Rocky Top, LLC v City of South Amboy

NOT FOR PUBLICATION WITHOUT APPROVAL OF

THE TAX COURT COMMITTEE ON OPINIONS

TAX COURT OF NEW JERSEY

Mala Sundar R.J. Hughes Justice Complex

JUDGE P.O. Box 975

25 Market Street

Trenton, New Jersey 08625

Telephone (609) 943-4761

TeleFax: (609) 984-0805

taxcourttrenton2@judiciary.state.nj.us

January 26, 2015

BY ELECTRONIC MAIL

Thomas J. Denitzio, Jr. Esq.

Greenbaum Rowe Smith & Davis, L.L.P.

99 Wood Avenue South

Iselin, New Jersey 08830-2712

John R. Lanza, Esq.

Lanza & Lanza, L.L.P.

5 Main Street, P.O. Box 2520

Flemington, New Jersey 08822

Re: Rocky Top, L.L.C. v. City of South Amboy

Block 89, Lot 5 (540 Bordentown Avenue)

Docket Nos. 006942-2011; 008144-2012

Dear Counsel

This is the court s opinion in connection with plaintiff s ( Rocky Top ) in limine motion where Rocky Top sought to, (i) dismiss defendant s ( City ) counterclaim for tax year 2011 because the City did not except it from the general release provisions of a settlement agreement in a separate land use litigation related to the above captioned property ( Subject ), and, (ii) strike portions of the City s expert s appraisal report because the expert used information which post-dated the assessment dates.

The City opposed the motion arguing that (i) the prosecution of its counterclaim was unimpaired because the City s release did not affect its ability to effectuate its taxing authority; (ii) the instant motion should be dismissed on grounds of laches, waiver and equitable estoppel; and, (iii) the claim for striking portions of its expert s report was premature since Rocky Top had the initial burden of overcoming the presumptive correctness of the assessments, and has the opportunity to attack the City s report during trial.

The court adjourned the trial and heard the motion. The parties argued that their respective positions were supported by the plain language of the release provisions, which, in pertinent part, read as follows (emphasis added)

6. Releases

A. Upon fulfillment of all conditions . . . [Rocky Top] . . . hereby releases and forever discharges [the City] . . . from any and all actions, causes of actions, suits, claims, charges or complaints, known or unknown, which [Rocky Top] has, may have, or claims to have against [the City] for everything that has occurred up to the date of the signing of this [settlement] Agreement, except any claims for tax appeals related to the [Subject] . . . . This General Release includes all claims, known or unknown, for anything that has occurred up to and including the date of this Agreement, except any claims for tax appeals related to the [Subject] . . . [Rocky Top] releases all claims including those of which [it] is not aware and those mentioned in this Agreement, except any claims for tax appeals related to the [Subject] . . . .

B. Upon fulfillment of all conditions . . . [the City] . . . hereby release[s] and forever discharge[s Rocky Top] . . . from any and all causes of actions, suits, claims, charges or complaints, known or unknown, which [the City] has, may have, or claims to have against [Rocky Top] for everything that has occurred up to the date of the signing of this [settlement] Agreement, except for tax liens related to the [Subject] . . . Further, it is expressly understood and agreed that this General release does not affect the [City s] ability to enforce ordinances and code violations, effectuate its police powers, enforce life/safety and health issues as well as effectuate its taxing authority with respect to the [Subject].

The court found that the terms tax appeals and effectuate its taxing authority in the above provisions were ambiguous as to scope and intent, especially because Rocky Top claimed that the City should be precluded from increasing assessments (via the counterclaim) under the square corners doctrine, and both parties asserted equitable estoppel. The court allowed parties to introduce extrinsic evidence in support of their respective positions. Both parties produced their attorneys (hereinafter Land Use Counsel ) who were involved in the Subject s land use litigation and in the preparation/execution of the settlement agreement and the related release provisions. Rocky Top also provided testimony of one of its principals.

For the reasons more fully stated below the court finds that the neither party intended to include or encompass the pending Tax Court matters within the general release or exclude the same from the exception to the release.1 Therefore, Rocky Top s motion to dismiss the City s 2011 counterclaim is denied. The court also denies, without prejudice, Rocky Top s motion to strike portions of the City s expert s report, as being premature.

