148	                         November 9, 2017	                            No. 60

               IN THE SUPREME COURT OF THE
                     STATE OF OREGON

                     Barbara ELLISON,
                    Plaintiff-Respondent,
                               v.
                DEPARTMENT OF REVENUE,
                      State of Oregon,
                    Defendant-Appellant,
                              and
              CLACKAMAS COUNTY ASSESSOR,
                         Defendant.
                   (TC 5177; SC S064092)

  On appeal from a supplemental money judgment of the
Oregon Tax Court.
    Henry C. Breithaupt, Judge.
    Argued and submitted June 14, 2017.
   Denise G. Fjordbeck, Assistant Attorney General, Salem,
argued the cause and filed the brief for appellant Department
of Revenue. Also on the brief were Ellen F. Rosenblum,
Attorney General, Benjamin Gutman, Solicitor General, and
Daniel Paul, Assistant Attorney General.
   Jack L. Orchard, Ball Janik, LLP, Portland, argued the
cause for respondent Barbara Ellison. Bruce H. Cahn and
Jack L. Orchard filed the brief.
   Before Balmer, Chief Justice, and Kistler, Walters, Landau,
Nakamoto, and Flynn, Justices, and Brewer, Senior Justice
pro tempore.*
    BREWER, S. J.
   The supplemental money judgment of the Tax Court is
vacated. The matter is remanded to the Tax Court for fur-
ther proceedings.

______________
	  *  Duncan, J., did not participate in the consideration or decision of this case.
Cite as 362 Or 148 (2017)	149

     Case Summary: In an underlying property tax appeal, the Tax Court rejected
a request by the Department of Revenue (department) and the county assessor
to increase the real market value of taxpayer’s property, and the court later
awarded taxpayer attorney fees against the department under ORS 305.490(4)
(a) (authorizing discretionary award of attorney fees in ad valorem taxation cases
if “the court finds in favor of the taxpayer”). The department appealed the attor-
ney fee award only. Held: (1) In ORS 305.490(4)(a), the words “in favor of the
taxpayer” include the situation in which both parties request a change in valua-
tion on appeal, and the taxpayer persuades the court to reject the department’s
request for an increase, even though the taxpayer was unsuccessful in her own
request for a reduction in value; (2) the court here found “in favor of the taxpayer”
and had discretion to award attorney fees under ORS 305.490(4)(a); and (3) in
reviewing the Tax Court’s exercise of that discretion, one of the factors was not
supported by substantial evidence in the record.
   The supplemental money judgment of the Tax Court is vacated. The matter is
remanded to the Tax Court for further proceedings.
150	                                               Ellison v. Dept. of Rev.

	          BREWER, S. J.
	        In the underlying property tax appeal, the Tax Court
rejected a request by the Department of Revenue (depart-
ment) and the county assessor to increase the real market
value of taxpayer’s property, and the court later awarded
taxpayer attorney fees against the department under ORS
305.490(4)(a) (authorizing discretionary award of attorney
fees in ad valorem taxation cases if “the court finds in favor
of the taxpayer”). The department appeals the attorney fee
award only. As we will explain, even though the Tax Court
also rejected the taxpayer’s request for a reduction in real
market value, we conclude that the legal prerequisite for a
discretionary attorney fee award under that statute—that
the court found “in favor of the taxpayer”—was met. We also
conclude that the Tax Court did not err in applying most
of the factors on which it relied in making the fee award.
However, we conclude that the court’s use of one factor was
erroneous, thus bringing into question the court’s overall
exercise of discretion. Accordingly, we vacate the attorney
fee award and remand for the court to exercise its discretion
without considering that factor.
                              I. OVERVIEW
A.  The Underlying Appeal
	        Even though this case involves only the propriety
of a discretionary award of attorney fees, the Tax Court’s
decision on the merits in the underlying property tax appeal
provides the necessary context for our analysis. At issue in
that appeal was the real market value for tax year 2011-12
of two tax lots (the property) owned by taxpayer. The tax lots
are part of a high-end horse breeding and training facility
and an associated residence. Taxpayer substantially com-
pleted construction before January of 2011, and thus the
value for that year would establish an exception value for
the property.1
	       The county assessor originally found a real mar-
ket value for the two tax lots, both land and improvements,
	1
       As discussed in greater detail below, an exception value permissibly exceeds
otherwise applicable constitutional limits on the amount by which property val-
ues can periodically increase for tax purposes.
Cite as 362 Or 148 (2017)	151

of $9,279,571. Taxpayer appealed that value to the county
Board of Property Tax Appeals (BOPTA). BOPTA affirmed
without changing that value.
	        Taxpayer next appealed to the Magistrate Division
of the Oregon Tax Court. Before the magistrate, the depart-
ment and assessor asserted a real market value of $18,275,412.
Taxpayer, by contrast, appears to have asserted a much lower
real market value than that affirmed by BOPTA (although
the exact amount does not appear in the record). The magis-
trate accepted neither value, nor was she able to determine
the correct real market value from the appraisals provided.
She therefore affirmed BOPTA’s determination of real mar-
ket value.
	         Taxpayer then appealed to the Regular Division of
the Tax Court. Her complaint asserted a real market value
of less than $4.8 million,2 though by the time of trial she had
revised that upward to $8.8 million. In contrast, in their
answer to taxpayer’s complaint in the Regular Division, the
department and county assessor asserted a value of almost
$20 million, which was slightly higher even than the amount
they had originally asserted before the magistrate.3
	        At trial, the parties offered appraisals to support
their respective valuations. Both appraisers agreed that the
cost approach was the best way to determine real market
value. Their primary disagreement concerned the ques-
tion of external obsolescence and its effect, if any, on the
value of the property. In asserting a lower value, taxpayer’s
appraiser, Gilmore, concluded that there was significant
external obsolescence. In support of the department’s proposed

	2
       That was the value asserted for the two tax lots at issue here, plus six other
tax lots. Taxpayer would later agree that only two lots were at issue in the appeal.
	3
       The department asserted that value in its answer, but it did not separately
plead a counterclaim. In its decision on the merits, the Tax Court acknowledged
its prior holding that counterclaims have no “statutory validity” in the Tax Court,
but nevertheless concluded that ORS 305.412 permits a party to request a value
“above or below that determined in prior proceedings.” Ellison v. Clackamas
County Assessor, 22 OTR 201, 202 n 1 (2015). The parties do not dispute the Tax
Court’s understanding of ORS 305.412. Nor do they challenge that court’s prior
decision addressing counterclaims. See Village at Main Street Phase II, LLC II v.
Dept. of Rev., 360 Or 738, 745 n 4, 387 P3d 374 (2016) (noting Tax Court’s hold-
ing regarding counterclaims, but without determining correctness of holding).
Regardless, the county assessor did plead a counterclaim for the higher value.
152	                                               Ellison v. Dept. of Rev.

