Opinion
Docket No. 003473-2011
06-12-2013
Re: Advanced Stor Edge, L.L.C. v. Township of Edison
BY ELECTRONIC MAIL Eileen W. Toll, Esq. Schneck Law Group, L.L.C. Albert J. Alvarez, Esq. Hoagland, Longo, Moran, Dunst & Doukas, L.L.P.
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Mala Sundar
JUDGE
BY ELECTRONIC MAIL
Eileen W. Toll, Esq.
Schneck Law Group, L.L.C.
Albert J. Alvarez, Esq.
Hoagland, Longo, Moran, Dunst & Doukas, L.L.P.
Block 265.GG, Lot 11 Dear Counsel:
This letter constitutes the court's decision in connection with Plaintiff's application (by motion) for relief under the Freeze Act, and requesting entry of a judgment for tax year 2012 based upon a final judgment for tax year 2011 which was entered pursuant to the parties' stipulation of settlement ("Stipulation"). Defendant ("Township") opposes the relief on grounds it could not, and did not, consent to a reduction of the assessment for tax year 2012 without governing body approval, in furtherance of which it crossed out the paragraph in the Stipulation in which the parties had agreed to set the 2012 assessment at the same amount as the agreed upon reduced assessment for tax year 2011.
The court finds that the Township's inability to settle tax year 2012 at a reduced assessment, and the Plaintiff's agreement in this regard, does not equate to an affirmative waiver of the Freeze Act application by Plaintiff, the only party that can exercise a waiver. The Township's protection of its interests, namely, avoiding an unauthorized settlement, does not curtail the mandate in the Freeze Act. Therefore, Plaintiff's motion is granted. FACTS
On or about September 7, 2012, the parties submitted a fully executed Stipulation to this court, Plaintiff having signed the Stipulation on August 3, 2012. The Stipulation covered three tax years: 2009 (Docket No. 5720-2009); 2010 (Docket Number 6181-2010), and 2011 (Docket Number 3473-2011), and for each year reduced the original assessment. For tax year 2011, the parties agreed that the original assessment of $1,852,600 be reduced to $1,600,000.
Pursuant to paragraph 4 of the Stipulation, the parties agreed that receipt of refunds due to Plaintiff as a consequence of the settlement was conditioned upon authorization from the Local Finance Board "to issue tax refund bonds," which was anticipated in October/November 2012. Plaintiff further agreed to waive any interest due on the refunds until December 31, 2012. In addition, but subject to the December 31, 2012 date, Plaintiff also agreed to waive statutory interest under N.J.S.A. 54:3-27 provided refunds were paid to it within 60 days from the date of the judgment.
Paragraph 6 of the stipulation addressed tax year 2012. It read as follows:
The parties agree that the property's 2012 total assessment shall be $1,600,000 and further agree that either party shall have the right to file a tax appeal for the 2012 tax year to obtain a judgment to implement, enforce and/or confirm the $1,600,000 assessment agreed upon herein. This agreement shall be binding upon any
assignees, tenants and successors in interest with regard to the subject property.
The Township crossed out this paragraph. The cross-out showed the initials of Township's counsel only. During oral argument, Plaintiff's counsel stated that this was of no moment since Plaintiff consented to the cross-out.
By the time the Stipulation was executed, Plaintiff had already filed a complaint for tax year 2012 (Docket No. 001586-2012), on or about March 12, 2012, challenging the assessment of $1,852,600. The complaint challenged the assessment claiming only one count and cause of action, namely, that the assessment did not reflect the true value of the subject property. That matter is still pending.
By judgment dated February 15, 2013, the Clerk of the Tax Court issued a judgment for tax year 2011 setting the assessment at the agreed upon $1.6 million. Plaintiff then filed this motion seeking that the 2012 assessment be the same as the amount set forth in the judgment for 2011, namely, for $1.6 million, pursuant to the Freeze Act.
