Commerce Park Associates 1, LLC v. Monique Houle, in her capacity as Tax Collector of the Town of Coventry

Supreme Court
No. 2012-207-Appeal.
No. 2012-210-Appeal.
(KB 11-1434)
Commerce Park Associates 1, LLC, et al. :
v. :
Monique Houle, in her capacity as Tax :
Collector of the Town of Coventry et al. :
NOTICE: This opinion is subject to formal revision before
publication in the Rhode Island Reporter. Readers are requested to
notify the Opinion Analyst, Supreme Court of Rhode Island,
250 Benefit Street, Providence, Rhode Island 02903, at Telephone
222-3258 of any typographical or other formal errors in order that
corrections may be made before the opinion is published.
Supreme Court
No. 2012-207-Appeal.
No. 2012-210-Appeal.
(KB 11-1434)
Commerce Park Associates 1, LLC, et al. :
v. :
Monique Houle, in her capacity as Tax :
Collector of the Town of Coventry et al. :
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
OPINION
Justice Indeglia, for the Court. These consolidated cases came before this Court on
cross-appeals from a judgment of the Superior Court granting the defendants’ motion to dismiss
the plaintiffs’ complaint for failure to exhaust administrative remedies and denying the
defendants’ request for sanctions against the plaintiffs. In the first of these cases, the plaintiffs
claim that the hearing justice erred in granting the defendants’ motion to dismiss because the
appeal process set forth in G.L. 1956 § 44-5-26 is not applicable to sewer assessments. In their
cross-appeal, the defendants contend that their request for sanctions against the plaintiffs should
have been considered and granted by the hearing justice because of the plaintiffs’ various
duplicative and frivolous filings. For the reasons set forth in this opinion, the judgment of the
Superior Court is vacated in part and affirmed in part.
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I
Facts and Travel
These consolidated cases concern only one of a series of substantially similar cases 1
which have been filed by one or more of the plaintiffs involved in this appeal challenging the
legality of sewer assessments assessed by the Town of Coventry (defendants or Coventry). 2
The plaintiffs, Commerce Park Associates 1, LLC; Commerce Park Associates 2, LLC;
Commerce Park Associates 6, LLC; Commerce Park Associates 13, LLC; Commerce Park
Properties, LLC; Commerce Park Realty, LLC; Commerce Park Realty 2, LLC; and Commerce
Park Management, LLC (collectively plaintiffs or Commerce Park) are all limited liability
entities in the state of Rhode Island and managed by Nicholas Cambio, Vincent Cambio, and
Melissa Faria. The plaintiffs own real property in Coventry, known as the Centre of New
England. The sewer assessments for the Centre of New England properties are at the heart of
this appeal.
On or about October 18, 2011, Commerce Park received notices of sale of their properties
for nonpayment of sewer assessments from Coventry. The notices indicated that the nonpayment
of the sewer assessments would result in a tax sale process, scheduled for January 24, 2012.
Thereafter, on November 29, 2011, Commerce Park filed suit in the Kent County
Superior Court, seeking declaratory and injunctive relief challenging the legality of the sewer
1
See, for example, Commerce Park Associates 1, LLC et al. v. Jean Carroll, in her capacity as
Deputy Treasurer of the Town of Coventry, C.A. No. 07-1433; Commerce Park Associates 1,
LLC et al. v. Town of Coventry Sewer Assessment Board of Review et al., C.A. No. 08-262;
Commerce Park Associates 1, LLC et al. v. The Town of Coventry et al., C.A. No. P.B. 11-6096.
These other actions are not directly involved in the instant appeal. They are noted here to
provide context for defendants’ request for sanctions.
2
The named defendants in the instant action are Monique Houle, in her capacity as tax collector
of the Town of Coventry; Ted Przybyla, in his capacity as finance director of the Town of
Coventry; the Town of Coventry; and the Sewer Authority of the Town of West Warwick
(collectively defendants or Coventry).
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assessments and enjoining Coventry from selling Commerce Park’s properties for nonpayment
of the allegedly unlawful sewer assessments. Commerce Park also filed a motion for temporary
and permanent injunctions prohibiting Coventry from selling Commerce Park’s properties at a
tax sale. Commerce Park cites to certain agreements made between Commerce Park and
Coventry, which they assert exempt Commerce Park from being required to pay the disputed
sewer assessments on the Centre of New England properties—namely, an Economic
Development Tax Incentive Agreement, a consent judgment in an appeal of certain enactments
of the Coventry Zoning Code, 3 and an off-site improvement agreement.