FACTS

(A) Local Property Tax Appeals

The Subject comprises of about 3.04 acres of land. It is improved by a building measuring 116,874 square feet of building area (excluding the basement). It is zoned RA-Memorial Medical Center Redevelopment Area. The building was the site of a former hospital facility, the Memorial Medical Center, which closed operations in 1999. Rocky Top acquired the Subject sometime in 2001 in a bankruptcy sale of the facility

For tax years 2011 and 2012, the City assessed the Subject as follows

Land $1,690,000

Improvements $2,560,000

TOTAL $4,250,000

The average ratio for 2011 was 91.77% (common level range under Chapter 123 being 78% to 105.54%). For tax year 2012, the average ratio was 96.07% (the common level range being 81.66% to 110.48%). Thus, the implied true value of the Subject is $4,631,140 and $4,423,860.

Rocky Top filed the above-captioned complaint for 2011 on March 29, 2011. The City filed a counterclaim for 2011 on April 19, 2011 claiming that the Subject was under-assessed.

Rocky Top filed the 2012 complaint on March 29, 2012. Two years later, on February 12, 2014, the City moved to file a late counterclaim. Rocky Top opposed the motion. Its only basis for the same was that the statute of limitations should be strictly construed against all parties, including the City. The court denied the City s motion.2

On March 12, 2013, the City filed motions before this court to dismiss the 2011 and 2012 complaints for failure to pay taxes. The City withdrew these motions (on June 14, 2013 for tax year 2011; and on July 2, 2013 for tax year 2012) since the delinquent taxes were paid by a third party tax-sale certificate holder.3

By order of June 25, 2014, the court ordered a mutual exchange of appraisal reports and set the trial date. The parties filed their respective reports September 29, 2014.4 Four days prior to the scheduled trial date of October 6, 2014, Rocky Top filed the instant in limine motion.5

(B) Land Use Litigation

In 2004, Rocky Top filed a complaint, which it amended in 2005 and 2006, alleging misconduct by the City and certain officials for violation of land use laws in connection with a 2002 redevelopment plan for the Subject, and of certain civil rights.6 In 2012, the Appellate Division affirmed the trial court s dismissal of eight counts of Rocky Top s complaint, but reversed and remanded three other counts. During the litigation period, the City had filed tax liens against the Subject for non-payment of local property taxes.

After remand, and attempted mediation, the matter was set for trial. The Law Division judge closely monitored the progress of the case, and the parties with their respective Land Use Counsel appeared in court almost every week to report the status of the matter. The parties then entered into settlement negotiations on May 10, 2013.7 After almost daily exchanges of proposed changes from that date onwards, with the Law Division judge being regularly apprised of the status/progress, a settlement agreement was executed in June 2013. It is undisputed that the City promptly complied with all of its obligations under the agreement.

(C) Evolution of the Release Provisions

The City s Land Use Counsel drafted the initial proposed settlement agreement ( First Draft ). The Recitals section referenced only the land use litigation between the parties (by its docket number and court of venue) and to the Subject. It noted that both parties desired to settle all controversies among and between them including any of Rocky Top s claims related to the land use litigation claims, past, present, or future, known or unknown. In return for Rocky Top dismissing its land use complaint with prejudice, the City undertook to pay certain amounts, and enact an ordinance to amend the redevelopment plan for the Subject. As pertinent here,

5 called for a general release by Rocky Top for all claims, including the claims in the land use litigation (which were specified by statutory references), it could have against the City.

6 had Rocky Top promise not to sue the City for any claim for anything which occurred until the date of the Agreement.

8 had Rocky Top represent is had no pending claims or complaints of any kind against the City.

18 had both parties agree that no provision of the agreement would be construed against the drafter, should there be any issue as to its interpretation.

In response, Rocky Top s Land Use Counsel made changes (copying the trial court judge) since the First Draft did not reflect any of the extended colloquy with the Court, thus, any of the parties agreed-upon language worked out in Court, and also because, as Rocky Top s Land Use Counsel testified, the release language was non-mutual, thus, unacceptable. In the Recitals section, it added the case name of the land use litigation, and stated the reasons for settlement as being the parties desire avoid costs of further and future litigation. As pertinent here

6A and 6B replaced 5 of the First Draft (the general release provision).

