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Township of Warren v. Suffness

Decided: June 6, 1988.


On appeal from the New Jersey Tax Court.

Shebell, Gaynor and A. M. Stein. The opinion of the court was delivered by Shebell, J.A.D.


These cross-appeals pertain to the 1981 tax year assessments of adjacent residential properties owned by William L. Smith and Nancy A. Smith (Smith), at 10 Jennifer Lane (Block 139A, Lot 5), Charles G. Savini and Barbara A. Savini (Savini), at 12 Jennifer Lane (Block 139A, Lot 7), and Marion R. Suffness (Suffness), at 14 Jennifer Lane (Block 139A, Lot 8), located in the Township of Warren.

On appeal Smith, Savini and Suffness (defendants) contend the Tax Court erred in not affirming the lots' 1981 tax year assessments established by the Somerset County Board of Taxation (county board). On cross-appeal the Township of

Warren (plaintiff) contends the Tax Court erred in not adopting the lots' valuations for the 1981 tax year established by Michael S. Sorich, a real estate appraiser and plaintiff's expert witness.

The three lots, containing defendants' single-family houses, abut a quarry to their rear. As of 1986, the houses ranged in age from 17 to 22 years. Defendants appealed plaintiff's 1976, 1979 and 1981 tax assessments to the county board, which substantially reduced the assessments for all three years. Plaintiff appealed the county board assessments for all three years.

Prior to the original Tax Court trial, plaintiff's 1981 appeals were "joined" with its 1976 and 1979 appeals "per agreement of all parties;" however, on January 10, 1984, when the parties appeared for trial the Tax Court Judge noted "neither side" was "ready to go ahead" with the 1981 appeals. He therefore consolidated only the 1976 and 1979 appeals "for purposes of trial."

On January 10, 1984, Sorich testified as plaintiff's only expert witness. He used the "market approach" to value the three lots for all six tax years, 1976 through 1981, because, "for single-family residences," that approach was the "best methodology in terms of measuring value." Sorich also used the "cost approach" to value all three lots for all six tax years, but only to "test the plausibility of the market approach." He asserted that his market approach and his cost approach "corroborated each other" for each lot and tax year, in the sense that the value conclusions yielded by each approach were "close" in amount. At the conclusion of Sorich's testimony on January 10, 1984, his three written appraisals were entered into evidence.

After both sides rested on January 20, 1984, the Tax Court Judge rendered an oral decision. The judge noted that defendants had presented no expert evidence and concluded that Sorich's evidence "establishes what the assessment should be on those three residential lots." The judge directed entry of

separate judgments, in essence "affirming the original assessment" for each lot for the 1976 and 1979 tax years.

On appeal of that Tax Court ruling, we noted that Sorich established the lots' values for 1976 and 1979 "by taking subsequent comparable sales and 'trending back' to the assessing dates and then corroborating those findings with cost approach assessment data." Township of Warren v. Suffness, et al., No. A-3281-83T5, slip op. at 3 (App.Div. November 27, 1985). When applied to the 1976 tax year, we concluded Sorich's approach contained a fatal flaw:

This approach for the year 1976 was one of total hindsight and did not use facts known or reasonably foreseeable on the [October 1, 1975] assessment date. . . . All [comparable] sales utilized were subsequent to October 1, 1975. [ Id. at 7].

This violated the principle that "sales of comparable property" subsequent to the pertinent "date of valuation . . . may not be used as direct evidence of value but may be used only to corroborate value established by comparable sales which preceded that date." Id. at 5. Because of this flaw, we overturned the 1976 assessments of the Tax Court.

We found no fault with Sorich's approach when applied to the 1979 tax year:

For the tax year 1979, although only one comparable sale preceded the [October 1, 1978] assessing date, we are satisfied, with the utilization of the trending and cost approach evaluation as corroborative evidence, there is sufficient credible evidence to support the Tax Court's findings and conclusions. Rova Farms Resort v. Investors Ins., Co., 65 N.J. 474, 484 (1974). [ Id. at 8].

We considered at that time the fact that Sorich attributed "no value" to the "portion of each tract that lay beneath the easement" since he "simply treated each tract as if the easement area did not exist," thereby (in effect) reducing the "land area attributable to . . . [each defendant's] ownership . . . by the area of the easement." Id. at 9. We concluded defendants had "no cause to complain" about this, because Sorich's land-area-reduction approach for the easement "resulted in a benefit to

. . . [defendants] because they were assessed for less land area [than they actually owned]." Ibid.

We held:

The judgments of the Tax Court as to the 1976 assessment values are reversed and remanded for entry of judgments consonant with this opinion. The judgments of the Tax Court as to the ...

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