DOCKET NO. A-0127-15T3
Richard J. Vapnar, attorney for appellants. Blau & Blau, attorneys for respondent (Robert D. Blau, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3. Before Judges Sabatino, Nugent and Haas. On appeal from the Tax Court of New Jersey, Docket No. 18378-2011. Richard J. Vapnar, attorney for appellants. Blau & Blau, attorneys for respondent (Robert D. Blau, on the brief). PER CURIAM
Plaintiffs Maria Padilla and 32 4th Street, LLC appeal from the July 24, 2015 Tax Court decision granting the motion for summary judgment filed by defendant City of Elizabeth ("City"), and dismissing plaintiffs' complaint seeking a tax abatement under a City ordinance. We affirm.
By way of background, our Legislature has stated that "[p]roperty tax abatements for the construction of certain residential structures . . . will constitute a substantial incentive for owners and investors to improve vacant land and underutilized structures." N.J.S.A. 54:4-3.139(i). Thus, a municipality "may, by ordinance, provide for abatements of real property taxes for qualified residential property." N.J.S.A. 54:4-3.142. Such abatements shall be for a period of five years. N.J.S.A. 54:4-3.142(a). With particular reference to the present case, N.J.S.A. 54:4-3.142(e)(1) provides that as a condition for receiving an abatement, a municipality may require that the residential property "be occupied by the owner thereof. . . ."
Pursuant to this statutory authority, the City enacted an ordinance, codified in Chapter 3.12 of its Revenue and Finance Code ("the Code"), setting forth the eligibility requirements for tax abatements for "new one and two-family residential structures[.]" CITY OF ELIZABETH, NJ, ORDINANCES CH. 3.12. Consistent with N.J.S.A. 54:4-3.142(e)(1), Code Section 3.12.030(B) states that "[o]wners of new residential properties . . . are entitled to avail themselves of the opportunity to gain a five-year tax abatement when . . . [t]he newly constructed residential dwelling unit [is] occupied by the owner thereof[.]" Code Section 3.12.040(A) further provides that "[t]he application [for the tax abatement] shall be filed with the tax assessor within thirty (30) days following the completion of the new construction, improvement, or conversion alteration[.]"
Turning to the present case, VFD Capital Adventures, LLC ("VFD") acquired property in Elizabeth, New Jersey. VFD thereafter built two new two-family homes on the property, one of which, located at 32 4th Street, is the subject of this appeal. A certificate of occupancy for this property was issued on April 3, 2009.
On April 23, 2009, VFD filed an application for a five-year tax abatement. However, the City would not accept the application because the dwelling was not "owner occupied" due to the fact that VFD was a limited liability company ("LLC") and, therefore, could not personally occupy a residential property as required by Code Section 3.12.030(B). The thirty-day period set by Code Section 3.12.040(A) for the filing of the tax abatement application relating to the property expired on May 3, 2009. VFD never filed an appeal from the City's rejection of its application.
Ten months later, one of the members of VFD, Vincent DePasquale, asserted that the City told him that he needed to "bifurcate" his interest in the two homes the LLC owned. Allegedly in response to this advice, DePasquale and his girlfriend, plaintiff Mary Padilla, formed two new limited liability companies. Thereafter, title to the house at 32 4th Street, was transferred to one of these new companies, plaintiff 32 4th Street, LLC. Still later, 32 4th Street, LLC transferred title to the residence to Padilla.
VFD transferred title to the second home to the other LLC formed at that time. --------
On August 10, 2010, approximately sixteen months after the expiration of the time period for filing a tax abatement application, Padilla filed an application for an abatement on the residence located at 32 4th Street. The City's tax assessor denied this application because it was untimely. Padilla filed an appeal of this decision to the Union County Board of Taxation, which affirmed the denial. Plaintiffs then filed a complaint with the Tax Court, challenging the denial of their application.
