STATE TAX COMMISSION OF MISSOURI
|MADISON MARQUETTE RETAIL||)|
|SERVICES LLC, AS RECEIVER FOR||)|
|CHESTERFIELD MALL, LLC||)|
|v.||)||Appeal No.||16-14273 through 16-14277|
|JAKE ZIMMERMAN, ASSESSOR||)|
|ST. LOUIS COUNTY, MISSOURI,||)|
AFFIRMING DISMISSAL OF THE HEARING OFFICER
UPON APPLICATION FOR REVIEW
On February 7, 2017, Chief Counsel Maureen Monaghan (Hearing Officer), dismissed these appeals for lack of jurisdiction to accept the Complaint for Review of Assessment.
Madison Marquette Retail Services, LLC, As Receiver for Chesterfield Mall, LLC, (Receiver), Complainant, filed its Application for Review of the Decision. Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) filed a Response. Receiver filed a Reply. We affirm.
FINDINGS OF FACT
Chesterfield Mall, LLC, (Chesterfield Mall) was the owner of the subject property on January 1, 2015, and January 1, 2016. The last day on which Chesterfield Mall could file an appeal of real property assessment with the St. Louis County Board of Equalization (BOE) regarding the subject properties in 2016 was July 11, 2016. Chesterfield Mall did not file an appeal with the BOE. Because Chesterfield Mall did not file an appeal with the BOE, it was not entitled to appeal to the STC. See Section 138.110 RSMo.
On August 10, 2016, the Circuit Court of St. Louis County, Missouri, issued its Stipulated Order Appointing Receiver in which Madison Marquette Retail Services, LLC, (Receiver) was appointed receiver at the request of U.S. Bank National Association (U.S. Bank). U.S. Bank holds the Deed of Trust and the Note, i.e., a security interest, for the subject property. Pursuant to the Deed of Trust, U.S. Bank was entitled to the appointment of a receiver to keep, preserve and protect U.S. Bank’s interest pending the determination of U.S. Bank’s Petition for Breach of Note, Declaratory Judgment and Specific Enforcement of Deed of Trust against Chesterfield Mall.
The Stipulated Order Appointing Receiver contained the following key provisions:
Simultaneous with the filing of [the motion requesting the appointment of a receiver] [U.S. Bank] commenced this lawsuit by filing the Petition seeking enforcement of the Loan Documents and appointment of a receiver. (Page 2, Paragraph 3)
Pursuant to the Loan Documents, in order to secure the payment of the indebtedness evidenced by the Loan Documents, [Chesterfield Mall] granted [U.S. Bank’s] predecessor in interest a security interest in the Mortgaged Property, which includes the Real Property, the Personal Property associated with the Real Property, and the Rents generated from the operation of the Mortgaged Property. (Page 2, Paragraph 6)[U.S. Bank] is the assignee of the Loan Documents and is the holder in due course and owner of all such Loan Documents with the right to enforce the obligations therein and to seek the remedies sought herein. (Page 3, Paragraph 7) [Chesterfield Mall] is in default under the terms of the Loan Documents due to [Chesterfield Mall’s] failure to make timely payments and [Chesterfield Mall’s]failure to observe and perform the material obligations imposed up on [Chesterfield Mall], as lessor of the Chesterfield Mall, to its tenants under leases for space at the Chesterfield Mall. (Page 3, Paragraph 8) [U.S. Bank] provided [Chesterfield Mall] notice of its default. (Page 3, Paragraph 9)
Pursuant to terms of the Deed of Trust and Assignment of Rents, in the event of any default by [Chesterfield Mall], [U.S. Bank] is entitled to the appointment of a receiver relating to the Mortgaged Property without regard for the adequacy of [U.S. Bank’s] security and without regard to the solvency of the [Chesterfield Mall] upon the occurrence of one or more of the defaults. (Page 3, Paragraph 10)
The appointment of a receiver pending determination of the causes of action in this lawsuit is also necessary to keep, preserve and protect [U.S. Bank’s] interest in the Mortgaged Property, including [U.S. Bank’s] interests in the Rents generated from the Mortgaged Property. (Page 3-4, Paragraph 13)[Receiver] is well qualified to act as the receiver in this lawsuit. Madison Marquette does not have an interest in the Mortgaged Property or in the outcome of this lawsuit. (Page 4, Paragraph 14) [Receiver] is hereby given the power and authority to [t]ake immediate and exclusive possession, custody and control of the Receivership Property . . . Receiver shall keep, preserve and protect the Receivership Property. . . . (Page 5-6, Section 4(A)) [Receiver] is hereby given the power and authority usually held by receivers and reasonably necessary to accomplish the purpose of this receivership including, without limitation, the specific power to . . . [c]ommence, prosecute, defend, and compromise all proper actions necessary to preserve and protect the Receivership Property, and/or recover possession of all or any part thereof, including actions for the collection of Rents, accounts receivable, and contract and lease rights relating to the Receivership Property when due or for the removal of any tenant, sublease, or occupant in possession of any part of the Receivership Property . . . (Page 8, Section 4(B)(x)) [Receiver] shall not be obligated to file any federal or state income tax returns, schedules or other forms for [Chesterfield Mall], which shall continue to be an obligation of the [Chesterfield Mall]. (Page 9, Section 4(C))
