Opinion
FSTCV156025420S
12-06-2016
Edelstone Capital LTD. v. Town of Greenwich
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
A. William Mottolese, Judge
This is a tax appeal brought pursuant to C.G.S. § 12-117a. The complaint alleges and the facts show that on the assessment date of October 1, 2014 the assessor of the Town of Greenwich valued the plaintiff's property at $17,240,800, yielding an assessment of $12,068,560 (seventy percent) and the Board of Assessment Appeals (" the Board") reduced the assessment to $11,299,260 based upon a revised value of $16,141,800. The property is residential and is located at 25 Close Road. The land consists of 5.63 acres and has frontage on a small pond with an unobstructed view of a larger body of water called Wilshire Pond. The land is improved by a house of seventeen rooms built in 2000 and contains 12, 963 square feet of livable area. It houses 6 bedrooms and 7.2 bathrooms. There are 8 fireplaces, an indoor swimming pool and a 3-car garage. The pond, located wholly within the boundaries, is improved with a pier which gives access to the water and provides dockage for small boats. A finished basement with grade level access houses a theater, a game room, a pool room and a bedroom. Geographically, the property is located in the northwest quadrant of the town close to the border of Westchester County in the RA-4 (four-acre zone).
The complaint erroneously recites C.G.S. § 12-117a as the basis for the appeal. The court recognizes that as a typographical error.
The valuation is based on the assessment for October 1, 2010, the last revaluation date and continued through 2015 when the next five-year revaluation was due.
The sole allegation of wrongdoing by the defendant is found in paragraph 8 of the complaint which reads: " The adjusted assessment valuation of the Property placed thereon by the Board continued to exceed its true and actual market value on the assessment date, and the adjusted assessment valuation was grossly excessive, unlawful and disproportionate."
The plaintiff challenges the fair market value found by the Board in the conventional fashion, offering an expert real estate appraiser who testified in support of his appraisal report that the property had a value of $6,600,000 on the assessment date. The plaintiff also challenges as flawed and discriminatory the computerized methodology which the assessor employed in establishing a value of $17,240,800 as reduced by the Board to $16,141,800.
As a preliminary matter the court must determine whether the allegations of the complaint are sufficient to interpose a challenge to the assessor's methodology. The defendant argues that the allegations of the complaint limit the plaintiff to an attack on market value but are not broad enough to encompass an attack on the assessor's methodology. It is well settled that " the right of a plaintiff to recover is limited to the allegations of the complaint and that a plaintiff may not allege one cause of action and recover upon another . . . " These pronouncements relate to the requirement that a pleading must provide adequate notice of the facts claimed and the issues to be tried. Whether a complaint furnishes such notice, however, is a fundamentally different question from whether it fails to state a cause of action because of the omission of an essential allegation, a deficiency that should be raised before trial . . . Whether a complaint gives sufficient notice is determined in each case with reference to the character of the wrong complained of and the underlying purpose of the rule which is to prevent surprise upon the defendant." Tedesco v. Stamford, 215 Conn. 450, 455-59, 576 A.2d 1273 (1990). The court notes that the format of the complaint follows Form 204.4 contained in 2 CT. Practice Series by Kaye and Effron.
" In a § 12-117a tax appeal, the trial court tries the matter de novo and the ultimate question is the ascertainment of the true and actual value of the [taxpayer's] property . . . At the de novo proceeding, the taxpayer bears the burden of establishing that the assessor has overassessed its property . . . Once the taxpayer has demonstrated aggrievement by proving that its property was overassessed, the trial court [will] then undertake a further inquiry to determine the amount of the reassessment that would be just." (Citations omitted; internal quotation marks omitted.) United Technologies Corp. v. East Windsor, 262 Conn. 11, 22-23, 807 A.2d 955 (2002); Sibley v. Middlefield, 143 Conn. 100, 105-06, 120 A.2d 77 (1956). (Alternate citations omitted). (Emphasis added.)