Plaintiff also appealed its 2013 assessment (docketed as 004284-2013) but that is not at issue before this court. The assessment for 2013 is $1.6 million.
The Township opposed the motion on grounds the parties specifically agreed not to have the 2012 as part of the Stipulation. It stated that the crossed-out paragraph 6 was a waiver of the Freeze Act because it was intended to "conclusively establish" that the assessment for 2012 would not be reduced "as a result of the 2009-2011 settlements" but rather would be addressed separately because the Township lacked express written approval from its governing body authorizing such settlement. Plaintiff denies paragraph 6 is its waiver of the Freeze Act application (but agrees that the parties consensually agreed to its deletion). It maintains that the parties' understanding or agreement as to the reason for the cross-out or as to the application of the Freeze Act is irrelevant because the statute mandates this relief. FINDINGS
Subject to certain exceptions, the Freeze Act protects a taxpayer by "freezing" an assessment for the two years following a final judgment of the Tax Court for a particular tax year (called the "base year"). N.J.S.A. 54:51A-8. The purpose of the statute "is only to protect taxpayers from arbitrary repeated yearly changes in assessment and from harassment." Rockaway 80 Assocs. v. Township of Rockaway, 15 N.J. Tax 326, 335 (Tax 1996).
The application of the Freeze Act is "mechanical and automatic" because it is "self-executing." MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J. Tax 95, 98 (Tax 1999) (quotations omitted). It applies "regardless of whether an appeal for the subsequent year has been filed." Borough of Northvale v. Director, Div. of Taxation, 17 N.J. Tax 204, 208 (Tax 1998), aff'd, 324 N.J. Super. 518 (App. Div. 1999). It also applies if a stipulation of settlement is silent as to the Act's application. Borough of South Plainfield v. Kentile Floors, Inc., 4 N.J. Tax 1, 10 (Tax 1981) ("parties consent" to the "availability of the Freeze Act for the benefit of the taxpayer" is "not a prerequisite to the operation of the statute" therefore, "[t]he absence of an agreement by the parties to apply the Freeze Act is not relevant"), aff'd, 92 N.J. 483 (1983).
If there is a final judgment as of October 1 of the year preceding the freeze year, the assessor must "reduce the assessment for the freeze year in accordance with the base year judgment." Rockaway, supra, 15 N.J. Tax at 331. If not, "the taxpayer must apply for Freeze Act relief." Ibid. A township can oppose such relief by claiming there is a change in the value of the property. Ibid.
However, a taxpayer can waive the benefit of the Freeze Act. Zisapel v. Borough of Paramus, 20 N.J. Tax 209, 212 (Tax 2002). Thus, as of the October 1 assessment date, parties can agree to a "taxable value for a year that is not yet the subject of a tax appeal . . . as a material part of the settlement for the earlier year." Borough of Northvale, supra, 17 N.J. Tax at 213, n.2. Although, a stipulation of a taxable value "earlier than October 1 of the 'pre-tax year' would be ineffective, since the circumstances that will hold on this valuation date are not yet known," nonetheless, a taxpayer's "agreement . . . not to seek a reduction below a specified level in a future year would, in ordinary circumstances, be enforceable." Ibid.
Here, Plaintiff's counsel executed the Stipulation on August 3, 2012, after the October 1, 2011 assessment date for tax year 2012, and after the April 1, 2012 deadline for filing a property tax appeal for 2012.
Thus, Plaintiff's argument that the statutory grant of the Freeze Act automatically applies regardless of any agreement or understanding to the contrary, is not borne out by precedent.
The only issue then is whether the crossed-out paragraph 6 evidences the parties' agreement that the Freeze Act should not apply to tax year 2012. The Township contends that it was unwilling to agree to a reduction for 2012 because it did not have the express written approval of its governing body and that Plaintiff was well aware of this fact. Therefore, the Township argues, the Stipulation and the crossed-out paragraph 6 is ample evidence that tax year 2012 was subject of ongoing negotiations and possibly a separate stipulation of settlement for that year, which is also supported by the fact that Plaintiff filed a separate complaint for 2012.
