Opinion
4000/07.
Decided December 15, 2009.
Robert Goldstein, Esq., Goldstein Goldstein Rikon Gottlieb, PC, New York, NY.
Michael A. Cardozo, Esq., Corporation Counsel of the City of New York, New York, NY.
At issue in this condemnation proceeding is the just compensation to be awarded to claimants Lori A. Riccio and Joseph and Carole Aloi for the taking of a portion of the property owned by them. The Alois are the owners of 540 Lamont Avenue (Block 6311, Lot 13, Damage Parcel 1) and Ms. Riccio is the owner of 153 Darlington Avenue (Block 6309, Lot 53, Damage Parcel 7). Both properties are located in the Huguenot neighborhood of Staten Island, are zoned R-3X and are improved with detached, two-family residences that conformed to existing zoning regulations before the taking. On March 12, 2007, the condemnor, the City of New York (the City), took title to 2,800 square feet of each parcel, i.e., strips measuring 28 feet wide by 100 feet long, leaving strips measuring 1 foot wide by 28 feet long on the far side of each of the lots, for the purpose of installing new sanitary and storm sewer lines, as well as upgrading existing water mains in the area.
The court tried this proceeding on April 1, 2 and 20, 2009. The court inspected the properties on December 10, 2009. Both claimants' appraiser and the City's appraiser agree that the properties are located in an up scale area; that the highest and best use of the properties both before and after the taking is as developed as a two-family detached residence; and that the acquisitions eliminated the large side yards and rendered the properties non-conforming uses with regard to zoning.
The parties stipulated that the damages for lost improvements located on that portion of Ms. Riccio's property that was taken, including trees, pavers, fencing and lighting is $13,724, and that the damages for lost improvements located on that portion of the Alois' property that was taken, including grass, fencing, retaining wall and trees is $9,212. Accordingly, the issue of the value of improvements will not be addressed herein.
As is also relevant herein, the City made a motion and claimants made a cross motion in which each sought to preclude the admission of the appraisal reports of the other. By decision dated November 10, 2008, this court denied the motion and the cross motion ( Matter of City of New York, 2008 NY Slip Op 52261U) (the November 2008 Decision).
The Trial Testimony
Lori Riccio
Ms. Riccio testified that she purchased the subject property on June 9, 2005 for $750,000; she described it as being improved with a two-family center hall colonial home located in a park-like setting, surrounded by trees and shrubs. The home had a side yard that was large enough to allow her to install a built-in swimming pool; she testified that she and her family used the side yard every weekend. After March 12, 2007, the City brought bull dozers in and ripped out the bushes, trees and retaining wall, so that she was left with a very small lot of land that cannot accommodate a pool, she does not own the driveway or the stairs that go into the back of the house and her central air conditioning units were taken. Ms. Riccio further testified that she does not believe that she can sell the house.
Brent Lally
Mr. Lally testified that he was retained to value the Riccio property as of March 12, 2007. He has been a real estate broker for 43 years, he has been appraising properties on Staten Island for 35 years, he received his license in 1965, he has appraised many properties that have been condemned and he has previously been qualified by this court to testify as an expert. The City objected to the appraisal report being introduced into evidence in order to preserve the contentions raised in its motion to preclude its admissibility; the objection was over ruled and the report was admitted. The report includes photographs of the property which were identified by Mr. Lally.
Mr. Lally testified that when he inspected the property, he observed a center hall colonial two-family house on a parcel of property that measured 64 by 100 feet, located in a middle to upper middle class neighborhood. The property's zoning allows detached houses to be built on a lot having a minimum of 3,800 square feet, a minimum frontage of 40 feet and side yards of ten feet on one side and five feet on the other. Mr. Lally valued the property at $779,000 immediately before the taking, premised upon comparable sales.
Mr. Lally further testified that although the City took a portion of the lot that measured 28 feet by 100 feet, he considered the parcel taken to be 29 by 100 feet, for a total of 2,900 square feet, because the one foot strip of land on the far side of the lot, adjacent to the adjoining lot, is useless to the current owner. Mr. Lally valued the direct damages at $246,500, or $85 per square foot, based on comparable sales of buildable lots in similar locations. He further opined that the property suffered severance damages because the legal side yard was eliminated, the existing building is now oversized for its lot, there is no legal access along the eastern property line, there is no means by which to get to the back of the property from the front without going through the house, there is a questionable right of access to make repairs because the City owns the property up to one foot from the wall of the home, there are questions with regard to who is responsible for maintenance of the property taken, there is a loss of off-street parking for one car and the property is now a non-conforming use. Mr. Lally testified that he calculated severance damages to the remainder to be 25%, based upon his experience and personal judgment, since he could not find a comparable sale, i.e., a building that had been built to its best use, using the entire parcel of land, which could no longer be built in compliance with zoning regulations. He accordingly concluded that the value of the property after the taking was $399,500, so that the total value of the damages was $379,500, as explained in his report.
On cross examination, Mr. Lally testified that he had done approximately 150 to 200 appraisals for claimants' attorneys and that he was currently working on about 30 or 40 claims; he is not licensed as a real estate appraiser. He was involved in one transaction where he sold property to the City and was dissatisfied because of the length of time that the purchase took. Mr. Lally testified that although the minimum lot area required to build a detached residence is 3,800 square feet, the comparable sales that he relied upon in valuing the parcels taken consisted of vacant lots having areas of 12,000, 4,370, 5,000 and 4,000 square feet that were buildable; he further testified that one could not build a detached two-family home on a lot having 2,800 square feet. He explained, however, that he valued the property at $85 per square foot, using the median value of the comparable sales, and calculated the direct damages by multiplying the number of square feet of the property that the City took by $85.
On redirect examination, Mr. Lally explained that he considered developable parcels of property as comparable sales for the property taken by the City because before the condemnation, the property was part of a parcel that could be developed; he therefore concluded that the parcel taken should not be valued as non-buildable. Further, the remaining parcel of 3,500 is not large enough for the construction of a house unless special permits are obtained; after the taking, the property constituted a legal con-conforming use. Mr. Lally explained that he valued the property taken as buildable because he did not believe that claimants should be penalized because of the taking.
Mr. Lally also testified that he prepared an appraisal report for the Aloi Property, valuing it as of the date of the taking; the report was admitted into evidence over the City's objection. The report includes photographs of the property taken, which were identified by Mr. Lally; he testified that the photos showed that the Alois resodded the property taken and were using it as part of their yard. His inspection of the property revealed that it was improved with a very upscale, custom-built, two-family dwelling, with a built-in two car garage; he is familiar with the area because he lives two blocks away. He described the neighborhood as being improved with mostly custom homes built on larger than normal lots; the applicable zoning regulations require a minimum lot size of 40 feet by 95 feet, with side yards of five feet on one side and ten feet on the other. He valued the property, before the taking, at $910,000, based upon comparable sales.
Mr. Lally explained that he calculated direct damages as $246,500, using the same methodology used for valuing Ms. Riccio's property. He was of the opinion that the taking caused the remainder of the property to suffer a loss in value, or severance damages, in the amount of $133,000, because the legal side yard was eliminated, the footprint of the building was too wide for the remaining lot, legal access along the western property line of the remainder to the rear yard was eliminated, and questionable legal rights of access for repair remained, as did questions regarding responsibility for maintenance of the property taken. He calculated the lost value at 20% of the value of the property because this parcel did not have garage space taken; his estimate of this damage was based upon his experience because there were no comparable sales. Mr. Lally concluded that the value of the Aloi property, after the taking, was $530,500, with total damages being $379,500.
