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NRG Wholesale Generation LP v. Kerr

Supreme Court of Mississippi

December 6, 2018

NRG WHOLESALE GENERATION LP f/k/a GENON WHOLESALE GENERATION, LP
v.
LORI P. KERR, IN THE OFFICIAL CAPACITIES OF TAX ASSESSOR AND COLLECTOR OF CHOCTAW COUNTY, MISSISSIPPI, AND CHOCTAW COUNTY, MISSISSIPPI

          DATE OF JUDGMENT: 03/27/2017

          CHOCTAW COUNTY CIRCUIT COURT HON. GEORGE M. MITCHELL, JR. JUDGE

          TRIAL COURT ATTORNEYS: SHELDON G. ALSTON PETER J. CROSSETT PAUL H. STEPHENSON, III PEYTON D. PROSPERE KASEY CAROL BURNEY LOUIS G. FULLER WILLIAM F. GOODMAN, JR. SCOTT FULLER SINGLEY

          ATTORNEYS FOR APPELLANT: JOSEPH ANTHONY SCLAFANI SHELDON G. ALSTON PETER J. CROSSETT

          ATTORNEYS FOR APPELLEES: PAUL H. STEPHENSON, III PEYTON D. PROSPERE KASEY CAROLBURNEY

          BEFORE WALLER, C.J., CHAMBERLIN AND ISHEE, JJ.

          ISHEE, JUSTICE

         ¶1. The main issue presented by this case is whether NRG Wholesale Generation's proffered expert used an acceptable method to determine the "true value" of its power plant in computing ad valorem tax. NRG's expert used a mixture of the sales-comparison approach, the income approach, and the cost approach to determine the true value of the facility. Lori P. Kerr, the tax assessor for Choctaw County, and Choctaw County, Mississippi (collectively, the "County"), contend that Mississippi law mandates a trended historical costless-depreciation approach to calculate the true value of industrial personal property.[1] The circuit court found in favor of the County and excluded NRG's proffered expert testimony. NRG claims the circuit court abused its discretion.

         ¶2. NRG also argues that the circuit court erred in denying its motion to change venue. NRG asserts that, because many of the jurors knew the county officials named as defendants in this case, a fair trial in Choctaw County was impossible.

         ¶3. We hold that the Mississippi Department of Revenue (the "DOR") regulation controlled and that NRG's expert applied an unacceptable method to determine true value. Therefore, the circuit court did not err in excluding NRG's proffered expert testimony. Additionally, because NRG was afforded a fair and impartial jury, the circuit court did not abuse its discretion in denying the motion to change venue. We affirm the judgment of the circuit court.

         FACTS AND PROCEDURAL HISTORY

         ¶4. NRG owns a power plant located in Choctaw County. In calculating the ad valorem tax, the Choctaw County Tax Assessor determined that the true value of the facility was $467, 213, 070. Having itself appraised the true value of the facility at $110, 000, 000, NRG appeared before the Choctaw County Board of Supervisors (the "Board") in protest. Upon reconsideration, the Board discovered a calculation error and found that the true value of the facility was actually $559, 974, 970, or $92, 761, 900 more than the tax assessor's initial valuation. NRG appealed.

         ¶5. NRG designated Mark R. Simzyk as its valuation expert and submitted his report. In calculating the true value of the facility, Simzyk first determined the value of the facility under the sales-comparison approach, the income approach, and the cost approach.[2] He then reconciled the three results, finding the true value of the facility to be $180, 000, 000.

         ¶6. After the close of discovery, the County moved to exclude Simzyk's expert testimony. The County argued that Simzyk utilized methods for determining the true value of industrial personal property different from the method mandated by state law and regulation. NRG countered that, since the circuit court must hear NRG's tax appeal anew, Simzyk's appraisal would assist in determining the true value of the facility. NRG asserted that the County ignored the clear language of Mississippi Code Section 27-35-50 (Rev. 2017), which defines "true value" as encompassing all approaches to value.

         ¶7. In its order granting the County's motion to exclude Simzyk's expert testimony, the circuit court noted that no DOR regulations allowed a taxpayer to use a method other than the one prescribed by state law and regulation. Allowing Simzyk to testify to an appraisal based on a method other than the method prescribed by the DOR would contradict the guidelines established for expert witnesses, such as Daubert v. Merrell Dow Pharmacuticals, Inc., 509 U.S. 579, 582, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) and Kumho Tire Co., Ltd. v. Carmichael, 526 ...


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