CITY OF BOSTON v. WILLIAM CRANMORE as trustee of the AVENUE REALTY TRUST

Introduction

At issue in this tax lien foreclosure case [Note 1] are the unpaid Fiscal Year 1989-2013 property taxes on 879 Blue Hill Avenue in Dorchester - a two-story commercial building with office, retail and restaurant space - titled in the name of defendant William Cranmore as trustee of the Avenue Realty Trust. [Note 2] None of those taxes have been paid for any of those years and, as of June 27, 2013, the amount allegedly owed exceeded $855,000, approximately $520,000 of which is interest.

Until FY 2009, the City of Boston took the position that both (1) the 879 Blue Hill Avenue property (the "879 parcel"), owned beginning November 8, 1988 by Mr. Cranmore individually and then, by transfer for $1 on August 4, 1989, by himself as trustee for the Avenue Realty Trust (the "Trust"), and (2) an abutting 1,872 square foot triangular parcel of land ("the Triangle"), were in common ownership or possession, and the City thus assessed and taxed them together as a single parcel. See G.L. c.59, §11 (providing for taxation to owner of record on January 1 of tax year or "to the person who is in possession thereof" on that date). That ended on August 15, 2008 when judgment entered in Cranmore v. City of Boston, et al., Land Court Case No. 07 MISC. 348736 (KCL), in which this court (Long, J.) determined that the two properties were in separate ownership and it was the City itself, not Mr. Cranmore or the Trust, that owned the Triangle as the result of the City's eminent domain taking in 1894. [Note 3]

The City did not appeal that judgment. Instead, shortly after it was entered, the City sua sponte abated the 879 parcel's property tax assessment and bills, removing the Triangle portion of the bills for the tax years the Triangle had been included in the assessment (FY 1989 - FY 2008) and retroactively reducing the amount owed (principal and interest) to only that attributable to the 879 parcel. New bills were then sent for those years reflecting those new assessments. For all of the subsequent years at issue (FY 2009 - 2013), the City assessed and billed the Trust only for the 879 parcel. All bills were thus now correctly assessed. Despite this, none of those bills for any of those years have been paid, in whole or in part. The City recorded a new instrument of taking limited to the 879 parcel, [Note 4] disclaimed the earlier taking (invalid because the taking facially "took" both the 879 parcel and the Triangle), [Note 5] and filed this proceeding to foreclose the Trust's right of redemption. The Trust still refuses to pay, making three arguments as to why, in its view, the tax liens are invalid and even the new taking thus invalid. [Note 6]

The first is its argument that the City's abatements made in 2008 were too low, and the reassessed valuations (now solely on the 879 parcel) too high, making the taxes excessive. [Note 7] That argument, however, can only be made in the context of an abatement proceeding and is ultimately, and exclusively, a question for the Appellate Tax Board, not this court. See G.L. c. 59, §59; Sears, Roebuck & Co. v. Somerville, 363 Mass. 756 , 757-759 (1973). To the extent that such requests for abatements were not timely sought and pursued in those administrative proceedings, the time to do so has now long since passed and this argument has thus been waived. Id. [Note 8]

The second is an argument that the 879 parcel has never properly been re-assessed as a separate parcel, making the tax liens against it and the associated taking for their non-payment "wholly void." This too is easily addressed. The initial taking, facially covering both the 879 parcel and the Triangle, was void, as this court previously held. See Cranmore v. Boston, 91 TL 092254, Order (Jul. 3, 2009) & Judgment (Jul. 6, 2009) (Patterson, Rec.). But, as noted above, the City issued a re-assessment based on the 879 parcel alone, sent out abated bills, withdrew the initial (invalid) taking, and then recorded a new taking limited solely to the 879 parcel. Mr. Cranmore was fully aware of this and knew exactly what property was being taxed. The taxes, liens, and taking are thus not invalid on that basis. See Town of Franklin v. Metcalfe, 307 Mass. 386 , 389-390 (1940) (description need only "fairly designate[] the property for the information of those interested. The purpose of the rule is that owners and prospective purchasers may be sure what property is being taken or sold.") (internal quotations and citations omitted). [Note 9] The City had full statutory authority to reassess the property and, after recording a disclaimer of the ineffective taking, proceed "forthwith [to] collect the unpaid tax or assessment in conformity to law." G.L. c.60, §84.

