (Lead)
)
v. )
)
DEPARTMENT OF REVENUE, )
State of Oregon, )
)
Defendant. )
)
_____________________________________ )
)
HORIZON AIR INDUSTRIES, INC., )
)
Plaintiff, ) TC-MD 200367N
)
v. )
) ORDER GRANTING DEFENDANT’S
DEPARTMENT OF REVENUE, ) MOTION FOR SUMMARY
State of Oregon, ) JUDGMENT and DENYING
) PLAINTIFFS’ CROSS-MOTION FOR
Defendant. ) PARTIAL SUMMARY JUDGMENT
This matter came before the court on Defendant’s Motion for Summary Judgment
(Motion) and Plaintiffs’ Cross-Motion for Partial Summary Judgment (Cross-Motion). An oral
argument was held remotely on June 11, 2021. David Perkins, an Oregon CPA, appeared on
behalf of Plaintiff. Marilyn J. Harbur and Darren Weirnick, Senior Assistant Attorneys General,
appeared on behalf of Defendant.
I. STATEMENT OF FACTS
Defendant sent Plaintiffs notices of tentative assessment for the 2020-21 tax year on or
before May 25, 2020, as required by ORS 308.582. (See Stip Facts at ¶1.) On June 5, 2020,
Jerry Yim, Senior Tax Accountant for Plaintiffs, requested a “director’s review conference” on
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 1
the reduction in valuation or modification of the apportionment of a tentative assessment set
forth in the notice as required under ORS 308.584(1)-(2). (Id. at ¶2, 3.) Defendant scheduled a
conference with Plaintiffs for July 20, 2020. (See id. at 12.)
Before the scheduled conference, Plaintiffs and Defendant “engaged in a dialogue,
inclusive of email and phone communication,” to exchange information. (Stip Facts at ¶3.) As a
result of that dialogue, Defendant proposed a reduction that satisfied Plaintiffs “as to the
reduction in valuation or modification of the apportionment” that Plaintiffs sought when they
requested a conference. (Id.) Plaintiffs requested that the conference be cancelled once the final
values were submitted. (Id. at ¶4, 12.) Plaintiffs did not request a final opinion and order from
Defendant. (Id. at ¶7.) Defendant issued final values reflecting the agreed upon reductions and
canceled the conference. (Decl of Rodriguez at 2; Am Compl at 5.)
Plaintiffs filed this appeal on November 2, 2020, claiming that Defendant had failed to
issue an order as required under ORS 308.584 and raising a new claim that Defendant’s practice
of assessing intangible personal property of air transportation companies violates the Oregon
Constitution and federal law. Defendant filed its Motion requesting that Plaintiffs’ Complaints
be dismissed because they failed to exhaust administrative remedies as required by ORS
308.584. Plaintiffs filed their Cross-Motion requesting that their appeal be allowed to proceed in
this court or, in the alternative, be remanded to Defendant to issue an appealable order.
II. ISSUES
To resolve the parties’ motions, the court decides the following issues:
1. What is a “conference” within the meaning of ORS 308.584?
2. What is required to exhaust the administrative remedy under ORS 308.584(4)?
3. Is the department required to issue an order under ORS 308.584(3) even if the
conference is not held?
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 2
4. If taxpayer fails to exhaust the administrative remedy under ORS 308.584(4), should
the court remand or dismiss the case?
III. ANALYSIS
The court grants a motion for summary judgment if “the pleadings, depositions,
affidavits, declarations, and admissions on file show that there is no genuine issue as to any
material fact and that the moving party is entitled to prevail as a matter of law.” Tax Court Rule
(TCR) 47 C. “A material fact is ‘one that, under applicable law, might affect the outcome of a
case.’” Salisbury v. Dept. of Rev., TC 5400, WL 1323313 at *4 (Or Tax, Apr 8, 2021). The
parties filed comprehensive stipulated facts and no issue of material fact remains. For the
following reasons, the court grants Defendant’s Motion and denies Plaintiffs’ Cross-Motion.
A. Meaning of “Conference” under ORS 308.584
Defendant argues that Plaintiffs failed to comply with the conference requirement and,
therefore, failed to exhaust administrative remedies required by ORS 308.584(4).1 (Def’s Mot at
5.) ORS 308.584(4) provides:
“A conference with the director is an administrative remedy that must be
exhausted before an appeal of the valuation or apportionment of an assessment
may be made to the Oregon Tax Court. The valuation or apportionment of an
assessment under ORS 308.505 to 308.674 may not be appealed to the tax court if
the person or company does not file a timely request for a conference under this
section prior to seeking an appeal before the tax court.”
Plaintiffs argue that they complied with the statute by timely requesting a conference and
participating in discussions with Defendant, what they describe as an “appeal process.” (Ptfs’
Cross-Mot at 4, 6.) Plaintiffs maintain that the statute does not require taxpayers to participate in
a scheduled conference.2 (Id. at 5-6.) In essence, Plaintiffs argue that the statute requires
1
All references to the Oregon Revised Statutes (ORS) are to the 2019 edition, unless otherwise noted.
2
Plaintiffs use the term “actual conference” to refer to conferences with the director, such as the July 20,
2020, conference. The court uses the term “scheduled conference” to refer to these conferences, because “actual
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 3
taxpayer to confer with the department. Defendant disagrees, arguing that ORS 308.584(4)
requires that taxpayers not only request but also attend a scheduled conference with the director
before they are permitted to appeal.3 (Def’s Mot at 5.) The initial question is the meaning of
“conference” in ORS 308.584. The court uses the principles of statutory interpretation to resolve
the ambiguity in the language of the statute, including the text, context, and legislative history of
the statute. State v. Gaines, 346 Or 160, 171-72, 206 P3d 1042 (2009).
1. Text
“Conference” is not defined anywhere in ORS 308.584 or related statutes, so the court
begins with contemporaneous dictionaries to determine the plain meaning of the term.4 See
Comcast Corp. v. Dept. of Rev., 356 Or 282, 295-96 n 7, 337 P3d 768 (2014). Webster’s defines
“conference” as (1) “the act of consulting together usually formally; interchange of views;
discussion, deliberation;” or (2) “a meeting for consultation, discussion, or an interchange of
opinions whether of individuals or groups * * *.” Webster’s Third New Int’l Dictionary 475
(unabridged ed 2002).5
Here, Plaintiffs and Defendant consulted together by email and phone: they interchanged
views, discussed, and deliberated the issues. That tends to support Plaintiffs’ view. However,
the first definition of “conference” specifies that such discussions are done “usually formally.”
conference” implies an answer to the question at issue here.
3
Plaintiffs note that the director did not personally hold any conferences during the 2020 tentative
assessment review period. (Ptfs’ Cross-Mot at 3.) However, the director has the authority to delegate power to
others under ORS 305.057 and evidently did so in 2020. The court uses “conferences with the director” here to
include conferences with the director or her delegate.
4
The court finds no technical definitions of “conference” to be relevant here. See Black’s Law Dictionary
316 (8th ed 2004) (defining conference by reference to a meeting of the two houses of a bicameral legislature or
conference with a judge during the pendency of a lawsuit).
5
ORS 308.584 was enacted in 2007. See Or Laws 2007, ch 616, §3.
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 4
The second definition references “a meeting,” tending to suggest that a conference is a scheduled
event rather than a series of conversations. The timeline given in ORS 308.584 suggests that
conferences with the director are scheduled meetings. Conference requests must be made by
June 15, after which the director must “hold a conference * * * as soon as is practicable.” ORS
308.584(2)-(3). The director is required to send the taxpayer an order modifying or affirming the
assessment by August 1 of the tax year. ORS 308.584(3). Irregular email exchanges and
telephone conversations with an appraiser do not clearly fit within the timeline described in the
statute. The plain meaning of “conference” tends to support Defendant’s view of a scheduled
discussion with the director.
Plaintiffs’ Cross-Motion demonstrates the confusion between Plaintiffs’ asserted meaning
and the language of the statute. Plaintiffs state that “the entire process * * * constitutes the
Director’s conference even if an actual conference with the Director does not occur.” (Ptfs’
Cross-Mot at 3 (emphasis added).) Plaintiffs contend that “conference” means “conference
process” but acknowledge that Defendant must also schedule conferences. In essence, Plaintiffs
argue that “conference” means the process, except when it does not. This interpretation is
unsustainable. ORS 308.584(3) requires the director to hold a conference when requested. The
informal discussion process that Plaintiffs and Defendant engaged in, and many other taxpayers
engage in annually, does not meet this requirement.6 Plaintiffs suggest multiple meanings of
“conference,” but they offer no insight into how the court should decide when the statute refers
to the conference process or a scheduled conference.7
6
This is especially the case when the appraiser working with the taxpayer has not been delegated authority
by the director to hold conferences on the director’s behalf. In this case, neither party has alleged that the appraiser
had been delegated such authority.
Indeed, the emails between Plaintiffs’ representative and Defendant’s appraiser indicate that Plaintiffs
7
understood “conference” to refer to the scheduled conference. In an email dated July 16, 2020, Plaintiffs asked
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 5
Plaintiffs contend that this court’s decision in Charter v. Dept. of Rev., TC 5361, WL
1501263 (Or Tax, Mar 30, 2020), should be understood to mean that taxpayers need only
participate in the “conference process” to have had a conference within the meaning of ORS
308.584. (Ptfs’ Cross-Mot at 4.) For Plaintiffs, the court’s use of the phrase “conference
process” in Charter reflects the court’s understanding that discussions between taxpayers and the
department satisfy the conference requirement under ORS 308.584(4). (Id.) Charter refers to
the “conference process” and acknowledges the benefits of it for both taxpayers and the
department. 2020 WL 1501263 at *8. But that case concerned ORS 308.584 in a different
context. Id. at *2. The taxpayer in Charter had attended the scheduled conference with the
director but sought to raise a new claim on appeal to this court that it had not previously raised
during conference. Id. at *1. Although the court in Charter encouraged taxpayers to engage in
informal discussions with the department through the “conference process,” the court did not
decide the question presented here. Id. at *8.
The text of ORS 308.584 indicates that “conference” means a scheduled meeting with the
director or her delegate, rather than a process or series of discussions. Although this court has
expressed support for the “conference process,” it has not held that informal discussions with an
appraiser are the conference within the meaning of the statute.
2. Context
The court next considers relevant context, including other provisions of the statute and
other contemporaneous statutes. PGE v. Bureau of Labor & Indus., 317 Or 606, 611, 859 P2d
1143 (1993); see also Unger v. Rosenblum, 362 Or 210, 221, 407 P3d 817 (2017) (courts “consider
all relevant statutes together, so that they may be interpreted as a coherent, workable whole.”)
Defendant to “cancel our director’s conference scheduled for Monday, July 20th * * *.” (Stip Facts at 12.)
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 6
Relevant context may also include prior versions of the statute at issue and related statutes. See State
v. Perry, 336 Or 49, 54–55, 77 P3d 313 (2003). As discussed above, the other provisions of ORS
308.584 support Defendant’s view that a conference is a discrete scheduled event rather than an
informal series of discussions. Subsection (1) permits the taxpayer to request “a conference” and
subsection (3) requires Defendant to hold “a conference” as soon as it practicable after receiving the
request.
a. Other contemporaneous statutes
Other statutes refer to conferences with the department. In the context of industrial plant
valuation, ORS 308.411(7) allows the taxpayer to request a conference with the department
following physical appraisal of the industrial plant but before May 1 of the assessment year. If
the taxpayer requests a conference, the taxing authority “shall give written notice to the owner of
the time and place for the conference for an informal discussion of the valuation.” Id.In its capacity of exercising “general supervision and control over the system of property
taxation throughout the state[,]” the department may “hold a conference to determine whether to
order a change or correction” to the assessment or tax roll for the current or prior two tax years.
ORS 306.115(1), (4). The department’s power is discretionary, and the purpose of the
conference is to determine whether any of the statutory conditions for a change or correction are
satisfied. See ORS 306.115(3).
In the context of income tax, ORS 305.265 and 305.270 allow a taxpayer who has
received a notice of deficiency or a notice of proposed adjustment to request a conference with
the department. “If a request for a conference is made, the department shall notify the person of
a time and place for conference and appoint a conference officer to meet with the person for an
informal discussion of the matter.” ORS 305.265(6); see also ORS 305.270(4)(b).
The court makes several observations about references to conferences with the
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 7
department in other statutes. First, the legislature often refers to “informal conferences” or
“informal discussions” to be held at the conference. The court is not aware of a statutory
definition of “informal” or references to “formal” conferences. Even when using the term
“informal,” the legislature requires the department to give notice of the time and place for the
conference, supporting Defendant’s view that a conference is a scheduled event. ORS 308.584
does not use the term “informal,” suggesting that the conference required is at least as formal as
conferences required under other statutes.
