Opinion
DOCKET NO. A-0337-13T4
01-12-2015
JIYOUNG SON and DONG HYUN LEE, Plaintiffs-Appellants, v. STATE OF NEW JERSEY, NJ STATE DIVISION OF TAXATION, and NJ STATE ALCOHOLIC BEVERAGE COMMISSION, Defendants-Respondents.
Kimm Law Firm, attorneys for appellants (Michael S. Kimm, Thomas W. Park, and Sung H. Jang, on the briefs). John J. Hoffman, Acting Attorney General, attorney for respondents (Heather Lynn Anderson, Deputy Attorney General, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Alvarez and Waugh. On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-0133-13. Kimm Law Firm, attorneys for appellants (Michael S. Kimm, Thomas W. Park, and Sung H. Jang, on the briefs). John J. Hoffman, Acting Attorney General, attorney for respondents (Heather Lynn Anderson, Deputy Attorney General, on the brief). PER CURIAM
Plaintiffs Jiyoung Son and Dong Hyun Lee appeal the Chancery Division's August 9, 2013 order dismissing their complaint against the State of New Jersey, the Division of Taxation (Division), and the Division of Alcoholic Beverage Control (ABC). We affirm.
We provide a brief outline of the background of this litigation, which we discern from the record on appeal. Son and Lee are business partners. Lee lent money to One Star Entertainment, Inc. (One Star), a business entity that operated two restaurants in Palisades Park. One of the restaurants had a liquor license. After both restaurants ceased operations, One Star defaulted on its obligation to Lee. On November 30, 2009, Lee obtained a default judgment against One Star in the amount of $181,800. Lee's judgment was recorded as a lien in February 2010.
The lien did not, and could not have, included One Star's liquor license. N.J.S.A. 33:1-26.
At the time the restaurants closed, One Star owed substantial taxes to the State. In 2007, One Star had filed a complaint in the Tax Court, contesting a tax assessment by the Division. In 2010, and independent of the 2007 complaint, One Star filed a second complaint in the Tax Court contesting the Division's final determination that One Star owed $1,350,493.27 in additional taxes.
On July 15, 2011, the Tax Court resolved the 2007 litigation and entered judgment for $370,573.12 in favor of the Division. In April 2013, according to plaintiffs, One Star entered into a settlement agreement with the Division, resulting in the dismissal of the 2010 complaint.
Plaintiffs commenced negotiations with One Star to purchase the liquor license. During the course of the negotiations, there were some communications with the defendant State agencies by attorneys representing the parties to the proposed sale of the liquor license. The letters were concerned with how the purchase and transfer could be accomplished and requested certain necessary approvals. However, the sale was never consummated by plaintiffs and One Star.
In 2012, the Division seized One Star's liquor license pursuant to its authority under N.J.S.A. 54:49-13a. In May 2013, having learned that the Division had scheduled an auction of the liquor license, plaintiffs filed an order to show cause and verified complaint in the Chancery Division, seeking to enjoin the auction of the liquor license and also seeking specific performance of an alleged agreement between plaintiffs and the State defendants to settle One Star's tax liabilities and ABC fines in exchange for the transfer of One Star's liquor license to them. The parties eventually agreed to defer the auction until the specific performance issue was resolved.
On June 19, the State defendants filed a motion to dismiss for failure to state a claim, or alternatively a transfer to the Tax Court. In the motion to dismiss, the State defendants argued that the complaint did not state a claim because they had not negotiated with or entered into any agreement with Lee or Son. They also argued that the Tort Claims Act (TCA), N.J.S.A. 59:1-1 to 12-3, barred plaintiffs' claims because they arose out of the collection of a tax. Finally, they argued that the matter should be transferred to the Tax Court because it fell under its jurisdiction.
On August 9, the motion judge heard oral argument on the motion. Because the motion judge relied on facts set forth in the verified complaint and the State defendants' statement of undisputed facts, he applied the standard for a motion for summary judgment under Rule 4:46-2(c). He found that there was no evidence, "other than some innuendos," that the State defendants entered into any settlement agreement with plaintiffs. Thus, "there [was] nothing [there] that would lead a rational fact finder to believe that either the Division of Taxation or the ABC entered into a [s]ettlement [a]greement with the [p]laintiffs." The judge also found that, because "the sale of the liquor license [was] to satisfy [a] tax," the claim was barred by the TCA, which grants immunity to the State from "an injury caused by . . . instituting any judicial or administrative proceeding or action for or incidental to the assessment or collection of a tax." N.J.S.A. 59:7-2. Finally, the judge found that, even if plaintiffs' claim was contractual, it was governed by the Contractual Liability Act (CLA), N.J.S.A. 59:13-1 to -10, and they were barred from recovery because they failed to provide the notice required by the Act, as per N.J.S.A. 59:13-5. The judge entered an implementing order on the same day. This appeal followed.
On appeal, plaintiffs argue that the judge erred in granting summary judgment prior to completion of discovery, that the TCA is inapplicable because they brought a contractual claim against the State, and that the State defendants were equitably estopped from selling the liquor license because plaintiffs were the intended beneficiaries of agreements between One Star and the State defendants.
Having reviewed plaintiffs' arguments on appeal in light of the record and applicable law, we find them to be without merit and not warranting extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only the following.
It is clear from the record that plaintiffs had no enforceable agreement with the State defendants. The February 14, 2012 email between counsel for the parties involved in the sale negotiations, on which plaintiffs rely, does nothing more than assert that an unnamed deputy attorney general (DAG) "tentatively" agreed to the proposed transfer of the liquor license, subject to conditions that were, in fact, never fulfilled. We are convinced that no additional discovery in this case would change this conclusion. Minoia v. Kushner, 365 N.J. Super. 304, 307 (App. Div. 2004) ("[D]iscovery need not be undertaken or completed if it will patently not change the outcome.").
In addition, one of the conditions mentioned in the February 14 email was that the transaction be completed by August 14, 2012. Plaintiffs knew as of that date that the transfer had not taken place. Consequently, to the extent they were seeking to enforce a contractual right, they were obligated to give notice within ninety days of that date under the notice provision of the CLA, N.J.S.A. 59:13-5. To the extent plaintiffs were seeking to state a claim sounding in tort, which they dispute because they assert their claim sounded in contract, it would be barred by N.J.S.A. 59:7-2, as the motion judge held, as well as the notice provision of the TCA, N.J.S.A. 59:8-8(a).
Pursuant to N.J.S.A. 59:1-4, a contractual claim, even if it involved collection of a tax, would not be subject to the TCA.
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Finally, equitable estoppel is "rarely invoked against a government entity." Sellers v. Bd. of Trs. of the Police & Firemen's Ret. Sys., 399 N.J. Super. 51, 57-58 (App. Div. 2008). It may be applied only to "'avoid wrong or injury ensuing from reasonable reliance upon such conduct.'" Ibid. (quoting Skulski v. Nolan, 26 N.J. 179, 198 (1975)). There is absolutely no basis for its application in this case.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION