Opinion
Index No. 19-5818 Mot Seq. Nos. 001002
06-29-2020
In the Matter of the Application of SL BABYLON, LLC Plaintiff/Petitioner, v. JOAN M. BALL, in her official -capacity as THE ASSESSOR OF THE TOWN OF.BABYLON, THE BOARD OF ASSESSMENT REVIEW OF THE TOWN OF BABYLON, THE BOARD OF EDUCATION OFTHE WEST BABYLON UNION FREE SCHOOL DISTRICT, and THE TOWN OF BABYLON and its taxable districts, COUNTY OF SUFFOLK, NEW YORK, Defendants/Respondents, for a declaratory judgment and relief pursuant to article 78 of the Civil Practice Law and Rules of New York.
EGAN &GOLDEN, LLP Attorney for Petitioner SCOTT DeSIMONE, P.C. Attorney for Town of Babylon Respondents and of counsel to Board of Education of West Babylon Union Free School District DENNIS M. BROWN Suffolk County Attorney
Unpublished Opinion
MOTION DATE 12/6/19 (#001)
MOTION DATE 2/6/20 (#002)
ADJ. DATE 2/27/20
EGAN &GOLDEN, LLP Attorney for Petitioner
SCOTT DeSIMONE, P.C. Attorney for Town of Babylon Respondents and of counsel to Board of Education of West Babylon Union Free School District
DENNIS M. BROWN Suffolk County Attorney
SHORT FORM ORDER
Joseph Farneti, Justice
Upon the following papers numbered 1 to 7 read on this motion to dismiss: Notice of Motion/Order to Show Cause and supporting papers 1-3- Notice of Cross Motion, and supporting papers _______; Answering Affidavits-and supporting papers______; Replying Affidavits and supporting papers 4-7; Other summons, complaint # petition, dated Nov. 1, 2019 and supporting papers: petitioner's memorandum-of law; (and after hearing counsel in support and opposed to the motion) it is.
ORDERED that the motion by defendants/respondents Joan M. Ball, In her official capacity as the Assessor of the Town of Babylon, The Board of Assessment Review of the Town of Babylon, The Board of Education of the West Babylon Union .Free School District, and the Town of Babylon and its taxing districts, for an order dismissing the causes of action contained in the combined complaint and petition (i) relative to the plaintiff&petitioner's claimed entitlement to a partial real property tax exemption pursuant to RPTL 48:7, (H) relative to the plaintiff/petitioner's claimed entitlement to a full real property tax exemption pursuant to RPTL 420-a, and (lit) to the extent they seek declaratory relief to challenge the denial of an exemption pursuant to RPTL 420-a, is granted to the extent, of dismissing the first and fourth causes of action against them, and is otherwise denied.
In this hybrid article 78proceeding and action for declaratory and injunctive relief (hereinafter, “proceeding”), the plaintiff/petitioner (hereinafter, “petitioner”), who owns and operates a solar photovoltaic energy facility on a portion of St. John's Cemetery in West Babylon, New York, challenges foe removal of the RPTL 420-a religious tax exemption on. the property and the imposition of real properly taxes on both the,property and .the facility. According to the petitioner, St John's Cemetery is exempt from taxation under RPTL 420-a, which provides a mandatory tax exemption for real property owned by a-corporation or association organized or conducted exclusively for religious (and other designated) purposes. The petitioner also claims that the facility is a “solar energy system” within the meaning of RPTL 487; RPTL 487 (2) provides that any real property which includes a solar energy system “shall, be. exempt from taxation to the extent of any increase in the value, thereof by reason of the inclusion of [such system] for a period of fifteen years.”
It appears from the combined complaint and petition (hereinafter, “petition'') that the tax parcel on which the facility is located is owned by St. John's Cemetery, a special act corporation wholly owned by the Roman Catholic Church, On December. 29, 2014, the petitioner entered into a-ground lease with St. John's Cemetery to develop,a solar energy system on an unused 45-acre portion, of .the parcel known as St. John's Annex. The petitioner alleges that the lease required the petitioner to restore foe property to its original condition at foe end of the lease term to allow the land to be used for future burials, and obligated the petitioner for any increase in taxes incurred in connection with the facility.
