O'Brien v. MT Dept. of Revenue
CourtMontana Supreme Court
Date FiledJune 23, 2026
DocketDA 25-0673
StatusPublished
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Full Opinion
06/23/2026
DA 25-0673
Case Number: DA 25-0673
IN THE SUPREME COURT OF THE STATE OF MONTANA
2026 MT 132
IN RE: KENNETH E. O’BRIEN,
PERSONAL REPRESENTATIVE OF
THE ESTATE OF MAXINE O’BRIEN,
DECEASED, AND THE C. MARK HASH
AND THERESE FOX HASH
REVOCABLE FAMILY TRUST,
Petitioners and Appellants,
v.
MONTANA DEPARTMENT OF REVENUE,
Respondent and Appellee.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV-15-2025-430(B)
Honorable Paul Sullivan, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Therese Fox Hash, Hash, Rudbach, Hutchison & Murray, Kalispell,
Montana
For Appellee:
Nicholas J. Gochis, Senior Tax Counsel, Montana Department of Revenue,
Helena, Montana
Submitted on Briefs: May 6, 2026
Decided: June 23, 2026
Filed:
__________________________________________
Clerk
Justice Katherine M. Bidegaray delivered the Opinion of the Court.
¶1 In 2024, taxpayers Kenneth O’Brien, as personal representative for the estate of
Maxine O’Brien, and the Mark and Therese Hash Revocable Family Trust (Hash Family
Trust) (collectively, O’Brien), appealed the Montana Department of Revenue’s (MDOR)
adjusted appraisal of their property for the 2023/24 tax cycle to the Flathead County Tax
Appeal Board (CTAB). When CTAB decided the appeal in O’Brien’s favor, MDOR
appealed to the Montana Tax Appeal Board (MTAB), which reversed CTAB. O’Brien
then sought judicial review of MTAB’s decision, which the Montana Eleventh Judicial
District Court affirmed in July 2025. O’Brien appeals.
¶2 O’Brien raises numerous issues, which we summarize and restate as follows:
1. Whether MTAB improperly considered the validity and reliability of O’Brien’s
appraisal for the first time on appeal or conducted a “trial de novo” on that
issue.
2. Whether MTAB correctly denied O’Brien’s motion for summary judgment.
3. Whether MTAB correctly construed Admin. R. M. 2.51.307(4).
4. Whether “sufficient, relevant information on income” was “made available to
the department” under § 15-8-111(5), MCA.
5. Whether MTAB correctly reversed CTAB’s decision.
We affirm the District Court’s July 15, 2025 order to the extent it concluded MTAB could
consider the validity and reliability of O’Brien’s appraisal and correctly affirmed MTAB’s
denial of O’Brien’s motion for summary judgment; reverse the District Court’s order to
the extent it affirmed MTAB’s February 2025 merits decisions; reverse MTAB’s
2
February 2025 merits decisions; and reinstate CTAB’s April 2024 decisions for Units 130,
132, and 136.
FACTUAL AND PROCEDURAL BACKGROUND
¶3 O’Brien’s case has a complicated factual and procedural history. The dispositive
statutory question, however, is straightforward: whether, at the time of MDOR’s informal
review of its 2023/24 assessment, “sufficient, relevant information on income was made
available to the department.”1 If the answer was yes, MDOR had to use the income
approach to appraise O’Brien’s commercial condominiums. If the answer was no, MDOR
had to use the cost approach. Section 15-8-111(4), (5)(b), (c), MCA. With this governing
question in mind, we discuss the relevant factual and procedural history of this case.
The subject property: PWI Units 130, 132, and 136
¶4 The subject property, Plaza West I (PWI), is a commercial condominium building
located in Kalispell, Montana. PWI was built in 1973 and has five individual units. The
owners of two units, 126 and 128, were parties to the CTAB and MTAB proceedings
below, but these unit owners did not seek judicial review of MTAB’s decision and are
therefore not parties to this appeal. The remaining units are: 130 and 132,2 formerly owned
by Maxine O’Brien and now by her estate, and 136, owned by the Hash Family Trust.
1
This case does not require us to decide whether MDOR generally may rely on mass-appraisal
models when valuing commercial property. The narrower question is whether MDOR may treat
the absence of model data for commercial condominiums as dispositive when the taxpayer has
made income information available that bears directly on the subject property and comparable
rental property.