Second, the legislature at times specifies who at the department should hold the
conference. For instance, ORS 305.265 and 305.270 state that the department shall appoint a
conference officer to conduct the conference. By contrast, ORS 308.584 specifies that the
director shall hold the conference.8 Discussions with someone other than the director or her
delegate do not qualify as a conference under the statute. This reading of “conference” as a
scheduled meeting with the director is supported by ORS 308.595 which requires the department
to give a 6-day notice before increasing the value of centrally assessed properties but waives that
requirement if the person or company “voluntarily appears before the director” and is told about
the increase. Or Laws 2007 ch 616, § 6. This reference to a voluntary appearance “before the
director” means the conference under ORS 308.584. See Level 3 Commc’ns, LLC v. Dept. of
Rev., TC 5236, 2019 WL 5620088 at *32 (Or Tax, Oct 25, 2019), aff’d, 368 Or 303, 490 P3d
149 (2021) (noting that the reference to an appearance “before the director” refers to the
conference under ORS 308.584).
Defendant argues that ORS 305.487 provides context supporting its narrow construction
8
As noted above, the director may delegate this authority and did so in 2020.
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 8
of the term conference. (Def’s Resp at 2.) ORS 305.487 declares the state’s policy “to strongly
encourage taxpayers, * * * the department and the Oregon Tax Court to resolve appeals related
to the value of * * * centrally assessed property as quickly and efficiently as possible, in order to
reduce the financial impacts of lengthy appeal processes.” ORS 305.487. This policy would be
undermined if taxpayers could accept a reduction in assessed value, withdraw from a conference
with the director, but nonetheless appeal to this court. (Def’s Resp at 2.)
Defendant asserts that its intention in holding discussions with taxpayers ahead of
scheduled conferences is to reduce the number of conferences and therefore the number of
potential appeals to this court, consistent with ORS 305.487. (Def’s Resp at 2.) In many
situations, these discussions achieve the state’s policy to quickly resolve disputes and are not
appealed to this court.9 Any taxpayers that are concerned about unknown emergent issues must
still attend the scheduled conference to ensure that they exhaust the administrative remedy. This
situation is inefficient, as it requires both taxpayers and the department to hold an unnecessary
conference to preserve taxpayer’s right to appeal. Ultimately, ORS 305.487 is not helpful to
understanding what “conference” means under ORS 308.584.
b. Predecessor statute
Plaintiffs assert that the predecessor statute to ORS 308.584 shows that the legislature
intended “conference” to refer to the entire conference process, rather than a scheduled meeting.
(Ptfs’ Reply at 4.) ORS 308.595(3) (2005) required taxpayers to make a conference request by a
certain date and required the director to “hold conferences and issue orders on all conferences
9
According to the legislative history of the 2007 amendments to ORS 308.584, “historically” only about 4
percent of taxpayers that requested conferences with the director appealed to the tax court. (Def’s Mot, Ex 1 at 14.)
There was also testimony that, of the 25 percent of taxpayers subject to central assessment that requested a
conference with the director in the 2005-06 tax year, only four appealed to the tax court. (Id. at 6.)
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 9
under this subsection.” It further required the director to “issue the orders no later than the
following August 1.” Id. Plaintiffs argue that this language, along with department testimony to
the legislature,10 indicates that the entire process did not change with ORS 308.584 because ORS
308.584(3) imposes similar requirements on the director. (Ptfs’ Reply at 5.)
The court agrees with Plaintiffs that the prior statute contained a similar schedule and
timeline for requesting and holding director conferences as ORS 308.584. The predecessor
statute also required the director to hold conferences, suggesting that informal discussions with
department appraisers did not qualify as a conference under the predecessor statute either.
Unlike ORS 308.584, the predecessor statute did not contain an express exhaustion requirement.
That change is discussed further below. Ultimately, the language of the predecessor statute does
not support Plaintiffs’ proposed meaning of conference and tends to support Defendant.
c. Context conclusion
Relevant context supports the plain meaning of “conference” as a discrete scheduled
meeting with the director or her delegate rather than informal discussions with department
appraisers. Even when the legislature described a conference as “informal” in other statutes, it
contemplated that it would be held on a set day and time with written notice provided to the
participants. The predecessor statute also established a timeline for taxpayers to request
conferences and for the director to hold those conferences.
3. Legislative History
After considering text and context, the court considers any relevant legislative history.
Gaines, 346 Or at 171-72. Defendant submitted legislative history for HB 2239 (2007),
amending ORS 308.584, but did not substantively explain how the legislative history supports its
10
This and other legislative history are addressed in more detail below.
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 10
position. (See Def’s Mot at 6 (referencing legislative history).) In contrast, Plaintiffs argue that
the legislative history confirms Plaintiffs’ view that “conference” refers to the entire process and,
moreover, the bill was not designed to change the existing process. (Ptfs’ Reply at 1-3.)
During a public hearing before the House Revenue Committee on HB 2239, John Phillips
(Phillips), a representative for the department, testified that “the attempt [of the bill] is not to
change the process at all. The idea in concept is just to simply put it in a chronological order in
the statute.” (Def’s Mot, Ex 1 at 5.11) For Plaintiffs, Phillips’ testimony reflects the legislature’s
intent to require participation in the conference process, not only the scheduled conference.
(Ptfs’ Reply at 4.) They argue that Phillips repeated references to “the process” reflects the
legislature’s intent that “conference” includes discussions between a timely-filed request for
conference and a scheduled conference. (Id. at 4.)
Phillips’ use of the term “process” seems to broadly refer to the entire process from
creating the tentative assessment roll through certification of the roll, with numerous intervening
steps including the director’s conference. (See Def’s Mot, Ex 1 at 4-5 (explaining “the process”
as beginning with taxpayers’ submission of value statements and ending with certification of the
11
Phillips explained the existing process to the committee:
“in the calendar year the taxpayer sends in statements that say this is our value, this is our
property, the appraisers then in our department and division then evaluate that and make changes
from last year, apply the depreciation schedules and do all of the analysis that they do. Then a
notice is mailed to the taxpayer saying, ‘Ok, we’re going to start reviewing the roll, here are our
values for your property.’ They are given a chance to request a conference with the director and
then the director in mid-June begins holding conferences and reviewing the roll. The director of
the Department has to finalize that by August 1 to get it to the counties so that they can calculate
the taxes and get the tax statements mailed on time. During the conference the director can make
changes to that tentative or draft roll, a clerical error or mistakes on property reported, changes in
value depending upon the discussions or what we find out from the taxpayer * * *. So, following
the certified certification of the roll the director completes her work, certifies the roll to the
counties and then the taxpayer can appeal that value that final value to the Tax Court.”
(Def’s Mot, Ex 1 at 4-5.)
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 11
roll and appeal to the Tax Court).)
The court finds other aspects of Phillips testimony more helpful than his use of the phrase
conference process. In explaining the conference and exhaustion requirement, Phillips stated:
“What we don’t want to see and what we haven’t seen because this is the way
we’ve administered the law is people jumping over that process and saying we’re
not going talk to the director, we’re going to go to the — on appeal to the Tax
Court. We don’t see that, it hasn’t been done to my knowledge and people
understand that they need to have the conversation, that’s why they file the
protective appeal or where they have the conversation. So this spells it out in
language that we think is crystal clear.”
(Def’s Mot, Ex 1 at 14 (emphasis added).) Previously in his testimony, Phillips explained that
“a lot of companies will just put in a protective request for conference. They may
never even come to the conference but, you know, it’s in their best interest to put
in a request for a conference and then if, you know, the appraiser and the
company can work it out, then the conference never occurs. So we do get a lot of
requests for conference but we get very few actual appeals resulting.”
(Id. at 6-7 (emphasis added).)
On the one hand, Phillips description of the conference as “a conversation” lends some
support to Plaintiffs’ proposed meaning of conference as an informal discussion. However,
Phillips repeatedly refers to a conference or conversation with the director, indicating a
consistent view that the statute contemplates the director will hold the conferences. When
referring to discussions between taxpayer and the appraiser, Phillips explained that those are for
settlement purposes. If the settlement discussions are successful “then the conference never
occurs” and no further appeal is taken. Taken together, that testimony indicates that conferences
do not include informal discussions with department appraisers.