On Or about. June 26, 2015, the petitioner, ostensibly oh behalf of the owner, submitted an application to the Town for a 15-year exemption from real property taxes relating to the establishment of its facility, effectively asking the Town to forego any net increase in tax revenue relative to the construction of its solar energy system for 15 years. By letter dated August 20,2015, the Town, without specifically addressing foe-application, indicated its position that-.the owner would be required to enter into a contract for payment in lieu of taxes (PILOT)r pursuant to RPTL 487 (9) (a), and. that the'45-acre portion of the property on which the facility was to be constructed would become taxable as it would no longer be used in a manner consistent with the exempt purposes set forth in RPTL 420-a. The Town continued to treat the property as tax exempt for all purposes for tax years 2016/17 and 2017/18, and the facility became operational on December 4, 2017.
For tax year 2018/19, however, the Town placed the parcel on its tax rolls and assessed the. owner a tax, inclusive of the facility, in the amount of $942,547.30. On or about February 16, 2018, the petitioner submitted its second application for a tax exemption relative to its solar energy system. By letter dated April 24, 2018,the Town denied the application, on the grounds (i) pursuant to RPTL 487 (6), that the application had not. been submitted by the owner of the-property, (ii) pursuant to RPTL 487 (4), that the petitioner had not-demonstrated that-the system meets the guidelines set by the president of the authority, and. (iii) pursuant to RPTL 487 (9) (a), that despite the Town having lawfully advised of its intention to require s PILOT agreement, neither the petitioner nor the owner had entered into any such agreement. The petitioner proceeded to pay the amount due, under protest. On or about February 28, 201.9, the petitioner submitted its third application for a tax exemption relative to its solar energy system; the Town, however, took no action on the application. On July 1,2019, the Town published the 2019 certified tax roll, which reflected the same assessed value on the parcel, inclusive of the facility, as-shown oh the 2018tax bill. On Jufy24, 2019, the petitioner commenced a. proceeding to review the 201.9 assessment under RPTL, article 7 (Matter of SL Babylon v Board of Assessors, Sup Ct, Suffolk County, Index No, 19-614287). This proceeding followed.
The petitioner pleads five causes of action in its petition. The first, which is based on the petitioner's claimed entitlement to an exemption under RPTL 487, is to direct the respondents to reverse the assessments on the 2018 and 2019 assessment rolls to reflect a $0 taxable value on the facility and the parcel, and to list the same exemption from taxation on all subsequent annual-assessment rolls through 2033. The second is for judgment declaring that the Town's demand that the petitioner enter into a PILOT agreement is unlawful because it was untimely made under RPTL 487 (9) fa). The third is for judgment nullifying the Town's 2018 and 2019 statements .of taxes for the parcel on the ground that they were contrary to law, irrational, and arbitrary and capricious; in that they were, based on the erroneous assertion that the petitioner's solar energy system is real property. The fourth is for judgment nullifying the Town's decision .to remove St. John's Cemetery's mandatory tax exemption under RPTL 420-a as unlawful, arbitrary and capricious, and not supported by sufficient evidence, the fifth is for Injunctive relief based on an alleged violation of the petitioner's rights to equal protection under the law.
The respondents now move, pre-answer, to dismiss, the petitioner's first and fourth causes of action. As to the first cause, of action, the respondents contend, in part, that a challenge to an allegedly wrongful denial of a partial property tax exemption can only be made pursuant to the articles 5 and 7 of the RPTL - not by means of a CPL.R article 78 proceeding or a declaratory judgment action and that the. petitioner failed to exhaust its administrative remedies by filing a timely grievance or complaint in accordance with RPTL 524. As to the fourth cause of action, the respondents contend, in part, that the petitioner lacks standing to seek judicial review denying an exemption under RPTL 420-a, as it is not the owner of the property.
As used prospectively in this Order, the term "respondents" will refer to the named defendants/ respondents exclusive of the County of Suffolk. According to the Court's computer records, a notice of appearance was filed on behalf of the County of Suffolk on or about November 20, 201-9, although it is unclear whether the notice of appearance was served of whether the County of Suffolk has since answered the petition.
Although the respondents' -notice of motion is phrased in. far broader- terms, it-is difficult, even on careful review of the petition and the motion to dismiss, to ascertain-which causes of action (or parts of causes of action) their motion is intended to address. Since the petitioner, in its opposition, characterizes the motion as one to-dismiss the first and fourth causes of action, and the respondents, in-their-reply, do not object to that characterization, the Court will treat the motion as directed solely to those causes-of action.
A motion to dismiss, "Whether in an action or a special proceeding, is a procedural vehicle to test the sufficiency of a pleading.
