Wihtol I v. Dept. of Rev. , 21 Or. Tax 260 ( 2013 )

260 September 5, 2013 No. 33
IN THE OREGON TAX COURT
REGULAR DIVISION
Jeffrey B. WIHTOL,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
Defendant,
and
MULTNOMAH COUNTY ASSESSOR,
Defendant-Intervenor.
(TC 5171)
Plaintiff (taxpayer) appealed from a Magistrate Division decision as to tax-
payer’s entitlement to award of costs and disbursements incurred in the litigation
of his appeal in the Magistrate Division. Taxpayer argued he was the prevailing
party and was entitled to an award of costs in the form of his Magistrate Division
filing fee. Defendant-Intervenor Multnomah County Assessor (the county) argued
that pursuant to statute and the court’s rules that costs could not be awarded by
a tax court magistrate, but only by the judge of the Regular Division. Following
oral argument on cross-motions for summary judgment, the court ruled that the
provisions of ORS 305.490(2) grant authority to a tax court magistrate to award
costs and disbursements, as a magistrate and the Magistrate Division are con-
sidered part of the court as the term is used by the statute.
Oral argument on cross-motions for summary judgment
was held June 3, 2013, in the courtroom of the Oregon Tax
Court, Salem.
Jeffrey B. Wihtol, Attorney at Law, Portland, filed the
motion and argued the cause for Plaintiff (taxpayer).
Lindsay R. Kandra, Multnomah County Counsel,
Portland, filed the cross-motion and argued the cause for
Defendant-Intervenor Multnomah County Assessor (the
county).
Decision for Plaintiff rendered September 5, 2013.
HENRY C. BREITHAUPT, Judge.
I. INTRODUCTION
This matter is before the court on cross-motions
for summary judgment by Plaintiff (taxpayer) and
Cite as 21 OTR 260 (2013) 261
Defendant-Intervenor Multnomah County Assessor (the
county).
II. FACTS
In this property tax case, a stipulated decision was
entered by the Magistrate Division. See Wihtol v. Multnomah
County Assessor, TC-MD 120762N (Jan 30, 2013). Taxpayer
contended that he prevailed in the Magistrate Division and
was entitled to recover his filing fee paid in that division as
a cost or disbursement. The decision of the magistrate hear-
ing the matter did not reach the question of whether tax-
payer was the prevailing party. Rather, the decision of the
magistrate was that magistrates do not have the authority
to award costs and disbursements.
III. ISSUE
The issue presented in these motions is whether
magistrates may award as costs and disbursements the fil-
ing fee paid by a taxpayer in a proceeding in the Magistrate
Division.
IV. ANALYSIS
The relevant statutes at issue are subsections (2)
and (4) of ORS 305.490.1 Tax Court Rule (TCR) 68 is also
relevant, as is the Preface to the rules of the Magistrate
Division. The statute provides, in relevant part:
“The party entitled to costs and disbursements on such
appeal shall recover from the opponent of the party the
amount so paid upon order of the court, as in equity suits in
the circuit court. * * *
“* * * * *
“4(a) If, in any proceeding before the tax court judge
involving ad valorem property taxation, exemptions, spe-
cial assessments or omitted property, the court finds in
favor of the taxpayer, the court may allow the taxpayer, in
addition to costs and disbursements the following:
“(A) Reasonable attorney fees for the proceeding under
this subsection and for the prior proceeding in the matter,
if any, before the magistrate; and
1
Unless otherwise noted, all references to the Oregon Revised Statutes
(ORS) are to 2011.
262 Wihtol I v. Dept. of Rev.
“(B) Reasonable expenses as determined by the court.
Expenses include fees of experts incurred by the individual
taxpayer in preparing for and conducting the proceeding
before the tax court judge and the prior proceeding in the
matter, if any, before the magistrate.”
(Emphases added.) The Preface to the Rules of the Magis-
trate Division provides: “If circumstances arise that are not
covered by a Magistrate Division rule, rules of the Regular
Division of the Tax Court may be used as a guide to the
extent relevant.” TCR 68 provides, in relevant part:
“A(1) Attorney Fees. ‘Attorney fees’ are the reasonable
value of legal services related to the prosecution or defense
of an action.
