JOVSIM, LLC VS. CITY OF NEW BRUNSWICK (TAX COURT TO NEW JERSEY) (CONSOLIDATED)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NOS. A-4832-18
A-4833-18

JOVSIM, LLC,

Plaintiff-Appellant,

v.

CITY OF NEW BRUNSWICK,

Defendant-Respondent.
___________________________

Submitted September 29, 2021 – Decided November 17, 2021

Before Judges Fuentes, Gilson, and Gummer.

On appeal from the Tax Court of New Jersey, Docket
Nos. 011827-2015 and 004211-2016.

Schneck Law Group, LLC, attorneys for appellant
(Michael I. Schneck and Kevin S. Englert, on the
briefs).

Hoagland, Longo, Moran, Dunst & Doukas, LLP,
attorneys for respondent (Richard J. Mirra, of counsel
and on the brief).

PER CURIAM
 These consolidated appeals arise out of a reassessment of the value of

property located in the City of New Brunswick (City) and a corresponding

increase in the taxes on that property in 2015 and 2016. Plaintiff Jovsim, LLC

appeals from an order by the Tax Court denying its motion for summary

judgment and holding that the reassessment was not an illegal spot assessment.

We affirm the judgment of the Tax Court.

I.

We take the facts from the record, which includes the materials submitted

on the motion for summary judgment and the subsequent trial in the Tax Court

on the valuation of the property. 1 The property is located at 66 Sicard Street and

is designated block 86, lot 35.02 (the Property). It is in a single-family and two-

family residential zone near the campus of Rutgers University. In 2010, the City

granted a use variance so that a private developer could construct an apartment

building for college students.

The Property consists of a three-story building with thirty-two two-

bedroom apartments and two one-bedroom apartments. It also has an

1
Plaintiff appeals from only the summary judgment order. Following the denial
of summary judgment, however, plaintiff continued to pursue its appeal in the
Tax Court and the action concluded with a valuation trial. Accordingly, the full
record is relevant to this appeal.
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underground parking garage. The Property is one of only a few privately owned

student-housing apartments in the City. Under a City ordinance, the Property is

exempt from rent control for thirty years from the date of its completion. The

same developer constructed a similar building for student housing located at 130

Easton Avenue, which was about a half a mile away from the Property.

In 2012, after the construction was finished, the City issued a certificate

of occupancy for the Property. At that time, the Property was assessed with a

value of $1,500,000. According to the City's tax assessor, that 2012 value

estimate was derived from income estimates provided by the developer and

rental data from competitive properties in the area.

In December 2014, plaintiff purchased the Property for $9,370,000. The

City's tax assessor became aware of that sale in March 2015. He investigated

the validity of the 2012 assessment, the validity of the sale, and the Property's

assessed value. The tax assessor obtained and reviewed actual data for two years

of the Property's operation. He also collected and compared rental rates from

other competing college rental properties in the area. Based on that review, the

tax assessor came to the belief that the assessment significantly undervalued the

Property. Accordingly, as authorized by a City resolution, the tax assessor asked

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the City's special tax counsel to file a tax appeal of the 2015 property tax on the

Property.

On March 30, 2015, the City filed a petition with the Middlesex County

Board of Taxation (the Tax Board), seeking an increase of the 2015 assessment

of the Property's value from $1,500,000 to $3,600,000. The City contended that

the Property was under-assessed and that $3,600,000 was an accurate assessment

after calculating 38.72 percent, the ratio under N.J.S.A. 54:1-35a to -35c for

2015, of $9,370,000, the recent sale price. At the same time the City filed an

appeal with the Tax Board concerning the Property, it also appealed the

assessments on eight other properties.

On June 12, 2015, the Tax Board conducted a hearing on the City's

assessment appeals. Plaintiff appeared with counsel, but the only witness who

testified was the City's tax assessor. That same day, the Board entered a

judgment increasing the assessment on the Property from $1,500,000 to

$3,500,000. The assessments on the other eight properties were increased by

way of settlement.

Plaintiff timely filed a complaint with the Tax Court in August 2015,

challenging the Tax Board's judgment for tax year 2015. The City filed an

answer and counterclaim. The counterclaim sought relief under N.J.S.A. 54:3-

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21 to increase the Property's assessment to its true value. That statute allows

either a taxpayer or a taxing district to appeal the assessed value of property.

Ibid.

For the tax year 2016, the City tax assessor set the assessment of the

Property's value at the same value of $3,500,000, acting in accordance with

N.J.S.A. 54:3-26. Plaintiff filed a direct appeal of the assessment for 2016 with

the Tax Court.

