Edward Kostowski et al. v. City of Norwalk et al. (2013)

CORRECTED MEMORANDUM OF DECISION (Correction to Memorandum of Decision dated May 16, 2013 Correction on page 10, sentence added at bottom)

I. Background

This case arises out of the aftermath of a real estate tax appeal taken by the plaintiffs in which this court found the fair market value of the Kostowski property at 39 Gillies Lane, Norwalk, Connecticut as of October 1, 2003 was $660,000.   Norwalk's ¹ assessment of the value of the property had been $906,400.   Kostowski v. Norwalk, Superior Court, judicial district of Stamford–Norwalk at Stamford, CV 04 4000291 (October 30, 2007, Adams, J.).   That decision was not appealed.   The complaint in the case sought only a determination of the October 1, 2003 fair market value, and was never amended to include the subsequent Grand Lists of October 1, 2004, 2005 and 2006.

Following this court's decision the Kostowskis sought further relief when Norwalk, after reducing its valuation of the property to $660,000 for October 1, 2003, did not adjust its valuations for the following three years.   Meeting no success, the Kostowskis commenced this action in mandamus seeking an order that Norwalk comply with the October 30, 2007 judgment of this court, adjust the gross assessed value of 39 Gillies Lane for October 1, 2004, October 1, 2005 and October 1, 2006 to reflect the court's finding of fair market value for October 1, 2003, and refund any overpaid taxes for those periods to the plaintiffs.   In its answer Norwalk admitted that it had not changed the property's valuation for 2004 through 2006 and pleaded a special defense of collateral estoppel or res judicata.

The trial of this action took place on March 7, 2013.

II. Facts

A significant portion of the relevant evidence in this case was presented by means of a written Stipulation of Facts submitted by the parties, and counsel and admitted into evidence as Exhibit 5. Counsel on both sides are commended for this step as it saved trial time and laid out somewhat complex facts and calculations far more clearly than had they been introduced through direct and cross examination.   The Stipulation is as follows.

“1. Plaintiffs are individuals who reside at 39 Gillies Lane, Norwalk, Connecticut (the “Property”).   At all relevant times, Plaintiffs have been owners of the Property.

“2. Defendant City of Norwalk (“Norwalk”) is a municipality organized under the laws of the State of Connecticut.

“3. Defendant City of Norwalk Board of Assessment Appeals (“BAA”) is a board organized by Norwalk and authorized to review, confirm, reduce and modify real property tax assessments within and for Norwalk pursuant to Conn. Gen.Stat. §§ 12–110 through 12–115, inclusive.

“4. Defendant, Michael J. Stewart (“Stewart”), is the current Tax Assessor for Norwalk.   Stewart is the successor in his office to former Norwalk Tax Assessor, Kenneth Whitman (“Whitman”).

“5. At all relevant limes, Norwalk assessed the Property pursuant to the following model.   The Fair Market Value of a property is estimated by the Tax Assessor as of October 1 for a given year.   Seventy per cent (70%) of the Fair Market Value is then calculated to determine a property's “Gross Assessed Value.”   Relevant exemptions are applied to the Gross Assessed Value to determine a “Net Assessed Value.”   The Net Assessed Value is then multiplied by a mill rate in effect for the year to determine the real property taxes due for the property in question before credits or abatements.