2
Due to mislabeling while condominiumizing, Unit 132 is sometimes alternatively called Unit
134.
3
Below, the parties consolidated proceedings on all units because everything is materially
the same between them except for their square footage. O’Brien used Unit 130 as the
prototypical example and so will we.
¶5 Each PWI unit has its own basement with individual access via stairs, and each unit
rents the first floor and basement together. The basements generally mirror the upstairs
floor plans, and one cannot access the basement of one unit from the basement of another,
though some of the basement space is apparently also common area. The basements are
not separately rentable, however, because of fire code and access only through the first
floor. They are used primarily for storage, though some have mixed-used office space.
¶6 Plaza West II (PWII) is located immediately adjacent to PWI and was built shortly
after by the same builder using the same plans and same materials. The only substantive
differences between the two buildings are that PWII has more individual units configured
slightly differently and is not condominiumized. Like PWI, PWII units also each have full
basements accessible only via the first floor and the first floor and basements are rented
together.
MDOR’s 2021 assessment on PWI Condominiumization and O’Brien’s 2022 CTAB
appeal
¶7 The events underlying this case began when O’Brien condominiumized PWI in
2021. According to O’Brien, in 2020, MDOR appraised PWI using the income approach
to valuation, as it always had.3 But O’Brien’s condominiumizing PWI in 2021 triggered a
3
In 2020, MDOR appraised the PWI and PWII buildings each at $697,900.
4
mid-cycle reappraisal.4 Using the income approach, MDOR assigned Unit 130 a potential
gross income (PGI) of $20.50/square foot (s.f.)5 for the first floor only and did not value
the basement separately. Believing the $20.50 PGI was “vastly in excess of what it should
be,” O’Brien sought MDOR informal review. On informal review, MDOR reassessed and
reduced the first-floor PGI to $15.50 but then, for the first time ever, valued the basement
separately at a PGI of $8.75. When O’Brien asked MDOR to supply the basis for its PGI
numbers, MDOR supplied only information on comparable sales, not comparable rents.
¶8 Maxine O’Brien and the Hash Family Trust appealed MDOR’s assessments for
Units 130, 132, and 136 to CTAB, arguing MDOR could not separately value the
basements because they were not separately rentable due to their being accessible only
through the upstairs of each unit and not up to fire code. In 2022, CTAB accepted
O’Brien’s and the Hash Family Trust’s proposed income-approach valuations, which
valued the unit first floors only. The only record before this Court of CTAB’s 2022
decisions are three November 16, 2022 letters from the CTAB secretary, one each for Units
130, 132, and 136, describing the decision as “correcting the valuation by adjusting the
total valuation” for each unit to the taxpayers’ valuation.6
4
“Each unit of a condominium project is considered a parcel of real property subject to separate
assessment and taxation.” Section 15-8-511(1), MCA; see also Title 70, chapter 23 (Montana’s
“Unit Ownership Act” governing condominiumizing).
5
PGI is a component of the net operating income calculus and equals the monthly rent times
12 months divided by the “income area” square footage. All references to PGI throughout are to
the potential gross income per square foot. See Admin. R. M. 42.20.108(1)(b) (2005); MDOR’s
CTAB Exhibit B, pp. 12-13 (calculating PGI based on the “square foot model”).
6
For example, CTAB valued Unit 130 at O’Brien’s proposed $145,438, down from MDOR’s
$474,000.
5
¶9 MDOR admits that CTAB found in O’Brien’s favor in 2022 and that it did not
appeal CTAB’s 2022 decisions.
The 2023/24 appraisal and O’Brien’s request for MDOR informal review
¶10 After the 2022 CTAB decisions, MDOR assessed PWI for the 2023/24 tax cycle.
In June 2023, again using the income approach, MDOR assigned Unit 130 a first-floor PGI
of $14.75 and a basement PGI of $9.00.
¶11 In July 2023, O’Brien asked for MDOR informal review under § 15-7-102(3)(a)(ii),
MCA.7 O’Brien said MDOR’s $14.75 first-floor PGI was too high and that MDOR could
not separately value the basements under the 2022 CTAB decisions. Like in 2021, O’Brien
asked MDOR to “provide all comparable rental properties and rent used in making the
assessment.” See § 15-7-102(3)(b), MCA. MDOR later confirmed that it never provided
the taxpayers this requested information.
