...
Turning to the
substance of Appellant's arguments, the Court is not persuaded that the
Bankruptcy Court misapplied Indiana's market value-in-use standard in valuing
Majestic Star's riverboat casinos. Lake County contends that the Bankruptcy
Court erred in determining value based on sales of closed riverboats, as
"sale prices of riverboat casinos not in use are not representative of the
subject riverboats' market value-in-use because they are special purpose properties
which were in use on the valuation dates." (D.I. 6 at 22; see
also Tr. at 20-21) The Debtors respond by relying (as
the Bankruptcy Court did) on two decisions- Stinson v.
Trimas Fasteners, 923 N.E.2d 496 (Ind. Tax Ct. 2010), and Meijer
Stores Ltd Partnership v. Smith, 926 N.E.2d 1134, 1137
(Ind. Tax Ct. 201 0)- for the proposition that "what matters for purposes
of determining 'market value-in-use' is not whether the sale comparables were
in business and operating on the date of sale, but whether the properties'
'use'- both before and after sale- was generally the same (i.e., retail use,
manufacturing use, gaming use)." (D.I. 9 at 36) The Court agrees with the
Debtors. Here, the comparables were in the same use both before and after their
sales, just as was true for the Vessels. Lake County's attempt to distinguish Trimas
and Meijer primarily
on the grounds that the Vessels, unlike the property at issue in those cases,
are special purpose properties (see Tr.
at 69; D.I. 16 at 9)- is unavailing. While Trimas states
that "[g]enerally, a sale will not be representative of
utility with respect to special-purpose property," 923 N.E.2d at
501 n.10 (emphasis added), here the Court has failed- as Appellees insisted
would occur- to uncover "anything in the Bankruptcy Court's finding of
fact or conclusions of law on whether this [i.e., the Vessels] is a special
purpose property or not." (Tr. at 64-65; see also D.l. 9 at 38-39)
Notably, none of the appraisal witnesses noted in their reports that the
Vessels were special purposes properties. (See Tr. at 74-76)
13. Next, Lake
County argues that the appraisals offered by the Debtors and relied on by the
Bankruptcy Court were flawed and insufficient. However, as Appellants concede, "the
Bankruptcy Court decision as to which appraisals are more probative, deserves
the highest degree of deference from this Court." (Tr. at 12-13) The Court
finds no clear error was committed by the Bankruptcy Court in this regard.
14. For instance,
while Lake County criticizes the Debtor's expert, Mr. Herman, from drawing on
comparables located in markets beyond the immediate vicinity of Lake County,
Lake County's expert did the same. (See Tr. at 78-79) As for Appellant's
assertion that Mr. Herman's reports failed to perform the income approach, 8
again it was not clear error to rely on his analysis, particularly as
"no Indiana Board or Court has ever concluded that the authority to apply
all three approaches renders them mandatory." (Tr. at 80) As to criticism
that Mr. Herman invoked the Jurisdictional Exception Rule to Uniform Standards
for Professional Appraisal Practice ("USPAP"), this was not clear
error, as Indiana's Riverboat Valuation Statute applies (see Tr. At 70, 85) and
even one of Lake County's experts "agreed that if the Riverboat Valuation
Statute applied, it was appropriate to take the jurisdictional exception" (id
at 85). With respect to the Bankruptcy Court's finding that Mr. Herman's
"quantification of obsolescence was credible and reasonable," the
Court finds no clear error in the Bankruptcy Court's finding that Lake County "offered
no evidence to rebut Mr. Herman's conclusion that the Vessels suffered from obsolescence,
nor did the County offer any evidence suggesting a different quantification of obsolescence."
(FFCL at 34-35; see also Tr. at 51)
15. In sum,
after applying the applicable standards of review to the evidence and arguments
presented by the parties, the Court, like the Bankruptcy Court, is unpersuaded
by Lake County. Accordingly, the Bankruptcy Court's FFCL is adopted, its Order
is affirmed, and the Appeal is dismissed. The Clerk of Court is directed to
CLOSE this case.
See earlier posts on this matter here:
http://indianapropertytaxreporter.blogspot.com/2012/06/more-on-delaware-deciding-significant_30.html
