Sobel v. City of Rutland, 11–436.

• Decision Date: 01 November 2012
• Docket Number: No. 11–436.,11–436.
• Citation: 2012 VT 84,60 A.3d 625
• Parties: Eitan SOBEL and Vered Sobel v. CITY OF RUTLAND.
• Court: Vermont Supreme Court

60 A.3d 625

2012 VT 84

Eitan SOBEL and Vered Sobel

v.CITY OF RUTLAND.

No. 11–436.

Supreme Court of Vermont.

Oct. 12, 2012.

Motion for Reargument Denied Nov. 1, 2012.

Eitan Sobel and Vered Sobel, Pro Ses, Rutland, Plaintiffs–Appellants.

John T. Leddy and Kevin J. Coyle of McNeil, Leddy & Sheahan, Burlington, for Defendant–Appellee.

Present: REIBER, C.J., DOOLEY, SKOGLUND, BURGESS and ROBINSON, JJ.

BURGESS, J.

¶ 1. Plaintiffs, Doctors Eitan and Vered Sobel, owners of a medical office building in Rutland, appeal the superior court's grant of summary judgment for defendant, City of Rutland. Plaintiffs sued the City for damages, claiming the City Tax Assessor (the Assessor) was negligent in providing allegedly inaccurate property tax estimates on the proposed, but not yet built, office. Plaintiffs also sought to enjoin the City from enforcing the tax assessment on the office building ultimately constructed. On appeal, they argue that the court erred in concluding that their negligence claim was barred by municipal immunity and that they failed to establish equitable estoppel against the City. We affirm.

¶ 2. The undisputed facts may be summarized as follows. In October 2008, plaintiffs bought a residential property with the goal of establishing a medical practice on the lot. Soon thereafter they contacted the Assessor by telephone when, as they characterized it, “nothing was concrete” and they were “trying to start playing with plans.” Plaintiffs followed up on this telephone conversation with a series of emails. According to plaintiffs, they approached the Assessor strictly in his official capacity, although they knew he was not obligated to offer tax estimates.

¶ 3. In the first email to the Assessor in December 2008, plaintiffs advised of a plan to construct a 6000–square–foot building, but were also considering whether the building should be one or two stories tall. In the same email, plaintiffs indicated that they needed “to know in advance whether to go ahead and to build the second floor [and] hop[e] for ‘better times.’ ” Plaintiffs asked for a tax estimate for both a one and two story building.

¶ 4. The Assessor replied to this first email as follows:

I ran some different scenarios with the information you supplied. Without the submission of detailed plans this is at best a very vague estimate. That said, I considered a brick exterior building comprised of ... 6000 square feet of unfinished area on the second floor.... The present land value comprising .72 acres is 47,200 and that would be the value as of April 1, 2009 assuming the building is not in place at that time. If the building was in progress of being built as of that date the assessment would reflect the value in place [on] that date. Upon completion, a very cursory estimate would be $772,700 land included. Using the present tax rate, the annual property tax would be $21,400. I must advise you that these calculations are done per your request without having detailed plans with which to work. Accordingly these estimates could change. Once the building is complete and the assessment is established you will be granted all rights to appeal said value. (emphases added).

The Assessor's reply also included a separate section estimating the “approximate value of 6000 square feet one story to be about $371,500 land included,” but noting that this was “an estimate without any plans to go by.”

¶ 5. In February 2009, plaintiffs wrote another email, which in pertinent part advised that they were “reconsidering the idea of building the office,” and were considering the option of renting or building a smaller office. Without attaching any plans, plaintiffs asked for the estimated value of a one floor, 4500–square–foot building. The Assessor replied with an estimate of $243,000 for the building plus $47,200 for the land. Next, plaintiffs asked for the yearly tax for this kind of building; the Assessor responded that, under the then current tax rate, the annual tax would be about $8050. Plaintiffs later explained they understood the estimates were “nonbinding,” but “assum[ed] it could be 10 percent more, 10 percent less.”

¶ 6. Plaintiffs applied for a building permit in July, estimating the cost of improvements to be $700,000. With the permit in hand, plaintiffs provided TD Bank with building plans, and in November the bank issued a mortgage on the property in the amount of $490,000 to finance construction. The existing structure was demolished and construction on the new building was completed before April 1, 2010. The final cost of construction was approximately $700,000.