¶12 To support the taxpayers’ proposed income valuations, O’Brien provided MDOR
with a “Taxpayers’ Appraisal” worksheet showing values for each PWI unit. O’Brien later
submitted a more formal “Report and Appraisal” dated October 27, 2023, and authored by
Jeff O’Brien (Jeff), a CPA and Ken and Maxine O’Brien’s son. The appraisal explained
its methodology, which calculated value using MDOR’s income-approach formula, as
7
Section 15-7-102(3)(a)(ii) prescribes a taxpayer request for “informal classification and appraisal
review” of “class four property described in 15-6-134,” also known as a Form AB-26.
6
provided in Admin. R. M. 42.20.108 (2005),8 and a first-floor-only $12.59 PGI developed
from actual PWI rents and rents from the nearly identical PWII.
¶13 On January 17, 2024, MDOR sent O’Brien a determination letter regarding its
decision on informal review. MDOR indicated it had adjusted the property value based on
a “change to property information.” MDOR lead appraiser Andrew Pritchard would later
testify that this “change” was to the use code for PWI basements from “office” to “storage.”
Though the letter also contained a box for “change in valuation method,” MDOR did not
check it.9
¶14 O’Brien obtained the new property record cards for each unit in February 2024.
Unit 130’s record card showed a reduced appraisal value based on the “cost method.”
Confusingly, the record card also showed an appraisal value calculated under the “income”
method, assigning a first-floor PGI of $14.75 and a basement PGI of $5.50. The total
cost-approach and income-approach values were nearly the same amount. MDOR’s
Pritchard would later testify that the record card showed an income-approach valuation “by
default in the form” as “informational for the property owner”; but he also, somewhat
contradictorily, testified that MDOR intentionally reduced the basement PGI from $9.00
8
In its simplest form, the income-approach formula calculates property value (V) as the product
of “typical property net income” (I) divided by a capitalization or “cap” rate (R), i.e., V=I/R.
In this formula, I is separately calculated by taking the PGI and subtracting an MDOR vacancy
discount and allowable expenses. A vacancy discount is a percentage reduction from income for
rental vacancy and uncollected rents. R, the cap rate, reflects an income-producing property’s
return on investment and is separately calculated by dividing the property’s net operating income
by its corresponding valid sale price. Admin. R. M. 42.20.108; 42.20.109 (2002).
9
MDOR’s determination letter further explained “how the department calculated the market value
of [PWI units] using the cost approach.” O’Brien would later claim that the taxpayers’ copy of
the letter did not contain this language.
7
to $5.50 “in an effort to recognize the property owner’s concerns” about valuing the
basements. Despite that the property record cards showed income and cost valuations,
Pritchard confirmed MDOR used only the cost approach to value.
O’Brien’s 2024 CTAB appeal
¶15 O’Brien appealed MDOR’s adjusted appraisal to CTAB pursuant to §§ 15-7-102(6)
and 15-15-102(4), MCA, on the grounds that the $14.75 first-floor PGI was unsupported
and that MDOR could not value the basements separately because of the 2022 CTAB
decisions which MDOR did not appeal. O’Brien asked CTAB to reduce the unit values to
the taxpayers’ valuation amounts as stated in Jeff’s appraisal.
¶16 Prior to the scheduled CTAB hearing, MDOR provided O’Brien with a copy of its
cost-approach appraisal wherein MDOR identified its rationale for switching appraisal
methods.10 To wit:
The property owner states the department has overvalued the Plaza West
Condos.
In the past, concern was expressed regarding the department’s income value
method for some of these units. To avoid that concern for 2023, the
department has valued the units on the cost approach. The department
selected the cost approach and applied appropriate depreciation as evident in
the overall price per square foot.
The department recognizes the basement area for each unit does not meet fire
code requirements to legally rent as office space. This consideration is
evident in the price per square foot . . . for this area. The basement areas are
being utilized as either storage or additional office space.
10
O’Brien would later claim that this was the first time the taxpayers learned of MDOR’s switching
appraisal methods. MTAB and the District Court rejected any claim of surprise, however, because
the property record cards, which Ken O’Brien personally received in February 2024, noted that
MDOR had adjusted the 2023/24 appraisal values based on the “cost method.”
8
The department’s valuation is also supported by the sale price of two of the
Plaza West units. The sales occurred within six months of the current
appraisal date of January 1, 2022.
. . .
