Court Opinion

ID: 2651050
Source: CourtListenerOpinion
Date Created: 2014-01-25 01:05:07.347232+00
Date Added: 2024-06-11T12:33:31.287455
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                  APPROVAL OF THE APPELLATE DIVISION

                                     SUPERIOR COURT OF NEW JERSEY
                                     APPELLATE DIVISION
                                     DOCKET NO. A-2466-12T1

WATERSIDE VILLAS HOLDINGS, LLC,
                                        APPROVED FOR PUBLICATION
     Plaintiff-Appellant,
                                           January 24, 2014
v.
                                          APPELLATE DIVISION
MONROE TOWNSHIP,

     Defendant-Respondent.
____________________________________

         Argued November 18, 2013 – Decided January 24, 2014

         Before Judges Harris, Kennedy and Guadagno.

         On appeal from the Tax Court of New Jersey,
         Docket No. 2583-2011.

         Kevin S. Englert argued the cause for
         appellant (The Irwin Law Firm, attorneys;
         Mr. Englert, on the brief).

         Nancy   Stewart   argued    the  cause   for
         respondent (Shain, Schaffer & Rafanello,
         attorneys; Richard A. Rafanello, of counsel;
         Ms. Stewart, on the brief).

     The opinion of the court was delivered by

KENNEDY, J.A.D.

     Plaintiff Waterside Villas Holdings, LLC, appeals from the

December 28, 2012 final order of the Tax Court dismissing its

complaint contesting the 2011 property tax assessment on its
property    in   defendant     Monroe      Township.         The    Tax    Court     had

earlier    granted,     in     part,     defendant's        motion        to   dismiss

plaintiff's complaint for its failure to respond to a municipal

request    for   income      and   expense       information       as    required     by

N.J.S.A. 54:4-34, often referred to as "Chapter 91,"1 subject to

plaintiff's right to a "reasonableness hearing" pursuant to the

holding in Ocean Pines, Ltd. v. Borough of Point Pleasant, 112
N.J. 1 (1988).        Following the hearing, Tax Court Judge Gail L.

Menyuk    concluded    that    neither         the   data   nor    the    methodology

employed by the assessor in reaching the 2011 assessment were

unreasonable     or   arbitrary      and       dismissed    the     complaint      with

prejudice.

    On appeal, plaintiff raises the following arguments:

            POINT I: THE TAX COURT ERRED IN CONCLUDING
            THAT THE ASSESSOR SENT A VALID CHAPTER 91
            REQUEST.

            A.   The Assessor's Request Was Not "Clear
            And Unequivocal."

            B.   The Assessor's Request Did Not Include
            A Copy Of The Statute. (Not Raised Below).

            POINT II: THE DATA AND METHODOLOGY USED BY
            THE MONROE ASSESSOR WERE ARBITRARY AND

1
  This name references the 1979 amendment to the statute that
established the dismissal sanction "where the owner has failed
or refused to respond to [the assessor's] written request for
information . . . or shall have rendered a false or fraudulent
account." See L. 1979, c. 91, § 1 (amending N.J.S.A. 54:4-34).

                                           2                                   A-2466-12T1
           CAPRICIOUS AND THE RESULTING ASSESSMENT WAS
           UNREASONABLE.

           A.   The Arbitrary And Capricious Standard
           Of   Review   Governs   In An  Ocean  Pine
           Reasonableness Hearing.

           B.   The Assessor's Income Approach To Value
           Was Based On Non-Market Data And Was
           Contrary To The Other Data Available.

           C.   The Assessor Did Not Apply A True
           Common Level To His Value Conclusion For The
           Subject.

           POINT III: THE ONLY FEASIBLE REMEDY IS A
           FULL TRIAL ON THE MERITS IN THE EVENT AN
           ASSESSMENT IS FOUND TO BE UNREASONABLE.

We have considered these arguments in light of the record and

the   applicable legal principles, and we affirm essentially for

the   reasons   set   forth   by   Judge    Menyuk   in   her   well-reasoned

written   opinion     dated   December     28,   2012.    We    add   only    the

following with respect to plaintiff's arguments arising from its

failure to respond to the notice tendered by defendant pursuant

to N.J.S.A. 54:4-34.

                                    I.

