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Plaza 12 Associates v. Carteret Borough

March 30, 1995


On appeal from Final Judgment of the New Jersey Tax Court.

Approved for Publication March 30, 1995.

Before Judges Villanueve, Wefing *fn1 and Braithwaite. The opinion of the court was delivered by Braithwaite, J.s.c. (temporarily assigned).

The opinion of the court was delivered by: Braithwaite

BRAITHWAITE, J.S.C. (temporarily assigned).

Plaintiff appeals from the Tax Court's dismissal of its tax appeal challenging the municipal tax assessment for the year 1993. We reverse.

Plaintiff filed a complaint with the Tax Court appealing the assessment of $4,287,700 by defendant, Borough of Carteret. The defendant propounded interrogatories upon plaintiff. Because plaintiff did not timely answer the interrogatories, defendant filed a motion to dismiss plaintiff's complaint. Plaintiff ultimately provided the answers and on July 30, 1993, defendant withdrew the motion. One of the interrogatories served on plaintiff sought "a true copy of all leases in use in connection with the subject property during the year under appeal in this action and in each of the five years immediately preceding." Plaintiff answered, "See attachments," and annexed to its answers the rent rolls dated May 1, 1993, July 15, 1992, and March 1, 1988. The rent rolls provided the name of the tenant, percent of CAM, *fn2 square feet occupied, lease expiration, options, security deposit, monthly base rent, monthly CAM, monthly tax, monthly insurance and monthly payment. Defendant never objected prior to trial to what was provided in answers to its interrogatories, and did not make any motion to compel the production of the leases or to sanction plaintiff for failure to comply with discovery.

Plaintiff provided its expert's report on the value of the property four days before trial and the matter was tried on March 30, 1994. The only issue in the trial was the fair market value of the property as of October 1, 1992, which is the assessment date for the tax year 1993. Plaintiff's expert testified that, in his opinion, the fair market value of the property for the tax year 1993 was $3,449,900. Plaintiff's expert testified that he relied upon the capitalization of income approach, except for the McDonald's facility, in valuing the property.

When plaintiff's expert began to testify about utilizing the leases in valuing the property, counsel for defendant objected stating that the "testimony sought to be elicited deals with leases. We were not provided with leases in discovery." Plaintiff's counsel stated that he had received no objection to the rent rolls from defendant prior to trial, and therefore believed that the information provided was sufficient. He further stated that in the past if the discovery provided was insufficient, defendant's counsel would request more specific answers and since that was not done in this case, he believed that the rent rolls were sufficient. The trial court sustained the objection and would not "permit any testimony with regard to those leases." After another objection from defendant's counsel, the court further precluded plaintiff's expert from testifying as to gross rental income because the leases were not provided in discovery. Finally, when the expert attempted to testify from information contained in the rent rolls, the trial court sustained defendant's counsel's objection based on a lack of authentication of the rent rolls, even though the answers to interrogatories were certified.

As a result of the trial court's rulings, plaintiff's counsel was unable to elicit testimony of any kind regarding the income of the subject property. Plaintiff did not seek to submit evidence that differed from the data which was submitted in answers to interrogatories. After counsel for plaintiff completed his direct examination, counsel for defendant moved to dismiss the complaint on the grounds that plaintiff failed to present "clear and persuasive evidence of a value of the property other than the assessment," which motion the trial Judge granted.

Plaintiff has raised three points on this appeal. First, plaintiff contends that the trial Judge committed reversible error by excluding evidence regarding lease data and the income from such leases because plaintiff failed to provide the leases in answers to interrogatories. Second, plaintiff asserts that the trial Judge committed reversible error by excluding evidence regarding income for failure to authenticate rent rolls attached to interrogatories. Lastly, plaintiff contends that defendant's failure to object to plaintiff's answers to the interrogatories within a reasonable time prior to trial constitutes a waiver of any objection to the admissibility of evidence contained therein.

Here, the trial Judge precluded the plaintiff from proving its case because of a failure to attach the leases to the answers to interrogatories. "Imposition of the sanction of exclusion of evidence ... because of the limiting effect of an interrogatory answer is always subject to the sound discretion of the trial Judge." Skibinski v. Smith, 206 N.J. Super. 349, 354-55, 502 A.2d 1154 (App. Div. 1985).

But the application of the sanction is consigned to the sound discretion of the Judge, subject only to the rule that the sanction visited upon the party must be just and reasonable. The factors which "strongly urge" the trial Judge, in the exercise of his discretion, to suspend the imposition of sanctions, are (1) the absence of a design to mislead, (2) absence of the element of surprise if the evidence is admitted, and (3) absence of prejudice which would result from the admission of the evidence. This accords with the overriding objective of giving the defaulting party his day in court, with due regard, however, to protecting the opposing party from the effects of surprise or other prejudicial factors.

[Westphal v. Guarino, 163 N.J. Super. 139, 145-46, 394 A.2d 377 (App. Div.), aff'd, 75 N.J. 308 (1978)(quoting Brown v. Mortimer, 100 N.J. Super. 395, 402, 242 A.2d 36 (App. Div. 1968)) (citations omitted).]

We are satisfied that the trial Judge mistakenly exercised his discretion in precluding the evidence because the leases were not provided in answers to interrogatories. There was no design on the part of the plaintiff to mislead the defendant or the court. Certainly there was no element of surprise, inasmuch as plaintiff only sought to introduce evidence that was consistent with what had been ...

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