Burger King Store #4, Inc. v. Board of Assessors of the City of Marlborough (June 14, 2010)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


BURGER KING STORE #4, INC.   v.	BOARD OF ASSESSORS OF
							THE CITY OF MARLBOROUGH

Docket No. F298291				Promulgated:
							June 14, 2010
		
This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on certain personal property in the City of Marlborough owned by and assessed to Burger King Store #4, Inc. ("Burger King Store #4" or "appellant") under G.L. c. 59, §§ 2 and 18, for fiscal year 2008.  This appeal is being prosecuted by Burger King Store #4 as the lessee of the subject personal property. 
	Commissioner Rose ("Presiding Commissioner") heard the appeal and, in accordance with G.L. c. 58A, § 1 and 831 CMR 1.20, issued a single-member decision for the appellee. 
	These findings of fact and report are made pursuant to a request by the appellant under G.L. c. 58A, § 13 and 831 CMR 1.32.
	
Alfred L. Morin, pro se, for the appellant.
	
Anthony R. Trodella, assessor, for the appellee.
FINDINGS OF FACT AND REPORT
On the basis of the exhibits and testimony offered into evidence during the hearing of this appeal, the Presiding Commissioner made the following findings of fact.  
On January 1, 2007, the appellant, Burger King Store #4 was the assessed owner of personal property consisting of machinery and equipment (the "subject personal property") situated in Marlborough.  For fiscal year 2008, the Board of Assessors of the City of Marlborough ("assessors") valued the subject personal property at $28,830.  As detailed in the table below, the assessed values were derived by applying a depreciation deduction to the replacement cost of each item:

Property Details	Year New	Depreciation	Item Cost	Qty	Replacement
Cost	Total Fair Market Value
	
Broiler
	1996	55%	$10,300	1	$10,300	$ 5,670	
Bun Warmer
	1996	55%	$     950	1	$     950	$    520	
Warming Cabinet	1996	55%	$     650	1	$     650	$    360
	
CO2 System
	1996	55%	$  6,700	1	$  6,700	$ 3,690	
Exhaust Hood
	1996	55%	$       90	16	$  1,440	$    790	
Friolator  Station	1996	55%	$  8,800	1	$  8,800	$ 4,840
	
Warmer (fry)
	1996	55%	$  3,100	1	$  3,100	$ 1,710	
Warmer (franchise)	1996	55%	$  1,550	2	$  3,100	$ 1,710
	
Ansul (avg)
     	1996	55%	$  2,200	1	$  2,200	$ 1,210	
Microwave (commercial)	1996	55%	$     800	4	$ 3,200	$ 1,760	
Ice Maker (large)	1996	55%	$  4,100	1	$ 4,100	$ 2,260
	
Coffee Machine 	2000	75%	$     950	1	$    950	$    710
	
Product Holding Unit	2003	90%	$  1,100	3	$ 3,300	$ 2,970	
Grand Total						$28,830	

Based on the above fair market values, the appellee assessed a tax, at the rate of $24.58 per thousand, in the total amount of $708.64, which the appellant timely paid.  
On January 31, 2008, the appellant timely filed an abatement application with the assessors.  The assessors denied the abatement application on March 28, 2008.  On June 26, 2008, the appellant seasonably filed an appeal, under the formal procedure, with the Appellate Tax Board ("Board").  On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction over this appeal.
At the hearing of this appeal, Alfred L. Morin, the owner of Burger King Store #4, testified on behalf of the appellant.  His contention was that the subject personal property had been overvalued by about $21,080.  He claimed that the appraisals furnished to the appellee by its valuation company were not supported by the market for like machinery and equipment.  To support his contention, Mr. Morin submitted several computer print-out copies of postings from various websites, including Craigslist (http://www.Craigslist.com), ebay (http://www.ebay.com), and Live Auctioneers (http://www.Liveauctioneers.com) - advertising equipment and machinery which he claimed to be comparable to the subject personal property.  He testified that he was able to find listings for property comparable to only three items of the subject personal property.  His evidence is summarized in the following chart:

Subject Equipment	Advertising Details of Purportedly Comparable Equipment	Compar-able's Asking Price	Compar-able's Sale Price	TP's Adjust-ments	

