Opinion
Docket No. 005693-2013
06-25-2013
Re: Saker Enterprises of Freehold, L.L.C. v. Township of Freehold
Peter Davidson, Esq. The Davidson Legal Group, L.L.C. Martin Allen, Esq. DiFrancesco Bateman et al. , P.C.
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Mala Sundar
JUDGE
BY ELECTRONIC MAIL
Peter Davidson, Esq.
The Davidson Legal Group, L.L.C.
Martin Allen, Esq.
DiFrancesco Bateman et al., P.C.
Dear Counsel:
This is the court's opinion with respect to defendant's motion to dismiss the above-captioned complaint for plaintiff's failure to respond to income and expense information requests pursuant to N.J.S.A. 54:4-34, more commonly known as a "Chapter 91" request. Plaintiff opposed the motion claiming that its accountant timely provided a response. Defendant then requested an evidentiary hearing since the opposition raised "potential credibility issues." During the hearing, it transpired that the accountant used the response form as to Lot 32, however, had clearly noted in his cover letter that the response pertained to Lots 31, 31.01 and 32, all of which comprised the above-captioned property. However, defendant's Chapter 91 motion included only Lot 31.01. Therefore, defendant argued that even if this court were to find that plaintiff provided a timely response, it still was entitled to the relief sought in its motion as plaintiff failed to respond to the Chapter 91 request attached to its motion addressing Lot 31.01.
For the reasons set forth below, the court finds that plaintiff did file a timely response. However, the court is unable to decide whether that response sufficed for purposes of the Chapter 91 request as to Lot 31.01 in the absence of necessary facts. Since this issue was not the subject of defendant's motion, but only arose during the evidentiary hearing at the behest of the court, the parties must be provided an opportunity to address the facts underlying the issue. The court will therefore direct the parties to submit supplemental pleadings in this regard with necessary certifications for factual assertions, and thereafter render its decision. FACTS
The facts are found from the pleadings, documents attached to the same, certifications provided by the Township's assessor and plaintiff's accountant, as well as the latter's testimony.
Plaintiff is the owner of property located in defendant, Township of Freehold ("Township"), designated as Block 50 and is comprised of Lots 31, 31.01 and 32.
By cover letter dated August 10, 2012, the Township's assessor sought income and expense information from plaintiff, pursuant to Chapter 91, pertaining to "New B: 50 L:31.01" with a street address of "3583-3632, Rt 9." The Chapter 91 request sought information for 2011 (01/01/2011 to 12/31/2011). As required by the statute, the request was mailed on August 8, 2012, to plaintiff at 922 Highway 33, Freehold, NJ 07728, by certified mail, return receipt requested. The return receipt indicates the Subject's identification as in the cover letter, namely, "New B: 50 L:31.01" with a street address of "3583-3632, Rt 9." The Township's cover letter stated that responses were to be sent "no later than September 25, 2012."
The certified mail's return receipt shows that the mailing was received by plaintiff on August 10, 2012. The Township's assessor certified that plaintiff "did not respond" to his Chapter 91 request.
Plaintiff's accountant provided a certification and testimony of its Managing Director. Attached to the certification was the Chapter 91 request, the Chapter 91 response, and the accountant's cover letter attached to the Chapter 91 response. The request was the assessor's August 10, 2012 cover letter which showed the property's identification as "New B: 50 L:31" located at "3585 Rt 9." The accountant's cover letter accompanying the response was dated September 17, 2012. The Chapter 91 response was undated, contained the accountant's signature, showed the property's identification as "New B: 50 L:32" located at "3625 Rt 9," and included information pertaining to the physical description and income/expenses.
The Managing Director averred that plaintiff is the firm's oldest and largest client, and for the last twenty years, he has been charged with preparing (or causing to be prepared), supervising, and filing (or causing to be filed) all of plaintiff's income and expense information for the Township in addition to several other accounting services. He testified that for the same period, he has prepared and caused to be prepared Chapter 91 requests on behalf of the plaintiff after plaintiff forwards him those requests. He stated that there are no other municipalities in which he submits a Chapter 91 response because the Subject is plaintiff's sole asset which is located in the Township.
His procedure in responding to the Chapter 91 request in the instant motion was the same as it has been each year: after receipt of the same from the plaintiff, he delegates the task of filling out the information to his associate, a CPA (who has practiced as such for at least twenty years). The associate pencils in the income and expense information, which he then reviews. If corrections are required, he sends them back to the associate, after which he reviews the corrected information. If not, he returns the form to the associate and directs her to finalize it. The penciled information is then manually typed out by one of his two administrative assistants. The final version (typed) is then placed on his desk for another review, after which he signs the information statement. Simultaneously, the assistant also prepares a cover letter for his signature, using the prior year's format and content, but making necessary changes to the dates. The assistant then makes a copy of the cover letter and the Chapter 91 response for the files and the client, generates an envelope (which has the firm's pre-printed return address) from the word-processing system, using the assessor's name and address as they appear on the Chapter 91 request. She then uses a mail meter for placing postage on the envelope, and at the end of her work day, physically drives the mail (along with the day's mail) to the post office, which is a few blocks from the accountant's office.
