Opinion
Docket No. 001459-2012
08-09-2013
Re: Toranco Assocs. L.L.C. v. Township of Edison Block 676, Lot 1.A
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Mala Sundar
JUDGE
BY ELECTRONIC MAIL
John F. Casey, Esq.
Wolff & Samson, P.A.
One Boland Drive
West Orange, New Jersey 07052
Bridget M. Riepl, Esq.
Hoagland Longo et al., L.L.P.
40 Paterson Street
New Brunswick, New Jersey 08901
Dear Counsel:
This is the court's opinion with respect to plaintiff's motion to compel defendant ("Township") to pay refund of taxes for tax year 2012 based upon a stipulation of settlement executed between the parties for tax years 2010 and 2011. Alternatively, plaintiff maintains that it is entitled to relief under the Freeze Act (N.J.S.A. 54:51A-8) because there is a final judgment for tax year 2011, and asks the court to issue a judgment in this regard, including an order that statutory interest is payable on the refunds due for tax year 2012.
The Township opposes the motion compelling a refund on grounds that the stipulation specifically crossed out the proposed settlement of the assessment for tax year 2012, thus there was no approval from the governing body authorizing the proposed 2012 settlement, in addition to which there is no Tax Court judgment for this tax year. It also opposes plaintiff's request for application for Freeze Act on grounds the parties have a settlement. It further disputes plaintiff's entitlement to statutory interest on any refunds payable, if this court were to grant the Freeze benefit, on grounds interest is payable only any refunds resulting from a "tax appeal" and not to a reduction of assessment due to the mechanical application of the Freeze Act.
For the reasons set forth below, the court finds that in the absence of authority to settle, it cannot compel the Township to issue a refund based upon a proposed agreement for tax year 2012. The plaintiff's motion in this regard is therefore denied.
However, plaintiff is entitled to the benefit of the Freeze Act for tax year 2012 based upon the Tax Court judgment issued for tax year 2011 which is undisputedly final in nature. Therefore, plaintiff's application in this regard, which is considered in this motion, is granted.
The court also finds that plaintiff would be entitled to statutory interest on any refunds due for tax year 2012 because it filed a 2012 appeal and as a condition to filing and maintain that appeal, was statutorily was required to pay taxes based on a higher assessment than the finally adjudged 2011 assessment. The court, however, will not issue a judgment compelling such refunds plus interest because the statute provides a 60-day period (from date of the judgment) for the Township to make such payments. FACTS
The facts are based upon the pleadings, the attachments to the same (whose contents or authenticity are undisputed), and counsel certifications in support of the parties' respective positions.
On May 17, 2013, the Law Director for the Township instructed counsel that any and all pending or proposed stipulations of settlements must ensure that "[a]ll settlements for 2011 and earlier years" contain the following language:
The parties hereby understand and agree that notwithstanding the issuance of a judgment by the Tax Court and any law to the contrary, the Plaintiff will not received (sic) their cash refund until the Township of Edison receives authorization from the Local Finance Board to issue tax refund bonds which is anticipated to be in October/November 2012, but in no event will payment be made later than December 31, 2012.Accordingly, the Township's counsel notified "all attorneys" including plaintiff's counsel of this requirement, and because of this requirement, reference to tax years 2012 or beyond be removed from a proposed stipulation but incorporated in a separate stipulation, which stipulation/s the Township's counsel certified, was to be subject to future consideration by the governing body.
By cover letter dated July 6, 2012, plaintiff's counsel forwarded a stipulation of settlement to Township's counsel. The cover letter noted that the agreed upon valuations were rounded to the nearest $100, and further that it "reflect[ed] the agreed upon language concerning the municipality's bond refunding." Paragraph 4 of the proposed stipulation contained the above quoted language. It also included a paragraph that plaintiff was to waive any "prejudgment and post judgment interest . . . on the refund." The stipulation referenced and included three tax years 2010 to 2012. For tax year 2012, the original assessment was proposed to be reduced from $4,021,600 to $2,721,500. This is the same reduction for tax year 2011.
