ATTORNEYS FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
TIMOTHY D. HERNLY    STEVE CARTER
RICHARD J. DEAHL    ATTORNEY GENERAL OF INDIANA
BARNES & THORNBURG    Indianapolis, IN
South Bend, IN    
    LINDA I. VILLEGAS
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
______________________________________________________________________
     IN THE INDIANA TAX COURT

THE MAJESTIC STAR CASINO, LLC,         )
                                        )
    Petitioner,                         )
                                        )
    v.                                  )

Whether, in making its final determination, the Indiana Board arbitrarily withdrew the admissions of the Township Assessor;

Whether the Indiana Board erred in calculating the amount of physical depreciation applicable to Majestic Star’s riverboat; and

Whether the Indiana Board erred in calculating the amount of obsolescence depreciation applicable to Majestic Star’s riverboat?

(2)    contrary to constitutional right, power, privilege, or immunity;

(3)    in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction, authority, or limitations;

(4)    without observance of procedure required by law; or
(5)    unsupported by substantial or reliable evidence.
Ind. Code Ann. § 33-26-6-6(e)(1)-(5) (West Supp. 2004). The party seeking to overturn the Indiana Board’s final determination bears the burden of proving its invalidity. Osolo Township Assessor v. Elkhart Maple Lane Assocs., L.P., 789 N.E.2d 109, 111 (Ind. Tax Ct. 2003).

(Pet’r Br. at 23, 25.) Consequently, Majestic Star asserts that Indiana Code § 6-1.1-1-15(5), which classifies riverboats as real property, is unconstitutional.
While the legislature has the broad power to tax, it does not have unfettered discretion in that power. See State ex rel. Lewis v. Smith, 63 N.E. 25, 26-27 (Ind. 1902), reh’g denied. The Indiana Constitution, including Article 10, § 1, contains some limitations on the legislature’s authority to tax. State ex rel. Lewis v. Smith, 64 N.E. 18 (Ind. 1902) (stating that Article 10, § 1 is a “curb upon the authority of the general assembly”); Smith, 63 N.E. at 26 (“[t]he judiciary can afford no redress against oppressive taxation, so long as the legislature, in imposing it, shall keep within the limits of legislative authority, and violate no express provision of the constitution”) (quoting Cooley, Tax’n, 5) (emphasis added); Bielski v. Zorn, 627 N.E.2d 880, 884-85 (Ind. Tax Ct. 1994) (“the legislature is duty-bound to follow the requirements of Article 10, § 1”). “What property shall be taxed, and how it shall be taxed, are legislative questions, so long as there is uniformity and equality of rate as to those of the same class; and the subjects and methods of taxation are legislative matters, and cannot be disturbed so long as the method prescribed is applicable alike to all within the prescribed class.” Davis v. Sexton, 200 N.E. 233, 241 (Ind. 1936).
By taxing riverboats as real property and commercial vessels as something else, the Indiana legislature has created a statutory classification based upon whether gambling occurs on the vessel. This statutory classification is clothed with the presumption of constitutionality. See State Bd. of Tax Comm'rs v. Town of St. John, 702 N.E.2d 1034, 1037 (Ind. 1998) (St. John V). Consequently, Majestic Star bears the burden of proving otherwise, and all doubts will be resolved against it. See id. The Court will not hold the classification to be unconstitutional “simply because [it] might consider it born of unwise, undesirable, or ineffectual policies.” Boehm v. Town of St. John, 675 N.E.2d 318, 321 (Ind. 1996) (St. John II) (citation omitted).
Article 10, § 1 of the Indiana Constitution requires: “(1) [u]niformity and equality in assessment; (2) uniformity and equality as to rate of taxation; and (3) a just valuation for taxation.” Id. at 326 (quoting Fesler v. Bosson, 128 N.E. 145, 147 (Ind. 1920)). The purpose of these constitutional requirements is to distribute the burden of taxation upon the principles of uniformity, equality, and justice. Florer v. Sheridan, 36 N.E. 365, 369 (Ind. 1894).
    The limitation upon the legislature that taxation be equal can be satisfied “when there is no discrimination as between taxpayers.” Smith, 63 N.E. at 27. This includes the requirement that “assessments be consistent with similar property of the same classification.” Harrington v. State Bd. of Tax Comm’rs, 525 N.E.2d 360, 361 (Ind. Tax Ct. 1988) (citing Ind. Const. art. X, § 1); see also GTE North, Inc. v. State Bd. of Tax Comm’rs, 634 N.E.2d 882, 886 (Ind. Tax Ct. 1994). “[W]hen, for any reason, [taxation] becomes discriminative between individuals of the class taxed, and selects some for an exceptional burden, the tax is deprived of the necessary element of legal equality, and becomes inadmissible.” Smith, 63 N.E. at 27 (quoting Cooley, Tax’n, 169). Thus, if the legislature creates a classification within a statute, that classification must not be arbitrary. State Bd. of Tax Comm’rs v. Lyon and Greenleaf Co., 359 N.E.2d 931, 934 (Ind. Ct. App. 1977), reh’g denied. Consequently, in this case, Majestic Star must prove that the contested classification is not based upon differences naturally inhering in the property or in the subject matter of the legislation that creates the classification. See St. John V, 702 N.E.2d at 1042.
Historically, Indiana has strictly prohibited gambling. American Legion Post No. 113 v. State, 656 N.E.2d 1190, 1192 (Ind. Ct. App. 1995). Nevertheless, the Indiana legislature legalized riverboat gambling in 1993. See Ind. Code Ann. § 4-33. In doing so, the legislature expressed its clear intent “to benefit the people of Indiana by promoting tourism and assisting economic development.” Ind. Code Ann. § 4-33-1-2 (West 1997). More specifically, the legislature provided that the Indiana Gaming Commission was to issue riverboat licenses to those applicants “that promote the most economic development in a home dock area and that best serve the interests of the citizens of Indiana.” Ind. Code Ann. §4-33-4-1(a)(5) (West 1997) (amended 2003).
Riverboats utilize resources provided by local government. Most notable, perhaps, is their need for law enforcement supervision. See A.I.C. § 4-33-1-2 (stating that the legislature’s goals in legalizing riverboat gambling “will be maintained only through [] comprehensive law enforcement supervision[] and [] the strict regulation of facilities, persons, associations, and gambling operations”). See also, e.g., Ind. Code Ann. § 4-33-4-18 (West 1997) (amended 2003) (providing that the state police shall assist the Indiana Gaming Commission in conducting background investigations of riverboat licensee applicants). Riverboats also use local fire protection services, road and street maintenance services, water and utility services, etc.
The cost of local services and government is borne by individual property owners and businesses alike through the payment of property taxes. See St. Mary’s Med. Ctr. of Evansville, Inc. v. State Bd. of Tax Comm’rs, 534 N.E.2d 277, 280 (Ind. Tax Ct. 1989) (stating that a property tax exemption is strictly construed against a taxpayer and in favor of the State because it releases property from the obligation of bearing its share of the cost of government and serves to disturb the equality and distribution of the common burden of government upon all property) (quotation and citation omitted), aff’d, 571 N.E.2d 1247 (Ind. 1991). There is perhaps no better way to promote economic development in an area than to insure that all bear their burden in sharing the cost of government through property tax payment.
The Indiana legislature has chosen to classify vessels, for purposes of property taxation, based upon whether gambling occurs on those vessels. While the reason for this treatment may not be based upon differences naturally inhering in the vessels themselves, it is most definitely based upon differences naturally inhering in the subject matter of the legislation that creates the classification. In other words, the legislature legalized riverboat gambling in an effort to revitalize/promote/enhance the economy in local areas; by requiring riverboats like Majestic Star I to pay property taxes, revenue is pumped back into the local economy. See Indiana Dep’t of State Revenue v. Trump Indiana, Inc., 814 N.E.2d 1017, 1021 (Ind. 2004) (acknowledging the legislature’s “power to classify [riverboats] as [both] realty and [] as personalty to effectuate independent statutory schemes of taxation”).
In addition, all taxpayers within this classification are treated equally. There is no artificial distinction between certain members of the class: all riverboats are subject to taxation as real property. Thus, the Court finds no violation of Article 10, § 1. See St. John V, 702 N.E.2d at 1042. The Indiana Board’s final determination with respect to this issue is therefore AFFIRMED.

the Assessor with requests for admission pursuant to Trial Rule 36. See footnote Specifically, Majestic Star requested that the Assessor respond, within thirty days of service, to the following assertions: 1) that based on its actual age, the Majestic Star I was entitled to a 55% physical depreciation adjustment; and 2) that based on its numerous functional deficiencies which resulted in poor economic performance, the Majestic Star I was entitled to an 80% obsolescence depreciation adjustment. ( See Cert. Admin. R. at 232, 234, 253-55.) (See also Pet’r Br. at 12-13.) The Assessor never responded to these requests for admission. Consequently, the matters contained within Majestic Star’s requests for admission were conclusively established by operation of law. See Ind. Trial R. 36(A), (B).
At the Indiana Board hearing in December 2002, counsel for Majestic Star produced the requests for admission and requested that they be admitted into evidence. (See Cert. Admin. R. at 464-65, 481-82.) The Assessor did not object to Majestic Star’s motion. Nevertheless, when the Indiana Board issued its final determination on the matter in April of 2003, it “withdrew” the admissions, ruling that
[a]t the administrative hearing, the [Assessor] testified contesting the issues contained in the Requests[.] The [Assessor’s] testimony is sufficient to challenge the admissions deemed admitted, and to act as a motion to withdraw these admissions.

(Cert. Admin. R. at 55-56.)
Majestic Star argues that the Indiana Board abused its discretion in withdrawing the Assessor’s admissions. Majestic Star is correct for several reasons.
First, as support for its determination, the Indiana Board relied on a 1990 Indiana Court of Appeals opinion that held that “justice requires a trial court to allow withdrawal [] of admissions where the admissions involve core controverted issues and the opposing party fails to establish that he would be prejudiced thereby in maintaining his action on the merits.” (Cert. Admin. R. at 55 (quoting Gary Mun. Airport Auth. Dist. v. Peters, 550 N.E.2d 828, 832 (Ind. Ct. App. 1990)).) Nevertheless, one year later, the Indiana Supreme Court issued an opinion “to provide guidance to the bench and bar” on Trial Rule 36 issues. Gen. Motors Corp. v. Aetna Cas. & Sur. Co., 573 N.E.2d 885, 886 (Ind. 1991), reh’g denied. In that case, the high Court explained that Trial Rule 36 was expansive enough to permit a request for admission regarding an opinion, a contention, or a legal conclusion. Id. at 888. Thus, the Indiana Board’s reliance on the Gary Municipal Airport case for the proposition that Majestic Star’s requests for admission were, somehow, “improper subject matter” is misplaced. See id. See also Bryant v. County Council of Lake County, 720 N.E.2d 1, 6 (Ind. Ct. App. 1999) (stating that a motion to withdraw requests for admission is insufficient if it is based on a mere showing that the admissions go to the core issues to be litigated), trans. denied; Corby v. Swank, 670 N.E.2d 1322, 1325 (Ind. Ct. App. 1996) (stating that a party’s assertion that requests for admission were not proper because they addressed issues to be proved at trial was against the holding in General Motors).
In addition, as the General Motors case explains, the very language of Trial Rule 36 limits the discretion of a trial court (or, in this case, the Indiana Board See footnote ) in ruling on a motion to withdraw admissions. Indeed, the adjudicating body cannot grant a motion to withdraw unless it determines that, first, “the presentation of the merits of the action will be subserved thereby and[, second,] . . . that withdrawal [] will [not] prejudice [the party who obtained the admission] in maintaining his action or defense on the merits.”See footnote T.R. 36(B) (footnote added); Gen. Motors, 573 N.E.2d at 889. The test, however, requires an affirmative showing by each party. Indeed, the party seeking withdrawal of the admissions bears the burden of showing how the withdrawal would subserve the presentation of the case’s merits; the party who has obtained the admissions bears the burden of demonstrating that it would be prejudiced in maintaining its action on the merits if withdrawal was permitted. See footnote Corby, 670 N.E.2d at 1326 (footnote added).
In reviewing the administrative record, the Court finds that neither of these criteria was conclusively demonstrated. First, the Court notes that, at the outset, the Assessor made no motion - formal or otherwise - to withdraw his admissions. Cf. Corby, 670 N.E.2d at 1327 (stating that the party seeking withdrawal must actually make a motion for withdrawal). Even assuming that the Assessor’s testimony at the hearing did constitute a motion to withdraw, the Assessor made no showing that the presentation of the case’s merits would be subserved by the withdrawal. Indeed, he presented no evidence or indication that his failure to timely respond to Majestic Star’s requests for admissions was “an honest error” or “inadvertent.” See fn. 8, supra. Likewise, he made no showing that Majestic Star was aware that he intended to contest the admitted issues at the Indiana Board hearing. See footnote
On the “flip side,” because the Assessor made no motion to withdraw his admissions, Majestic Star was never required to demonstrate that it would be prejudiced in maintaining its action on the merits if withdrawal was permitted. Thus, the Indiana Board put the cart before the horse when it expected Majestic Star to object to a motion when the motion was never made in the first place. See footnote
Under these circumstances, the Court finds that the Indiana Board’s withdrawal of the Assessor’s admissions is clearly in error. See Gen. Motors Corp., 573 N.E.2d at 889. Consequently, the Indiana Board’s final determination with respect to this issue is REVERSED.

(Oral Argument Tr. at 5.)