In June 2016, plaintiff moved for summary judgment in the Tax Court on

both of its appeals of the assessment for 2015 and 2016. Plaintiff sought to have

the Tax Court vacate the Tax Board's judgment for the 2015 tax year, contending

that the reassessment was an illegal spot assessment based purely on the sale

price of the Property in December 2014. Plaintiff also argued that the 2016

assessment should be rolled back since it was carried forward from the 2015

reassessment. In addition, plaintiff moved to dismiss the City's counterclaim,

arguing it was untimely and had not been pled before the Tax Board.

In an order and opinion issued January 24, 2017, the Tax Court denied

plaintiff's request for summary judgment. The Tax Court found that the City's

tax appeal to the Tax Board was not an illegal spot assessment. While noting

that the December 2014 sale of the Property "undoubtedly had a role to play in

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the City's appeal challenging the 2015 assessment," the Tax Court reasoned that

it was not an illegal spot assessment because the validity of the reassessment

was left to the Tax Board. Instead, the Tax Court found that the assessor was

appropriately concerned about the Property's under-assessment because of the

sale and noted the Property was a new kind of student housing in the City.

The Tax Court also found that the lack of a revaluation for nearly a quarter

of a century (the City's last city-wide revaluation was in 1991) did not establish

that the assessment was a spot assessment. The court reasoned that such a

holding would effectively nullify the statutory authority in N.J.S.A. 54:3-21,

which allows taxing districts to appeal a property's assessment. Finally, the Tax

Court reasoned that accepting plaintiff's position would entitle plaintiff to pay

less than its fair share of taxes until the City undertook a revaluation of the

property values in the entire City.

The Tax Court consolidated both matters, and plaintiff moved for

reconsideration of the denial of summary judgment, contending that the Tax

Court had failed to consider our Supreme Court's decision in Township of West

Milford v. Van Decker, 120 N.J. 354 (1990). The Tax Court denied that motion

and issued an opinion on July 25, 2017, and an order on August 4, 2017. The

Tax Court pointed out that it did not ignore Van Decker. Instead, it had included

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Van Decker as part of an in-depth analysis of Borough of Freehold v. WNY

Properties L.P./Post & Coach, 20 N.J. Tax 588 (Tax 2003).

Following the denial of plaintiff's motion for reconsideration, the parties

engaged in additional discovery, and a valuation trial was conducted in May

2019. At that trial, both parties presented testimony from real estate appraisal

experts. After hearing the evidence, the Tax Court found that the Property's true

value was $7,776,799 for 2015 and $8,176,735 for 2016. The court placed its

reasons for that ruling on the record on May 28, 2019. That same day, the Tax

Court entered orders affirming the 2015 and 2016 assessments. On July 25,

2019, the Tax Court issued a written supplemental decision as well as a corrected

judgment for the 2015 tax year to reflect a value of $3,011,000.

Plaintiff filed notices appealing both the 2015 and 2016 tax year

judgments. We consolidated those appeals.

II.

On appeal, plaintiff makes two arguments contending that the Tax Court

erred in failing to grant it summary judgment because (1) the reassessment was

an unconstitutional spot assessment; and (2) the City's tax assessor violated

N.J.S.A. 54:4-23 by not undertaking a reassessment of all under-assessed

properties and submitting a compliance plan. We disagree and affirm.

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 We review the Tax Court's decision denying summary judgment de novo

and apply the same legal standards employed by that court. Waksal v. Dir., Div.

of Tax'n, 215 N.J. 224, 231-32 (2013). "[W]hether there exists a genuine issue

with respect to a material fact challenged [on a motion for summary judgment]

requires the motion judge to consider whether the competent evidential materials

presented, when viewed in the light most favorable to the non-moving party . . .

are sufficient to permit a rational factfinder to resolve the alleged disputed issue

in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142

N.J. 520, 523 (1995). Although the "factual findings of a Tax Court judge are

entitled to deference because of that court's expertise in the field, the judge's

interpretation of a statute is not entitled to such deference and is subject to our

de novo review." Advance Hous., Inc. v. Twp. of Teaneck, 422 N.J. Super. 317,

327 (App. Div. 2011).

1. A Spot Assessment

The New Jersey Constitution mandates that property "shall be assessed

for taxation under general laws and by uniform rules . . . according to the same

standard of value . . . ." N.J. Const. art. VIII, §1, ¶ 1. Accordingly, "[e]quality

of treatment in sharing the duty to pay real estate taxes is a constitutional right."

Murnick v. City of Asbury Park, 95 N.J. 452, 458 (1984).

