Opinion
Docket No. 017763-2009
04-10-2012
Tilwy, LLC v. Township of Lakewood
Yanky Brenner, Esq. Law Office of Norman Douglas Smith Paul L. LaSalle, Esq. Cleary, Giacobbe, Alfieri, Jacobs, LLC
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Patrick DeAlmeida
Presiding Judge
R.J. Hughes Justice Complex
P.O. Box 975
Trenton, New Jersey 08625-0975
(609) 292-8108 Fax: (609) 984-0805
Yanky Brenner, Esq.
Law Office of Norman Douglas Smith
Paul L. LaSalle, Esq.
Cleary, Giacobbe, Alfieri, Jacobs, LLC
Dear Counsel:
This letter constitutes the court's opinion with respect to defendant's motion to dismiss the Complaint pursuant to N.J.S.A. 54:51A-1(b) because all taxes due and payable for tax year 2009, the tax year under review, were not paid at the time that the Complaint was filed. For the reasons explained more fully below, defendant's motion is granted.
I. Findings of Fact and Procedural History
This letter opinion sets forth the court's findings of fact and conclusions of law on defendant's motion. R. 1:6-2(f). The findings of fact are based on the exhibits submitted by the parties on the motion.
Plaintiff Tilwy, LLC owns 7.72 acres of land in defendant Lakewood Township. The land is designated as Block 172, Lot 9 and is commonly known as 685 Squankum Road. The property is assessed at a total of $2,284,800 for tax year 2009.
Plaintiff challenged the assessment before the Ocean County Board of Taxation. On October 5, 2009, the county board issued a Judgment affirming the assessment.
On November 18, 2009, plaintiff filed a Complaint with this court challenging the Judgment of the county board. At the time that plaintiff filed its Complaint, none of the taxes due and owing on the property for tax year 2009 had been paid.
On December 10, 2009, defendant moved to dismiss the Complaint pursuant to N.J.S.A. 54:51A-1(b), which requires a taxpayer to have paid at the time of the filing of the Complaint all taxes due and owning for the tax year under review. The statute permits relaxation of the tax payment requirement in the "interests of justice."
According to the uncontested representations of plaintiff, while defendant's motion was pending the parties engaged in settlement negotiations. Apparently in order to facilitate further negotiations, the parties agreed that defendant would withdraw its motion in exchange for plaintiff's payment in full of all taxes due on the subject property for tax year 2009.
A January 21, 2010 letter from plaintiff's counsel to defendant's counsel provides:
Pursuant to our various phone conversations, enclosed please find a receipt from the Township of Lakewood Tax Collector's Office evidencing payment of $36,964.56. These monies were tendered
in certified funds in full payment of all outstanding 2009 taxes plus interest and penalties with regard to the above referenced property.
Kindly withdraw your Motion to Dismiss Plaintiff's Complaint which is returnable tomorrow and copy this office on your correspondence with the Tax Court.
Thank you for your cooperation and assistance in this matter.
On January 22, 2010, defendant's counsel informed the court in writing that the municipality wished to withdrawn its motion. Although the parties continued negotiations, the challenge to the assessment was not amicably resolved.
Defendant's withdrawal of its motion to dismiss the Complaint was informed by the holding in U.S. Land Resources v. Borough of Roseland, 24 N.J. Tax 484 (Tax 2009), issued in May 2009, six months prior to the filing of the Complaint and seven months prior to defendant's motion. In that case, Judge Hayser held that where taxes for the year under review are paid, in that case through the issuance of a tax sale certificate, prior to the return date of a motion to dismiss pursuant to N.J.S.A. 54:51A-1(b), dismissal of the Complaint is not warranted. Id. at 490-491. The court reasoned that the purpose of the statute is satisfied once the municipality collects the outstanding taxes for the year in question, warranting relaxation of the mandate in N.J.S.A. 54:51A-1(b) that the taxes be paid "[a]t the time that a complaint has been filed with the Tax Court . . . ." Id. at 492.
On April 20, 2011, the Appellate Division issued its decision in Dover-Chester Assocs. v. Township of Randolph, 419 N.J. Super. 184 (App. Div.), certif. denied, 208 N.J. 338 (2011). In that case, the court held that relaxation of the tax payment obligation in N.J.S.A. 54:51A-1(b) is not required by the interests of justice when the outstanding taxes are paid prior to the return date of a motion to dismiss the taxpayer's Complaint. Expressly disagreeing with the holding in U.S. Land Resources, the court held that the tax payment requirement in N.J.S.A. 54:51 A-1(b) is not satisfied by the issuance of a tax certificate prior to the return date of a motion to dismiss. Id. at 201-202. According to the Dover-Chester Assocs. court, the harm resulting from the interruption in the flow of revenue to the municipality meant to be discouraged by N.J.S.A. 54:51A-1(b) is not ameliorated by the collection of overdue taxes after the filing of a taxpayer's Complaint.
