Appeal from Mobile Circuit Court. (CV-91-2556, -3073, and. -3074). Ferrill D. McRae, TRIAL JUDGE.
Rehearing Overruled April 21, 1995, . Certiorari Denied August 25, 1995. Released For Publication February 23, 1996.
Beatty, Retired Justice. All the Judges concur.
The opinion of the court was delivered by: Beatty
Delaney's, Inc., and Springdale Stores, Inc. (hereinafter jointly referred to as "the Taxpayers"), contested the revocation of current use valuation for tax assessment purposes on certain parcels of real property located in Mobile County. The trial court concluded that a grant of current use valuation in a previous tax year precluded re-examination of the property's eligibility for current use valuation in a subsequent tax year, and entered a summary judgment for the Taxpayers. The State of Alabama; Freda P. Roberts, revenue commissioner of Mobile County; and the Mobile County Board of Equalization (hereinafter jointly referred to as "the Taxing Authorities") appeal. We reverse and remand.
Alabama's statutory scheme for the taxation of real property prescribes, as a general rule, that ad valorem taxes are based upon the fair and reasonable market value of the property. § 40-7-15, Ala. Code 1975. Beginning on October 1, 1978, the state legislature permitted an exception to the rule for property known as Class III property, which is defined as agricultural, forest, residential, or historic property. §§ 40-7-25.1 and 40-8-1, Ala. Code 1975. Upon application by the property owner, Class III property may be assessed for ad valorem tax purposes at its current use value rather than its fair market value. Id. The assessed value of property eligible for current use treatment is based upon the use being made of the property on October 1 of any taxable year. Id.
The Taxpayers are related corporations that together own the 11 parcels of real property at issue in this case. The property is located in Mobile County near the intersection of Interstate Highway 65 and Airport Boulevard. At various times during the tax years 1985 through 1989, the Taxpayers filed applications for current use valuation on these 11 parcels of property with the Mobile County tax assessor, all of which were granted. According to the Taxpayers, the property was being used as timberland. On April 1, 1989, Freda Roberts assumed the duties of the newly created office of revenue commissioner of Mobile County. *fn1 The revenue commissioner's office undertook a review of the property in Mobile County that was being taxed on the basis of current use valuation. The parcels owned by the Taxpayers were included in the property reviewed. After requesting information from the Taxpayers and having the property inspected and appraised, the revenue commissioner determined that none of the 11 parcels of property at issue here was being used "for the growing and sale of timber and forest products." § 40-8-1(b)(1), Ala. Code 1975. See also § 40-7-25.1. The revenue commissioner revoked the current use assessment, reclassified the property as Class II property, i.e., property not otherwise classified, and assessed ad valorem taxes based on fair market value. In tax year 1990, the total ad valorem tax bill for all 11 parcels, assessed as Class III property and based on current use value, was $147.29. In tax year 1991, the total ad valorem tax bill for all 11 parcels, assessed as Class II property and based on fair market value, was $134,278.01.
The Taxpayers appealed the revised assessments to the Mobile County Board of Equalization, arguing that the property should have retained its Class III status so that it could continue to enjoy current use valuation. The Board ruled that it did not have the authority to review the denial of current use valuation to the Taxpayers. The Taxpayers then filed in the Mobile Circuit Court an action for a declaratory judgment against the Taxing Authorities. The Taxpayers asked the court to declare that the Board had the authority to review the reclassification of their property or, in the alternative, to decide the dispute between the parties by declaring that the reclassification of their property was improper. While the declaratory judgment action was pending, the Board rendered 11 decisions on July 25, 1991, fixing the final value for assessment on each of the 11 parcels for the tax year 1991 on the basis of fair market value. Delaney's and Springdale Stores each appealed the Board's decisions to the Mobile Circuit Court pursuant to § 40-3-25, Ala. Code 1975. The three actions were then consolidated.
