Opinion
Docket No.: 019457-2012 Transfer from Superior Court Docket No.: C-318-12
11-19-2013
Re: Giua, Benjamin & Deborah v. Closter
Daniel B. Shapiro Law Office of Daniel B. Shapiro JoAnne Riccardi Edward Rogan & Associates, LLC
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
JOSEPH M ANDRESINI
JUDGE
Daniel B. Shapiro
Law Office of Daniel B. Shapiro
JoAnne Riccardi
Edward Rogan & Associates, LLC
Dear Counsel:
This letter serves as the court's opinion with respect to the parties' cross-motions for summary judgment. Plaintiff seeks a judgment from the Tax Court to declare the purported right to a reduction in property taxes given as consideration in exchange for an easement granted to the defendant. Alternatively, Plaintiff argues that there was no meeting of the minds, or consideration, and that the easement should be extinguished. Defendant contends that plaintiff failed to exhaust the State's statutory scheme for an administrative review of the property tax assessment under N.J.S.A. 54:3-21, and the Tax Court does not have jurisdiction to provide relief * from assessments in years in which tax appeals were not filed. The court denies the cross-motions for summary judgment, and finds plaintiff has failed to exhaust his administrative remedies under N.J.S.A. 54:7-1. Accordingly, plaintiffs complaint is dismissed without prejudice for failure to exhaust administrative remedies.
Decision is not pursuant to N.J.S.A. 54:3-21 as argued by defendant.
Findings of Fact and Procedural History
Plaintiffs, Benjamin Giua, Jr. and Deborah Giua ("plaintiff") are taxpayers in the Borough of Closter ("defendant") and the owners of record of the property listed on the Borough's Tax Map as Block 1312, Lot 13, commonly known as 326-330 Harrington Avenue ("subject property"). Defendant owns two adjacent lots, Block 1302, Lot 12 and Block 1302, Lot 29. On or about 2000, Defendant undertook what became known as the South Parking Lot project ("project"). The project set to make provisions for a permanent reciprocal easement with adjacent property owners for access to, and parking facilities for, the parties to the project and their invitees. The easement in question was designed for the limited right of ingress and egress of plaintiffs property and the pavement of the lot. For reasons unbeknownst to the court, the full project is yet to be completed, but the portion of plaintiff's property subject to the easement is in use.
On or about July 2, 2007, plaintiff and defendant entered into an agreement in which plaintiff agreed to accept "in consideration of One...dollar and other valuable consideration paid each to the others..." in exchange for, among other things, allowing the Borough access to the property." Paragraph 11 of the 2007 agreement states:
The parties to this Agreement, as additional consideration, shall have their real estate taxes reduced in a percentage equal to that portion of the current land assessment currently assessed on their property to the portion being covered by the terms of this Agreement.
According to defendant, in 2008 the plaintiff approached the Borough Assessor to request his tax adjustment pursuant to the 2007 easement. Plaintiffs certification represents that he never approached the assessor. Regardless of the parties' recollection, the assessor in fact made a 10% downward adjustment to the land assessment of the subject property effective 2009. The Borough attorney represents plaintiff was notified of the same by letter dated April 29, 2008. See Def. Att'y Certification, ¶ 8, June 5, 2013; see also Def. Ex. D.
Previously, in 2000, the Borough attempted to secure an identical easement from the same property owners, including plaintiff, for the same parking project. Although the plaintiff signed on to the 2000 easement, not all of the property owners signed, and the project remained incomplete. Nevertheless, the defendant represents that the assessor noted the plaintiff's easement and provided a 5% reduction in land value following the 2000 easement. The previous 5% reduction was confirmed in the aforementioned April 2008 letter. See Def. Ex. D. Thus, the defendant Borough represents that plaintiff was receiving a 15% downward adjustment to his land assessment.
Plaintiff did not file a property tax appeal in 2008, 2009, 2010, or 2011. On October 17, 2012 plaintiff filed a Complaint for Declaratory Judgment in the Superior Court, Chancery Division, Bergen County. Plaintiff sought a 51% reduction in their land taxes prospectively and equivalent damages retroactively under the 2007 agreement. See Pl. Br. Jan. 22, 2013. The matter in question concerns taxes and was therefore transferred to this court pursuant to an order filed on January 13, 2013. Thereafter, plaintiff clarified all relief sought is prospective, and there would be no request for retroactive relief. See Pl. Att'y Certification , ¶ 1, June 7, 2013.
