MTAG CUST ALTERNA FUNDING II, LLC VS. 94 JABEZ REALTY LLC (F-006655-18, ESSEX COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: October 21, 2021
• Docket: A-3871-19
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3871-19

MTAG CUST ALTERNA FUNDING II, LLC,

Plaintiff,

v.

94 JABEZ REALTY, LLC, and STATE OF NEW JERSEY,

Defendants. ___________________________

94 JABEZ REALTY, LLC,

Third-Party Plaintiff/ Appellant,

CITY OF NEWARK,

Third-Party Defendant/ Respondent. ___________________________

Argued September 27, 2021 – Decided October 21, 2021

Before Judges Vernoia and Firko. On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-006655-18.

Lazaro Berenguer argued the cause for appellant (Clark Law Firm, PC, attorneys; Lazaro Berenguer, of counsel and on the briefs).

Azeem M. Chaudry, Assistant Corporation Counsel, argued the cause for respondent (Kenyatta K. Stewart, Cooperation Counsel, attorney; Gary S. Lipshutz and Azeem M. Chaudry, Assistant Corporation Counsel, on the brief).

PER CURIAM

Defendant-third-party plaintiff 94 Jabez Realty, LLC, (Jabez) appeals

from an order dismissing its single-count, third-party complaint against the City

of Newark (Newark) for failure to state a claim upon which relief may be

granted. We find no merit to Jabez's arguments on appeal, and we affirm the

court's dismissal of the third-party complaint pursuant to Rule 4:6-2(e).

We conduct a de novo review of a trial court's dismissal of a complaint

pursuant to Rule 4:6-2(e). Baskin v. P.C. Richard & Son, LLC, 246 N.J. 157,

171 (2021). "A reviewing court must examine 'the legal sufficiency of the facts

alleged on the face of the complaint,' giving the plaintiff the benefit of 'every

reasonable inference of fact.'" Ibid. (quoting Dimitrakopoulos v. Borrus,

Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108 (2019)). "If

A-3871-19 2 the complaint states no claim that supports relief, and discovery will not give

rise to such a claim, the action should be dismissed." Dimitrakopoulos, 237 N.J.

at 107. We owe no deference to the motion court's legal conclusions. Id. at 108.

This action was initiated by plaintiff MTAG Cust Alterna Funding II,

LLC, (MTAG) with its filing of a complaint for foreclosure of a tax sale

certificate. MTAG alleged it was the holder of a tax sale certificate on real

property in Newark owned by Jabez. In its complaint, MTAG sought a

determination of the amount due on its tax sale certificate, a judgment for the

amount due on the certificate with interests and costs, and, in default of that

judgment, an order foreclosing Jabez's interest in the property.

Jabez filed an answer to the complaint, generally denying the allegations

and asserting affirmative defenses. Jabez also filed the third-party complaint

against Newark that is at issue on this appeal.

The third-party complaint alleges that in December 2015, Jabez purchased

property in Newark from MTAG. Jabez further alleges that its address for

mailing "is, and always has been," 811 16th Avenue, Belmar, New Jersey.

Following Jabez's purchase of the property, Newark sent Jabez's real estate tax

bills and tax notices to an incorrect address in Belmar. As a result, Jabez did

not receive any tax bills or notices following its purchase of the property until

A-3871-19 3 April 17, 2018, when it received an "Outside Lien Redemption Statement" from

Newark stating $32,059.69 in "taxes, fees, and costs[s] . . . had accrued with

regard" to Jabez's Newark property.

According to the third-party complaint, on April 18, 2018, Jabez "issued

a check in the amount of $32,059.69 in full and final settlement of the Outside

Lien Redemption Statement." Of that amount, $4,022.21 was for interest on the

principal amount of taxes Jabez had failed to pay "in timely fashion." The

amount paid also included $1,187.56 for attorney's fees incurred by MTAG in

providing Jabez with the Outside Lien Redemption Statement.

