LLC v. City of New Britain (2011)

MEMORANDUM OF DECISION ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

The defendant city of New Britain (city) moves for summary judgment in this real estate tax appeal on the basis that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.   The city argues that the plaintiff, Samnard Associates, LLC (Samnard), the owner of the subject property, is collaterally estopped from taking an appeal from the October 1, 2009 Grand List because its tenant, Wal–Mart Real Estate Business Trust (Wal–Mart), had previously appealed the assessor's valuation to the board of assessment appeals (BAA), as of the revaluation date of October 1, 2007, and accepted a reduction in valuation without further appeal.

The plaintiff alleges the following facts:

On October 1, 2007, the city conducted a city-wide revaluation of all real estate, including the plaintiff's property located at 643 Farmington Avenue in New Britain.   The assessor determined that the value of the subject property was $11,173,100.   In 2008, the plaintiff authorized Wal–Mart to appeal the assessment of the subject property to the BAA for the October 1, 2007 Grand List. The BAA reduced the value of the subject property to $9,875,700, a reduction of $1,297,400 for the Grand List of October 1, 2007, the revaluation date.   Neither Wal–Mart nor Samnard appealed the BAA's decision regarding the Grand List of October 1, 2007 to the Superior Court.

Samnard now brings a second appeal (subsequent to the BAA's decision in the Wal–Mart appeal) to the Superior Court for the Grand List of October 1, 2009.

The city, in filing this motion for summary judgment, contends that the plaintiff has already successfully challenged the assessor's valuation as of the revaluation year of October 1, 2007 and cannot now take an interim appeal for the Grand List of October 1, 2009.

“Practice Book § 17–49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party ․ The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law ․” (Internal quotation marks omitted.)  Brooks v. Sweeney, 299 Conn. 196, 210, 9 A.3d 347 (2010).

There are three key issue here:  (1) whether a taxpayer, having taken an appeal to the BAA for the revaluation year, may maintain a subsequent challenge to the BAA's valuation of the same property within the same revaluation period;  (2) whether the plaintiff is estopped from bringing this second tax appeal;  and (3) whether Public Act (P.A.) No. 09–196, regarding the amendment of § 12–111, has retroactive or prospective effect.

Samnard opposes the city's motion for summary judgment, claiming that it is not precluded from maintaining this appeal because its tenant, Wal–Mart, was not authorized to bind the plaintiff “to any value for a tax year beyond the time in which Wal–Mart remained in possession of the Property.”  (Plaintiff's 12/17/10 memorandum in opposition, p. 2.) ¹ The plaintiff argues that there is a genuine issue of material fact whether Wal–Mart had the authority to bind the plaintiff to assessments in subsequent tax years following the October 1, 2007 Grand List. As Wal–Mart did not take an appeal to the Superior Court from the BAA's decision regarding the October 1, 2007 Grand List, Samnard further argues that nothing was litigated to final judgment to bar this action.

It is the defendant's contention that a taxpayer is entitled to only one appeal in between revaluation years based on its reading of General Statutes § 12–111(a) (as amended by § 1 of P.A. No. 09–196).

The plaintiff counters that § 1 of P.A. No. 09–196 has no retroactive effect and does not bar the plaintiff's appeal.   See plaintiff's 12/17/10 memorandum in opposition, p. 4. The plaintiff relies on D'Eramo v. Smith, 273 Conn. 610, 620, 872 A.2d 408 (2005), discussing “General Statutes § 55–3, which states:  No provision of the general statutes, not previously contained in the statutes of the state, which imposes any new obligation on any person or corporation, shall be construed to have retrospective effect.   The obligations referred to in the statute are those of substantive law ․ Thus, we have uniformly interpreted § 55–3 as a rule of presumed legislative intent that statutes affecting substantive rights shall apply prospectively only.”  (Internal quotation marks omitted.)