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 A spot assessment is the unconstitutional and discriminatory practice of

singling out for reassessment a particular property or group of properties while

other properties are not reassessed. Van Decker, 120 N.J. at 357; Schumar v.

Borough of Bernardsville, 347 N.J. Super. 325, 330 (App. Div. 2001). In Van

Decker, the municipal tax assessor increased the appraised value of a property

to reflect the recent purchase price. 120 N.J. at 357. The assessor also increased

the appraised value of 346 other properties that had been sold in the town that

year. Id. at 359. Our Supreme Court held that that practice constituted a spot

assessment that violated both the uniformity clause of the New Jersey

Constitution and the Equal Protection clause of the federal Constitution. Id. at

362-63. The Court explained:

By singling out for reassessment only that small group
of taxpayers who purchased homes in 1984 while
leaving undisturbed the assessments of other property
in the class, West Milford deviated from the well-
established assessment policy of the State. Such spot
assessments known as the "welcome stranger" pattern,
are commonly recognized as intentional discriminatory
practices.

[Id. at 361.]

It is arbitrary and intentional discrimination that is unconstitutional. Id.

at 362. Tax districts can conduct reassessments for certain properties in years

when there is no district-wide reevaluation. Ibid. For example, a property can

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be reassessed when it has been improved or a study shows the property is part

of a class of under-assessed properties. Ibid. "However, under no circumstances

can appraised valuation of property be increased merely because it has been

sold." Ibid.

Determining whether there has been a spot assessment is fact-sensitive

and finding a spot assessment is rare. Corrado v. Twp. of Montclair, 18 N.J.

Tax 200, 202 (Tax 1999); City of Elizabeth v. 264 First St., LLC, 28 N.J. Tax

408, 454 (Tax 2015). The focus is on whether there are legitimate reasons apart

from the sale of the property for the reassessment. Van Decker, 120 N.J. at 362;

compare Brunetti v. Cherry Hill Twp., 21 N.J. Tax 80, 86 (App. Div. 2002)

(holding adequate independent basis existed for reassessment when assessor

discovered property did not contain wetlands that previously served to reduce

its valuation, a "distinct and definable factor that could significantly affect

property value for tax purposes"), with Centorino v. Tewksbury Twp., 347 N.J.

Super. 256, 266-67 (App. Div. 2001) (finding spot assessment discrimination

and no legitimate non-sales related justifications warranting increase in

appraised valuation when city decided property was wrongfully classified only

after it was sold and without an original property record card). If the

reassessment was based on "independent non-sales-related considerations," the

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assessment is not an unconstitutional spot assessment. Brunetti, 21 N.J. Tax at

84.

The sale of plaintiff's Property was not the sole reason for the

reassessment. The City tax assessor certified, without contradiction from

plaintiff, that the apartment building was recently constructed in 2012 and was

unique as a student-housing apartment building. The assessor also analyzed the

recent income information from the Property and compared the Property to other

nearby apartments. Those facts establish that the reassessment was not based

solely on the sale in December 2014; rather, the reassessment was based on the

analysis of the improvements to the Property and the under-assessment of the

Property in 2012.

Plaintiff argues that the issue presented is a pure question of law based on

undisputed facts. It assumes that the reassessment was based solely on the sale

of the Property in December 2014. The record, however, refutes plaintiff's

position. The record was developed both on the appeal to the Tax Board and on

plaintiff's appeal to the Tax Court. Indeed, following the denial of summary

judgment by the Tax Court, the matter proceeded to a valuation trial where both

plaintiff and the City presented expert testimony and the Tax Court made

findings of fact and conclusions of law. Consequently, plaintiff cannot ask us

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to simply ignore the complete record and focus on the arguments it made in

moving for summary judgment.

Moreover, the reassessment was not a unilateral act by the City tax

assessor. Instead, the City appealed to the Tax Board and the Board conducted

a hearing. Importantly, it is not merely the appeal to the County Board that

makes the reassessment legitimate. It is the testimony of the City's tax assessor

establishing independent considerations apart from the recent sale of the

Property that supports the legitimacy of the reassessment.

