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Universal Folding Box Co., Inc. v. Hoboken City

May 24, 2002


On appeal from Final Judgments of the Tax Court Docket Nos. 001445-94; 002175-95; 002024-96; 001503-97; 000894-98.

Before Judges Wefing, Ciancia and Parrillo.

The opinion of the court was delivered by: Wefing, J.A.D.


Argued: March 19, 2002

Defendant City of Hoboken (Hoboken) appeals from five judgments entered in the Tax Court on September 15, 2000 setting the assessed value for property owned by Universal Folding Box Co., Inc. (Universal) for the tax years 1994 through 1998. *fn1 The result of the judgments in question is to entitle Universal to a refund of more than $450,000. We have reviewed the record and are satisfied the judgments should be affirmed.

The property is located at Lot 1 of Block 106 in Hoboken and is known as 1200-1318 Madison Avenue. The area is zoned industrial and the property is used for manufacturing and warehousing. The neighboring properties are used in a similar vein. Plaintiff's appraiser, Maurice Stack, testified that was the highest and best use of the property, and that, in his opinion, the value of the property was $2,600,000. Hoboken, however, had assessed the property at values ranging from $5,801,000 in 1994 to $4,720,000 in 1998. That dispute in valuation led to this litigation.

Universal filed complaints with the Tax Court annually, commencing in 1994. However, the ensuing litigation did not proceed swiftly. Various trial dates were assigned and then adjourned. Indeed, by the time the matter proceeded to trial in June 2000, at least twelve different trial dates had been set, many as peremptory, and then adjourned. Also, various case management orders had been entered setting final dates for submission of expert reports and then ignored.

Plaintiff's appraiser prepared two reports, the first of which was served on Hoboken in February 1997 in anticipation of a scheduled May 1997 trial date, and a second, supplementary report in October 1998. However, despite the various deadlines set by the Tax Court for submission of an expert report, Hoboken never submitted one.

In June 1999, when a number of these court-ordered deadlines had come and gone and Universal had not received a report from the City's expert, it prepared and served a set of interrogatories on Hoboken. Hoboken made no objection to this apparently late service of discovery, but neither did it provide any response to the interrogatories, which were hardly burdensome, totaling only eight questions in all.

On December 23, 1999, facing a January 10, 2000 trial date and having received neither an expert's report nor any response to the interrogatories served nearly six months earlier, Universal filed a motion captioned as one "to preclude defendant from producing any expert testimony or witnesses at the time of trial." On January 10, 2000, the Tax Court judge did not deal with the substance of Universal's motion. Rather, he met with counsel in chambers, adjourned the trial date until May 22, 2000, and set a date of April 22, 2000 for the final exchange of experts' reports.

Hoboken did not submit an expert's report by April 22, 2000 and did not have a report by May 22. The matter did not proceed to trial on that date either; rather, the Tax Court judge heard argument on Universal's motion, which it had filed more than five months earlier. Although Hoboken had filed no opposition to the motion in the five months that it had been pending, the Tax Court judge permitted its attorney to argue in opposition. By the time of this argument, nearly a year had passed since Universal had served its interrogatories and Hoboken had provided no response to them at all.

It is clear from the transcript of the argument on May 22 that any delay in serving a report or answering interrogatories lay not at the feet of Hoboken's attorney, but rather with the individual the City had retained as its expert who was serving in that capacity in more than five hundred pending matters for Hoboken. It is also clear from that transcript that the Tax Court judge was familiar with the fact that this individual had in the past taken the stand after a taxpayer's expert had testified, but without having served a report in advance, to challenge the bases of the opinion offered by the taxpayer's expert, asserting that his rebuttal testimony was factual in nature, not expert opinion. Hoboken's expert had utilized this technique in Mori v. Town of Secaucus, 17 N.J. Tax 96 (App. Div. 1997), certif. denied, 154 N.J. 608 (1998), necessitating a remand to permit the taxpayer the opportunity to confront information not supplied in advance of trial. Finally, it also clear from that transcript that the difference in valuation was due in large measure to the position of the City's expert that the property should be valued as if it could be converted to residential use to capitalize on the success of such conversions in other sections of the city. It was that difference that had prevented the parties from reaching a resolution in this matter, despite numerous conferences.

After hearing argument, the Tax Court judge granted the motion. He signed an order under which Hoboken was barred from submitting any appraisals in defense of its assessment, from presenting any expert testimony at the time of trial, and from presenting any testimony at trial as to the Hoboken real estate market, the market values of any properties in Hoboken, or any comparable leases or sales. The order, as had the motion, made no reference to R. 4:23-5, applicable in the Tax Court through R. 8:6- 1(a).

The matter still did not go to trial but was instead carried initially until June 1, 2000, and then further adjourned until June 21, 2000, when it finally got under way. At no point did the City present an expert's report or seek relief from the terms of the May 21, 2000 order. Twice during the proceedings, the Tax Court judge supplemented on the record his reasons for granting such relief against the municipality and, on June 29, 2000, ...

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