6A contained Rocky Top s general release for all claims with the same language proposed in the First Draft, except it deleted the list of the statutory references delineated by the City as being part of the release, and added only to the extent that such actions . . . or complaints were or could have been brought in the land use litigation related to the Subject property. Rocky Top s Land Use Counsel testified that this language was co-terminus with an intent to render the issues subject to the principles of estoppel and res judicata.

6B was identical to 6A, except that the release generated from the City.

8 was renumbered as 9, was titled Covenant Not to Sue and the language was changed to make it mutual so that each party represented it had no other . . . complaint of any kind pending against any of the other and added except as may relate to tax liens or tax appeals.

The City s Land Use Counsel then re-inserted the broader release language and the parties governed by the same with the list of delineated statutory claims in in 6A. In 6B, it retained Rocky Top s version (but corrected a typographical reference error), and added this exception: This does not affect Defendant s abilities to enforce ordinances and code violations, effectuate its police power and effectuate its taxing authority. It added a new 8 whereby Rocky Top promised not to file any claims in the future for anything for anything occurring until the date of the settlement agreement. It accepted re-numbered Rocky Top s 9 ( Covenant Not to Sue ) as 10, and made no changes except inserted the word currently (thus, each party represented that it did not have any complaint of any kind currently pending against the other except for tax liens or tax appeals).

While Rocky Top s Land Use Counsel did not challenge the new language inserted by the City, he disagreed with the City s retention of various statutory references and parties releasing claims which he viewed was biased in favor of the City, and had ignored the extended discussion on this point in court and before the Law Division judge that the releases were to be (i) mutual; and (ii) limited to claims which were, could have been, or should have been brought in this action or otherwise relate to the premises. He asked that 6A and 6B be retained as drafted which was a balanced and symmetrical release. He found the City s carve-out in 6B as well-meaning but inconsistent in that the settlement, which called for an amended redevelopment plan as to the Subject s uses, did affect the City s powers to enforce an ordinance. He asked for some different verbiage since the exception had started out in life on Friday as a carve-out for tax assessment/collection but was now vague. He also objected to 8 as being redundant due to the releases, and in any event, because it was non-mutual.

On May 14, 2013, the parties appeared in court, and thereafter, reported the matter as tentatively settled. The judge went on the record to note the six principle aspects of the settlement as reported to him: (1) payment by the City of certain amounts; (2) the timing and procedural aspects of enacting an ordinance to permit the agreed upon uses for the Subject in the redevelopment plan; (3) the parties were not admitting any liability; (4) all parties would execute a stipulation of dismissal with prejudice; (5) all parties would release each other under the terms set forth in the settlement agreement, which releases were mutual and equivalent in scope, but subject to carve out for activities of the City as set forth in the agreement. The judge noted that the release reflects the ongoing discussions about, frankly, which claims and the nature of claims on both sides that are to be released, which he understood as still evolving but is pretty much close to done; (6) anything which remained open would be finalized. The judge stated that since the parties appeared to have all the principles done he would mark the the litigation [as] settled for the record but subject to finalization of the documentation.8

Thereafter, the City s Land Use Counsel incorporated the adversary s proposals with some variations. As pertinent here, the City used its version of 6A, thus, included a list of claims under various State and federal laws, but with some modification. In 6B, it added an express understanding of its ability to also enforce life/safety and health issues. It made 8 mutual. It added the same carve-out stated in 6B, namely, that nothing in the agreement or releases affected the City s ability to, among others, effectuate its taxing authority as to the Subject.

Rocky Top s Land Use Counsel then added except any claims for tax appeals related to the [Subject] wherever the sentence required Rocky Top s release in 6A (thus, thrice). It did not change the several statutory citations included by the City in that paragraph. In 6B, it included all parties obtaining the release (so it was mutual with those providing the release in 6A) and added except for tax liens related to the [Subject]. It accepted the carve-out in 6B and its re-assertion in 8. The executed settlement agreement reflected these changes.