However, the fact that the Township was unable to settle for a reduced assessment would not estop a taxpayer from seeking application of the Freeze Act. If Plaintiff's settlement is rejected (here by crossing out paragraph 6) so that its 2012 appeal remains pending, it does not mean that Plaintiff has waived the Freeze Act benefit and has chosen to litigate the merits of its 2012 appeal. Equating or deeming the inability to settle by a municipality as a waiver of the Freeze Act by a taxpayer defeats the language and purpose of the Freeze Act. The "raison d'etre" for the Freeze Act "was the protection of the taxpayer, not the municipality." Borough of Hasbrouck Heights v. Division of Tax Appeals, 41 N.J. 492, 499 (1964). Cf. Borough of South Plainfield, supra, 92 N.J. at 491 (rejecting the Borough's contention that it did not "intend" to "bind itself to a five-year freeze of the assessment" and holding that "[w]hen a case is settled, the Freeze Act may be invoked at the exclusive option of the taxpayer, not the municipality"). Thus, actions of the Township to protect itself (here, by deleting an unauthorized settlement) cannot defeat the statutory protection afforded to the Plaintiff. See Zisapel, supra, 20 N.J. Tax at 215f (if a township's "interest under the Freeze Act conflicts with that of the taxpayer, the taxpayer's interest should be paramount."). Unlike Plaintiff's explicit waiver of statutory interest in paragraph 5 of the Stipulation, there is no explicit affirmative waiver of the Freeze Act in paragraph 6 the Stipulation by Plaintiff.
The case consolidated two appeals, with the taxpayer in one matter being Borough of South Plainfield v.Kentile Floors, Inc., and in the other matter being Somerville Industrial Park v. Borough of South Plainfield. The Supreme Court affirmed the decision of the Appellate Division in the former, but reversed another panel of the Appellate Division's decision in the latter. In the Somerville Industrial Park matter, the Appellate Division had held that the Borough "had entered into the settlements on the assumption that the Freeze Act applied only to the 1977 assessment and that absent a 'meeting of the minds'" the Freeze Act did not apply. Borough of South Plainfield, supra, 92 N.J. at 491. The Appellate Division then "gave the taxpayer the option of setting aside the entire settlement." Ibid.
The Township's argument that the crossed-out paragraph 6 indicated Plaintiff's implicit intention to prosecute/litigate tax year 2012 and is thus an implicit waiver of the Freeze Act, is defeated by the Township's own concession that it was the Township which could not agree to the proposed reduction for 2012 due to lack of governing body approval. Thus, there was simply no waiver of the Freeze Act by the Plaintiff, the only party which is entitled to do so.
It is equally plausible to conclude that paragraph 6 was deleted because Plaintiff had already filed a 2012 appeal at the time the Stipulation was being executed, thus, the language permitting "either party" to "file a tax appeal for the 2012 tax year to obtain a judgment to implement, enforce and/or confirm the $1,600,000 assessment agreed upon herein" was inapplicable by its very terms. A deletion for this reason would then simply render the Stipulation silent as to the Freeze Act, and such silence does not prevent application of the Freeze Act. See Borough of South Plainfield, supra, 4 N.J. Tax at 10.
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In sum, that Plaintiff was unable to settle 2012 because the Township could not obtain the required authority cannot require a conclusion that Plaintiff exercised its exclusive right as a taxpayer to waive application of the Freeze Act.
It is undisputed that the Tax Court's judgment for tax year 2011 is final. There is no contention that any of the statutory exceptions to the Freeze Act (such as a revaluation) exist. Nor is there any allegation of a change in value. Therefore, Plaintiff is entitled to relief under the Freeze Act for tax year 2012. CONCLUSION
For the aforementioned reasons, Plaintiff's application for relief under the Freeze Act for tax year 2012 is granted.
Very truly yours,
Mala Sundar, J.T.C.