Opinion
Docket No. 009534-2013
07-01-2015
Re: AMC Theaters of New Jersey, Inc. v. Township of Freehold Block 69.01, Lot 18.02, Qual. C01
Mala Sundar JUDGE
NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS
BY ELECTRONIC MAIL
James T. Ryan, III, Esq.
Stavitsky & Associates, L.L.C.
350 Passaic Avenue
Fairfield, New Jersey 07004
Jorge Sanchez, Esq.
DiFransecso Bateman et al., P.C.
15 Mountain Boulevard
Warren, New Jersey 07059
Dear Counsel:
This is the court's decision of defendant's summary judgment motion which sought to dismiss plaintiff's complaint. Defendant ("Township") maintains that plaintiff, a tenant of the above captioned property, ("Subject"), is contesting its allocation of the "total assessed value" for Block 69.01, Lot 18.02, which is a battle that must be fought with the landlord and outside the realm of this court's jurisdiction. The Township's basis for this conclusion is that the Subject was merely a line-item created for the convenience of plaintiff and the landlord; that there was no challenge by anyone to the total assessment on Block 69.01, Lot 18.02 for 2013; and that the 2014 property record card shows a single assessment for Block 69.01, Lot 18.02. *
Plaintiff ("AMC") argues that (1) since 2007 to 2013 (including 2013), the Subject has been separately assessed for land and improvements; (2) for the same period, the Subject has been identified as Block 69.01, Lot 18.02, Qualifier C01; (3) for the same period, AMC consistently received Notices of Assessments in its name and as a tenant; (4) as a taxpayer, and pursuant to the terms of its ground lease, it had standing to file the 2013 appeal; and (5) the assessor's decision to merge two lot qualifiers, including the Subject, with another vacant land portion, as a single taxable parcel called Block 69.01, Lot 18.02, and issue a single assessment in the landlord's name, was only for tax year 2014 onwards.
AMC's arguments are fully supported by the record. The Township concedes that as a tenant-taxpayer in 2013, AMC had standing to file a local property tax appeal. AMC was issued a separate Notice of Assessment for tax year 2013 as to the Subject (identified with its Qualifier), which only indicated the assessment for the Subject. The Township did not show that it had issued a "total" assessment for Lot 18.02 (i.e., without any qualifiers) in 2013 such that AMC's appeal was substantively erroneous. The Township's motion is therefore denied. FACTS
On January 5, 1990, AMC's predecessor, Loews Freehold Mall Cinemas Inc. ("Loews"), signed a ground lease for 12 acres of vacant land located in a large shopping center, identified as Lot 18.02, from Freemall Associates ("Landlord"). Loews agreed to build a stand-alone cinema theater, and assumed liability for all real estate taxes and assessments on the land plus improvements. It had the "right . . . to seek a reduction of the valuation" of the leased premises "for tax purposes and to contest in good faith by appropriate proceedings, the amount or validity in whole or in part of any" assessment, with or without the Landlord's participation. Any refunds or increase in tax liability due to the litigation was to inure only to Loews.
The agreement provided that the parties would make their best efforts to "obtain . . . an assessed valuation" of the leased portion "as a separate tax lot," failing which they would try to obtain "a separate official or 'divided interest' apportionment" or "a separate unofficial apportionment." If all these efforts failed, then Loews would be responsible for its proportionate share of taxes based on the ratio of the leased land area and gross leasable area of the theater. Loews was still entitled to contest the taxes and assessments "by appropriate proceedings diligently conducted in good faith," provided the Landlord had not filed appeals.
AMC bought Loews in 2006, assumed the ground lease, and continued to operate a movie theater. For tax year 2007 and 2008, the 12 acres of land and the movie theater, identified as Lot 18.01TH, was assessed at $12,557,600 (allocated $6,000,000 for land and $6,557,600 for improvement). Notices of Assessment were mailed to AMC, "Attn Licenses." The pattern of lot identification, assessment, and mailing continued, except that from tax year 2009 the Subject was identified with a qualifier "C01." It did not change for tax year 2013, thus, AMC received the 2013 Notice of Assessment of $15,250,000 (allocated $6,885,000 to land and $8,365,000 for improvement). AMC timely appealed the assessment on April 1, 2013.
The assessment was the same as in 2012. The 2013 Notice of Assessment had a notation, "Reassessment District."
By letter dated August 30, 2013, the Township's assessor sent a notice of "Adjustment to Block 69.01, Lot 18.02." The assessor stated that he had decided to "delete Block 69.01 Lot 18.02 C01 (AMC Loews)" and another parcel, Block 69.01, Lot 18.02 C02 (a furniture store), and "merge the[ir] assessments "with Block 69.01, Lot 18.02," a piece of vacant land which had been assessed at $2,351,500 for tax year 2013. The assessor noted that there would be no change in the 2013 assessment for AMC, but that for 2014, the total assessment would be $28,400,200, with AMC's "portion" to "remain" at the 2013 amount. The assessor's justification for this merged assessment for 2014 was that AMC and the furniture company were tenants therefore they should "not be listed as an owner of the property."
The computer printout of the 2014 property record card shows the Landlord's name, and a total assessment of $28,400,200. The bottom portion of this document reads "For 2014 - Deleted C01 & C02 - No Master Deed Filed. . . . AMC Loews: 81,690 (12 Acres)" (presumably meaning that the improvements measured 81,690 square feet on the 12 acres of land). ANALYSIS
The Township concedes that for purposes of N.J.S.A. 54:3-21, the local property tax appeal provision, AMC has standing to file and prosecute a property tax appeal. It however argues that since AMC only appealed its portion of the total assessment, it is not an "aggrieved taxpayer," therefore this court lacks subject matter jurisdiction. The Township maintains that the 2013 assessment was merely a "line item" for AMC's convenience, which cannot be separately appealed. It relies upon an unpublished opinion, Brunswick Hills Racquet Club v. Township of East Brunswick, Dkt. Nos. 13941-2011; 4272-2012; 1497-2013, (Tax Oct 2, 2013), and on Hull Junction Holding Corp. v. Borough of Princeton, 16 N.J. Tax 68, 125 (Tax 1996).
