MTAG CUST ALTERNA FUNDING II, LLC VS. 94 JABEZ REALTY LLC (F-006655-18, ESSEX COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3871-19
MTAG CUST ALTERNA
FUNDING II, LLC,
Plaintiff,
v.
94 JABEZ REALTY, LLC, and
STATE OF NEW JERSEY,
Defendants.
___________________________
94 JABEZ REALTY, LLC,
Third-Party Plaintiff/
Appellant,
v.
CITY OF NEWARK,
Third-Party Defendant/
Respondent.
___________________________
Argued September 27, 2021 – Decided October 21, 2021
Before Judges Vernoia and Firko.
On appeal from the Superior Court of New Jersey,
Chancery Division, Essex County, Docket No.
F-006655-18.
Lazaro Berenguer argued the cause for appellant (Clark
Law Firm, PC, attorneys; Lazaro Berenguer, of counsel
and on the briefs).
Azeem M. Chaudry, Assistant Corporation Counsel,
argued the cause for respondent (Kenyatta K. Stewart,
Cooperation Counsel, attorney; Gary S. Lipshutz and
Azeem M. Chaudry, Assistant Corporation Counsel, on
the brief).
PER CURIAM
Defendant-third-party plaintiff 94 Jabez Realty, LLC, (Jabez) appeals
from an order dismissing its single-count, third-party complaint against the City
of Newark (Newark) for failure to state a claim upon which relief may be
granted. We find no merit to Jabez's arguments on appeal, and we affirm the
court's dismissal of the third-party complaint pursuant to Rule 4:6-2(e).
We conduct a de novo review of a trial court's dismissal of a complaint
pursuant to Rule 4:6-2(e). Baskin v. P.C. Richard & Son, LLC, 246 N.J. 157,
171 (2021). "A reviewing court must examine 'the legal sufficiency of the facts
alleged on the face of the complaint,' giving the plaintiff the benefit of 'every
reasonable inference of fact.'" Ibid. (quoting Dimitrakopoulos v. Borrus,
Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108 (2019)). "If
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the complaint states no claim that supports relief, and discovery will not give
rise to such a claim, the action should be dismissed." Dimitrakopoulos, 237 N.J.
at 107. We owe no deference to the motion court's legal conclusions. Id. at 108.
This action was initiated by plaintiff MTAG Cust Alterna Funding II,
LLC, (MTAG) with its filing of a complaint for foreclosure of a tax sale
certificate. MTAG alleged it was the holder of a tax sale certificate on real
property in Newark owned by Jabez. In its complaint, MTAG sought a
determination of the amount due on its tax sale certificate, a judgment for the
amount due on the certificate with interests and costs, and, in default of that
judgment, an order foreclosing Jabez's interest in the property.
Jabez filed an answer to the complaint, generally denying the allegations
and asserting affirmative defenses. Jabez also filed the third-party complaint
against Newark that is at issue on this appeal.
The third-party complaint alleges that in December 2015, Jabez purchased
property in Newark from MTAG. Jabez further alleges that its address for
mailing "is, and always has been," 811 16th Avenue, Belmar, New Jersey.
Following Jabez's purchase of the property, Newark sent Jabez's real estate tax
bills and tax notices to an incorrect address in Belmar. As a result, Jabez did
not receive any tax bills or notices following its purchase of the property until
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April 17, 2018, when it received an "Outside Lien Redemption Statement" from
Newark stating $32,059.69 in "taxes, fees, and costs[s] . . . had accrued with
regard" to Jabez's Newark property.
According to the third-party complaint, on April 18, 2018, Jabez "issued
a check in the amount of $32,059.69 in full and final settlement of the Outside
Lien Redemption Statement." Of that amount, $4,022.21 was for interest on the
principal amount of taxes Jabez had failed to pay "in timely fashion." The
amount paid also included $1,187.56 for attorney's fees incurred by MTAG in
providing Jabez with the Outside Lien Redemption Statement.
