West Orange Twp. v. Crest Ridge Realty LLC
| Docket Number | 004373-2018,000949-2019,000648-2020,002579-2021,001394-2022 |
| Decision Date | 28 June 2023 |
| Parties | West Orange Township v. Crest Ridge Realty LLC |
| Court | New Jersey Tax Court |
Robert D. Blau, Esq.
Blau & Blau
David B. Wolfe, Esq.
Skoloff & Wolfe, P.C.
Dear Mr. Blau and Mr. Wolfe:
This letter shall constitute the court's opinion on Crest Ridge Realty, LLC's motions for summary judgment, and on West Orange Township's motion seeking to strike Crest Ridge Realty, LLC's 2020 tax year affirmative defenses.
Crest Ridge Realty, LLC ("Crest Ridge") is the owner of a 178-unit garden apartment complex, located at 200 Mt Pleasant Avenue, in West Orange Township, Essex County, New Jersey (the "subject property"). The subject property is identified as block 80.03, lot 36 on West Orange Township's municipal tax map.[1]
For the 2018, 2019, 2020, 2021, and 2022 tax years, West Orange Township ("West Orange") instituted local property tax appeals against the subject property seeking to increase its tax assessments ("reverse tax appeals"), arguing that the subject property's true or market value exceeds its equalized tax assessment.[2]
For the 2020 tax year, Crest Ridge filed a Second Amended Answer and Second Amended Counterclaim seeking a reduction in the subject property's local property tax assessment ("Second Amended Answer"). The Second Amended Answer raises ten affirmative defenses including that West Orange's complaint: (i) fails to state a claim on which relief may be granted; (ii) is barred in whole or in part by the statute of limitations; (iii) is barred in whole or in part by the doctrine of laches, waiver, or estoppel; (iv) is barred because it was required to be filed in the Superior Court as an action in lieu of prerogative writs; (v) should be dismissed due to an insufficient service of process; (vi) violates the Uniformity Clause of the New Jersey Constitution; (vii) violates the Fourteenth Amendment of the United States Constitution; (viii) is arbitrary unreasonable, and capricious as there is no common level of assessment in West Orange; (ix) is based on an ulterior motive and is lacking in neutrality that all New Jersey municipalities must abide by in governing its taxpayers; and (x) violates the square corners doctrine.
Crest Ridge motions for summary judgment, seek dismissal of West Orange's complaints, alleging that the reverse tax appeals instituted by West Orange violate the Uniformity Clause of the New Jersey Constitution and the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution. In addition, Crest Ridge charges that West Orange's treatment of Crest Ridge and other similarly situated Class 4 commercial property owners in West Orange violates New Jersey's square corners doctrine.
In response, West Orange maintains that Crest Ridge "does not have a constitutional right to be under-assessed." Moreover, West Orange contends that its reverse tax appeals result in a more uniform tax burden, are not discriminatory, and do not violate the square corners doctrine.
As a precursor to Crest Ridge's summary judgment motions, West Orange filed motions seeking to strike Crest Ridge's 2020 tax year affirmative defenses, primarily targeting the same arguments raised by Crest Ridge under its summary judgment motions.
For the reasons expressed herein, the court finds that insufficient detailed information has been presented to enable the court to conclude that West Orange's reverse tax appeals, and the selection or identification of properties by West Orange's special counsel, violates the New Jersey Constitution's Uniformity Clause, the Equal Protection Clause under the Fourteenth Amendment of the United States Constitution, or New Jersey's square corners doctrine. As such, the court denies Crest Ridge's motions for summary judgment.
Moreover, for the reasons expressed herein, the court finds that West Orange's motion seeking to strike Crest Ridge's 2020 tax year affirmative defenses asserting that, West Orange's complaint: (i) fails to state a claim upon which relief may be granted; (ii) is barred by the applicable limitations period; and (iii) is barred in whole or in part by the doctrine of laches, waiver, or estoppel, should be granted. However, the court finds that material questions of fact exist with respect to the balance of Crest Ridge's 2020 tax year affirmative defenses.