The letter also referenced other appeals captioned Torsiello Construction & Management Co. v. Township of Edison, Docket Nos. 002303-2010 and 004355-2011 (hereinafter "Torsiello"). Plaintiff filed a motion in those cases seeking enforcement of the stipulation and judgment for tax year 2012 by compelling the Township to pay the refund with statutory interest. The court issued a letter opinion in that matter separately although many of the facts are similar to the facts in the instant matter, except for the Freeze Act issue raised here.
By resolution of July 25, 2012, the Township's Council approved the settlement for tax years 2010 and 2011 only. The resolution bore an "Explanation" at the beginning stating "This Resolution authorizes the settlement of tax appeals filed by Toranco Associates for tax years 2010 and 2011." It authorized the payment of refund for both tax years to plaintiff's counsel "within sixty (60) days of the date of entry of the judgment." It noted that "interest is waived on the refund, provided such refund is provided as specified herein." It also authorized "the Tax Appeal Attorney" to thereafter "execute a Stipulation of Settlement" for tax years 2010 and 2011. It added, without any caveats or exceptions, that "the form of Stipulation of Settlement is annexed hereto, having been reviewed by and approved by the Township Council . . . ." Finally, it authorized the "proper Township officials" to "issue checks" but only "upon receipt of the appropriate Tax Court judgment(s)."
By letter dated August 13, 2012, plaintiff's counsel advised the court that the matters, which were listed for the court's trial calendar of August 15, 2012, were settled and stipulations would be forthcoming. The cover letter only included the docket number for 2010.
The letter also referenced the Torsiello appeals.
From the faxed date on the stipulation, it appears that the Township's counsel crossed out the column-by-column assessment information and proposed reduction for tax year 2012, signed the stipulation but did not date it, and returned the same to plaintiff's counsel on or about August 13, 2012. Plaintiff's counsel then added his signature, dated it August 14, 2012, and filed the stipulation with the court. The court received the fully-executed stipulation on August 16, 2012.
On that same date of August 14, 2012, and pursuant to the Township's counsel's request, plaintiff's counsel sent a cover letter (referencing the docket number for tax year 2010) stating that "[a]s discussed" he was enclosing a "separate" proposed stipulation of settlement for tax year 2012 to the Township's counsel. He requested the same be executed and returned to him, so he could file the same with the Tax Court. The copy of the stipulation attached to the moving papers shows that it referenced the docket number for tax year 2012, and was identical to the 2010 and 2011 stipulation as to the conditional refund (upon authority to bond), but assured payment no later than December 31, 2012, and further that plaintiff waived interest on the refund. Both signature lines on the stipulation were blank.
Plaintiff's counsel also faxed another letter on the same date of August 14, 2012 to the Township's counsel, enclosing the "executed" and filed copy of the stipulation of settlement in the Torsiello matters. In that letter, plaintiff's counsel requested that Township's counsel "forward" him "the executed Stipulation" in Toranco Associates (the instant plaintiff), for filing with the court. This cover letter also referenced both matters but did not identify the instant matter with a 2012 docket number.
The 2012 stipulation was never executed by the Township's counsel. Nor was a copy partially executed or otherwise, filed with the Tax Court.
By cover letter of December 10, 2012 to the Township's counsel, plaintiff's counsel sought advice as to the status of the refunds. Although the letter referenced only the 2010 docket number, the body of the letter stated that "[a] separate Stipulation for the 2012 tax year was entered . . . ." Plaintiff's counsel reminded the Township's counsel that the stipulations "required" refunds be paid no later than December 31, 2012, thus, he wanted to ensure that "there were no problems with respect to the payment of that refund." Plaintiff's counsel further inquired whether "the assessor had changed the assessment for the 2013 year to match the 2012 settlement amount" to ensure that plaintiff did not have to file either a "tax appeal" or a "Freeze Act application" for 2013.
The letter also referenced the Torsiello appeals.
In response, the Township's counsel wrote a letter dated December 26, 2012 stating that he was advised that the "bonding for municipal purposes inclusive of tax refunding has been consummated and refunds are currently being processed." He further stated that by copy of his letter he was requesting the assessor "as to the status of the assessment book change."
The letter also referenced the Torsiello appeals and only listed the docket number for tax year 2010 for the instant taxpayer.
On January 9, 2013, plaintiff's counsel wrote to the Township's tax collector inquiring about the status of the payment of the refunds since plaintiff had not received any refunds. This letter also referred only to the Docket Number for tax year 2010. The letter reminded the Tax Collected that a stipulation of settlement in this regard was "entered" in August of 2012, which "provided" that "in exchange for a waiver of interest in payment was timely made, that payment of the refunds would be made no later than December 31, 2012."
The letter also referenced the Torsiello appeals.
On January 31, 2013, the Clerk of the Tax Court issued a judgment for tax year 2010. On February 8, 2013, a judgment was issued for tax year 2011.
On February 7, 2013, plaintiff's counsel wrote to the Township's counsel referencing the 2012 appeal (Docket No. 001459-2012). He stated that judgments from the Tax Court had "begun to arrive" and the Tax Court had indicated that there was no stipulation for 2012 tax year. He stated that he had reviewed his file which indicated that "the Stipulation was never executed and returned to" him for filing. He therefore requested that the Township's counsel promptly execute the same and return to him for filing with the court. The copy of the stipulation enclosed with the instant pleadings did not have plaintiff's counsel's signature.
A week later, on February 14, 2013, plaintiff's counsel wrote to the Township's counsel (this time referencing only Docket No. 002304-2010), that pursuant to the judgments for 2010 and 2011, refunds be promptly made by the Tax Collector. In that letter he noted that he had "recently forwarded . . . the 2012 Stipulation" to Township's counsel, "which had never been executed." He ended the letter requesting the Township's counsel to return "that executed Stipulation" so that he could file it with the court and obtain a judgment.
On March 14, 2013, plaintiff's counsel faxed a cover letter to the Township's Tax Collector notifying him that the Tax Court had entered judgments for tax years 2010 and 2011 but refunds pursuant to the August 2012 stipulations were never paid on or before December 31, 2012. He requested the same so as to avoid a motion seeking these "over due refunds."
The letter also referenced the Torsiello appeals.
On April 10, 2013, plaintiff's counsel wrote to the Township's counsel acknowledging receipt of the refunds for tax years 2010 and 2011. He noted that plaintiff did not receive a refund for 2012 tax year. He also inquired "when" he could "expect a signed Stipulation" for 2012 as to the instant plaintiff, noting that "even after" the signed stipulation was received, the Tax Court would "take[] some time" to issue a judgment. He stated that he needed a "deadline by which the Stipulation will be signed and filed," else he would seek court intervention.
The letter also referenced the Torsiello appeals.
Subsequent to this letter there were telephone conversations between counsel for the parties on the status of the 2012 refunds, wherein, according to plaintiff's counsel "it became clear that" the Township's counsel could not provide any definite date as to when he would be authorized to sign the 2012 proposed stipulation, which in turn meant no judgment at a date certain, which then meant there could be no refund for 2012 in the foreseeable future.
Plaintiff then filed this motion seeking an Order directing the Township pay refunds plus interest for tax year 2012.
It should be noted that the assessment for tax year 2013 has been changed to match the 2012 reduction that was crossed out in the stipulation filed for tax years 2010 and 2011. ANAYLSIS A. Refund of Taxes for Tax Year 2012
It is undisputed that the only fully executed stipulation which was filed with this court, and as to which judgments were issued, were for tax years 2010 and 2011. That stipulation specifically crossed out any reference to tax year 2012. Therefore, the filed stipulation provides no grounds for compelling the Township to pay a refund for tax year 2012.
