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Balmuth v. Dolce

Supreme Court of Rhode Island

May 2, 2018

Michael A. Balmuth et al.
v.
David E. Dolce, in his capacity as Tax Assessor for the Town of Portsmouth. John Qua et al.
v.
David E. Dolce, in his capacity as Tax Assessor for the Town of Portsmouth. William Antle
v.
David E. Dolce, in his capacity as Tax Assessor for the Town of Portsmouth.

          Newport County Superior Court (NC 10-296), (NC 10-298), (NC 11-127), (NC 10-299), (NC 11-131), Associate Justice Walter R. Stone

          For Plaintiffs: Michael J. Richards, Esq. Brian G. Bardorf, Esq. Mark B. Bardorf, Esq.

          For Defendant: Kevin P. Gavin, Esq.

          Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

          OPINION

          FLAHERTY, JUSTICE

         "Don't tax you,

         Don't tax me, Tax that fellow behind the tree."[1]

         The defendant, who is the tax assessor for the Town of Portsmouth, [2] appeals from a judgment of the Superior Court in favor of the plaintiffs, a group of Portsmouth taxpayers who had challenged the defendant's tax assessments on their properties for tax years 2009 and 2010. These cases come to us in the wake of what is considered generally to be the worst economic downturn since the Great Depression. It is common knowledge that in 2008 the stock market plummeted, and with it the value of real estate throughout the country tumbled as well. It also is well known that Rhode Island was not immune from the effects of that economic collapse. Indeed, as both the plaintiffs and the defendant agree, the value of the plaintiffs' properties decreased in 2008 and 2009. This appeal, though, is not a contest about the value of the plaintiffs' properties. Rather, this appeal is about whether certain sections of G.L. 1956 chapter 5 of title 44 require the plaintiffs to base their tax appeals on the fair market value of their properties "as of December 31 in the year of the last update or revaluation * * *."

         When the plaintiffs appealed their assessments for tax years 2009 and 2010, the defendant maintained that they were locked in to the value of their properties as of December 31, 2007, the year of Portsmouth's last revaluation. The plaintiffs, whose properties had experienced a substantial decline in value after December 31, 2007, disagree. After a nonjury trial based on an agreed statement of facts, the trial justice concluded that, based on the language set forth in the pertinent sections of chapter 5 of title 44, the plaintiffs were not "locked in" to the values of their properties as of December 31, 2007.[3] Put another way, the trial justice decided that the plaintiffs were authorized under the law to challenge the defendant's assessments for tax years 2009 and 2010 by employing the fair market values of their properties as of December 31, 2008 and December 31, 2009, respectively. We agree. Accordingly, for the reasons set forth in this opinion, we affirm the judgment of the Superior Court.

         I Facts and Travel

         The facts here are undisputed and straightforward. The plaintiffs all own property in the Town of Portsmouth. More specifically, each of the plaintiffs owns a condominium in the same development. In 2007, consistent with his statutory duties as the tax assessor for Portsmouth, defendant conducted a full-scale revaluation of all real estate in the town, including plaintiffs' properties.[4] The defendant determined that, as of December 31, 2007, the full and fair cash values[5] of plaintiffs' properties were as follows: the Balmuth Property, $4, 430, 200; the Qua Property, $5, 320, 800; and the Antle Property, $4, 076, 500.

         Then, in 2008, the economy cratered. There is no question that real estate values were adversely affected by the downturn. Nevertheless, as he was permitted to do, for his assessment for tax year 2009, defendant carried forward the December 31, 2007 valuations of plaintiffs' properties. For tax year 2010, he did the same. Thus, for tax years 2009 and 2010, defendant assessed plaintiffs' property taxes based on the fair market values of those properties as of December 31, 2007.

         However, as of December 31, 2008-the date of assessment for tax year 2009-and December 31, 2009-the date of assessment for tax year 2010-the fair market values of plaintiffs' properties had decreased. As of December 31, 2008, the parties stipulate that the fair market values of plaintiffs' properties were as follows: the Balmuth Property, $4, 107, 333; the Qua Property, $4, 788, 720; and the Antle Property, $3, 668, 850. As of December 31, 2009, the fair market values of plaintiffs' properties were as follows: the Qua Property, $4, 256, 640; and the Antle Property, $3, 261, 200.[6]

         The plaintiffs sought review of those assessments on the ground that they had been overtaxed for tax years 2009 and 2010.[7] Following the procedure set forth in § 44-5-26(a), plaintiffs first appealed to defendant. He denied their appeals, informing plaintiffs that, under chapter 5 of title 44, he had properly carried forward the December 31, 2007 valuations for use in determining his assessments for tax years 2009 and 2010. The plaintiffs then appealed to the Portsmouth Tax Assessment Board of Review, where they were again denied relief. Still unsatisfied, plaintiffs then petitioned for relief in the Superior Court.

         Over the course of several years, plaintiffs' tax appeal cases were consolidated as they wound their way through the normal course of litigation. Ultimately, after the parties submitted an agreed statement of facts, a justice of the Superior Court granted plaintiffs the relief for which they had petitioned. The trial justice found that plaintiffs could challenge defendant's tax assessments for tax years 2009 and 2010 using the fair market values of their properties as of December 31, 2008 and December 31, 2009, respectively. He concluded that, contrary to defendant's interpretation of the language set forth in §§ 44-5-15 and 44-5-26 (language we will discuss infra), plaintiffs were not confined to the December 31, 2007 valuations. The trial justice reasoned that, under § 44-5-30, plaintiffs had satisfied the preconditions necessary to prevail on their tax appeals. Citing § 44-5-30, he wrote:

"For judgment to enter in favor of the taxpayer challenging [a] property tax assessment, the taxpayer must demonstrate: (1) that an account has been given; (2) that the tax has been assessed in excess of the property's full and fair cash value; and (3) that the taxes on the property have been paid prior to judgment entering."

