N. New Eng. Tel. Operations, LLC v. Town of Acworth

• Decision Date: 06 November 2020
• Docket Number: No. 2018-0570,2018-0570
• Parties: NORTHERN NEW ENGLAND TELEPHONE OPERATIONS, LLC d/b/a Fairpoint Communications-NNE v. TOWN OF ACWORTH & a.
• Court: New Hampshire Supreme Court

173 N.H. 660

247 A.3d 809

NORTHERN NEW ENGLAND TELEPHONE OPERATIONS, LLC d/b/a Fairpoint Communications-NNE

v.TOWN OF ACWORTH & a.

No. 2018-0570

Supreme Court of New Hampshire.

Argued: October 10, 2019

Opinion Issued: November 6, 2020

Devine, Millimet & Branch, Professional Association, of Manchester (Matthew R. Johnson on the brief and orally), for the plaintiff.

Mitchell Municipal Group, P.A., of Laconia (Walter L. Mitchell and Laura Spector-Morgan on the brief, and Ms. Spector-Morgan orally), for the defendants.

HICKS, J.

This appeal arises from a consolidated case that encompasses actions brought by the plaintiff, Northern New England Telephone Operations, LLC d/b/a FairPoint Communications-NNE (FairPoint), against several New Hampshire towns and cities, asserting claims of ultra vires taxation and disproportionate taxation. As "representative municipalities" in the "test cases" established for this litigation, the defendants, the Town of Durham and the Town of Hanover (Towns), appeal two orders of the Superior Court (McNamara, J.). The Towns challenge the superior court's order on summary judgment, ruling that the taxation of FairPoint's use or occupation of municipal rights-of-way in certain test cases was ultra vires because the agreements authorizing such use or occupation did not satisfy the requirements of RSA 72:23, I(b) (2012) (amended 2017, 2018, 2020). The Towns also challenge the superior court's decision after trial, arguing that the court committed several errors in concluding that FairPoint was entitled to abatements of its tax assessments from the Town of Durham and the Town of Hanover for tax years 2013 and 2011 respectively. We affirm in part, reverse in part, and remand.

I. Background and Procedural History

As a provider of telecommunications services, FairPoint owns poles, conduits, and other related property located in many municipalities in New Hampshire. The placement of these types of property in, under, or across municipal rights-of-way is governed by a statutory framework. See King v. Town of Lyme, 126 N.H. 279, 283-84, 490 A.2d 1369 (1985). To erect, install, and maintain any such poles, structures, conduits, cables, or wires in, under, or across municipal rights-of-way, a permit or license is required from the relevant municipality. RSA 231:160 (2009), :161 (2009); see King, 126 N.H. at 284, 490 A.2d 1369. RSA 231:161 sets out the procedure for acquiring the required permit or license. See RSA 231:161 ; King, 126 N.H. at 284, 490 A.2d 1369. As an exception to the procedural licensing requirements of RSA 231:161, previously approved poles, structures, conduits, cables, or wires existing in, under, or across land that subsequently becomes a public highway are "deemed legally permitted or licensed" provided that specified documentation is submitted to the municipality for recording purposes. RSA 231:160-a (2009).

This litigation involves disputes over the valuation of property relevant to two types of property taxes: (1) a tax on the value of FairPoint's poles and conduits; and (2) a tax on the value of FairPoint's use or occupation of municipal rights-of-way. A statutory framework governs each type of tax. With respect to the first, municipalities are permitted to tax "all structures, poles, towers, and conduits employed in the transmission of telecommunication ... services ... as real estate in the town in which such property or any part of it is situated." RSA 72:8-a (2012) (amended 2016); see RSA 72:6 (2012). In regard to the second type of tax, municipalities can also impose property taxes on another's use or occupation of municipal rights-of-way when the terms of the lease or other agreement authorizing such use or occupation "provide for the payment of properly assessed ... property taxes" by the other party. RSA 72:23, I (2012) (amended 2017, 2018, 2020) (applying with equal effect to cities and towns); see RSA 72:6.

FairPoint sued a number of municipalities, seeking abatement of several years’ worth of tax assessments on its poles and conduits, and on its use or occupation of municipal rights-of-way. In May 2014, the superior court consolidated FairPoint's actions into a "test case" structure in which certain towns and cities would act as "representative municipalities." The consolidated case proceeded in two phases: Phase 1, evaluating FairPoint's claims of ultra vires taxation based upon the interpretation of relevant statutes at summary judgment, and Phase 2, taking selected test cases to trial on the issue of whether specific tax assessments were disproportionate and required abatement.