On cross examination, Mr. Lally testified that because the property was zoned R-3A, the parcel taken by the City did not constitute a buildable lot. He further opined that the owner of the subject property would not have the right to enter upon the property taken by the City to make repairs.
On redirect examination, Mr. Lally testified that he considered developable properties as comparable sales for the property taken because the portion of the property taken was part of a developable parcel and was required to build the existing structure.
Henry A. Salmon
Mr. Salmon's testimony corrected numerous errors found in his written report.
Mr. Salmon testified that he is a certified real estate appraiser, he has been the president and chief appraiser for Equity Valuation Associates for 24 years, he has a degree in urban development and an MBA, he has worked as a commercial banker concentrating on asset based financing, he has testified as an expert witness in numerous cases and in numerous courts and he has done at least 500 appraisals a year on Staten Island. He prepared an appraisal report dated November 20, 2007 for the Aloi property in which he valued it as of March 12, 2007 and determined that the damage caused by the City's taking was $209,212; his report was marked into evidence and he identified the photographs included therein.
In its memorandum of law, the City states that Mr. Salmon testified that he has appraised approximately 12,000 properties on Staten Island over 24 years, a statement that is not supported by the transcript.
Mr. Salmon explained that he valued the property by the direct method, i.e., he valued the portion taken on its own, the entire site as it existed before the taking and the property as it existed after the taking; he then subtracted the before the taking value from the after the taking value. In this case, since the direct value of the property taken was less than the before minus the after values, his final estimate of damages was the before value minus the after value. Mr. Salmon explained that he used three comparable sales of non-developable property to value the property taken, i.e., sales valued at $17.50, $11.90 and $12.73 per square foot, with an adjusted price per square feet of between $13.96 and $18.08. Mr. Salmon accordingly valued the property taken at $15.00 per square foot and calculated the direct damage for the Aloi property to be $42,000. Mr. Salmon further testified that he used three comparable sales to value the property before the taking, which sold for $1,145,000, $990,000 and $910,000, with adjusted values of between $963,300 and $1,105,800. Mr. Salmon accordingly valued the subject property, before the taking, at $1,030,000. Mr. Salmon testified that he then estimated the value of the remainder after the taking, using different comparable sales, which sold for $775,000, $850,000 and $918,000, with a range of value after adjustment of $799,600 to $876,900, and valued the remainder of the subject property, after the taking, at $830,000. Hence, Mr. Salmon concluded that the value of the property before the taking exceeded the value of the property after the taking by $200,000, so that claimant sustained damages of $209,212, including the stipulated damages for the improvements taken.
Mr. Salmon then testified that he also prepared an appraisal report for the Riccio property; he identified the photographs included in the report. He valued the property taken using the same method utilized in valuing the Aloi Property. In so doing, Mr. Salmon relied upon the same three comparable sales of non-developable property that had less than the minimum square footage needed to construct a dwelling pursuant to applicable zoning regulations and valued the subject property at $15.00 per square foot, for direct damages of $42,000. Mr. Salmon further testified that he valued Ms. Riccio's property before the taking, as of March 12, 2007, in reliance upon three properties that sold for $760,000, $850,000 and $775,000, for an adjusted range of values of $779,600 to $852,900, and valued the property at $810,000 before the taking. In reliance upon three different properties that sold for $717,500, $735,000 and $625,000, with an adjusted range of values of $622,200 to $651,100, Mr. Salmon valued the remainder of the lot at $635,000 after the taking. Accordingly, since the value of the property before the taking exceeded the value of the remainder after the taking by $175,000, he concluded that Ms. Riccio sustained damages in the amount of $188,724, including the value of improvements taken.
On cross examination, Mr. Salmon testified that in assessing the direct damages sustained, he compared non-developable property to the 2,800 square feet taken by the City because one could not build a two-family home on a 2,800 square foot parcel, since R-3X zoning requires a minimum lot area of 3,800 square feet and a minimum lot width of 40 to build. In valuing the property taken, Mr. Salmon testified that comparable sale one was a 1,200 square foot lot that was zoned R3-1; that the property could not be developed because the minimum required lot area is 3,800 square feet for a detached home; that the sale was located in Midland Beach, which is an inferior neighborhood as compared to Huguenot; and that it is located in a flood risk zone, which is also not the case with the subject property. Comparable sale two is also located in an R3-1 zone, is only 2,016 square feet in size, is located in a flood risk zone, has vegetation indigenous to a wetland environment and is also located in Midland Beach. Comparable sale three is zoned R3-2; it is also non-developable because it is 20 feet wide and has a total area of 2,000 square feet, which is too small to accommodate construction; and it is located in Rossville, which is also an inferior neighborhood to the properties at issue herein. Mr. Salmon then testified that he valued the 2,800 square feet taken from the Aloi property, which was developed with a two-family detached home, by comparing it with the value of non-developable property, although a two-family home similar to the one owned by the Alois could not be constructed on any of the three lots relied upon as comparable sales. Mr. Salmon further stated that if the lots had been vacant and condemned in the entirety, he would not have relied upon the same comparable sales.
Mr. Salmon also testified that after the taking, the remainder of the Aloi property did not have the minimum ten-foot side yards required by the applicable zoning regulations and is narrower than similar lots in the neighborhood, so that after the taking, the property did not comply with applicable zoning regulations. In addition, none of the comparable sales that he relied upon in valuing the 6,100 square foot remainder were next to a sewer easement; none had lot areas that were less than required by applicable zoning regulations; none were located in same neighborhood and no adjustment was made for location; and none had sustained a loss of area of 31%. Instead, he adjusted negative 5% for the fact that the subject property had a one foot side after the taking. Mr. Salmon also testified that he concluded that the value of the Aloi property after the taking was $830,000. In arriving at the total amount of damages sustained, Mr. Salmon deducted the after the taking value from the before the taking value and added the value of the lost improvements; he did not consider the direct damages because the difference between the before and after value is greater than the direct damages. Mr. Salmon recalled that in appraising the property, the City told him that he did not have to utilize the cost approach.
In addition, Mr. Salmon testified that although the Riccio property consisted of a lot having 6,400 square feet and was improved with a 2,850 square foot building that conformed to R-X3 zoning requirements before the taking, in valuing the property taken, he compared the 2,800 square foot parcel to non-developable lots. In addition, all of the sales relied upon in valuing the property after the taking were in compliance with existing zoning regulations, were in inferior locations, had smaller gross building areas, were not next to sewer easements, and did not have smaller side yards than are permitted by applicable zoning regulations and no adjustments were made for these differences. Further, a taking of 2,800 square feet represents approximately 44% of the lot. Mr. Salmon also testified that he adjusted the comparable sales by 5% because claimants were left with a one-foot side yard. He also noted that on Staten Island, there are many properties with grand fathered uses that do not comply with current zoning regulations. He did not consider the 100 square foot sliver remaining on the far side of the lot, because doing so benefitted the landowners. The comparable sales relied on would be purchased by adjacent property owners.