The department is not required to use income data provided by each property
owner to then create an income value for each individual property. This
would require an individual appraisal of each property every reappraisal
[which] would be time-consuming and an impossible task for mass appraisal
valuation.
The department is required to review any income data provided by an
individual property owner to determine if an adjustment is necessary based
on the department’s model data. If sufficient, relevant data is not available,
the department shall value condominiums using the cost approach to value.
The income calculation provided by the property owner . . . is not an
appraisal. Choosing to use the property owner’s reported income values,
with some of the department’s income model values, overstates expenses and
reduces the net operating income below market averages.
Determining market value by using only portions of the department’s income
calculation model, and then incorporating outside data, is not an acceptable
appraisal methodology. . . . The property owner’s calculated NOI, divided
by the sales price of either of the two sold units, suggests a much lower cap
rate than the department’s modeled cap rate. . . . The property owner’s
calculations are not acceptable.
The April 2024 CTAB hearing
¶17 Based on MDOR’s asserted rationale, the focus of the April 4, 2024 CTAB hearing
became whether MDOR had “sufficient, relevant information on income” and therefore
had to use the income approach to value PWI’s commercial condo units as required by
§ 15-8-111(5)(b), MCA. MDOR said it lacked sufficient information; O’Brien said MDOR
had sufficient information because the taxpayers provided it. Noting that MDOR had, at
all times prior to the 2023/24 tax cycle, used the income approach, including after
9
condominiumization in 2021, O’Brien suggested that MDOR switched to the cost approach
not for lack of data, but to assess the basements separately and thereby circumvent CTAB’s
2022 decisions. O’Brien argued that taxpayer “concerns” could not legitimately justify
using the cost approach under § 15-8-111(5), MCA.
¶18 When examined at the hearing, Jeff described himself as PWI’s bookkeeper and
property manager; he collected rents and paid building expenses. Though not a certified
appraiser, Jeff had over 30 years’ experience as a CPA, including preparing income-based
appraisals.
¶19 Jeff testified as to the basis for his income-approach valuation. He explained that
he developed the $12.59 PGI from actual PWI and PWII rents in 2021. Prior to their sale
in late 2021, Units 126 and 128 rented for $10.62/s.f. Unit 132 rented for $12.59/s.f. Unit
130, which Jeff rented as office space for his CPA firm, rented for $10.37/s.f.11 The
average rent rates for PWII’s units was $12.87/s.f. Units in both buildings were rented
under similar terms and all rents included use of the basements.
¶20 The taxpayers separately provided an affidavit from PWII part-owner Dennis
Green, which corroborated Jeff’s appraisal. Green stated he rented PWII units for an
average of $12.87/s.f. based on and competitive with the market and that each unit’s rent
included use of the basement, which Green treated as an amenity and not a separately
rentable space.
11
Unit 136 was owner-occupied in 2021.
10
¶21 Jeff explained that he used the “highest” $12.59 PGI to calculate each PWI unit’s
value using MDOR’s Rule 42.20.108 income-approach formula. The formula requires
inputting values for income, expenses, vacancy discounts, and capitalization rates.12
Initially, Jeff used MDOR model data for all those values except for income, where he used
the $12.59 PGI, and expenses, where he used actual PWI expenses and MDOR model
expenses where PWI was lacking. But, when MDOR objected to Jeff’s mixing actual and
model expense data in his first appraisal (O’Brien’s CTAB Exhibit 9), he prepared a second
appraisal (O’Brien’s CTAB Exhibit 15), which used his $12.59 PGI and MDOR’s model
data for all other values in the calculus.13
¶22 MDOR witnesses, lead appraiser Pritchard and regional manager Dawn Cordone,
testified as to why MDOR switched from the income to the cost approach: (1) it lacked
model income data for comparable properties; (2) O’Brien’s appraisal was neither
sufficient nor relevant and was instead unacceptable for several reasons; and (3) the cost
approach allowed MDOR to “overcome the property owners’ concerns” about valuing the
PWI basements under the income approach while still bringing the overall appraisal value
in line with the market.
¶23 As for lack of model data, Cordone testified that income data on commercial
condominiums in Kalispell was “limited,” meaning MDOR could not adequately build a
mass-appraisal income model for that property type. This was why, when O’Brien
12
See supra, note 8.
13
This resulted in a revised total value for Unit 130 of $275,889, up from $251,951.