Jabez alleged that the amounts it was required to pay for accrued interest
and MTAG's attorney's fees "were the direct result of" Newark's errors in
sending Jabez's tax bills and notices to an incorrect address. Jabez asserted that
"had [it] received" the tax bills and notices, the taxes on the property "would
have been paid in timely fashion and there would have been no cause to issue
an Outside Lien Redemption Statement." Jabez sought $5,209.57 in
compensatory damages for the interest ($4,022.21) and attorney 's fees
($1,187.56) it claimed it was required to pay as a result of Newark 's failure to
provide timely notice of Jabez's real estate tax obligations following its purchase
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of the property. Jabez also sought punitive damages, attorney's fees, and costs
of litigation.
Newark filed a Rule 4:6-2(e) motion to dismiss the complaint for failure
to state a claim upon which relief can be granted. Newark did not dispute that
it sent Jabez's real estate tax bills to the wrong address, but it argued its error
did not excuse Jabez's failure to timely pay its taxes. More particularly, Newark
argued Jabez could not claim it lacked notice of its tax liability as a matter of
law because N.J.S.A. 54:4-64(a)(3) imposes on every taxpayer the obligation to
ascertain his, her, or its real estate tax liability regardless of whether the taxpayer
receives a tax bill or not. The statute provides as follows:
The validity of any tax or assessment, or the time at
which it shall be payable, shall not be affected by the
failure of a taxpayer to receive a tax bill, but every
taxpayer is put on notice to ascertain from the proper
official of the taxing district the amount which may be
due for taxes or assessments against him or his
property.
[N.J.S.A. 54:4-64(a)(3).]
The court heard argument on Newark's motion and determined Jabez's
claim did not state a claim upon which relief could be granted because the
fundamental premise of its claim – that Jabez's failure to timely pay its taxes
was the result of Newark's failure to send the tax bills to the correct address –
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was incorrect as a matter of law. More particularly, the court determined Jabez
had an obligation under N.J.S.A. 54:4-64(a)(3) to ascertain its tax liability, and
that obligation was not affected by the failure of Jabez to receive the tax bills.
The court found that if Jabez had fulfilled its obligation under the statute, it
would not have owed the interest and attorney's fees it sought in its claim against
Newark. The court entered an order dismissing the complaint, and this appeal
followed.
Jabez presents a single argument on appeal. It contends its complaint
asserts a viable cause of action for a violation of its due process rights based on
Newark's failure to provide proper notice of its tax liability. Jabez argues the
motion court erred by concluding Newark's failure to send the tax bills to the
correct address did not support a legally cognizable due process claim. 1 We are
not persuaded.
1
The third-party complaint does not clearly identify the cause of action. Jabez
argued before the motion court, and argues again in its brief on appeal, that the
complaint asserts a cause of action for a denial of its due process rights. Based
on Jabez's assertions, and because we must "search[] the complaint in depth and
with liberality to ascertain whether a fundament of a cause of action may be
gleaned even from an obscure statement of claim," Printing Mart-Morristown v.
Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (citation omitted), we consider the
complaint as one asserting a cause of action for a violation of Jabez's due process
rights.
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Jabez's due process claim is founded solely on a claimed lack of notice of
its tax liability based on Newark's failure to send the tax bills to Jabez's correct
address. A due process analysis is required upon a finding that a statute affects
a significant property interest. See e.g., Sherwood Ct. v. Borough of S. River,
294 N.J. Super. 472, 481-82 (App. Div. 1996) (applying due process analysis to
a statutory lien under N.J.S.A. 40:62-14 securing payment of unpaid utility
charges). Here, a due process analysis is required because imposition of the tax
lien resulted in Jabez's obligation to pay interest on the delinquent taxes as well
as the costs for the attorney's fees.
Analysis of the due process claim requires consideration of the three
factors in Mathews v. Eldridge, 424 U.S. 319, 335 (1976): (1) "the private
interest that will be affected by the official action"; (2) "the risk of an erroneous
deprivation of such interest through the procedures used, and the probable value,
if any, of additional or substitute procedural safeguards"; and (3) "the
Government's interest, including the function involved and the fiscal and
administrative burdens that the additional or substitute procedural requirement
would entail." See also Connecticut v. Doehr, 501 U.S. 1, 9-18 (applying the
Mathews factors to a claim a statute authorizing prejudgment attachment of real
estate without prior notice or hearing, and without a requirement that the
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individual or entity seeking the attachment post a bond, violates the property
owner's due process rights).