Neico 980 Gas Broiler	
"Neico Broiler"; "Used for broiling burgers and toasting bread in good condition"	
$500	
n/v	
None	
	
"Nice Neico Automatic Broiler Model 200E"; "208 volt"	$250	n/v	None	
	
"Neico gas broiler. Good shape."
	$500	n/v	None	
	"I have a Neico Chain Broiler for sale. It is approx. 15-20 yrs old. It works"; "It was used in a Dairy Queen, but I've seen the same type in a Burger King. It has 8 burners, 4 on top and 4 on the bottom. It also has a bun toaster on the bottom."	$500	n/v	None	
	"Neico Hamburger Conveyor Broiler Gas"; "complete with stand on casters"; broiler appears to be missing a cover		$200	None	
Frymaster 250/350
(5-tub fryer)	"Frymaster 3 Tub Deep Fryer"; "used"; "set up for natural gas but can be converted to propane"	$300  	n/v	$500
(for 5-tub)	


	"Real nice Frymaster triple deep fat fryer, Model MJH250BLCSC, Natural gas. Tested and it is in good working condition. Carefully used, well kept, and clean inside and out. Comes with 2 baskets, all the 3 wells have filters."	Current bid - $600.01	n/v	$1,000 (for 5-tub)	
	"Frymaster Triple bank frying system w/ attached filter system. Electronicly [sic] controled [sic] timers for each of the three fryers in the bank.  We have never used and we purchased them from a restaurant open less than a year - Practicly [sic] new!"	$999.00 	n/v	$1655 (for 5-tub)	
Hoshizaki B-990 SD Ice Maker	"Hoshizaki KM-630MRE commercial ice maker. makes 1000 lbs of ice a day. takes 4 lbs. 2 oz. of refrigeration (already charged and running).  AC supply voltage 200-230/60/1 (3 wire with neutral for 115v). compressor 208-230v; 6 RLA; 311 RA. Pump 120v 5 FLA 10w. fan remote 120v 3A max. max fuse 15 amps; Manitawac water filter. Ice scoop and self bagger 2 cases of bags works great"	$850.00	n/v	None	

Mr. Morin also contended that the assessed value for the subject personal property was skewed because the depreciation deductions used by the appellee's valuation company did not comport with those applied by the Internal Revenue Service ("IRS"), which assume a shorter class life for property used in distributive trades and services.  
Finally, Mr. Morin cited examples of dispositions of purportedly comparable personal property from other Burger King franchises which had closed.  His original petition to the Board included a copy of an electronic mail message, which he had received from a former Burger King franchise owner who sold equipment from a purportedly similar Burger King in April, 2008.  The former franchise owner simply stated that the closing of that Burger King store "cost us $8,500," which "was in kind as far as labor and disposing of miscellaneous equipment." 
At the hearing, Mr. Morin introduced into evidence a letter from a fellow Burger King franchise owner who had acquired equipment from another purportedly comparable Burger King restaurant located at an airport ("Airport Burger King"), which had closed in January, 2008.  According to the letter, the franchise owner received the equipment from the demised franchise at no cost, as part of a bargain to relieve the demised franchise owner of the expense of removing the equipment from the premises.  The letter continues:
If [the former owner] had offered us the option of removing only the equipment we wanted: the Neico broiler, Duke PHU's, Taylor shake machine, main prep board, microwaves, ice maker, Douwe Egbert coffee machine, CO2 and soda system, Frymaster fry pots and fry station, and bun toasters, we would have offered him a total of $4,000 to $6,000 for these items.

No further documentation identifying any item's exact make, model, or year purchased was submitted into evidence.  
Anthony Trodella, Chairman of the appellee, testified in support of the subject personal property assessment.  Mr. Trodella explained that, by presenting evidence of sales of equipment from closed stores, the appellant was equating market value with salvage value.  Mr. Trodella then submitted as evidence a written explanation, which he explained had been provided by the appellee's valuation company, which states in pertinent part:
Depreciation for the purposes of valuing personal property should not be confused with depreciation for IRS purposes, due to the fact that the personal property retains value as long as it is in service. . . .  Personal property should bear normal and reasonable depreciation, but never fully depreciated as long as it is in use.  Generally the minimum fair utility value should be around 30% condition, the converse of 70% depreciation.
  
