Our Lady of Ephesus House of Prayer, Inc. v. Town of Jamaica

CourtUnited States State Supreme Court of Vermont
Citation869 A.2d 145
Decision Date28 January 2005
Docket NumberNo. 2004-001,2004-001
PartiesOur Lady of Ephesus House of Prayer, Inc. v. Town of Jamaica

Christina Reiss of Gravel and Shea, Burlington, for Plaintiff-Appellant.

Robin Stern of Potter Stewart, Jr. Law Offices, P.C., Brattleboro, for Defendant-Appellee.

PRESENT: Dooley, Johnson, Skoglund and Reiber, JJ., and Allen, C.J. (Ret.), Specially Assigned.

DOOLEY, J.

¶ 1. Plaintiff, Our Lady of Ephesus House of Prayer, Inc. (OLEHOP), appeals a superior court judgment that declined to increase the portion of plaintiff's property exempt from property taxation beyond the amount determined in a previous ruling. OLEHOP argues that all of its property is exempt as either a pious or public use. We affirm.

¶ 2. OLEHOP is a nonprofit corporation organized in Vermont and granted tax-exempt status as a church under § 501(c)(3) of the Internal Revenue Code by the U.S. Internal Revenue Service (IRS). Mary and Donald Tarinelli incorporated OLEHOP after visits to a shrine at the last residence of Mary, the mother of Christ, in Ephesus, Turkey. The Tarinellis deeded OLEHOP 81.7 acres of land, subdivided from the land surrounding their own residence, in the Town of Jamaica. A private road serves a common driveway for both the Tarinelli's house and OLEHOP's property.

¶ 3. Plaintiff's by-laws describe it as a "private institution which exists for the purpose of nurturing the spiritual growth and development of all those who come into association for religious services, periods of meditation, and spiritual retreats." In OLEHOP's application to the IRS for tax-exempt status, it represented itself as a church without membership and open to persons of all faiths. Plaintiff further indicated that it holds services for weddings, stations of the cross, rosary, catechism, and occasional meetings for visiting priests. OLEHOP described its ecclesiastical government as "Catholic Faith-this church does not have hierarchy."

¶ 4. There are several buildings on OLEHOP's property, including a main barn, a smaller barn, three sheds and an abandoned sugarhouse. In 2001, the west end of the main barn was converted into a small chapel. In 2002, OLEHOP began work on a second, larger chapel next to the smaller one, and this work was largely completed in 2003 although the chapel remains unheated. Another part of the barn served as an indoor riding ring, and, following the collapse of the roof in this area, the space has been converted into outdoor parking. Also, the stable area in the barn was converted into room units with bathrooms, and above that two units were constructed for visiting priests. Next to the small chapel is a meditation garden and pathway with the Stations of the Cross.

¶ 5. The main part of OLEHOP's property is open and undeveloped. Approximately 22.8 acres consists of fenced fields and pastures. The remaining acreage is wooded, with an extensive network of bridle trails running through it. Some of this woodland was sugared in the past.

¶ 6. The Jamaica listers set plaintiff's property at $511,700 in 2000, and plaintiff grieved the assessment, claiming the entire property was exempt because it was a religious society. In response, the listers adjusted the assessment to $341,500, and plaintiff filed for a declaratory judgment in superior court. In that action, the court accepted that the property was used for "pious" purposes, a prerequisite for exemption from property taxation under 32 V.S.A. § 3802(4), but further concluded that a limiting provision, 32 V.S.A. § 3832(2), allowed only part of the property to be exempt: a small portion of the barn renovated as a modest chapel, its lawn, the meditation garden and the pathway containing the Stations of the Cross. Accordingly, the court granted plaintiff an exemption for ten percent of the barn's total value and its accompanying well and septic system, and for six acres containing the garden, lawn, and Stations of the Cross. The total exemption was $38,494, and the resulting property value subject to tax was $473,206.

¶ 7. OLEHOP then undertook further renovations to the property, adding the large chapel, the room units and the parking area as described above, and sought another declaratory judgment, asking the court to reexamine the proportion of the property exempt from property taxes in light of the changes. The renovations were incomplete in 2002 at the listers' assessment, but were "substantially complete" when the court issued its order in 2003.