Applying these principles it is apparent that the sole allegation which may be deemed operative is paragraph 8 quoted above. The allegation without more is limited to an attack on fair market value but contains no allegation that the methodology is flawed. In Davis v. Westport, 61 Conn.App. 834, 767 A.2d 1237 (2001) the plaintiff amended her complaint to add an allegation that the assessor treated her waterfront property unequally compared to other waterfront properties similarly situated. The claims specifically asserted faulty methodology and formulation because the assessor used different factors as between the same classes of property. The plaintiff made no claim of impropriety in fair market value. In contrast, the plaintiff here makes no specific allegation of faulty methodology employed by the assessor in placing its property in an improper computer classification, thereby producing an excessive assessment. The plaintiff's only allegation claims impropriety in the 2014 market value. The plaintiff's heavy reliance on the Davis case is misplaced for the simple reason that unlike the present case, the plaintiff abandoned her cause of action based on the impropriety in market value and never alleged anything but unequal treatment.
Nevertheless, in Wheelabrator Bridgeport, L.P. v. Bridgeport, 320 Conn. 332, 367-72, 133 A.3d 402 (2016) our Supreme Court broadened the scope of Section 12-117a so as to permit proof of wrongdoing in the assessment process. While it does not appear from the court's opinion whether the plaintiff alleged specific acts of wrongdoing since the plaintiff had alleged before the Board that the assessment was excessive, it is fair to infer that this allegation was carried forward into the complaint which was before the court. The court concluded that " evidence of wrongdoing is not irrelevant as a matter of law as to the issuance of an award of interest" on the overpayment generated by the wrongful assessment. In the process of reaching this conclusion the court identified evidence in the record of multiple acts of what it labeled " wrongdoing, " viz: (1) the city fabricated the property revaluation so that it could charge the plaintiff enough to cover its annual budget; (2) the assessor attempted to tax pollution control equipment that the assessor knew was not taxable; (3) the city imposed a late fee when it knew the tax payment was timely paid; (4) the city imposed a double tax on personal property; and (5) punished the plaintiff for refusing to produce its expert's appraisal report before the Board of Assessment Appeals. On the strength of this record the court remanded the case to the trial court for the purpose of determining whether the plaintiff was entitled to interest pursuant to C.G.S. § 37-3a.
While it is true that the court's holding on this issue was limited to the propriety of the trial court taking into consideration acts of wrongdoing in awarding G.S. § 37-3a interest, the court's analysis is not similarly limited. More specifically, although clearly in the context of awarding statutory interest, the court stated at page 371: " We agree with Wheelabrator that the issue of the city's wrongdoing is a proper consideration in a property tax appeal pursuant to § § 12-117a and 12-119." Id. at 371. Again, addressing the companion municipal tax relief statute, C.G.S. § 12-119, the court observed " it does not follow from the fact that a plaintiff is required to establish some degree of wrongdoing to bring a claim pursuant to § 12-119, however, that wrongdoing is irrelevant to claims brought pursuant to § 12-117a." On the basis of this analysis this court concludes that acts of " wrongdoing" committed by a municipal tax assessor, quite apart from the duty to evaluate property at its fair market value, falls within the preview of Section 12-117a whether or not they are specifically alleged in the complaint as long as it is alleged that the assessment was excessive and unlawful.
Having reached this conclusion it is now necessary to assay the contours of the term " wrongdoing." The Wheelabrator court did not expound on the meaning of the word nor did it discuss its inner or outer limits. What it did do is characterize the plaintiff's claims of the assessor's wrongdoing as " conduct in bad faith." Id. Whether the meaning of the term should be elevated to this high threshold need not be determined in the present case because " wrongdoing" in dictionary parlance means " any act or behavior that is wrong; transgression; unfair, unjust, injurious." Webster's New World Dictionary 2nd Coll. Ed. at 1642. Similarly, Ballentine's Law Dictionary 3rd Ed. at 1382 defines the word as " any act which in the ordinary course will infringe on the rights of another to his damage." On the basis of this analysis this court now concludes that the plaintiff's allegations are sufficient to permit a challenge to the Greenwich assessor's methodology.
Even the court in Davis v. Westport, supra, at 848 recognized that unfair treatment in assessment methodology constitutes " wrongful" conduct.