To dismiss a pleading on CPLR 323 I (a) grounds, it must appear either that the pleading is defective on its face or, though adequate on its face, lacks merit or requires dismissal on some other basis (Siegel, NY Prac § 257 [5th ed). On a motion- pursuant to CPLR 3211 (a) to-dismiss a complaint for lack of Standing, “ the burden is on the moving defendant to establish, prima facie, the plaintiff's lack of standing, rather than on the plaintiff to affirmatively establish its standing in order for (he motion to .be denied [and] the motion will be defeated if the plaintiffs submissions raise a question of fact as to its standing" (Deutsche Bank Trust Co. Ams. v Vitellas, 131 A.D.3d 52, 59-60, 13 N.Y.S.3d 163, 170 [2615]). Pursuant to CPLR 3211 (f) k the mere making of a motion during the time in which to respond automatically extends the responding time for 10. days after service of notice of entry of the Order disposing of the motion, and a motion made against any pad of a pleading extends the time to serve a responsive pleading to all .of it(John R. Higgitt, Practice Commentaries, McKinney's Cons Laws of NY, CPLRC3211:68).
CPLR 7804 (f) provides that the. respondent in an article 78 proceeding may, within-the time allowed for answer, move to dismiss the petition based on an "objection in point of law," such as failure to exhaust administrative remedies (Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C7804:7). On a. pre-answer motion to dismiss an article 78 petition, whether on standing grounds or otherwise, only. the. petition is to be considered and all of its allegations arc deemed to be true (Matter of East End Resources v Town of Southold Planning Bd., 81 A.D.3d 947, 917 N.Y.S.2d 315 [2011]; Matter of Long Is. Contractors' Assn, v Town of Riverhead. 17 A.D.3d 590. 793 N.Y.S.2d 494 [2005]; Matter of Massiello v Town Bd. of Town of Lake George, 257'A.D.2d 962; 684 N.Y.S.2d 330 [1999]). If the motion is denied, 'The court shall permit the respondent to answer" (CPLR 7804 [f]; see also Matter of Nassau BOCES Cent. Council of Teachers v Board of Coop. Educ. Servs. of Nassau County, 63 N.Y.2d 100, 480 N.Y.S.2d 190 [1984]).
The first cause of action is dismissed. The respondent correctly note that the exemption contemplated by RPTL.487 is a partial exemption, as it applies only to the improvements, not the land, and only to general taxes, not to special ad valorem levies or special assessments (see RPTL 102 [14], [15], [20]; 490; see also Matter of Luther Forest Corp, v McGuiness, 164 At)2d 629,565,N.Y.S.2d 570 [1991]; cf. RPTL 420-a). Generally, a taxpayer's exclusive remedy to redress the wrongful denial of a partial exemption is. to commence a tax certiorari proceeding under RPTL article 7 (Matter of LAPC Lofts v City of Buffalo Dept, of Assessment &Taxation, 155 A.D.3d 153.9,65 N.Y.S.3d 361 [2017]; Matter of Laurel Hill Farms v Board of Assessors of Nassau County, 51 A.D.3d 794, 857 N.Y.S.2d 71 ] [2008] Stabile v Half Hollow Hills Cent. Sch. Dist. of Huntington &Babylon, 83 A.D.2d 945, 442 N.Y.S.2d 778 [ 1981]). "It is through article 7 that taxpayers must assert instances of illegality, overvaluation, or inequality" (id. at 945, 442 N.Y.S.2d at 780; accord Matter of Board of Mgrs. of Greens of N. Hills Condominium v. Board of Assessors of County of Nassau, 202A.D.2d 417, 608 N.Y.S.2d 694, Iv denied 83 N.Y.2d 757, 615 N.Y.S.2d 874 [1994]). When "only a partial exemption is claimed, the assessing officer has Jurisdiction of the property in question, and collateral attack of his determination will not be permitted" (Stabile v. Half Hollow Hills Cent. Sch. Dist. of Huntington &Babylon, supra at 946,442 N.Y.S.2d at 780). Although there are exceptions to the general rule-when the tax is claimed to be unconstitutional, and when .the jurisdiction or methodology of the taxing authority is being challenged (e:g. 1688 Rojav Realty v Frankel, 32 Misc.3d 1247,938 N.Y.S.2d 228 [2011]) -none applies here. While the Court might otherwise convert this proceeding into its appropriate form (see CPLR 103 [c]), here no. grievance or complaint was filed with respect to the 2018 assessment4 (5ee RPTL 524). Since the petitioner seeks relief afforded by a RPTL article 7 tax certiorari proceeding but foiled to satisfy a condition precedent to the commencement of such a proceeding (see RPTL 706 [2]; Matter of Circulo Hous. Dev. Fund Corp, v Assessor of City of Long Beach, Nassau. County,NY, 96 A.D.3d 1053, 947 N.Y.S.2d 559 [20.12]), .conversion is hot available; rather, dismissal is proper.
