Nedmac Assoc Inc v. Camden , 38 F. App'x 835 ( 2002 )


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  •                                                                                                                            Opinions of the United
    2002 Decisions                                                                                                             States Court of Appeals
    for the Third Circuit
    7-19-2002
    Nedmac Assoc Inc v. Camden
    Precedential or Non-Precedential: Non-Precedential
    Docket No. 01-4534
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    Recommended Citation
    "Nedmac Assoc Inc v. Camden" (2002). 2002 Decisions. Paper 415.
    http://digitalcommons.law.villanova.edu/thirdcircuit_2002/415
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    NOT PRECEDENTIAL
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    No. 01-4534
    NEDMAC ASSOCIATES, INC.,
    Appellant
    v.
    CITY OF CAMDEN
    ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR
    THE DISTRICT OF NEW JERSEY
    (Dist. Court No. 01-cv-00782)
    District Court Judge: Stephen M. Orlofsky
    Submitted Under Third Circuit LAR 34.1(a)
    July 15, 2002
    Before: SCIRICA, ALITO, and FUENTES, Circuit Judges.
    (Opinion Filed: July 19, 2002)
    OPINION OF THE COURT
    PER CURIAM:
    This case arises from a Chapter 11 petition for bankruptcy relief filed by Nedmac
    Associates, Inc. ("Nedmac"). Nedmac operates the Parkade Building in the City of
    Camden ("City"), pursuant to a fifty-year ground lease with the City that was executed on
    September 27, 1954 ("Lease"). To recover money that was allegedly overpaid in real
    estate taxes, Nedmac filed an adversary complaint against the City. The Bankruptcy
    Court dismissed Nedmac’s adversary complaint, and the District Court affirmed.
    Nedmac appeals from this ruling. As the parties are well aware of the history of these
    proceedings and the facts involved, we need not repeat them here.
    On appeal, Nedmac alleges that the District Court erred in: (1) the ruling that the
    City did not breach Article 4 of the Lease; (2) the ruling that Nedmac was entitled to no
    remedy notwithstanding the City’s breach of Article 10 of the Lease; (3) the refusal to set
    aside the 1995 Tax Sale Certificate issued and purchased by the City; and (4) the refusal
    to set aside the Notice of Unsafe Structure issued by the City.
    Our review of the District Court’s determination is plenary. In re O’Brien
    Environmental Energy, Inc., 
    188 F.2d 116
    , 122 (3d Cir. 1999). "In reviewing the
    decision of the Bankruptcy Court, we exercise the same standard of review as the District
    Court, that is, we review the Bankruptcy Court’s legal determinations de novo, its factual
    findings for clear error, and its exercise of discretion for abuse thereof." 
    Id. First, Nedmac
    alleges a breach of Article 4 of the Lease, which sets forth
    Nedmac’s obligations to pay property taxes. The Bankruptcy Court concluded that the
    City did not beach Article 4 of the Lease because Article 4 imposes no positive
    obligations on the City to appeal property assessments on Nedmac’s behalf. Bankr. Ct.
    Memop. at 18, in App. at 59a. Article 4 of the Lease provides:
    LESSEE TO PAY TAXES, ETC. Lessee agrees that as additional rent it
    will pay and discharge all taxes, charges and assessments, water and sewer
    rents assessed, charged, imposed or levied, whether by the nation, state, city
    or any other public authority, upon so much of the demised premises or the
    buildings or improvements that may be constructed thereon and devoted to
    a use other than for the parking of automobiles, on or before the date or
    dates that the same become due and payable, and within ten (10) days
    thereafter produce and deliver to Lessor for inspection proper and
    sufficient receipts therefor, and to pay all water and sewer rents for services
    furnished for any part or portion of said building notwithstanding its use.
    Lease, in App. IV at 443a. Thus, Nedmac is required to pay real estate taxes on the
    portion of the building devoted to non-parking uses.
    It is clear that Article 4 does not impose any obligations on the City, but "merely
    sets forth the responsibilities of the tenant to pay all property taxes." Dist. Ct. Memop. at
    10, in App. at 25a ("Nedmac appears to argue that Article 4 requires the City, as
    Nedmac’s landlord and as the record owner of the Parking Lot, to correct an excessive
    tax assessment based on an allegedly improper apportionment of space contained in the
    1992 Librizzi appraisal. The plain language of Article 4 cannot support such a strained
    reading of the 1954 Lease."). Nedmac argues that the Bankruptcy Court’s analysis was
    flawed because it treated the issue as a dispute between a real estate taxpayer and a taxing
    municipality instead of as an issue between a tenant and landlord. However, Nedmac
    provides no legal reasoning supporting this argument. Without citing any basis in law,
    Nedmac asserts that Article 4 of the Lease somehow obligated the City as a landlord to
    ensure that the methodology used by the tax assessor was proper. As the District Court
    observed, the proper procedure for pursuing this claim was to file an appeal with the Tax
    Board. Dist. Ct. Memop. at 10-11, in App. at 25a-26a. Instead of appealing the tax
    assessments to the Tax Board, Nedmac simply stopped paying its property taxes, and
    now attempts to raise this issue by alleging a breach of Article 4 of the Lease. This
    argument has no merit, and we agree with the Bankruptcy Court’s and District Court’s
    holdings on this issue.
    Additionally, regarding Nedmac’s third argument that the Bankruptcy Court
    should have set aside the 1995 Tax Sale Certificate, Nedmac concedes that "if this Court
    upholds the District Court’s affirmance of the Bankruptcy Court’s determination under
    Point I above, no grounds will exist for setting aside the 1995 Tax Sale Certificate." Br.
