As a result, North County filed the instant lawsuit protesting, inter alia, the involuntary tax liens and water and sewer liens filed by the Township against the apartment complex. (Later, OB Partners was named as a plaintiff, as well). North County sought to preserve its attack upon the municipal taxes and, thus, in the contract of sale between OB Partners and the FDIC, the standard language requiring payment of all outstanding taxes at closing was omitted. (See Segall Dep. at 56-58). Pursuant to the contractual arrangement, taxes were not paid at closing but, rather, remained open so that North County/OB Partners could continue to challenge their propriety.
Throughout the course of this litigation, the Township has been assessing interest (at the rate of 18 percent per annum) and penalties on the outstanding property taxes. Although North County and OB Partners continue to maintain that a portion of that interest should be characterized as a penalty and that they cannot be liable for this portion of the interest and all of the penalties under 12 U.S.C. § 1825(b)(3), they did not want the amount they already allegedly owed to the Township to continue growing. Thus, on or about May 7, 1997, without prejudice to its right to pursue its claims in this case, OB Partners paid all outstanding property taxes, interest and penalties assessed by the Township, which totaled $ 2,084,009.82. (See West Cert., Exh. A, wherein a breakdown of the amounts paid is provided).
This Court has ruled that 12 U.S.C. § 1825(b)(1) precludes the Township from asserting a lien or enforcing a lien against the apartment complex. See Old Bridge Owners Cooperative Corp. v. Township of Old Bridge, 914 F. Supp. 1059, 1065-66 (D.N.J. 1996) (holding that the Township's only recourse is against the debtor or the FDIC in personam but that it may not proceed against the property). OB Partners now seeks an order declaring that the Township is not entitled to penalties in this case. OB Partners asks for a refund in the amount of $ 165,326.54, plus prejudgment interest. (See West Cert., Exh. A). The thrust of its argument is that when the property was subject to federal receivership, the Township was precluded from assessing penalties on the unpaid property taxes and, thus, that the Township should be required to refund that portion of the money that OB Partners paid for the penalties imposed.
The Township contends that nothing in the above-cited Opinion of the Court or any of the Court's unpublished Opinions in this matter ever invalidated the tax-related debt or any of its components (i.e., tax principal, interest and penalties) and, thus, as a result of their contractual arrangement with the FDIC, whereby the taxes on the property were not paid at closing, plaintiffs were required to pay all of the taxes, interest and penalties owed on the land -- including those that accrued during the federal receivership. The Township's primary argument is that while 12 U.S.C. § 1825(b)(3) would have exempted the FDIC from paying penalties on the property, plaintiffs here are not the FDIC; rather, they are private parties who cannot invoke that statutory exemption.
I. Summary Judgment Standard
As an initial matter, the Court determines that summary judgment is the appropriate vehicle for the disposition of this motion. Federal Rule of Civil Procedure 56(c) provides that summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir.) (en banc), cert. dismissed, 483 U.S. 1052 (1987).
In the instant case the Township did not file a cross-motion for summary judgment, but the briefs of both parties indicate that summary judgment is the appropriate vehicle for the disposition of the issues presented. Authority has developed to allow a court to grant summary judgment to a non-moving party, see American Flint Glass Workers Union v. Beaumont Glass Co., 62 F.3d 574 (3d Cir. 1995); however, judgment cannot be entered without first placing the adversarial party on notice that the court is considering that course, sua sponte. See Chambers Development v. Passaic County Utilities Authority, 62 F.3d 582, 584 n.5 (3d Cir. 1995). Additionally, the court must provide the moving party with an opportunity to present relevant evidence in opposition to the granting of summary judgment against it.
Here, plaintiffs had adequate notice that the Court might grant summary judgment to the Township. In its opposition papers, the Township noted that it not only sought the denial of plaintiffs' motion, but also the "dismissal of plaintiffs' claim of penalty." (See Opp. Br. at 16). Thus, plaintiffs were on notice that the Court was being asked not only to deny their motion but also to award judgment to the Township. Plaintiffs' reply papers implied that they understood this to be the case, because therein plaintiffs repeated that summary judgment was the appropriate vehicle for the disposition of the issue brought before the Court, because no material facts remained in dispute and the only question to be determined was a question of law. The Court, therefore, will proceed to determine whether summary judgment is appropriate for either party.
The issue that the Court must decide here is whether plaintiffs are entitled to a refund for their payment of certain penalties on unpaid property taxes. It is undisputed that the Township assessed these penalties, that OB Partners paid the amounts allegedly owed, and that the Township accepted the payment (of the penalties as well as of the taxes and interest). The Court agrees with the parties that summary judgment is the appropriate vehicle for the disposition of this matter.
II. Plaintiffs' Motion is Denied
In order to determine whether plaintiffs are entitled to a refund for their payment of penalties, the Court must decide whether they may invoke the exemption afforded to the FDIC under § 1825(b)(3).
It is axiomatic that the starting point for ascertaining the plain meaning of a statute is the language of the statute itself. See K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 100 L. Ed. 2d 313, 108 S. Ct. 1811 (1988). The Court must ask whether Congress has spoken directly to the question at hand. Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 842, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984). Subsection (b)(3) of 12 U.S.C. § 1825 explicitly exempts the FDIC from penalties and fines that would arise from the nonpayment of property taxes:
(b) Other exemptions
When acting as a receiver, the following provisions shall apply with respect to the Corporation: