Opinion
Docket No. 003008-2012
12-18-2012
UTSI Finance Inc., v. Town of Kearny
Salvatore G. Roccaro, Esq. Castano Quigley LLC John Hyon, Esq. Stavitsky & Associates LLC
JUDGE
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT
COMMITTEE ON OPINIONS
Salvatore G. Roccaro, Esq.
Castano Quigley LLC
John Hyon, Esq.
Stavitsky & Associates LLC
Dear Counsel:
This matter was opened to the court on defendant's motion to dismiss plaintiff's 2012 property tax appeal pursuant to N.J.S.A. 54:4-34 for failure to respond to the tax assessor's request for financial information. The decision of the court is based on review of the motion papers submitted and on oral argument presented by counsel.
In the request for financial information which is the subject of the motion, the assessor asked that the taxpayer provide the income and expense information for 2011. Taxpayer could respond either by providing the 2011 information as of the date of the response, or by estimating the yearly financial information. The assessor did not otherwise identify a specific twelve month reporting period or range of dates. Plaintiff claims that the request is unclear and ambiguous and therefore no response was required. For the reasons that follow, the court finds that the request is framed in language which provided plaintiff with fair notice of the information sought. Because plaintiff failed to respond to the valid chapter 91 request, defendant's motion is granted.
Plaintiff admits that the Chapter 91 mailing was received.
FINDINGS OF FACT AND PROCEDURAL HISTORY
The subject property is located at 15 N. Hackensack Ave., Kearny, New Jersey, also known as Block 295, Lot 7. Plaintiff filed an appeal with the tax court challenging the 2012 assessment. The Kearny tax assessor, Gerard N. Pontrelli, sent plaintiff a one-page cover letter and a pre-printed form entitled "Lease Income and Expense Statement." The letter dated September 19, 2011, reads as follows:
The cover letter includes the address and block and lot for the subject property in the upper right-hand corner.
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The Assessment Department is gathering data which will aid us in projecting and establishing market trends. In order to maintain a continuing analysis of rental data, it is our procedure, in accordance with N.J.S.A. 54:4-34, to request information on income and expenses incurred at the property. The information you furnish is CONFIDENTIAL and will not be exposed to the public inspection.
There are two ways in which you may respond to this request for information.
Provide to this office the current income and expense data for the property for this year as of the date of your response, along with copies of all leases and rent rolls relating to the property at issue;
OR
Based upon the current information available to you and using the enclosed income and expense form you may estimate the income and expense data for the property for the year 2011.
Regardless of which method you choose to report the information requested, your reponse must be completed and returned to the Assesor's office, Kearny Town Hall, 402 Kearny Avenue, Kearny, New Jersey 07032, within 45 days from the above date.
Failure to supply this information may result in a denial of your rights to file a tax appeal for the 2012 tax year.
A copy of N.J.S.A. 54:4-34 is printed on the enclosed income and expense form for your information."
Plaintiff argues that the assessor's request for current income and expense information "for this year as of the date of your response" or, alternatively, an "estimate" of the income and expense "for the year 2011" is unclear since the reporting period is not further identified. At oral argument counsel further argued that the request is ambiguous since the failure to identify the exact months requested left unanswered whether the 2011 information should be provided on a fiscal or calendar year basis.
Defendant argues that in the cases relied on by plaintiff the assessor failed to clearly set forth the reporting year, a fact not present in this matter, and that therefore defendant is entitled to the relief sought. See Town of Phillipsburg v. ME Realty, LLC, 26 N.J. Tax 57 (Tax 2011) (assessor's request found to be vague and open to various interpretations where it sought information for the "year ending 2008/2009"); Cassini v. City of Orange, 16 N.J. Tax 438 (Tax 1997) (assessor requested financials for the full tax year which had not yet ended and thereby sought information that was impossible to provide).
FINDINGS OF LAW
The purpose of the Chapter 91 request is to assist the assessor's collection of information for use in establishing value for an income producing property, which value is generally determined by the capitalization approach. Delran Holding Corp. v. Delran Township, 8 N.J. Tax 80, 83 (Tax 1985). The governing statute, N.J.S.A. 54:4-34, reads as follows:
"Every owner of real property of the taxing district shall, on written request of the assessor, made by certified mail, render a full and true account of his name and real property and the income therefrom, in the case of income-producing property,...and if he shall fail or refuse to respond to the written request of the assessor within 45 days of such request,...the assessor shall value his property at such amount as he may, from any information in his possession or available to him, reasonably determine to be the full and fair value thereof. No appeal shall be heard from the assessor's valuation and assessment with respect to income-producing property where the owner has failed or refused to respond to such written request for information within 45 days of such request."
"By adoption, in 1979, of the Chapter 91 amendment to [the statute], the Legislature's purpose was to provide assessors with additional authority to secure as much information as possible to aid in ascertaining the fair market value of income-producing property. In so doing, however, the Legislature obviously intended that the income data be sought prior to setting assessments to be forwarded to the county boards." Westmark Partners v. West Deptford Township, 12 N.J. Tax 591, 596-97 (Tax 1992).
As established by statute, no tax appeal shall be heard in the case of a taxpayer who fails to respond to a Chapter 91 request. Given the severity of the sanction, the courts require that the municipality strictly adhere to the statutory requirements. The property owner must be adequately notified of its statutory obligations. In Great Adventure, Inc. v. Township of Jackson, 10 N.J. Tax 230, 233 (App. Div. 1988), the court stated that "the severity of the penalty for noncompliance provided by N.J.S.A. 54:4-34, namely, the taxpayer's loss of his right to appeal the assessment, requires a strict construction of the statute."
