                            STATE OF WEST VIRGINIA

                          SUPREME COURT OF APPEALS


Lee Trace, LLC,
                                                                                  FILED
Petitioner Below, Petitioner
                                                                               April 28, 2017
vs) No. 16-0239 (Berkeley County 15-AA-5)                                      RORY L. PERRY II, CLERK
                                                                             SUPREME COURT OF APPEALS
                                                                                 OF WEST VIRGINIA
Berkeley County Council as

Board of Review and Equalization,

Berkeley County Council and Larry Hess,

as assessor for Berkeley County, West Virginia,

Respondents Below, Respondents



                               MEMORANDUM DECISION
       Petitioner Lee Trace, LLC (“Lee Trace”), by counsel Thomas Moore Lawson and
Kristopher R. McClellan, appeals the order of the Circuit Court of Berkeley County, entered on
February 9, 2016, denying its petition for writ of certiorari regarding the Berkeley County
Council Board of Review and Equalization’s denial of an adjustment to the 2015 real property
taxes on petitioner’s apartment complex. Respondents Assessor Larry Hess, Berkeley County
Council, and Berkeley County Council as the Board of Review and Equalization (“the Board”)
appear by counsel Norwood Bentley, III.1

       1
           Pending before the Court is petitioner’s motion, filed on February 2, 2017, to
supplement the record and file a supplemental brief on the basis of evidence discovered after the
institution of this appeal. Petitioner represents that it discovered, on December 9, 2016, “for the
first time that [respondents] never produced the entire 2016 [c]ommercial [r]eview [d]ocument
for the [p]roperty and had apparently purposefully withheld key portions of the document.”
Respondents have filed no response to petitioner’s motion. We note that petitioner’s request for
relief is that we consider this evidence, and not that we remand to the circuit court for its
consideration. The request, inexplicably made nearly two months after discovery of the
information in question, is inappropriate for this forum.

               Although our review of the record from a summary judgment proceeding
       is de novo, this Court for obvious reasons, will not consider evidence or
       arguments that were not presented to the circuit court for its consideration in
       ruling on the motion. To be clear, our review is limited to the record as it stood
       before the circuit court at the time of its ruling.

Powderidge Unit Owners Ass’n v. Highland Properties, Ltd., 196 W. Va. 692, 700, 474 S.E.2d
872, 880 (1996). Though the matter before us is an appeal from a circuit court order approving
the assessment of a board of review and equalization, rather than an appeal from a summary
(cont’d . . . .)
                                                1

       This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision affirming the order of the circuit court is appropriate under
Rule 21 of the Rules of Appellate Procedure.

        Petitioner owns a 156-unit apartment complex (built in 2009) on a 17.02 acre site in
Martinsburg, West Virginia (“the property”). Our familiarity with the property originates with
the appeal yielding our per curiam opinion Lee Trace LLC v. Raynes, 232 W.Va. 183, 751 S.E.2d
703 (2013) (“Lee Trace I”). In that case, we considered the 2010 and 2011 assessments of the
property. We ultimately reversed and remanded the assessments to the circuit court for
consideration of both assessments, because petitioner had not received adequate notice of the
right to appeal (the 2010 assessment), and because the Board had abused its discretion in
applying methodology that was inconsistent with the directives set forth in the Code of State
Rules (the 2011 assessment). Subsequent to the remand, we were asked to revisit the 2010
assessment, and we did so in Lee Trace, LLC v. Hess, No. 14-0962, 2015 WL 7628718 (W.Va.
Nov. 20, 2015)(memorandum decision)(“Lee Trace II”), wherein we upheld the circuit court’s
affirmation of the Board’s ruling.

