Opinion
Docket No. 001461-2012
07-02-2013
Re: Torsiello Constr. & Mgmt Co. v. Township of Edison
BY ELECTRONIC MAIL John F. Casey, Esq. Wolff & Samson, P.A. Bridget M. Riepl, Esq. Hoagland Longo et al. L.L.P.
NOT FOR PUBLICATION WITHOUT APPROVAL OF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.
Bridget M. Riepl, Esq.
Hoagland Longo et al. L.L.P.
Block 412.B, Lot 1
Dear Counsel:
This is the court's opinion with respect to plaintiff's motion to compel defendant ("Township") to pay a refund of taxes for tax year 2012 based upon a stipulation of settlement executed between the parties and a judgment entered by the Tax Court in this regard. The Township opposed the motion because the settlement for tax year 2012 was not authorized by a resolution of the Township's governing body, therefore, its counsel's mistaken execution of the stipulation was unauthorized and invalid. It argues that plaintiff was fully aware of this fact and is therefore not entitled to a refund with interest for tax year 2012.
A municipality's counsel cannot settle a matter unless authorized to do so, which authority takes the form of municipal action such as a resolution or ordinance. It is undisputed that the Township's Council passed a resolution authorizing the settlement and issuance of refunds for tax years 2010 and 2011 only. The facts tend to prove that the Township's counsel erroneously, due to a volume of pending stipulations, omitted to excise the amount of reduction negotiated for tax year 2012.
Although the Township's counsel's requested that the 2012 judgment be vacated in his certification only, the court will consider this request after the Township files a cross-motion in this regard. This will provide plaintiff an opportunity to oppose the relief defendant is seeking, namely, vacation of the 2012 judgment. FACTS
The facts are based upon the pleadings, the attachments to the same (whose contents and authenticity are undisputed), and counsels' certifications in support of the parties' respective positions.
On May 17, 2013, the Law Director for the Township instructed its counsel that any and all pending or proposed stipulations of settlements "for 2011 and earlier years" must 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 were to be removed from the proposed stipulation and 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 as requested by the Township's Law Director. It also included a paragraph that plaintiff waived any "prejudgment and post judgment interest . . . on the refund." The stipulation referenced tax years 2010 through 2012, the original assessment of $2,960,000 being the same for all three years. For tax year 2012, the assessment was to be reduced to $2,160,800. This was less than the reduction to $2,274,500 for tax year 2011, which in turn was less than the reduction to $2,388,200 for tax year 2010.
The letter also referenced another matter captioned Toranco Assoc., L.L.C. v. Township of Edison, Docket No. 001459-2012 (hereinafter "Toranco"). Plaintiff has filed a motion in that case seeking identical relief, namely, requiring the Township to pay a refund for tax year 2012 with statutory interest. The court is dealing with this matter separately although many of the facts are similar to the facts in the instant matter.
On July 25, 2012, the Township's Council passed a resolution approving 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 Torsiello Construction and Management Co. for tax years 2010 and 2011." It authorized the payment of a 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 had been listed on the court's August 15, 2012 trial calendar, were settled and that stipulations would be forthcoming. The cover letter only referenced the docket numbers for tax years 2010 and 2011.
The letter also referenced the Toranco appeals.
From the faxed date on the stipulation, it appears that the Township's counsel received the stipulation on August 13, 2012, signed the same, dated it August 14, 2012 and returned the same to plaintiff's counsel without any changes or deletions to any portion of the stipulation. Plaintiff's counsel then added his signature, dated it August 14, 2012 and filed the fully-executed stipulation with the court with a cover letter of the same date. He also faxed a copy of the filed stipulation to Township's counsel on the same date. The cover letters to the court and to Township's counsel did not list the docket number for tax year 2012.
The cover letter to Township's counsel also requested the return of an executed copy of the separate stipulation for tax year 2012 which plaintiff's counsel had sent to Township's counsel in the Toranco appeals.
By cover letter dated December 10, 2012 to Township's counsel, plaintiff's counsel sought advice as to the status of the refunds (but listed the docket numbers for tax years 2010 and 2011 only). Plaintiff's counsel reminded Township's counsel that the stipulations "required" that 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 Toranco 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 that the assessor provide information "as to the status of the assessment book change."
The letter listed the docket numbers for tax years 2010 and 2011 and also referenced the Toranco appeals.
On January 9, 2013, plaintiff's counsel wrote to the Township's Tax Collector inquiring about the status of the refunds since plaintiff had not received any refunds. This letter did not reference the docket number for tax year 2012. The letter reminded the Tax Collector that a stipulation of settlement in this regard was "entered" in August of 2012, which "provided" that "in exchange for a waiver of interest if payment was timely made, that payment of the refunds would be made no later than December 31, 2012."
The letter also referenced the Toranco appeals.
On January 31, 2013, the Clerk of the Tax Court issued a judgment for tax years 2010 and 2012. A judgment for tax year 2011 was issued on February 15, 2013.
On March 14, 2013, plaintiff's counsel faxed a cover letter to the Township's Tax Collector listing the docket numbers for tax years 2010 and 2011 only. The letter notified the Tax Collector that the Tax Court had entered judgments for tax years 2010 through 2012, and since refunds were to be paid on or before December 31, 2012 pursuant to the August 2012 stipulation, refunds with interest were due on the reduced assessments. He requested the same so as to avoid a motion seeking these "over due refunds."
The letter also referenced the Toranco appeals.
On April 10, 2013, plaintiff's counsel wrote to Township's counsel acknowledging receipt of the refunds for tax years 2010 and 2011. He noted that plaintiff did not receive a refund for tax year 2012. He stated that "the judgment that was entered actually did include the 2012 tax year," therefore, "interest is running" on the same. He asserted that the Township "cannot sit on these matters forever" and sought some "deadline by which the . . . refund" would be paid or else he would seek court intervention.
The letter also referenced the Toranco appeals.
Sometime after this letter, plaintiff's counsel called Township's counsel to discuss the status of the 2012 refund. It was then that Township's counsel realized that he had erroneously signed the stipulation of settlement without deleting the proposed reduction for tax year 2012, and that he should have created a separate stipulation for that year as he had in the Toranco matter.
Plaintiff then filed the instant motion seeking an Order directing the Township pay a refund, plus interest, for tax year 2012.
It should be noted that the assessment for tax year 2013 has been changed to match the 2011 reduction, namely, to $2,274,500. Plaintiff did not file an appeal for tax year 2013. ANAYLSIS
This court "recognizes New Jersey's strong public policy toward settling litigation and enforcing settlements." Petrie Retail, Inc. v. Town of Secaucus, 19 N.J. Tax 356, 363 (Tax 2001), aff'd, 363 N.J. Super. 74 (App. Div. 2003). Settlements negotiated and executed in tax matters before the Tax Court "are typically considered binding contracts." Ibid.; see also Seacoast Realty Co. v. Borough of West Long Branch, 14 N.J. Tax 197, 201 (Tax 1994) ("a settlement agreement between parties to a lawsuit is a contract").
However, where one of the parties to the settlement is a local government, "[i]t is elementary that municipalities can ordinarily act only by adoption of an ordinance or resolution at a public meeting." City of Jersey City v. Roosevelt Stadium Marina, Inc., 210 N.J. Super. 315, 327 (App. Div. 1986), certif. denied, 110 NJ. 152 (1988). Thus, there "must" be a "formal action . . . as to giving consent to the settlement of litigation." Ibid. This principle is recognized by an "overwhelming weight of the authority." Sumo Prop. Mgmt., L.L.C. v. City of Newark, 21 N.J. Tax 522, 527 (Law Div. 2004).
For this reason, it "is an accepted practice in the Tax Court" for settlements to be "contingent on governing body approval." Seacoast, supra, 14 N.J. Tax at 201. Indeed, "[s]ettlements before the Tax Court are typically considered binding contracts" between the taxpayer and a municipality, "once approval is obtained from the governing body." AT&T Corp. v. Township of Morris, 19 N.J. Tax 319, 322 (Tax 2000) (emphasis added); 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"). This additional step for obtaining governing body approval was also recognized in the context of vacating judgments. See AT&T Corp., supra, 19 N.J. Tax at 322 ("once [governing body] approval is obtained, the court will only vacate a settlement upon a showing of clear and convincing proof of fraud or other compelling circumstances") (citations and quotations omitted) (emphasis added).