In their complaint, plaintiffs contended that the City erred by refusing to accept VFD's April 23, 2009 application because the residence was not "owner occupied." Plaintiffs asserted that the Legislature did not preclude LLCs from seeking tax abatements and, therefore, the City should have approved VFD's application. Plaintiffs also alleged that the City gave them incorrect advice when it recommended that DePasquale "bifurcate" his interest in the two residences by titling them in two separate LLCs. The City opposed plaintiffs' arguments and filed a motion for summary judgment. Plaintiffs responded by filing a cross-motion for summary judgment.
Following oral argument, Judge Kathi F. Fiamingo rendered a comprehensive oral decision on July 24, 2015 granting the City's motion for summary judgment and dismissing plaintiffs' complaint. The judge subsequently filed an equally thorough, written amplification of her findings of fact and conclusions of law pursuant to Rule 2:5-1(b).
Judge Fiamingo observed that plaintiffs' appeal of the denial of the tax abatement was untimely for two reasons. First, an application for the abatement had to be filed within thirty days of the issuance of the certificate of occupancy for the residence under Code Section 3.12.040(A). Here, the certificate of occupancy was issued on April 3, 2009 and, therefore, the deadline for filing the tax abatement application relating to the property expired on May 3, 2009. Plaintiffs did not file their application for an abatement until August 10, 2010, long past the expiration of the deadline.
Second, neither VFD nor plaintiffs appealed the tax assessment imposed against the property after VFD's tax abatement application was rejected on April 23, 2009. The time period for filing such an appeal would have expired no later than April 1, 2010. N.J.S.A. 54:3-21(a)(1) (stating that a taxpayer who feels "aggrieved by the assessed valuation of the taxpayer's property" may file an appeal to the county board of taxation "on or before April 1, or 45 days from the date of the bulk mailing of the notification of assessment[,] . . . whichever is later"). Quoting F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 425 (1985) in her amplified decision, Judge Fiamingo noted that plaintiffs' "[f]ailure to file a timely appeal [to the county board of taxation or the Tax Court] is a fatal jurisdictional defect."
Although it was therefore likely the Tax Court lacked jurisdiction to consider plaintiffs' complaint, Judge Fiamingo nevertheless considered plaintiffs' contentions on their merits. The judge found that the language of the City's tax abatement code was clear. Code Section 3.12.030(B) plainly states that the abatement is only available if "[t]he newly constructed residential dwelling unit [is] occupied by the owner thereof[.]" Thus, VFD, which filed a timely application for the tax abatement on April 23, 2009, did not qualify for the abatement because, as an LLC, it could not personally occupy a residence.
In so ruling, Judge Fiamingo relied upon our decision in 3510-3513 Realty, LLC v. Law, 406 N.J. Super. 423 (App. Div. 2009). In Law, the plaintiff LLC served its tenant with a notice to quit based on N.J.S.A. 2A:18-61.1(l)(3), which permits a landlord to remove a tenant if the owner of the property seeks to personally occupy a unit. Id. at 425. The plaintiff argued that it was entitled to avail itself of that provision because its sole member intended to reside in the leased unit. Ibid.
We disagreed and, in an opinion authored by our former colleague Judge Dorothea Wefing, we examined the purpose of the anti-eviction statute, N.J.S.A. 2A:18-61.1(l)(3)), which we found was "to protect residential tenants from the effects of what the Legislature has recognized to be a severe shortage of rental housing in this state." Id. at 425 (citing Franklin Tower One, L.L.C. v. N.M., 157 N.J. 602, 614 (1999)). Under those circumstances, we concluded that an LLC could not personally occupy a residential property within the intendment of the statute. As Judge Wefing stated, "were we to adopt the [plaintiff's] approach, and overlook the distinction between [an LLC] and its [individual] member . . ., we would be construing the statute in a manner at odds with its purpose because we would be expanding the universe of parties entitled to dispossess tenants from their residence." Id. at 426.
