CLAUDETTEA. LUGANO v. DIRECTOR, DIVISION OF TAXATION, STATE OF NEW JERSEY

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NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3948-13T4
CLAUDETTE A. LUGANO,

Plaintiff-Appellant,

DIRECTOR, DIVISION OF
TAXATION, STATE OF NEW JERSEY,

Defendant-Respondent.
_______________________________

Argued May 4, 2015 - Decided June 29, 2015

Before Judges Lihotz, Espinosa and Rothstadt.

On appeal from the Tax Court of New Jersey,
Docket No. 11442-2013, whose opinion is
published at
28 N.J. Tax 49 (Tax 2014).

Andrew M. Epstein argued the cause for
appellant (Lampf, Lipkind, Prupis & Petigrow,
P.A., attorneys; Mr. Epstein, on the briefs).

Heather Lynn Anderson, Deputy Attorney
General, argued the cause for respondent
(John J. Hoffman, Acting Attorney General,
attorney; Lewis A. Scheindlin, Assistant
Attorney General, of counsel; Ms. Anderson,
on the brief).

PER CURIAM

Plaintiff Claudette A. Lugano challenges the legal

conclusion of the Tax Court, which upheld the assessment by

defendant Director, Division of Taxation for Transfer

Inheritance Tax, due on monies plaintiff received upon the death
of her partner Armin J. Lovi. Plaintiff argues the judge erred

in rejecting her claimed eligibility for exemption based upon a

Declaration of Domestic Partnership (Declaration) she and Lovi

submitted to his former employer, the Federal Reserve Bank of

New York (FRB). Alternatively, plaintiff argues the FRB pension

should qualify for exemption as a federal pension under
N.J.S.A.

54:34-4(h). We disagree and affirm substantially for the

reasons set forth in the thirteen-page opinion authored by Judge

Kathi F. Fiamingo. R. 2:11-3(e)(1)(A). We add these comments.

Plaintiff asserts application of the equal protection

doctrine requires her domestic partnership, confirmed by the

Declaration, be given the same legal effect as a partnership

established by an Affidavit of Domestic Partnership pursuant to

New Jersey's Domestic Partnership Act (DPA),
N.J.S.A. 26:8A-1 to

-13. In the context of this matter, were plaintiff correct, she

would be entitled to claim an exemption from inheritance tax as

a Class "A" beneficiary,
N.J.S.A. 54:34-2(a)(1), rather than pay

15% tax on the sums inherited from Lovi's estates as a Class "D"

beneficiary,
N.J.S.A. 54:34-2(d).1

The judge properly rejected plaintiff's contention, which

ignores the State's authority to regulate these legal

N.J.S.A. 54:34-4(j) also exempts from taxation the value of
certain retirement plans payable to a spouse or "a domestic
partner as defined in [the DPA]."

2 A-3948-13T4
relationships. See Lewis v. Harris,
188 N.J. 415, 435 (2006).

The Legislature has designed specific requirements for

establishing a domestic partnership, which include filing an

Affidavit of Domestic Partnership.
N.J.S.A. 26:8A-4. Domestic

partner applicants must meet the nine requisites set forth in

N.J.S.A. 26:8A-4(b), but must also file the required fee to

comply with State registration,
N.J.S.A. 26:8A-4(a).

Admittedly, there are similarities between the information

plaintiff submitted to FRB and that required of a DPA affidavit;

however, the two are not identical. Plaintiff candidly admits,

when she submitted the Declaration to FRB, she could not qualify

under the DPA. More important, once plaintiff was eligible

under the DPA, she and Lovi did not file under the DPA.2

The language of the tax exemption provisions is

unambiguous. N.J.S.A. 54:34-2(a)(1) explicitly limits

eligibility for the exemption to domestic partners whose

partnerships were established pursuant to the DPA. The

2
Plaintiff's de facto domestic partnership assertion is
unavailing. In the respective statutes, the Legislature has
clearly defined the requirements for marriage, domestic
partnership and civil union. Further, we find persuasive
support in
N.J.S.A. 37:1-10, reflecting the Legislature's
rejection of a "de facto" or common law marriage when parties
have failed to comply with the explicit statutory requirements
for licensure.

3 A-3948-13T4
statutory provisions do not include provisions for substantial

compliance or relaxation of the express requirement.

Moreover, "[s]tatutory exemptions from taxation should be

strictly construed against those invoking the exemption."

Advance Hous., Inc. v. Twp. of Teaneck,
215 N.J. 549, 566 (2013)

(citation and internal quotation marks omitted). This reflects

the legislative policy to assure "'the public tax burden is to

be borne fairly and equitably.'" Ibid. (quoting Int'l Sch.

Servs., Inc. v. W. Windsor Twp.,
207 N.J. 3, 15 (2011)). The

court's role is to effectuate legislative intent, not alter it.

Morristown Assocs. v. Grant Oil Co.,
220 N.J. 360, 380 (2015)

("When construing a statutory provision, a court's role is to

discern and give effect to the Legislature's intent.").

Here, plaintiff bears the burden of satisfying the

requirements for entitlement to the exemption. Advance Hous.,

supra,
215 N.J. at 566. She has not carried her burden. The

statutory requirements are substantively meaningful, not merely

procedural or pro forma. Because plaintiff did not meet the

requirements of the DPA, she is not entitled to an exemption

under
N.J.S.A. 54:34-2(a)(1) as a Class A beneficiary. Simply

stated, that plaintiff and Lovi were domestic partners does not

deem them qualified as such under the DPA. Therefore, she has

4 A-3948-13T4
no entitlement to claim state benefits defined by the law,

including the inheritance tax exemption.

We also reject plaintiff's contention the Declaration she

submitted to the FRB qualifies under the reciprocity provision

of the DPA.
N.J.S.A. 26:8A-6(c) gives full faith and credit to

domestic partnerships entered into in other jurisdictions. The

Full Faith and Credit clause of the United States Constitution

mandates "Full Faith and Credit shall be given in each State to

the public Acts, Records, and judicial Proceedings of every

other State." U.S. Const. art. IV, § 1. The submission to the

FRB cannot be equated with another state's act or record.

Plaintiff's contrary arguments lack merit. R. 2:11-3(e)(1)(E).

Alternatively, plaintiff argues FRB pension benefits should

be deemed benefits from a "federal pension," entitled to

exemption pursuant to
N.J.S.A. 54:34-4(h). We disagree. The

plain language of
N.J.S.A. 54:34-4(h) does not apply to all

federal pensions, but specifically to pension benefits payable

to a federal employee who enrolled in the Civil Service

Retirement Act. A rational basis for this exemption exists

because said federal employees did not contribute to and

therefore could not claim a Social Security death benefit

exemption. See Butzbach v. Dir., Div. of Taxation,
3 N.J. Tax
462, 467 (Tax 1981). We reject plaintiff's arguments for the

5 A-3948-13T4
reasons set forth by Judge Fiamingo. R. 2:11-3(e)(1)(A). Any

other arguments not addressed herein lack sufficient merit to

warrant discussion. R. 2:11-3(e)(1)(E).

Affirmed.

6 A-3948-13T4

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