No. 018815-2012

Sept. 29, 2017 (Date Decided)

Judge BIANCO

FOR PLAINTIFF: L. Jeffrey Lewis (McKirdy and Riskin, P.A., attorneys).

FOR DEFENDANT: Jason A. Cherchia (O’Donnell McCord, P.C., attorneys).

Defendant moved for summary judgment to dismiss plaintiff’s complaint, and plaintiff cross-moved for summary judgment in its complaint seeking a refund of taxes paid by mistake. Deerfield Developers, a non-party, applied to the township planning board for approval for a major subdivision on property adjacent to plaintiff’s business. After the subdivision was approved, plaintiff filed an adverse possession claim against Deerfield, claiming a portion of its property on the basis that it had used that portion of the lot for more than 30 years. The matter was settled by conveying the contested portion to plaintiff and conveying the remainder of the lot to the township for draining and conservation purposes for the proposed subdivision.

However, the township tax assessor erroneously listed plaintiff as owner of the entire lot and began sending tax bills for the entire lot. Plaintiff’s bookkeeper paid the bills for 10 years, mistakenly believing the tax bills were only for plaintiff’s portion of the lot. Plaintiff discovered the discrepancy and brought it to the township’s attention; the township informed plaintiff it would have to file a tax appeal for a refund. Plaintiff ceased paying taxes on the whole lot, but made payments under protest after the township sent delinquency notices. Thereafter, the township became the legal owner of the lot by dedication.

As for the taxes paid by plaintiff after the township was notified of the ownership error, the court ruled that plaintiff had paid taxes on the property of another by “mistake” as defined under N.J.S.A. 54:4-54. The court rejected the township’s assertion that plaintiff was fully aware of the ownership issue when it paid taxes on the lot for over 12 years, finding that plaintiff did not have actual knowledge that their assessment included property plaintiff did not own. The court ruled that refund of the taxes paid after notification to the township was mandatory under the statute, noting prior case law holding that the municipality and not the taxpayer should bear the burden of the clerical error. The court further ruled that plaintiff was entitled to a refund for taxes paid after 2009, but not before due to the applicable statute of limitations. Accordingly, the court granted plaintiff partial summary judgment.