ANALYSIS

Where the court, as here, employs the parole evidence rule as an aid to interpreting the provisions of the parties settlement agreement, and where the intention is doubtful or obscure, the most fair and reasonable construction, imputing the least hardship on either of the contracting parties, should be adopted, so that neither will have an unfair or unreasonable advantage over the other. J.L. Davis & Assocs. v. Heidler, 263 N.J. Super. 264, 270 (App. Div. 1993) (quotations omitted). As the Appellate Division observed

[a]n agreement must be construed in the context of the circumstances under which it was entered into and it must be accorded a rational meaning in keeping with the express general purpose . . . . The writing is to have a reasonable interpretation. Disproportionate emphasis upon a word or clause or a single provision does not serve the object of interpretation. The general purpose of the agreement is to be considered in ascertaining the sense of particular terms. The literal sense of particular words or clauses may be qualified by the context and given the meaning that comports with the probable intention. It is the revealed intention that is to be effectuated, the sense that would be given the integration by a reasonably intelligent person.

[Id. at 271-72] (citations and quotations omitted)

See also Anthony L. Petters Diner, Inc. v. Stellakis, 202 N.J. Super. 11, 27-28 (App. Div. 1985) ( [i]n the quest for the common intention of the parties to a contract, the court must consider the relations of the parties, the attendant circumstances, and the objects they were trying to attain ).

The same standards apply in connection with release provisions in a settlement agreement. The scope of a release is determined by the intention of the parties as expressed in the terms of the particular instrument, considered in the light of all the facts and circumstances. Bilotti v. Accurate Forming Corp., 39 N.J. 184, 203 (1963). See also Globe Motor Co. v. Igdalev, 436 N.J. Super. 594, 616-17 (App. Div. 2014) (same). Where a general release is not restricted by its terms to particular claims or demands then the release covers all claims and demands due at the time of its execution and within the contemplation of the parties. Biloti, supra, 39 N.J. at 204 (citations omitted) (emphasis added). See also Goncalvez v. Patuto, 188 N.J. Super. 620, 629 (App. Div. 1983) (a defendant s release is only as to those claims by those parties as are actually or intended to be encompassed thereby ).

The evidence clearly shows that the City s pending counterclaim and Rocky Top s pending property tax appeals, were never contemplated or intended to be either a part of the general release or excluded from being a part of the exception to the releases. Credible testimony of the witnesses shows that all efforts were focused primarily on resolving only the almost 10-year old land use litigation so that neither party would re-visit issues relative to the permitted uses of the Subject. Recitals portion of the settlement referenced only the land use litigation by name, docket number and venue. The settlement was primarily the dismissal of the action pending in the Superior Court and the claims hence the agreement s definition of the term Action. The reason for settlement was to avoid further and future litigation and the settlement included known or unknown claims which were related to the land use litigation and which could have been brought in that litigation. Counterclaims in local property tax matters which were pending in the Tax Court could not have been joined in the land use litigation because the jurisdiction to decide the issues raised in the counterclaim, (here the undervaluation of the Subject, thus, the allegedly incorrect local property tax assessment on the same), lies only with the Tax Court. See N.J.S.A. 54:3-21(a)(1).9

The pending Tax Court matters were never a material element of or material to the settlement of the land use litigation. Rocky Top s Land Use Counsel was not sure if he was aware of the Rocky Top s pending Tax Court complaints. Both Counsel did not know that a municipality could even file a counterclaim in a tax appeal. Although the issue of the tax liens on the Subject was discussed only during the attempted mediation (which the City refused to compromise), both Counsel agreed that local property tax complaints did not form the sum and substance of the settlement of the land use litigation. Per Rocky Top s Land Use Counsel, the tax appeals/tax liens were peripheral issues only. Per the City s Land Use Counsel, the tax issues were intended to be separated from the settlement of the land use litigation. All witnesses conceded that there was no discussion or negotiation of the City s pending counterclaim, nor of its waiver/release. The settlement did not require a stipulation of a with-prejudice dismissal of the City s pending counterclaim, unlike for the pending land use litigation.

Thus, the main subject matter of the settlement and releases was not the pending local property tax appeals. It was the res of the land use litigation which was only about the permitted uses for and of the building under local ordinances.