“A(2) Costs and Disbursements. ‘Costs and disburse-
ments’ are reasonable and necessary expenses incurred in
the prosecution or defense of an action other than for legal
services, and include the fees of officers; the statutory fees
for witnesses; the postage for summonses or notices; the
necessary expense of copying of any public record, book, or
document used as evidence on the trial; recordation of any
document where recordation is required to give notice of the
creation, modification, or termination of an interest in real
property; a reasonable sum paid a person for executing any
bond, undertaking, stipulation, or other obligation therein;
and any other expense specifically allowed by agreement,
by these rules, or by other rule or statute. The court, act-
ing in its sole discretion, may allow as costs reasonable
expenses incurred by a party for interpreter services. If
such costs are not awarded and the beneficiary of the inter-
preter services is unable to pay, then interpreter services
shall be paid for in the same manner as interpreters used
in the circuit court. See ORS 45.275(4)(c). The expense of
taking depositions shall not be allowed, even though the
depositions are used at trial, except as otherwise provided
by rule or statute.
“B Allowance of Costs and Disbursements. In any
action, costs and disbursements shall be allowed to the
prevailing party, unless these rules or other rule or statute
direct that in the particular case costs and disbursements
shall not be allowed to the prevailing party or shall be
allowed to some other party, or unless the court otherwise
directs. If, under a special provision of these rules or any
Cite as 21 OTR 260 (2013) 263
other rule or statute, a party has a right to recover costs,
such party shall also have a right to recover disbursements.”
In the Magistrate Division, taxpayer appears to
have relied on ORS 305.501(4)(a) and the provisions of TCR
68 quoted above. In this division of the court, taxpayer
places his reliance on ORS 305.490(2) and the same rule
provisions.
To start with, the court considers it important to
point out that the Tax Court Rules are adopted pursuant to
statutory authority found in ORS 305.425(3), which states:
“All hearings and proceedings before the tax court judge
shall be in accordance with the rules of practice and proce-
dure promulgated by the court, which shall conform, as far
as practical to the rules of equity practice and procedure in
this state.”
Rules for the Magistrate Division are authorized in ORS
305.501(3).
Unlike the Oregon Rules of Civil Procedure, the
rules of the tax court, of either division, do not have the force
and effect of statutes. That said, the court is reluctant to
conclude that any division of the court has authority to make
any monetary award unless that award is supported by stat-
utory authorization. Rules of practice and procedure—the
subject of both ORS 305.425(3) and ORS 305.501(3)—are
authorized, but the court is reluctant to conclude that “prac-
tice and procedure” includes money awards.
There is, however, a specific statutory basis for
awards of costs and disbursements in the tax court. That
is found in ORS 305.490(2), the provisions of which are set
forth above.
ORS 305.490(2) presents three questions:
(1) Is an appeal to the Magistrate Division included in the
reference in the statue to “on such appeal”?
(2) If so, does the reference to “order of the court” in the
statute include an order of a magistrate?
(3) If so, what are the parameters of the terms “as in
equity cases in the circuit court,” found in ORS
305.490(2) and relating to the earlier phrase “costs
and disbursements”?
264 Wihtol I v. Dept. of Rev.
The last sentence of ORS 305.490(2) dates to the initial stat-
ute creating the Oregon Tax Court. Or Laws 1961, ch 533,
§ 15(1). At that time, while the tax court had a Regular
Division, there was no Magistrate Division but rather only
a Small Claims Division. The first section of ORS 305.490
described appeals from orders of the State Tax Commission,
the predecessor to the Department of Revenue (department),
and the requirement to pay a fee, except no fee was due from
a government entity. The last sentence of the section was,
except for a minor editorial change, the same as the last
sentence of what is now ORS 305.490(2).
By 1995, when the legislature created the Magistrate
Division, the appeal and the fee requirement was described
in subsection (1) of the statute and the possibility of recovery
of the fee was found in subsection (2) of the statute. The ref-
erence to “such appeal” in subsection (2) was clearly to the
process now described in subsection (1) of the statute. The
references to an “order of the court” and “costs and disburse-
ments” and awards “as in equity cases” were not changed in
any way.