4. Conclusion on meaning of conference in ORS 308.584
The text and context point toward a narrow reading of “conference” in ORS 308.584 as
the scheduled conference. They further indicate that the conference is with the director or her
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 12
delegate, not department appraisers. The legislative history creates some ambiguity by using
informal language such as “conversation.”12 Yet the legislative history consistently refers to the
conference or conversation with the director and indicates that discussions with department
appraisers are not the conference. The court concludes Plaintiffs’ scheduled conference with the
director on July 20, 2020, which Plaintiffs cancelled, was “the conference” within the meaning
of ORS 308.584(4). Plaintiffs’ discussions with Defendant’s appraisers do not qualify as a
conference under the statute.
B. Exhaustion Requirement Under ORS 305.584(4)
Having concluded that “conference” means the scheduled director’s conference, the next
question is what is required for a taxpayer to exhaust their administrative remedy under ORS
308.584(4). This question arises because of two seemingly inconsistent sentences in the statute.
The first sentence states that “[a] conference with the director is an administrative remedy” that a
taxpayer must exhaust before appealing to this court. The second sentence requires only that a
taxpayer “timely request” a conference before appealing to this court. “A conference” and “a
timely request for a conference” are two different things and it is unclear which is required for a
taxpayer to exhaust the administrative remedy and appeal to this court. Plaintiffs argue that the
two sentences of ORS 308.584(4) should be read together to require only that taxpayer request a
conference and participate in discussions with the department to appeal to this court. (Ptfs’
Cross-Mot at 4.)
“The general doctrine of exhaustion of administrative remedies is judicially created, a
12
To the extent there is a disagreement on the meaning of “conference” between the statutory text and the
legislative history, the text controls. Tektronix v. Dept of Rev, 354 Or 531, 544, 316 P3d 276 (2013) (citing Gaines,
346 Or, at 172-73).
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 13
creature of the common law, and is employed by the courts—including this one—in the interest
of orderly procedure and good administration.” Tuckenberry v. Bd. of Parole & Post-Prison
Supervision, 365 Or 640, 646, 451 P3d 227 (2019). It holds that “judicial review is only
available after the procedure for relief within the administrative body itself has been followed
without success.” Mullenaux v. Dept. of Revenue, 293 Or 536, 539, 651 P 2d 724 (1982). To
exhaust the administrative remedy, Plaintiffs must “afford[] the agency an opportunity to rule on
the substance of the dispute.” Id. at 541. The “prudential doctrine of exhaustion is not rigid but
flexible, and can be relaxed, or even dispensed with altogether, depending on the circumstances.”
Tuckenberry, 365 Or at 646 (internal quotation marks omitted). Such circumstances may include
“considerations of individual justice, efficiency, or wise judicial administration * * *.” Id.
(quoting Kristen E. Hickman & Richard J. Pierce, Jr., 2 Administrative Law Treatise § 17.2,
1457 (6th ed 2019)).
With that background in mind, the court considers relevant context and legislative history
provided by Defendant. ORS 308.584(4) expressly requires exhaustion of the administrative
remedy, whereas the predecessor statute, ORS 308.595 (2005), did not. The exhaustion
requirement was new to the statute in 2007. Phillips flagged the exhaustion requirement as “the
one place in the bill that there may be a perception of a change” but stated his “legal advice is
that this is not a change * * *.” (Def’s Mot, Ex 1 at 14.) He explained that the department had
not historically seen “people jumping over [the director’s conference] process” and appealing
directly to the tax court. (Id.) Its intention in adding the exhaustion requirement was to make
that “crystal clear.” (Id.) Phillips acknowledged that many companies “put in a protective
request for conference” but ultimately resolve their issues without need to attend the conference
or appeal. (Id. at 6-7.) Ultimately, the legislative history suggests that the legislature did not
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 14
intend to depart from the judicially-created common law principles of exhaustion of
administrative remedies.
Defendant’s practice of issuing “pass-through letters” may clarify the relationship
between the two sentences of ORS 308.584(4). Defendant sometimes issues “pass-through
letters” when “the same issues” have been raised in prior years and the taxpayer has already
appealed those issues to this court. (Def’s Resp at 2.) Such pass-through letters are issued at the
discretion of the director. (Id.) Essentially, Defendant’s pass-through letters allow a taxpayer
who timely requested a conference to proceed with an appeal to this court without participating
in a director’s conference. Neither the statute nor the legislative history makes explicit reference
to pass-through letters, though both parties are aware of the practice. It appears that Defendant’s
practice of issuing pass-through letters is consistent with the general common law administrative
exhaustion requirement because Defendant had the opportunity to rule on the substance of the
dispute in the prior year. Here, Plaintiffs made a timely request for conference and Defendant
did not issue a pass-through letter or otherwise waive the conference. Plaintiffs requested that
the conference be cancelled and thus deprived the director the opportunity to rule on the
substance of the dispute and did not exhaust their administrative remedy.
