Commerce Park Assocs. 1, LLC v. Houle

• Decision Date: 31 March 2014
• Docket Number: Nos. 2012–207–Appeal, 2012–210–Appeal.,s. 2012–207–Appeal, 2012–210–Appeal.
• Citation: 87 A.3d 1061
• Parties: COMMERCE PARK ASSOCIATES 1, LLC, et al. v. Monique HOULE, in her capacity as Tax Collector of the Town of Coventry et al.
• Court: Rhode Island Supreme Court

87 A.3d 1061

COMMERCE PARK ASSOCIATES 1, LLC, et al.

v.Monique HOULE, in her capacity as Tax Collector of the Town of Coventry et al.

Nos. 2012–207–Appeal, 2012–210–Appeal.

Supreme Court of Rhode Island.

March 31, 2014.

Richard G. Riendeau, Esq., Matthew W.J. McGowan, Esq., Providence, for Plaintiffs.

Arthur M. Read, II, Esq., Warwick, for Defendants.

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.

IFacts 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 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 enactmentsof 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 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 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.

IIStandard 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).

IIIDiscussion

AThe 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 § 44–5–26⁹ 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.¹⁰See 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 constructioncosts * * * 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 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...