In applying this principle to the requirement in Code Section 3.12.030(B) that "[t]he newly constructed residential dwelling unit shall be occupied by the owner thereof" in order to qualify for the tax abatement, Judge Fiamingo quoted the Supreme Court's holding in N.J. Carpenters Apprentice Training & Educ. Fund v. Borough of Kenilworth, 147 N.J. 171, 177 (1996) that "[t]ax-exemption statutes are strictly construed against those claiming exemption because of the compelling public property that all property bear its fair share of the burden of taxation." Thus, the judge reasoned,
It is in accord with the appellate court's reasoning in [Law], supra, that the court finds that an LLC is not eligible as an owner-occupant of residential property. Construing [Code Section 3.12.030(B)] as allowing a corporate entity to be considered an owner-occupant of residential property for abatement purposes would expand the universe of parties entitled to abatement, a result at odds with the constitutional requirement that all property bear its fair share of taxes. See Boardwalk Prop. v. Atl. City, 5 N.J. Tax 192, 196 (Tax Ct. 1983). Since the subject property was owned by an entity which could not have satisfied the owner-occupancy requirement of [Code Section 3.12.030(B)], the City's rejection of VFD's Initial Application [for a tax abatement] was justified.
Judge Fiamingo also rejected plaintiffs' contention that N.J.S.A. 54:4-3.142(e)(1) does not prevent a municipality from permitting an LLC or other corporate entity from taking advantage of a tax abatement offered by a municipality. As the judge noted, plaintiffs correctly pointed out that N.J.S.A. 54:4-3.142(e)(1) specifically states that a municipality has the option of imposing a requirement that the residential property "be occupied by the owner thereof" in order to qualify for the abatement. The decision whether to include such an optional requirement is left to the municipality's discretion, which the City exercised in this case. Thus, the judge concluded that the City acted in compliance with the statute by selecting that option with regard to its tax abatement program.
Finally, Judge Fiamingo also rejected plaintiffs' argument that the City somehow misled VFD, DePasquale, or plaintiffs about the requirement that the residence had to be "owner-occupied" by an individual rather than by an LLC. The judge found that the record clearly established that when VFD filed its application on April 23, 2009, the City specifically rejected it because the home was titled in the name of an LLC rather than an individual. VFD did not attempt to correct this deficiency prior to the expiration of the application deadline on May 3, 2009.
DePasquale later claimed the City failed to inform him in February 2010, ten months after the application deadline expired, that he could not own the property through an LLC if he wanted to take advantage of the tax abatement. Plaintiffs therefore asserted the City was estopped from applying Code Section 3.12.030(B) against them when they subsequently applied for a tax abatement in August 2010.
In rejecting this argument, Judge Fiamingo noted that DePasquale was unable to identify the individual he spoke to at "the City" concerning the matter. "More importantly," the judge found that "plaintiffs do not maintain that the City affirmatively advised . . . DePasquale that ownership in an LLC form would qualify for the abatement. Instead, . . . DePasquale certifies that he 'was never told that [he] could not own the property through'" an LLC. However, as we observed in Law, an individual has the right to decide to arrange his or her affairs in any manner he or she chooses but, by doing so, "he [or she] must accept the concomitant burdens that follow from the choice he [or she] made." Law, supra, 406 N.J. Super. at 426.
In this case, Judge Fiamingo found
that plaintiffs did not reasonably rely to their detriment on any information provided by the [C]ity when they placed the ownership of the property in VFD Capital Ventures, LLC. The City did not mislead them into owning the property in that manner, intentionally or otherwise. In fact, it appears that the City did inform the plaintiffs that ownership in an LLC format would not qualify for the abatement when the Initial Application was submitted and rejected. Assuming that this was April 23, 2009, the plaintiffs had time within which to transfer title to individual ownership and timely reapply. Regardless, plaintiffs do not assert that the City affirmatively advised [them] that an LLC could own property and qualify for the abatement; thus, there was nothing upon which they relied to their detriment or otherwise.This appeal followed.
