Opinion
No. CV 05-4005810 S
October 27, 2006
MEMORANDUM OF DECISION
The plaintiff, Eyelet Crafters, Inc., appeals from the decision of the Waterbury Board of Assessment Appeals (the "Board") which sustained the Waterbury Tax Assessor's ("Assessor") imposition of a statutorily prescribed twenty-five percent penalty determined by the Assessor to be due under Sec. 12-41(d) of the C.G.S. for the late filing of the plaintiff's personal property declaration for the October 1, 2004 assessment date. In Count One of its complaint, the plaintiff appeals pursuant to Sec. 12-17a of the C.G.S. alleging that the Board's tacit approval of the Assessor's imposition of the "unjust and inequitable penalty resulted in an over assessment of the plaintiff's property by the amount of $216,558 as a result of the penalty and petitions the court to reduce the assessment by ordering the Board to rescind and to cancel the penalty. In Count Two, the plaintiff appeals pursuant to Sec. 12-119 of the C.G.S. alleging that the tax on the plaintiff's property was based on an assessment that was "manifestly excessive and could not be arrived at except by disregarding the provisions of the statutes for determining the valuation of such property . . ." The plaintiff prays that the court reduce the assessment ". . . to an amount equal to 70% of its true and actual value without inclusion of the 25% penalty" and for such other relief as the Court may grant pursuant to Sec. 12-119. The defendants move to strike both counts of the plaintiff's complaint pursuant to P.B. § 10-39 for failure to allege sufficient facts upon which relief can be granted.
I
The plaintiff's allegations that the defendant's decision "was arbitrary, inequitable and contrary to law" as set forth in Count One of the Complaint are predicated on a finding that the determination of whether to impose the statutory penalty lies within the discretion of the assessor.
The parties agree that the plaintiff's declaration of personal property was filed with the Assessor's Office on November 2, 2004 at approximately 9:15 a.m. The declaration bears the signature of the plaintiff's president, Robert Fitzenzeller and is dated "11-1-04." In an Affidavit attached to the plaintiff's complaint, the plaintiff set forth the circumstances which led to the delayed filing of the declaration. Describing them in the Plaintiff's Memorandum as likened to "Murphy's Law" they include the transfer of the plaintiff's records to new "outside accountants" due to the ill health of the plaintiff's former accountant, the unavailability of the officer authorized to sign the declaration until his return on November 1 and a series of additional unfortunate snafus.
Section 12-41(d) provides in part that "(1) Any person who fails to file a declaration of personal property on or before the first day of November, or on or before the extended filing date as granted by the assessor pursuant to section 12-42 shall be subject to a penalty equal to twenty-five percent of the assessment of such property . . ."
The defendants, in their Memorandum in support of the Motion to Strike, argue that by the use of the word "shall" in Sec. 12-41, the legislature created a mandatory duty on an assessor to impose the twenty-five percent penalty on any taxpayer who fails to file a timely declaration of personal property, and that since the plaintiff has admitted that the declaration was not filed by November 1, 2004, the plaintiff has failed to state a claim for which relief can be granted. The plaintiff counters that by adding the phrase "be subject to" after the word "shall" the legislature intended that the provisions of § 12-41 be directory rather than mandatory, and accordingly, an assessor has discretion with respect to the imposition of the statutory penalty for a late filing.
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003); see Practice Book § 10-39. "It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Asylum Hill Problem Solving Revitalization v. King, 277 Conn. 238, 246, 890 A.2d 522 (2006). "[I]t does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Doe v. Yale University, 252 Conn. 641, 694, 748 A.2d 834 (2000). "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint. The court must construe the facts in the complaint most favorably to the plaintiff . . . If facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).
The issues raised in this appeal are very similar to those addressed in Tilcon Connecticut v. North Branford, Superior Court, judicial district of New Haven, Docket No. CV 04 0489089 (August 19, 2004, Thompson, J.) ( 37 Conn. L. Rptr. 750). For the reasons stated herein, this court is inclined to follow the reasoning of the court in Tilcon.
