NJ Supreme Court Rules Tax Collector and Borough Must Face CRA Suit

In Winberry Realty Partnership v. Borough of Rutherford (A-22/53-19/083156) (Decided June 28, 2021), the Supreme Court of New Jersey held that the Borough of Rutherford’s Tax Collector was not entitled to qualified immunity. According to the court, the Tax Collector’s refusal to provide the redemption amount to plaintiffs because the request was not in writing or timely made was not objectively reasonable.

The Court disagreed, however, that plaintiffs had not established the basis for municipal liability. The court held that because the Tax Collector is the final policymaker on matters related to the redemption of tax sale certificates in the Borough, the Borough is liable if the Tax Collector violated the constitutional or statutory rights of plaintiffs.

Facts of Winberry Realty Partnership v. Borough of Rutherford

Plaintiffs fell into arrears on the taxes on their home in the Borough. To collect unpaid property taxes, a municipality may sell at public auction a tax sale certificate. The successful bidder agrees to pay the taxes due and may institute a foreclosure action if the property owner does not redeem the certificate within two years of the auction. The property owner has the right to redeem the certificate until barred by the judgment of the Superior Court. Here, four years after buying the tax sale certificate on plaintiffs’ home, the purchaser initiated foreclosure proceedings. The trial court ordered that “redemption shall be permitted up until entry of final judgment, including the whole of the last day upon which judgment is entered.”

After the date of redemption but before entry of final judgment, plaintiff John Winberry called the Tax Collector to determine the total amount needed to redeem the certificate. According to Winberry’s deposition testimony, the Tax Collector told him that she “[didn’t] have the time” to give him either the total amount or the per diem interest rate. Winberry testified that he then offered to pay an amount well over what he estimated to be the redemption amount and that the Tax Collector replied, “No. . . . [Y]ou’ve had years to pay this,” and “I can’t accept your check anymore.”

When deposed, the Tax Collector acknowledged the right to redemption at any time before entry of a final foreclosure judgment, and that her computer software could calculate arrearages “within a matter of minutes.” She testified that her policy as Tax Collector required that the property owner put the redemption request in writing and also stated that her policy was to contact the certificate holder to get the correct amount owed.

The day after plaintiffs attempted to redeem the certificate, the court entered the final foreclosure judgment. After costly legal proceedings, plaintiffs succeeded in having the foreclosure judgment overturned and reclaimed their property.

Plaintiffs filed suit under the New Jersey Civil Rights Act (CRA) and U.S.C. §§ 1983 and 1985, alleging that the Tax Collector and the Borough violated their constitutional, statutory, and common law rights to reclaim their property. The trial court granted summary judgment to defendants, finding that the Tax Collector was entitled to qualified immunity and the Borough derivative immunity. The Appellate Division reversed and reinstated the case against the Tax Collector but dismissed the Borough from the case, holding that plaintiffs failed to establish municipal liability because the Tax Collector’s policy was not the Borough’s policy. The New Jersey Supreme Court granted certification regarding the Borough’s liability and the denial of qualified immunity to the Tax Collector.

NJ Supreme Court’s Decision in Winberry Realty Partnership v. Borough of Rutherford

The New Jersey Supreme Court reversed in part and affirmed in part. “We affirm the Appellate Division’s decision to deny the Tax Collector qualified immunity,” the court held “Based on the summary judgment record, the Tax Collector’s refusal to provide the redemption amount to plaintiffs because the request was not in writing or timely made was not objectively reasonable.”

The New Jersey Supreme Court disagreed with the Appellate Division regarding whether the plaintiffs had established the basis for municipal liability. “The Tax Collector is the final policymaker on matters related to the redemption of tax sale certificates in the Borough, and therefore, under [Monell v. Dep’t of Soc. Servs., 436 U.S. 658, 690-94 (1978)], the Borough is liable if the Tax Collector violated the constitutional or statutory rights of plaintiffs in this case,” the court held.

As Justice Barry Albin explained, whether a public official is entitled to qualified immunity on summary judgment depends on (1) whether the evidence, viewed in the light most favorable to the plaintiff, establishes that the official violated the plaintiff’s constitutional or statutory rights, and (2) whether the right allegedly violated was clearly established at the time of the officer’s actions.

Here, the court found that the law clearly established that when Winberry called and requested the redemption amount, the Tax Collector was obligated to provide that information promptly and to accept a redemption payment. Justice Albin wrote:

In short, viewing the summary judgment record in the light most favorable to plaintiffs, the Tax Collector left Winberry, a property owner desperate to save his family’s home, with no means to exercise his clearly established statutory right to redeem the tax sale certificate. The Tax Collector, in essence, held the keys to plaintiffs’ home. She withheld, or made no effort to secure, the information necessary for plaintiffs to vindicate their substantive right to reclaim their home under the Tax Sale Law. Additionally, she flatly refused to accept the redemption payment at a point when the right to redeem the tax sale certificate had not been cut off. Under those circumstances, and under the governing standard of review, we determine that the Tax Collector did not act in an objectively reasonable manner and therefore is not entitled to qualified immunity.

The New Jersey Supreme Court next turned to the Borough’s potential liability on the CRA and § 1983 claims. In reaching its decision, the court emphasized that a municipality may be accountable for the action of an official who possesses final authority to establish municipal policy and who exercises that authority in violation of a person’s rights. Additionally, an official need only have final policymaking authority in a particular area or on a particular issue of municipal business to be a final policymaker.

“Because Miller spoke as a final policymaker for the Borough on matters of redemption, Miller’s policy was the Borough’s policy,” Justice Albin wrote. “On that basis, the Borough may be held liable for Miller’s violation of the Tax Sale Law under the CRA or for a violation of an applicable federal constitutional right under § 1983.”

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