Waterside Villas Holdings, LLC v. Monroe Township

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2466-12T1
WATERSIDE VILLAS HOLDINGS, LLC,
APPROVED FOR PUBLICATION
Plaintiff-Appellant,
January 24, 2014
v.
APPELLATE DIVISION
MONROE TOWNSHIP,
Defendant-Respondent.
____________________________________
Argued November 18, 2013 – Decided January 24, 2014
Before Judges Harris, Kennedy and Guadagno.
On appeal from the Tax Court of New Jersey,
Docket No. 2583-2011.
Kevin S. Englert argued the cause for
appellant (The Irwin Law Firm, attorneys;
Mr. Englert, on the brief).
Nancy Stewart argued the cause for
respondent (Shain, Schaffer & Rafanello,
attorneys; Richard A. Rafanello, of counsel;
Ms. Stewart, on the brief).
The opinion of the court was delivered by
KENNEDY, J.A.D.
Plaintiff Waterside Villas Holdings, LLC, appeals from the
December 28, 2012 final order of the Tax Court dismissing its
complaint contesting the 2011 property tax assessment on its
property in defendant Monroe Township. The Tax Court had
earlier granted, in part, defendant's motion to dismiss
plaintiff's complaint for its failure to respond to a municipal
request for income and expense information as required by
N.J.S.A. 54:4-34, often referred to as "Chapter 91,"1 subject to
plaintiff's right to a "reasonableness hearing" pursuant to the
holding in Ocean Pines, Ltd. v. Borough of Point Pleasant, 112
N.J. 1 (1988). Following the hearing, Tax Court Judge Gail L.
Menyuk concluded that neither the data nor the methodology
employed by the assessor in reaching the 2011 assessment were
unreasonable or arbitrary and dismissed the complaint with
prejudice.
On appeal, plaintiff raises the following arguments:
POINT I: THE TAX COURT ERRED IN CONCLUDING
THAT THE ASSESSOR SENT A VALID CHAPTER 91
REQUEST.
A. The Assessor's Request Was Not "Clear
And Unequivocal."
B. The Assessor's Request Did Not Include
A Copy Of The Statute. (Not Raised Below).
POINT II: THE DATA AND METHODOLOGY USED BY
THE MONROE ASSESSOR WERE ARBITRARY AND
1
This name references the 1979 amendment to the statute that
established the dismissal sanction "where the owner has failed
or refused to respond to [the assessor's] written request for
information . . . or shall have rendered a false or fraudulent
account." See L. 1979, c. 91, § 1 (amending N.J.S.A. 54:4-34).
2 A-2466-12T1
CAPRICIOUS AND THE RESULTING ASSESSMENT WAS
UNREASONABLE.
A. The Arbitrary And Capricious Standard
Of Review Governs In An Ocean Pine
Reasonableness Hearing.
B. The Assessor's Income Approach To Value
Was Based On Non-Market Data And Was
Contrary To The Other Data Available.
C. The Assessor Did Not Apply A True
Common Level To His Value Conclusion For The
Subject.
POINT III: THE ONLY FEASIBLE REMEDY IS A
FULL TRIAL ON THE MERITS IN THE EVENT AN
ASSESSMENT IS FOUND TO BE UNREASONABLE.
We have considered these arguments in light of the record and
the applicable legal principles, and we affirm essentially for
the reasons set forth by Judge Menyuk in her well-reasoned
written opinion dated December 28, 2012. We add only the
following with respect to plaintiff's arguments arising from its
failure to respond to the notice tendered by defendant pursuant
to N.J.S.A. 54:4-34.
I.
Plaintiff purchased property in Monroe Township in 2004
and, after obtaining the requisite permits in 2006, completed
construction of a 100-unit apartment complex in 2009. The Monroe
Township tax assessor visited the property prior to the issuance
of a certificate of occupancy in May 2009, and received from
plaintiff's property manager a list of the rental units and the
3 A-2466-12T1
rents to be charged for each unit. The rents included a
discounted "first-year" rate, and progressively higher rates
thereafter.
Employing the discounted "first-year" rents only, the
assessor calculated the total annual rents, and then applied
figures for expected vacancies and collection losses, an expense
figure of forty-five percent, and a capitalization rate of eight
percent to arrive at a market value of $14,945,800. After
applying the Chapter 123 ratio for 2009, he arrived at an
assessment of $6,707,700.2 This assessment was carried over to
tax years 2010 and 2011.
