Opinion
Docket No. 005474-2012
09-23-2014
Re: Chesterfield Assoc. L.L.C. v. Township of Freehold Block 41.01, Lot 5.03
BY ELECTRONIC MAIL Paul Tannenbaum, Esq. Zipp & Tannenbaum, L.L.C. 166 Gatzmer Avenue Jamesburg, New Jersey 08831 Jorge Sanchez, Esq. Martin Allen, Esq. DiFransceso Bateman et al. P.C. 15 Mountain Blvd. Warren, New Jersey 07059
NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS
BY ELECTRONIC MAIL
Paul Tannenbaum, Esq.
Zipp & Tannenbaum, L.L.C.
166 Gatzmer Avenue
Jamesburg, New Jersey 08831
Jorge Sanchez, Esq.
Martin Allen, Esq.
DiFransceso Bateman et al. P.C.
15 Mountain Blvd.
Warren, New Jersey 07059
Dear Counsel:
This opinion addresses plaintiffs motion to dismiss defendant's counterclaim. Plaintiff ("Chesterfield") argues that it is entitled to the self-executing relief under the Freeze Act for tax year 2012 based on the final judgment for tax year 2010. Therefore, it maintains, defendant's counterclaim for 2012, which did not allege a cause of action for the Freeze Act's avoidance complaint, should be dismissed.
Defendant ("Township") contends (i) Chesterfield waived the Freeze Act application due to language in a stipulation of settlement for tax year 2009 whereby parties agreed that either could obtain a judgment only to "implement, enforce and/or confirm" the agreed to 2010 assessment amount; (ii) that by filing a valuation complaint for tax year 2012, plaintiff risked a counterclaim, which must be heard pursuant to the ruling in Clearview Gardens Associates v. Township of Parsippany-Troy Hills, 196 N.J. Super. 323 (App. Div. 1984); (iii) the counterclaim put Chesterfield on notice that the Township was requesting a change in assessment due to a change in valuation for purposes of the Freeze Act; and (iv) Chesterfield should be estopped from seeking a dismissal of the Township's counterclaim because it continued to pursue defense of the same until almost the eve of the trial.
The court finds that the 2010 final judgment properly forms the basis for the automatic freeze relief for 2012. The parties settlement agreement for 2010 was on the merits and did not imply a waiver of the Freeze Act by Chesterfield. Further, Chesterfield's withdrawal of its 2012 valuation complaint does not require an automatic dismissal of the Township's counterclaim. However, to proceed the Township must first satisfy the provisions of the Freeze Act exceptions, namely, show a change in values between the valuation dates of the base year and the freeze year. To do this, the Township should have initially alleged a change in value between these valuation dates as a separate cause of action in its counterclaim. This was not done. It cannot now be pled because a claim for freeze exception is a new and distinct cause of action. Therefore, the court grants Chesterfield's motion to dismiss the Township's counterclaim for failure to state a cause of action for which relief can be granted. FACTS AND PROCEDURAL HISTORY
The above referenced property ("Subject") is a garden-style apartment complex located in the Township. Chesterfield was its owner until November 2012 when the property was sold.
For tax year 2009, Chesterfield filed a timely complaint challenging the assessment on the Subject. In November 2009, the parties negotiated a settlement of this appeal. The Township's counsel confirmed the settlement terms by a letter to Chesterfield's counsel, namely, that the assessed value for 2009 be $12 million and that there be "an adjusted assessment of $10 million in 2010." The letter also confirmed that if the "2010 assessment is adjusted as agreed" then Chesterfield would "be restricted to filing an appeal in 2010 for the sole purpose of confirming and enforcing the agreed to $10 million assessment."
Counsel in this regard are the same law firms listed in this matter.
In response, Chesterfield's counsel prepared and sent stipulation of settlement in accordance with the above agreement for 2009 and 2010 to the Township's counsel. The fully executed stipulation was then filed with the court on December 11, 2009, whereby the 2009 assessment was reduced to $12 million and the 2010 assessment was agreed to at $10 million. Paragraph 5 of the stipulation stated:
The parties agree that provided there is no material change in the property between the date hereof and January 1, 2010, the property's 2010 total assessment shall be $10 million and further agree that either party shall have the right to file a tax appeal for the 2010 tax year to obtain a judgment to implement, enforce and/or confirm the $10 million assessment agreed upon herein.The clause also agreed that the parties' assignees, tenants, successors be bound by this language. There was no language addressing the Freeze Act.