Conclusions of Law
The Tax Court's jurisdiction over declaratory judgment actions pursuant to the Uniform Declaratory Judgment Act is well established. As Judge Sundar aptly summarized in Labor Ready Ne., Inc. v. Dir., Div. of Taxation:
The Uniform Declaratory Judgments Act grants any court of this State "within" its "jurisdiction," the "power to declare rights, status and other legal relations..." N.J.S.A. 2A:16-52. Indeed that statute bars an objection to any action on grounds "that a declaratory judgment is demanded." Ibid. The Act, which is remedial in nature, is to be liberally construed and administered since its purpose "is to settle and afford relief from uncertainty and insecurity with respect to rights, status and other legal relations." N.J.S.A. 2A:16-51. The Tax Court has jurisdiction to hear declaratory actions.The New Jersey Rules of Court reiterate that "[t]he Tax Court shall also have rgeneral] jurisdiction over any action cognizable in the Superior Court that raises any issue as to which expertise in taxation is desirable..." R. 8:2(a).
[Id., 25 N.J. Tax 607, 612 (Tax Ct. 2011).]
Summary judgment should be granted where "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2. In Brill v. Guardian Life Ins. Co., 142 N.J. 520, 523 (1995), our Supreme Court established the standard for summary judgment as follows:
[W]hen deciding a motion for summary judgment under Rule 4:462, the determination whether there exists a genuine issue with respect to a material fact challenged requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party in consideration of the applicable evidentiary standard, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.Where a prima facie right to summary judgment exists the burden is on the party or parties opposing the motion to demonstrate by competent evidence that genuine issues of fact exist for trial. See James Talcott, Inc. v. Shulman, 82 N.J. Super. 438, 443 (App. Div. 1964); see also Robbins v. Jersey City, 23 N.J. 229, 241 (1957).
[Id.,]
The resolution of parties' respective summary judgment motions depends on this court's interpretation of language in the 2007 easement agreement. "Interpretation and construction of a contract is a matter of law for the court..." Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998). Accordingly, such matters are usually suitable for decision upon a motion for summary judgment. See Spring Creek Holding Co., Inc. v. Shinnihon U.S.A. Co., Ltd., 399 N.J. Super. 158, 190 (App. Div. 2008), certif. denied, 196 N.J. 85 (2008). However, the court finds that there are disputed material facts in this matter, and the matter is not ripe for summary judgment.
In interpreting any disputed terms of the 2007 easement, the court is guided by well-established principles. "We do not supply terms to contracts that are plain and unambiguous, nor do we make a better contract for either of the parties than the one which the parties themselves have created." Maglies v. Estate of Guy, 193 N.J. 108, 143 (2007). Thus parties are bound by the contract as written, and the court enforces terms by their plain or ordinary meaning. See Watson v. City of E. Orange, 175 N.J. 442, 447 (2003); see also Pizzulo v. N.J. Mfrs. Ins. Co., 196 N.J. 251, 270 (2008). "[I]f the terms of the contract are susceptible to at least two reasonable alternative interpretations, an ambiguity exists. In that case, a court may look to extrinsic evidence as an aid to interpretation." Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008).
With respect to the instant matter, the court finds an ambiguity does exist in paragraph 11 of the 2007 easement. Specifically, the words "real estate taxes" and "current land assessment currently assessed" are susceptible to alternative explanations. First, it is unclear if the words direct a percentage reduction based on the current assessment at the time of the easement's execution, or was the intention to utilize the assessment, set by the assessor, for subsequent years. The values can differ year to year, and in fact the values did differ as demonstrated by the assessor's initial reduction of assessment by 5% and then an additional 10%. Furthermore, it is the tax rate by which the "real estate taxes" paid are determined, and the tax rate varies from year to year. Thus, it is unclear which tax rate is meant to be utilized to determine the tax paid.