General Statutes § 12–111(a) (as amended by § 1 of P.A. No. 09–196), provides, in relevant part, as follows:

“When the board increases or decreases the gross assessment of any taxable real property or interest therein, the amount of such gross assessment shall be fixed until the assessment year in which the municipality next implements a revaluation of all real property pursuant to section 12–62, unless the assessor increases or decreases the gross assessment of the property to (1) comply with an order of a court of jurisdiction, (2) reflect an addition for new construction, (3) reflect a reduction for damage or demolition, or (4) correct a factual error by issuance of a certificate of correction.”  (Emphasis added.)

The enactment of this key language in P.A. No. 09–196 eliminates the necessity of complying with the provisions of General Statutes § 12–117a that “[i]f, during the pendency of such appeal, a new assessment year begins, the applicant may amend his application as to any matter therein, including an appeal for such new year ․ and such applicant need not appear before the ․ [BAA] ․ to make such amendment effective.”

As noted by the court in Jupiter Realty Co. v. Board of Tax Review, 242 Conn. 363, 368–69, 698 A.2d 312 (1997), in construing the meaning of a tax statute, it is important to consider “(1) the history of § 12–62, its chronological relationship to the tax appeal statutes, and the public policy behind tax appeals;  (2) the uniform understanding of the tax appeals statutes as held by those charged with carrying out the statutes' mandates and by those who litigate and adjudicate tax appeals;  (3) the bizarre and unacceptable results that would ensue ․”

A brief review of the statutory history of tax appeals is helpful here.   A taxpayer had a right to appeal under General Statutes (Rev. to 1949) § 1800 ² to the board of tax review.   Subsequently, the legislature streamlined the appellate process by providing the right to include subsequent tax years in § 12–117a.   An improvement of this appellate process was enacted by the legislature in P.A. No. 09–196 by amending § 12–111(a), thereby eliminating the necessity of amending the original application to include subsequent tax years.

The historical development of the appellate process in tax appeals, ending with the taxpayer appearing before the BAA just once in order to preserve the taxpayer's claim to subsequent tax years prior to the next revaluation, shows a legislative effort to make substantive changes to improve and simplify the appellate process.   See Wiseman v. Armstrong, 269 Conn. 802, 820, 850 A.2d 114 (2004) (“[i]t is a basic tenet of statutory construction that the intent of the legislature is to be found not in an isolated phrase or sentence but, rather, from the statutory scheme as a whole”).  (Internal quotation marks omitted.)

To emphasize that the changes noted above are substantive rather than procedural, the legislature's decision to make P.A. No. 09–196 effective on October 1, 2009, and not retroactive, shows that if the legislature had intended the amendment to be retroactive, there would have been no need to wait from the date of the amendment's passage until October 1, 2009 to put the provision into effect.   The more logical interpretation is that the legislature intended the amendment to operate prospectively only.³  Our courts have held that legislation generally is presumed to operate prospectively unless the legislature has made it clear that its intent was to make the legislation operate retrospectively.   See Stafford Higgins Industries, Inc. v. Norwalk, 245 Conn. 551, 565, 715 A.2d 46 (1998).

Turning to the estoppel issue, the defendant claims that “[t]he reduction in assessment by the [BAA] and failure of the applicant to appeal that decision to Superior Court operates to collaterally estop applicant from bringing the instant action.”  (Defendant's 10/12/10 memorandum of law, p. 8.)

“The doctrine of collateral estoppel expresses the fundamental principle that once a matter has been fully and fairly litigated, and finally decided, it comes to rest ․ Collateral estoppel, or issue preclusion, is that aspect of res judicata which prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties upon a different claim ․ For an issue to be subject to collateral estoppel, it must have been fully and fairly litigated in the first action.   It also must have been actually decided and the decision must have been necessary to the judgment.”  Megin v. New Milford, 125 Conn.App. 35, 38, 6 A.3d 1176 (2010).  (Emphasis omitted;  internal quotation marks omitted.)

