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JOSEPH E. COSTANZA         Attorney General of Indiana KEVIN E. STEELE         Indianapolis, Indiana
BURKE COSTANZA & CUPPY                      
Merrillville, Indiana                     ANGELA L. MANSFIELD
                            Deputy Attorney General
                            Indianapolis, Indiana

JOHN S. MATONOVICH et al.,                                        )    
             Petitioners,                                              )
v.                                                                     ) Cause No. 49T10-9809-TA-00111
STATE BOARD OF TAX COMMISSIONERS,                                      )                                             
                         Respondent.                                   )


October 22, 1998


    John Matonovich and other township assessors (hereinafter referred to collectively as Petitioners) in Lake County have filed an original tax appeal challenging an order of the State Board of Tax Commissioners (State Board) requiring a

reassessment of all real property in Lake County.See footnote 1 1 The Petitioners have moved the Court to enjoin portions of that order pending the outcome of this original tax appeal.

    A division of the State Board, the Division of Tax ReviewSee footnote 2 2 studied the need to reassess real property in Lake County. In its study, the Division of Tax Review concluded that there was a need to conduct a reassessment of all real property in Lake County due to an endemic problem with the uniformity of assessments within classes of property. On April 1, 1998, in response to the study, the State Board issued a Reassessment Resolution and Order. In the Reassessment Resolution and Order, the State Board found sufficient cause to hold hearings regarding the reassessment of all real property in Lake County.See footnote 3 3 On May 19 and 20, 1998, the State Board conducted those hearings.
    On August 14, 1998, after considering the evidence presented at the hearings as well as supplemental evidence, the State Board ordered the reassessment of all real property in Lake County as of March 1, 2000 pursuant to the State Board's authority under section 6-1.1-4-9. In its order, the State Board stated that it would hire a contractor to conduct and oversee the reassessment. The contractor would be paid out of the Lake County Reassessment Fund.See footnote 4 4 In addition, the State Board ordered Lake

County assessing officials to submit a statement detailing what assistance they could make available to the contractor hired by the State Board.
    On September 11, 1998, the Petitioners filed this original tax appeal challenging the State Board's reassessment order. Although the Petitioners do not dispute that the State Board has the authority to order a reassessment of all real property within Lake County, the Petitioners contend that portions of the State Board's reassessment order are unlawful. Specifically, the Petitioners contend that the State Board's order will unlawfully infringe upon the Petitioners' duty to conduct the reassessment specified in the reassessment order. The Petitioners also contend that to the extent that the order requires that the data collection for the reassessment will be used for the March 1, 2001 state-wide general reassessment,See footnote 5 5 the order is unlawful because it will infringe upon the Petitioners' duty to conduct the 2001 general reassessment. The Petitioners have moved this Court to enjoin the State Board from hiring a contractor to conduct and oversee the Lake County reassessment pending the outcome of this original tax appeal. On October 7, 1998, this Court held a hearing on the Petitioners' motion, and now the Court issues its decision.

    The Petitioners have moved this Court for injunctive relief pursuant to Ind. Code § 33-3-5-11 (1998) and Trial Rule 65. As the party seeking the extraordinary remedy of a preliminary injunction, the Petitioners bear the burden of proving entitlement to that remedy. See Keller v. Department of State Revenue, 530 N.E.2d 787, 790 (Ind. Tax Ct.

    At the outset of its analysis, the Court notes that the Petitioners are not seeking to enjoin the collection of a tax. This puts the Petitioners' motion outside of the ambit of section 33-3-5-11 because that statutory provision on its face only applies to petitions to enjoin the collection of a tax. However, the Court holds that its power to enjoin the actions of parties before the Court is not limited by section 33-3-5-11. In Sproles v. State, 672 N.E.2d 1353, 1359 (Ind. 1996), the Indiana Supreme Court explained that section 33-3-5-11 was enacted in order to allow the Indiana Tax Court to enjoin the collection of taxes, an authority specifically withheld from circuit and superior courts before the creation of the Indiana Tax Court. See id. It therefore follows that the General Assembly did not enact section 33-3-5-11 in order to limit this Court's authority to issue injunctions when necessary to afford the parties before the Court complete and meaningful relief.
    Although the authority for the issuance of a preliminary injunction in this instance does not emanate from section 33-3-5-11, but rather the Court's inherent authority, the Court finds the general principles animating that statutory provision helpful in its analysis of this case. Section 33-3-5-11 provides in pertinent part:
    [T]he tax court may enjoin the collection of a tax pending the original tax appeal,
    if the tax court finds that:

    (1) the issues raised by the original tax appeal are substantial;
    (2) the petitioner has a reasonable opportunity to prevail in the original tax     appeal; and

    (3) the equitable considerations favoring enjoining the collection of the tax

    outweigh the state's interests in collecting the tax pending the original tax     appeal.