Here, the resolution of the Township's Council is confined to tax years 2010 and 2011. There is no evidence of such resolution approving the settlement for tax year 2012. It is true that the resolution of July 2012 stated that "the form of Stipulation of Settlement is annexed hereto, having been reviewed by and approved by the Township Council . . . ." However, the resolution preceded the statement by authorizing "the Tax Appeal Attorney" to thereafter "execute a Stipulation of Settlement" for tax years 2010 and 2011 only, and specifically referenced the assigned docket numbers for each of those years. Consequently, the Township's counsel makes a compelling argument that his signature on the stipulation did not convert it into a binding contract between the Township and plaintiff. See City of Jersey City, supra, 210 N.J. Super. at 327 ("[t]he unauthorized consent of a municipal attorney cannot bind the governing body").
Plaintiff argues that the Township's counsel had apparent authority to negotiate and settle the tax appeals, therefore, his signature on the stipulation is binding upon the Township. This general proposition has limited application, if any, where a local government is involved. See Seacoast, supra, 14 N.J. Tax at 203 ("[a] municipal corporation is bound only by the acts of an agent that are expressly or implicitly authorized. Apparent authority does not suffice.").
Plaintiff's last argument is that the Township must be estopped from "denying the validity of the judgment." This is because plaintiff relied upon the executed stipulation for the Freeze Act benefit for tax year 2013, so much that it never filed an appeal for 2013. Plaintiff claims that the Township was aware of this reliance because its letter dated December 10, 2012 inquired whether the books were changed for 2013 based upon the settlements, and in response, the Township's counsel assured plaintiff that this was being done. Plaintiff notes that it made "significant compromises in the 2010-2011 years" to achieve a "global resolution" so that trying the 2012 case does not afford plaintiff any relief that "it had bargained for." Plaintiff claims that it would not have settled the matters if it knew that the Township would settle only a portion of the stipulation.
The Township maintains that its counsel's uniform instruction to all taxpayers' counsel of settlements being approved for 2010 and 2011 only, thus requiring exclusion of information for tax year 2012 in proposed stipulations (and their submission as a separate stipulation), and inclusion of certain conditional refund payment language, evidences that plaintiff's counsel was never misled into believing that it would receive a 2012 refund in the same time/manner as the 2010 and 2011 refunds. While Township's counsel does not dispute that the "contemplated" settlement extended to multiple years, including 2012, he strenuously maintains that the above facts also indicate that plaintiff's reliance in this regard, if any, was unreasonable. The Township's counsel further maintains that the assessor did in fact change the books for tax year 2013, and plaintiff received the 2013 assessment notice on February 3, 2013 (which is before the April 1, 2013 appeal deadline for tax year 2013).
To provide equitable estoppel against a governmental entity or person, a claimant must show that the adverse party, "conscious of the State's true interest and aware of the private [party's] misapprehension, stood by while the private [party] acted in detrimental reliance." Marrinan v. Director, Div. of Taxation, 17 N.J. Tax 47, 57 (Tax 1997) (citation omitted). Generally, equitable estoppel is not used lightly against governmental entities or officials. See e.g., Black Whale, Inc. v. Director, Div. of Taxation, 15 N.J. Tax 338 (Tax 1995). Thus:
when a contract has been entered into by a municipal corporation with respect to a subject-matter which was not within its corporate powers, or which it is authorized to make only under prescribed conditions, within prescribed limitations, or in a prescribed mode or manner, the corporation cannot be held liable on the contract regardless of whether the other party thereto has fully carried out his part of the agreement. The corporate powers of such a corporation cannot be extended by the doctrine of estoppel.Additionally, estoppel, if applicable, is to be imposed against the public official or entity who or which had the authority to act. See Maltese v. Township of North Brunswick, 353 N.J. Super. 226, 247 (App. Div. 2002) (ruling that where the Mayor appointed an individual and promised him certain benefits, but those benefits could only be authorized by the town council, the "proper inquiry" for purposes of equitable estoppel is "whether any conduct by the council, the entity that had the authority to act and provide plaintiff the benefits as promised by the mayor, manifested an intention to ratify or affirm the unauthorized actions of the mayor," which conduct would generally have to be "by resolution or ordinance and with full knowledge of all the facts and with the intent to grant plaintiff the benefits promised").