Plaintiff argues that the lack of an executed stipulation does not prevent this court from ordering the Township to provide a refund for 2012 because plaintiff's counsel had mistakenly believed that the separate stipulation for 2012 had already been executed "along with the other stipulations" and he was never given cause by the Township or Township's counsel to believe otherwise in his string of correspondence with the Township or its counsel.
The court does not find this to be a credible assertion. All along, and in both matters (the instant plaintiff and Torsiello), the sequence of events was that plaintiff's counsel forwarded unsigned copies of the proposed stipulations, awaited the return of an executed copy from the Township's counsel, then appended plaintiff's counsel's signature, and subsequently, filed the same with the court. Indeed, the correspondence addressing the 2012 stipulation proposed the same sequence. The fact that the Township's counsel's December 26, 2012 letter advised plaintiff's counsel that the refunds were being processed does not lend to a reasonable conclusion that the 2012 tax year was included as part of the refunds in light of the Township Council's resolution approving only the 2010 and 2011 refunds.
Plaintiff next argues that its counsel was never advised that the Township's counsel did not have authority to settle tax year 2012. Rather, according to plaintiff, its counsel forwarded a separate stipulation for 2012 only because the Township wanted to "deal with" tax year 2012 separately by issuing a "separate" bond resolution/s in this regard.
The Township's counsel disagrees. He certified that he had notified all counsel, in no uncertain terms, that he could not settle tax years 2012 onwards, which is why he insisted on any stipulations referencing 2012 be removed and addressed in a separate stipulation. He certified that he had also notified all attorneys that these separate stipulations would be addressed and considered by the Township's governing body at an indeterminate date in the future. He noted that plaintiff's counsel's July 2012 letter accompanying the stipulation, and the August 14, 2012 letter enclosing a separate stipulation for tax year 2012, evidenced that plaintiff and its counsel were fully aware of these restrictions, and also evidenced the Township's counsel's lack of governing body approval for the 2012 appeals without which the 2012 stipulations could not be executed. These facts also cast doubt, per Township's counsel, on plaintiff's counsel's understanding that the 2012 tax year was merely awaiting separate authority from the Local Finance Board to issue separate bonds to pay the 2012 refund.
In local property tax appeals, it is "an accepted practice" to settle cases "contingent on governing body approval." Seacoast Realty Co. v. Borough of West Long Branch, 14 N.J. Tax 197, 201 (Tax 1994). This is "because municipalities can ordinarily act only by adoption of an ordinance or resolution at a public meeting . . . and governing bodies meet only periodically." Ibid. (relying upon and quoting City of Jersey City v. Roosevelt Stadium Marina, Inc., 210 N.J. Super. 315, 327 (App. Div. 1986), certif. denied, 110 N.J. 152 (1988)) (internal quotation marks omitted). This principle is firmly established by "[t]he overwhelming weight of the authority," Sumo Prop. Mgmt, L.L.C. v. City of Newark, 21 N.J. Tax 522, 527 (Law Div. 2004).
Once municipal approval has been "obtained from the governing body," the "[s]ettlements before the Tax Court are typically considered binding contracts" as between the township and the taxpayer. AT&T Corp. v. Township of Morris, 19 N.J. Tax 319, 322 (Tax 2000). See also Seacoast, supra, 14 N.J. Tax at 202 (on the date the "governing body approved the settlement" there was a "binding contract to settle the litigation").
Here, there is no evidence of a resolution by the Township's governing body approving the plaintiff's proposed 2012 stipulation of settlement and authorizing the consequent refund. The court finds credible the Township's counsel's averments that without approval of the governing body embodied in a resolution, proposed stipulations of settlements remained as proposed or negotiated but un-finalized settlements. Plaintiff has not provided any authority, such as a statute, regulation, or local laws, establishing that the Township was exempt from the requirement of a local resolution approving settlements, or that the resolution passed by the Township's council approving the stipulation of settlement for tax years 2010 and 2011 and authorizing consequent refunds, was somehow required only for those tax years but not so required for tax year 2012. Plaintiff's counsel impression that a separate stipulation for 2012 was required because bonding, rather than settlement authority, was lacking does not alter the fact that there is no Township resolution approving the 2012 stipulation.
