Opinion
No. CV 96-0133244 S
September 11, 2003
MEMORANDUM OF DECISION ON THE SPECIAL DEFENSE OF EQUITABLE ESTOPPEL
This is an application brought pursuant to General Statute § 12-119 which provides, in part, for a remedy when the tax on real property "was computed on an assessment which, under all the circumstances, was manifestly excessive and could not have been arrived at except by disregarding the provisions of the statutes for determining the valuation of such property." The application was brought by the plaintiffs Ray A. Humiston, Joan H. King and Lyra Saydah on their own behalf as owners of condominium units at a complex known as Heritage Village and on behalf of the other unit owners situated in Heritage Village in Southbury, Connecticut to challenge the assessments on the grand lists of 1995 and 1996 which were predicated on the 1987 decennial tax revaluation.
General Statutes 12-119: "When it is claimed that a tax has been laid on property not taxable in the town or city in whose tax list such property was set, or that a tax laid on property was computed on an assessment which, under all the circumstances, was manifestly excessive and could not have been arrived at except by disregarding the provisions of the statutes for determining the valuation of such property, the owner thereof or any lessee thereof whose lease has been recorded as provided in section 47-19 and who is bound under the terms of his lease to pay real property taxes, prior to the payment of such tax, may, in addition to the other remedies provided by law, make application for relief to the superior court for the judicial district in which such town or city is situated. Such application may be made within one year from the date as of which the property was last evaluated for purposes of taxation and shall be served and returned in the same manner as is required in the case of a summons in a civil action, and the pendency of such application shall not suspend action upon the tax against the applicant. In all such actions, the Superior Court shall have power to grant such relief upon such terms and in such manner and form as to justice and equity appertains, and costs may be taxed at the discretion of the court. If such assessment is reduced by said court, the applicant shall be reimbursed by the town or city for any overpayment of taxes in accordance with the judgment of said court."
More specifically, the plaintiffs allege that "[t]he adoption of the grand list of real property prepared by the assessor for the town of Southbury (assessor) for the years 1995 and 1996 was illegal, invalid and contrary to statutory duties, in that: (1) the class members bear an unfair and illegal share of the tax burden because a great number of non-Heritage Village properties were assessed for less than 70 percent of their true and actual value, while the Heritage Village Properties have been assessed disproportionately high; (2) the assessor established and used a single manifestly excessive assessment for each type of model unit in Heritage Village and then applied it to all similar units notwithstanding significant variations in actual value; and (3) the assessor failed to physically observe or inspect the exterior of the properties when the last revaluation occurred as required by General Statutes § 12-62 (b)."
Heritage Village consists of 2580 condominium units, each of which are individually taxed by Southbury. The 2580 units are comprised of fourteen different model types, known as Berkshire (one-car garage), Berkshire (two-car garage), Carriage House, Country House, Ethan Allen, Franklin, Hawthorne, Heritage, Mark Twain (lower level), Mark Twain (upper level), New Englander, Sherman, Villager and Winthrop.
Heritage Village was built in phases beginning in the late 1960s and ending in the mid-1970s and is located on approximately 1,000 acres. In addition to the residential condominium units, Heritage Village includes two golf courses, a health club, and a commercial center with shops and restaurants.
The gravamen of this appeal is that Southbury for the 1987 decennial tax revaluation, with one exception, inspected one unit of each model and then assigned the same value to all units of that model ("model revaluation") without taking into consideration matters such as the location and other amenities of the units. If each unit was separately revalued ("unit revaluation"), these matters would have been taken into consideration.
The one exception Southbury made was for the model type known as Berkshire which included 342 units.
However, adjustment in the assessments were made based upon whether the unit had a fireplace, central air conditioning and finished bonus space.
On September 28, 2000, the Court (Holzberg, J.) authorized this matter to proceed as a class action and certified the class as follows: "[a]ll persons who are taxpayers who own property in the Heritage Village condominium complex in Southbury, Connecticut, as set forth in the grand list[s] of October 1, 1995, and October 1, 1996."