The court is unpersuaded. It is undisputed that for 2013 the Township issued a separate Notice of Assessment for the Subject; that Notice was sent to AMC; and AMC, as a tenant-taxpayer had the standing to appeal. There is no proof that the Township sent a notice of a merged assessment (which the Township now calls the "total assessed value") in 2013 to AMC. All AMC could then do was to follow the appeal instructions on the Notice of Assessment it received, which was to file an appeal from assessment indicated on the Notice, i.e., $15,250,000. The Township's instant motion requiring AMC to appeal the total assessment implies that the Notice of Assessment sent to AMC advising it to appeal from that assessment is erroneous.
Furthermore, it is erroneous to construe the assessor's August 2013 "decision" to disregard the two Qualifiers C01 and C02 and merge the three separate "tax" lots, as somehow trumping the Notice of Assessment sent to AMC for 2013. This is because the August 2013 letter itself applied the merged assessment decision to tax year 2014. Such a construction is also inequitable because the assessor's decision was made after the April 1 filing deadline, and should not be applied retroactively to deprive AMC of its ability to challenge its 2013 assessment. See F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418 (1985) ("government must turn square corners" in "dealing with the public").
The Township's reliance upon the unpublished decision is misplaced. There was no issue of the tenant receiving a separate notice of assessment for its portion of the leased property, which was identified as a separate taxable lot. There was one assessment for each tax year, against which appeals were filed by the landlord. Additionally, the plaintiff tenant conceded that its only concern in the litigation was "the internal allocation of the value of [its] building in relation to the remainder of the shopping center," thus, it did "not dispute the total assessed value of the property." Here, there is no evidence that the assessor had even issued a single assessment for Block 69.01, Lot 18.02 for 2013. AMC does not concede that it is simply disputing the Landlord's allocation of value. Its 2013 complaint, based upon the separate assessment issued to AMC for Block 69.01, Lot 18.02, Qual. C01, clearly states that it is challenging the assessment as being "in excess of the true or assessable value of the property." The Township's argument that AMC's complaint is merely stating an "internal" allocation dispute with the Landlord is completely unsupported.
Plaintiff did not even oppose the summary judgment motion to dismiss its complaints.
AMC used the standard complaint form prescribed by the Tax Court Management Office.
The ruling in Hull Junction, supra, that an "assessor's voluntary segregation of one tax lot into multiple assessment line items should be disregarded," 16 N.J. Tax at 125, does not defeat AMC's position in this motion. First, that conclusion was for purposes of the application of Chapter 123, not in the context of whether a tenant's appeal should be dismissed for lack of subject-matter jurisdiction. Second, the court observed that the separate line-items could not be considered as separate assessments because there were "no long term ground leases dividing the subject property into marketable segments" and that the line item "assessments do not even relate to separate buildings, but rather [were] imposed by function or use." Id. at 125. Clearly, the facts are not so here, and the Township failed to explicate why this distinction is insignificant. Third, the court pointed out the several errors, even if in good faith, arising from the assessor's "accommodation" to the property owner's request for "separate assessment line items" for "different segments of the property," which included appeals on portions of the property that were either settled or withdrawn, did not and could not "ignor[e] the reality of what the subject property was, and is, and how its owners have treated it." Id. at 127-28. Here, the "reality" as evidenced by the ground lease and the annual Notices of Assessment from 2007 to 2013 shows that the Landlord and AMC (and apparently the Township), agreed to and did treat the Subject as a separate assessable lot for purposes of filing and prosecuting an appeal.
The court also stated that "[a]ssessments should be imposed in accordance with [the] statutes and regulations so that, except where a farmland assessment is involved, there is only one assessment for each tax lot." 16 N.J. Tax at 128. Thus it is disingenuous for the Township to seek dismissal of AMC's 2013 complaint pursuant to Hull Junction when it had been doing what that court disapproved. Again, that case had been decided when the Township filed two separate complaints for tax year 1997, one against Loews (in connection with a $6,539,500 assessment on the Subject, identified as Block 69.01, Lot 18.02TH, 101 Trotters Way), and one against the Landlord (in connection with a $5,071,400 assessment on Block 69.01, Lot 18.02BB (3710 Route 9). The first case was settled for $10,600,000 and the second case for $6,542,000.
In Village Supermarkets, Inc. v. Township of West Orange, 106 N.J. 628, 633 (1987), the Court noted that "there can be but one appeal of a single assessment of a parcel, [thus] a tenant's appeal necessarily brings into question the assessment of the entire shopping center," therefore a tenant's appeal should be on notice to the landlord. Here, however, the Township has failed to show that there was a "single assessment" in 2013. Its reliance on the assessor's decision, post-2013 filing deadline, to consolidate the lot qualifiers for purposes of the 2014 assessment, as providing a legal basis for dismissing AMC's 2013 complaint, is meritless. CONCLUSION
The property in Village Supermarkets, supra, was a "multi-tenanted shopping center" with "several buildings," and although separate values were allocated to each building on the property record card, the center was "assessed as a single parcel" for which one "tax bill" was issued. 206 N.J. Super. 597, 599 (App. Div. 1986). --------
For the aforementioned reasons, the Township's motion to dismiss AMC's complaint for tax year 2013 is denied. An Order reflecting the denial will be simultaneously entered.
Very truly yours
/s/
Mala Sundar, J.T.C.