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August 27, 2015


Argued December 16, 2014 Decided

Before Judges Nugent and Accurso.

On appeal from the Tax Court of New Jersey, Docket No. 009783-08.

Debbie Kugler Irwin argued the cause for appellants (The Irwin Law Firm, P.A., attorneys; Steven R. Irwin, of counsel; Kevin S. Englert, on the brief).

Robert A. Baxter argued the cause for respondent (Craig, Annin & Baxter, LLP, attorneys; Mr. Baxter, of counsel; John C. Grady, on the brief).


Plaintiff-taxpayers Vernon W. Hill, II and Shirley Hill appeal from a final order of the Tax Court affirming defendant Township of Moorestown's tax year 2008 $20,814,500 assessment of their two-story, single-family home. Plaintiffs contend the tax court erred by failing to preclude the testimony of the Township's experts; by rejecting comparable sales and adopting a cost approach for valuing the property; by including entrepreneurial profit in its calculation; and by accepting the Township's experts' unsupported depreciation rate. Having considered those issues in light of applicable law, we affirm substantially for the reasons expressed by Judge DeAlmeida in his written opinion of January 29, 2013.

Plaintiffs' home, which they call "Villa Collina," more commonly known as 262 East Main Street in Moorestown, they concede is a mansion having a total of 55,543 square feet of improvements and 29,236 square feet of living space situated on 7.21 acres of land, part of a larger 44 acre parcel. Completed in 2002, the home is built in an Italianate style and boasts a Barre granite fa ade, granite terraces, cascading waterfalls and several reflecting pools. There are six bedrooms and eleven full bathrooms. The walls and floor of the two-story foyer are marble. A fountain of black onyx marble anchors a circular marble staircase to the second floor. The living room is topped by a large circular dome with a Venetian plaster finish. There are three kitchens (two on the first floor and a full-size commercial kitchen in the basement), a gym, a library, two massage rooms, a hair salon, a billiards room, six storage or pantry rooms, laundry and trash rooms, a wine cellar, and two "viewing rooms" for admiring the landscape. The two-story "Lemon Room," a sort of orangery for lemon trees, was added in 2006.

In his twenty-nine page opinion following a three-day trial, Judge DeAlmeida assessed the testimony of the parties' experts and explained why, despite his rejection of several elements of the experts' valuations, he concluded there was enough substantive and competent evidence in the record to allow him to determine true value.

Specifically, accepting plaintiffs' proofs as true and according them the benefit of all favorable inferences, the judge found plaintiffs "raised a debatable question regarding the correctness of the assessment" sufficient to overcome its presumption of validity. See Pantasote Co. v. City of Passaic, 100 N.J. 408, 412-13 (1985). The judge, however, rejected both parties' expert's comparable sales values because the experts were unable to identify a single suitable comparable sale in southern New Jersey and few, if any, truly comparable sales in either northern New Jersey or Pennsylvania. Judge DeAlmeida concluded the size and scope of the required adjustments "render[ed] the comparable sales unreliable as evidence of value."

The court accordingly adopted the cost approach to determine the value of plaintiffs' property. Finding plaintiffs' expert's comparable vacant land sales more credible than those presented by the Township, the court adopted the opinion of plaintiffs' expert that the value of the land was $1,550,000. Plaintiffs' expert also had the advantage of access to plaintiffs' actual costs of construction. Using those figures, plaintiffs' expert estimated the total costs of reproducing the building and site improvements as of the valuation date to be $33,850,000. To that figure, the judge added entrepreneurial profit of 5%, resulting in a total cost new of $35,542,500 and applied a 7.5% depreciation rate. To that figure of $32,876,812, the judge added the land value of $1,550,000 to arrive at true market value of $34,426,812.

As 2008 was a revaluation year, the court did not revise the assessment in accordance with N.J.S.A. 54:51A-6d, and, because the Township did not counterclaim and the court did not find the quantum of the assessment so far removed from the property's true value or the method of assessment patently arbitrary, see F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 431 (1985), it did not raise the assessment to reflect the property's true value but merely affirmed the Township's assessment of $20,814,500.

