Kohl's Dep't Stores, Inc. v. Town of Rocky Hill

195 Conn.App. 831

227 A.3d 1040

KOHL'S DEPARTMENT STORES, INC.

v.TOWN OF ROCKY HILL

AC 42021

Appellate Court of Connecticut.

Argued October 21, 2019

Officially released February 18, 2020

Daniel J. Krisch, with whom were Morris R. Borea, and, on the brief, Robbie T. Gerrick, for the appellant (defendant).

Gregory F. Servodidio, with whom was Michael J. Marafito, for the appellee (plaintiff).

DiPentima, C.J., and Moll and Bishop, Js.

BISHOP, J.

In this tax appeal, we are required to determine whether a municipal tax assessor is permitted to utilize the depreciation schedule set forth in General Statutes § 12-63 (b) (6)¹ to assess the personal property of a taxpayer when the municipality has not adopted by ordinance the statutory depreciation schedule as provided in § 12-63 (b) (2).² We answer that question in the affirmative. The defendant, the town of Rocky Hill (town), appeals from the judgment of the trial court sustaining the appeal of the plaintiff, Kohl's Department Stores, Inc., from the town's assessment of personal property located at 1899 Silas Deane Highway, Rocky Hill (store). On appeal, the town claims that the court erred in determining that the town's tax assessor (assessor) could not utilize the depreciation schedule set forth in § 12-63 (b) (6) because the town had not adopted the statutory schedule by ordinance, which likely influenced the court's conclusion that the town had overassessed the plaintiff's personal property.³ We agree and, accordingly, reverse the judgment of the trial court.

The following factual and procedural background is relevant to our resolution of this appeal. As required by law,⁴ the plaintiff prepared and filed personal property declarations with the town as of October 1, 2014, October 1, 2015, October 1, 2016, and October 1, 2017, in which it declared the value of its retail fixtures, equipment, furniture, signage, and other items of personal property located in the store. Its declarations varied from the town's declarations with regard to the depreciation schedules used by each party to assess the value of the plaintiff's personal property.⁵ The assessor rejected the plaintiff's valuation, as did the Rocky Hill Board of Assessment Appeals (board).⁶ After the plaintiff's unsuccessful appeal to the board, it filed a complaint with the trial court, appealing from the assessment made by the assessor and the subsequent action of the board, pursuant to General Statutes §§ 12-117a and 12-119.⁷ In its complaint, the plaintiff asserted that the assessor improperly had overvalued and overassessed the true and actual value of its personal property located in its store. The dispute centered on the different depreciation schedules employed by the parties, which resulted in dissimilar values for each year in question.

The personal property in dispute consisted of showcases used by the plaintiff in its store to display merchandise. To value the showcases, the assessor utilized the depreciation schedule set forth in § 12-63 (b) (6). The plaintiff, however, retained an outside appraisal company, Valcon Partners, Ltd. (Valcon). Douglas R. Krieser was an appraiser for Valcon. Krieser developed a depreciation schedule based on a study he conducted that related to the value of used retail showcases without regard to whether the plaintiff's showcases had been designed specifically for their approach to retail presentation.

The matter was tried to the court, Hon. Arnold W. Aronson , judge trial referee, on November 29 and 30, 2017. At trial, Krieser testified about his approach to the valuation of the showcases, in which he considered three components to be essential in the depreciation calculation: physical deterioration, functional obsolescence, and economic obsolescence. Krieser relied on information he had received from out-of-state fixture furniture dealers in the business of reselling used showcases. He provided these dealers with a sample of the fixtures used in one of the plaintiff's typical stores and instructed them to use their experience and sales history and to consider relevant economic factors to estimate what the fixtures would sell for in a transaction between a typical buyer and seller. Although he acknowledged that he had learned that there was, in fact, no market for used custom showcases, he used the information on the market for generic showcases as a factor in determining the value of the plaintiff's showcases.

In response, the town offered no evidence as to the value of the showcases; rather, the assessor testified that he took the historic costs of the showcases, a calculation not in dispute, and applied to that cost the depreciation schedule set forth in § 12-63 (b) (6). Although he acknowledged that he was not aware if the town had enacted an ordinance adopting the statutory schedule, the assessor testified that, as a matter of fact, he assesses all personal property in the town in the same way, by taking the original cost of an asset and applying a uniform depreciation schedule to that asset.

Following trial, the court issued its memorandum of decision sustaining the plaintiff's appeal. At the outset of its analysis, the court stated that, pursuant to § 12-63 (b) (2), the depreciation schedule set forth in § 12-63 (b) (6) can be used by a municipal assessor only if the municipality has, by ordinance, adopted the provisions of that section. The court found that the town had not adopted any such ordinance. The court further observed: "The town did not offer an expert appraiser to counter Valcon's opinion of value. The only credible evidence related to fair market value that was introduced at the time of trial was that made by Valcon's appraiser and its appraisal report. Valcon's appraisal report was based on a study of factors dealing with the depreciation of in-store personal property." n the basis of the Valcon evidence and the lack of any appraisal from the town, the court found that the plaintiff was aggrieved by the tax assessment. The court's findings make clear that it did not give any weight to the assessor's evidence based on the statutory depreciation schedule solely because it concluded that the assessor was not legally permitted to utilize the statutory depreciation schedule. On appeal, the town argues that the court's refusal to consider the assessor's use of the statutory depreciation schedule was incorrect and that this legal determination likely influenced the court's finding of aggrievement and its ultimate determination of valuation.

We begin our analysis with the applicable standard of review and a discussion of the legal principles that guide our decision. "A trial court hears tax appeals pursuant to § 12-117a de novo and must arrive at [its] own conclusions as to the value of [the taxpayer's property] by weighing the opinion of the appraisers, the claims of the parties in light of all the circumstances in evidence bearing on value, and [its] own general knowledge of the elements going to establish value .... We are bound by the trial court's findings of facts unless those findings are clearly erroneous, but we invoke a plenary review of any legal conclusions. We must, therefore, decide whether the conclusions are legally and logically correct, and find support in the record." (Citation omitted; internal quotation marks omitted.) Davis v. Westport , 61 Conn. App. 834, 840, 767 A.2d 1237 (2001).

"[A]n aggrieved taxpayer may appeal to the Superior Court. In a § 12-117a appeal, the court potentially performs two functions. Initially, the court determines whether the board's action aggrieved the taxpayer.... A taxpayer satisfactorily demonstrates aggrievement where the board's action will require the payment of an unjust and, therefore, illegal tax.... An affirmative finding of aggrievement is an absolute condition precedent to the second function, which involves the court's broad discretionary power to grant appropriate relief.... In exercising its discretion, the court should correct the valuation.... The issue of aggrievement involves a two part analysis, which entails both factual determinations and a question of law. Whether a specific action that the assessor takes in his valuation has aggrieved a taxpayer is a question of law.... Whether a property has been overvalued for tax assessment purposes is a question of fact for the trier." (Citations omitted; footnote omitted; internal quotation marks omitted.) Id., at 842, 767 A.2d 1237. "[T]he trial court first must determine whether the plaintiff has offered sufficient, credible evidence that the subject property has been overvalued. If the trial court concludes that the plaintiff has not met [this] burden, the trial proceeds no further, and the town's assessment stands.... If the trial court finds that the taxpayer has failed to meet his burden because, for example, the court finds unpersuasive the method of valuation espoused by the taxpayer's appraiser, the court may render judgment for the town on that basis alone.... With respect to appeals by taxpayers, we have regularly affirmed such judgments without a showing that the town adduced affirmative evidence sufficient to demonstrate that the assessor's determination of market value was not unjust." (Citations omitted; internal quotation marks omitted.) Nutmeg Housing Development Corp . v. Colchester , 324 Conn. 1, 9, 151 A.3d 358 (2016).

Having set forth the principles that guide our review, we now turn to the issue of whether a municipal tax assessor may use the depreciation schedule provided in § 12-63 (b) (6) for purposes of assessing personal property when the municipality has not adopted it by ordinance. The court, in its memorandum of decision, concluded that, "before § 12-63 (b) (6) can come into play, § 12-63 (b) (2) requires that a municipality must , by ordinance, adopt the provisions" thereof. (Emphasis added.) Thus, in order to determine whether the court's conclusion regarding the provision was correct, we must carefully...