In re Tax Appeal of Rakestraw Brothers

No. 110,219

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

In the Matter of the Protest Appeal of
RAKESTRAW BROTHERS, L.L.C.,
for Tax Year 2011 in Kingman County, Kansas.


SYLLABUS BY THE COURT

1.
Administrative agencies are created by statute, so they have only the powers
granted by statute. An agency may create a jurisdictional requirement only if the
legislature has specifically authorized it to do so. Mere authority to adopt rules does not
authorize the agency to adopt jurisdictional rules; the authority to set jurisdictional limits
must come from express statutory language.

2.
Neither K.S.A. 2011 Supp. 74-2433f(e) nor K.S.A. 2011 Supp. 74-2437 give the
Court of Tax Appeals the authority to adopt regulations that would set jurisdictional
requirements for parties appearing before it.

3.
The Kansas Legislature has provided in K.S.A. 2011 Supp. 74-2433f(f) that a
taxpayer may appear through a tax representative or agent in the small-claims division of
the Court of Tax Appeals. Accordingly, when a tax representative signs a form entry of
appearance to begin the taxpayer's appeal in the small-claims division, that form, when
timely filed, provides the Court of Tax Appeals subject-matter jurisdiction to hear the
appeal even if the representative is neither an attorney nor the taxpayer's officer or
employee.

2

Appeal from Court of Tax Appeals. Opinion filed October 17, 2014. Reversed and remanded.

Patrick B. Hughes and Bradley A. Stout, of Adams Jones Law Firm, P.A., of Wichita, for
appellant Rakestraw Brothers, L.L.C.

S. Eric Steinle and Carole K. DeWald, of Martindell, Swearer, Shaffer, Ridenour, LLP, of
Hutchinson, for appellee Kingman County, Kansas.

Before POWELL, P.J., LEBEN and ARNOLD-BURGER, JJ.

LEBEN, J.: When Rakestraw Brothers, LLC, wanted to appeal the tax valuation of
its oil lease by Kingman County, it hired Kenton Hupp, a petroleum engineer, to handle
the appeal. Hupp filed a notice of appeal on Rakestraw Brothers' behalf with the small-
claims division of the Court of Tax Appeals.

The Court of Tax Appeals dismissed the appeal for lack of jurisdiction, concluding
that the notice of appeal had to be signed either by a member or officer of Rakestraw
Brothers or by a licensed attorney. But the Kansas Legislature has specifically provided
that "[a] party . . . may be represented by a . . . tax representative or agent" in the small-
claims division. K.S.A. 2011 Supp. 74-2433f(f). We therefore conclude that the Court of
Tax Appeals was wrong to dismiss the appeal for lack of jurisdiction, and we remand for
a hearing on the merits of the appeal.

FACTUAL AND PROCEDURAL BACKGROUND

Rakestraw Brothers hired Hupp to handle the appeal of Kingman County's
valuation of its oil lease for the 2011 tax year. Hupp is a licensed petroleum engineer who
does consulting work, including work related to the valuation of oil leases. Aside from
consulting with Rakestraw Brothers about the valuation of its oil lease, he was not
employed by Rakestraw Brothers.
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Hupp signed a notice of appeal on a form provided by the Court of Tax Appeals.
He signed as the taxpayer's representative and attached a "Declaration of Representative,"
stating that he would serve as Rakestraw Brothers' representative during the appeal. Hupp
paid the $150 filing fee and sent a letter to the small-claims division indicating that he
was representing Rakestraw Brothers in the appeal.

The small-claims division conducted a hearing on the appeal, and it upheld
Kingman County's valuation.

An attorney, Bradley Stout, then filed an appeal of the small-claims ruling to the
regular division of the Court of Tax Appeals. But Kingman County filed a motion to
dismiss the case for lack of jurisdiction based on a recent Court of Tax Appeals ruling in
a similar case. The Court of Tax Appeals granted the motion, concluding that only a
taxpayer or its attorney may sign a notice of appeal. Since Hupp was neither an attorney
nor the taxpayer (as a member or even an employee), the Court of Tax Appeals ruled that
the notice of appeal had to be disregarded. As a result, it concluded, no timely appeal had
been filed in the small-claims division, and it had no subject-matter jurisdiction to hear
the appeal.

Rakestraw Brothers filed a motion to reconsider, but the Court of Tax Appeals
denied that motion. Rakestraw Brothers then appealed to this court.

