VICTOR GRUODIS et al. v. DIRECTOR, DIVISION OF TAXATION

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5370-04T35370-04T3

VICTOR GRUODIS and

AUSRA GRUODIS,

Plaintiffs-Appellants,

v.

DIRECTOR, DIVISION OF TAXATION,

Defendant-Respondent.

_______________________________________________________________

 

Argued May 24, 2006 - Decided August 3, 2006

Before Judges Stern and Parker.

On appeal from the Tax Court of New Jersey,

Docket No. 220-03.

Brian J. Molloy argued the cause for

appellants (Wilentz, Goldman & Spitzer,

attorneys; Mr. Molloy, of counsel; Mr.

Molloy and Keith L. Hovey, on the brief).

Mala Narayanan, Deputy Attorney General,

argued the cause for respondent (Zulima V.

Farber, Attorney General of New Jersey,

attorney; Patrick DeAlmeida, Assistant

Attorney General, of counsel; Ms. Narayanan,

on the brief).

PER CURIAM

In this appeal from a tax court judgment entered on June 7, 2005, plaintiffs Victor and Ausra Gruodis argue that (1) the trial court erred in finding that they were New Jersey domiciliaries in the 2000 tax year; and (2) they established that they were domiciled in Lithuania for the year 2000.

Plaintiff Victor Gruodis was born in Lithuania in 1942 and moved to the United States as a child. He maintains dual citizenship, went to school in the United States, including college, married a United States citizen, his first wife Carol, and had two children in the United States. From 1983 to 1998, Victor and Carol maintained a primary residence with their two children in River Vale, New Jersey.

In 1998, Carol died and in 1999 Victor became engaged to a Lithuanian citizen, Ausra. The New Jersey house was in Carol's name and was never transferred to Victor after her death. The parties stipulated to virtually all of the facts and plaintiffs' counsel acknowledged in argument before us that the facts found by the tax court are undisputed. Rather, plaintiffs argue that the tax court erred in the conclusions drawn from the undisputed facts.

Our standard of review in a non-jury case is limited. We will not "disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974) (citation omitted). We must determine whether "there is substantial evidence to support the trial judge's findings and conclusions." Id. at 484 (citations omitted); see also, Hackensack Water Co. v. Haworth, 178 N.J. Super. 251, 259 (App. Div.), certif. denied, 87 N.J. 378 (1981) (applying "substantial credible evidence" standard to a tax court determination). "Since the judges assigned to the New Jersey Tax Court have special expertise, we will not disturb their findings unless they are plainly arbitrary or there is a lack of substantial evidence to support them." NYT Cable TV Div. of N.Y. Times Co. v. Audubon, 230 N.J. Super. 530, 534 (App. Div.), certif. denied, 117 N.J. 646 (1989) (citations and quotations omitted).

Plaintiffs contend that the trial judge misapplied the law, and we should not, therefore, give deference to his decision. Plaintiffs claim that under N.J.S.A. 54A:1-2(m)(2), they were not domiciled in New Jersey in 2000 because they "(1) established an actual and physical residence in Lithuania . . . (2) intended to remain there permanently or indefinitely . . . and (3) intended to abandon the old residence/domicile in New Jersey and intended to and did abandon other elements of a New Jersey domicile."

Defendant maintains that the trial judge "properly concluded that all the facts, objectively considered, established that Mr. Gruodis did not abandon his New Jersey domicile in tax year 2000, and that he continued to be a New Jersey resident for that year." Defendant argues that the question of whether plaintiffs were domiciled in New Jersey is factual and that the trial court's determination is entitled to deference.

We have carefully considered the extensive record in light of plaintiffs' arguments and the applicable law. We are satisfied that the tax court's decision is supported by competent relevant and reasonably credible evidence and that plaintiffs' arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A) and (E). Nevertheless, we add the following comments.

N.J.S.A. 54A:1-2(m) defines "resident taxpayer" as an individual:

1. Who is domiciled in this State, unless he maintains no permanent place of abode in this State, maintains a permanent place of abode elsewhere, and spends in the aggregate no more than 30 days of the taxable year in this State; or

2. Who is not domiciled in this State but maintains a permanent place of abode in this State and spends in the aggregate more than 183 days of the taxable year in this State, unless such individual is in the Armed Forces of the United States.

N.J.S.A. 54A:1-2(n) defines "non-resident taxpayer" as "a taxpayer who is not a resident." In order to determine whether plaintiffs were "resident taxpayers," the parties agree the threshold question is whether one or the other was domiciled in New Jersey in the year 2000. "The determination of one's domicile is a mixed one of law and fact with the factual elements predominating, and each case must be evaluated and determined by its own facts and circumstances." Goffredo, supra, 9 N.J. Tax at 141 (citations omitted).

