Donald V. Cain, Jr., appellant,
Custer County Board of Equalization, appellee.
Taxation: Judgments: Appeal and Error. An
appellate court reviews Nebraska Tax Equalization and Review
Commission decisions for errors appearing on the record.
___: ___ . When reviewing a Nebraska Tax Equalization and
Review Commission judgment for errors appearing on the
record, the inquiry is whether the decision conforms to the
law, is supported by competent evidence, and is neither
arbitrary, capricious, nor unreasonable.
Administrative Law. An administrative
agency's decision is arbitrary when it is made in
disregard of the facts or circumstances without some basis
which would lead a reasonable person to the same conclusion.
. Administrative agency action taken in disregard of the
agency's own substantive rules is arbitrary and
Taxation: Appeal and Error. Questions of law
arising during appellate review of Tax Equalization and
Review Commission decisions are reviewed de novo.
Constitutional Law: Due Process. The
determination of whether the procedures afforded to an
individual comport with constitutional requirements for
procedural due process presents a question of law.
Administrative Law: Statutes. The meaning
and interpretation of statutes and regulations are questions
Due Process. Due process principles protect
individuals from arbitrary deprivation of life, liberty, or
property without due process of law.
Administrative Law: Due Process. A party
appearing in an adjudication hearing before an agency or
tribunal is entitled to due process protections similar to
those given to litigants in a judicial proceeding.
Due Process: Notice. Due process does not
guarantee an individual any particular form of state
procedure. Instead, the requirements of due [298 Neb. 835]
process are satisfied if a person has reasonable notice and
an opportunity to be heard appropriate to the nature of the
proceeding and the character of the rights which might be
affected by it.
Taxation. An owner is not deprived of his
property without due process of law by means of taxation if
he has an opportunity to question its validity or amount of
such tax or assessment in some stage of the proceedings,
either before that amount is finally determined or in a
subsequent proceeding for its collection.
Judges: Evidence. Generally, a successor
judge may not make a decision based on conflicting evidence
that a predecessor judge heard.
Trial: Judges: Due Process: Witnesses. Due
process entitles a litigant to have all the evidence
submitted to a single judge who can see the witnesses testify
and, thus, weigh their testimony and judge their credibility.
Due Process. Oral argument is not an
essential element of due process.
Trial: Judges: Due Process: Waiver. A party
has a due process right that a successor or substitute judge
may not render a judgment for a predecessor judge who
conducted the trial, but the party may waive this right and
agree to have a successor judge decide the case.
Taxation: Valuation: Presumptions: Evidence.
A presumption exists that a county board of equalization has
faithfully performed its official duties in making a property
tax assessment and has acted upon sufficient competent
evidence to justify its action. The presumption disappears
when competent evidence to the contrary is presented. Once
the presumption is rebutted, whether the valuation assessed
is reasonable becomes a question of fact based on all of the
Taxation: Valuation: Proof. The burden of
showing a property tax valuation to be unreasonable rests
upon the taxpayer.
___: ___: ___. The taxpayer's burden to show a property
tax valuation to be unreasonable is not met by showing a mere
difference of opinion. Rather, the taxpayer must establish
the valuation placed upon the property when compared with
valuations placed on other similar property is grossly
excessive and is a result of arbitrary or unreasonable action
and not just a mere error in judgment.
Taxation: Notice: Proof. When the Tax
Equalization and Review Commission hears a property tax
protest under Neb. Rev. Stat. § 77-1507.01 (Reissue
2009) and performs the factfinding functions that a county
board of equalization would have if the county had timely
provided notice to the taxpayer, the taxpayer's burden of
persuasion is by a preponderance of the evidence.
Evidence: Words and Phrases. Competent
evidence is evidence that is admissible and tends to
establish a fact in issue.
Neb. 836] 21. Property: Valuation:
Witnesses. A resident owner who is familiar with his
or her property and knows its worth is permitted to testify
as to its value without further foundation.
Taxation: Valuation: Evidence. When an
independent appraiser using professionally approved methods
of mass appraisal certifies that an appraisal was performed
according to professional standards, the appraisal is
considered competent evidence under Nebraska law.
Taxation: Valuation. In tax valuation cases,
actual value is largely a matter of opinion and without a
precise yardstick for determination with complete accuracy.
Evidence: Presumptions. A presumption may
take the place of evidence unless and until evidence appears
to overcome or rebut it, and when evidence sufficient in
quality appears to rebut it, the presumption disappears and
thereafter the determination of the issues depends upon the
___: ___.A presumption is not evidence and should never be
placed in the scale to be weighed as evidence.
Administrative Law. If an agency rule is but
an aid to help the agency in its decision, then the rule is
not binding upon the agency unless the rule confers a
procedural benefit upon a party.
from the Tax Equalization and Review Commission. Reversed and
remanded with directions.
A. Domina, of Domina Law Group, P.C., L.L.O.. for appellant.
R. Bowers, Custer County Attorney, and Glenn A. Clark for
Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy, Kelch,
and Funke, JJ.
V. Cain, Jr., appeals an order of the Tax Equalization and
Review Commission (TERC) affirming the decision of the Custer
County assessor (Assessor) regarding the 2012 taxable value
of his agricultural property. Because we find error on the
record, we reverse the TERC's order and remand the cause
with directions to sustain Cain's property valuation
protests for the 2012 tax year.