      Plaintiff   purchased     property    in   Monroe   Township     in    2004

and, after obtaining the requisite permits in 2006, completed

construction of a 100-unit apartment complex in 2009. The Monroe

Township tax assessor visited the property prior to the issuance

of a certificate of occupancy in May 2009, and received from

plaintiff's property manager a list of the rental units and the

                                      3                                A-2466-12T1
rents   to    be    charged        for    each       unit.      The   rents       included      a

discounted        "first-year"         rate,      and   progressively           higher    rates

thereafter.

      Employing         the    discounted            "first-year"      rents      only,       the

assessor calculated the total annual rents, and then applied

figures for expected vacancies and collection losses, an expense

figure of forty-five percent, and a capitalization rate of eight

percent    to     arrive      at   a     market      value    of   $14,945,800.           After

applying     the    Chapter        123    ratio       for    2009,    he   arrived       at    an

assessment of $6,707,700.2                 This assessment was carried over to

tax years 2010 and 2011.

      On     August     13,    2010,       the       assessor      sent    a    letter    with

enclosures to plaintiff by certified mail requesting a statement

of   income       and   expenses         for   the      property.          The    enclosures

included      a    form    captioned        "Annual          Statement     of    Income       and

Expenses for Income Producing Property" with instructions, and a

typed version of N.J.S.A. 54:4-34.                          The letter explained that

the request for information was sent in accordance with N.J.S.A.

54:4-34 and instructed that "[u]nder 'Statement and Expenses'

2
  While the assessor employed the income approach to valuation,
he also checked his calculation by combining the cost of the
land acquisition with the prospective construction costs, set
forth in plaintiff's construction permit. This was not a
traditional cost approach, but an approximation based on
plaintiff's own construction figures. The assessor regarded the
two figures he reached as relatively close.

                                                 4                                   A-2466-12T1
[on the form] enter your recent twelve months (January 1, 2009

through December 31, 2009) operational cost to the extent that

such cost is actually paid by management."

    In addition, the assessor's letter to plaintiff stated,

         This request for the Income and Expense data
         is made by certified mail and includes a
         copy of the statutory language of N.J.S.A.
         54:4-34,   amended   L.1979  C91   p.1,   as
         required. The requested information must be
         submitted to this office within 45 days from
         the date this letter is received.     In the
         event that you do not furnish this office
         with the requested Income and Expense data
         within the 45-day period, the law provides
         that you will be precluded from filing a tax
         appeal challenging the assessment of the
         property.

               . . . .

         If you have any questions with regard to
         this request or require any clarification
         relating to the information sought, kindly
         contact this office for further assistance.

Plaintiff received the request on August 16, 2010, and never

responded.    Consequently,   after   plaintiff   filed   its     direct

appeal of the 2011 assessment with the Tax Court, defendant

moved to dismiss the complaint under the statute.             Plaintiff

opposed the motion and argued that "the language of the request

leaves room for reasonable doubt whether an average property

owner would understand what the assessor's looking for[.]"

    Judge    Menyuk   rejected   plaintiff's      argument,     finding

"nothing contradictory or confusing" in defendant's request for

                                 5                              A-2466-12T1
information      and    that      "any   reasonable      person    would     understand

what was meant."          She then granted defendant's motion, subject,

as   noted     earlier,      to    plaintiff's     right      to   a   reasonableness

hearing under Ocean Pines, supra, 112 N.J. at 11.

       Plaintiff argues on appeal that the assessor's request was

not "clear and unequivocal" and asserts that "[a] taxpayer is

left    to    guess    whether     the   assessor       is   looking   for    the    most

recent [twelve] months of information (August 2009 – July 2010)

or January to December 2009."                   Further, for the first time on

appeal, plaintiff argues that the assessor's correspondence was

fatally flawed because N.J.S.A. 54:4-34 requires an assessor to

include a copy of the statute with the information request and

that,    in    the    case     before    us,     "the    text   included      with    the

assessor's correspondence omits the word 'may' from the phrase,

'. . . and he may be examined on oath by the assessor . . . .'"

We shall briefly address each of these arguments in the order

presented.

                                           II.

