2012-364, Signal Aviation Services, Inc. v. City of Lebanon

lease to Sierra Nevada Helicopters, which then assigned the rights to its HL Leasing for certain airport land. HL Leasing assigned its rights under the Municipal Airport. In July 1996, the City ent ered into a twenty - year lease with The following facts are found in the record. The City owns the Lebanon

reverse in part, and remand. dismiss filed by the respondent, City of Lebanon (City). We affirm in part, appeals an order of the Superior Court (Vaughan, J.) granting the motion to DALIANIS, C.J. The petitioner, Signal Aviation Services, Inc. (Signal),

M. Pantesco on the brief), for the respondent. Gardner Fulton & Waugh PLLC, of Lebanon (Adele M. Fulton and Joshua

Girdwood on the brief), for the petiti oner. Law Office of Stephen P. Girdwood, PLLC, of Lebanon (Stephen P.

No. 2012 - 364 Grafton

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E - mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

“change or modify the public law regulating taxation”). statute); Mack v. Jones, p. 2 21 N.H. 393, 395 (1850) (municipalities may not City of Nashua, 143 N.H. 140, 143 (1998) (power to tax arises solely by statute must be assessed “at its market value”); Pheasant Lane Realty Trust v. by statute. See RSA 75:1 (2012) (all taxable property except as identified in contractual restriction” on its taxi ng authority, unless otherwise provided for required to “assess relative to market value” and could “not be bound by any breach of contract claim. Nonetheless, the BTLA observed that the City was acre basis,” t he BTLA decided that it had no jurisdiction to adjudicate Signal’s from assessing the other two similarly situated properties “on a different per Although Signal argued that its lease with the City precluded the City

generally assessed in the city.”). higher percentage of fair market value than the percentage at which property is disproportionality, taxpayer must establish “that its property is assessed at a England v. City of Rochester, 151 N.H. p. 2 263, 272 (2004) (To prove other airport tenants] are under[-]assessed or some of both.” See Verizon New determine “whether [Signal] is over[-]assessed or whether [the properties of t he of its property. Absent such evidence, the BTLA ruled that it could not the appeals because Signal failed to present any evidence of the market value and Land Appeals (BTLA). In an August 2009 de cision, the BTLA dismissed its 2006 and 2007 taxes and then appealed to the New Hampshire Board of Tax S ignal unsuccessfully applied to the City’s assessors for an abatement of

per acre, respectively. Signal’s at rates of approximately $61,000 pe r acre and approximately $30,000 observes that the City has taxed two airport tenants with parcels similar to compared to other entities operating and leasing land at the [a]irport.” It Signal claim s that the City assessed its land disproportionately “as

approximately $97,45 p. 2 2 per acre. which the City assessed the land, not including the improvements, was resulted in a corresponding increase in Signal’s property taxes. The rate at land, not including the improvements, from $77,400 to $868,300, which products.” In 2006, the City increased the assessed value of Signal’s leased terminal facility, and a “fuel farm for the storage of relevant petroleum various improvements have been constructed, including a main hangar, a Signal’s leased premises consist of approximatel y nine acres upon which

those set forth in the lease. the airport “under rates, terms [or] conditions” that were more favorable than not allow any other provider of commercial aeronautical services to operate at affiliate, Signal. In the lease, the City agreed, among other thing s, that it would p. 3 3

The court decided as well that Signal could not seek abatement of its 2008 and . . would have been an appeal [of the BTLA’s decision] to the Supreme Court.” its appeal o f the assessors’ denial of its abatement requests, its “only recourse . the statutory process for abating taxes. The court ruled that once Signal lost claims for abatement of its 2006 and 2007 taxes because it failed to adhere to of taxes.” Accordingly, the court determined that Signal could not maintain its as a breach of contract, the relief sought by [Signal] is abatement of five ye ars The trial court agreed with the City “that although the petition is styled

for disproportionate taxation. contende d that the statutory abatement process was Signal’s exclusive remedy taxes – was outside of the trial court’s jurisdiction to grant. The City the monetary relief Signal sought in its lawsuit – abatement of its 2006 - 2010 The City moved to dismiss Signal’s “claims for tax relief,” arguing that

