In re Mocco
| Decision Date | 01 July 1998 |
| Docket Number | Adversary No. 94-3333.,Bankruptcy No. 94-31932 |
| Citation | 222 BR 440 |
| Parties | In re Lorraine MOCCO, et al., Debtor. Peter MOCCO and Village Townhouse Estates, Inc., Plaintiffs, v. CITY OF JERSEY CITY, Defendant. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
James A. Scarpone, Philip Lindeman II, Hellring Lindeman Goldstein & Siegal, Newark, NJ, for Debtor.
Joseph M. Andresini, Andora, Palmisano & Geaney, Elmwood Park, NJ, for City of Jersey City.
This matter comes before the court as an adversarial proceeding commenced on July 13, 1994 by notice of removal to this Court by debtors Peter Mocco and Village Townhouse Estates, Inc. (together, the "debtors") against the City of Jersey City (the "City"), to determine, modify and reduce the amount of real property tax, pursuant to 11 U.S.C. § 505(a)(2)(A).
The debtors contend that the City's valuations of the debtors' real property located in the City of Jersey City have, for the tax years 1986 through 1996, materially overstated the full and fair market value of such property. As such, the debtors argue that they have overpaid property tax obligations to the City for those years, and seek the amount they claim they have overpaid in damages.
The City disputes the debtors' claims and asserts that the assessments made upon the debtors' property were at their full and fair value and that taxes on the property were assessed in a manner substantially similar to other like real property within the city of Jersey City.
The court held plenary hearings on May 23, 1996, July 2, 1996, September 11, 1996 and August 28-29, 1997, during which hearings, witnesses testified for both sides and evidence was entered into the record. The debtors submitted a post-hearing brief on January 5, 1998; the City submitted its brief on January 7, 1998.
This court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b) and 28 U.S.C. §§ 157(a)(2)(A), (B) and (O).
Peter Mocco, the plaintiff and the debtor herein, is and was during all relevant times a real estate developer in the State of New Jersey. Village Townhouse Estates, Inc. is another plaintiff and debtor in this adversary proceeding; however, it is not a significant party in this decision as trial went forward only on those parcels relating to Peter Mocco. Liberty Harbor Marina, Inc. is a New Jersey corporation ("LHMI") owned one hundred percent by Lorraine Mocco, also a debtor in this case, and the wife of Peter Mocco. LHMI owns various parcels described below, which comprise the marina enterprise, by virtue of an Agreement of Sale dated January 20, 1990, wherein Peter Mocco conveyed the marina to LHMI. Pursuant to an undated post-nuptial agreement between Mr. and Mrs. Mocco, Peter Mocco has a forty year lease on the LHMI premises. The post-nuptial agreement also provides that Mr. Mocco is responsible for real estate taxes in excess of $42,000 for tax years 1990 through 1995 and for all real estate taxes in 1996. In addition that agreement provides that "over-paid" taxes are property of Peter Mocco if he is successful on tax appeal.1
The property which is the subject of the instant dispute consists of two parcels: (i) 18.09 acres of land (described on the tax maps of Jersey City as Block 60, Lots 21D, 22B, 23A, 24B, 25H) owned by debtor Peter Mocco, and (ii) an additional 25.92 acres of land (described on the tax maps of Jersey City as Block 60, Lots 26A, 26B, 27, 27B, 27D and 41) owned by Liberty Harbor Marina, Inc. (collectively, the "Subject Property"). The LHMI parcels are improved with a 96 slip marina constructed in 1991 which was expanded to 110 slips in 1993 and various out-buildings. See Appraisal of Charles Blau (the "Blau Appraisal") at 2; Appraisal of Michael Hiller (the "Hiller Appraisal") at 15. The Subject Property is situated in the Liberty Harbor North Redevelopment Zone, which is located in the City of Jersey City. Id.
Historically, the land upon which the Subject Property is situated was, for the most part, owned by the railroads and used for industrial purposes. Blau Appraisal at 18. As early as 1966, the City of Jersey City began planning a redevelopment of the area, and in 1973, it formulated the Liberty Harbor North Redevelopment Plan (the "Redevelopment Plan") to promote residential development and other improvements to the industrialized downtown area. Id. at 24. Pursuant to the Redevelopment Plan, the area containing the Subject Property was incorporated into the "Liberty Harbor North Redevelopment Zone" (the "Redevelopment Zone"). Blau Appraisal at 24; Amendment to the City of Jersey City's Liberty Harbor North Redevelopment Plan, dated March 2, 1983 (the "Amended Redevelopment Plan"). In 1983, the Redevelopment Plan was amended to provide more favorable development regulations which sought to encourage residential development in the Redevelopment Zone and to further redevelop the blighted industrial areas. Id.
