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Bluedog Capital Partners, LLC v. Murphy

Supreme Court of Rhode Island

May 1, 2019

Bluedog Capital Partners, LLC
v.
John A. Murphy, in his capacity as Tax Collector for the City of Providence, et al.

          Providence County Superior Court (PC 16-2572) Netti C. Vogel Associate Justice.

          For Plaintiff: John O. Mancini, Esq. Michael J. Farley, Esq.

          For Defendants: Lisa Fries, Esq. Samuel A. Budway, Esq.

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

          OPINION

          Gilbert V. Indeglia Associate Justice.

         In this action challenging the assessment of alleged illegal taxes, the plaintiff, Bluedog Capital Partners, LLC (Bluedog), appeals from a judgment of the Superior Court granting the motion to dismiss pursuant to Rule 12(b)(6) of the Superior Court Rules of Civil Procedure filed by the defendants, John A. Murphy, in his capacity as tax collector for the City of Providence (the city); David Quinn, in his capacity as tax assessor for the city; and Michael Pearis, in his capacity as finance director for the city (collectively defendants).[1] This matter came before the Court on March 27, 2019, pursuant to an order directing the parties to appear and show cause why the issues raised should not be summarily decided. After considering the arguments set forth in the parties' memoranda and at oral argument, we are convinced that cause has not been shown. Thus, further argument or briefing is not required to decide this matter. For the reasons outlined below, we affirm the judgment of the Superior Court.

         I

         Facts and Travel

         The following facts, sparse as they are, have been gleaned from Bluedog's complaint. On or about October 3, 2014, Bluedog, a private lender, loaned $35, 000 to Fogliare Group, LLC (Fogliare), in consideration of a first-priority mortgage on Fogliare's real property, which has a street address of 170 Bartlett Avenue, Providence, Rhode Island (the property). Bluedog recorded the mortgage in the Providence land evidence records.[2] The property encompasses two lots: Assessor's Plat 90, Lot 13, which is located within the city (the Providence parcel); and Assessor's Plat 2-5, Lot 1520, which is located within the City of Cranston (the Cranston parcel). The city noticed a tax sale for the Providence parcel in tax year 2015; and, thereafter, on July 1, 2015, it sold the Providence parcel at a tax sale, with a collector's deed being recorded in the Providence land evidence records on July 9, 2015. On June 2, 2016, Bluedog filed a two-count complaint, seeking a declaration that defendants had illegally assessed the Providence parcel (Count I) and seeking injunctive relief against the sale of the property (Count II). Bluedog alleged that its mortgage was "subject to the tax sale[, ]" and that, in tax year 2015, the total assessed value of the Providence parcel was $102, 200.[3]

         On June 24, 2016, defendants filed a motion to dismiss Bluedog's complaint, pursuant to Rule 12(b)(6). In their memorandum in support of the motion to dismiss, defendants argued that G.L. 1956 § 44-5-26 provides the exclusive procedures for the tax-abatement relief that Bluedog sought and that Bluedog had not complied with those procedures.[4] Moreover, defendants averred that, even if Bluedog sought to bypass those procedures by invoking the Superior Court's equity jurisdiction under § 44-5-27, the three-month statute-of-limitations period for such actions had expired; defendants alleged that Bluedog had filed its complaint "more than seven (7) months after the limitations period expired for the most recent tax year at issue (2015) * * *." (Emphasis in original.) Finally, defendants contended that there was nothing for the Superior Court to enjoin because the tax sale had already taken place.

         In Bluedog's memorandum in support of its opposition to defendants' motion to dismiss, Bluedog contended that "there are certain situations which have been recognized in Rhode Island for bypassing the normal review procedures set forth in * * * §§ 44-5-26 and 44-5-27." Bluedog argued that one such case is where, as here, a tax is alleged to be illegal.[5]

         On November 17, 2016, a hearing on defendants' motion to dismiss was held in Providence County Superior Court. At that hearing, defendants began by arguing that the statute of limitations for tax year 2015 had run on October 24, 2015, and that the complaint, which was filed in June 2016, was therefore untimely. They also averred that the complaint merely alleged an overassessment because the property was at least partially within the city's jurisdiction, and that, even if the taxes were alleged to be illegal, Bluedog was required to appeal the assessment to the board of tax assessment review or else bring an action sounding in equity, pursuant to § 44-5-27, in the Superior Court. The defendants cited the Superior Court decision underlying this Court's opinion in Narragansett Electric Company v. Minardi, 21 A.3d 274 (R.I. 2011), in which the hearing justice found that the Uniform Declaratory Judgments Act could not be used to replace the procedures set forth in §§ 44-5-26 and 44-5-27. See Minardi, 21 A.3d at 277.

         Moreover, defendants quoted this Court's opinion in Pascale v. Capaldi, 95 R.I. 513, 188 A.2d 378 (1963), in which we stated: "In our opinion the legislature did not intend that a petition under the uniform declaratory judgments act was to take the place of a taxpayer's suit and, therefore, the Superior Court had no jurisdiction under the act to grant the [taxpayer's] prayers." Pascale, 95 R.I. at 514, 188 A.2d at 379. Finally, defendants argued, and the hearing justice seemed to agree, that, because the tax sale had already occurred, there was nothing for the Superior Court to enjoin and, thus, there was no relief that could be granted under Count II of the complaint.

         Bluedog responded by outlining the deferential standard that courts give to plaintiffs on motions to dismiss in general, and specifically in declaratory-judgment actions. Bluedog then described the necessary elements to allege an illegal tax, which includes situations where the taxing authority acted without jurisdiction or where the tax was so palpably exorbitant and excessive as to amount to constructive fraud.[6] Bluedog maintained that the tax in this case fit the latter criterion because the building that the city had taxed was located "entirely outside of the City of Providence." The hearing justice then indicated that, even if she were willing to give Bluedog the benefit of the doubt regarding whether the taxes were illegal, the three-month statute of limitations under ยง 44-5-27 had clearly run by the time Bluedog filed its complaint. Bluedog responded that the statute of limitations did ...


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