September 20, 2013
REINVESTMENT II, LLC, Appellant,
BOARD OF ASSESSMENT REVIEW OF NEW CASTLE COUNTY and NEW CASTLE COUNTY, a Political Subdivision of the State of Delaware Appellees.
Submitted: June 4, 2013
Upon Appellant's Appeal from the Decision of the Board of Assessment Review of New Castle County,
William J. Rhodunda, Jr., Esq., Rhodunda & Williams, Wilmington, Delaware, Attorneys for Appellant.
Wilson B. Davis, Esq., Assistant County Attorney, New Castle County Office of Law, New Castle, Delaware, Attorney for Appellees.
OPINION AND ORDER
The Maurice J. Moyer Academy ("Moyer Academy"), a public charter school, commenced operations in 2006 at 610 and 611 East 17th Street ("Property"). The Property originally belonged to the Sills/Moyer Education Fund until the Education Fund defaulted on its mortgage obligation to the Reinvestment Fund. After defaulting, on July 15, 2010 the Sills/Moyer Education Fund transferred the Property to Reinvestment II, a wholly-owned subsidiary of the Reinvestment Fund,  via a deed in lieu of foreclosure. Reinvestment II permitted the Moyer Academy to continue operations on the Property through a lease.
K12 Classroom DE, LLC ("K12"), which was appointed by the State of Delaware to manage the Moyer Academy, currently has a lease agreement with Reinvestment II for the Property, on which the Moyer Academy operates. Based on the current record, which does not include the lease agreement, the record does not reflect what rights, if any, the Moyer Academy has under K12's lease with Reinvestment II. The lease agreement requires an annual rent of $615, 299.44 to be paid to Reinvestment II. K12 pays this rent through funds it receives from the Department of Education. Reinvestment II contends that it does not profit from the rent because the rent is needed to maintain the Property. Additionally, Reinvestment II states that it only took title to the Property to permit the Moyer Academy to continue operating and would prefer to transfer the Property to a willing party such as the State of Delaware, but has been unable to because of the encumbrances on the land from other mortgages.
Because the Property is being used for educational purposes, Reinvestment II applied for a property tax exemption under 9 Del. C. § 8105, which applies to property that is owned by a school and used for educational or school purposes. This exemption would allow Reinvestment II to avoid paying property taxes for the land on which the Moyer Academy operates. On August 23, 2011, the New Castle County Office of Law denied Reinvestment II's application. Reinvestment II filed a timely appeal of this denial on September 22, 2011 and the Board of Assessment of Review ("Board") held a hearing about this matter on November 8, 2012. The Board's decision resulted in a two-two vote. Therefore, the Board denied Reinvestment II's appeal because a majority of the members of the Board failed to vote in favor of reversal.
II. Parties Contentions
A. Reinvestment II
Reinvestment II argues that the New Castle County attorney made misstatements of law to the Board that improperly influenced its decision, resulting in the Board denying the property tax exemption. Reinvestment II contends that the New Castle County attorney incorrectly stated in both her Letter of Opinion and presentation in front of the Board that the education exemption should be "strictly construed against the property owner." Reinvestment argues that both the education exemption, 9 Del. C. § 8105, and the exemption that is extended to fiduciaries of schools through Section 14.06.401C of New Castle County's municipal code should be construed broadly. Reinvestment II argues that if 9 Del. C. § 8105 is construed broadly, then Reinvestment II would be entitled to the education exemption from property taxes.
Reinvestment II also asserts that the New Castle County attorney erred when she stated that the exemption provided by § 8105 is limited to land that is not held by way of investment, and further asserted that Reinvestment uses the land to attempt to recoup its investment.Reinvestment II claims that it does not matter whether the Property is held by way of investment, because 9 Del. C. § 8105, it argues, allows land held by way of investment to be exempt so long as the land is owned by a school and used for educational or school purposes. Reinvestment II contends that the New Castle County attorney's representation improperly influenced the Board, resulting in the Board denying the property tax exemption.