    Obviously, the Court, in its consideration of the instant motion, must modify the third statutory prerequisite to some extent. In previous decisions, this Court has drawn from the general body of case law concerning preliminary injunctions when evaluating this statutory prerequisite. See Keller, 530 N.E.2d at 791; American Trucking Ass'ns v. State, 512 N.E.2d 920, 923 (Ind. Tax Ct. 1987). Under that body of case law, a court must consider whether the Petitioners will suffer irreparable harm if the injunction is not granted, balance the harm to the Petitioners if the petition is not granted with the harm to the respondent if the relief is granted, determine whether the public interest will be adversely affected, and determine whether the Petitioners can post sufficient security to cover costs and damages that the respondent may suffer if the respondent is wrongfully enjoined. See American Trucking Ass'ns, 512 N.E.2d at 923.
    However, because this case involves a dispute between public servants acting in their official capacities,See footnote 6 6 the Court finds that the public interest is the only relevant equitable consideration. Any interest that the parties have in these proceedings is for the benefit of the public they represent. Accordingly, the Court will evaluate any arguments made by the parties in that light.

The Substantiality of the Issues
    This case involves how the reassessment of all real property in Lake County will

be done and raises significant issues concerning the authority of the State Board and the autonomy of local elected officials. This is no trivial matter; this case will affect all real property owners in Lake County. The State Board appears to concede as much. At the hearing on the Petitioners' motion, the State Board did not argue that the issues raised by this original tax appeal were not substantial. For these reasons, the Court finds that the first prerequisite for the issuance of a preliminary injunction has been met.

The Likelihood of Success on the Merits
    This Court has defined a “reasonable opportunity to prevail” as a “tolerable, moderate, rational, honest, or equitable chance of success on the merits.” Video Tape Exch. Coop of Am., Inc. v. Department of State Revenue, 512 N.E.2d 476, 477 (Ind. Tax Ct. 1986). This Court has not had the opportunity to evaluate this standard in the context of an original tax appeal from a final determination of the State Board.See footnote 7 7 In cases involving a State Board final determination, a litigant will have to demonstrate that the State Board's decision is unsupported by substantial evidence, is arbitrary or capricious, constitutes an abuse of discretion, or exceeds statutory authority in order to succeed. See King Industrial Corp. v. State Bd. of Tax Comm'rs, 699 N.E.2d 338, 339 (Ind. Tax Ct. 1998). Therefore, the Petitioners will have to show a reasonable

likelihood of making that demonstration because the Petitioners cannot succeed on the merits without meeting the standard under which this Court may reverse final determinations of the State Board.
    The Petitioners contend that the State Board does not have the statutory authority to hire a contractor to conduct the Lake County reassessment because the State Board itself does not have the authority to conduct the assessment. In the Petitioners' view, this makes those portions of the State Board's order providing for the hiring of a contractor to conduct that reassessment invalid. In response, the State Board argues that because it has been given wide latitude in determining when to order a reassessment, it has the discretion to choose the means by which a reassessment is to be accomplished. According to the State Board, this includes the authority to conduct the reassessment itself or select and employ persons to conduct the reassessment on its behalf.
     Under section 6-1.1-4-9, the State Board has the unquestioned authority to order a county-wide reassessment. The State Board also has the authority to supervise such a reassessment.See footnote 8 8 See Ind. Code § 6-1.1-35-1(3) (1998) (State Board has duty to “see that all property assessments are made in manner provided by law.”); see also Bielski v. Zorn, 627 N.E.2d 880, 886 (Ind. Tax Ct. 1994); cf. id. § 6-1.1-4-31(a) (State Board required to check conduct of general reassessment). The question presented by this case is whether the authority to order a reassessment and the