It is true that the separate proposed 2012 stipulation was identical in all respects to the terms of the 2010 and 2011 stipulation (including the amount of the 2012 assessment reduction excised therein by the Township's counsel). Plaintiff argues that this fact proves that the parties negotiated a settlement for all years 2010 through 2012 contemporaneously. The Township's counsel does not dispute that the "contemplated" settlement extended to multiple years, including 2012. He, however, strenuously maintains that this is of no moment without governing body approval and resolution.
The court finds the latter's arguments credible. Even if the counsel for the Township negotiates a settlement and agrees to the terms, it does not equate to an authorized settlement absent a resolution. An "unauthorized consent of a municipal attorney cannot bind the governing body." City of Jersey City, supra, 210 N.J. Super. at 327. Cf. Sumo Prop., supra, 21 N.J. Tax at 526-27 (compelling a municipality to provide property tax abatement, a remedy under "an in lieu of prerogative writs proceeding" filed before the Superior Court's Law Division or before the Tax Court judge temporarily assigned to the Superior Court, is unavailable because "approval or denial of an application for abatement by a municipal attorney or tax assessor does not constitute a ruling by the municipality's governing body"). Thus, although the Township Council approved the stipulation attached to the resolution, and whether or not the attached stipulation had the 2012 information crossed out, it is clear that the resolution authorized "the Tax Appeal Attorney" to thereafter "execute a Stipulation of Settlement" only for tax years 2010 and 2011, and specifically referenced the assigned docket numbers for each of those years.
Plaintiff posits that it is harmed because it settled all three years contemporaneously and saved time and money by not having to prepare an appraisal report for tax year 2012. Now it would have to "go back, put the 2012 case back on the trial calendar . . . and draft a new report for 2012 year." However, it is not at all an unusual practice in the Tax Court for the matter to be placed on a stipulation calendar when parties report the matter settled but contingent on client or governing body approval, and then restored to the trial calendar when the parties report to the court that the clients failed to approve the settlement. Nothing prevents the plaintiff from trying to settle the matter again, even if on different terms. The court has not scheduled any substantive proceedings, such as a trial date, thus far.
In sum, plaintiff's counsel's mistaken assumption that the 2012 stipulation was signed and filed by the Township in court is not credible. His further impression that the 2012 tax year would be processed in the same manner as the 2010 and 2011 but just as a separate package or item, while unfortunate, is not a reasonable basis for directing the Township to issue a refund with interest in the absence of an authorized fully executed stipulation by both parties filed with the court, which would have caused issuance of an ensuing judgment by the court. Therefore, the court will not compel the Township to pay a refund to plaintiff for tax year 2012.
B. Application of the Freeze Act to Tax Year 2012
Plaintiff points out that it is nonetheless eligible to the benefit of the Freeze Act for tax year 2012 on the basis of the 2011 judgment which is final.
The court directed plaintiff to file an application for Freeze Act relief because plaintiff raised this alternative basis for the first time in its reply to the Township's opposition, see R.1:6-3(a) (requiring "[r]eply papers responding to opposing affidavits or certifications"), and the Township requested time to properly respond to such application. Plaintiff thereafter promptly filed such application. The court will consider the application as part of this motion.
Subject to certain exceptions, the Freeze Act, N.J.S.A. 54:51A-8, 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).
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). 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 80 Assocs. v. Township of Rockaway, 15 N.J. Tax 326, 331 (Tax 1996). 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.
Here, the judgment for tax year 2011 was issued and became final after the October 1, 2011, the assessment date for tax year 2012. Therefore, plaintiff's application for relief under the Freeze Act is allowable. None of the statutory exceptions to the Freeze Act, such as a revaluation for tax year 2012, exist. The Township has not alleged or proven any change in value preventing application of the Freeze Act. Nor has the 2012 tax year been litigated and "prosecuted to a separate determination of value for that year." Northvale Borough, supra, 17 N.J. Tax at 208.
The Township argues that the Freeze Act benefit is unavailable because the parties have settled tax year 2012 (albeit subject to governing body approval). The Township maintains that this settlement is a "contract" between the parties, and under general provisions of the contract law, plaintiff is bound by the settlement and cannot resort to the Freeze Act to "back out of the agreement."
Although the Township strenuously advocated against the grant of the Freeze Act benefit for tax year 2012, it concluded its opposition by "respectfully request[ing] that the Court . . . [g]rant Plaintiff's Motion, seeking application of the Freeze Act for the years following the 2011 judgment, entered pursuant to settlement, but . . . [d]eny Plaintiff's request for interest in connection with the application of the Freeze Act . . . ." The court will deem the detailed arguments in the Township's opposition, rather than its conclusion, as being the Township's position, and will therefore address the merits of the Township's arguments.
The Township's argument is in direct contradiction to this court's precedent. See Seacoast, supra, 14 N.J. Tax at 202 (on the date the "governing body approved the settlement" there was a "binding contract to settle the litigation").
Additionally, the argument essentially uses the 2012 stipulation which was sent by plaintiff, but is yet to be authorized and thus executed by the Township, as a sword and a shield. The Township claims it cannot be forced to issue a refund for 2012 because the 2012 stipulation is not fully settled unless authorized by the governing board. Yet, that same stipulation is sought to be considered as a contractual settlement for purposes of preventing application of the Freeze Act (and entitling plaintiff to statutory interest since the proposed stipulation waived such interest). Per the Township's arguments, the 2012 stipulation is at most a contingent settlement for purposes of opposing plaintiff's demand for a refund pursuant to the terms of that stipulation, whereas the same document should be considered a final settlement and a contract for purposes of the Freeze Act application. These arguments are internally inconsistent and unpersuasive.
Moreover, the Township's reliance upon Zuccarelli v. State of New Jersey, Department of Environmental Protection, 326 N.J. Super. 372 (App. Div. 1999) for the proposition that settlement agreements are akin to binding contracts, is misguided. In that case, the settlement was final and not contingent. As noted by the court, "while these matters were pending before the Commissioner, the parties reached a final settlement agreement . . . " which was "affirmed" by an "order" of the Commissioner who "affirmed the terms of the settlement 'as just and reasonable and as disposing of all issues in both cases.'" Id. at 375. Here, there is no such "affirmance" or authorized approval by the Township's governing body.
Equally unpersuasive is the Township's argument that the plaintiff should be and was on notice that the 2012 stipulation required governing body approval, but still chose the settlement route instead of litigation, and is therefore precluded from resorting to the Freeze Act. It relies upon Town of Secaucus v. City of Jersey City, 20 N.J. Tax 562, 573 (Tax 2003) for this proposition. However, in that case, there was no issue that the settlement agreement was contingent, or pending approval of the municipality's governing body/council. Indeed, the court was dealing with the enforceability of one of the clauses of a final agreement and held it void against public policy.
Moreover, the fact that plaintiff opted to pursue settlement rather than litigate the tax appeals does not permit a conclusion that the settlement is a final and binding contract regardless of whether the settlement is final or contingent. If this were so, then it ignores the well-established law that settlements or contracts with municipalities requires authorization by ordinances and/or valid resolutions.
Nor can plaintiff's decision to attempt settlement be construed as a waiver 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"). The actions of the Township to protect itself here by deleting an unauthorized settlement for 2012 cannot defeat the statutory protection afforded to plaintiff. See Zisapel v. Borough of Paramus, 20 N.J. Tax 209, 215 (Tax 2002) (if a municipality's "interest under the Freeze Act conflicts with that of the taxpayer, the taxpayer's interest should be paramount").
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, 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. 92 N.J. at 491. The Appellate Division then "gave the taxpayer the option of setting aside the entire settlement." Ibid.