higher value, its appraiser, Healy, asserted that there was
no external obsolescence at all.4 Before turning to a more
detailed review of the two appraisals, it is useful to provide
an overview of several property valuation principles that
were factors in the underlying appeal.
B.  Valuation Principles
	         The starting point for calculating property taxes
is the property’s real market value. Dept. of Rev. v. River’s
Edge Investments, LLC, 359 Or 822, 825, 377 P3d 540
(2016). For that purpose, “real market value” is defined in
essence to be what a buyer would pay a seller in an arm’s
length transaction on the assessment date. Or Const, Art
XI, § 11(11)(a)(A); 5 ORS 308.205(1).6 To determine the real
market value of property, appraisers use three approaches:
the cost approach, the income approach, and the comparable
sales approach. OAR 150-308.205-(A)(2)(a). The approaches
are named for the types of indicators that the appraiser
uses to estimate the value that a purchaser in the market
would pay for the property. The cost approach considers “the
cost of constructing a substitute property that provides the
same utility as the subject property at its highest and best
use”; the income approach relies on the income stream that
the property generates; and the comparable sales approach
examines the prices that buyers have paid for similar prop-
erties. See Hewlett-Packard Co. v. Benton County Assessor,
357 Or 598, 603, 356 P3d 70 (2015). Appraisers must con-
sider each approach, but they need not use them all. See,
e.g., River’s Edge, 359 Or at 827. An appraiser may well con-
clude that one of the three approaches represents the best

	4
        Strictly speaking, the county assessor was the party who offered Healy’s
testimony. At trial, however, the department effectively adopted Healy’s testi-
mony, declining to offer its own appraisal. To avoid unnecessarily confusing ter-
minology, we will sometimes refer to Healy as “the department’s appraiser.”
	5
        That subsection of the constitution provides:
    	     “The real market value of property shall be the amount in cash that could
    reasonably be expected to be paid by an informed buyer to an informed seller,
    each acting without compulsion in an arm’s length transaction occurring as
    of the assessment date for the tax year, as established by law.”
	6
        Unless otherwise noted, all references to the pertinent statutes and admin-
istrative rules are to the versions in effect on January 1, 2011, the assessment
date for the 2011-12 tax year. See ORS 308.007 (defining “assessment date” and
explaining relation to “tax year”).
Cite as 362 Or 148 (2017)	153

approximation for the real market value. Appraisal Institute,
The Appraisal of Real Estate 600 (12th ed 2001) (appraiser
weighs approaches “and relies most heavily on the approach
that is most appropriate to the nature of the appraisal prob-
lem”); see, e.g., Brooks Resources Corp. v. Dept. of Revenue,
286 Or 499, 505-07, 595 P2d 1358 (1979) (on facts of that
case, court concluded that income approach provided better
measure of value than cost approach).
	        Another type of property value is use value (also
known as “value in use”). Use value essentially looks to the
economic value that the property has to its current owner,
without regard to what price the property might draw in the
market. Appraisal of Real Estate at 24-25; STC Submarine,
Inc. v. Dept of Rev., 320 Or 589, 595-96, 890 P2d 1370 (1995)
(to same effect). Use value often differs from market value,
and it can be significantly higher than market value:
   “ ‘For example, a property may be designed to produce a
   special product, the patent for which is held only by the
   owner of the property. Such a property would have little
   value to any other person but could be of great value to the
   owner of the patent.’ ”
STC Submarine, 320 Or at 596 (quoting Truitt Brothers, Inc.
v. Dept. of Rev., 10 OTR 111, 114 (1985)).
	        In some cases, a property has no immediate market
value. In that circumstance, the “real market value” is the
amount that would justly compensate the owner if the prop-
erty were lost. ORS 308.205(2)(c).7 Although this court does
not appear to have directly addressed the issue, the Tax
Court has held that the just compensation standard in ORS
308.205(2)(c) is not use value; it is still market value. Truitt
Brothers, Inc. v. Dept. of Rev., 10 OTR 111, 113-15 (1985), aff’d
on other grounds, 302 Or 603, 732 P2d 497 (1987) (discussing

	7
       That statute provides:
   	     “(2)  Real market value in all cases shall be determined by methods and
   procedures in accordance with rules adopted by the Department of Revenue
   and in accordance with the following:
   	     “* * * * *
   	     “(c)  If the property has no immediate market value, its real market value
   is the amount of money that would justly compensate the owner for loss of the
   property.”
154	                                               Ellison v. Dept. of Rev.

concepts and explaining its conclusion). The department’s
rule implementing ORS 308.205(2)(c), the “especial prop-
erty” rule, comports with that understanding. It states that,
if comparable sales are not available for a property, then
“real market value” will be determined using only the cost
approach and/or the income approach. OAR 150-308.205-
(A)(3).8 In their briefing to the Tax Court, the department
and county assessor both adopted that understanding of the
statute and rule.
	       In this case, both parties used the cost approach.
In doing so, the major difference between the appraisers’
opinions was whether and to what extent the property had
external obsolescence (sometimes also called economic obso-
lescence). External obsolescence is
   “a loss in value caused by factors outside a property. It is
   often incurable. External obsolescence can be either tem-
   porary (e.g., an oversupplied market) or permanent (e.g.,
   proximity to an environmental disaster).”
Appraisal of Real Estate at 412; see J.R. Simplot Co. v. Dept.
of Rev., 321 Or 253, 260, 897 P2d 316 (1995) (same). Because
of its amorphous quality, external obsolescence has been
called a “ ‘ghostly apparition,’ ” a “ ‘spirit whose presence may
be discerned but whose intangible nature defies measure-
ment’ ”; “ ‘it confuses and chills the marketplace.’ ” Truitt
Brothers, Inc. v. Dept. of Rev., 302 Or 603, 611, 732 P2d 497
(1987) (quoting Truitt Brothers, 10 OTR at 118).
	        One final legal concept is relevant to the issues
here. The Oregon Constitution creates a limit on the value
at which real property may be assessed. Or Const, Art XI,
§ 11; see Gall v. Dept. of Rev., 343 Or 293, 295, 170 P3d 558
	8
      Specifically, that rule states:
   	 “(3)  Valuation of Especial Property: Especial property is property spe-
   cially designed, equipped, and used for a specific operation or use that is
   beneficial to only one particular user. This may occur because the especial
   property is part of a larger total operation or because of the specific nature of
   the operation or use. In either case, the improvement’s usefulness is designed
   without concern for marketability. Because a general market for the prop-
   erty does not exist, the property has no apparent immediate market value.
   Real market value must be determined by estimating just compensation for
   loss to the owner of the unit of property through either the cost or income
   approaches, whichever is applicable, or a combination of both.”
Cite as 362 Or 148 (2017)	155

