NATHAN SILVERSTEIN v. TOWNSHIP OF MIDDLETOWN
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3071-15T31
A-3072-15T3
NATHAN SILVERSTEIN,
Plaintiff-Appellant,
v.
TOWNSHIP OF MIDDLETOWN,
Defendant-Respondent.
______________________________
Argued November 8, 2017 – Decided January 22, 2018
Before Judges Fasciale and Moynihan.
On appeal from Tax Court of New Jersey, Docket
Nos. 003146-2013 and 000723-2014.
Kevin S. Englert argued the cause for
appellant.
Bernard M. Reilly argued the cause for
respondent.
PER CURIAM
1
These are back-to-back appeals consolidated for the purpose of
this opinion.
In these consolidated appeals, plaintiff appeals from the Tax
Court judgments affirming the 2013 and 2014 tax assessments of
defendant's once-grand home on a bluff overlooking the Navesink
River in Middletown. Adducing the evidence presented at trial,
Judge Mala Sundar, after rejecting the expert testimony presented
by both parties, concluded plaintiff failed to satisfy his burden
of proving the assessments incorrect. We agree and, applying the
applicable law and standards of review, affirm for the reasons set
forth in Judge Sundar's thorough and thoughtful written opinion.
We consider first plaintiff's argument that "[t]he evidence
considered by the Tax Court demonstrates that the quantum of the
assessment is so far removed from the property's true value as to
require adjustment" because plaintiff's 2012 purchase price of the
property and both parties' experts' valuation of the property was
substantially below the assessments of $5,122,100.2
Although we review a Tax Court's legal determinations de
novo, UPS Gen. Servs. Co. v. Dir., Div. of Taxation,
430 N.J.
Super. 1, 8 (App. Div. 2013), aff'd,
220 N.J. 90 (2014), our review
is highly deferential, Estate of Taylor v. Dir., Div. of Taxation,
2
Plaintiff purchased the property for $3,100,000. Plaintiff's
expert opined the property's value was $2,820,000 and $2,715,000
for 2013 and 2014, respectively. Defendant's expert valued the
property at $4,000,000 for both years.
2 A-3071-15T3
422 N.J. Super. 336, 341 (App. Div. 2011). "The judges presiding
in the Tax Court have special expertise; for that reason their
findings will not be disturbed unless they are plainly arbitrary
or there is a lack of substantial evidence to support them."
Glenpointe Assocs. v. Twp. of Teaneck,
241 N.J. Super. 37, 46
(App. Div.), aff'd,
12 N.J. Tax 118 (Tax 1990). We also owe "due
regard to the Tax Court's expertise and ability to judge
credibility." Southbridge Park, Inc. v. Borough of Fort Lee,
201 N.J. Super. 91, 94 (App. Div. 1985).
Judge Sundar held that credibility was a "primary issue" as
it related to
each expert's adjustment for the concededly
poor condition of significant portions of the
[property's] exterior and interior. Each
expert's methodology is problematic.
Plaintiff's expert disfavored the cost
approach as unreliable due to difficulty in
estimating depreciation and entrepreneurial
profits, yet he included a [fifteen percent]
entrepreneurial profit when computing his
costs-to-cure claiming that was the standard
or acceptable margin. [Defendant's] expert
verified his "adjustment for physical
condition" by comparing his conclusion of the
[property's] value as-new and its value in its
existing condition, however this presupposed
that his value conclusions were credible.
The judge went on to address "the more pressing problem common
to both experts" and found that both adjusted their valuations
because of the poor physical condition of the property but neither
3 A-3071-15T3
expert had the necessary expertise "to make the foundational
determination" as to what renovations were required because
"neither [was] a contractor, a developer, an architect, or a
building construction specialist/expert."
Judge Sundar, in rejecting plaintiff's expert's opinion,
distinguished cases in which an expert appraiser – utilizing cost-
to-cure to devalue a property – relied on qualified experts who
analyzed the costs of renovation, rehabilitation, "design,
engineering, construction management, and contingency costs."
Although the judge found that plaintiff's expert's application of
cost-to-cure to adjust the valuation of the property – because of
its "poor condition and required deferred maintenance" – was
"reasonable, and indeed, preferable to a subjective adjustment,"
she rejected the expert's opinion because the evaluation of the
items in need of repair or replacement and the estimate of costs
was
unpersuasive due to lack of a foundational
requirement, namely, credible and reliable
evidence establishing the need for, and
estimated costs of, a structural gutting and
rebuilding of the entire [property's]
interior. In this connection, plaintiff's
testimony that various contractors advised him
of the need to replace windows and doors is
unpersuasive and hearsay. His testimony that
the roof and brickwork had "problems" is also
unpersuasive for purposes of a value
conclusion, since he is not an architect,
builder or developer.
4 A-3071-15T3
The judge also recognized plaintiff's expert conceded in his
report that, because he was not an engineer and was not "required
to hire one, he was not responsible for the structural 'soundness'
of improvements or of the 'functional utility of major appliances
or mechanical units,'" and "that he did not review material on
interior construction and made judgment calls in this regard based
on his personal observation, as well as conversations with, and
photographs from, the plaintiff."
The judge also rejected plaintiff's expert's valuation for
other reasons: finding the "significant adjustment for the
farmland assessment status" of a comparable used by the expert
"unpersua[sive]"; the variation in the depreciation rates for
various accessories used to calculate the expert's adjustments
"unexplained"; and the reason for the failure to adjust for a
conservation deed restriction in a comparable "unpersuasive."
