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Middletown Township v. Mountain Hill


July 23, 2008


On appeal from the Tax Court, Docket No. 007351-2005.

Per curiam.


Argued: April 7, 2008

Before Judges Stern, Collester and C.L. Miniman.

Defendant Mountain Hill, LLC (Mountain Hill), appeals from a judgment of the Tax Court enforcing a settlement negotiated by Mountain Hill's former attorney of a correction-of-errors complaint filed by plaintiff Middletown Township (Middletown) seeking to correct its assessor's clerical error in applying the farmland tax rate to defendant's land after the Monmouth County Board of Taxation (the County Board) in 2004 changed the farmland assessment. We affirm.


Mountain Hill owns 17.65 acres of land designated as Block 871, Lot 7.02 on the Middletown tax map. The property is located within a large parcel of land owned by Mountain Hill, which had been vacant for many years and was designated as farmland with an assessment of $1800. In 2003 Mountain Hill applied for approval to construct a 20,000-square-foot industrial space and received a building permit on July 2, 2004. Once aware of the new use, the County Board on September 10, 2004, reassessed the land at $1,027,700 for 2002; $908,300 for 2003; and $786,000 for 2004. The County Board issued a rollback-tax judgment for those years based on the revised assessments. Mountain Hill did not appeal the $86,861.82 rollback-tax judgment.

Despite the judgment of the Board, the 2005 tax assessment remained at $1800 on Middletown's tax roll rather than the 2004 vacant-property assessment of $786,000. Middletown's tax assessor, Charles Heck, certified that in October 2004 he directed his subordinate, Judy Cannon, Senior Assistant Assessor, "to correct the proposed tax book for the year 2005 to place the full value assessment, $786,000, on the Tax Book for this property for 2005." Heck became aware of Cannon's error in failing to make the correction to the assessed value in late September of 2005. He informed Middletown's attorney, Bernard Reilly, and on October 6, 2005, Middletown filed a correction-of-errors complaint pursuant to N.J.S.A. 54:51A-7 to change the tax assessment. The Tax Court notified Middletown of deficiencies in its complaint, and Reilly replied on October 13, 2005, with a new information sheet and a letter expressing his belief that the land was intended for construction but remained vacant. Reilly served the complaint on Mountain Hill and its attorney, Gary Fox, who represented Mountain Hill in various legal disputes with Middletown and its Board of Adjustment.*fn1

Mountain Hill did not answer the complaint, nor was it required to do so. R. 8:3-2.

In June 2006 with the trial date approaching and no answer filed, Riley contacted Fox, who he believed was representing Mountain Hill with respect to the tax issue. Fox told Reilly that Stuart Brodman with the law firm of Ansell, Zaro, Grim & Aaron was actually handling the matter. However, when Reilly contacted that firm he was told that Brodman was very ill and away from the office for some time. The Ansell firm knew nothing about the correction-of-errors complaint. Reilly then spoke with Fox again because the trial was only two days away. On June 12, 2006, one day before the case was scheduled to go to trial, the two attorneys reached a settlement, agreeing to reduce the 2005 tax assessment by $50,000 to $736,000. As a result, no trial took place. Reilly prepared a stipulation of settlement, which was executed by Fox and sent to the Tax Court on June 20, 2006.

Mountain Hill subsequently obtained new counsel, Richard M. Conley of the Conley & Sozansky, LLC, firm. On August 1, 2006, Conley asked the tax court judge not to enforce the settlement because Mountain Hill intended to seek a dismissal of Middletown's complaint on the grounds that it was not a matter intended for a correction-of-errors complaint and was filed past the deadline. Mountain Hill then filed a motion to dismiss returnable on May 11, 2007, and Middletown cross-moved to enforce the settlement.

The Tax Court judge, Gail L. Menyuk, reviewed the parties' motions and on May 30, 2007, issued an opinion in which she reached the following conclusions: First, she rejected Mountain Hill's argument that the Tax Court lacked jurisdiction to enforce the settlement since the subject of the complaint fell within the scope of the Correction of Errors statute, N.J.S.A. 54:51A-7. Second, she concluded that the settlement was binding because Fox had the authority to enter into a settlement agreement on Mountain Hill's behalf and there was no evidence of fraud or other compelling circumstances. Mountain Hill appealed this judgment on July 18, 2007.

