July 21, 2017 – Homeowners who refused to allow an interior inspection of their home for property tax assessment purposes did not relinquish a right to challenge the resulting property tax assessment, the Wisconsin Supreme Court has ruled.
But in Milewski v. Town of Dover, 2017 WI 79 (July 7, 2017), a majority could not fully agree on why that conclusion is the right one, leaving questions for another day.
In 2013, the Town of Dover, in Racine County, was reassessing all properties within its jurisdiction. The town hired Gardiner Appraisal Service LLC (Gardiner Appraisal) to appraise property values. Gardiner Appraisal sent a notice to Vincent Milewski and Morganne MacDonald (the Milewskis), indicating an interior inspection was required.
But when an assessor arrived, the Milewskis told him he could view the exterior of the home but could not enter the home for an interior inspection. The assessor departed without reviewing the exterior or asking any questions. Gardiner Appraisal made a second request to view the interior via certified letter, but the Milewskis again declined.
Gardiner Appraisal increased the assessed value of the Milewski home by 12.12 percent from the previous assessment, a $33,200 increase. Assessed values are available for public inspection, and Vincent Milewski reviewed the open books.
He learned that four of the 43 homeowners in his subdivision did not have an interior inspection. Gardiner Appraisal increased the assessment for all four, but decreased the assessed value on the 39 other properties that did receive interior inspections.
Two of the four properties that did not receive interior inspections subsequently allowed the interior inspection and their assessments were reduced. Thus, only two properties received increased assessments: the two properties that declined interior inspections.
Assessment Challenge Denied
Under Wis. Stat. section 70.47(7)(aa), property owners cannot challenge the amount of an assessment “if the person has refused a reasonable written request by certified mail of the assessor to view such property.” The Milewskis had refused the written request to view the interior of the property, but they allowed the assessor to view the exterior.
Joe Forward, Saint Louis Univ. School of Law 2010, is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by email or by phone at (608) 250-6161.
They filed a formal objection letter and appeared before the Dover Board of Review (BOR) to object to the assessment. But the BOR refused to hear the objection, claiming the Milewskis lost their statutory right to challenge by declining an interior inspection.
For 2013 and 2014, the Milewskis paid their property taxes and filed claims of excessive assessment under Wis. Stat. section 74.37, but the town disallowed the claims.
The Milewskis commenced an action in circuit court, arguing that the statutes governing assessment challenges were unconstitutional, as applied to them, by conditioning the right to challenge on whether they agreed to an interior inspection.
Specifically, the Milewskis argued they had a constitutional right to refuse a government search of their home, as well as a constitutional right to challenge the assessment. Making them choose one or the other, they argued, was unconstitutional.
The circuit court dismissed the Milewskis' claims and the appeals court affirmed. But a supreme court majority reversed, expressing differing reasons.
Lead Opinion Leads on Constitutional Grounds
Through a 53-page lead opinion, Justice Daniel Kelly concluded that an application of state statutes that conditioned the Milewskis’ property assessment challenge on a tax assessor’s “search” of their home violated the Milewskis' due process rights.
Kelly concluded that the Milewskis had a constitutional right to refuse the tax assessor’s entry, because government entry to obtain information would be a “search” under the Fourth Amendment, which guards against unreasonable searches and seizures.
Justice Kelly rejected the town’s argument that requiring a “search” to assert due process rights is reasonable because home searches are necessary to comply with a state constitutional mandate requiring uniform valuation of real property.
But state statutes that implement the Uniformity Clause (Art. VIII, § 1) do not require interior inspections, Kelly concluded. That is, section 70.32(1) allows valuations based on two sources of information: actual view or the best information available.
The town still assigned a value to the Milewski home, Kelly noted, without viewing the interior, contradicting the argument that a valuation requires an interior inspection.
“Thus, we conclude that although an interior inspection may be useful, convenient, and expedient in developing a valuation, the Uniformity Clause does not require it,” he wrote.
Justice Kelly also rejected the town’s argument that an interior inspection would be reasonable because such inspections are minor intrusions and notice is provided.
“The Fourth Amendment is less concerned with the politeness with which the government agent enters a home than it is with the fact that he is there at all,” Justice Kelly wrote. “The purpose of the Fourth Amendment’s promise is that a person may stand in his door and tell the government agent ‘you shall not pass.’…”
Finally, Justice Kelly explained that the town forced the Milewskis to face the dilemma of surrendering their Fourth Amendment rights in order to assert their due process rights.