[Receiver] may undertake the risks and obligations ordinarily incurred by owners, managers and operators of similar businesses and enterprises and [Receiver] shall pay for these services from the funds of the receivership estate. No such risk or obligation so incurred shall be the personal risk or obligation of the Receiver or any of its employees, agents, attorneys, professionals, or management companies retained by [Receiver], but shall be the risk and obligation of the receivership estate. (Page 11, Section 9) [Receiver] shall pay only those bills that are reasonable and necessary for the operation or the protection of the Receivership Property and shall allocate funds in the following order of priority: (1) the costs and expense of the receivership estate, including [Receiver’s] fees and professional fees; (2) operating expenses relating to the Receivership Property, including post-receivership utilities, insurance premiums, general and special taxes or assessments levied on the real property and improvements thereon; (3) the creation and retention by [Receiver] of a reasonably working capital fund; (4) after reserving sufficient funds [Receiver] deems reasonable to retain for operation and protections of Receivership Property, [Receiver] may pay, at its discretion, on a monthly basis any remaining amounts to [U.S. Bank] to reduce the amounts due, owing and unpaid by [Chesterfield Mall] to [U.S. Bank]. All monies coming into [Receiver’s] possession shall only be expended for the purposes herein authorized, and the balance of funds shall be held by [Receiver] pending further order of this Court. (Page 12-13, Section 13)
As soon as is practicable after the need for the receivership terminates, [Receiver] shall file and serve in this Court its Final Report and Audit, after which [Receiver] or a party in interest shall file a motion seeking approval of the final report and discharge of [Receiver] and termination of this receivership. . . . (Page 15, Section 20)[Receiver] shall have no liability for any claims, obligation, causes of action, or debts incurred by [Chesterfield Mall]. [Receiver] and its employees, agents and attorneys shall have no personal liability . . . . (Page 16, Section 22(B)).
[U.S. Bank], [Chesterfield Mall], and the receivership estate shall jointly and severally indemnify and hold [Receiver] harmless for all suits in connection with the Receivership Property . . . . (Page 16, Section 22(D)).
IT IS FURTHER ORDERED that [Receiver] is acting as an officer of the Court and not as an agent of any party to this action. (Page 20)
On December 28, 2016, Receiver filed a Complaint for Review of Assessment of the subject property with the STC. The Hearing Officer subsequently entered her Order Dismissing Appeal for Lack of Jurisdiction finding that Receiver was not a new owner of the subject property and, therefore, was not entitled to appeal directly to the STC. This application for review followed.
CONCLUSIONS OF LAW AND DECISION
Points on Review
Receiver did not set forth specifically numbered points of error but instead generally stated that it should be considered a “’new owner’ for purposes of 12 CSR 30-3.010(1)(B)(1) and is entitled to file a direct appeal with the Commission without appearing before or obtaining a decision of the Board of Equalization.”
For the reasons that follow the STC finds Receiver’s arguments to be unpersuasive. The STC, having thoroughly reviewed the whole record and having considered the Order Dismissing Appeal for Lack of Jurisdiction and the Application for Review of Complainant (Receiver), concludes that the Hearing Officer’s Order was correct and proper.
Standard of Review
A party subject to a Decision and Order of a Hearing Officer with the State Tax Commission (STC) may file an application requesting the case be reviewed by the STC. Section 138.432 RSMo Cum. Supp. 2015; 12 CSR 30-3.080(4). The STC may then summarily allow or deny the request. Section 138.432; 12 CSR 30-3.080(5). The STC may affirm, modify, reverse, set aside, deny, or remand to the Hearing Officer the Decision and Order of the Hearing Officer on the basis of the evidence previously submitted or based on additional evidence taken before the STC. Section 138.432; 12 CSR 30-3.080(5)(A).
Exhaustion of Administrative Remedies
The doctrine of exhaustion of administrative remedies is a jurisdictional requirement. Pessin v. State Tax Commission, 875 S.W.2d 143, 146 (Mo. App. E.D. 1994). “The doctrine requires recourse to an agency for relief as a condition for judicial relief where the agency is empowered to grant relief.” Pessin, 875 S.W.2d at 146.