I. The Assessor's Methodology
The plaintiff argues that the methodology which the assessor employed was discriminatory because she singled out the property for special treatment which differed from the way she treated neighboring properties. Specifically, the plaintiff refers to the quality grade classification which she assigned to the property. Exhibit H, a " Residential Revaluation Manual For The Town Of Greenwich" at page 44-45, contains a classification grid which assigns a grade to each residential property based on comparable quality. Here, the assessor assigned to the subject property the highest grade of S6+. Lauren Jeanne Elliot, the town's assessor, testified that grade S6+ was assigned to superior homes townwide of which this property is one. She admitted that this grade was a new model which was created in 2010 by the town's revaluation consultant, Municipal Valuation Services, LLC, and that it was not used for the 2015 revaluation. The effect of this particular classification was to apply a percentage increase in value of fifty-seven percent over and above the next highest grade (S6). The claim that this action was discriminatory is based on the plaintiff's assertion that the assessor decreased the assessment " of every other property around the subject property." This claim is distinctly contrary to the unimpeached testimony of the assessor who stated that every assessment in the area adjusted upward and while sales prices in the town between 2007 and 2010 generally decreased, prices in the area of the subject property actually increased.
While it is true that the assessor's field sheets in evidence showed that no other property in the area received an S6+ classification, it was readily apparent from the evidence that no other property in the area was comparable in quality. This fact was brought to the court's attention in impressive fashion in two ways. First, the photographs in evidence and the verbal descriptions given by the assessor and the town's appraiser Christopher Kerin, made it clear that the location, size, design, quality of construction and physical amenities made this property extraordinary. Second, none of the plaintiff's evidence militated against this characterization as the plaintiff's appraiser, Richard Greco, admitted that he did a desk appraisal, formulated his conclusions solely on the basis of computer data, determined the property to be in " average condition" when the persuasive evidence was that it was in " excellent condition." Finally, although the court has not viewed the property, the court draws upon its own " general knowledge of the elements going to establish value." Konover v. Town of West Hartford, 242 Conn. 727, 735, 699 A.2d 158 (1997). Having been exposed as a Judge to a multitude of residential properties through years of foreclosure proceedings and property evaluation cases coupled with having spent sixty years living and working in the Town of Greenwich, the court would categorize this property as exceptional in every observerable characteristic. Thus, there was a very sound reason for giving this property a higher rating than its neighbors. This is not a case like Davis, supra, where the assessor used different data for the plaintiff's property from the data he used to assess similar waterfront properties. Nor did the assessor engage in bad faith wrongdoing such as the assessor did in Wheelabrator . In municipal assessment jurisprudence there is a maxim that " proper deference should be accorded to the assessor's evaluation" without raising it to the level of a presumption. Stamford Apartments, Co. v. Stamford, 203 Conn. 586, 589, 525 A.2d 1327 (1987). While the maxim has little practical application in the ordinary case, this is one case where it should be applied. The plaintiff has failed to prove that the action of the assessor was wrongful.
While Greco testified that he had inspected the property in 2009 he noted the condition as " good" but not excellent. For the 2010 appraisal he apparently assumed that the condition had deteriorated to " average" although in his written appraisal report he classified it as " good" as he did in 2009.
The defendant's assessor who inspected the property inside and out described the house as " a mansion of exceptional quality; one of the finest in the town." The court notes that the dictionary definition of " mansion" is " a large, imposing house; stately residence." Webster's New World Dictionary 2nd Ed. at 863. The subject property is all of the above and more.
II. Overvaluation
" When a property owner challenges the assessor's evaluation, the plaintiff's burden is a difficult one." Connecticut Coke Co. v. New Haven, 169 Conn. 663, 668, 364 A.2d 178 (1975). However, . . ." overvaluation is sufficient to justify redress under [Sec. 12-117a]." . . . whether a property has been overvalued for assessment purposes is a question of fact for the trier. Newbury Commons, Ltd. Partnership v. Stamford, 226 Conn. 92, 104, 626 A.2d 1292 (1993). " The trier arrives at his own conclusions as to the value of land by weighing the opinion of the appraisers, the claims of the parties in light of all the circumstances in evidence bearing on value, and his own general knowledge of the elements going to establish value including his own view of the property." Esposito v. Commissioner of Transportation, 167 Conn. 439, 441, 356 A.2d 175 (1974).
In the present case the assessor raised the 2010 revaluation assessment to $12,068,560 based on a fair market value of $17,240,800 (reduced by Board to $11,299,260 based on a value of $16,141,800). The previous revaluation held in 2005 had set the value at $10,552,100. The assessor explained that the reason for the sharp increase was the fact that on October 11, 2007 the current owner paid $19,500,000 for the property. It is noteworthy that the assessor did not raise the assessment based on the full purchase price but set the value at $2,259,200 less, another fact which is inconsistent with the claims of discriminatory treatment. The plaintiff makes no claim that the sale was not an armslength transaction. Nor does the plaintiff make any claim that the condition of the property deteriorated between the sale date and the assessment date, three years later.