In Goffredo, the tax court discussed the differences between domicile and residence:

"Domicile" and "residence" are related terms and although in certain contexts are used interchangeably, they are not legally identical. Domicile is defined as:

That place where a man has his true, fixed, and permanent home and principal establishment, and to which whenever he is absent he has the intention of returning. The permanent residence of a person or the place to which he intends to return even though he may actually reside elsewhere. A person may have more than one residence but only one domicile.

Additionally, "domicile" is compared and distinguished from "residence" by Black's [Law Dictionary] as follows:

As "domicile" and "residence" are usually in the same place, they are frequently used as if they had the same meaning, but they are not identical terms, for a person may have two places of residence, as in the city and country, but only one domicile. Residence means living in a particular locality, but domicile means living in that locality with intent to make it a fixed and permanent home. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile. "Residence" is not synonymous with "domicile," though the two terms are closely related; a person may have only one legal domicile at one time, but he may have more than one residence.

[Id. at 140 (citations omitted).]

"Domicile is very much a matter of the mind - of intention. One may be acquired, or changed to a new one, when there is a concurrence of certain elements: i.e., an actual and physical taking up of an abode in a particular State, accompanied by an intention to make his home there permanently or at least indefinitely, and to abandon his old domicile." Lyon v. Glaser, 60 N.J. 259, 264 (1972). The three elements that "may be considered when determining whether a change of domicile has occurred" are "(1) whether there has been an actual and physical establishment of an abode in a particular state; (2) whether the subject intends to make a home permanently or at least indefinitely in that state; and (3) whether the subject intends to abandon his or her previous domicile." Lipman v. Rutgers-State Univ. of N.J., 329 N.J. Super. 433, 444 (App. Div. 2000) (citations omitted). "Once established, a person's domicile continues until superseded by a new domicile." Ibid.

Plaintiffs claim that the trial court misapplied the burden of proof in this case. "[S]ince decision on the ultimate issue of taxability depends upon proof of domicile, and since the State holds the affirmative of the ultimate issue, it follows that the State must establish the status of taxability, i.e., domicile by the preponderance of the evidence." Glasser, supra, 60 N.J. at 278. Nevertheless, certain presumptions apply, particularly the presumption of continued domicile. Id. at 277. The presumption shifts the burden to the party claiming a new domicile to rebut it. Ibid.

The party claiming a new domicile can weaken the presumption of continued domicile in a number of ways.

For example, a home or residence in another state is commonly regarded as prima facie evidence of domicile, and the longer the period of the new residence the stronger the prima facie case becomes. It has been said also that proof of residence elsewhere is sufficient to rebut the presumption, and to return the onus of going forward with the proof that the former domicile has not been abandoned to the proponent of continuance. And the same concept has been put in another form: When a residence is taken up elsewhere, a presumption arises that the original residence has been abandoned.

[Id. at 277-78 (citations omitted).]

We are not persuaded by plaintiffs' argument. The trial court considered the proofs as a whole and found that plaintiffs "did not effect a change of domicile in the year 2000." That determination is supported by substantial credible evidence in the record.

The tax court analyzed the facts and the law and found the following in its written decision of May 27, 2005:

This court finds the facts in Goffredo, supra, 9 N.J. Tax at 135, very similar to the facts in this case. First, with regard to the establishment of a physical residence in the new domicile, it is significant that Mr. Gruodis' home outside of Vilnius, Lithuania had not been completed until the end of the year 2000. Mr. Gruodis urges this court to accept that his new domicile was Ausra's apartment, or prior to that, the apartments rented for him by Omnitel. Yet, for a number of years prior to 2000, Mr. Gruodis continued to live in the same manner, going back and forth from New Jersey to Lithuania. "While it is true that a person has a right to choose his domicile, and the motives for his choice are immaterial to a determination of domicile, Wolff v. Taxation Div. Director, 9 N.J. Tax 11 (Tax 1986), 'declarations of domicile motivated by tax considerations may be carefully scrutinized and readily rejected when negated by the objective circumstances.'" Quick, supra, 9 N.J. Tax at 297 (quoting Lyon, supra, 60 N.J. at 281 (Jacobs, J. dissenting)).

