Nunes v. Marino

• Decision Date: 27 February 1998
• Docket Number: No. 95-556-M,95-556-M
• Citation: 707 A.2d 1239
• Parties: George R. NUNES et al. v. Angelo MARINO et al. P.
• Court: Rhode Island Supreme Court

Page 1239

707 A.2d 1239

George R. NUNES et al. v. Angelo MARINO et al.

No. 95-556-M.P.

Supreme Court of Rhode Island.

Feb. 27, 1998.

Neil P. Galvin, Newport, for Plaintiff.

Lauren E. Jones, Providence, Anthony DiSisto, for Defendant.

Before WEISBERGER, C.J., and LEDERBERG, BOURCIER, FLANDERS and GOLDBERG, JJ.

OPINION

BOURICER, Justice.

This case concerns a dispute over the appropriate land use change tax applicable when farmland is withdrawn from the State of Rhode Island's Farm, Forest, and Open Space Program. The petitioner, Angelo Marino, in his official capacity as the Chairman of the town of Warren's Tax Assessment Board of Tax Review, seeks this Court's review of a final judgment of the Superior Court striking down the imposition of a $239,750 land use change tax upon the defendants, George R. Nunes and his wife, Margaret M. Nunes, (the Nuneses). We reverse the judgment of the Superior Court.

I Facts and Procedural History

From 1946 until 1987 the Nuneses owned and farmed three tracts of land in the town of Warren. In 1983 the town of Warren undertook to revalue all land within its borders in order to reflect current real estate market value and to apportion fairly the tax obligations of its town property owners. As a result of that revaluation the Nuneses' property valuation assessment was increased from $28,250 to $256,100, and their tax liability thereon increased from $2,244.97 to $6,273.18.

The Nuneses then, pursuant to G.L.1956 § 44-27-3, sought to have their property classified as farmland and entered into the Farm, Forest, and Open Space Program (program), a state initiative designed to promote the preservation of undeveloped land as well as to preserve lands currently being used as farmland. Property classified as farmland pursuant to this state program would presumptively be assessed at much less than full and fair cash value. As a result the landowner would receive the benefit of reduced property tax liability.

In order to obtain the desired farmland classification, the Nuneses, pursuant to § 44-27-3, submitted an application for designation to the Rhode Island Department of Environmental Management (DEM) in July of 1984, seeking the director's designation of their property as farmland. Following an inspection of the property, the DEM approved the Nuneses' application, and their land was thereafter formally designated farmland in the state program. Under the statutory scheme established by the General Assembly, the Nuneses were then permitted to apply to the tax assessor of the town in which their land was located to obtain local recognition of their property's classification and favorable tax treatment.

Although it is unclear whether such a formal application was ever made to the local assessor in this case, it is evident from the local assessment records that the town of Warren did recognize and accept the Nuneses' property into the state farmland program and awarded the Nuneses an advantageous property valuation. In fact the town revalued the Nuneses' farmland, and their property's assessed valuation was reduced to $129,200. This valuation resulted in a substantial tax savings to the Nuneses over the next three tax years.

In 1987 the Nuneses entered into a purchase and sales agreement with a developer, Dennis Gray (Gray), wherein Gray agreed to purchase the Nuneses' farmland for $3,126,000. The agreement, however, was conditioned upon the rezoning of the Nuneses' farmland to permit planned residential unit development (PUD). In anticipation of this impending change in use, the Nuneses' attorney sent a letter to the town of Warren on December 9, 1987, notifying the town of the withdrawal of the Nuneses' land from its farmland classification because it was no longer to be utilized as farmland.

In response to the letter of December 9, the town tax assessor then informed the Nuneses that their property would now become subject to a land use change tax pursuant to G.L.1956 § 44-5-39. This tax is automatically required whenever a landowner voluntarily removes his or her property from the state classification program. ¹ Before computing the land use change tax to be levied against the Nuneses' property, the town tax assessor first revalued the property to reflect its current fair market value, taking into consideration the agreed upon sale price of $3,126,000. Then, after applying the appropriate statutory formula set out in § 44-5-39(b), the tax assessor determined that a land use change tax of $239,750 was due. The Nuneses disputed the amount of the tax.