Although claimants moved to strike the testimony with regard to why Mr. Salmon chose not to value the 100 square foot sliver remaining after the taking, the court will deny the application, but in so doing, notes that the reasoning behind this decision does not impact on the valuations that he placed on the properties.
Mr. Salmon then testified that he prepared a pre-vesting appraisal report for the Aloi property in which he considered comparable sales with adjusted values of $79.92, $68.39 and $85.36 per square foot, as adjusted, for an indicated value of $78 per square foot, or $209,212. Mr. Salmon also testified that in a pre-vesting report dated May 26, 2006, prepared for Ms. Riccio's property, he considered a sales valued at $74.14, $90.23 and $77.50 per square foot, adjusted to $64.59, $77.98 and $72.00 per square foot, and he concluded that the value was $228,600. In one of his reports, he adjusted the sales price to $74.14 to $64.59 per square foot. In a report dated January 5, 2007, he valued the Riccio property at $265,000 in reliance upon comparable sales valued at $79.00, $72.19, $87.15, for and adjusted value of $76.15 per square foot for vacant land. The court declined to admit the pre-vesting appraisals into evidence.
Mr. Salmon further testified that he followed the Uniform Standards of Professional Appraisal Practice (USPAP) when doing his appraisals. He identified a memorandum that he received from counsel for the City, dated January 6, 2003, which set forth a formula to be utilized in valuing the properties taken. He further testified that he adopted the method set forth therein and included the language in his reports. He also testified that he reviewed a memorandum from the City's attorneys, dated October 11, 2007, which asked him to, inter alia, research his vacant land sales, review the adjustments that he made, check the gross building area of some of the comparable sales, revamp the highest and best use section and include the zoning for all comparable sales. He also reviewed a memorandum from counsel dated February 5, 2007 which inquired about a 5% depreciation adjustment, the 100 square foot severed portion of the properties remaining after the taking, irregular topography and the use of certain comparable sales. Mr. Salmon averred that both appraisal reports contained statements that the reports were prepared in conformity with the USPAP. In this regard, he admitted that although the Standards require an appraiser signing a report to state the names of those providing assistance, he did not include the names of the City's attorneys from whom he received memoranda and revised his reports in accordance therewith.
The memorandum was admitted into evidence subject to being stricken. The memorandum will remain in evidence, since the City does not provide any reason to preclude admission in its submissions after trial.
On redirect examination, Mr. Salmon testified that although he used the cost approach in valuing the properties in his pre-vesting reports, he did not use that approach in his final reports because it is speculative. Prior to finalizing his reports, Mr. Salmon testified that he received comments from the City's Law Department; the comments clarified what he already knew that he was supposed to do. He further testified that his reports did not include the names of the City's attorneys because they did not give him appraisal advice. In addition, Mr. Salmon explained that he did not make any adjustments for zoning because the comparable sales were similar and did not have any material differences; he made adjustments to account for his belief that the comparable sales were located in less desirable areas than the subject properties. Finally, Mr. Salmon testified that when claimants purchased their properties, each lot was encumbered by a mapped street that would have been revealed in a title report, and neither claimant could have obtained a permit to build a structure within the mapped street.
On re-cross examination, Mr. Salmon testified that from the time that he prepared his pre-vesting reports until the date of the taking, land values were increasing 10% to 20% a year. Further, if the properties were destroyed, they could be rebuilt because the foundations would not burn.
Compensation for Cases of Partial Takings of Property
In addressing the issue of the amount of damages to which claimants are due, the court must first recognize that it is well established that:
"The Fifth Amendment to the United States Constitution provides that private property [shall not] be taken for public use, without just compensation' (US Const Fifth Amend). The New York State Constitution similarly provides that the owner receive just compensation' for property taken for a public purpose (NY Const, art I, § 7[a]). The constitutional requirement of just compensation requires that the property owner be indemnified so that he may be put in the same relative position, insofar as this is possible, as if the taking had not occurred' ( City of Buffalo v Clement Co., 28 NY2d 241, 258 [1971]). Nonetheless, there is no . . . formula or set of . . . rules by which [just compensation can] be realized in dollars and cents' ( Matter of Rochester Urban Renewal Agency, 45 NY2d 1, 8 [1978]). New York courts have generally examined the issue of just compensation in equitable terms and determined that just compensation is the fair market value of the property, i.e., the price a willing buyer would have paid a willing seller for . . . the highest and best use of the property' ( Matter of Town of Islip, 49 NY2d 354, 360 [1980]). It is also well settled that just compensation is measured by what the property owner has lost rather than what the condemner has gained ( see Matter of City of New York, 21 NY2d 293 [1967]; St. Agnes Cemetery v State of New York, 3 NY2d 37 [1957]; see also Brown v Legal Found. of Wash., 538 US 216 [2003])."
( City of New York v Mobil Oil Corp. , 12 AD3d 77 , 81).
As is also relevant to the instant dispute and as was discussed in the November 2008 Decision:
"It is well settled that the measure of damages in partial taking cases is the difference between the value of the whole before the taking and the value of the remainder after the taking' ( Diocese of Buffalo v State, 24 NY2d 320, 323 [1969], citing Matter of City of New York [Fourth Ave.] [1931]). Stated differently, [w]here there is a partial taking of land, the measure of damages to which a claimant is entitled is the market value of the entire tract and improvements before the taking, less the value of the remainder after the taking' ( Donaloio v State, 99 AD2d 335, 338 [1984], affd 64 NY2d 811 [1985], citing Acme Theatres v State of New York, 26 NY2d 385 [1970]). Where the before and after approach is used, both the before' and the after' valuations must be calculated by the same method' ( Mil-Pine Plaza v State, 72 AD2d 460, 462 [1980], citing Diocese of Buffalo, 24 NY2d at 326).
"Further, it is well settled in this State that, where there is a partial taking, consequential damages which ensue upon the taking are to be considered in determining the award and that, among other things, damages which arise from the use of the parcel taken are entitled to consideration' ( Dennison v State, 22 NY2d 409, 412 [1968], citing Buffalo Ry. Co. v Kirkover, 176 NY 301 [1903]):
"Consequential damages, also known as severance damages, reflect the fact that in addition to the loss of value of the property actually taken, the condemnee's remaining property may suffer a diminution in value as a result of the loss of the condemned parcels ( see Town of Fallsburgh v Silverman, 260 AppDiv 532 [1940], affd 286 NY 594 [1941]; see generally 8A Nichols, Eminent Domain § 16.02). The measure of severance damages is what the condemnee has lost, not what the condemnor has gained (see 8A Nichols, Eminent Domain § 16.02 [4]).'
"( Murphy v State, 14 AD3d 127, 132 [2004]).
"Consequential damages are measured by the difference between the before and after values, less the value of the land and improvements appropriated' ( Chemical Corp. v Town of E. Hampton, 298 AD2d 419, 420 [2002], citing Matter of Estate of Haynes v County of Monroe, 278 AD2d 823, 825 [2000], appeal denied 96 NY2d 712 [2001]; Mil-Pine Plaza, 72 AD2d at 462; accord Coldiron Fuel Ctr. v State , 8 AD3d 779 , 780 [2004]; Hewitt v State, 54 AD2d 812, 812-813 [1976]). As is also relevant herein, "[i]t is widely accepted that partial taking does not itself cause a consequential loss . . . Damages for such a loss must be based upon either the opinion of an experienced, knowledgeable expert . . . or on actual market data showing a reduction in the value of the remainder as a result of the appropriation"' ( Chemical Corp., id. at 422, quoting Zappavigna v State of New York, 186 AD2d 557, 560 [1992]). [T]he burden is upon the claimant to prove consequential damages and to furnish a basis from which a reasonable estimate of those damages can be made' ( Mil-Pine Plaza, 72 AD2d at 464, citing 4A Nichols, Eminent Domain [3d ed], § 14.21, subd 2; Wickham Lake Homes v State of New York, 55 AD2d 976 [1977]).