C. Defendant’s Order Requirement Under ORS 305.584(3)
Plaintiffs move for partial summary judgment on the ground that Defendant failed to
provide them with a written order maintaining or amending the tentative assessment as required
by ORS 308.584(3). (Ptfs’ Cross-Mot at 5-6.) ORS 308.584(3) states: “The director shall hold a
conference under this section as soon as is practicable following the date a request is made and
shall issue an order modifying the valuation or apportionment of an assessment or affirming the
tentative assessment on or before August 1 of the tax year.” Two interpretations of the statute
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 15
are possible. First, it requires the director to take two different actions, but neither of those
actions are dependent on the other. Under that reading, the director must issue an order for every
timely requested conference, whether or not the conference was held. Second, it requires the
director to issue an order but only if the conference is held. Once again, the court turns to the
principles of statutory interpretation to resolve this ambiguity.
The text of the statute requires the director to do two things. First, the director must hold
a conference after it is requested. Second, the director must issue an order either modifying or
affirming the tentative roll. It is tempting to read the two clauses as related with the second
contingent upon the first. However, the Supreme Court has declined to read independent clauses
as related. See Horton v. Oregon Health and Science University, 359 Or 168, 251, 376 P3d 998
(2016) (observing that violation of one independent clause does not necessarily result in
violation of another). Thus, the text alone does not resolve the ambiguity.
Other provisions of ORS 308.584 and the related statute ORS 305.280 provide helpful
context. ORS 308.584(4) requires exhaustion of the administrative remedy – specifically, the
director’s conference – before a taxpayer may appeal to the tax court. ORS 308.584(5) states
that, subject to subsection (4) – the exhaustion requirement – appeal may be taken to the tax
court under ORS 305.280. In turn, ORS 305.280(1) states that “[a]n appeal under ORS 308.505
to 308.674 shall be filed within 90 days after the date the order is issued under ORS 308.584(3).”
(Emphasis added.) Putting those provisions together indicates that the legislature intended for a
taxpayer to participate in a conference with the director before receiving an order that may be
appealed to this court.
///
The legislative history supports that reading of ORS 308.584(3). Phillips described the
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 16
goal of putting the entire process into chronological order. Thus, the placement of the director’s
duty to issue an order following the director’s duty to hold a conference indicates a legislative
intent to reflect the order of events. Furthermore, Phillips expressed the department’s concern
that taxpayers would “jum[p] over that process and sa[y] we’re not going to talk to the director *
* *.” (Def’s Mot, Ex 1 at 14.) The department was concerned that taxpayers would try to avoid
a conference with the director. If an order is required each time a request is made, without
regard to whether a conference was actually held, it would nullify the conference requirement
and permits taxpayers to “jump over” the process—precisely the outcome the bill was designed
to prevent.
The court concludes that ORS 308.584(3) requires the director to issue an order only after
conference. When, as here, taxpayers withdraw their request for a conference, the director is not
obliged to issue an order under ORS 308.584.
D. Inconsistencies in Defendant’s Policies and Position
Plaintiffs argue that Defendant’s practices are inconsistent with the narrow understanding
of “conference” it has advanced here. (See Ptfs’ Cross-Mot at 5.) Plaintiffs point to Defendant’s
practice of issuing an order at a taxpayer’s request even when a conference has not been held.
(Id. at 5-6.) Plaintiffs allege, and Defendant does not deny, that in some instances, taxpayers
timely request a director’s conference, discuss issues with the department ahead of the
conference, resolve those issues, cancel the conference, and then request that the director issue
an order. (Id.)
