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St. Mary's Building Corp. v. Redman

Tax Court of Indiana

November 21, 2019

ST. MARY'S BUILDING CORPORATION, Petitioner,
v.
SARAH E. REDMAN, WARRICK COUNTY ASSESSOR, Respondent.

          ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW.

          ATTORNEYS FOR PETITIONER: ANDREW B. HOWK N. KENT SMITH HALL, RENDER, KILLIAN, HEATH & LYMAN, P.C. Indianapolis, IN.

          ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR. ATTORNEY GENERAL OF INDIANA JEFFERSON S. GARN WINSTON LIN REBECCA L. McCLAIN PARVINDER K. NIJJAR DEPUTY ATTORNEYS GENERAL Indianapolis, IN.

          ATTORNEYS FOR AMICI CURIAE ASSOCIATION OF INDIANA COUNTIES and WARRICK COUNTY BOARD OF COMMISSIONERS: MARK E. GIAQUINTA SARAH L. SCHREIBER HALLER & COLVIN, PC. Fort Wayne, IN.

          WENTWORTH, J.

         Saint Mary's Building Corporation ("Building Corporation") has appealed the final determination of the Indiana Board of Tax Review that denied its request for a property tax exemption for the 2014 and 2015 tax years. Upon review, the Court affirms the Indiana Board's final determination.

         FACTS AND PROCEDURAL HISTORY

         The Building Corporation, an Indiana non-profit corporation, [1] owns the Epworth Crossing medical building located in Newburgh, Indiana. (See Cert. Admin. R. at 4385-86.) The Building Corporation maintains that its sole corporate member is St. Mary's Health, Inc., which owns and operates a hospital in Evansville, Indiana ("the Hospital"). (See Pet'r Br. at 6-8 (citing Cert. Admin. R. at 4302, 4365).)[2]

         In May of both 2014 and 2015, the Building Corporation filed applications for exemption with the Warrick County Property Tax Assessment Board of Appeals ("PTABOA") seeking a charitable purposes exemption, an educational purposes exemption, and a religious purposes exemption for the portions of Epworth Crossing (as well as the personal property therein) that it leased to St. Mary's Breast Center, LLC, St. Mary's Medical Group, LLC, and St. Mary's Medical Center of Evansville, Inc. (See, e.g., Cert. Admin. R. at 13-17, 121-25, 4286-88, 4529-31, 4537.) St. Mary's Breast Center used its leased space to operate a breast imaging and therapy center, St. Mary's Medical Group used its leased space to operate a primary care physician's practice, and St. Mary's Medical Center of Evansville used its leased space to operate both an urgent care and an imaging and laboratory center. (See Cert. Admin. R. at 4530, 4537.)[3] The Building Corporation's appeal documentation stated that "[t]he services [] offered within the[se] space[s are] in furtherance of the charitable, religious, and educational mission of each of the [tenants]. Services are offered at a reduced cost or free of charge depending upon the patient's ability to pay for the services." (Cert. Admin. R. at 4530.)

         The PTABOA denied the exemption applications and the Building Corporation subsequently pursued an appeal with the Indiana Board. (See, e.g., Cert. Admin. R. at 1-3, 109-11.) In its appeal documentation, the Building Corporation stated it "delivers health care services in furtherance of its charitable, religious, and educational mission and in accordance with its charity care policy. [Thus, its] use of the property meets with the requirements of I.C. 6-1.1-10-16, including, in particular, subsection (h)[.]" (See, e.g., Cert. Admin. R. at 1-3, 109-11.) Furthermore, the Building Corporation indicated that it was a "wholly-owned affiliate" of the Hospital and that each of its three tenants was "owned and operated by [the Hospital] as [one of its] departments . . . or as separate wholly-owned, not-for-profit 501(c)(3) entities."[4] (Cert. Admin. R. at 4248, 4253, 4255-56.)

