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TAX COURT OF NEW JERSEY

Patrick DeAlmeida R.J. Hughes Justice Complex Presiding Judge P.O. Box 975 25 Market Street Trenton, New Jersey 08625-0975 (609) 292-8108 Fax: (609) 984-0805

April 26, 2012

Brian A. Pelloni, Esq. Wertheimer Pelloni, LLC 1500 Walnut Street, 22 nd Floor Philadelphia, Pennsylvania 19102

Michelle Banks-Spearman Assistant City Attorney City of Camden Office of the City Attorney City Hall, Suite 419 P.O. Box 95120

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Camden, New Jersey 08101-5120

Re: El Centro Comunal Borincano v. City of Camden Docket No. 000168-2011

Dear Counsel: This letter constitutes the court's opinion with respect to plaintiff's cross-motion for sanctions against defendant's counsel pursuant to R. 1:4-8 for making a false statement to the court in support of defendant's subsequently withdrawn motion to dismiss the Complaint. For the reasons stated more fully below, plaintiff's motion is denied because defendant's counsel withdrew the allegedly offending pleading within the cure period allowed by the rule. * I. Findings of Fact and Procedural History This letter opinion sets forth the court's findings of fact and conclusions of law on plaintiff's cross-motion. The following findings of fact are based on the certifications and exhibits submitted by the parties. R. 1:62(f). Plaintiff El Centro Comunal Borincano, a New Jersey non-profit corporation, owns real property in defendant City of Camden. The property is designated by the City as Block 177, Lots 47 through 53 and 68 and is commonly known as 438 Martin Luther King Boulevard. Plaintiff operates a children's day care center and educational facility on the property. Plaintiff acquired the property on May 19, 2003. Shortly after acquiring the property, plaintiff filed an application for an exemption from local property taxes pursuant to N.J.S.A. 54:4-3.6. The application was granted and the property was listed as exempt beginning in 2004. On January 29, 2010, a notice of property tax assessment was mailed to plaintiff. The notice listed an assessment for tax year 2010 identical to the assessment for tax year 2009 and noted that the local property tax paid on the property for tax year 2009 was $0. The notice did not state that the exemption on

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the property had been rescinded for tax year 2010. At some time during 2010, plaintiff received tax bills for the subject property. Plaintiff did not pay the taxes due because an officer of plaintiff believed the bills to be in error. On September 27, 2010, plaintiff received a letter from the Camden tax assessor reminding plaintiff to file a further statement by November 1st to continue the tax exemption for the upcoming 2011 tax year. This letter suggested that the property was exempt for tax year 2010. Plaintiff completed the further statement on October 19, 2010 and returned it to the tax assessor's office. Shortly thereafter, plaintiff was informed that the tax exemption for the subject property had been rescinded for tax year 2010. On October 26, 2010, plaintiff's counsel contacted the Camden tax assessor regarding the property. The tax assessor informed plaintiff's counsel that the Camden County tax administrator had directed him to revoke the exemption on the subject property. In a subsequent conversation with plaintiff's counsel, the tax administrator stated that she was unaware of the subject property and had not given the tax assessor any instructions regarding the tax exempt status of the property. On November 8, 2010, the tax assessor informed plaintiff's counsel in writing that "the Camden County Administrator ordered me to remove El Centro Day Care from their exempt status." The assessor stated that he was sending a copy of the notice to "Ms. Plaza," who he described as the Executive Director of the day care center. He concluded the letter as follows: "If you could forward to me the annual copies of a Certified Accounts Audit for two (2) years that Ms. Plaza sends to the State annually; I will discuss the audit with the County Tax Administrator for possible reinstatement of the exemption without the necessity of a County or State Appeal." This was the first and only written notice plaintiff received that the property's tax exemption had been revoked. The assessor's letter did not provide a reason for the revocation or cite the statutory authority for the county tax administrator to order an assessor to remove an exemption. Nor did the assessor explain how the law would allow the exemption to be reinstated without the necessity of an appeal to the county board of taxation or this court. On November 16, 2010, plaintiff responded to the assessor's request for information with several exhibits