(2007) (explaining). That limit is known as the maximum
assessed value. Or Const, Art XI, § 11(1)(a); Gall, 343 Or at
295. Ordinarily, a property’s maximum assessed value can
only increase by three percent per year. Or Const, Art XI,
§ 11(1)(b); ORS 308.146(1). In specified exceptional circum-
stances, however, the maximum assessed value is calculated
differently, and it can increase by more than three percent
in a particular year. See Or Const, Art XI, § 11(1)(c); ORS
308.146(3) (listing circumstances). When such an exception
applies, the result is sometimes colloquially called the
exception value. See Douglas County Assessor v. Crawford,
21 OTR 6, 7 (2012) (discussing term). One situation in which
there is an exception value is for new improvements to prop-
erty. Or Const, Art XI, § 11(1)(c)(A); ORS 308.146(3)(a). The
exception value becomes the new maximum assessed value
in future years and will otherwise be subject to the three
percent limit. See Or Const, Art XI, § 11(1)(d). For that rea-
son, the exception value has long-term implications for the
tax that may be assessed against the property.
	       With that preface, we turn to the parties’ appraisals.
C.  Appraisal Evidence
	        Taxpayer’s appraiser, Gilmore, had valued hundreds
of equine properties all over the nation. He concluded that
there was a market for the property, but it was a national
market. Based on a detailed analysis of sales of those prop-
erties, he testified that purchasers would not pay the cost
that the owner of this property had incurred in adding the
various improvements. Thus, while Gilmore used the cost
approach, he concluded that the property suffered substan-
tial external obsolescence of 50 percent. That led to his ulti-
mate value for the property of $8,800,000.
	         Healy—the department’s appraiser—had no expe-
rience with valuing agricultural business properties gener-
ally (except a few hobby farms), or with equine properties, or
with valuing especial properties; his experience was largely
limited to residential properties. In searching for compara-
ble sales, Healy referred to fewer sources than Gilmore, and
his sources were more general than Gilmore’s. Healy’s analy-
sis of the few sales that he did locate was limited to deter-
mining whether the property as a whole was comparable to
156	                                             Ellison v. Dept. of Rev.

taxpayer’s. Moreover, he did not break taxpayer’s property
down into component parts to determine if external obsoles-
cence applied to such individual improvements as fencing or
the horse arena.
	        Based in part on a decision to limit the market to
properties in Oregon, Healy concluded that the subject prop-
erty had no immediate market value: in his view, it was an
especial property under OAR 150-308.205(A)(3), and there-
fore it was subject to the just compensation standard of ORS
308.205(2)(c). Healy’s testimony showed that he believed
that the just compensation standard is different from real
market value and more akin to use value.9 Later, however,
Healy testified that his value did not depend on whether the
property was, in fact, especial.
	        Because Healy had found no market data within
the market as he defined it, he concluded that there was no
external obsolescence at all. Accordingly, Healy opined that
the just compensation value of the property would be the full
cost that taxpayer had spent improving it, without deduct-
ing anything for depreciation or external obsolescence. His
final value was $19,815,225.
D.  The Tax Court’s Decision On The Merits
	       The Tax Court ultimately rejected both appraisals,
explaining in a written opinion that it found that neither
one met the relevant burden of proof. Ellison v. Clackamas
	9
       The relevant exchange was as follows:
   	     “THE COURT:  * * * [U]nder your understanding of this statute and rule,
   do you think that the amount to justly compensate the owner for the loss of
   property is any different from the real market value of the property? * * *
   	     “* * * * *
   	     “Just from your point of view as an appraiser, would you—when you look
   at all of this, do you—would you think that there could be a just compensation
   to the owner that is greater than the real market value?
   	 “THE WITNESS:  Well, the ‘real market value’ being defined as some-
   thing derived from market sales? Because if—
   	     “THE COURT:  No. The real market value being defined as the amount
   that a willing buyer would pay a willing seller, neither acting under
   compulsion.
   	     “THE WITNESS:  Then, yes, quite possibly, there could be a big differ-
   ence, but—
   	     “THE COURT:  Okay. Thank you.”
Cite as 362 Or 148 (2017)	157

County Assessor, 22 OTR 201 (2015). In so holding, how-
ever, the Tax Court gave some credit to Gilmore’s testimony
because (1) he was experienced in appraising farm proper-
ties in general and horse properties in particular; (2) he had
correctly concluded that the relevant market was national,
not local; and (3) he had correctly opined that there should
be some substantial deductions for economic obsolescence.
22 OTR at 205. The Tax Court rejected taxpayer’s appraisal,
however, primarily because the court was not persuaded by
Gilmore’s opinion as to the amount of obsolescence. The court
also critiqued some of Gilmore’s other steps in the appraisal
process. Id. at 204-05.
	        The court more sharply rejected the department’s
appraisal. In doing so, the court raised broad questions
about Healy’s methodology.10 Accordingly, the court stated,
it “place[d] no reliance upon the conclusions” of Healy. Id.
Unpersuaded by either party’s appraisal, the court then
considered whether it could independently determine the
true value of the property under ORS 305.412. It concluded
that it could not do so. Accordingly, the court affirmed the
BOPTA value. 22 OTR at 206.
E.  Attorney Fee Award
	        In the wake of the tax court’s decision, taxpayer
sought an award of attorney fees under ORS 305.490(4)(a).
As noted, that statute gives the Tax Court discretion to
award attorney fees and expert witness fees incurred before
a magistrate and in the Regular Division if the court “finds
in favor of the taxpayer.”11 If that legal prerequisite is met,
	10
        In particular, the court noted that Healy “lacked any experience” with
appraising this type of property. 22 OTR at 206. He made only limited inquiry
into the state of the market, based on his “unsupported” view that he should only
consider the local market. Id. “Throughout his report and testimony, [Healy] * * *
repeatedly indicated a profound inability to distinguish between value in use and
market value.” Id. He also “ignore[d] taxpayer’s persuasive evidence” of substan-
tial external obsolescence. Id.
	11
         ORS 305.490 provides, in part:
     	 “(4)(a) If, in any proceeding before the tax court judge involving ad
     valorem property taxation, exemptions, special assessments or omitted prop-
     erty, the court finds in favor of the taxpayer, the court may allow the tax-
     payer, 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
158	                                              Ellison v. Dept. of Rev.