The Tax Court clerk issued a judgment for 2009 on March 10, 2010.
Thereafter, the Township's assessor changed the 2010 assessment and adjusted it to $10 million. The change was executed by the January 10 deadline for submission of the tax list.
On March 3, 2010, Chesterfield filed a complaint for tax year 2010. Its form complaint alleged that it contested the assessment because it was "in excess of the true or assessable value of the property." The complaint was accompanied by the required forms, such as the Civil Case Information Statement and proof of service.
Upon receipt of a Case Management Notice from the court, the Township's counsel wrote to Chesterfield's attorney that "we presume that appeal was filed in order to effectuate paragraph 5 of the stipulation." With the letter, he enclosed a copy of a proposed stipulation for 2010 "affirming the 2010 assessment as agreed." The proposed stipulation stated that the 2010 assessment "be affirmed." It also contained the standard language required in stipulations filed with the Tax Court, namely that the parties have examined the property's value and assessment; obtained appraisals or information for enabling them to enter the stipulation; that the assessor was consulted and agreed to the stipulation; and that the settlement will result in an assessment at the fair assessable value. There was no language as to the Freeze Act's applicability.
The court then received a fully executed stipulation for 2010 with no changes from the one proposed by the Township. A judgment was thereafter was issued on August 31, 2010 reflecting the assessment at $10 million.
For tax year 2011, the assessment was $10 million. Chesterfield did not appeal the same.
For tax year 2012, the assessment was $10 million. Chesterfield filed a timely appeal on March 23, 2012. The Township filed an answer and counterclaim on March 30, 2012. Its counterclaim contained a single count which alleged that it was "discriminated against by the assessment which is less than the true or assessable value of the Property." There was no allegation that there was a change in the value of the Subject or any other reason and for which the Township sought relief from the Freeze Act's application.
In August 2012, Chesterfield entered into an Agreement of Sale with "Chesterfield Freehold Associates, LLC" to sell the Subject at $16,550,000. On November 19, 2012, a sale deed was recorded for the Subject for the same amount but with three different buyers as tenants-in-common. On the same date, these buyers executed a Commercial Mortgage Note for $14,735,000 borrowed from Provident Bank for purchase of the Subject.
The Open Public Records Search System (accessed through the MOD-IV) shows the sale being marked as "NU-26" (or non-usable sale, category 26). Under this category, "[s]ales which for some reason other than specified in the enumerated categories are not deemed to be a transaction between a willing buyer, not compelled to buy, and a willing seller, not compelled to sell," are not used in developing the Chapter 123 ratios. N.J.A.C. 18:12-1.1(a).
The parties pursued discovery in connection with the 2012 complaint. The Township filed a motion for more specific answers on February 22, 2013. One of the exhibits attached in support of the motion was a letter dated December 7, 2012 from the Township's counsel to Chesterfield's counsel seeking more specific answers. The introductory paragraph noted that the Subject had sold for $16,550,000; that its implied true value was $10,062,400; and that the Township would only have to "prove a value of $11,838,500" based on the lower limit of the Chapter 123 to succeed in its counterclaim. It ended by asking Chesterfield's counsel to "promptly advise as to your intentions with respect to this matter." The last paragraph of the same letter reiterated the request by asking the counsel "to contact" Township's counsel as to its "intentions . . . in light of the sale of the" Subject, and that if plaintiff intended to proceed, then the Township "would likewise proceed on [its] counterclaim."
A similar request was made by the Township's letter of January 16, 2013. That letter stated that if Chesterfield intended to pursue its 2012 valuation appeal, it had to provide responses to the Township's request for more specific answers or risk a motion for the same without further notice. Chesterfield evidently did not respond since the Township then filed its February 22, 2013 motion.
By letter of February 28, 2013, Chesterfield withdrew its complaint. By letter of March 4, 2013, the Township's counsel informed the court that the Township intended to continue prosecuting its counterclaim and had ordered an appraisal report. Counsel noted that upon receipt of the report the Township would determine whether or not to proceed, however, thus far it had decided that it would be in its "best interest to proceed with" its counterclaim.
The Tax Court clerk entered a judgment dismissing the 2012 complaint on July 12, 2013.
The Township's discovery motion was kept pending due to its pending counterclaim. The motion was subsequently denied by order of June 10, 2013.
Both parties prepared appraisal reports. They exchanged the same on January 23, 2014. The Township's expert concluded the Subject's value as of October 1, 2011 as $14,860,000.