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supporting the exempt status of the subject property. The assessor indicated that he would forward the materials to the county tax administrator for her review. On December 17, 2010, having received no response to several messages left for the assessor, plaintiff's counsel contacted the county tax administrator. The county tax administrator indicated that she had received no communication from the assessor and had had nothing to do with the revocation of the exemption on plaintiff's property. On December 23, 2010, plaintiff's counsel went to the office of the county tax administrator to file a Petition of Appeal challenging the revocation. An employee of the county board of taxation, after consulting with the county tax administrator, refused to accept the Petition of Appeal on the ground that it was untimely. Plaintiff's counsel immediately thereafter sent a copy of the Petition of Appeal to the county tax administrator, the Camden city clerk and tax assessor by certified mail. On December 29, 2010, plaintiff's counsel was informed by the county tax administrator in writing that the Petition to Appeal was rejected as untimely because it was filed after April 1, 2010. On February 10, 2011, plaintiff filed a Complaint in this court challenging the revocation of the exemption. The appeal was assigned docket number 000168-2011. Because the Complaint was filed during calendar year 2011, the docket number ends in 2011, even though the appeal concerns tax year 2010. This is relevant information in this instance, as will become apparent later in this opinion. The Complaint was served by plaintiff's counsel via first-class mail under three separate cover letters to the county tax administrator, the tax assessor and the city clerk. The record indicates that the Complaint was received by the county tax administrator on February 9, 2011. On February 16, 2011, the Clerk of the Tax Court sent the parties a notice that the Complaint had been docketed and assigned a docket number. The notice, which plainly states that it relates to "ASSESSMENT YEAR: 2010," was sent to Michelle Banks-Spearman, the Assistant City Attorney representing defendant in this matter. The tax assessor has certified that Ms. Banks-Spearman forwarded the docketing notice to him. On April 1, 2011, plaintiff filed a timely Petition of Appeal with the Camden County Board of Taxation with

