ATTORNEY FOR PETITIONERS: ATTORNEYS FOR RESPONDENT:
BEVERLY B. HAMERSLY STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
VINCENT S. MIRKOV
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
RICHARD A. and PHYLLIS L. BOEHNING, )
and LOUISE K. HEINOLD, )
v. ) Cause No. 49T10-9905-TA-128
STATE BOARD OF TAX COMMISSIONERS, )
ON APPEAL FROM A FINAL DETERMINATION OF
THE STATE BOARD OF TAX COMMISSIONERS
October 4, 2001
Richard Boehning, Phyllis Boehning, and Louise Heinold (collectively, the Taxpayers) appeal the final
determination of the State Board of Tax Commissioners (State Board) valuing their property
for the March 1, 1995 assessment date.
Whether the settlement of an appeal on a neighboring parcel can be considered
by this Court in its ruling; and
Whether the State Board erred in classifying the majority of Taxpayers property as
primary commercial/industrial land.
FACTS AND PROCEDURAL HISTORY
The Taxpayers, along with Harvey Gutwein, own an operational aggregate stone quarry in
Pulaski County, Indiana. Eighty (80) acres of the quarry are owned by
and assessed to the Taxpayers (Parcels 013-00060-00 and 013-00061-00). The other seventy-eight
(78) acres of the quarry are owned by and assessed to Gutwein (Parcel
For the March 1, 1995 assessment date, the Pulaski County assessing officials classified
the Taxpayers property as follows: seventy-six (76) acres as primary commercial/industrial land;
3.32 acres as undeveloped usable commercial/industrial land; and 0.68 acres as roadway land.
The Taxpayers challenged the assessment, alleging that only one acre should have
been assessed as primary land, and essentially the rest should have been classified
as undeveloped/unusable commercial/industrial land. At the same time, Gutwein also challenged the
1995 assessment of his property, raising similar issues of land classification.
On review, the Pulaski County Board of Review (BOR) chose not to reclassify
the Taxpayers land. Accordingly, the Taxpayers appealed their assessment to the State
Board. At this point, Gutweins appeal had also reached the State Board,
and so on March 30, 1998, the State Board held a joint hearing
on the Taxpayers and Gutweins appeal. On April 12, 1999, the State
Board issued a final determination on the Taxpayers appeal, upholding the BORs classifications.
The State Board did not, however, issue a final determination on the
The Taxpayers filed an original tax appeal with this Court on May 24,
1999, and trial was held on February 3, 2000. Gutwein filed an
original tax appeal with this Court on May 27, 1999, however, this Court
remanded the case to the State Board to correct deficiencies in its administrative
record. On February 29, 2000, Gutwein and the Pulaski County assessing officials
reached a settlement of the issues, eliminating the need for trial. On
March 14, 2000, the State Board issued a final determination on Gutweins appeal,
incorporating the settlement terms. Additional facts will be supplied as necessary.
STANDARD OF REVIEW
This Court gives great deference to final determinations of the State Board.
Wetzel Enters. Inc. v. State Bd. of Tax Commrs, 694 N.E.2d 1259, 1261
(Ind. Tax Ct. 1998). Accordingly, this Court will reverse a State Board
final determination only if it is unsupported by substantial evidence, is arbitrary or
capricious, constitutes and abuse of discretion, or exceeds statutory authority. Id.
The taxpayer bears the burden of showing the invalidity of the State Boards
final determination. See Clark v. State Bd. of Tax Commrs, 694 N.E.2d
1230, 1233 (Ind. Tax Ct. 1998). In bearing that burden, a taxpayer
may only present evidence to this Court that he or she originally presented
at the administrative level. State Bd. of Tax Commrs v. Gatling Gun
Club, Inc., 420 N.E.2d 1324, 1328 (Ind. Ct. App. 1981). Thus, this
Court may only review the testimony of those witnesses who testified at the
administrative hearing, the facts to which those witnesses testified, and those exhibits that
were introduced at the administrative hearing. Id.
The Effect of Gutweins Settlement On Disposition of This Case
In one of its post-trial briefs, counsel for the Taxpayers discusses the settlement
reached in the Gutwein appeal. Specifically, counsel argues that the settlement resolution
of certain land classification issues in that case constitutes legal precedent and should
therefore control the outcome of this case. (Petrs Reply Br. at 3-5.)
The State Board subsequently filed a motion to strike that portion of the
Taxpayers brief (Respts Motion to Strike at 1), arguing that under Indiana Evidence
evidence regarding compromises and settlements of claims is not admissible.
