BOROUGH OF RED BANK VS. RMC-MERIDIAN HEALTH (TAX COURT OF NEW JERSEY) (CONSOLIDATED)

NOT FOR PUBLICATION WITHOUT THE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 NOS. A-0277-18T2
A-0278-18T2
BOROUGH OF RED BANK,
Plaintiff-Appellant,
v.
RMC-MERIDIAN HEALTH,
Defendant-Respondent.
_____________________________
Submitted February 27, 2019 – Decided March 14, 2019
Before Judges Nugent and Mawla.
On appeal from the Tax Court of New Jersey, Docket
Nos. 0007-2016 and 0008-2016.
DiFrancesco, Bateman, Kunzman, Davis, Lehrer &
Flaum, PC, attorneys for appellant (Martin Allen, of
counsel and on the brief; Kevin A. McDonald, on the
briefs).
McCarter & English, LLP, attorneys for respondent
(Susan A. Feeney, of counsel and on the brief; Farhan
Ali, on the brief).
PER CURIAM
In these consolidated tax appeals, the Borough of Red Bank challenges
July 26, 2018 orders granting RMC-Meridian Health (Meridian) summary
judgment dismissal of the Borough's complaints. Those complaints sought to
impose a tax assessment against a hospital operated by Meridian for 2014 and
2015. Meridian had been exempt from taxation by the tax assessor pursuant to
a payment in lieu of taxes agreement.
On appeal, the Borough raises the following arguments: 1) the Borough
had independent authority to tax Meridian and was not bound by the tax
assessor's ability to impose omitted assessments; 2) Meridian could be taxed
since it was no longer operating the hospital as intended by the statute, entitling
it to the tax exemption, because it had experienced a change in use, and the tax
court erred by entering summary judgment without permitting the Borough
discovery on the change in use; 3) the tax court ignored AHS Hosp. Corp. v.
Morristown, 28 N.J. Tax 456 (Tax 2015), which permits taxation on omitted
assessments; and 4) the tax court's error was a mistake of law and subject to our
de novo review.
Having reviewed the Borough's arguments and considered the record, we
affirm for the reasons expressed in the thorough and well-reasoned opinion of
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Judge Mala Sundar in Borough of Red Bank v. RMC-Meridian Health, 30 N.J.
Tax 551 (Tax 2018). We add the following comments.
"An appellate court accords a highly deferential standard of review to tax
court decisions." N.J. Tpk. Auth. v. Twp. of Monroe, 30 N.J. Tax 313, 318
(App. Div. 2017) (citing Brown v. Borough of Glen Rock, 19 N.J. Tax 366, 375
(App. Div. 2001)). "[We] will not disturb a tax court's findings 'unless they are
plainly arbitrary or there is a lack of substantial evidence to support them'
because '[t]he judges presiding in the Tax Court have special expertise.'" Ibid.(quoting Glenpointe Assoc. v. Twp. of Teaneck, 241 N.J. Super. 37, 46 (App.
Div. 1990)). "Although [we] defer[] to a tax court's valuation decisions, [we]
will review de novo a tax court's legal decisions." Ibid. (citing Toll Bros. v.
Twp. of W. Windsor, 173 N.J. 502, 549 (2002)).
The Borough argues the judge misinterpreted N.J.S.A. 54:4-63.26 and
"ignored the municipality's independent right to seek omitted assessments" upon
the property owned by Meridian. The Borough claims the judge ignored
N.J.S.A. 54:63.12 "as a basis for the review of [d]efendant's property tax
exemption by the municipality." We disagree.
"Tax laws are creatures of the Legislature and as such are to be strictly
construed." Little Egg Harbor Twp. v. Am. Tel. & Tel. Co., 9 N.J. Tax 314, 323
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(Tax 1987), aff'd o.b., 10 N.J. Tax 236 (App. Div. 1988). "Tax laws generally
require that tax determinations be subject to review in a mandatory manner in
strict conformity with statutory time limitations." Hovbilt, Inc. v. Twp. of
Howell, 138 N.J. 598, 603 (1994) (quoting Egg Harbor, 9 N.J. Tax at 323).
Here, the Borough attempted to impose an omitted assessment for the
2014 and 2015 tax years, outside the procedural requirements of N.J.S.A. 54:3-
21 and N.J.S.A. 54:4-63.26. The Borough assessor determined Meridian was
exempt for the 2015 tax year based on the assessment made during the pretax
year, 2014. N.J.S.A. 54:3-21 requires a party to appeal the assessment on or
before April 1 of the tax year. The Borough filed its complaints after the April
1 statutory deadlines for 2014 and 2015, respectively. The Borough's only
avenue of appeal was filing a timely complaint pursuant to N.J.S.A. 54:3-21,
which it failed to do. Egg Harbor, 9 N.J. Tax at 329. Judge Sundar did not
misinterpret the statutory requirements, which governed the Borough's right to
appeal.
We also reject the Borough's argument the judge misinterpreted N.J.S.A.
54:4-63.26. The statute allows omitted assessments when the exemption status
of real property "ceases by reason of a change in use or ownership of such
property[.]" Ibid. However, in order to impose an omitted assessment, there
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must be facts indicating a change in use or ownership of real property causing it
to lose its exemption status. Boys' Club of Clifton, Inc. v. Jefferson Twp., 72
N.J. 389, 400 n.4 (1977) (citing N.J.S.A. 54:4-63.26).
The Borough adduced no evidence of a change in use of Meridian's
property. The Borough argued it was owed discovery related to its "theory
regarding 'change in use,'" however, it provided no explanation for either its
theory or the discovery sought to corroborate the theory. Judge Sundar
concluded, "[a]s [Meridian] correctly argues, the Borough is using the discovery
process as a fishing expedition and as an attempt to find support for denial of an
exemption." Borough of Red Bank, 30 N.J. Tax at 563.
We agree. The judge did not misinterpret N.J.S.A. 54:4-63.26 because
there was no evidence suggesting there had been a change in use.
Finally, the Borough argues "the [t]ax [c]ourt's interpretation of N.J.S.A.
54:4-63.26 [is] against the overall statutory scheme" and its "interpretation of
the legislation . . . is novel and against the myriad of existing case law." The
Borough points to AHS and argues "the plaintiff in [AHS] filed a partial
summary judgment motion that employed the same arguments as [Meridian
does] here."
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In AHS, a tax court assessed the appeals of two omitted assessments levied
by a taxing district against a plaintiff which operated a hospital. 28 N.J. Tax at
471. The hospital timely challenged each of the omitted assessments. Ibid. The
AHS court decided the hospital did "not meet the current criteria for property
tax exemption under N.J.S.A. 54:4-3.6 and the applicable case law" based on
"the court's findings that the [s]ubject [p]roperty is being used substantially for
profit" pursuant to the evidence presented on appeal. Id. at 536.
AHS was not binding on Judge Sundar and is not binding on us. More
importantly, its procedural posture and facts are distinguishable from this case.
As we noted, in AHS, the omitted assessments already existed on the subject
property and the court's decision regarded the property owner's timely direct
appeal of those omitted assessments. Here, the Borough sought to impose an
omitted assessment for the 2014 and 2015 tax years, not challenge an already
omitted assessment.
For these reasons, we conclude Judge Sundar correctly granted summary
judgment in favor of Meridian. To the extent we have not addressed the other
arguments raised by the Borough, it is because they are without sufficient merit
to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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