160 Chubb Props., LLC v. Twp. of Lyndhurst
| Decision Date | 14 December 2018 |
| Docket Number | DOCKET NO. 002442-2014,DOCKET NO. 006305-2015 |
| Parties | 160 CHUBB PROPERTIES, LLC, Plaintiff, v. TOWNSHIP OF LYNDHURST, Defendant. |
| Court | New Jersey Tax Court |
NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS
Joseph G. Ragno and Robert J. Guanci for plaintiff (Waters, McPherson, McNeill, P.C., attorneys).
Kenneth A. Porro for defendant (Chasan, Lamparello, Mallon & Cappuzzo, P.C., attorneys).
ORSEN, J.T.C.
This opinion constitutes the court's decision with respect to plaintiff, 160 Chubb Properties, LLC's ("Chubb") motion for relief under N.J.S.A. 54:51A-8 (hereinafter the "Freeze Act") for the 2017 tax year based on the settled and adjudged assessment for tax year 2015. Defendant, Township of Lyndhurst ("Lyndhurst"), opposes the motion, and asserts that the settlement agreement between the parties limits Freeze Act relief to tax year 2016. Lyndhurst further claims that improvements were made to the property after 2015, which resulted in a change in value that precludes application of the Freeze Act.
For the reasons stated more fully below, the court concludes that (1) Chubb did not waive Freeze Act protection for the 2017 tax year; and (2) Lyndhurst is not entitled to a plenary hearing on the applicability of the Freeze Act, since it has not made a prima facie showing that a substantial and meaningful change in value occurred between base year 2015 and freeze year 2017. Accordingly, the Freeze Act applies, and the 2017 assessment should be reduced to the amount reflected in the judgment for tax year 2015.
The following findings of fact and conclusions of law are based on the certifications and exhibits submitted in support of the parties' pleadings.
On December 3, 2013, Chubb purchased a multi-tenanted office building located at 160 Chubb Avenue, Lyndhurst, New Jersey, designated as Block 231, Lot 3 on the local tax map ("subject property"), for $10,300,000.
Chubb filed property tax appeals for the 2014 and 2015 tax years. For each tax year, the subject property's assessment was $16,250,000. Chubb alleged that the assessments were in excess of the true value of the subject property and that Lyndhurst assessed the property in an arbitrary, unreasonable, unequal, and discriminatory manner when compared to assessments of other properties within the taxing district.
During 2014 and 2015, Chubb obtained construction permits totaling $355,1001 for the subject property on the following dates:
On November 5, 2015, after the permits were issued, the parties were able to resolve the tax appeals and filed a Stipulation of Settlement for the 2014 and 2015 tax years. The Stipulation of Settlement reduced the assessments for both tax years as follows:
| Original |
| Assessment |
| 2014 - 2015 |
| Settled |
| Assessment |
| 2014 - 2015 |
| Land |
| $11,286,000 |
| $11,286,000 |
| Improvements |
| $ 4,964,000 |
| $ 1,714,000 |
| Total |
| $16,250,000 |
| $13,000,000 |
With respect to the Freeze Act, Paragraph 4 of the Stipulation of Settlement included the following language:
The parties agree that there has been no change in value or municipal-wide revaluation or reassessment adopted for the tax year 2016, and therefore agree that the provisions of [N.J.S.A.] 54:51A-8 (Freeze Act) shall be applicable to and a final disposition of this case and the entire controversy and of any actions pending or hereafter instituted by the parties concerning the assessment of the property referred to herein for said Freeze Act year. No Freeze Act year shall be the basis for application of the Freeze Act for any subsequent year.
The court entered judgments on December 18, 2015 for the 2014 tax year and December 4, 2015 for the 2015 tax year, in accordance with the agreed to assessment of $13,000,000. Based on the language in paragraph 4 of the Stipulation of Settlement, the Freeze Act was expressly adopted.
Although the 2015 tax year judgment was the "base year" for 2016 Freeze Act relief, Lyndhurst's tax assessor continued to assess the subject property at $16,250,000 for the 2016 tax year. The parties resolved this matter during the summer of 2016, reducing the 2016 assessment to the agreed $13,000,000 assessment. For tax year 2017, the assessor continued to assess thesubject property at $16,250,000, despite having resolved application of the Freeze Act for tax year 2016 prior to the October 1, 2016 valuation date.2
Chubb sold the subject property on November 17, 2016 to its current owner, CCC NJ Owner, LLC, for $20,025,000. Thereafter, Chubb filed a motion for entry of judgment applying the Freeze Act to the 2017 tax year based on the 2015 tax year judgment.
Given the proximity of the 2016 tax year assessment date at the time of the settlement, Chubb reasoned that the Stipulation of Settlement included normal language as to the applicability of the Freeze Act for the 2016 tax year. Chubb further noted that the Stipulation of Settlement did not address invocation of the Freeze Act for the 2017 tax year, instead maintaining that the parties were not in a position when the Stipulation of Settlement was executed to make the required recitations to invoke the Freeze Act for the 2017 tax year, that "no change in value" and "no revaluation or assessment" was contemplated for tax year 2017. Chubb additionally argued that a waiver of the Freeze Act for the 2017 tax year was not a term of the Stipulation of Settlement.
Lyndhurst opposed Chubb's Freeze Act application, claiming in its response that Chubb was trying to circumvent the clear intent of the settlement agreement by arguing that (1) the settlement reducing the assessments was based on Chubb's representation that the subject property was substantially unoccupied at the time of Chubb's purchase, and also needed substantial improvements; and (2) the parties had agreed that the Freeze Act would only apply to 2016, thus Chubb waived its application for 2017. Lyndhurst additionally emphasized that after the alleged improvements were made to the subject property, Chubb sold the property for $20,025,000, which is almost double the 2013 purchase price. In support, Lyndhurst's assessor certified that the"[s]ubstantial building improvements along with the tenant occupancy undoubtedly increased the value of the property as it was sold for $20,025,000 on November 17, 2016." Accordingly, Lyndhurst requested a plenary hearing with an opportunity for further discovery to resolve these matters.
In reply, Chubb submitted a certification by the subject property's manager who claimed, in part:
Chubb reiterated that waiver of the Freeze Act for the 2017 tax year was never discussed at the time of settlement or during execution of the Stipulation of Settlement. Chubb also asserted that Lyndhurst failed to make a prima facie showing that Freeze Act relief is unavailable, as the issued construction permits do not rise to the level of evidentiary support needed to show a substantial and meaningful increase in value of the subject property. Chubb additionally pointed out that Lyndhurst failed to utilize the Chapter 91 "arsenal of devices" at a tax assessor's disposal to investigate occupancy status, relying on nothing more than the tax assessor's certification to support its claim that the subject property was substantially unoccupied when Chubb purchased the property in 2013.
The court begins its analysis with a review of the Freeze Act, which does not contain any limitations period to file a motion to enforce its provisions. See N.J.S.A. 54:51A-8; R. 8:7(d). The Freeze Act specifically provides, in part:
The historical background of changes to the Freeze Act is relevant to clarify the procedural posture of Lyndhurst's challenge to the freeze protections sought by Chubb. Prior to 1999, a taxing district had "to file a complaint seeking relief from the base year assessment" to prevent application of the Freeze Act on grounds of an alleged change in value. AVR Realty Co. v. Cranford Twp. ("AVR I"), 294 N.J. Super. 294, 299 (App. Div. 1...
To continue reading
Request your trial