As part of the assessor's obligation, the Chapter 91 request must be framed in language that is both clear and unequivocal so that the taxpayer may understand its obligation to respond. Cassini, supra, 16 N.J. Tax at 438. In Cassini the court explained,
N.J.S.A. 54:4-34 confers authority upon the tax assessor to determine the scope of information to request from a taxpayer and a corresponding duty to give the taxpayer clear and unequivocal notice of the specific information which must be submitted. Tax assessors are experts in the field of real estate valuation.. .while the owners of income producing properties include not only substantial business enterprises...but also small business persons who may have difficulty reading complex and confusing forms and may lack ready access to legal advice. Consequently, 'the assessor's request notice to the taxpayer must be clear cut.'
[Id. at 447 (citing Summerton Shopping Plaza v. Manalapan Township, 15 N.J. Tax 173, 177 (App. Div. 1995)]
Judge Small noted in Cassini, "[t]he government must speak in clear and unequivocal language where the consequences of non-compliance is the loss of the right to appeal assessments. The taxpayer should not bear the burden of divining the assessor's intent or purpose in sending a Chapter 91 request." Cassini, supra, 16 N.J. Tax at 453.
The letter from the Kearny assessor to the taxpayer in this matter, dated September 2011, allowed the taxpayer to provide either "current" information for "this year" as of the date of the taxpayer's response (along with tax rolls and leases) or estimated 2011 financial information. Although it was not raised by the parties, the court finds it critical that the income and expense form, attached to the assessor's certification as an exhibit to the motion papers, specifically seeks 2011 information. The form includes a section entitled "income 2011" and requests that the taxpayer provide the owner's expense schedule for 2011. Considering the letter request and the form together, the language provided the taxpayer with notice of its obligation to respond. There was no need for the taxpayer to "divine" the intent of the assessor. In fact the taxpayer does not claim any confusion over the fact that the response required the production of 2011 financial information. Plaintiff argues only that without a specific date range the 2011 information might cover the fiscal year rather than the calendar year.
The court finds that the assessor satisfied its obligation to formulate a request for financial information in clear and unequivocal language which placed plaintiff on notice of the information sought. This court is not persuaded by the taxpayer's argument that case law directs a different result. The assessor's request left no room for doubt as to the year requested, which was the court's concern in ME Realty, and the taxpayer in this case was capable of providing the information based either on a fiscal or a calendar year, unlike Cassini where compliance with the request was impossible.
Plaintiff's failure to respond to the tax assessor's request warrants dismissal of the complaint in this matter, subject to plaintiff's right to a reasonableness hearing pursuant to Ocean Pines Ltd. v. Point Pleasant Bor., 112 N.J. Taxi (Tax 1988).
Very truly yours,
Christine M. Nugent, J.T.C PREPARED BY THE COURT UTSI FINANCE INC.,
v. TOWN OF KEARNY
TAX COURT OF NEW JERSEY
DOCKET NO. 003008-2012
ORDER
THIS MATTER being opened to the Court upon application of Castano Quigley, LLC (Salvatore Roccaro, Esq., appearing), attorneys for defendant, Town of Kearny, in the presence of, John Hyon, Esq. attorney for plaintiff, for an Order dismissing plaintiff's complaint or otherwise limiting the appeal from the assessor's valuation and assessment under N.J.S.A. 54:4-34, and the court having read the moving papers of the parties, and it appearing that the assessor has complied with the requirements of N.J.S.A. 54:4-34 and that plaintiff did not provide the information requested by the assessor nor did plaintiff establish good cause for the failure to comply with the assessor's request, and it further appearing that plaintiff is entitled to a hearing relative to the reasonableness of the underlying data used by the assessor and the reasonableness of the methodology employed by the assessor in arriving at his assessment pursuant to Ocean Pines, Ltd, v. Bor. of Point Pleasant, 122 NJ. 1 (1988); and the court having considered the argument presented by or on behalf of the parties; and for good cause shown; IT IS ON THIS 18 day of December, 2012, ORDERED as follows:
1. Defendant's motion is granted in part in that the hearing on plaintiff's complaint will be limited to the reasonableness of the assessor's valuation based upon the data available to the assessor and the methodology used by the assessor in arriving at his assessment.
2. Plaintiff is entitled to conduct an inquiry as to the reasonableness of the underlying data available to the assessor and the reasonableness of the methodology used by the assessor in arriving at his assessment.
3. Discovery shall be completed by January 18, 2013. At the conclusion of the discovery period, the attorney for the plaintiff will advise the court and the attorney for defendant if plaintiff intends to proceed with a hearing based solely on the reasonableness of the assessor's valuation.
4. If the attorney for plaintiff fails to advise this court that plaintiff intends to proceed with a reasonableness hearing by January 24, 2013, then in that event plaintiffs complaint will be dismissed for lack of prosecution.
5. If plaintiff elects to proceed with a reasonableness hearing, such hearing shall be conducted on February 1, 2013.
___________
Hon. Christine M. Nugent, J.T.C.
Record Notation _ On , 20_, oral findings of fact and conclusions of law were made by the court. X On 12/18 2012, written findings of fact and conclusions of law were made by the court. _ The court did not make oral or written findings. The court concludes that no explanation is necessary or appropriate. _ The court did not make oral or written findings, Appended hereto is written statement of reasons by the Court for the entry of this Order. X This motion was opposed. _ This motion was not opposed. The within form of Order is submitted pursuant to R. 1:6-2(a) and R. 4:42-1(e)
Findings of fact and conclusion of law:
See Letter Opinion.