NATIONSTAR MORTGAGE, LLC VS. FARAH YUCEYUKSEL DONTAS(F-47496-09, MORRIS COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: September 6, 2017
• Docket: A-2217-14T2
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-2287-14T4

PATERSON CITY,

Plaintiff-Respondent,

v.

PATERSON COALITION FOR HOUSING, INC.,

Defendant-Appellant,

and

ROYAL TAX LIEN SERVICES, L.L.C.,

Third-Party Defendant- Respondent. __________________________________

Argued January 25, 2017 – Decided February 23, 2017

Before Judges Simonelli and Carroll.

On appeal from the Tax Court of New Jersey, Docket No. 11021-2008.

Kevin Weinman argued the cause for appellant (Belsole & Kurnos, LLC, attorneys; Mr. Weinman, on the brief).

Douglas E. Burry argued the cause for respondent Paterson City (Saponaro Law Group, attorneys; Justin J. Yost, on the brief). Robert W. Keyser argued the cause for respondent Royal Tax Lien Services, L.L.C. (Taylor and Keyser, attorneys, join in the brief of respondent Paterson City).

PER CURIAM

Defendant Paterson Coalition For Housing, Inc. (Coalition)

appeals from the December 5, 2014 Tax Court order, which granted

the motion of plaintiff Paterson City (City) to voluntarily dismiss

its complaint with prejudice pursuant to Rule 4:37-1(b), and denied

Coalition's cross-motion to invalidate a tax sale certificate,

among other things. We affirm.

We derive the following facts from the record. Coalition, a

non-profit corporation, owned property in Paterson (the property).

In October 2007, Coalition applied for a property tax exemption

based on its status as a charitable organization. The tax assessor

denied an exemption. Coalition filed an appeal with the Passaic

County Board of Taxation (Board). On June 24, 2008, the Board

affirmed the assessment of the property at $1,583,000 and entered

judgment for an exemption, but only for one year from the second

half of tax year 2008 to the first half of tax year 2009 (the one-

year exemption).

In August 2008, the City filed a complaint in the Tax Court,

appealing the one-year exemption. Coalition did not file a

2 A-2287-14T4 complaint, answer, or counterclaim in the Tax Court challenging

the one-year exemption.

For the tax years 2009 to 2012, the City assessed and taxed

the property as non-exempt. Coalition paid the property taxes for

the first two quarters of tax year 2008, but paid nothing

thereafter. Coalition did not file an appeal of the non-exempt

tax assessments for the tax year 2009 or thereafter.

On June 25, 2009, the City held a tax sale of the property.

Defendant Royal Tax Lien Services, LLC (Royal) purchased a tax

sale certificate. On March 21, 2012, Royal filed a complaint

against the City, Coalition, and other defendants in the Superior

Court, Chancery Division, to bar the right of redemption and

foreclose on the property.

Coalition filed an answer in the foreclosure matter,

challenging the validity of the tax sale and tax sale certificate.

Coalition alleged that the City improperly included taxes for the

one-year exemption period in calculating the deficient property

taxes, and failed to give Coalition credit for taxes it paid for

the first and second quarters of tax year 2008.

Coalition subsequently filed a motion in the Tax Court, on

notice to Royal, to invalidate the tax sale certificate. On

October 19, 2012, the Tax Court entered a consent order permitting

Royal to intervene as a third-party defendant and file a

3 A-2287-14T4 counterclaim or third-party complaint. Royal filed no pleading,

and Coalition did not file a third-party complaint against Royal.

On May 3, 2013, the Tax Court entered an order denying Coalition's

motion without prejudice, finding that the court must first resolve

the City's appeal of the one-year exemption.

On February 6, 2014, the Chancery Division judge entered a

consent order, which deemed Coalition's answer in the foreclosure

matter to be non-contesting and returned the matter to the

Foreclosure Section for processing as an uncontested foreclosure.

The consent order did not transfer the matter to the Tax Court;

it merely stayed the filing of a motion to enter final judgment

until thirty days after final resolution of the City's Tax Court

appeal.

The City subsequently filed a motion in the Tax Court for

voluntary dismissal of the complaint with prejudice pursuant to

Rule 4:37-1(b). Coalition filed a cross-motion to: (1) invalidate

the tax sale certificate; (2) apply the Freeze Act to the two

assessment years succeeding the one-year exemption; (3) void the

one-year exemption; and (4) permit Coalition to contest the non-

exempt tax assessments for the tax years 2009 to 2012.

In a December 5, 2014 order, Tax Court Judge Kathi F. Fiamingo

granted the City's motion and denied Coalition's cross-motion. In

an oral opinion, the judge found that Coalition did not file an

4 A-2287-14T4 answer, counterclaim, third-party complaint, or a tax appeal

contesting the validity of the tax lien, tax sale certificate, or

non-exempt assessments for the tax year 2009 and thereafter. The

judge, thus, concluded that the court lacked jurisdiction to

consider the issues raised in Coalition's motion. The judge

determined that the only issue before her was the City's appeal

of the one-year exemption, and since the City's complaint was

dismissed with prejudice, the issue was resolved, the one-year

exemption was valid, and any taxes collected for the one-year

exemption period would be refunded. The judge emphasized that

Coalition was not without remedy, as it could contest the validity

of the tax lien and tax sale certificate before the Chancery

Division in the foreclosure matter.

