In Farmland Dairies, Inc. v. Borough of Wallington, N.J. Super. App. Div. (per curiam) (unpublished decision) (35-2-7909), the Appellate Division upheld the decision of the Tax Court in denying an unrelated neighboring property owner’s efforts at intervening in a pending local property tax appeal between the property owner and the Borough.  The court concluded that the intervention application of the putative intervenor was out of time and barred by the statute of limitations.  Although all residents of municipalities have standing and maintain the right to pursue tax appeals as “aggrieved” parties under the statute, including those related to their neighbor’s properties, any such contests must nonetheless comply with the statutory filing deadline.

The New Jersey Supreme Court has consistently recognized the necessity of complying with filing deadlines in the area of taxation.  The statutory scheme establishing the court’s jurisdiction in this area is “one with which continuing strict and unerring compliance must be observed.” See McMahon v. City of Newark, 195 N.J. 526, 546 (2008).  Indeed, our Supreme Court has declared that the “failure to file a timely appeal is a fatal jurisdictional defect.”  F.M.C. Stores v. Borough of Morris Plains, 100 N.J. 418, 425 (1985).  The Supreme Court has also explained that strict adherence to statutory filing deadlines is of particular concern in tax matters, given “the exigencies of taxation and the administration of local government.”  F.M.C. Stores, 100 N.J. at 424.  The Legislature “has attempted to set out a well-organized time-table for the purpose of enabling a municipality to ascertain the amount of taxable ratables within the jurisdiction in order that it might adopt a responsible and fairly accurate budget.”  Id. at 425.  “By incorporating a strict deadline in [the statute], the Legislature intended to ensure that municipalities receive timely notice that a particular property’s valuation is subject to challenge.”  Prime Accounting Dept. v. Township of Carney’s Point, 2013 N.J. Lexis at *31.

After previously remanding the matter to the Tax Court for further proceedings concerning the timeliness and propriety of the putative intervenor’s application for permissive intervention, the Appellate Division made it plain, mindful of the above-referenced well-settled jurisprudence, that any effort to intervene must, in the first instance, be timely pursued and that the annual tax appeal filing deadline will effectively wait for no one.

Although as demonstrated above, the inviolate nature of this statutory deadline is plain, the court’s decision here may have been made easier by the attendant distasteful nature of a case involving an unrelated party’s efforts at meddling with pending litigation between the real parties in interest (the actual owner of the property in question and the municipality).

In a market where economic indicators continue to show encouraging signs (e.g., decreasing vacancy conditions across market segments, improved employment numbers and rental rates, and continuing low levels of inflation), the prospect for property value appreciation exists.  Because of questionable municipal assessment practices, often blindly motivated by the objective of maximizing tax ratables, careful scrutiny of assessments, especially in changing market conditions, is warranted.  Consequently, it behooves commercial property owners to review their property tax assessments with their professionals now to ensure that their assessments are in line with present values and to verify that they are not paying more than their fair share of taxes.  At the same time the potential exists that a successful appeal can work to lock in assessments at current property values, even in the face of possible increasing values.

Because New Jersey law provides for a “Freezing” of assessments for a period of two additional years, beyond any successful year appealed, the tax appeal vehicle has positive effects reaching into the future as well.  In fact, because assessments are generally not modified until a town-wide revaluation or reassessment program is implemented (usually every 5-10 years), there is a real prospect that a lower assessment achieved as a result of a successful appeal could actually remain in place for well beyond the statutorily guaranteed two year “Freeze” period.

As a result, we believe that there continues to be substantial opportunities for property owners to realize significant tax savings and lock in current values for the foreseeable future. We therefore encourage commercial property owners (whether owners of office, industrial, manufacturing, hotel, multi-family and/or other special purpose properties) to discuss options for a tax appeal with counsel having expertise in this specialized practice area.  In addition, those property owners who may benefit from statutory tax exemptions relating to non-profit, institutional or religious organization owner/users should similarly be reviewing with counsel whether all benefits available to them are being realized.

Because the 2019 tax appeal filing deadline is rapidly approaching (April 1, 2019, or May 1, 2019 in the case of a town-wide reassessment or revaluation) now is the appropriate time to take action.

New Jersey’s Appellate Division has once again served a stark reminder to prospective construction lien claimants regarding who may validly sign a construction lien claim.  The consequences of failing to properly execute a construction lien claim are dire – not only because the lien claim is subject to discharge, but along with that discharge may come an order requiring the payment of the attorneys’ fees and costs of the party making application for such discharge.

In Diamond Beach, LLC v. March Associates, Inc., Docket No. A-1704-17T1 (N.J. App. Div. December 24, 2018) (approved for publication), the court determined that the 2011 revisions to the Construction Lien Law did not serve to clarify or limit the then-existing construction lien signatory requirements, and therefore the 2011 revisions did not apply retroactively to lien claims filed prior to 2011.  Before the 2011 revisions, Lien Law Section 6 explicitly required that a lien be executed by a corporation’s “duly authorized officer.”  The 2011 revisions to Section 6 removed the “duly authorized officer” language, and instead stated that the lien claim form, provided in Section 8, “be signed, acknowledged and verified by oath of the claimant[.]”  The form in Section 8, however, requires that an “officer/member” sign the form, and the suggested notary form provides that the notary be satisfied that the signatory is the “Secretary (or other officer/manager/agent) of the Corporation (partnership or limited liability company)” with “authority to act on behalf of the Corporation (partnership or limited liability company) and who, by virtue of its Bylaws, or Resolution of its Board of Directors (or partnership or operating agreement) executed the [lien claim] on its behalf.”

The trial court in Diamond Beach had ordered that the subject lien claim be discharged because it had been signed by the subcontractor lien claimant’s Accounting & Information Systems Manager, and there was insufficient evidence to support the claimant’s contention that that manager had been expressly authorized to execute lien claims by the claimant’s Board of Directors.  Thus, the court found, under the pre-2011 Lien Law, that the lien claim had not been executed by a “duly authorized officer” of the lien claimant.  The trial court further awarded attorneys’ fees to the project owner, which had sought the discharge of the lien.  The Appellate Division affirmed the trial court’s determinations, including the award of fees, reading broadly Lien Law Section 15’s language regarding the circumstances under which lien rights are forfeited and an affected party is entitled to a fee award for obtaining such a determination.

Even under the post-2011 Lien Law, the court signaled that the results would have been the same for essentially the same reasons.  In last year’s published decision, NRG REMA LLC v. Creative Environmental Solutions Corp., 454 N.J. Super. 578 (App. Div.), certif. denied, 234 N.J. 577 (2018), the court conducted much the same analysis under the current law, and held a lien claim unenforceable that had been signed by the claimant’s “financial director” without any written evidence presented that such “financial director” was a corporate officer or designated by the Board of Directors to execute such documents on behalf of the claimant.  In doing so, the court noted that the Lien Law’s “procedural requirements were intended to be stringently applied.”

The critical lesson from the foregoing cases is that any business entity, however formed, that seeks to file a New Jersey construction lien claim, must ensure that the person signing that lien claim, is authorized to do so by the governing documents of that business entity – or by a written resolution or authorization duly executed by the appropriate board, officer, member or partner of that business entity – as that entity’s business form dictates.  The failure to have a properly-authorized individual execute the lien claim will, if challenged, prove fatal to the lien claim and extremely costly to the lien claimant.

 

A New Jersey appellate court ruled in Lopez v. Palin Enterprises, Associated, No. A-0886-17T4 (N.J. App. Div. December 5, 2018) that a tenant’s insurance policy was not the primary coverage for an injury to its employee which occurred within its leased premises.

The defendant in the case, Palin Enterprises, Associated (“Palin”) owned a commercial building and leased a portion of it to Agile Trade-Show Furnishings, Inc. (“Agile”).  Agile employed the plaintiff, Teodoro Lopez (“Lopez”).  Lopez was injured using a freight elevator located within the leased premises and sued Palin for damages.  Palin tendered the defense to Agile’s insurance company, Wausau Insurance (“Wausau”), arguing that the Wausau policy was the primary insurance coverage for Lopez’s claim.  Palin was named as an additional insured under the Wausau policy.  The Wausau policy provided “[t]his insurance shall be excess over any other insurance available to the additional insured whether such insurance is on an excess, contingent or primary basis, unless you are obligated under a written agreement to provide liability insurance for that additional insured on any other basis. In that event, this policy will apply solely on the basis required by such written agreement.”

The lease between Palin and Agile required Agile to procure “a comprehensive policy of liability insurance protecting [Palin] . . . against any liability whatsoever, occasioned by any occurrence on or about the Demised Premises.”  The lease did not require such policy to be the primary liability coverage for such occurrences.   The Court found that Wausau was not required to defend the Lopez lawsuit as its coverage is not to all claims, only as to all liability.  The Court ruled that due to the failure of the lease to specify that Agile’s liability insurance policy must be primary, per the terms of the Wausau policy it provides excess coverage and Palin’s liability insurance policy provides the primary coverage.

This case underscores the necessity of carefully drafting indemnity and insurance provisions in contracts to properly allocate risks between the parties thereto, specify the types of insurance each party must carry to cover such risks, and designate the insurance which is primary or excess.

 

 

Lawsuits by homeowners against their own insurance companies for failing to pay on damage claims that homeowners believe and argue are covered by their policies of insurance are quite common in Florida.  Frequently these involve claims for water-related damages—a typical example being a slow leak from piping in a kitchen or bathroom sink that is unknown to the homeowner but that occurs over an extended period of time and that ultimately causes damage to adjoining cabinets or perhaps even flooring.  As a plumber who came to inspect such damage in my own house once remarked, when I asked him what all this meant, “Water has to go somewhere.”

A homeowner’s insurance policy is, in its most basic form, a contract of insurance.  Each party to any contract has certain rights, duties and obligations under the contract.   If a party breaches his or her contractual obligations, the other party may have a claim for damages.  Under these circumstances, while other claims may exist, the homeowner’s primary claim against her own insurance carrier, resulting from the carrier’s refusal or failure to pay for damages that the homeowner maintains are covered by her insurance policy, is a claim for breach of contract.

From a homeowner’s perspective, one of the advantages that perhaps minimizes the risk of a lawsuit against her own insurance company is the one-way attorney’s fee provision set forth in Florida Statutes Sec. 627.428.  Subsection (1) of this statute provides:

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.

Thus, if a homeowner sues her insurance company for failing to pay for a loss that the homeowner feels is covered by her policy and wins that lawsuit, she will be awarded her reasonable attorney’s fees.  If, however, the homeowner loses that lawsuit, she will not be required to pay the company’s attorney’s fees.  That is why Florida Statutes Sec. 627.428 is a one-way attorney’s fee statute.

If attorney’s fees are awarded, those fees become part of the actual judgment under subsection (3) of Florida Statutes Sec. 627.428.   In addition, if an appeal is filed and the homeowner prevails in that appeal, the attorney’s fees associated with the appeal are recoverable.