To the extent that constitutionality may be an issue, it is already a subject of a separate cause of action (the fifth); jurisdiction is not a issue as-the property remains "subject to. some degree of taxation" (Hewiett Assoc. v. City of New York, 57 N.Y.2d 356, 364, 456 N.Y.S.2d 704. 707 [ 1982]); and any objection to methodology is inapplicable because the petitioner is challenging the assessment as to only one property (see Matter of Cayuga Grandview Beach Coop. Corp, v Town Ed. of Town of Springport, 51 A.D.3d 1364, 857 N.Y.S.2d.862, iv denied 11 N.Y.3d 702, 864 N.Y.S.2d 389 [2008];; Matter of General Elec. Co. v. MacIsaac, 292 A.D.2d 689, 739 N.Y.S.2d 768 [2002]).
The fourth cause of action is dismissed as well. In support of their claim that the petitioner lacks standing to seek judicial review because it is not, the owner of the property, the respondents cite RPTL 420-a (11), which provides that when property is riot granted an exemption under RPTL 420-a, "the owner may seek judicial review pursuant to article seven-of this chapter or article, seventy-eight of the civil practice law and rules [emphasis added]. Even were the Court to find that RPTL 420-a (11) does not limit judicial review to owners, it is evident that the petitioner is without standing to. challenge the assessment Standing to review an assessment of real property, whether in. the context of RPTL article 7 or CPLR article 78, rests on the petitioner's status as an "aggrieved" person (RPTL 704 [I]; Vincent C. Alexander, Practice Commentaries, McKinney's Cons Laws of NYrGPLRC7802:5; see Matter of Steel Los III/Goya Foods v Board of Assessors of County of Nassau, 10NY3d 445, 859 N.Y.S.2d 576 [2008] [RPTL article 7]; Matter of Hudson Prop. Owners' Coalition v. Slocum, 92 A.D.3d 1198< 939 N.Y.S.2d 177 [2012] [CPLR article 78]). A person Is "aggrieved" when an assessment has a "direct adverse affect on the challenger's pecuniary interests" {Matter of Waldhaum, Inc. v Finance Adm'r of City of N.Y., 74 N.Y.2d 128, 132, 544 N.Y.S.2d 561, 563 [1989]). The petitioner alleges-that it paid the taxes due for the 2018/19 tax year because it was required under the terms of its lease to do so. However, section 13.6 of the lease - a copy of which was submitted in support of the petition - says otherwise;
The Court notes again that at the time this proceeding was commenced, there was already an article 7 proceeding pending relative to the 2019 assessment. Whether the petitioner failed to file a proper grievance or complaint for the 2019/20 tax year and therefore, failed to satisfy a condition precedent for the commencement of that proceeding will, presumably, be decided in the context of that proceeding.
Pursuant to RPTL 402 (2), an "assessment" is a determination made by assessors as to the valuation of real property, "including, the valuation of exempt real property," regardless of whether the property "is subject to taxation."
Landlord represents and warrants that it is a tax-exempt organization and that the Premises are exempt from real estate taxes. Landlord shall be responsible, for maintaining its tax exempt status * * * to the extent permitted by law, and shall be responsible for any Taxes resulting from the loss of such status.
Section 13.1 defines "Taxes" to include "all real property taxes [and] assessments * * * which may now or hereafter be levied, imposed or assessed against the Premises due to this Lease." As the parties to the lease specifically provided that legal responsibility for the subject tax' liability was to remain with St John's Cemetery, .the impact-of the assessment on the petitioner s pecuniary interests is insufficient to render it "aggrieved."
[O]nly a lessee who is obligated to pay an assessment is sure to lose something from his own property or means. * * * [W]hile paying taxes always has. a direct adverse effect on one's pecuniary interest, that alone- has never been enough* Accordingly, in the absence of a direct contractual obligation, the assessment's remote and consequential impact on petitioner Is inadequate to confer standing.(Matter of Larchmont Pancake House v Board of Assessors and/or Assessor of Town of Mamaroneck, 33 N.Y.3d228, 239, 100 N.Y.S.3d 680,685 [2019] [internal quotation marks and citations omitted]).
The respondents shall serve their answer within 10 days after service upon them of a copy of this Order with-notice of its entry, after which time any party may, pursuant to CPLR 7804 (f), re-notice for hearing any portions of the remaining causes of action as may be for article 78 relief.