Citing Boys' Club of Clifton, Inc. v. Jefferson Township, 72

N.J. 389 (1977) and County of Essex v. East Orange, 214 N.J. Super.

568 (App. Div.), certif. denied, 107 N.J. 120 (1987), Judge

Fiamingo found that Coalition was not entitled to relief under the

Freeze Act because it did not file appeals from the one-year

exemption and the non-exempt tax assessments for the tax year 2009

and therafter.

Lastly, citing F.M.C. Stores v. Borough of Morris Plains, 100

N.J. 418 (1985), and Lawrenceville Garden Apartments v. Township

of Lawrence, 14 N.J. Tax 285 (App. Div. 1994), the judge emphasized

5 A-2287-14T4 there must be strict adherence to statutory filing deadlines. The

judge found that Coalition's failure to file a timely appeal was

a "fatal jurisdictional defect," and the "failure to file a timely

complaint divest[ed] th[e] [c]ourt of jurisdiction even in the

absence of harm to the [City]." The judge concluded that the

court lacked jurisdiction to grant relief for the tax year 2009

and thereafter.

In a January 29, 2015 written amplification submitted

pursuant to Rule 2:5-1(b), Judge Fiamingo added that the City was

also entitled to voluntary dismissal pursuant to Rule 8:3-9.1 The

judge reiterated that Coalition did not file an answer,

counterclaim, third-party complaint, or a tax appeal contesting

the validity of the tax lien, tax sale certificate, or non-exempt

assessments for the tax year 2009 and thereafter. The judge also

factually distinguished Hackensack v. Bergen County, 24 N.J. Tax

390 (App. Div. 2009), from the facts in this case, and found the

holding therein did not apply here to grant Coalition relief under

the Freeze Act.

1 Rule 8:3-9 provides that "[w]hether or not a responsive pleading has been filed, a complaint or a counterclaim may be withdrawn at any time prior to the close of the proofs before the Tax Court and thereafter with leave of [c]ourt."

6 A-2287-14T4 The judge also found that even if the Freeze Act applied,

relief to Coalition was premature, as the Board's judgment granting

the one-year exemption was not final until after dismissal of the

City's complaint. Nevertheless, the judge concluded that

Coalition's failure to file an appeal from the denial of the

exemption for the tax year 2009 and thereafter "removed the issue

from being considered by [the] court."

On appeal, Coalition contends that the Tax Court had

jurisdiction under N.J.S.A. 2B:13-2 and -3(a) to resolve its

challenge to the validity of the tax sale certificate. Coalition

argues that the failure to file a formal pleading contesting the

validity of the tax sale certificate was insufficient grounds to

reject the challenge, and the issue was properly before the Tax

Court by virtue of both the consent order permitting Royal to

intervene and Coalition's motion to invalidate the tax sale

certificate.2 Coalition also contends that the Tax Court erred by

rejecting its claim under the Freeze Act, and it raises other

2 We decline to address Coalition's judicial estoppel argument, raised for the first time in its reply brief. Coalition did not raise this argument before the Tax Court, and it is not jurisdictional in nature nor does it present a matter of great public interest. Goldsmith v. Camden Cnty. Surrogate's Office, 408 N.J. Super. 376, 387 (App. Div.), certif. denied, 200 N.J. 502 (2009). Moreover, it is improper to raise issues for the first time in a reply brief that do not present a matter of great public interest. Goldsmith v. Camden Cnty. Surrogate's Office, 408 N.J. Super. 376, 387 (App. Div.), certif. denied, 200 N.J. 502 (2009).

7 A-2287-14T4 contentions relating to the tax sale certificate. All of

Coalition's contentions lack merit.

"The Tax Court is a court of limited jurisdiction." Prime

Accounting Dep't v. Twp. of Carney's Point, 212 N.J. 493, 505

(2013) (citing McMahon v. City of Newark, 195 N.J. 526, 546

(2008)). "In accordance with its constitutional authority to

'establish[ ], alter[ ] or abolish[ ] by law' courts of limited

jurisdiction, the Legislature created the Tax Court by statute in

1978." Ibid. (quoting N.J. Const. art. VI, § 1, ¶ 1; N.J.S.A.

2B:13-1). "Its jurisdiction is constrained by the language of its

enabling statutes." Ibid. "The Tax Court has the 'authority to

review actions or regulations with respect to a tax matter'

concerning state agencies and officials, county boards of taxation

and county and municipal officials." Ibid. (quoting N.J.S.A.

2B:13-2(a)). "In 1993, its jurisdiction was expanded to include

'actions cognizable in the Superior Court which raise issues as

to which expertise in matters involving taxation is desirable, and

which have been transferred to the Tax Court pursuant to the Rules

of the Supreme Court.'" Id. at 505-06 (quoting N.J.S.A. 2B:13-

2(b)); see also R. 8:2(a) (providing that "[t]he Tax Court shall

also have jurisdiction over any action cognizable in the Superior

Court that raises any issue as to which expertise in taxation is

desirable and that has been transferred to the Tax Court pursuant

8 A-2287-14T4 to Rule 4:3-4(a)" (emphasis added)); R. 4:3-4(a) (providing that

"[t]he [Superior] [C]ourt in which an action is pending may order

it transferred to the Tax Court provided that the principal issue

or issues raised therein are cognizable in that court.").