The third argument is more interesting and warrants a more extended discussion, set forth below. In essence, it is this. The FY 1989 and subsequent tax liens purported to be perfected by the initial taking but, because that taking was void, were not. Mr. Cranmore claims that those unperfected liens then expired under G.L. c.60, §37 before the new taking could perfect them and the City's failure to timely record a G.L. c.60, §37A instrument regarding them now time-bars their collection. The City disagrees.

The material facts are undisputed, and the resolution of this dispute turns on questions of statutory interpretation and its application to those facts. The parties thus filed cross-motions for summary judgment. For the reasons set forth below, I find and rule as follows.

Facts

Summary judgment is appropriately granted when there are no genuine issues of material fact and, on those facts, judgment may be entered as a matter of law. Mass. R. Civ. P. 56(c); Cassesso v. Comm'r of Corr., 390 Mass. 419 , 422 (1983), Cmty. Nat'l Bank v. Dawes, 369 Mass. 550 , 553 (1976). In this case, the material facts are these. None are in genuine dispute.

The 879 parcel is approximately 22,761 square feet in size, and at all relevant times has been occupied by a two-story commercial building containing office, retail and restaurant space. It has been owned by William Cranmore as trustee of the Avenue Realty Trust since August 4, 1989. Before that, it was owned by Mr. Cranmore in his individual name (Nov. 8, 1988 - Aug. 3, 1989, the date when he transferred it to the Trust for $1), and before that by Stephen and Edward Osman as trustees of the Osman Realty Trust (Aug. 7, 1980 - Nov. 7, 1988), who sold it to Mr. Cranmore.

The trust instrument for the Avenue Realty Trust is recorded at the Suffolk County Registry of Deeds and makes clear that Mr. Cranmore is in total control of the Trust. In Article III it states that "[t]he Trustee [Mr. Cranmore] shall have the entire control and management of the Trust Property to the same extent as if [he was] the absolute owner free of trust" [Note 10] and, in Article V(A), states that "[n]o corporation, government body, government employee, person, transfer agent or any entity of any kind shall be held to examine into the Trusts hereunder, but such corporation, government body, government employee, person, transfer agent or any entity of any kind shall deal with such property as if the Trustee [was] the owner[] thereof free of all trust." [Note 11] (emphasis added). Indeed, Article V(A) goes on to say, "[n]o corporation, government body, government employee, person, transfer agent or any entity of any kind are authorized to nor allowed to examine the books, bank records, tax returns, or other documentation as to the affairs of the Trust except as may be required by the order of a court of competent jurisdiction, and then only after the court has determined that the claim is meritorious." Id. (emphasis added). Mr. Cranmore alleges that his son Shayne - eight years old at the time the Avenue Realty Trust was formed and the 879 parcel then titled in the Trust - was the sole beneficiary of the Trust, and that Shayne remained so during all the years in question. But the Trust's beneficiaries are not disclosed in the Registry filings, and Mr. Cranmore never notified the City that his son was the beneficiary nor of what significance or effect he expected that to have. Instead, as just noted, the Trust instrument itself, which was on record at the Registry, directs the City to "deal with [the] property as if the Trustee [Mr. Cranmore] [was] the owner[] thereof free of all trust."

At issue are the property taxes on the 879 parcel for FY 1989 - FY 2013 (Jul. 1, 1988 - Jun. 30, 2013). No taxes have been paid for any of those years [Note 12] nor, except for the City's sua sponte abatement described below, have any abatement proceedings been brought regarding them, timely or otherwise. See G.L. c.59, §59. As noted above, the City contends that, as of 2013, the total taxes owed for those years are in excess of $855,000 and now, due to continuing interest, even more.

The 879 parcel directly abuts the Triangle - an 1,842 square foot triangular-shaped strip of land between the 879 building and Blue Hill Avenue.

The City took the Triangle by eminent domain in 1894 as part of a proposed traffic circle at the Angell Street/Harvard Street/Talbot Avenue intersection with Blue Hill Avenue. That traffic circle was never constructed and, in 1931, the City voted to "discontinue" its plans to do so, recording that discontinuance at the Suffolk County Registry of Deeds.