Before analyzing whether the Court of Tax Appeals was wrong in its legal
conclusion, we add a note regarding the statutes and regulations cited in this opinion. We
are citing to the 2011 statutes and regulations that were in place when Rakestraw
Brothers filed its appeal to the small-claims division in March 2012. Those statutes and
regulations were the ones that determined jurisdiction at that time, and the Court of Tax
Appeals relied upon them in its decision.
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We recognize that the 2014 Kansas Legislature has made changes to the statutes
governing the Court of Tax Appeals. In fact, even the name of that tribunal has been
changed—reverting back to its former name, the Board of Tax Appeals. See L. 2014, ch.
141. Neither party has filed anything with our court suggesting that these legislative
changes should have any impact on whether the Court of Tax Appeals was correct to
dismiss Rakestraw Brothers' appeal. We have not considered those legislative changes
and accordingly express no opinion on what impact, if any, they may have on remand.

ANALYSIS

In our view, the result in this case is driven by the language of K.S.A. 2011 Supp.
74-2433f, in which the Kansas Legislature provided for expedited hearings in designated
cases through a small-claims division of the Court of Tax Appeals. Kingman County
makes no argument that Rakestraw Brothers' appeal was in any way inappropriate for
small-claims treatment. See K.S.A. 2011 Supp. 74-2433f(c).

For a small-claims appeal, the legislature provided in K.S.A. 2011 Supp. 74-2433f
that the appeal begins with the filing of a notice of appeal and that the taxpayer may
appear through any of several parties, including an attorney, a certified public accountant
or appraiser, or a tax representative or agent:

"(e) A taxpayer shall commence a proceeding in the small claims and expedited
hearings division by filing a notice of appeal in the form prescribed by the rules of the
state court of tax appeals which shall state the nature of the taxpayer’s claim. . . .

"(f) The hearing in the small claims and expedited hearings division shall be
informal. The hearing officer may hear any testimony and receive any evidence the
hearing officer deems necessary or desirable for a just determination of the case. A
hearing officer shall have the authority to administer oaths in all matters before the
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hearing officer. All testimony shall be given under oath. A party may appear personally
or may be represented by an attorney, a certified public accountant, a certified general
appraiser, a tax representative or agent, a member of the taxpayer's immediate family or
an authorized employee of the taxpayer. A county or unified government may be
represented by the county appraiser, designee of the county appraiser, county attorney or
counselor or other representatives so designated. No transcript of the proceedings shall be
kept." (Emphasis added.) K.S.A. 2011 Supp. 74-2433f .

Thus, in a section specifically governing the small-claims division, the legislature has
said that a taxpayer "may be represented by . . . a tax representative or agent."

Kingman County suggests in its brief that there's no proof in the record that Hupp,
a petroleum engineer, was a tax representative or agent. But the Court of Tax Appeals
didn't question whether Hupp was a tax representative—a managing partner of Rakestraw
Brothers had signed the Court of Tax Appeals form for "Declaration of Representative"
stating that Hupp was its representative, and Hupp had said in a letter submitted with the
appeal notice that he was a licensed petroleum engineer with "28 years of Kansas Ad
Valorem Tax preparation experience," including testimony before counties and the Court
of Tax Appeals. Hupp was Rakestraw Brothers' "tax representative or agent" for purposes
of K.S.A. 2011 Supp. 74-2433f.

So we have an action properly filed in the small-claims division by the tax
representative or agent of the taxpayer, and the legislature has specifically authorized
such a person to appear for the taxpayer in the small-claims division. What, then, could
be the problem?

Based on the Court of Tax Appeals' ruling, Kingman County suggests four reasons
that the notice of appeal Hupp filed wasn't valid and thus didn't give the Court of Tax
Appeals jurisdiction over the appeal. First, Kingman County argues that since K.S.A.
2011 Supp. 79-2005(g) provides that "the protesting taxpayer may, if aggrieved . . . ,
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appeal" a county's tax assessment, only the taxpayer (or its attorney) may file the notice
of appeal. Second, Kingman County argues that a Court of Tax Appeals regulation,
K.A.R. 94-5-4(b) (2011 Supp.), provides that a notice of appeal be "signed by the party
or the party's attorney," leaving no option to use a non-attorney agent. Third, Kingman
County argues that K.S.A. 2011 Supp. 74-2433f(f) applies only to hearings, not to the
filing of the notice of a taxpayer's appeal. Fourth, Kingman County argues that signing
the notice of appeal to the small-claims division would constitute the unauthorized
practice of law if done by a representative who was not licensed to practice law in
Kansas. Based on our understanding of K.S.A. 2011 Supp. 74-2433f, we do not find any
of these arguments persuasive.