In that regard, we note that the Tax Court followed the holding in WNY

Properties, 20 N.J. Tax at 604-05, where the Tax Court found that a municipal

appeal of an assessment is not the equivalent of an assessment by the tax

assessor. A municipal appeal "is a claim that a property has been under-

assessed, and a request for relief from [the Tax Court] in the form of a

determination as to the property's true value." Id. at 605. But "[i]n any appeal,

regardless of by whom made, [the Tax Court] is required to 'apply its own

judgment to valuation data submitted by experts in order to arrive at a true value

and find an assessment' for the subject property." Ibid. As already noted, there

must be legitimate reasons apart from a recent sale to establish that a

reassessment is lawful. See Van Decker, 120 N.J. at 362; Brunetti, 21 N.J. Tax

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at 84. While the record shows that the City's tax assessor began to investigate

the value of the Property because of the December 2014 sale, the decision to

seek a reassessment was based on other legitimate considerations.

Plaintiff also argues that the reassessment was impermissible in the

absence of a city-wide reassessment. Plaintiff points out that the City

implemented a municipal-wide revaluation in 1991 and did not conduct another

revaluation until 2017. A periodic revaluation of all real property in a tax district

is required to maintain assessments at true value and to achieve tax equality.

Keane v. Twp. of Monroe, 25 N.J. Tax 479, 493 (Tax 2010). Nevertheless, even

when a district-wide revaluation has not occurred, a property can still be

reassessed if there are legitimate reasons for the reassessment apart from the sale

of the property. Van Decker, 120 N.J. at 362. See also Mountain View Crossing

Invs., LLC v. Twp. of Wayne, 20 N.J. Tax 612, 620 (Tax 2003), aff’d, 21 N.J.

Tax 481 (App. Div. 2004). We agree with the Tax Court that requiring a

reassessment to be undertaken only in connection with a district-wide

revaluation would effectively nullify N.J.S.A. 54:3-21, which grants tax districts

the right to appeal assessments to ensure that taxpayers are paying their fair

share of taxes.

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 2. N.J.S.A. 54:4-23

Plaintiff next asserts that the Tax Court erred in not granting it summary

judgment because the tax assessor violated N.J.S.A. 54:4-23 by not undertaking

a partial reassessment of all under-assessed properties in the City and submitting

a compliance plan reflecting that reassessment. We disagree.

N.J.S.A. 54:4-23 provides, in relevant part:

[W]hen the assessor has reason to believe that property
comprising all or part of a taxing district has been
assessed at a value lower or higher than is consistent
with the purpose of securing uniform taxable valuation
of property according to law for the purpose of taxation,
or that the assessment of property comprising all or part
of a taxing district is not in substantial compliance with
the law and that the interests of the public will be
promoted by a reassessment of such property, the
assessor shall, after due investigation, make a
reassessment of the property in the taxing district that
is not in substantial compliance, provided that (1) the
assessor has first notified, in writing, the mayor, the
municipal governing body, the county board of
taxation, and the county tax administrator of the basis
of the assessor's determination that a reassessment of
that property in the taxing district is warranted and (2)
the assessor has submitted a copy of a compliance plan
to the county board of taxation for approval.

A compliance plan is required when all or part of a taxing district is under-

or over-assessed in violation of the principals of uniformity of taxation. Metz

Fam. Ltd. P'ship v. Twp. of Freehold, 30 N.J. Tax 513, 523 (Tax 2018). The

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assessment of a single property does not always require the approval of a

compliance plan under N.J.S.A. 54:4-23. 264 First St., 28 N.J. Tax at 417.

Instead, the reassessment of a single property, if done properly, is consistent

with the assessor's obligation to maintain the assessment list on an annual basis.

See Tri-Terminal Corp. v. Borough of Edgewater, 68 N.J. 405, 413-14 (1975);

Regent Care Ctr., Inc. v. City of Hackensack, 362 N.J. Super. 403, 411-12 (App.

Div. 2003).

In making this argument, plaintiff relies on 264 First St., where the County

Board of Taxation invalidated the assessment of 212 properties because the

assessor did not follow procedural safeguards before or after assessment,

including failing to submit a compliance plan in accordance with N.J.S.A. 54:4-

23. 28 N.J. Tax at 417. The Tax Court upheld that ruling but noted that a

compliance plan is not always required "in cases affecting changes to only a

single or a limited number of property assessments in a taxing district." Id. at

431. Unlike in 264 First St., the City appealed eight other properties for

reassessment along with plaintiff's Property. None of those properties had

characteristics like plaintiff's Property. Consequently, there has been no

showing that the City assessor violated N.J.S.A. 54:4-23.

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 In summary, we affirm the orders of the Tax Court dated January 24, 2017,

denying summary judgment, and August 4, 2017, denying plaintiff's motion for

reconsideration. Because plaintiff has not appealed from the corrected judgment

entered on July 25, 2019, concerning tax year 2015, or the judgment entered on

May 28, 2019, concerning tax year 2016, those judgments remain in place.

Affirmed.

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