June 18, 2013
DEBBIE GIBBONS, Plaintiff-Appellant,
CITY OF EAST ORANGE, Defendant-Respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 26, 2013
On appeal from the Tax Court of New Jersey, Docket No. 019151-2010.
Thomas D. Williamson, attorney for appellant.
Jason Holt, Corporation Counsel, attorney for respondent (Ryan Linder, Assistant Corporation Counsel, on the brief).
Before Judges Lihotz and Ostrer.
Plaintiff Debbie Gibbons appeals from a March 23, 2012 judgment of the Tax Court. The Tax Court affirmed the judgment of the Essex County Board of Taxation (the Board), which had affirmed the 2010 real estate tax assessment issued by defendant, the City of East Orange, regarding plaintiff's residential realty located on North Maple Avenue (the subject property). On appeal, plaintiff argues the Tax Court erred in rejecting her evidence limited to the purchase price to fix the value of the subject property for tax assessment purposes. We are not persuaded and affirm substantially for the reasons stated by the Tax Court.
These facts are taken from the trial record and the Tax Court's opinion. In 2009, plaintiff began searching for a home for herself and her three children. She located the subject property, which was advertised for sale for $120, 000, through the multiple listing service (MLS). The MLS described the owner as "anxious" to sell, and identified the subject property's features, noting it was in "need[ of] TLC, " and "[p]riced right to sell." In her opinion, Tax Court Judge Mala Narayanan described the subject property as
a lot measuring about 0.11 acres and is improved with a three-story colonial-style residence with vinyl siding. Erected sometime in 1929, the house has five bedrooms and one full bathroom on the second floor, and a half bathroom on the first floor. The first floor has a living room with a gas fireplace, dining room, and a kitchen. The second floor has the three bedrooms and the bath. The third floor has two bedrooms. It has a finished basement with a walkout facility. There is wood flooring throughout the house. The property is surrounded by a metal fence. It has a driveway and a detached garage. The house is not centrally air-conditioned.
In September 2009, plaintiff visited the subject property, which had recently been placed on the market. The home was vacant, and all utility systems were old but fully operational. Plaintiff's offer of $125, 000 was immediately accepted without negotiation. Plaintiff learned the owner was ill and confined to a nursing home. The property had been listed by his daughter, who appeared at the January 14, 2010 closing as his attorney-in-fact.
Plaintiff began renovations on the property, expending approximately $40, 000 to $50, 000, and within months, she and her children moved into the home.
The tax assessment of the property was issued by defendant on October 1, 2009. The assessment stated the aggregate value of the property was $262, 100, allocated between the land, $135, 700, and improvements, $126, 400. Plaintiff timely filed a petition appealing the assessment. She sought a downward modification suggesting the value of the land should be $75, 000, and improvements were worth only $50, 000. Defendant contested her petition. After review, the Board affirmed the assessment.
Plaintiff filed her complaint in the Tax Court challenging the Board's decision. Plaintiff contended the assessment was incorrect as the sale was an arm's length transaction between a willing buyer and willing seller, thus making the purchase price a "reliable indicator of . . . market value." At the close of plaintiff's case at the December 16, 2011 hearing, defendant moved to dismiss. Judge Narayanan denied the motion and reserved decision on the issue presented for review.
In a written opinion issued on January 17, 2012, the judge affirmed the Board's judgment upholding defendant's assessment, concluding plaintiff failed to sustain her burden of proof in showing the inaccuracy of the assessment. Plaintiff filed her appeal.
Our review of a Tax Court decision is limited. Estate of Taylor v. Dir., Div. of Taxation, 422 N.J.Super. 336, 341 (App. Div. 2011). As a general rule, we recognized the Tax Court's unique expertise in the highly "specialized and complex area" of taxation. See Metromedia, Inc. v. Dir., Div. of Taxation, 97 N.J. 313, 327 (1984). The Tax Court's factual findings "will not be disturbed unless they are plainly arbitrary or there is a lack of substantial evidence to support them." Yilmaz, Inc. v. Dir., Div. of Taxation, 390 N.J.Super. 435, 443 (App. Div.) (internal quotation marks and citations omitted), certif. denied, 192 N.J. 69 (2007). Thus, we examine "whether the findings of fact are supported by substantial credible evidence with due regard to the Tax Court's expertise and ability to judge credibility." Ibid. (internal quotation marks and citations omitted). However, our review of the Tax Court's legal conclusions is de novo.