“6. Real property in Norwalk was revalued as of October 1, 2003.   At that time, Norwalk phased-in the value increases over the 2002 values resulting from the 2003 revaluation.   The phase-in took place over the four year period from 2003 to 2006 and used each property's final 2002 Grand List value as the base value for calculating the Phase–In Exemption for the 2003 revaluation.   Accordingly, the difference between the Property's Gross Assessed Value as October 1, 2003 and October 1, 2002 constituted an amount that is subject to a “Phase–In Exemption,” for 2003.   The amount subject to a “Phase–In Exemption” for grand list years 2004 through 2006 is the difference between the 2002 final assessed value and the final assessed value for each grand list.   The Phase–In Exemption was the annual reduction taken from the gross assessment.   Thus, Seventy-five (75%) percent of the value increase was applied as a Phase–In Exemption to property's gross assessed value as of October 1, 2003.   Fifty percent (50%) of the value increase on the 2004 grand list was applied as a Phase–In Exemption for a given property's gross assessed value as of October 1, 2005.   No Phase–In Exemption amount was applied for a given property's gross assessed value as of October 1, 2006.   Thus, as a general rule, absent some change affecting the fair market value estimate of a particular property, a property's fair market value as of October 1, 2003 remained the fair market value for that property for purposes of calculating real property taxes for the Grand Lists of October 1, 2004, October 1, 2005 and October 1, 2006.

“7. At all relevant times, the Property was subject to a $6,000.00 exemption because Plaintiff's qualified for a Veteran's Exemption.

“8. Norwalk assessed the value of the Property for the grand list of October 1, 2003 at $906,400.00.

“9. Plaintiff's appealed Norwalk's valuation of the Property to BAA pursuant to Conn. Gen.Stat. § 12–111.   BAA did not adjust the valuation.   In early 2004, Plaintiffs appealed the valuation of the Property to the Superior Court for the Judicial District of Stamford/Norwalk at Stamford in a matter entitled Kostowski, et al. v. Norwalk, et al., D.N. CV–04–4000291–S (the “Appeal”).   Norwalk, BAA and Whitman were named defendants in the Appeal.

“10. In the Appeal, Plaintiffs did not amend their pleadings pursuant to Conn. Gen.Stat. § 12–117a to include the subsequent tax years commencing during its pendency.   Mr. Kostowski testified at the hearing of the Appeal that the residence at the Property was “not complete.”   Certain building permits were open for incomplete work at the time of the hearing of the Appeal.

“11. On October 27, 2007, (sic) the Court (Adams, J.) rendered judgment on the appeal determining that the fair market value (gross assessed value) of the Property as of October 1, 2003 was $660,000.00.

“12. No party appealed the Judgment.

“13. After the judgment was rendered, Defendants reduced the fair market value of the Property to $660,000.00 as of October 1, 2003.

“14. Plaintiffs had originally paid $9,891.41 in property taxes for the assessment of the Property as of October 1, 2003.   On or around June 11, 2008, Defendants adjusted the property taxes for the Property as described above and credited Plaintiffs $1,143.10.

“15. Defendants did not adjust the property taxes for the Property subsequent to the Grand List of October 1, 2003 because the pleadings in the Appeal had not been amended to include the Grand Lists of October 1, 2004, October 1, 2005 and October 1, 2006 and no evidence of value was presented as to impact, of value on subsequent years (sic).

“16. Defendants determined the fair value of the Property to be $906,400.00 as of October 1, 2004.   As a result, Plaintiffs paid $12,818.84 in property taxes.   Were one to substitute the fair market value for the Property determined by the Court in the Judgment, the following tax would result:  $660,000.00 (fair market value).   Seventy per cent (70%) of that amount results in a gross assessed value of $462,000.00.   The difference between that gross assessed value and the gross assessed value as of October 1, 2002 ($294,000.00) is $168,000.00.   For 2004, fifty per cent (50)% of the difference is the applicable Phase–In Exemption, or $84,000.00.   The Veteran's Exemption of $6,000.00 would also be applicable.   Thus, the total of exemptions would be $90,000.00.   The result is a net assessed value of $372,000.00.   The mill rate for 2004 was .02456.   Multiplying this factor against the net assessed value results in a tax of $9,136.32, or an amount $3,682.52 less than Plaintiffs actually paid.

