2012 VT 84


Sobel
v. City of Rutland (2011-436)
 
2012 VT 84
 
[Filed 12-Oct-2012]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 

2012 VT 84 

 

No. 2011-436

 

Eitan Sobel and Vered Sobel


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Rutland Unit,


 


Civil Division


 


 


City of Rutland


March Term, 2012


 


 


 


 


Mary
  Miles Teachout, J.


 

Eiten Sobel
and Vered Sobel, Pro Ses, Rutland,
Plaintiffs-Appellants.
 
John T. Leddy and Kevin J. Coyle
of McNeil, Leddy & Sheahan,
Burlington, for 
  Defendant-Appellee.

 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund,
Burgess and Robinson, JJ.
 
 
¶
1.            
BURGESS, J.  Plaintiffs, Doctors Eitan
and Vered Sobel, owners of
a medical office building in Rutland, appeal the superior court’s grant of
summary judgment for defendant, City of Rutland.  Plaintiffs sued the City
for damages, claiming the City Tax Assessor (the Assessor) was negligent in
providing allegedly inaccurate property tax estimates on the proposed, but not
yet built, office.  Plaintiffs also sought to enjoin the City from
enforcing the tax assessment on the office building ultimately
constructed.  On appeal, they argue that the court erred in concluding
that their negligence claim was barred by municipal immunity and that they
failed to establish equitable estoppel against the
City.  We affirm.  
¶
2.            
The undisputed facts may be summarized as follows.  In October
2008, plaintiffs bought a residential property with the goal of establishing a
medical practice on the lot.  Soon thereafter they contacted the Assessor
by telephone when, as they characterized it, “nothing was concrete” and they
were “trying to start playing with plans.”  Plaintiffs followed up on this
telephone conversation with a series of emails.  According to plaintiffs,
they approached the Assessor strictly in his official capacity, although
they knew he was not obligated to offer tax estimates.  
¶
3.            
 In the first email to the Assessor in December 2008, plaintiffs
advised of a plan to construct a 6000-square-foot building, but were also
considering whether the building should be one or two stories tall.  In
the same email, plaintiffs indicated that they needed “to know in advance
whether to go ahead and to build the second floor [and] hop[e] for ‘better
times.’ ”  Plaintiffs asked for a tax
estimate for both a one and two story building. 
¶
4.            
 The Assessor replied to this first email as follows:
 
I ran some different scenarios with the information you supplied. Without
the submission of detailed plans this is at best a very vague estimate.
 That said, I considered a brick exterior building comprised of . . . 6000 square feet of unfinished
area on the second floor. . . . The present land value
comprising .72 acres is 47,200 and that would be the value as of April 1, 2009
assuming the building is not in place at that time.  If the building was
in progress of being built as of that date the assessment would reflect the
value in place [on] that date.  Upon completion, a very cursory
estimate would be $772,700 land included.  Using the present tax rate,
the annual property tax would be $21,400.  I must advise you that these
calculations are done per your request without having detailed plans with which
to work.  Accordingly these estimates could change. Once the building is
complete and the assessment is established you will be granted all rights to
appeal said value. (emphases added).  
The Assessor’s reply also included
a separate section estimating the “approximate value of 6000 square feet one
story to be about $371,500 land included,” but noting that this was “an
estimate without any plans to go by.”  
¶ 5.            
In February 2009, plaintiffs wrote another email, which in pertinent
part advised that they were “reconsidering the idea of building the office,”
and were considering the option of renting or building a smaller office.  Without
attaching any plans, plaintiffs asked for the estimated value of a one floor,
4500-square-foot building.  The Assessor replied with an estimate of
$243,000 for the building plus $47,200 for the land.  Next, plaintiffs
asked for the yearly tax for this kind of building, the Assessor responded
that, under the then current tax rate, the annual tax would be about
$8050.  Plaintiffs later explained they understood the estimates were
“nonbinding,” but “assum[ed]
it could be 10 percent more, 10 percent less.”  
¶
6.            
Plaintiffs applied for a building permit in July, estimating the cost of
improvements to be $700,000.  With the permit in hand, plaintiffs provided
TD Bank with building plans, and in November the bank issued a mortgage on the
property in the amount of $490,000 to finance construction.  The existing
structure was demolished and construction on the new building was completed
before April 1, 2010.  The final cost of construction was approximately
$700,000.  
¶
7.            
The Assessor examines new construction on April 1 of each year, and inspected
and assessed plaintiffs’ property at $649,100, with $96,500 reflecting the
value of the land and $552,600 reflecting the value of the new building.
 On June 26, 2010, the Assessor received an email from plaintiffs stating
that they were “surprised to receive your l[e]tter of
appraisal valuing the building as $649,100” because it was “2¼ times more than
[the] original estimate.”  Plaintiffs protested that, while they
understood the Assessor could not “provide a final appraisal until the building
is finished, it should be much closer to the initial appraisal.”  The
Assessor treated this email as an appeal of the assessed value and denied
relief.  
¶
8.            
Plaintiffs appealed the Assessor’s denial to the City’s Board of Civil
Authority (BCA), citing their interactions with the Assessor as the basis of
their disputed valuation.  Plaintiffs retained an appraiser who assessed
their property at $575,000.  The BCA held a hearing where plaintiff, Dr. Sobel, testified about the history of the Assessor’s
estimates and the ultimately different assessment.  The BCA upheld
the $649,100 assessment.  
¶ 9.            
Plaintiffs next appealed to the State Director of Property Valuation and
Review, complaining that “[u]nfortunately, once the
building was completed, [the Assessor] increased his
appraisal value.  It was about 2.5 times more than his original estimate.”
 After a hearing, the State Appraiser decided the value of the
building was $516,700.  Plaintiffs did not appeal the State
Appraiser’s decision.  
¶ 10.         Plaintiffs
did, however, sue the City in April 2011 alleging negligent misrepresentation
and equitable estoppel.* 
Plaintiffs complained that they relied on the Assessor’s initial email
estimate, which was a major factor in their decision on the type and size of
the building constructed on the lot.  The City moved for summary judgment
arguing, as on appeal, that the undisputed facts failed to defeat the City’s
defense of municipal immunity, or support plaintiffs’ claim of estoppel.  Plaintiffs responded with a memorandum in
opposition contending that the fact of the Assessor’s knowledge of their
reliance on his figures remained in dispute, and arguing the City’s immunity
claim failed as matter of law.      
¶
11.        
The superior court granted summary judgment for the City. 
Explicitly adopting the City’s argument in its motion for summary judgment, the
superior court held that the City was protected against suit by municipal
immunity.  The court explained that the Assessor’s estimates arose from
the City’s governmental function of assessment and collection of taxes. 
The court further held that plaintiffs could not meet the elements of negligent
misrepresentation or equitable estoppel.  This
appeal followed.  
¶
12.        
We review summary judgments under the same standard as the trial
court.  We will affirm if there is no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law.  Campbell v. Stafford, 2011 VT 11, ¶ 10, 189 Vt. 567, 15
A3d. 126 (mem.). 
The non-moving party is entitled to “the benefit of all reasonable doubts and
inferences. Id. (quotation omitted).  In the instant case, there is
little dispute as to what happened, but much disagreement over the legal
significance of the fact of the Assessor’s tax estimate in terms of
governmental immunity and whether the City is estopped,
as a matter of equity, from assessing the property at actual market
value.     
¶
13.        
We first address whether municipal immunity protects the City from
plaintiffs’ negligence suit arising from the Assessor’s tax estimates. 
Plaintiffs argue that the Assessor’s estimations are a proprietary rather than
a governmental activity, since his statutory duty of tax collecting carries no
official obligation to estimate.  Invoking our decision in Marshall v.
Town of Brattleboro, 121 Vt. 417, 160 A.2d 762 (1960), plaintiffs further
characterize the Assessor’s estimates as proprietary insofar as their purpose
was to help them start a medical practice that would serve the City and
