Sears Roebuck and Co. v. Board of Tax Review of the Town of West Hartford

• Decision Date: 22 July 1997
• Docket Number: No. 15492,15492
• Citation: 699 A.2d 81,241 Conn. 749
• Court: Connecticut Supreme Court
• Parties: SEARS ROEBUCK AND COMPANY v. BOARD OF TAX REVIEW OF THE TOWN OF WEST HARTFORD.

Page 81

699 A.2d 81

241 Conn. 749

SEARS ROEBUCK AND COMPANY v. BOARD OF TAX REVIEW OF THE TOWN OF WEST HARTFORD.

No. 15492.

Supreme Court of Connecticut.

Argued April 22, 1997.

Decided July 22, 1997.

Marjorie Wilder, Corporation Counsel, Hartford, for appellant (defendant).

I. Milton Widem, Hartford, for appellee (plaintiff).

Before CALLAHAN, C.J., and BERDON, NORCOTT, McDONALD and PETERS, JJ.

PETERS, Associate Justice.

The principal issue in this tax appeal is the extent of a trial court's discretion, under General Statutes § 12-117a, ¹ to award prejudgment interest to an aggrieved taxpayer upon finding that a municipality has overassessed the value of the taxpayer's real property. The plaintiff, Sears, Roebuck and Company, appealed to the trial court from the refusal of the defendant, the board of tax review of the town of West Hartford (board), ² to reduce the assessed value of the plaintiff's property. The trial court determined that the property in question had been overassessed and, in a subsequent decision, awarded the plaintiff interest on its tax overpayment. The town of West Hartford (town) appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c). We affirm in part and reverse in part.

The relevant facts are undisputed. The plaintiff owns property in the town consisting of a thirteen acre parcel of land improved with two buildings, an automobile service center and a department store. As a result of the town's decennial revaluation of real property; see General Statutes § 12-62(a); the town assessor (assessor) determined that, as of the assessment year commencing October 1, 1989, the true and actual value of the plaintiff's property was $13,045,000 and assessed the property at 70 percent of this value. See General Statutes § 12-62a(b) (municipality shall assess all property at "seventy per cent of present true and actual value"). Disputing the valuation, the plaintiff appealed to the board seeking a reduction in the property assessment. See General Statutes § 12-111 (providing for appeal to board). After the board declined to alter the assessment, the plaintiff appealed from the board's decision to the trial court. See General Statutes § 12-117a. While this matter was on appeal in the trial court, the town continued to assess the plaintiff's property at its 1989 valuation, and the plaintiff amended its appeal to include the assessment years 1990 through 1995. ³ See General Statutes § 12-117a.

The only substantive issue on which the trial court heard evidence in the de novo proceedings pursuant to § 12-117a was whether the 1989 assessment was excessive. ⁴ The principal witness for the plaintiff was William Kane, a professional appraiser who had conducted an appraisal of the plaintiff's property. Kane testified that, based on the capitalization approach to property valuation, ⁵ the fair market value of the plaintiff's property, in 1989, was $11,700,000. ⁶ The principal witness for the town was William French, also a professional appraiser. French testified that he had performed two valuation studies of the plaintiff's property, one using the cost approach to property valuation ⁷ and the other using the capitalization approach advocated by the plaintiff. He testified that, in 1989, the property had a fair market value of $12,346,000 under the cost approach and $12,106,000 under the capitalization approach. No one associated with the 1989 reassessment testified at trial, and the town submitted no evidence that would support its original $13,045,000 valuation of the plaintiff's property.

In an October 18, 1995 memorandum of decision (October, 1995 decision), the trial court determined that "the plaintiff [had] met its burden [of proving] that the assessor's [$13,045,000] valuation was not the true and accurate value of the property." The court found that the capitalization approach advocated by the plaintiff was the more appropriate method of valuation under the circumstances of this case. It also found, however, that Kane's appraisal suffered from a "number of factual inaccuracies" ⁸ that rendered Kane a less "careful, thorough and credible" witness than French and undermined the court's confidence in his testimony. Accordingly, the court concluded that the fair market value of the property was $12,106,000, the valuation reached by French using the capitalization approach.