In Sherwood Ct., the plaintiff owners of an apartment complex claimed
they were denied due process by the imposition of a lien under N.J.S.A. 40:62 -
14 for unpaid municipal electric bills. 294 N.J. Super. at 475-76. The statute
provided for municipal liens against property and premises for unpaid utilities
charges, for the assessment of interest on the liens, and for the collection of the
sums due under the liens "in the same manner as arrearages of taxes." N.J.S.A.
40:62-14. The plaintiffs claimed they were denied due process because the
utility bills had been sent to their tenants, and therefore they had not been
provided notice of the amounts due prior to the imposition of the statutory lien
on their property. 294 N.J. Super. at 480-84.
We applied the Mathews standards to determine whether "N.J.S.A. 40:62-
14[,] which authorizes municipal liens against property and premises where such
light, heat or power is furnished," violated the due process rights of the plaintiff
property owners against whose property the statutory lien was imposed. Id. at
480-84. Under the first Mathews factor, we found the property owners had a
"significant property interest at stake." Id. at 483. That is because statutory
liens burden a title to property. See Doehr, 501 U.S. at 12 (explaining "even the
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temporary or partial impairments to property rights that attachments, liens, and
similar encumbrances entail are sufficient to merit due process protection ").
We further determined under the second prong of the Mathews standard
that there was "minimal opportunity for error" because there was no uncertainty
concerning the amount of the lien; the lien was based on a "sum certain" in the
amount of the unpaid utilities charged. Sherwood Ct., 294 N.J. Super. at 483.
We found under the Mathews standard's third prong that "the government and
municipal utility authority also have significant interests" in collecting the sums
due for "unpaid utilities charges" because, by doing so, the taxpayers are
"prevent[ed] . . . from bearing the burden." Ibid.
Based on those findings, we concluded the plaintiff property owners were
not deprived of due process by the imposition of the statutory lien under N.J.S.A.
40:62-14. Id. at 484. We found "the notice requirement in tax statutes satisfies
any due process concerns that a taking of the property could occur without
notice," ibid., even though the property owners did not receive the utility bills
in the first instance. We also found it was "obvious [to the property owners]
that tenants need electricity, and the government must be paid for providing it,"
and that the property owners were "in the best position to address the concern
of unpaid electric charges" by their tenants. Ibid. We held that "the notice
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requirements for the lien which parallel the tax statute's requirements are
sufficient to withstand a due process challenge." Ibid.
Our reasoning in Sherwood Ct. applies with syllogistic precision here.
Like the property owners in Sherwood Ct., under the first prong of the Mathews
standard, Jabez has a significant property interest at stake in the imposition of
the tax lien for the unpaid taxes on its Newark property. See id. at 483.
Under the second prong of the Mathews standard, there is "minimal
opportunity for error here." Sherwood Ct., 294 N.J. Super. at 483. The amount
of taxes due from Jabez is a sum certain, the interest charged is set by statute,
and the amount of attorney's fees charged is not disputed by Jabez. In sum,
Jabez neither points to, nor claims, there was any opportunity for error in the
calculation of the taxes due, or the interest and fees for which it paid to redeem
the tax lien, and for which it seeks damages.
Under the Mathews standard's third prong, Newark has a significant
interest in the collection of municipal real estate taxes from each of its property
owners. See McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, 496
U.S. 18, 37 (1990) (explaining "government's exceedingly strong interest in
[the] financial stability" obtained through the timely collection of taxes);
Varsolona v. Breen Cap. Servs. Corp., 180 N.J. 605, 621 (2004) (explaining the
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importance of the reduction of administrative costs and importance of regular
cash flow to the municipality); Schneider v. City of E. Orange, 196 N.J. Super.
587, 595 (App. Div. 1984) (noting municipalities have a "significant interest" in
"receiving timely payment of taxes").
We find here, as we did in Sherwood Ct., the taxpayer had adequate notice
of its tax liability such that the imposition of the tax lien, and the resulting
obligation to pay interest and fees, did not violate any due process requirements.