[Hoboken Local No. 2, N.J. S. P. B. Ass'n v. City of Hoboken, 23
N.J. Misc. 334, 341 (Sup. Ct. 1945), aff'd o.b., 134 N.J.L. 616 (E&A 1946).]
Here, the authority to approve the settlement and form a contract of settlement with the plaintiff was with the Township Council, not the Township's counsel. There is nothing in the Township Council's resolution addressing tax year 2012 and authorizing a settlement and refund for that year.
Additionally, there is nothing to show that the assessor was the individual with authority to settle the matter. The fact that the assessor changed the books for tax year 2013 does tend to prove that the parties' settlement envisaged multiple tax years of 2010 through 2012 (which the Township's counsel does not dispute). That the assessor used the exact same amount that the parties had negotiated and settled for tax year 2011 ($2,274,500) also tends to show that the 2013 assessment was not independently based, but was derived or was a consequence of the multi-year settlement between the parties, and also tends to show that a Freeze Act benefit for 2013 was also part of the settlement talks. However, these facts do not establish that the assessor had the authority to approve the 2012 settlement, which was in litigation, and for which plaintiff is seeking application of equitable estoppel.
While the assessor could not change the books for tax year 2012 since the matter was already in litigation, she presumably could do so for tax year 2013, since that year was not yet in litigation when she made the change in the books. Therefore, there was no need to get approval from the Township's Council to reduce the 2013 assessment.
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It is difficult to agree with plaintiff that the Township's counsel's failure to cross out the 2012 language in the stipulation, and his assurances that the 2013 assessment was being changed, misled the plaintiff into believing (and detrimentally relying on this belief) that the 2012 reduction was approved by the Township Council. The Township was not agreeing to include tax year 2012 as any part of the 2010 and 2011 stipulations based upon the Law Director's May 2012 instructions. This fact was conveyed by the Township's counsel to all attorneys, including plaintiff's counsel. Plaintiff's counsel also inserted the requested language regarding the refund payment conditions. Further, in the Toranco matter, for which the proposed stipulation of settlement was sent along with the instant matter, plaintiff's counsel not only inserted the requested language but also sent a separate stipulation for tax year 2012. In the Toranco matter, plaintiff's counsel received the 2010-2011 stipulation with the 2012 assessment crossed out. It was sent to him at the same time that the stipulation for this matter was returned to him for filing. It is unreasonable to conclude that the Township would not agree to a 2012 reduction for one taxpayer (Toranco) but would do so for this taxpayer, both of which had properties in the same Township. Indeed, the Township Council's resolutions do not include tax year 2012 for either taxpayer.
"Parties . . . dealing with a governmental body, . . . are charged with knowledge of the law and the necessity for official public action . . . . [regardless of] whether experienced counsel knew or should have known that formal approval of a governing body is required." City of Jersey City, supra, 210 N.J. Super. at 322, n.4, 331 (App. Div. 1986). Consequently, "even" if "there had been a settlement which had not been approved by the governing body, the settlement and order could be set aside at any time." Id. at 331 (citing R. 4:50-1(d)).
Here, the Township did not file a cross-motion to vacate the 2012 judgment. After it initially opposed plaintiff's motion, it provided an additional certification (with this court's permission) of the Township's counsel in support thereof, in which the counsel requested that the court vacate the 2012 judgment. Because such request is procedurally improper, and does not permit plaintiff to adequately oppose this request in the context of controlling law and court rules pertaining to vacation of a judgment, the court will require the Township to file a cross-motion in this pleading, even if untimely, since the subject matter relates to the subject matter of plaintiff's motion. See R. 1:6-3(b). Although plaintiff's counsel proffered oral arguments against the Township's request for vacation of the 2012 judgment, the court will provide a new return date for the cross-motion by the Township and for a reply/opposition by plaintiff. See ibid. The parties can address any issues of alleged inequities in the cross-motion, including but not limited to, plaintiff's argument that it failed to file an appeal for 2013 because of the Township's actions (or failure to act) although the Township has noted that notice of the 2013 assessment was provided to plaintiff well before the appeal deadline. However, to avoid repetition, parties may if they so desire, incorporate by reference any portion of the pleadings already filed in connection with the instant motion. The court will then issue an opinion deciding the entire matter.
Very truly yours,
______________
Mala Sundar, J.T.C.