Also in question is the method by which the reduction in taxes, if one is to be achieved, should be effectuated. Plaintiff asserts the easement obligates the defendant to reduce the land portion of the assessment by 51%. See Pl. Att'y Certification , ¶ 1, June 7, 2013. Nevertheless, as defendant effectively argued, the governing body may not direct the assessor to set an assessment, nor can an easement constrain the assessor's independent duty to set the assessment. See N.J.S.A. 54:4-23; see also N.J.S.A. 54:4-1. In the alternative, plaintiff contends that the governing body has the authority to allocate the taxes pursuant to N.J.S.A. 54:7-1 without interfering with the assessor's statutory role.
This court would require a full plenary hearing to interpret the terms of the 2007 easement. However, there is a basic doctrine which prevents a plaintiff from proceeding in court if the Legislature has established means for a remedy by way of an administrative agency.
[T]he doctrine of exhaustion of administrative remedies serves three primary goals: (1) the rule ensures that claims will be heard, as a preliminary matter, by a body possessing expertise in the area; (2) administrative exhaustion allows the parties to create a factual record necessary for meaningful appellate review; and (3) the
agency decision may satisfy the parties and thus obviate resort to the courts.
[Atlantic City v. Laezza, 80 N.J. 255, 265 (1979).]
After a careful review of major opinions of this State's courts with respect to the doctrine of exhaustion of administrative remedies, it is readily apparent the doctrine applies to both declaratory judgments and prerogative writ matters. See Exxon Corp. v. E. Brunswick Tp, 5 N.J. Tax 216, 224 (Tax Ct. 1982) (discussing doctrine of exhaustion), aff'd in pt. and rev'd in pt., 192 N.J. Super. 329, 332 (App. Div. 1983). As our Supreme Court stated in Adams v. Atlantic City, 26 N.J. Misc. 259, 261-262 (1948), "even the broadest view of the scope of the [Uniform Declaratory Judgments Act] suggests that discretion should be exercised against granting declaratory relief where another remedy would be more effective or appropriate." The Court went on to strongly caution against allowing a declaratory judgment action to supplant administrative or other statutory procedures for relief. Id. Thus, "[t]he doctrine that a litigant must first exhaust his administrative remedies before he seeks judicial review is widely recognized and has been the subject of extended discussion." Central R.R. v. Neeld, 26 N.J. 172, 178 (1958). The same principle is formalized in the New Jersey Rules of Court at R. 4:69-5, which states: "Except where it is manifest that the interest of justice requires otherwise, actions under R. 4:69 shall not be maintainable as long as there is available a right of review before an administrative agency which has not been exhausted."
"It is axiomatic that the exhaustion of remedies requirement is neither jurisdictional nor absolute." 21st Century Amusements, Inc. v. D'Alessandro, 257 N.J. Super. 320, 322 (App. Div. 1992). Given "the traditional imperative" to exhaust administrative remedies, our courts only take "the extraordinary course of bypassing" the administrative process if, in the opinion of the court, such action is required to serve the interest of justice. Registrar & Transfer Co. v. Dir., Div. of Taxation, 166 N.J. Super. 75, 79 (App. Div. 1979). The doctrine of exhaustion of administrative remedies is repeatedly followed. See Matawan v. Monmouth Cnty. Bd. of Taxation, 51 N.J. 291, 296 (1968).
However, nothing suggests the courts are prohibited from relaxing the doctrine's requirements when it is necessary to serve the interest of justice. In Exxon Corp. v. E. Brunswick our Appellate Division overruled a lower decision by the Tax Court, which dismissed plaintiff's complaint for failure to exhaust administrative remedies, because circumstances presented "compelling reasons for by-passing the exhaustion doctrine." Id., 192 N.J. Super. 329, 332 (App. Div. 1983). At that time, the Exxon Corporation owned and leased hundreds of service stations across New Jersey representing a presence in every county. The tax controversy arose after the Division of Taxation directed all underground fuel storage tanks should be assessed locally as real property starting in 1982. Plaintiff asserted it was either directly or contractually liable for property taxes at all locations. Compliance with the statutorily provided appeal process under N.J.S.A. 54:3-21 would necessitate a multiplicity of county board appeals by the taxpayer. Hundreds of separate appeals would hardly be the most expeditious method of justice, and the court found judicial economy was best served by allowing all matters to be settled in one Superior Court action. Id. With regards to the instant matter, the taxpayer presented no compelling reasons as to why the statutorily defined administrative process must be bypassed in the interest of justice. Moreover, the circumstances of plaintiff's situation demonstrate no particularly onerous burden to comply with one application for apportionment by statute. Plaintiff need only make single application for his one parcel before one governing body.