The court then scheduled a trial for April 10, 2014, later rescheduled it to July 17, 2014. In March 2014, Chesterfield's counsel deposed the Township's expert.
On July 11, 2014, Chesterfield's counsel served a Notice in Lieu of Subpoena demanding the presence of the Township's former tax assessor and parties with knowledge of the Township's decision to pursue the counterclaim despite Chesterfield's complaint withdrawal. The Township's counsel objected. The court scheduled a telephonic conference in this regard on July 15, 2014. Chesterfield's attorney then advised the court that at the conference it would also "like to address . . . the Freeze Act" since plaintiff "is entitled to Freeze Act relief pursuant to the parties' 2010 Judgment concerning the subject property." The Township's counsel promptly objected to raising this issue at the "eleventh hour." The court thereafter directed the parties to brief the issue of whether the Freeze Act is available to Chesterfield in a self-executing manner, and whether whether the counterclaim would survives thereafter application of the Freeze Act because of this the counterclaim can be dismissed . Chesterfield specifically noted that its submission in this regard was not intended to and could not be deemed as its "application" for Freeze relief because the base year judgment (2010) was entered much before the assessing date for tax year 2012.
Chesterfield then filed the instant motion to dismiss the Township's counterclaim. Its counsel, who had the primary responsibility to settle the 2009 complaint and who executed the stipulation in this regard certified that "plaintiff never agreed to, and plaintiff never intended to, waive the Freeze Act with respect to the 2010 tax year judgment." ANALYSIS
(A) Is Plaintiff entitled to relief under the Freeze Act?
With certain exceptions, the Freeze Act 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 (called the "base year"). N.J.S.A. 54:51A-8. That judgment can be pursuant to litigation or settlement. Borough of South Plainfield v. Kentile Floors, Inc., 4 N.J. Tax 1, 10 (Tax 1981), aff'd, 92 N.J. 483 (1983).
Where the base year's judgment is entered before the assessment date for a freeze year, "the assessor is no longer at liberty to make an independent assessment of value as of that date." AVR Realty Co. v. Township of Cranford, 294 N.J. Super. 294, 298-99 (App. Div. 1996), certif. denied, 148 N.J. 460 (1997). Thus, application of the Freeze Act is "mechanical and automatic" because it is "self-executing." MSGW Real Estate Fund, L.L.C. v. Borough of Mountain Lakes, 18 N.J. Tax 95, 98 (Tax 1999). A taxpayer therefore need not do anything to ensure that the base year's assessment is carried forward to a freeze year.
In contrast, a taxpayer has to file a motion to have the Freeze Act apply where the base year's judgment is entered after the valuation date for the freeze years. Rockaway 80 Assoc. v. Township of Rockaway, 15 N.J. Tax 326, 331 (Tax 1996).
Here, the 2010 tax year is the latest tax year for which a final judgment was obtained for purposes of the Freeze Act. Although Chesterfield filed a complaint for 2012, it was withdrawn before the court even set a trial date. This means tax year 2012 is subject to relief under the Freeze Act unless that statute's application was waived.
The judgment dismissing the 2012 complaint as withdrawn is not a judgment on the merits since it did not "involve . . . determination of value." Rainhold Holding Co. v. Township of Freehold, 15 N.J. Tax 420, 427 (Tax 1996). Therefore 2012 cannot be deemed the base year for application of the Freeze Act
The court is not persuaded that the silence as to the Freeze Act's applicability in the 2009 or 2010 stipulation implies a waiver. Law does not support this proposition. 2nd Roc-Jersey Assoc. v. Township of Morristown, 11 N.J. Tax 45, 55 (Tax 1990) (if "settlement silent as to the Freeze Act" the relief "automatically applies" even if the township claims "it never intended to be bound" by the Act); Kentile Floors, supra, 4 N.J. Tax at 10 ("parties consent is not a prerequisite" to the application of the Freeze Act, therefore, "absence of an agreement by the parties to apply the Freeze Act is not relevant").
The case consolidated two appeals. In the other appeal, Somerville Industrial Park v. Borough of South Plainfield, 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 Supreme Court reversed. Ibid.
Further, only a taxpayer can expressly waive the benefit of the Freeze Act. Id. 92 N.J. at 491 ("[w]hen a case is settled, the Freeze Act may be invoked at the exclusive option of the taxpayer, not the municipality"). This is because 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). Thus, the Township's intention not to have the Freeze Act apply is not a basis for a denial of the same.