Neb. 837] I. BACKGROUND
owns property in Custer County southwest of Broken Bow,
Nebraska. The subject property encompasses 10 contiguous
parcels totaling 1, 093.93 acres of agricultural land
exclusively used for cattle production and grazing. The land
consists of rolling hills with Valentine sand and native
grass. About 756 acres of the property is irrigated native
grass upon which Cain grazes cattle. In 2006, Cain improved
this portion of his land with center pivot irrigation systems
to enhance livestock grazing. Cain does not cultivate row
crops on the subject property.
2012, the Assessor increased the total assessed value of
Cain's property from $734, 968 to $1, 834, 925. This
represented nearly a 250-percent property tax increase from
the prior year, without improvements being made to the
property during that time. This sharp increase was largely
due to the Assessor's decision to change the
classification of irrigated grassland for purposes of
valuation. From 2006 to 2012, the Assessor had used a
Nebraska Department of Revenue formula to adjust the value of
irrigated native grassland. In 2012, the Assessor
reclassified irrigated grassland by uniformly classifying all
irrigated land as irrigated cropland, whether the land is
used for "cultivated row crops, small grains, seeded
hay, forage crops, or grasses."
protested. Because Cain had not been provided timely notice
of the increased assessments, he was not afforded an
evidentiary hearing for his protests before the Custer County
Board of Equalization. Pursuant to Neb. Rev. Stat. §
77-1507.01 (Reissue 2009), Cain directly petitioned the TERC
to determine the actual value of each parcel. The TERC
consolidated Cain's protests and afforded him a hearing
on his petitions. A divided panel of two TERC commissioners,
Nancy J. Salmon and Thomas D. Freimuth, affirmed the
Assessor's increased valuations of Cain's property
Neb. 838] Following an appeal, in Cain v. Custer Cty. Bd.
of Equal. (Cain I),  we found plain error and reversed, and
remanded. We found the TERC's role according to the
procedure provided under § 77-1507.01 was to
'"determine the actual value or special value of
real property for that year.'" We found the
TERC's decision to determine Cain's protests using
the clear and convincing evidence standard provided under
Neb. Rev. Stat. § 77-5016(9) (Cum. Supp. 2016) was
erroneous, because such standard applied in '"all
appeals'" before the TERC. However, the TERC's role
was not to conduct an appellate review but to perform an
initial review of Cain's challenges to the increased
assessments. We held the TERC's decision erroneously
increased the taxpayer's burden of proof in a proceeding
under § 77-1507.01. We remanded the cause with
instructions for the TERC to reconsider the matter on the
record using the preponderance of the evidence standard
applicable to initial protests before a county board of
resigned as a TERC commissioner in September 2015, so upon
remand, the matter was assigned to another commissioner,
Robert W. Hotz. Cain moved for a new hearing on the merits
and an opportunity to present supplemental evidence and argue
the case under the preponderance of the evidence standard. He
also filed a notice of constitutional issues in which he
requested the TERC to vacate the Assessor's valuations of
his property and determine that the statutes he challenged
were unconstitutional. The TERC denied both requests,
determining that it had no authority to do anything other
than follow this court's instructions on remand.
Hotz and Salmon reviewed the full record and, without an
additional hearing, considered Cain's protests. The TERC
issued a new order which reversed in part the Assessor's
[298 Neb. 839] determination with respect to three parcels of
Cain's land, because, due to clerical errors, these
parcels had been incorrectly assessed as including water
wells. For the remaining seven parcels, the TERC accepted the
Assessor's reasoning and affirmed the Assessor's 2012
valuations of Cain's property. The TERC's order
stated, "[TERC] finds that the presumptions in favor of
the initial valuations by the . . . Assessor have not been
rebutted by a preponderance of the evidence . . . ."
Cain timely appeals.
ASSIGNMENTS OF ERROR
assigns, restated, that the TERC erred by (1) failing to
conduct a hearing following remand which permitted him
argument under the correct standard of review, (2) failing to
hear constitutional claims and decide those issues, (3)
rendering a decision not supported by sufficient evidence,
(4) failing to follow remand instructions, (5) making errors
of law; and (6) violating Cain's constitutional rights by
failing to classify his property in a uniform and
STANDARD OF REVIEW
review decisions of the TERC for error appearing on the
record of the commission. When reviewing a TERC judgment for
errors appearing on the record, the inquiry is whether the
decision conforms to the law, is supported by competent
evidence, and is neither arbitrary, capricious, nor
unreasonable. An administrative agency's decision is
arbitrary when it is made in disregard of the facts or
circumstances without some basis which would lead a
reasonable person to the same conclusion. Administrative
agency action [298 Neb. 840] taken in disregard of the
agency's own substantive rules is also arbitrary and
capricious. Questions of law arising during appellate
review of the TERC's decisions are reviewed de
determination of whether the procedures afforded to an
individual comport with constitutional requirements for
procedural due process presents a question of
law. The meaning and interpretation of
statutes and regulations are questions of law.
first address whether Cain's due process rights were
violated. We then address whether the TERC erred in affirming
the Assessor's valuation ...