NEWTON WEST, LTD. VS. TOWN OF NEWTON(TAX COURT OF NEW JERSEY)

NOT FOR PUBLICATION WITHOUT THE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-1976-15T1
NEWTON WEST, LTD.,
Plaintiff-Appellant,
v.
TOWN OF NEWTON,
Defendant-Respondent.
_________________________________
Argued telephonically on June 12, 2017 –
Decided September 8, 2017
Before Judges Koblitz, Rothstadt and Sumners.
On appeal from the Tax Court of New Jersey,
Docket No. 9612-2010.
Lawrence S. Berger argued the cause for
appellant (Berger & Bornstein, LLC, attorneys;
Mr. Berger, on the briefs).
Thomas H. Prol argued the cause for respondent
(Laddey, Clark & Ryan, LLP, attorneys; Mr.
Prol, on the brief).
PER CURIAM
In this appeal from the Tax Court's rejection of a taxpayer's
Freeze Act action, N.J.S.A. 54:51A-8,1 plaintiff, Newton West,
Ltd., the owner of an apartment building in defendant Town of
Newton challenges the court's finding that plaintiff's action was
time barred, the court was without jurisdiction to consider the
matter and, in any event, defendant was permitted to increase
plaintiff's property's assessment under an exception to the
application of the Freeze Act when a municipality conducts a
"complete reassessment or complete revaluation" of all properties.
For the reasons stated below, we vacate the court's denial of
relief and remand to the Tax Court for reconsideration.
1
The Freeze Act states:
Where a judgment not subject to further appeal
has been rendered by the Tax Court involving
real property, the judgment shall be
conclusive and binding upon the municipal
assessor and the taxing district, parties to
the proceeding, for the assessment year and
for the 2 assessment years succeeding the
assessment year covered by the final judgment,
except as to changes in the value of the
property occurring after the assessment date.
The conclusive and binding effect of the
judgment shall terminate with the tax year
immediately preceding the year in which a
program for a complete revaluation or complete
reassessment of all real property within the
district has been put into effect.
[N.J.S.A. 54:51A-8 (emphasis added).]
2 A-1976-15T1
The material facts are not disputed and are summarized as
follows. After plaintiff filed a tax appeal from its property's
2010 assessed valuation, the parties reached an agreement as to
the value and the Tax Court entered a judgment on June 17, 2011,
fixing the assessment in the agreed upon amount. Prior to the
entry of the judgment and despite the Freeze Act's "conclusive and
binding" effect, defendant increased the property's assessed value
for 2011, and the next two years.2
Defendant notified plaintiff of the increased assessments
based upon its reassessment3 of properties within the entire
community, which began in 2010. In order to pursue the
reassessment, defendant submitted an application to the County Tax
Board and the State Division of Taxation (Division). The
application indicated that the reassessment would not include an
attempt to inspect all properties in the communities. In an
addendum to the application, defendant noted a "diligent attempt
will be made to inspect the interior and exterior of all
improvements that remain as 'estimates' from the 2008 Revaluation
2
The reassessment valued plaintiff's property at $9,433,000.00
for the 2011 tax year, an increase of $1,033,000 above the agreed
upon 2010 property value.
3
Defendant had previously conducted a revaluation in 2008 in
order to redistribute the burden of falling property values among
the commercial and residential properties.
3 A-1976-15T1
. . . . [a]n attempt will also be made to gain entry into any
properties that have sold within the past 2 years, . . . . [and]
[a]n attempt will be made to gain entry into any properties that
are currently listed 'for sale' through the [Garden State Multiple
Listing Service]." The reassessment was to be completed by January
10, 2011.
After conducting a public hearing, the County Tax Board
approved defendant's application, including defendant's proposal
to use an outside contractor, Appraisal Systems, Inc. (ASI), to
assist in the process. The Division also stated that it expected
to receive "monthly status reports on the progress of the work
from the assessor." On October 13, 2010, defendant's council
passed a resolution authorizing defendant's retaining ASI "for the
complete assessment of all real property with the Town of Newton."
Defendant sent property owners letters dated November 5,
2010, advising them of the planned reassessment. According to the
letter, not all properties would be inspected. Instead,
"[i]nspections will be conducted on properties that have been
recently sold and/or listed for sale, properties that were never
inspected during the last Revaluation, and properties that have
had substantial renovations since the last Revaluation or where
the [property record cards] data is in question." The assessment
4 A-1976-15T1
was to be finalized by early January 2011 "at which point all new
assessments will become effective for the 2011 tax year."