in exercising its discretion whether to award fees, the Tax
Court must consider the factors set out in ORS 20.075(1).12
If the court decides to make a discretionary award, then the
court must consider the same factors, plus the additional
factors found in subsection (2) of that statute, to determine
the amount of the award. Taxpayer sought approximately
$122,000 in attorney fees incurred litigating the case, plus
$44,000 in expert witness fees.13
	       The department objected. Among other arguments,
it asserted that ORS 305.490(4)(a) did not permit a fee
award, because the Tax Court had not found “in favor of the
taxpayer.”
	         The Tax Court awarded the full amount of fees
requested by taxpayer. The court initially held that its deci-
sion on the merits satisfied the legal prerequisite of being “in
favor of the taxpayer” under ORS 305.490(4)(a). Although the
court had ultimately rejected both appraisals and affirmed
the BOPTA value, the court concluded that its rejection of
the department’s appraisal seeking a higher value higher
amounted to a finding “in favor of the taxpayer.”
	         The Tax Court then concluded that it should exer-
cise its discretion to award attorney fees. The court initially
concluded that the department’s valuation was not objec-
tively reasonable. The court reiterated that the depart-
ment’s theory was based on a “fundamental” error of using
“value in use” rather than market value. Although Healy
had attempted to rely on the especial property definition,
the court concluded that he “could not explain or justify”
that reliance.
	       The court also concluded that the department
persistently had pursued its aggressive and unreasonable

     	    “(B)  Reasonable expenses as determined by the court. Expenses include
     fees of experts incurred by the individual taxpayer in preparing for and con-
     ducting the proceeding before the tax court judge and the prior proceeding in
     the matter, if any, before the magistrate.”
	12
         The text of that statute is set out below.
	13
        That amount was based on taxpayer’s estimate that 75 percent of her
attorney’s time was spent on defending against the department and county asses-
sor’s request for an increase in valuation of the property, rather than on her own
request for a reduction in valuation.
Cite as 362 Or 148 (2017)	159

valuation by repeatedly seeking a valuation of more than
twice what BOPTA had found. Moreover, the court noted,
in light of the constitutional requirements for determining
maximum assessed value, the determination here would
have affected taxpayer’s property taxes for years to come, if
not perpetually.
	        The court added that the department’s aggressive
and unreasonable valuation had made it necessary for tax-
payer to appeal to the Regular Division in the first place—
“to protect against” the department’s position “that the
property had been grossly undervalued by BOPTA.” In the
court’s view, the department’s valuation also likely had made
settlement impossible. Finally, the court concluded that an
award of fees was needed to deter “the type of claims made
by [the department and county] and then so inadequately
supported.”
                      II. ANALYSIS
	        As noted, we ultimately review the Tax Court’s deci-
sion to award fees for abuse of discretion. ORS 20.075(3).
However, such an exercise of discretion can involve predi-
cate factual and legal determinations. See Oakmont, LLC
v. Dept. of Rev., 359 Or 779, 789, 377 P3d 523 (2016). For
predicate legal questions, we review for errors of law. ORS
305.445. For predicate factual issues, we review for “lack
of substantial evidence in the record to support the tax
court’s decision or order.” Id. Because this appeal requires
us to consider whether the Tax Court’s underlying valuation
decision supported the award of fees, and because neither
party has challenged the merits of that decision, we assume
for present purposes that the Tax Court’s decision correctly
resolved the underlying legal and factual issues regarding
the valuation.
A.  The Tax Court Ruled “in Favor of the Taxpayer” Under
    ORS 305.490(4)(a)
	      We begin with the legal question whether the Tax
Court had authority to make an attorney fee award under
ORS 305.490(4)(a), which, as noted, permits an award if the
Tax Court has found “in favor of the taxpayer.” The depart-
ment asserts that the Tax Court’s decision on the merits did
160	                                    Ellison v. Dept. of Rev.

not meet that criterion, an argument that (if accepted) would
be dispositive. Accordingly, we address that issue first.
	        In construing ORS 305.490(4)(a), we consider its
text in context, giving any pertinent legislative history such
weight as is appropriate. See State v. Gaines, 346 Or 160,
171-72, 206 P3d 1042 (2009). Again, that statute provides,
in part:
   	 “If, in any proceeding before the tax court judge involv-
   ing ad valorem property taxation, exemptions, special
   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
   	 “(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.”
	        The department argues that “ORS 305.490(4) does
not authorize an award of attorney fees and costs when a
taxpayer appeals to the Tax Court but obtains no reduc-
tion in tax assessment.” For the reasons explained below,
we reject that argument in the circumstances present here,
where both parties on appeal requested a change in tax
assessment, and the Tax Court rejected both requests.
	        Beginning with the text of the statute, we note that
the meaning of the phrase “in favor of the taxpayer” is not
self-evident. The phrase implies that the court must make
a relative determination, in which it determines favorabil-
ity by comparing the court’s decision on the merits to some
standard. The statutory text alone, however, does not explic-
itly identify that standard. One plausible textual reading
would determine favorability by comparing the Tax Court’s
decision to the taxpayer’s request for affirmative relief on
appeal. That reading is narrow; under it, a finding would
be in favor of the taxpayer only if the taxpayer sought and
obtained at least some affirmative relief from the decision
of the lower tribunal. That is the interpretation advanced
Cite as 362 Or 148 (2017)	161

by the department. That narrow definition is not met here:
Taxpayer did not succeed in having the BOPTA value
reduced on appeal.
	        Another plausible reading, however, understands
“in favor of” more broadly. That reading is not limited to the
situation in which a taxpayer succeeds in obtaining affirma-
tive relief on appeal (i.e., the taxpayer persuades the court
to reduce the BOPTA value). Instead, the broader reading
also could include the situation where both parties request
a change in valuation on appeal, and—even though unsuc-
cessful in her own request for a reduction in value—the tax-
payer persuades the court to reject the department’s request
for an increase. In that situation, the court’s rejection of the
department’s request for a valuation increase would consti-
tute a finding in favor of the taxpayer with respect to that
request. That reading reflects taxpayer’s position here.
	        With those competing views in mind, several related
principles inform our analysis. First, the Tax Court reviews
the valuation decisions of lower tribunals de novo. See ORS
305.425(1) (“All proceedings before the judge of the tax court
shall be original, independent proceedings and shall be tried
without a jury and de novo.”). Thus, the proper benchmark
for comparison of the outcome before the Tax Court in this
case was the BOPTA valuation decision, and the court owed
no deference to that valuation decision.
	        Second, when a party appeals the real market value
of one or more of the components of a property tax account,
any other party to the appeal also may challenge that value.
Under ORS 305.287 (2011):
    	 “Whenever a party appeals the real market value of one
    or more components of a property tax account, any other
    party to the appeal may seek a determination from the
    body or tribunal of the total real market value of the prop-
    erty tax account, the real market value of any or all of the
    other components of the account, or both.”14
	14
        Although that statute was adopted after January 1, 2011, it was in effect
and applied to taxpayer’s appeals to the Magistrate Division and Regular
Division. See Village at Main Street Phase II v. Dept. of Rev., 356 Or 164,
170, 182-85, 339 P3d 428 (2014) (holding that that statute applied to appeals
filed in either Magistrate or Regular Divisions after statute’s effective date,
September 29, 2011).
162	                                              Ellison v. Dept. of Rev.