Despite their disagreement with the tax assessor's computation of the land use change tax, the Nuneses, on June 28, 1988, loath to impede the profitable sale of their PUD-zoned land, paid the assessed land use change tax under protest. On that same day the sale of the land to Gray was successfully completed.

Subsequent to the sale of their land, the Nuneses filed an appeal with the town's Tax Assessment Board of Tax Review (board), challenging the revaluation of their property. This appeal was summarily denied by a letter from the board dated January 23, 1989.

In response the Nuneses filed suit in the Providence County Superior Court, appealing the board's denial of their challenge to the town of Warren's revaluation of their land, and moved for summary judgment on their appeal. ² That motion was denied, and the appeal was assigned to the nonjury trial calendar. When reached for trial, the trial justice found that there was an insufficient administrative record upon which to base his review. Accordingly, with the consent of the parties, the trial justice ordered the case remanded to the board so that a full and complete record of its decision could be prepared. The board, after a full hearing, once again affirmed the assessor's revaluation of the Nuneses' property and the imposition of a $239,750 land use change tax.

Now in possession of a sufficient administrative record, the Nuneses once again challenged the board's decision in the Providence County Superior Court. An amended complaint was filed on April 28, 1995, which presented a new and additional challenge to the disputed tax bill. In the amended complaint, the Nuneses not only reasserted that their land had been improperly valued but, in addition, that no land use change tax was in fact due. In support of their new contention the Nuneses contended that § 44-5-39(b)(10) provided that no land use change tax could be imposed upon farmland that was both owned by the taxpayer for five years prior to its classification and which was not withdrawn from classification until after ten years. This provision, argued the Nuneses, exempted them from any assessment of a land use change tax because their property had been both farmed and taxed as farmland since 1946 and thus the ten year program requirement had long expired by 1987, thereby exempting their property from any land use change tax.

Once again the Nuneses moved for summary judgment. The trial justice this time, however, accurately noted the impropriety of a motion for summary judgment in the setting of an administrative appeal. See Notre Dame Cemetery v. Rhode Island State Labor Relations Board, 118 R.I. 336, 373 A.2d 1194 (1977). Nonetheless the trial justice decided to forge ahead and address the merits of the tax-challenge dispute. In so doing, he purported to recharacterize the Nuneses' motion for summary judgment as an administrative appeal and applied the standard of review applicable to such a proceeding.

After trial on the merits of the case, the trial justice reversed the decision of the board and ordered the town to reimburse the Nuneses the full amount of the land use change tax imposed by the town tax assessor upon the land and paid by them under protest, plus interest from the time of payment.

Following the trial justice's decision, the town then moved for relief from, or vacation of the judgment of the Superior Court. In support of its motion the town contended, inter alia, that the trial justice had erred in considering the Nuneses use of their property as farmland since 1946 to conclude that they were exempt from any land use change tax in accordance with § 44-5-39(b)(10). The town asserted that the trial justice by erroneously factoring these years into the statutory formula of § 44-5-39 had erred. The town's motion for relief from or vacation of the judgment of the Superior Court was denied after a hearing held on October 24, 1995.

The town then duly filed its appeal as well as its present petition for writ of certiorari. Certiorari was granted by this Court on August 30, 1996, and writ issued on September 4, 1996. In seeking this Court's review, the town contends that the Superior Court erred as a matter of law in finding that the Nuneses were entitled to include those years during which they had used their land as farmland prior to the actual formal classification of their property in the state program as farmland in calculating the appropriate land use change tax pursuant to § 44-5-39. We agree.

II Land Use Change Tax

Under the Rhode Island Farm, Forest, and Open Space Program, classified land receives advantageous tax treatment by permitting valuation for tax purposes at less than full and fair cash value pursuant to § 44-5-12. ³ In order to obtain this special tax treatment, a property owner must first apply to the DEM for designation by its director of the property as either farmland, forest, or open space. ⁴ Once the property is designated by the director of the DEM as farmland, forest, or open space, the property owner may then apply to the appropriate city or town for classification. ⁵ It is that final classification that formally entitles the property owner to the advantageous tax valuation prescribed by § 44-5-12.

With this special tax treatment, however, comes a risk of a graduated percentage taxation within either a ten- or a fifteen-year period following classification. Since 19...