By 1983, the seventy-five acres containing the Subject Property were owned by the Employees Retirement System of Jersey City (the "ERS"). Tr. 9/11/96, p. 61. The ERS thereafter engaged the Jersey City Redevelopment Agency (the "JCRA") to act as its agent for the marketing and sale of this seventy-five acres to potential redevelopers. Id. The property was actively marketed through 1984 and 1985, and during that time frame, was the subject of several serious inquiries by potential purchasers, among them United Pacific Corporation. Id. Peter Mocco had also become interested in the Subject Property. Id.
On February 14, 1985, Peter Mocco entered into a "Contract for Sale of Land for Private Development" with the JCRA whereby JCRA was obligated to: (i) assist in the sale of the Subject Property by ERS to Peter Mocco and designate him as the redeveloper of the Liberty Harbor North Redevelopment Zone2 (ii) grant exclusive rights to Peter Mocco to acquire all lots comprising the Liberty Harbor North Redevelopment Zone adjacent to the Subject Property to provide access to the adjoining streets, and (iii) to use its powers of eminent domain to acquire and then resell those abutting parcels to Peter Mocco if he was unable to acquire those parcels on his own. Tr. 9/11/96 at 61. Mocco's obligation under the Redevelopment Agreement was to engage in redevelopment activities on the Subject Property itself. Id.
Shortly after entering into the Redevelopment Agreement, Peter Mocco entered into an agreement to purchase the Subject Property with the ERS, which provided that the property was sold "as is," but gave Mocco extensive rights to conduct inspections of the Subject Property (which included the right to conduct environmental testing)(the "Purchase Agreement"). Under the Purchase Agreement, the Subject Property was conveyed to Peter Mocco for a price of $20,000 per acre by deeds dated June 24, 26, 27, 1985 from the ERS.
After Peter Mocco entered into the Redevelopment Agreement with the JCRA and acquired the Subject Property under the Purchase Agreement with the ERS, the proposed redevelopment of the Liberty Harbor North Zone began experiencing some difficulties. An action was commenced in 1985 by Lawrence and Dolores Eccleston, Jersey City Public Employees, Local 245 and individual members of the ERS against Peter Mocco, the City of Jersey and the ERS. That litigation was settled on May 13, 1986. As part of the settlement, it was acknowledged that the blighting3 of two essential parcels (blocks 233 and 268), which will be discussed in detail below, would be delayed. However, the City agreed to use all efforts and resources to obtain "control" over those blocks.
Thereafter pursuant to the Redevelopment Agreement and the Settlement Agreement, the City began to acquire property in the Liberty Harbor North Redevelopment Zone; it did so by using its powers under New Jersey law to declare areas surrounding the Subject Property as blighted areas. Blau Appraisal at 33. Indications of difficulties with the proposed redevelopment began to surface when, on June 21, 1988, the Jersey City Planning Board (the "Planning Board") denied applications for approval of both Peter Mocco's site plan and subdivision plan for the redevelopment project. Blau Appraisal at 33; Tr. 8/28/97 at 128. The Planning Board articulated that its decision was based upon its belief that two parcels (blocks 233 & 268 on the tax maps of Jersey City) abutting the Subject Property had been improperly blighted by the JCRA. Id.
The Planning Board's determination was followed by a resolution of the Jersey City Municipal Council (the "Municipal Council") on November 10, 1988 directing that title to all of the residential properties so condemned be revested in those parties from whom those properties had been wrongfully acquired by the JCRA. Debtor's Proposed Findings of Fact and Conclusions of Law (the "Mocco Brief") at 5. In 1990, the Municipal Council's decision was appealed to New Jersey Superior Court where Judge Burrell Ives Humphreys affirmed the Municipal Council's determination. Id. at 6. See also Tr. 8/28/97 at p. 128. Judge Humphreys made a judicial determination that the declaration of blight was defective, and that all of the properties which had been condemned by the JCRA in the prior two years, had been illegally condemned. Id. The JCRA was required to return the properties to their former owners. JCRA did return the property to the original owners, but only when such property owner requested the return. JCRA never informed the former owners of the illegal...
To continue reading
Request your trial