The defendants filed a motion to dismiss arguing that the same issues were pending
before the Superior Court in a duplicative action filed by Commerce Park and that Commerce
Park had not followed the correct procedure in pursuing its appeal as laid out in § 44-5-26. The
defendants also asked the Superior Court to determine whether the various Commerce Park
filings had been made “in good faith” and “take such further action as it may deem appropriate in
the circumstances,” which both defendants and the hearing justice interpreted as a request for
sanctions under Rule 11 of the Superior Court Rules of Civil Procedure.
The motion came before the Washington County Superior Court 4 for oral argument, and
the hearing justice issued a bench decision on December 15, 2011. The hearing justice limited
his consideration of the motion to dismiss to the four corners of the instant complaint, but he did
note that another largely similar action was pending in the Kent County Superior Court 5 at the
time. The hearing justice cited to several cases from this Court for the tenet that “[b]efore a
3
That appeal was docketed as C.A. No. KC 03-444 and the consent judgment entered in favor of
the plaintiffs, various Commerce Park entities, on February 25, 2004.
4
The motion was heard on the Out County Business Calendar in Washington County, although
docketed in the Kent County Superior Court.
5
That case, Commerce Park Associates 1, LLC et al. v. Ted Przybyla, in his official capacity as
Finance Director of the Town of Coventry, et al., was docketed as C.A. No. 07-1433.
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taxpayer may proceed directly to the Superior Court[,] they [sic] must clearly show that their
assessment was so palpably exorbitant and excessive as to amount to constructive fraud or to
violate some constitutional principle.” He went on to declare that “[i]t is clear to this [c]ourt that
the plaintiff should have exhausted his administrative remedies before proceeding to this court to
dispute the assessment of his property.” The hearing justice cited a recent tax case of this Court,
Narragansett Electric Co. v. Minardi, 21 A.3d 274 (R.I. 2011), to explain that the appeal process
of § 44-5-26 “applies to all tax assessment cases.” Accordingly, the hearing justice granted
defendants’ motion to dismiss due to plaintiffs’ failure to follow the correct administrative
appeal process. He further stated “the [c]ourt has determined it will not proceed on any
applications for sanctions * * *.” An order to that effect was entered on December 21, 2011. 6
The plaintiffs filed a notice of appeal to this Court on December 28, 2011. The
defendants filed a cross-appeal on the denial of their request for sanctions on January 3, 2012.
The appeals were consolidated by this Court on January 9, 2013. 7
On appeal, plaintiffs argue, first, that they have already exhausted their administrative
remedies because they appealed Coventry’s sewer assessments to the sewer assessment board of
review and were denied. 8 The plaintiffs also argue that the appeal process in § 44-5-26 applies
to annual real estate taxes but does not apply to Coventry’s sewer “betterment” assessments.
The defendants contend, in turn, that the hearing justice erred in not considering the
sanctions sought by Coventry in addressing the motion to dismiss. They assert that the numerous
6
On the order, defendants’ motion for sanctions was termed as “a prayer for an award of
attorneys’ fees,” but “attorneys’ fees” was crossed out and “sanctions” inserted in a handwritten
substitution that was initialed by the hearing justice.
7
During the pendency of these appeals, some of the plaintiff Commerce Park entities entered into
receivership and a permanent receiver was appointed by the Providence County Superior Court.
Accordingly, the receiver is now a party to these appeals.
8
The plaintiffs’ appeal of that denial by the sewer assessment board of review is docketed in the
Kent County Superior Court as C.A. No. KM 08-262 and is currently pending.
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duplicative filings made by the Cambio brothers through various Commerce Park entities were
frivolous and have exposed Coventry to the risk of facing different legal results in different
cases, all addressing the legality of the sewer assessments.
Additional facts will be provided as necessary to aid in the disposition of these cross-
appeals.
II
Standard of Review
“[T]he sole function of a motion to dismiss is to test the sufficiency of the complaint.”
Minardi, 21 A.3d at 277 (quoting Laurence v. Sollitto, 788 A.2d 455, 456 (R.I. 2002)). “In
reviewing a justice’s decision on a * * * motion to dismiss, we apply the same standards as the
motion justice.” Burke v. Gregg, 55 A.3d 212, 217-18 (R.I. 2012). We confine our review to the
complaint, examine the allegations contained therein, and view them in the light most favorable
to the plaintiff. See id. at 218. “A motion to dismiss may be granted only ‘if it appears beyond a
reasonable doubt that a plaintiff would not be entitled to relief under any conceivable set of
facts[.]’” Minardi, 21 A.3d at 278 (quoting Estate of Sherman v. Almeida, 747 A.2d 470, 473
(R.I. 2000)).