        Thereafter, for the 2015 tax year, the assessor valued the property at $11,091,600,
resulting in an assessed value of $6,654,960.2 Petitioner appealed the assessment to the Board,
which conducted a hearing in February of 2015. At the hearing, petitioner’s expert, L. Steven
Noble, testified that he reached a value of $7,000,000 through the cost approach, and he believed
the assessed value was $4,200,000. He further testified that he verified his appraisal using the
income approach, and he also testified that the assessor had failed to equalize petitioner’s
property with comparable properties within the county. Mr. Noble testified that there had been
market changes since he first testified in a separate hearing conducted by the Board, several
years prior, regarding the 2010 assessment of the property. The changes include the construction
of two large apartment complexes—Stony Pointe (built about two years after petitioner’s


judgment order, our concern is the same. Neither the circuit court nor the Board had the
opportunity to assess this evidence, and we will not commandeer the functions of a lower
tribunal. Accordingly, the motion is denied.
       2
           West Virginia Code § 11-3-1(a) provides:

               All property, except public service businesses assessed pursuant to article
       six of this chapter, shall be assessed annually as of July 1 at sixty percent of its
       true and actual value; that is to say, at the price for which the property would sell
       if voluntarily offered for sale by the owner thereof, upon the terms as the
       property, the value of which is sought to be ascertained, is usually sold, and not
       the price which might be realized if the property were sold at a forced sale.



                                                2

property) and The Reserves—now potentially available for comparison purposes. Mr. Noble
stated that he did not emphasize land values, but instead focused on construction cost and value
of improvements. By way of example, Mr. Noble explained that petitioner had a higher
assessment cost per unit than Stony Pointe. He expressed his opinion that the assessor’s
assessment yields an “illogical” result because Stony Pointe collects higher rent and income, but
has a 7% lower assessment than petitioner’s property. He testified that, in addition, petitioner
was effectively assessed at 11.7% of gross value, while The Reserves was effectively assessed at
8.3% of its value. According to Mr. Noble, the assessor considered only physical depreciation
and not economic obsolescence.

         In contrast, Tamara Edgar, a commercial appraiser employed by the assessor’s office,
testified that she had appraised the property on behalf of the assessor’s office, and that she
considered the income, sales, and cost approaches in doing so. However, she testified that she
was unable to develop a capitalization, or “cap,” rate for the income approach because, though
the assessor sent requests for information from properties deemed to have been sold in arm’s
length transactions, the assessor did not receive adequate information in response.3 Ms. Edgar
testified that she considered differences between petitioner’s property and Stony Pointe, such as
Stony Pointe’s lack of a pool and the difference in square footage of the units. She testified that
functional obsolescence was considered, but that it was considered in traditional terms, such as
whether a forty-year-old building functions at the same level as a modern building. She
explained:

              The physical depreciation is based upon the age of the building and upon
       the condition of the building.

                I mean we did consider economic obsolescence.

               But based upon the sales that we had of other apartment buildings—and
       we did have other apartment buildings that did sell, but they were nowhere near
       the size of the Lee Trace complex.

              But all of the other sales that we had sold for more than we had them
       appraised for. So it was determined that we really did not need to account for
       economic obsolescence at this time. . . . We did not allow for any this year based
       upon the information that we received.



       3
           The “income approach” is set forth in W.Va. C.S.R. § 110–1P–2.2.1.2 as follows:

               Income approach.—A property’s present worth is directly related to its
       ability to produce an income over the life of the property. The selection of an
       overall capitalization rate will be derived from current available market data by
       dividing annual net income by the current selling price of comparable properties.
       The present fair market value of the property shall then be determined by dividing
       the annual economic rent by the capitalization rate.


                                                3

Ms. Edgar further testified that the assessor’s office uses a computerized system (“the IAS
system”) for equalization purposes.

        Respondent Assessor Hess also testified. He explained that the cost approach was used
“[a]nd the way it’s designed, it absolutely equalizes assessments.” He agreed with Ms. Edgar that
the assessor’s office was not able to obtain sufficient information to use the income approach.4
Respondent Assessor also testified about another property, The Cottages, which he said is now
approximately twenty years old.5 Respondent Assessor testified:

             . . . [W]e have analyzed all three approaches [income, sales, and cost].
       And we do it with all of the information that we can get.

              And so, you know, we absolutely have treated all of the income producing
       properties equal with the cost approach and looked at The Cottages of
       Martinsburg based on our cost approach.

              And using the same system, the grading system, the depreciation system,
       the physical and functional, all of that stuff prices out The Cottages right under—
       you know, what it sold for.

              So the system actually works. Those same variables was (sic) applied to
       Lee Trace. That shows the market value.