On August 13, 2010, the assessor sent a letter with
enclosures to plaintiff by certified mail requesting a statement
of income and expenses for the property. The enclosures
included a form captioned "Annual Statement of Income and
Expenses for Income Producing Property" with instructions, and a
typed version of N.J.S.A. 54:4-34. The letter explained that
the request for information was sent in accordance with N.J.S.A.
54:4-34 and instructed that "[u]nder 'Statement and Expenses'
2
While the assessor employed the income approach to valuation,
he also checked his calculation by combining the cost of the
land acquisition with the prospective construction costs, set
forth in plaintiff's construction permit. This was not a
traditional cost approach, but an approximation based on
plaintiff's own construction figures. The assessor regarded the
two figures he reached as relatively close.
4 A-2466-12T1
[on the form] enter your recent twelve months (January 1, 2009
through December 31, 2009) operational cost to the extent that
such cost is actually paid by management."
In addition, the assessor's letter to plaintiff stated,
This request for the Income and Expense data
is made by certified mail and includes a
copy of the statutory language of N.J.S.A.
54:4-34, amended L.1979 C91 p.1, as
required. The requested information must be
submitted to this office within 45 days from
the date this letter is received. In the
event that you do not furnish this office
with the requested Income and Expense data
within the 45-day period, the law provides
that you will be precluded from filing a tax
appeal challenging the assessment of the
property.
. . . .
If you have any questions with regard to
this request or require any clarification
relating to the information sought, kindly
contact this office for further assistance.
Plaintiff received the request on August 16, 2010, and never
responded. Consequently, after plaintiff filed its direct
appeal of the 2011 assessment with the Tax Court, defendant
moved to dismiss the complaint under the statute. Plaintiff
opposed the motion and argued that "the language of the request
leaves room for reasonable doubt whether an average property
owner would understand what the assessor's looking for[.]"
Judge Menyuk rejected plaintiff's argument, finding
"nothing contradictory or confusing" in defendant's request for
5 A-2466-12T1
information and that "any reasonable person would understand
what was meant." She then granted defendant's motion, subject,
as noted earlier, to plaintiff's right to a reasonableness
hearing under Ocean Pines, supra, 112 N.J. at 11.
Plaintiff argues on appeal that the assessor's request was
not "clear and unequivocal" and asserts that "[a] taxpayer is
left to guess whether the assessor is looking for the most
recent [twelve] months of information (August 2009 – July 2010)
or January to December 2009." Further, for the first time on
appeal, plaintiff argues that the assessor's correspondence was
fatally flawed because N.J.S.A. 54:4-34 requires an assessor to
include a copy of the statute with the information request and
that, in the case before us, "the text included with the
assessor's correspondence omits the word 'may' from the phrase,
'. . . and he may be examined on oath by the assessor . . . .'"
We shall briefly address each of these arguments in the order
presented.
II.
N.J.S.A. 54:4-34 provides, in pertinent part, as follows:
Every owner of real property of the
taxing district shall, on written request of
the assessor, made by certified mail, render
a full and true account of his name and real
property and the income therefrom, in the
case of income-producing property, and
produce his title papers, and he may be
examined on oath by the assessor, and if he
6 A-2466-12T1
shall fail or refuse to respond to the
written request of the assessor within 45
days of such request, or to testify on oath
when required, or shall render a false or
fraudulent account, the assessor shall value
his property at such amount as he may, from
any information in his possession or
available to him, reasonably determine to be
the full and fair value thereof. No 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 request or to testify on oath when
required, or shall have rendered a false or
fraudulent account. The county board of
taxation may impose such terms and
conditions for furnishing the requested
information where it appears that the owner,
for good cause shown, could not furnish the
information within the required period of
time. In making such written request for
information pursuant to this section the
assessor shall enclose therewith a copy of
this section.
[N.J.S.A. 54:4-34 (emphasis added).]
As noted earlier, the typed copy of the statute defendant sent
to plaintiff omitted the word "may" which we highlighted in the
statute above. Plaintiff did not respond to defendant's request
within the statutorily required forty-five day period, does not
dispute receiving the request, and concedes it made no inquiry
of the assessor about what he was seeking.
We first address plaintiff's argument that it had no duty
to respond to the request because it was not "clear and
unequivocal." The purpose of N.J.S.A. 54:4-34
7 A-2466-12T1
is to assist the assessor, in the first
instance, to make the assessment and thereby
hopefully to avoid unnecessary expense, time
and effort in litigation.
. . . .
