IN THE OREGON TAX COURT
REGULAR DIVISION

Kurt E. FREITAG
and Rita H. Schaefer

Plaintiffs,

v.

DEPARTMENT OF REVENUE

Defendant,

and

LINCOLN COUNTY ASSESSOR

Intervenor.

(TC 4764)

Plaintiffs object to Intervenor's ORS 20.105 claim for attorney fees. Plaintiffs assert that Intervenor is not entitled to an award of attorney fees because their claim had an objective basis in law or fact and, in the alternative, that Intervenor did not prove that the amount sought was reasonable. The court held that Plaintiffs had the burden of proof, and their failure to present evidence to support their assertions of value rendered their claim without an objective basis in law or fact. Noting that Intervenor's itemization of charges may serve as the basis for an inference of reasonableness that Plaintiffs had failed to rebut, the court found Intervenor's claim reasonable in amount and justified in light of the factors set forth in ORS 20.075.

Property Taxation -- Valuation -- Appeal

1. After litigation has begun regarding the real market value of any property, the matter is a question of fact to be established in the litigation process.

Property Taxation -- Valuation -- Appeal

2. Valuation of property is a question of fact for which taxpayers bear the burden of

proof.

Tax Court -- Attorney Fees -- Frivolous Appeal

3. Failure to present evidence in support of a valuation claim precludes establishing a basis in fact necessary to avoid an award of attorney fees for a frivolous claim.

Tax Court -- Attorney Fees

4. In determining the reasonableness of attorney fees, an itemized statement of charges may serve as the basis of an inference of reasonableness.

A hearing was held May 29, 2007, by telephone.

Robert E. Bovett, Lincoln County Assistant County Counsel, Newport, filed the petition and argued the cause for Intervenor.

Kurt E. Freitag, Plaintiff, filed a response and argued the cause pro se.

Decision for Intervenor rendered July 3, 2007.

HENRY C. BREITHAUPT, Judge.

This matter is before the court on the objections filed by Plaintiffs (taxpayers) to the claim of the Intervenor-Defendant (the county) for attorney fees. In their objection, Plaintiffs made no request for special findings of fact. The claim of the county is made under ORS 20.105, (1) which mandates an award of reasonable fees if the position of the taxpayers is without an objective basis in fact or law.

1. Taxpayers assert that their position had a basis in law and cite to a manual prepared by the Department of Revenue (the department) regarding appraisal and including a discussion of mass appraisal practice. Department Publication 150-303-415 (2003). Taxpayers interpret the manual as establishing a legal rule that only the mass appraisal technique discussed in the manual may be used in establishing real market value (RMV) under ORS 308.205. The manual does not support the taxpayers' position. Although mass appraisal is a technique that has a role in the general administration of the property tax laws, once litigation occurs regarding the RMV of any property, the matter is a question of fact to be established in the litigation process. That is a fundamental principle well established in the case law. See, e.g., Clark v. Dept. of Rev., 14 OTR 221, 224-25 (1997); Menasha Corp. v. Dept. of Rev., 6 OTR 313, 322 n 6 (1976) (citation omitted). Taxpayers have cited no statute, rule, or case precedent supporting their unique view of the effect of the department publication. (2)

2-3. This case involved a dispute about the RMV of taxpayers' property. That is a question of fact to which taxpayers bore the burden of proof and the burden of going forward. ORS 305.427. Following the court's ruling denying taxpayers the opportunity to prove a value for their property through testimony of the county's appraiser, taxpayers presented no evidence at the trial on this matter. Therefore, there was no basis in fact established at trial to support the taxpayers' asserted value for the property in question. Accordingly, the court concludes that there was no objective basis in fact or law for the position of the taxpayers, and the county is entitled to an award of reasonable attorney fees.

4. On the question of reasonableness, taxpayers raise no objection to the amount of time claimed by the county. On the question of the hourly rate for legal work, taxpayers assert that the county has presented no evidence of reasonableness. The statement of the county shows that the hourly rate of $90 is the amount established by the commissioners of the county for intra-county charges. The position of the taxpayers regarding required proof is not the law. Under ORCP 68, on which TCR 68 is modeled and which, for these purposes, will be followed, the itemization of charges contained in the claim in this matter may serve as the basis of an inference of reasonableness. Dept. of Transportation v. Gonzales, 74 Or App 514, 519-20, 703 P2d 271 (1985), rev den, 300 Or 249, 710 P2d 146 (1985). Taxpayers presented no evidence sufficient to divert the court from drawing such an inference and the court finds that the claim was reasonable in amount. Finally, the court has reviewed the factors contained in ORS 20.075. The award of the full amount of the claim by the county is especially justified in light of the factors listed in each and every paragraph of subsection (1) of that statute, except paragraph (g). Further, the amount is reasonable considering the factors contained in paragraphs (a), (c), (d), and (g) of subsection (2) of ORS 20.075. Now, therefore,

IT IS ORDERED that county's request for attorney fees is granted.

Counsel for the county is directed to prepare an appropriate form of supplemental judgment.


1. All references to the Oregon Revised Statutes are to the 2005 edition.

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2. Taxpayers asserted that this court had made contrary statements in the proceedings in Schaefer v. Department of Revenue, TC No 4530, WL 914208 (Jul 12, 2001). Nothing in the unpublished opinion in the case supports taxpayers' assertions.

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