B. New Castle County
The County contends that no legal error took place. While conceding the County attorney may have incorrectly stated that the education exemption should be narrowly construed, the County asserts that nothing in the record or in the Board's opinion suggests that the Board narrowly construed 9 Del. C. § 8105. Moreover, the County contends that even if the Board committed a legal error in narrowly construing 9 Del. C. § 8105, this Court will engage in a plenary review because this case presently solely a question of statutory interpretation.
In conducting a plenary review of the Board's statutory construction § 8105, the County urges this Court to apply the plain meaning to the words of statute, while broadly construing the statute as Reinvestment II advocates. However, the County contends that after applying the plain meaning to and broadly interpreting § 8105, this Court should find that the Property did not belong to the Moyer Academy, and as a result the exemption should not be granted.Additionally, the County contends that the plain meaning of "fiduciary, " as used in New Castle County Section 14.06.401C, clearly demonstrates that Reinvestment II is not a fiduciary of the Moyer Academy, and as such is not subject to an exemption under § 8105.
Reinvestment II seeks a property tax exemption pursuant to 9 Del. C. § 8105, which provides, in pertinent part, that "[p]roperty belonging to . . . any college or school and used for education or school purposes . . . shall not be liable to taxation and assessment for public purposes." To receive the exemption, two elements must be meet: (1) the Property must belong to a college or school and (2) the Property must be used for education or school purposes. Here, neither party disputes that the Property is used for educational or school purposes, because the Moyer Academy, which operates as a school, is located on the Property.
Thus, the Court's review is limited to the second element—i.e., whether the land can properly be considered as "belonging to" a school or college. The property owner seeking the exemption— here, Reinvestment II—carries the burden of establishing eligibility under 9 Del. C. § 8105. 
A. Standard of Review
Because the issue facing the Court is purely one of statutory construction, without a question of fact, the Board's decision is subject to plenary review. Consequently, this Court will not defer to the Board's decision, but instead will consider the proper statutory construction of 9 Del. C. § 8105 de novo. As a result, assuming arguendo that the Board erred by applying § 8105 too conservatively or committed some other error—for example, as Reinvestment claims resulted from the New Castle County attorney's alleged "improper influence"—that error is of no moment because this Court's review is plenary.
B. Proper Statutory Construction of "Belonging To"
When there is a question regarding the meaning or effect of a statute, this Court will seek to interpret that statute in a manner consistent with the legislative intent of the statute.Legislative intent is discerned from the language of the statute. When interpreting statutory language, absent a precise definition, this Court will give words their plain meaning, notwithstanding an absurd result. Additionally, every word, phrase, or sentence of the statute will be given weight and consideration, again, as long as a reasonable result is achieved. In interpreting 9 Del. C. § 8105, this Court recognizes that a more liberal construction should be undertaken, because § 8105 pertains to an exemption for educational purposes.
i. "Belonging to" Defined
"Belonging" is not defined by Title 9, Chapter 81 of the Delaware Code, where § 8105 appears. As a result, this Court must consider the words plain meaning. "Belong to" is defined by non-legal dictionaries as "to be someone's property, " "to be the property of, " and "to be owned by someone." Furthermore, Black's Law Dictionary defines "belong" as "to be the property of a person or thing."
ii. Indices of "Ownership"
Reinvestment II contends that title to the Property, which the Moyer Academy indisputably does not hold, is not the sole consideration in determining whether the Property belongs to a school or college. Reinvestment II argues that it should be granted the exemption because of the circumstances under which it took title to the Property as well as the fact that it has a lease agreement with K12, which manages the Moyer Academy. Reinvestment II relies on Alpha Rho Zeta of Lambda Chi Alpha, Inc. v. Inhabitants of City of Waterville,  a decision of the Supreme Judicial Court of Maine, to support its contention that the Property should be considered as belonging to the Moyer Academy. In Inhabitants of City of Waterville, the city levied property taxes on several fraternities that occupied and held title to houses located on Colby College's campus. The court concluded that the college was the owner of the property at issue, because the college demonstrated sufficient indices of ownership. The indices demonstrated included the fact that Colby College had the power to (1) control alienation of the property, (2) expel fraternities from the property, (3) control who resides on the property, and (4) control the costs of staying on the property.
Here, unlike the property owners in Inhabitants of City of Waterville, Reinvestment II has not demonstrated that the Moyer Academy has similar indices of ownership. Although K12 has a leasehold interest in the Property, the record is devoid of any evidence that the Moyer Academy has any rights under the lease. Moreover, that lease has not been provided into the record and the Moyer Academy's rights, if any, under that lease were never disclosed. As a result, the Court cannot determine whether the Moyer Academy has sufficient indices of ownership to satisfy the plain-meaning definitions for "belong" and "belong to" cited supra.
iii. Reinvestment as a Fiduciary
Section 14.06.401C of New Castle County's municipal code provides that "[t]he right to claim exemption shall extend to property, the title to which is held by a . . . conservator, or other fiduciary for any person who would otherwise be entitled to claim exemption under this Section." Although in appealing to this Court Reinvestment II only tangentially discusses whether it can properly be considered a fiduciary of the Moyer Academy,  Reinvestment II asserted below that it does qualify as a fiduciary under Section 14.06.401C. Thus, as a final consideration, this Court must determine whether Reinvestment II is the Moyer Academy's fiduciary, thereby qualifying Reinvestment II to receive the educational property tax exemption pursuant to Section 14.06.401C.
The term "fiduciary, " like "belonging, " is not defined by the controlling statute.Therefore, this Court must consider the words plain meaning. Webster's Dictionary defines "fiduciary, " in pertinent part, as "holding, held, or founded in trust or confidence, " and "of, having to do with, or involving confidence or trust." Furthermore, Black's Law Dictionary provides the following definitions of fiduciary: " A person who is required to act for the benefit of another person on all matters within the scope of their relationship: one who owes to another the duties of good faith, trust, confidence, and candor . . . ."; and " One who must exercise a high standard of care in managing another's money or property." In addition to these dictionary definitions, Delaware case law pertaining to fiduciary status is robustly developed. The Delaware Supreme Court has explained that "'the concept of a fiduciary relationship, which derives from the law of trusts, is more aptly applied in legal relationships where the interests of the fiduciary and the beneficiary incline toward a common goal in which the fiduciary is required to pursue solely in the interests of the beneficiary of the property.'"
Reinvestment II cannot properly be considered a fiduciary of the Moyer Academy based on the current record. Unlike the definition provided by Webster's Dictionary, Reinvestment II has failed to establish that its relationship with the Moyer Academy "h[as] to do with, or involve[es] confidence or trust." Furthermore, the definitions provided by Black's Law Dictionary, which stress that the fiduciary "is required to act for the benefit of another person, " and "must exercise a high standard of care in managing another's money or property, " also do not comport with Reinvestment II's position as the Property's owner. Finally, and most importantly, Delaware courts similarly state that a "fiduciary is required to pursue . . . the interests of the beneficiary of the property." Here, Reinvestment II is simply a landlord, with K12 as its tenant. Thus, K12, which manages the Moyer Academy pursuant to a contract with the Department of Education, is the party with whom Reinvestment II has a lease. As stated above, the record provides no direct, legal relationship between Reinvestment II and the Moyer Academy, let alone a fiduciary relationship where Reinvestment II is required to pursue the Academy's interests. Because Reinvestment II has not established that it is required to act in the Moyer Academy's best interest, it cannot properly be considered the Moyer Academy's fiduciary. As a result, based on the current record-which omits what rights the Academy has under the lease, if any-the educational property tax exemption provided by § 8105 does not extend to Reinvestment II through Section 14.06.401C.
While this Court recognizes that a broad interpretation must be given to 9 Del. C. § 8105,  because Reinvestment II has failed to disclose whether the Moyer Academy has any rights under its lease with K12 that would give the Moyer Academy sufficient control to constitute a basis to find the property "belongs" to the Moyer Academy, the Court is unable to properly determine whether the Moyer Academy satisfies the plain, definitional meaning of "belonging to." As a result, this Court concludes that Reinvestment II has failed to establish that it is entitled to the educational property tax exemption under 9 Del. C. § 8105.
IT IS SO ORDERED.