Based on that discontinuance and the City's belief that the Triangle had been used in conjunction with the 879 parcel since 1917, [Note 13] the City took the position that the two should be taxed together. See G.L. c.59, §11 (providing for taxation to the record owner as of January 1 or "to the person who is in possession thereof" on that date). The City thus showed both the 879 parcel and the Triangle as a single tax parcel on its tax assessor's map, and assessed and taxed the two together under that parcel number.

On January 1, 1988, for Fiscal Year 1989 (Jul. 1, 1988 - Jun. 30, 1989), the City assessed both 879 and the Triangle to the Osman Realty Trust, the then-record owner of 879, and bills were sent out accordingly. See G.L. c.59, §11.

On November 8, 1988, Mr. Cranmore, individually, purchased the 879 parcel from the Osman Realty Trust. The deed did not facially include the Triangle, but the two properties continued to be included in the same tax parcel. Anyone looking at the tax assessor's map of that parcel would immediately have seen that both the 879 parcel and the Triangle were being taxed together as a single parcel. The record does not indicate what adjustment to the purchase price was made between Mr. Cranmore and the Osman Realty Trust for accrued but unpaid taxes as of the closing date, but normal closing practice makes such an adjustment. I thus conclude that one was made here, reducing Mr. Cranmore's purchase price. See Webber Lumber Co. v. Shaw, 189 Mass. 366 , 367 (1905) (purchaser's duty to pay tax and discharge lien).

Neither Mr. Cranmore nor the Osman Realty Trust paid the FY 1989 tax bills in whole or part, even under protest, nor did either seek an abatement of any of those or subsequent taxes, then or later. As previously noted, the record does not indicate if the Osman Realty Trust had paid the previous years' assessments.

On January 1, 1989, by statute, the unpaid taxes as assessed on January 1, 1988 (i.e., the FY 1989 taxes as they were assessed on that date), along with their associated charges and fees, became a lien on the property then assessed (the 879 parcel and the Triangle). See G.L. c.60, §37.

Unperfected tax liens expire on (1) the fourth December 31 after the fiscal year to which the tax relates (three years and six months after the last day of that fiscal year), or (2) the date of the recorded "alienation" of the property, whichever occurs later. See G.L. c.60, §37. A tax taking "perfects" such liens provided that a formal demand for payment and certain other notices are sent beforehand. See G.L. 60, §§16, 53-54. It is undisputed that all such demands and notices were sent in this case.

On August 3, 1989, Mr. Cranmore transferred the 879 parcel to himself as trustee of the Avenue Realty Trust for $1 and, for FY 1990 and thereafter, all tax bills were assessed and sent to Mr. Cranmore as trustee. None of these bills were paid, even in part, and neither Mr. Cranmore nor anyone else purporting to act on behalf of the Trust sought abatement of any of them.

On September 19, 1989, consistent with its assessment and billing that treated the 879 parcel and the Triangle as a single taxable parcel at that time, the City recorded an Instrument of Taking at the Registry of Deeds that facially included both the Triangle and the 879 parcel. See G.L. c.60, §§53, 54. The taking was based on the unpaid FY 1989 taxes, see Suffolk Registry of Deeds, Book 15918, Page 230, and, by statute, all subsequent unpaid taxes automatically were added to the lien purportedly perfected by that taking. G.L. c.60, §61.

On October 23, 1991, the City filed an action in this court to foreclose the right of redemption on the land so taken. See G.L. c.60, §64. City of Boston v. Cranmore, trustee, 91 TL 92254 (the "1991 tax lien case").

Mr. Cranmore did not timely respond in that case and was defaulted. He subsequently moved to vacate the default and, ultimately, the motion was granted on June 12, 1997 (Trombly, Rec.). [Note 14] Thereafter came a series of motions for continuances and re-schedulings, leading to a general continuance of the case on October 23, 2003 for reasons not reflected on the docket. See Docket Report, City of Boston v. Cranmore, 91 TL 92254.

On June 12, 2007 - ten years after the default was removed, and with no activity in the tax lien case during that time - Mr. Cranmore filed Cranmore, individually and as trustee v. City of Boston, Land Court Case No. 07 MISC. 348736 (the "2007 title case"), seeking a declaration that the City, not the Trust, owned the Triangle. Shortly after that filing, the 1991 tax lien case was stayed pending the outcome of the title case.