Quaestio vexata (a troubling question apparently not raised before Holzberg, J.): whether a class of plaintiffs can include unit owners whose taxes on their units could ultimately increase as a result of a judgment in favor of the plaintiff class? For example, if a unit revaluation is required to be utilized, by necessity some units of a particular model could be assessed for more than others. An exaggerated example is demonstrated by the following: a unit of a model overlooking the golf course is bound to have a higher assessment than a unit of the same model overlooking garbage pails.
Southbury filed its answer denying the allegations of the plaintiffs' application together with several special defenses which included an allegation that the plaintiffs are "estopped from bringing these claims because their representatives, including the Heritage Village Master Association, its Ad Hoc Committee/Revaluation Committee and Edward Heberger, agreed with the methodology utilized by the Town and the appraisal values used by the Town, and the Town relied on those actions in establishing the Grand List, evaluating the Town budget, setting the mill rates and assessing and collecting taxes" (equitable estoppel). Because proof of the defense of equitable estoppel would be dispositive of this case, the court bifurcated the issue, heard relevant evidence pertaining to it and received briefs from the parties on the issue.
In order to fully explore the issue of equitable estoppel, the court finds it necessary to first review the governance of Heritage Village. The 2580 condominium units of Heritage Village are divided into twenty-four separate "condominium clusters." Each of these clusters has its own condominium declaration and has a nine-member board of directors who are elected by the unit owners. There is also established a Heritage Village Master Association (HVMA) which is responsible for the administration and management of the entire condominium complex. A director is elected to serve on the governing board of HVMA by the unit owners of each cluster and the voting power of the director is measured by the fair market value of the units located in the cluster of that director.
The duties and power of HVMA are delineated in the bylaws. HVMA is responsible for the administration and management of Heritage Village including maintaining and making repairs to the exterior of each unit and the common areas. There is no provision in the bylaws that authorizes HVMA to bind the owners with respect to a method of assessment of the individual units for tax purposes. A 1982 amendment to the bylaws provide that the President of the HVMA is authorized to establish ad hoc committees as it deemed necessary to carry out its powers and duties and that the duties and responsibilities of the ad hoc committee shall be recorded in the minutes. The amendment also provided that HVMA had authority to "enforce any right or address any wrong that may belong to or affect all of them provided that the grant of authority was made without limiting the rights of any unit owner." (Emphasis supplied.)
The 1987 decennial revaluation was commenced in 1985 and finalized in 1988. Although Helen Cooper (Cooper), the Tax Assessor for Southbury was ultimately charged with the responsibility for the revaluation, the town entered into a contract on May 3, 1985 with Cole Lager Trumble (CLT), a division of United Appraisal Company to do the basic appraisal work. The CLT contract required it to do a "unit revaluation" for 95 percent of the property in Southbury with exception of condominiums. With respect to condominiums, the contract required CLT to do a "model revaluation" for each condominium, except for the Berkshire model which CLT was required to do a "unit revaluation." The CLT contract was preceded by negotiations between the Southbury Assessor and CLT which commenced as early as December 28, 1984.
Harmon L. Andrews, the first selectperson of Southbury (Andrews) invited HVMA to send a representative to participate in the 1987 revaluation as he previously did for the 1977 decennial tax revaluation. HVMA appointed the Heritage Village Ad Hoc Committee on Property Revaluation (1987 Ad Hoc Committee). The 1987 Ad Hoc Committee was charged with the following duties which are relevant to the issue before the court: "a) establish a close working relationship with the First Selectman of the Town of Southbury or his delegated representative (s) and through them with whomever is selected to undertake the tasks of revaluation of property in the Town of Southbury; b) determine the best procedures to be followed in undertaking the revaluation of properties in Heritage Village including methods and criteria, taking into account an evaluation of the experience gained in the last such survey; . . . (f) represent the HVMA at all meetings convened by the First Selectman of the Town of Southbury or his authorized representative (s) on matters related to the revaluation and act as official spokesman for the Heritage Village Master Association at such meetings."