"Accordingly, it has been held that [l]oss of enhancement due to the location and esthetic qualities of a claimant's property is readily cognizable as consequential damage' ( Monser v State, 96 AD2d 702 [1983], citing City of Yonkers v State of New York, 40 NY2d 408, 413 [1976]). Hence, it has been held that consequential damages or severance damages were properly awarded where access to the remaining property was found to be unsuitable ( Schreiber v State, 56 NY2d 760, 762 [1982]; Priestly v State, 23 NY2d 152, 155 [1968]); where there was a loss of access from the street to a garage on the remaining property ( Meyers v State, 215 AD2d 357, 357-358 [1995]); where the remaining parcel of property had an irregular shape as a result of the taking ( Niagara Mohawk Power v Olin, 138 AD2d 940, 941 [1988]); where the remaining property lost a setback ( Monser, 96 AD2d 702); and where the remaining property lost a buffer zone ( Cummings v State of New York, 62 AD2d 1084, [1978], lv denied 44 NY2d 648 [1978]; appeal dismissed 44 NY2d 948 ]1978])."
(November 2008 Decision).
In view of the testimony received at trial, it must also be noted that although the distinction is not always made, consequential damages consist of damages resulting from the use to which the condemnor puts the property taken, while severance damages consist of the reduction in value of the property not taken (3-28 Warren's Weed New York Real Property § 28.38[1][a]). In explaining the methodology to be utilized in calculating such damages, a leading treatise explains that:
"There are two main formulas that the courts have used to measure the depreciation in value of the portion of property not taken in order to determine the amount of severance damages. The first formula is the market value of the land taken, plus the difference before and after the taking in the market value of the remainder area. This formula is sometimes difficult to apply because it may be difficult to assign a pre-taking market value to the remainder area since that parcel was part of a larger piece of land before the taking. . . .
"Under the second formula, severance damages equal the difference between the value of the entire tract before the taking and the value of the remainder after the taking. This formula does not involve the difficulty of determining a pre-taking value for the remainder parcel that is present when using the first formula. Yet neither formula is constitutionally required, since the goal in each taking case is to use the formula that will best lead to just compensation.'"
(13-79F Powell on Real Property § 79F.04).
As is also relevant herein, "[i]n determining an award to an owner of condemned property, the findings must either be within the range of expert testimony, or be supported by other evidence and adequately explained by the court" ( Chester Indus. Park Assoc. v State of New York ,65 AD3d 513, 515 [2009], quoting In re City of New York [Reiss], 55 NY2d 885, 886, citing Estate of Dresner v State of New York, 262 AD2d 274, 275; accord Madowitz v State, 288 AD2d 442, 443; Matter of Town of Islip v Sikora, 220 AD2d 434, 435-436). It must also be recognized that "[t]he suitability of comparable sales, absent legal error . . . is a matter for resolution by the trial court'" ( Krebs v Board of Assessors, 225 AD2d 625, 625; quoting Matter of Phelps Dodge Indus. v Kondzielaski, 131 AD2d 675, 678, appeal denied 70 NY2d 613; accord In re Cobleskill, 149 AD2d 876, 877 [the degree of comparability between sales is a matter within the province of the trial court]). In this regard, the court may exercise its discretion and accept comparable sales as evidence of the value of property where the expert testimony relied upon sufficiently explains the basis of the adjustments made, or the lack thereof, to the comparables which form the basis of the appraisal ( see generally City of New York v Estate of Levine, 196 AD2d 654, 655, appeal dismissed 84 NY2d 864, lv denied 88 NY2d 803). Further, appellate courts will defer to trial courts in evaluating the credibility of witnesses, holding that the quality of the proof can best be made in a nonjury trial, since the trial court has direct access to the parties ( see, e.g. In re Acquisition of Real Property by City of Albany, 199 AD2d 746, 749).
The Parties' Contentions
Claimants' Contentions
Claimants contend that they properly valued the subject properties before the taking, in reliance upon suitable comparable sales. They accordingly valued the parcels taken at $85 per square foot, which value was selected based upon the value of comparable parcels of developed land. Claimants argue that the use of comparable sales that could be developed is proper, since the lots conformed to the applicable zoning regulations and could be developed before the taking, but were rendered nonconforming after. They further aver that valuing the property as non-buildable lots is inconsistent with the highest and best use because it devalues the property by disregarding its utility and it penalizes claimants for the taking. In this regard, claimants also note that during cross examination, Mr. Salmon revealed that he had considered other sales having greater values in the pre-vesting reports that he prepared for the City, which he relied upon in valuing the property using the cost approach; this approach was abandoned after Mr. Salmon adopted counsel's valuation formula. Claimants thus assert that the $85 per square foot value placed on the property using the cost approach is more persuasive than the values that the City arrived at in its final reports and testified to at trial.
Claimants also argue that the comparable sales relied upon by the City in arriving at direct damages of the properties taken are not sufficiently similar because none were zoned R-3X, all were located in inferior neighborhoods, none were developable as of right and all were located in flood areas. Further, all of the sales had limited marketability because the only people who would buy the properties would be the adjacent owners, so that the sales prices do not represent fair market value, i.e., the price which a willing buyer under no compulsion to buy would pay to a willing seller who is under no compulsion to sell. In addition, the sales occurred between November 4, 2005 and June 2, 2006, well before the date of vesting. In this regard, Mr. Salmon testified that the price of properties was increasing 10 to 20 per cent per year during this time, that he would not have used these comparable sales if the entire lot had been taken and that the amount of direct damages would change if the damage parcels were developable.
In addition, claimants also contend that the sales relied upon in arriving at the after the taking values were not located in the same neighborhood, none were next to sewers, none were built on lots that did not conform to applicable zoning regulations and none had been reduced in size by 31% and 44%. Further, the comparable sales relied upon in valuing the Ricco property were zoned R3A, so that the lots and side yards were smaller. Mr. Salmon, however, made only a nominal adjustment of 5% for functional utility to account for the facts that the remaining lots will have side yards that are only one foot wide after the taking. Claimants also argue that an award of remainder damages is appropriate on these facts and that the amount of such damages was properly based upon Mr. Lally's opinion, which is supported by over 43 years of experience and his familiarity with the area, because he could not locate any comparable sales.