The Taxpayers filed a motion for summary judgment, which was opposed by the Taxing Authorities. After discovery, extensive briefing, and oral argument, the trial court entered a summary judgment in favor of the Taxpayers. The trial court held that the tax assessor's initial grant of the Taxpayers' applications for current use valuation was "res judicata as to the question of whether the use to which this property is being put qualifies for current use status," and declared the ad valorem tax assessments for the tax year 1991 to be void and illegal. The trial court then directed the revenue commissioner to reissue assessments for the 11 parcels, with corresponding tax bills, in which the property was assessed as Class III property based upon current use valuation. The Taxing Authorities appealed to the Supreme Court of Alabama; however, that court transferred the case to this court on jurisdictional grounds. *fn2 The Alabama Association of School Boards, the Association of Tax Assessors and Tax Collectors of Alabama, the Association of County Commissions of Alabama, the Alabama Education Association, the Mobile County Parent Teacher Association, the Board of School Commissioners of Mobile County, the Baldwin County district attorney, the Baldwin County Commission, the Baldwin County tax assessor, and the Baldwin County tax collector have filed amicus curiae briefs in support of the Taxing Authorities.
The Taxing Authorities present two issues on appeal. They contend that the tax assessor's decisions granting the Taxpayers' applications for current use valuation in tax years 1985 through 1989 do not preclude reclassification of the property in the tax year 1991 on the basis of res judicata. The Taxing Authorities also contend that the record in this case contains sufficient evidence for this court to reverse the summary judgment for the Taxpayers.
We first address the Taxing Authorities' argument that the initial assessments of the subject parcels of property during 1985 through 1989 are not res judicata as to their reclassification in subsequent tax years. This issue is one of first impression in Alabama. The trial court's decision to apply the principle of res judicata is a Conclusion of law that is reviewable de novo by this court. Manning v. City of Auburn, 953 F.2d 1355, 1358 (11th Cir. 1992); Helms v. Helms' Kennels, Inc., 646 So. 2d 1343 (Ala. 1994).
The Taxing Authorities and amici curiae argue that at least two, if not more, of the elements of res judicata are missing in this case. Alabama law requires proof of four elements before the doctrine of res judicata can be applied. Our supreme court has discussed these elements as follows:
"In order for the doctrine of res judicata to apply (1) the question or fact must have been litigated and determined by a court of competent jurisdiction; (2) a final judgment must have been rendered on the merits; (3) the parties, or those in privity with them, must be so related to the parties in the subsequent action as to entitle those in the subsequent action to the benefits and/or burdens of the prior litigation; and (4) the same cause of action must be involved in both suits."
Waters v. Jolly, 582 So. 2d 1048, 1053 (Ala. 1991) (citations omitted). If all four elements are present, than any issue that was, or could have been, decided in the initial action cannot be litigated in the subsequent action. Id. If one of the four elements is missing, however, then the doctrine of res judicata is inapplicable. Manning, 953 F.2d at 1358; Fisher v. Space of Pensacola, Inc., 461 So. 2d 790, 792 (Ala. 1984). We agree with the Taxing Authorities that at least one element of the doctrine, the fourth, has not been satisfied in the instant case, thus making this doctrine inapplicable. Because the fourth element of the doctrine of res judicata is not present in this action, we pretermit any Discussion of the first three elements.
For the doctrine of res judicata to apply, the same cause of action must be involved in both lawsuits. Our supreme court discussed this premise in State v. Plantation Pipe Line Co., 265 Ala. 69, 89 So. 2d 549 (1956), a case involving franchise taxes in different years. The court quoted with approval the following applicable principles from Annotation, "Judgment in Tax Cases in Respect of One Period as Res Judicata in Respect to Another Period," 150 A.L.R. 5 (1943):
"'Generally, where in a proceeding concerning a tax for a particular period a judgment is rendered which determines that the taxpayer or his property is taxable or is exempt from taxation, but is not supported by a finding or findings specifying the grounds or facts upon which the Conclusion is reached, such judgment has been held not to settle conclusively the question that the taxpayer or his property is taxable, or exempt from taxation, for a different period not involved in the former proceeding. This observation is borne out by nearly all the cases, ...