Merrimack Premium Outlets, LLC & a. v. Town of Merrimack ( 2021 )

NOTICE: This opinion is subject to motions for rehearing under Rule 22 as well
as formal revision before publication in the New Hampshire Reports. Readers are
requested to notify the Reporter, Supreme Court of New Hampshire, One Charles
Doe Drive, Concord, New Hampshire 03301, of any editorial errors in order that
corrections may be made before the opinion goes to press. Errors may be
reported by email at the following address: reporter@courts.state.nh.us.
Opinions are available on the Internet by 9:00 a.m. on the morning of their
release. The direct address of the court’s home page is:
http://www.courts.state.nh.us/supreme.
THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Hillsborough-southern judicial district
No. 2020-0358
MERRIMACK PREMIUM OUTLETS, LLC & a.
v.
TOWN OF MERRIMACK
Argued: July 7, 2021
Opinion Issued: October 1, 2021
Sassoon Cymrot Law, LLC, of Hingham, Massachusetts (Anthony M.
Ambriano on the brief and orally), for the plaintiffs.
Drummond Woodsum & MacMahon, of Manchester (Matthew R. Serge
and Demetrio F. Aspiras on the brief, and Demetrio F. Aspiras orally), for the
defendant.
HICKS, J. The plaintiffs, Merrimack Premium Outlets, LLC and
Merrimack Premium Outlets Center, LLC, appeal, and the defendant, Town of
Merrimack (Town), cross-appeals, orders of the Superior Court (Colburn, J.) in
this action challenging the Town’s reassessment of taxable property. We
reverse and remand.
The following facts were recited in the trial court’s orders or relate the
contents of documents contained in the record. Merrimack Premium Outlets,
LLC owns a large property in Merrimack (the Property) that it leases to
Merrimack Premium Outlets Center, LLC. The latter entity operates a retail
outlet shopping mall, known as the Merrimack Premium Outlets, on the
Property. In 2016, the Town conducted a revaluation of all taxable property
within the municipality. See RSA 75:8-a (2012). As a result, the Property was
assessed at $86,549,400. Later that year, the Town became aware that the
Property had been used in or about 2013 as collateral for a loan and had been
valued for that purpose at $220,000,000. Based on this information, the Town
believed that it had severely undervalued the Property. Accordingly, the Town
reassessed the Property for the 2017 tax year at $154,149,500 (the 2017
reassessment). The plaintiffs then brought this action for declaratory judgment
and injunctive relief.
The plaintiffs’ complaint alleges that there were no changes in either the
Property or the market that justify the 2017 reassessment. It further alleges
that: (1) the Property was not sold during that timeframe; (2) the reassessment
did not correct any clerical or mathematical errors in the 2016 assessment;
and (3) the increase in the assessment did not result from changes in
assessment methodology applied to all Town properties. The complaint asserts
that because “[t]he Town had no legal authority to make such a reassessment,”
it was “void and illegal.” The complaint also alleges, “[o]n information and
belief,” that “the Town did not increase the tax year 2017 assessments of the
other shopping center and retail outlets in the Town” and asserts that the
“reassessment is an unauthorized, illegal and unconstitutional ‘spot’
assessment.”
The parties requested that the court resolve certain legal issues on the
pleadings to narrow the issues for trial. Accordingly, on June 14, 2019, the
court issued an order addressing, among other issues, whether the Town had
statutory authority to make the 2017 reassessment. The court ruled that “the
Town had the legal authority to adjust the appraised value of the [Property] for
the 2017 tax year despite the fact that there were no physical, zoning, or
ownership change[s] to the [P]roperty following the 2016 town-wide
revaluation.” Based on that ruling, the court subsequently dismissed count II
of the complaint for failure to state a claim, to the extent that it sought relief
“on the basis that the Town lacked the authority to change the assessed value”
of the Property.
The Town also initially sought to dismiss the plaintiffs’ constitutional
challenge for failure to state a claim, which the trial court denied. Thereafter,
the trial court dismissed that claim with prejudice when it granted the Town’s
second motion for sanctions based upon the plaintiffs’ repeated failure to
answer certain interrogatories. It subsequently denied the plaintiffs’ motion for
reconsideration.
2
The plaintiffs now appeal, arguing, in pertinent part, that the trial court
erred in: (1) ruling that the Town had statutory authority to make the 2017
reassessment when there had been no physical, zoning, or ownership changes
to the Property; and (2) dismissing their constitutional claim with prejudice as
a discovery sanction. The Town cross-appeals, arguing that the trial court
erred in denying the Town’s motion to dismiss the plaintiffs’ unconstitutional
spot assessment claim.
We begin with the plaintiffs’ argument that the trial court erred in ruling
that the Town had the authority to reassess the Property for the 2017 tax year
in order to correct a prior undervaluation. “Because the power to tax arises
solely by statute, the right to tax must be found within the letter of the law and
is not to be extended by implication.” Pheasant Lane Realty Trust v. City of
Nashua, 143 N.H. 140, 143 (1998) (quotation and citations omitted). “As such,
mistaken property tax valuations can be corrected only through legislatively
authorized remedies.” Id. Accordingly, “[r]esolving this issue requires us to
engage in statutory interpretation, and, therefore, our review is de novo.”
Virgin v. Fireworks of Tilton, 172 N.H. 484, 486 (2019) (quotation omitted).
When interpreting statutes, “[w]e first look to the language of the statute
itself, and, if possible, construe that language according to its plain and
ordinary meaning.” Id. at 486. “We interpret legislative intent from the statute
as written and will not consider what the legislature might have said or add
language that the legislature did not see fit to include.” Id. “We construe all
parts of a statute together to effectuate its overall purpose and avoid an absurd
or unjust result. Moreover, we do not consider words and phrases in isolation,
but rather within the context of the statute as a whole.” Id. at 486-87 (citation
omitted).
We described New Hampshire’s statutory property tax scheme in
LLK Trust v. Town of Wolfeboro, 159 N.H. 734 (2010). Specifically, “a tax year
runs from April 1 to March 31” and “[t]axes are assessed based upon the value
of property located in a town as of April 1.” LLK Trust, 159 N.H. at 736; see
RSA 76:2 (Supp. 2020); RSA 74:1 (2012). “The Town must adjust assessments
annually so that all assessments are reasonably proportional within that
municipality.” LLK Trust, 159 N.H. at 736 (quotation omitted); see RSA 75:8, I
(2012). In addition, at least every five years, “[t]he assessors and/or selectmen
shall reappraise all real estate within the municipality so that the assessments
are at full and true value.” RSA 75:8-a; cf. LLK Trust, 159 N.H. at 736
(discussing prior version of statute).
The plaintiffs argue that “[o]nce proportionality is achieved by the ‘5-year’
town-wide reappraisal, that proportionality can only be modified when there
has been a change in a property within the express terms of RSA 75:8.” They
contend that no such change occurred here.
3
RSA 75:8 provides:
I. Annually, and in accordance with state assessing guidelines, the
assessors and selectmen shall adjust assessments to reflect changes so
that all assessments are reasonably proportional within that
municipality. All adjusted assessments shall be included in the
inventory of that municipality and shall be sworn to in accordance with
RSA 75:7.
II. Assessors and selectmen shall consider adjusting assessments for any
properties that:
(a) They know or believe have had a material physical change;
(b) Changed in ownership;
(c) Have undergone zoning changes;
(d) Have undergone changes to exemptions, credits or abatements;
(e) Have undergone subdivision, boundary line adjustments, or
mergers; or
(f) Have undergone other changes affecting value.
RSA 75:8 (2012).
The Town argues that the plaintiffs urge a “restrictive reading” of RSA
75:8 under which “no change in assessment may occur unless it satisfies one
of the conditions listed in RSA 75:8, II.” That reading is erroneous, the Town
contends, because “[t]he plain language of RSA 75:8, II contains no limitation
on why the Selectmen may consider adjusting an assessment.” According to
the Town, the statute is not mandatory, but “merely directs the municipality to
‘consider’ adjusting assessments if one of the enumerated conditions is
present. It neither mandates such an adjustment, nor does it preclude an
adjustment under other conditions.”