According to plaintiff, ASI's actual work was limited to
inspecting only a fraction of the municipality's properties for
the purpose of defendant completing the revaluation. As proof,
it relied upon defendant's agreement with ASI that only required
inspection of a property's interior and exterior "that require[d]
inspection." Also, defendant's tax assessor instructed ASI to
inspect only a fraction – 400 of 2900 – of the properties, and,
ultimately, only 101 properties were actually inspected.4
After receiving notice of the increased assessments for its
property, plaintiff filed timely tax appeals for each year. The
court dismissed plaintiff's action challenging the 2011
assessment, which did not seek enforcement of the Freeze Act,
because plaintiff would not supply "Chapter 91" income
information.5
4
In 2013, the County Tax Board "determined that the assessment
of [defendant] result[ed] in an unequal distribution of the tax
burden within [the] municipality" and directed defendant to
"implement a municipal wide reassessment to be completed by
December 31, 2013 and to be effective for the 2014 tax year." The
Division later entered an order implementing the Board's
directive.
5
A Chapter 91 request is the common name for a request by a
municipal assessor for income information from the taxpayer in
accordance with N.J.S.A. 54:4-34. 1717 Realty Assocs., LLC v.
5 A-1976-15T1
Plaintiff filed a motion with the Tax Court in November 2014
seeking to enforce the Freeze Act as to the 2011 and 2012
assessments – more than three years after the filing deadline for
appealing the 2011 assessment and two years for the 2012
assessment. In its supporting papers, plaintiff stated that the
increase in the assessment was not the product of "a complete
revaluation or complete reassessment." Defendant responded and
asserted that that the increased assessments were allowed by an
exception to the Freeze Act that permits an increase when it is
due to a "complete" revaluation of the municipality. The parties
engaged in discovery as to the issue of whether defendant conducted
the complete revaluation contemplated by the Freeze Act, and once
completed, provided the court with supplemental submissions on the
issue.
The Tax Court judge considered the matter, denied plaintiff
any relief and placed his decision on the record on December 4,
2015, which he later amplified in writing, Rule 2:5-6(c). The
judge explained that plaintiff's action was untimely because, as
Borough of Fair Lawn, 201 N.J. 275, 275 n.1 (2010). Under N.J.S.A.
54:4-34, "[n]o appeal shall be heard from the assessor's valuation
and assessment with respect to income-producing property where the
owner has failed or refused to respond to such written request for
information within 45 days of such a request." N.J.S.A. 54:4-34.
See 1717 Realty Assocs., supra, 201 N.J. at 279-80 (upholding the
constitutionality "of the appeal-preclusion sanction of N.J.S.A.
54:4-34").
6 A-1976-15T1
a tax appeal, the matter should have been filed by April 1, 2011,
for the 2011 tax year and, by not complying with the Chapter 91
requests, plaintiff "lost its shot" to challenge the application
of the exception to the Freeze Act. If the action was considered
as a challenge to defendant's decision to pursue the reassessment,
the judge found that the action was cognizable as an action in
lieu of prerogative writs only in the Superior Court, unless that
court referred the matter to the Tax Court. Ultimately, the judge
concluded, that plaintiff was not entitled to any relief because
the increased assessment was the result of defendant's complete
revaluation as contemplated by the exception to the Freeze Act.
In his written amplification, the judge stated that he "concluded
that [defendant's] 2011 reassessment was indeed complete, and
therefore the application of the Freeze Act to tax years 2011 and
2012 was not appropriate." The judge found that although the
Freeze Act does not define the word "complete" as it relates to
reassessment, the Division has promulgated regulations setting for
the requirements that must be met, N.J.A.C. 18:12A-1.14(c)(3),
which "the evidence demonstrates that [defendant] has satisfied
the preconditions necessary for its 2011 complete reassessment."
He found that defendant satisfied the statutory requirements of a
"complete" reassessment because it held a public hearing before
it adopted a formal resolution authorizing the revaluation, the
7 A-1976-15T1
County Tax Board formally approved its application to conduct the
revaluation, and it obtained approval from the Division.