On appeal, plaintiffs argue that the judge erred by: (1) granting defendant's motion for summary judgment; (2) entertaining the motion for summary judgment when "discovery was not complete and there were issues of fact that existed precluding summary judgment"; and (3) failing to "follow the law of the case doctrine." Our review of the Tax Court's decision granting summary judgment is de novo, using the same legal standard employed by the trial judge. Waksal v. Dir., Div. of Taxation, 215 N.J. 224, 231 (2013). We owe special deference to the expertise of the Tax Court, although we do not defer to its interpretation of statutes. Ibid.
With regard to the issue of statutory interpretation, proper "analysis of a statute begins with its plain language, giving the words their ordinary meaning and significance." In re Estate of Fisher, 443 N.J. Super. 180, 190 (App. Div. 2015) (citing State v. Olivero, 221 N.J. 632, 639 (2015)), certif. denied, 224 N.J. 528 (2016). Moreover, courts generally construe tax exemptions narrowly, Metpath, Inc. v. Dir., Div. of Taxation, 96 N.J. 147, 152 (1984), and the person or entity seeking the exemption bears the burden of proving that they are entitled to it. See Container Ring Co. v. Dir., Div. of Taxation, 1 N.J. Tax 203, 208 (Tax 1980) (holding that "[o]ne who claims exemption from a tax must bring himself clearly within the exemption provisions"), aff'd o.b. 4 N.J. Tax 527 (App. Div.), certif. denied, 87 N.J. 416 (1981). "Statutory exemptions from taxation should be 'strictly construed against those invoking the exemption.'" Advance Housing, Inc. v. Twp. of Teaneck, 215 N.J. 549, 566 (2013) (quoting Hunterdon Med. Ctr. v. Twp. Of Readington, 195 N.J. 549, 569 (2008)). Any doubt as to eligibility should be resolved against the person or entity claiming the exemption. Mal Bros. Contracting Co. v. Dir., Div. of Taxation, 124 N.J. Super. 55, 61 (App. Div.), certif. denied, 63 N.J. 554 (1973).
We have considered plaintiffs' contentions in light of the record and applicable legal principles and conclude they are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We are satisfied that Judge Fiamingo properly granted summary judgment to the City, and affirm substantially for the reasons expressed in her July 24, 2015 oral opinion and her subsequent written amplification of her findings of fact and conclusions of law. However, we make the following brief comments.
As Judge Fiamingo found, the plain language of the governing statute, N.J.S.A. 54:4-3.142(e)(1), permits a municipality to require that the residential property "be occupied by the owner thereof" in order to obtain a tax abatement. The City selected this option when it adopted Code Section 3.12.030(B), which clearly states that "[t]he newly constructed residential dwelling unit shall be occupied by the owner thereof" in order to qualify for the abatement. VFD, the only applicant that filed a timely application for the abatement involved in this case, was an LLC and therefore, unable to personally occupy the residence as required by the ordinance. Therefore, the City properly rejected VFD's application. Padilla's application, filed approximately sixteen months after the residence received its certificate of occupancy, was clearly untimely under Code Section 3.12.040(A). Therefore, we agree with the judge that the City properly denied plaintiffs' request for a tax abatement.
Plaintiffs' equitable estoppel argument is equally unavailing. "Equitable estoppel is 'rarely invoked against a governmental entity[,]'" Middleton Twp. Policeman's Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 367 (2000) (quoting Wood v. Borough of Wildwood Crest, 319 N.J. Super. 650, 656 (App. Div. 1999)), particularly when estoppel would interfere with "essential governmental functions[.]" Vogt v. Borough of Belmar, 14 N.J. 195, 205 (1954). The doctrine of equitable estoppel requires proof of
a misrepresentation or concealment of material facts, known to the party allegedly estopped and unknown to the party claiming estoppel,
done with the intention or expectation that it will be acted upon by the other party and on which the other party does in fact rely in such a manner as to change his [or her] position for the worse[.]The reliance must be "reasonable and justifiable" and the burden of proof is on the party asserting the estoppel. Foley Mach. Co. v. Amland Contractors, Inc., 209 N.J. Super. 70, 75-76 (App. Div. 1986).