He noted cases invoking the “unconstitutional conditions doctrine,” which prohibits the government from pressuring citizens to surrender their rights to receive benefits.
“It’s troubling when the price of a discretionary governmental benefit is loss of a constitutional right; it’s simply unacceptable when the State requires a person to sideline one constitutional right before exercising another,” Justice Kelly wrote.
Justice Kelly did not strike the statutes as facially unconstitutional. But he concluded that they were applied in a manner that violated the Milewskis' constitutional rights.
Concurrences Pull the Reins
Only Justice Rebecca Bradley fully signed on to Kelly’s lead opinion. Three other justices agreed that the court of appeals decision should be reversed – and the Milewskis still had a right to challenge the assessments despite refusing an interior inspection – but those justices did not fully endorse Kelly’s constitutional analysis.
Chief Justice Patience Roggensack concluded that the Milewskis are “statutorily entitled to a hearing even though they did not permit a tax assessor to enter the interior of their home.” That is, a constitutional analysis was not necessary to resolve the case.
The chief justice said the statutes allow an assessor to make an assessment without entering the interior of the home, based on an exterior view – the taxpayer is barred from challenging the assessment only after refusing both exterior and interior inspection.
But a taxpayer who denies interior inspection is not entitled to present evidence of the interior condition at a hearing, she noted, when challenging the assessment.
“[A] taxpayer who provides only an external view of his property is not entitled to produce evidence of the interior condition of his home at a hearing before the board of review or in a claim for excessive assessment before a circuit court,” she said.
The taxpayer can only cross-examine the assessor “to determine if the assessor came to a reasonable conclusion as to its value,” the chief justice noted, and “may introduce other evidence unrelated to the interior condition of the property to show his tax assessment was unjust or unreasonable.”
Justices Annette Ziegler and Michael Gableman agreed that the town could not, consistent with federal and state constitutions, compel a choice “between exercising their constitutional right to challenge a governmental deprivation of their property and exercising their constitutional right to refuse governmental entry into their home.”
However, Ziegler said she “would like to join the lead opinion” but could not “for fear of its potential effects on existing case law and the ways in which it could be cited in the future.’” Ziegler (and Gableman) only joined in the mandate that the appeals court decision be reversed.
For instance, Justice Ziegler said the “unconstitutional conditions doctrine” that Kelly discussed typically applies in cases involving government benefits and the parties never briefed that issue. She invoked judicial restraint to decide the case on narrow grounds.
“While the lead opinion may be entirely correct, I am not willing to decide an infinite number of potential future cases without briefing and argument,” Justice Ziegler wrote.
Justice Shirley Abrahamson wrote a 45-page dissent, joined by Justice Ann Walsh Bradley, arguing the Wisconsin Legislature has placed a reasonable restriction on assessment challenges in order to obtain fair and uniform property tax assessments.
“The legislature’s inducement to obtain the property owner’s consent to the assessor’s entry is to require the non-consenting property owner to forego a hearing at which the owner may contest the amount of the assessment,” Justice Abrahamson wrote. “The inducement is more than reasonable in light of the governmental interests involved.”
The legislature determined, she noted, that homeowners can’t hide information material to a property valuation but then use the information to challenge the assessment of an evaluator who is forced to rely on other sources of information to assess the property.
“The challenged statutes are, in a sense, a corollary of the well-accepted legal principle that persons who fail to disclose material evidence that is in their possession and that is not readily available to an opposing party may not avail themselves of a judicial forum.”
Abrahamson noted that barring the assessment challenge did not fully bar the Milewskis’ ability to contest the assessment. The Milewskis could, and attempted to, seek damages from the town’s assessor for retaliation and excessive assessment.
On remand, the dissenters (in accordance with Chief Justice Roggensack), said the Milewskis (or any witnesses) should not be able to use any information regarding the interior of the property. But only three justices expressly agreed on that point.
“Their challenge … should be limited to the assessor’s calculation of the value of the real property,” Justice Abrahamson wrote. “Without this limit on the Milewskis’ challenge … the Town’s duty to assess real property uniformly and fairly may become a nullity.”