              I mean, all of the other properties have the same thing applied to them,
       you know.

               So it’s absolutely a fair and equal assessment across the board.

Respondent Assessor also testified that the assessor’s office uses a “grading system” to compare
properties based on quality of construction and architecture; petitioner’s property is graded C+
(“a little bit above average”) and Stony Point is a C (“average”). The difference between a C and
a C+, he said, is “an 8 percent increase.”

       The Board denied petitioner’s appeal. Petitioner filed an appeal with the Circuit Court of
Berkeley County, asserting three assignments of error: that (1) the Board failed to give proper
notice of the 2010 assessment, and, thus, no subsequent assessment supersedes the 2009
assessment of $677,050; (2) the Board failed to consider required factors such as income,
physical deterioration, and obsolescence; and (3) the Board failed to equalize the property with
comparable properties. The circuit court entered its order denying the appeal on February 16,

       4
         As previously noted, Ms. Edgar testified about the inability to develop a cap rate or use
the income approach.
       5
          Ms. Edgar testified that this property is “significantly smaller” than petitioner’s
property, as it consists of 120 units.


                                                4

2016, explaining that: (1) Lee Trace II upheld the 2010 assessment when the Court found that the
remand to the Board ordered in Lee Trace I remedied the defective notice of the 2010
assessment; (2) Lee Trace I addressed the discretion of the assessor in choosing the method of
appraisal, Ms. Edgar’s testimony demonstrated that the assessor considered physical
deterioration, petitioner failed to present evidence of decreased demand that would necessitate a
review of economic obsolescence, and petitioner presented no evidence that the assessor did not
consider functional obsolescence; and (3) petitioner failed to establish by clear and convincing
evidence that the assessor caused unequal, non-uniform assessments.

        On appeal, petitioner asserts seven assignments of error: that the circuit court erred in (1)
finding that the assessor equalized the property’s taxes with those of properties in the same class
as required by Article X, § 9 of the West Virginia Constitution, though the assessor “admits that
he did not have the information necessary to equalize property taxes”; (2) making factual
findings contrary to expert testimony and undisputed record evidence; (3) finding that there was
no evidence of intentional or systematic overvaluation of the property relative to comparable
properties; (4) applying an “effectively irrebuttable presumption of correctness” in favor of the
assessor, thus depriving petitioner of due process; (5) finding that the property valuation set by
the assessor is accorded great deference and is presumed to be correct in the face of evidence to
the contrary; (6) finding that the assessor considered the depreciation factors required by the
Code of State Rules when applying the cost approach to value the property in the face of
evidence to the contrary; and (7) finding that the assessor need not consider the property’s
income or perform an income approach analysis.

       We employ the same standard of review that we applied when these parties previously
appeared before us.

               “‘This Court reviews the circuit court’s final order and ultimate
       disposition under an abuse of discretion standard. We review challenges to
       findings of fact under a clearly erroneous standard; conclusions of law are
       reviewed de novo.’ Syllabus Point 4, Burgess v. Porterfield, 196 W.Va. 178, 469
       S.E.2d 114 (1996).” Syllabus Point 1, Foster Found., 223 W.Va. 14, 672 S.E.2d
       150 (2008). This Court has repeatedly recognized that

               “‘[a]n assessment made by a board of review and equalization and
               approved by the circuit court will not be reversed when supported
               by substantial evidence unless plainly wrong.’ Syllabus Point 1,
               West Penn Power Co. v. Board of Review and Equalization, 112
               W.Va. 442, 164 S.E. 862 (1932) (other internal citations omitted).”
               “Syllabus Point 3, In re: Tax Assessment of Foster Foundation’s
               Woodlands Retirement Community, 223 W.Va. 14, 672 S.E.2d 150
               (2008).”

       Syllabus Point 2, Mountain America LLC v. Huffman, 224 W.Va. 669, 687 S.E.2d
       768. The interpretation of a statute, or the constitutionality of a statute, as written
       or as applied, as in this case, presents a purely legal question subject to de novo
       review. Foster Found., 223 W.Va. at 18–19, 672 S.E.2d at 154–55 (citing

                                                 5

       Appalachian Power Co. v. State Tax Dept. of West Virginia, 195 W.Va. 573, 466
       S.E.2d 424 (1995)); Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d
       415 (1995).