The court is not bound by Defendant’s interpretation of the statute. Oregon Occupational
Safety & Health Div. v. CBI Servs., Inc., 356 Or 577, 584-85 341 P3d 701 (2014) (the meaning
of a statute is ultimately a question of law although an agency’s construction of a statute may be
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 17
entitled to “a measure of deference.”) Plaintiffs have not raised an estoppel claim or otherwise
alleged that they were misled by Defendant as to the appeal process. See Jeld-Wen v. Dept. of
Rev., 5 OTR 358, 362 (1973) (setting forth elements necessary to prove equitable estoppel); ORS
305.875 (requiring Defendant to provide an explanation of “[t]he audit, conference, or meeting
process and the taxpayer’s rights under such process”). As discussed above, Defendant
sometimes issues “pass-through letters” in its discretion when the same issues were raised in
prior years and are pending in this court. (Def’s Resp at 2.)
Because Defendant’s practice is not inconsistent with the statute and Plaintiffs have failed
to allege that Defendant misled Plaintiffs or failed to explain Plaintiffs’ appeal rights, the court
finds no basis to alter its conclusion based solely on Defendant’s occasional waiver of
conference in some cases.
E. Remedy for Failure to Exhaust
Plaintiffs argue that, if Defendant’s Motion is granted, the proper remedy is to remand to
the department to exhaust administrative remedies. (Ptfs’ Cross-Mot at 7.) Defendant seeks to
dismiss Plaintiffs’ case, contending that ORS 308.584 does not provide for remand and
remanding the case would defeat the purpose of the statute to resolve as many disputes as
possible before the department sends assessment values to the counties. (Def’s Resp at 4.) ORS
308.584 requires taxpayers to adhere to a particular procedure and time frame.13 (Id.)
///
“[T]he usual consequence for failing to exhaust the administrative process is that the
13
The legislative history for HB 2239 (2007) includes a statement from Committee Chair Phil Barnhart
asking whether the tax court had ever “sent something back because that conversation [conference with the director]
didn’t take place” to which Phillips responded that he was not aware of any such cases. (Def’s Mot, Ex 1 at 14.)
The court interprets that to mean that the legislature was aware of the possibility that cases could be remanded, but it
was not the existing practice and the legislature chose not to make any reference to remand in the statute.
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 18
reviewing court will remand the case to the agency for further proceedings there.” Mullenaux,
293 Or at 541. However, where “the party seeking judicial review has foreclosed through his
own inaction completion of the administrative process, remand is inappropriate. An appeal that
has died within the agency cannot be resurrected by appealing outside of it. In such a case, the
doctrine serves as a bar to further relief.” Id. In Mullenaux, the taxpayers challenged an income
tax assessment and requested a hearing with the department but failed to appear because it
“slipped [their] mind.” Id. at 538. On appeal, both the tax court and Supreme Court found
taxpayers’ explanation for missing the hearing unsatisfactory and declined to remand the case.
Id. at 541.
Although the facts here differ from Mullenaux in that Plaintiffs voluntarily cancelled their
director’s conference having received satisfactory relief ahead of conference, the outcome is the
same: Plaintiffs foreclosed completion of the administrative process, so remand is inappropriate.
Having concluded that Plaintiffs were required to participate in the scheduled director’s
conference in order to exhaust the administrative remedy under ORS 308.584, the court further
concludes that Defendant’s request for dismissal must be granted.
IV. CONCLUSION
Upon careful consideration, the court concludes that “conference” in ORS 308.584, refers
to the scheduled director’s conference, not to informal discussions with department appraisers.
A taxpayer must participate in the director’s conference to exhaust the administrative remedy
under ORS 308.584(4) unless the director, in her discretion, waives the conference requirement
after taxpayer has made a timely request for conference. The department is not required to issue
an appealable order under ORS 308.584(3) unless the taxpayer exhausts the administrative
remedy by attending the director’s conference. Where, as here, taxpayer cancels the conference,
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 19
dismissal is the appropriate remedy rather than remand. Now, therefore,
IT IS ORDERED that Defendant’s Motion for Summary Judgment is granted and
Plaintiffs’ Cross-Motion for Partial Summary Judgment is denied.
______________________
This is a dispositive order pursuant to Tax Court Rule – Magistrate Division 16
C(1). The court will issue a decision after waiting 14 days to determine whether
there is a dispute about costs and disbursements. Any claim of error in regard to
this order should be raised in an appeal of the Magistrate’s decision when all
issues have been resolved. See TCR-MD 19.
This document was signed by Presiding Magistrate Allison R. Boomer and
entered on December 30, 2021.
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT TC-
MD 200363G; 200367N 20