Further, claimants argue that the appraisal formula utilized by the City, i.e., that the appraiser must disregard direct damages if he or she finds that the difference between the before and after value exceeds the amount of the direct damages, has never been adopted in any partial taking case and is at odds with the general principle that property owners are always entitled to direct damages. In addition, claimants note that this valuation formula was not used in any of the earlier pre-vesting appraisal reports that Mr. Salmon submitted to the City and the formula can be found, verbatim, in a memorandum that Mr. Salmon received from one of the City's attorneys. This is of particular relevance herein because it is improper to incorporate the formula promulgated by the City's attorneys in the appraisal reports, without disclosing that it was provided by counsel, since the USPAP requires an appraiser to include a certification in which he or she states that the report was prepared independently and in conformity with the Standards, or to summarize the assistance received, which Mr. Salmon did not do. Claimants thus conclude that the appraisals are tainted in that it is clear that the City's attorneys fail to appreciate that an appraisal is supposed to be the product of an independent expert. Indeed, when discussing the issue during trial, counsel for the City incorrectly stated that Mr. Salmon is employed by the City.
The City's Contentions
The City similarly contends that it properly valued the damages sustained in its reports. It then argues that Mr. Lally did not properly employ the before and after method in valuing the damages that claimants sustained, since Mr. Lally chose improper comparable sales of developable property in valuing the direct damages because the 2,800 square foot parcels taken were not buildable. The City further avers that the value of the damage parcels would not be affected if the comparable sales were non-buildable for other reasons, as if, for example, the property was encumbered by wetlands restrictions. In addition, Mr. Lally did not calculate the after the taking value of each property as it existed, improved with a house, and instead subtracted the direct damages from the before value of the improved property for both damage parcels. Also, Mr. Lally made no adjustments for the difference in size. The City further contends that in calculating severance damages, Mr. Lally selected arbitrary percentages, which were not based on any market data.
The City also asserts that it is significant to note that the houses owned by the Alois and Ms. Riccio were untouched after the taking and since the remaining lots were already developed with houses, that use could be continued, repaired and reconstructed in accordance with Sections 52-21 and 52-24 of the Zoning Regulations and Real Property Actions and Proceedings Law (RPAPL) § 881. Further "it is absurd to claim that any City official would penalize Claimants for walking over the portion of the property taken or for setting up picnic tables or folding chairs. It is not the intent of the City to preclude transitory passage of the subject damage parcels," particularly since the City did not leave any demarcations as to its title line. The City also notes that Mr. Lally testified that the Alois went back and resodded the property and were using it as part of their yard. The City also claims that the availability and amount of on-site parking spaces, as well as access to the property, remained unchanged. In addition, the City points out that when claimants purchased the subject properties, they were encumbered by mapped and unopened streets, so that claimants could not have obtained a permit to build any structure on those portions of the properties.
The City also argues that inasmuch as claimants' expert reports were prepared by a real estate broker, rather than by a licensed or certified real estate appraiser, the reports should be given little or no weight. Moreover, Mr. Lally engaged in a real estate transaction with the City that he declared to be the "worst arrangement ever made," so that this court should find that he is biased against the City. In addition, the City avers that Mr. Lally could not identify the rules that he followed in preparing his reports. Further, the testimony establishes that Mr. Lally's objectivity is compromised because he maintains a close relationship with counsel for claimants, since he has worked with the firm for over 20 years and he has prepared hundreds of appraisal reports for them. The City thus concludes that this court should adopt the findings of its reports.
Claimants' Reply
Claimants first aver that most of the arguments raised by the City have already been determined by the court, since in the November 2008 Decision, this court determined that they properly calculated damages using the before and after method. They then argue that the City's appraisal reports are deficient because they fail to apportion direct damages and severance damages. Claimants also refute the City's contentions that Mr. Lally is not a credible witness qualified to testify as an expert. To the contrary, claimants argue that the City's appraiser lacks credibility because he was unable to prepare his reports without significant input from the City's attorneys and he relied upon counsel's flawed formula in calculating damages. Claimants also contend that consequential damages can properly be based upon the opinion of an expert, particularly since Mr. Lally testified that there was no market data available to reflect the condition of the two remaining lots after the taking.
In addition, claimants contend that since the City took title in fee simple absolute, no reservations were made for claimants' continued use of the property. Accordingly, damages must be awarded as of the date of the taking, on the basis of what the City took. Thus, the City should not be permitted to minimize the damages that it is obligated to pay because it condemned more than it required, without regard to whether it intends to allow transitory passage or because it left no visible demarcation lines. In this regard, claimants also note that it is clear that the City has the right to enter onto the taken parcels if work needs to be done to repair the sewer lines.
The City's Reply
In reply, the City asserts that claimants improperly argue that the November 2008 Decision accepted the analysis of claimants' expert in that the decision characterized the City's motion as one for summary judgment and held only that the City did not sustain its burden of proof. The City also defends the formula that it used to calculate damages as proper.
The City also reiterates its contention that claimants' expert did not use the same methodology in valuing the property before and after the taking, so that the valuations are incorrect as a matter of law, and that Mr. Lally improperly valued the remainder after the taking. Further, since the effects of the taking herein are minimal, because the City took narrow strips of land, its use of the damage parcels is not inconsistent with residential use, so that an award of consequential damages should be denied. Similarly, the City argues that claimants did not prove that the subject property lost value because the taking rendered the property non-conforming with applicable zoning regulations, particularly in view of Mr. Salmon's testimony that there were many properties on Staten Island that have grand fathered non-conforming uses.
Finally, the City contends that since medical and scientific treatises are generally inadmissible at trial, claimants should not be permitted to rely upon the USPAP, since the rules were not admitted during the trial. Further, claimants' contention that Mr. Salmon violated the rules promulgated in conjunction with the USPAP should be disregarded as baseless. The City also argues that claimants' assertion that Mr. Salmon was unduly influenced by the City's attorneys is without merit.
The City's Request to Preclude Claimants from
Offering Their Appraisal Reports into Evidence The City's Contentions
In support of its request for an order precluding claimants from introducing their appraisal reports into evidence, the City argues, in brief, that Mr. Lally's reports fail to contain any facts, figures or calculations to support his estimates and for the above discussed reasons, the reports are flawed and must be rejected.
Claimants' Contention
In opposition, claimants argue that this issue has already been decided against the City in the November 2008 Decision in which this court held that they properly calculated damages sustained by reason of the taking, utilizing the before and after method.
The Law
Pursuant to the doctrine of law of the case, once a point is decided within a case, that point is binding upon all parties and upon all courts of coordinate jurisdiction ( Gee Tai Chong Realty v GA Ins. Co., 283 AD2d 295, 296, citing Siegel, NY Prac, § 488, at 680 [2nd ed]). Thus, where a party has a full and fair opportunity to litigate the propriety of a determination, and that issue is resolved on the merits in a prior decision and order, the prior decision constitutes law of the case ( see e.g. Briggs v Chapman , 53 AD3d 900 , 901 [under the law of the case doctrine, parties or their privies are precluded from relitigating an issue decided in an ongoing action where there previously was a full and fair opportunity to address the issue]; Posin v Russo, 294 AD2d 344 [since defendant had a full and fair opportunity to litigate the propriety of the trial court's determination, and that issue was resolved on the merits in a decision, the second amended judgment appealed from violates the doctrine of law of the case]).
Discussion
Herein, as argued by claimants, this court previously denied the City's pre-trial motion seeking to preclude claimants from introducing their appraisal reports into evidence on essentially the same grounds as are argued now. Accordingly, the November 2008 Decision is found to be law of the case and controlling herein, so that the City's request to preclude claimants from introducing their appraisal reports into evidence is denied.
