February 20, 2009
DOUGLAS SCHWARTZ AND MARY ANN SCHWARTZ, PLAINTIFFS-APPELLANTS,
TOWNSHIP OF WAYNE, DEFENDANT-RESPONDENT.
On appeal from the Tax Court of New Jersey, Docket No. 7994-2007.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: December 10, 2008
Before Judges C.L. Miniman and King.
Plaintiffs Douglas and Mary Ann Schwartz, residents of defendant Township of Wayne (Wayne), appeal from a February 22, 2008, judgment affirming the May 8, 2007, Memorandum of Judgment of the Passaic County Board of Taxation (the Board), affirming the assessment of plaintiffs' land at $124,000 and improvements at $241,000, for a total assessment of $365,000. We affirm.
In 2001, plaintiffs moved into their newly constructed home at 2 Holmes Lane, an east-west cul-de-sac in Wayne, which is lot 46.01 in block 1119 on Wayne's tax map. Lot 46.01 had been subdivided in 1998 and was subsequently assessed for tax year 1999. There are nine lots on Holmes Lane, all in block 1119. Seven of the lots had access adjustments to the land valuation. The access adjustments for lots 39, 43, 44, 44.01 and 45 were all .95. The access adjustment for lot 40 was .90. Finally, the access adjustment for lot 42 was .93. Lots 41 and 46.01 had no access adjustments.
Lots 39-45 apparently all had existing homes as of 1991 when the last revaluation took place in Wayne. In or around 1997, lot 44 was subdivided into lots 44 and 44.01 and both lots retained the access adjustment of .95 for the land valuation. A new home was to be constructed on lot 44.01 and it was completed on December 15, 1999. The existing home on lot 44 was demolished in January 1999 and construction of a new home began on June 14, 1999. At the same time, lot 45 was subdivided into lots 45 and 46.01 and, although lot 45 retained an access adjustment of .95 for land valuation, no access adjustment was given to lot 46.01. Some of the other lots had existing homes demolished and new homes constructed: lot 39 in 1997-98, lot 40 in 1999, and lot 41 in 2004. The access adjustment for lots 39 and 40 remained in place, but it is not known whether lot 41 lost a prior access adjustment or never had one. Ultimately, the two lots that had the newest construction, in 2000 and 2004, had no access adjustment whereas the lots that had new construction between 1997 and 1999 retained their access adjustments, as did the lots with older homes.
In its interrogatory answers, Wayne certified that the access adjustments "were made to reflect a private roadway, not a public right-of-way. At the time of the  revaluation, the roadway was not paved." It also certified that at the time lot 46.01 was subdivided, it was "on a dedicated public roadway owned by the municipality." A minor subdivision map dated February 1, 1997 (only a portion of which is included in the plain-tiff's appendix) indicates that Holmes Lane was a public road up to plaintiffs' property line with lot 45*fn1 and beyond that point it was a private road.
Each residence on Holmes Lane, including that of plaintiffs, has received and continues to receive garbage, vegetative-waste, recycling, and snow-plowing services. When plaintiffs moved into their home, Holmes Lane was not fully paved or curbed; however, by October 1, 2006, it was. As of October 1, 2006, there were no impediments to access for any property on Holmes Lane. The record, however, does not disclose whether Holmes Lane continued in 2006 to be partially public and partially private requiring Wayne to traverse private property to provide services.
In 2006, Wayne assessed plaintiffs' land at a net adjustment of 1.0, reflecting no access adjustment.*fn2 Unhappy with this assessment, plaintiffs filed a verified Petition of Appeal from Wayne's assessment of their property for the 2007 tax year with the Board, contending that Wayne had acted arbitrarily and capriciously in singling them out for discriminatory tax treatment. On May 8, 2007, the Board denied plaintiffs' appeal.
Plaintiffs then filed a complaint on July 9, 2007, against Wayne in Tax Court pursuant to N.J.S.A. 54:3-21(a). They alleged that Wayne had arbitrarily singled them out for discriminatory tax treatment because their property was "the only parcel on Holmes Lane . . . where the land tax rate [is] assessed at 100% of value." The matter was tried before a Tax Court judge on December 14, 2007, at which time plaintiffs acknowledged that lot 41 also had no access adjustment to the true value of the land.
