Opinion
08-24-2013
TEN PARK PLACE ASSOCIATES, INC.; MILITARY PARK BUILDING, LLC; AND ROBERT TREAT HOTEL, INC., Plaintiffs, v. CITY OF NEWARK AND NEWARK DOWNTOWN DISTRICT MANAGEMENT CORPORATION, Defendant.
Richard L. Zucker, Esq., for plaintiffs (Lasser Hochman, LLC, attorneys). Gary S. Lipshutz, Esq., for defendant City of Newark (Assistant Corporation Counsel, City of Newark). Francis A. Kirk, Esq., for defendant Newark Downtown District Management Corporation (McCarter & English, LLP, attorneys).
NOT FOR PUBLICATION
OPINION
Richard L. Zucker, Esq., for plaintiffs (Lasser Hochman, LLC, attorneys).
Gary S. Lipshutz, Esq., for defendant City of Newark (Assistant Corporation Counsel, City of Newark).
Francis A. Kirk, Esq., for defendant Newark Downtown District Management Corporation (McCarter & English, LLP, attorneys). BRENNAN, J.T.C. (t/a)
This is the court's opinion with respect to defendant Newark Downtown District Management Corporation's summary judgment motion seeking to dismiss Plaintiffs' Complaint with prejudice for failure to state a claim upon which relief can be granted, Plaintiffs' cross-motion for partial summary judgment and defendant City of Newark's summary judgment motion. For the reasons explained more fully below, the court grants defendant Newark Downtown District Management Corporation's summary judgment motion in part and denies in part, denies Plaintiffs' summary judgment motion and does not rule on defendant City of Newark's summary judgment motion as it was not filed in accordance with R. 4:46-2.
I. FINDINGS OF FACTS AND PROCEDURAL HISTORY
This opinion sets forth the court's findings of fact and conclusions of law based on the submissions of the parties. R. 1:6-2(f); R. 1:7-4.
Defendant Newark Downtown District Management Corporation ("NDD") is incorporated pursuant to Title 15A of the New Jersey Statutes. As authorized by N.J.S.A. 40:56-65 to -89 ("enabling statute"), the NDD is designated by a Newark City Ordinance to receive funds collected within the Downtown Newark Special Improvement District ("SID"), and to manage the SID.
The NDD's authorizing ordinance, 6S&FE, was adopted on September 2, 1998 ("1998 Ordinance"). Newark, N.J., On February 20, 2013, and subsequent to the filing of Plaintiffs' Complaint, the 1998 Ordinance was repealed and replaced by Ordinance 6PSF-c ("2013 Ordinance"). The 2013 Ordinance expands the geographical boundaries of the SID but does not change the language pertinent to the claims in this matter.
Plaintiffs Ten Park Place Associates, Inc., Military Park Building, LLC and Robert Treat Hotel, Inc. ("Plaintiffs") are owners of real property located within the boundaries of the SID. Since 1998, Plaintiffs have received quarterly SID bills payable to the Tax Collector of defendant City of Newark ("City"). Both the 1998 and 2013 Ordinances state that the special assessment is to be collected by the City's Tax Collector with the regular property tax payment. The City is then required to transfer the funds to the NDD in quarterly payments. The NDD uses these funds to promote economic growth within the SID. Neither Ordinance sets forth the basis or method for calculating the special assessments.
Pursuant to the same enabling statute, the City has two other special improvement districts known as the Ironbound SID and the Mt. Prospect SID. Although not required to, both of the ordinances creating these two districts outline the method to be used when calculating the special assessment.
Through individual appeals to the tax court, Plaintiffs successfully challenged and reduced the amount of their property assessments for tax years 2009 and 2010. The judgment dates for these appeals range from June 30, 2010 to March 18, 2011. These Complaints named the City as the sole defendant. As a result of the reduction in the assessed value of their properties, Plaintiffs were entitled to and received a refund for the excess real property taxes previously paid to the City. Consequently, Plaintiffs believed they were entitled to a refund of the special assessments paid for 2009 and 2010 proportional to the reduced amount of their property assessments.
Plaintiff Ten Park Place Associates, Inc., received a judgment dated June 30, 2010 for its 2009 appeal and a judgment dated December 10, 2010 for its 2010 appeal received. Plaintiff Military Park Building, LLC, received judgments dated October 29, 2010 for both its 2009 and 2010 appeals. Plaintiff Robert Treat Hotel, Inc., received a judgment dated June 30, 2010 for its 2009 appeal and a judgment dated March 18,2011 for its 2010 appeal.