[Carlsen v. Masters, Mates & Pilots Pension Plan Tr., 80 N.J. 334, 339 (1979).]
Judge Fiamingo correctly rejected plaintiffs' equitable estoppel argument. The City specifically advised VFD that its April 3, 2009 application was deficient because it was submitted by an LLC rather than by an individual owner. Thus, the City did not provide any incorrect advice to VFD during the thirty-day application period. Similarly, even if the City subsequently told DePasquale to "bifurcate" his ownership of the two properties in February 2010, he never asserted the City told him that an LLC could own the property and still be eligible for the abatement. Under these circumstances, the judge properly found that plaintiffs did not reasonably rely to their detriment on any information provided to them by the City.
Plaintiffs' argument that summary judgment was "premature" because discovery had not been completed also lacks merit. "A party challenging a motion for summary judgment on grounds that discovery is as yet incomplete must show that 'there is a likelihood that further discovery would supply . . . necessary information' to establish a missing element in the case." Mohamed v. Iglesia Evangelica Oasis De Salvacion, 424 N.J. Super. 489, 498 (App. Div. 2012) (quoting J. Josephson, Inc. v. Crum & Forster Ins. Co., 293 N.J. Super. 170, 204 (App. Div. 1996)). Plaintiffs fail to identify any specific information that could be obtained from discovery or the manner in which discovery would have inured to their benefit. Under these circumstances, we perceive no basis to disturb Judge Fiamingo's decision not to delay summary judgment in order to allow for additional discovery.
Contrary to plaintiffs' contention, there were also no material facts in dispute in this matter. The record clearly reflects that during the thirty-day application period for filing an application for a tax abatement, April 3, 2009 to May 3, 2009, VFD was the only applicant and it was an LLC, not an individual owner of the residence. Thus, the deadline imposed in Code Section 3.12.040(A) had long passed by the time Padilla filed her application in August 2010. Based upon these undisputed facts, summary judgment was clearly appropriate.
Finally, plaintiffs argue for the first time on appeal that the judge failed to adhere to "the law of the case" when she granted the City's motion for summary judgment. Plaintiffs assert that, at some earlier point in the litigation, a different judge had denied the City's motion for summary judgment. Plaintiffs argue that Judge Fiamingo was bound by this prior decision and, therefore, should not have entertained the City's subsequent motion for summary judgment.
This argument lacks merit. First, there is nothing in the record to support plaintiffs' claim that a judge previously denied the City's motion for summary judgment. Plaintiffs have not provided the date on which the order was allegedly entered, and have not included the order in their appendix as required by Rule 2:6-1(a)(1)(I).
Moreover, we will ordinarily decline consideration of an issue not properly raised before the trial court, unless the jurisdiction of the court is implicated or the matter concerns an issue of great public interest. Zaman v. Felton, 219 N.J. 199, 226-27 (2014) (citing Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)). Neither situation exists here and, because plaintiffs did not raise this issue at trial, the record is plainly insufficient to permit appellate review.
In any event, the law of the case doctrine simply has no application to a judge's prior denial of summary judgment because such a determination "decides nothing and merely reserves issues for future disposition." Gonzalez v. Ideal Tile Imp. Co., Inc., 371 N.J. Super. 349, 356 (App. Div. 2004), aff'd, 184 N.J. 415 (2005), cert. denied, 546 U.S. 1092, 126 S. Ct. 1042, 163 L. Ed. 2d 857 (2006). Such an order is interlocutory and may be revisited at any time, in the interests of justice, prior to entry of final judgment. R. 4:42-2; Lombardi v. Masso, 207 N.J. 517, 534 (2011). Accordingly, Judge Fiamingo was not bound to adhere to another judge's earlier contrary determination on a prior motion for summary judgment.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION