Appellate Court Reinstates Kearny Tax Appeals

Court Reinstates Tax Appeals Dismissed for Plaintiff-Taxpayer’s Failure to Provide Discovery

In Leeds Terminal Inc. v. Town of Kearny (Docket Nos. A-4867, 4874 through 4881 – 09T3) an appellate court reversed the Tax Court’s order denying several taxpayers’ motions to reinstate property-tax appeals dismissed with prejudice for their failure to provide discovery. These matters involved appeals for the tax years 2003 through 2007 on several properties in the Town of Kearny.  In April 2008 the Tax Court issued case management orders that required all outstanding discovery to be served within 20 days. The orders provided further that the complaints would be dismissed if discovery was not provided within the 20 day time period. The plaintiff taxpayers provided partial discovery within the 20 day time period. The municipality informed the Tax Court that plaintiffs’ discovery was incomplete and the judge entered an order dismissing the complaints with prejudice. Plaintiffs moved to vacate the dismissals and reinstate the appeals, which the Tax Court denied.

In reversing the Tax Court, the appellate court found that while deference is usually owed to the motion judge, the “totality of the circumstances warrants reversal to avoid a potentially inequitable result arising from imposition of the ultimate penalty of dismissal in a discovery dispute.” The appellate panel did, however, condition the reversal on plaintiffs’ prompt provision of all remaining discovery and on payment of reasonable counsel fees and costs in connection with the motion to vacate the orders and the appeal.

A copy of the appellate court’s opinion is available here.