Judge Sundar's careful analysis – supported by the record –
is entitled to our deference. Her rejection of plaintiff's
expert's valuation complied with our Supreme Court's charge that
an unsubstantiated expert's opinion should not be accepted by a
court. Glen Wall Assocs. v. Twp. of Wall,
99 N.J. 265, 280 (1985).
It is well established that challenged real estate tax
assessments are "entitled to a presumption of validity." MSGW
5 A-3071-15T3
Real Estate Fund, LLC v. Borough of Mountain Lakes,
18 N.J. Tax
364, 373-80 (Tax 1998). It is incumbent on the taxpayer
challenging the municipality's original assessment to rebut the
validity of the assessment. Ibid. The judge's rejection of the
key valuation evidence presented by plaintiff left plaintiff
unable to meet his burden.
We also reject plaintiff's argument that the judge failed to
recognize that the foundation supporting an expert's opinion must
be practically and realistically limited, and failed to ascertain
from the evidence an appropriate value for the property. The
judge recognized the legal tenets on which plaintiff relies in
advancing these arguments and asserted that she did not lightly
affirm the assessments. She carefully considered the other
evidence presented and rejected same. She did not find plaintiff's
purchase price at auction to be credible evidence of the property's
fair market value in light of the way auctions are conducted and
found subjective plaintiff's expert's opinion that auctions of
"palatial homes" result in competitive prices. She also rejected
defendant's expert's opinion, detailing the expert's failure to
make adjustments for certain amenities, include the data from
accepted cost manuals to support his cost-based adjustments, and
adjust a comparable for a conservation deed restriction; and for
6 A-3071-15T3
various deficiencies she detailed regarding the expert's cost
approach.
We conclude Judge Sundar's decision that she was unable to
independently value the property is supported by the record. The
judge recognized she was duty-bound to make a value determination
based on the credible evidence in the record. See Ford Motor Co.
v. Twp. of Edison,
127 N.J. 290, 312 (1992) (explaining that when
a court "rejects the ultimate conclusions as to the true value
proffered by the parties' experts, it should make an independent
determination of true value on the basis of those portions of the
experts' testimony which the court finds credible"). Although a
Tax Court "has the duty to apply its own judgment to valuation
data submitted by experts in order to arrive at true value," its
"right to make an independent assessment is not boundless; it must
be based on evidence before it and data that are properly at its
disposal." Glenpointe Assocs.,
241 N.J. Super. at 46. A Tax
Court judge "must not arbitrarily assign a value to the property
which is not supported in the record." Ibid. Moreover, "[t]he
probative value of an expert's opinion depends entirely upon the
facts and reasoning adduced in support of it." Kearny Leasing
Corp. v. Town of Kearny,
6 N.J. Tax 363, 376 (Tax 1984), aff'd,
7 N.J. Tax 665 (App. Div. 1985). "Stated otherwise, an 'expert's
conclusion rises no higher than the data which provide the
7 A-3071-15T3
foundation.'" Gale & Kitson Fredon Golf, LLC v. Twp. of Fredon,
26 N.J. Tax 268, 281 (Tax 2011) (quoting Town of West Orange v.
Estate of Goldman,
2 N.J. Tax 582, 588 (Tax 1981)).
Judge Sundar rightfully refused to accept the expert's
opinions she found to be unsubstantiated. Absent any credible
admissible evidence of valuation, she was unable to make a proper
assessment. The record supports the judge's finding that the
evidence used to justify the experts' valuations of this property
was lacking, especially considering this property – unique in its
location, age, architecture and condition. The judge did not
expect an impractical and unrealistic quantum of evidence. She
expected well-supported conclusions.
Plaintiff failed to provide the Tax Court with adequate and
sufficient evidence from which the court could derive the
property's value; as such the assessment must stand. See id. at
278-87, 289.
We determine plaintiff's arguments regarding the judge's
evidentiary rulings are without sufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E). "[A] trial
court's evidentiary rulings are entitled to deference absent a
showing of an abuse of discretion . . . ." State v. Nantambu,
221 N.J. 390, 402 (2015) (alteration in original) (quoting State v.
Harris,
209 N.J. 431, 439 (2012)). The home inspection report –
8 A-3071-15T3
including the photographs contained therein – was not timely
disclosed in discovery, and its author did not testify, so the
report was hearsay that fit no exception. The judge acted within
her discretion in excluding same. The use of the conservation
easement deed to impeach the expert's valuation of a comparable
property was proper. Plaintiff objected to the use of the deed
to cross-examine plaintiff's expert only because it was not
disclosed by defendant. Any prejudice caused by plaintiff's
"surprise" was ameliorated by the judge's offer to allow plaintiff
time to examine the deed and to produce rebuttal evidence. In
fact, after the case was carried to the next day, plaintiff's
counsel – having had the opportunity to review the deed – declined
an opportunity to further examine the expert and was "satisfied
with the testimony." Inasmuch as it was the nature of the easement
that impacted the property value, it is of no moment, as plaintiff
now contends, that the deed was not a certified true copy.
Plaintiff offered no proof – despite being given time to produce
rebuttal evidence after the easement was used to impeach his expert
– that the easement was not genuine.
Affirmed.
9 A-3071-15T3
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