The assessor of each county in Missouri and the City of St. Louis must assess annually real property in accordance with Section 137.115. In St. Louis County, any person aggrieved by the assessment of his property may appeal to the local county board of equalization before the third Monday in June unless the board, in its discretion, extends the time for filing such appeals. Section 137.385. A taxpayer who is dissatisfied with the local board of equalization’s decision as to assessment or valuation may appeal to the STC no later September 30 or 30 days following the board’s decision, whichever is later. Section 138.430.1; 12 CSR 30-3.010(1)(B). Where no appeal is filed with the local board of equalization, the STC does not have jurisdiction to accept a Complaint for Review of Assessment, unless an exception under 12 CSR 30-3.010(1)(B) applies. Pessin, 875 S.W.2d at 146; Riddle v. Schmidt, 732 S.W.2d 185 (Mo. App. E.D. 1987).
12 CSR 30-3.010(1)(B)(1) states:
In any county or the City of St. Louis, the owner may appeal directly to the State Tax Commission (a) where the assessor fails to notify the current owner of the property of an initial assessment or an increase in assessment from the previous year, prior to thirty (30) days before the deadline for filing an appeal to the board of equalization, including instances in which real property was transferred and the prior owner was notified, or (b) where a new owner purchased real property less than thirty (30) days before the deadline for filing an appeal to the board of equalization or later in the tax year, regardless if the assessment is an initial assessment, an increase or decrease in assessment, or an assessment established in the prior year. Appeals under this paragraph shall be filed within thirty (30) days after a county official mailed a tax statement or otherwise first communicated the assessment or the amount of taxes to the owner or on or before December 31 of the tax year in question, whichever is later. Proof of late notice, the date of purchase, and/or notice sent to the prior owner shall be attached to, or set forth in, the complaint.
A receiver, appointed under by the court, does not by the fact of his appointment become vested with any title or estate in the property involved because the receiver is a “mere custodian thereof for the court, and for the benefit of the party ultimately proved to be entitled.” Jennings Sewer Dist. of St. Louis County v. Pitcairn, 187 S.W.2d 750, 755 (Mo. App. 1945). “[T]he utmost effect of [the receiver’s] appointment is to put the property from that time into his custody, as an officer of the court, for the benefit of the party ultimately proved to be entitled, but not to change the title, or even the right of possession, in the property.” Jennings Sewer Dist., 187 S.W.2d at 755, quoting Union Nat. Bank of Chicago v. Kansas City Bank, 136 U.S. 223, 236, 10 S.Ct. 1013, 1017, 34 L.Ed. 341, 346 (1890).
The issue in this case is a matter of law. It is undisputed that, Chesterfield Mall, the owner of the subject properties as of January 1, 2015, and January 1, 2016, failed to file an appeal with the local board of equalization in 2016 and, therefore, was barred from filing an appeal with the STC in 2016. Sections 137.385; 138.430.1; 12 CSR 30-3.010(1)(B). Receiver, appointed by the Court to preserve and protect the interests of U.S. Bank, contends it should be entitled to appeal directly to the STC on the ground that it is a “new owner” of the subject property. We disagree.
As specifically stated in the Order Appointing Receiver, Receiver has no ownership interest in the subject property. According to the Stipulated Order Appointing Receiver, Chesterfield Mall remains the owner of the subject property. Receiver has no risk or liability regarding the subject property and, in fact, is entitled to indemnification by U.S. Bank, the receivership estate, and Chesterfield Mall. Receiver is the custodian or holder of the subject property while U.S. Bank proceeds with non-judicial foreclosure or otherwise enforces its rights and remedies under the Deed of Trust and the Note.
At best, Receiver stepped into the shoes of U.S. Bank to protect U.S. Bank’s interest in the subject property. Receiver cannot be considered a “new owner” under 12 CSR 30-3.010(1)(B)(1) because it did not purchase the subject property from a previous owner. Furthermore, Receiver did not acquire any ownership interest in the subject property by virtue of the Order Appointing Receiver. Receiver is merely the disinterested third-party custodian of the subject property for the duration of the receivership – however long or short that duration might be. Receiver cannot file a direct appeal to the STC on the ground that it has been transformed into a “new owner.”
The Order of Dismissal of the Hearing Officer is AFFIRMED. The STC lacked jurisdiction to accept the Complaint for Review of Assessment.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.
If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.
SO ORDERED July 11th, 2017.
STATE TAX COMMISSION OF MISSOURI
Bruce E. Davis, Chairman
Victor Callahan, Commissioner
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this July 11th, 2017, to: Complainants(s) counsel and/or Complainant, the County Assessor and/or Counsel for Respondent and County Collector.