On February 13, 1985, the 1987 Ad Hoc Committee met with Cooper and other town officials and representatives of CLT to review procedures for the revaluation of the real property. With respect to the appraisal of individual units, the minutes of a meeting of the 1987 Ad Hoc Committee taken by Cooper provide the following:
The Ad Hoc Committee of the Heritage Village Master Association feels all of the units need not be entered. The final consensus was that all need not be entered but that a number in each condo should be checked and that Berkshire units with two car garages should be checked for extra rooms. The Ad Hoc Committee members are and will be very cooperative in any way with the revaluation firm and myself when the decision is made as to how we will proceed with Heritage Village.
Southbury, for its special defense of equitable estoppel, relies on Union Carbide Corporation v. Danbury, 257 Conn. 865 (2001). The Supreme Court of Connecticut pointed out in Union Carbide the following: "Estoppel has its roots in equity and stems from the voluntary conduct of a party whereby [the party] is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed . . . as against another person, who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse." (Citations omitted.) Union Carbide v. Danbury, supra, 872-3. The burden of proof rests upon the party who relies upon the doctrine of equitable estoppel. Dupuis v. Submarine Base Credit Union, Inc., 170 Conn. 344, 353 (1976).
In Union Carbide the court pointed out that "we [have] recognized that estoppel always requires proof of two essential elements: the party against whom estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief; and the other party must change its position in reliance on those facts, thereby incurring some injury." (Citation omitted, internal quotation marks omitted.) Union Carbide v. Danbury, supra, 873. There clearly is a third essential element that must be proven when the party to be charged has acted through a representative and that is — the representative must have been authorized by the party to be charged to do or say what was relied upon by the party claiming estoppel.
Not only must the party relying on the doctrine of equitable estoppel prove the two essential elements set forth in Union Carbide, but that party has the burden "to show he exercised due diligence to ascertain the truth and that he not only lacked knowledge of the true state of things but had no convenient means of acquiring that knowledge." (Citation omitted; internal quotation marks omitted.) O'Sullivan v. Bergenty, 214 Conn. 641, 650 (1990). It is not necessary to review this issue because of the Court's ultimate finding on the other elements of equitable estoppel.
In Union Carbide, all three elements clearly existed. The agreement with respect to the amount of the assessment on the real property owned by Union Carbide was made with Union Carbide's director of general services and manager of taxes who clearly had authority. The oral agreement provided that the real property was assessed at an amount lower than the town's estimate of true market value saving Union Carbide approximately $600,000.00 annually. The agreement also provided that during the decennial that was covered "the agreed upon value would remain in effect." Id. 869. Subsequently a successor town assessor attempted to increase the assessment but the manager of taxes for Union Carbide reminded the town of its agreement and the assessment was reduced to the agreed amount. Union Carbide, thereafter during this period covered by the agreement, attempted to reduce the assessment and the court held that it was estopped.
Unlike the manager of taxes in Union Carbide, HVMA and the 1987 Ad Hoc Committee did not have the authority to act on behalf of the plaintiffs as previously pointed out. HVMA had authority to appoint an ad hoc committee to act for the unit owners "provided that the grant of authority was made without limiting the right of any unit owner." This limitation was no dark secret to Southbury. Andrews, the first selectperson of Southbury, testified that he was familiar with the governance of Heritage Village. Of course, if HVMA did not have this authority, the 1987 Ad Hoc Committee it appointed would not have the authority.
Neither does Southbury's reliance on Edward Heberger, the appraiser retained by Mark Dost, the attorney for of HVMA, satisfy the elements of equitable estoppel. Certainly, Heberger would have no more authority than HVMA who had no authority. Furthermore, he was retained for a limited purpose. He was not retained to agree upon the method to be used, but, rather "to look over the shoulder of the revaluation company . . . [a]nd where there was room to lower the numbers . . ." to attempt to do so.
Transcript 12/12/02, p. 201.