Such an alleged intention is belied by the assessor's carrying forward the 2010 assessment to 2011 and 2012.
The court does not construe paragraph 5 of the 2009 stipulation as a waiver of the Freeze Act for 2011 and 2012. All it meant was that Chesterfield would not seek a further reduction, and the Township would not seek a further increase for 2010 via a valuation appeal. This does not indicate that Chesterfield impliedly agreed to forego freeze relief for 2011 and 2012 (and the court disfavors such implication). There is also no support to conclude that the 2010 assessment agreement was some kind of mechanical compromise, therefore, a potential judgment procured to "enforce" the agreement was not on the merits. Indeed, the 2010 stipulation, drafted by the Township's counsel, sought an affirmance of the assessment and included the requisite language that the settlement was fair and in line with the fair assessable value of the Subject. This renders the values agreed to in the stipulated settlement as being on the merits, and therefore, allows the 2010 tax year to be treated as the base year. See Kentile Floors, supra, 92 N.J. at 489 ("consent judgment entered by the Tax Court pursuant to a stipulation of settlement is a final judgment entitling the taxpayer to the benefit of the Freeze Act" because the "values arrived at by consent are [not] any less reliable than those resulting from a hearing on the merits" and "the parties . . . acknowledge[ed] that the settlement figure was a fair assessment of the property").
The Township could have included language that if Chesterfield obtained a judgment for 2010, it could not be the basis for a Freeze Act application. It did not. If the Township felt that the 2010 judgment was "not to impose the Freeze Act upon the Township" it could have negotiated for and sought for Chesterfield's withdrawal of the 2010 appeal or an express waiver of the Freeze Act. See Zisapel v. Borough of Paramus, 20 N.J. Tax 209, 216 (Tax 2002) ("[t]o require the taxing district to obtain assurance at the time the stipulation is executed as to the continuation of that status in a Freeze Act year, if it wishes to deal conclusively with that year in the stipulation, imposes no great burden on either party to the base year litigation"). See also Curtiss Wright Corp. v. Borough of Wood-Ridge, 4 N.J. Tax 68, 81 (Tax 1982) ("If each agreement were to be open to scrutiny by the Tax Court" it would effectively "nullify the pragmatic purpose" of the Freeze Act, thus, when parties settle a tax year, the agreement "should be reviewed by the parties with full recognition of the effect of the freeze act"). It did neither.
In sum, the court finds that Chesterfield did not waive application of the Freeze Act. The 2010 judgment was the base year's final judgment, which makes 2012 an eligible freeze year.
(B) Should the Township's counterclaim be dismissed because Chesterfield withdrew its complaint and elected the Freeze Act's self-executing application for 2012?
The Township relies heavily upon the following language to dispute the contention that its counterclaim is no longer viable due to the self-executing nature of the freeze for 2012:
The mandatory and self-executing nature of the Freeze Act establishes the assessment for the two Freeze Act years. If a taxpayer determines that it wishes to seek a lower valuation by way of appeal it may open itself to a claim by the municipality that a higher assessment is, in fact, warranted . . . . The burden of proof would be upon each of the parties to demonstrate that the assessment should be respectively lowered or raised. If both fail in discharging this burden, the Freeze Act valuation, mandated by statute, would remain effective . . . .
[Clearview, supra, 196 N.J. Super. at 330-331] (emphasis added).
The Township claims that under the above language, regardless of Chesterfield's complaint withdrawal, the Township can continue to prosecute its counterclaim, put forth its valuation proofs, have Chesterfield cross-examine or attack those proofs, and then, after this court has decided that the Township has failed to carry its burden of proving the incorrectness of the 2012 assessment, the Freeze Act would "kick-in" to maintain the assessment at the 2010 assessment level. Chesterfield argues that the above language was in the context of a taxpayer's "election of remedies" (opting for freeze relief versus litigating the freeze year until judgment), therefore, once it has elected the freeze application, nothing should remain to for it to litigate, which then requires dismissal of the counterclaim as moot.
The underscored language as to the municipality's pleading for an increased assessment could have been addressing a counterclaim since that is the usual response to a complaint. It should be noted, however, that Clearview may not have been procedurally similar to this case since it is unknown whether the taxpayers there had withdrawn their respective valuation appeals but the municipality's counterclaims were pending.
