Waterside Villas Holdings, LLC v. Monroe Township

NOT FOR PUBLICATION WITHOUT THE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