At trial, plaintiffs contended that Wayne was arbitrarily and capriciously singling out lots with new homes and assessing the land value at 100% of true value, whereas all the other lots had the land value adjusted downward for "access." Plaintiffs very specifically rejected Wayne's assertion that the issue in the case was whether the assessment was correct. Rather, they stated that they did not contest the property values of their or any other property on the street and so had not submitted any comparable sales. All they contested was the dichotomy of access adjustments for seven of the nine lots, but none for lots 41 and 46.01.
Plaintiffs argued that, because lot 41 had a new modular home constructed in 2004, it followed that Wayne was essentially "spot assessing" the newest homes on the street by not giving them access adjustments. They asserted that their claim of new-home "spot assessing" was reinforced by the fact that lot 41 was at the end of Holmes Lane on the corner of the cul-de-sac where the roadway had been private in 1997 when the subdivision took place. They urged if lot 41 was not given an access adjustment, then the road must have become public to the end of the cul-desac at some point in time, which would have required all the other lots to be assessed at 100% of true value. We additionally note that the lot across the street from lot 46.01 received an access adjustment, although it is not clear from the map whether the road in front of that lot was public or private.
At the close of plaintiffs' case, Wayne moved to dismiss under Rule 4:37-2(b), arguing that plaintiffs had failed to establish a cause of action for tax discrimination because they had not established the true value of the property as a whole, not just one portion of the assessment. Thus, it argued that plaintiffs had not overcome the presumption that the assessment was valid.
Plaintiffs responded that New Jersey law was clear that properties cannot be singled out for discriminatory tax treatment. Because Holmes Lane was fully paved and each residence had equal access to the road and municipal services, they argued that there was no rational basis for the differing access adjustments for the various lots. They urged that the access adjustments were merely a subterfuge to avoid liability for illegal spot assessments of new home sales at full value.
The judge, after noting that municipal tax assessments are entitled to a presumption of validity and that the burden of establishing a discriminatory assessment is on the taxpayer, granted the motion to dismiss, explaining:
In order to establish discrimination the taxpayers have to establish that the assessment on their property . . . reflects a discriminatory action by the tax assessor. Land is one component of an assessment and . . . even if I were to accept plaintiffs['] proofs that their land has been taxed excessively in relation to their neighbors, [that alone] does not establish that the assessment on their property is discriminatory.
Plaintiffs have offered no proofs as to the value of their property and indeed have acknowledged that they do not contest the total assessment. It is the total assessment which is the basis for discrimination, not one element of the assessment.
If, for example, the land portion of plaintiffs['] property did not receive an adjustment, but the improvements portion of the assessment reflects an amount somewhat below what the improvement value should be, that would mean that the overall assessment is not discriminatory.
I have no facts on the record to make any findings about any of that and that really is the problem . . . . The only facts I have are that plaintiffs['] property is located on the public road portion of Holmes Lane and with the exception of one property, the other properties on Holmes Lane that have received some adjustment for land value are located on the private road section.
The assessor obviously concluded that location on the private road section warrants some minor adjustment. As I've indicated most of the adjustments or all of the adjustments range between 5 and 10% and most of them are in the 3 to 5% range.
Based on the facts presented I have no basis for concluding that that is not a reasonable exercise of the assessor's discretion of the fact that one property in the private road section did not receive an adjustment does not mean that plaintiffs were entitled to an adjustment or that the failure to give plaintiffs an adjustment reflects any kind of intentional discrimination or singling out or spot assessment by the assessor. It simply reflects that in the assessor's judgment b[e]ing located on the public road portion of Holmes Lane is preferable to being located on the private road section by a small amount relating only to land value.
The fact that the properties are assessed differently does not necessarily establish discrimination and establishing discrimination is particularly problematical when the difference in the assessment is on an overall basis I suspect less than 5%.
Under Chapter 123 as applied to tax assessments which requires adjustments based on the Director's ratio, the assessor has a corridor of plus or minus 15% within which to establish an assessment. So even if an assessment is 10% higher than fair market value . . . , an assessment that is excessive by 10% may nevertheless not be entitled to a reduction because of the corridor established by the statute.
Applying that concept to the proofs here, I conclude that the only discrimination, if any, and I don't find there has been any, would be limited on the basis of the entire assessment to probably 5% or less. That in my mind is not a basis of relief to a taxpayer.
On February 22, 2008, the judge entered a judgment affirming the Board's decision. Plaintiffs timely appealed this judgment.