That statute thus permitted the department to affirma-
tively request an increase in the total real market value of
taxpayer’s property when taxpayer appealed BOPTA’s valu-
ation decision.
	        Third, the Tax Court also had authority “to deter-
mine the real market value or correct valuation on the basis
of the evidence before the court, without regard to the val-
ues pleaded by the parties.” ORS 305.412. However, to avoid
unfair surprise, the Tax Court’s own case law required
it to exercise its authority under ORS 305.412 within the
range of values set out in the parties’ pleadings. See Chart
Development Corp. v. Dept. of Rev., 16 OTR 9, 14-15 (2001)
(to avoid unfair surprise and interference with department’s
ability to perform statutorily mandated supervisory func-
tion, Tax Court limits party to relief sought in pleadings);
see also Wilsonville Heights Assoc., Ltd. v. Dept. of Rev., 339
Or 462, 467 n 5, 122 P3d 499 (2005) (noting that holding).
In short, the parties’ opposing requests for relief from the
BOPTA decision effectively set outside valuation limits for
the Tax Court’s decision on appeal.
	        With that understanding, we examine the text in
context of ORS 305.490(4)(a). Although the meaning of the
phrase “in favor of the taxpayer” may be uncertain based on
its text alone, we conclude that, in context, it has a readily
understood meaning as a term of legal art that is more con-
sistent with the broader interpretation for which taxpayer
advocates. Throughout the law relating to civil actions, stat-
utes,15 court rules,16 and court opinions17 regularly describe
	15
        E.g., ORS 18.810(2) (when creditor has garnished funds by provisional
process, money will be paid back to debtor if “judgment is entered in favor of the
debtor”); ORS 105.137(2) (in certain FED actions, if the defendant appears at
the first appearance and the plaintiff does not, then “a default judgment shall be
entered in favor of the defendant dismissing the plaintiff’s complaint”).
	16
        E.g., ORCP 21 A (“If the court grants a motion to dismiss, the court may
enter judgment in favor of the moving party”; a court granting a party’s motion
to dismiss is not awarding that party affirmative relief); ORCP 47 B (“A party
against whom a claim, counterclaim, or cross-claim is asserted * * * may, at any
time, move * * * for a summary judgment in that party’s favor[.]”); ORCP 61 A(1)
(“A general verdict is that by which the jury pronounces generally upon all or any
of the issues either in favor of the plaintiff or defendant.”).
	17
        E.g., Dowell v. Oregon Mutual Ins. Co., 361 Or 62, 65, 388 P3d 1050 (2017)
(“After a hearing, the trial court granted defendant’s motion [for summary judg-
ment] and entered a judgment in defendant’s favor.”); Wels v. Hippe, 360 Or 807,
Cite as 362 Or 148 (2017)	163

a judgment as being “in favor of” a party who successfully
resists an opposing party’s request for relief, without regard
to whether the party herself obtained affirmative relief.
	        The department counters that the sole “claim” in
a property tax appeal is “a request to determine the actual
value of the property.” According to the department, the Tax
Court therefore can be deemed to have found in favor of a
taxpayer only if it determines that the value of the property,
as found by BOPTA, is too high. In support of that argu-
ment, the department relies on Kaib’s Roving R.Ph. Agency
v. Employment Dept., 338 Or 433, 111 P3d 739 (2005), where,
it asserts, this court interpreted the phrase “in favor of” in
another attorney fee statute, ORS 183.497(1)(a), to require
that a decision be “ ‘of present benefit to [the] petitioner.’ ” We
disagree with both parts of the department’s argument.
	        First, the department’s suggestion that the sole
“claim” in a property tax appeal is “a request to determine
the actual value of the property” obscures the fact that both
parties made their own requests for affirmative relief from
the BOPTA valuation. As we already have explained, if the
department had not requested an increase in the BOPTA
value on appeal, the BOPTA value effectively would have set
the upper limit for the Tax Court’s decision. However, the
department’s own request for affirmative relief on appeal
expanded the upward limit for the Tax Court’s decision
above the BOPTA value and reset that limit to the higher
value pleaded by the department. Viewed accordingly, even
though the Tax Court made a single determination of value
on appeal, it did so in the context of resolving countervail-
ing requests for affirmative relief from the BOPTA decision
that, as pertinent here, effectively functioned as separate
claims by the parties.
	        Second, although the department relies on a defi-
nition that had been proposed to the court in Kaib’s Roving,
this court did not adopt that definition. In fact, to the extent
808, 388 P3d 1103 (2017) (“Defendants assert that this instruction requires the
trial court to vacate its original judgment in favor of plaintiff and enter judg-
ment in favor of defendants[.]”); Harkness v. Platten, 359 Or 715, 717, 375 P3d
521 (2016) (“This is a legal malpractice and negligent misrepresentation case
where we review a trial court judgment directing a verdict in favor of Platten
(defendant).”).
164	                                               Ellison v. Dept. of Rev.

that the court addressed the correctness of that definition
at all, it seems to have questioned it. See id. at 442, 442 n 4
(questioning whether statutory words “in favor of” required
that “ ‘challenged order must be invalidated or altered in a
way that is of present benefit to the petitioning party’ ” as
asserted by department).
	        The department next argues that the legislative
history of ORS 305.490(4)(a) shows that (1) the legislature
equated “in favor of” with “prevailing party”; and (2) “pre-
vailing party” had a recognized meaning when that statute
was enacted, requiring that the party must have obtained
some affirmative relief.
	        The first part of that argument—that the legisla-
ture equated “in favor of” with “prevailing”—does find some
support in the legislative history.18 The statutory text at
issue was adopted in 2001 by Senate Bill 130. Or Laws 2001,
ch 287, § 1. The history of that bill several times describes
it as authorizing fees to a “prevailing taxpayer.” See Staff
Measure Summary, Senate Committee on Judiciary, SB
130, March 9, 2001; Staff Measure Summary, Senate
Committee on Revenue, SB 130, March 26, 2001; Staff
Measure Summary, House Committee on Judiciary, SB 130,
May 10, 2001.
	        The second part of the department’s argument,
however—that “prevailing party” is a term of art indicating
that a party must have received some affirmative relief—
fails. Oregon law prior to 2001 expressly recognized that
a “prevailing party” included a party who had success-
fully defended against another party’s claim. In Wilkes v.
	18
        However, we hasten to add that this court has previously refused to accept
similar legislative history suggesting that “in favor of” means “prevailing party.”
In Kaib’s Roving, the Employment Department had offered such legislative his-
tory. This court characterized that argument as “misplaced”:
    “Clearly, the legislature knew how to refer to a ‘prevailing party’ when that
    was what it intended. The fact that the legislature chose instead to refer in
    ORS 183.497(1) to a finding ‘in favor of’ a party suggests that it intended
    something different.”
338 Or at 443 (in part because the legislature had used the words “prevailing
party” elsewhere in the relevant chapter of the ORS). We need not consider
whether Kaib’s Roving is distinguishable or revisit its reasoning on that point. As
we explain in the text, even if we agreed that “in favor of” should be understood
to mean “prevailing party,” that would not aid the department’s position.
Cite as 362 Or 148 (2017)	165

Zurlinden, 328 Or 626, 984 P2d 261 (1999), this court inter-
preted ORS 20.096(5) (1999), which provided that the “pre-
vailing” party in an action on a contract is “the party in
whose favor final judgment is rendered.” The court left no
doubt that the party in whose “favor” judgment is rendered
includes a party who successfully defends against another
party’s request for affirmative relief:
   	 “Because defendants defeated plaintiff’s claim, they
   are the party in whose favor final judgment was rendered
   on plaintiff’s claim. Similarly, because plaintiff defeated
   defendants’ counterclaim, he is the party in whose favor
   final judgment was rendered on defendants’ counterclaim.
   Consequently, both are prevailing parties on the claims on
   which they successfully defended.”
328 Or at 633-34 (emphases added). In short, even if we
agreed with the department that “in favor of” should be
understood to mean “prevailing party,” that would not sup-
port the department’s position that, for the court to have
found in her favor, taxpayer must have obtained a reduction
in value from the BOPTA decision. To the contrary, Wilkes
suggests that, when the legislature enacted ORS 305.490
(4)(a), it would have understood that a final judgment is (at
least in part) in favor of a party who defeats another party’s
request for affirmative relief.
	         The legislative history of ORS 305.490(4)(a) is con-
sistent with that understanding. The history shows that the
legislature intended the attorney fee provision for property
tax appeals to parallel an existing attorney fee award provi-
sion for income and inheritance tax appeals found in another
subsection of the same statute: ORS 305.490(3)(a) (1999).19
Then, as now, that provision authorizes attorney fee awards

	19
        See, e.g, Staff Measure Summary, Senate Committee on Judiciary, SB
130, March 9, 2001 (“Current law allows the tax court judge to award attorney
fees and costs to a prevailing taxpayer in income and inheritance tax appeals,”
but no similar provision exists for property tax appeals); Audio Recording,
Senate Committee on Judiciary, SB 130, March 7, 2001, at 6:20 (testimony of
Larry Tapanen, Tapanen Group, Inc.), http://records.sos.state.or.us/webdrawer/
webdrawer.dll/webdrawer/rec/4160427/ (accessed November 2, 2017) (noting that
bill would extend to property tax appeals existing law regarding attorney fee
awards in personal income tax); id. at 18:55 (statement of Mark Nelson, Oregon
Metals Industries Council) (noting that bill would “mirror[ ] that process” that
already exists for attorney fee awards in income tax appeals).
166	                                              Ellison v. Dept. of Rev.

in income tax cases not only if the taxpayer obtained affir-
mative relief, but also if the department failed in its own
request for relief against the taxpayer. Specifically, that sub-
section authorizes a discretionary award of attorney fees if
the Tax Court:
    “grants a refund claimed by the executor or taxpayer or
    denies in part or wholly an additional assessment of taxes
    claimed by the Department of Revenue to be due from the
    estate or taxpayer[.]”
(Emphasis added.) In that respect, even though the legis-
lature did not use identical phrasing in subsections (3) and
(4)(a), the legislative history suggests that the legislature
did not intend to limit attorney fee awards to those circum-
stances in which a taxpayer obtained affirmative relief.
	        In sum, based on the text, context, and legislative
history of ORS 305.490(4)(a), we conclude that the legisla-
ture did not intend to restrict attorney fee awards in prop-
erty tax appeals to the circumstance in which a taxpayer
sought affirmative relief from the Tax Court and obtained
it. In addition, the court finds in favor of a taxpayer where
both parties request a change in valuation on appeal, and—
even though unsuccessful in her own request for a reduc-
tion in value—the taxpayer persuades the court to reject the
department’s request for an increase.20
	        With that understanding, we turn to the facts.
Before both divisions of the Tax Court, each party to
the underlying appeal requested affirmative relief from
the BOPTA valuation decision in their pleadings: In her
complaints, the taxpayer asked both divisions to reduce
the BOPTA value, while in its answers, the department
and county assessor asked both divisions to increase the
BOPTA value. By rejecting taxpayer’s request for affirma-
tive relief, both divisions of the Tax Court found in favor of
the department and county assessor on taxpayer’s request.
However, at the same time, by rejecting the department
and county assessor’s request for affirmative relief, both
	20
        Again, the department’s assertion that the sole “claim” in a property tax
appeal is “a request to determine the actual value of the property” overlooks the
fact that both parties made their own affirmative requests for relief from the
BOPTA valuation.
Cite as 362 Or 148 (2017)	167

divisions found in favor of the taxpayer on that request.
See Wilkes, 328 Or at 633-34 (where both parties success-
fully defended against other party’s claims, judgment was
in favor of both parties). Therefore, the Tax Court cor-
rectly concluded that the legal prerequisite under ORS
305.490(4)(a) for an award of attorney fees to taxpayer was
satisfied. Accordingly, we turn to the question whether the
Tax Court correctly exercised its discretion in awarding
attorney fees to taxpayer.
B.  The Tax Court Did Not Correctly Exercise its Discretion
    in Awarding Attorney Fees
	        As noted, we ultimately review the Tax Court’s
decision to award attorney fees to taxpayer for an abuse
of discretion. ORS 305.490(4)(a); ORS 20.075(3). As fur-
ther noted, insofar as the court’s exercise of discretion
was predicated on its resolution of questions of law or fact,
those determinations implicate independent standards of
review. Oakmont LLC, 359 Or at 789 (noting importance,
in review of agency exercise of discretion, of distinguish-
ing factual findings from legal conclusions); see Barbara
Parmenter Living Trust v. Lemon, 345 Or 334, 342, 194
P3d 796, 801 (2008) (review of trial court’s exercise of dis-
cretion; distinguishing between factual findings and legal
conclusions).
	        When a statute provides for a discretionary award
of attorney fees, the legislature has directed courts to con-
sider the following factors in deciding whether to award fees:
   	 “(a)  The conduct of the parties in the transactions or
   occurrences that gave rise to the litigation, including any
   conduct of a party that was reckless, willful, malicious, in
   bad faith or illegal.
   	 “(b)  The objective reasonableness of the claims and
   defenses asserted by the parties.
   	 “(c)  The extent to which an award of an attorney fee
   in the case would deter others from asserting good faith
   claims or defenses in similar cases.
   	 “(d)  The extent to which an award of an attorney fee in
   the case would deter others from asserting meritless claims
   and defenses.
168	                                    Ellison v. Dept. of Rev.

   	 “(e)  The objective reasonableness of the parties and
   the diligence of the parties and their attorneys during the
   proceedings.
   	 “(f)  The objective reasonableness of the parties and
   the diligence of the parties in pursuing settlement of the
   dispute.
   	 “(g)  The amount that the court has awarded as a pre-
   vailing party fee under ORS 20.190.
   	 “(h)  Such other factors as the court may consider
   appropriate under the circumstances of the case.”
ORS 20.075(1).
	        The Tax Court determined that several factors sup-
ported its decision to award attorney fees to taxpayer. As we
will explain, one of the factors on which the court relied—
its determination that the department’s persistent over-
valuation of the property valuation had made it necessary
for taxpayer to appeal—was not supported by evidence in
the record and, therefore, was incorrect. Thus, we remand to
the Tax Court for that court to exercise its discretion with-
out considering that erroneous factor. We nevertheless dis-
cuss other factors relied on by the court, so as to minimize
the need for a future appeal to this court.
	        First, the court concluded that the department’s
position regarding valuation was “objectively unreason-
able,” referring (presumably) to ORS 20.075(1)(b) (“objective
reasonableness of the claims and defenses”). The depart-
ment understands the Tax Court to have focused entirely
on Healy’s use of the “especial property” rule. Noting that
both appraisers used the cost approach, the department
asserts that the especial property rule was functionally
irrelevant to the proper resolution of any issue in the under-
lying appeal. The result here, it contends, would have been
the same whether the property was labeled as especial or
not.
	        We do not agree that the Tax Court placed such
narrow emphasis on the “especial property” rule; rather, it
offered a broader criticism of the department’s position. The
court explained:
Cite as 362 Or 148 (2017)	169

   	 “The law in Oregon is that value is to be value in
   exchange, not value in use or value to a particular tax-
   payer. The position of the county departed completely from
   this fundamental starting point. Attempting to use the
   notion of especial property, which the appraiser for the
   county could not explain or justify, that appraiser essen-
   tially argued that the value of the property must be equal
   to the amount taxpayer spent to build it. This position was
   rejected in the opinion issued by this court.”
	        We find no error in that reasoning, either factually
or legally. As we have already explained, the department
has not challenged the premise that Oregon law requires the
use of market value, not “value in use”; in fact, the depart-
ment has endorsed that principle. Yet, there is evidence
in the record as a whole that the department’s appraiser
departed from that principle. As noted, Healy specifically
testified that he believed that just compensation value could
be higher than market value. That statement is inconsistent
with the department’s own position that just compensation
value is market value.
	        The Tax Court also did not err factually in stating
that Healy’s proposed value was essentially equal to the
amount that the owner had spent building it. Healy used the
cost approach without allowing for any depreciation or obso-
lescence. Nor did the Tax Court err factually in critiquing
Healy’s testimony about the especial property rule. Healy’s
testimony about especial property was confused, if not inter-
nally inconsistent. On the one hand, he asserted that the
property’s just compensation value—the value under the
especial property rule—could be greater than its market
value. On the other hand, he later asserted (at the end of a
long and somewhat confusing exchange) that his valuation
would be the same regardless of whether the property met
the definition of “especial property.”
	        In short, we conclude that the court did not err fac-
tually or legally. Factually, there was evidence in the record
to support the Tax Court’s determination that the depart-
ment’s appraisal incorrectly used “value in use” and that
Healy could not adequately explain or justify his use of the
“especial property” concept. Given Healy’s assertion that
just compensation value was different from market value—a
170	                                     Ellison v. Dept. of Rev.

legal position that both the department and the county
assessor disavowed in briefing to the Tax Court—the Tax
Court did not err in concluding that the department’s posi-
tion was objectively unreasonable. See Mattiza v. Foster, 311
Or 1, 8 n 10, 803 P2d 723 (1990) (position is meritless “if it is
not supported by the law as applied to the facts” (emphasis
deleted)).
	        The department next asserts that the court misap-
plied the factor set out in ORS 20.075(1)(a), which directs a
court to consider
   “[t]he conduct of the parties in the transactions or occur-
   rences that gave rise to the litigation, including any con-
   duct of a party that was reckless, willful, malicious, in bad
   faith or illegal.”
	        After noting that the department had persisted in
pursuing an unreasonably high valuation throughout the
litigation, the Tax Court added: “Persistence may not be
bad faith or malicious, but it is willful.” The department
does not appear to challenge the factual content of that
statement—that the department willfully persisted in its
unreasonable valuation position. Instead, based on the com-
mon terminology—“willful,” “bad faith,” “malicious”—the
department asserts that the court erred as a legal matter
in concluding that those facts fell within the factor in ORS
20.075(1)(a). That factor, the department notes, applies only
to “the conduct of the parties in the transactions or occur-
rences that gave rise to the litigation,” not to conduct during
the litigation.
	        The department assumes that the Tax Court could
only have meant to refer to the factor identified in ORS
20.075(1)(a), then asserts that ORS 20.075(1)(a) does not go
so far, and then draws the conclusion that the Tax Court
therefore abused its discretion. If we were to accept the
department’s position, however, we would place form over
substance. A court is not limited to considering only prelit-
igation willfulness in deciding whether to award fees. The
court also may consider any “other factors as the court may
consider appropriate.” ORS 20.075(1)(h). We do not discern
any legal error in basing an award of attorney fees in part on
a party’s persistence in pursuing an objectively unreasonable
Cite as 362 Or 148 (2017)	171

position during the litigation. Nor was it legally erroneous
for the court to characterize such persistence as “willful,”
regardless of whether that term might have a more technical
definition in subsection (1)(a) (as the department suggests).
Accordingly, we reject the department’s contrary argument.
	         The department also asserts that the Tax Court
lacked a factual basis in the record to find that the depart-
ment’s position “more likely than not” hindered settlement.
See ORS 20.075(1)(f) (court may consider”[t]he objective
reasonableness of the parties * * * in pursuing settlement of
the dispute”). The department objects that there is no direct
evidence in the record regarding settlement discussions. We
do not believe that the Tax Court erred in drawing infer-
ences from the evidence that was in the record. By the time
of trial, taxpayer had proposed a value that was 95 percent
of the BOPTA valuation. The department’s proposed value,
however, was more than twice the BOPTA value. In her
petition for attorney fees, taxpayer offered evidence that the
department had not expressed any desire to settle the case.
In light of that evidence, the court did not err factually in
inferring that the department’s unreasonably high valua-
tion hindered settlement.
	       As noted, however, we nevertheless conclude that
the Tax Court’s exercise of discretion was based in part on
an incorrect factor. Specifically, the court’s order awarding
attorney fees stated:
   “The court accepts the argument of taxpayer that an appeal
   of the decision in the Magistrate Division was necessary to
   protect against what appeared to be, and turned out to be,
   a persistent position of the county that the property had
   been grossly undervalued by BOPTA.”
Later, the court reiterated the same point, albeit more
ambiguously:
   “[T]he persistence with which the [valuation] position was
   advanced left taxpayer with no alternative but to expend
   significant amounts to defend against the position taken by
   [the department and the county] in the case.”
	       The court appears to have been referring to the
following assertion contained in an affidavit submitted by
taxpayer:
172	                                               Ellison v. Dept. of Rev.

    “The [taxpayer’s] proceedings at the Regular Division were
    made necessary by the Assessor’s insistence on a higher
    [real market value] and my belief (now confirmed by the
    Court) that Mr. Healy’s appraisal methodology was incor-
    rect, leaving the Assessor with no demonstrated rationale
    for the property’s [real market value].”
	        We cannot agree that substantial evidence in the
record supports the factual finding that the department’s
persistent over-valuation of the property made taxpay-
er’s appeal to either division of the Tax Court necessary.21
Taxpayer, not the department, appealed the BOPTA order
to the Magistrate Division and then appealed the mag-
istrate’s affirmance of the BOPTA order to the Regular
Division of the Tax Court. By appealing those decisions,
taxpayer opened the door for precisely what the department
ultimately did: present its higher value appraisal to another
tribunal. See ORS 305.412 (once real market value of prop-
erty is at issue, Tax Court has authority “to determine the
real market value * * * on the basis of the evidence before the
court, without regard to the values pleaded by the parties”);
ORS 305.287 (2011) (“Whenever a party appeals the real
market value of one or more components of a property tax
account, any other party to the appeal may seek a deter-
mination from the body or tribunal of the total real market
value of the property tax account * * *.”).
	        In short, substantial evidence is lacking in the
record to support a finding that it was necessary for taxpayer
to appeal (either to the Magistrate Division or the Regular
Division) in anticipation of a possible last-minute appeal by
the department or county. The statutes just mentioned, ORS
305.412 and ORS 305.287 (2011), would have allowed tax-
payer to seek a lower valuation during any appeal by the
department or the county, precisely as taxpayer’s appeals
did not preclude the department and county from seeking a
higher valuation. See ORS 305.412 (statutory text addresses
court’s ability to consider evidence before it and does not cre-
ate or refer to any pleading requirement); Ellison, 22 OTR at

	21
       It is not entirely clear from the court’s comments whether it meant to focus
exclusively on taxpayer’s appeal to the Regular Division or whether it also deter-
mined that taxpayer’s appeal from BOPTA’s order to the Magistrate Division was
necessary. Accordingly, we address both issues.
Cite as 362 Or 148 (2017)	173

202 n 1 (ORS 305.412 permits a party to “request that the
court reach a proper value above or below that determined
in prior proceedings” (emphasis added)).
	        At oral argument, taxpayer appeared to offer a dif-
ferent legal rationale for the Tax Court’s determination by
suggesting that the department might somehow try to col-
laterally attack the magistrate’s ruling in future tax years
based on its aggressive and erroneous theories about the
value of the property. Taxpayer implied that an appeal to
the Regular Division therefore was necessary to put an end
to that effort. However, taxpayer has not explained how—
assuming that there had been no appeal to the Regular
Division—the department in ensuing tax years could have
collaterally challenged the final valuation decision by the
magistrate for the tax year at issue. To the contrary, as
taxpayer herself acknowledged, it was the value finally
accepted by the court—not the value proposed in a rejected
appraisal—that would establish a baseline for the valuation
of the property in future years.22
	        In sum, we find neither legal support nor substantial
evidence in the record for the Tax Court’s determination that
the department’s persistent over-valuation made taxpayer’s
appeals necessary. Taxpayer’s complaint in the Regular
Division offers a more plausible reason for the appeal. That
complaint asserted that the BOPTA value adopted by the
magistrate should be reduced by almost half—a reduction in
value of more than $4 million. Although it is not clear from
the record what valuation taxpayer sought in the Magistrate
Division, taxpayer appears to admit that she sought an even
lower value from BOPTA: $1,787,320. In considering why
taxpayer filed her appeals, then, her initial quest to obtain
a major reduction in value (and thus her property tax) pro-
vided a more plausible incentive than speculative anticipa-
tion of possible appeals by the department and the county.
	22
        The Tax Court stated in its order:
    	    “In this case exception value was at issue. The outcome of the case would
    burden or benefit a party for a significant period of time, if not perpetually.”
	   Taxpayer’s brief similarly asserts:
    “[T]he 2011 tax year was significant to both Ms. Ellison and the Assessor.
    It was the last year that the Assessor could utilize, under ORS 308.153, an
    ‘exception value’ attributable to new construction.”
174	                                               Ellison v. Dept. of Rev.

	        We thus conclude that the Tax Court’s determina-
tion that the department’s persistent over-valuation of the
property made taxpayer’s appeals to the Tax Court neces-
sary is not supported by substantial evidence in the record.
That erroneous determination appears to have been an
integral part of the court’s decisionmaking both in deter-
mining whether to award fees to taxpayer and in setting
the amount of the award. We therefore remand for the Tax
Court to reconsider first whether it should exercise its dis-
cretion to award fees to taxpayer by evaluating the other,
permissible factors, and without giving consideration to the
erroneous one. In the event that the court determines that
it is appropriate to award fees, the court should then deter-
mine the amount of fees to be awarded based on the factors
set out in ORS 20.075(1) and (2), again without giving con-
sideration to the erroneous factor.23
                           III. CONCLUSION
	         To summarize: We conclude that, by rejecting the
department and assessor’s request for an increase in the
BOPTA valuation, the Tax Court here found “in favor of the
taxpayer” on that request and, therefore, had discretion to
award attorney fees to taxpayer under ORS 305.490(4)(a). In
reviewing that exercise of discretion, we uphold the majority
of the factors that the court relied on in deciding to award
fees. We conclude, however, that one of the factors was not
supported by substantial evidence in the record and, there-
fore, was erroneous. Accordingly, we vacate the order of the
Tax Court awarding fees and remand for that court to exer-
cise its discretion whether to award fees without considering
the erroneous factor and to determine the amount of any fee
award under ORS 20.075(1) and (2).
	        The supplemental money judgment of the Tax Court
is vacated. The matter is remanded to the Tax Court for fur-
ther proceedings.


	23
      Because the court will be required on remand to reconsider (without
regard to the erroneous factor) both its decision to award fees and, if it does, the
amount of fees to be awarded, we do not address the department and assessor’s
alternative contention that the amount of fees awarded was excessive “in view of
[taxpayer’s] limited success.”