On August 15, 2008, judgment was entered in the 2007 title case, declaring that the City owned the Triangle. See Cranmore v. City of Boston, et al., Case No. 07 MISC. 348736 (KCL), Mem. & Order on the Parties' Cross-Motions for Summary Judgment (Aug. 15, 2008) and Judgment (Aug. 15, 2008).

The City did not appeal that judgment. Instead, shortly thereafter, the City retroactively abated the FY 1989 - FY 2008 tax assessments and bills, removing the Triangle from the assessment and adjusting the taxes downward to reflect that removal. [Note 15] For the next fiscal year (FY 2009) and all subsequent fiscal years, the City assessed and billed the 879 parcel alone. The difference in the taxes (always a reduction) was approximately 2%.

None of those bills have been paid in either whole or part, and neither the Osman Realty Trust, Mr. Cranmore individually, nor Mr. Cranmore or anyone else on behalf of the Trust have brought an abatement proceeding for any of them. The time for bringing such proceedings has now long since passed. See G.L. c.59, §59.

On July 6, 2009 - almost a year after the 2007 title case was decided - judgment was entered in the 1991 tax lien case, dismissing it without prejudice. See City of Boston v. Cranmore, 91 TL 092254, Order (Jul. 3, 2009) & Judgment (Jul. 6, 2009) (Patterson, Rec.). Adding the Triangle to the taking, the court ruled, had been "a substantial and misleading error that made the tax taking invalid." Id. The Trust requested a ruling that the dismissal also invalidated the tax liens. That request was denied, with the order and judgment specifically stating that the dismissal of the case was "without prejudice" to the now correctly assessed taxes and liens. See City of Boston v. Cranmore, 91 TL 092254, Order (Jul. 3, 2009) (Patterson, Rec.) (denying Cranmore's request that the dismissal be with prejudice, "waiving all claimed taxes, fees and interest.").

The City did not file and record a G.L. c.60, §37A statement (Filing and Recordation of Statement by Collector That Sale Cannot be Legally Made).

Instead, based on (1) its retroactive abatement of the FY 1989 - FY 2008 tax bills which removed the Triangle from the assessment, and (2) its FY 2009 and subsequent assessments now on the 879 parcel alone, the City made a new taking, now expressly limited to the 879 parcel, and recorded the new Instrument of Taking on September 20, 2011. This new taking, like the previous one, cited the unpaid FY 1989 taxes. [Note 16] To the extent the liens for those taxes had not expired (see discussion below), this taking now perfected them.

This tax lien foreclosure case (12 TL 144456) was then filed on June 20, 2012, with notice of its filing recorded at the Registry on August 13, 2012. [Note 17]

On November 7, 2012, with the new Instrument of Taking on record at the Registry, the City recorded a Disclaimer of the previous one (the Instrument of Taking recorded on September 19, 1989, purportedly taking both the 879 parcel and the Triangle), citing G.L. c.60, §§37 & 84 (reasonable cause to believe invalid the tax title held by the City under that previous Instrument).

Further facts are included in the Discussion section below.

Discussion

At issue are the property taxes on the 879 parcel for Fiscal Years 1989 - 2013. None of these taxes have been paid, in whole or in part. I have already addressed two of the Trust's three arguments seeking to justify this. [Note 18] I now turn to the third.

I start with an issue already decided. This is whether the tax liens for the Fiscal Years in question were invalid because they originally included taxes for land not owned by the taxpayer. This was certainly true for the initial (Sept. 1989) tax taking (put simply, land not owned by the taxpayer cannot be taken), but it is not true for the taxes or their resulting liens once they were corrected and reassessed. See City of Boston v. Cranmore, 91 TL 092254, Order (Jul. 3, 2009) (Patterson, Rec.) (denying Cranmore's request that the dismissal of that proceeding be with prejudice, "waiving all claimed taxes, fees and interest."). Instead, as the court explicitly ruled, the dismissal was without prejudice to the validity of the taxes and the resulting liens which, by that time, had all been correctly reassessed and billed. See id. and the associated Judgment (Jul. 3, 2009) (Patterson, Rec.); Fidler, 394 Mass. at 543-544 (preclusive effect of prior judgment). This is certainly correct. As G.L. c.60, §37 makes plain, for items in the tax title account and their resulting liens to be invalid, their errors or irregularities must also be either "substantial" or "misleading." [Note 19] Here, they were not. As previously noted, the difference in the tax amount was approximately 2% and, in every case, a reduction. [Note 20]