[The statute] goes to the very substance of
assessing practices. By insuring to the
assessor income information from the best
available source, it seeks to relieve both
the taxpayer and the taxing district of the
time and expense of an adversary proceedings
[sic] to review an assessment either in the
county board of taxation or the Tax Court.
[Terrace View Gardens v. Dover Twp., 5 N.J.
Tax 469, 471-72 (Tax 1982), aff'd o.b., 5
N.J. Tax 475 (App. Div.), certif. denied, 94
N.J. 559 (1983).]
This expression of the statute's purpose was adopted in Ocean
Pines, supra, 112 N.J. at 7. The specific purpose of the forty-
five day time limit for responses to assessor's requests is
explained in the Statement, dated January 26, 1978, annexed to
Finance and Appropriations Committee revision of Senate Bill
309, Leg. Sess. of 1979, as follows: "Committee amendments fix a
forty-five day time period in which the income producing
property owner must respond to the written request from the
assessor. A specific time requirement is necessary to provide
for an orderly procedure."
Moreover, while the assessor has an important statutory
right to information necessary for proper and timely
assessments, the assessor must clearly set forth the information
8 A-2466-12T1
being sought when that right is exercised. In ML Plainsboro
Ltd. P'Ship. v. Plainsboro Twp., 16 N.J. Tax 250, 257 (App.
Div.), certif. denied, 149 N.J. 408 (1997), we explained that
Chapter 91
confers authority upon the tax assessor to
determine the scope of information to
request from a taxpayer and a corresponding
duty to give the taxpayer clear and
unequivocal notice of the specific
information which must be submitted. Tax
assessors are experts in the field of real
estate valuation, see N.J.S.A. 54:1-35.25,
while the owners of income producing
properties include not only substantial
business enterprises . . . but also small
business persons who may have difficulty
reading complex and confusing forms and may
lack ready access to legal advice.
Consequently, "the assessor's request notice
to the taxpayer must be clear cut."
Summerton Shopping Plaza v. Manalapan Twp.,
15 N.J. Tax 173, 177 (App. Div. 1995).
Moreover, if there is room for reasonable
doubt as to whether an average owner of an
income producing property would understand
an assessor's request to include a
particular kind of information, the benefit
of that doubt should be given to the
taxpayer. Cf. Great Adventure, Inc. v.
Jackson Twp., [ ] 10 N.J. Tax [230][,] 233
[(App. Div. 1980)] (noting that "the
severity of the penalty for noncompliance
provided for by N.J.S.A. 54:4-34, namely,
the taxpayer's loss of his right to appeal
the assessment, requires a strict
construction of the statute"); see also
SAIJ Realty, Inc. v. Town of Kearny, 8 N.J.
Tax 191, 196-97 (Tax Ct. 1986).
See Ocean Pines, supra, 112 N.J. at 8 (explaining that the
statute encourages compliance with a "proper request" for
9 A-2466-12T1
information); and Terrace View, supra, 5 N.J. Tax at 474
(referring to the taxpayer's refusal to comply with a "legal and
reasonable request").
However, where the taxpayer receives a Chapter 91 request
that it deems improper in some fashion, it may not simply ignore
its statutory obligation to respond. Rather,
the taxpayer must take action to challenge
the request within the forty-five day
statutory time limit, and to put the
municipality on notice of its contention.
In any event, the taxpayer cannot just sit
by and do nothing until the assessment is
finalized, as this taxpayer did, and
thereafter seek to appeal the assessment by
plenary review. Such conduct results in
"unnecessary expense, time and effort in
litigation." See Terrace View, supra, 5
N.J. Tax at 471-72.
[Tower Center Assocs. v. Twp. of East
Brunswick, 286 N.J. Super. 433, 438 (App.
Div. 1996).]
Accord H.J. Bailey v. Neptune Twp., 399 N.J. Super. 381, 389-90
(App. Div. 2008); Morey v. Wildwood Crest Borough, 18 N.J. Tax.
335, 340 (App. Div. 1999), certif. denied, 163 N.J. 80 (2000).
Chapter 91 does provide a "safety valve" before the county
tax board for taxpayers who cannot respond to a request for
information for good cause. 1717 Realty Assocs. v. Borough of
Fair Lawn, 201 N.J. 275, 276, n.2 (2010). In Ocean Pines,
supra, 112 N.J. at 9, the Court did not address what would
10 A-2466-12T1
constitute "good cause" for not furnishing requested
information.
Instead, the Court left that question
open for determination on a case-by-case
basis. [Ocean Pines, supra, 112 N.J. at 9].