The Court agrees.
The general intent of Indiana Evidence Rule 408 is to encourage parties to
engage in settlement negotiations without a judgment or admission of liability or wrong-doing.
See Four Winns, Inc., v. Cincinnati Ins. Co., 471 N.E.2d 1187, 1189-90
(Ind. Ct. App. 1984), trans. denied. To allow the Taxpayers to use
the settlement reached in the Gutwein appeal thwarts the intent of that rule.
Indeed, the Taxpayers attempt to use the settlement in Gutwein as a
State Board admission that its land classifications in this case are erroneous.
Furthermore, to allow the Taxpayers to use
the settlement would have a chilling effect on the incentive of all assessing
officials to resolve cases outside the courtroom. Courts would be wise not
to endorse such a policy their dockets are overloaded enough as it
is. Accordingly, the State Boards Motion to Strike the portion of Taxpayers
brief entitled Companion Case is Precedent is GRANTED.
Classification of Taxpayers Land
For the 1995 general reassessment, commercial and industrial land was classified according to
its use. See Ind. Admin. Code, tit. 50, 2.2-4-1 (1996). Specifically,
an assessing official would classify the land accordingly:
Primary commercial or industrial land refers to the primary building or plant site.
The following are examples of primary land:
Land located under buildings.
Regularly used parking areas.
Regularly used yard storage.
Necessary support land.
Secondary commercial or industrial land refers to land utilized for
purposes which are secondary to the primary use of the land. The
following are examples of secondary land:
Parking areas that are not used regularly.
Yard storage that is not used regularly.
* * * *
Unusable undeveloped commercial and industrial land means vacant
land that is unusable for commercial or industrial purposes.
Usable undeveloped commercial and industrial land means vacant
land that is held for future commercial or industrial development.
50 IAC 2.2-4-1. Using these regulations, the Pulaski County assessing officials found
that of the Taxpayers eighty (80) acres, seventy-six (76) were primary, 3.32 were
unusable/undeveloped, and 0.68 acres were public roadway.
To better understand their assessment, however, the Taxpayers contacted the State Board to
ascertain what criteria it used to classify quarry land. The State Board
forwarded a document that stated in relevant part:
Open area [in a quarry] being worked would qualify as primary industrial, immediate
area around the open area would qualify as industrial undeveloped land, land being
reclaimed or put back to present use may qualify as industrial un-developed nonusable
or possibly agricultural land, farm land should be valued at agricultural rates using
the soil productivity method.
(Stip. Ex. 3.)
The Taxpayers subsequently appealed, first to Pulaski County and then to the State
Board. Throughout the process, the Taxpayers, relying on the document forwarded to
them by the State Board, presented detailed testimony that their property should be
reclassified under IAC 2.2-4-1. Specifically, the Taxpayers testified that only one acre
should be designated as primary land. This one acre, they explained, is
comprised of a floating acre
that Taxpayers share equally with their neighbor, Gutwein,
as well as the half acre of land under their administrative office building.
(Stip. Ex. 1; Trial Tr. at 19-20.)
Taxpayers also claimed that adjacent to the county road on the southeast portion
of the property, there was a twelve (12) acre area where stone was
piled after it was taken out of the quarry pit. (Stip. Ex.
1; Trial Tr. at 21.) Taxpayers asserted that this area is not
used to store machines or equipment but is simply a place to pile
the stone until the trucks come in to pick it up. (Stip.
Ex. 1; Trial Tr. at 21.) Taxpayers contend that the twelve (12)
acres should be therefore be classified as usuable undeveloped.
Furthermore, Taxpayers explained that 4.06 acres is under the railroad right of way
and that 0.6 acres of the property is under the road right of
way. (Stip. Ex. 1; Trial Tr. at 16.) Thus, the Taxpayers
argue that the 4.12 acres should be valued at zero, as they exercise
no control over that property. (Stip. Ex. 1; Trial Tr. at 17.)
Finally, the Taxpayers argued that the balance of the property (62.88 acres) should
be classified as unusable undeveloped because it is the immediate area surrounding the
floating acre. Specifically, the Taxpayers asserted that about forty-two (42) acres is
the bottom of the pit, and another twenty (20) acres is where they
dump aggregate waste. (Trial Tr. at 21-22.) According to the Taxpayers, these
twenty (20) acres cannot be farmed or developed.
In its final determination, the State Board explained:
After inspecting the property, reviewing the property record card, Petitioners [Stipulated Exhibit 3]
. . . it is determined that the land classifications are correct.