Jabez alleged that the amounts it was required to pay for accrued interest

and MTAG's attorney's fees "were the direct result of" Newark's errors in

sending Jabez's tax bills and notices to an incorrect address. Jabez asserted that

"had [it] received" the tax bills and notices, the taxes on the property "would

have been paid in timely fashion and there would have been no cause to issue

an Outside Lien Redemption Statement." Jabez sought $5,209.57 in

compensatory damages for the interest ($4,022.21) and attorney 's fees

($1,187.56) it claimed it was required to pay as a result of Newark 's failure to

provide timely notice of Jabez's real estate tax obligations following its purchase

A-3871-19 4 of the property. Jabez also sought punitive damages, attorney's fees, and costs

of litigation.

Newark filed a Rule 4:6-2(e) motion to dismiss the complaint for failure

to state a claim upon which relief can be granted. Newark did not dispute that

it sent Jabez's real estate tax bills to the wrong address, but it argued its error

did not excuse Jabez's failure to timely pay its taxes. More particularly, Newark

argued Jabez could not claim it lacked notice of its tax liability as a matter of

law because N.J.S.A. 54:4-64(a)(3) imposes on every taxpayer the obligation to

ascertain his, her, or its real estate tax liability regardless of whether the taxpayer

receives a tax bill or not. The statute provides as follows:

The validity of any tax or assessment, or the time at which it shall be payable, shall not be affected by the failure of a taxpayer to receive a tax bill, but every taxpayer is put on notice to ascertain from the proper official of the taxing district the amount which may be due for taxes or assessments against him or his property.

[N.J.S.A. 54:4-64(a)(3).]

The court heard argument on Newark's motion and determined Jabez's

claim did not state a claim upon which relief could be granted because the

fundamental premise of its claim – that Jabez's failure to timely pay its taxes

was the result of Newark's failure to send the tax bills to the correct address –

A-3871-19 5 was incorrect as a matter of law. More particularly, the court determined Jabez

had an obligation under N.J.S.A. 54:4-64(a)(3) to ascertain its tax liability, and

that obligation was not affected by the failure of Jabez to receive the tax bills.

The court found that if Jabez had fulfilled its obligation under the statute, it

would not have owed the interest and attorney's fees it sought in its claim against

Newark. The court entered an order dismissing the complaint, and this appeal

followed.

Jabez presents a single argument on appeal. It contends its complaint

asserts a viable cause of action for a violation of its due process rights based on

Newark's failure to provide proper notice of its tax liability. Jabez argues the

motion court erred by concluding Newark's failure to send the tax bills to the

correct address did not support a legally cognizable due process claim. 1 We are

not persuaded.

1 The third-party complaint does not clearly identify the cause of action. Jabez argued before the motion court, and argues again in its brief on appeal, that the complaint asserts a cause of action for a denial of its due process rights. Based on Jabez's assertions, and because we must "search[] the complaint in depth and with liberality to ascertain whether a fundament of a cause of action may be gleaned even from an obscure statement of claim," Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (citation omitted), we consider the complaint as one asserting a cause of action for a violation of Jabez's due process rights. A-3871-19 6 Jabez's due process claim is founded solely on a claimed lack of notice of

its tax liability based on Newark's failure to send the tax bills to Jabez's correct

address. A due process analysis is required upon a finding that a statute affects

a significant property interest. See e.g., Sherwood Ct. v. Borough of S. River,

294 N.J. Super. 472, 481-82 (App. Div. 1996) (applying due process analysis to

a statutory lien under N.J.S.A. 40:62-14 securing payment of unpaid utility

charges). Here, a due process analysis is required because imposition of the tax

lien resulted in Jabez's obligation to pay interest on the delinquent taxes as well

as the costs for the attorney's fees.

Analysis of the due process claim requires consideration of the three

factors in Mathews v. Eldridge, 424 U.S. 319, 335 (1976): (1) "the private

interest that will be affected by the official action"; (2) "the risk of an erroneous

deprivation of such interest through the procedures used, and the probable value,

if any, of additional or substitute procedural safeguards"; and (3) "the

Government's interest, including the function involved and the fiscal and

administrative burdens that the additional or substitute procedural requirement

would entail." See also Connecticut v. Doehr, 501 U.S. 1, 9-18 (applying the

Mathews factors to a claim a statute authorizing prejudgment attachment of real

estate without prior notice or hearing, and without a requirement that the

A-3871-19 7 individual or entity seeking the attachment post a bond, violates the property

owner's due process rights).

