SBA Structures, Inc. v. Township of Hillsborough

NOT FOR PUBLICATION WITHOUT APPROVAL OF

THE TAX COURT COMMITTEE ON OPINIONS

TAX COURT OF NEW JERSEY

Patrick DeAlmeida R.J. Hughes Justice Complex

Presiding Judge P.O. Box 975

Trenton, New Jersey 08625-0975

(609) 292-8108 Fax: (609) 984-0805

September 27, 2016

Michael J. Caccavelli, Esq.

Zipp, Tannenbaum & Caccavelli, LLC

280 Raritan Center Parkway

Edison, New Jersey 08837

Martin Allen, Esq.

Kevin A. McDonald, Esq.

DiFrancesco, Bateman, Kunzman, Davis,

Lehrer & Flaum, P.C.

15 Mountain Boulevard

Warren, New Jersey 07059-6327

Re: SBA Structures, Inc. v. Township of Hillsborough

Docket No. 010259-2016

Dear Counsel

This is the court s opinion with respect to defendant s motion to dismiss the Complaint because of plaintiff s failure to respond to the tax assessor s request for income and expense information pursuant to N.J.S.A. 54:4-34, commonly known as Chapter 91 (L. 1979, c. 91). For the reasons explained below, the motion is granted, subject to plaintiff s right to a reasonableness hearing. See Ocean Pines, Ltd. v. Borough of Point Pleasant, 112 N.J. 1, 11 (1988).

I. Findings of Fact and Procedural History

This letter opinion sets forth the court s findings of fact and conclusions of law based on the submissions of the parties on defendant s motion.

Plaintiff SBA Structures, Inc. is the owner of real property in defendant Hillsborough Township, Somerset County. The property is designated in the records of the municipality as Block 171, Lot 75.01, Qualifier: Cell. The property is a cellular telecommunications tower located at 418 Long Hill Road.

On or about June 25, 2015, the municipal tax assessor mailed to plaintiff by certified mail, return receipt requested, a request for income and expense information relating to the subject property.

Plaintiff does not dispute that the assessor s information request was delivered to it. Nor does plaintiff dispute that it failed to respond in any manner to the request, or to make inquiry of the assessor to clarify the information sought.

Having received no response from the taxpayer to her information request, the assessor set the assessment on the parcel for tax year 2016 at a total of $698,100.

Plaintiff thereafter challenged the tax year 2016 assessment at the Somerset County Board of Taxation. The board subsequently entered Judgment affirming the assessment.

On July 12, 2016, plaintiff filed a Complaint in this court challenging the Judgment of the county board of taxation.

The municipality thereafter moved on a timely basis to dismiss the Complaint pursuant to N.J.S.A. 54:4-34 based on plaintiff s failure to respond to the assessor s information request. Plaintiff opposed the motion.

The parties waived oral argument. The municipality s motion, therefore, is decided on the moving papers.

II. Conclusions of Law

N.J.S.A. 54:4-34 provides

Every owner of real property of the taxing district shall, on written request of the assessor, made by certified mail, render a full and true account of his name and real property and the income therefrom, in the case of income-producing property, and produce his title papers, and he may be examined on oath by the assessor, and if he shall fail or refuse to respond to the written request of the assessor within 45 days of such request, or to testify on oath when required . . . the assessor shall value his property at such amount as he may, from any information in his possession or available to him, reasonably determine to be the full and fair value thereof. No appeal shall be heard from the assessor s valuation and assessment with respect to income-producing property where the owner has failed or refused to respond to such written request for information within 45 days of such request or to testify on oath when required . . . . The county board of taxation may impose such terms and conditions for furnishing the requested information where it appears that the owner, for good cause shown, could not furnish the information within the required period of time. In making such written request for information pursuant to this section the assessor shall enclose therewith a copy of this section.