Plaintiff argues that the approved plan was not a "complete
reassessment," and, even if it was, the execution of the approved
plan was insufficient to constitute a "complete reassessment."
According to plaintiff, defendant failed to establish a prima
facie showing that it was entitled to application of the exception
under the Freeze Act. Moreover, plaintiff contends that even if
defendant proved it satisfied the requirement for the exception
to the act, the exception still should not be applied because it
"should be invoked only where application of the Freeze Act results
in [in]equitably favorable treatment of a particular taxpayer."
Defendant disagrees, arguing that plaintiff's challenge to the
complete reassessment is untimely and that defendant conducted the
reassessment in accordance with the plan approved by the County
and State, is consistent with the Freeze Act and applicable
regulations and, in any event, plaintiff has no standing to
challenge the implementation of the reassessment process.
In our review of a Tax Court's judgment, we "recognize the
expertise of the Tax Court in this 'specialized and complex area.'"
Advance Hous., Inc. v. Twp. of Teaneck, 215 N.J. 549, 566 (2013)
(quoting Metromedia, Inc. v. Dir., Div. of Taxation, 97 N.J. 313,
327 (1984)). Our review is limited to whether the Tax Court's
8 A-1976-15T1
determination is supported by substantial credible evidence "with
due regard to the Tax Court's expertise and ability to judge
credibility." Southbridge Park Inc. v. Borough of Fort Lee, 201
N.J. Super. 91, 94 (App. Div. 1985) (citing Rova Farms Resort,
Inc. v. Investors Ins. Co., 65 N.J. 474 (1974)). "[J]udges
presiding in the Tax Court have special expertise; for that reason
their findings will not be disturbed unless they are plainly
arbitrary or there is a lack of substantial credible evidence to
support them." Hackensack City v. Bergen Cty., 405 N.J. Super.
235, 243 (App. Div. 2009) (alteration in original) (citations
omitted). "Although the Tax Court's factual findings 'are entitled
to deference because of that court's expertise in the field,' we
need not defer to its interpretation of a statute or legal
principles." Advance Hous., supra, 215 N.J. at 566 (quoting Waksal
v. Dir., Div. of Taxation, 215 N.J. 224, 231 (2013)).
We begin with the Freeze Act, which does not refer to any
time period for filing a motion to enforce its provisions. See
N.J.S.A. 54:51A-8; see also R. 8:7(d). The act protects a taxpayer
by "freezing" an assessment for the two years following a tax year
for which there is a final judgment of the Tax Court. Ibid.
"[J]udgments of the Tax Court obtained by settlement between the
parties . . . are entitled to Freeze Act protection." Grandal
Enters., Inc. v. Borough of Keansburg, 292 N.J. Super. 529, 537
9 A-1976-15T1
(App. Div. 1996) (citing S. Plainfield Borough v. Kentile Floors,
Inc., 92 N.J. 483, 487-89 (1983)). The act "is designed to protect
the taxpayer and grant repose to a final judgment of the Tax Court
for a period of two years, preventing arbitrary actions of the
taxing authority." Hackensack City, supra, 405 N.J. Super. at 250
(citation omitted).
A Freeze Act action filed by a taxpayer is independent of any
tax appeal pursued by the taxpayer under N.J.S.A. 54:3-21,6 which
challenges the fairness of an assessment. Because the statute is
"self executing," "[i]t is not necessary for a taxpayer to file a
tax appeal to obtain the benefit of the Freeze Act. Hackensack
City, supra, 405 N.J. Super. at 247 (quoting Grandal Enters.,
supra, 292 N.J. Super. at 537). A taxpayer can, at its option,
seek both a reduction in a property's assessment and pursue a
6
An appeal may be brought by
a taxpayer feeling aggrieved by the assessed
valuation of the taxpayer's property, or
feeling discriminated against by the assessed
valuation of other property in the county, or
a taxing district which may feel discriminated
against by the assessed valuation of property
in the taxing district, or by the assessed
valuation of property in another taxing
district in the county[.]
[N.J.S.A. 54:3-21.]
10 A-1976-15T1
Freeze Act claim. See Grandal Enters., supra, 292 N.J. Super. at
538.