11
requested MDOR’s basis for its June 2023 PGIs, MDOR did not provide that information.
Cordone did not, however, explain how MDOR derived the PGIs it used in its 2021 and
2023 income-approach appraisals, leaving Ken O’Brien’s testimony that they were based
on comparable sales, and not rents, uncontroverted.14
¶24 As for O’Brien’s appraisal, MDOR did not consider it “sufficient or relevant” for
two primary reasons. First, the $12.59 PGI was too low because it did not capture the value
of the basements and was the product of bad management practices like renting below
market to friends and family. Second, the methodology was flawed because blending
PWI’s $12.59 PGI with MDOR’s model data for all other values in the formula resulted in
an appraisal value half of the market value, which MDOR knew precisely from the 2021
sales of Units 126 and 128. MDOR said that it could not accept an appraised value half
the market value because that would violate the statutory mandate of § 15-8-111, MCA,
that MDOR assess all taxable property at 100% market value. MDOR disagreed with
O’Brien that § 15-8-111(4) and (5), MCA, the sections for valuing commercial
condominiums, permitted assessment below market value.
14
At the later MTAB hearing, Ken O’Brien tried to get MDOR to answer this question. There, he
asked Pritchard directly, “If you didn’t have sufficient information to perform an appraisal based
on the income approach, how did you use that method?” MDOR objected and Pritchard never
directly answered where MDOR came up with the information to perform its June 2023 income
approach appraisal; Pritchard did, however, confirm that MDOR never supplied that information
to the taxpayers, despite their request.
12
¶25 MDOR also took issue with Jeff’s qualifications and the fact that the appraisal was
dated in October 2023. Notwithstanding these shortcomings, Cordone testified that
MDOR fully considered O’Brien’s appraisal on informal review but rejected it.
¶26 Finally, as for MDOR’s switching appraisal methods to resolve taxpayer “concerns”
about the basements, Cordone said the basements had some inherent value, at minimum as
storage space. But, importantly, Cordone agreed that the basements had no separate,
individual, or additional value as income-producing property beyond what was already
captured in the rent for the first floor. MDOR’s concern, then, was that O’Brien’s PGI was
too low to reflect the basements’ value. By contrast, Cordone and Pritchard explained that
the cost approach, which allowed MDOR to value the basements separately, solved that
problem.
CTAB’s April 2024 decision
¶27 CTAB deliberated on the record. The board concluded that MDOR’s claimed lack
of income information was not credible and that the taxpayers had overcome MDOR’s
presumption of correctness by providing sufficient, relevant income information.
Therefore, CTAB resolved the threshold question in O’Brien’s favor: PWI units had to be
valued using the income approach under § 15-8-111(5)(b), MCA. CTAB then compared
the taxpayers’ and MDOR’s income-approach appraisals. Noting that O’Brien’s
calculation used all MDOR model data except for income, the board focused on the
competing PGIs—i.e., “whose figures to use.”
¶28 CTAB decided that O’Brien’s $12.59 PGI was “perfectly” corroborated by Green’s
affidavit describing actual rents from the nearly-identical PWII. PWII’s similar rents also
13
refuted MDOR’s claim that PWI’s reported rents were based on improper management
practices. And, like PWII’s rents, PWI’s rents reflected use of the basements and therefore
captured the basements’ values for taxation purposes. Conversely, the board expressed
concern that MDOR’s $14.75 PGI was based on comparable sales, not comparable
rents, as required under MDOR’s Rule 42.20.108, and disagreed with assigning any
separate PGI to the basements, which had no individual income-producing value.
¶29 After deliberation, CTAB ordered MDOR to apply O’Brien’s income-approach
valuation, Exhibit 15, which calculated value by using all MDOR model data and
O’Brien’s $12.59 PGI. CTAB issued conforming written decisions for each PWI unit the
next day on April 5, 2024.
MDOR’s appeal to MTAB; Issues presented
¶30 In May 2024, MDOR appealed CTAB’s decision to MTAB pursuant to
§§ 15-2-301 and 15-15-104(1), MCA, initially on the broad grounds that CTAB’s
decision was erroneous and its valuation did not comport with the law. At MTAB’s
request, MDOR later asserted more specifically that CTAB had erroneously rejected
MDOR’s cost-approach appraisal upon concluding that sufficient, relevant information on
income was made available, mandating use of the income approach under § 15-8-111(5),
MCA.