On September 2, 2011, defendant again moved to dismiss the Complaint pursuant to N.J.S.A. 54:51A-1(b). Defendant's initial moving papers do not mention the prior motion or plaintiff's payment of the 2009 taxes. At oral argument, defendant's counsel stated that defendant filed its second motion to dismiss because the Dover-Chester Assocs. court effectively overruled U.S. Land Resources and the appellate court holding mandated dismissal of the Complaint, despite plaintiff's late payment of the 2009 taxes on the subject property.
Plaintiff opposed the motion, arguing that N.J.S.A. 54:51A-1(b) should be relaxed based on the prior agreement of the parties which resulted in the withdrawal of defendant's first motion to dismiss. According to plaintiff, dismissal of the Complaint "would make a mockery of the negotiations between the parties at the time the first motion was filed." Plaintiff does not, however, move to enforce settlement or claim that the parties amicably resolved the underlying appeal. In addition, plaintiff argues that defendant should be estopped from seeking dismissal of the Complaint because it secured payment of the 2009 taxes from plaintiff through the promise to withdrawn it prior motion. Plaintiff also argues that the timing of defendant's motion, which was filed a year and eight months after plaintiff's payment of the outstanding taxes, militates in plaintiff's favor. Finally, plaintiff argues that its failure to pay taxes on the subject property is the result environmental concerns at the property which present an obstacle to development, warranting relaxation of the tax payment requirement.
II. Conclusions of Law
N.J.S.A. 54:51A-1(b) provides:
At the time that a complaint has been filed with the Tax Court seeking review of judgment of county tax boards, all taxes or any installments thereof then due and payable for the year for which review is sought must have been paid. Notwithstanding the foregoing, the Tax Court may relax the tax payment requirement and fix such terms of payments as the interests of justice may require.
As noted above, the Appellate Division recently underscored the importance of N.J.S.A. 54:51A-1(b) in Dover-Chester Assocs., supra, where the court explained that "[b]ecause the right of appeal in the Tax Court is statutory, the appellant must comply with all applicable statutory requirements for the Tax Court to entertain the appeal." 419 N.J. Super. at 190 (citing General Trading Co. v. Director, Div. of Taxation, 83 N.J. 122, 127 (1980); Royal Bradley Assocs. v. Borough of Bradley Beach, 252 N.J. Super. 401, 403-04 (App. Div. 1991)). A "taxpayer who seeks to appeal from a judgment of the county board of taxation must therefore comply with the tax payment requirement in N.J.S.A. 54:51A-1(b) unless the Tax Court determines to exercise its limited discretion" to relax the statute. Ibid.
N.J.S.A. 54:51A-1(b) was enacted to ensure the uninterrupted flow of revenue to the municipality while a tax appeal is pending. Sun Pipe Line Co. v. Township of West Deptford, 25 N.J. Tax 466, 475 (Tax 2010). "The purpose of the tax payment requirement is to protect the municipality's interest in receiving timely payment of taxes to provide the revenue necessary for governmental operations." Dover-Chester Assocs., supra, 419 N.J. Super. at 201 (citing J.L. Muscarelle, Inc. v. Township of Saddle Brook, 14 N.J. Tax 453, 457 (Tax 1995)). "When the flow of revenue is interrupted, the burden of an appealing taxpayer's unpaid taxes is shifted to the other taxpayers in the district and reflected in the reserve for uncollected taxes." Ibid.
Relaxation of the tax payment requirement is "granted sparingly, and in limited circumstances." Wellington Belleville, LLC v. Township of Belleville, 20 N.J. Tax 331, 336 (Tax 2002)(footnote omitted). The "'court must weigh all evidence relating to the totality of the circumstances resulting in non-payment of taxes, and make a fact sensitive determination on a case-by-case basis, as to whether the statutory tax payment should be relieved in the interests of justice.'" Dover-Chester Assocs., supra, 419 N.J. Super. 202 (quoting Huwang v. Township of Hillside, 21 N.J. Tax 496, 505 (Tax 2004)). In Wellington Bellville, supra, Judge Bianco established a three-part test to guide the court in determining whether relaxation of the tax payment requirement is justified:
At a minimum, it would seem that such circumstances must be (1) beyond the control of the property owner, not self-imposed, (2) unattributed to poor judgment, a bad investment or a failed business venture, and (3) reasonably unforeseeable.
[20 N.J. Tax at 336.]