In addition, “this Court reviews a trial justice’s decision to award or deny Rule 11
sanctions under an abuse-of-discretion standard.” In re Briggs, 62 A.3d 1090, 1097 (R.I. 2013).
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III
Discussion
A
The Motion to Dismiss
The plaintiffs contend on appeal that the hearing justice erred in granting defendants’
motion to dismiss for failure to exhaust administrative remedies because the tax appeal process
set forth in § 44-5-26 9 is not applicable to sewer assessments and because plaintiffs had followed
the appeal procedure established by Public Laws 1997, chapter 330, the act enabling the creation
of Coventry’s sewer system (the enabling act).
We are of the opinion that the language of Coventry’s sewer enabling act is central to this
case. The enabling act granted to Coventry the authority to construct, finance, and operate a
sewer system. 10 See P.L. 1997, ch. 330, § 1. The town council was permitted to establish and
construct a sewer system for the Town of Coventry and to “prescribe just and equitable sewer
assessment rates on account of the construction costs * * * and also rates of annual charge, on
account of operating and maintenance costs, to be levied against owners of property which is
connected to a common sewer.” P.L. 1997, ch. 330, § 9. The enabling act further provided that
“all the annual charges and sewer assessments * * * shall be collected in the same manner that
taxes assessed on real estate are by law collected.” Id. Section 19 of the enabling act established
9
General Laws 1956 § 44-5-26(a) provides that “[a]ny person aggrieved on any ground
whatsoever by any assessment of taxes against him or her in any city or town * * * may * * * file
an appeal in the local office of tax assessment * * *. The taxpayer, if still aggrieved, may appeal
the decision of the tax assessor to the local tax board of review * * *.”
10
The first version of the enabling act was passed by the General Assembly in 1970 by Public
Laws 1970, chapter 175. It has been amended several times since then, most recently in 2006.
The parties do not dispute that the version of the enabling act which is applicable to the instant
matter is Public Laws 1997, chapter 330. Accordingly, all references to the Coventry sewer
enabling act will be from the 1997 iteration of it.
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a sewer board of review, consisting of members appointed by the town council, and set forth the
following procedure for appeals of any assessments or charges levied by the town for the sewer
system:
“Within sixty (60) days after mailing of notice of an assessment or
charges [for construction and maintenance of the sewer system] * *
*, any person aggrieved by such assessment, charge or order may
appeal to the sewer board of review.
“The sewer board of review shall keep an accurate record of its
proceedings which shall be available for public inspection.
“If the board determines that such assessment[,] charge or order is
unwarranted in whole or in part, it shall annul or modify the same
and make such order as justice may require. Otherwise it shall
affirm the same. Within thirty (30) days after the decision of the
sewer board of review, any party aggrieved, which may include the
council, may appeal to the superior court which shall have the
same powers to annul, modify, enter further orders or affirm as the
sewer board of review.” P.L. 1997, ch. 330, § 19.
The hearing justice determined that plaintiffs were attempting to challenge the legality of
sewer taxes and that accordingly their challenge must follow the administrative appeal process
outlined in § 44-5-26. He cited to authority from this Court for the conclusion that “the taxing
statute provide[s] the exclusive relief to any person aggrieved by any assessment of taxes against
him in any city or town.” He further determined that plaintiffs had not met the burden of
establishing that they were challenging the legality of their taxes so as to permit them to proceed
directly to the Superior Court under the taxing statute. 11
We do not take issue with the hearing justice’s conclusion that previous authority from
this Court has definitively stated that the process set forth in § 44-5-26 is the exclusive remedy
11
Section 44-5-27 provides that a person challenging an illegal tax against him or her may skip
the process of appealing to the local assessor and proceed directly to the Superior Court by
invoking the court’s equity jurisdiction. See also Narragansett Electric Co. v. Minardi, 21 A.3d
274, 278 (R.I. 2011).
