Our second installment from the Tax Court's busy first week of 2021 is a twist on an exemption opinion penned by Presiding Tax Court Judge Mala Sundar, P.J.T.C. The case, Township of Freehold v. Centrastate Healthcare Services, Inc., Nos. 000047-2016 & 000048-2016 (Tax Court January 5, 2021) marks further fallout from the Tax Court's opinion in AHS Hospital v. Morristown, 28 N.J. Tax 456 (Tax 2015), though this time falling in the favor of the taxpayer. Let's dig in a little to this one.
First, a bit of history. The subject property was transferred to a for-profit entity in 2008, though still used as a clinic for indigent patients. The municipality filed an appeal from the "failure to impose" an omitted assessment for 2014 and 2015. The municipality initially moved for summary judgment on the grounds that a for-profit entity was not eligible for a tax exemption. The Tax Court initially denied that motion, and then later granted it, leaving open the issue of valuation for trial. After a change in counsel, the taxpayer moved for reconsideration of the grant of partial summary judgment rescinding the exemption on the grounds that the Tax Court's decision in another hospital exemption case mandated a dismissal, namely Borough of Red Bank v. RMC-Meridian Health, 30 N.J. Tax 551 (Tax), motion for leave to appeal den., 238 N.J. 455 (2019). In that case, the Tax Court found that a similar municipal appeal had to be dismissed, as the court lacked jurisdiction to consider the appeals. The court held that the municipality should have filed an appeal under N.J.S.A. 54:3-21 from the original assessment, and not from a failure to impose an omitted assessment.
With that background, the outcome of the case was straightforward. Because the statute for the termination of an exemption requires the omitted assessment to be imposed in the year that the change prompting the termination occurs, the court found that there was no basis for reliance upon the standard omitted assessment procedure in a subsequent year. Rather, since the exemption had been granted for that tax year, there was no other change at the property and the township had not filed a timely appeal, the taxpayer was entitled to rely on that exemption. Since the valuation claims could also not survive, the Tax Court directed the entry of judgment dismissing the appeals with prejudice.
While the rest of us were preoccupied with goings on elsewhere, the New Jersey Tax Court was quietly working away, bringing in 2021 with a trio of published decisions.
The first, authored by Tax Court Judge Mary Siobhan Brennan, J.T.C., involved mutual appeals by taxpayer and municipality in 30 Journal Square Partners, LLC v. City of Jersey City, No. 009666-2020 (Tax Court December 30, 2020). In this case, the municipality filed its appeals in early June at the county tax board, and the taxpayer filed directly to Tax Court on the July 1 filing deadline. The taxpayer contacted the county board, requesting that the municipality's appeals be dismissed for lack of jurisdiction. While the municipality did not object to a dismissal, the City wanted the right to appeal from the county's judgment to the Tax Court. The taxpayer took the position that the county board was deprived of jurisdiction, and the judgment would be a nullity from which the municipality would not be able to appeal. The taxpayer moved before the Tax Court to have jurisdiction established in the Tax Court, and to required the City to withdraw its county appeals. While the municipality did not contest the Tax Court's jurisdiction, it did insist that the proper procedure was for its appeal to be dismissed without prejudice, to allow it to appeal to the Tax Court and preserve its right to appeal.
The Tax Court confirmed its exclusive jurisdiction, but permitted the City's county appeal to proceed on appeal to Tax Court. The court adopted the reasoning of the Tax Court in another unpublished opinion, wherein the Tax Court allowed an untimely counterclaim to proceed so as to "harmonize" the municipality's right to appeal and the exclusive Tax Court jurisdiction established in the statute.
Practically, the Court's ruling would allow filers to the county board to preserve their appeal in the event that their adversary files at the Tax Court and that party fails to file a timely counterclaim. However, this loophole is not consistent with the plain language of the statute, and it runs contrary to the principle of strictness required with regards to filing deadlines. However, until the Appellate Division, Supreme Court or Legislature speaks on the issue, it appears that county board filers will be protected from losing their claims if their adversary files at the Tax Court and they fail to file a timely counterclaim. You can read the full opinion here:
30 Journal Square Partners, LLC v. City of Jersey City
Stay tuned for parts 2 and 3, which involve a trial encompassing seven years of appeals, and the reconsideration of a reconsidered decision!