Testimony establishes that Rocky Top s counsel inserted the term tax liens because he was aware of the tax liens on the Subject. He included tax appeals because the City was insistent that the Subject not be treated favorably in any respect simply because the settlement allowed for new uses of the Subject. In this regard, the City had opposed Rocky Top s proposal that enforcement of the local code/ordinance provisions against the building be done by the Department of Community Affairs, and wanted it expressly understood that it was ceding none of its local powers, including its taxing powers. Rocky Top s Land Use Counsel maintained that if the City wanted language to protect its ability to tax the Subject, then Rocky Top should have the equal ability to file tax appeals, hence the inclusion of tax appeals. This mutuality carried over to the same terms, as well as to the term effectuate its taxing authority in 6A and 6B. Rocky Top did not object to the City s reservation of its lawful powers in the releases or covenants ( 6B and 8) since it was a restatement of the obvious, i.e., that the City can do what it is lawfully required or permitted to do, and further since Rocky Top considered it as an assurance of the City ceasing to isolate it and the Subject, and reintegrating the Subject into the norm by treating it as any other property in the City. Similarly, the City did not object to Rocky Top s insertion of tax appeals since the City did not intend to take away any rights in that connection given that the crux of the settlement and releases was the issues implicated in the land use litigation

The evidence thus shows that inclusion of the three terms was intended to cover local property tax assessments by the City and responsive tax appeals by Rocky Top against those assessments, on a going-forward basis. If the City was to preserve its legal rights of future tax assessments against the Subject, then Rocky Top would preserve its rights to challenge the same. Positing now to the contrary is not supported by the evidence, and contradicts Rocky Top s Land Use Counsel s insistence for mutuality in the provisions of the settlement agreement. The court is unpersuaded that Counsel sought a balance and symmetry only at a macro level, i.e., in connection with resolution of the land use litigation, and not at a micro level, i.e., as to Rocky Top s tax appeals versus the City s counterclaims in those appeals. Indeed, a macro-micro distinction only supports the parties views that the pending Tax Court matters were never the subject of, or intended to be encompassed in the issues being settled and released.

Rocky Top s principal s testimony that he viewed 6A as eliminating the City s ability to pursue its counterclaim pending in the Tax Court is belied by his concession that he never discussed, negotiated or sought a specific release or waiver of the counterclaim. Even as to the motions filed by the City before this court, Rocky Top never once claimed that the City was barred from doing anything other than imposing local property tax assessments on the Subject pursuant to 6B of the settlement agreement.10 It is only on the eve of trial of these Tax Court appeals did Rocky Top attempt to use the release provisions in its favor.

Although the Land Use Counsel may have mutually understood the scope of the term effectuate [the City s] taxing authority as applying to the imposition of a local property tax assessment, there was also undisputed testimony that the City wanted to be able to do whatever it was legally allowed to do. Filing a counterclaim or even a local property tax appeal against an assessment is a statutorily available right to a municipality. See N.J.S.A. 54:3-21(a)(1). There was also credible testimony that property tax issues were to be kept separate from the land use litigation settlement. Thus, there was no intention to exclude the City s pending counterclaim from the carve-out in 6B.

As precedent dictates, although a release is broadly worded, as here to include any and all known or unknown claims or suits, it should be of something within the parties contemplation, actual or intended. Any ambiguity as to such a release is decided by examining the parties common intent, the circumstances of the settlement/release provisions, and the objectives of the settlement. Evidence (i) of a total lack of discussion of the City s pending counterclaim when negotiating the release language in 6B; (ii) that the releases in both 6A and 6B were intended to be mutual, equivalent in scope, balanced and symmetrical; (iii) that each party reserved mutual rights as to assessing/collecting tax and appealing the same only on a going-forward basis; and (iv) that the parties never intended for property tax issues to be a material element or requirement for the settlement of the land use litigation, compel a conclusion that there was no intention to have the release in 6B encompass the City s pending counterclaim or to exclude the same from the carve out in the same paragraph.