         Section 44-5-30 provides, in pertinent part, that:

"If the taxpayer has given in an account, and if on the trial of the petition, either with or without a jury, it appears that the taxpayer's real estate * * * has been assessed * * * at a value in excess of its full and fair cash value, * * * the court shall give judgment that the sum by which the taxpayer has been so overtaxed, * * * with his or her costs, be deducted from his or her tax * * *."

         Seizing on the use of "shall" in that statute, the trial justice determined that he was bound to enter judgment in plaintiffs' favor because they had satisfied their burden under § 44-5-30. He explained that defendant had even conceded as much, in that there was no dispute that plaintiffs had (1) given an account; (2) been assessed taxes in excess of their properties' full and fair cash value for tax years 2009 and 2010; and (3) timely paid their taxes for tax years 2009 and 2010. Accordingly, a judgment entered in plaintiffs' favor.

         The defendant timely appealed, posing to this Court a single question of statutory interpretation: whether, pursuant to chapter 5 of title 44, plaintiffs were locked in to the fair market valuations of their properties as of December 31, 2007, when they appealed defendant's assessments for tax years 2009 and 2010.

         II Standard of Review

         This Court reviews questions of statutory interpretation de novo. Whittemore v. Thompson, 139 A.3d 530, 540 (R.I. 2016). When we are confronted with a statute that is clear and unambiguous, we "must interpret the statute literally and must give the words of the statute their plain and ordinary meanings." Id. (quoting Cummings v. Shorey, 761 A.2d 680, 684 (R.I. 2000)). If, however, we are presented with an ambiguous statute-one that contains "a word or phrase * * * susceptible of more than one reasonable meaning[, ]" Drs. Pass and Bertherman, Inc. v. Neighborhood Health Plan of Rhode Island, 31 A.3d 1263, 1269 (R.I. 2011)-then "this Court will 'employ our well-established maxims of statutory construction in an effort to glean the intent of the Legislature.'" In re Proposed Town of New Shoreham Project, 25 A.3d 482, 505 (R.I. 2011) (quoting Town of Burrillville v. Pascoag Apartment Associates, LLC, 950 A.2d 435, 445 (R.I. 2008)).

         III Discussion

         Our state's statutory scheme for local taxation begins with § 44-5-1, which vests in cities and towns the power to tax. Under § 44-5-1, "[t]he tax is apportioned upon the assessed valuations as determined by the assessors of the city or town as of December 31 in each year at 12:00 A.M. midnight, the date being known as the date of assessment of city or town valuations." Pursuant to § 44-5-13, "[t]he assessors shall assess all valuation and apportion any tax levy on the inhabitants of the city or town and the ratable property in the city or town according to law, and the assessed valuation of the ratable property is made as of the date of assessment provided in § 44-5-1[.]"[8] "All real property subject to taxation shall be assessed at its full and fair cash value, or at a uniform percentage of its value, not to exceed one hundred percent (100%), to be determined by the assessors in each town or city * * *." Section 44-5-12(a). With respect to real estate in particular, "[t]he assessors shall make a list containing the true, full, and fair cash value * * * as defined in []§ 44-5-12 * * * of the ratable estate in the city or town, placing the real estate [and other assets] in separate columns * * *." Section 44-5-20.

         Before assessing any valuations, though, the tax assessors of all the cities and towns must comply with the notice provisions set forth in § 44-5-15.[9] Section 44-5-15 also requires the annual filing of an account by a taxpayer:

"The notices require every person and body corporate liable to taxation to bring in to the assessors at the time they may prescribe a true and exact account of all the ratable estate owned or possessed by that person or body, describing and specifying the value of every parcel of the real estate as of December 31 in the year of the last update or revaluation and personal estate as of December 31 of the tax year * * *." (Emphasis added.)

         The account required under § 44-5-15 is a pillar of our local taxation structure; it must be made under oath, and it serves as a condition precedent to appealing a tax assessment. Section 44-5-16(a); Whittemore, 139 A.3d at 547. Furthermore, as prescribed by § 44-5-17, "[i]f any person brings in an account as provided in § 44-5-15, the assessors shall nevertheless assess the person's ratable estate at what they deem its full and fair cash value * * *."

         Generally, a taxpayer seeking to appeal a tax assessment with which he or she is dissatisfied has an exclusive statutory remedy to do so. As § 44-5-27 instructs, that remedy is provided in § 44-5-26.[10] Under § 44-5-26(a), "[a]ny person aggrieved on any ground whatsoever by any assessment of taxes against him or her in any city or town * * * may within ninety (90) days from the date the first tax payment is due, file an appeal in the local office of tax assessment * * *." From the local office of tax assessment, the aggrieved taxpayer may appeal to the local tax board of review and then, if still dissatisfied, file a petition for review in the Superior Court. Sections 44-5-26(a) and (b). In addition to setting forth the procedural and timing requirements required to perfect a tax appeal, § 44-5-26 further directs that "[a]ppeals to the local office of tax assessment are to be on an application[, ]" and that "[t]he application shall be in" a particular form. Section 44-5-26(b); see Appendix. Contained in that form are two provisions that are of significance to defendant's position in this appeal. See § 44-5-26(b).

         First, included in the form under the heading "REASON(S) REDUCTION SOUGHT" is a space in which an aggrieved taxpayer can list his or her property's "Fair Market Value (as ofDecember 31 in the year of the last update or revaluation for real estate and as of December 31 of the tax year for personal estate * * *)[.]" (Emphasis added.) Next, below the form's signature block and under the heading "TAXPAYER ...


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