Park 50 Group, LLC v. Weehawken Township

NOT FOR PUBLICATION WITHOUT THE APPROVAL
                       OF THE TAX COURT COMMITTEE ON OPINIONS

                                           November 2, 2011

Steven R Irwin, Esq.
The Irwin Law Firm, PA.
80 Main Street, Suite 410
West Orange, New Jersey 07052

Richard P. Venino, Esq.
Law Director
Township of Weehawken
400 Park Avenue
Weehawken, New Jersey 07086

                RE:     Park 50 Group, LLC v. Weehawken Township
                        Docket No. 002507-2007

Dear Counsel:

       This constitutes the court’s decision on the motion for relief brought pursuant to R. 1:10-

3, wherein plaintiff seeks to compel defendant’s compliance with the prior court order to pay the

refund owing to plaintiff, and, both monetary sanctions and an award of attorney’s fees. Payment

of the refund was made before the return date of this motion which rendered as moot that relief.

Regarding the remainder of the relief sought, the request for attorney’s fees is granted and

plaintiff’s request for sanctions is denied, for the reasons that follow.

                             Findings of Fact and Procedural History

       Plaintiff filed a direct appeal with the Tax Court challenging the 2007 assessment on the

subject property and the parties settled the matter in November 2008. It was agreed between the

*


                                                   1
parties that a refund would be paid.      Due, in part, to a confluence of errors initiated by

defendant’s actions, payment was delayed.

       The 2008 stipulation of settlement required that all refunds “shall be made payable to,

and forwarded to, 'The Irwin Law Firm, P.A., as attorneys for Park 50 Group, LLC’”. It

provided that interest would be waived on condition that the refund was paid within 120 days of

the date of entry of the judgment. At the end of the 120-day period, defendant advised plaintiff

that the taxes on the subject property were delinquent, and rather than issue a refund, it intended

to credit the refund against the balance of the taxes owed. In response, by letter dated May 1,

2009, plaintiff informed defendant that it had sold the property on December 27, 2007, and

advised that the taxes were current at the time of the sale. It further explained to defendant that

the refund of one taxpayer could not be applied to the arrears of another. Plaintiff advised that

unless payment was forthcoming, it would file a motion to compel the payment, which motion

was filed by plaintiff in June 2009. Subsequent thereto, based upon defendant’s representation

that the refund would issue promptly, plaintiff agreed to withdraw the motion.

       A refund check was issued by defendant in January 2010 but mailed to the subject

property address rather than, as called for in the stipulation of settlement, to the plaintiff’s

attorney. The check found its way to the subsequent owner of the property, NYC View Terrace,

LLC, (NYC) and was endorsed by NYC. Capital One then cashed the check, and, despite the

defendant’s request, NYC did not return the money. The plaintiff and the defendant cooperated

in an effort to obtain return of the funds from the bank; however, such efforts were also

unsuccessful. Capital One denied defendant’s claim of improper payment and claimed that the

plaintiff and NYC were the same entity. Defendant investigated the claim by the bank and was

unable to verify the accuracy of the statement.




                                                  2
        Plaintiff filed a second motion to compel payment in November 2010 and requested that

the court order the defendant to pay the refund owed, no later than January 3, 2011. The motion

papers also sought interest at a rate of 5% to run from May 9, 2009 through January 3, 2011. On

December 8, 2010, the court granted plaintiff’s requested relief.1

        When timely payment was not made, plaintiff filed the within motion in aid of litigant’s

rights. By way of this motion plaintiff seeks an order for payment of the refund and interest, and

the imposition of a per-diem monetary sanction of 10% of the outstanding balance until receipt

of the payment due, and the payment of reasonable attorney’s fees. Prior to the return date,

defendant forwarded payment in the amount of $4,848.81, which includes interest in the amount

of 5% calculated to April 1, 2011. What remains for the court to determine is whether plaintiff is

entitled to attorney’s fees and per-diem monetary sanctions pursuant to R. 1:10-3, and if so, in

what amount.

                                            Conclusions of law

        When a party fails to abide by an order of the court, the other party may seek relief

through R. 1:10-3. The rule states, in relevant part,

                 Notwithstanding that an act or omission may also constitute a
                 contempt of court, a litigant in any action may seek relief by
                 application in the action . . .The court in its discretion may make an
                 allowance for counsel fees to be paid by any party to the action to a
                 party accorded relief under this rule.

        The Tax Court is vested with full authority to impose sanctions in an appropriate case.