Lee Trace I, 232 W.Va. at 189-90, 751 S.E.2d at 709-10.

       Guided by the principles set forth above, we consider petitioner’s assignments of error.
We also consider petitioner’s arguments in the light of basic property tax rubric:

                Article X, Section 1 of the West Virginia Constitution requires that “all
       property, both real and personal, shall be taxed in proportion to its value to be
       ascertained as directed by law.” For taxation purposes, property is to be assessed
       “at its true and actual value.” W.Va. Code § 11–3–1. “True and actual value” has
       been defined as “market value” and “the price paid for property in an arm’s length
       transaction.” Kline v. McCloud, 174 W.Va. [369] at 372, 326 S.E.2d [715] at 719
       [(1984)]. “The price paid for property is not conclusive as to value, but it may be
       a very important element of proof where there has been an open transaction
       between competent parties dealing at arm's length as appears from the evidence . .
       . In many jurisdictions, evidence of current market value is given substantial, if
       not conclusive, weight.” Id. (citations omitted). A taxpayer whose property is
       assessed at true and actual value must show more than the fact that other property
       is valued at less than true and actual value in order to obtain relief under Article
       X, Section I. Id. (emphasis added). “To obtain relief, he must prove that the
       undervaluation was intentional and systematic.” Id.

Mountain America, LLC v. Huffman, 224 W.Va. 669, 686-87, 687 S.E.2d 768, 785-86 (2009).

        We begin with petitioner’s first assignment of error, wherein it argues that the circuit
court erred in finding that the property was equalized. Our consideration of this issue necessarily
implicates petitioner’s second assignment of error—that the circuit court made factual findings
contrary to expert testimony and “undisputed” record evidence—and its third assignment of
error—that the circuit court erroneously found that there was no evidence of intentional or
systematic overvaluation of the property relative to comparable properties. Petitioner explains
the basis for its arguments as follows:

       The [a]ssessor has admitted to using a hybrid income approach prohibited by this
       Court in [Lee Trace I] to value other apartment properties over the course of
       multiple assessments and has admitted that this approach reduced the assessments
       on those properties. [Footnote omitted.] [Petitioner] has presented evidence
       through documents and the testimony of a licensed, certified expert real estate
       appraiser that the tax burden on the [p]roperty is not equalized with the taxes of
       comparable apartment properties in Berkeley County. A.R. 118-262. In particular,
       for the 2015 [a]ssessment, Mr. Noble explained that [petitioner’s] real estate tax




                                                6

       load per apartment unit is, on average, 33% higher than for the next three closest
       competitors, Stony Pointe, The Reserves, and Spring Mills.[6]

        Petitioner characterizes the points made in the preceding paragraph as demonstrative of a
“repeated, intentional, and systematic application of a more favorable valuation method” to its
competitors’ properties.7 Petitioner also relies on the assessor’s testimony that he did not have
the necessary information to make a fair and equitable assessment using the income approach to
insinuate that the assessor was wholly unable to make a fair and equitable assessment. The
entirety of Respondent Assessor’s testimony on this matter, as cited by petitioner, was:

              And, like I say, regardless of the income, we have the sole discretion to
       use which approach we use. And that’s the cost approach. That’s the best
       approach we could use right now. I mean you can talk all you want to about the
       income. And the [C]ourt says we have a right to pick. If we don’t use it—we just
       have to consider it, analyze it, and decide whether we want to use it or not. And
       we don’t have the information enough to make any sense from it. So I can’t fairly
       assess all of the apartments, all the retail stores by just that little bit of
       information. It just doesn’t give me enough information to make any sense out of
       it.

