University of Hawaii v. CITY & CTY. OF HONOLULU

• Decision Date: 01 October 2003
• Docket Number: No. 23434.,23434.
• Citation: 77 P.3d 478,102 Haw. 440
• Parties: In the Matter of the Tax Appeal of UNIVERSITY OF HAWAI'I, Appellant-Appellant, v. CITY AND COUNTY OF HONOLULU, Appellee-Appellee.
• Court: Hawaii Supreme Court

77 P.3d 478

102 Haw. 440

In the Matter of the Tax Appeal of UNIVERSITY OF HAWAI'I, Appellant-Appellant, v. CITY AND COUNTY OF HONOLULU, Appellee-Appellee.

No. 23434.

Supreme Court of Hawaii.

October 1, 2003.

Wesley H. Sakai, Jr. and Scott I. Batterman (Bendet, Fidell, Sakai & Lee) on the briefs, Honolulu, for Appellant-Appellant.

Lee M. Agsalud, Deputy Corporation Counsel, City and County of Honolulu, on the briefs, for Appellee-Appellee.

MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, and DUFFY, JJ.

Opinion of the Court by ACOBA, J.

We hold that under the facts of this case Appellant-Appellant University of Hawai'i (the University) does not have standing to appeal the real property tax assessments levied against Sodexho Marriott Management, Inc. (Marriott) either (1) as the "owner" of the assessed property pursuant to Revised Ordinances of Honolulu (ROH) § 8-12.1 (1987),¹ or (2) as a party contractually liable to pay the tax assessed pursuant to ROH 8-12.2.² Because we determine that the University lacks standing, we do not reach its other points on appeal. We therefore affirm the grant of summary judgment by the Tax Appeal Court (the court)³ in favor of Appellee-Appellee City and County of Honolulu (the City) on the grounds set forth below.

I.

In 1988, the University issued an invitation for bids, seeking a contractor to provide a food service program at its Manoa campus. Marriott was the successful bidder, and on August 15, 1988, entered into a contract with the University. The term of the contract was for a period of fifteen years from January 1, 1989 through December 31, 2003. The contract granted Marriott "the exclusive right to provide Food Service and Convenience Service Store Operations" at the campus. In exchange for this right, Marriott agreed to provide the University with (1) rebates of eight percent of "gross sales," with an alternative minimum floor amount; (2) an investment of $12,000,000 to establish a Capital Project Escrow Account from which Marriott would expend funds for renovations, additions, and equipment replacement in existing facilities; and (3) monthly contributions into an Equipment Replacement Escrow Account. The contract also included a provision requiring Marriott to pay taxes and assessments that might be levied against either the University or Marriott. At the time of Marriott's bid, the projected real property tax amount was $4,800.⁴

Marriott paid all real property taxes assessed against it, but in 1991, the City amended Marriott's real property taxes retroactively for the tax years 1988-89 through 1991-92. It did so on the ground that the City had failed to assess a building on the property, the Campus Center, because the building had not been built at the time of the original assessments. See ROH § 8-3.4 (1990).⁵ This reassessment substantially increased the property taxes that had been originally contemplated by the University and Marriott. With the reassessment, Marriott was obligated to pay a range of taxes from a low of $18,513.52 for 1988-89 to a high of $73,724.68 for 1991-92.

Because the contract required Marriott to pay a percentage of its gross revenues to the University, the increase in tax liability had a detrimental impact on Marriott's profits. In 1991, Marriott sought relief under the contract. The existing provisions of the contract allowed Marriott to increase its prices to consumers by submitting a request to the University. Approval for an increase rested on the discretion of the University. In the event of such an adjustment, the new prices would remain fixed for a period of eighteen months after which time Marriott could again request an increase.

Inasmuch as an adjustment to Marriott's prices had recently been approved, the University believed that another price increase would discourage students from using Marriott's services on campus, and correspondingly, result in a loss of revenues to the University from its percentage of Marriott's gross sales. Accordingly, in 1991 the University and Marriott entered into a contract modification (Modification 7) that reduced the rebate percentage from eight percent to seven percent for one year, from July 1, 1991 through June 30, 1992. At the time of the modification, the University believed the City's tax assessments were illegal and recommended that Marriott appeal. Modification 7 included a provision that, should Marriott's appeal be successful, the monies rebated would be returned to the University.⁶ However, Marriott did not appeal.