The first time the NDD was put on notice that it may be expected to refund the previously paid SID assessments was by letter dated January 13, 2012, wherein counsel for Plaintiffs requested that the NDD refund a percentage of the special assessments paid for 2009 and 2010. In relevant part, the letter states:
The 1998 ordinance does not set forth the basis for determining the SID special assessments. However, based upon subsequent ordinances creating special improvement districts for the Ironbound-Ferry Street business community and the Mount Prospect Avenue business community, it is my understanding that the formula for the special assessments within the Downtown Newark SID is the same, namely, "each property's current assessed value, as determined by the City of Newark Tax Assessor for real estate tax purposes, will be multiplied by the appropriate
factored amount to sustain the approved annual budget to determine the amount of the special improvement district assessment. The foregoing assessment shall be collected as a special assessment against the properties that are within the district." Please confirm that my understanding is correct.Applying this formula to the Plaintiffs' reduced assessments, counsel for Plaintiffs provided an estimate of the amount of the special assessment refunds and requested payment occur within thirty days.
Counsel for NDD responded by letter dated January 30, 2012, indicating that the NDD was investigating the request for a refund and requesting additional time. The letter also states as follows:
The amounts that you claim are owed to your clients seem high to the NDD based on the manner in which the SID special assessment taxes were calculated and levied.
Accordingly, the NDD wishes to ensure that any refunds that might be owed to your clients are calculated accurately. The NDD further understands that in previous instances where special assessment taxes have been refunded following a tax appeal that the refund payments have been made by the City of Newark, not the NDD.
Although specifically requested by Plaintiffs counsel, the letter did not set forth the manner in which the SID special assessment taxes were calculated and levied.
The 1998 Ordinance did not contain language regarding a procedure for claims for refunds or a repayment of an overpayment of an assessment. Over the next few months it was learned that the City's Tax Collector, upon advice from the City's auditor, would not be issuing the SID special assessment refund.
NDD had not budgeted for refunds, as past requests for refunds were handled directly by the City's Tax Collector. By email dated May 14, 2012, Plaintiffs' counsel advised the NDD that if the refunds plus interest were not paid within 20 days, a lawsuit would be commenced. NDD requested that Plaintiffs accept a payment plan and waive interest; however Plaintiffs rejected this proposal.
On July 2, 2012, Plaintiffs filed a Complaint with the Tax Court naming the City and NDD as defendants. The Complaint challenged the validity of the 1998 Ordinance and requested all payments paid in compliance with the 1998 Ordinance be refunded with interest and costs of suit. In the alternative, the Complaint requested that judgment be entered against the defendants for damages, pre-judgment interest and costs of suit. The following day, the NDD forwarded an electronic copy of a check to Plaintiffs' attorney in the amount of $17,040.72, representing the refund requested by Plaintiffs for their alleged 2009 and the 2010 overpayment of the SID special assessment. The method of calculation was not disclosed. The NDD offered to send Plaintiffs the physical check if Plaintiffs withdrew their Complaint and did not seek costs of suit. Plaintiffs' counsel refused to accept the check as full and final payment of the refund and refused to withdraw the Complaint. On August 6, 2012, the NDD filed a motion for summary judgment requesting Plaintiffs' Complaint be dismissed for failure to state a claim upon which relief could be granted.
There is a slight disparity in the calculations. Plaintiffs' attorney calculated $17,040.72. The City Tax Collector calculated 17,140.78.
The NDD issued payment of the SID refund to Plaintiffs on November 15, 2012. This payment solely refunded the amount of SID assessments Plaintiffs claimed they overpaid for 2009 and 2010.
On January 3, 2013, Plaintiffs filed a motion seeking partial summary judgment invalidating the 1998 Ordinance for failure to set forth a basis or method for determining the special assessments within the SID.
At this juncture, the City had yet to file a responsive pleading or make an appearance. Plaintiffs filed a request for default judgment against the City, which was denied because the case was still pending in the Tax Court where such relief is not warranted. R.8:3-2(b).
On February 20, 2013 the City repealed the 1998 Ordinance and adopted the 2013 Ordinance. Like the 1998 Ordinance, the 2013 Ordinance does not establish a basis or method for determining the special assessments within the SID and does not address procedures for claims for refunds to or overpayment by those within the SID.
Due to concerns involving the jurisdiction of the Tax Court to hear the motions involved, Plaintiffs' Complaint was transferred to the Superior Court, Law Division, Essex County for adjudication. By Order dated May 3, 2013, Chief Justice Rabner temporarily assigned this court to the Superior Court, Law Division, Essex County, for the puipose of adjudicating the claims raised in Plaintiffs' Complaint pursuant to N.J.S.A. 2B:13-2 (b). The motions previously filed while the case was pending in the Tax Court were withdrawn so that the parties could engage in limited discovery. The motions were then renewed and supplemented by additional briefs.
On June 26, 2013, Plaintiffs moved to supplement their Complaint. Plaintiffs' motion was unopposed and granted by Order dated July 19, 2013. Plaintiffs filed their Supplemental Complaint on July 23, 2013, incorporating the fact that the 1998 Ordinance had been repealed and the 2013 Ordinance had been enacted. The First Count of the Supplemental Complaint no longer seeks invalidation of the 1998 Ordinance, though it still requests all of the SID payments made by Plaintiffs under the 1998 Ordinance be returned to them with interest plus costs of suit. In the alternative, the Second, Third and Fourth Counts request judgment be entered against the defendants for damages, pre-judgment interest and costs of suit. The Fifth Count seeks the 2013 Ordinance be declared invalid for failure to set forth a method or basis for determining the SID assessment, requests all SID assessments paid by Plaintiffs under the 2013 Ordinance be returned to them with interest and requests costs of suit.
The court heard oral argument on August 21, 2013.
II. CONCLUSIONS OF LAW
A. Summary Judgment
Summary judgment is appropriate when the pleadings "show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c).
Summary judgment is proper if "a discriminating search of the merits in the pleadings, depositions and admissions on file, together with the affidavits submitted on the motion clearly shows not to present any genuine issue of material fact requiring disposition at a trial." Judson v. Peoples Bank & Trust Co., 3 7 N.J. 67, 75 (1954) (citation removed).
Our New Jersey Supreme Court has emphasized the importance of summary judgment "not only to save antagonists the expense of protracted litigation but also to reserve judicial manpower and facilities to cases which meritoriously command attention." Brill v. Guardian Life Ins. Co. of Am. 142 NJ. 520, 542 (1995) (quoting Robbins v. Jersey City, 23 NJ. 229, 240-241 (1957)). The motion judge must consider "whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540. "[I]f the summary judgment turns on a question of law, or if further factual development is unnecessary in light of the issues presented, then summary judgment need not be delayed." United Sav. Bank v. State, 360 N.J. Super. 520, 525 (App. Div.) (citing Pressler, Current N.J. Court Rules, comment on R. 4:46-2 (2003)), certif. denied, 177 N.J. 574 (2003).
The parties do not disagree on the pertinent facts regarding the validity of the 1998 and 2013 Ordinances. Instead, their disagreement focuses on how the relevant case law applies to the facts. The parties move as a matter of law for summary judgment in their favor and the court, upon considering the moving papers and oral argument, concludes that there are no material facts in dispute regarding Counts One and Five of Plaintiffs' Supplemental Complaint and the issue of the validity of the 1998 and 2013 Ordinances is appropriately resolved through summary judgment.
In the Second, Third and Fourth Counts of Plaintiffs' Supplemental Complaint, Plaintiffs individually request damages and pre-judgment interest, plus the costs of suit. Presumably, these damages are requested because the NDD did not issue the refund Plaintiffs' demanded within the timeline set by the Plaintiffs. The Supplemental Complaint does not set forth what the damages are for or what amount is being claimed.
To determine whether Plaintiffs are due damages because they received the NDD refund after the date Plaintiffs had requested, the court must first determine whether Plaintiffs were actually entitled to the refund. The record does not contain adequate discussion on this subject. Therefore, this issue must be further briefed by the parties before the court can determine whether damages are due. Accordingly, the Second, Third and Fourth Counts of Plaintiffs' Supplemental Complaint are not appropriately resolved through summary judgment.
B. Review of the Ordinances
A municipality is a creature of the State with the ability to exercise only those powers granted to it by the Legislature. Wagner v. Mayor & Municipal Council of Newark, 24 N.J. 467, 474(1957).