The record contains little probative evidence with respect to the cause of plaintiff's failure to pay the 2009 taxes for the subject property prior to the filing of the Complaint. Although plaintiff argues that relaxation of the tax payment obligation is justified by what plaintiff contends is an unforeseen obstacle to its intended development of the property, the evidence in support of this argument is sparse. In opposition to defendant's motion, plaintiff submitted an August 19, 2009 letter from a consulting company that states that 3.4 acres of the 7.72-acre site "is undevelopable due to NJDEP wetlands regulations and stream buffer regulations." The letter is not accompanied by a certification attesting to its authenticity, explaining how the letter came into being, detailing the qualification of the person who signed the letter, or providing any evidence that the letter's contents are accurate.
A second August 19, 2009 letter to plaintiff from a partner at a New Jersey law firm states that remediation of environmental damage at the property was not completed at that time. An undated, unsigned letter on New Jersey Department of Environmental Protection letterhead is attached to the attorney's letter. Neither letter is accompanied by a certification attesting to its authenticity, explaining how the letter came into being, detailing the qualification of the person who signed the letter, or providing any evidence that the letter's contents are accurate. Simply put, the record contains no competent evidence with respect to environmental restrictions on the potential development of the subject property or how those restrictions resulted in plaintiff's failure to pay the 2009 taxes due to Lakewood Township.
Even if the court were to assume the accuracy of the contents of the three letters, plaintiff has not established grounds for relaxation of the tax payment requirement in N.J.S.A. 54:51A-1(b). Potential environmental complications limiting development potential like "municipal approvals, the decontamination process . . . demolition" and other aspects of the development of real property involve "[d]elay and unpredictability" which are "commonplace and reasonably foreseeable." Wellington Belleville, supra, 20 N.J. Tax at 337. Any reasonable developer of property in New Jersey must anticipate delays in securing necessary approvals, including the satisfaction of environmental concerns, and the potential restrictions on development occasioned by environmental regulations. Plaintiff apparently failed to account for environmental restrictions at the subject property and did not set aside sufficient reserves to pay the local property taxes due on the property until approvals for a profitable development could, if ever, be secured. The other property owners in Lakewood Township should not have to bear the burden of what is plainly poor planning on plaintiff's part and the resulting failed business venture. There is nothing in New Jersey law that provides that a property owner intent on developing property may avoid the tax obligations arising from the ownership of that property until environmental concerns are addressed and a profitable development can be realized.
The court notes that plaintiff provided no evidence of its financial condition, assets or ability to raise the funds necessary to pay its outstanding taxes. Plaintiff was able in January 2010 to produce the full amount of taxes and interest due for 2009 to forestall dismissal of its Complaint. The record is silent with respect to why plaintiff could not pay the 2009 taxes when they were due and what reversal of fortune permitted the January 2010 payment.
Nor can plaintiff establish that events after the filing of the Complaint justify relaxation of N.J.S.A. 54:51A-1(b). When defendant's first motion to dismiss was pending, the parties, relying on Judge Hayser's holding in U.S. Land Resources, agreed that defendant would withdraw its motion if plaintiff paid all outstanding 2009 taxes on the subject property. By agreeing to withdraw the original motion, the municipality was merely recognizing that under the then prevailing interpretation of N.J.S.A. 54:51A-1(b) plaintiff could defeat defendant's motion by paying the outstanding taxes on the subject property. The payment was made; the motion was withdrawn; and the parties continued settlement negotiations that proved unsuccessful.
A year and three months later, the Appellate Division issued its decision in Dover-Chester Assocs., which effectively overruled U.S. Land Resources. As a result, defendant became aware of the fact that dismissal of the Complaint was not precluded by the municipality's receipt of the outstanding taxes on the subject property. Having exhausted attempts at settlement, defendant moved for dismissal of the Complaint pursuant to the clear holding of the appellate panel in Dover-Chester Assocs. This course of action strikes the court as entirely reasonable. The Appellate Division clarified the meaning of the "interests of justice" provision of N.J.S.A. 54:51A-1(b) and held that, contrary to the holding in U.S. Land Resources, the municipality's collection of overdue taxes after the filing of a Complaint does not necessarily require denial of a motion to dismiss. The municipality seeks the benefit of the holding in Dover-Chester Assocs., which was issued after both parties satisfied an agreement that was based on a trial court's incorrect interpretation of the law.