The more interesting argument is whether the City's failure to record a G.L.c.60, §37A statement meant that the tax liens terminated before they could be perfected by the new taking in September/November 2011. Like the previous taking, it "took" the land for non-payment of the FY 1989 taxes, with the subsequent years' taxes added on automatically pursuant to G.L. c. 60, §61. As noted above, unless previously perfected by taking, tax liens terminate on the fourth December 31 after the fiscal year to which the tax relates (three years and six months after the last day of that fiscal year), [Note 21] or the date of the recorded "alienation" of the property, whichever occurs later. See G.L. c.60, §37.

The full language of G.L. c.60, §37 is as follows:

Taxes assessed upon land, including those assessed under sections twelve, thirteen and fourteen of chapter 59, [Note 22] shall with all incidental charges and fees be a lien thereon from January first in the year of assessment. Except as provided in section sixty-one, [Note 23] such lien shall terminate at the expiration of three years and six months from the end of the fiscal year for which such taxes were assessed, if in the meantime the estate has been alienated and the instrument alienating the same has been recorded, otherwise it shall continue until a recorded alienation thereof, but if while such lien is in force a tax sale or taking is made, and the deed or instrument of taking has been duly recorded within sixty days, but the sale or taking is invalid by reason of any error or irregularity in the proceedings subsequent to the assessment, the lien and also the lien or liens for any subsequent taxes or charges which have been added to the tax title account under authority of section sixty-one shall continue for ninety days after a surrender and discharge under section forty-six or a release, notice or disclaimer under sections eighty- two to eighty-four, inclusive, has been duly recorded, or for ninety days after the sale or taking has been finally adjudged invalid by a court of competent jurisdiction. If at any time while a lien established by this section is in force, a sale or taking cannot in the opinion of the collector be legally made because of any federal or state law or because of any injunction or other action of, or proceeding in, any federal or state court or because of the action of any administrative body, the lien, if the statement provided for in section thirty-seven A is filed, shall continue as provided in said section thirty-seven A, subject, however, to any lawful action under any paramount authority conferred by the constitution or laws of the United States or the constitution of the commonwealth. Said taxes, if unpaid for fourteen days after demand therefor, may, with said charges and fees, be levied by sale or taking of the real estate, if the lien or liens have not terminated. No tax title and no item included in a tax title account shall be held to be invalid by reason of any irregularity which is neither substantial nor misleading, whether such error or irregularity occurs in the proceedings of the collector or the assessors or in the proceedings of any other official or officials charged with duties in connection with the establishment of such tax title or the inclusion of such item in the tax title account.

G.L. c.60, §37A states:

If at any time while a lien established by section thirty-seven of this chapter or under chapter eighty or chapter eighty-three is in force, a sale or taking cannot in the opinion of the collector be legally made because of any federal or state law or because of any injunction or other action of, or proceeding in, any federal or state court or because of the action of any administrative body, the collector may file with the register of deeds for record or registration, as the case may be, a statement reciting that the statement is filed pursuant to this section to continue, until abatement or payment, the lien for a tax or assessment in an amount stated, which need not include accrued interest and costs, assessed for a year or on a date specified to a person or person named upon an estate described. The statement shall also recite the reason why, in the opinion of the collector, a sale or taking cannot then be legally made; but any error or omission in the recitation of such reason shall not affect the validity of such statement. The filing of such statement for record or registration shall operate to extend the time within which a sale or taking may lawfully be made by continuing until payment or abatement of the lien for such tax or assessment and all assessments or portions thereof, rates and charges of every nature which have been added to or become a part thereof; but the filing of such statement shall not discharge the collector from liability upon his bond for failure to collect such tax, assessment or portion thereof, rate or charge, and the collector shall proceed to collect or take the land within six months after he first gets notice that the disability has been removed. The collector at any time may, and upon the payment or abatement of the tax to which such statement relates shall, file a renunciation of all rights under such statement; and the provisions relative to the recordation of such statement shall apply to the recordation of such renunciation.