O’Brien’s Motion for Summary Judgment
¶31 In advance of the MTAB hearing, O’Brien filed a motion for summary judgment,
claiming entitlement to judgment as a matter of law on the ultimate question of valuation.
Within that ultimate issue, however, lay numerous other questions—including the disputed
14
threshold question of whether MDOR had sufficient, relevant income information under
§ 15-8-111(5), MCA. MDOR said the predicate factual question—whether MDOR’s
model data or O’Brien’s property-specific data met the standard—remained disputed,
precluding summary judgment.
¶32 The parties also argued over the preclusive effects of the 2022 CTAB decisions
which MDOR did not appeal, and specifically whether MDOR could separately value the
unit basements. O’Brien said no; MDOR said yes, because Admin. R. M. 2.51.307(4)
(2023) creates an exception to the finality of CTAB decisions for circumstances affecting
property value, such as periodic reappraisal under § 15-7-111, MCA.
¶33 After full briefing, MTAB concluded that O’Brien was not entitled to summary
judgment and denied O’Brien’s motion.
The November 2024 MTAB Hearing
¶34 At the November 14, 2024 MTAB hearing, Ken O’Brien testified about the 2022
CTAB proceedings and decisions which MDOR did not appeal and about the history of the
2023/24 appraisal leading to the present MTAB appeal.
¶35 Jeff O’Brien testified in conformance with his CTAB testimony regarding how he
prepared his appraisal, and specifically, how he developed the $12.59 PGI by using actual
PWI and PWII rental income data, which he personally investigated and confirmed. Jeff
conceded he was not a certified appraiser but said that his 30-year accounting background
qualified him to prepare the income-approach appraisal. Finally, Jeff addressed MDOR’s
management practices concern, denying that he received any “sweetheart deal” because his
15
rent for Unit 130 was comparable with other PWI and PWII units and to office rent he paid
elsewhere.
¶36 MDOR’s lead appraiser Pritchard and regional manager Cordone also testified in
conformance with their CTAB testimony, namely that MDOR switched to the cost
approach because it lacked sufficient modeling data; it wanted to resolve the taxpayers’
concerns that MDOR was overvaluing the basements under the income approach; and the
cost-approach valuation “came right in line” with the sale prices for the recently-sold
Units 126 and 128. Pritchard and Cordone also offered the same critiques of O’Brien’s
appraisal: the PGI was too low; the blending methodology was flawed; Jeff was not an
appraiser; and the appraisal was not completed within six months of the pertinent valuation
date, January 1, 2022.
¶37 First, as for lack of model income data, Pritchard testified that MDOR’s
mass-appraisal data pool for Kalispell included 49 properties, only one of which was a
commercial condominium. That property, however, was not comparable because it did not
have a basement and was in an inferior location. MDOR therefore lacked sufficient income
data to build a model for that property type.
¶38 Second, as for O’Brien’s income data, Pritchard admitted O’Brien provided
“income information” for PWI and for the neighboring PWII. But that income information
could not be “independently verified” because O’Brien did not provide any tax returns or
lease or management agreements; though requested, PWII had also not provided income
and expense information; and the only other commercial condo in the data pool was not
comparable so MDOR could not use it to verify O’Brien’s PGI. In response to MDOR
16
interrogatories and requests for production ahead of the CTAB hearing, O’Brien disclosed
that there were no written rental agreements available because they were verbal leases.
¶39 When asked why MDOR did not use the income information O’Brien provided,
Pritchard answered that “the data was not reliable” because of “some inconsistencies with
the income information.” Specifically, O’Brien’s “rent rates were below market” and
“below what [MDOR] had typically seen for commercial properties.” Pritchard again
indicated O’Brien’s rent rates were discounted for friends and family but did not identify
anyone besides Jeff O’Brien as related to PWI ownership. Finally, despite possessing PWI
and PWII rent data, Pritchard expressly denied that MDOR “had sufficient information to
determine what the PGI was” for PWI or PWII.
¶40 Further, MDOR argued for the first time that PWII was not, as O’Brien claimed, an
“identical” property because it was wholly owned and not condominiumized. But the only
effect of this distinction, according to Cordone, was that PWI condos and the PWII building
had different market values. Cordone admitted, however, that because of their similarities,
PWI and PWII may “garner . . . the same market rent.”
