Shaw's Supermarkets, Inc. v. Town of Windham ( 2021 )

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Rockingham
No. 2020-0275
SHAW’S SUPERMARKETS, INC.
v.
TOWN OF WINDHAM
Argued: June 17, 2021
Opinion Issued: October 20, 2021
Alfano Law Office, PLLC, of Concord (John F. Hayes on the brief), and
Mark Murphy Law Offices, LLC, of Norwood, Massachusetts (Mark F. Murphy
on the brief and orally), for the plaintiff.
Beaumont & Campbell, Prof. Ass’n, of Salem (Bernard H. Campbell on
the brief and orally), for the defendant.
MACDONALD, C.J. The defendant, the Town of Windham (Town),
appeals an order of the Superior Court (Delker, J.) denying its motion to
dismiss the tax abatement appeal of the plaintiff, Shaw’s Supermarkets, Inc.
(Shaw’s), for lack of standing. The Town also appeals an order of the Superior
Court (Honigberg, J.), issued after a two-day bench trial, granting Shaw’s
requested tax abatement. We affirm.
I. Facts
This case involves a challenge to a tax assessment of a 34.21-acre parcel
of land in Windham owned by Route 111 Windham, LLC (Owner). Part of the
property is in Current Use. See RSA ch. 79-A (2012 & Supp. 2020)
(establishing Current Use tax program).
In 2004, the Owner entered into a ground lease with Shaw’s for a “pad
site” of approximately 1.5 acres. The lease had a term of twenty years with an
initial option for a ten-year extension, and four additional options, each for a
five-year extension. The lease, in relevant part, required Shaw’s to pay the
Owner its pro rata share of the real estate taxes assessed on the entire parcel,
and the Owner was required to pay the taxes to the Town. The responsibility of
reimbursing the Owner for the taxes was divided proportionally among the
tenants on the property. However, because Shaw’s was the only tenant in
2017, its pro rata share was 100%. The lease also provided that, upon Shaw’s
written request, the Owner “shall commence . . . any proceeding . . . for
abatement . . . of any assessment for Real Estate Taxes,” or at Shaw’s request,
“shall permit [Shaw’s] to do so in its [name] and/or [the Owner’s name],
provided that [Shaw’s] makes payment of all Real Estate Taxes as required
hereunder pending the determination of such conte[s]t.” If the Owner received
a tax abatement, Shaw’s was entitled to its pro rata share of the abatement.
As of April 1, 2017, the Town assessed the property at $10,887,150, and
the median equalization ratio was 88.1%. Thus, based on the Town’s
assessment, the equalized fair market value of the property was $12,357,718.
Shaw’s was directed by the Owner to pay the property taxes directly to the
Town, and it did. Shaw’s unsuccessfully applied to the Town’s selectboard for
a tax abatement and subsequently appealed to the superior court. The Town
moved to dismiss, arguing that Shaw’s lacked standing to request a tax
abatement on property it did not own. The trial court denied the Town’s
motion.
A two-day bench trial followed. Shaw’s presented the expert testimony of
B. Alec Jones, who is a certified general appraiser. Jones appraised the
property in 2019, and retroactively determined its value as of April 1, 2017.
Jones opined that, on that date, the property’s highest and best use was “for
continued use as a supermarket with limited excess or surplus land . . .
capable of supporting future commercial development.” Jones further testified
that the market value of the fee simple interest in the land not in Current Use
was $9,500,000, and that the equalized fair market value of the entire property
was $8,360,750. He determined these values by using the cost, sales
comparison, and income capitalization approaches. The Town called no
witnesses and offered no appraisal. The trial court credited Jones’ testimony
and granted Shaw’s requested abatement. This appeal followed.
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II. Analysis
A. Standing
The Town argues that Shaw’s lacks standing to seek a tax abatement
because, as a tenant, Shaw’s is not liable for the taxes on the value of the land
unless it agreed to pay them — something, the Town contends, Shaw’s had not
agreed to do. See Appeal of Reid, 143 N.H. 246, 249 (1998). In other words,
the Town contends that Shaw’s lacks standing because it does not have a
taxable interest in the property. See id.As an initial matter, notwithstanding the Town’s argument, Reid does not
apply here. In that case, we determined only whether a municipality had
authority under RSA 73:10 to levy a tax on a leasehold interest. Id. (observing
that leasehold is taxable only if lease is perpetual, renewable indefinitely, or if
tenant agrees to pay taxes on the land); see also RSA 73:10 (2012). We did not
address the issue of whether a tenant had standing to seek a tax abatement.
See Reid, 143 N.H. at 249.
As relevant here, RSA 76:17 provides that “any person aggrieved” by the
selectboard’s neglect or refusal to abate a tax in accordance with RSA 76:16,
I(b) may appeal the decision to the superior court. RSA 76:17 (Supp. 2020). In
the context of a tax abatement appeal, a “person aggrieved” is the person who
has paid the allegedly disproportionate tax, i.e., the taxpayer. See, e.g., Appeal
of Thermo-Fisher Scientific, 160 N.H. 670, 673 (2010) (quotation omitted).
This case is similar to Thermo-Fisher. In that case, we held that a
parent company had standing to petition for a tax abatement because, even
though one of its subsidiaries owned the property, it paid the disproportionate
tax on the subsidiary’s behalf. Id. at 671, 673. Here, there is no dispute that
Shaw’s actually paid the allegedly disproportionate tax to the Town on the
Owner’s behalf. Indeed, the Town concedes that Shaw’s paid the tax with its
own check. Additionally, under the terms of the lease, and because Shaw’s
was the only tenant, Shaw’s would have been required to reimburse the Owner
for 100% of the tax paid if the Owner had made the payment itself; conversely,
Shaw’s would have been entitled to receive 100% of any tax abatement the
Owner received. Thus, as a practical matter, a disproportionate tax
assessment is an injury to Shaw’s because Shaw’s is responsible for paying the
amount assessed, and Shaw’s will receive the benefit of any abatement.
Under these circumstances, Shaw’s is no less aggrieved than the
petitioner in Thermo-Fisher. See id. at 673. A disproportionate assessment of
land and buildings is an injury to the Owner, and because Shaw’s paid the
allegedly disproportionate tax on the Owner’s behalf, an injury to Shaw’s. Id.
It is immaterial to our analysis that Shaw’s does not own the property. See id.
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Accordingly, we conclude that Shaw’s has standing to appeal the Town’s denial
of its tax abatement request. In light of this conclusion, the issue of standing
warrants no further discussion.
B. Property Valuation
To succeed on its abatement claim, Shaw’s has the burden of proving by
a preponderance of the evidence that it is paying more than its proportional
share of taxes. Porter v. Town of Sanbornton, 150 N.H. 363, 367 (2003). To
show disproportionality, Shaw’s must establish that the property for which it
pays taxes is assessed at a higher percentage of fair market value than the
percentage at which property is generally assessed in the town. Id. at 368.
Generally speaking, fair market value refers to the “price which in all
probability would have been arrived at by fair negotiations between an owner
willing to sell and a purchaser desiring to buy, taking into account all
considerations that fairly might be brought forward and reasonably given
substantial weight in such bargaining.” Ventas Realty Ltd. P’ship v. City of
Dover, 172 N.H. 752, 755 (2020) (quotation omitted). The determination of fair
market value is a question of fact. Id.We will uphold the trial court’s factual findings unless they lack
evidentiary support or are legally erroneous. Id. “[T]he credibility of an
appraisal is a question of fact that the trial court must decide based upon the
evidence presented in a given case.” N. New England Tel. Operations v. Town
of Acworth, 173 N.H. 660, 678 (2020). “[T]he trial court is in the best position
to determine whether an appraisal presents an accurate opinion of market
value.” Id. As the trier of fact, the trial court may accept or reject any portion
of the evidence as it finds proper, including that of expert witnesses. Ventas,
172 N.H. at 755. We do not decide whether we would have ruled differently
than the trial court, but rather, whether a reasonable person could have
reached the same decision as the trial court based on the same evidence. Id.
Accordingly, we defer to the trial court’s judgment in resolving conflicts in the
testimony, measuring the credibility of witnesses, and determining the weight
to be given evidence. Id.
The trial court concluded that, based primarily on Jones’ expert
testimony and appraisal, Shaw’s “carried its burden of proof to establish the
value of the property.” On appeal, the Town contends that “[t]he trial court
erred in finding that [Shaw’s] met its burden” because its expert’s appraisal
contained “a series of errors” that “have the cumulative effect to render the
appraisal not sufficiently reliable.” (Capitalization omitted.) Specifically, the
Town argues that these errors invalidated the appraisal because they were
each contrary to provisions of the Uniform Standards of Professional Appraisal
Practice (USPAP). This argument ultimately rests on the premise that the
appraisal could not deviate from the USPAP in any respect. However, the Town
cites no authority to this effect, and we decline to adopt such a rule on this
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record. Based on our review of the evidence presented at trial, we conclude
that a reasonable person could have reached the same conclusion as the trial
court.
The Town contends that the trial court erred by crediting Jones’
valuation of the property because Jones failed to: (1) identify the correct
boundaries of the property; (2) consider a competitor’s purchase of a
comparable property only a short distance away and a few months before the
effective date of the appraisal; and (3) include value related to Shaw’s lease
payments to the Owner. The Town argues that, even if each of the alleged
errors might “not [have] affect[ed] the results of the appraisal” individually, they
“have the cumulative effect to render the appraisal not sufficiently reliable to
meet [Shaw’s] burden.”
Questions of credibility are for the trial court to decide because it “is in
the best position to determine whether an appraisal presents an accurate
opinion of market value.” N. New England Tel. Operations, 173 N.H. at 678.
Here, the trial court addressed each of the appraisal’s alleged deviations from
the USPAP and found that the appraisal was credible because Jones’ trial
testimony sufficiently responded to the Town’s objections. By asking us to
conclude that the appraisal was not sufficiently reliable, the Town essentially
asks us to second guess the trial court’s determination of credibility. That is
not our role on appeal. See Public Serv. Co. of N.H. v. Town of Bow, 170 N.H.
539, 542-43 (2018).
Based on our review of the evidence presented at trial, we conclude that
a reasonable person could have reached the same conclusion of value as the
trial court. Accordingly, we affirm the trial court’s decision to grant Shaw’s
requested abatement.
Affirmed.
HICKS, BASSETT, HANTZ MARCONI, and DONOVAN, JJ., concurred.
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