160 Chubb Props., LLC v. Twp. of Lyndhurst, DOCKET NO. A-4402-18T3
| Decision Date | 04 August 2020 |
| Docket Number | DOCKET NO. A-4402-18T3 |
| Parties | 160 CHUBB PROPERTIES, LLC, Plaintiff-Respondent, v. TOWNSHIP OF LYNDHURST, Defendant-Appellant. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 Sumners and Mayer.
On appeal from the Tax Court of New Jersey, Docket No. 2442-2014, whose opinion is reported at 30 N.J. Tax 613 (Tax 2018), and Docket No. 6305-2015, whose opinion is reported at 31 N.J. Tax 192 (Tax 2019).
Kenneth A. Porro argued the cause for appellant (Chasan Lamparello Mallon & Cappuzzo, PC, attorneys; Kenneth A. Porro, of counsel and on the brief; Edna J. Jordan, on the brief).
Robert J. Guanci argued the cause for respondent (Waters, McPherson, McNeill, PC, attorneys; Joseph G. Rango and Eric D. McCullough, of counsel; Robert J. Guanci, on the brief).
The Township of Lyndhurst appeals from the Tax Court's January 3, 2019 order entering judgment, and its reconsideration order of May 31, 2019, granting the application by plaintiff 160 Chubb Properties, LLC (160 Chubb) for taxpayer's relief for the 2017 tax year under the Freeze Act, N.J.S.A. 54:51A-8, based upon a 2015 tax appeal judgment. We affirm substantially for the reasons set forth by Tax Court Judge Jonathan A. Orsen in his cogent published decisions, 160 Chubb Props., LLC v. Twp. of Lyndhurst, 30 N.J. Tax 613 (2018) ("Chubb I") and 160 Chubb Props., LLC v. Twp. of Lyndhurst, 31 N.J. Tax 192 (2019) ("Chubb II").
Because the parties are very familiar with the facts and procedural history, both of which are well-documented in Chubb I and Chubb II, we need not devote much discussion to the background of this dispute. A brief summary will therefore suffice.
On November 5, 2015, the parties reached a stipulation of settlement resolving property tax appeals by 160 Chubb for the 2014 and 2015 tax yearspertaining to a multi-unit office building (the property).1 The settlement permitted 160 Chubb to apply the Freeze Act for the 2016 tax year, which would limit the property's taxes to the 2015 tax year assessment, but was silent as to the 2017 tax year. In pertinent part, the settlement stated:
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 on 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.
In accordance with the settlement, the Tax Court entered a December 18, 2015, judgment reducing the property's tax assessment from $16.25 million to $13 million for the 2014 and 2015 tax years.
In 2016, Lyndhurst assessed the property at the original pre-settlement assessment of $16.25 million. 106 Chubb's successful appeal to the County Tax Board reduced the property's assessment to $13 million in keeping with the settlement and judgment.
In November 2016, CCC NJ Owner, LLC (CCC NJ), purchased the property from 106 Chubb for $20.025 million. When Lyndhurst assessed the property at $16.25 million for the 2017 tax year, CCC NJ filed a Freeze Act application with the Tax Court in May 2017, and over two months later, submitted a Freeze motion for entry of judgment. Both parties submitted certifications in support of their respective positions. Oral argument was held but a fact-finding hearing was not conducted.
On December 14, 2018, Judge Orsen issued his decision, Chubb I, granting 106 Chubb relief for the 2017 tax year under the Freeze Act. The order confirming the decision was entered on January 3, 2019.
Lyndhurst filed a motion for reconsideration. Judge Orsen issued a May 31, 2019 order together with his decision, Chubb II, denying the motion.
In our review of a Tax Court's judgment, "[w]e recognize the expertise of the [court] in this 'specialized and complex area.'" Advance Hous., Inc. v. Twp. of Teaneck, 215 N.J. 549, 566 (2013) (citation omitted). The Tax Court's factual "findings will not be disturbed unless they are plainly arbitrary or there is a lack of substantial evidence to support them." Yilmaz, Inc. v. Dir., Div. of Taxation, 390 N.J. Super. 435, 443 (App. Div. 2007) (citation omitted). Thus, we examine"whether the findings of fact are supported by substantial credible evidence with due regard to the Tax Court's expertise and ability to judge credibility." Ibid. (citation omitted). However, our review of the Tax Court's legal conclusions is de novo. United Parcel Serv. Gen. Servs. Co. v. Dir., Div. of Taxation, 430 N.J. Super. 1, 8 (App. Div. 2013).