Statutes are to be interpreted "consistent with [their] plain meaning and in light of the aim of the Legislature unless to do so would achieve an illogical result." Sullivan v. Brookline, 435 Mass. 353 , 360 (2001) (internal citations omitted). Here, the "plain meaning" and "aim" of these statutory provisions is apparent. It is to give new acquirers of land assurance that the land they have acquired is free from tax liens once the specified period of time has passed without a taking or a G.L. c.60, §37A statement on record (i.e.,record notice). But that is only the case if the acquirer is new - in the words of the statute, if the land has been alienated. Non-alienated land continues to be subject to the liens, indefinitely, and a §37A extension statement is irrelevant because the liens have not expired. The policy reasons behind this are obvious. Unlike a presumably innocent purchaser, a taxpayer with full knowledge of his tax liabilities should not be allowed to evade them simply by the passage of time. See Ret. Bd. of Somerville v. Buonomo, 467 Mass. 662 , 668 (2014) (statutes to be construed in light of their intended purpose, ascertained "from all its parts and from the subject matter to which it relates . . . so as to render the legislation effective, consonant with sound reason and common sense."). The word "alienation" must thus be interpreted and applied in light of that intent. See W.A. Wilde Co., Inc. v. Bd. of Assessors of Holliston, 84 Mass. App. Ct. 102 , 104 (2013) ("We do not construe a statute's words in isolation or apart from the legal context within which they appear. The meaning of language is inherently contextual.") (internal quotations and citations omitted); U.S. Bank Trust N.A. v. Johnson, 95 Mass. App. Ct. 291 , 294-295 ("Our overarching objective is to discern the intent of the Legislature, based on the words used and the evident purpose for which the statute was enacted") (internal citations and quotations omitted).

Here, it is plain that the 879 parcel was not "alienated" and has always remained in the control of Mr. Cranmore. The recorded Trust instrument states, unequivocally, that Mr. Cranmore has "the entire control and management of the Trust Property to the same extent as if [he] [was] the absolute owner free of trust," [Note 24] and that all "government bod[ies]" and "government employee[s]" "shall deal with such properties as if the Trustee [was] the owner[] thereof free of all trust." [Note 25] (emphasis added). The $1 transfer from Mr. Cranmore to the Trust thus has no legal effect for G.L.c.60, §37 purposes. Mr. Cranmore bought the property in 1988 with knowledge of the taxes owed and liability for those taxes, and it has not been "alienated" since. See Webber Lumber Co., 189 Mass. at 367 (purchaser's duty to pay tax and discharge lien); Abbott v. Frost, 185 Mass. 398 , 401 (1904) ("[I]f the precedent condition of alienation which works a discharge of the lien does not arise, then no change has taken place in the title which operates to free the property made subject to it until the tax is paid or the estate sold.") (internal citation omitted). The tax liens from FY 1989-2013 thus remain in place, see Abbott, supra, and were perfected by the 2011 taking. Any other application of the statute to this case, effectively allowing Mr. Cranmore to evade hundreds of thousands of dollars in taxes on a major commercial property, would be an "absurd" result indeed and cannot be what the statute intended. See Deutsche Bank Nat'l Trust Co. v. Gabriel, 81 Mass. App. Ct. 564 , 569 (2012) (applicable rules of statutory construction require courts to construe statutes that relate to the same subject matter as a harmonious whole and avoid absurd results) (internal citations and quotations omitted).

Conclusion

For the foregoing reasons, the City's motion for summary judgment is ALLOWED and Mr. Cranmore's motion for summary judgment is DENIED. The City has valid tax liens against the 879 parcel for all the years at issue in this case (FY 1989-2013) in the reassessed amounts, those liens were each properly perfected by the 2011 taking, and the Trust's right to redeem the tax title shall be foreclosed, with title absolute vesting in the City, unless the Trust timely pays the redemption amount to be set by this court. The case shall return to the tax session docket for the purpose of setting that amount and the time by which it must be paid.

SO ORDERED.