However, as the Tax Court made clear in
Terrace View (quoted with approval by the
Supreme Court in Ocean Pines, 112 N.J. at
8):
Refusals on the part of the
taxpayers to cooperate with local
property assessors cannot be
tolerated by this court.
Legitimate requests for
information by assessors to
prepare assessments are actions
which should be encouraged by this
court. Taxpayers frequently
complain of local property tax
assessors and their work. Here
the taxpayer had an opportunity to
supply to the assessor information
pertinent to the assessor's work.
It failed and refused to do so
without any explanation, and its
attitude in failing to even
respond to the assessor's
legitimate statutory request is
inexcusable.
[[Terrace View, supra,] 5 N.J. Tax
at 474-75.]
Where the request is thought not to be
"legitimate," in whole or in part, the
taxpayer must do something to assert that
contention before the assessment is imposed
to avoid the statutory bar to appeal
embodied in N.J.S.A. 54:4-34. Thus, as in
Ocean Pines, "plaintiff's failure to respond
in any fashion to the assessor's request
precluded plaintiff from asserting a 'good
cause' claim." Ocean Pines, supra, 112 N.J.
at 9.
11 A-2466-12T1
[Tower Center Assocs., supra, 286 N.J.
Super. at 439.]
In the case before us, we need not address the parameters of
good cause because plaintiff simply ignored a clear and proper
Chapter 91 request for information and never sought relief
before the county tax board.3 The notice was sent to plaintiff
by certified mail, and the accompanying letter, dated August 12,
2010, expressly requested "your recent twelve months (January 1,
2009 to December 31, 2009) operational cost . . . ." It is
specious to suggest that such clear and explicit language was
equivocal or confusing in any respect.
3
This is not a case where the information was not requested in
time to assist the assessor in making the assessment and to
diminish the likelihood of litigation. See West Mark Partners
v. W. Deptford, 12 N.J. Tax 591 (Tax 1992); Terrace View,
supra, 5 N.J. Tax at 471-72. In such a case, the information
request may not be viewed as a Chapter 91 request, but rather a
discovery demand, if first tendered after the taxpayer has filed
its complaint. Consequently, the sanction required by Chapter 91
would not be available to the municipality. See Delran Holding
Corp. v. Delran Twp., 8 N.J. Tax 80 (Tax 1985). In addition,
this is not a case where the property in question is not
"income-producing" for which the statutory sanction is
unavailable, H.J. Bailey Co., supra, 399 N.J. Super. 381, or
where the motion is brought outside the time required by Rule
8:7(e). There may be other cases in which, for example, the
request is so egregiously ambiguous in its identification of the
property or in the instruction to the taxpayer that due process
principles are offended. Cf. Ocean Pines, supra, 112 N.J. at 9-
11. We expect that such a case would be rare. See Middletown
Twp. Policeman's Benevolent Ass'n Local No. 124 v. Twp. of
Middletown, 162 N.J. 361, 367 (2000). This is not the case
before us, in any event.
12 A-2466-12T1
Finally, we address plaintiff's argument that the omission
of the word "may" in the copy of N.J.S.A. 54:4-34 defendant
included with its information request, precluded relief under
the statute. While we might, with justification, have elected
to forego addressing this argument because plaintiff did not
raise it before the Tax Court, see Nieder v. Royal Indem. Ins.
Co., 62 N.J. 229, 234-35 (1973) ("It is a well-settled principle
that our appellate courts will decline to consider questions or
issues not properly presented to the trial court when an
opportunity for such a presentation is available 'unless the
questions so raised on appeal go to the jurisdiction of the
trial court or concern matters of great public interest.'"
(internal citation omitted)), we nonetheless consider the
argument, given that both parties have argued the issue in their
briefs, and it is an issue likely to rise again in the future.
As we noted earlier, the statute was amended in 1979 to add
the last three sentences to N.J.S.A. 54:4-34 providing that "no
appeal shall be heard" where the property owner has failed to
respond to the assessor's request within forty-five days,
establishing the power of the county board to impose terms and
conditions for furnishing the requested information, and
requiring the assessor to enclose a copy of the statute with the
13 A-2466-12T1
written information request. As the Supreme Court noted in
Lucent Techs., Inc. v. Twp. of Berkeley Heights:
The originally-filed bill was amended
by the Senate Revenue, Finance and
Appropriations Committee (Committee), which
articulated the reasons for the amendment to
the statute in more expansive language than
that used by the Sponsor. The Committee
explained its concerns as follows:
While current statutes provide the
assessor with a procedure whereby
an assessment can be made
notwithstanding the refusal of a
property owner to provide income
information, the property owner is
not subject to any penalty for not
disclosing property income
information. The property owner
is free to appeal the assessment,
notwithstanding his refusal to
provide information which would
have affected the valuation, and,
perhaps, avoided the appeal from
the assessment. Further, where an
appeal has been filed, the
assessor currently has no access
to information on which the
appellant is basing his appeal and
thus the assessor is unprepared to
testify in argument to the
appellant's representations.
[Senate Revenue, Finance and
Appropriations Committee,
Statement to Senate Bill No. 309
(Jan. 26, 1978) (Committee
Statement).]
In order to address the shortcomings in the
existing statute, therefore, the Committee
added the language imposing the obligation
to respond within forty-five days and
expanded the proposed limitation on a tax
14 A-2466-12T1
appeal to preclude such an appeal in the
case of a false or fraudulent account as
well. Senate Bill No. 309 (pre-filed for
1978) (second reprint). Echoing the
concerns expressed by the Sponsor, the
Committee stated that it had added the
forty-five day limitation to create an
"orderly procedure" for the timely receipt
and consideration of information by the
assessor.
[Lucent, supra, 201 N.J. 237, 246-47
(2010).]
The Court added that the requirement that the assessor enclose a
copy of the statute with the information request "served to
place the taxpayer on notice about the significant consequences
of failing to respond . . . ." Ibid.
In SAIJ Realty, the plaintiff opposed the defendant's
motion to dismiss its complaint seeking direct review of an
assessment, and argued that the defendant had enclosed only the
pre-amendment version of the statute, and made no reference
whatever to the consequences to the taxpayer for a failure to
comply. SAIJ Realty, Inc. v. Town of Kearney, supra, 8 N.J. Tax
at 194. In denying the motion, Judge Crabtree explained that
the statutory direction to the assessor to include the statute
is "mandatory" and that the assessor's failure to include the
"critical, substantive" 1979 amendment constituted a "palpable
failure on [the] defendant's part to comply with the statute."
15 A-2466-12T1
Id. at 196. Consequently, the "principles of fair dealing"
required denial of the defendant's motion. Id. at 196-97.
The ruling in SAIJ Realty is sound, and while questions of
statutory interpretation are purely legal and we review the
holding of the Tax Court on questions of law de novo, Gallenthin
Realty v. Borough of Paulsboro, 191 N.J. 344, 358 (2007), SAIJ
Realty applies the well-settled principle that in interpreting a
statute, the primary goal is to give effect to the Legislature's
intent. DiProspero v. Penn, 183 N.J. 477, 492 (2005). The best
indicator of that intent is the plain language of the statute
itself. State v. D.A., 191 N.J. 158, 164 (2007). We therefore
agree that the assessor's duty to provide property owners with
the statute when tendering a Chapter 91 request is mandatory.
We also agree with Judge Crabtree's conclusion that where
an assessor provides property owners with a copy of the statute
that omits "critical [and] substantive" statutory provisions,
principles of fair dealing preclude the assessor from seeking
relief under the statute. However, where, as here, the omission
is minor and inadvertent, does not alter the substance of the
statute, and does not prejudice the property owner, the
municipality is still entitled to a dismissal pursuant to
N.J.S.A. 54:4-34.
16 A-2466-12T1
As the Tax Court observed in James-Dale Enters., Inc. v.
Twp. of Berkeley Heights, 26 N.J. Tax. 117, 126 (Tax 2011),
while the government must "turn square corners" when dealing
with the public,
[t]he doctrine "cannot be applied with
rigidity or undue technicality." New
Concepts For Living, Inc. v. City of
Hackensack, 376 N.J. Super. 394, 403, 22
N.J. Tax 616, (App. Div. 2005). Equitable
relief under the doctrine "cannot be
exercised or withheld rigidly, but [is]
always subject to the guiding principles of
fundamental fairness." Id. at 404.
[James-Dale, supra, 26 N.J. Tax at 126.]
The duty of the assessor under the statute is to provide
property owners with clear and correct notices. The assessor in
the case before us fulfilled that duty. The minor alteration in
the statute seized upon by plaintiff did not obscure or omit any
substantive provision in the statute, and did not prejudice
plaintiff in any respect. Consequently, plaintiff was not
entitled to any equitable relief from the requirements of
N.J.S.A. 54:4-34.
Affirmed.
17 A-2466-12T1