" The sale price of the land in question is competent evidence to show its fair market value; Schnier v. Ives, 162 Conn. 171, 177, 293 A.2d 1; but it is not controlling in determining its fair market value. Schnier v. Ives, supra; Brothers, Inc. v. Ansonia Redevelopment Agency, 158 Conn. 37, 39, 255 A.2d 836." (Alternate citations omitted.) O'Brien v. Board of Tax Review, 169 Conn. 129, 135, 362 A.2d 914 (1975). The fact that the assessor did not rely exclusively on the sale price is reflected in the $2,259,200 reduction she made off of the sale price. Based upon the expert testimony and the respective appraisal reports in evidence the court will next vet the experts.
It is well established that the best test for determining value is ordinarily that of market sales or sales of comparable properties. Hutensky v. Avon, 163 Conn. 433, 437, 311 A.2d 92 (1972). In the present case both appraisers utilized this approach to value. " The question of evaluating the credibility of the appraisers is for the trial court. Pandolphe's Auto Parts, Inc. v. Manchester, 181 Conn. 217, 220-21, 435 A.2d 24 (1980). In arriving at an actual value of the property, the trial court ha[s] the right to accept so much of the testimony of the experts and the recognized appraisal methods which they employed as [it] finds applicable." (Alternate citation omitted.) Stamford Apartments Co. v. City of Stamford, 203 Conn. at, 594, supra .
The Plaintiff's Appraisal
The plaintiff's appraiser, Richard Greco, is a certified Connecticut residential appraiser whose office is in the Bronx, New York. His experience includes appraisal of properties in Fairfield County, Connecticut but most of his work has been done in New York State with emphasis on Westchester and Rockland Counties. There was no evidence of the extent of his experience with Greenwich residential properties. His opinion of the value of the subject property as of October 1, 2010 is $6,600,000. As stated earlier, Mr. Greco did a desktop appraisal pursuant to which he performed a computer search of properties which " closely resembled the square footage of the subject property." The data base for this search consisted of sales recorded by the multiple listing service, including photographs. While he " inspected" the property in 2009 he did not do so in 2010. The evidence did not disclose whether the 2009 inspection was a drive-by or whether it included a walk through, both exterior and interior. Unlike the assessor, Mr. Greco does not believe that the sales price of the property in 2007 is relevant to market value. This opinion flies in the face of our Connecticut case law, see, O'Brien Trustee v. Board of Tax Review, supra . Greco also disagrees with the assessor on the size of the living area because he excludes the basement area of 2, 867 square feet (see page 1 of appraisal report for basement description). Mr. Greco based his opinion on four comparable sales, two north and two south of the Merritt Parkway. Drawing once again upon the court's longtime familiarity with Greenwich zoning classifications it is observed that the properties north of the Merritt Parkway are in the RA-4 (four-acre minimum lot size) zone whereas the two south of the Merritt Parkway are in the RA-2 (two-acre minimum lot size) zone.
At page 1 of 3 of Greco's appraisal he states at " the adjusted sales value range is from $6,228,500 to $8,753,500. He confirmed this in his testimony at trial but added that " I went on the conservative side of the range." It is noted that the extent of the range is thirty percent.
The court notes that at page 1 of 3 of Greco's appraisal report he states that he " did verify the three year's sale history of the subject property" but made no mention of the 2007 transaction although he did mention it in his 2009 appraisal report. The sale in fact fell within the 36-month period referred to but it was excluded " because the purpose of the appraisal was not for a purchase."
The court has examined each of the comparables carefully and concludes that none of them is truly comparable to the subject property. Even Greco acknowledges this when in his appraisal report he refers to all of his comparables as " colonial" but refers to the subject property as " mansion."
Comparable No. One : 717 Riversville Road. This comparable sold in 2009 for $8,500,050. Drawing again upon the court's familiarity with the area, generally properties on Riversville Road do not carry the element of prestige which is enjoyed by properties located within the corridor north of the Merritt Parkway and bordered on the west by Round Hill Road and on the east by North Street, excluding the hamlet of Banksville. The court notes that the defendant's appraiser has identified five comparables all of which are located within this corridor. The property also differs from the subject in that it is frame construction as opposed to brick. Other significant differences are: the property has no water view similar to Wilshire Pond and no recreational rights to any body of water.