There are two exceptions to the Freeze Act. "[W]hen the
taxing authority demonstrates circumstances occurring after the
base year assessment date that result in an increase in the value
of the property or when the taxing authority implements a
revaluation program affecting all property in the tax district."
Id. at 536. Unless one of these exceptions apply, "the application
of the Freeze Act is 'mandatory and self-executing.'" Rockaway
80 Assocs. v. Rockaway Twp., 15 N.J. Tax 326, 331 (Tax 1996)
(quoting Clearview Gardens Assocs. v. Parsippany-Troy Hills Twp.,
196 N.J. Super. 323, 328 (App. Div. 1984)).
"If the base year final judgment is entered after the
assessing date for the freeze year, the taxpayer must apply for
Freeze Act relief," and the burden is on the municipality to prove
the application of one of the exceptions. Rockaway 80 Assocs.,
supra, 15 N.J. Tax at 331 (citing Clearview Gardens Assocs., supra,
196 N.J. Super. at 328) (addressing a municipality's claim of
change in value); see Grandal Enters., supra, 292 N.J. Super. at
536. If the municipality establishes a prima facie case as to an
exception applying, the court should order a plenary hearing to
resolve any questions of fact as to the exception's application.
See Entenmann's Inc. v. Totowa Borough, 19 N.J. Tax 505, 512 (Tax
11 A-1976-15T1
2001) (citing AVR Realty Co. v. Cranford Twp., 294 N.J. Super.
294, 300 (App. Div. 1996), certif. denied, 148 N.J. 460 (1997)),
aff’d, 21 N.J. Tax 182 (App. Div. 2003). If there are no factual
issues, the matter should be decided on summary judgment. R.
4:46-2(c).
"[A] timely [tax] appeal . . . or the dismissal of an untimely
appeal has no effect on the application of the Freeze Act."
Hackensack City, supra, 405 N.J. Super. at 247. Unlike the timing
of the filing of a tax appeal, which requires a swift determination
because of its relation to a municipality's budget, concerns about
timeliness do not outweigh a taxpayer's rights under the Freeze
Act. Grandal Enters., supra, 292 N.J. Super. at 540. Because a
Freeze Act action is independent of a tax appeal, it is not subject
to the same deadlines. See N.J.S.A. 54:3-21 (requiring tax appeals
be filed "on or before April 1, or 45 days from the date the bulk
mailing of notification of assessment is completed in the taxing
district, whichever is later").
"The Freeze Act . . . may be invoked at the option of the
taxpayer on motion for supplementary relief to the Tax Court under
the caption of the Tax Court judgment for the base year to which
the Freeze Application is sought." R. 8:7(d). "The taxpayer need
not submit any affidavits concerning the lack of change in value
or that there has been no general revaluation." Clearview Gardens
12 A-1976-15T1
Assocs., supra, 196 N.J. Super. at 329. Although there is also
no "statutory provision requiring that a Freeze Act motion be
brought within a specific period of time," Grandal Enterprises,
supra, 292 N.J. Super. at 540, regulations provide that "[a]
taxpayer may apply to the county board of taxation within a
reasonable period of time upon proper notice to the municipality
seeking the enforcement of the Freeze Act with regard to a judgment
previously entered by the county board of taxation." N.J.A.C.
18:12A-1.13(e).
In Freeze Act actions relating to Tax Court judgments, courts
that confronted the timeliness of a Freeze Act action have looked
to the doctrine of laches to determine whether an alleged delay
in filing was reasonable, justified, and without prejudice to the
taxing authority. See Fifth Roc Jersey Assocs., LLC v. Town of
Morristown, 26 N.J. Tax 212, 229-30 (Tax 2011) ("The 'Freeze Act'
has 'no specified time limitation . . . . Since there exists no
applicable statute of limitations [courts] must [ ] ascertain
whether the facts presented [ ] justify the imposition' of the
Doctrine of Laches" (alterations in original) (quoting Jack Nissim
& Sons, Inc. v. Bordentown Twp., 10 N.J. Tax 464, 468 (Tax 1989))).
"To determine whether the Doctrine of Laches applies, the
court must weigh the 'length of the delay, the reasons for delay,
and the changing conditions of either or both parties during the
13 A-1976-15T1
delay.'" Ibid. (quoting Knorr v. Smeal, 178 N.J. 169, 181 (2003)).