individual residents, and “did not benefit the public as a whole.” 
Because we conclude that the Assessor’s tax estimates are reasonably related to
the governmental function of taxation, we hold that plaintiffs’ negligence
claim is barred by municipal immunity.
¶
14.        
 Municipal immunity protects municipalities “from tort liability in
cases where the municipality fulfills a governmental rather than a proprietary
function.”  Courchesne v. Town of Weathersfield, 2003 VT
62, ¶ 9, 175 Vt. 585, 830 A.2d 118 (mem.) (quotation omitted).  Governmental functions are those
performed when a municipality “exercise[s] those powers and functions
specifically authorized by the Legislature, as well as those functions that may
be fairly and necessarily implied or that are incident or subordinate to the
express powers.”  Id. ¶ 10. 
Proprietary activities, on the other hand, are, essentially, commercial
activities performed by a municipality in its corporate capacity, for the
benefit of the municipality and its residents, and unrelated to its “legally
authorized activity.”  See Hinesburg Sand & Gravel Co. v. Town of
Hinesburg, 135 Vt. 484, 486-87, 380 A.2d 64, 66 (1977) (explaining that
Town’s activity of selling vast surpluses of gravel was “grossly commercial in
nature” and quite beyond its governmental function of operating a gravel pit
for town highway maintenance); Marshall, 121 Vt. at 425, 160 A.2d at 767
(“To be proprietary the benefit must accrue to the municipality in its
corporate capacity.”).
¶
15.        
In Courchesne, for example, the Town of
Weathersfield hired a private business to manage a
gravel pit leased by the town to secure a source of gravel for its
highways.  2003 VT 62.  Per its agreement
with the Town, the business was allowed to sell sand that covered the gravel,
for which the Town had no use.  We concluded, under those facts, that the Town had not engaged in a proprietary
activity, reasoning that the Town derived no monetary benefit from the
arrangement and that allowing the business to sell the unwanted sand was
“reasonably related to obtaining the gravel for municipal purposes.”  Id. ¶ 11.
¶
16.        
Here, the Assessor’s tax estimates were ancillary and related to
governmental functions for which the City is entitled to municipal
immunity.  The City’s assessment and collection of taxes is a core
governmental function.  See 24 V.S.A. App. Ch. 9, § 8.5 (providing
that Rutland Board of Alderman shall assess taxes required by state law and
other municipal purposes).  Pursuant to the City’s charter, and as defined
by state law, the Assessor is responsible for examining real property and
appraising its fair market value for the purpose of assessing a tax on the
property.  See id. § 13.1 (stating that the city assessor
shall exercise the duties of listers); 32 V.S.A.
§ 4041 (“On April 1 the listers shall proceed to
take up such inventories and make such personal examination of the property
which they are required to appraise as will enable them to appraise it at its
fair market value”).  Municipalities derive no income or similar
commercial return from estimating taxes.  
¶
17.        
Plaintiffs admit that the estimates here were sought from the Assessor
in his official capacity; but for his office plaintiffs would not have
inquired.  Plaintiffs’ argument that the Assessor had no municipal
obligation to make estimates ignores the extension of municipal immunity to
activities “fairly and necessarily implied,” or “reasonably related” to
functions of government.  Courchesne, 2003 VT 62, ¶¶ 10-11 (citing Town of Brattleboro v. Nowicki, 119 Vt. 18, 19-20, 117 A.2d 258, 259-60
(1955)).  Tax estimates elicited from the Assessor by putative
taxpayers solely on account of the former’s official position are not so remote
or attenuated from his governmental duties as not to be “reasonably related” to
his duties and the City’s taxing authority.  Id.  
¶
18.        
That the Assessor has no particular duty to provide such estimates, and
that estimates have no impact on the ultimate assessment, does not reduce it to
a proprietary activity.  There was no municipal obligation to lease a
gravel pit or hire a manager, rather than hire a hauler, to supply road gravel
in Courchesne, but the municipality’s decision
to do so was not a proprietary action since it was “incident or subordinate” to
its function to maintain roads.  Id. ¶ 10.
 Gratuitous estimates may not be literally “necessary” to the City’s
taxing power, but estimating cannot be reasonably characterized as not related,
incident or subordinate to assessing value for purposes of taxation.  Nor
did the Assessor’s estimates represent any commercially gainful activity for
the municipality, as required for proprietary liability in Hinesburg Sand
& Gravel, to distinguish this case from the application of municipal
immunity in Courchesne.  Such estimates
inform residents of the potential tax consequences of planned construction that
will be subject to eventual inspection, appraisal and assessment by the
City—all within, incidental or related to a municipality’s taxing
authority.  Thus, tax estimates provided in response to citizen inquiry
are reasonably treated as governmental, as opposed to proprietary, activity and
the City is immune from suit stemming from the Assessor’s estimates. 
¶
19.        
We next address whether, under the doctrine of equitable estoppel, the City should be foreclosed from enforcing the
tax assessed on plaintiffs’ property.  Plaintiffs concede that the
Assessor’s estimate was based only on limited facts known and supplied at the
time, and therefore that some difference between the estimate and the
assessment could be expected.  However, plaintiffs’ claim that the Assessor,
with knowledge of the property’s location and approximate specifications, as
well as the value of comparable properties, possessed enough facts to provide a
“reasonable” estimate and that the estimates provided “were grossly out of
range.”  As a result, plaintiffs contend that the City should be bound to
a tax assessment within ten percent of the Assessor’s estimate.  Moreover,
plaintiffs assert that their reliance on the estimates was reasonable in light
of the Assessor’s knowledge that their decision to move forward with the
construction depended on whether they could afford the property’s future
tax.  
¶
20.        
We conclude, however, that plaintiffs cannot establish the elements of
equitable estoppel on these facts.  Estoppel requires
that the party invoking the doctrine establish 
 