When examining a taxpayer's challenge to a real estate tax assessment, it is well-settled such assessments are "entitled to a presumption of validity." MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18
N.J.Tax. 364, 373 (Tax 1998). The presumption stands "so long as the quantum of the assessment is not so far removed from the true value of the property[.]" Transcon. Gas Pipe Line Corp. v. Bernards Twp., 111 N.J. 507, 517 (1988) (citation omitted). The Tax Court must determine whether "a fair preponderance of the evidence[, ]" Ford Motor Co. v. Twp. of Edison, 127 N.J. 290, 312 (1992) (internal quotation marks and citations omitted), proves the judgment of a board of assessment was incorrect and the true value of the realty differs from the assessment, id. at 314-15.
On appeal, plaintiff relies on her proof of the purchase price of the subject property, established by her contract of sale dated November 3, 2009, very near the date of assessment. She argues the Tax Court properly accepted the purchase price as sufficient evidence to overcome the presumption of correctness and avoid involuntary dismissal, but then erred in rendering judgment for defendant in light of the fact that there was no competing proof offered as to the subject property's present value. We disagree.
Involuntary dismissals in an action challenging a municipal real estate assessment are governed by Rule 4:37-2(b). The court accepts plaintiff's proofs as true by granting it all favorable inferences when considering whether the evidence sufficiently overcomes the presumption of correctness of the assessment. "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." MSGW, supra, 18
N.J.Tax. at 378 (internal quotation marks and citation omitted).
As Judge Narayanan properly noted, the assessment of evidence when considering a motion to dismiss is minimal and the purchase price of the property evidentially supports its fair value. See Passarella v. Twp. of Wall, 22
N.J.Tax. 600, 603 (App. Div. 2004) (stating that when considering a motion to dismiss, a property's purchase price "may be the best indicator of its true value in some circumstances"). Even though a court using "rose-colored glasses" concludes the evidence overcomes the presumption of validity, a critical analysis of the proofs may determine the purchase price alone is insufficient to satisfy a plaintiff's burden to prove the assessment is incorrect. MSGW, supra, 18
N.J.Tax. at 379. See also Ford, 127 N.J. at 314-315 ("[T]he burden of proof remain[s] on the taxpayer throughout the entire case[.]").
A Tax Court's determination of the correctness of the assessed value of realty "properly involve[s] the weighing and appraising of all component factors and adventitious circumstances." Romulus Dev. Corp. v. Town of W. N.Y., 7
N.J.Tax. 305, 316 (Tax 1985) (internal quotation marks and citations omitted), aff'd, 9
N.J.Tax. 90 (App. Div. 1987).
In this matter, plaintiff did not present an opinion of value to buttress the asserted correctness of the sale price. She offered her suggestion that, at most, she would pay only $130, 000 for the property; however, that statement falls far short of definite and positive proof showing the true valuation differs from the assessment. We concur with Judge Narayanan's conclusion that although the sale was between unrelated parties, other factors suggest the contract price alone does not prove market value of the realty. See id. at 316-18.
First, the actual owner did not participate in the listing and sale; the transaction was handled by his daughter, who described the seller as "anxious." The property had been vacant, a fact that could affect its insurability. Plaintiff's assertion that others were bidding on the property was not supported. These facts provide an inference suggesting the owner was compelled to make a quick sale.
Second, other than what she paid for this home, plaintiff failed to proffer comparable sales of adjacent or similar properties. No evidence was presented regarding the values of homes on the subject property's street, or other location indicia impacting property values such as the surrounding neighborhood, schools, and services.
Third, plaintiff maintains the purchase price was typical in the current state of the real estate market, stating she was familiar with the market based on her home search over the prior months. Such unfounded assertions are of no evidential value.
Plaintiff also attacks defendant's case, noting it offered no proof of value, but rested on its assessed valuation. This argument is rejected, as the burden was plaintiff's to carry. Ford, supra, 127 N.J. at 314.
"[I]n tax matters it is to be presumed that governmental authority has been exercised correctly and in accordance with the law." Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (1985) (citation omitted). The assessment is presumed correct.
We conclude as did Judge Narayanan:
"[T]he sale price, standing alone, is insufficient to provide  reliable evidence of market value. In the absence of any other corroborative evidence of comparable sales or of market conditions in the East Orange market, . . . plaintiff has not met her burden to prove by a fair preponderance of the evidence that the judgment of the . . . Board . . . is incorrect."