N.J. Appellate Court: Third-Party Tax Appeals Are Not “an Issue of Public Interest”
Last month, the N.J. Appellate Division decided a case involving the constitutionality of a newly amended statue that eliminates third-party appeals of tax assessments and a property’s tax-exempt status. In particular, the statute in question, N.J.S.A. 54:3-21(a), prohibits a taxpayer from appealing the tax-exempt status or assessment of property they do not own to the county board of taxation or the Tax Court. (Emphasis added).
The plaintiffs in the matter consisted of a non-profit corporation that “engage[s] in issue advocacy, education[,] and outreach” and provides assistance to New Jersey residents, a non-profit union that represents education workers in New Jersey, and two induvial tax payers from South Brunswick (collectively, “plaintiffs”). The non-profit plaintiffs alleged that “they are harmed by the statute because it reduces public revenues and, consequently, public funds that could be used to aid education.” Likewise, the individual taxpayer plaintiffs alleged that “they are harmed by the amended statute because they cannot challenge the exempt status of hospitals in their county and the exempt status of undeveloped land adjacent to their property. They further allege[d] the statute as amended will cause an increase in their property taxes.”
Plaintiffs filed a four-count verified complaint in the Tax Court. The count at issue in the Appellate Division, count four, “alleged that prohibiting a taxpayer’s ability to challenge the tax exemption status or assessment of a property they did not own was unconstitutional under Article I, Paragraph 18 of the New Jersey Constitution and the First Amendment of the United States Constitution (collectively referred to as the “Petition Clauses”), and Article VI, Section 5, Paragraph 4 of the New Jersey Constitution (the Prerogative Writs Clause).”
Thereafter, the matter was transferred to the Superior Court, Law Division, and several parties were allowed to participate in arguments as amicus curiae. The State moved to dismiss the complaint on the grounds that “the amended statute did not bar a third party from filing an action in lieu of prerogative writs in the Superior Court under Rule 4:69. Therefore, a third party continues to have an avenue for relief regarding the taxation of a property it did not own.” Plaintiffs “cross-moved for summary judgment and moved for leave to amend their complaint to include a claim that defendants had violated the New Jersey Civil Rights Act (CRA), N.J.S.A. 10:6-1 to -2.”
The trial court ultimately granted The State’s motion to dismiss and denied plaintiffs’ cross-motion for summary judgment and motion for leave to amend their complaint. The trial court found that the claims under count four were moot because the parties and amici agreed that a local property tax appeal could be pursued under Rule 4:69. Therefore, the trial court held there was no justiciable issue, and it did not have to determine the constitutionality of the amended statute.
On appeal, the Court agreed with the trial judge and affirmed the finding that was no controversy for the court to decide after the concession that individuals can still pursue their third-party claims in the Superior Court under Rule 4:69. The Court also declined to enter declaratory judgment finding that a taxpayer can file a third-party appeal in Superior Court since it found that the statute is clear and unambiguous. The Court also opined that a declaratory judgment would have amounted to an impermissible “advisory opinion” since there was no issue in dispute and “plaintiffs have not presented an issue of public interest warranting the need to educate the public on a matter about which there is no dispute among the parties.”
This case highlights an important PSA for N.J. residents: if a taxpayer intends to appeal the tax-exempt status or assessment of property that he or she does not own, they must do so in the Superior Court, Law Division pursuant to Rule 4:69. Under these circumstances, the county board of taxation or the Tax Court is the improper venue. If you believe your property was incorrectly assessed or would like to challenge a tax assessment, please contact McKirdy, Riskin, Olson & DellaPelle, P.C. to speak with an experienced property tax appeal attorney who can guide you through every stage of the litigation process. To view the full New Jersey Citizen Action v. Murphy, et al. decision, click here.