    of Appellant at 31. Having determined that the District Court properly agreed with the
    Bankruptcy Court on this point, we also agree that there is no basis to set aside the 1995
    Tax Sale Certificate. In any case, Nedmac was time-barred from challenging the validity
    of the Certificate. See Dist. Ct. Memop. at 13, in App. at 28a.
    Second, Nedmac claims that the City breached Article 10 of the Lease and
    therefore that it is entitled to damages from the City equivalent to the excess real estate
    taxes it paid. That is, Nedmac claims that it is entitled to the amount of damages that it
    would have received had the hearing before the Tax Board occurred. Article 10 of the
    Lease provides:
    LESSEE MAY CONTEST THE VALIDITY OF TAX LIENS. It is agreed
    that the Lessee, upon giving written notice thereof to the Lessor, shall not
    be required to pay, discharge or remove any tax, assessment, tax title, or
    any judgment or lien against the demised premises . . . so long as the
    Lessee shall in good faith and with diligence, at his own expense, contest
    the same or the validity thereof by appropriate legal proceedings, and that
    pending any such legal proceedings, the Lessor shall not have the right to
    pay, remove or discharge the taxes, assessments, tax lien, tax title,
    mechanics’ lien or judgment thereby contested unless necessary to protect
    the title to said premises, and that such delay of the Lessee in paying the
    same until final determination of such disputed matter shall not be deemed
    a default in the conditions of this lease: Provided that, on demand of the
    Lessor, the Lessee shall furnish indemnity satisfactory to the Lessor against
    any loss or damage on account thereof.
    Lease, in App. IV at 447a-448a. Thus, Article 10 allows Nedmac not to pay assessed
    taxes pending an appeal of a real estate tax assessment.
    Nedmac filed its tax appeal with the Tax Board on March 28, 1998. At the
    hearing in June 1998, the appeal was dismissed pursuant to N.J.S.A. 54:3-27 because
    Nedmac had not paid its real estate taxes for 1994, 1995, and 1996. The Bankruptcy
    Court agreed that the City had breached Article 10 of the Lease by raising Nedmac’s
    non-payment of taxes before the Tax Board, which prompted the Tax Board to dismiss
    Nedmac’s 1996 tax appeal. The Bankruptcy Court concluded, however, that Nedmac
    was not entitled to recover damages because it could have entirely mitigated any damages
    by appealing the dismissal to the New Jersey Tax Court. Bankr. Ct. Memop. at 25-26, in
    App. at 66a-67a. To go forward with an appeal to the Tax Board, an appealing taxpayer
    must present evidence that is "definite, positive and certain in quality and quantity to
    overcome the presumption" given to an initial tax assessment. Pantasote Co. v. City of
    Passaic, 
    100 N.J. 408
    , 412-13 (1985) (citation omitted). Inadequacies in the assessment
    methodology are insufficient to defeat this presumption of validity. 
    Id. at 415.
    Therefore, the District Court determined that "the Bankruptcy Court was justified in
    concluding from the absence of evidence in the record that Nedmac did not raise the
    issue of the City’s breach of Article 10 at the hearing, did not possess its own appraisal at
    the time of the hearing, and did not request an adjournment of the proceedings so that it
    could procure such an appraisal." Dist. Ct. Memop. at 18, in App. at 33a.
    Because of the deference given to determinations of evidentiary sufficiency and
    witness credibility by trial courts, we do not disturb the findings of the Bankruptcy Court
    that Nedmac did not submit an appraisal and did not raise the Article 10 provision at the
    County Board. Bankr. Ct. Memop. at 32, in App. at 73a ("There is no indication in the
    record that the debtor . . . argued the issue of Article 10 of the lease . . . . [T]he debtor
    apparently did not have an appraisal to demonstrate true value at the time of its 1996 tax
    appeal. The debtor does not even allege that it had any evidence of value at that time.").
    The Bankruptcy Court considered the evidence that Nedmac had in 1996 and concluded
    that Nedmac did not have sufficient appraisal evidence for the 1996 appeal to proceed.
    That is, Nedmac failed to show that it would have prevailed before the Tax Board in
    1996. Therefore, it could not have suffered any damages as a result of the Article 10
    breach. 
    Id. at 74a.
    Thus, the Bankruptcy Court properly found that Nedmac was entitled
    to no damages as a result of the City’s breach of Article 10 of the Lease.
    Finally, Nedmac contends that the Notice of Unsafe Structure issued by the City to
    Nedmac on January 20, 1998 should be set aside. Because this argument challenges the
    Bankruptcy Court’s findings of fact, our review is for clear error. The District Court
    concluded that the Bankruptcy Court’s findings of fact were not clearly erroneous. The
    inspection on Martin Luther King Day may or may not have occurred, but the record is
    not clear enough to conclude that the Bankruptcy Court plainly erred. The Morabito
    report confirmed the unsafe conditions in the building. The City’s failure to act on the
    Notice does not go to the issue of whether the Notice was originally issued in bad faith.
    In sum, the facts are not unambiguous about the propriety of the issuance of the Notice of
    Unsafe Structure, but the lower courts’ conclusions were not plainly in error in
    determining that the issuance of the Notice did not constitute a breach of the duty of
    good faith and fair dealing. Therefore, the Bankruptcy Court properly refused to set
    aside the Notice of Unsafe Structure.
    For the foregoing reasons, we affirm the District Court’s order affirming the
    Bankruptcy Court’s dismissal of Nedmac’s adversary complaint.
    

Document Info

Docket Number: 01-4534

Citation Numbers: 38 F. App'x 835

Filed Date: 7/19/2002

Precedential Status: Non-Precedential

Modified Date: 1/12/2023