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Livingston Mall Corp. v. Livingston Township

August 8, 1997

LIVINGSTON MALL CORP., PLAINTIFF,
v.
LIVINGSTON TOWNSHIP, DEFENDANT.



The opinion of the court was delivered by: Kuskin

Sears, Roebuck & Co. ("Sears") and The May Department Store ("May") are anchor tenants at the Livingston Mall ("shopping center"), a super-regional mall in Livingston Township. They have both moved under R. 4:33-1 to intervene as of right as party plaintiffs in appeals filed for the tax years 1994, 1995, 1996 and 1997 by Livingston Mall Corp., the owner and landlord of the shopping center. Neither Sears nor May filed an independent appeal of the shopping center assessment for any such year, and the deadlines for filing such appeals have passed. Plaintiff Livingston Mall Corp. and defendant Livingston Township oppose the motions to intervene. Plaintiff has moved to compel arbitration of the intervention issue. Sears and May oppose this motion. I will refer to Sears and May together as the "intervenors" for convenience of reference only. Obviously, whether they are in fact intervenors depends on the outcome of the motions.

I will first address plaintiff's motion to compel arbitration because, if I grant that motion, there is no need to decide the motions to intervene. I have been provided with excerpts from the May lease for its premises at the shopping center dated January 28, 1971 (originally between R.K. Winston Corporation, as landlord, and Adcor Realty Corporation as tenant) and the Sears lease for its premises at the shopping center. In both documents, Article IX is entitled "Taxes," and contains comprehensive provisions as to the rights and obligations of the parties with respect to local property taxes. The contents of both Articles IX appear to be identical. If there are any differences between the two, those differences are of no substantive significance to the motions.

Section 9.2(f) of Article IX provides in part "Any dispute under this Article IX shall be determined by arbitration." Section 25.1 of both leases provides in part: "In the event of any dispute arising out of the provisions of this Lease, ... the rights and obligations imposed thereunder or the Tenant's use and occupancy of the Demised Premises, such dispute shall be determined by arbitration."

I conclude that the dispute as to whether Sears and May may intervene in tax appeals previously filed by their landlord is neither a dispute under Article IX nor a dispute arising out of the provisions of their leases, and does not involve the "rights and obligations" imposed under such leases.

Section 9.2(g) of each lease contains the provisions relating to tax appeals. This Section provides as follows:

So long as the Demised Premises are not separately and independently assessed as a separate Tax block, Landlord shall, at Tenant's request, which Tenant agrees not to make unreasonably, contest in good faith by appropriate proceedings, or in any other manner permitted by law, in Landlord's name, any Taxes assessed or levied on the Shopping Center, and Tenant agrees to cooperate with Landlord and to execute any documents reasonably required for such purpose. Such contest shall include appeals from any judgments, decrees or orders until a final determination shall be made by a court or governmental department or authority having final jurisdiction in the matter. During any such contest, payment of the Tax by Landlord may be deferred for the maximum period permitted under Subsection (b) of Section 9.1 if Landlord and Tenant so agree in writing. Any Tax refund and all costs, fees and expenses (including reasonable counsel fees) actually incurred and paid by Tenant or Landlord in connection with a contest requested by Tenant pursuant to this Subsection (g) (whether or not resulting in a Tax refund or a lowering of assessment) shall be apportioned between Landlord and Tenant on an equitable basis, and if Landlord and Tenant cannot so agree, the issue shall be determined by arbitration. If Landlord fails or refuses to contest such Tax within 30 days after Tenant's request, and thereafter to prosecute the same with due diligence, Tenant shall have the right to contest such Tax in Tenant's name and/or in the name of Landlord and the costs, fees and expenses of such contest shall be allocated between Landlord and Tenant on the same basis as if such contest had been prosecuted and such costs incurred by Landlord.

Here, the landlord (plaintiff), either of its own volition or upon request by one of the intervenors, filed appeals for each of the years 1994 through 1997. As a result, the provisions of Section 9.2(g) relating to the filing of appeals are not, and cannot be, the subject of a dispute. The only provisions of such Section which could generate disputes relate to cooperation by the intervenors in connection with the pending appeals, the diligence with which the landlord pursues the appeals, and allocation of the costs of the appeals. Article IX contains no provisions relating to tenant participation or intervention in a pending appeal. Accordingly, the applications to intervene do not involve issues under, or arising out of, the leases, and I deny the motion to compel arbitration for this reason.

I also deny the motion because the applications to intervene and the dispute relating thereto involve the interpretation and application of the Court Rules relating to intervention. Even though arbitrators have broad powers, see State Farm Mutual Automobile Ins. Co. v. Moline, 289 N.J. Super. 406, 411 (App. Div. 1991), I conclude that they cannot determine for this Court the rights of parties in pending litigation under the Rules of Court. Cf. Wm. Blanchard Co. v. Beach Concrete Co. Inc., 150 N.J. Super. 277, 298 (App. Div. 1977) certif. denied, 75 N.J. 528 (1977) (holding that once a matter is submitted to the judicial process, the Rules of Court are binding in such process).

I turn now to the motions by Sears and May to intervene under R. 4:33-1. This Rule provides:

Upon timely application anyone shall be permitted to intervene in an action if the applicant claims an interest relating to the property or transaction which is the subject of the action and is so situated that the Disposition of the action may as a practical matter impair or impede the ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.

The Rule was interpreted in Chesterbrooke Ltd. Partnership v. Planning Bd. of Chester Tp., 237 N.J. Super. 118 (App. Div. 1989), certif. denied 118 N.J. 234 (1989), as follows:

Rule 4:33-1 sets out four criteria for determining intervention as of right. The applicant must (1) claim "an interest relating to the property or transaction which is the subject of the action," (2) show he is "so situated that the Disposition of the action may as a practical matter impair or impede his ability to protect that interest," (3) demonstrate that the "applicant's interest" is not "adequately represented by existing parties," and (4) make a "timely" application to intervene.

[Id. at 124.]

There is little or no dispute as to three of such four criteria. To the extent these are in dispute, I find that the intervenors satisfy those criteria. Specifically:

1. Each intervenor has an interest relating to the property. Each is a tenant under a long term lease. Sears occupies 191,921 sq. ft. and May occupies 169,921 sq. ft. Both pay significant amounts of taxes. Sears pays ...


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