In sum, the separate proposed stipulation for tax year 2012 which has not been executed by the Township's counsel to date due to lack of governing body approval, does not prevent plaintiff from seeking and benefiting from the application of the Freeze Act. The court finds that the Freeze Act applies since there is a final judgment for tax year 2011.
C. Interest on Refund Due to the Application of the Freeze Act\
Plaintiff argues that upon entry of a judgment for tax year 2012 based on the application of the Freeze Act, it should receive statutory interest on the refund of the 2012 excess taxes paid (based upon the 2011 assessment as reduced in the final judgment). It requests the court's judgment include an order to this effect.
The Township argues that interest on refunds is unavailable because N.J.S.A. 54:3-27.2 applies only to cases where the assessment is successfully reduced by a tax appeal, whereas the Freeze Act provides an automatic reduction solely by virtue of an appeal of the base year, without the necessity of even filing an appeal for the Freeze year. Indeed, it argues, the Freeze Act is silent as to grant of interest payments by a municipality.
It is true that the Freeze Act does not address any refunds due as a result of the use of the base year's adjudged assessment (if the same is in excess of the imposed assessment for the Freeze year). Even plaintiff notes that the Freeze Act only "focuses on the quantum of the assessment to be reflected in the Freeze year." See also Universal Folding Box Co., Inc. v. City of Hoboken, 20 N.J. Tax 1, 5 (Tax 2002), ("[a]uthority is clear, in that a judgment reducing an assessment requires the municipality only to reduce the assessment"), aff'd, 362 N.J. Super. 429 (App. Div. 2003).
However, it is "[o]bvious[]" that "the application of the freeze act could result in a refund of taxes to a taxpayer." Id. at 4. Cf. Union Terminal Cold Storage Co. v. Spence, 17 N.J. 162, 164 (1954) (granting taxpayer's request to compel the municipality to "allow a credit" for taxes owed for a Freeze year pursuant to the then existing N.J.S.A. 54:4-8.2 (now N.J.S.A. 54:4-69.2)).
The Township correctly points out that N.J.S.A. 54:3-27.2 permits refund of excess taxes paid with interest "in the event that a taxpayer is successful in an appeal from an assessment on real property." The Township's position that the reduction of an assessment due to the application of the Freeze Act is not a reduction due to a "successful" tax appeal (or its settlement) has merit because the application of the Freeze Act is not tantamount to a conclusion that base year's judgment constitutes a determination of the true value of the property for the Freeze year. See Riverview Gardens, Section One, Inc. v. Borough of North Arlington, 9 N.J. 167, 173 (1952) (freezing the assessments to the base year "is not a determination that the assessment . . . for the subsequent assessment year to which the determination is directed . . . is a true valuation of the property within the scope of the statutory standard"). This is so because the "base 'assessment year' and 'assessment date' specified in the statute are necessarily those at which the last true valuation of the property was determined by the assessor on the merits." Ibid.
Nonetheless, the court finds that interest would accrue on excess tax payments made by plaintiff for tax year 2012. The legislative intent permeating N.J.S.A. 54:3-27.2 would support this result. This intent and purpose of granting interest on refunds was examined in detail in 9W Contractors, Inc. v. Borough of Englewood Cliffs, 1 N.J. Tax 465 (Tax 1980). The matter involved the taxpayers' application for Freeze Act relief, and an "order compelling the" municipality "to refund to the taxpayers excess taxes paid together with interest." Id. at 469. The court analyzed "not just N.J.S.A. 54:3-27.2" but also the "several statutes bearing on the subject of interest on excess tax payments," such as the tax appeal statutes, N.J.S.A. 54:3-27. Id. at 474. The history (precedent and statutory) indicated that formerly, interest was not permitted to taxpayers who chose to pay more taxes than statutorily required because of the voluntary nature of the payment. Id. at 474-75. However, this changed when law required taxpayers to pay up to 100% of the taxes assessed pre-litigation. Id. at 475-76. The prevailing concept was that where the payment of taxes prior to its reduction (via appeal) was involuntary, i.e., where there is a "compulsion to pay in order to prosecute a tax appeal," then the taxpayer should be entitled to interest on the excess payments after the assessment is reduced. Id. at 476. The legal history was thus "clear that no interest is due on refunds where the excess tax payments were voluntarily made" provided such interest payment is statutorily authorized. Id. at 477. The court concluded that the taxpayers were entitled to refund of excess tax payments made for one of the Freeze years, plus interest.