Conversely, the responsive pleading alluded to in the quoted language may have been referring to a municipality's claim of "change in value" for Freeze Act purposes. This is because the court cites to Township of Wayne v. Robbie's Inc., 118 N.J. Super. 129 (App. Div.), certif. denied, 60 N.J. 351 (1972) in support for the underscored language. See Clearview, supra, 196 N.J. Super. at 330. Robbie's Inc. did not involve a valuation appeal in a freeze year and a responsive counterclaim from the town. Rather, it was a taxpayer's application for freeze since the base year's judgment was entered after the freeze year's assessment date (thus, and the freeze year's original assessment was higher than the assessment in the base year's judgment) as to which the municipality was denied the request to prove that the matter came "within the exception to the freeze, i.e., that there were changes in the value of the property occurring after the assessment date" by the Division of Tax Appeals. 118 N.J. Super. at 131-32 (internal quotation marks omitted). This holding then casts doubt whether the Clearview court was addressing a town's counterclaim to a taxpayer's valuation appeal or a town's opposition to such an appeal with a freeze avoidance defensive pleading.
The caption of the matter lists the Township as the Respondent-Appellant, and the taxpayer as the Petitioner-Respondent.
In Clearview, supra, the freeze applications involved base year judgments some of which were entered after the valuation dates for the freeze years, and some before the valuation dates. 196 N.J. Super. at 327. The underscored language above did not differentiate between the two in terms of addressing the issue whether the right to freeze relief is lost upon filing a valuation appeal for further reduction in a freeze year. Id. at 330-31.
Moreover, it is also doubtful whether Clearview would permit the above language to be construed such that a municipality could force a taxpayer to litigate a freeze year (by opposing a municipality's counterclaim) even after the taxpayer elected freeze relief. Such construction would be counterintuitive to the underlying basis for the protection afforded by the Freeze Act. See Zisapel, supra, 20 N.J. Tax at 215 (if a township's "interest under the Freeze Act conflicts with that of the taxpayer, the taxpayer's interest should be paramount"); Rockaway 80, supra, 15 N.J. Tax at 335 (purpose of Freeze Act is "to protect taxpayers from arbitrary repeated yearly changes in assessment and from harassment").
Even if the above quoted language is ambiguous as to whether a counterclaim alleging a valuation count should survive a withdrawal of the taxpayer's valuation complaint (and as here, even before a trial was scheduled) because of the freeze relief election, there is nothing to indicate that the Township is relieved of its burden of first proving why the Freeze Act should not apply. It is unlikely that Clearview supports a departure from the Freeze Act's requirements simply because the remedies of Freeze Act and further reduction by a valuation appeal co-exist, or because a taxpayer files (but does not litigate to judgment) a valuation appeal in a freeze year.
This means that the Township would have had to properly plead, as a separate cause of action in its counterclaim, a count that the Freeze Act does not apply to the Subject because there was a change in value from October 1, 2009 to October 1, 2011. Once the court determines that the Freeze Act should not apply, it can decide, based on the valuation proofs, what that the true value of the property should be. Coastal Eagle Point Oil Co. v. Township of West Deptford, 353 N.J. Super. 212, 221 (App. Div. 2002) (the court first must "conclude[] that the Freeze Act is inapplicable and [then] will conduct[] a valuation hearing"), app. dismissed, 2012 N.J. Super. Unpub. LEXIS 2388 (App.Div. Oct. 24, 2012).
Here, the Township's counterclaim does not allege an exception to the Freeze Act. The court does not agree that its counterclaim implies a change in value cause of action when it sought an increase in assessment on grounds of discrimination, which then put Chesterfield on notice that its freeze benefit was being challenged. Claiming change of value for purposes of the Freeze Act avoidance is not the same as asserting a claim for an increased valuation. For the former, a taxing district must allege (and then show) a change in value from the assessment date of the base year until the assessment date of the freeze year in two steps, by a prima facie showing and if so shown, by a plenary hearing of before-and-after change in property values, which include proving: "(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." Id. at 218. However, in a valuation claim, the taxing district must prove that the assessment for the freeze year alone is not representative of the property's true value and is discriminatory as to other taxpayers unless increased.