Moreover, restricting the City s ability to only impose an assessment, issue a tax bill, and collect upon the same, but nothing more, is not only unreasonable,11 but is also a strained construction of the City s carve-out to the general release. For instance, if the City had wanted to file a hypothetical Correction of Errors complaint on grounds the assessment was $5 million but an erroneous computer entry made it $50,000, the City would be unable to do so because its only ability under 6B or 8 would be to impose an assessment. Nor for instance, could the City oppose Rocky Top s hypothetical application for the Freeze Act of a post-settlement, post-valuation date Tax Court judgment deciding the Subject s valuation. The court is not persuaded that so narrow a scope of the City s taxing authority is a fair construction of the term effectuate its taxing authority. If imposition of an assessment and collection of tax arising from that assessment is within the City s taxing authority, then the ability to correct or change the same, whether administratively (as an assessor s appeal, see Northvale Borough v. Director, Div. of Taxation, 17 N.J. Tax 204, 214 (Tax 1998), aff d, 324 N.J. Super. 518 (App. Div.), certif. denied, 161 N.J. 147 (1999)), by settlement (pre-litigation or during litigation), or by the tax appeals process (before the County Board of Taxation or the Tax Court), is equally included in, and a vital part of that taxing authority.

Finally, allowing Rocky Top to prosecute its property tax appeals but barring the City s prosecution of its counterclaim pending in the Tax Court results in Rocky Top acquiring an unfair or unreasonable advantage over the City. This is specially so because the City s counterclaim was filed because of Rocky Top s property tax appeals.12 It strains credulity when Rocky Top insists on mutuality in the settlement and release terms yet seeks special treatment by arguing that only it be allowed access to the Tax Court. It also strains credulity because Rocky Top wanted to be reintegrated and thus be treated just like any other property in the City, yet now it seeks to be insulated unlike other properties which can have counterclaims in response to their challenges to the City s assessments in the Tax Court. Such a one-sided construction is undesirable, and under the circumstances here, unwarranted. Cf. Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 132 (2001) ( [a] clause depriving a citizen of access to the courts should clearly state its purpose thus, waiver of statutory rights must be clearly and unmistakably established, and contractual language alleged to constitute a waiver will not be read expansively ) (citations and quotation omitted).

In sum, based on evidence of the circumstances surrounding the settlement of the land use litigation, the court finds that the parties intended to terminate once and for all, only the issues pending in the land use litigation. There was no intention, actual or contemplated, to terminate the City s counterclaim pending in the Tax Court, which was filed in response to Rocky Top s complaint. The term tax appeals in Rocky Top s release was included as a reaction to the City s ability to effectuate is taxing power so as to achieve mutuality on a going-forward basis. The ambiguous term ability to effectuate is taxing power should be construed in a manner that is fair and reasonable, so that it encompasses not only the City s ability to impose a local property assessment, but also the City s ability to exercise any legal powers it has following such an imposition, such as the ability to change or challenge the assessment, which includes filing and prosecuting the City s counterclaim pending in the Tax Court when the settlement agreement of the land use litigation was executed. To hold otherwise provides Rocky Top with an unreasonable and unfair advantage, a result proscribed by precedent, especially when the counterclaim had its genesis in Rocky Top s tax appeal.

The above findings dispose Rocky Top s contentions that the equitable principles of estoppel or the square corners doctrine merit dismissal of the City s counterclaim. The court adds that there is simply no evidence that the City assured Rocky Top that it would not oppose Rocky Top s complaints pending in the Tax Court, or that the City improperly filed the pending counterclaim to obtain a tactical advantage. The City vigorously rejected any attempts at compromising the existing tax liens, and no one even discussed the City s pending counterclaim, let alone negotiate its waiver. Nothing was shown to prove that Rocky Top changed its position to its detriment because of the City s actions in the land use settlement agreement. To the contrary, the City promptly and fully complied with every one of its obligations under the land use settlement agreement. The facts simply do not lend themselves to a finding of estoppel against or bad faith on part of the City.

Rocky Top s request that this court strike certain portions of the City s expert s appraisal report for using post-assessment data is premature. It will have ample opportunity to attack the report, and/or its veracity or credibility, during the course of the trial.

CONCLUSION

For the aforementioned reasons, Rocky Top s motion is denied. An Order reflecting the above findings will be entered.

Very truly yours,

Mala Sundar, J.T.C.

1 Rocky Top conceded that it did not dispute the City s ability to file and prosecute counterclaims for tax years after the land use litigation settlement agreement, thus, after June 2013.

