From Casetext: Smarter Legal Research

Bridgeport Aviation v. Stratford

Connecticut Superior Court Judicial District of Fairfield at Bridgeport
Dec 27, 2005
2005 Ct. Sup. 16723 (Conn. Super. Ct. 2005)

Opinion

No. CV 03 039 96 89 S

December 27, 2005


MEMORANDUM OF DECISION RE CROSS MOTIONS FOR SUMMARY JUDGMENT (#119 124)


The plaintiff, Bridgeport Aviation (Aviation), filed pursuant to General Statutes § 12-119 an amended one-count complaint on April 16, 2003, seeking a declaratory judgment as to its rights concerning property taxes assessed against it by the defendant, the town of Stratford. On August 4, 2004, Stratford filed its amended answer with special defenses. Aviation is a private company engaged in the business of providing aeronautical services. In September of 1995 Aviation entered into a lease for the use of property located at the Sikorsky Memorial Airport (airport) which is owned by Bridgeport but located in Stratford. Pursuant to General Statutes § 12-74 the airport property owned by Bridgeport is tax exempt. The issue of the airport's exemption status has been the subject of multiple lawsuits between the two municipalities. In 1978 they entered a stipulation that was approved by the court in which both parties agreed that if any portion of the airport was leased to a third person, the lease would provide that the lessee shall pay real and personal property taxes to Stratford. In concurrence with the stipulation the 1995 lease agreement between Aviation and Bridgeport provides in paragraph 14.08 that: "[t]he Tenant shall be solely responsible for any real, and/or personal property taxes, charges and assessments levied by any governmental entity against it for the use of the Leased Premises." Prior to the lease agreement between Aviation and Bridgeport, Stratford filed suit against the city claiming that the lease of the property violated the stipulation and constituted a violation of General Statutes § 12-74, and therefore Bridgeport lost its exemption on the airport. The court in Stratford v. Bridgeport, Superior Court, judicial district of Fairfield, Docket No. 204584 (September 16, 1996, Levin, J.) ( 17 Conn. L. Rptr. 569) held that the plain meaning of § 12-74 does not permit the airport to lose its tax-exempt status unless the airport as a whole is leased. As of October 1, 1997 Stratford began assessing taxes against Aviation for their leased property. Bridgeport along with Aviation unsuccessfully challenged the assessment through Stratford's board of assessment appeals. Bridgeport alone appealed that decision to the Superior-Court. In 2002 the court entered judgment on a stipulation entered into by the two municipalities which affirmed the 1978 stipulation and referenced the lease between Aviation and Bridgeport. Aviation is now seeking a declaratory judgment that it does not owe Stratford property taxes for the years 1997 through 2002.

General Statutes § 12-119 provides: "When it is claimed that a tax has been laid on property not taxable in the town or city in whose tax list such property was set, or 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 or any lessee thereof whose lease has been recorded as provided in section 47-19 and who is bound under the terms of his lease to pay real property taxes, prior to the payment of such tax, 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. Such application may be made within one year from the date as of which the property was last evaluated for purposes of taxation and shall be served and returned in the same manner as is required in the case of a summons in a civil action, and the pendency of such application shall not suspend action upon the tax against the applicant. In all such actions, the Superior Court shall have power to grant such relief upon such terms and in such manner and form as to justice and equity appertains, and costs may be taxed at the discretion of the court. If such assessment is reduced by said court, the applicant shall be reimbursed by the town or city for any overpayment of taxes in accordance with the judgment of said court."

Aviation does not specifically cite to § 12-119, but does, however, allege that Stratford has levied taxes on property not taxable in the town in which it is located. Further, in their reply brief, Aviation does not argue that § 12-119 does not apply, but instead argues that the one-year statute of limitations is directory rather than mandatory. In the alternative, the defendant argues that the court may exercise its discretion in the interests of equity and justice.

General Statutes § 12-74 provides: "All property owned by any town or city, which is located in another town and used for the purposes of an airport, shall be exempt from taxation so long as it continues to be used for such purposes and so long as the town in which it is located has the same privileges as to the use of such airport as are possessed by the municipality owning the same; but, if any such airport is leased to any person, association or private corporation, or is used in such a manner as to become a source of profit to the municipality owning the same, the land so occupied and situated in any adjoining town or towns shall thereupon be subject to taxation."

For a detailed history see Bridgeport Aviation Services, Inc. v. Stratford, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 03 0399689 (August 16, 2005, Doherty, J.).

On June 25, 2004, Aviation filed a motion for summary judgment and a corresponding memorandum. On August 4, 2005, Stratford filed a cross motion for summary judgment with a corresponding memorandum in support of its motion and opposing Aviation's motion. On December 27, 2004, Aviation filed a memorandum in response to the town's motion, and on February 15, 2005, Stratford filed a reply memorandum. In their briefs and at oral argument both parties agreed that there are no material issues of fact.