       N.J.S.A. 54:4-34 provides, in pertinent part, as follows:

                   Every owner of real property of the
              taxing district shall, on written request of
              the assessor, made by certified mail, render
              a full and true account of his name and real
              property and the income therefrom, in the
              case   of  income-producing   property,  and
              produce his title papers, and he may be
              examined on oath by the assessor, and if he

                                            6                                  A-2466-12T1
           shall fail or refuse to respond to the
           written request of the assessor within 45
           days of such request, or to testify on oath
           when required, or shall render a false or
           fraudulent account, the assessor shall value
           his property at such amount as he may, from
           any   information   in    his   possession  or
           available to him, reasonably determine to be
           the full and fair value thereof. No appeal
           shall be heard from the assessor's valuation
           and assessment with respect to income-
           producing property where the owner has
           failed or refused to respond to such written
           request for information within 45 days of
           such request or to testify on oath when
           required, or shall have rendered a false or
           fraudulent account.      The county board of
           taxation    may   impose    such    terms  and
           conditions for furnishing the requested
           information where it appears that the owner,
           for good cause shown, could not furnish the
           information within the required period of
           time.    In making such written request for
           information pursuant to this section the
           assessor shall enclose therewith a copy of
           this section.

           [N.J.S.A. 54:4-34 (emphasis added).]

As noted earlier, the typed copy of the statute defendant sent

to plaintiff omitted the word "may" which we highlighted in the

statute above.       Plaintiff did not respond to defendant's request

within the statutorily required forty-five day period, does not

dispute receiving the request, and concedes it made no inquiry

of the assessor about what he was seeking.

      We first address plaintiff's argument that it had no duty

to   respond   to    the   request   because   it   was   not   "clear   and

unequivocal."       The purpose of N.J.S.A. 54:4-34

                                      7                            A-2466-12T1
               is to assist the assessor, in the first
               instance, to make the assessment and thereby
               hopefully to avoid unnecessary expense, time
               and effort in litigation.

                   . . . .

               [The statute] goes to the very substance of
               assessing practices.    By insuring to the
               assessor income information from the best
               available source, it seeks to relieve both
               the taxpayer and the taxing district of the
               time and expense of an adversary proceedings
               [sic] to review an assessment either in the
               county board of taxation or the Tax Court.

               [Terrace View Gardens v. Dover Twp., 5 N.J.
               Tax 469, 471-72 (Tax 1982), aff'd o.b., 5
N.J. Tax 475 (App. Div.), certif. denied, 94
N.J. 559 (1983).]

This expression of the statute's purpose was adopted in Ocean

Pines, supra, 112 N.J. at 7.            The specific purpose of the forty-

five day time limit for responses to assessor's requests is

explained in the Statement, dated January 26, 1978, annexed to

Finance   and     Appropriations       Committee    revision       of   Senate    Bill

309, Leg. Sess. of 1979, as follows: "Committee amendments fix a

forty-five       day    time   period    in     which     the    income   producing

property owner must respond to the written request from the

assessor.       A specific time requirement is necessary to provide

for an orderly procedure."

    Moreover,          while   the   assessor    has     an   important   statutory

right     to     information         necessary     for        proper    and    timely

assessments, the assessor must clearly set forth the information

                                          8                                   A-2466-12T1
being sought when that right is exercised.                      In ML Plainsboro

Ltd. P'Ship. v. Plainsboro Twp., 16 N.J. Tax 250, 257 (App.

Div.), certif. denied, 149 N.J. 408 (1997), we explained that

Chapter 91

              confers authority upon the tax assessor to
              determine    the    scope    of   information    to
              request from a taxpayer and a corresponding
              duty   to    give    the   taxpayer     clear   and
              unequivocal      notice      of    the     specific
              information which must be submitted.            Tax
              assessors are experts in the field of real
              estate valuation, see N.J.S.A. 54:1-35.25,
              while    the    owners    of    income    producing
              properties include not only substantial
              business enterprises . . . but also small
              business persons who may have difficulty
              reading complex and confusing forms and may
              lack    ready     access     to    legal    advice.
              Consequently, "the assessor's request notice
              to   the    taxpayer    must    be    clear   cut."
              Summerton Shopping Plaza v. Manalapan Twp.,
              15 N.J. Tax 173, 177 (App. Div. 1995).
              Moreover, if there is room for reasonable
              doubt as to whether an average owner of an
              income producing property would understand
              an    assessor's     request     to    include    a
              particular kind of information, the benefit
              of that doubt should be given to the
              taxpayer.      Cf. Great Adventure, Inc. v.
              Jackson Twp., [ ] 10 N.J. Tax [230][,] 233
              [(App.    Div.    1980)]     (noting    that   "the
              severity of the penalty for noncompliance
              provided for by N.J.S.A. 54:4-34, namely,
              the taxpayer's loss of his right to appeal
              the     assessment,      requires       a    strict
              construction of the statute"); see also
              SAIJ Realty, Inc. v. Town of Kearny, 8 N.J.
              Tax 191, 196-97 (Tax Ct. 1986).