Trisun Corp. v. Town of W. New York, 
341 N.J. Super. 556, 559 (App. Div. 2001). The Tax

Court “must possess the power to enforce its own judgments,” Arrow Mfg. Co. v. West New

York, 
321 N.J. Super. 596, 599 (App. Div. 1999). The power to impose sanctions is inherent in


1 The date May 9, 2009 was agreed upon by the parties as the first date on which interest would begin to run. The
parties had forwarded to the court an executed Consent Order for payment of the refund and interest, however this
court signed and entered the order included with the motion papers.


                                                         3
the authority of the court. Ritter v. Clinton House Rest., 
64 F. Supp. 2d 374 (D. N.J. 1999).

As noted in the rule, the determination of a fee is within the discretion of the court.

       On the issue of counsel’s fees, an award is appropriate, according to the comments to R.

1:10-3, where a party willfully fails to comply with an order or judgment. Those comments

provide the following:

               Although the so-called American rule, still followed in New
               Jersey, continues to require each party to bear his own attorney’s
               fees except as otherwise provided by R. 4:42-29, this rule
               provision allowing for attorney’s fees recognizes that as a matter of
               fundamental fairness, a party who willfully fails to comply with an
               order or judgment entitling his adversary to litigant’s rights is
               properly chargeable with his adversary’s enforcement expenses.
               The authority to grant fees under this rule applies only to violations
               of orders and judgments, not to settlements agreements that have
               not been so memorialized.

See Pressler & Verniero, Current N.J. Court Rules, comment 4.4.5 to R. 1:10-3 (2011). New

Jersey Courts based their understanding of “willful neglect” on the definition provided by the

Third Circuit Court of Appeals, in East Wind Industries, Inc. v. United States of America, as

cited by the Tax Court in Trisun:

               A definition of “willful neglect” was provided by the Supreme
               Court in [United States v. Boyle, 
469 U.S. 241 (1985)] which
               found that the phrase “willful neglect,” as used in section
               6651(a)(1), had been construed over the years to mean “a
               conscious, intentional failure or reckless indifference.” Stated
               another way, the taxpayer must show that the failure to file a return
               timely was the result “neither of carelessness, reckless
               indifference, nor intentional failure.”

               Trisun Corp. v. Town of W. New York, 
18 N.J. Tax 533, 538
               (2000), aff’d in part and rev’d in part, 
341 N.J. Super. 556 (App.
               Div. 2001) (citing East Wind Industries, Inc. v. United States of
               America, 
196 F.3d 499, 504 (3d Cir. 1999)).

       The Tax Court in that case found that the town acted willfully in failing to make payment

of the refund and interest to taxpayers on various judgments, as ordered by the court. The court



                                                  4
entered numerous judgments and a series of orders directing payment by a date certain. After the

town’s failure to comply the taxpayers filed a motion for attorney’s fees and sanctions pursuant

to R. 1:10-3. Certifications indicating that the town was faced with serious budget deficits from

the time the judgments were entered, and that the town was required to pass bonding ordinances

to provide the necessary funds to cover the deficits, were submitted to the court. However, the

certifications indicated that the main reason for the non-payment was because municipal officials

had assumed that all monies had been paid when in fact they had not. The Tax Court awarded

the attorney’s fees and set forth the following rationale:

                 The municipality’s certifications do not establish justification for
                 not having fully complied with this court’s judgments and orders.
                 Assuming that payments had been made, the municipality’s
                 conduct, at the very least, falls within the scope of “reckless
                 indifference,” even if not a “conscious intentional failure.” The
                 relevant municipal officials are entrusted with the diligent and
                 responsible handling of taxpayer’s funds, including both funds to
                 be received and funds to be returned to taxpayers by reason of
                 overpayment of taxes. This court finds said failure to comply to be
                 willful. Sanctions in the form of counsel fees are warranted in
                 these matters.

                 Trisun, supra, 
18 N.J. Tax at 538.2


        In the present matter, there were no certifications or evidence of any other nature

submitted in opposition to the motion with an explanation for the delay in payment, which

extended nearly three months, from January 3, 2011 until March 25, 2011. In fact counsel noted

that he was unable to provide “a good reason” for the defendant’s delay in making payment but

alluded to the fact that “cash flow is difficult”. Had plaintiff not filed the within motion, it is



2
  The Appellate Division reversed and remanded the Trisun matter as to denial of the taxpayers request for
sanctions, and reiterated that the Tax Court has the ability to award both counsel fees and sanctions on a motion
brought under R. 1:10-3. Trisun Corp. v. Town of W. New York, supra, 
341 N.J. Super. at 558 (citing the holding
in Arrow Mfg. Co. v. West New York, supra, 
341 N.J. Super. 556).


                                                       5
unclear when payment may have been made since it appears that the filing of the motion seeking

sanctions essentially provided defendant with the impetus to act.