¶41 Finally, as before CTAB, market value was the primary asserted reason for both
rejecting O’Brien’s appraisal and switching to the cost approach. Above all other
shortcomings, O’Brien’s appraisal resulted in unit values that were half their market value,
which MDOR found unacceptable and inequitable. By comparison, MDOR said the cost
approach solved this problem because it “recognized the reduced utility” of the basement
spaces, reduced the overall assessment, “came right in line with the sales prices”
17
of Units 126 and 128, and therefore was “the most appropriate and defensible approach to
valuation.”15
MTAB’s February 2025 decision
¶42 On February 5, 2025, MTAB issued its decisions, reversing CTAB and adopting
MDOR’s cost-approach assessments for all PWI units. As pertinent to our analysis, MTAB
made the following conclusions of law:
(1) “Under Montana law, [MTAB] may hear cases de novo and may affirm,
reverse, or modify a CTAB decision.”
(2) O’Brien’s “valuation” was not “an appraisal” because “it was performed
more than six months after the valuation date” and “because it mixed” actual
PWI information with MDOR model information, “result[ing] in an
unreliable value.”
(3) “Because MDOR performs mass appraisals, they cannot use a property’s
actual income and expense data to value that property.” That would require
“a separate appraisal for each commercial property” which is “not feasible.”
(4) MDOR “determined it did not have sufficient information to use the income
approach to value [PWI] because only one of the voluntary submissions of
income information they received was from a commercial condominium,”
but that property “was in an inferior location and lacked a basement.”
(5) “If MDOR does not receive sufficient information to value a particular
commercial property using the income approach, which can happen when
there are not enough voluntary submissions of data to develop a model,
MDOR must value the property using the cost approach.”
15
MDOR’s Pritchard testified in support of MDOR’s cost-approach appraisal and O’Brien tested
Pritchard’s assessment methodology on cross-examination. MDOR modeler Jake Thiesen
testified about the land value modeling data underlying the cost-approach appraisal. O’Brien
stipulated, for purposes of the cost approach, that MDOR’s model was accurate and met all
required standards.
18
(6) “If MDOR receives sufficient income information from voluntary
submissions in a future cycle,” it “may value [PWI] using the income
method.”
(7) “Because MDOR only received income information from one commercial
condominium during the 2023/24 valuation cycle,” MDOR “correctly valued
the property using the cost approach.”
(8) MDOR was not “prohibited from valuing the basements” under the 2022
CTAB decisions because, under Admin. R. M. 2.51.307(4), “each valuation
cycle stands on its own.”
O’Brien’s petition for judicial review of MTAB’s decisions on Units 130, 132, and 136
¶43 In March 2025, O’Brien sought judicial review of MTAB’s decisions pursuant to
§§ 15-2-303, 2-4-702, and -704, MCA, asking the court to reverse MTAB’s decisions and
reinstate CTAB’s decisions. O’Brien identified four primary issues, whether (1) CTAB
erred; (2) MTAB erroneously decided the case based on an issue not presented on appeal;
(3) MTAB erroneously tried the case “de novo”; and (4) MTAB erroneously denied
O’Brien’s motion for summary judgment.
¶44 The District Court identified the “heart of the issue” as whether the income- or
cost-approach appraisal method applied. The court concluded that substantial record
evidence showed MDOR lacked sufficient, relevant income information and therefore that
the “threshold condition” triggering mandatory use of the income approach was not met
and that MTAB did not err in adopting MDOR’s cost-approach appraisal. From there, the
court also concluded that MTAB did not consider new issues beyond the scope of
appeal; MTAB had authority under § 15-2-301, MCA, and Mont. Dep’t of Revenue v.
Burlington N., 169 Mont. 202, 545 P.2d 1083 (1976), to hear appeals from MTAB
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“de novo”; and MTAB correctly denied O’Brien’s motion for summary judgment. The
District Court affirmed MTAB’s decisions on July 15, 2025. O’Brien appeals.
STANDARD OF REVIEW
¶45 Section 2-4-704, MCA, sets forth the standards for judicial review of agency
decisions, permitting modification or reversal of the agency decision if the petitioner’s
substantial rights were prejudiced because:
(a) the administrative findings, inferences, conclusions, or decisions were:
(i) in violation of constitutional or statutory provisions;
(ii) in excess of the statutory authority of the agency;
(iii) made upon unlawful procedure;
(iv) affected by other error of law;
(v) clearly erroneous in view of the reliable, probative, and substantial evidence
on the whole record; or
(vi) arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.