The power of the Legislature to enact statutes permitting local assessments is based upon its police power:
Power to levy a local assessment, given to municipalities by statute, is based, not upon the state's power of eminent domain, nor upon its power to tax, but upon its police power. The police power is the power to promote the public health, safety, welfare and morals. Its exercise is premised upon the understanding that the local improvement has conferred a benefit upon the assessed property for which the municipality has a right to be paid. It is the benefit which confers and limits the power. An assessment which exceeds the value of the benefit is arbitrary. It exceeds the limits of the police power and, in the language of the fourteenth amendment, "deprive[s] ... person[s] of ... property without due process of law." This deprivation of property requires the offending action to be set aside.
[Bung's Bar & Grille, Inc. v. Township Council of Florence, 206 N.J. Super. 432, 455-456 (Law Div. 1985).]
Municipal ordinances are presumed to be valid and reasonable. First Peoples Bank of N.J. v. Township of Medford, 126 NJ. 413, 418 (1991) (citing Quick Chek Food Stores v. Township of Springfield, 83 N.J. 438, 447 (1980)). Those challenging an ordinance have the burden of proving its invalidity. First Peoples Bank, supra, 126 N.J. at 418 (citations omitted). Unless the challenger meets the heavy burden of showing the municipal ordinance is arbitrary, capricious or unreasonable, the ordinance will be upheld. Bryant v. Atlantic City, 309 N.J. Super. 596, 610 (App. Div. 1998) (citations omitted).
The language of an ordinance should be liberally construed in favor of the municipality and interpreted to achieve the legislative intent considering the language used and the objective sought. City Council, City of Orange Township v. Brown, 249 N.J. Super. 185, 191 (App. Div. 1991); Borough of Haledon v. Borough of North Haledon, 358 NJ. Super. 289, 308 (App. Div. 2003).
Courts are first instructed to apply the plain meaning of the language used fay the municipality. Bergen Comm'l Bank v. Sisler, 157 NJ. 188, 202 (1999). The municipality's application is controlling if its meaning is clear and unambiguous. Ibid. If the language is prone to differing interpretations, the court may also consider extrinsic factors, such as the purpose of the ordinance, its legislative history, and context to ascertain the legislature's intent. Wingate v. Estate of Ryan, 149 N.J. 227, 236 (1997).
Assessments imposed on properties within a SID are not taxes, but rather special assessments. 2nd Roc-Jersey Associates v. Morristown, 158 N.J. 581, 602 (1999). Special assessments will be upheld if they were levied "'as nearly as may be in proportion to and not in excess of the peculiar benefit' received by the property." Id. at 596 (quoting McNally v. Township of Teaneck, 75 NJ. 33, 40 (1977)). Special assessments are "presumptively correct and the taxpayers [have] the burden of overcoming that presumption by clear and convincing evidence." 2nd Roc-Jersey, supra, 158 NJ. at 597 (quoting McNally, supra, 75 NJ. at 44-45). While it is true that special assessments need not be measured with mathematical precision, it is also true that they "must not be in 'substantial excess' of the special benefits to the land." 2nd Roc-Jersey, supra, 158 N.J. at 596 (citations omitted).
As previously stated, the statutory authority for the creation of the SID and its management by the NDD is found in the enabling statute. To adopt a special improvement district ordinance, the enabling statute requires a municipality to make four findings:
(1) that an area within the municipality, as described by lot and block numbers and by street addresses in the enabling ordinance,
would benefit from being designated as a special improvement district; (2) that a district management corporation would provide administrative and other services to benefit the businesses, employees, residents and consumers in the special improvement district; (3) that a special assessment shall be imposed and collected by the municipality with the regular property tax payment or payment in lieu of taxes or otherwise, and that all or a portion of these payments shall be transferred to the district management corporation to effectuate the purposes of this amendatory and supplementary act and to exercise the powers given to it by municipal ordinance; and (4) that it is in the best interests of the municipality and the public to create a special improvement district and to designate a district management corporation; except that no district management corporation shall be designated to receive any funds or to exercise any powers pursuant to the provisions of this amendatory and supplementary act, unless the board of directors of that corporation shall include at least one member of the governing body of the municipality.Both the 1998 Ordinance and the 2013 Ordinance contain language complying with the statutory requirements listed above. 1998 Ordinance, § 2. 2013 Ordinance, § 2.
[N.J.S.A. 40:56-68(b).]
