Friday, November 30, 2012

Tilting at Tax Appeals

Sobel v. City of Rutland, 2012 VT 84.

Sometimes a lawsuit is nothing more than a prolonged reaction to a single mistake.  A driver appears to waive another car forward, and the parties spend years litigating the question of whether this gesture caused the ensuing accident. 

Today’s appeal is essentially this problem writ large.  Plaintiffs are doctors who had the entrepreneurial idea to buy a residential property in Rutland, tear it down, and build an office building where they could house their practice and potentially charge commercial tenants commercial rents.

As part of their due diligence, Plaintiffs wanted to know how much property tax this project was likely to cost.  Rather than hiring their own appraiser, they cleverly contacted their friendly neighborhood City Assessor and gave him some rough outlines of the project.  Assessor responded to Plaintiffs’ inquiries with a series of best-guess-estimates that were disclaimed and clearly labeled as such.  Assessor did not charge Plaintiffs for his work but did it as a function of his position with the City.

Plaintiffs went ahead with construction.  Several months and $700,000 later, they had a new office building, and shortly thereafter a new tax bill.  Plaintiffs were shocked—shocked even—when their first tax bill arrived and listed the new property at $649,000 ($553,000 for the house and $96,000 for the land) which was twice as high for the building as one of the estimates the Assessor had initially made on the limited information given to him.  (Note, the SCOV’s record seems to indicate that the Assessor had given out other estimates that were closer).

Plaintiffs were not happy.  They appealed their assessment, but it was upheld by the Board of Civil Authority and then the state appraiser. 

Not a big surprise.  Plaintiffs could not really argue with the assessment.  They had just poured $700,000 into the property.  Assessing it 78% of that amount is probably close to what Plaintiffs would believe the property to be worth.  After all it is a commercial property that Plaintiffs built for profit rather than to express aesthetic joy. 

Plaintiff’s beef was not really with the valuation but the fact that they had been led to believe that it was going to be lower.

Enter present lawsuit where Plaintiffs seek compensation for what they characterize as the Assessor’s negligent misrepresentation and on the basis of equitable estoppel.  Plaintiffs’ basic theory is that they relied on the estimates provided by the Assessor, and they should not be held responsible for Assessor’s bad guesses.

This theory did not have legs at the trial court level, and it comes to the SCOV on grant of summary judgment.

The SCOV agrees with the trial court and makes quick work of the appeal.  For municipal law junkies, though, the meat of the SCOV’s discussion offers some good language on the ever-tricky issue of municipal immunity.

Like many municipal liability cases, the issue here is not one of merits but of defenses.  The primary question before the SCOV is whether the Assessor (and by extension the City) is protected from liability by municipal immunity. 

Any form of immunity is hard to explain, but municipal immunity is a particularly knotty concept.  The first thing to remember is that immunity comes before anything else.  It comes before the court weighs the merits of the claim.  It comes before the plaintiff can even build her case.  It is basically a doctrine that says—no matter the alleged negligence or incompetence, we will not let a private action stand against the city or its employee.  It is a threshold question that is usually confuses everyone.  How can you dismiss those serious claims against that nogoodnik state employee?  The answer is immunity. 

The working theory here is that there are certain governmental functions that are immune from liability.  In other words, we recognize that there are dangerous, undesirable, necessary jobs that fall to government.  In return for doing them, we, as a society, agree to hold them harmless.  There is also the fact that responsibility for any liability ultimately rests with the taxpayers.

The test of municipal immunity rests on a governmental–proprietary distinction.  If the city was doing something that we associate primarily with governments (legislating, fighting a fire, plowing a street), then the action is immune from liability.  If the city was doing something that we associate primarily with private business (selling gravel to companies, running concession at a baseball game, plowing private driveways), then the action is not immune and a lawsuit may proceed.

As you can imagine, the grey area under this test often threatens to outstrip the bright-lines. 

Here the problem is one of perspective.  There is no doubt that the Assessor was acting as an assessor when Plaintiffs contacted him, but the specific acts that he performed were not strictly assessor duties.  There is no statute, rule, or obligation that requires or allows an assessor to offer off-the-cuff estimates on what future construction projects might be worth on the Grand List.  This is more the province of the private appraiser.  Assessor was just being nice and doing a favor. 

The SCOV looks to the bigger picture.  Just because Assessor was not required to provide this estimate does not make it a proprietary function.  This is part of his job as Assessor—to interact with the public provide information, give of his skills to the citizens who benefit from this type of work.  Furthermore, this was a freebie.  Neither the Assessor nor the City benefited from this work.  It was pure public service, which means you get what you don’t directly pay for.

In the end, the SCOV finds this ancillary action by the Assessor to be a governmental function in the way it was conducted, in the nature of the service provided, and its relation to the larger function of the Assessor’s Office.

The SCOV makes a final stop in the realm of equitable estoppel.  This is a doctrine that says if someone makes a false statement and another person reasonably relies upon it to her detriment, the courts should provide a remedy no matter what the law says.  As a judge once told me, if you are leading off with equity, son, you are in a world of trouble already.  Equitable estoppel is basically there to prevent someone from being a bad actor and getting away with it on a technicality.  It is basic fairness, but the SCOV, like most courts, won’t go too far into equity if the facts do not clearly support such relief. 

You can guess how it turns out here.  The Assessor warned Plaintiffs not to rely or invest on his estimates.  He limited his opinion, and it was neither reasonable nor fair to think he was misleading Plaintiffs.  They relied on a result that was explicitly limited.  When it blew up, they were the only ones holding the fuse.

For Plaintiffs, it is a hard lesson.  Mistakes happen, but sometimes liability doesn’t.


  1. It is quite enjoyable to read your article but sorry, you over simplified this case. The assessor actions were not a simple mistake. Of a greater concern here is the supreme court decision in this case.
    As you stated, the Supreme Court job is to determined if an action should be allowed to proceed to court “as a matter of law” and not to make judgments about the merit of cases.
    It is obvious to me as it is obvious to you, that the Supreme Court elected to extend municipal immunity in this case because they felt that the assessor tried to do a good deed, while performing his governmental duties. As much as the court despises the basis of this action, it is not the court’s role to make a judgment at this stage. According to the US constitution, it is the role of the jury.
    Municipal immunity is limited to activities that are “necessary”, “fairly implied” and “incidental” to fulfill governmental duties. "If any fair, reasonable, substantial doubt exists concerning this question it must be resolved against the [grant of power]." Valcour v. Village of Morrisville, 104 Vt. 119, 131-32 (1932).
    Our system of checks and balances depends on neutrality of the judiciary branch, but in this case, the Supreme Court took a stand where it is supposed to be neutral.
    You can further read my comments about the Supreme Court decision on

  2. I would like you to further think about the proper due process in this country.
    The same way you would not agree to shortcut justice by a police officer, you should not accept a shortcut of justice by the Supreme Court at the level of Summary Judgment.

    The court obviously believed the assessor side and felt that while doing his duties, the assessor made a mistake. Yes, the Supreme Court understood very well that estimates are not really a part of a direct governmental duty of the assessor, but wouldn’t it be nice to protect the unfortunate assessor who just “tried to help” and to block this disgusting action right here?

    At the stage of Summary Judgment, the court should evaluate cases based on the law. Since we do not have a forth branch that oversees the court’s actions, it is up to the Supreme Court to carefully review its own decisions and to distinct between interpretation of the law and manipulation of the law.

    Justice is not served by shortcutting justice.

  3. Dr. Sobel,

    Thank you for posting your thoughts and a link to your motion for re-argument. You raise four points that merit a brief response.

    First, your motion and statement above appear to equate governmental authority (as established under Dillon's Rule) with the governmental/proprietary distinction under the municipal liability analysis. To state it another way, your argument is that a municipality must prove it had authority (explicit or implicit) for its action before it is eligible for municipal immunity.

    That is not quite correct. The two analyses are separate. What the Assessor did in your case may not be specifically authorized by rule or statute, but, as the SCOV determined, it was a governmental action. The point is that the governmental/ proprietary distinction is intended to separate out those functions that are governmental in nature from those in which the municipality is behaving like a private (for profit) actor. Simply because a municipality does not have explicit or implicit authority for a governmental action does not necessarily transform it into a proprietary one.

    Second, I think you will find there have been a number of decisions since the mid-1990s that, while not outright altering Dillion's Rule or the standard of Valcour, have certainly widened the scope of implied power that the SCOV is willing to attribute to a municipality. So it was not unreasonable or unexpected that the SCOV in this case would conclude that these activities fit within an implied or general duties of an assessor.

    Third, the ultra vires argument you levy is somewhat problematic because you bear some responsibility for its existence. You asked the Assessor for the estimate and you accepted them. The Assessor did not charge you for the work he did and did not have a particular benefit from them. You did have a benefit. You sought to benefit from this free information and to build a for profit commercial project. There is nothing wrong with what you did, in fact it is commendable, but to the outsider, the whole transaction looks like a private actor using government resources and seeking the type of warranties and remedies that would attach to a deal between private parties. Or in more blunt terms, with free information, it is sometimes a matter of getting what you pay for.

    Fourth, many of your arguments appear geared toward a tax appeal. I know you lost your last one, but each year is a new opportunity to appeal. If the amount is substantial, it might be worth your while to hire an appraiser and fight your assessment in the spring when next grand list is lodged.

    Good luck,


  4. So basically we both in agreement that the court is using the gray area between municipal immunity and proprietary activity to make a determination that it is not based on Dillon's Rule or Valcour v. Village of Morrisville guidelines. Furthermore, as you stated, the court have done it before and it would continue to do so.
    The difference between us is that you agree that expansion of immunity is OK. After all, I got what I paid for, while I believe that by deviating from Dillon's Rule or Valcour v. Village of Morrisville guidelines, we are tearing down our great due process that is based on justice and constitutional right for fair trial.
    Don’t you think that the people who wrote the constitution of this country had reasons to allow the people of this country to demand trial by jury rather than relying on the wisdom of judges?
    In my mind, as a pro se litigant, the Supreme Court decision was not interpretation of the law but manipulation of the law. This gray area between municipal immunity and proprietary activity represents the majority of court cases against local government and therefore, it gives great power to the court to block or to allow any given case before it was even brought to trial.
    Instead of accepting in this blog the Supreme Court decision as the right one, shouldn’t you take a stand and express some concerns about the unintended power that was given to the Supreme Court and to the direction of this Supreme Court?

  5. One more thing, I lost the case and I accept it. I am moving on as I am too weak to change things
    But I would like to thank you for great discussion.

  6. Thanks for sharing this! This honestly is great information about tax appeals and what to do with them and how to work things out.