Lowenstein Sandler successfully represented the New Jersey Community Development Corporation (NJCDC) and its subsidiary, Oliver’s Corner, in litigation with a real estate speculator plaintiff and co-defendant, the City of Paterson.

The dispute centered on the tax-exempt status of Oliver’s Corner’s Paterson property, which has housed Michael’s Energy Factory, a charitable preschool for underserved youth, for nearly two decades.

On January 13, Judge Bruno Mongiardo of the Superior Court of New Jersey, Passaic County, ruled that the property has always been tax-exempt under New Jersey law and dismissed Oliver’s Corner from the case.

Dedicated to transforming lives and neighborhoods within Paterson, NJCDC is a private, nonprofit community development and social services agency focused on education, youth development, housing, and community-building; it serves more than 4,000 children, teens, and families daily. In April 2016, Lowenstein initially assisted NJCDC in forming a subsidiary entity, Oliver’s Corner, to acquire the property and continue operating Michael’s Energy Factory after the former owner declared bankruptcy. By this time, due to its longstanding educational and charitable use, the property had been tax-exempt for several years. To sustain the preschool, NJCDC and Oliver’s Corner partnered with another nonprofit to run a Head Start program for disadvantaged kids. 

Unbeknownst to NJCDC and Oliver’s Corner, Paterson began taxing the property after Oliver’s Corner’s acquisition and, after the taxes went unpaid, sold a tax-sale certificate to the plaintiff over a year later. The certificate created a lien that could have eventually let the plaintiff foreclose on the property.

Lowenstein successfully appealed to Paterson, which passed an ordinance in May 2019 that exempted the property from taxes, canceled the plaintiff’s lien, and reimbursed the plaintiff for the property taxes it paid to hold its lien. The plaintiff later sued Oliver’s Corner and Paterson for interest on its reimbursement, claiming that the property lost its tax exemption after Oliver’s Corner purchased it.

In this latest ruling, the court granted Lowenstein’s motion for summary judgment, filed and argued by Richard F. Ricci and Zachary L. Berliner, and dismissed Oliver’s Corner from the case. Adopting Lowenstein’s arguments, the court found that the property has always been tax-exempt, so all taxes since 2016 were invalid and the plaintiff’s lien void at creation. The court also upheld Paterson’s May 2019 ordinance. It therefore held that Oliver’s Corner had no role in the dispute and should be dismissed.

Ted Hunter, Chair of the firm’s Real Estate practice, says, “Through the years, lawyers across many of the firm’s practice groups have worked together to support our pro bono client, NJCDC, in its mission to provide education and community-building to underserved populations. Today marks a great victory for our client and stands as a testament to what we can do when we put our heads (and hearts) together.”

The Lowenstein team included Ted Hunter, Richard F. Ricci, and Zachary L. Berliner.

About Lowenstein Sandler LLP

Lowenstein Sandler is a national law firm with over 350 lawyers based in New York, Palo Alto, New Jersey, Utah, and Washington, D.C. The firm represents leaders in virtually every sector of the global economy, with particular emphasis on investment funds, life sciences, and technology. Recognized for its entrepreneurial spirit and high standard of client service, the firm is committed to the interests of its clients, colleagues, and communities.

Stephen J. Kimmerling
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Lowenstein Sandler LLP
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