Lebanon Hangar Associates, Ltd. v. City of LebanonAnnotate this Case
Plaintiff Lebanon Hangar Associates, Ltd. (LHA) appealed a superior court decision that vacated an arbitrator's decision that it was not required to pay taxes under a lease agreement with Defendant City of Lebanon. LHA leased property at the City's airport. Although the terms of the lease require LHA to pay "taxes . . . lawfully levied or assessed, "between 1991 and the first half of 2006, the City did not tax LHA on the value of the land itself, limiting its assessment of taxes to the value of the buildings. In October 2006, the City assessed a tax upon the value of the land, thereby increasing the total valuation subject to
taxation. After unsuccessfully requesting an abatement from the City, LHA petitioned the superior court, pursuant to RSA 76:17 (2003), to rule that the leasehold is not taxable. LHA subsequently moved to amend its petition to add a claim that the City breached the lease by demanding the payment of taxes. In response, the City invoked an arbitration clause in the lease. In April 2009, the arbitrator issued the first of two decisions, concluding that, while the written lease unambiguously allows the City to assess a tax upon the value of LHA’s leased land, other evidence submitted by LHA could serve as the basis for reforming the lease based upon mutual mistake. At the next hearing, LHA asserted its reformation argument over the objections of the City, which contended that the arbitrator’s authority was limited to deciding the meaning of the four corners of the lease agreement. After reviewing the evidence, the arbitrator issued a second, and final, decision in March 2010, concluding that LHA "is not and has not been obligated to pay real estate taxes to the City" under the lease. The issue on appeal to the Supreme Court was whether the arbitrator exceeded the scope of his authority by reforming the lease based upon mutual mistake. Upon review, the Supreme Court agreed with LHA that the arbitrator did not exceed the scope of his authority in this case, and reversed the superior court's decision, and remanded the case for further proceedings.