Comparable No. Two : 8 Copper Beach Road. This comparable is rejected because of its location almost four miles from the subject property and the land itself is sixty percent smaller.
Comparable No. Three : 205 Clapboard Ridge Road. This comparable is likewise rejected for remoteness of location, being more than three miles from the subject property.
Comparable No. Four : At 1.59 miles from the subject this is the closest property of all four comparables and equals the distance of the most remote of the five comparables selected by the defendant's appraiser. This property is not comparable because the land is thirty-six percent of the size of the subject property, the dwelling is frame construction rather than brick, has no swimming pool, tennis court, game room or indoor theater.
The validity of Mr. Greco's appraisal is called into serious question when the following factors are considered: (1) disallowance of 2, 867 square feet of habitable living space; (2) omission of seven fireplaces (credits only one); (3) unwillingness to assign any relevance to value for a busy street; (4) unwillingness to assign significance to the recent sale price of the property; (5) using a range of values that vary on average of twenty-two percent (defendant's variation range averaged twelve percent); (6) limiting his research to a computerized data base without doing a minimal drive-by appraisal; (7) failure to understand the peculiar value given to properties in the four-acre zone; (8) by allowing square footage of a house to be the determinative factor for selecting comparables.
The four-acre zone provides a confidence factor to a homeowner that unlike all other zone classifications in town no four-acre lot can be subdivided.
The Defendant's Appraisal
The defendant's appraiser was Christopher Kerin who is a certified appraiser in Connecticut, holds an MAI (Member Appraiser Institute) designation, has an office in Fairfield, Connecticut and has spent the last twenty-five years appraising properties in Connecticut with an emphasis on Fairfield County. He estimated that he has done over 100 appraisals in the area. His opinion of the value of the subject property as of October 1, 2010 is $16,400,000. Mr. Kerin's firm also designed the computer model and revaluation manual which the assessor used for the 2010 revaluation. The plaintiff asserts that because the assessment was based on Kerin's computer model his appraisal is an attempt to " justify" the assessment. The court notes that the revaluation manual which he prepared contains the following representations.
The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions .
We have no present or prospective interest in or bias with respect to the properties that are the subject of this report and we have no personal interest in or bias with respect to the parties involved.
We have no bias with respect to any property that is the subject of this report or to the parties involved with this assignment. (Emphasis added.)
The appraisal report itself contains the following representation.
16. I stated in this appraisal report my own personal, unbiased, and professional analysis, opinions, and conclusions, which are subject only to the assumptions and limiting conditions in this appraisal report. (Emphasis added.)
There was no evidence to contradict or impugn these statements.
Mr. Kerin based his appraisal on both an exterior and interior inspection of the property. He described the quality of construction of the house as " the highest grade of construction" and the property as a whole as " one of the finest in town." His inspection, confirmed by the photographic evidence, revealed that the interior of the dwelling has first floor rooms which are two stories in height and that even the room in which the swimming pool is located is two stories in height. He further described the flooring as high quality. Unlike Mr. Greco he opined that the sale price of a property is " the most compelling evidence of the value of the property." Unlike Mr. Greco whose principal factor in selecting comparables was building square footage, Mr. Kerin looked for properties that were " of upper tier quality" with ponds. Other important distinctions between the appraisals are: all of the Kerin comparables are located north of the Merritt Parkway in the RA-4 zone within the Round Hill Road/North Street corridor whereas only two of the Greco comparables are so located. Moreover, none is located more than 1.6 miles from the subject property, whereas the closest Greco comparable is 1.59 miles away. Because the subject property is extraordinary in design and quality the court believes that the factor of " upper tier quality" rates equally in importance with size. Consistent with this, four of five of the Kerin comparables are all over 11, 000 square feet in gross living area where all of the Greco comparables are below 10, 000 square feet. The court finds that the appraisal report and testimony of Christopher Kerin is more reliable and therefore more credible. The assessor valued the property at $16,141,800 after adjustment by the Board. The plaintiff has failed to satisfy its burden of proof to establish aggrievement because it has failed to prove that the property was overassessed by failing to prove that is undervalued. National Amusements, Inc. v. East Windsor, supra .
The court has previously noted that Greco's exclusion of the habitable basement area which is above grade (2, 867 square feet) from calculation of gross living area negatively impacted his appraisal.
Accordingly, the appeal is dismissed.