four essential
elements: (1) the party to be estopped must know the
facts; (2) the party being estopped must intend that
its conduct be acted upon; (3) the party asserting estoppel
must be ignorant of the true facts; and (4) the party asserting the estoppel must rely on the conduct of the party to be estopped to its detriment.
Town of
Victory v. State, 174 Vt. 539, 540, 814 A.2d 369, 372 (2002) (mem.).  Moreover, the reliance asserted must be
reasonable.  Vermont Structural Steel v. State,
153 Vt. 67, 74, 569 A.2d 1066, 1070 (1989).  The party asserting estoppel has the burden of establishing all of its
elements.  Id. at 73, 569 A.2d at 1069.
¶
21.        
Plaintiffs did not show below that the Assessor intended his estimates
to be relied upon, or that their reliance on the estimates was
reasonable.  Assuming, as plaintiffs maintain, that the Assessor knew they
did not want to construct a building that would cost them more than $10,000 in
annual property taxes, such knowledge would not render his estimates any more
reliable or binding than expressly disavowed by the Assessor.  Regardless
of his understanding of plaintiffs’ plans, the Assessor’s response to their
initial inquiry explicitly disclaimed the accuracy and finality of his
estimates, emphasizing that they were made “without having detailed plans,” and
that the estimates were “vague” and “could change.”  All of the Assessor’s
subsequent estimates were given in this context, and no evidence supports the
notion that the Assessor intended for plaintiffs to rely on the hypothetical,
vague, and changeable valuations.  
¶
22.        
Nor, in the face of the same disclaimers, could plaintiffs prove that
their claimed reliance on the estimates was reasonable.  There was no
evidence that the Assessor was, or should have been, aware of plaintiffs’
presumed “ten percent” rule of accuracy.  Plaintiffs’ effort to impute
that standard into their dealing with the Assessor is unavailing. 
According to their complaint and deposition, no such ten percent expectation
was imparted to or discussed with the Assessor.  Instead, the standard was
borrowed, later, from affirmative governmental commerce regulations limiting
charges to consumers to 110% of job costs estimated by interstate moving vans
in the United States and automotive repair shops in Ontario, Canada.  On
this record, and absent any authority to the contrary,
it cannot be said that the trial court erred in declining to consider the ten
percent standard here, in a circumstance entirely divorced from commercial
regulation.  Because plaintiffs cannot establish these aspects of estoppel, the remaining elements require no discussion, and
their claim fails.
 
Affirmed.
 
 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate
  Justice

 
 





* 
As noted in the City’s motion for summary judgment, plaintiffs’ complaint asked
for damages, and did not explicitly invoke the doctrine of equitable estoppel.  It did assert, however, that the Assessor
was aware that plaintiffs would use his estimates to decide whether to pursue
their planned construction, that the Assessor had enough information to provide
a reasonable estimate, and that they would not have gone forward had they known
the actual tax burden.  The City, in its motion for summary judgment,
couched plaintiffs’ assertions under the rubric of equitable estoppel and argued that plaintiffs failed to meet the
elements for estopping enforcement of the tax
assessment.  
 