The purpose of Chapter 91 is to assist the municipal tax assessors, who are charged with the responsibility for property valuations, by affording them access to fiscal information that can aid in the valuation of property. Lucent Techs, Inc. v. Township of Berkeley Heights, 405 N.J. Super. 257, 263 (App. Div. 2009), rev d in part, aff d in part, 201 N.J. 237 (2010). The correct and timely availability of this information to the tax assessor avoid[s] unnecessary expense, time and effort in litigation. Ibid. (quoting Ocean Pines, supra, 112 N.J. at 7)(internal quotations omitted). As provided in the statute, a property owner s failure to respond to an assessor s request for income and expense information precludes the property owner s subsequent appeal of the assessment set by the assessor.

In Ocean Pines, however, the Supreme Court held that a property owner who fails to comply with N.J.S.A. 54:4-34 may nevertheless seek a sharply limited, and likely summary, review of the reasonableness of the assessor s valuation based upon the data available to the assessor when the valuation was made. Such an inquiry would be limited to (1) the reasonableness of the underlying data used by the assessor, and (2) the reasonableness of the methodology used by the assessor in arriving at the valuation. 112 N.J. at 11.

Plaintiff does not dispute the sufficiency or clarity of the assessor s information request or its failure to respond. Instead, plaintiff argues that the court should withhold decision on the motion until plaintiff has had an opportunity to conduct discovery with respect to whether the assessor s information requests were legitimate inquiries or routinely made not to obtain information to use in setting assessments, but rather to serve as a sword to defeat subsequent tax appeals.

Chapter 91 places no affirmative obligation on the assessor to send information requests. Nor, where such information requests are sent, does the statute require the assessor to use the responses in the assessing function in any specified way. It is plainly within the assessor s discretion to determine how information provided in response to a Chapter 91 inquiry is to be used. SKG Realty Corp. v. Township of Wall, 8 N.J. Tax 209 (App. Div. 1985).

The question raised by plaintiff, however, is whether an assessor may issue Chapter 91 information requests with no intention of using the information provided in response to those requests in setting assessments. According to plaintiff, where a taxpayer s failure to respond to a Chapter 91 information request interferes with the assessing process, preclusion of the taxpayer s appeal is warranted. However, plaintiff contends, if the taxpayer s response could not have assisted in the assessing process i.e. if the tax assessor s practice is not to review any of the Chapter 91 responses then dismissal of the taxpayer s appeal would not be justified. In light of these arguments, plaintiff contends that it is entitled to engage in discovery with respect to the assessor s practices before the court can decide defendant s motion to dismiss.

In support of its argument, the taxpayer relies on the holding in John Hancock Mut. Life Ins. Co. v. Township of Wayne, 13 N.J. Tax 417, 422 (Tax 1993). In that case, the court held that a Chapter 91 information request sent to a property owner too late to be used in the assessing process could not be the basis for dismissal of the property owner s Complaint. The court explained that [t]o advance the purpose of N.J.S.A. 54:4-34, the assessor s request must be timely, so that upon its receipt, the assessor can utilize the information by January 10 in setting an assessment for the upcoming tax year. This holding reflects the fact that the courts recognize that a Chapter 91 information request may be used as a predicate for the harsh sanction of dismissal only if the request was issued to provide financial information to the assessor for use in the assessing process.

Also implicated by plaintiff s argument is the obligation of government officials to turn square corners when dealing with taxpayers. The Supreme Court examined the square corners doctrine in the local property tax context in F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 426-27 (1985). The Court s directive was clear

We have in a variety of contexts insisted that governmental officials act solely in the public interest. In dealing with the public, government must turn square corners. Gruber v. Mayor and Twsp. Com. of Raritan Tp., 73 N.J. Super. 120 (App. Div.), aff d., 39 N.J. 1 (1962). This applies, for example, in government contracts. See Keyes Martin v. Director, Div. of Purchase and Property, 99 N.J. 244 (1985). Also, in the condemnation field, government has an overriding obligation to deal forthrightly and fairly with property owners. See Rockaway v. Donofrio, 186 N.J. Super. 344 (App. Div. 1982); State v. Siris, 191 N.J. Super. 261 (1983). It may not conduct itself so as to achieve or preserve any kind of bargaining or litigational advantage over the property owner. Its primary obligation is to comport itself with compunction and integrity, and in doing so government may have to forego the freedom of action that private citizens may employ in dealing with one another.