The scope of our review of judgments of the Tax Court is limited. Because "[t]he judges presiding in the Tax Court have special expertise . . . their findings will not be disturbed unless they are plainly arbitrary or there is a lack of substantial evidence to support them." First Republic Corp. of Am. v. Borough of E. Newark, 17 N.J. Tax 531, 536 (App. Div. 1998) (quoting Glenpointe Assoc. v. Twp. of Teaneck, 241 N.J. Super. 37, 46 (App. Div.), certif. denied, 122 N.J. 391 (1990)). We cannot conclude that Judge DeAlmeida's findings were either arbitrary or without substantial evidence in the record. Indeed, to the contrary, we affirm the judgment for the reasons the judge expressed in his careful and well-reasoned opinion.

We add only the following. In our view, plaintiffs' argument that the Tax Court should have rejected the Township's experts because they were contractually obligated to defend their appraised values in challenges to their 2008 revaluation borders on the frivolous. Of course the Township, and its taxpayers, would expect the firm that conducts the Township's revaluation to be willing and able to defend its appraisals. We do not find that a disqualifying bias. Moreover, an appellate court will not interfere with the exercise of a trial judge's discretion regarding the admission or exclusion of expert or opinion testimony unless there is a clear abuse of discretion. Carey v. Lovett, 132 N.J. 44, 64 (1993).

The adjustments required to the comparable sales presented by both parties' experts amply justified the court's rejection of a comparable sales approach to valuing a property that is so obviously out of the ordinary. Judge DeAlmeida's decision to add a modest entrepreneurial profit in the interest of furthering the principle of uniformity is in accord with case law, see Beneficial Facilities Corp. v. Peapack & Gladstone Borough, 11 N.J. Tax 359, 381 (Tax 1990), aff'd 13 N.J. Tax 112 (App. Div.), certif. denied, 130 N.J. 397 (1992). Further, any error in that regard would not affect the outcome of the case given the $13,612,312 difference between the court's true value of $34,426,812 and the assessed value of $20,814,500.

Finally, we see no error in the court's decision to reject plaintiffs' expert's opinion of a 75% depreciation rate in a six-year-old home as unreasonable and not supported by the evidence. The plaintiffs' expert did not apply the standard factors of physical, functional and economic obsolescence in calculating his depreciation rate. Instead, he backed into his depreciation rate by taking his comparable sales approach value of $10,125,000, minus the $1,550,000 allocated to the land and comparing it to the $33,850,000 he estimated to be the cost of reproducing plaintiffs' home in 2008. Calculating the difference in those two values led him to the conclusion that plaintiffs' home had depreciated by 75%. In his view, that a hypothetical willing buyer would pay only $10,125,000 for a home that cost $33,850,000 to build equated to a 75% rate of depreciation. Leaving aside that the court had already rejected his comparable sales value as unreliable, the Supreme Court has in the past noted that

there are situations in which the relationship between cost and market will not always determine value. A wise judge noted long ago: "If this be not so, a citizen, by the erection of a residence so costly that no one could buy it, would escape all taxation, which is obviously not the intent of the legislature or the proper interpretation of its statute."

[Ford Motor Co. v. Edison Twp., 127 N.J. 290, 302-03 (1992) (quoting Turnley v. City of Elizabeth, 76 N.J.L. 42, 44 (Sup. Ct. 1908)).]

Judge DeAlmeida's determination that the Township's 7.5% depreciation rate was more credible than plaintiffs' alternative and represented "a reasonable rate at which the cost of the reproduction of the home would depreciate in the few years between the dates of completion of the original home and Lemon Room addition and the valuation date" represents the sound judgment of an experienced member of the Tax Court and is thus entitled to our deference.

Plaintiffs' remaining arguments, to the extent we have not addressed them, lack sufficient merit to warrant discussion in a written opinion. See R. 2:11-3(e)(1)(E).



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