In Phase 1, the central issue was whether a municipality's failure to comply with the requirements set forth in RSA 72:23, I(b) rendered the municipality's taxation of FairPoint's use or occupation of municipal rights-of-way ultra vires. The parties stipulated to the historical facts relevant to each municipality's taxation of FairPoint. FairPoint moved for summary judgment in eight test cases, arguing that the representative municipalities, including the Town of Durham, acted ultra vires in assessing taxes on its poles and conduits, and/or its use or occupation of municipal rights-of-way, because they had failed to comply with RSA 72:23, I(b). The test-case municipalities objected and filed cross-motions for summary judgment, making several arguments that RSA 72:23, I, did not preclude taxation in the various test-case scenarios.

Following a hearing on the motions, the superior court granted summary judgment to FairPoint on most of its claims of ultra vires taxation related to its use or occupation of municipal rights-of-way. The court ruled, inter alia, that RSA 72:23, I, applies to licenses arising under RSA 231:160-a, and that such licenses "do[ ] not automatically include the statutorily required tax-shifting language." Moreover, it rejected the argument that FairPoint's use or occupation of municipal rights-of-way is, in substance, a perpetual lease that is "taxable under RSA 72:6 and RSA 73:10 [(2012)] regardless of the presence of RSA 72:23, I(b) tax-shifting language."

The superior court largely denied the municipalities’ motions for reconsideration, expanding upon certain parts of its previous order in doing so, including further analysis of the perpetual lease argument and the application of RSA 72:23, I, to licenses arising under RSA 231:160-a. Noting that only a "relatively small number" of the pending cases settled after Phase 1, the superior court scheduled a bench trial for selected test cases "in order to provide the New Hampshire Supreme Court with an appropriate record" to "consider the ultra vires issue[s] as well as the issue of what methodology is appropriate for experts to use in valuing the plaintiff's property" and its use or occupation of the municipalities’ rights-of-way.

In Phase 2, the Towns of Durham and Hanover, inter alia, were chosen as test cases for trial to determine whether specific tax assessments — for the 2011 tax year in Hanover, and the 2013 tax year in Durham — warranted abatement. The critical issues for trial were how to determine the valuation of FairPoint's poles and conduits, and the valuation of its use or occupation of the municipal rights-of-way. After the trial in April 2018, the superior court concluded that FairPoint was entitled to abatements from the Towns for the tax years in question. The Towns, inter alia, moved for reconsideration, which the trial court denied.

The Towns appeal the superior court's decision abating their tax assessments at issue in the Phase 2 trial and also appeal certain applications of RSA 72:23, I, by the superior court to the test cases in Phase 1. We first address the Towns’ arguments on the ultra vires issues resolved by the superior court on summary judgment in Phase 1.

II. Phase 1: Ultra Vires Taxation

The disputes on appeal pertaining to Phase 1 involve only the second of the two types of property taxes implicated by this case — the tax on the value of FairPoint's use or occupation of municipal rights-of-way. The Towns argue that the superior court erred in ruling that such taxation was ultra vires without the express inclusion of tax-shifting language pursuant to RSA 72:23, I(b) because: (1) licenses arising under RSA 231:160-a contain the required language as a matter of law; and (2) FairPoint's use or occupation of municipal rights-of-way, "in substance," constitutes a perpetual lease.

The first argument was raised below as part of the Phase 1 litigation and was addressed by the trial court. We conclude that it is properly before us, and, on the merits, we agree with the Towns.

In reviewing the superior court's rulings on cross-motions for summary judgment, we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party, and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law.

Polonsky v. Town of Bedford, 171 N.H. 89, 93, 190 A.3d 400 (2018). If our review of that evidence discloses no genuine issue of material fact and if the moving party is entitled to judgment as a matter of law, then we will affirm the grant of summary judgment. Id. We review the superior court's application of the law to the facts de novo. Id.

In matters of statutory interpretation, we are the final arbiter of the intent of the legislature as expressed in the words of the statute considered as a whole. Id. We first look to the language of the statute itself, and, if possible, construe that language according to its plain and ordinary meaning. Id. ; RSA 21:2 (2020). 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. Polonsky, 171 N.H. at 93, 190 A.3d 400. We construe all parts of a statute together to effectuate its overall purpose and to avoid an absurd or unjust result. Id. Furthermore, w...