Section 2-4-704(2)(a), MCA.
¶46 Under this standard, agency findings are reviewed for clear error and conclusions
of law for correctness. GBN, Inc. v. Mont. Dep’t of Revenue, 249 Mont. 261, 264, 815 P.2d
595, 596-97 (1991); Flathead Lakers Inc. v. Mont. Dep’t of Nat. Res. & Conservation,
2023 MT 85, ¶¶ 33-35, 412 Mont. 225, 530 P.3d 769. Agency factual findings are clearly
erroneous if unsupported by substantial record evidence, if the agency misapprehended the
effect of the substantial evidence, or if review leaves the court with a firm conviction a
mistake was made. Flathead Lakers, ¶ 34; Peretti v. Mont. Dep’t of Revenue, 2016 MT
105, ¶¶ 17-18, 383 Mont. 340, 372 P.3d 447.
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¶47 This Court reviews district court decisions on judicial review of agency decisions
applying the same § 2-4-704, MCA, standards. Flathead Lakers, ¶ 35; Peretti, ¶ 15.
Reviewing courts “may not re-weigh the evidence or re-determine witness credibility to
achieve a different result.” Peretti, ¶ 17; § 2-4-704(2), MCA. We must review the entire
administrative record, giving deference to agency findings only if not clearly erroneous
and to agency determinations only insofar as they are lawful and the product of consistent,
rational, well-supported, and cogently-explained decision-making. DeBuff v. Mont. Dep’t
of Nat. Res. & Conservation, 2021 MT 68, ¶ 24, 403 Mont. 403, 482 P.3d 1183;
Puget Sound Energy, Inc. v. State, 2011 MT 141, ¶¶ 15-16, 361 Mont. 39, 255 P.3d 171.
¶48 When reviewing decisions of the Montana Tax Appeal Board, we recognize that the
board “is particularly suited for settling disputes over the appropriate valuation of a given
piece of property.” O’Neill v. Mont. Dep’t of Revenue, 2002 MT 130, ¶¶ 22-23, 310 Mont.
148, 49 P.3d 43; Peretti, ¶¶ 14, 17-18. Because tax assessments are within MTAB’s
specific expertise, we will uphold them “unless there is a clear showing of an abuse of
discretion.” O’Neill, ¶ 23; Dep’t of Revenue v. Grouse Mt. Dev., 218 Mont. 353, 355-56,
707 P.2d 1113, 1115 (1985). An abuse of discretion occurs where MTAB misapplies
the controlling law or exercises discretion based on clearly erroneous findings of fact.
See Bessette v. Bessette, 2019 MT 35, ¶ 13, 394 Mont. 262, 434 P.3d 894; accord Flathead
Lakers, ¶ 34 (agency decisions are arbitrary or capricious if at odds with the information
gathered or the product of internally inconsistent analysis).
¶49 Agency interpretations, applications, and conclusions of law are reviewed de novo
for correctness. Flathead Lakers, ¶ 35. While we afford an agency’s interpretation of
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statutes it administers “respectful consideration,” administrative interpretations are not
binding on this Court. Mont. Power v. Mont. PSC, 2001 MT 102, ¶¶ 24-27, 305 Mont.
260, 26 P.3d 91.
¶50 This appeal does not require us to substitute our judgment for MTAB’s appraisal
expertise or to reweigh competing valuation evidence. Rather, it requires us to determine
whether MTAB and the District Court correctly construed and applied the statutory
threshold in § 15-8-111(5), MCA. MTAB’s valuation expertise receives deference when
it weighs evidence under the correct legal standard. It does not receive deference when it
inserts a requirement into the statute that the Legislature did not include or when it
misapprehends the legal effect of undisputed income information made available to MDOR
through informal review and appeal. See § 2-4-704(2), MCA; Peretti, ¶¶ 15, 17; Flathead
Lakers, ¶¶ 34-35; Mont. Power, ¶¶ 24-27.
DISCUSSION
¶51 1. Whether MTAB improperly considered the validity and reliability of O’Brien’s
appraisal for the first time on appeal or conducted a “trial de novo” on that
issue.
¶52 Issue framing became an issue here when MDOR appealed to MTAB. However, as
stated above, the threshold dispositive question before CTAB and MTAB was the same:
whether “sufficient, relevant information on income [was] m