Law of the Case
The court, however, rejects claimants' assertion that the November 2008 Decision resolved the issues raised herein. More specifically, in that decision, this court held that the City did not sustain its burden of proof, stating that:
"[A]lthough the City correctly argues that the burden is on claimants to establish an entitlement to consequential and/or severance damages at trial, on a motion seeking summary judgment on the ground that no such damages were sustained, the burden of proof is on the City, as movant. The City fails to sustain this burden."
Accordingly, while the prior decision of this court determined that the City was not entitled to summary judgment as a matter of law, it did not reach the issue of whether the City's appraiser or claimants' appraiser more properly determined the amount of damages to be awarded to claimants. From this it follows that the arguments raised by the parties must now be disposed of on the merits.
The City's Objections to Mr. Lally's Qualifications as an Expert
As argued by the City, it is well settled that "[w]hen an expert opinion lacks factual support and is bolstered only by the expert's qualifications, it carries little probative value and should be rejected" ( Shore Haven Apartments No. 6 v Commissioner of Finance, 93 AD2d 233, 237, citing Vircillo v State of New York, 24 AD2d 534; Katz v State of New York, 10 AD2d 164, Matter of Seagram Sons v Tax Comm. of City of N Y, 18 AD2d 109, affd 14 NY2d 314; Yonkers Urban Renewal Agency v 44 Prospect St., 49 AD2d 894). It is equally well established, however, that "[f]or a witness to be qualified as an expert, the witness must possess the requisite skill, training, education, knowledge or experience from which it can be assumed that the opinion rendered is reliable" ( Matott v Ward, 48 NY2d 455, 459). "No precise rule has been formulated and applied as to the exact manner in which such skill and experience must be acquired. Long observation and actual experience, though without actual study of the subject, qualify a witness as an expert in that subject" ( Meiselman v Crown Heights Hospital, 285 NY 389, 398, citing Slater v Wilcox, 57 Barb 604; accord Schechter v 3320 Holding , 64 AD3d 446 ; Miele v American Tobacco Co. , 2 AD3d 799 , 802; Steinbuch v Stern , 2 AD3d 709 , 710; see also Price by Price v New York City Hous. Auth., 92 NY2d 553, 560 [although the expert had no academic degree in behavioral sciences, his skill, training, knowledge and experience were adequate to support an assumption that the opinion he rendered was reliable]; Caprara v Chrysler, 52 NY2d 114, 121, rearg denied 52 NY2d 1073 [an expert's competency can be derived just as well "from the real world of everyday use" as from a laboratory]). "[O]nce the witness is allowed to testify as an expert the extent of the witness's qualifications becomes a matter to be weighed by the trier of fact" ( McLamb v Metropolitan Suburban Bus Auth., 139 AD2d 572, 574, citing Felt v Olson, 51 NY2d 977).
Applying these general principles of law to the facts of this case, the court finds that Mr. Lally was properly qualified as an expert to value the damages sustained by claimants, since he has been a real estate broker for 43 years, he has been appraising properties on Staten Island for 35 years, he received his license in 1965, he has appraised many properties that have been condemned, he has been previously qualified by this court to testify as an expert and he resides in the neighborhood where the damage parcels are located ( see generally Maplewood v Wood , 21 AD3d 933 [the trial court providently exercised its discretion in qualifying defendants' witness as an expert on the basis of his expertise in land use, real estate, and zoning; the witness' lack of experience with such matters in the specific town involved goes to the weight of his testimony and not to its admissibility]).
Claimants' Objections to Mr. Salmon's Objectivity
As a threshold issue, the court finds that claimants' arguments, as premised upon Mr. Salmon's failure to comply with the USPAP, are properly before the court. In so holding, the court first notes that the City waived any objection to this testimony by failing to object during the trial ( see generally Tomanelli v Lizda Realty, 174 AD2d 889; Forrester v Port Authority of New York New Jersey, 166 AD2d 181, 183; Short v Short, 142 AD2d 947, 948 [1988]). Hence, the testimony is properly before the court, without the need to consider the Standards themselves, as annexed to claimants' memorandum of law.
Moreover, in the alternative and as was noted above, "it is well established that the admissibility of expert testimony on any particular issue is addressed to the sound discretion of the trial court" ( Franco v Muro, 224 AD2d 579, citing De Long v County of Erie, 60 NY2d 296, 307; Selkowitz v County of Nassau, 45 NY2d 97, 101-102; Crawford v Koloniaris, 199 AD2d 235). In this regard, it is clear that a party will be permitted to introduce evidence, including expert testimony, which might demonstrate that the performance at issue falls short of applicable professional standards ( see generally Sears, Roebuck Co. v Enco Assocs., 43 NY2d 389, 396). Similarly, evidence of guidelines or industry standards that should have been followed in a particular case are also admissible ( see generally Lubecki v City of New York, 304 AD2d 224 [the New York City Police Department Patrol Guide was properly utilized as a basis for imposing liability]; Sweeting v Board of Coop. Educ. Servs., 83 AD2d 103, 115 [no error was found in the court charging the jury as to the safety standards set forth in the National Electric Code]; cf. Perrotta v Simon Prop. Group , 11 AD3d 596 , 597 [the conclusion of plaintiff's expert that the truck tunnel at issue was defectively designed, without setting forth any violations of industry-wide standards or accepted practices with respect to loading dock design and construction, was insignificant]; Trojahn v O'Neill , 5 AD3d 472 , 473 [the conclusion of plaintiff's expert that the subject parking lot was defectively designed, without setting forth any violations of industry wide standards or accepted practices in the field of parking lot design and construction, was insignificant]).
Having held that the testimony regarding Mr. Salmon's lack of compliance with the USPAP guidelines is properly before the court, the court further finds that Mr. Salmon's adoption of the suggestions and valuation formula offered by counsel for the City should have been disclosed in his certification in accordance with the USPAP. From this it follows that his failure to do so is an issue that impacts adversely on the credibility of his findings.
Claimants' Objections to the City's Formula for Valuing the Damages
More significantly, the court finds that the formula profferd by the City and relied upon by Mr. Salmon in valuing damages is fundamentally flawed. In concluding that "[i]f the before-minus-after damages exceeds the direct damages, then this is the amount of the total damages, and the difference between the before-minus-after and the direct damages is called severance damages," the City and its appraiser fail to acknowledge that when supported by the facts, a condemnee is entitled to recover severance and/or consequential damages in addition to direct damages ( Williams v State, 90 AD2d 882, 884, citing NY Const, art I, § 7[a]; Keinz v State of New York, 2 AD2d 415, 417 [having established a consequential loss, it was necessary to award just compensation]). In rejecting the City's conclusion, the court finds that its reliance upon Chiesa v State ( 36 NY2d 21) and 3-28 Warren's Weed New York Real Property § 28.38[2] is misplaced.
In Chiesa, the court addressed the issue of whether special and general benefits accruing to remaining land may be used to offset direct damages attributable to land actually taken by the State ( Chiesa, 36 NY2d at 22); the court held that they could not. In explaining the holding in Chiesa, the Appellate Division, Second Department, stating that:
"While the general rule is that the measure of damages in a case of partial taking is the difference between the before and after value of the property ( see, Acme Theatres v State of New York, 26 NY2d 385, 388), that rule does not apply where it would have the effect of offsetting any benefits to the remaining land as a result of the condemnation ( Chiesa v State of New York, 36 NY2d 21). Here, the court found a significantly greater per-acre value after the taking than existed before the taking, indicating that the remaining land was benefited [sic] by the condemnation. In such a situation, the benefit may not be used to diminish the award to the claimant, as in no case should an award be made for less than the value of the property actually taken by [the] condemnation' ( Matter of City of New York [Consolidated Gas Co.], 190 NY 350, 360)."
