Tax Court Denies Subpoena Request

by: Allan Zhang
25 Sep 2018

A recent Tax Court decision concerned a subpoena regarding a non-party’s appraisal report and income and expense information relating to a 2018 property tax assessment.  In Township of Gloucester v. Lakeview Realty Investment Associates, the court denied the municipality’s motion to direct a non-party bank to produce the above information, citing its relevance and plaintiff’s need of the information.

With regard to the appraisal report subpoenaed, the issue was whether it was relevant to the market value of the subject property as of the date of value, October 1, 2017. Defendant certified that the requested appraisal was completed on August 18, 2015, a date the court referred to as “far removed from October 1, 2017” and not relevant to the true market value of the property. Defendant added that the 2015 report would not reasonably lead to the discovery of admissible evidence.

The court noted that using 2015 information for a 2017 valuation would not be too remote in time and may lead to discovery of admissible evidence. However, since the report utilized a “leased fee approach” to valuation, the report had no relevance to the fair market value of subject property. Historically, leased fee reports have been rejected by New Jersey courts, as these are situations where ownership interest is held by the lessor who has the right to the rent and reversionary rights upon expiration of the lease. Further, the court questioned whether data in the report would lead to admissible evidence. The court agreed with defendant that it was questionable that any data from three years prior to the valuation date would have any relevance to the current matter.

Additionally, the court held that income and expense statements and rent rolls would likely contain relevant information in determining the fair market value of the property. However, in quashing a subpoena, a court must determine whether the subpoena is oppressive or unreasonable. In examining this, a court looks to the requesting party’s need for the production. Here, the court concluded that the information could have been be obtained directly from the defendant and the need for the information did not outweigh the invasion of privacy to the non-party. Accordingly, defendant’s request to quash the subpoena was granted.

The Tax Court’s opinion in Township of Gloucester v. Lakeview Realty Investment Associates may be found here.