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respect to tax year 2011. On June 21, 2011, a county board hearing on the tax year 2011 appeal took place in Camden City Hall. At the hearing Ms. Banks-Spearman acknowledged the pendency of a Tax Court Complaint with respect to the subject property. A recording of the hearing submitted to this court with the motion papers reveals confusion by all parties with respect to the tax year at issue in the pending Tax Court Complaint. On July 27, 2011, Ms. Banks-Spearman served on plaintiff's counsel a Request for Standard Interrogatories and Request for Inspection in the 2010 tax appeal. The documents reference docket number 000168-2011. On November 10, 2011, the City moved to dismiss the Complaint for untimely filing and failure to serve the Complaint on defendant. According to a certification of the tax assessor, the subject property was treated as exempt for 2009 and many prior years and "was returned to the tax rolls for the year 2010 after it was determined that Plaintiff was not entitled to a tax exemption." The assessor does not explain who made the determination to revoke the exemption on the subject property, nor does he provide the basis for the revocation. The assessor does not address his prior correspondence with plaintiff's counsel indicating that he was "ordered" to revoke the exemption by the county tax administrator or offer an explanation for why plaintiff had subsequently been asked by the assessor's office to submit a further statement in support of continuing the exemption if the exemption had been revoked several months earlier. According to defendant, plaintiff was put on notice that the exemption on its property was revoked when plaintiff received the notice of assessment card in January 2009, triggering the April 1, 2010 filing deadline established in N.J.S.A. 54:3-21. Defendant alleges that annual assessment notices are mailed only to nonexempt properties and that receipt of the card should have put plaintiff on notice that its property had lost its exemption. Plaintiff disputes that contention and plaintiff's counsel represented to the court at oral argument that his client was prepared to submit proof that plaintiff had received notice of assessment cards in the tax years for which an exemption was in place. The court need not resolve this discrepancy in order to decide plaintiff's cross-motion. The court notes, however, that the notice of assessment card for tax year 2010 does not state that the long-standing exemption for the subject property had been revoked. With respect to the alleged lack of service, defendant's assessor submitted a certification indicating that a search of his records determined that the assessor was not served with the Complaint in this matter. He certified that, despite receiving notice from the Tax Court Clerk that the tax year 2010 Complaint had been
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filed, he "did not realize that this was an appeal of 2010 taxes, as the appeal was out of time and the City had never received a copy of the complaint." He stated that he "was under the mistaken impression that the Tax Court appeal was an appeal of the 2011 tax assessment." The municipal clerk also submitted a certification in support of the City's motion stating that her office had no record of having received a copy of the Complaint in this matter. Ms. Banks-Spearman submitted a certification in support of defendant's motion to dismiss. She certified that she received a copy of the notice of the Tax Court Clerk that the Complaint in this matter had been docketed. She certified that she "did not realize that this was an appeal of the 2010 tax assessment until a couple of weeks ago." Ms. Banks-Spearman noted that the City received over 800 appeals to the county board of taxation and 90 appeals to the Tax Court with respect to tax year 2011. The tax year 2010 Complaint in this matter was filed in the same period as the numerous tax year 2011 matters involving the City. Ms. Banks-Spearman certified that she obtained a copy of the Complaint in this matter from the county tax administrator on October 31, 2011 and at that time realized that the appeal concerned tax year 2010. On November 16, 2011, plaintiff demanded in writing pursuant to R. 1:4-8 that defendant's counsel withdraw the motion to dismiss the Complaint. In particular, plaintiff demanded the production of evidence that Ms. Banks-Spearman, the county tax administrator, the tax assessor or the city clerk were unaware of the pending tax year 2010 appeal prior to October 31, 2011. On November 16, 2011, Ms. Banks-Spearman responded to plaintiff's counsel by stating that although she was aware that the Complaint in this matter had been filed she was under the mistaken impression that this matter concerned tax year 2011. Ms. Banks-Spearman suggested that the timing of the filing of the Complaint in February 2011 lead to her mistaken impression because the April 1, 2010 filing deadline for 2010 tax appeals had long since passed and appeals for tax year 2011 were being filed in the months leading to April 1, 2011. On November 28, 2011, plaintiff opposed the City's motion and cross-moved for an Order imposing sanctions on defendant's counsel pursuant to R. 1:4-8 for making a false statement to the court and failing to withdraw that statement when notified of its falsity. Counsel for the parties have represented to the court that a tax sale certificate was sold with respect to
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unpaid taxes on the subject property for tax year 2010. No documentary evidence has been introduced to support these representations. The court, however, has no reason to doubt counsel's credibility on this point. On December 2, 2011, at oral argument on the motions, defendant's counsel made an unexpected representation to the court. She reported that the Camden tax assessor "could not explain why" the exemption on the subject property was removed for tax year 2010 and that "the removal of the exemption was an error." In light of these admissions, Ms. Banks-Spearman reported that the assessor was prepared to restore the exemption on the subject property for tax year 2010 and that the City would pay the holder of the tax sale certificate to clear "wipe clean" the 2010 taxes for the property. Ms. Banks-Spearman stated that the City wished to withdraw its motion to dismiss the Complaint and suggested the entry of Judgment in plaintiff's favor. Plaintiff agreed to the entry of Judgment in its favor conditioned on the City being directed to satisfy all outstanding tax sale certificates relating to the subject property for tax year 2010. Plaintiff, however, elected not to withdraw its cross-motion for sanctions pursuant to R. 1:4-8. II. Conclusions of Law Rule 1:4-8 provides: The signature of an attorney or pro se party constitutes a certificate that the signatory has read the pleading, written motion or other paper. By signing, filing or advocating a pleading, written motion, or other paper, an attorney or pro se party certifies that to the best of his or her knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

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(3) the factual allegations have evidentiary support or, as to specifically identified allegations, they are either likely to have evidentiary support or they will be withdrawn or corrected if reasonable opportunity for further investigation or discovery indicates insufficient evidentiary support . . . .