2 The City filed a timely counterclaim for 2013. Per the parties, the issues raised herein as to the effect of the general release provisions on the continuation of the counterclaim, also applies to the 2013 counterclaim.

3 The City noted that Rocky Top s counsel had advised of law in support for this proposition, and based on Freehold Office Park, Ltd. v. Township of Freehold, 12 N.J. Tax 433 (1992), the City was withdrawing its motion.

4 Rocky Top s expert concluded the Subject s value as $2,630,000 and $2,710,000 for tax years 2011 and 2012 respectively. The City s expert concluded the value as $6,754,000 (2011) and $6,998,000 (2012).

5 Rocky Top s counsel here (and for 2013 and 2014 local property tax appeals) was not its Land Use Counsel, thus, was unaware of the land use litigation or its settlement until eve of the trial date for the 2011 and 2012 local property tax appeals.

6 The lengthy procedural history of the litigation is contained in the unpublished Appellate Division s decision, Rocky Top, L.L.C. v. City of South Amboy, 2012 N.J. Super. Unpub. LEXIS 2106 (App. Div. 2012). Both parties were represented by their respective Land Use Counsel (who were witnesses herein). Parties (but not their respective counsel) were hostile to each other throughout the litigation, Rocky Top feeling it was being targeted for unfavorable treatment through land use restrictions upon the Subject and removal (through litigation) of a previously granted PILOT, and the City feeling that Rocky Top was disagreeable to every land use accommodation the City made through the redevelopment plan.

7 The City s counsel in the Tax Court matters here (who also signed and filed the counterclaim) was the Law Director for the City but was conflicted out of the land use litigation. However, as the Law Director for the City, he was consulted, and participated, in the settlement negotiations due to his expertise in land use matters, and specifically in connection with the issue of the enacting an ordinance to amend the redevelopment plan.

8 Upon the court s questioning, Rocky Top s principal agreed that he knew of, and had voluntarily agreed to, the principles of the settlement, and was satisfied with his Land Use Counsel s services.

9 There was nothing to show that the parties had referenced the Tax Court complaints in the Superior Court pleadings (such as a certification in the Law Division pleadings, see R. 4:5-1(b)(2) or otherwise).

10 The settlement agreement was pending when the City filed its failure-to-pay-tax motions, and was finalized when the City withdrew the same, and later filed its untimely-counterclaim motion. Although Rocky Top s tax counsel was not involved, and thus, was unaware of the land use litigation or its settlement, Rocky Top, as plaintiff, was fully aware of the same due to its principals active participation in the litigation, and court appearances during settlement. One of the principals was an attorney since the Law Division judge made reference to this fact when he was placing the essential settlement terms on the record on May 14, 2013, and ensuring that Rocky Top and its principals voluntarily and knowingly agreed to the settlement parameters.

11 Rocky Top s principal testified that he viewed the carve-out in 6B to simply mean that the City would conduct and continue its typical course of business, thus, there would be only a tax bill, a payment (or a lien if no payment) and Rocky Top s tax appeal on a going-forward basis. He thought 6B would eliminate all of the City s claims against Rocky Top, and claimed that he would not have agreed to the settlement known the City would still be litigating against him via a counterclaim. However, this is not credible because Tax Court complaints were to be kept separate from the settlement of land use litigation, and further, because Rocky Top wanted to be able to litigate the City for on-going local property tax assessments.

12 Even without a counterclaim, the City can obtain an increase in assessment if it adduces credible proof, and the year at issue is not a revaluation year, which here, 2011 was not. See Campbell Soup Co. v. City of Camden, 16 N.J. Tax 219, 228 (Tax 1996) ( even in the absence of an affirmative request by the taxing district the court can increase an assessment in a non-revaluation year pursuant to Chapter 123, which operates substantively in the nature of an automatic counterclaim and the increase in assessment is the risk taxpayer took when it appeal[s] an assessment in a non-revaluation year). By the same token, an increase in assessment is not necessarily automatic simply because a counterclaim is filed. However, dismissal of a counterclaim would jeopardize the City s opportunity to adduce proof for an increase in assessment if Rocky Top withdrew its complaint.

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