Petitioners [Stipulated Exhibit 3] is from the January 1991 Assessors Conference Questions and
Answers. This petition is for 1995. The petitioner failed to submit
evidence to substantiate the assessment is incorrect. Without specific evidence to show
an error exist [sic] it is determined no change in the land assessment
is made as a result of this issue.
(Stip. Ex. 2 at 33.) Thus, the State Board denied the Taxpayers
appeal on a falling domino theory: 1) Taxpayers submitted an outdated State Board
document to support their claim; 2) because the document was outdated, it would
not be considered; 3) the Taxpayers therefore failed to submit evidence to substantiate
their claim. There is, however, a flaw in the State Boards reasoning.
The State Board argues that because the document was not applicable, there was
no evidence to support the Taxpayers claims. What the State Board fails
to recognize is that while there may have not been any written evidence,
there was enough detailed testimony to present a prima facie showing that the
land was incorrectly classified. See Western Sel. Prop. v. State Bd. of
Tax Commrs, 639 N.E.2d 1068, 1074 (Ind. Tax Ct. 1994).
Once the Taxpayers made their prima facie showing that their land classifications were
inconsistent with Indiana Administrative Code, title 50, 2.2-4-1, it was incumbent on the
State Board to rebut the Taxpayers evidence. See id. Instead, the
State Board simply rejected the testimonial evidence because it was not supported by
See footnote This is not a sufficient rebuttal.
Indeed, when a taxpayer offers probative evidence, that evidence must be dealt with
in some meaningful manner. Clark, 694 N.E.2d at 1235. By not
rebutting the Taxpayers evidence, the State Board failed to deal with it in
a meaningful manner. This Court will not uphold a State Board decision
rejecting Taxpayers evidence when the State Board fails to make any findings that
it is inaccurate or unreliable. See Canal Square Ltd. Ptrs. v. State
Bd. of Tax Commrs, 694 N.E.2d 801, 807 (Ind. Tax Ct. 1998) (citations
For the foregoing reasons, this Court finds the State Boards final determination is
invalid. Accordingly, the assessment is REVERSED and REMANDED to the State Board
to reclassify the Taxpayers land consistent with the testimonial evidence presented by the
Taxpayers at the administrative hearing.
The Taxpayers roadway land was assigned an assessed value of zero.
(Stip. Ex. 4.)
Footnote: Indiana Evidence Rule 408 provides in pertinent part:
Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting
or offering or promising to accept a valuable consideration in compromising or attempting
to compromise a claim, which was disputed as to either validity or amount,
is not admissible to prove liability for or invalidity of the claim or
its amount. Evidence of conduct or statements made in compromise negotiations is
likewise not admissible. This rule does not require exclusion when the evidence
is offered for another purpose, such as proving bias or prejudice of a
witness, negating a contention of undue delay, or proving an effort to obstruct
a criminal investigation or prosecution. Compromise negotiations encompass alternative dispute resolution.
Footnote: Nevertheless, when, as in Gutwein, the parties have agreed upon or stipulated
to an assessment, those stipulations are eventually documented on the appropriate property record
card. Property record cards are a matter of public record, and may
be used by subsequent taxpayers in assessment challenges to indicate similarities between properties.
It is the State Boards duty to ensure that similar properties are
Alcoils, Inc. v. State Bd. of Tax Commrs, 727 N.E.2d
795, 801 (Ind. Tax Ct. 2000).
This document was from the January 1991 Assessors Conference Questions and Answers.
(Petrs Petition for Review of Final Assessment Determination at 2.)
The State Board subsequently sent another document to the Taxpayers that stated:
We [the State Board] use the concept of assigning a floating acre
to the parcel where the actual shovel is located. This floating acre
plus the acreage used for roads, maintenance facilities, scale areas, crushing facilities, loading
facilities, and administrative offices are considered industrial primary acreage. . . .
(Stip. Ex. 6.)
At trial, the State Board hearing officer testified:
Q: So, if Mr. Boehning told you, Heres what the breakdown on
acreage is, . . . then you basically disregarded his testimony, didnt you?
A: . . . He testified, but he gave no actual outlines on
the map or
no legal descriptions, or he could have provided a record of the
right of way.
Q: If he gave you information as to what the acreages were
for the various things, various attributes and types of property . . .
he gave you specific numbers, then you either . . . would use
his testimony or you would disregard it, wouldnt you? And
in this case, you chose to disregard his testimony.
A: I considered it had very little weight . . . .
(Trial Tr. at 72.)