Friday, February 24, 2012

Pulling Off the Udders


Murray v. City of Burlington, 2012 VT 11 (mem.).

In the world of the SCOV there are cases that expand and enlarge our understanding of the law, pushing forward answers that clarify the ambiguities that arise in various areas of practice.  Other cases clarify important points of procedure, untangle the web of decisions and cross-motions to bring sense and order to litigation run amok.  Then there are cases like today’s.


Today’s case takes us back to the go-go days of the early Clinton administration when Plaintiff, who owned property where a cleaning business used to operate learned that the site was contaminated by petroleum-based substance.

(Free legal advice: if you thinking of buying a property that used to house a dry cleaning company, don’t.)

Plaintiff’s knowledge of the contamination came from the bank that held her mortgage, and she took it to the City’s Board of Abatement in 1995 seeking relief from her property taxes and a determination that the property was worthless.  The Board disagreed.  They took $10,000 off her appraisal but continued to deem it as holding some value. 

From 1995 forward, Plaintiff refused to pay her property taxes and they accrued into a sizeable lien.  Usually that is when the City would seize the property for tax sale, but they did not in this case.  Plaintiff eventually raised the funds to conduct her own site testing and the results confirmed what the Bank had found: petroleum-based contamination.

In 2010, Plaintiff filed a new appeal with the Board of Abatement.  They agreed to abate the taxes up to 1994 but refused to dismiss the later taxes.

Here is where the case really gets moving.  Plaintiff appealed the Board’s decision to the trial court under good old Rule 75.  City moved to dismiss because Plaintiff never appealed her tax assessments that determined the value of the property, and her current appeal was a collateral attack on that prior decision.  In other words, City argued that there was a time and a place for Plaintiff to raise these issues, and this was neither.  The trial court agreed and dismissed.

On appeal to the SCOV, the outcome is different.  The SCOV rejects City’s position.  Failure to appeal an appraisal does not cut off a homeowner’s right to abatement.  The two are separate. 

Appraisal is the normal process that every property goes through periodically.  The town listers review the property and assess the value.  Then the tax rates are set based off the “grand list” value of all of the properties.

Abatement is kind of like a board of mercy.  It is there to correct mistakes, oversight, unfairness, and outright poverty. 

As the SCOV notes one is not a substitute for the other, but each exists as its own separate framework to provide fair market value on one hand and relief from such on the other.  In Plaintiff’s case, her argument is that, despite evidence to the contrary, the City treated a worthless, contaminated property, as one holding value.  While this argument could be made at an assessment, it is also squarely within the parameters of abatement as the City’s continued assessments could represent manifest error.

Not all is sunshine and lollipops for Plaintiff.  The SCOV notes that even though Plaintiff has the right to appeal the Board of Abatement’s decision, the appeal is a Rule 75 proceeding.  That means it is an on-the-record review of a limited nature looking at the legal support or manifest error of the underlying decision.  In other words, it is a limited review where Plaintiff will have only a narrow range of issues to raise.

So Plaintiff stays alive to fight another appeal, and the City is left with the question of whether it should just write off this property, fight the appeal on remand, or strike a deal. 

Whatever the City’s ultimate decision is, it should keep in mind the old Greek proverb about taxation, Milk the cow, but do not pull off the udder.

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