Thus, the requisite showings are substantively different, and "a hearing regarding the applicability of Freeze Act is not equivalent to "a regular fair market valuation hearing." Id. at 220. See also New Rock Inv. Partners v. City of Elizabeth, 18 N.J. 207, 213 (Tax 1999) ("[a] change in value sufficient to warrant an added assessment may not be sufficient to avoid application of the Freeze Act . . . [since the Act's] avoidance requires a demonstration of a change in value measured against the base year value" thus, "while an added assessment may represent a change in value from the base year assessment, the added assessment does not automatically translate into a change in value from the base year value"); Entenmann's, Inc. v. Borough of Totowa, 19 N.J. Tax 505, 521 (Tax 2001) (where the freeze year's assessment is a regular but increased assessment, the municipality "retain[s] the burden of establishing that a substantial and meaningful change in value occurred between . . . the base year assessing date . . . the [freeze year] assessing date for 2001" since "[s]peculation . . . as to what the assessor may have been thinking in setting the 2001 assessment is unreliable, uninformative and unnecessary"), aff'd, 21 N.J. Tax 182 (App. Div. 2003).
If otherwise construed, a township can file a counterclaim or even a complaint every year alleging discrimination (an allegation made routinely in every valuation complaint whether by a taxpayer or a municipality) and defeat the Freeze Act's requirement that there be a showing of substantial and meaningful change in value between the assessing dates of the base year and the freeze year to justify departure from the freeze relief. A taxpayer would have no way of knowing that the municipality is asking for an exception from application of the Freeze Act. Cf. Campbell Soup Co. v. City of Camden, 16 N.J. Tax 219, 225-226 (Tax 1996) (failure to designate a response as a "Counterclaim" and specifically allege an "affirmative claim for an increase in the assessment" precludes the court from treating it so under the general request for "such other and further relief at law or in equity as to which [the taxing district] may show themselves entitled.") (citing to R. 8:3-7; R. 4:5-2; Spring Motors Distrib., Inc. v. Ford Motor Co., 191 N.J. Super. 22, 29-30 (App. Div. 1983) (pleadings must "fairly apprise the adverse party of the claims and issues to be raised at trial"), rev'd on other grounds, 98 N.J. 555 (1985)).
The Township argues that it need not file a specific pleading asserting freeze avoidance because the 1999 amendment to the Freeze Act deleted such requirement. See L. 1999, c. 28, §16 (deleting "where those changes are alleged, the complaint shall specifically set forth the nature of the changes relied upon as the basis for the appeal" from N.J.S.A. 54:51A-8). However, the change in the law contemplated an increase in assessment as a predicate to deletion of a freeze avoidance complaint. This is evidenced by the additional language enacted by the same amendment that:
If the assessor increases the assessment or fails to reflect on the tax duplicate a [final judgment of the] county board of taxation or Tax Court [which was ]. . . issued prior to the final preparation of the tax duplicate in either of the two years following the [base] year . . . , the burden of proof is on the taxing district to establish that the assessor acted reasonably in increasing the assessment.The Statement to Senate No. 673 (April 17, 1997) explained this change as follows:
The bill would eliminate the requirement that a taxing district file a protective appeal if it wishes to increase an assessment in a year subsequent to a successful appeal. In its place, the bill would substitute a provision that if the assessor increases an assessment in the subsequent year, the taxing district has the burden of proving the reasonableness of the increase, and if the county tax board or the Tax Court finds that the increase in unreasonable, it shall award the taxpayer reasonable counsel fees, appraisal costs and other costs.
In Entenmann's Inc., supra, 19 N.J. Tax at 520-521, the court construed the deletion as "relieving the municipality of the obligation to file a Freeze Act avoidance complaint when the base year judgment has been entered before the assessment date for the freeze year, as previously required under the decisions in AVR" supra. Thus, a township can still resist the taxpayer's freeze act application motion "even without the filing of a Freeze Act avoidance complaint." Id. at 521. Note that the case also involved an increase in assessment in a freeze year (freeze year's regular assessment was the base year's judgment plus the added assessment), as to which the taxpayer responded with a motion for Freeze Act application. Id. at 209-10.
Thus, in situations where, as here, there was no increase in a base year's assessment, the above language does not dictate that a taxing district do nothing if it desires to increase the freeze's year's assessment. Since the 1999 amendment still imposes the burden upon the municipality to show the reasonableness of the increase, and in this regard, must "make a prima facie showing in order to obtain a hearing on a claim of change in value," see Entenmann's, supra, 19 N.J. Tax at 521, the manner of seeking such increase is either to file its own complaint or to file a counterclaim with a specific allegation of change in value between the assessing dates. Otherwise, and in the absence of an increase in the assessment, the inference is that there was no substantial and meaningful change in the value between the valuation dates, and the assessor is complying with the mandatory obligation to carry forward the base year's assessment. See e.g. AVR, supra, 294 N.J. Super. at 300-01 (when the assessor set the freeze year's assessment as the base year's "he evidently did so in the bona fide belief that the prior assessment was still 'good' vis-a-vis the true value of the property").