The enabling statute also sets forth specific requirements for the adoption of a special improvement district's annual budget and provides for public notice and involvement in the setting of the special assessment every year. The 1998 and 2013 Ordinances comply with the procedures required by the enabling statute.
The enabling statute requires the NDD's proposed budget be submitted to the governing body annually. N.J.S.A. 40:56-80(a) and (b). 1998 Ordinance, § 6, ¶ a. 2013 Ordinance, § 5 ¶ f. Upon approval by the governing body, the municipal assessor must prepare an assessment roll separately accounting for the amounts to be specially assessed against the benefitted and assessable properties in the special improvement district in proportion to the benefits. N.J.S.A. 40:56-80(c). 1998 Ordinance, § 6, ¶ c. 2013 Ordinance, § 5 ¶ h. The prepared assessment roll must be filed in the office of the municipal clerk and be made available for inspection. N.J.S.A. 40:56-80(c). 1998 Ordinance, § 6, ¶ c. 2013 Ordinance, § 5 ¶ h. The governing body must hold a public hearing to consider any objections to the amounts of the special assessments. N.J.S.A. 40:56-80(c). 1998 Ordinance, § 6, ¶ c. 2013 Ordinance, § 5 ¶ g (4). This hearing must be advertised at least once in the official newspaper and must be mailed to the named owner(s) of any property proposed to be assessed. N.J.S.A. 40:56-80(c). 1998 Ordinance, § 6, ¶ c. 2013 Ordinance, § 5 ¶ g (5).
The statutory requirement to annually notice all properties subject to the proposed assessment allows property owners to have the opportunity to object to their assessment before it is finalized. Objections to the assessments may be raised at the mandatory public hearing.
In the present case, the Plaintiffs dispute the validity of the 1998 Ordinance and 2013 Ordinance based on the Ordinances' failure to state with any specificity the method or basis of calculating the special assessment being charged. Although counsel for Plaintiffs conceded at oral argument that both Ordinances comply with the enabling statute, he claimed that the Ordinances violate the spirit and purpose of the enabling statute. Plaintiffs argue that when the enabling statute is read along with 2nd Roc-Jersey, supra, it is clear that the special improvement district ordinances must contain a method of calculating the special assessment.
The court disagrees with Plaintiffs' reading of 2nd Roc-Jersey. 2nd Roc-Jersey, supra, largely dealt with whether special assessments should be deemed real property taxes and which method of determining the special assessment is correct. 158 N.J. at 586, 596-603.
The formula to determine the special assessment was known in 2nd Roc-Jersey, but the Court does not specify whether the formula was actually provided within the ordinance. Plaintiffs seem to be arguing that because the method for calculating the special assessment was discussed in 2nd Roc-Jersey, the enabling statute intended all special improvement district ordinances to contain a formula to determine the special assessment. Plaintiffs' argument is not expressly stated in 2nd Roc-Jersey and this court declines to read it into the opinion.
The Legislature requires municipalities be "given the broadest possible discretion" in establishing a special improvement district. N.J.S.A. 40:56-65(b). It is conceivable that the Legislature intended to allow municipalities flexibility when choosing a calculation method and chose not to limit the special improvement district ordinance to a specific approach. If the Legislature intended to require an ordinance created pursuant to the enabling statute contain a formulaic method for determining the special assessment, they could have written that into the enabling statute.
This court finds that the 1998 Ordinance and the 2013 Ordinance are not invalid for failing to contain a formula to determine the special assessments because the enabling statute does not require ordinances creating a special improvement district to specify the method of calculating the special assessment. Both the 1998 Ordinance and the 2013 Ordinance fully comply with the requirements enumerated in the enabling statute.
III. CONCLUSION
For reasons stated above, the court dismisses Counts One and Five of the Plaintiffs' Supplemental Complaint.5 The NDD's motion for summary judgment is hereby granted as to these two Counts and Plaintiffs' motion for partial summary judgment is denied.
The NDD's motion for summary judgment regarding these the Second, Third and Fourth counts is denied without prejudice. The test created by the enabling statute is whether the assessment is proportional to the benefits received by the property owners. A trial will be scheduled for the court to make factual findings regarding the Second, Third and Fourth Counts of Plaintiffs' Supplemental Complaint.
The court will issue an order enumerating its above decision.
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Mary Siobhan Brennan, J.T.C. (t/a)