“17. Defendants determined the fair value of the Property to be $817,900.00 as of October 1, 2005.   As a result, that year, Plaintiffs paid $11,968.18 in property taxes.   Were one to substitute the fair market value for the Property determined by the Court in the Judgment, the following tax would result:  $660,000.00 (fair market value).   Seventy per cent (70%) of that amount results in a gross assessed value of $462,000.00.   The difference between that gross assessed value and the gross assessed value as of October 1, 2002 ($294,000.00) is $168,000.00, or the Phase–In Exemption.   For 2005, twenty-five per cent (25%) of the difference, of $42,000.00 was the applicable Phase–In Exemption.   The Veteran's Exemption of $6,000.00 would also be applicable.   Thus, the total of exemptions would be $48,000.00.   The result is a net assessed value of $414,000.00.   The mill rate for 2005 was .022635.   Multiplying this factor against the net assessed value results in a tax of $9,370.89, or an amount $2,697.29 less than Plaintiffs actually paid.

“18. Defendants determined the fair market value of the Property as of October 1, 2006 to be $911,400.00.   As a result, that year, Plaintiffs paid $13,368.26 in property taxes.   Were one to substitute the fair market value for the Property determined by the Court in the Judgment, the following tax would result:  $660,000.00 (fair market value).   Seventy per cent (70%) of that amount results in a gross assessed value of $462,000.00.   The difference between that gross assessed value and the gross assessed value as of October 1, 2002 ($294,000.00) is $168,000.00.   By 2006, no Phase–In Exemption was applicable.   The Veteran's Exemption of $6,000.00 would be applicable.   Thus, the total of exemptions would be $6,000.00.   The result is an net assessed value of $456,000.00.   The mill rate for 2006 was .021153.   Multiplying this factor against the net assessed value results in a tax of $9,645.77, or an amount of $3,722.49 less than Plaintiffs actually paid.

“19. Defendants acting through its tax assessor performed exterior inspections of the Property on November 23, 2004, and December 22, 2006.

“19. (Sic) Were one to apply the fair market value as determined by the Court (Adams, J.) in the Judgment to the property taxes for the Grand Lists of October 1, 2004, October 1, 2005 and October 1, 2006, absent any other change in the condition of the Property as would require a change in the value pursuant to Conn. Gen.Stat. § 12–117a, the total amount of taxes plaintiffs overpaid would be $10,002.03.”

The only testimony given at the trial was that of Michael Stewart, the Norwalk Tax Assessor.   He testified that while the October 1, 2003 fair market value was reduced to $660,000 as a result of this court's decision, he did not make any other changes to the fair market value Norwalk had established for the property for October 1, 2004, October 1, 2005 and October 2006.

These values were $906,400, $817,900 and $911,400 respectively.   Stewart testified that Norwalk did not think the fair market valuation established by the court applied to 2004 or beyond, presumably because the tax appeal complaint was only directed at the 2003 valuation.

Stewart further testified there was no increase in the property's value in 2004 and subsequently, the property increased in value based on two inspections of the property.

III. Discussion

As noted in this court's earlier decision, the subject property presents difficult valuation problems in part because of the unfinished condition of the residence structure, and in part because of the unusual nature of some of the areas in the residence which are large, but at least during the relevant period, lacked insulation or plumbing, although the Kostowskis have a certificate of occupancy and are living at the property.

General Statutes § 12–117a provides that any person aggrieved by a real estate tax assessment may appeal to the Superior Court, and states further that “[i]f, during the pendency of such appeal a new assessment year begins, the applicant may amend his application ․ to [include] an appeal for each new year ․” The last sentence of Section 12–117a states that if the appeal results in a lower assessed value, the reduced assessment “shall be the assessed value of such property on the grand lists for succeeding years until the tax assessor finds the value of the applicant's property has increased or decreased.”   In this case, the parties chose not to follow the language of the statute.   The Kostowskis chose not to amend their appeal to include the tax years of 2004 through 2006, and Norwalk did not apply the reduced value found by this court in the years succeeding 2003.

The Connecticut Supreme Court decision in Albert Brothers, Inc. v. City of Waterbury, 195 Conn. 48 (1985), is helpful in construing Section 12–117a.   In that case the Connecticut Supreme Court interpreted what was then General Statutes § 12–118, the provisions of which have subsequently been moved to Section 12–117a.   See First Bethel Associates v. Bethel, 231 Conn. 731, 733–34 n.2. (1995) (“the provisions of § 12–118 ․ have been moved to General Statutes § 12–117a”).

In Albert Brothers the court upheld a trial court decision which found that increases to property valuations resulting from a 1979 city-wide revaluation that was not completed in a timely fashion were invalid for use in 1980.   The plaintiff also challenged whether the increases could be used for the tax years 1981 and 1982, relying on the last sentence of the Section 12–118 (now found in Section 12–117a).   The Connecticut Supreme Court stated the increases, which were supported by the most recent revaluation, were not inequitably high, could be used.   Indeed, the plaintiff had abandoned at trial any claim that the valuations of his property were above fair market value.  Id. 59.   The court explained the purposes of the last sentence of what is now Section 12–117a was to deal with the situation where an assessment was inequitably high and that “tax is carried forth on subsequent tax lists.”  Id. Thus, in Albert Brothers the earlier tax was reduced because the revaluation process was not timely completed, not because the valuation was too high.   In this case, however, it has been judicially determined that the 2003 tax was inequitably high and, under the reasoning of Albert Brothers and the language of now Section 12–117a the inequitably high valuation may not be simply carried forward.

Based on the testimony of Stewart that there was no increase in the value of the subject property in 2004, Norwalk now acknowledges that the $660,000 fair market valuation established by this court for 2003 should apply to the 2004 tax year as well.   However, Norwalk contends that two inspections of the subject property, on November 23, 2004 and December 22, 2006, provide a basis for supporting the fair market value of the property of $817,900 for October 1, 2005 and $911,400 for October 1, 2006.   The Kostowskis disagree.

The 2004 inspection report was made by Tom Malloy.   He reported with respect to an open building permit for a masonry fireplace, with an estimated value of $4,000 that it was “80% complete” with concrete block only, and “no brick fascia.”   Ex. A. Stewart assigned the fireplace an unknown partial value as of October 1, 2004 (“PV”).  Id. In connection with a 3–bay garage, Malloy reported the project, valued at $20,000 to be “85% complete.”   As to three proposed storage sheds on the property, one stucco shed existed along with two lean-tos.   The notes by Malloy do not reflect what value, if any, was ascribed to these facets of the residence, nor do they indicate whether the completion percentages reflect work done since the last valuation.

The December 22, 2006 inspection was conducted by Stewart, and was impeded by the presence of a dog that barred access to the inside of the residence.   Therefore, Stewart had no additional observations about the fireplace.   He found the garage to be completed and assigned it an unknown partial value, and made no written comments about the three storage sheds.  Id.

General Statutes § 12–55 permits the tax assessor to increase or decrease the fair market value of individual properties apart from the statutorily required municipality-wide revaluation every ten years.   Norwalk contends that the provisions of General Statutes §§ 12–55 and 12–117a support its position that the subject property's valuation need not remain unchanged from its October 1, 2003 valuation set by this court.   Therefore, it argues that the valuations for 2005 and 2006 of $817,900 and $911,400 should stand.   The court agrees that the tax assessor or Board of Assessment Appeals may raise or lower property valuations after a tax appeal has set the fair market value for one year.  84 Century Ltd. Partnership v. Board of Tax Review, 207 Conn. 250 (1998).   But, there are two caveats.   First, Section 12–55(b) requires written notice of an increase must be sent to the property owner.   See Fedus v. Colchester, Superior Court, judicial district of New London at Norwich, CV 020125210 (April 19, 2004, Aronson, J.T.R.) [36 Conn. L. Rptr. 821].   Second, there must be some actual change in valuation, as Norwalk concedes by belatedly accepting this court's 2003 valuation for the 2004 tax year.   See Ex. 5, ¶ 6.