authority to supervise that reassessment necessarily imply the authority to conduct that reassessment. From the Court's examination of the specific statutory provisions relied on by the parties, as well as the general tenor of the laws governing the assessment of real property, the Court concludes that the answer to this question is probably negative.     The plain language of section 6-1.1-4-9See footnote 9 9 speaks in terms of the State Board ordering a reassessment, not conducting a reassessment. This strongly implies that the State Board is not the body charged with actually conducting that reassessment. In general, someone does not order himself to do something. Rather, an order is given to others to do something. In addition, the fact that section 6-1.1-4-9 requires the State Board to specify in its order the time in which the reassessment must be completed strongly suggests that the reassessment is conducted by someone other than the State Board.
    Other statutory provisions inform the Court's analysis as well. Under Ind. Code § 36-6-5-3 (1998), township assessors are charged with duty of conducting assessments. This strongly suggests that township assessors are to conduct reassessments ordered by the State Board pursuant to section 6-1.1-4-9. Moreover, under Ind. Code § 6-1.1-4-29(b) (1998), the State Board is required to estimate the cost of conducting a reassessment. Under subsection 6-1.1-4-29(b), the local assessing officials, the county assessor, the county property tax board of appeals, and the county auditor may not spend more than the amount estimated by the State Board. Once

again, this strongly implies that the local officials are the ones engaged in the reassessment.
    The State Board invites this Court's attention to Ind. Code § 6-1.1-35-13 (1998). The Court finds the State Board's invocation of that statutory provision to support its position unpersuasive. Under section 6-1.1-35-13, the State Board is empowered to “prepare a report, plat, or other property tax record” if a local official does not make a report required by the laws governing assessments or fails to deliver a plat or property tax record to an appropriate official or board. It is difficult to construe the plain language of this statutory provision as allowing the State Board to conduct a reassessment. A reassessment is not a report, plat, or property tax record. See Peele v. Gillespie, 658 N.E.2d 954, 958 (Ind. Ct. App. 1995) (In construing statute, it is just as important to recognize what statute does not say as it is to recognize what it does say.), trans. denied. In addition, the statutory provision predicates the State Board's ability to act on the failure of an assessing official to act. There is no allegation of a failure to act on the part of Lake County assessing officials in this case.
    Moreover, construing this statutory provision to allow the State Board to conduct a reassessment would have palpably absurd results. Under subsection 6-1.1-35-13(b), a local official who fails to prepare a report or to deliver a plat or other property tax record can be personally liable for the amount it cost to prepare the report, plat, or property tax record. If the State Board is authorized to conduct a reassessment under this statutory provision (i.e., because the terms report, plat, or other property tax record include a reassessment), theoretically, at least, an official could be held personally

liable for the entire cost of the reassessment. If the General Assembly intended this result, it would have said so in much clearer terms.
    In addition to these specific statutory provisions, the general tenor of Indiana's property tax assessment system also militates against the State Board's position in this case. In general, assessments are done locally, and the State Board, in general, does not determine the assessed value of property, except in property tax appeals. Therefore, an exception to this general rule is likely to be explicit.See footnote 10 10 The State Board has not identified any statutory provision explicitly allowing it to conduct a reassessment. Accordingly, it is likely that the general rule that assessments are done locally will apply to the Lake County reassessment.
    Based on this preliminary analysis of the relevant law, the Court concludes that the Petitioners have demonstrated a reasonable likelihood of success on the merits of their contention that the State Board is without the statutory authority to conduct the Lake County reassessment and therefore cannot delegate this task to a contractor. Accordingly, the Court holds that the second prerequisite for the issuance of a preliminary injunction has been met.
    In reaching this conclusion, the Court is not unaware of the State Board's finding

that “[t]he weight of the testimony and evidence reflects a widespread recognition that an assessment problem exists in Lake County.” (State Bd. Reassessment Ord. ¶ 14). In response to this problem, the State Board has ordered a reassessment of Lake County real property.See footnote 11 11 Any reading of the reassessment order makes it quite clear that the State Board believes that it must play a large role in the conduct of this reassessment because otherwise the reassessment will not be done in accordance with the law. The Court recognizes the State Board's concern.
    However, the fact that a problem exists (even one of constitutional magnitude) does not allow an agency to act in a manner inconsistent with the law. If the State Board is without the power to conduct the Lake County reassessment, as appears likely from the Court's preliminary examination of the relevant law, nothing that happens in Lake County can confer that power. The powers of the State Board are granted by the General Assembly, not the exigencies of any particular situation.