Accordingly, the reference to entitlement to costs
and disbursements was therefore an entitlement in the
case of an appeal from an order of the government agency
from whose action the appealing party was proceeding—
in those days, in all events, the predecessor of the
department.
In 1961, an “appeal” to the tax court was from an
order of the predecessor of the department. However, “appeal”
is still the word used to describe the initiation of proceed-
ings in the tax court, which in most cases must be in the
Magistrate Division. See ORS 305.275. The term “appeal”
is also used currently to describe further proceedings in the
Regular Division after a decision by a magistrate. See ORS
305.501(5)(a).
The next question is whether the Magistrate Division
is a court for purposes of the phrase “order of the court” as
used in ORS 305.490(2). This court has long taken the posi-
tion that in 1995 the legislature, effective for 1997, created
or continued one court with two divisions. ORS 305.404, pro-
vides that the phrase “tax court” may refer to either division
Cite as 21 OTR 260 (2013) 265
or both. While it is true that the word “court” is used in
305.490(2) without any qualifier, the court concludes that
the phrase “order of the court” in ORS 305.490(2) includes
the Magistrate Division.
The legislative history of the 1995 legislative ses-
sion in which the Magistrate Division was created is silent
as to what, if any, significance there is in the fact that
the legislature left the last sentence of ORS 305.490(2)
unchanged. Did the legislature intend to leave unchanged
what had existed before the creation of the Magistrate
Division—namely a first level of dispute resolution without
any possibility of recovery of costs and disbursements? That
is not a logical conclusion as in the appeal process prior to
the creation of the Magistrate Division there was no fee due
from a taxpayer in connection with the first level appeal to
the department.
The creation of the Magistrate Division differed
from the prior process in that there would be a filing fee
connected with the first level of appeal, the appeal to the
Magistrate Division. That appeal and the fee therefore
would now be described in ORS 305.490(1) and by parallel
construction to the statute as it had existed, the reference
to “such appeal” in subsection (2) would be to any appeal
described in subsection (1), including the initial appeal to
the Magistrate Division.
Initially, the fee for bringing an appeal in the
Magistrate Division was very modest: $25. Today, however,
the fee is $240. Other legislative provisions and the legisla-
tive history of the statutes creating the Magistrate Division
indicate that the legislature intended to make the first level
of appeal quite accessible to taxpayers.2 The court is of the
opinion that the legislative intent regarding the functioning
of the Magistrate Division in the tax dispute process leads
to the conclusion that the Magistrate Division is a “court”
within the meaning of ORS 305.490(2) such that a prevail-
ing taxpayer may recover the fee that is required in order to
pursue a remedy.
2
Thus, for example, much broader representation rules apply. Compare ORS
305.494 and ORS 305.230. Further, the Oregon Rules of Evidence do not apply in
the Magistrate Division. ORS 305.501(4)(a).
266 Wihtol I v. Dept. of Rev.
ORS 305.490(2) must be read as relying on the
rules related to “equity suits in the circuit court” for pur-
poses of determining if a party is entitled to “costs and dis-
bursements.” There are no such rules in existence now, nor
were there any such rules in existence in 1995 when the
Magistrate Division was created. However, in 1961, when
the reference to such rules in “equity suits” was adopted,
there were rules for costs and disbursements in “equity
suits.” ORS 20.030 (1961).
The rules for “equity suits” were that costs and dis-
bursements could be awarded to a prevailing party, unless
the court otherwise directed. Id. A separate and somewhat
different set of rules existed for actions at law. See ORS
20.040 (1961). The elimination of the distinction between
equity and law, a feature of the adoption of the Oregon Rules
of Civil Procedure, occurred without any change being made
to ORS 305.490(2). That statutory subsection therefore
directs the reader to a body of law that no longer exists. The
court concludes that what must be done in such a case is to
read the statutory reference as if it now provided authority
for an award of costs and disbursements to the prevailing
party, unless the court otherwise directs. That rule would
apply to magistrates as well as the judge of the tax court
and would permit such decision makers to exercise discre-
tion in deciding the question.
Based on an analysis of the text and history of
ORS 305.490(2) there appear to be no reasons to deny to
the Magistrate Division the authority to award costs and
disbursements. Indeed, there are good reasons to find such
authority as a complement to the legislative purpose of mak-
ing the Magistrate Division an accessible forum for resolu-
tion of tax disputes. Such accessibility would be frustrated
if taxpayers were faced with a substantial fee in order to
seek a remedy but were denied a recovery of that cost when
successful in the quest for a remedy.
