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Covenant Investments, Inc. v. State

Supreme Court of Montana

August 6, 2013

COVENANT INVESTMENTS, INC., Petitioner and Appellee,
v.
STATE OF MONTANA, DEPARTMENT OF REVENUE, Respondent and Appellant.

Submitted on Briefs: June 19, 2013

APPEAL FROM: District Court of the Eighteenth Judicial District, In and For the County of Gallatin, Cause No. DV-11-913A Honorable Holly Brown, Presiding Judge

For Appellant:

Michelle R. Crepeau, Special Assistant Attorney General, Montana Dept. of Revenue; Helena, Montana

For Appellee:

Michael Green, D. Wiley Barker, Crowley Fleck PLLP; Helena, Montana

OPINION

BRIAN MORRIS JUSTICE

¶1Covenant Investments, Inc. (Covenant), challenged the constitutionality of the six- year tax cycle mandated by § 15-7-111, MCA. The District Court for the Eighteenth Judicial District, Gallatin County, determined that § 15-7-111, MCA, as applied to Covenant, violated Covenant's right to equal protection. The Department of Revenue (Department) appeals. We reverse.

¶2 We address the following issue on appeal:

¶3 Whether the District Court correctly determined that § 15-7-111, MCA, violated Covenant's right to equal protection?

PROCEDURAL AND FACTUAL BACKGROUND

¶4 Covenant owns property for residential subdivision development in Gallatin County. Section 15-7-211, MCA, requires the Department to reappraise all residential property in Montana every six years. The Department assessed the value of Covenant's property in 2008. The Department used the 2008 appraisal to establish Covenant's tax liability for the six-year tax cycle ending in 2014.

¶5 The Department valued Covenant's property at $17, 600, 988. Covenant challenged the 2008 appraisal value of its property. The Gallatin County Tax Assessment Board reduced the appraised value of Covenant's property from $17, 600, 988 to $13, 745, 684.

ΒΆ6 Covenant submitted a petition to the State Tax Appeal Board (STAB) asking it to reduce further Covenant's 2008 appraisal value. The Department had added 35% to the value of Covenant's property based on the sale price of the first four parcels in the subdivision. Testimony before STAB established, however, that Covenant had sold these parcels to close friends and families of Covenant's principals at an artificially high value in order to establish a higher market value for the subdivision. STAB determined that this artificially high value did not correctly represent the ...


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