Thereafter, the plaintiff filed a motion with the trial court pursuant to § 12-117a, seeking, as a remedial matter, to recover prejudgment interest on the taxes overpaid between 1989 and 1995 as a result of the overassessment. A hearing was held in March, 1996, at which time both parties presented evidence regarding the plaintiff's right to interest and the applicable interest rate. ⁹ In an April 9, 1996 memorandum of decision (April, 1996 decision), the trial court opened its judgment and granted the plaintiff the relief it had requested. The court concluded that, as an aggrieved taxpayer, the plaintiff had a mandatory right to prejudgment interest under § 12-117a and that, under General Statutes § 37-3a, ¹⁰ the rate of such interest was mandatorily fixed at 10 percent. After permitting the parties to submit proposed calculations consistent with this decision, the trial court awarded the plaintiff $27,795.77 in interest on its tax overpayment.

On appeal, the town challenges both the trial court's October, 1995 decision substantively reducing the assessment and its April, 1996 decision awarding prejudgment interest to the plaintiff. With respect to the October, 1995 decision, the town claims that the assessment reduction was improper because the plaintiff failed to satisfy its burden of proving overvaluation. With respect to the April, 1996 decision, the town claims that, in awarding mandatory interest at 10 percent, the trial court failed to exercise proper discretion under § 12-117a. We disagree with the town's first claim but agree with its second claim. We will address each claim in turn.

I

The parties do not dispute the principles that govern a trial court's decision whether to reduce a property valuation. "Whether a property has been overvalued for tax assessment purposes is a question of fact for the trier.... Mere overvaluation is sufficient to justify redress under [§ 12-117a], and the court is not limited to a review of whether an assessment has been unreasonable or discriminatory or has resulted in substantial overvaluation." (Citations omitted; internal quotation marks omitted.) Newbury Commons Ltd. Partnership v. Stamford, 226 Conn. 92, 103-104, 626 A.2d 1292 (1993). The trial court tries a § 12-117a appeal de novo. Id., at 104, 626 A.2d 1292; see also Xerox Corp. v. Board of Tax Review, 240 Conn. 192, 204, 690 A.2d 389 (1997); New Haven Water Co. v. Board of Tax Review, 166 Conn. 232, 234, 348 A.2d 641 (1974). Although the ultimate question at this de novo proceeding "is the ascertainment of the true and actual value of the taxpayer's property"; (internal quotation marks omitted) Newbury Commons Ltd. Partnership v. Stamford, supra, at 104, 626 A.2d 1292; the taxpayer bears the burden of establishing the impropriety of the assessor's valuation. Xerox Corp. v. Board of Tax Review, supra, at 204, 690 A.2d 389.

In this case, the town urges us to conclude that, as a matter of law, the plaintiff failed to meet its burden. The town contends that, because the trial court did not credit Kane's testimony and because Kane was the plaintiff's principal witness, the plaintiff "utterly failed" to present evidence establishing an overassessment. Although the town concedes that the testimony of its own expert, French, supported the valuation reached by the trial court, it contends that the court should not have considered French's testimony once the court had rejected Kane's testimony. We are unpersuaded.

Because a tax appeal is heard de novo, a trial court judge "is privileged to adopt whatever testimony he reasonably believes to be credible." (Internal quotation marks omitted.) Newbury Commons Ltd. Partnership v. Stamford, supra, 226 Conn. at 99, 626 A.2d 1292; cf. Eichman v. J & J Building Co., 216 Conn. 443, 452, 582 A.2d 182 (1990) (in deficiency judgment hearing, trier of fact "is privileged to adopt whatever testimony he reasonably believes to be credible" [internal quotation marks omitted] ). This principle applies not only to the trial court's determination of the true and actual value of taxable property, but also to its determination of whether the plaintiff has satisfied the burden of establishing overvaluation. See Midway Green Corp. v. Board of Tax Review, 8 Conn.App. 440, 442, 512 A.2d 984 (1986) ("[t]he ultimate decision for the court is whether, considering all of the evidence ... the plaintiff has proved by a fair preponderance of the evidence that any of the assessments on its property were illegal or excessive" [emphasis added] ).

The fact that, in this case, the testimony that the trial court found credible was presented by the town's own expert does not undermine the applicability of this principle. Because the burden of proving overvaluation rested on the plaintiff, the town was under no obligation to submit expert evidence in support of its valuation. Having submitted such evidence, however, the town cannot circumscribe its significance or prevent the trial court from relying on it for substantive purposes. See CTB Ventures 55, Inc. v. Rubenstein, 39 Conn.App. 684, 692-94, 667 A.2d 1272 (1995), cert. denied, 235 Conn. 940, 669 A.2d 577 (1996) (in deficiency judgment hearing, trial court may rely on defendant's expert in finding that plaintiff has satisfied burden of proof).

The propriety of the trial court's reliance on the town's expert witness finds support in the "waiver rule." Under this rule, when a trial court denies a defendant's motion for a directed...