¶ 8. In this second proceeding, plaintiff advanced a new theory. Plaintiff argued that it was not a "religious society," under the operative language in the limitation of 32 V.S.A. § 3832(2), and that all of its property should be exempt under the "public use" exception of 32 V.S.A. § 3802(4). In the alternative, OLEHOP argued that even if it was a "religious society" engaged in pious uses, it was entitled to more than a ten percent property tax exemption.

¶ 9. The court found that there was no basis to exempt plaintiff's entire property. Specifically, the court rejected plaintiff's claim that it is not a religious society. The court did not articulate a definition for a religious society and acknowledged that the term was ambiguous. It found, however, that "the Legislature must have intended to include any organization which, as Plaintiff did here, represented itself as a 'church' to the Internal Revenue Service." Although OLEHOP argued that all of its property should be exempt as a "public use," the court rejected this claim because the property was unquestionably being used for pious purposes. Further, the court found that the limitations of § 3832(2) would apply regardless of whether the use was defined as public or pious because the real estate is "owned or kept by a religious society." The court denied plaintiff's request to expand the tax exemption from the 2001 order, finding that, even considering the changes made to the property, no greater proportion of OLEHOP's property was eligible for exemption.

¶ 10. We view the trial court's factual findings in the light most favorable to the party prevailing below and will set them aside only for clear error. Brown v. Whitcomb, 150 Vt. 106, 109, 550 A.2d 1, 3 (1988). Our review of questions of law is nondeferential and plenary. Vt. Alliance of Nonprofit Orgs. v. City of Burlington, 2004 VT 57, ¶ 5, 15 Vt. L. Wk. 183, 857 A.2d 305. Issues of statutory construction are questions of law and, thus, subject to a nondeferential standard of review. State v. Koch, 169 Vt. 109, 112, 730 A.2d 577, 580 (1999).

¶ 11. We divide OLEHOP's appellate issues into two categories: those that would result in a determination that all of its property is exempt from taxation, and those that would increase the share of its exempt property. We begin with the first category.

¶ 12. OLEHOP's main argument is that it is not subject to 32 V.S.A. § 3832(2), primarily because it is not a "religious society," but also because its real estate is sequestered and used for both public and pious uses. That subsection provides:

The exemption from taxation of real and personal estate granted, sequestered or used for public, pious or charitable uses shall not be construed as exempting:
. . . .
(2) Real estate owned or kept by a religious society other than a church edifice, a parsonage, the outbuildings of the church edifice or parsonage, a building used as a convent, school, orphanage, home or hospital, land adjacent to any of the buildings named in this subsection, kept and used as a parking lot not used to produce income, lawn, playground or garden and the so-called glebe lands.

32 V.S.A. § 3832 (emphasis added). This provision must be read with the applicable property tax exemption statute:

The following property shall be exempt from taxation:

. . . .
(4) Real and personal estate granted, sequestered or used for public, pious or charitable uses; real property owned by churches or church societies or conferences and used as parsonages and personal property therein used by ministers engaged in full time work in the care of the churches of their fellowship within the state . . . .

Id. § 3802(4).

¶ 13. As set out above, this argument represents a change from OLEHOP's position in 2001 that resulted in the declaration that ten percent of the barn's value and a small portion the acreage was exempt from property taxation. Under OLEHOP's current argument its real property is exempt under § 3802(4) as "real . . . estate granted, sequestered or used for public, pious or charitable uses," but the exemption is not limited under § 3832(2) because the limitation applies to "real estate owned or kept by a religious society" and only if the use creating the exemption is solely "pious." Id. § 3832(2). OLEHOP submits that it is not a religious society because it does not "have a membership, established vows or tenets, and does not engage in the teaching or indoctrination of either the Board of Trustees or the members of the public which visit the Property." It submits that the use is public because any member of the public can use the chapel and grounds to meditate, contemplate or pray. We find that plaintiff is a religious society and its use is subject to the exemption limits of § 3832(2).

¶ 14. We must consider OLEHOP's arguments in light of the statutory scheme designed by the Legislature. Our primary goal in interpreting a statute is to give effect to the Legislature's intent. Town of Killington v. State, 172 Vt. 182, 188-89, 776 A.2d 395, 400-01 (2001). If terms are unambiguous we use the plain meaning, but "we will not enforce the common and ordinary meaning of statutory language if doing so would render the statute ineffective or lead to irrational results." Id. Furthermore, in construing tax exemptions, the burden is on the person claiming the benefit of the exemption, In re Aloha Found., Inc., 134 Vt. 239, 240, 360 A.2d 74, ___ (1976), and the exemption stat...

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