The magistrate in this matter concluded that ORS
305.490(4), dealing with awards of attorney fees in certain
cases, compelled a conclusion that costs and disbursements
could not be awarded by a magistrate. That conclusion was
based on the wording in ORS 305.490(4), a statute that
permits the “tax court judge” to award attorney fees and
Cite as 21 OTR 260 (2013) 267
certain “expenses” to a taxpayer in a property tax matter,
“in addition to costs and disbursements.” (Emphasis added.)
The wording of the statute makes it clear that the “expenses”
mentioned are different from what is encompassed in the
terms “costs and disbursements.” 3 It appears the premise of
the magistrate’s analysis was that costs and disbursements
could only be awarded in proceedings in which attorney fees
and certain expenses could be awarded. Reasoning that only
the judge of the tax court, and not a magistrate, could award
attorney fees and specified “expenses,” the magistrate con-
cluded that only in Regular Division proceedings—where
the tax court judge is involved—could a filing fee be recov-
ered by a prevailing party as a “cost” or “disbursement.”
However, ORS 305.490(4) was added in the 2001
legislative session. Or Laws 2001, ch 287, § 1. This was long
after ORS 305.490(2) was in existence.4 ORS 305.490(4)
cannot therefore be read as creating the authority for the
judge of the tax court to award costs and disbursements.
Rather, the statute should be read as recognizing that the
authority already existed, by reason of ORS 305.490(2) and
the ability to award attorney fees and certain other costs is
an additional authority.
That being the case, ORS 305.490(4) and its coun-
terpart for income tax cases found in ORS 305.490(3) should
be read as describing what the tax court judge may award,
as the statute says, in addition to costs and disbursements.
ORS 305.490(4) need not, and in light of the legislative text
and history should not, be read as a barrier to a conclusion
as to the authority of a magistrate under ORS 305.490(2)
to award costs and disbursements—the Magistrate Division
being part of “the court.” 5
3
In this regard the court has no difficulty concluding that a filing fee is a
“disbursement.” ORS 20.020 (1961) defined what could be recovered as “all nec-
essary disbursements.” Bivvins v. Unger, 263 Or 239, 501 P2d 1262 (1972), estab-
lished that filing fees were such necessary disbursements.
4
The comparable provision for an award of attorney fees to taxpayers who
prevailed in personal income tax cases, now found in ORS 305.490(3) was added
to the statutes in 1971. Or Laws 1971, ch 265, § 1.
5
The magistrate relied on two prior cases in that division in which a request
for costs and disbursements was denied. One of the cases simply relied on the
logic of an earlier case. That earlier case, in turn, reached a conclusion as to costs
and disbursements grounded on the same premise as to the meaning of ORS
305.490(4) as was employed by the magistrate in this case.
268 Wihtol I v. Dept. of Rev.
The authority that a magistrate has to award costs
and disbursements under the construction contained in this
opinion should be guided by the provisions of TCR 68, at
least for so long as the Magistrate Division does not have a
rule of its own on the matter. The authority will be one that
is subject to the discretion of a magistrate and may be exer-
cised only in favor of a prevailing party.
The decision of the magistrate in this matter meant
that the question of prevailing party status for taxpayer
and the exercise of discretion by the magistrate were not
resolved or undertaken. The court therefore remands the
matter to the magistrate for consideration and decision on
these matters, retaining, however, jurisdiction to consider
any appeal from the decision of the magistrate to the extent
that there will be no necessity to pay a filing fee in respect
of any appeal to this division from the decision of the magis-
trate on these matters.
V. CONCLUSION
Now, therefore,
IT IS ORDERED that Plaintiff’s Motion for Sum-
mary Judgment is granted;
IT IS FURTHER ORDERED that Defendant-
Intervenor’s Cross-Motion for Summary Judgment is denied;
IT IS FURTHER ORDERED that costs and dis-
bursements are awarded to Plaintiff in respect of this
appeal; and
IT IS FURTHER ORDERED that this matter be
remanded to the Magistrate Division for further litigation
of these issues.