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Prime Accounting Department v. Township of Carney’s Point

421 N.J. Super. 199, 23 A.3d 427 (App. Div. 2011)

TAXATION; APPEALS — Even though a tax assessment complaint filed in the Tax Court clearly identifies the property in question and the issue presented, if it does not identify the taxpayer or property owner, the Tax Court will not have jurisdiction to hear the appeal.

A corporation operated a hotel on leased land. Despite it being the ground tenant responsible for property taxes, the municipal tax bill named the corporation’s accounting department as the taxpayer. The accounting department was not an independent legal entity. The lease was assigned to a successor tenant who thereby assumed the obligation to pay local property taxes. The new tenant was affiliated with the original tenant.

The municipality’s tax records were never revised to identify the new tenant as the taxpayer. Instead, they continued to name the accounting department of the previous tenant. A managing member of the new tenant requested an address change in the tax collector’s records, but never produced proof of its ownership of the lease as the tax collector had requested.

The new tenant protested a tax assessment in the Tax Court. The complaint named the previous tenant’s accounting department as plaintiff and owner, and properly identified the property’s correct block, lot, address, and municipality. The complaint did not identify the new tenant in any way; in fact, counsel merely stated that he was attorney for the plaintiff. The complaint was served upon the municipality’s clerk/assessor and on the administrator of the County Board of Taxation.

The municipality filed a motion requesting income and expense information from the previous tenant’s accounting department; the new tenant never received the request. When the motion went unanswered, the municipality filed a motion to dismiss. At a hearing, counsel of record for the previous tenant’s accounting department appeared to oppose the motion on behalf of the new tenant, which was not a named party. When it became apparent that the accounting department was neither the owner of the property nor the lessee, and wasn’t liable for the payment of local property taxes, the court deferred ruling on the municipality’s motion. Instead, it directed the parties to address the issue of standing in supplemental filings.

The new tenant then filed a motion for leave to amend the complaint to name itself as the taxpayer-plaintiff, as well as to oppose the motion to dismiss. In support, it produced lease documents to demonstrate it was the actual taxpayer. After argument, the Tax Court denied the motion to amend the complaint and dismissed the matter for lack of jurisdiction, finding the original complaint a nullity because the “accounting department” no longer had any legal interest in the property.

On appeal, the Appellate Division agreed with the Tax Court that the new tenant had failed to meet the statutory mandate of filing a timely complaint to challenge the tax assessment in the name of the true party in interest. By the time the new tenant realized the defect, the time to file an appeal had already passed. Thus the amendment would have had to relate back to the original complaint. The complaint was never properly before the Tax Court because the named plaintiff was not only a non-legal entity, but had no relation to the subject property. The naming of a new plaintiff was held to be more than a routine substitution. Thus, the Court found the lower court had properly denied the new tenant’s motion to amend. It found no compelling equity considerations to help the new tenant because there were neither extreme circumstances nor any detrimental reliance by the new tenant (who was aware of its own leasehold interest in the property). In the years prior to the dispute, the new tenant had been afforded ample opportunity to demonstrate, to the tax collector, its leasehold interest in the property. Presumably, this would have resulted in a correct tax listing. Further, counsel for the new tenant could have completed the case information statement in such a way to explain the new tenant’s true interest.


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