The present controversy involves the Tax Court's application of the Freeze Act, which protects a taxpayer by "freezing" an assessment for the two years following a tax year for which there is a final judgment of the Tax Court. N.J.S.A. 54:51A-8; see also R. 8:7(d). In addition, "judgments of the Tax Court obtained by settlement between the parties . . . are entitled to Freeze Act protection." Grandal Enters., Inc. v. Borough of Keansburg, 292 N.J. Super. 529, 537 (App. Div. 1996) (citing S. Plainfield Borough v. Kentile Floors, Inc., 92 N.J. 483, 487-89 (1983)). The Act "is designed to protect the taxpayer and grant repose to a final judgment of the Tax Court for a period of two years, preventing arbitrary actions of the taxing authority." Hackensack City v. Bergen Cty., 405 N.J. Super. 235, 250 (App. Div. 2009) (citation omitted).
A Freeze Act action filed by a taxpayer is independent of any tax appeal pursued by the taxpayer under N.J.S.A. 54:3-21, which challenges the fairness of an assessment. Because the statute is "self-executing[,]" "[i]t is not necessaryfor a taxpayer to file a tax appeal to obtain the benefit of the Freeze Act. Hackensack City, 405 N.J. Super. at 247 (quoting Grandal Enters., 292 N.J. Super. at 537). A taxpayer has the option to seek both a reduction in a property's assessment and pursue a Freeze Act claim. See Grandal Enters., 292 N.J. Super. at 538. The Act also applies if a stipulation of settlement is silent as to the Act's application. S. Plainfield Borough v. Kentile Floors, Inc., 4 N.J. Tax 1, 10 (Tax 1981) ().
There are two exceptions to the Freeze Act: "[(1)] when the taxing authority demonstrates circumstances occurring after the base year assessment date that result in an increase in the value of the property or [(2)] when the taxing authority implements a revaluation program affecting all property in the tax district." Grandal Enters., 292 N.J. Super. at 536; see also N.J.S.A. 54:51A-8(a). Unless one of these exceptions apply, "the application of the Freeze Act is 'mandatory and self-executing.'" Rockaway 80 Assocs. v. Rockaway Twp., 15 N.J. Tax 326, 331 (1996) (quoting Clearview Gardens Assocs. v. Parsippany-Troy Hills Twp., 196 N.J. Super. 323, 328 (App. Div. 1984)).
Here, Lyndhurst contends the basis for its $16.25 million 2017 tax assessment was the property's increased value. For the taxing authority to sustain a claim of increased property value, this court has held there must be a prima facie showing: "(1) the change in value result[ed] from an internal or external change; (2) the change materialized after the assessing date of the base year; and (3) the change substantially and meaningfully increased the value of the property." Coastal Eagle Point Oil Co. v. Twp. of W. Deptford, 353 N.J. Super. 212, 218 (App. Div. 2002) (alteration in original) (quoting AVR Realty Co. v. Cranford Twp., 316 N.J. Super. 401, 407 (App. Div. 1998)). Only when a prima facie case is shown will a plenary hearing be held to determine Freeze Act applicability. Ibid.
"The Freeze Act . . . may be invoked at the option of the taxpayer on motion for supplementary relief to the Tax Court under the caption of the Tax Court judgment for the base year to which the Freeze Application is sought." R. 8:7(d). "The taxpayer need not submit any affidavits concerning the lack of change in value or that there has been no general revaluation." Clearview Gardens Assocs., 196 N.J. Super. at 329.
We first address Lyndhurst's argument that there was a genuine dispute of material fact precluding entry of judgment in favor of 106 Chubb without a plenary hearing. Specifically, Lyndhurst relied on certifications of its Tax Assessor and counsel, asserting the parties intended the settlement agreement to be limited to the 2016 tax year and not to extend to the 2017 tax year; and 106 Chubb's construction permits for property improvement totaling $355,100 increased the property's value. Lyndhurst also cited its tax assessor's claim the property's value increased because it was sold to CCC NJ for $20.025 million in 2016 and its tenancy occupancy rate is much more in 2017, than in 2013, when 106 Chubb acquired the property. Lyndhurst maintains because 106 Chubb disputed these assertions, a plenary hearing was warranted.
Judge Orsen rejected the argument that a hearing was necessary to determine whether the settlement agreement included application of the Freeze Act to the 2017 tax year. The judge held:
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