The Town misconstrues the plaintiffs’ argument. The plaintiffs do not
rely on paragraph II of the statute, and the changes explicitly listed therein;
rather, they rely on paragraph I, which directs assessors and selectmen to
annually “adjust assessments to reflect changes.” RSA 75:8, I (emphasis
added). Based on that plain language, we agree with the plaintiffs that some
“change” is a prerequisite to a municipality’s legal authority to adjust a
property’s assessment under RSA 75:8, I.
The Town nevertheless contends that even if there is a “change”
requirement in RSA 75:8, I, “[n]othing limits such ‘changes’ to physical
manifestations.” It argues that “the discovery of the extreme underassessment
of the Property here satisfies any ‘change’ requirement in the statute.” We
disagree.
4
To discern the meaning of “changes” in RSA 75:8, I, we first look to
paragraph II of that statute, which lists a number of events that might prompt
assessors and selectmen to adjust a property’s assessment. As evidenced by
the final, catchall phrase, the listed events are all changes that may “affect[]
value.” RSA 75:8, II(f). Also informing our interpretation is recognition that
“[t]axes are assessed based upon the value of property.” LLK Trust, 159 N.H.
at 736. RSA 75:1 requires the selectmen to appraise all taxable property, other
than certain types of property specifically excepted, “at its market value[,] . . .
mean[ing] the property’s full and true value as the same would be appraised in
payment of a just debt due from a solvent debtor.” RSA 75:1 (Supp. 2020).
Reading RSA 75:8 as a whole and in conjunction with RSA 75:1, we conclude
that adjustment to an assessment pursuant to RSA 75:8, I, requires an actual
change in the property’s market value.
The Town contends that the catchall provision in RSA 75:8, II(f) is
satisfied here, relying also on the portion of RSA 75:1 that provides: “The
selectmen shall receive and consider all evidence that may be submitted to
them relative to the value of property, the value of which cannot be determined
by personal examination.” RSA 75:1. The Town reasons that when “the
Assessor became aware of new information bearing directly on the Property’s
value,” that discovery constituted “an actionable change ‘affecting value’” for
purposes of RSA 75:8, II(f). Again, we disagree. Acquisition of information
bearing on a property’s value is not a change in value itself; it is merely a
change in what the acquirer knows about the property’s value. In other words,
assuming, under the facts of this case, that the adjusted assessment of
$154,149,500 is the correct value for the Property in 2017, it is also the correct
value for the Property in 2016 — the Property’s value did not change; rather, as
the Town itself acknowledges, it “severely undervalued the [P]roperty in 2016.”
The Town next argues that when interpreting RSA 75:8, we must
consider RSA 75:7, which provides:
The selectmen and assessors shall take and subscribe upon
the copies or original inventories and assessments of both resident
and nonresident taxes, furnished by them to the town clerks in
their respective towns, to be recorded in the clerk’s records, the
following oath, which may be subscribed before any justice of the
peace or notary public: We, the selectmen and assessors of
__________, certify under the penalty of perjury that in making the
inventory for the purpose of assessing the foregoing taxes all
taxable property was appraised to the best of our knowledge and
belief at its full value, in accordance with state appraisal
standards.
5
RSA 75:7 (2012). The Town argues that “[t]o accept the [plaintiffs’] reading of
RSA 75:8, II would significantly curtail an official’s ability to faithfully carry out
the oath taken in RSA 75:7.”
“When interpreting two statutes that deal with a similar subject matter,
we construe them so that they do not contradict each other, and so that they
will lead to reasonable results and effectuate the legislative purpose of the
statutes.” In re A.D., 172 N.H. 438, 441 (2019). The Town, however, seeks to
do more than read RSA 75:7 and RSA 75:8 harmoniously; it seeks to read into
RSA 75:8 the ability to correct an undervaluation. The trial court similarly
construed RSA 75:8, relying on our decision in Tennessee Gas Pipeline Co. v.