The court denied interest for one of the Freeze years because the taxpayers had paid more than the taxes required to maintain an appeal, which was 75% of the taxes due, and there was no order compelling them to pay more than the 75% amount.
It should be noted that the court's conclusion in 9W Contractors, supra, that the municipality was required to pay interest at a "fair and reasonable rate" rather than the statutorily mandated rate of 5%, because the refund was made much after the 60-day period provided in N.J.S.A. 54:3-27.2 was disapproved in New York Life Ins. Co. v. Township of Lyndhurst, 280 N.J. Super. 387 (App. Div.), certif. denied, 142 N.J. 457 (1995). However, the Tax Court's decision to award the refund plus statutory interest for the Freeze year was not overruled or disapproved.
Subsequent cases involving refunds payable due to application of the Freeze Act have also permitted payment of interest on the excess taxes previously paid. See Fifth Roc Jersey Assocs., L.L.C. v. Town of Morristown, 26 N.J. Tax 212, 231 (Tax 2011) (voiding an added assessment through taxpayer's application for the Freeze Act, and granting taxpayer's claim for refund of excess taxes paid for the Freeze year plus interest under N.J.S.A. 54:3-27.2). This is also because "N.J.S.A. 54:3-27.2 is the sole authority governing the right of a taxpayer to retrieve tax refunds." Id. at 231 (citing and quoting Universal Folding, supra, 20 N.J. Tax at 3-4). Note that Universal Folding, supra, had also stated that the refund statute was the only authority for the taxpayer to be entitled to "interest based on overpayments." Id. at 4.
There is no question that plaintiff filed an appeal for tax year 2012. In order to do so, and to maintain the viability of the appeal, plaintiff was statutorily required to pay taxes on the assessment of $4,021,600 (which was also the 2011 assessment). There were excess tax payments because the 2011 assessment was reduced by final judgment to $2,721,500. Thus, and although the complaint was the subject of settlement discussions, the taxpayer would be entitled to a refund of the excess payments with interest.
However, for tax year 2013 there should not be any issue of either refunds or interest on the same because the 2013 assessment was changed to match the 2012 reduction that was crossed out in the stipulation filed for tax years 2010 and 2011, and presumably, plaintiff paid the taxes based on the lowered assessment.
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However, the court will not enter a judgment or order compelling the Township to pay any refund amount with interest. This is not only because this mandate is already contained in N.J.S.A. 54:3-27.2, but also the 60-day period in that statute has not expired, let alone, begin to run. Additionally, "[a]uthority is clear, in that a judgment reducing an assessment . . . does not require the payment of money." Universal Folding, supra, 20 N.J. Tax at 5. CONCLUSION
For the aforementioned reasons, the court denies plaintiff's motion to compel the Township to issue a refund with interest for tax year 2012 based upon the lack of a fully executed and duly authorized stipulation of settlement and a judgment in this regard. However, the court grants plaintiff's application for the Freeze Act.
The Clerk of the Tax Court is hereby directed to enter judgment for tax year 2012 pursuant to the Freeze Act on the basis of the tax year 2011 judgment as follows:
+---------------------------+ ¦Land ¦$ 672,000 ¦ +--------------+------------¦ ¦Improvement ¦$2,049,500 ¦ +--------------+------------¦ ¦Total ¦$2,721,500 ¦ +---------------------------+
Very truly yours,
Mala Sundar, J.T.C.