The plain language of N.J.S.A. 54:4-64(a)(3) imposes a statutory duty on every
taxpayer to determine their own real estate tax obligations. The statute further
instructs the taxpayer that municipal real estate tax liability "shall not be affected
by" a failure "to receive a tax bill." N.J.S.A. 54:4-64(a)(3). We have held that
under N.J.S.A. 54:4-64(a)(3), "property owners are charged with an affirmative
duty . . . to seek out their tax assessments" and "[t]heir failure to do so . . . must
be considered a result of their own inaction." Appeal of Twp. of Monroe from
Determination of Loc. Fin. Bd., 289 N.J. Super. 138, 147 (App. Div. 1995).
Jabez was not denied due process by Newark's failure to mail the tax bills
to Jabez's correct address. N.J.S.A. 54:4-64(a)(3) provided statutory notice to
Jabez that it had an obligation imposed by law to determine its tax obligation
whether it received a tax bill or not.
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Although the motion court relied on N.J.S.A. 54:4-64(a)(3) as the basis
for its determination Jabez's claim did not allege a cause of action upon which
relief may be granted under Rule 4:6-2(e), Jabez does not cite to, or address, the
statute in its brief on appeal. Thus, Jabez does not directly challenge the motion
court's determination that the due process claim asserted in the complaint is
insufficient as a matter of law because Jabez had a statutory duty, separate from
any additional notice that might have supplied by its receipt of a tax bill, to
ascertain its municipal tax liability.
Jabez instead relies on cases wholly inapposite to any reasoned analysis
of the legal sufficiency of its asserted claim. For example, in support of his due
process argument, Jabez cites Berkeley Twp. v. Berkeley Shore Water Co., 213
N.J. Super. 524, 532 (App. Div. 1986), for the proposition that a municipal tax
office has the burden of sending notices to the proper address of record of the
property owner. Our decision in Berkeley has no application here. In Berkeley
we did not consider whether a taxpayer who failed to receive a tax bill had an
obligation under N.J.S.A. 54:4-64(a)(3) to independently ascertain a municipal
tax liability. We considered only whether a notice of foreclosure was properly
served in accordance with requirements of Rule 4:64-7(c) "[o]n each person
whose name appears as an owner in the tax foreclosure list at his [or her] last
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known address as it appears on the last municipal tax duplicate." Id. at 531.
Jabez does not argue that it failed to receive proper notice of the foreclosure
under Rule 4:64-7(c). Thus, its reliance on Berkeley is unavailing.
Jabez also relies on Twp. of Brick v. Block 48-7, 202 N.J. Super. 246(App. Div. 1985), but that case also did not involve a claim similar to Jabez's
asserted cause of action here.2 In pertinent part, the issue in Brick was whether
a foreclosure complaint was properly served in accordance with N.J.S.A. 54:5-
104.42 and Rule 4:64-7 by mailing the complaint to the property owners "at their
'last known address as it appears on the last municipal tax duplicate.'" Id. at
247-48. Again, in Brick, we did not consider the issue presented here – whether
a property owner could properly claim a lack of notice of its tax liability based
on a failure to receive tax bills where N.J.S.A. 54:4-64(a)(3) imposes an
obligation on the property owner to determine its tax liability in the absence of
a tax bill. Thus, we are not persuaded Brick supports Jabez's due process claim.
In sum, we agree with the motion court that Jabez failed to state a due
process claim upon which relief may be granted. See R. 4:6-2(e). The claim is
2
Jabez relies on Center for Molecular Medicine v. Belleville Township, 18 N.J.
Tax 215, 223 (Tax 1998), for the same proposition of law for which it cites
Brick. We therefore need not address Molecular Medicine, other than to note it
was reversed on other grounds in Center for Molecular Medicine v. Belleville
Township., 19 N.J. Tax 193 (App. Div. 2000).
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founded on the singular and incorrect premise that a municipal tax lien, with its
attendant interest and assessment of costs, could not be properly imposed
because Jabez did not receive tax bills from Newark. As we have explained,
Jabez had a statutory obligation under N.J.S.A. 54:4-64(a)(3) to ascertain its
own tax liability, such that its due process claim fails as a matter of law.
Any arguments made by Jabez we have not expressly addressed are
without sufficient merit to warrant discussion in a written opinion. R. 2:11-
3(e)(1)(E).
Affirmed.
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