Plaintiff has not moved to enforce a settlement agreement with defendant; nor does plaintiff allege, in effect, a breach of contract by the municipality. Plaintiff's request for relief is predicated on its argument that plaintiff paid the 2009 taxes only because defendant was willing to withdraw its motion in exchange. Yet, had plaintiff not paid its taxes, its Complaint would have been dismissed in January 2010. The only substantive argument that plaintiff has in opposition to defendant's motion, apart from its agreement with defendant, is the claim that environmental restrictions on the property warrant relaxation of N.J.S.A. 54:51A-1(b). As noted above, that argument is not persuasive. Thus, in the absence of plaintiff's January 2010 payment of taxes, the Complaint would have been dismissed. The taxes, however, would have remained due. Ultimately, the municipality would have issued a tax sale certificate with respect to the property, which would have resulted in the property being encumbered with a lien. Plaintiff would either satisfy the tax sale certificate through the payment of all outstanding taxes and interest or the certificate holder would ultimately have the option of foreclosing on the property. Under either circumstance, plaintiff would be in a worse position than it currently is as a result of its agreement with defendant. Plaintiff satisfied is 2009 tax obligation without issuance of a tax sale certificate, and without the threat of additional interest and foreclosure, and had the benefit of more than a year in which to negotiate a settlement of its tax appeal.
The only conceivable harm that plaintiff can allege to have suffered as a result of its January 2010 payment of the 2009 taxes is that plaintiff has been denied its "right" to have had its Complaint dismissed in January 2010 without paying the 2009 taxes. Theoretically, a property owner with land that cannot be developed might elect to forego payment of overdue taxes and allow dismissal of the Complaint, issuance of tax sale certificates and the loss of the property through foreclosure. Plaintiff, however, has not suggested that it would have preferred to have taken that course of action. Nor would the court support the effective abandonment of property by relaxing N.J.S.A. 54:51A-1(b) because a taxpayer was convinced by a municipality to pay its overdue taxes.
Additionally, the purposes of the statute would not be served by application of the relaxation provision here. As the Appellate Division made clear in Dover-Chester Assocs., the purpose of N.J.S.A. 54:51A-1(b) is to ensure the uninterrupted flow of revenue to the municipality. Plaintiff's 2009 taxes went unpaid until January 2010. The municipality was deprived of revenue for a significant period and the burdens of the shortfall occasioned by plaintiff's failure to fulfill its financial obligations fell on the shoulders of the other taxpayers of Lakewood Township. While the Legislature amended N.J.S.A. 54:51A-1(b) to permit relaxation in the interests of justice, Judge Bianco aptly limited application of that provision in Wellington Bellville, supra, to circumstances beyond the control of the taxpayer. Application of the interests of justice provision where a taxpayer withholds payment of its taxes until the return date of defendant's motion in order to facilitate settlement negotiations would not encourage the prompt and timely payment of taxes to municipalities prior to the filing of a Complaint.
Nor does the record support plaintiff's demand that defendant be estopped from seeking dismissal of the Complaint. "Equitable estoppel is the effect of the voluntary conduct of party whereby the party is absolutely precluded, both at law and in equity, from asserting rights which might have otherwise existed, against another person, who has in good faith relied upon such conduct and has been led thereby to change his position for the worse." Department of Envt'l Protection and Energy v. Dopp, 268 N.J. Super. 165, 175-176 (App. Div. 1993)(citing W.V. Pangborne & Co v. Department of Transportation, 116 N.J. 543, 553 (1989)). Instances in which estoppel has been applied against a government agency are rare. Ibid. "In practice, taxing authorities in New Jersey have never been estopped, either by their spoken words, their written words, or their actions, from imposing a tax." Black Whale, Inc. v. Director, Div. of Taxation, 15 N.J. Tax 338, 355 (Tax 1995). Estoppel may be applied against a government entity "to prevent manifest injustice." Dopp, supra, 268 N.J. Super. at 176 (citing Anske v. Borough of Palisades Park, 139 N.J. Super. 342, 348 (App. Div. 1976)).
As explained above, plaintiff did not suffer as a result of having relied on defendant's representation that its initial motion to dismiss would be withdrawn if plaintiff paid the outstanding 2009 taxes. Defendant fulfilled its promise. In addition, plaintiff benefited from the payment of the 2009 taxes, both by extending the time in which to negotiate an amicable resolution of this matter and by precluding the otherwise inevitable issuance of a tax sale certificate, with its attendance interest and foreclosure potential. This court cannot agree with the proposition that a taxpayer has been harmed by having fulfilled its statutory obligation to pay local properties taxes.
Finally, the timing of defendant's motion does not preclude relief to the municipality. The Appellate Division has held that the timing of a motion to dismiss pursuant to N.J.S.A. 54:51A-1(b) is not germane. See Dover-Chester, supra, 419 N.J. Super. at 199. The statute does not establish a time restriction for the filing of a motion to dismiss.
The court having concluded that no grounds exist for the relaxation of N.J.S.A. 54:51A-1(b), defendant's motion is granted. An Order and Final Judgment dismissing the Complaint is enclosed.
Very truly yours,
_________________
Patrick DeAlmeida, P.J.T.C.