Southbury argues that as a substitute for actual authority it can rely on apparent authority to satisfy this element of equitable estoppel. Assuming that this element can be satisfied by proving apparent authority, Southbury has failed to make out a case under that doctrine. "Apparent authority is that semblance of authority which a principal, through his own acts or inadvertences, causes or allows third persons to believe his agent possesses. Consequently, apparent authority is to be determined, not by the agent's own acts, but by the acts of the agent's principal. The issue of apparent authority is one of fact to be determined based on two criteria. First, it must appear from the principal's conduct that the principal held the agent out as possessing sufficient authority to embrace the act in question, or knowingly permitted [the agent] to act as having such authority. Second, the party dealing with the agent must have, acting in good faith, reasonably believed, under all the circumstances, that the agent had the necessary authority to bind the principal to the agent's action." (Emphasis added, internal quotation marks and citations omitted.) Tomlinson v. Board of Education, 226 Conn. 704, 734-35 (1993). Simply put, there is no evidence that the plaintiffs held HVMA, the 1987 Ad Hoc Committee, or Heberger out as their agents. Furthermore, there was no evidence that the plaintiffs knowingly permitted HVMA, 1987 Ad Hoc Committee or Heberger to act as having such authority.
Southbury also claims that the 1987 Ad Hoc Committee was acting directly as the agent of the plaintiff unit owners. For this claim, it relies on Section 4 of Article VII of HVMA's bylaws. That reliance is misplaced. Section 4 is merely a disclaimer of liability for the board of trustees and officers on contracts entered into on behalf of the condominium. It provides in part, the following: "[e]very contract made by the Master Association, or by the Village Manager on behalf of the Master Association, shall provide that the members of the Board of Trustees, or the Village Manager, are acting only as agents for the unit owners and shall have no personal liability thereunder (except as unit owners), and that each unit owner's liability thereunder shall be limited to the proportion of the total liability thereunder as his interest in the common areas and facilities bears to the interest of all unit owners in the common areas and facilities."
Even if Southbury could overcome the issue of authority, it could not satisfy the second element of equitable estoppel. There is no evidence that Southbury changed its position in reliance on anything said or done by the plaintiffs, HVMA, 1987 Ad Hoc Committee or Heberger. Rather the evidence clearly demonstrates that Southbury was determined to use the "model revaluation" methodology. On May 3, 1985, Southbury entered into a contract with CLT to do the revaluation which provided for "model revaluation." Although the date of the contract is subsequent to the meeting with the 1987 Ad Hoc Committee, negotiations with CLT had been ongoing before there was any involvement with any of the entities Southbury relies upon for its equitable estoppel defense and the focus was always on "model revaluation." Furthermore, the court finds that Southbury was wedded to model revaluation.
Dost, on cross-examination testified as follows:
Q. And did there come a point in time when you agreed with the town, representing the Master Association, as to the methodology that be used for coming to this?
A. I don't think I recall an agreement that the town dictated to us what the methodology was going to be. And they were not interested in looking at any other methodology, because individual assessments to them was too expensive. And they said, we will listen to you on this basis and this basis alone. And that is that we are going to look at unit types, we're not going to look at individual units. And we said, well, based on that, we will talk to you about that and we will — we'll have Mr. Heberger take, you know, take a look at the valuation of the individual types.
(Transcript, Dec. 12, 2002, pp. 204 and 205.)
In a report by Cooper to Southbury's Revaluation Committee on January 2, 1985, she stated:
Called CLT [made on December 28, 1985]. Spoke to Sherwood Vermilya about inspection of Heritage Village Units. He had all of the Berkshire Units figured in the bid price, all of which would be inspected for extra rooms. He had planned to go into one of each type in each Condo Cluster for other than the Berkshire Units. He will go into each one but also hoped he would not be held to the 95 percent if he has to go into every unit It would be $4500 more if each and every unit had to be entered.
This report preceded the February 13, 1985 meeting with the Ad Hoc Committee.
Dost confirmed that the one unit fits all methodology was set by Southbury. Dost testified that Southbury would consider only the "model revaluation" "because individual assessments to . . . [Southbury] were too expensive."
See footnote 10.
The court concludes there is no merit to the special defense of equitable estoppel and finds for the plaintiffs on this issue.
Under the undisputed facts of this case, the court has serious reservations of whether the defense of equitable estoppel would be applicable. Both the plaintiff class and Southbury agree that each individual unit owner could have brought this action under General Statute § 12-119. If the individual unit owners could have brought this action so could the plaintiffs as a class. Nevertheless, the court has decided this matter based upon principles of equitable estoppel.
Robert I. Berdon, Judge Trial Referee