Mountain Hill contends that the facts alleged by Middletown do not meet the strict standards of the Correction of Errors statute and Middletown did not timely appeal the assessment, depriving the Tax Court of jurisdiction to hear the matter. Additionally, in response to Middletown's brief Mountain Hill contends that it did not retain Fox to represent it in this action and did not authorize a settlement of this litigation.


The issue of whether the Tax Court had jurisdiction to hear this matter is a question of law and we need not defer to the ruling of the Tax Court judge on this issue. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference."). We are satisfied that the TaX Court had primary jurisdiction over this tax issue under Rule 8:2(a). Thus, it had jurisdiction to construe the Correction of Errors statute. Even if it erred in doing so, and we are not satisfied that it did, the parties did not dispute the jurisdictional issue raised here when they settled the case and, thus, waived any technical defects in jurisdiction. Quasi-jurisdictional or procedural defects, as here, can be waived. See, e.g., Jos. L. Muscarelle Dev. Co., Inc. v. Manalapan Twp., 13 N.J. Tax 330, 335 n.1 (Tax 1993), aff'd sub nom., J.L. Muscarelle, Inc. v. Saddlebrook Tsp., 15 N.J. Tax 164 (App. Div. 1994) (describing the payment of taxes jurisdiction issue in Lecross Assocs. v. City Partners, 168 N.J. Super. 96 (App. Div.), certif. denied, 81 N.J. 294 (1979), as a "quasi-jurisdictional or procedural defect"); see also Drobney v. Drobney, 146 N.J. Super. 317, 322 (App. Div. 1977).


Having correctly concluded that the Tax Court had jurisdiction over the matter, Judge Menyuk turned to the enforceability of the stipulation of settlement. Mountain Hill argued that it should not be held to the agreement because Fox had no authority to reach a settlement on its behalf. The judge observed that Fox had not certified that he was not authorized to act for Mountain Hill in this matter, nor had any principal, officer or manager of Mountain Hill certified that Fox had no authority to act.

Reilly explained in his certification that he believed Fox to be Mountain Hill's attorney because he had represented the landowner in other litigation with the township and the Middletown Board of Adjustment. Indeed, Reilly and Fox had regular communications over the years since 2001 respecting Mountain Hill and its various applications for development of the larger parcel of land in which the subject property is included. The judge concluded that, because Fox gave the appearance that he was authorized to reach a settlement and there was nothing to suggest that Fox was not authorized and did not actually speak for Mountain Hill, the stipulation was enforceable.

Mountain Hill challenges this decision on appeal. It argues that Brodman was its tax attorney, while Fox was its land-use attorney. Thus, it contends, Fox was not authorized to reach a settlement in a tax matter during Brodman's illness. Middletown counters that an attorney who regularly represents a client has presumptive authority to act on its behalf.

A settlement agreement between parties to a lawsuit is a contract. Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div.), certif. denied, 94 N.J. 600 (1983). "Settlement of litigation ranks high in our public policy." Jannarone v. W.T. Co., 65 N.J. Super. 472[, 476] (App. Div.), certif. denied, 35 N.J. 61 (1961). Consequently, our courts have refused to vacate final settlements absent compelling circumstances.

In general, settlement agreements will be honored "absent a demonstration of 'fraud or other compelling circumstances.'" Pascarella, supra, 190 N.J. Super. at 125 (quoting Honeywell v. Bubb, 130 N.J. Super. 130, 136 (App. Div. 1974)). Before vacating a settlement agreement, our courts require "clear and convincing proof" that the agreement should be vacated. DeCaro v. DeCaro, 13 N.J. 36[, 42] (1953). [Nolan v. Lee Ho, 120 N.J. 465, 472 (1990).]

Thus, the question becomes, "Has Mountain Hill proven by clear and convincing evidence that the settlement agreement should be set aside on the ground that Fox was not authorized to settlement this matter on its behalf?" The answer is a resounding "no" because, as Judge Menyuk recognized, there was no evidence before her that Fox had not been authorized to so act and, thus, Mountain Hill has not met its burden of proof under Nolan.


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