For laches to apply "[t]here 'must be a delay for a length of time
which, unexplained and unexcused, is unreasonable under the
circumstances and has been prejudicial to the other party.'" Id.
at 230 (quoting W. Jersey Title & Guar. Co. v. Indus. Trust Co.,
27 N.J. 144, 153 (1958)).
We conclude that the Tax Court judge here did not engage in
this required analysis when considering whether plaintiff's Freeze
Act claim was timely filed. Instead, he found that by not filing
it within the period for filing a tax appeal plaintiff could be
barred from pursuing the Freeze Act action.
We also conclude the judge erred by considering plaintiff's
motion an action in lieu of prerogative writs, subject to the
applicable forty-five day for filing a complaint in the Superior
Court, see R. 4:69-6(a), and, as such, untimely and not cognizable
in the Tax Court. We find no support for this conclusion.
Plaintiff argued the approved plan did not call for a "complete
reassessment" and also that the execution of the plan was
inconsistent with the approval.
We conclude that the Tax Court judge's finding that the plan
was complete because of the approvals obtained from the County and
Division established defendant's prima facie entitlement to the
exception's application. We part company with the judge as to his
14 A-1976-15T1
belief that the approvals alone were sufficient to establish as a
matter of law that the plan resulted in a "complete reassessment"
in light of plaintiff's evidence-based allegations about the
plan's implementation. The fact that the County and the Division
approved the reassessment plan does not necessarily mean the
assessor and ASI conducted it in accordance with the approved
plan.
Contrary to plaintiff's assertions, the fact that each and
every property was not inspected does not mean a reassessment was
not "complete." While Tax Courts have recognized "the Freeze Act
[does not apply] in a year in which a county tax board approved
reassessment program is adopted by a taxing district," Ennis,
supra, 13 N.J. Tax at 430, they have looked to how the reassessment
was conducted to determine whether it was done properly. In City
of Elizabeth v. 264 First St., LLC, 28 N.J. Tax 408, 439-40 (Tax
2015), the court explained:
[T]he term "reassessment", involves a change
in the property assessments of all property
or all property in a given class in a taxing
district; or changes in property assessments
to a substantial number of individual parcels
in a taxing district, resulting in a variance
in property values from one year to the next
(except for changes to assessments permitted
for added, omitted or added/omitted
assessments, correction of mathematical
errors, exemptions, demolitions, or changes
required by tax appeal judgments). A
reassessment of property is conducted and
15 A-1976-15T1
carried out by, and under the supervision of,
the tax municipal tax assessor. . . . [A]
"good reassessment program includes: an
analysis of all recent sales of real property
occurring within a taxing district, including
a comparison of sales with the assessed values
of the properties sold; an identification of
real property value trends occurring within
the taxing district; a review of all real
property values, parcel by parcel within a
taxing district; . . . gathering of pertinent
income data and utilization of such data where
applicable;...a reconciliation and revised
true value developed for each property . . .
and carrying forward revised taxable values
to the tax list for the year in which the
reassessment is to become effective." Ennis,
supra, 13 N.J. Tax at 426-27 (quoting Handbook
for New Jersey Assessors, Section 801.13 (3d
ed. 1989)). Thus, an effective and useful
reassessment program "seeks to spread the tax
burden equitably throughout a taxing
district." Ibid.
Whether a tax assessor conducted a reassessment in accordance
with an approved "complete" plan is subject to the Tax Court's
review and "must be based on the evidence before it and the data
that are properly at its disposal. It must also be consistent
with the issues as framed by proper pleadings or settled
presumptive rules reflecting the underlying policy that government
action is valid." Id. at 447 (quoting F.M.C. Stores Co. v. Borough
of Morris Plains, 100 N.J. 418, 430 (1985)).
We are therefore constrained to vacate the order denying
plaintiff relief and remand this matter for the Tax Court judge
to consider whether laches barred the filing of plaintiff's Freeze
16 A-1976-15T1
Act action and, if not, whether plaintiff raised a viable issue
as to whether the reassessment was executed in accordance with the
approved plan. If the court finds that an issue exists, it should
conduct a plenary hearing to resolve any questions as to material
facts.
The order under appeal is vacated and the matter remanded to
the Tax Court for further proceedings consistent with this opinion.
We do not retain jurisdiction.
17 A-1976-15T1