Opinion
Docket No. 006793-2012
11-15-2012
Omega Self Storage of NJ, LLC v. Township of Lawrence
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Patrick DeAlmeida
Presiding Judge
John F. Casey, Esq.
Wolff & Samson, P.C.
The Offices at Crystal Lake
One Boland Drive
David M. Roskos, Esq.
Sterns & Weinroth, PC
Trenton, New Jersey 08607-1298
Dear Counsel:
This letter constitutes the court's opinion with respect to defendant's motion to dismiss the Complaint for want of jurisdiction. For the reasons explained more fully below, the court concludes that at the time the Complaint was filed plaintiff was not a taxpayer aggrieved by the assessment within the meaning of N.J.S.A. 54:3-21. As a result, the Complaint did not establish jurisdiction in this court to review the assessment on the subject property for tax year 2012.
I. Findings of Fact and Procedural History
This letter opinion sets forth the court's findings of fact and conclusions of law based on the submissions of the parties on defendant's motion. R. 1:6-2(f); R. 1:7-4.
The property that is the subject of this appeal is located in Lawrence Township, Mercer County and is designed by the municipality as Block 4201, Lot 17.01. Commonly known as 300 Lawrence Station Road, the property was assessed at a total of $1,747,000 for tax year 2012. The Chapter 123 average ratio for Lawrence Township for 2012 is 49.20%, resulting in an equalized value of $3,550,813 ($1,747,000 ÷ .4920 = $3,550,813). See N.J.S.A. 54:1-35a.
On March 29, 2012, a Complaint was filed with this court by plaintiff Omega Self Storage of NJ, LLC challenging the 2012 assessment on the property. At the time that it filed the Complaint, plaintiff did not own the subject property and was not responsible for the payment of local property taxes for the parcel. The property was owned at that time by Lawrence Station Storage, LLC, which did not file a Complaint in this court challenging the assessment.
Despite the fact that it did not own the subject property, plaintiff alleged in paragraph one of the Complaint that "Plaintiff is the taxpayer of the properties (sic) shown on the local tax case information statements (sic) attached to the FACE of the complaint." Lawrence Station Storage, LLC is not mentioned in the Complaint or the accompanying case information statement.
Plaintiff purchased the subject property from Lawrence Station Storage, LLC for $2.6 million on May 30, 2012, approximately two months after the filing of the Complaint. The parties are in agreement that at the time that the Complaint was filed, plaintiff and Lawrence Station Storage, LLC had executed a contract for the sale of the property.
On September 5, 2012, defendant moved to dismiss the Complaint for want of jurisdiction. Plaintiff subsequently filed opposition to the motion.
The parties waived oral argument. The motion, therefore, is decided on the papers.
II. Conclusions of Law
The "Tax Court is vested with limited jurisdiction" defined by statute. McMahon v. City of Newark, 195 N.J. 526, 546 (2008)(citing N.J.S.A. 2B:13-2 and Union City Assocs. v. City of Union City, 115 N.J. 17, 23 (1989)). "'The right to appeal a real property assessment is statutory, and the appellant is required to comply with all applicable statutory requirements.'" Macleod v. City of Hoboken, 330 N.J. Super. 502, 505 (App. Div. 2000)(quoting F.M.C. Stores Co. v. Borough of Morris Plains, 195 N.J. Super. 373, 381 (App. Div. 1984), aff'd, 100 N.J. 418 (1985)). The statutory scheme establishing this court's jurisdiction is "one with which continuing strict and unerring compliance must be observed . . . ." McMahon, supra, 195 N.J. at 543.
This court's jurisdiction to review assessments on real property is established by N.J.S.A. 54:3-21. The statute provides in relevant part that:
[A] taxpayer feeling aggrieved by the assessed valuation of the taxpayer's property . . . may on or before April 1, or 45 days from the date the bulk mailing of notification of assessment is completed in the taxing district, whichever is later, . . . file a complaint directly with the Tax Court, if the assessed valuation of the property subject to the appeal exceeds $1,000,000. In a taxing district where a municipal-wide revaluation or municipal-wide reassessment has been implemented, a taxpayer or a taxing district may appeal before or on May 1 to the county board of taxation by filing with it a petition of appeal or, if the assessed valuation of the property subject to the appeal exceeds $1,000,000, by filing a complaint directly with the State Tax Court.