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for any taxpayer challenging a local tax. We are convinced, however, that the process set forth
in § 44-5-26 is not applicable to the instant case. This Court has previously noted that “sewer
charges are not ordinarily to be considered a tax.” Newport Court Club Associates v. Town
Council of Middletown, 716 A.2d 787, 790 (R.I. 1998) (citing Costello v. Ricci, 121 R.I. 509,
512, 401 A.2d 38, 40 (1979)). In Costello, this Court considered annual sewer use charges
levied by the North Providence Town Council and concluded that, because annual sewer use
charges are generally not considered to be taxes, “statutes relating to taxation are inapposite in
the present case.” Costello, 121 R.I. at 512, 401 A.2d at 40. We recognize that the instant case
is not limited to annual sewer use charges such as were at issue in Costello but also relates to
sewer assessments for the construction of the sewer system. We believe, however, that this
distinction is immaterial for the purposes of determining whether the taxing statute of chapter 5
of title 44 applies. Whether sewer assessments are applied to construction charges or to ordinary
maintenance charges has generally not been viewed as a meaningful distinction. See 11 Eugene
McQuillin, The Law of Municipal Corporations § 31:32 at 366-67 and 372-73 (Rev. 3d ed. 2010)
(noting that sewer charges and fees are not ordinarily treated as taxes and that such fees may be
used to defray construction costs and expenses).
We turn now to the language of the Coventry enabling act to determine if the sewer
assessments levied by the town pursuant to the enabling act were, in fact, intended to be treated
as taxes so as to fall within the purview of chapter 5 of title 44. We find it significant that the
enabling act consistently refers to the means of raising funds in order to cover the cost of
construction and maintenance of the sewer system as “assessments” and “annual charges,”
respectively. See P.L. 1997, ch. 330, §§ 1, 9. In particular, § 9 of the enabling act specifically
distinguishes between the portion of the cost of construction and maintenance of the sewage
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works which will be paid for by the town through its “general taxation” and the portion which
will be paid for “by assessments and annual charges against individual parcels of property,” such
as the assessments being challenged by plaintiffs here. See P.L. 1997, ch. 330, § 9. Only once
does the enabling act equate the assessments and charges levied by the town with taxes, in
generally stating that unpaid sewer assessments or charges “shall be collected in the same
manner that taxes assessed on real estate are by law collected.” Id. We note that the fact that the
General Assembly deemed it necessary to state that assessments and charges were to be treated
as taxes for purposes of collection appears to indicate that the General Assembly recognized that
the assessments and charges were not taxes for other purposes. See Retirement Board of the
Employees’ Retirement System of Rhode Island v. DiPrete, 845 A.2d 270, 279 (R.I. 2004) (“We
presume that the General Assembly intended to attach significance to every word, sentence[,]
and provision of a statute.”). More significantly, § 19 of the enabling act, which established the
process by which property owners may challenge sewer assessments levied upon them, does not
include any reference to taxes in general or to the tax appeal process in chapter 5 of title 44. As a
general rule, we will not read into a statute a requirement that the drafters omitted. Iadevaia v.
Town of Scituate Zoning Board of Review, 80 A.3d 864, 875 (R.I. 2013); see also Woods v.
Safeway System, Inc., 102 R.I. 493, 495, 232 A.2d 121, 122 (1967) (“Unless there are
compelling reasons for us to do so, we should not by implication read into the statute what the
[L]egislature has not expressed.”) (quoting Adelson v. McKenna, 55 R.I. 363, 365, 181 A. 799,
800 (1935)). Accordingly, we decline to read into a simple statement of a right to appeal to the
Superior Court an intention on the part of the General Assembly to mandate that sewer
assessments and charges are to be treated as real estate taxes for appeal purposes or, more
specifically, that appeals under § 19 of the enabling act, P.L. 1997, ch. 330, must follow the
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process of § 44-5-26. See generally 2A Sutherland Statutes and Statutory Construction § 46:6 at
251-52 (7th ed. Norman J. Singer 2007) (stating that, “where the legislature has employed a term
in one place and excluded it in another, it should not be implied where excluded”). We conclude
that the sewer assessments at issue in the instant matter are not taxes and that, accordingly, the
tax appeal process in chapter 5 of title 44 is inapplicable. We therefore hold that the hearing
justice erred in granting defendants’ motion to dismiss on the grounds that plaintiffs had not
followed the § 44-5-26 tax appeal process. We further hold that the appeal process set forth in
§ 19 of P.L. 1997, ch. 330 is the only process by which residents of Coventry may appeal any
sewer assessments or charges levied by the town pursuant to its authority under the enabling act,
including the assessments being challenged by plaintiffs here.