A statutorily authorized increased assessment in a freeze year puts a taxpayer on notice that its freeze entitlement is being challenged by the assessor due to, among others, value change between the base and freeze year's assessment dates. This notice is absent where a municipality files a counterclaim asserting only a discrimination count in response to valuation appeal for a self-executing freeze year where there is no increased assessment. Such type of pleading would certainly cause concern under the "square corners" doctrine imposed upon the government. See F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 426-27 (1985).
In sum, where the freeze year's assessment is that of the base year, a counterclaim must specifically allege that there was a substantial and meaningful change in value from the base year. Here, this was not done. Because of this, and furthermore, because a change in value for purposes of the Freeze Act is distinct cause of action, the Township cannot attempt to cure its pleading at this stage. See R. 4:9-3. Therefore, its counterclaim must be dismissed for failure to timely state a cause of action for which relief can be granted. It is thus unnecessary to address the Township's arguments that its valuation appraisal report, containing an opinion of true value of the Subject only as of the freeze year's valuation date, is evidence of changes in the market, and, thus, of value, as is the Subject's sale (after the October 1, 2011 valuation date) for a price that is at least 40% above the freeze year assessment.
Even where a taxing district's answer seeking an increase in assessment was deemed to state the same or similar cause of action, i.e., "valuation and discrimination" and thus was deemed as not raising a "new matter" by which a taxpayer would be prejudiced so as to require compliance with the filing deadlines, see Curtiss-Wright Corp. v. Borough of Wood-Ridge, 2 N.J. Tax 143, 150 (Tax 1981), the Court in F.M.C. required such compliance on grounds of strict compliance with time limitations and the government's need to turn square corners when dealing with taxpayers. 100 N.J. at 426-27. As a result, N.J.S.A. 54:3-21 was amended to provide a 20-day time limit for filing counterclaims.
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(C) Is Chesterfield estopped from seeking dismissal of the Township's counterclaim?
The Township argues that Chesterfield's continued defense of the Township's counterclaim led the Township to reasonably believe that Chesterfield waived its entitlement to freeze relief and that it would not challenge the counterclaim. Therefore it should be estopped from asking for the counterclaim's dismissal.
Equitable estoppel "requires a party to show that an adversary engaged in conduct that induced reliance, and that the party acted or changed position to the party's detriment." Prime Accounting Dep't v. Township of Carney's Point, 421 N.J. Super. 199, 211-212 (App. Div. 2011), rev'd on other grounds, 212 N.J. 493 (2013).
The Township (as is plaintiff), is chargeable with the knowledge of the law. Law is well-established that a waiver of the Freeze Act application is exclusively at the option of the taxpayer, and must be express. Thus, as long as Chesterfield did not waive the self-executing application of the Freeze Act, and because of the statute's patent intent of being enacted solely for the protection of the taxpayer, the Township's request that Chesterfield be estopped from asserting its entitlement to the freeze benefit has no basis in law. As noted above, the court also does not find that Chesterfield expressly waived application of the Freeze Act under the facts of this case. The Township's contention that Chesterfield's decision to have the freeze apply to 2012 repudiated their settlement as to tax year 2010 is unpersuasive as a basis for estoppel.
Additionally, when asked its intentions to proceed with its 2012 valuation appeal vis-à-vis the Township's request for more specific answers, Chesterfield did not provide the requested discovery. When the Township filed a motion for that discovery, Chesterfield promptly withdrew its complaint. These actions indicated that Chesterfield did not desire to pursue its valuation appeal. Rather, it was the Township which refused to withdraw its discovery motion maintaining that it intended to pursue the counterclaim. Thus, the Township, by its own actions, assumed the risk of facing any remedies legally available to Chesterfield.
In sum, the principles of equitable estoppel do not apply to prevent Chesterfield's election of the freeze for 2012 or the filing of its instant motion. CONCLUSION
For the aforementioned reasons, Chesterfield's motion to dismiss the Township's counterclaim is granted.
Very truly yours
/s/
Mala Sundar, J.T.C.