Cape Cod Shellfish & Seafood Co., Inc. v. City of Boston ( 2014 )


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    11-P-1474                                           Appeals Court
    CAPE COD SHELLFISH & SEAFOOD COMPANY, INC., & others 1      vs.   CITY
    OF BOSTON & another. 2
    No. 11-P-1474.
    Suffolk.      October 9, 2013. - November 12, 2014.
    Present:   Cypher, Katzmann, & Maldonado, JJ.
    Taxation, Exemption, Leased property, Abatement, Real estate
    tax: exemption, abatement. Contract, Lease of real
    estate. Landlord and Tenant, Taxation, Tenancy at
    sufferance, Lease as contract. Real Property,
    Lease. Massachusetts Port Authority. Boston.
    Civil action commenced in the Superior Court Department on
    November 9, 2004.
    After review by this court, 
    74 Mass. App. Ct. 1127
    (2009),
    the case was heard by Elizabeth M. Fahey, J., on a motion for
    summary judgment.
    1
    John Mantia & Sons Co., Inc.; Atlantic Coast Seafood,
    Inc.; New England Marketers, Inc.; and Great Eastern Seafood,
    Inc.
    2
    Massachusetts Port Authority (Massport). The plaintiffs
    and Massport stipulated to dismissal of the plaintiffs' claims
    against Massport and Massport's counterclaims. Massport has not
    participated in this appeal.
    2
    Marshall F. Newman for the plaintiffs.
    Adam Cederbaum, Assistant Corporation Counsel, for city of
    Boston.
    MALDONADO, J.   The plaintiffs appeal from a Superior Court
    judgment in favor of the city of Boston (city) in its effort to
    tax the plaintiffs as lessees of property owned by the
    Massachusetts Port Authority (Massport), on Boston's Fish Pier.
    Although, pursuant to G. L. c. 91 App., § 1-17 (§ 17), as
    appearing in St. 1978, c. 332, § 2, Massport and its lessees are
    not required to pay real estate taxes on Massport properties, an
    exception to the exemption applies to business lessees of
    property in the area known as the Commonwealth Flats.    In an
    earlier decision pursuant to our rule 1:28, we determined that
    the plaintiffs are liable for taxes for their respective lease
    terms under that exception. 3   At issue now is whether the
    3
    See Cape Cod Shellfish & Seafood Co. v. Boston, 74 Mass.
    App. Ct. 1127 (2009). In that prior appeal, the plaintiffs here
    argued that they came within the exception to taxation provided
    for in G. L. c. 59, § 2B, third par. We rejected that argument,
    relying, inter alia, on the clear language of § 17, the case of
    Boston v. U.N.A. Corp., 
    11 Mass. App. Ct. 298
    (1981) (construing
    that provision), and the principle of statutory construction
    that a specific statute, such as § 17, controls over a general
    statute, such as G. L. c. 59. Cf. Beacon S. Station Assocs.,
    LSE v. Board of Assessors of Boston, 
    85 Mass. App. Ct. 301
    (2014) (for-profit lessee of Massachusetts Bay Transportation
    Authority [MBTA] was exempt from real estate taxation pursuant
    to specific exemption for MBTA property provided in G. L.
    c. 161A, § 24, and notwithstanding contrary provision in general
    tax statute, G. L. c. 59, § 2B); 
    id. at 307,
    quoting from TBI,
    Inc. v. Board of Health of N. Andover, 
    431 Mass. 9
    , 18 (2000)
    3
    plaintiffs, all of whom remained on the property after the end
    of their lease terms, continue to be liable as lessees for the
    taxes assessed during the holdover period.
    Background.   We recount the undisputed facts from the
    motion judge's May 20, 2011, memorandum of decision and order on
    the city's motion for summary judgment, supplemented also by the
    record on appeal as noted.   The plaintiffs, Cape Cod Shellfish &
    Seafood Company, Inc.; John Mantia & Sons Co., Inc.; Atlantic
    Coast Seafood, Inc.; New England Marketers, Inc.; and Great
    Eastern Seafood, Inc., operated wholesale fish and seafood
    businesses on the Boston Fish Pier, which is owned by Massport
    and situated in the Commonwealth Flats area of South Boston.
    The plaintiffs originally occupied the property pursuant to
    written leases with Massport.   The relevant leases of the
    plaintiffs covered the period of January 1, 1998, to December
    31, 2004, and were virtually identical.   All required the
    plaintiffs to pay any taxes and fees assessed against the tenant
    or landlord in relation to the leased premises.   The city
    sporadically billed the plaintiffs for the real estate taxes due
    on the leased premises for their respective periods of
    occupancy; except for a single payment by New England Marketers,
    Inc., the taxes went unpaid.
    ("It is a basic canon of statutory interpretation that general
    statutory language must yield to that which is more specific").
    4
    Prior to the expiration of their lease terms, the
    plaintiffs sought to enter into new leases.   Massport refused,
    citing a lease provision that required a letter from the city
    indicating that all taxes were current.   The plaintiffs filed a
    declaratory judgment action, as permitted by the leases, seeking
    a determination that they were not liable for the taxes.
    Judgment entered in favor of the city for the taxes owing for
    the period covered by the leases, and, as we have noted, see
    note 
    3, supra
    , this court affirmed.
    In the interim, the plaintiffs continued to occupy and pay
    rent for the Massport property beyond their lease terms.   The
    city supplemented its counterclaims in the declaratory judgment
    action to recover additional unpaid taxes from the plaintiffs
    for the time from January 1, 2005, through March 31, 2010, that
    they had remained on the property after the expiration of the
    lease term.
    The leases contained the following provision concerning the
    obligations of the tenants in the event of their holding over: 4
    "If Tenant shall, with the consent of the Landlord,
    hold over after the expiration of the Term, the resulting
    tenancy shall be treated as a month-to-month tenancy.