         The Tax Court succinctly described the duty of public officials “entrusted with the

diligent and responsible handling of taxpayer’s funds”. I conclude that, given the absence of any

other explanation, defendant exhibited reckless indifference toward its responsibility to provide

taxpayer’s refund for three months after the order to compel was entered, if not an intentional

failure to do so. The fact that payment was finally made, prior to the motion date, does not

excuse defendant’s failure to appreciate both its obligation owed to the taxpayer as well as the

need to abide by the orders and judgments of the court. Accordingly, I find that plaintiff is

entitled to an award of attorney’s fees in an appropriate amount.

         Plaintiff supplied a certification of legal services with the original motion papers. At oral

argument counsel indicated that additional attorney time had been expended in this case.

Thereafter a supplemental certification was supplied to the court.3 With regard to the amount of

the fee to be awarded to plaintiff, this court does not find it appropriate to provide relief for

plaintiff’s attorney time spent prior to this motion, since I do not find that defendant’s actions

during that period were willful, for the reasons that follow.

         It is undisputed that defendant’s initial error in sending the check to the property address

rather than to plaintiff’s attorney, as called for in the stipulation, triggered the attendant

confusion. While plaintiff expended costs in its efforts to obtain payment during that time, the

delay was not entirely due to defendant’s error. After issuance of the check it was reasonable for

defendant to believe that the money had been refunded to plaintiff based on the bank’s advice

that plaintiff and NYC were the same entity. Defendant was likewise justified in taking the time


3
  Defendant did not object to the substance of the certifications but argued against imposition of attorney’s fees, and
that an award of attorney’s fees, if any, should be limited to the time expended on the present motion.


                                                          6
to follow up with reasonable efforts to investigate the claim rather than immediately issuing a

second check given the information received from the bank. As such, some of the delay was

beyond defendant’s control when the parties became ensnared in the bank’s administrative red

tape.

        A review and comparison of both certifications is necessary in making the determination

of an appropriate award. The time period in the first certification begins with December 30,

2008, when counsel forwarded the judgment to the tax assessor and before the refund was due,

through December 10, 2010. Counsel certified to attorney time in the amount of $4,150.00,

which included the time spent on the motions to compel.             The supplemental certification

indicated attorney time from March 1, 2011 through April 26, 2011 for a total amount of

$3,300.00. Approximately 3.2 hours were billed to the associate for preparation of the motion at

a rate of $375.00 per hour. An additional 2.2 hours were billed to the partner for time spent to

argue the motion, at a rate of $500.00 per hour and, while not indicated in the certification, likely

included time for travel to and from the court as well as the time actually spent in court.

        In making a determination as to the appropriate amount to be awarded, the court

considers the following circumstances. Notably, at oral argument plaintiff’s counsel emphasized

that the within motion was essentially brought as a means of enforcing the principle that the

orders and judgments of the court must be honored by the parties, aside from a means of

reimbursement for legal fees occasioned by defendant’s conduct. And, there was no opposition

provided to the court from defendant as to the reasonableness of the fee set forth in plaintiff’s

certifications. However the court also considers the representations of counsel made during

argument before the court that what occurred is an aberration on defendant’s part. While the

court accepts the representations of counsel, I find that an award is warranted in these particular




                                                 7
circumstances to avoid parties from willfully flouting the orders and the judgment of the court.

The court is acutely mindful of the fact that the attorney fee ordered to be paid in this matter will

be borne by the taxpayers who were not responsible for the delay.4 Considering all of the

circumstances presented to the court, I find that a fee in the total amount of $700.00 is

appropriate.

         Plaintiff requests that the court impose an additional per diem money sanction upon

defendant for its failure to comply with the court’s order and judgment. While the court does

possess the power to impose sanctions, it elects not to do so at this juncture, for several reasons.

Despite payment being late, defendant has paid plaintiff all monies owed. This matter is before

the court on an application in aid of litigant’s rights. An award of sanctions now would be akin

to a punishment for past non-compliance and not in aid of litigant’s rights. Trisun Corp., supra,


341 N.J. Super. at 559. (“An award of sanctions 'is an entirely proper tool to compel compliance

with a court order.’ Franklin Twp. v. Quakertown, 
274 N.J. Super. 47, 55 (App. Div. 1994).”)

         Plaintiff’s motion for relief is granted. Defendant is to pay to plaintiff attorney’s fees in

the amount of $700.00 within 30 days of the Order entered and forwarded to the parties on this

date, in accordance with this opinion.

                                                           Very truly yours,




                                                           Christine M. Nugent, J.T.C.




4
  There was nothing in the record to indicate that counsel for the defendant in any way caused delay in payment of
the refund, but that rather that it is attributable to defendant dragging its feet in the process of making payment.


                                                          8