"The Tax Court also has jurisdiction 'over any other matters

as may be provided by statute.'" Id. at 506 (quoting N.J.S.A.

2B:13-2(c)). "It may exercise any powers that may be necessary

to effectuate its decisions, judgments and orders . . . and 'grant

legal and equitable relief so that all matters in controversy

between the parties may be completely determined.'" Ibid. (citing

N.J.S.A. 2B:13-2(d), -3(a)). "The Tax Court's judgments may be

directly appealed, as of right, to the Appellate Division." Ibid.

(citing N.J.S.A. 2B:13-4).

The procedure for filing tax appeals is as follows, in

pertinent part

[A] taxpayer feeling aggrieved by the assessed valuation of the taxpayer's property, or feeling discriminated against by the assessed valuation of other property in the county, or a taxing district which may feel discriminated against by the assessed valuation of property in the taxing district . . . may on or before April 1, or 45 days from the date the bulk mailing of notification of assessment is completed in the taxing district, whichever is later, appeal to the county board of taxation by filing with it a petition of appeal; provided, however, that any such taxpayer or taxing district may on or before April 1, or 45 days from the date the bulk

9 A-2287-14T4 mailing of notification of assessment is completed in the taxing district, whichever is later, file a complaint directly with the Tax Court, if the assessed valuation of the property subject to the appeal exceeds $1,000,000[.]

. . . .

If a . . . complaint is filed on April 1 or during the 19 days next preceding April 1, a taxpayer or taxing district shall have 20 days from the date of service of the . . . complaint to file a . . . counterclaim with the Tax Court[.]

[N.J.S.A. 54:3-21(a)(1).]

"Thus, a tax appeal [or counterclaim] must be filed on behalf of

an aggrieved taxpayer within the meaning of N.J.S.A. 54:3-21."

Prime Accounting Dep't, supra, 212 N.J. at 506. N.J.S.A. 54:3-

21(a)(1) does not permit the filing of a consent order or motion

as substitutes for a tax appeal or counterclaim. Even if it did,

the consent order and motion were both filed outside the statutory

deadline.

"The timeliness of a tax appeal is critical." Id. at 507.

"N.J.S.A. 54:3-21 imposes a strict deadline of 'April 1, or 45

days from the date the bulk mailing of notification of assessment

is completed in the taxing district, whichever is later[.]'" Ibid.

(quoting N.J.S.A. 54:3-21). "[B]oth appealing taxpayer and taxing

districts must adhere strictly to the deadlines prescribed by

statute. Failure to file a timely appeal [or counterclaim] is a

10 A-2287-14T4 fatal jurisdictional defect." F.M.C., supra, 100 N.J. at 425

(citation omitted).

Coalition failed to adhere to the strict deadlines prescribed

by N.J.S.A. 54:3-21. Coalition did not file a tax appeal or

counterclaim with the Tax Court challenging the one-year

exemption, the non-exempt assessments for the tax year 2009 and

thereafter, the tax lien, or the tax sale certificate. Its failure

to do so divested the Tax Court of jurisdiction to consider these

issues.

We reach the same conclusion as to the Freeze Act. The Freeze

Act provides, in pertinent part, as follows:

[T]he judgment of the county board shall be conclusive and binding upon the municipal assessor and the taxing district for the assessment year, and for the two assessment years succeeding the assessment year, covered by the judgment, except as to changes in value of the property occurring after the assessment date.

[N.J.S.A. 54:3-26.]

Construing the Freeze Act, our Supreme Court has found that a

"judgment with respect to valuation in one year 'shall be

conclusive and binding . . . for the assessment year and for the

[two] assessment years succeeding the assessment year covered by

the [County Board of Taxation's] final judgment[.]'" Boys' Club

of Clifton, supra, 72 N.J. at 405 (quoting Union Terminal Cold

11 A-2287-14T4 Storage Co. v. Spence, 17 N.J. 162, 167 (1954)). However, the

Freeze Act "has no application, either by its phraseology or its

obvious intent, to determinations of the tax exempt status."

Newark v. Fischer, 8 N.J. 191, 200 (1951); see also Boys' Club of

Clifton, supra, 72 N.J. at 405. The Court made clear that an

aggrieved taxpayer must file an appeal of the denial of that

status, "even though a judgment of exemption had been entered for

the prior year." Boys' Club of Clifton, supra, 72 N.J. at 405.

Because Coalition did not file an appeal from the denial of tax

exempt status for an additional two years, the Tax Court lacked

jurisdiction to consider this issue.

The order entered on December 5, 2014 is affirmed. The

parties may return to the Chancery Division to consider Coalition's

challenge to the validity of the tax lien and tax sale certificate.

We express no view as to the merits of that challenge.

Affirmed.

12 A-2287-14T4