Plaintiffs contend on appeal that the judge improperly favored Wayne by allowing defense counsel to give "testimony"; ignoring sworn testimony that there was no access issue; and ignoring actions by Wayne that were "either arbitrary or [prohibited] new sale-based changes in assessment."
"The scope of appellate review from a determination of the Tax Court is the same as that applicable to a non-jury determination of any other trial court." 125 Monitor St. v. City of Jersey City, 23 N.J. Tax 9, 13 (App. Div. 2005). Findings of fact by a trial court in a non-jury case should not be disturbed upon review unless "they are so wholly insupportable as to result in the denial of justice." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974) (citation and quotations omitted). These findings are considered binding on appeal when supported by adequate, substantial, and credible evidence. Id. at 484.
Thus, our appellate function is limited: "'we do not disturb the factual findings and legal conclusions of the [Tax Court] judge unless we are convinced those findings and conclusions are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Ibid. (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)). When reviewing the decision of the Tax Court on appeal, the appellate division "generally defer[s] to the expertise of the Tax Court in this 'specialized and complex area.'" Disabilities Res. Ctr./Atl. & Cape May, Inc. v. City of Somers Point, 371 N.J. Super. 1, 9 (App. Div. 2004) (quoting Reck v. Dir., Div. of Taxation, 345 N.J. Super. 443, 446 (App. Div. 2001), aff'd, 175 N.J. 54 (2002)); accord Brown v. Borough of Glen Rock, 19 N.J. Tax 366, 375 (App. Div.) ("Decisions of the Tax Court are accorded a highly deferential standard of review."), certif. denied, 168 N.J. 291 (2001).
At the conclusion of a plaintiff's proofs at trial, Rule 4:37-2(b) allows a defendant to move for a dismissal of the action on the ground that the facts provided do not demonstrate a right to relief. Ibid. "Whether the action is tried with or without a jury, such motion shall be denied if the evidence, together with the legitimate inferences therefrom, could sustain a judgment in plaintiff's favor." Ibid. The judicial function in deciding a motion for involuntary dismissal under Rule 4:37-2(b) "'is quite a mechanical one. The trial court is not concerned with the worth, nature, or extent (beyond a scintilla) of the evidence, but only with its existence, viewed most favorably to the party opposing the motion.'" Kranz v. Tiger, 390 N.J. Super. 135, 148 (App. Div.) (quoting Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969)), certif. denied, 192 N.J. 294 (2007). Put another way, if no rational trier of fact could conclude from the evidence that an essential element of the plaintiff's prima facie case is present, dismissal is appropriate. See Pressler, Current N.J. Court Rules, comment 2 on R. 4:37-2 (2009).
"Equality of treatment in sharing the duty to pay real estate taxes is a constitutional right." Murnick v. City of Asbury Park, 95 N.J. 452, 458 (1984). Article VIII, Section 1, paragraph 1(a), of our 1947 Constitution provides, "Property shall be assessed for taxation under general laws and uniform rules. All property assessed and taxed locally . . . shall be assessed according to the same standard of value . . . ."
"'Equality of treatment and burden' in property assessments remains a fundamental principle of the New Jersey constitutional mandate." Twp. of W. Milford v. Van Decker, 120 N.J. 354, 360-61 (1990) (citing Baldwin Constr. Co. v. Essex County Bd. of Taxation, 16 N.J. 329, 340 (1954)). However, it is only "arbitrary intentional discrimination that is unconstitutional." Id. at 362.
Taxpayers must "be treated in a manner comparable to other similarly-situated taxpayers." Id. at 361 (citation omitted). Our Supreme Court has "long condemned spot assessment because it violates this State's constitutional principle of equality in property taxation." Ibid. (citation omitted). Singling out a small group of taxpayers who recently acquired property for reassessment while leaving assessments on other similarly situated properties untouched violates our constitutional uniformity clause. Id. at 362. "[U]nder no circumstances can appraised valuation of property be increased merely because it has been sold." Ibid.
The overwhelming number of discriminatory-tax-assessment cases is subject to the provisions for discrimination relief in N.J.S.A. 54:51A-6 (L. 1973, c. 123, commonly known as "Chapter 123"). Plaintiffs concede that they have not demonstrated that they are entitled to relief under Chapter 123 because they do not contest the true-value assessment of their property, contending only that the access adjustments are discriminatory. Chapter 123 is not, however, the sole remedy for discriminatory assessments. Murnick, supra, 95 N.J. at 455. "In egregious cases of discrimination, a taxpayer retains a constitutional right to relief. Except in those cases, which we expect will be rare, chapter 123 establishes both the right to and measure of relief." Ibid.