[its leased land].” stay of the imposition of interest and penalties against Signal for taxes owed on providers of aeronautical services on leased land at the Airport” and “granting a “in the form [of] an order prohibiting further disparate tax assessment of current taxes due to the City. Signal also brought a claim for equitable relief For this conduct, Signal sought damages, including a set - off against

advantage over Signal.” terms and conditions gave the Executive Ramp tenants “a competitive conditions than those under which Signal operat es and that these favorable accordingly, the Executive Ramp tenants had more favorable terms and land comprising the Executive Ramp untaxed.” Signal alleged that, “newly c onstructed Executive Ramp facility” leaves “a significant portion of the “[t]he method used by the City to attribute taxable land to tenants” at the City’s the airport property” than similarly situated competitors. Signal alleged that Signal also alleged that it “is obligated to pay taxes on a larger portion of

services provided at the Airport as compared to other tenants operating ther e.” disproportionate rates and terms for operation of its commercial aeronautical a result of the disproportionate assessment, “Signal’s tax bill amounts to property of] other entities operating and leasing land a t the Airport”; and (2) as the City “disproportionately assessed” Signal’s property “as compared to [the schemes” to “other entities at the [a]irport.” Signal specifically alleged that: (1) providing more favorable and disproporti onate tax assessments and taxation alleging that the City “materially breached its obligations under the Lease by In February 2010, Signal filed the instant petition against the City,

assessors for abatemen t. the City’s 2008 and 2009 assessme nts of its property by applying to the Signal did not appeal the BTLA’s 2009 decision. Nor did Signal contest p. 4 4

disproportionately. Alternatively, Signal argues that its lease required the City for the City’s breach of its contractual obligation not to tax Signal disproportionate taxation and that it should be allowed contractual remedies constituted an “additional layer of bargained for protection” against set forth above. To support this assertion, Signal contends that its lease justiciable, Signal first had to adhere to the statutory tax abatement scheme of contract claim was a claim for abatement of taxes and, therefore, to be Signal argues that the trial court erred when it concluded that its breach

in an abatement proceeding is appellate.” Id. at 37 p. 4 4. not use both.” LSP Assoc., 142 N.H. at 373. “The superior court’s jurisdiction see RSA 76:17 (2012). “The taxpayer may choose which forum to use, but may may appeal to either the BTLA, see RSA 76:16 - a (2012), or the superior court, shown.” RSA 76:16, I (2012). If the assessors refuse to do so, the taxpayer sc heme, municipal assessors have the authority to abate taxes “for good cause N.H. 369, 374 (1997) (emphasis added). Under our tax abatement statutory assessment made against his property.” LSP Assoc. v. Town of G ilford, 142 “provide the exclusive remedy available to a taxpayer dissatisfied with an “The New Hampshire tax abatement statute s are remedial in nature” and

basis for legal relief.” Id. at 531. court’ s grant of a motion to dismiss if the facts pleaded do not constitute a pleadings against the applicable law.” Id. at 530 - 31. “We will uphold the trial “We then engage in a threshold inquiry, testing the facts alleged in the However, we need not accept allegations that are merely conclusions of law. Id. construe all reasonable inferences in the light most favorable to it. Id. 529, 530 (2012). We assume the pet itioner’s allegations to be true and construction that would permit recovery.” Suprenant v. Mulcrone, 163 N.H. allegations in the [petitioner’s] pleadings are reasonably susceptible of a “In reviewing a motion to dismiss, our standard of review is whether the

reconsideration, and this appeal followed. equitable relief based upon that claim. Signal unsuccessfully moved for claim upon which relief could be granted, the court also denied its request for Because the court found tha t Signal’s breach of contract claim failed to state a properly before it, the trial court dismissed Signal’s breach of contract claim. request for tax abatement and that none of Signal’s abatement requests were Having concluded that Signal’s breach of contract claim was actually a

abatement was still pending before the asse ssors. taxes were disproportional was not yet ripe for review because its request for the assessors. Finally, the court ruled that any claim Signal had that its 2010 2009 taxes in superior cou rt because it failed to request abatement first from p. 5 5

claim is unavailing. Contrary to Sig nal’s assertions, a claim for breach of contract claim sought relief from “disproportionate taxation,” its Consistent with Porter, we conclude that to the extent that Signal’s

78. abatement an d that the superior court had jurisdiction over them. Id. at 177 - 79 - D. Id. We concluded, therefore, that their claims were not for tax only that the town had violated the agreement and misinterpreted RSA chapter The plaintiffs, however, made neither of these arguments, asserting, instead, levied by the Town,” or that “the Town assessed them disproport ionately.” Id. lawsuit, they would have argued “that they were unable to pay the higher taxes We reasoned that if the plaintiffs were seeking an abatement of taxes in their abatement proceeding may address a claim of i nability to pay a tax levy.” Id. owners in the taxing district.” Id. at 177. “We have also held that an the government has taxed the plaintiff out of proportion to other property Id. at 178. T he issue in an abatement proceeding, we explained, is “whether prescribed abatement procedure to confer jurisdiction on the superior court.” taxes, and, therefore, they “were not required to follow the statutorily We concluded that the plaintiffs’ claims were not for an abatement of

jurisdiction to decide their breach of contract and statut ory claims. Id. procedure for tax abatement in RSA 76:17, the court lacked subject matter concluding that because the plaintiffs failed to follow the statutorily required for violation of RSA chapter 79 - D. Id. The trial court dismissed their lawsuit, $ p. 5 50,527. Id. The plaintiffs eventually sued the town for breach of contract and increased the assessment of the plain tiffs’ two properties from $8,407 to After the agreement, the town re - evaluated all properties in the town and

agreement. Id. a result of repairs or improvements the plaintiffs made pursuant to the than their full value as of a certain date, and to not increase the assessment as exchange, the town agreed to assess the buildings for twenty - five percent less historical, agricultural buildings and accept an easement on their land. Id. In at 176. Th e parties’ agreement required the plaintiffs to maintain their two maintenance of such structures benefits the public interest.” Porter, 1 p. 5 53 N.H. own structures that are both historical and agricultural, because the “towns to enter into agreements to reduce taxes imposed upon residents who the defendant town entered into pursuant to RSA chapter 79 - D, which allows dispositive. Porter concerned an agreement between the plaintiff taxpayers and Our decision in Porter v. Town of Sandwich, 153 N.H. 175 (2006), is

of taxable land attributable to Signal. tenants at the Airport” different from the scheme used to determine th e amount used a scheme “to determine the amount of taxable land attributable to other to treat “parties equally” and that the City violated this requirement when it p. 6 6

Lebanon Hangar, “[t]he merits of the underlying action were not before the issue in the Lebanon Han gar appeal. As the City aptly observes in its brief, in decision could be read to imply approval of this notion, in fact, this was not an permanent exemption from taxation was “illegal and void”). Although our l and from taxation”); Mack, 21 N.H. at 39 p. 6 6 (any attempt by town to grant land 113 (1927) (“a town cannot, by grant or stipulation in a convey ance, exempt to tax can be modified by contract. But see Piper v. Meredith, 83 N.H. 107, Lebanon Hangar we upheld the notion that a municipality’s statutory authority municipality engages in disproportionate taxation. Signal argues that in taxpayer can have both a contractual and a statutory remedy when a Signal relies upon Lebanon Hangar to support its contention that a

arbitrator exceeded the scope of his authority. Id. at p. 6 672 - 73. Lebanon Hangar to pay taxes to the City based upon the value of its land, the review in the appeal was whether, in deciding that the lease did not require sought to arbitrate the breach of contract claim. Id. The sole issue for our demanding the payment of taxes. Lebanon Hangar, 1 63 N.H. at 671. The City RSA 76:17. Lebanon Hangar also claimed that the City breached the lease by the assessors, who denied it, and then appealed to the superior court. Id.; see $360,400 in 2006. Id. Leba non Hangar sought an abatement of its taxes from total assessment of Lebanon Hangar’s property from $77,400 in 2005 to assessed a tax upon the value of Lebanon Hangar’s land, which increased the Hangar’s building. Id. In October 2006, the City changed its practice and the land itself; it limited its assessment of taxes to the value of Le banon 1996 until October 2006, the City did not tax Lebanon Hangar on the value of levied or assessed.” Id. (quotation and ellipsis omitted). Nevertheless, from 163 N.H. at 671. Lebanon Hangar’s lease requir ed it to pay “taxes lawfully had a lease with the City to rent land at the Lebanon Airport. Lebanon Hangar, case, the plaintiff, Lebanon Hangar Associates (Lebanon Hangar), like Signal, in Lebanon Hangar Assocs. v. City of Lebanon, 163 N.H. 670 (2012). In that for disproportionate taxation, Signal mistakenly relies upon our recent decision In arguing that it should be allowed to pursue a breach of contract claim

disproportionate taxation. concerns Signal’s all egations about unequal treatment unrelated to See id. at 1 p. 7 77 - 78. We, therefore, reverse the trial court’s decision insofar as it pursue this claim without complying with the tax abatement statutory process. Signal and to other airport tenants with which the City contracts, Signal may specifically with respect to the amount of taxable land the City attributes to Signal’s breach of contract claim sought relief from “unequal treatment,” Signal’s allegations of “disproportionate taxation.” However, to the extent that at 177. We, therefore, uphold the trial court’s decision insofar as it relates to such, may be pursued only through the tax abatement statutory scheme. Id. “disproportionate taxation” is, in effect, a claim for abatement of taxes, and, as 7

HICKS, CONBOY and LYNN, JJ., concurred.

decided.” (Citation omitted.) Court, and the legality or enforceability of the underlying contract was not