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Amses v. Borough of Avalon

A-2666-04T5 and A-2668-04T5 (N.J. Super. App. Div. 2006) (Unpublished)

TAXATION; APPEALS — State courts are prohibited from providing Section 1983 relief from unconstitutional tax assessments if state law provides adequate remedies and, in New Jersey, the remedies of filing a Chapter 123 tax appeal and the right to enforce constitutional rights in egregious cases of tax discrimination are deemed adequate to preclude Section 1983 relief.

Taxpayers claimed they were unfairly and inequitably treated by the municipality when their tax assessments increased while the assessments for other taxpayers were not increased. Their chief complaint was a claim for relief under 18 U.S.C.A. Section 1983 for compensatory and punitive damages. The taxpayers declined to pursue their state law remedies available in cases of unconstitutional tax assessments, and refused to pursue remedies available by appealing to the county tax board. Despite receipt of notice that the municipality would seek counsel fees and costs for pursuit of a frivolous lawsuit, the taxpayers persisted in their Section 1983 claim. Amendments to state law made during the litigation modified the municipality’s assessment maintenance program, thereby rendering moot the taxpayers’ challenges to the assessment maintenance program. The county tax board directed the municipality to conduct a revaluation and similarly mooted many of the taxpayers’ complaints. The lower court dismissed the taxpayers’ complaints and imposed counsel fees and costs on them for pursuing a frivolous claim.

All taxpayers are to be treated in a manner comparable to other similarly situated taxpayers so that the overriding principle is equity of treatment and burden. However, mathematical precision is not required and not every deviation is of constitutional significance. The Legislature adopted L. 1973, c. 123 (Chapter 123) in response to the judiciary’s invitation to adapt a means to resolve cases of tax discrimination. Chapter 123 establishes a ratio of assessed value to true value for all taxable properties in the taxing district. The ratio is: (1) computed according to an established formula; (2) is based on a study of sales recorded during a one-year sampling period: and (3) if the assessment falls within 15% of the average ratio for the taxing district, establishes a rebuttable presumption of the validity of the assessment. Chapter 123 therefore establishes both the right and the measure of relief. In egregious cases of discrimination, taxpayers can enforce their constitutional rights if they can show unequal treatment in violation of State law and a reasonable basis for compensation. However, aggrieved taxpayers do not have the right to seek Section 1983 compensatory and punitive damages. For purposes of determining Section 1983 relief, local property taxes actually constitute State taxes. According to the United States Supreme Court, state courts are prohibited from providing Section 1983 relief from unconstitutional tax assessments if state law provides adequate remedies. The remedies available in New Jersey, including a Chapter 123 tax appeal and the right to enforce constitutional rights in egregious cases of tax discrimination, are deemed adequate to preclude Section 1983 relief.

The taxpayers in this case argued that a tax appeal would be futile because such an appeal would only have addressed the assessment being appealed and not the claimed inequitable tax burden because the properties that were not assessed would not have been considered in the appeal. The Appellate Division disagreed and ruled that such properties would be considered in a tax appeal, provided the owners thereof received notice of the appeal. Rather than seek relief either in a Chapter 123 appeal or seek relief under State constitutional law for egregious cases of tax discrimination, these property owners persisted in pursuing only a Section 1983 claim for compensatory and punitive damages. Therefore, dismissal of the taxpayers’ complaint and imposition of counsel fees and costs was affirmed.


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