In 1996, the parties entered into a second modification (Modification 9), a rebate reduction again lowering the percentage to be paid by Marriott from eight percent to seven percent, effective July 1, 1993 for the remainder of the contract term. In 1996, Marriott appealed the assessments for the tax years 1996-97 and 1997-98. See In re Sodexho Marriott Mgmt., Inc., Tax Appeal Case Nos. 96-5029 and 97-5387 (Consolidated). In Sodexho, the court held that the contract was a service contract rather than a lease and, thus, did not create an interest in the real property which would subject Marriott to any real property taxes. The court relied on In re Fasi, 63 Haw. 624, 634 P.2d 98 (1981).⁷ Consequently, it granted Marriott's motion for summary judgment, declared the assessments null and void, and ordered a full refund. Final judgment was entered on June 17, 1998.

On August 26, 1999, the University filed a notice of appeal with the Tax Appeal Court from the tax assessment for the years 1988-89 through 1995-96. On December 29, 1999, the University filed a motion for summary judgment, relying on In re Fasi. It argued, among other things, that (1) it had standing to appeal as (a) the owner of the property, pursuant to ROH § 8-12.1 and (b) a person under a contractual obligation to pay a tax assessed against another, pursuant to ROH § 8-12.2. The City filed a memorandum in opposition or in the alternative, a cross-motion for summary judgment. It maintained in part that the University lacked standing to bring the tax appeal because (1) the University was not an owner aggrieved by the assessment within the definition of ROH § 8-12.1 and (2) the University was not under a contractual obligation to pay any real property taxes assessed against Marriott as described in ROH § 8-12.2.⁸

The Tax Appeal Court heard arguments on February 7, 2000, and entered a minute order granting the City's Cross-Motion for Summary Judgment on February 15, 2000. The order stated that the University lacked standing to appeal the tax assessment because it was neither a taxpayer nor a party under contractual obligation to pay Marriott's real property taxes.

The University filed a Motion for Reconsideration on February 17, 2000, arguing that, although the court had addressed the question of contractual obligation, the court had not addressed the University's alternate basis for standing as the owner of the property. In a minute order dated March 29, 2000, the court denied this motion, indicating that new matters had not been presented for its consideration. The court entered an order denying the University's motion for reconsideration or for rehearing and entered judgment for the City on May 4, 2000.

II.

On appeal, the University argues that it has standing to bring an action to disgorge taxes that the City illegally assessed against Marriott and that the court erred in denying its motion for summary judgment. Briefly, the University contends it has standing because 1) it is an "owner" under ROH § 8-12.1, and 2) it is a party contractually obligated to pay a tax. Inasmuch as we hold that the University lacks standing, we do not address the University's other points on appeal.⁹

III.

We review an award of summary judgment de novo under the same standards applied by the trial court. See Kamikawa v. Lynden Air Freight, Inc., 89 Hawai'i 51, 54, 968 P.2d 653, 656 (1998)

. "[A] court may enter judgment for the non-moving party on a motion for summary judgment where there is no genuine issue of material fact and the non-moving party is entitled to judgment as a matter of law." Konno v. County of Hawai`i, 85 Hawai'i 61, 76, 937 P.2d 397, 412 (1997) (citing Flint v. Mackenzie, 53 Haw. 672, 672-73, 501 P.2d 357, 357-58 (1972) (per curiam)).

Motions for reconsideration are "reviewed under the abuse of discretion standard. The trial court abuses its discretion when it clearly exceeds the bounds of reason or disregards rules or principles of law or practice to the substantial detriment of a party litigant." Kaneohe Bay Cruises, Inc. v. Hirata, 75 Haw. 250, 258, 861 P.2d 1, 6 (1993) (citations omitted).

IV.

Because the right to appeal a tax assessment is purely statutory, "whether a person challenging an assessment bears such a relation to the real property being assessed as to entitle that person the right to appeal is determined by the applicable statutes." Maile Sky Court Co. v. City & County of Honolulu, 85 Hawai`i 36, 39, 936 P.2d 672, 675 (1997).

The University asserts that, as the owner of the property assessed, it has standing to appeal pursuant to ROH § 8-12.1. The broad language of ROH § 8-12.1, according to the University, "does not require that the owner pay the tax or be the party against whom the tax was assessed."¹⁰

The term "owner" is not defined in chapter eight of the Revised Ordinances of Honolulu. The common definition of "owner" is a "person in whom is vested the ownership, dominion, or title of property[.]" Black's Law Dictionary 1105 (6th ed.1990). The City argues that this definition is too general, and cites to ROH § 1-2.1(a) (1990) ("[T]echnical words ... [that] may have acquired a peculiar and appropriate meaning in the law shall be construed and understood according to such peculiar and appropriate meaning."). Compare ROH § 1-2.1(c) (1990) ("Ordinances in pari materia, or upon the same subject matter, shall be construed in reference to each other.") Accordingly, the City maintains that...