Equitable Considerations
    As stated earlier, the Court will focus its inquiry on whether the public interest is served by granting the preliminary injunction in this case. The contractor charged with conducting the reassessment will be paid out of the Lake County reassessment fund. If the State Board does not have the authority to conduct a reassessment, then this expenditure will be a waste of the hard-earned tax dollars of Lake County taxpayers.

The Court, in good conscience, cannot countenance this possibility.
    On the other hand, the Court is aware that the public interest is served by the reassessment ordered by the State Board. Naturally, any delay in the reassessment caused by these proceedings is prejudicial to the public interest. However, the Court is confident in its ability to issue a decision on the merits in this case in a timely manner because the issues are primarily legal. Consequently, any delay caused by these proceedings will be slight, and, when balanced against the possibility of a significant waste of tax dollars, the slight delay is of lesser importance. Accordingly, the Court finds that granting a preliminary injunction is in the public interest.

    For the reasons stated above, the Court finds that the Petitioners have met the prerequisites for the issuance of a preliminary injunction. It is therefore ADJUDGED, ORDERED, AND DECREED that the State Board is ENJOINED until further order from the Court from contracting with any entity for the purpose of allowing that entity to conduct the Lake County reassessment.

                             Thomas G. Fisher, Judge
                            Indiana Tax Court


Kathryn D. Schmidt
Joseph E. Constanza
Kevin E. Steele
Burke Costanza & Cuppy
8585 Broadway, Suite 600
Merrillville, IN 46410

Jeffrey A. Modisett
Attorney General of Indiana
By: Angela L. Mansfield
Deputy Attorney General
Indiana Government Center South, Fifth Floor
402 West Washington Street
Indianapolis, IN 46204-2770

Footnote: 1    1See Ind. Code § 6-1.1-4-9 (1998).
Footnote: 2    2See Ind. Code § 6-1.1-33-1 (1998).
Footnote: 3    3See Ind. Code § 6-1.1-4-10 (1998).
Footnote: 4    4See Ind. Code § 6-1.1-4-29 (1998).
Footnote: 5    5See Ind. Code § 6-1.1-4-4 (1998).
Footnote: 6    6The Petitioners have brought suit in their official capacities as well as their individual capacities. However, the relief they seek in this original tax appeal would not inure to their private interest.
Footnote: 7    7In all likelihood, the lack of court decisions dealing with preliminary injunctions forbidding the collection of property tax results from a statutory provision dealing with situations where taxpayers challenge property tax assessments. Ind. Code § 6-1.1-15- 10 (1998) stays any tax resulting from an assessment or increase in assessment until the assessment or increase in assessment is finally determined. See generally Kent Co. v. State Bd. of Tax Comm'rs, 685 N.E.2d 1156 (Ind. Tax Ct. 1997), review denied.
Footnote: 8    8Because the State Board has the authority to supervise the Lake County reassessment, the State Board also has the authority to select and employ persons to supervise that reassessment on the State Board's behalf.
Footnote: 9    9The Court notes that the State Board has not issued any regulations interpreting this statutory provision.
Footnote: 10    10One example is found under Ind. Code § 6-1.1-14-10 (1998). Under section 6- 1.1-14-10, the State Board is empowered to review an assessment or reassessment of any property. See Joyce Sportswear Co. v. State Bd. of Tax Comm'rs, 684 N.E.2d 1189, 1194 (Ind. Tax Ct. 1997), appeal dismissed; Bielski, 627 N.E.2d at 885-86 (discussing purpose behind State Board's ability to review property assessments under section 6-1.1-14-10). The Court expresses no view concerning whether the State Board could accomplish a county-wide reassessment under this statutory provision.     
Footnote: 11    11As Indiana's assessing expert, the State Board is in a unique position to determine whether the reassessment is in fact warranted, and it is not the place of this Court to second-guess the State Board's decision to order a reassessment in Lake County, absent the clearest abuse of discretion.

Converted by Andrew Scriven