         On February 23, 2018, after reviewing the case on the parties' motions for summary judgment and the stipulated record, the Indiana Board denied the Building Corporation's exemption applications. In its final determination, the Indiana Board "concluded as a matter of law" that Epworth Crossing was owned, occupied, and used by the Hospital. (See Cert. Admin. R. at 5123-24 ¶ 8, 5147 ¶ 66.) Nonetheless, it found that Epworth Crossing did not qualify for an exemption under Indiana Code § 6-1.1-10- 16(h) because the Building Corporation failed to show 1) how the operations at Epworth Crossing actually supported the Hospital's inpatient facility or 2) that the provision of charity care and community benefits was the predominant use of Epworth Crossing. (See Cert. Admin. R. at 5147-51 ¶¶ 66-74.) Alternatively, the Indiana Board concluded that Epworth Crossing did not "independently" qualify for an exemption under Indiana Code § 6-1.1-10-16(a) because it "operate[d] on a fee-for-service basis, with an indeterminate impact on the poor, uninsured, or underinsured. There is no evidence that Epworth Crossing satisfies a particular need in the community that would otherwise be unmet or fall to the government." (Cert. Admin. R. at 5151 ¶ 75.) The Indiana Board arrived at this conclusion, in part, because

[the Building Corporation's] brief offer[ed] a disjointed parade of generalizations rather than a methodic explanation of the charity provided . . . The Board notes that "[c]onclusory statements do not constitute probative evidence." . . . Overall, [the Building Corporation] did little in its brief to sift through the evidence and present a comprehensive, or even accurate, summation of the evidence.

(Cert. Admin. R. at 5132-33 ¶ 30 (citations omitted).) (See also, e.g., Cert. Admin. R. at 5130 ¶ 24 n.7; 5131 ¶ 26 n.9; 5135 ¶ 39 n.14; 5136-37 ¶¶ 43, 45 nn.17 & 18; 5138 ¶ 47 n.19 (all indicating instances in its final determination where the Indiana Board admonished the Building Corporation for citing to evidence that only "vaguely" supported its propositions, not providing evidentiary support at all, not walking the Indiana Board through its evidence and analysis, an overall lack of attention to detail, and carelessness in its briefing citation).

         On April 9, 2018, the Building Corporation initiated this original tax appeal. After filing the appeal, the Building Corporation abandoned its claims for both the educational purposes exemption and the religious purposes exemption, pursuing only its charitable purposes exemption claim. (See Pet'r Br. at 15; Oral Argument Tr. at 3-5.) On March 15, 2019, the Court conducted oral argument on the matter. Additional facts will be supplied when necessary.

         STANDARD OF REVIEW

         The party seeking to overturn an Indiana Board final determination bears the burden of demonstrating its invalidity. Osolo Twp. Assessor v. Elkhart Maple Lane Assocs., 789 N.E.2d 109, 111 (Ind. Tax Ct. 2003). Consequently, the Building Corporation must demonstrate to the Court that the Indiana Board's final determination is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to constitutional right, power, privilege, or immunity; in excess of or short of statutory jurisdiction, authority, or limitations; without observance of procedure required by law; or unsupported by substantial or reliable evidence. Ind. Code § 33-26-6- 6(e)(1)-(5) (2019).

         LAW

         In Indiana, all tangible property is subject to taxation. Ind. Code § 6-1.1-2-1 (2014). Nevertheless, the Indiana Constitution provides that the Legislature may exempt certain categories of property from taxation. See Ind. Const. art X, § 1. Pursuant to that grant of authority, the Legislature enacted Indiana Code § 6-1.1-10-16, which pertains to property used for, among other things, "charitable purposes." See generally Ind. Code § 6-1.1-10-16 (2014).

         Indiana Code § 6-1.1-10-16(a)

         Under Indiana Code § 6-1.1-10-16(a), "[a]ll or part of a building is exempt from property taxation if it is owned, occupied, and used [ ] for . . . charitable purposes." I.C. § 6-1.1-10-16(a). This exemption also generally extends to the land on which an exempt building is situated, as well as the ...


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