See   Ocean    Pines,   supra,   112   N.J.   at       8   (explaining   that   the

statute   encourages      compliance       with    a       "proper   request"   for

                                       9                                  A-2466-12T1
information);   and   Terrace   View,   supra,   5   N.J.   Tax   at    474

(referring to the taxpayer's refusal to comply with a "legal and

reasonable request").

    However, where the taxpayer receives a Chapter 91 request

that it deems improper in some fashion, it may not simply ignore

its statutory obligation to respond.      Rather,

         the taxpayer must take action to challenge
         the   request    within the   forty-five day
         statutory time limit, and to put the
         municipality on notice of its contention.
         In any event, the taxpayer cannot just sit
         by and do nothing until the assessment is
         finalized,    as   this  taxpayer   did, and
         thereafter seek to appeal the assessment by
         plenary review. Such conduct results in
         "unnecessary expense, time and effort in
         litigation."     See Terrace View, supra, 5
         N.J. Tax at 471-72.

         [Tower Center Assocs. v. Twp. of East
         Brunswick, 286 N.J. Super. 433, 438 (App.
         Div. 1996).]

Accord H.J. Bailey v. Neptune Twp., 399 N.J. Super. 381, 389-90

(App. Div. 2008); Morey v. Wildwood Crest Borough, 18 N.J. Tax.

335, 340 (App. Div. 1999), certif. denied, 163 N.J. 80 (2000).

    Chapter 91 does provide a "safety valve" before the county

tax board for taxpayers who cannot respond to a request for

information for good cause.      1717 Realty Assocs. v. Borough of

Fair Lawn, 201 N.J. 275, 276, n.2 (2010).             In Ocean Pines,

supra, 112 N.J. at 9, the Court did not address what would

                                  10                              A-2466-12T1
constitute     "good   cause"   for   not   furnishing   requested

information.

              Instead, the Court left that question
         open for determination on a case-by-case
         basis. [Ocean Pines, supra, 112 N.J. at 9].
         However, as the Tax Court made clear in
         Terrace View (quoted with approval by the
         Supreme Court in Ocean Pines, 112 N.J. at
         8):
              Refusals   on    the    part   of   the
              taxpayers to cooperate with local
              property    assessors      cannot    be
              tolerated      by      this      court.
              Legitimate         requests         for
              information     by     assessors     to
              prepare assessments are actions
              which should be encouraged by this
              court.        Taxpayers      frequently
              complain of local property tax
              assessors and their work.          Here
              the taxpayer had an opportunity to
              supply to the assessor information
              pertinent to the assessor's work.
              It failed and refused to do so
              without any explanation, and its
              attitude   in     failing     to   even
              respond     to      the      assessor's
              legitimate statutory request is
              inexcusable.

                [[Terrace View, supra,] 5 N.J. Tax
                at 474-75.]

              Where the request is thought not to be
         "legitimate," in whole or in part, the
         taxpayer must do something to assert that
         contention before the assessment is imposed
         to avoid the statutory bar to appeal
         embodied in N.J.S.A. 54:4-34.    Thus, as in
         Ocean Pines, "plaintiff's failure to respond
         in any fashion to the assessor's request
         precluded plaintiff from asserting a 'good
         cause' claim." Ocean Pines, supra, 112 N.J.
         at 9.

                                 11                       A-2466-12T1
           [Tower Center       Assocs.,   supra,    286    N.J.
           Super. at 439.]

In the case before us, we need not address the parameters of

good cause because plaintiff simply ignored a clear and proper

Chapter   91   request   for   information   and   never   sought    relief

before the county tax board.3       The notice was sent to plaintiff

by certified mail, and the accompanying letter, dated August 12,

2010, expressly requested "your recent twelve months (January 1,

2009 to December 31, 2009) operational cost . . . ."                  It is

specious to suggest that such clear and explicit language was

equivocal or confusing in any respect.

3
  This is not a case where the information was not requested in
time to assist the assessor in making the assessment and to
diminish the likelihood of litigation.    See West Mark Partners
v. W. Deptford, 12 N.J. Tax 591 (Tax 1992);        Terrace View,
supra, 5 N.J. Tax at 471-72.    In such a case, the information
request may not be viewed as a Chapter 91 request, but rather a
discovery demand, if first tendered after the taxpayer has filed
its complaint. Consequently, the sanction required by Chapter 91
would not be available to the municipality. See Delran Holding
Corp. v. Delran Twp., 8 N.J. Tax 80 (Tax 1985).      In addition,
this is not a case where the property in question is not
"income-producing"   for  which   the   statutory   sanction   is
unavailable,   H.J. Bailey Co., supra, 399 N.J. Super. 381, or
where the motion is brought outside the time required by Rule
8:7(e).   There may be other cases in which, for example, the
request is so egregiously ambiguous in its identification of the
property or in the instruction to the taxpayer that due process
principles are offended. Cf. Ocean Pines, supra, 112 N.J. at 9-
11. We expect that such a case would be rare. See Middletown
Twp. Policeman's Benevolent Ass'n Local No. 124 v. Twp. of
Middletown, 162 N.J. 361, 367 (2000).      This is not the case
before us, in any event.

                                    12                              A-2466-12T1
    Finally, we address plaintiff's argument that the omission

of the word "may" in the copy of N.J.S.A. 54:4-34 defendant

included with its information request, precluded relief under

the statute.        While we might, with justification, have elected

to forego addressing this argument because plaintiff did not

raise it before the Tax Court, see Nieder v. Royal Indem. Ins.

Co., 62 N.J. 229, 234-35 (1973) ("It is a well-settled principle

that our appellate courts will decline to consider questions or

issues    not     properly    presented     to    the   trial   court   when    an

opportunity for such a presentation is available 'unless the

questions so raised on appeal go to the jurisdiction of the

trial    court     or   concern   matters    of    great    public   interest.'"

(internal        citation    omitted)),     we    nonetheless    consider      the

argument, given that both parties have argued the issue in their

briefs, and it is an issue likely to rise again in the future.

    As we noted earlier, the statute was amended in 1979 to add

the last three sentences to N.J.S.A. 54:4-34 providing that "no

appeal shall be heard" where the property owner has failed to

respond     to    the   assessor's    request      within    forty-five     days,

establishing the power of the county board to impose terms and

conditions        for   furnishing   the     requested       information,      and

requiring the assessor to enclose a copy of the statute with the

                                       13                               A-2466-12T1
written information request.    As the Supreme Court noted in

Lucent Techs., Inc. v. Twp. of Berkeley Heights:

              The originally-filed bill was amended
         by   the   Senate    Revenue,   Finance  and
         Appropriations Committee (Committee), which
         articulated the reasons for the amendment to
         the statute in more expansive language than
         that used by the Sponsor.      The Committee
         explained its concerns as follows:

              While current statutes provide the
              assessor with a procedure whereby
              an   assessment    can    be     made
              notwithstanding the refusal of a
              property owner to provide income
              information, the property owner is
              not subject to any penalty for not
              disclosing      property       income
              information.    The property owner
              is free to appeal the assessment,
              notwithstanding   his   refusal    to
              provide information which would
              have affected the valuation, and,
              perhaps, avoided the appeal from
              the assessment. Further, where an
              appeal   has    been   filed,     the
              assessor currently has no access
              to   information    on   which    the
              appellant is basing his appeal and
              thus the assessor is unprepared to
              testify    in   argument    to    the
              appellant's representations.

              [Senate   Revenue,    Finance   and
              Appropriations           Committee,
              Statement to Senate Bill No. 309
              (Jan.    26,    1978)    (Committee
              Statement).]