( Done Holding Co. v State, 144 AD2d 528, 529, lv denied 73 NY2d 710 [emphasis added]; see generally Lalomia v State, 134 AD2d 846 [consequential damages are improper where the value of the property after the taking is greater than before the taking, since the value of benefits is deducted from any consequential damages]; Brown v State, 52 AD2d 1079, 1080 [it is clear that benefits to the remaining land may be deducted from consequential damages]). Accordingly, since there is no contention that the remainder of the property held by claimants benefitted from taking, the holding in Chiesa ( 36 NY2d 21) is inapplicable here.
Similarly, in addressing the issue of whether a setoff is appropriate, 3-28 Warren's Weed New York Real Property § 28.38[2] provides that:
"[A]s a general rule, the measure of damages for a partial taking is the difference between the property's value before condemnation and the value of the remainder thereafter. However, the general rule does not apply where it would have the effect of offsetting any benefits to the remaining land as a result of the condemnation.'"
( id., quoting Star Plaza v State of New York, 79 AD2d 746; Done Holding Co., 144 AD2d 528). Thus, for the same reasons, this rule is also inapplicable to the facts of this case. Further, as is more fully discussed hereinafter, courts routinely hold that under certain circumstances, claimants are entitled to an award of direct damages, as well and an award of severance and/or consequential damages.
Valuation of Damages
Turning to the issue of direct damages to be awarded to claimants, i.e., the value of the properties taken, the court finds that claimants' decision to value 2,900 square feet as having been taken, instead of 2,800 square feet, is reasonable. In so holding, the court accepts claimants' assertion that the one-foot strip remaining on the far side of the lots owned by claimants, separated by property that the City now owns, is of no value to them.
The court also finds that Mr. Lally's decision to value the property as if it could be developed is more persuasive than the City's decision to value the property as if is was non-buildable. In this regard, neither party cites any case law precedent that offers guidance with regard to how to value a portion of property taken by eminent domain when that portion was a component of a buildable lot in compliance with existing zoning regulations before the taking, and neither the parcel taken nor the remainder is buildable, in compliance with zoning regulations, after the taking, nor has the independent research of the court revealed any controlling authority. The court must therefore be guided by the general principles that provide that the measure of damages must reflect the fair market value of the property in its highest and best use ( see e.g. Chemical Corp., 298 AD2d at 421, citing Matter of City of New York, 59 NY2d 57, 61; 627 Smith St. v Bureau of Waste Disposal of Dept. of Sanitation of City of NY, 289 AD2d 472, 473) and that claimants are entitled to just compensation and are to be put in the same relative position as if the taking had not occurred ( see City of New York, 12 AD3d at 81).
The court accordingly finds that under these circumstances, it is more equitable to value the damage parcels in reliance upon comparable sales of buildable lots. This holding recognizes that claimants purchased property upon which a two-family dwelling had been built in compliance with applicable zoning regulations and presumably paid a price for the property that contemplated such a use. If the parcels taken are now valued as non-buildable lots, claimants would be awarded a reduced amount of compensation because the taking rendered the property less useful, and hence less valuable, than it had been before the City took title. Accordingly, the court finds that claimants' determination to value the direct damages for the property taken at $85 per square foot is more convincing than the City's appraisals, which value the property at $15 per square foot. In reaching this conclusion, the court also notes that this finding is consistent with the value placed upon the properties by Mr. Salmon in his pre-vesting appraisals, before he adopted the valuation formula proffered by counsel for the City and that Mr. Salmon testified that the value of land was increasing between 10 and 20% between the date of his pre-vesting reports and the date of the taking. The court therefore concludes that the direct damages sustained by claimants, or the value of the property taken, is $246,500, as determined by Mr. Lally.
It is next necessary to determine whether claimants are entitled to recover consequential and/or severance damages. In this regard, the court rejects the City's contention that because both the Alois' property and Ms. Riccio's property was encumbered by a mapped street before the taking, so that no structures could be erected on this portion of the lots, the encumbrances reduce the value of the property. In so holding, the court finds that the City offered no evidence to support a finding that the presence of the mapped street impacted negatively on the value of the property.
In their post-trial memorandum of law, claimants object to Mr. Salmon's testimony regarding the presence of the mapped street. Their argument is rejected, however, since no objection was raised during the trial. More significantly, claimants introduced no evidence to establish that no such restriction existed.
The court also finds that the City's contention that claimants' award of damages should be reduced because claimants are permitted to use the property taken is unpersuasive. In this regard, although so Mr. Salmon testified, there is no testimony from any City official before the court to establish that claimants will be permitted to do so in the future. Moreover, even if such testimony had been introduced, a reduction in damages on this ground is contrary to law. In fact, in holding that claimants were entitled to be compensated for the loss of their right to enter and exit their property, the court stated that "the absence of an explicit reservation of a right to access in the original appropriation may not be cured by provisional expedients, offered by and subject to the grace of the [condemnor]" ( Pollak v State, 41 NY2d 909, 911, citing Kravec v State of New York, 40 NY2d 1060; Wolfe v State of New York, 22 NY2d 292). In elaborating upon the holding in Pollack (id.) and Wofe ( id.), the Court of Appeals explained that:
" Pollak makes clear that damages must be paid unless the condemnee retains legal access' — i.e. a legally enforceable right to entry and exit. Damages are to be quantified based on a calculation of the damages at the time of the taking with no effect given to subsequent efforts to reestablish access ( see Wolfe v State of New York, 22 NY2d 292, 295, 239 NE2d 517 [1968]; Kravec v State of New York, 40 NY2d 1060 [1976]). This principle serves as strong incentive for the government to plan carefully and take only what is necessary or otherwise be subject to consequential damages ( see Wolfe, 22 NY2d at 295-296)."
( Lake George Assocs. v State, 7 NY3d 475, 480; accord Donaloio, 64 NY2d at 812 [representations by the State at trial, years after the appropriation, that the necessary authorizations would be forthcoming upon application by claimants to dispose of the sewage generated by their restaurant, did not satisfy the requirement for timely, unequivocal assurance by the State that this alternative would be implemented]). Applying these general principles of law to the facts of this case, it follows that claimants are entitled to damages because the City took title to the property in fee simple absolute and as such, it has the right to prevent claimants from entering upon it in the future, as well as the right enter onto the property if the installation of additional sewer lines and/or water mains is found to be needed, or if maintenance or repair work becomes necessary.
The court also holds that the City's reliance upon RPAPL 881 to argue that claimants are entitled to a reduced amount of damages because they can enter onto City owned property to make necessary repairs is specious. While the provision does allow an owner access to adjacent property if permission is refused, the owner must commence a special proceeding seeking to obtain a license to do so. The time and expense that would be required to commence legal proceedings to gain access to the City owned property compels the conclusion that claimants sustained damages by reason of the taking. Similarly, the court finds that the City's reliance upon Sections 52-21 and 52-54 of the Zoning Regulations, which permits claimants to rebuild their houses in the event that they are destroyed, does not support the conclusion that claimants did not sustain damages because the size of their properties was reduced so that the structures built on the lots are now non-conforming uses.