¶ 7. The Assessor examines new construction on April 1 of each year, and inspected and assessed plaintiffs' property at $649,100, with $96,500 reflecting the value of the land and $552,600 reflecting the value of the new building. On June 26, 2010, the Assessor received an email from plaintiffs stating that they were “surprised to receive your l[e]tter of appraisal valuing the building as $649,100” because it was “2 1/4 times more than [the] original estimate.” Plaintiffs protested that, while they understood the Assessor could not “provide a final appraisal until the building is finished, it should be much closer to the initial appraisal.” The Assessor treated this email as an appeal of the assessed value and denied relief.

¶ 8. Plaintiffs appealed the Assessor's denial to the City's Board of Civil Authority (BCA), citing their interactions with the Assessor as the basis of their disputed valuation. Plaintiffs retained an appraiser who assessed their property at $575,000. The BCA held a hearing where plaintiff, Dr. Sobel, testified about the history of the Assessor's estimates and the ultimately different assessment. The BCA upheld the $649,100 assessment.

¶ 9. Plaintiffs next appealed to the State Director of Property Valuation and Review, complaining that “[u]nfortunately, once the building was completed, [the Assessor] increased his appraisal value. It was about 2.5 times more than his original estimate.” After a hearing, the State Appraiser decided the value of the building was $516,700. Plaintiffs did not appeal the State Appraiser's decision.

¶ 10. Plaintiffs did, however, sue the City in April 2011 alleging negligent misrepresentation and equitable estoppel.^* Plaintiffs complained that they relied on the Assessor's initial email estimate, which was a major factor in their decision on the type and size of the building constructed on the lot. The City moved for summary judgment arguing, as on appeal, that the undisputed facts failed to defeat the City's defense of municipal immunity, or support plaintiffs' claim of estoppel. Plaintiffs responded with a memorandum in opposition contending that the fact of the Assessor's knowledge of their reliance on his figures remained in dispute, and arguing the City's immunity claim failed as matter of law.

¶ 11. The superior court granted summary judgment for the City. Explicitly adopting the City's argument in its motion for summary judgment, the superior court held that the City was protected against suit by municipal immunity. The court explained that the Assessor's estimates arose from the City's governmental function of assessment and collection of taxes. The court further held that plaintiffs could not meet the elements of negligent misrepresentation or equitable estoppel. This appeal followed.

¶ 12. We review summary judgments under the same standard as the trial court. We will affirm if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Campbell v. Stafford, 2011 VT 11, ¶ 10, 189 Vt. 567, 15 A.3d 126 (mem.). The nonmoving party is entitled to “the benefit of all reasonable doubts and inferences.” Id. (quotation omitted). In the instant case, there is little dispute as to what happened, but much disagreement over the legal significance of the fact of the Assessor's tax estimate in terms of governmental immunity and whether the City is estopped, as a matter of equity, from assessing the property at actual market value.

¶ 13. We first address whether municipal immunity protects the City from plaintiffs' negligence suit arising from the Assessor's tax estimates. Plaintiffs argue that the Assessor's estimations are a proprietary rather than a governmental activity, since his statutory duty of tax collecting carries no official obligation to estimate. Invoking our decision in Marshall v. Town of Brattleboro, 121 Vt. 417, 160 A.2d 762 (1960), plaintiffs further characterize the Assessor's estimates as proprietary insofar as their purpose was to help them start a medical practice that would serve the City and individual residents, and “did not benefit the public as a whole.” Because we conclude that the Assessor's tax estimates are reasonably related to the governmental function of taxation, we hold that plaintiffs'negligence claim is barred by municipal immunity.

¶ 14. Municipal immunity protects municipalities “from tort liability in cases where the municipality fulfills a governmental rather than a proprietary function.” Courchesne v. Town of Weathersfield, 2003 VT 62, ¶ 9, 175 Vt. 585, 830 A.2d 118 (mem.) (quotation omitted). Governmental functions are those performed when a municipality “exercise[s] those powers and functions specifically authorized by the Legislature, as well as those functions that may be fairly and necessarily implied or that are incident or subordinate to the express powers.” Id. ¶ 10. Proprietary activities, on the other hand, are, essentially, commercial activities performed by a municipality in its corporate capacity, for the benefit of the municipality and its residents, and unrelated to its “legally authorized activity.” See Hinesburg Sand & Gravel Co. v. Town of Hinesburg, 135 Vt. 484, 486–87, 380 A.2d 64, 66 (1977) (explaining that Town's activity of selling vast surpluses of gravel was “grossly commercial [in] nature” and quite beyond its...