Let's begin with K.S.A. 2011 Supp. 79-2005(g). That statute does provide that an
aggrieved "taxpayer" can appeal, and K.S.A. 2011 Supp. 79-2433f(e) provides that "[a]
taxpayer" may commence a small-claims appeal. But neither statute provides that only
the taxpayer can file the appeal form. Kingman County and the Court of Tax Appeals
agree that an attorney could file the appeal on behalf of Rakestraw Brothers. These
statutes don't explicitly address who may prepare a taxpayer's appeal form and should not
be read to prohibit anyone but the taxpayer from preparing or filing the notice of appeal.
Hupp did not purport to file his own appeal—he signed as Rakestraw Brothers'
representative.

Kingman County next cites to K.A.R. 94-5-4(b) (2011 Supp.), which provides that
notices of appeal be "signed by the party or the party's attorney." But that regulation
cannot deprive the Court of Tax Appeals of jurisdiction to hear an appeal: An
administrative agency does not define its own jurisdiction—the legislature does by
statute.

Administrative agencies are created by statute, so they have only the powers
granted by statute. See Ft. Hays St. Univ. v. University Ch., Am. Ass’n of Univ. Profs.,
7

290 Kan. 446, Syl. ¶ 1, 228 P.3d 403 (2008). Agency rules must be within the agency's
statutory authority, Ruddick v. Boeing Co., 263 Kan. 494, 499, 949 P.2d 1132 (1997), so
an agency may create a jurisdictional requirement only if the legislature has specifically
authorized it to do so. See Chelf v. State, 46 Kan. App. 2d 522, 525-33, 263 P.3d 852
(2011). Mere authority to adopt rules does not authorize the agency to adopt jurisdictional
rules; there must be express statutory language that the agency has the authority to set
jurisdictional limits. See Union Pacific R. Co. v. Locomotive Engineers, 558 U.S. 67, 83-
84, 130 S. Ct. 584, 175 L. Ed. 2d 428 (2009); Hernandez v. Holder, 738 F.3d 1099, 1102
(9th Cir. 2013); Hoogerheide v. I.R.S., 637 F.3d 634, 636-37 (6th Cir. 2011); Chelf, 46
Kan. App. 2d at 532-33.

K.A.R. 94-5-4(b) (2011 Supp.) was adopted under the authority of K.S.A. 2011
Supp. 74-2437, which lets the Court of Tax Appeals adopt rules "relating to the
performance of its duties and particularly with reference to procedure before it on
hearings and appeals." K.S.A. 2011 Supp. 74-2437(c). Nothing in that statutory grant of
authority suggests that the Court of Tax Appeals may adopt regulations that limit its
jurisdiction.

K.S.A. 2011 Supp. 74-2433f(e) does provide that taxpayers begin their small-
claims appeal "by filing a notice of appeal in the form prescribed by the rules of the state
court of tax appeals . . . ." But nothing in that statute clearly expresses a legislative
authorization that the Court of Tax Appeals rules for the form of the notice shall be
jurisdictional.

The upshot is that the Court of Tax Appeals had no authority to adopt a regulation
purporting to deprive it of jurisdiction if an appeal form was unsigned or signed by the
wrong party.

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That result should not be surprising. Even courts within the judicial branch don't
define their own jurisdiction, so court rules do not create jurisdictional requirements. See
Adams v. St. Francis Regional Med. Center, 264 Kan. 144, 151, 955 P.2d 1169 (1998).
And even the outright failure to sign a paper filed in court—even including a notice of
appeal—doesn't deprive a court of jurisdiction. Instead, Rule 11 of the Federal Rules of
Civil Procedure and its Kansas counterpart, K.S.A. 2011 Supp. 60-211, both provide for
striking an unsigned paper only if the failure to sign it is not corrected after being brought
to the party's attention. See Fed. R. Civ. P. 11(a); K.S.A. 2011 Supp. 60-211(a). Thus, the
United States Supreme Court has held that the failure to sign a notice of appeal does not
deprive a federal court of jurisdiction over that appeal. Becker v. Montgomery, 532 U.S.
757, 760, 763-68, 121 S. Ct. 1801, 149 L. Ed. 2d 983 (2001).

Kingman County's next argument is a claim that K.S.A. 2011 Supp. 74-2433f(f),
which authorizes an appearance by a "tax representative or agent," only applies at the
small-claims hearing and not to the filing of the appeal notice. Kingman County contends
that the filing of the appeal is governed solely by K.S.A. 2011 Supp. 74-2433f(e), which
makes no reference to a "tax representative or agent."