[N.J.S.A. 54:3-21].
Compliance with the filing requirement is a necessary predicate to establish jurisdiction in this court for review of an assessment. "Failure to file a timely appeal is a fatal jurisdictional defect." F.M.C. Stores v. Borough of Morris Plains, 100 N.J. 418, 425 (1985). This is true even in the absence of harm to the defendant municipality. Lawrenceville Garden Apartments v. Township of Lawrence, 14 N.J. Tax 285 (App. Div. 1994).
Only a taxpayer aggrieved by the assessed valuation of the subject property may establish jurisdiction in this court to challenge the assessment. It is well established that one need not be the owner of real property to challenge the assessment on that property. However, to have statutory authority to file a Complaint, the plaintiff must, at the time of the filing, have a sufficient financial interest affected by the challenged assessment.
For example, in Township of Ewing v. Mercer Paper Tube Corp., 8 N.J. Tax 84, 91 (Tax 1985), this court held that "the Legislature intended to include within the class of 'aggrieved taxpayers,' given the right to appeal tax assessments, any lessee whose lease covers the full tax year and requires him to pay the full assessment of the taxes levied." (footnote omitted). This court concluded, however, that
[b]ecause real estate taxes are a lien against the real estate, N.J.S.A. 54:5-6, and since in addition to a possible reduction there also exists the risk of an increased assessment, F.M.C. Stores, Inc. v. Borough of Morris Plains, 100 N.J. 418 (1985); even though the tenant is solely responsible for the taxes, the owner of the real property is a necessary party, therefore any appeal by the sole tenant . . . must be instituted in the name of the owner by the tenant as express agent for the owner, or, as co-plaintiff, or, in lieu thereof, the owner must be included as a co-defendant.See R. 8:5-3(8)(requiring tenant filing tax appeal to serve a copy of the complaint on the record owner of the property); accord Aperion Enterps., Inc. v. Borough of Fair Lawn, 25 N.J. Tax 70 (Tax 2009)(holding that tenant at single-tenant property responsible for paying all local property taxes under lease has standing to control tax appeal despite owner's previously filed appeal).
[Id. at 91-92.]
In Village Supermarkets, Inc. v. Township of West Orange, 106 N.J. 628, 630-32 (1987), the Supreme Court effectively affirmed the holding in Mercer Paper Tube and held that in some circumstances a single tenant at a multi-tenanted commercial property is a "taxpayer . . . aggrieved by the assessed valuation" of the leased property within the meaning of N.J.S.A. 54:3-21. In that case, an entity that operated a supermarket was the tenant under a lease for a portion of a shopping center. The tenant was required by the lease to pay as additional rent to the landlord all local property taxes due on the portion of the property occupied by the supermarket, as well as an allocated share of the assessment on the common areas of the shopping center. Id. at 629. The tenant filed appeals with this court challenging the assessment on the entire shopping center for three tax years. Id. at 630. The landlord moved to intervene to have the three appeals dismissed for want of jurisdiction. Id. at 631. Although this court granted the motions, the Appellate Division reversed. Ibid.
The Supreme Court allowed the tenant's tax appeals to proceed. The Court held that N.J.S.A. 54:3-21 "is not an insurmountable bar to the prosecution of an appeal by some net-lease tenants, depending upon their economic circumstances." Id. at 631-32. According to Justice O'Hern, who was writing for a unanimous Court, "[t]he most obvious example is the tenant in possession of a free-standing store under a net lease." Id. at 632. "In the context of a long-term lease, the landlord has almost no interest in the assessment." Id. at 632-33. "At the other end of the spectrum, however, is the tenant in possession of an ice cream stand in a suburban mall. Although such a tenant may have a tax payment or tax surcharge clause in its lease, its interest in the shopping center assessment should not properly be considered one that would confer an independent right to prosecute a tax appeal in its own name." Id. at 633. As the Court explained, "[t]he question is one of degree, depending upon the relative circumstances of the parties and their economic interests." Ibid.
