Supervisor v. Hartge Yacht Yard, Inc.

• Decision Date: 12 February 2004
• Docket Number: No. 45,45
• Citation: 379 Md. 452,842 A.2d 732
• Parties: SUPERVISOR OF ASSESSMENTS OF ANNE ARUNDEL COUNTY, Maryland v. HARTGE YACHT YARD, INC.
• Court: Maryland Court of Appeals

842 A.2d 732

379 Md. 452

SUPERVISOR OF ASSESSMENTS OF ANNE ARUNDEL COUNTY, Maryland v.HARTGE YACHT YARD, INC.

No. 45, Sept. Term, 2003.

Court of Appeals of Maryland.

February 12, 2004.

David M. Lyon, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., on brief), for appellant.

David C. Barclay(Simcox and Barclay, LLP, Annapolils), Richard T. Wright(Richard T. Wright, P.C., Annapolis), on brief, for appellee.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and JOHN C. ELDRIDGE(retired, specially assigned), JJ.

CATHELL, J.

This case concerns the appropriate classification for taxation purposes of mooring buoys¹ located in the West River in Anne Arundel County.Basically, the question before this Court is whether these mooring buoys should be assessed as real or personal property when they are placed in the waters of the State.

The casesub judice has its origins in a 1994 decision by the Maryland Tax Court, Whitestake Associates v. Supervisor of Assessments of Anne Arundel County,No. 1051, slip op.(Md. Tax Ct. Feb. 4, 1994), which was an administrative appeal of the 1991 real estate tax assessment of the real property owned by Whitestake Associates Limited Partnership("Whitestake") and leased to Hartge Yacht Yard, Inc.("Hartge") for Hartge's marina operations.In that case, the Maryland Tax Court ruled that the Supervisor of Assessments of Anne Arundel County could not assess the mooring buoys at the marina to Whitestake because the moorings were owned by Hartge.Judicial review of that ruling of the Maryland Tax Court was not sought.

After the 1994 Tax Court ruling, the State Department of Assessments and Taxation("SDAT") issued a real property tax assessment for the mooring buoys owned and used by Hartge in its marina operation for tax years 1996, 1997, 1998, and 1999.Hartge challenged the assessment of the moorings as real property for taxation purposes.The Supervisor of Assessments of Anne Arundel County, petitioner, affirmed the assessment and Hartge then appealed to the Property Tax Assessment Appeals Board for Anne Arundel County("PTAAB").After PTAAB also affirmed the assessment, Hartge appealed administratively to the Maryland Tax Court.During this hearing, the Maryland Tax Court ordered that Whitestake be brought in as a party.In an oral opinion on November 14, 2001, the Tax Court affirmed the classification of the mooring buoys as real property taxable to Hartge.The Tax Court issued a final order on January 18, 2002.

Both Hartge and Whitestake sought judicial review of the Maryland Tax Court decision in the Circuit Court for Anne Arundel County.In a well-reasoned Memorandum Opinion and Order by Judge Nancy Davis-Loomis, dated December 17, 2002, the Circuit Court reversed the Maryland Tax Court decision.Petitioner filed an appeal to the Court of Special Appeals.On July 28, 2003, prior to consideration by the Court of Special Appeals, we issued a Writ of Certiorari.Supervisor of Assessments v. Hartge,376 Md. 139, 829 A.2d 530(2003).

Petitioner presents one question for our review:

"Since the mooring buoys were owned and utilized by the long term operator of the marina, had been permanently positioned in the West River for 20 to 60 years, and had been registered as a group mooring with the Department of Natural Resources(`DNR') since 1989, did the Maryland Tax Court properly apply Tax-Property Article, § 6-102(e) when it determined that mooring buoys, together with the State owned river bottom, were taxable to Hartge as real property?"

We answer petitioner's question in the negative and hold that the Maryland Tax Court improperly applied § 6-102(e) of the Tax-Property Article in regard to Hartge's mooring buoys.As we will discuss, infra, the mooring buoys at issue do not meet the elements of "fixtures" under Maryland law and, as such, are not deemed real property for taxation purposes.At best, they are, under the circumstances of this case, "trade fixtures" and properly classified as personal property for taxation purposes.Furthermore, despite petitioner's argument to the contrary, the application of § 6-102(e) does not change this classification.Even if Hartge was "the owner of the property," here, the relevant portion of the river, the mooring buoys that have been placed there would still not be considered permanent fixtures.Under § 6-102(e), Hartge's mooring buoys would still be classified as personal property for taxation purposes.Accordingly, we affirm the judgment of the Circuit Court for Anne Arundel County.