Stratford moves for summary judgment on the plaintiff's claim as well as its own special defenses. "The decisions of the Connecticut Superior Court . . . are almost in unanimous agreement that a motion for summary judgment as to a special defense is improper . . . Such a motion is improper because Practice Book [§ 17-44] does not provide for summary judgment on Special Defenses." (Internal quotation marks omitted.) Moffa v. Geico General Ins. Co., Superior Court, judicial district of Waterbury, Docket No. CV 96 132030 (October 23, 1998, Shortall, J.). The court, however, must address Stratford's special defenses in order to rule on Aviation's motion for summary judgment, and thus will treat Stratford's special defenses as arguments offered in opposition to summary judgment.

Both parties also filed affidavits and exhibits.

"Practice Book [§ 17-49] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Larobina v. McDonald, 274 Conn. 394, 399, 876 A.2d 522 (2005). "The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).

In support of their motion Aviation argues that the town cannot tax the property because the property is tax exempt under § 12-74. They further contend that Stratford does not have the power to tax their leasehold interest. Stratford asserts that § 12-74 does not apply to the leased portion of the airport property. They argue instead that the 1978 stipulation and the lease agreement between Aviation and Bridgeport should control on the issue of taxability. Stratford also admits that they are not taxing the leasehold interest of Aviation, instead they are taxing the real property on which the hangars are located.

Stratford also argues that the special defenses of collateral estoppel, based on the stipulated judgment, and waiver and equitable estoppel, based on the lease, require that the court grant summary judgment in their favor regarding Aviation's claims based on the 1997 through 2002 assessments. Stratford contends further that the statute of limitations under General Statutes § 12-119 bars Aviation from bringing claims based on those assessments. In response, Aviation asserts that collateral estoppel does not apply because the issues in the earlier suit are not identical with the issues presented in this action, nor is there privity between Bridgeport and Aviation. Regarding Stratford's waiver claim, Aviation argues that the lease provision pertaining to the issue of tax liability is contrary to the law and cannot be enforced by the court. On the statute of limitations issue, Aviation argues that § 12-119 is directory rather than mandatory, and further that the statute of limitations is not applicable to a proceeding in equity.

I

The central issue is whether Stratford has the power to assess taxes against Aviation for land that they lease at the airport which is owned by Bridgeport and is tax exempt under General Statutes § 12-74. Prior litigation over whether the airport property owned by Bridgeport could be taxed by Stratford has determined that § 12-74 protects the owner, Bridgeport, from taxation as long as the airport is not operated for profit and as long as the entire airport is not leased to a private entity. See Bridgeport v. Stratford, 142 Conn. 634, 116 A.2d 508 (1955) (determining that Bridgeport will lose its exemption only if revenue from the airport is added to the city's treasury); Stratford v. Bridgeport, supra, Superior Court, Docket No. 204584 (determining, under, the plain meaning rule, that under the lease provision of § 12-74, Bridgeport will lose the exemption only if the entire airport is leased). Stratford has admitted that they are not challenging the tax status of the airport as it relates to its owner, Bridgeport. Instead they argue that the stipulations of 1978 and 2002 as well as the lease agreement between Aviation and Bridgeport provide them with the authority to tax Aviation. Aviation contends that the exemption granted by § 12-74 extends to their property held in the lease.

"Leased land can only be assessed against the lessor, the freehold owner. Montgomery v. Branford, 107 Conn. 697, 701, CT Page 16726 142 A. 574 (1928). "It is settled law in this state that real property taxes are normally assessed against the owner . . . Leased property is assessed against the lessor as the owner of the freehold estate . . . who by statute is obligated to pay the tax even though the lessee . . . agreed to pay the taxes . . .

"There are, however, certain circumstances under which the lessee has been treated as the fee owner for tax purposes. See Russell v. New Haven, 51 Conn. 259 (1883); Parker v. Redfield, 10 Conn. 490 (1835); see also Osborne v. Humphrey, 7 Conn. 335 (1829) (building used for gospel ministry leased for 999 years)." (Citations omitted.) University of Hartford v. Hartford, 2 Conn.App. 152, 158-9, 477 A.2d 1023 (1984). The cases cited by the court in University of Hartford do not permit the land owned by the lessor to be assessed against the lessee, but they do permit any building to be taxed which the lessee creates and retains a substantial amount of control over. The exception, however, does not apply to the present situation.

The agreements between Bridgeport and Stratford, therefore, are in conflict with the mandate of the General Assembly as dictated by § 12-74. "A municipality, as a creation of the state, has no inherent power of its own . . . nor does it have any powers of taxation except those expressly granted to it by the legislature. For these reasons, a municipality's powers of taxation can be lawfully exercised only in strict conformity to the terms by which they were given . . . Further, any doubt as to a municipality's power to tax should be resolved against the existence of the power and in favor of the taxpayer." (Citations omitted; internal quotation marks omitted.) Pepin v. Danbury, 171 Conn. 74, 83, 368 A.2d 88 (1976). Our Supreme Court has held that: "[t]he town can assess such taxes as the law authorizes; the contracts of private parties cannot vary the authorization of the law." Montgomery v. Branford, supra, 107 Conn. 703. Further, "[l]evying a tax on property exempt from taxation would be an illegal exaction." Faith Center, Inc. v. Hartford, 192 Conn. 434, 437, 472 A.2d 16, cert. denied, 469 U.S. 1018, 105 S.Ct. 432, 83 L.Ed.2d 359 (1984).

Therefore, since the property is tax exempt in the hands of the owner and since, under Connecticut law, a lessee cannot be directly taxed for real property owned by the lessor, the court finds that Stratford does not have the power to tax the leasehold interest nor the land leased by Aviation.

II SPECIAL DEFENSES A Collateral Estoppel

Stratford argues that the issue of whether the property Aviation leases may be taxed is identical to the issue raised by Bridgeport in an action commenced in 1998 and resolved by the 2002 stipulated judgment. Since the same issue was litigated and because Aviation is in privity with Bridgeport through the lease, Stratford argues that the court should apply collateral estoppel and dismiss the case. Aviation argues that collateral estoppel does not apply due to the lack of privity between Bridgeport and Aviation. The court finds, based on the stipulated agreement, that there is no privity between Aviation and Bridgeport, and that the issue of taxability was not litigated.

"The applicability of the doctrine of collateral estoppel . . . presents a question of law . . . [C]ollateral estoppel precludes a party from relitigating issues and facts actually and necessarily determined in an earlier proceeding between the same parties or those in privity with them upon a different claim . . . An issue is actually litigated if it is properly raised in the pleadings or otherwise, submitted for determination, and in fact determined." (Citations omitted; internal quotation marks omitted.) DaCruz v. State Farm Fire Casualty Co., 268 Conn. 675, 686, 846 A.2d 849 (2004). "While it is commonly recognized that privity is difficult to define, the concept exists to ensure that the interests of the party against whom collateral estoppel is being asserted have been adequately represented because of his purported privity with a party at the initial proceeding." (Emphasis in original; internal quotation marks omitted.) Willard v. Travelers Ins. Co., 247 Conn. 331, 336, 721 A.2d 894 (1998).

The 2002 stipulated agreement between Bridgeport and Stratford upon which Stratford bases its claim of collateral estoppel gives Stratford the right to tax Aviation for the property it holds by the lease. This agreement indicates that Bridgeport did not adequately and fairly represent the interests of Aviation, but instead represented its own interest in settling the dispute before trial.

"[W]here there is a lack of mutuality [of parties] or the doctrine of privity is raised, the court must make certain that there was a full and fair opportunity to litigate. The requirement of full and fair litigation ensures fairness, which is a crowning consideration in collateral estoppel cases." (Internal quotation marks omitted.) Id., 337.

Further, "[a] stipulated judgment is not a judicial determination of any litigated right. It may be defined as a contract of the parties acknowledged in open court and ordered to be recorded by a court of competent jurisdiction." (Internal quotation marks omitted.) Magowan v. Magowan, 73 Conn.App. 733, 736, 812 A.2d 30 (2002), cert. denied, 262 Conn. 934, 815 A.2d 134 (2003). The issue of whether Stratford was allowed to tax Aviation was not judicially determined by the 2002 stipulation, and, further, "[a] consent judgment is a contract between the parties approved by the court, and its terms may not be extended beyond the agreement entered into." (Internal quotation marks omitted.) Lind-Larsen v. Fleet National Bank of Connecticut, 84 Conn.App. 1, 18-19, 852 A.2d 799, cert. denied, 271 Conn. 940, 861 A.2d 514 (2004). In recording the stipulated agreement the court simply recognized that Bridgeport and Stratford agreed that Aviation may be taxed by Stratford. The court did not decide whether Stratford had the power to tax Aviation. The issue, therefore, raised by Aviation, namely whether Stratford had the power to tax their property, was not addressed by the court in entering judgment in accordance with the 2002 stipulation, and thus is not precluded by collateral estoppel.