This statement of the law supports the plaintiff's contention that in order to invoke the doctrine of collateral estoppel, the BAA's decision should have been appealed to the Superior Court and judgment rendered there to be effective.   This contention is supported by the court's decision in Waterbury Hotel Equity, LLC v. Waterbury, 85 Conn.App. 480, 493–94, 858 A.2d 259, cert. denied, 272 Conn. 901, 863 A.2d 696 (2004) which stated:

“When a previous owner stipulated to an agreed on value of the property and the court has rendered judgment on that stipulation, the parties are collaterally estopped from relitigating the same issue of valuation of the property only for the duration of that statutorily prescribed revaluation period.   The adjusted revaluation memorialized in the stipulated judgment is conclusive as to the value of the property for that statutorily prescribed revaluation period.”

While a stipulated judgment, as described in the Waterbury case, is entered by the court, a BAA decision is not.  “One of the statutory functions of the ․ [BAA] is to determine appeals taken by taxpayers claiming to be aggrieved by the action of the assessor.   In performing this function, the [BAA] acts as an administrative board, not a judicial tribunal and in performing its duties it acts largely upon the knowledge of its members as to valuations and as to the taxable property of the taxpayers.”  (Emphasis added.)   Nargi v. Waterbury, Superior Court, judicial district of Waterbury, Docket No. CV 96 0133015 (March 5, 2002) (Aronson, JTR) [31 Conn. L. Rptr. 483], citing Bugbee v. Putnam, 90 Conn. 154, 158, 96 A. 955 (1916) and Burritt Mutual Savings Bank v. New Britain, 146 Conn. 669, 674–75, 154 A.2d 608 (1959).

As the first appeal resulted in the BAA lowering the fair market value of the subject property as of October 1, 2007, the question is whether collateral estoppel applies to this situation since Wal–Mart accepted the BAA's decision and did not appeal to the Superior Court.   Here, there was no judicial litigation of the issues involved in this case, nor has there been any judgment which would prevent a relitigation based upon collateral estoppel.

Considering estoppel as applied to administrative bodies, “the governing principle is that administrative adjudications have a preclusive effect when the parties have had an adequate opportunity to litigate ․ [A] valid and final adjudicative determination by an administrative tribunal has the same effects under the rules of res judicata, subject to the same exceptions and qualifications, as a judgment of a court.”  (Internal quotation marks omitted.)  Birnie v. Electric Boat Corp., 288 Conn. 392, 406, 953 A.2d 28 (2008).   However, in the present action, there was no final adjudicative determination in which all parties had an adequate opportunity to litigate the issue.

The defendant raises the issue in this case of whether a taxpayer may have two or more “bites of the apple” by challenging the assessor's initial valuation of its property in subsequent tax years (between revaluation dates) following the BAA's decision to lower the original assessment with the taxpayer's acquiescence.

In resolving this issue, the court's discussion in Danbury v. Dana Investment Corp., 249 Conn. 1, 12–14, 730 A.2d 1128 (1999) is most helpful.   The court noted therein that “[i]t is well settled that, if the owner of the properties at the times of the assessments in question had wanted to challenge the assessments, it would have been required to follow the appropriate statutory procedures, either by (1) timely appealing from the assessments to the city's [BAA] pursuant to General Statutes §§ 12–111 and 12–112, and from there by timely appealing to the trial court pursuant to General Statutes § 12–117a, or (2) timely bringing a direct action pursuant to General Statutes § 12–119.”

The court's discussion in Jupiter Realty Co. v. Board of Tax Review, supra, 242 Conn. 371, is instructive.   In that case, the trial judge held that the right of a taxpayer in the revaluation process was limited to challenging the assessor only in the first year following the date of revaluation, thereby precluding any further challenge during subsequent years.   The Supreme Court rejected this holding noting “we decline to read our statutes so as to limit appeals of allegedly inaccurate valuations to the year of the revaluation because such a rule would generate severe inequities.”   The Jupiter Realty court, see id., further acknowledged the holding in Carol Management Corp. v. Board of Tax Review, 228 Conn. 23, 633 A.2d 1368 (1993), affirming a decision of the trial court allowing a taxpayer to challenge a revaluation in a subsequent year.   As discussed in Jupiter Realty, 242 Conn. 373–74, “a challenge to the decennial revaluation in a subsequent year seeks only to correct an already existing revaluation.”

