JERSEY CITY -- Jersey City has lost the breach-of-contract case filed by the assessment firm hired in 2011 to oversee the long-stalled citywide property revaluation, with the judge presiding over the case using the decision to slam Jersey City's "unfair" tax system.

Hudson County Superior Court Judge Francis B. Schultz ruled this afternoon that the city showed bad faith when Mayor Steve Fulop stopped the reval in 2013 and ordered the city not to pay West New York firm Realty Appraisal Co. the remainder of its $3.2 million contract.

The city must pay the firm $984,511 plus interest and attorney's fees dating to Realty Appraisal's October 2015 settlement offer, Schultz ruled.

The firm, which sued for breach of contract after Fulop stopped the reval, was "simply doing a job that it was hired to do," Schultz said today after dismissing almost every argument city attorneys made during the seven-day trial.

"The evidence in this trial is clear and convincing," the judge said. "The city simply does not want a revaluation. Period."

Phil Elberg, Realty Appraisal's attorney, and Neil Rubenstein, a co-owner of the firm, embraced after Schultz ruled in their favor.

The decision is a blow for Fulop, though not an unexpected one. His administration vowed to appeal back in February when Schultz dismissed the city's final counterclaim in the suit. A request for comment on whether the city still intends to appeal was not returned.

It was clear from the start of Schultz's decision -- which he delivered from the bench in this non-jury trial -- that Jersey City was headed for defeat. He began the ruling by calling Jersey City's tax system one of "the most unfair" in New Jersey and he ended by calling the city's continued delay of a reval "intransigence."

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Asked to comment on the judge's ruling, city spokeswoman Jennifer Morrill said the Fulop administration agrees with Schultz about the unfair system "which we inherited." Fulop was elected mayor in 2013.

"However it doesn't change the fact that a faulty reval will further create hardship and residents across the city will lose their homes which we will continue to fight," Morrill said. "We will explore next steps over the next few weeks and continue to advocate for tax fairness."

The decision prompted a response from Gov. Chris Christie's office late this afternoon. Christie's administration last week ordered Jersey City to complete a reval by November 2017, saying the ratio of assessed to true value in the city had dipped so low it violates state laws and the New Jersey Constitution.

"We agree with the court that Mayor Fulop is presiding over 'one of the most unfair' tax systems in the state of New Jersey," the statement reads. "The recent actions by the court and the state government prove that tax fairness can prevail in Jersey City."

Revaluations bring the assessment of every property into line with its market value. When a municipality goes a long time between revals -- Jersey City's last reval was in 1988 -- the more out-of-whack some properties' assessments are with their market value.

The city made multiple arguments in pre-trial hearings and during the seven-day trial. Its main case was that the 2011 contract was void from the start because Realty Appraisal had hired Brian O'Reilly, a former city tax assessor, after his city retirement. O'Reilly's job with the firm gave it an unfair advantage, city attorneys argued.

Schultz today dismissed that argument.

The city's own witnesses "testified clearly and unambiguously that O'Reilly was not present at any meeting and had nothing to do with the revaluation" before his city retirement, Schultz said.

Schultz also noted the "curious" decision by the city to call as a witness Konstantin Belenky, who in 2009 admitted stealing $475,000 from an Elks club so he could pay off Atlantic City gambling debts. As a witness in the reval trial, Belenky, a tax assessor, challenged the amount of work Realty Appraisal said it completed for the reval was halted.

<a href="https://www.documentcloud.org/documents/2806167-Judge-Schultz-s-April-14-Decision/annotations/290512.html">View note</a>

See documents from the case:

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Terrence T. McDonald may be reached at tmcdonald@jjournal.com. Follow him on Twitter @terrencemcd. Find The Jersey Journal on Facebook.