Trial courts are to consider several factors before permitting an appeal to be "brought in the owner's name by the tenant with notice to the owner." Ibid. Those factors include:
(1) the provisions of the lease itself, its duration, the burden of the tax surcharge on the tenant, and the possibility that the issue can soon be resolved by renegotiation; (2) the tenant's relationship to the property, whether it is the lead tenant in a shopping center or only one slightly affected by the assessment; (3) whether the tenant will adequately represent the interests of the landlord and other tenants, or whether the tenant has interests adverse to either group; (4) the tenant's ability to mount and prosecute an effective appeal; (5) the landlord's overall relationship with the taxing authority, and whether this is but one of multiple properties as to which the landlord may wish to exercise the right to appeal.
[Id. at 634-35.]
The ability to file an appeal of an assessment has been extended to a mortgagee after a default by the mortgagor. Chemical Bank of N.J. v. City of Absecon, 13 N.J. Tax 1 (Tax 1992). Noting that the mortgagee "has a substantial interest in the property, and . . . many of the attributes of an owner upon the happening of any event of default," the court held that "there is no justifiable reason for prohibiting a mortgagee, whose mortgage is in default, who has paid the real estate taxes, and who seeks to protect its security, from pursuing an appeal of the local property tax assessment on the mortgaged property." Id. at 11. Key to the court's analysis were the common law's creation by the mortgage of "an immediate estate in fee simple in the mortgagee subject to defeasance by the payment of the mortgage debt," id. at 8 (citing Boteler v. Leber, 112 N.J. Eq. 441 (Ch. 1933)), and the mortgage instrument in that case, which vested in the mortgagee significant interests in the property. Id. at 11. As is the case in other, similar contexts, the court required that the entity filing the appeal of the assessment provide notice to the property owner. Id. at 13-14.
In Northfield City v. Zell, 12 N.J. Tax 180 (Tax 1991), Judge Lario held that the purchaser of a tax sale certificate was not an aggrieved taxpayer within the meaning of N.J.S.A. 54:3-21. Although the purchaser paid taxes on the relevant property for several years after issuance of the tax sale certificate, the court concluded that she held only an "inchoate right or interest in the property" subject to a right of redemption, which the court determined was insufficient to satisfy the jurisdictional prerequisites of N.J.S.A. 54:3-21. Id. at 184. In addition, the court noted an absence of a statutory grant of authority to a tax sale certificate holder to file an appeal, id. at 185, and a similar absence of a statutory requirement that the certificate holder pay taxes on the relevant property after issuance of the certificate. Id. at 186.
In Lato v. Township of Rockaway, 16 N.J. Tax 355 (Tax 1997), Judge Kuskin disagreed with Judge Lario's holding in Zell and held that the holder of a tax sale certificate who had paid taxes on the subject property subsequent to issuance of the certificate and who initiated foreclosure proceedings has an implied right to file an appeal of the assessment on the property. Judge Kuskin found the certificate holder in these circumstances to have a "significant and substantial property interest equal to, and in some respects greater than, the property interest of a mortgagee or tenant" sufficient to constitute a "taxpayer" under N.J.S.A. 54:3-21. Id. at 366 (citing Jefferson Township v. Block 447A, Lot 10, 228 N.J. Super. 1, 5 (App. Div. 1998)(holding that tax sale certificate vests "a property interest protected by the requirements of due process."). Of particular importance to the court was the fact that the certificate holder likely would be compelled to pay all taxes on the property in order to satisfy the statutory requirement that all taxes be current before the certificate holder could foreclose the right of redemption. Id. at 366. The court required that the certificate holder provide notice to the property owner of the filing of the appeal. Id. at 368.