A party may seek the imposition of sanctions for violation of R. 1:4-8(a). The rule requires notice of the intention to seek sanctions and an opportunity to withdraw the allegedly offending pleading:
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An application for sanctions under this rule shall be by motion made separately from other applications and shall describe the specific conduct alleged to have violated this rule. No such motion shall be filed unless it includes a certification that the applicant served written notice and demand pursuant to R. 1:5-2 to the attorney or pro se party who signed or filed the paper objected to. The certification shall have annexed a copy of that notice and demand, which shall (i) state that the paper is believed to violate the provisions of this rule, (ii) set for the basis for that belief with specificity, (iii) include a demand that the paper be withdrawn, and (iv) give notice, except as otherwise provided herein, that an application for sanctions will be made within a reasonable time thereafter if the offending paper is not withdrawn within 28 days of service of the written demand.

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No motion shall be filed if the paper objected to has been withdrawn or corrected within 28 days of service of the notice and demand or within such other time period as provided herein.

[R. 1:4-8(b).]

The purpose of the notice requirement is to identify with precision the allegedly offending pleading and to afford an opportunity for withdrawal of the pleading. Ferolito v. Park Hill Ass'n, Inc., 408 N.J. Super. 401, 408 (App. Div.), certif. denied, 200 N.J. 502 (2009) (citing Trocki Plastic Surgery Ctr. v. Bartkowski, 344 N.J. Super. 399, 406 (App. Div. 2001), certif. denied, 171 N.J. 338 (2002)). Plaintiff served on Ms. Banks-Spearman its notice of what it believed to be a violation of R. 1:4-8 on November 16, 2011. The notice specified that plaintiff believed that defendant's motion to dismiss the Complaint violated R. 1:4-8. In particular, plaintiff demanded the withdrawal of "any document which states that either you, the Camden City Tax Assessor, the Tax Administrator, or the City Clerk had no notice of the pending tax appeal prior to October 31, 2011." Pursuant to R. 1:4-8, the twenty-eight-day cure period ended on December 14, 2011. On December 2, 2011, within the twenty-eight-day cure period, Ms. Banks-Spearman withdrew defendant's motion to dismiss the Complaint. The withdrawal was not based on an admission by Ms. Banks-Spearman that the moving papers contained factual inaccuracies regarding her and her client's knowledge of the pendency of a 2010 tax appeal. Defendant withdrew its motion because it conceded the underlying claim by
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plaintiff that the exemption on the subject property had been improperly revoked for tax year 2010. Defendant's tax assessor could offer no explanation of how or why the exemption had been removed. For purposes of R. 1:4-8 it matters not why the allegedly offending pleading was withdrawn. The rule does not require an admission by the allegedly offending attorney that the underlying pleading violated the rule to avoid sanctions. See First Atlantic Federal Credit Union v. Perez, 391 N.J. Super. 419, 433 (App. Div. 2007)(holding that party's settlement of underlying claims within 28 days of service of notice under R. 1:48, while not technically resulting in withdrawal of allegedly offending answer, "effectively qualified for the rule's protection.") Having cured the alleged violation of R. 1:4-8 within the cure period, defendant's counsel is protected from the award of sanctions under the rule. The court, therefore, need not determine whether plaintiff's claim to sanctions based on Ms. Banks-Spearman's representations regarding her awareness of a 2010 tax appeal was substantively warranted. The court notes, however, that the record contains no evidence to suggest that Ms. Banks-Spearman was anything but fully candid with the court when she stated that she was aware of the pendency of this matter but had mistakenly believed that the appeal concerned tax year 2011, as would be suggested by the docket number assigned to this case by the Tax Court. The court offers no comment on the strength of defendant's legal position with respect to the revocation of the 2010 exemption. As noted above, defendant's tax assessor could offer no explanation or justification for having revoked the exemption on plaintiff's property. Plaintiff's R. 1:4-8 notice, however, did not mention the underlying merits of the exemption claim as a basis for seeking sanctions. The court encloses an Order and Final Judgment. Very truly yours,

Patrick DeAlmeida, P.J.T.C.

This archive is a service of Rutgers School of Law - Camden.

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