(Emphasis supplied by petitioner.) Petitioner argues that the accentuated portion of this
testimony provides the smoking gun. We disagree. In context, Respondent Assessor’s testimony
shows that he considered whether the income approach could fairly be applied to similarly-
situated taxpayers and determined that it could not. This matter was sufficiently resolved in Lee
Trace I, wherein we clarified that “an assessor need not perform a useless act of considering an
appraisal method where the assessor does not have sufficient data to perform that appraisal
method.”8 Lee Trace I, 232 W.Va. at 193, 751 S.E.2d at 713. (For this reason, we take

       6
         We reiterate that “[a] taxpayer whose property is assessed at true and actual value
[must] show more than the fact that other property is valued at less than true and actual value” in
order to obtain relief under Article X, Section I. Kline v. McCloud, 174 W.Va. 369, 372, 326
S.E.2d 715, 719 (1984).
       7
         W.Va. C.S.R. § 110–1P–2.2.1 (1991) recognizes three different appraisal methods for
determining the fair market value of “commercial and industrial real and personal property for ad
valorem tax purposes.” This subsection provides: “. . . the Tax Commissioner will consider and
use, where applicable, three generally accepted approaches to value: (A) cost, (B) income, and
(C) market data.”
       8
           Petitioner argues that, because at least one other sale of similar property occurred,
respondents had information available to develop a cap rate and employ the income approach.
We note, however, that the assessor also must know the property’s annual net income; though
petitioner argues it provided its own income information, there is no evidence that respondents
were provided income information by properties that were sold. In fact, Respondent Assessor
and Ms. Edgar testified to the contrary. The circuit court noted that Mr. Noble reached the cap
(cont’d . . . .)
                                                7

petitioner’s assignments of error out of turn, to briefly reject its seventh, wherein it argues that
the circuit court incorrectly concluded that the assessor need not consider the property’s income
or perform an income approach analysis. The testimony of Respondent Assessor and Ms. Edgar
shows that respondents did consider the income approach, as state rules require, and determined
it was not the best approach for the assessment.)

        The balance of petitioner’s arguments is unpersuasive for other reasons. First, in support
of its statement that it “has presented evidence through documents and the testimony of a
licensed, certified expert real estate appraiser that the tax burden on the [p]roperty is not
equalized with the taxes of comparable apartment properties,” petitioner broadly cites one-
hundred forty-four pages of transcript. Such a general reference falls short of our requirement,
found in Rule 10(c)(7) of the West Virginia Rules of Appellate Procedure, that arguments
“contain appropriate and specific citations to the record on appeal, including citations that
pinpoint when and how the issues in the assignments of error were presented to the lower
tribunal. The Court may disregard errors that are not adequately supported by specific references
to the record on appeal.” It further offends our frequent admonition that “[j]udges are not like
pigs, hunting for truffles” in the pleadings before us. State v. Honaker, 193 W.Va. 51, 56 n. 4,
454 S.E.2d 96, 101 n. 4 (1994) quoting United States v. Dunkel, 927 F.2d 955, 956 (7th
Cir.1991). Second, we note that petitioner references a number of certified records, presumably
from appeals of other assessments, and not contained in the appendix record on appeal, to
support its assertion that other properties have benefitted from an illegal “hybrid” approach to
valuation.9 If we are not hunters of truffles in the documents before us, we certainly will not
become gatherers of morsels hidden in dusty file rooms far afield. Petitioner’s proffers are
deficient for these reasons.

        Having addressed petitioner’s first, second, third, and seventh assignments of error, we
proceed. Petitioner’s fourth assignment of error asserts that the circuit court applied an
“effectively irrebuttable presumption of correctness” in favor of the assessor, thus depriving
petitioner of due process. Its fifth assignment of error asserts that the circuit court was wrong in
acting under the premise that the property valuation set by the assessor is accorded great
deference “and is presumed to be correct when the [a]ssessor admitted that the assessment was


rate that he used by calculating information from outside markets, and petitioner has not disputed
that finding.
       9
          In a footnote, petitioner purports to “incorporate[] by reference” the “[c]ertified
[r]ecords for the respective [c]ircuit [c]ourt cases in which the appeals for [various] assessments
are pending. . . .” All of the assessments mentioned by petitioner predate the 2015 assessment
now before us, and some appear to predate our decision in Lee Trace I. It is thus not clear how
those records pertain to the instant appeal. Moreover, parties are not entitled to our consideration
of evidence not consigned to the appendix record on appeal, inasmuch as Rule 7(a) of our Rules
of Appellate Procedure clarifies that “[a]n appendix must contain accurate reproductions of the
papers and exhibits submitted to the lower court, administrative agency or other tribunal. . . .”
Therefore, there is no evidence before us that respondents favored other taxpayers with a hybrid
method of valuation for the 2015 assessments.


