City of East Orange v. Township of Livingston, No. 000007-2012; Tax Court; opinion by Sundar, J.T.C.; decided and approved for publication January 31, 2013. DDS No. 35-5-8910 [25 pp.]

Defendant Township of Livingston imposed local property tax assessments on 40 properties used and known as the East Orange Water Reserve for tax years 2009 and 2010. It issued a tax sale notice in September 2010 against a 95.66-acre parcel of the reserve due to delinquent property taxes for the fourth quarter 2009. The tax sale was scheduled for October 2010.

Plaintiffs City of East Orange and the Board of Water Commissioners filed a complaint with the Superior Court in December 2010 seeking to enjoin the tax sale, asserting that (i) the assessments were grossly excessive and thus unconstitutional; (ii) the proposed sale violated the New Jersey Green Acres Land Acquisition and Recreation Opportunities Act, N.J.S.A. 13:8A-35 et seq.; and (iii) portions of the reserve were used for "public purposes" and statutorily tax-exempt under 54:4-3.3.

The Chancery Division enjoined Livingston from selling the tax-sale certificate or acting on the tax assessments. It then transferred the matter to the Tax Court. Both parties moved for summary judgment. Living-ston sought dismissal of the complaint for lack of subject-matter jurisdiction. East Orange claimed that for 2009 it never received the assessment notices because they were incorrectly addressed and that for tax years 2009 and 2010, the appeal deadline should be relaxed.

Held: The court does not have jurisdiction to determine the validity of the challenged assessments because plaintiffs failed to file timely challenges in the Tax Court, the incorrect mailing addresses on the 2009 notices of assessment were not a sufficient basis to excuse plaintiffs’ failure to timely file a challenge, and plaintiffs failed to challenge the 2010 assessments. Plaintiffs’ allegation that the assessments are unconstitutionally excessive and that portions of the assessed properties are exempt because they are used for a public purpose do not toll or waive the statute of limitations. However, plaintiffs’ allegation that the tax-sale certificate is void because it violates the Green Acres Act was timely filed in the Superior Court and will be decided by the Tax Court, to which it has been transferred.

In all cases, except revaluation, the deadline to file an appeal with the county board of taxation or the Tax Court is April 1 or 45 days from the date the bulk mailing of notification of assessment is completed, whichever is later. In a revaluation year, the deadline is May 1. Notices of assessment must be sent before Feb. 1 of each year. Where a taxpayer fails to receive such notice, courts have extended the appeal filing deadlines set in 54:3-21 because of due process concerns.

The court finds that Livingston established by a preponderance of evidence that the 2009 assessment notices for the reserve were properly bulk mailed to East Orange. However, East Orange provided credible evidence that establishes the notices were not delivered to the Water Commission or the city. Nonetheless, East Orange had actual notice of the assessments when the tax bills were received in June/July 2009 or, at the latest, in September 2009 when the executive director of the Water Commission met with the tax assessor. Yet it did not challenge the assessments until December 2010. The court says that while it was reasonable for the executive director to seek an explanation for the basis of the 2009 assessments from the assessor, nothing prevented East Orange from filing a complaint in the Tax Court and its decision to pursue negotiations and challenge the assessments only after the tax-sale certificate was issued and proposed to be sold does not warrant exercise of equity to extend the appeal deadline by more than one year, particularly since the Water Commission is a sophisticated taxpayer.

Based on the totality of circumstances, the court finds that East Orange is not entitled to a relaxation of the statute of limitations.

The court then considers East Orange’s argument that the statute of limitations should be waived because the assessments are challenged as being unconstitutional as grossly excessive and thus confiscatory and violative of its procedural and substantive due process rights.

The court reviews the case law relied on by East Orange and concludes that no where therein is there any ruling that the statute of limitations cannot apply when a taxpayer raises constitutional claims against an assessment. Nor do those cases deal with an untimely filed tax appeal. Moreover, since taxpayers routinely allege discrimination in their annual local property tax appeals, under East Orange’s theory, there would be no finality to these assessments. Such a result goes against the very reason for timely challenges.

The court concludes that East Orange’s allegation that the sheer quantum of the assessments is so grossly excessive that it amounts to an unconstitutional "taking" does not immunize the complaint from the application of the statute of limitations.

The court then says to the extent that East Orange posits that its partial public-purpose-exemption allegation renders the assessments void ab initio, which in turn renders 54:3-21 inapplicable, the court is bound by case law holding that government instrumentalities are not exempt from the statutory limitations period provided for appealing tax assessments.

Further, East Orange’s couching its relief in the form of a declaratory judgment does not provide grounds for the court to exercise jurisdiction. East Orange’s failure to timely file a 2009 appeal is not equitably excusable and it does not even allege lack of notice for tax year 2010. It had more than an adequate remedy to challenge the assessments by applying to either the county board of taxation or the Tax Court. Thus, although an action for declaratory relief generally does not have a prescribed statute of limitations, East Orange cannot use the declaratory relief to bypass the statute of limitations.

Finally, as to East Orange’s claim that Livingston’s issuance of the tax-sale certificate violates the Green Acres Act, the court says that since East Orange timely raised this issue in the Superior Court, which transferred the matter to the Tax Court in its entirety without any restrictions, the Tax Court will decide the issue.

For plaintiffs — Aaron Mizrahi (Schwartz Simon Edelstein & Celso). For defendants — Anthony J. Marchese (Nowell, Amoroso, Klein, Bierman).