In this case, Mr. Gruodis paid his estimated taxes as a New Jersey resident for the year 2000, and subsequently filed a New Jersey non-resident return. Yet, Mr. Gruodis claims that his intent to be domiciled in Lithuania, in reality occurred when he proposed to Ausra in 1999, and later moved into her apartment. This is unlike the cases of Lyon, supra, 60 N.J. at 259, Citizens Bank, supra, 70 N.J. at 72 or McDonald, supra, 10 N.J. Tax at 556, and more akin to cases such as Quick, supra, 9 N.J. Tax at 288 and Goffredo, supra, 9 N.J. Tax at 135.

In the present case, this court finds that Mr. Gruodis did not establish his physical residency or intent to effect a change of domicile in the year 2000. Taxpayers filed for a homestead rebate. Taxpayer points to the fact that the resident return was unsigned as evidence that it was never filed. This court, however, finds that as both returns were stipulated to, that both returns were filed. Whether the taxpayer recalls such filing is inconsequential. Further, taxpayer testified that he understood the homestead rebate to be for a primary residence located in New Jersey, and not a statement of the taxpayer's legal domicile. This court also finds taxpayer's misunderstanding of the legal consequences of the filing to be inconsequential. Taxpayer is responsible for his actions, whether or not he recalls or understands their effects. Taxpayer chose not to bring in his accountant to testify that the resident return was never filed or that a mistake had been made in regard to the filing.

Taxpayer also filed and received a 2000 New Jersey Saver rebate. While the Saver rebate was addressed to the Estate of Carol Gruodis, Mr. Gruodis did not present any evidence that the rebate was claimed by anyone other then himself. Mr. Gruodis acted as if the home was his. Mr. Gruodis always used the River Vale address and continued to use that address after the year 2000. This court recognizes that mail sent abroad is subject to delays. However, this court finds it persuasive that Mr. Gruodis used the River Vale address not only in his domestic endeavors (bank, marriage license, partnerships, etc.) but also in his foreign endeavors, as well (the Lithuanian bank account).

It is not relevant to this court that the Division has accepted taxpayers' status as a non-resident after the year 2000. This court has addressed the Division's residency determinations in years other than the year(s) appealed in Samuelsson v. Director. Div. of Taxation, ___ N.J. Tax ___ (Tax 2005). In Samuelsson, the taxpayer was a professional hockey player for the Philadelphia Flyers. After obtaining a job with the Tampa Bay Lightning, he and his family moved from their New Jersey home to Florida. They moved all furniture and belongings, put their house up for sale, looked for a house in Florida, enrolled their children in a Florida school, but never actually purchased a Florida house or sold their New Jersey house. They eventually returned to their New Jersey house and retained New Jersey as their domicile. However, they contested the Director's assertion that New Jersey remained their domicile for the year they had resided in Florida. The court found that the Samuelssons had abandoned their New Jersey domicile, even though they had not sold their house. Samuelsson initially appears to be similar to the present case. However, in Samuelsson the plaintiffs closed all their New Jersey bank accounts and opened Florida accounts, Mr. Samuelsson changed his driver's licenses to Florida, registered his car in Florida and left the house empty during the period of abandonment. In the present action, Mr. Gruodis:

(a) retained and maintained the River Vale residence for his son and for his business relations,

(b) claimed a deduction for property taxes and mortgage interest on his federal income tax returns,

(c) claimed and received a New Jersey Saver rebate,

(d) filed a joint tax return, federally and in several states, listing the River Vale address as his residence,

(e) listed the River Vale house as his place of business on his 2000 federal income tax returns,

(f) maintained his bank accounts and financial accounts in New Jersey,

(g) maintained his New Jersey driver's license until he was able to replace it . . . with his Bahamas license, and

(h) was married in New Jersey and used the River Vale address as his residence on the New Jersey marriage license.

Considering all the evidence as a whole, this court finds that taxpayers did not effect a change of domicile in the year 2000.

All of these facts were virtually undisputed at trial. Accordingly, we find that there is substantial evidence in the record to support the trial judge's findings and conclusions. Rova Farms, supra, 65 N.J. at 484.

We note that the tax court decision does not specifically address whether Ausra was a domiciliary or a resident of New Jersey in 2000. It is clear, however, that both the resident and non-resident New Jersey tax returns in 2000 were filed jointly, with Ausra attesting to the New Jersey address. Moreover, on her application for a marriage license in River Vale, Ausra listed her New Jersey address. We are satisfied that under the stipulated facts, there is sufficient evidence to subject Ausra to New Jersey tax for the year 2000. R. 2:11-3(e)(1)(A).

We affirm substantially for the reasons stated by Judge Roger M. Kahn in his written decision rendered on May 27, 2005.

Affirmed.

 

(continued)

(continued)

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A-5370-04T3

August 3, 2006