The plaintiffs argue that they have, in fact, already followed the correct procedure by
bringing their claims to the Coventry Sewer Assessment Board of Review, as provided for in
§ 19 of P.L. 1997, ch. 330, and then by filing an appeal to the Kent County Superior Court in a
petition docketed as C.A. No. KM 08-262. Because we conclude that the hearing justice erred in
finding that the process set forth in § 44-5-26 applied, we need not, and do not, reach the issue of
whether plaintiffs’ prior actions in filing suit in the Superior Court satisfied the requirements of
the appeal process of § 19 of the enabling act, P.L. 1997, ch. 330. On remand, we direct the
Superior Court to conduct a hearing as to whether plaintiffs had already followed the correct
procedure in their 2008 complaint and to determine what effect, if any, the pendency of the 2008
complaint should have on the disposition of the instant case. 12
12
We note that the interests of judicial economy and efficiency appear to dictate that the various
cases pending in the Superior Court between Commerce Park and Coventry related to the sewer
assessments for the Centre of New England properties should, to the extent they remain viable
causes of action, be consolidated into one action in order to resolve all outstanding issues
between the parties.
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B
Sanctions
The defendants take issue with the hearing justice’s denial of their request for sanctions
without hearing argument on the issue. In addition, defendants argue that plaintiffs have misused
the judicial process by filing multiple suits in the Superior Court all making essentially the same
argument, thereby exposing Coventry to the danger of different legal results in different cases on
the same issue. The plaintiffs, in contrast, contend that the instant action was valid and
necessary because they were entitled to seek injunctive relief to prevent the sale of their property.
Rule 11 grants trial courts considerable discretion in their decision to impose sanctions
against attorneys for any violation of the rules. See Michalopoulos v. C & D Restaurant, Inc.,
847 A.2d 294, 300 (R.I. 2004). “[T]his Court will not reverse a trial justice’s imposition [or
denial] of sanctions for a litigant’s misconduct unless the trial court based its ruling on an
erroneous view of the law or on a clearly erroneous assessment of the evidence.” In re Briggs,
62 A.3d at 1098-99 (quoting Pleasant Management, LLC v. Carrasco, 918 A.2d 213, 217 (R.I.
2007)).
Here, the hearing justice summarily determined not to grant the defendants’ request for
sanctions. While the lack of a record on the issue of sanctions necessarily limits our ability to
review it, we note that the hearing justice evinced an awareness of the pendency in Superior
Court of the several other actions between these parties concerning sewer assessments, which
constituted the basis of the defendants’ request for sanctions. The defendants insist that the
hearing justice erred in specifically limiting his consideration to the four corners of the instant
complaint and thereby ignoring the other pending actions. We conclude that this argument lacks
merit as his decision explicitly stated that the limited consideration was solely on the issue of the
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motion to dismiss. The hearing justice did not specifically limit his decision on sanctions to the
four corners of the instant complaint. We will not assume error on the hearing justice’s part
without any basis in the record. In addition, it was the hearing justice’s prerogative to determine
if further argument on the issue of sanctions was necessary. Moreover, we cannot conclude that
he abused his discretion or was otherwise clearly wrong in declining to impose sanctions on the
plaintiffs. Accordingly, we will not disturb the hearing justice’s denial of the defendants’ request
for sanctions.
IV
Conclusion
For the reasons set forth in this opinion, the judgment of the Superior Court granting the
defendants’ motion to dismiss is vacated. We affirm the judgment of the Superior Court on the
issue of sanctions. The papers in this case shall be returned to that tribunal for further
proceedings consistent with this opinion.
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RHODE ISLAND SUPREME COURT CLERK’S OFFICE
Clerk’s Office Order/Opinion Cover Sheet
TITLE OF CASE: Commerce Park Associates 1, LLC, et al. v. Monique Houle, in her
capacity as Tax Collector of the Town of Coventry et al.
CASE NO: No. 2012-207-Appeal.
No. 2012-210-Appeal.
(KB 11-1434)
COURT: Supreme Court
DATE OPINION FILED: March 31, 2014
JUSTICES: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
WRITTEN BY: Associate Justice Gilbert V. Indeglia
SOURCE OF APPEAL: Kent County Superior Court
JUDGE FROM LOWER COURT:
Associate Justice Brian P. Stern
ATTORNEYS ON APPEAL:
For Plaintiffs: Richard G. Riendeau, Esq.
Matthew W.J. McGowan. Esq.
For Defendants: Arthur M. Read, II, Esq.