Kansas Supreme Court Decisions, July 1, 2022

01 Jul 2022 8:24 AM | Executive Director (Administrator)

Appeal No. 121,053: State of Kansas v. Joseph Miguel Valdez

Appeal No. 121,053 archived oral argument

The Supreme Court affirmed Valdez's Saline County District Court convictions for possession of methamphetamine with intent to distribute and two counts of drug paraphernalia possession. The Court reversed Valdez's conviction for unlawful possession of a firearm within 10 years of a prior felony. The drugs, paraphernalia, and firearm were discovered after Valdez was shot inside his Salina home.

In an opinion written by Justice Dan Biles, the Court held that the jury instructions at Valdez's trial incorrectly informed the jury it could conclude he intended to distribute the drugs based on the amount possessed because that instruction conflicted with state law requiring the jury to presume intent based on the amount. However, the conviction was affirmed because the error did not influence the jury's verdict. Justice Caleb Stegall wrote a concurring opinion, arguing Valdez failed to show the instruction was incorrect.

The Court unanimously reversed the firearm conviction for lack of sufficient evidence. Valdez stipulated a prior conviction at trial, but the stipulation was not detailed enough for the jury to determine the prior conviction barred Valdez from possessing a firearm at the time of his arrest.

Appeal No. 122,162: In the Matter of the Equalizations Appeals of Wal-Mart Stores, Inc; Wal-Mart Real Estate Business Trust; Sam’s Real Estate Business Trust; and TMM Roeland Park Center, L.L.C., for the year 2016 in Johnson County; and Wal-Mart Real Estate Business Trust and Sam’s Real Estate Business Trust for the year 2017 in Johnson County

Appeal No. 122,162 archived oral argument

The Supreme Court reversed a Board of Tax Appeals order determining the fair market values of 11 Johnson County Walmart and Sam's Club stores for property tax purposes for the 2016 and 2017 tax years. The Board of Tax Appeals imposed values significantly lower than the Johnson County appraisals.

At the Board of Tax Appeals hearing, the County presented expert testimony from appraisers who relied on data from build-to-suit leases to estimate the properties' fair market rental values. Build-to-suit leases are arrangements in which a developer builds a store to the retailer's unique specifications, then leases the completed store to the retailer. The County's appraisers testified that their use of data from these leases was consistent with generally accepted appraisal practices.

The Board of Tax Appeals disregarded this evidence, relying on a 2012 Kansas Court of Appeals decision, In re Prieb Properties, LLC. That case held that "rental rates contained in or reflected by commercial build-to-suit leases are not reflective of market conditions and may not be utilized for purposes of the income approach or the sales comparison approach []es to value for ad valorem tax purposes in Kansas without a disentanglement by adjustments . . ." Among the reasons for its decision, the Prieb court asserted that "such a lease is essentially a financing agreement between a lessor and lessee, and the rental rates therein are based in large part upon the revenue needed to amortize the investment required for the required construction—plus a measure of profit—over the lease term or extensions thereof."

In a unanimous opinion written by Justice Dan Biles, the Court overruled the Prieb decision and remanded the case to the Board of Tax Appeals to fully consider the County's evidence in determining the properties' values. The Court acknowledged the "unique appraisal problems" presented by big-box retail properties, but said, "Prieb represents a judicial attempt to address these concerns by simply announcing a rule of law." And that rule of law "invade[d] BOTA's longstanding province as the fact-finder in the statutory process of appraising real property at its fair market value."

Appeal No. 124,156: City of Olathe v. City of Spring Hill and James Hendershot

Appeal No. 124,156 archived oral argument

In 2006, the cities of Spring Hill and Olathe signed a written agreement to restrict their future growth by establishing boundaries for annexing land adjacent to the two cities. The agreement had no time limitations and was to remain in effect unless the two cities mutually agreed to terminate it. But in the spring of 2021, Spring Hill announced its intention to break the agreement by annexing land on Olathe’s side of the agreed boundary. The purpose of the annexation was to pursue a commercial site development. Olathe took Spring Hill and its City Administrator to court to get a restraining order and injunctions to prevent the annexation. The district court ruled against Olathe but stayed its order while the case was being appealed to the Court of Appeals. The Supreme Court assumed jurisdiction over the case at Olathe’s request.

Writing for a unanimous Supreme Court, Justice Eric Rosen affirmed the Johnson County District Court. The Court relied on the longstanding rule that elected governing bodies may not compel future elected officials to follow general policy decisions. It would undermine democratic principles if a city council could take away from future voters the power to elect city councils that could pursue their own policies. The Court concluded that the 2006 agreement cannot be enforced against the 2021 Spring Hill city council. The Court upheld the district court decision and lifted the stay on the district court’s order.

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