The written explanation also states that the definition of "market value" as applied by the International Association of Assessing Officers ("IAAO") is "the price that dealers in the goods are willing to receive and purchasers are willing to pay when goods are bought and sold in the ordinary course of trade."  Mr. Trodella contended that when property is sold from a demised franchise, it is not "in the ordinary course of trade," but instead for salvage value.  Mr. Trodella emphasized to the Board that the valuation company's procedures are approved and certified by the Massachusetts Department of Revenue ("DOR").  
On the basis of the evidence presented, the Presiding Commissioner found that the appellant failed to present reliable evidence of the overvaluation of the subject property.  First, Mr. Morin presented evidence relating to only three items of the subject personal property; he presented insufficient information as to any other personal property items.  Moreover, the evidence that he submitted lacked adequate detail to be probative of the items' fair market value.  Many of the website listings which Mr. Morin submitted did not disclose pertinent information like the make and model of the listed item, its age, and its condition.  When the listing did disclose the model numbers, they did not match, and Mr. Morin failed to explain whether the purportedly comparable items were, in fact, comparable to the subject personal property.  Furthermore, Mr. Morin's evidence consisted primarily of asking prices; he failed to demonstrate that any but one of his website sales were actually consummated.  The copies of electronic mail messages that he submitted were even vaguer with respect to the identification of specific items of personal property being disposed - for example, $8,500 for "labor and disposing of miscellaneous equipment" -- as well as their ages and conditions.   The disposition of personal property from the Airport Burger King was admittedly not even a sale.
Therefore, the Presiding Commissioner found that the appellant failed to meet its burden of proving that the subject personal property had a fair market value less than the subject assessment.  Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

OPINION
"All property, real and personal, situated within the commonwealth . . . shall be subject to taxation."  G.L. c. 59, § 2.  "‛The burden of proof is upon the petitioner to make out his right as [a] matter of law to [an] abatement of the tax.'"  Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974) (quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)).  "‛[T]he [B]oard is entitled to 'presume that the valuation made by the assessors [is] valid unless the taxpayers . . . prov[e] the contrary.'" General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984) (quoting Schlaiker, 365 Mass. at 245). 
In appeals before this Board, a taxpayer "'may present persuasive evidence of overvaluation either by exposing flaws or errors in the assessors' method of valuation, or by introducing affirmative evidence of value which undermines the assessors' valuation.'"  General Electric Co., 393 Mass. at 600 (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)).  
On the basis of all of the evidence, the Presiding Commissioner found that the appellant failed to proffer sufficient evidence comparing the purportedly comparable property to the subject personal property.  Mr. Morin presented purportedly comparable property for only three items of the subject personal property.  Of those three items, he failed to demonstrate sufficient similarity in make, model, age, and quality.  Moreover, he presented mostly advertising posts or electronic mail messages pertaining to dispositions of equipment from closed Burger King franchises, as opposed to consummated arm's-length sales.  The Presiding Commissioner thus found and ruled that his analysis was insufficient to rebut the presumably valid assessment. 
The Board has previously granted abatements of personal property assessments when the taxpayer has presented evidence of actual sales of property shown to be comparable to the subject personal property.  See, e.g., Kabat v. Board of Assessors of Cummington, Mass. ATB Findings of Fact and Reports 2008-397 (granting abatement of real estate tax levied on a trailer assessed for $31,500, which the taxpayers had purchased for $8,000, where taxpayers present sufficient evidence of the market value for comparable trailers).  By contrast, the appellant in the instant appeal failed to present adequate evidence of sales of personal property comparable to the subject personal property.
On this basis, the Presiding Commissioner found and ruled that the appellant failed to meet its burden of proving that the assessed value of the subject personal property for the fiscal year at issue exceeded its fair cash value.  Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

                            APPELLATE TAX BOARD


				
  By: ________________________________
	        			 James D. Rose, Commissioner

			
A true copy,

Attest: ______________________________	
	        Clerk of the Board

  As of the time that Mr. Morin printed this posting from ebay, no bids    had been placed for this item.
  See note 1, supra.
  See note 1, supra. 

ATB 2010-556