There is no evidence that Norwalk sent the required notice of revaluation.   Perhaps more importantly, Norwalk has provided an almost complete lack of foundation for the 2005 and 2006 valuations of the subject property.   Accepting, as it must, that the proper valuations in 2003 and 2004 were $660,000 the meager evidence presented by Norwalk contained in the short notations arising from the 2004 and 2006 inspections (see Ex. A) that contain no assessor's valuation of the progress of work fails to support the 2005 and 2006 valuations of $817,900 and $911,400 respectively.   These are exactly the same valuations that were assigned to the Kostowski property before this court found the property to be overvalued by Norwalk by almost a quarter million dollars.   It is clear that Norwalk simply maintained the old valuations, without taking into account the valuations placed on the property by the court, an approach contrary to law.   This conclusion is supported by the valuation placed on the property in 2007 by the Board of Assessment Appeals which was $662,700.   Without evidence to support either the 2005 or 2006 valuations asserted by Norwalk, the court finds that the 2005 and 2006 valuation should, as a matter of law, remain at $660,000.

In deciding the propriety of issuing a writ of mandamus the trial court exercises discretion rooted in the principles of equity.

* * *

A writ of mandamus is an extraordinary remedy, available in limited circumstances for limited purposes ․ [The court's discretion] will be exercised in favor of issuing the writ only where the plaintiff has a clear legal right to have done that which he seeks․  The writ is proper only when, (1) the law imposes on the party against whom the writ would run a duty the performance of which is mandatory and not discretionary;  (2) the party applying for the writ has a clear legal right to have the duty performed;  and (3) there is no other specific adequate remedy.

Garcia v. City of Hartford, 135 Conn.App. 248, 255 (2012) [quoting Jalowiec Realty Associates, L.P. v. Planning & Zoning Commission, 278 Conn. 408, 412 (2006).]

The court finds that the Kostowskis had a clear right to have their property assessed for tax purposes in accordance with the law.   Norwalk concedes there was no legal basis to raise the valuation in 2004 from the 2003 value established by the Superior Court which was not subject to any further appeal.   Further, the court finds that the 2005 and 2006 valuations were based on the failure of Norwalk to take into account the Superior Court's valuation, but simply reflected more of what happened in 2004—i.e. a failure to recognize the Superior Court's valuation.   The Norwalk argument that steps toward completing the residence, which themselves were not given a dollar value, justified reverting to the pre-appeal valuation is not at all persuasive and leaves the court no choice but to find those valuations inequitable.

IV. Conclusion

Based on the findings above and the Stipulation of Facts also set forth above, particularly the second Paragraph 19 thereof, the court grants the writ of manadamus and orders Norwalk to refund or credit the Kostowskis the amount of $10,002.03 ² in previously paid real estate taxes for the years 2004 through 2006.   Added to this amount shall be interest calculated at the rate charged by Norwalk for overdue or unpaid taxes during the same time period.

The request for attorneys fees is denied.

TAGGART D. ADAMS

JUDGE TRIAL REFEREE

FOOTNOTES

FN1. The defendants in this case and the earlier tax appeal, were the City of Norwalk, the City's Board of Assessment Appeals and the City's Tax Assessor.   The defendants here will be referred to jointly as Norwalk..  FN1. The defendants in this case and the earlier tax appeal, were the City of Norwalk, the City's Board of Assessment Appeals and the City's Tax Assessor.   The defendants here will be referred to jointly as Norwalk.

FN2. By the court's calculations, the overpaid taxes for 2004–2006 set forth in the Stipulation actually amount to $10,102.30.   However, since the parties agreed to the lower amount, the court will not disturb it.   The parties are free to agree on the higher amount, if they find the court's calculations to be correct..  FN2. By the court's calculations, the overpaid taxes for 2004–2006 set forth in the Stipulation actually amount to $10,102.30.   However, since the parties agreed to the lower amount, the court will not disturb it.   The parties are free to agree on the higher amount, if they find the court's calculations to be correct.

Adams, Taggart D., J.T.R.