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Fifth Roc Jersey Associates, L.L.C. v. Town of Morristown

June 8, 2010


On appeal from the Tax Court of New Jersey, Docket No. 3062-2007.

Per curiam.


Argued April 13, 2010

Before Judges Fuentes, Gilroy and Simonelli.

Defendant, the Town of Morristown, and plaintiff, Fifth Roc Jersey Associates, LLC, owners of the Hyatt Hotel property, agreed to settle a tax appeal by fixing the 2007 tax assessment for the property at $16,500,000. Defendant subsequently imposed an $8,000,000 added assessment on the property for renovations allegedly completed during the added assessment period of October 1 through December 31, 2007. Plaintiff applied to the Tax Court for Freeze Act relief under N.J.S.A. 54:51A-8, to fix its 2008 and 2009 assessments at the 2007 level.

The question thus before the Tax Court was whether the $8,000,000 added assessment should have been included as part of the $16.5 million settlement agreement. Plaintiff maintained that the Freeze Act application allowed the Tax Court to determine the validity of the added assessment. Defendant argued that plaintiff was precluded from disputing the validity of the added assessment because it failed to file a timely direct appeal.

The Tax Court conducted a plenary hearing to determine if the basis for the added assessment was valid. In so doing, the court specifically declined to address the reasonableness of the assessment itself. After determining that plaintiff overcame the presumption of validity for the added assessment and that defendant failed to meet its burden of showing a change in value to defeat the application of the Freeze Act, the Tax Court granted plaintiff's application and fixed the assessment for tax years 2008 and 2009 at $16,500,000.

The following facts informed the Tax Court's decision. Renovations on the Hyatt Hotel property began sometime in 2004. The renovation of the public areas was completed in 2006 and elevator modernization began in 2007. On August 10, 2007, the parties agreed to settle the property's assessment for tax year 2007 at $16,500,000.

Defendant subsequently levied an added assessment of $8,000,000 for tax year 2008. According to the tax assessor's affidavit, "on or about September 2007, [he] inspected the subject property and saw that the renovations were substantially complete for its intended use to be available for hotel occupancy at the Hyatt Hotel chain standards." The tax assessor also determined that his "inspection of the subject hotel property showed that there was a change in the property's value between October 1, 2006 and December 31, 2008 of $8,000,000.00."

On February 17, 2009, plaintiff moved before the Tax Court for a judgment pursuant to the Freeze Act to fix the assessment for the property at the agreed upon $16.5 million level. After considering the arguments of counsel, Judge Kuskin granted plaintiff's application for Freeze Act relief. He also scheduled a hearing to determine the applicability of the Freeze Act to the 2008 added assessment on the property. In so doing, Judge Kuskin specifically indicated that the scope of the hearing would be limited to determining the applicability of the Freeze Act, not to provide plaintiff with the opportunity to challenge the amount of the added assessment.

At that hearing plaintiff called Sanford Kornfeld, the Director of Construction Management for the Hyatt Hotel, to testify as to when the renovations that formed the basis of the added assessment were completed. Defendant offered the hotel's general manager, Thomas Blundell, to present similar testimony. Judge Kuskin determined that plaintiff met its burden of overcoming the assessment's presumption of validity through the tax assessor's affidavit that was entered into evidence. The burden then shifted to defendant to demonstrate a change in value to the property during the relevant period to defeat application of the Freeze Act. After viewing all of the relevant evidence, Judge Kuskin concluded that defendant had failed to meet that burden. Applying the holding in U.S. Postal Serv. v. Town of Kearny, 19 N.J. Tax 282 (Tax Ct. 2001), aff'd, 21 N.J. Tax 282 (App. Div. 2002), Judge Kuskin held that the Freeze Act applied to invalidate the added assessment.

Defendant now appeals that determination, reiterating the arguments rejected by the Tax Court. Specifically, defendant argues, inter alia, that plaintiff failed to file a timely appeal of the added assessment, thus depriving the Tax Court of subject matter jurisdiction to consider its Freeze Act application.

We review decisions made by the Tax Court mindful that judges assigned to that court are presumed to have special expertise in these unique matters. Thus, we will not disturb the findings reached by Tax Court judges unless they are plainly arbitrary, or there is a lack of substantial credible evidence to support such findings. Hackensack City v. Bergen County, 405 N.J. Super. 235, 243 (App. Div. 2009). In this light, we reject defendant's arguments and ...

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