MTAG Cust Alterna Funding II, LLC v. 94 Jabez Realty, LLC

Docket NumberA-3871-19
Decision Date21 October 2021
PartiesMTAG CUST ALTERNA FUNDING II, LLC, Plaintiff, v. 94 JABEZ REALTY, LLC, and STATE OF NEW JERSEY, Defendants. 94 JABEZ REALTY, LLC, Third-Party Plaintiff/ Appellant, v. CITY OF NEWARK, Third-Party Defendant/ Respondent.
CourtNew Jersey Superior Court — Appellate Division

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 27, 2021

Lazaro Berenguer argued the cause for appellant (Clark Law Firm, PC attorneys; Lazaro Berenguer, of counsel and on the briefs).

Azeem M. Chaudry, Assistant Corporation Counsel, argued the cause for respondent (Kenyatta K. Stewart, Cooperation Counsel attorney; Gary S. Lipshutz and Azeem M. Chaudry, Assistant Corporation Counsel, on the brief).

Before Judges Vernoia and Firko.

PER CURIAM

Defendant-third-party plaintiff 94 Jabez Realty, LLC, (Jabez) appeals from an order dismissing its single-count, third-party complaint against the City of Newark (Newark) for failure to state a claim upon which relief may be granted. We find no merit to Jabez's arguments on appeal, and we affirm the court's dismissal of the third-party complaint pursuant to Rule 4:6-2(e).

We conduct a de novo review of a trial court's dismissal of a complaint pursuant to Rule 4:6-2(e). Baskin v P.C. Richard & Son, LLC, 246 N.J. 157, 171 (2021). "A reviewing court must examine 'the legal sufficiency of the facts alleged on the face of the complaint,' giving the plaintiff the benefit of 'every reasonable inference of fact.'" Ibid. (quoting Dimitrakopoulos v. Borrus Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108 (2019)). "If the complaint states no claim that supports relief, and discovery will not give rise to such a claim, the action should be dismissed." Dimitrakopoulos, 237 N.J. at 107. We owe no deference to the motion court's legal conclusions. Id. at 108.

This action was initiated by plaintiff MTAG Cust Alterna Funding II, LLC, (MTAG) with its filing of a complaint for foreclosure of a tax sale certificate. MTAG alleged it was the holder of a tax sale certificate on real property in Newark owned by Jabez. In its complaint, MTAG sought a determination of the amount due on its tax sale certificate, a judgment for the amount due on the certificate with interests and costs, and, in default of that judgment, an order foreclosing Jabez's interest in the property.

Jabez filed an answer to the complaint, generally denying the allegations and asserting affirmative defenses. Jabez also filed the third-party complaint against Newark that is at issue on this appeal.

The third-party complaint alleges that in December 2015, Jabez purchased property in Newark from MTAG. Jabez further alleges that its address for mailing "is, and always has been," 81116th Avenue, Belmar, New Jersey. Following Jabez's purchase of the property, Newark sent Jabez's real estate tax bills and tax notices to an incorrect address in Belmar. As a result, Jabez did not receive any tax bills or notices following its purchase of the property until April 17, 2018, when it received an "Outside Lien Redemption Statement" from Newark stating $32, 059.69 in "taxes, fees, and costs[s] . . . had accrued with regard" to Jabez's Newark property.

According to the third-party complaint, on April 18, 2018, Jabez "issued a check in the amount of $32, 059.69 in full and final settlement of the Outside Lien Redemption Statement." Of that amount, $4, 022.21 was for interest on the principal amount of taxes Jabez had failed to pay "in timely fashion." The amount paid also included $1, 187.56 for attorney's fees incurred by MTAG in providing Jabez with the Outside Lien Redemption Statement.

Jabez alleged that the amounts it was required to pay for accrued interest and MTAG's attorney's fees "were the direct result of" Newark's errors in sending Jabez's tax bills and notices to an incorrect address. Jabez asserted that "had [it] received" the tax bills and notices, the taxes on the property "would have been paid in timely fashion and there would have been no cause to issue an Outside Lien Redemption Statement." Jabez sought $5, 209.57 in compensatory damages for the interest ($4, 022.21) and attorney's fees ($1, 187.56) it claimed it was required to pay as a result of Newark's failure to provide timely notice of Jabez's real estate tax obligations following its purchase of the property. Jabez also sought punitive damages, attorney's fees, and costs of litigation.