[Id. at 426-427.]

The currency of the square corners doctrine in the area of taxation was highlighted by the Court. The statutory provisions governing substantive standards and procedures for taxation, including the administrative review process, are premised on the concept that government will act scrupulously, correctly, efficiently, and honestly. It is to be assumed that the municipality will exercise its governmental responsibilities in the field of taxation conscientiously, in good faith and without ulterior motives. Id. at 427. See also Lowe s Home Centers v. City of Millville, 25 N.J. Tax 591 (Tax 2010); Gastime, Inc. v. Director, Div. of Taxation, 20 N.J. Tax 158 (Tax 2002).1

In opposition to plaintiff s motion, the municipality submitted a certification from the tax assessor detailing how she arrived at the assessment for the subject property for tax year 2016. The assessor explained that her office relies upon taxpayers responses to the Township s Chapter 91 requests and that her office reviews these Chapter 91 responses prior to setting the upcoming tax year s assessments. The assessor further explained that after plaintiff failed to respond to her information request her office considered the rents received by other cell tower sites throughout the Township, which information is contained within the Chapter 91 responses of other taxpayers in the Township. Her staff also considered the expenses for other cell tower sites throughout the Township, which information is likewise contained within the Chapter 91 responses of other taxpayers in the Township before setting the assessment on the subject property. According to the certification, the assessor s office routinely utilized income and expense data provided in response to our Chapter 91 requests in setting assessments throughout the Township.

This court is reluctant to allow a taxpayer to delve into the assessor s practices and broad discretion with respect to the use in the assessing process of financial information provided in response to Chapter 91 inquiries. It is clear that the Legislature intended to vest in the assessor the authority to review responses to Chapter 91 inquiries and decide, based on the assessor s opinion of the utility of the responses, whether, and to what extent, those responses will be used in the assessing process.

The assessor s certification submitted in this matter directly addresses the use to which responses to Chapter 91 requests were put in setting assessments throughout Hillsborough Township for tax year 2016. The assessor also detailed how she arrived at the assessment that is at issue here, despite plaintiff s failure to provide income and expense information relating to the subject property. Plaintiff has offered no evidence, or even a suggestion, that the assessor s certification is not credible.

There is, therefore, no cause to refrain from deciding defendant s motion to dismiss. The court will grant the motion and schedule a reasonableness hearing pursuant to the holding in Ocean Pines, supra.

Plaintiff will be provided an opportunity to conduct discovery with respect to the issues relevant to the reasonableness hearing, many of which are addressed in the assessor s certification. As a general rule, there shall be a substantial liberality in the granting of discovery in New Jersey courts. Shanley & Fisher, P.C. v. Sisselman, 215 N.J. Super. 200, 215-216 (App. Div. 1987). A party may seek production of all information relevant to the subject matter involved in the pending action or which appears reasonably calculated to lead to the discovery of admissible evidence, R. 4:10-2(a); In re: Liquidation of Integrity Ins. Co., 165 N.J. 75, 82 (2000). This court has the discretion to determine the scope and manner of permissible discovery between the parties. Payton v. New Jersey Turnpike Auth., 148 N.J. 524, 559 (1997). Plaintiff is entitled to examine the credibility of the assertions made in the assessor s certification during the discovery relating to the reasonableness hearing. Should plaintiff uncover evidence suggesting that this motion has been wrongly decided, plaintiff is, of course, free to move for reconsideration.

Very truly yours,

/s/Hon. Patrick DeAlmeida, P.J.T.C.

1 The court notes that plaintiff also relied on two unpublished Tax Court opinions, which do not constitute precedent. R. 1:36-3. Although counsel attached a copy of the cited unpublished opinions to plaintiff s moving papers, counsel did not affirm compliance with the requirement in R. 1:36-3 that all contrary unpublished opinions known to counsel were also served on the court and opposing counsel. Rule 1:36-3 prohibits this court from citing to unpublished opinions.