There are several problems with this argument.

First, K.S.A. 2011 Supp. 74-2433f(e) is ambiguous about who may file the appeal.
It references only "[a] taxpayer," yet everyone agrees that the parties who may prepare
and file the appeal form include at least attorneys in addition to the taxpayer. Given that
ambiguity, it makes sense to consider subsection (e) along with subsection (f), which
clearly allows a "tax representative or agent," among others, to appear for the taxpayer at
the hearing. See Northern Natural Gas Co. v. ONEOK Field Services Co., 296 Kan. 906,
918, 296 P.3d 1106, cert. denied 134 S. Ct. 162 (2013). An attorney is, after all, simply
one type of agent, so it makes sense to use the list of permissible agents provided by the
legislature in subsection (f) when determining which agents may file the notice of appeal
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on the taxpayer's behalf. By contrast, it would make no sense to say that a corporation
must hire an attorney for the sole purpose of signing the appeal form but then may be
represented by a non-attorney at the small-claims hearing. Construing the statute in that
manner would defeat the obvious purpose of the small-claims process—to allow for a
less cumbersome, more informal, and less expensive initial appeal. None of these
considerations support Kingman County's argument.

Second, Kingman County relies upon K.A.R. 94-5-4(b) (2011 Supp.) for the
requirement that only the taxpayer or its attorney may sign the appeal form. That
regulation is ultimately the source of the claimed requirement that only an attorney or the
taxpayer may sign the appeal form since K.S.A. 2011 Supp. 74-2433f(e) doesn't mention
attorneys. But we have already explained that the Court of Tax Appeals has no authority
to use this regulation to define its jurisdiction.

Third, K.A.R. 94-5-4(b) (2011 Supp.) by its own terms does not set forth a
jurisdictional requirement. Immediately after the sentence that requires the form to be
"signed by the party or the party's attorney," the regulation goes on to say that "[i]f a
pleading is filed with insufficient information or is otherwise deficient, the pleading may
be rejected by the court or may be accepted by the court, with supplementation by the
parties required by the court." (Emphasis added.) A provision giving the body discretion
whether to accept a form that is deficient in some way is not a jurisdictional provision.
And to the extent the Court of Tax Appeals had discretion in this case, we hold it was an
abuse of discretion to dismiss the appeal without first giving Rakestraw Brothers an
attempt to correct the error, just as a court in the judicial branch would be required to do.
See K.S.A. 2011 Supp. 60-211(a).

Kingman County suggests a final problem—that filling out or signing the notice of
appeal constitutes practicing law, which only an attorney may do. There are two answers
to this argument. First, filling out the appeal notice did not constitute the practice of law.
10

Second, even if it were the practice of law, that would not present a jurisdictional hurdle
for the reason we just noted: Even in a court, the party would be given another
opportunity to have the paper properly signed before it would be stricken. There's
certainly no reason that a stricter rule should be applied in an administrative proceeding
unless the legislature has created one—and here, the legislature has provided that the
hearing in the small-claims division "shall be informal." K.S.A. 2011 Supp. 74-2433f(f).
There's no statutory hint that a taxpayer should be thrown out over some technical
pleading requirement.

Let's first consider whether filling out the appeal form provided by the Court of
Tax Appeals constitutes the practice of law. There is nothing in the form that requires
legal training: The taxpayer advises that it wants a hearing, provides contact information,
and states what it claims the proper value of the property is. Law school doesn't train
students to appraise real property, let alone oil and gas interests. Nor does law school
teach a person how to sign his or her name, also required on the form.

The Colorado Court of Appeals found that filling out a similar tax-appeal form did
not constitute the practice of law in BQP Industries v. State Bd. of Equalization, 694 P.2d
337, 341-42 (Colo. App. 1984). In that case, the non-attorney presidents of 10
corporations had filed appeal forms to a state tax-appeal agency using an agency form
that asked for several items of information. In fact, it asked for more than the Court of
Tax Appeals form in our case did; the Colorado form asked for the facts and law on
which the appeal was based and a list of witnesses and exhibits. The Colorado court
found that filling out the form did not constitute the unauthorized practice of law: "The
completion of this form does not require any knowledge and skill beyond that possessed
by the ordinary, intelligent taxpayer." 694 P.2d at 342. Filling out the Kansas appeal form
did not constitute the practice of law.

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Our conclusion that Hupp did not practice law by filing the small-claims appeal
form is underscored by the nature of administrative proceedings, in which non-attorneys
often handle even some complicated proceedings. Administrative agencies are created by
statute, not by the common law, so there's no common-law prohibition on a corporation
or other artificial entity appearing through a non-attorney. In some complicated
administrative-agency proceedings, like patent registrations, for example, non-attorneys
may become registered agents to represent other parties. See 37 C.F.R. §§ 11.6(b), 11.7
(2013). The Kansas Administrative Procedure Act provides that parties may participate in
hearings "in person or, if the party is a corporation or other artificial person, by a duly
authorized representative." K.S.A. 77-515(a). Had the legislature wanted to limit the
ability to represent artificial entities in administrative proceedings only to attorneys, it
could have done so by substituting "attorney" for "representative."

But what if merely filling out the notice of appeal form were considered practicing
law? Even then, the Court of Tax Appeals would not be barred from considering the
appeal. To understand why, let's consider what happens when a notice of appeal is filed
in a court, where the rules against non-lawyers acting on behalf of corporate entities are
stricter.

There is a common-law rule under which corporations and other artificial entities
must be represented by an attorney in court. See In re Arnold, 274 Kan. 761, 770, 56 P.3d
259 (2002); cf. Babe Houser Motor Co. v. Tetreault, 270 Kan. 502, Syl. ¶¶ 3-4, 14 P.3d
1149 (2000) (recognizing that legislature had changed the common-law rule by statute to
allow corporations to appear in court in small-claims cases by a full-time employee or
officer). But even if Hupp, a non-attorney, had filed the notice of appeal in a court, that
doesn't mean the notice of appeal would be treated as a nullity and disregarded altogether.
Instead, many courts now take the position that the pleading filed by a non-attorney
should not be deemed a nullity (in an appeal, depriving the court of jurisdiction because a
proper appeal wasn't timely filed) unless the party knew that its action was improper. See
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In re IFC Credit Corp., 663 F.3d 315, 320-21 (7th Cir. 2011) (concluding that there was
no jurisdictional defect when corporation's president, rather than attorney, signed the
initial pleading); Downtown Disposal Serv. v. City of Chicago, 2012 IL. 112040, ¶¶ 17-
38, 979 N.E.2d 50 (2012) (same).

That's the approach the Kansas Supreme Court took in Benson v. City of DeSoto,
212 Kan. 415, 422, 510 P.2d 1281 (1973). In that case, the trial court had dismissed a
city's appeal because it had been signed by three city council members who were not
attorneys. The court found that the dismissal was "overly technical" and concluded that
the filing should not be declared a nullity. 212 Kan. at 421-22. Kansas law is thus in
agreement with the other courts cited above that have concluded that a filing made by a
non-attorney should not be considered a nullity for jurisdictional purposes in a court
proceeding.

Here, though, the filing by non-attorney Hupp came in an administrative-agency
proceeding, not a court proceeding. Despite its name when it ruled in this case, the Court
of Tax Appeals was an administrative agency in the Executive Branch. See In re Protests
of Oakhill Land Co., 46 Kan. App. 2d 1105, 1113-14, 269 P.3d 876 (2012). Surely if an
appeal in court would not be thrown out solely because a non-lawyer signed the notice of
appeal, an appeal before an administrative agency, where less formal rules apply, should
not be, either.


We recognize that K.S.A. 77-515(c) provides that a state agency "may require a
corporation or other artificial person to participate by counsel." But that is a general
provision broadly applicable through the Kansas Administrative Procedure Act, while
K.S.A. 2011 Supp. 74-2433f is a specific statute governing small-claims appeals in the
Court of Tax Appeals. In the event of a conflict between a general statute and a more
specific one, the specific statute controls. See In re Adoption of H.C.H., 297 Kan. 819,
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833, 304 P.3d 1271 (2013). A fair reading of K.S.A. 2011 Supp. 74-2433f(e) and (f),
taken together, is that certified public accountants and other tax representatives or agents
may both file the notice of appeal and appear for the taxpayer at the small-claims hearing.
The general statutory authority in K.S.A. 77-515(c) cannot override that legislative
directive.

We conclude there was nothing improper about Hupp's filing. When the legislature
provides that "[a] party may appear personally or may be represented by an attorney [or
by] . . . a tax representative or agent," K.S.A. 2011 Supp. 74-2433f(f), it surely has not
excluded non-attorneys from representing taxpayers in the small-claims division. The
decision of the Court of Tax Appeals dismissing the appeal of Rakestraw Brothers is
reversed, and the case is remanded for a hearing on the merits of that appeal.