The meaning of N.J.S.A. 54:3-21 was also examined in Mobil Administrative Serv. Co. v. Township of Mansfield, 15 N.J. Tax 583 (Tax 1997). In June 1995, Mobil filed an appeal with this court challenging the 1995 assessment on property it owned in Mansfield Township. Approximately two months later, in August 1995, while the appeal was pending, Mobil sold the property to Zeta Consumers Products Corporation ("Zeta"). Zeta subsequently moved to intervene in the pending appeal, arguing that it was responsible for the payment of taxes on the property for the portion of 1995 following the purchase. Id. at 587-588. Judge Kuskin denied the motion, based on his conclusion that Zeta was not a taxpayer aggrieved by the assessment within the meaning N.J.S.A. 54:3-21 at the time the Complaint was filed. According to the court, as of the filing deadline for 1995, Zeta "had no interest in the subject property and no obligation to pay property taxes assessed to the property." Id. at 588; see also Pogostin v. Leighton, 216 N.J. Super. 363 (App. Div.)(holding that shareholder who purchased stock after date of merger lacks standing to challenge merger because he had lacked property interest at time of transaction he sought to challenge), certif. denied, 108 N.J. 583, cert. denied, 484 U.S. 964, 108 S. Ct. 454, 98 L. Ed. 2d 394 (1987)). Thus, the court concluded, Zeta could not intervene in an action in which it lacked statutory authority to challenge the assessment.
Of particular importance to the present case is Judge Kuskin's observation that
Zeta's interest in the 1995 tax assessment on the subject property was known, or at least knowable, by it when it signed the purchase contract on August 30, 1995. Zeta could, therefore, have included provisions in the contract which required its consent to the resolution of any pending tax appeal. The contract is, however, barren of any such provisions.
* * *
Zeta's failure to include provisions in the contract protecting its interest in the 1995 tax appeal cannot be remedied by intervening in Mobil's appeal. Zeta lacked standing to appeal as of the applicable filing deadlines and, accordingly, lacks standing to intervene.
[Id. at 589-590.]
Finally, in Slater v. Township of Holmdel, 20 N.J. Tax 8 (Tax 2002), Judge Bianco held that a husband, who resides with his wife in the marital home owned by his wife alone, is a taxpayer within the meaning of N.J.S.A. 54:3-21 with the authority to file an appeal challenging the assessment on the residence. The court held that the non-owner husband had a sufficient financial interest in the subject property under N.J.S.A. 54:3-21 because of his statutory rights to remain in the martial home, regardless of who holds title, see N.J.S.A. 3B:28-3 and Pilone v. Banda, 226 N.J. Super. 397, 402 (Ch. Div. 1988), and his common law liability for the necessary expenses of his spouse, see Jersey Shore Medical Center v. Estate of Baum, 84 N.J. 137 (1980), including, presumably, the expenses of maintaining her home. Slater, supra, 20 N.J. Tax at 14.
Applying these precedents to the facts here leads to the conclusion that Omega was not a "taxpayer" within the meaning of N.J.S.A. 54:3-21 at the time that the Complaint was filed. Omega did not have title to the subject property on March 29, 2012. It was not at that time responsible for the payment of taxes assessed against the property and was not liable for the debts of the entity that owned the property on the filing date. At best, Omega had a contractual right to purchase the property on a date after the filing deadline. It is true that the existence of the contract made evident Omega's potential liability for a portion of the taxes due on the property for 2012. This potential liability, however, was insufficient to vest in Omega the financial interest necessary to satisfy the strict jurisdictional requirements of N.J.S.A. 54:3-21. As noted by Judge Kuskin in Mobil, supra, Omega could easily have addressed its potential liability for the 2012 taxes on what it perceived to be an excessive assessment by requiring in its contract that the owner of the subject property file a tax appeal for 2012 and grant to Omega any tax savings deriving from the appeal. Nor did Omega name the owner of the subject property in its Complaint or, as far as can be derived from the file, serve the owner with notice of the filing of the appeal.
Because Omega was not a taxpayer within the meaning of N.J.S.A. 54:3-21 on March 29, 2012, its Complaint did not create jurisdiction in this court to review the 2012 assessment on the subject property. See Prime Accounting Dept v. Township of Carney's Point, 421 N.J. Super. 199 (App. Div.), certif. granted, 208 N.J. 382 (2011). Defendant's motion to dismiss the Complaint for want of jurisdiction is, therefore, granted. A Judgment dismissing the Complaint will be forwarded to the parties.
Very truly yours,
_______________
Patrick DeAlmeida, P.J.T.C.