In Connecticut, a taxpayer must avail itself of the statutory process in order to address a dispute involving a revaluation assessment by the assessor.  “The rationale for this rule is the need on the part of the government for fiscal certainty.   A municipality, like any governmental entity, needs to know with reasonable certainty what its tax base is for each fiscal year, so that it responsibly can prepare a budget for that year.  [The tax appeal statutes] limit to a short period the time within which the property owner can seek relief under them, and the purpose of this is undoubtedly to prevent delays in the ultimate determination of the amounts a municipality can collect as taxes.   Public policy requires, therefore, that taxes that have not been challenged timely cannot be the subject of perpetual litigation, at any time, to suit the convenience of the taxpayer ․ A taxpayer who has not sought redress in an appropriate manner is foreclosed from continuing litigation outside [those] statutes.”  (Citations omitted;  internal quotation marks omitted.)  Danbury v. Dana Investment Corp., supra, 249 Conn. 15.

From the facts in this case, the plaintiff sought relief not from the revaluation date of October 1, 2007, but from the Grand List of October 1, 2009.   It makes no difference that the initial appeal was taken by Wal–Mart following the revaluation year of October 1, 2007 and not for subsequent tax years.   This is so because Wal–Mart's appeal reset the valuation of the subject property as of the revaluation year of October 1, 2007.   Once Wal–Mart availed itself of the appellate process, it bound the property owner for each successive tax year until the next city-wide revaluation.

While the plaintiff contends that there is a genuine issue of material fact whether Wal–Mart, as lessee, could bind its lessor under the theory of agency, the issue here is not whether Wal–Mart had the authority to bind Samnard for the October 1, 2009 Grand List, but whether a taxpayer may have “two bites of the apple.”

On this issue, whether a tax appeal must revert to the revaluation year, and not subsequent years, was considered in Wallingford Center Associates v. Board of Tax Review, 68 Conn.App. 803, 793 A.2d 260 (2002).   While this appeal was pending, the plaintiff transferred title to Captiva Realty Company.   Captiva filed a motion to intervene in the plaintiff's appeal so that it could amend the plaintiff's complaint to include the tax years of 1995 and thereafter which would benefit Captiva.   See id., 805.   The trial court denied Captiva's motion on the basis that Captiva bypassed the statutory requirement of appealing to the BAA, thereby failing to exhaust its administrative remedies.   The BAA reduced the valuation of the subject property based on the plaintiff's appeal only for the tax years of 1991, 1992, 1993 and 1994.   Following the judgment of the trial court, Captiva instituted an appeal claiming that the trial court improperly denied its motion to intervene.

The appellate court sustained Captiva's right to intervene in the original appeal and remanded the case back to the trial court with the following instructions:  “The judgment is reversed only insofar as the trial court failed to make Captiva Realty Company a party to the appeal and failed to extend the judgment's applicability to the years 1995 through 1999, and the case is remanded with direction to grant the motion for intervention as a party plaintiff by Captiva Realty Company and to amend the judgment by setting $1.5 million ⁴ as the value of the subject property to apply to the years 1995 through 1999.”  Id., 814–15.

The theory behind the Wallingford Center decision is that no evidence would have to be taken since the trial court decided the issue of the property's valuation and that decision was not appealed.   The significant point here is that Captiva was not allowed to contest the $1.5 million found by the trial court;  it could only benefit from the court's decision to add the years during its period of ownership.

In the present case, Samnard wants to benefit from Wal–Mart's appeal to the BAA and build upon that decision to seek a further reduction by going through the same appeal process as Wal–Mart.

From its initial complaint, Samnard accepts the decision of the BAA in the Wal–Mart decision but seeks to obtain a further reduction in the assessment, not as of the original revaluation date, but as of October 1, 2009.   Samnard's action is an attempt to change, not the original revaluation date, but to afford the plaintiff with an interim revaluation.

As noted in Davis v. Westport, 61 Conn.App. 834, 850, 767 A.2d 1237 (2001):  “General Statutes § 12–64a compels an interim revaluation under the limited circumstance of damage to the property requiring either complete demolition or total reconstruction.   The legislature has not provided any other statutory exception, and the Supreme Court has declined to recognize nonstatutory exceptions.”