Town of Hudson, 145 N.H. 598 (2000), to conclude that the “annual
adjustments to assessed values may be made for any number of reasons,
including if a property is mistakenly undervalued in a prior tax year.”
Tennessee Gas Pipeline, however, was decided under a prior version of
RSA 75:8, which provided that “‘assessors and selectmen shall, in the month of
April in each year, . . . correct all errors that they find in the then existing
appraisal.’” Tennessee Gas Pipeline, 145 N.H. at 605 (quoting RSA 75:8
(1991)). Following its repeal and reenactment in 2001, see Laws 2001, 158:53,
RSA 75:8 no longer contains the language mandating the correction of errors,
and we will not, under the guise of statutory interpretation, reinsert that
language into the statute. See Virgin, 172 N.H. at 486 (“We interpret legislative
intent from the statute as written and will not consider what the legislature
might have said or add language that the legislature did not see fit to
include.”). Moreover, we will not extend by implication the authority to correct
erroneous property tax valuations. Pheasant Lane Realty Trust, 143 N.H. at
143.
To the extent that RSA 75:7 may seem to conflict with RSA 75:8, we note
that the former statute must be read in the context of the overall statutory
scheme, which sets forth a system of municipality-wide reappraisals at least
every five years and a limited authority to adjust assessments annually to
reflect changes in value. See RSA 75:8, :8-a; N. New England Tel. Operations
v. Town of Acworth, 173 N.H. 660, 667 (2020) (noting that “we interpret
statutes in the context of the overall statutory scheme and not in isolation”).
That statutory scheme, in its current form, does not allow for correction of even
known errors in valuation prior to the next municipality-wide reappraisal.
Compare RSA 75:8 (2012), with RSA 75:8 (1991). Accordingly, we conclude
that the oath in RSA 75:7 that “all taxable property was appraised to the best
of our knowledge and belief at its full value” must be read as certifying the
accuracy of the last legally-authorized appraisal or adjustment at the time it
was made. RSA 75:7 (emphasis added).
For similar reasons, we reject the Town’s arguments that the 2017
reassessment was necessary to ensure the proportionality required under RSA
6
75:8, I, and the New Hampshire Constitution, see N.H. CONST. pt. II, art. 5,
and that interpreting RSA 75:8 as failing to authorize reassessment under
these circumstances “would lead to absurd results” because “a property owner
[would be] permitted to benefit from an under-assessment unless or until a
general reassessment occurs.” We acknowledge that RSA 75:8, I, mandates
annual assessment adjustments “so that all assessments are reasonably
proportional within that municipality.” RSA 75:8, I. However, under the
statute’s plain language, such an annual adjustment shall occur “to reflect
changes.” Id. The construction urged by the Town would read that phrase out
of the statute. See Appeal of Town of Lincoln, 172 N.H. 244, 248 (2019) (“The
legislature is not presumed to waste words or enact redundant provisions and
whenever possible, every word of a statute should be given effect.” (quotation
omitted)). The current statutory scheme seeks to ensure proportionality
through municipality-wide reappraisals at least every five years and annual
adjustments to the assessments of properties that have changed in value. The
scheme may not be perfect; indeed, “the demand of constitutional equality in
taxation anticipates some practical inequalities” and “[a]bsolute mathematical
equality is not obtainable in all respects if taxation is to be administered in a
practical way.” Sirrell v. State, 146 N.H. 364, 370 (2001) (quotations and
brackets omitted). The Town does not raise a developed claim that the
statutory scheme, as we interpret it, violates Part II, Article 5 of the New
Hampshire Constitution, and it has not persuaded us that it leads to absurd
results.
For the foregoing reasons, we conclude that the trial court erred in ruling
that the Town had the authority to correct its undervaluation of the Property by
adjusting its assessment pursuant to RSA 75:8. Accordingly, we reverse and
remand. Given this disposition, we need not address the remaining arguments
of the parties.
Reversed and remanded.
MACDONALD, C.J., and BASSETT and DONOVAN, JJ., concurred.
7