Newark filed a Rule 4:6-2(e) motion to dismiss the complaint for failure to state a claim upon which relief can be granted. Newark did not dispute that it sent Jabez's real estate tax bills to the wrong address, but it argued its error did not excuse Jabez's failure to timely pay its taxes. More particularly, Newark argued Jabez could not claim it lacked notice of its tax liability as a matter of law because N.J.S.A. 54:4-64(a)(3) imposes on every taxpayer the obligation to ascertain his, her, or its real estate tax liability regardless of whether the taxpayer receives a tax bill or not. The statute provides as follows:

The validity of any tax or assessment, or the time at which it shall be payable, shall not be affected by the failure of a taxpayer to receive a tax bill, but every taxpayer is put on notice to ascertain from the proper official of the taxing district the amount which may be due for taxes or assessments against him or his property.
[N.J.S.A. 54:4-64(a)(3).]

The court heard argument on Newark's motion and determined Jabez's claim did not state a claim upon which relief could be granted because the fundamental premise of its claim - that Jabez's failure to timely pay its taxes was the result of Newark's failure to send the tax bills to the correct address - was incorrect as a matter of law. More particularly, the court determined Jabez had an obligation under N.J.S.A. 54:4-64(a)(3) to ascertain its tax liability, and that obligation was not affected by the failure of Jabez to receive the tax bills. The court found that if Jabez had fulfilled its obligation under the statute, it would not have owed the interest and attorney's fees it sought in its claim against Newark. The court entered an order dismissing the complaint, and this appeal followed.

Jabez presents a single argument on appeal. It contends its complaint asserts a viable cause of action for a violation of its due process rights based on Newark's failure to provide proper notice of its tax liability. Jabez argues the motion court erred by concluding Newark's failure to send the tax bills to the correct address did not support a legally cognizable due process claim.[1] We are not persuaded.

Jabez's due process claim is founded solely on a claimed lack of notice of its tax liability based on Newark's failure to send the tax bills to Jabez's correct address. A due process analysis is required upon a finding that a statute affects a significant property interest. See e.g., Sherwood Ct. v. Borough of S. River, 294 N.J.Super. 472, 481-82 (App. Div. 1996) (applying due process analysis to a statutory lien under N.J.S.A. 40:62-14 securing payment of unpaid utility charges). Here, a due process analysis is required because imposition of the tax lien resulted in Jabez's obligation to pay interest on the delinquent taxes as well as the costs for the attorney's fees.

Analysis of the due process claim requires consideration of the three factors in Mathews v. Eldridge, 424 U.S. 319, 335 (1976): (1) "the private interest that will be affected by the official action"; (2) "the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards"; and (3) "the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail." See also Connecticut v. Doehr, 501 U.S. 1, 9-18 (applying the Mathews factors to a claim a statute authorizing prejudgment attachment of real estate without prior notice or hearing, and without a requirement that the individual or entity seeking the attachment post a bond, violates the property owner's due process rights).

In Sherwood Ct., the plaintiff owners of an apartment complex claimed they were denied due process by the imposition of a lien under N.J.S.A. 40:62-14 for unpaid municipal electric bills. 294 N.J.Super. at 475-76. The statute provided for municipal liens against property and premises for unpaid utilities charges, for the assessment of interest on the liens, and for the collection of the sums due under the liens "in the same manner as arrearages of taxes." N.J.S.A. 40:62-14. The plaintiffs claimed they were denied due process because the utility bills had been sent to their tenants, and therefore they had not been provided notice of the amounts due prior to the imposition of the statutory lien on their property. 294 N.J.Super. at 480-84.

We applied the Mathews standards to determine whether "N.J.S.A. 40:62-14[, ] which authorizes municipal liens against property and premises where such light, heat or power is furnished," violated the due process rights of the plaintiff property owners against whose property the statutory lien was imposed. Id. at 480-84. Under the first Mathews factor, we found the property owners had a "significant property interest at stake." Id. at 483. That is because statutory liens burden a title to property. See Doehr, 501 U.S. at 12 (explaining "even the temporary or partial impairments to property rights that attachments, liens, and similar encumbrances entail are sufficient to merit due process...

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