Plaintiff Exxon Corporation, as part of its business, owns 394 gasoline service stations in 218 municipalities in all 21 counties of the State of New Jersey. It also leases land in 102 municipalities on which 138 service stations are built. In addition, it furnishes equipment including fuel storage tanks to operators at an additional 348 service stations in 216 municipalities. Exxon Corp., supra, 192 N.J. Super. at 332.
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In that light, the court considers plaintiffs petition for prospective tax relief in reliance on N.J.S.A. 54:7-1, which states that any municipal assessment "may be apportioned among proper subdivisions of the parcel by the governing body of the municipality in which the parcel is located." Id. During oral argument taxpayer's attorney contended that paragraph 11 of the 2007 easement was clear and enforceable. Moreover, he was of the opinion that the apportionment statute permits a portion of property tax on the subject property to be abated based on the current land assessment. The Borough's attorney disputed whether the statute was even applicable in the instant matter. Plaintiffs counsel asserted that N.J.S.A. 54:7-3 was specifically applicable, because it contemplates apportionment beyond terms of subdivision as "chargeable only to a particular part of the whole parcel." Id.
Be that as it may, N.J.S.A. 54:7-3 clearly requires "[t]he apportionment shall be made on the written application of any person interested, or on the motion of the governing body without application." Id. Accordingly, the court inquired as to whether application for apportionment was made by the plaintiff or on motion by the governing body without application. No application was made by plaintiff, nor was any motion without an application made by the governing body.
"[T]he exhaustion of remedies requirement is a rule of practice designed to allow administrative bodies to perform their statutory functions in an orderly manner without preliminary interference from the courts." Brunetti v. New Milford, 68 N.J. 576, 588 (1975). As discussed in Exxon, courts have only relaxed the administrative exhaustion doctrine in taxation cases when the circumstances indicate the interest of justice so requires. In Brunetti v. New Milford our Supreme Court contemplated four discernible scenarios wherein the administrative remedies requirement might be waived. First, if any administrative review would be futile. Second, when the public interest necessitates a prompt decision. Third, the issue is only a question of law that involves no administrative discretion. Lastly, if denial of immediate judicial relief will result in irreparable harm. Id., 68 N.J. 576, 589 (1975).
None of the aforementioned exceptions applies to the instant matter. First, there is no reason to believe an application by plaintiff to the Borough of Closter's governing body for apportionment of taxes will prove futile. Admittedly, neither the Giua's nor their attorney have attempted to make such application. Secondly, a prompt decision by this court is not necessary for the public interest. Conversely, public interest favors adhering to the administrative application process provided for by the Legislature. That process further provides opportunity to develop a factual record without preliminary interference by the court. Third, the instant matter does concern an issue involving administrative discretion. The governing body of the Borough possesses both the expertise and power to determine how the contemplated reduction of plaintiff's property taxes was to be effectuated, and the municipal body may very well decide to accept the taxpayer's application for apportionment. See id., 68 N.J. 576, 590 (1975) (considering the power of an administrative agency to afford plaintiff the same relief as could be afforded by a court indicative of remedy available by administrative discretion). Finally, plaintiff's attorney made no showing that Mr. Giua will suffer irreparable harm if the court does not now make a declaration of the parties' respective rights under the easement.
Conclusion
For the aforementioned reasons, the court denies the motion for summary judgment by both plaintiff and defendant. The plaintiff's complaint is dismissed for failure to exhaust administrative remedies. The Clerk of the Tax Court will enter Judgment dismissing the Complaint.
Very truly yours,
______________________
Hon. Joseph M. Andresini, J.T.C.