In Sherwood Ct., the plaintiff owners of an apartment complex claimed

they were denied due process by the imposition of a lien under N.J.S.A. 40:62 -

14 for unpaid municipal electric bills. 294 N.J. Super. at 475-76. The statute

provided for municipal liens against property and premises for unpaid utilities

charges, for the assessment of interest on the liens, and for the collection of the

sums due under the liens "in the same manner as arrearages of taxes." N.J.S.A.

40:62-14. The plaintiffs claimed they were denied due process because the

utility bills had been sent to their tenants, and therefore they had not been

provided notice of the amounts due prior to the imposition of the statutory lien

on their property. 294 N.J. Super. at 480-84.

We applied the Mathews standards to determine whether "N.J.S.A. 40:62-

14[,] which authorizes municipal liens against property and premises where such

light, heat or power is furnished," violated the due process rights of the plaintiff

property owners against whose property the statutory lien was imposed. Id. at

480-84. Under the first Mathews factor, we found the property owners had a

"significant property interest at stake." Id. at 483. That is because statutory

liens burden a title to property. See Doehr, 501 U.S. at 12 (explaining "even the

A-3871-19 8 temporary or partial impairments to property rights that attachments, liens, and

similar encumbrances entail are sufficient to merit due process protection ").

We further determined under the second prong of the Mathews standard

that there was "minimal opportunity for error" because there was no uncertainty

concerning the amount of the lien; the lien was based on a "sum certain" in the

amount of the unpaid utilities charged. Sherwood Ct., 294 N.J. Super. at 483.

We found under the Mathews standard's third prong that "the government and

municipal utility authority also have significant interests" in collecting the sums

due for "unpaid utilities charges" because, by doing so, the taxpayers are

"prevent[ed] . . . from bearing the burden." Ibid.

Based on those findings, we concluded the plaintiff property owners were

not deprived of due process by the imposition of the statutory lien under N.J.S.A.

40:62-14. Id. at 484. We found "the notice requirement in tax statutes satisfies

any due process concerns that a taking of the property could occur without

notice," ibid., even though the property owners did not receive the utility bills

in the first instance. We also found it was "obvious [to the property owners]

that tenants need electricity, and the government must be paid for providing it,"

and that the property owners were "in the best position to address the concern

of unpaid electric charges" by their tenants. Ibid. We held that "the notice

A-3871-19 9 requirements for the lien which parallel the tax statute's requirements are

sufficient to withstand a due process challenge." Ibid.

Our reasoning in Sherwood Ct. applies with syllogistic precision here.

Like the property owners in Sherwood Ct., under the first prong of the Mathews

standard, Jabez has a significant property interest at stake in the imposition of

the tax lien for the unpaid taxes on its Newark property. See id. at 483.

Under the second prong of the Mathews standard, there is "minimal

opportunity for error here." Sherwood Ct., 294 N.J. Super. at 483. The amount

of taxes due from Jabez is a sum certain, the interest charged is set by statute,

and the amount of attorney's fees charged is not disputed by Jabez. In sum,

Jabez neither points to, nor claims, there was any opportunity for error in the

calculation of the taxes due, or the interest and fees for which it paid to redeem

the tax lien, and for which it seeks damages.

Under the Mathews standard's third prong, Newark has a significant

interest in the collection of municipal real estate taxes from each of its property

owners. See McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, 496

U.S. 18, 37 (1990) (explaining "government's exceedingly strong interest in

[the] financial stability" obtained through the timely collection of taxes);

Varsolona v. Breen Cap. Servs. Corp., 180 N.J. 605, 621 (2004) (explaining the

A-3871-19 10 importance of the reduction of administrative costs and importance of regular

cash flow to the municipality); Schneider v. City of E. Orange, 196 N.J. Super.

587, 595 (App. Div. 1984) (noting municipalities have a "significant interest" in

"receiving timely payment of taxes").

We find here, as we did in Sherwood Ct., the taxpayer had adequate notice

of its tax liability such that the imposition of the tax lien, and the resulting

obligation to pay interest and fees, did not violate any due process requirements.