The first issue is whether the penalty language in Sec. 12-41(d)(1) is directory or mandatory. The court in Tilcon found three Connecticut cases that interpreted the phase " shall be subject to," and each case affirmed its mandatory character. Vartuli v. Sotire, 192 Conn. 353, 472 A.2d 336 (1984), Caron v. Inland Wetlands Watercourses Commission, 222 Conn. 269, 275, 610 A.2d 584 (1992) and Blodgett v. New Britain Trust Co., 108 Conn. 715, 719, 145 A.2d 56 (1929). In Blodgett, our Supreme Court noted: "the statute is explicit and mandatory, `the interests of such beneficiaries shall be subject to such tax.' "(Emphasis added.) Id., 719. Also, in Braithwaite v. Wallingford, Superior Court, judicial district of New Haven, Docket No. 262168 (November 12, 1991, Healey, J.T.R.) ( 5 Conn. L. Rptr. 261, 6 C.S.C.R. 1104), the court explained that "[t]he payment of interest on delinquent taxes is mandatory. Section 12-146 is entitled `Tax, when delinquent. Interest.' This statute provides inter alia when a tax becomes `delinquent, it' shall be subject to interest from the date of such delinquent installment . . ." (Emphasis added.)
In reaching its decision, the court in Tilcon also took note of the result in Westrope Associates v. Director of Revenue, 57 S.W.3d 880, 881-82 (Mo.App.W.D. 2001) which construed the following statutory language: "Any tax imposed . . . which is delinquent in payment shall be subject to a penalty of ten percent of the tax." (Emphasis added.) The plaintiff in Westrope, whose check was received a day late resulting in a $11,962.43 penalty, unsuccessfully argued that "the plain and clear language" of the statute evinced a legislative intent that "required the Director of Revenue to exercise his discretion to either impose or not to impose a 10% penalty, rather than to impose a penalty mandatorily." Id., 882.
As did the Westrope court, the court in Tilcon concluded, that of the definitions of "subject to" in Black's Law Dictionary — i.e. "liable" — fit most naturally within the context of § 12-41(d)(1) which, if applied to the statute, would read: "Any person who fails to file a declaration of personal property on or before the first day of November . . . shall be [liable for] a penalty equal to twenty-five percent of the assessment of such property." Tilcon Connecticut v. North Branford, supra, Superior Court, Docket No. CV 04 0489089.
More recently, our Supreme Court in Board of Education of Hamden v. State Board of Education, 278 Conn. 326, 332, 898 A.2d 170 (2006) impliedly determined the mandatory nature of similar statutory language found in General Statutes § 10-66dd which provides that charter schools ". . . shall be subject to all federal and state laws governing public schools"; (Emphasis in original); in its ruling that under Connecticut's statutory scheme, transportation services should not be provided to preschool children attending charter schools because a similar service is not provided to preschool students attending other schools. Id., 340-41.
Although our courts have found the word "shall" in the context of statutory notice and time requirements to be directory rather than mandatory, (See United Illuminating Co. v. New Haven, 240 Conn. 422, 692 A.2d 742 (1997); ( Katz v. Commissioner of Revenue Services, 234 Conn. 614, 662 A.2d 762 (1995) "[d]efinitive words, such as must or shall, ordinarily express legislative mandates of a nondirectory nature." Lostritto v. Community Action Agency of New Haven, Inc., 269 Conn. 10, 20, 848 A.2d 418 (2004). Moreover, although General Statutes § 12-41(d)(1) imposes a time requirement for filing, the essence of the statute, as its caption "Penalty" in bold face print indicates, is that of a substantive penalty requirement.
Many sections of the general statutes use the same phrase " shall be subject to." For example, General Statutes § 12-71b provides, in part, that motor vehicles replaced in an assessment year " shall be subject to property tax as provided herein." (Emphasis added). Section 7-185 states that raffles " shall be subject to regulation by the executive director of the Division of Special Revenue." (Emphasis added). It would take quite a stretch of one's imagination to contend that the legislature by the use of the phrase " shall be subject to" intended to grant an assessor or an executive director the authority under these statutes to decide whether or not to tax or regulate.
The delegation of legislative power is proper if the statute declares a legislative policy, establishes primary standards for carrying it out, or lays down an intelligible principle to which the administrative officer or board must conform, with a proper regard for the protection of the public interests and with such degree of certainty as the nature of the case permits, and enjoins a procedure under which, by appeal or otherwise, both public interests and private rights shall have due consideration. State v. Stoddard, 126 Conn. 623, 628, 13 A.2d 586.
If the legislature intended to grant discretion to waive the statutory penalty, it is logical to assume that it would have designated the official having such authority and also included standards for the proper exercise of the discretion and prevention of its abuse. For example, under General Statutes § 12-3a(c), a Penalty Review Committee was created and designated by the legislature to consider waivers of penalties on delinquent state taxes but only in accordance with regulations adopted for such purpose.
The plaintiff, in its Memorandum in opposition to the defendants' motion, cites the provisions of General Statutes § 12-42 in support of its contention that the defendant assessor has discretion with respect to the imposition of the statutory penalty. General Statutes § 12-42 provides in pertinent part that "The assessors may grant an extension of not more than forty-five days to file the declaration required pursuant to section 12-41 upon determination that there is good cause." A fair reading of General Statutes § 12-42 militates against the plaintiff's argument. Through its use of the terms "the assessors may" and "upon a determination of good cause," the legislature clearly expressed its intention to grant discretion to a designated official and to establish a standard for its exercise. In this respect, General Statutes § 12-42 stands in sharp contrast to the legislature's silence with respect to the granting of any discretion or criteria to waive or reduce the penalty in General Statutes § 12-41.
In its Memorandum, the plaintiff also refers to a letter dated December 14, 2004 attached to the Complaint, which "was filed within the 45-day period prescribed by Section 12-42" and "requests the Assessor to `exercise' his `good judgment and discretion' and not impose the Draconian penalty . . ." This letter does not add any weight to the plaintiff's argument for the following reasons. The plaintiff's Complaint does not specifically allege, but given very broad latitude may be read as alleging that the defendants arbitrarily denied the plaintiff's request for an extension of time to file its declaration. Although the plaintiff may be able to show that the letter was sent and received within 45 days from November 1 as claimed, the 45-day period in the statute refers to an extended period of time within which " to file" the declaration, if an extension is granted by the assessor for good cause shown. The use of the future tense "to file" in the statute clearly contemplates a procedure for the application before November 1 for permission to file a declaration within 45 days following November 1 and the establishment of a final date for the filing of all declarations including those granted extensions. Any reading of the statute without reference to its use of the future tense would frustrate the need for an assessor to obtain information in a timely manner and would delay the compilation of the grand list. At the time of the December 14, 2004 letter, the plaintiff's declaration was filed. The plaintiff's letter which expressed a request for forgiveness of the penalty could not be considered by the Assessor as a timely request for an extension of time to file under General Statutes § 12-42.
In following Norwich v. Lebanon, 200 Conn. 697, 708-13, 513 A.2d 77 (1986), our Supreme Court in Wilson v. Kelley, 224 Conn. 110, 617 A.2d 433 (1992), stated as part of its holding that "the same respect for the legislatively recognized need for the prompt resolution of challenges to tax assessments guides us today." Id., 123. "Public policy requires . . . that this court net permit [tax issues] to be the subject of perpetual litigation, at any time, to suit the convenience of the taxpayer." National CSS, Inc. v. Stamford, 195 Conn. 587, 597-98, 489 A.2d 1034 (1985). By expressly authorizing local assessors to prospectively grant extensions of time to file personal property declarations upon a showing of good cause but withholding any discretion to impose or waive the statutory penalty, the legislature has created a statutory scheme designed to promote fairness and avoid opening the door to endless litigation or abuse.
It is undoubtedly a harsh result that the plaintiff's filing of its personal property declaration fifteen minutes late should subject the plaintiff to a twenty-five percent penalty. However, despite the harsh result, General Statutes § 12-41(d) cannot be read in any manner so as to escape the conclusion that the legislature clearly intended that the statutory penalty for a late filing be mandatory. The defendants' Motion to Strike the First Count is granted.
II
In its Second Count, the plaintiff appeals pursuant to General Statutes § 12-119 and alleges that the tax on the plaintiff's property is based on an assessment that is "manifestly excessive" as the result of the addition of the twenty-five percent penalty to the assessment. General Statutes § 12-119 provides in relevant part: "When it is claimed that a tax laid on property was computed on an assessment which, under all the circumstances, was manifestly excessive and could not have been arrived at except by disregarding the provisions of the statutes for determining the valuation of such property, the owner thereof . . . may, in addition to the other remedies provided by law, make application for relief to the superior court for the judicial district in which such town or city is situated."
A number of reported cases have ruled that a taxpayer's action for relief under General Statutes § 12-119 requires more than the mere claim that the assessor overvalued the property. "[The] plaintiff . . . must satisfy the trier that [a] far more exacting test has been met: either there was misfeasance or nonfeasance by the taxing authorities, or the assessment was arbitrary or so excessive or discriminatory as in itself to show a disregard of duty on their part." (Internal quotation marks omitted.) Wilson v. Kelley, 224 Conn. 110, 119, 617 A.2d 433 (1992), quoting Mead v. Greenwich, 131 Conn. 273, 275, 38 A.2d 795 (1944). Only if the plaintiff is able to meet this exacting test by establishing that the action of the assessors would result in illegality can the plaintiff prevail in an action under General Statutes § 12-119. The focus of General Statutes § 12-119 is whether the assessment is "illegal." Cohn v. Hartford, 130 Conn. 699, 703, 37 A.2d 237 (1944); see E. Ingraham Co. v. Bristol, 146 Conn. 403, 151 A.2d 700 (1959) (municipality disregarded the statutes when it taxed real property at 50 percent of its value, personal property at 90 percent and motor vehicles at 100 percent at a time when municipalities were prohibited from assessing property as a percentage of its value). Sec. 12-119 only applies to an assessment that establishes "a disregard of duty by the assessors." L.G. DeFelice Son, Inc. v. Wethersfield, 167 Conn. 509, 513, 356 A.2d 144 (1975). "The focus of § 12-119 is whether the assessment is illegal . . . The statute applies only to an assessment that establishes `a disregard of duty' by the assessors." (Citations omitted; internal quotation marks omitted). Second Stone Ridge Cooperative Corp. v. Bridgeport, 220 Conn. 335, 341-42, 597 A.2d 326 (1991).
In its prayer for relief under Count Two of its Complaint, the plaintiff "prays that the assessment of its personal property on October 1, 2004 be reduced to an amount equal to 70% of its true and actual value without the inclusion of the 25% penalty." The plaintiff's aggrievement is based solely on its claim that the assessment of its personal property was "manifestly excessive" as the result of the Assessor's actions with respect to the twenty-five percent statutory penalty. The plaintiff does not allege any "illegality" or "disregard of duty" on the part of the Assessor other than the imposition of the late filing penalty. Having concluded that the statutory penalty under General Statutes § 12-41(d) is mandatory and that the Assessor has a duty rather than discretion with respect to its imposition, and mindful that the court is limited to the facts alleged in the complaint, the Motion to Strike the Second Count is granted for the reason that it fails to state a cause of action for which relief can be granted.