Accordingly, West Orange's motion seeking to strike Crest Ridge's 2020 tax years first, second, and third affirmative defenses are granted; and West Orange's motion seeking to strike Crest Ridge's 2020 tax year fourth, fifth, sixth, seventh, eighth, ninth, and tenth affirmative defenses are denied.
In accordance with R. 1:7-4(a), the court makes the following factual findings based on the submissions of the parties.
In or about 2012, West Orange advertised a Request for Qualifications ("RFQ") seeking to retain special counsel to defend it against local property tax appeals initiated by commercial property owners in the taxing district. In response to the RFQ, the Blau and Blau law firm submitted a proposal to represent West Orange not only in connection with the defense of its commercial local property tax appeals, but to prosecute reverse tax appeals against certain commercial properties in West Orange.
Beginning in 2012, and in each subsequent year thereafter, Blau and Blau (the "Blau firm") entered into an Agreement for Commercial Real Estate Tax Appeals (the "Retainer Agreements") with West Orange.[3] The Retainer Agreements provide that West Orange retains the Blau firm, as special counsel, to defend West Orange in connection with "all commercial real estate tax appeals pending or commenced in the Tax Court of New Jersey," for a fixed monthly rate.[4]
Notably, the Retainer Agreements further authorize the Blau firm, as special counsel, to "file [reverse] tax appeals for the Township [of West Orange] on a contingent fee basis of one-third of the money obtained for the Township from cases filed during the term of the contract."[5] Under the terms of the Retainer Agreements, the Blau firm must submit a "list of recommended appeals to the Township attorney for review and the Township attorney shall have the opportunity to 'veto' any recommended appeals at his discretion." The parties stipulated that the Township attorney has never exercised this "veto" power.
Importantly, the Retainer Agreements further state that "[i]t is contemplated that [special] [c]ounsel will only recommend appeals on commercial properties and will not be obligated to file an appeal unless [special counsel] believes the property is substantially under-assessed" (emphasis added). Thus, the criteria for identification of commercial properties and the selection of commercial properties against which reverse tax appeals will be recommended for prosecution is exclusively vested with the Blau firm, in its sole and absolute discretion. West Orange's municipal tax assessor is not consulted and offered no input regarding the identification or selection of properties for prosecution of reverse tax appeals.
Moreover, the Retainer Agreements provide that should West Orange "refuse[] to accept [special] [c]ounsel's recommendation to settle a matter, the Township shall be responsible for payment of the contingent fee based upon the recommendation and reimbursement of [special] Counsel's actual out of pocket expenses related to that Affirmative Appeal."[6] Between 2018 and 2021, the Blau firm, on behalf of West Orange, instituted approximately seventy-eight reverse tax appeals against Class 4, commercial properties in the taxing district.[7]During the same period, West Orange did not institute reverse tax appeals against any other class of property in the taxing district.
Between 2012 and 2022, West Orange received $3,251,683.30 in revenue resulting from the reverse tax appeals and paid the Blau firm $1,083,683.10 in contingent fees resulting from the prosecution of reverse tax appeals.
In or about March 2022, Crest Ridge moved before the court seeking to bifurcate the constitutional issues from the valuation issues in these matters. On March 18, 2022, the court granted Crest Ridge's motions bifurcating trial of these issues. The court further assigned the parties dates for the submission of motions for summary judgment on the constitutional issues.
On November 8, 2022, West Orange filed the instant motions seeking to strike Crest Ridge's 2020 tax year affirmative defenses.
On November 18, 2022, Crest Ridge filed the instant motions for summary judgment. In support of its motions to strike Crest Ridge's 2020 tax year affirmative defenses, West Orange argues that the affirmative defenses In sum, West Orange asserts that Crest Ridge has not and cannot offer any factual evidence demonstrating that West Orange's reverse tax appeals amount to a violation of: (i) New Jersey's Uniformity Clause; (ii) the Equal Protection Clause under the Fourteenth Amendment of the United States Constitution; and (iii) the square corners doctrine set forth under F.M.C. Stores v. Morris Plains, 100 N.J. 418 (1985). West Orange further maintains that the balance of Crest Ridge's affirmative defenses must also be stricken, as Crest Ridge has not presented any facts in support of any of the affirmative defenses raised.
In support of its motions for...
To continue reading
Request your trial