“An interim revaluation is, in essence, a challenge to the legislatively designed revaluation time period.”  Waterbury Hotel Equity, LLC v. Waterbury, supra, 85 Conn.App. 497.

In effect, it would be an interim revaluation, contrary to the will of the legislature, if the plaintiff were to obtain a further reduction in its assessment, as of an interim date such as October 1, 2009.   See Davis v. Westport, 61 Conn.App. 851.   In addition, such a policy permitting multiple challenges to the assessment over a short period of time would undermine the need for fiscal certainty.   See Danbury v. Dana Investment Corp., 249 Conn. 15.⁵

As further noted in Waterbury Hotel Equity, LLC, supra, 85 Conn.App. 494, under the legislative scheme for property tax appeals, litigants cannot be permitted “to contest the validity of an assessment figure on ten different occasions (i.e., each of the ten years permitted by General Statutes § 12–62).”  (Internal quotation marks omitted.)   The fact that Wal–Mart successfully challenged the assessor's valuation of the subject property as of the revaluation date of October 1, 2007 and no appeal was taken of that decision either by Wal–Mart or Samnard, Samnard cannot now seek a different result because the adjusted revaluation, once set, must be applied to successive Grand Lists.

Even when viewing the evidence in the light most favorable to the plaintiff, it is clear that the plaintiff may not take an interim appeal from the October 1, 2009 Grand List. Accordingly, for the reasons stated above, the defendant's motion for summary judgment is granted.   Judgment may enter in favor of the defendant without costs to any party.

Arnold W. Aronson

Judge Trial Referee

FOOTNOTES

FN1. The Wal–Mart lease expired by its terms on January 31, 2010..  FN1. The Wal–Mart lease expired by its terms on January 31, 2010.

FN2. At the time of its effect, General Statutes (Rev. to 1949) § 1800 provided as follows:  “Any person claiming to be aggrieved by the action of the board of tax review in any town or city may, within two months from the time of such action, make application, in the nature of an appeal therefrom, to the court of common pleas of the county in which such town or city is situated.”.  FN2. At the time of its effect, General Statutes (Rev. to 1949) § 1800 provided as follows:  “Any person claiming to be aggrieved by the action of the board of tax review in any town or city may, within two months from the time of such action, make application, in the nature of an appeal therefrom, to the court of common pleas of the county in which such town or city is situated.”

FN3. In its 10/12/10 memorandum of law, p. 7, the city quotes the comments of Representative Sharkey (from the floor of the House of Representatives considering P.A. No. 09–196) that the amendment “simply clarifies what I think is common practice throughout the state, but apparently has not been applied evenly by our assessors.”.  FN3. In its 10/12/10 memorandum of law, p. 7, the city quotes the comments of Representative Sharkey (from the floor of the House of Representatives considering P.A. No. 09–196) that the amendment “simply clarifies what I think is common practice throughout the state, but apparently has not been applied evenly by our assessors.”

FN4. This was a reduction from the assessor's valuation of $2,104,700..  FN4. This was a reduction from the assessor's valuation of $2,104,700.

FN5. See DeSena v. Waterbury, 249 Conn. 63, 82–83, 731 A.2d 733 (1999), for a discussion on the statutory scheme and the philosophy of the legislature governing the revaluation of property.   See also Southern New England Telephone Co. v. Board of Tax Review, 31 Conn.App. 155, 160–61, 623 A.2d 1027 (1993) (compliance with the statutory provisions for taking a tax appeal is mandatory and, if not complied with, is subject to dismissal)..  FN5. See DeSena v. Waterbury, 249 Conn. 63, 82–83, 731 A.2d 733 (1999), for a discussion on the statutory scheme and the philosophy of the legislature governing the revaluation of property.   See also Southern New England Telephone Co. v. Board of Tax Review, 31 Conn.App. 155, 160–61, 623 A.2d 1027 (1993) (compliance with the statutory provisions for taking a tax appeal is mandatory and, if not complied with, is subject to dismissal).

Aronson, Arnold W., J.T.R.