                                                 8

not proper.” We have explained that, “‘[a]s a general rule, there is a presumption that valuations
for taxation purposes fixed by an assessor are correct. . . . The burden is on the taxpayer
challenging the assessments to demonstrate by clear and convincing evidence that the tax
assessment is erroneous.’ Syllabus point 2, in part, Western Pocahontas Properties Ltd. v.
County Commission of Wetzel County, 189 W.Va. 322, 431 S.E.2d 661 (1993).” Syl. Pt. 8, Bayer
MaterialScience, LLC, v. State Tax Commissioner, 223 W.Va. 38, 672 S.E.2d 174 (2008); See
also Syl. Pt. 5, in part, In re: Tax Assessment of Foster Foundation’s Woodlands Retirement
Community, 223 W.Va. 14, 672 S.E.2d 150 (Stating that “[a] taxpayer challenging an assessor’s
tax assessment must prove by clear and convincing evidence that such assessment is
erroneous.”). Petitioner does not take issue with this established standard but, rather, argues that
the circuit court ignored evidence that the property was not equalized with comparable
properties, thus imposing “a presumption of correctness that no taxpayer could overcome.”
Inasmuch as petitioner’s arguments are wholly dependent on our agreeing that the circuit court
erroneously failed to consider evidence, we reject them for the reasons set forth above.

        Finally, we evaluate petitioner’s sixth assignment of error, wherein it argues that the
circuit court incorrectly concluded that the assessor considered the depreciation factors required
by the Code of State Rules when applying the cost approach to value the property. Where the
cost approach to assessments is concerned, the assessor must “consider” three types of
depreciation: physical deterioration, functional obsolescence, and economic obsolescence. See
W.Va. C.S.R. § 110–1P–2.2.1.1. Interpreting this rule, we have clarified that it

       does not require . . . any adjustment to the valuations made regarding property
       because of physical deterioration, functional obsolescence and economic
       obsolescence. . . . Rather, all that is required . . . in applying the cost approach to
       valuation is that [one] will think about or contemplate [the] three types of
       depreciation. . . .

Century Aluminum of W.Va., Inc. v. Jackson Cty. Comm’n, 229 W. Va. 215, 224–25, 728 S.E.2d
99, 108–09 (2012).

        The basis for petitioner’s argument with respect to physical depreciation and functional
obsolescence is that Respondent Assessor provided no evidence that these factors were
considered, except insofar as he testified that the IAS system generated physical depreciation
based on numbers that were “plugged in.” Petitioner argues that Ms. Edgar testified that she “did
not need to account for economic obsolescence” because other properties in the area sold for
values above the appraisal rates. We note again that “[a] taxpayer challenging an assessor’s tax
assessment must prove by clear and convincing evidence that such tax assessment is erroneous.”
Syl. Pt. 5, in part, In re Tax Assessment of Foster Found.’s Woodlands Ret. Cty., 223 W.Va. at
16, 672 S.E.2d at 152. It is insufficient, then, for petitioner to assert that it has met its burden of
proof based on the absence of evidence. We note, as well, that the testimony cited by petitioner
does not provide evidence that Respondent Assessor did not consider these factors as required by
Century Aluminum. In fact, the circuit court concluded that Respondent Assessor “did consider
all three forms of depreciation, and explained why no adjustments were made for economic and
functional obsolescence[,]” and further concluded that Respondent Assessor “adjusted for



                                                  9

[physical depreciation] by reducing the replacement value of the complex.” In light of the
evidence before us, we find no error in the circuit court’s conclusion.

       For the foregoing reasons, we affirm.

                                                                                Affirmed.

ISSUED: April 28, 2017

CONCURRED IN BY:

Chief Justice Allen H. Loughry II
Justice Robin Jean Davis
Justice Margaret L. Workman
Justice Menis E. Ketchum
Justice Elizabeth D. Walker




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