The plain language of N.J.S.A. 54:4-64(a)(3) imposes a statutory duty on every

taxpayer to determine their own real estate tax obligations. The statute further

instructs the taxpayer that municipal real estate tax liability "shall not be affected

by" a failure "to receive a tax bill." N.J.S.A. 54:4-64(a)(3). We have held that

under N.J.S.A. 54:4-64(a)(3), "property owners are charged with an affirmative

duty . . . to seek out their tax assessments" and "[t]heir failure to do so . . . must

be considered a result of their own inaction." Appeal of Twp. of Monroe from

Determination of Loc. Fin. Bd., 289 N.J. Super. 138, 147 (App. Div. 1995).

Jabez was not denied due process by Newark's failure to mail the tax bills

to Jabez's correct address. N.J.S.A. 54:4-64(a)(3) provided statutory notice to

Jabez that it had an obligation imposed by law to determine its tax obligation

whether it received a tax bill or not.

A-3871-19 11 Although the motion court relied on N.J.S.A. 54:4-64(a)(3) as the basis

for its determination Jabez's claim did not allege a cause of action upon which

relief may be granted under Rule 4:6-2(e), Jabez does not cite to, or address, the

statute in its brief on appeal. Thus, Jabez does not directly challenge the motion

court's determination that the due process claim asserted in the complaint is

insufficient as a matter of law because Jabez had a statutory duty, separate from

any additional notice that might have supplied by its receipt of a tax bill, to

ascertain its municipal tax liability.

Jabez instead relies on cases wholly inapposite to any reasoned analysis

of the legal sufficiency of its asserted claim. For example, in support of his due

process argument, Jabez cites Berkeley Twp. v. Berkeley Shore Water Co., 213

N.J. Super. 524, 532 (App. Div. 1986), for the proposition that a municipal tax

office has the burden of sending notices to the proper address of record of the

property owner. Our decision in Berkeley has no application here. In Berkeley

we did not consider whether a taxpayer who failed to receive a tax bill had an

obligation under N.J.S.A. 54:4-64(a)(3) to independently ascertain a municipal

tax liability. We considered only whether a notice of foreclosure was properly

served in accordance with requirements of Rule 4:64-7(c) "[o]n each person

whose name appears as an owner in the tax foreclosure list at his [or her] last

A-3871-19 12 known address as it appears on the last municipal tax duplicate." Id. at 531.

Jabez does not argue that it failed to receive proper notice of the foreclosure

under Rule 4:64-7(c). Thus, its reliance on Berkeley is unavailing.

Jabez also relies on Twp. of Brick v. Block 48-7, 202 N.J. Super. 246

(App. Div. 1985), but that case also did not involve a claim similar to Jabez's

asserted cause of action here.2 In pertinent part, the issue in Brick was whether

a foreclosure complaint was properly served in accordance with N.J.S.A. 54:5-

104.42 and Rule 4:64-7 by mailing the complaint to the property owners "at their

'last known address as it appears on the last municipal tax duplicate.'" Id. at

247-48. Again, in Brick, we did not consider the issue presented here – whether

a property owner could properly claim a lack of notice of its tax liability based

on a failure to receive tax bills where N.J.S.A. 54:4-64(a)(3) imposes an

obligation on the property owner to determine its tax liability in the absence of

a tax bill. Thus, we are not persuaded Brick supports Jabez's due process claim.

In sum, we agree with the motion court that Jabez failed to state a due

process claim upon which relief may be granted. See R. 4:6-2(e). The claim is

2 Jabez relies on Center for Molecular Medicine v. Belleville Township, 18 N.J. Tax 215, 223 (Tax 1998), for the same proposition of law for which it cites Brick. We therefore need not address Molecular Medicine, other than to note it was reversed on other grounds in Center for Molecular Medicine v. Belleville Township., 19 N.J. Tax 193 (App. Div. 2000). A-3871-19 13 founded on the singular and incorrect premise that a municipal tax lien, with its

attendant interest and assessment of costs, could not be properly imposed

because Jabez did not receive tax bills from Newark. As we have explained,

Jabez had a statutory obligation under N.J.S.A. 54:4-64(a)(3) to ascertain its

own tax liability, such that its due process claim fails as a matter of law.

Any arguments made by Jabez we have not expressly addressed are

without sufficient merit to warrant discussion in a written opinion. R. 2:11-

3(e)(1)(E).

Affirmed.

A-3871-19 14