         In order to address the shortcomings in the
         existing statute, therefore, the Committee
         added the language imposing the obligation
         to   respond within   forty-five  days  and
         expanded the proposed limitation on a tax

                               14                       A-2466-12T1
           appeal to preclude such an appeal in the
           case of a false or fraudulent account as
           well.   Senate Bill No. 309 (pre-filed for
           1978)   (second  reprint).    Echoing  the
           concerns expressed by the Sponsor, the
           Committee stated that it had added the
           forty-five day limitation to create an
           "orderly procedure" for the timely receipt
           and consideration of information by the
           assessor.

           [Lucent,    supra,      201 N.J. 237,     246-47
           (2010).]

The Court added that the requirement that the assessor enclose a

copy of the statute with the information request "served to

place the taxpayer on notice about the significant consequences

of failing to respond . . . ."         Ibid.

    In    SAIJ   Realty,   the    plaintiff        opposed    the    defendant's

motion to dismiss its       complaint seeking direct review of an

assessment, and argued that the defendant had enclosed only the

pre-amendment    version   of    the   statute,     and     made    no   reference

whatever to the consequences to the taxpayer for a failure to

comply.   SAIJ Realty, Inc. v. Town of Kearney, supra, 8 N.J. Tax

at 194.    In denying the motion, Judge Crabtree explained that

the statutory direction to the assessor to include the statute

is "mandatory" and that the assessor's failure to include the

"critical, substantive" 1979 amendment constituted a "palpable

failure   on [the] defendant's part to comply with the statute."

                                       15                                 A-2466-12T1
Id. at 196.         Consequently, the "principles of fair dealing"

required denial of the defendant's motion.                Id. at 196-97.

    The ruling in SAIJ Realty is sound, and                 while questions of

statutory    interpretation       are   purely    legal    and   we    review    the

holding of the Tax Court on questions of law de novo, Gallenthin

Realty v. Borough of Paulsboro, 191 N.J. 344, 358 (2007), SAIJ

Realty applies the well-settled principle that in interpreting a

statute, the primary goal is to give effect to the Legislature's

intent.     DiProspero v. Penn, 183 N.J. 477, 492 (2005).                 The best

indicator of that intent is the plain language of the statute

itself.     State v. D.A., 191 N.J. 158, 164 (2007).                  We therefore

agree that the assessor's duty to provide property owners with

the statute when tendering a Chapter 91 request is mandatory.

    We also agree with Judge Crabtree's conclusion that where

an assessor provides property owners with a copy of the statute

that omits "critical [and] substantive" statutory provisions,

principles of fair dealing preclude the assessor from seeking

relief under the statute.          However, where, as here, the omission

is minor and inadvertent, does not alter the substance of the

statute,     and    does   not    prejudice       the    property     owner,     the

municipality       is   still    entitled    to   a     dismissal     pursuant    to

N.J.S.A. 54:4-34.

                                        16                                A-2466-12T1
      As the Tax Court observed in            James-Dale     Enters.,      Inc.    v.

Twp. of Berkeley Heights, 26 N.J. Tax. 117, 126 (Tax 2011),

while the government must "turn square corners" when dealing

with the public,

             [t]he doctrine "cannot be applied with
             rigidity   or   undue   technicality."   New
             Concepts For Living, Inc. v. City of
             Hackensack, 376 N.J. Super. 394, 403, 22
N.J. Tax 616, (App. Div. 2005).    Equitable
             relief   under   the  doctrine  "cannot   be
             exercised or withheld rigidly, but [is]
             always subject to the guiding principles of
             fundamental fairness." Id. at 404.

             [James-Dale, supra, 26 N.J. Tax at 126.]

The   duty   of    the   assessor    under     the   statute     is   to   provide

property owners with clear and correct notices.                  The assessor in

the case before us fulfilled that duty.              The minor alteration in

the statute seized upon by plaintiff did not obscure or omit any

substantive       provision   in   the   statute,    and   did    not   prejudice

plaintiff    in    any   respect.        Consequently,     plaintiff       was    not

entitled     to    any   equitable   relief     from   the     requirements       of

N.J.S.A. 54:4-34.

      Affirmed.

                                         17                                A-2466-12T1