B Waiver and Equitable Estoppel

Stratford argues that by signing the lease agreement Aviation assented to paying the taxes levied, and thus has waived its right to challenge the assessments. Aviation argues that as a third-party beneficiary, Stratford lacks standing to enforce the contract. Aviation contends, further, that Stratford's interpretation of the clause violates the law by forcing an illegal tax upon them.

"Waiver is an intentional relinquishment or abandonment of a known right or privilege. It involves the idea of assent, and assent is an act of understanding . . . The rule is applicable that no one shall be permitted to deny that he intended the natural consequences of his acts and conduct . . . In order to waive a claim of law it is not necessary . . . that a party be certain of the correctness of the claim and its legal efficacy. It is enough if he knows of the existence of the claim and of its reasonably possible efficacy." (Internal quotation marks omitted.) Segale v. O'Connor, 91 Conn.App. 674, 678, 881 A.2d 1048 (2005). "[W]hile recognizing the analytic distinction between express waiver and estoppel, [the Supreme Court] has held that implied waivers and estoppels by conduct are so similar that they are nearly indistinguishable." (Internal quotation marks omitted.) O'Hara v. State, 218 Conn. 628, 641, 590 A.2d 948 (1991).

The language of the lease provides that Aviation will pay all taxes levied upon them by any governmental entity. The lease, however, does not state that Aviation will be liable for any illegal taxes levied upon them. Under Connecticut law, as discussed in part I, Stratford does not possess the power to tax Aviation. Stratford cannot rely upon the lease to levy an illegal tax. "A tenant by assuming in a lease the payment of taxes which shall be subsequently levied upon the demised premises does not thereby obligate himself to pay any taxes which may be illegal and void." Erwin v. Farrington, 285 App.Div. 1212, 140 N.Y.S.2d 379 (1955). Further, "no court will lend its assistance in any way toward carrying out the terms of a contract, the inherent purpose of which is to violate the law." (Internal quotation marks omitted.) Parente v. Pirozzoli, 87 Conn.App. 235, 246, 866 A.2d 629 (2005). Accordingly, Stratford's special defenses of equitable estoppel and waiver must fail.

C Statute of Limitations

Stratford argues that General Statutes § 12-119 bars Aviation's claims to all but the October 1, 2002 assessments. In response Aviation argues that the language of § 12-119 is directory rather than mandatory, and in the alternative argues that in interests of equity and justice the court is not obligated to abide by the statute of limitations and may exercise its discretion in entertaining their claim for the 1997 through 2001 assessments. Section 12-119 provides that an application under the statute "may be made within one year from the date as of which the property was last evaluated for purposes of taxation . . . In all such actions, the Superior Court shall have the power to grant such relief upon such terms and in such manner and form as to justice and equity appertains . . ."

Stratford has conceded that the challenge to the 2002 assessment has been properly filed within the applicable statute of limitations under the statute, and the court has ruled that Stratford does not have the power to tax Aviation. See part I. To hold Aviation liable for the 1997 through 2001 assessments which Stratford had no power to assess would lead to an inequitable result. "To conclude . . . that the fact that the plaintiff invoked § 12-119 instead of bringing a common-law action in equity . . . [deprives] the trial court of jurisdiction would be to exalt form over substance . . . Nothing would be gained by requiring the plaintiff to initiate a new proceeding that, in all respects except its characterization of the claim, would be identical to this one." Stepney Pond Estates, Ltd. v. Monroe, 260 Conn. 406, 422, 797 A.2d 494 (2002). "[I]n [such] an equitable proceeding, a court may provide a remedy even though the governing statute of limitations has expired, just as it has discretion to dismiss for laches an action initiated within the period of the statute." Giordano v. Giordano, 39 Conn.App. 183, 215, 664 A.2d 1136 (1995). Accordingly, the court will entertain the validity of all the assessments.

CONCLUSION

Accordingly, the court hereby denies Stratford's motion for summary judgment and grants Aviation's motion because they are entitled to judgment as a matter of law. Under Connecticut law, the lessor, not the lessee, is directly responsible for real property taxes. A municipality, further, has no power to tax property that the state has deemed exempt. To tax a lessee on property that is exempt would be an illegal exaction and thus void.


Summaries of

Bridgeport Aviation v. Stratford

Connecticut Superior Court Judicial District of Fairfield at Bridgeport
Dec 27, 2005
2005 Ct. Sup. 16723 (Conn. Super. Ct. 2005)
Case details for

Bridgeport Aviation v. Stratford

Case Details

Full title:BRIDGEPORT AVIATION v. TOWN OF STRATFORD ET AL

Court:Connecticut Superior Court Judicial District of Fairfield at Bridgeport

Date published: Dec 27, 2005

Citations

2005 Ct. Sup. 16723 (Conn. Super. Ct. 2005)
40 CLR 511