I.Facts

Hartge Yacht Yard, Inc.("Hartge") operates a marina on the West River in Anne Arundel County on land that it leases from Whitestake Associates, L.P.("Whitestake").Since 1973, Hartge has maintained mooring buoys in the West River in conjunction with its marina operations.²Each buoy consists of a float with a boat tie and a steel chain connected to an anchor weighing 100 to 300 pounds.These anchors rest on the river bottom.The rest of the apparatus extends upward to and on the surface.The mooring buoys are inspected regularly and the individual parts are replaced over time.About every ten years, the entire mooring assembly is pulled up by a crane on a barge for a complete inspection.During these inspections, any necessary repairs are done and the mooring, including its anchor, is returned to the river.

In 1989, Hartge registered a group mooring³ with the Department of Natural Resources in accordance with COMAR 08.04.13.03.⁴Hartge was permitted to register the group mooring because it complied with the requirements that it have an interest in the adjacent commercially-zoned riparian land and that it provide a specified number of motor vehicle parking spaces.This group mooring registration is renewable every three years.⁵

As part of its marina operation, Hartge rents the mooring buoys to boat owners.For a rental fee, the boat owner receives the right to tie up and leave a boat attached to the mooring buoy with the expectation that it will remain in place, the right to access the water from the land at the marina, and the right to park a car at the marina.This rent is part of the operating income of the marina which is conducted as a business for profit.

In 1994, Whitestake successfully appealed an SDAT decision to tax the mooring buoys as Whitestake's property.In 1999, the Supervisor of Assessments for Anne Arundel County sent out two assessment notices assessing 74 mooring buoys owned by Hartge as real property.The notices covered fiscal years 1996, 1997, 1998, and 1999 on the basis that the buoys were "escaped property."⁶

Witnesses for the Supervisor of Assessments stated at the Tax Court hearing that, since approximately the 1970s, mooring buoys have been valued as real property when considering the value of a marina for tax purposes.These witnesses, however, did admit at the hearing that this case was unique in that the owner of the mooring buoys was different than the owner of the fast land associated with their use.

In an oral opinion rendered on November 14, 2001 and affirmed by a written "Order" dated January 18, 2002, the Maryland Tax Court found that the river bottom is owned by the State of Maryland and that Hartge had a "nonexclusive" privilege to place the mooring buoys on the river bottom.The Tax Court found that this privilege was a sufficient use to be taxed as "real property" under Maryland Code(2001 Repl.Vol.), § 6-102(e) of the Tax-Property Article.⁷The Tax Court further found that the mooring buoys were permanent fixtures to the river bottom.

On judicial review in the Circuit Court for Anne Arundel County, Judge Nancy Davis-Loomis, in a decision dated December 17, 2002, reversed both rulings of the Maryland Tax Court.First, the Circuit Court held that the Maryland Tax Court had wrongly applied § 6-102(e) of the Tax-Property Article.The Circuit Court found that Hartge had a renewable license to use mooring buoys and had not been granted a real property interest in the river bottom.Therefore, the Circuit Court concluded that § 6-102(e) did not apply.

Secondly, the Circuit Court disagreed with the Maryland Tax Court's conclusion that the mooring buoys were permanent fixtures and therefore taxable as real property.The Circuit Court found that the anchors merely rested on the river bottom, were kept there by weight only, and were not affixed in any way.The court then applied the "trade fixture" test and concluded that the buoy moorings were to be considered trade fixtures and, therefore, "personal property."

Petitioner then appealed the Circuit Court ruling to the Court of Special Appeals.On July 28, 2003, prior to consideration by the Court of Special Appeals, we issued a Writ of Certiorari.

II.Standard of Review

We begin by noting the appropriate standard of review.The Maryland Tax Court is an administrative agency.SeeRead v. Supervisor of Assessments of Anne Arundel County,354 Md. 383, 391, 731 A.2d 868, 872(1999).Maryland Code(1988, 1997 Repl.Vol.), § 13-532(a) of the Tax-General Article provides that the final order of the Tax Court is subject to judicial review as provided in §§ 10-222and10-223 of the State GovernmentArticle, which govern the standard of review for decisions of administrative agencies.The standard of review for Tax Court decisions is generally the same as that for other administrative agencies.Accordingly, under this standard, a reviewing court is under no statutory constraints in reversing a Tax Court order which is premised solely upon an erroneous conclusion of law.See, e.g., Supervisor of Assess. v. Carroll,298 Md. 311, 469 A.2d 858(1984);Comptroller v. Mandel Re-Election Comm.,280 Md. 575, 374 A.2d 1130(1977).

On the other hand, where the Tax Court's decision is based on a factual determination, and there is no error of law, the reviewing court may not reverse the Tax Court's order if substantial evidence of record...