The Managing Director testified that his administrative assistant, an ex-FBI employee but who also received personal training and supervision in his office, has always been diligent, and that he has trained his staff to be vigilant about deadlines, since as an accountant, his clients are always facing one deadline after another, and the firm's computer includes software which tracks all due dates for clients. He stated that his associate and staff are well aware of the 45-day deadline for a Chapter 91 response, and the associate always marks the draft response with the deadline on it. He further testified that he has never had an occasion or cause to discipline the assistant for any professional reason. He also stated that in the 20-odd years he has caused the Chapter 91 responses to be mailed to the Township, he has never been faced with an issue of non-receipt of his responses. Upon cross-examination, he admitted that the "Schedule A" attached to the request (pertaining to details of the rented area) was left blank, but averred that he could not recollect ever having filled that Schedule or being notified that his Chapter 91 response was rejected or deficient because Schedule A was not completed.
At the end of the accountant's testimony, the court sought clarification from the parties' counsel as to the Lot numbers identified in the Chapter 91 request (Lot 31.01) and the response (Lot 32). The accountant testified that he used the pre-printed form sent by the assessor's office (via plaintiff), which also had the pre-printed address label. He averred that for as long as he has been responding to the Chapter 91 requests for the Township, he always received only one such request from the plaintiff and provided one unified response on that request form. He did not recollect receiving three separate Chapter 91 requests for the three Lots (31, 31.01 and 32). He further stated that he always provided information pertaining to the three Lots as one response because the Subject is the plaintiff's sole asset in the Township; the three Lots are contiguous; and they are all used for retail stores or parking as the "Freehold Shopping Center." This is also why, he stated, his cover letter which is in the same format and content for the last twenty years, always contained the sentence that the response covered all three Lots. Thus, his response (attached to his certification in the instant motion) stated as follows:
As requested in your letter of August 10, 2012 (copies enclosed), we are enclosing detailed income and expense information for Saker Enterprise of Freehold, LLC for the year ended [sic] December 31, 2011. The information includes Lots 31, 31.01, and 32.A perusal of the documents submitted with the parties' respective pleadings showed that the three Lots had been subject of separate Chapter 91 requests: (1) the attachment to the accountant's certification, i.e., the August 10, 2012 cover letter from the assessor asking for the Chapter 91 information, indicated the property's identification as "New B: 50 L:31" located at "3585 Rt 9;" (2) plaintiff's Chapter 91 response showed the property's identification as "New B: 50 L:32" located at "3625 Rt 9;" (3) the August 10, 2012 cover letter, the attached income/expense form, and the certified mail receipts, the subject of the instant motion, all showed the property's identification as "New B: 50 L:31.01" located at "3583-3632, Rt 9." ANALYSIS
We hope this information satisfies all requirements. If you have any questions, please do not hesitate to call.
N.J.S.A. 54:4-34 requires an owner of income producing property to "render a full and true account" of income from such property in response to a "written request of the assessor, made by certified mail." The assessor must also include a copy of the statute with the written request. Ibid. Failure or refusal to provide a response, or provision of a "false or fraudulent" response, within 45 days of the Chapter 91 request, bars the property owner from challenging the property's assessment for the tax year at issue. Ibid.
(A) Did Plaintiff Send a Response to the Chapter 91 Request
A presumption of receipt is attached to a properly mailed response. Mail is presumed to be received if: "(1) . . . [it] was correctly addressed; (2) . . . proper postage was affixed; (3) . . . the return address was correct; and (4) . . . [it] was deposited in a proper mail receptacle or at the post office." SSI Med. Servs., Inc. v. State, 146 N.J. 614, 621 (1996). These four elements can be established by proof of "habit or routine practice with corroboration that the practice was followed in a particular instance." J & J Realty Co. v. Township of Wayne, 22 N.J. Tax 157, 162 (Tax 2005) (citation and internal quotations omitted).
Thus, this court must "evaluate the nature and worth of the corroborative evidence offered to determine whether it meets the preponderance of the evidence standard and raises a presumption of mailing and receipt. As the forms of communication change, different proofs will have to be established in order to demonstrate mailing." SSI Medical, supra, 146 N.J. at 624, n.1. Therefore, a taxpayer who has not failed or refused to respond, and proves this fact by a preponderance of evidence, is not subject to the limitation of appeal rights merely because the tax assessor has not received the response.
Here, the court is satisfied that plaintiff's accountant followed its 20-year practice and procedure of responding to the Township's Chapter 91 request. The Managing Director provided credible testimony of the procedure, was personally aware of the same, having established and supervised it, and followed the exact procedure in connection with the instant Chapter 91 response. He also credibly testified that he has never encountered an issue with respect to timely mailings and receipt of Chapter 91 responses from the Township.