    4
    The leases for the relevant period were not included in
    the record on appeal. We take the text of the holdover
    provision, for the leases covering the period from January 1,
    1998, through December 31, 2004, from Massport's answer and
    counterclaims, to which the parties refer in their briefs on
    appeal.
    5
    Tenant shall pay Base Rent, Additional Rent and any other
    charges due hereunder and shall be bound by the terms of
    the Lease. Any holding over by Tenant after the expiration
    of the Term of this Lease without Landlord's consent shall
    be treated as a tenancy at sufferance at two hundred
    percent (200%) of the rents and other charges herein
    (prorated on a daily basis) and shall otherwise be on the
    terms and conditions set forth in this Lease, as far as
    applicable. Any holding over, even with the consent of the
    Landlord, shall not constitute an extension or renewal of
    this Lease." (Emphasis supplied.)
    The city moved for summary judgment on its supplemented
    counterclaims, and the judge allowed the motion. 5   The judge
    reasoned that the plaintiffs, as tenants at sufferance following
    the expiration of the lease term, continued to operate their
    businesses and pay rent to Massport, and continued to have a
    leasehold that was recognized by Massachusetts law for purposes
    of § 17.   The plaintiffs filed this appeal.
    Discussion.    1.   Applicability of tax exemption after
    expiration of lease term.     General Laws c. 91 App., § 1-17, is
    part of Massport's enabling act and provides generally for an
    exemption from taxation for Massport and its lessees.     Boston
    v. U.N.A. Corp., 
    11 Mass. App. Ct. 298
    , 299-300 (1981).     The
    purpose of the exemption is to assist Massport in the
    performance of its essential governmental functions, which are
    principally aimed at establishing and maintaining the means of
    public travel.     It was anticipated that Massport properties
    5
    We note that the city has not pursued its remaining
    counterclaims, which, it acknowledges, are time-barred.
    6
    would be devoted to public use.    Opinion of the Justices, 
    334 Mass. 721
    , 733, 739 (1956).
    The exemption in § 17 includes certain qualifications, one
    of which is for Massport lands located in the Commonwealth
    Flats, which "shall, if leased for business purposes, be taxed
    by the city . . . to the lessees thereof, respectively, in the
    same manner as the lands and the buildings thereon would be
    taxed to such lessees if they were the owners of the fee
    . . . ." 6   The plaintiffs maintain that after the lease term
    expired and they remained on the property, they could no longer
    6
    Section 17, first par., provides more broadly:
    "The exercise of the powers granted by this act will
    be in all respects for the benefit of the people of the
    commonwealth, for the increase of their commerce and
    prosperity, and for the improvement of their health and
    living conditions, and as the operation and maintenance of
    the projects by the Authority will constitute the
    performance of essential governmental functions, the
    Authority shall not be required to pay any taxes or
    assessments upon any project or any property acquired or
    used by the Authority under the provisions of this act or
    upon the income therefrom . . . and no property of the
    Authority shall be taxed to a lessee thereof under section
    three A of chapter fifty-nine of the General Laws;
    provided, however, that anything herein to the contrary
    notwithstanding, lands of the Authority, except lands
    acquired by the commonwealth under the provisions of
    chapter seven hundred and five of the acts of nineteen
    hundred and fifty-one situated in that part of the city
    called South Boston and constituting a part of the
    Commonwealth Flats, and lands acquired by the Authority
    which were subject to taxation on the assessment date next
    preceding the acquisition thereof, shall, if leased for
    business purposes, be taxed by the city or by any city or
    town in which the said land may be situated to the lessees
    7
    be considered lessees and, therefore, were no longer subject to
    taxation under the § 17 exception for business lessees of
    Massport's Commonwealth Flats properties.   At that point, they
    argue, the property came within Massport's exemption under § 17,
    despite the plaintiffs' continued occupancy.
    The express language of the leases persuades us otherwise.
    The holdover provision in the leases sets out the conditions of
    a continued tenancy after expiration of the lease term, and
    expressly states, as well, that any holding over is subject to
    the applicable provisions of the lease.   When they signed the
    leases, the plaintiffs thereby agreed that they would continue
    to be bound by the holdover provision, and other applicable
    thereof, respectively, in the same manner as the lands and
    the buildings thereon would be taxed to such lessees if
    they were the owners of the fee, except that the payment of
    the tax shall not be enforced by any lien upon or sale of
    the lands, but a sale of the leasehold interest therein and
    of the buildings thereon may be made by the collector of
    the city in the manner provided by law in case of
    nonpayment of taxes for selling real estate, for the
    purpose of enforcing the payment of the taxes by such
    lessees to the city or town assessed under the provisions
    hereof."
    We do not consider the parties' arguments, raised for the
    first time in their respective reply and surreply brief, whether
    § 17, first par., was amended subsequent to St. 1978,
    c. 332, § 2 (the version of the statute relied upon by the judge
    below, the parties, and by this court in our earlier decision).
    See Pasquale v. Casale, 
    72 Mass. App. Ct. 729
    , 738 (2008),
    quoting from Assessors of Boston v. Ogden Suffolk Downs, Inc.,
    
    398 Mass. 604
    , 608 n.3 (1986) ("Any issue raised for the first
    time in an appellant's reply brief comes too late, and we do not
    consider it").
    8
    lease provisions, in the event their tenancies extended beyond
    the lease term.
    It has long been held that where, as here, a lease contains
    a provision governing the conditions of the lessee's occupancy
    in the event of holding over, the parties' rights continue to be
    determined by the applicable provisions in the lease, and
    indeed, the holding over is said to be under the lease.
    See Warren v. Lyons, 
    152 Mass. 310
    , 314-316 (1890)
    (distinguishing between holding over under the lease and
    occupying under a new agreement).   See also, e.g., Edwards
    v. Hale, 
    9 Allen 462
    , 464-466 (1864); Rice v. Loomis, 
    139 Mass. 302
    , 303-304 (1885).   When the parties to a lease "look to the
    contingency of the lessee's holding over for some purpose,"
    their agreement in that regard is deemed a "contract to have
    effect, provisionally after the expiration of the
    term."   Salisbury v. Hale, 
    12 Pick. 416
    , 422 (1832).
    Similarly, in cases addressing the amount of rent owing for
    occupancy beyond the lease term, we have distinguished between
    holdovers governed by a provision in the lease, in which case
    the applicable lease provisions control, and holdovers where the
    lease lacks such a provision, in which case common-law
    principles are applied.   See, e.g., Kobayashi v. Orion Ventures,
    Inc., 
    42 Mass. App. Ct. 492
    , 502-503 (1997); Lawrence
    v. Osuagwu, 
    57 Mass. App. Ct. 60
    , 64-65 (2003) (lease provision
    9
    establishing rent due for period beyond lease term controlled,
    rather than a reasonable rent, the usual measure of landlord's
    damages against holdover tenant).    As such, the holdover
    provision contained in the plaintiffs' leases, spelling out
    their obligations in the event of their holding over, took
    effect upon the expiration of the lease term and governed their
    tenancies thereafter.     See Salisbury v. 
    Hale, 12 Pick. at 422
    .
    The case of Commonwealth v. Goldberg, 
    319 Mass. 7
    (1946),
    confirms our view.   At issue was whether the landlord in a
    tenancy at will constituted a "lessor" under G. L. c. 186, § 14,
    providing for prosecution of lessors who interfere with the
    quiet enjoyment of their premises.    In concluding that the
    Legislature intended for the statute to cover "landlords who
    have let their premises without a lease in writing," 
    id. at 9,
    the court reasoned that "the words lease, lessor, and lessee are
    nevertheless sufficiently comprehensive to include in
    appropriate instances tenancies at will and the parties to such
    tenancies."   
    Id. at 8.
       The court noted that tenancies at will
    "have been referred to as parol 'leases,' and the landlord has
    been called the 'lessor' and the tenant the 'lessee.'     
    Ibid. Given the Goldberg
    court's conclusion that the landlord and
    tenant in a tenancy at will, with no written lease, could be
    considered to be lessor and lessee, we have no hesitation in
    concluding that here, where the plaintiffs agreed to a holdover
    10
    provision in a written lease that was to control their tenancies
    beyond the lease term, they may properly be characterized as
    lessees occupying the property under a leasehold.
    The case of Corcoran v. Boston, 
    193 Mass. 586
    (1907), cited
    by the plaintiffs, is not to the contrary.    That case involved
    St. 1904, c. 385, an earlier version of the statutory tax
    exemption for lands of the Commonwealth, prior to the creation
    of Massport, and an exception to the exemption indistinguishable
    from that in § 17 for lands situated in the Commonwealth Flats
    that were leased for business purposes.    See Boston v. U.N.A.
    
    Corp., 11 Mass. App. Ct. at 302
    & n.4.    The question of tax
    liability arose when a purchaser of property in the Commonwealth
    Flats took up occupancy, prior to the transfer of ownership,
    under a contract for a deed.    Because the purchaser never
    actually leased the property, and because the relationship of
    landlord and tenant never existed between the purchaser and the
    Commonwealth, the court held that the purchaser was not to be
    considered a lessee for the period that he occupied the property
    pending delivery of the 
    deed. 193 Mass. at 587-588
    .   The
    present case differs in significant respects -- here, the
    plaintiffs originally occupied the property pursuant to written
    leases, agreed at the outset to a holdover provision, and,
    pursuant to that provision, continued to be governed by the
    applicable lease terms during the holdover period.
    11
    We reject the plaintiffs' suggestion that we are to resolve
    doubts in interpreting legislative use of the word "lessee" in
    § 17 in the taxpayer's favor.   The plaintiffs rely on a rule of
    statutory construction that applies in interpreting the tax
    laws.   See, e.g., Massachusetts Assn. of Tobacco Distribs.
    v. State Tax Commn., 
    354 Mass. 85
    , 89 (1968) (construing G. L.
    c. 64C, imposing an excise tax on cigarette sales); Davisson
    v. Commissioner of Rev., 
    18 Mass. App. Ct. 748
    , 754 (1984)
    (construing G. L. c. 65C, to determine whether decedent's
    interests in out-of-State gas and oil properties were taxable
    under the estate tax statute); Commissioner of Rev. v. Destito,
    
    23 Mass. App. Ct. 977
    , 978 (1987) (construing G. L. c. 62, to
    determine whether New Hampshire resident's income was taxable
    under the Massachusetts income tax statute).
    Section 17, however, by its express terms formulates an
    exemption from taxation for Massport properties.   Boston
    v. U.N.A. 
    Corp., 11 Mass. App. Ct. at 299-300
    .   See Opinion of
    the 
    Justices, 334 Mass. at 730
    (court requested to give opinion
    as to whether it is "constitutionally competent for the General
    Court to grant the tax exemptions provided [in Massport's
    enabling act] . . . with respect to the physical property of
    [Massport]").   While the Legislature may permit such "reasonable
    exemptions based upon various grounds of public policy, . . .
    yet taxation is the general rule."   Animal Rescue League of
    12
    Boston v. Bourne's Assessors, 
    310 Mass. 330
    , 332 (1941).      "It is
    for this reason that statutes granting exemptions from taxation
    are strictly construed.   A taxpayer is not entitled to an
    exemption unless he shows that he comes within either the
    express words or the necessary implication of some statute
    conferring this privilege upon him."    
    Ibid. See Global Cos.,
    LLC v. Commissioner of Rev., 
    459 Mass. 492
    , 494 (2011) (citation
    omitted) (an exemption is "to be recognized only where the
    property falls clearly and unmistakably within the express words
    of a legislative command," and it is the taxpayer's burden to
    "demonstrate entitlement to the exemption claimed").    See
    also AA Transp. Co. v. Commissioner of Rev., 
    454 Mass. 114
    , 121
    (2009).
    Based on the foregoing, we conclude that the plaintiffs,
    upon holding over after the lease term expired, continued to
    remain on the property under the applicable provisions of their
    leases, and are properly characterized as business lessees, for
    purposes of § 17.   Accordingly, the plaintiffs have not
    established entitlement to the tax exemption for Massport
    properties under that section.   Our conclusion also comports
    with the additional principle of statutory construction that we
    are to follow "a common sense approach in the interpretation and
    application of all statutes."    State Tax Commn. v. John Hancock
    Mut. Life Ins. Co., 
    361 Mass. 125
    , 131 (1972).    It defies common
    13
    sense to permit the plaintiffs in this case, who agreed to the
    leases' holdover provision and who were statutorily and
    contractually bound to pay taxes during the lease term, to be
    excused from the obligation by virtue of their simply remaining
    on the leased property, without Massport's consent, after the
    expiration of the lease term.
    2.   Tax amount.   As a final matter, the judge properly
    dismissed the plaintiffs' claims that the city calculated their
    taxes based on inaccurate square footage measurements.    In
    challenging the amount assessed, the plaintiffs did not have the
    option, as they suggest, to elect to pursue either an
    administrative remedy or, alternatively, a declaratory judgment
    action as to that claim.   See Harron Communications Corp.
    v. Bourne, 
    40 Mass. App. Ct. 83
    , 86 (1996) ("For an excessive
    tax, the exclusive remedy is application for abatement and
    petition to the Appellate Tax Board").   Compare Massachusetts
    Mut. Life Ins. Co. v. Commissioner of Corps. & Taxation, 
    363 Mass. 685
    , 688-689 (1973) (taxpayer properly pursued both
    administrative remedy and declaratory relief as to proper
    construction of taxing statute).   Accord Sydney v. Commissioner
    of Corps. & Taxation, 
    371 Mass. 289
    , 294 n.10 (1976).
    Also unavailing is the plaintiffs' argument that the March
    30, 2005, denial of the city's motion to dismiss for failure to
    exhaust administrative remedies permitted the plaintiffs to also
    14
    pursue in these proceedings their challenge to the amount of
    taxes assessed as opposed to only permitting them to proceed on
    their challenge to the imposition of any tax liability under
    § 17.    From our review of the appellate record, it appears the
    issue was neither raised nor decided as part of the motion to
    dismiss, and we find no support for the plaintiffs' contention
    that the law of the case permitted them to forego the exclusive
    statutory remedy for tax abatements. 7
    Judgment affirmed.
    7
    The first amended complaint, which was the subject of the
    city's motion to dismiss, did not allege that the taxes assessed
    were excessive. The judge's decision on the motion to dismiss
    addressed only the issue of the plaintiffs' claimed exemption
    under § 17, and, because it posed a novel question of law, it
    was permitted to go forward as a declaratory judgment action.
    Moreover, the judge here observed that the plaintiffs' claims of
    excessive taxes were raised for the first time in opposition to
    the city's motion for summary judgment, and nothing in the
    record before us suggests the contrary.
    

Document Info

Docket Number: AC 11-P-1474

Judges: Cypher, Katzmann, Maldonado

Filed Date: 11/12/2014

Precedential Status: Precedential

Modified Date: 10/19/2024