Such an egregious case of discrimination was found in Van Decker. There, a tax assessor increased the 1985 appraised value of a single-family home the plaintiffs purchased in 1984 to reflect the purchase price. 120 N.J. at 357. The appraiser also increased the 1985 appraised value of 346 other new homes purchased within the municipality in 1984. Ibid. At issue was whether the practice of reassessing only properties that were the subject of a recent sale while leaving undisturbed the appraised valuations of properties in the same class that have not been sold constitutes selective or spot assessment that violates the uniformity clause of the New Jersey Constitution, [a]rt. VIII, § 1, [¶] 1. [Ibid.]
The Court, after noting that West Milford's assessor had changed the assessments "solely [due] to sales," id. at 358, found that West Milford had been engaged in an illegal and unconstitutional form of "welcome stranger" spot assessment, id. at 361; namely, the practice of "singling out for reassessment only that small group of taxpayers who purchased homes in 1984 while leaving undisturbed the assessments of other property in the class." Ibid. Such "spot assessments violate the New Jersey Constitution's uniformity clause," and this practice was "arbitrary intentional discrimination that is unconstitutional." Id. at 362. The Court concluded that the case was "one of a narrow few that falls outside of the scope of Chapter 123." Id. at 365 (emphasis added).
Plaintiffs have not met their burden to prove an egregious case of discrimination where relief is not limited to the remedies of Chapter 123. Historically, Holmes Lane was not a public street and the action of Wayne's assessor in granting access adjustments to the lots fronting on that private road was an entirely reasonable and proper exercise of authority. Because plaintiffs' lot fronted on a portion of Holmes Lane that was a public street as of 1997, the assessor acted entirely within his authority to assess plaintiffs' land at full true value. The public portion of the street in front of their property furnishes the rational basis for the land assessment.
The evidence plaintiffs submitted did not prove that the entire width of Holmes Lane in front of their property was a public road, which would have raised an issue of discrimination vis-à-vis the lot directly across the street from their property. They also did not prove that the entire length of Holmes Lane had become a public road as of 2006, which also would have raised an issue of discrimination vis-à-vis lots 39, 40, 42, 43, 44, 44.01, and 45. The mere fact that the road is now paved does not prove that it is now public. The builder may have been required to pave the entire length of Holmes Lane as a condition of subdivision approval.
All that plaintiffs proved was that lot 41 also did not receive an access adjustment. They did not call the tax assessor as a witness to establish the reason for the absence of an access adjustment. Absent proof of such a reason, we cannot conclude that the assessor engaged in unconstitutional spot assessment based on new home construction in 2000 and 2004. The absence of an access adjustment for lot 41 might have been a mere error. After all, lots 39 and 40 had new homes constructed within one or two years of the home plaintiffs purchased, yet those lots retained their access adjustments. This certainly does not present a pattern of systematic "welcome stranger" spot assessments and is a far cry from Van Decker.
Municipal tax assessments are presumed to be correct on appeal. Pantasote Co. v. City of Passaic, 100 N.J. 408, 412-13 (1985). This presumption attaches to the quantum of the assessment; the taxpayer has the burden of proving the assessment is erroneous, which may be accomplished only by the presentation of cogent evidence. Id. at 413; see also 125 Monitor St., supra, 23 N.J. Tax at 13. That evidence must be "definite, positive and certain in quality and quantity to overcome the presumption." 125 Monitor St., supra, 23 N.J. Tax at 13 (quoting Aetna Life Ins. Co. v. City of Newark, 10 N.J. 99, 105 (1952)).
Although a plaintiff is entitled to all legitimate inferences from the proofs adduced at trial, see Kranz, supra, 390 N.J. Super. at 148, that evidence still must be "definite, positive, and certain in quality and quantity," Pepperidge Tree Realty Corp v. Kinnelon Borough, 21 N.J. Tax 57 (Tax 2003) (quoting Pantasote, supra, 100 N.J. at 413). The evidence before the Tax Court did not support an inference of discrimination in this case and plaintiffs' appeal from the judgment of the Board was properly affirmed.