"The presumption of receipt derived from proof of mailing is rebuttable and may be overcome by evidence that the notice was never in fact received." SSI Medical, supra, 146 N.J. at 625 (citations and internal quotations omitted). Although here the assessor certified (but did not testify) that plaintiff did not respond to his request, this does not automatically require a dismissal of plaintiff's appeal. This is because, in the context of a Chapter 91 motion, the courts balance the severity of the consequences of such dismissal to the taxpayer and the municipality. Thus, this court has held that:
when a taxpayer, in good faith, responds by regular mail to a Chapter 91 request, and, through no fault or negligence of the taxpayer, the assessor does not receive the response, the severe limitation on appeal rights contained in Chapter 91 should not be imposed. That limitation is appropriate only when a taxpayer has, in the words of the statute, "failed or refused to respond" to the assessor's request.Under the circumstances of this matter, and in the absence of any contradictory testimony or evidence, the court finds that plaintiff did send a timely Chapter 91 response to the Township.
[J & J Realty, supra, 22 N.J. Tax at 165.]
(B) Does a Response Identifying Lot 32 Suffice as a Response for Lot 31.01
Although the court has found that plaintiff mailed a timely response, it does not answer the issue raised by the court, namely, whether the response which referenced Lot 32 as the property's identification, suffices as a response to the Chapter 91 request which addressed Lot 31.01, the subject of this motion.
This became an issue only during the evidentiary hearing and as a consequence to the court's request for a clarification from the parties.
The Township argues that because plaintiff's accountant responded to a Chapter 91 request that addressed only Lot 32, plaintiff had failed to respond to the Chapter 91 request at issue in this motion, i.e., Lot 31.01. Therefore, its motion should be granted. This is especially because, Township contends, plaintiff filed a complaint only as to two of the three lots (i.e., Lots 31.01 and Lot 32).
Plaintiff argues that the Subject was and has always been dealt with by both parties as a single economic unit. It also asserts that given the accountant's testimony that he always provided the Township with only one response but specifically notified the assessor that the response addressed all three Lots 31, 31.01 and 32, the plaintiff did provide a timely response for the Subject, so as to defeat the Township's Chapter 91 motion. He added that requiring a separate response for Lot 31.01 would essentially require superfluous information, and that seeking a separate response for a property which is treated as a single income-producing property renders the multiple Chapter 91 requests, at the very least, confusing to a taxpayer.
It is undisputed that plaintiff's accountant provided a timely Chapter 91 response. It is further undisputed that the accountant addressed all three Lots in the response as indicated by his cover letter. It is also undisputed that the Chapter 91 response form he used, which was provided by the Township, referenced only Lot 32. A perusal of the Chapter 91 request addressing Lot 31.01 and the response form used by plaintiff's accountant (addressing Lot 32) shows that the information requested is identical. Plaintiff's accountant indicated on the response that the year of construction of the one-story building was 1991 with 153,400 gross floor area and 33 rental units which are "subject to lease." While the accountant testified that the three Lots are used for retail stores or parking, plaintiff's counsel indicated that he believed there are two buildings. There is no factual information as to this building, which Lot the building is situated upon, and whether it separately produces any income. Counsel was also unaware of the fact that only two of the three Lots were under appeal.
For tax year 2013, plaintiff filed one complaint against the assessments imposed upon Lots 31.01 and Lot 32. The complaint noted that "Plaintiff is also the owner of the property located at Block 50, Lot 32. Said Property is in common ownership and contiguous to the other properties referred to in his complaint." The Township filed counterclaims for both Lots as well. Note that plaintiff's 2012 complaint (presently pending) also listed only Lots 31.01 and Lot 32. The Township did not file counterclaims or Chapter 91 motions for tax year 2012.
Additionally, it is unknown whether the assessor even considered the information provided by plaintiff as being inapplicable to Lot 31.01, or whether it was appropriate vis-à-vis Lot 32's assessment since the assessor was not produced as a witness during the evidentiary hearing. Further, while the Township argued that the single economic unit theory is inapplicable in a re-assessment year when each property is separately assessed, there were no facts in support thereof (such as the assessor's testimony).
The Township noted that the assessment for Lot 32 was $486,600 and for Lot 31.01 was $16,868,200 (note that for tax year 2012, the assessments were slightly higher at $523,000 for Lot 32 and $17,860,900 for Lot 31.01). The Chapter 91 response indicated gross income from leased spaces at about $2.3 million, "actual income" of about $1.7 million, and total expenses of about $181,000.
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Neither party was prepared to address the facts pertaining to this issue, as the issue of a response as to one Lot sufficing as a response for another Lot was not the subject of the Township's motion at any time. It only arose during the evidentiary hearing because of the court's questions. While counsel for each party argued the "reality" of the world of Chapter 91 requests and responses, without credible facts in this regard, the court views it premature to decide the issue of whether a response for Lot 32 is sufficient for Lot 31.01, and if not, whether the court should apply the "good cause" exception. See TMC Props. v. Borough of Wharton, 15 N.J. Tax 455, 463 (Tax 1996).
Consequently, the court directs the parties to supplement their pleadings by filing simultaneous briefs (with required certifications for factual assertions) on the issue of the allegedly interchangeable information for Lots 31.01 and Lot 32 no later than July 5, 2013. Simultaneous reply briefs will be due no later than July 12, 2013. Thereafter, the court will render its decision.
Very truly yours,
Mala Sundar, J.T.C.