RPAPL 881 provides that:
"When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules. The petition and affidavits, if any, shall state the facts making such entry necessary and the date or dates on which entry is sought. Such license shall be granted by the court in an appropriate case upon such terms as justice requires. The licensee shall be liable to the adjoining owner or his lessee for actual damages occurring as a result of the entry."
Section 52-21 of the Zoning Regulations provides that "[r]epairs to both structural and non-structural parts or incidental alterations may be made in a building or other structure substantially occupied by a non-conforming use, or in connection with a permitted change or extension of a non-conforming use." Section 52-54, buildings designed for residential use in residence districts, provides that:
"In all Residence Districts, if the floor area occupied by non-conforming uses within a building designed for residential use is damaged or destroyed by any means, including but not limited to any demolition ordered or permitted by the Department of Buildings, to the extent of 25 percent or more of such floor area, such building may be continued in use or reconstructed only in accordance with the provisions of Section 52-53 (Buildings or Other Structures in All Districts) except that the 25 percent ratio set forth in this Section shall apply instead of the 50 percent ratio set forth in Section 52-53."
As is also relevant herein, Section 52-11 provides that "[a] non-conforming use may be continued, except as otherwise provided in this chapter" and Section 52-51, which provides, in pertinent part, that:
"[I]f a non-conforming single- or two-family residence in an R3, R4, or R5 District is damaged, destroyed or demolished, such building may be continued in use and reconstructed provided that such reconstruction shall not create a new noncompliance nor increase the pre-existing degree of noncompliance with the applicable bulk regulations."
Further, contrary to the City's assertion, the court finds that claimants are entitled to recover consequential and severance damages because the value of the remaining property has been significantly reduced by virtue of the amount of the property taken and the use of the property being made by the City ( see e.g. Monser, 96 AD2d 702 [the trial court properly fount that claimants were entitled to an award for consequential damages for a reduced setback because the taking adversely affected the subject remainder to a degree because of the loss of potential future use of the land for shrubbery and landscaping, the greater exposure to traffic noise and odors, the increased hazards of operating a business on the subject land and the loss of a buffer zone]; Williams, 90 AD2d 882, 884 [claimant's loss of an identifiable and functional interest in quietude, which was adversely affected by the proximity to the highway, established a consequential loss and the right to an award of just compensation]; Obermeier v State, 22 AD2d 966 [claimants were entitled to an award of consequential damage under circumstances where after the taking, the State line was within 30 feet of the northeast corner of the claimants's house and several large trees, a portion of the lawn and several flower beds were destroyed, despite the State's claim that after the taking, the highway itself was over 200 feet therefrom and that the paved portion in the future will not come any closer to the residence than presently located]).
Determining the amount of consequential damages to which claimants are entitled is somewhat problematic, however, since the evidence offered by both parties is unpersuasive in some respects. As discussed above, as a general rule, consequential damages can be measured by the difference between the before and after values, less the value of the land and improvements appropriated ( Coldiron Fuel Ctr., 8 AD3d at 780; Chemical Corp., 298 AD2d at 420, Matter of Estate of Haynes, 278 AD2d at 825; Mil-Pine Plaza, 72 AD2d at 462; Hewitt, 54 AD2d at 812-813; Matter of City of New York, 2008 NY Slip Op 52261U at 8). In seeking to establish damages, both claimants and the City relied upon comparable sales to value the property owned by claimants before the taking, reaching similar conclusions, i.e., Mr. Lally valued Ms. Ricco's property at $779,000 and the City valued it at $810,000, while Mr. Lally valued the Alois' property at $910,000 and the City valued it at $1,030,000. Inasmuch as the court's role in this proceeding is to award claimants just compensation, and the City has placed a higher value on the property than do claimants, the court will adopt the higher value, as offered by the City, as the better indicator of value.
In valuing the property after the taking, the City again relies upon comparable sales, while claimants subtract the value of the property taken, plus their estimate of consequential damages, from the before the taking value. The court finds that claimants' valuation of the properties after the taking must be rejected, since it has been held that the same method of valuation must used in determining both the before and after values ( Mil-Pine Plaza, 72 AD2d at 462; Diocese of Buffalo, 24 NY2d at 326; Matter of City of New York, 2008 NY Slip Op 52261U at 8), and claimants use of two different methods. Nonetheless, it is well settled that once a claimant introduces evidence of one measure of property damages, the burden shifts to the condemnor to present an alternative method ( Webster v Ragona , 51 AD3d 1128 , 1130, citing Fisher v Qualico Contr., 98 NY2d 534, 539).
Turning to the City's after the taking value, the court similarly finds that the comparable sales fail to adequately account for the fact that both properties are rendered non-conforming uses after the taking; both have a side yard of only one foot on one side; and both are adjacent to property owned by the City for the installation and maintenance of sewer lines and water mains, so that the property may be entered and dug up any time that repairs or improvements are needed. The court therefore finds that the City's after the taking values of Ms. Riccio's property at $635,000 and the Alois' property at $830,000, which adjusted the comparable sales by only 5% to account for these conditions, to be arbitrarily low. Nor is there any basis before the court that would allow it to adjust the values of the properties for these factors to arrive at a more equitable value after the taking ( see generally Du Bois v State, 54 AD2d 782, 783). Accordingly, the court cannot employ the formula articulated in Coldiron Fuel Ctr. ( 8 AD3d at 780), Chemical Corp. ( 298 AD2d at 420), Matter of Estate of Haynes ( 278 AD2d at 825), Mil-Pine Plaza ( 72 AD2d at 462), Hewitt ( 54 AD2d at 812-813) or Matter of City of New York ( 2008 NY Slip Op 52261U at 8) to value consequential damages.
As was recognized in the November 2008 Decision, however, it has been held that the court may award consequential and/or severance damages based upon the opinion of a qualified expert ( see e.g. Yonkers, 40 NY2d at 410-411; Chemical Corp., 298 AD2d at 423; Zappavigna, 186 AD2d at 560; Estate of Haynes, 278 AD2d 823). The court adopts this methodology herein. In so doing, however, the court notes that Mr. Lally determined that the Alois suffered increased damages valued at $133,000, or 20% of the before the taking value, as reduced by direct damages, and that Ms. Riccio suffered increased damages of $133,000, or 25% of the before the taking value, as reduced by direct damages, because she also lost off street parking. The court also notes that in adjusting the comparable sales relied upon in valuing the after the after the taking properties, the City's made an adjustment of 5% to adjust for the reduction in size.
In view of the amount of direct damages awarded and the fact that claimants are not denied of the use of their homes, albeit with reduced side yards and rights of access, the court finds that an award of increased damages in the amounts of 20% to 25%, as found by Mr. Lally, is excessive. The court also finds, however, that in view of the fact that the Alois' property was reduced in size by approximately 30% and Ms. Riccio's property was reduced in size by approximately 40%, and both structures on the remainder of the lots no longer conform to the applicable zoning regulations, an award of only 5% of the value is inadequate to provide just compensation. The court therefore determines that the Alois will be awarded consequential and severance damages in the amount of 10% of the before the taking value and Ms. Riccio will be awarded consequential damages in the of 15% of the before the taking value of her property ( see generally Yonkers, 40 NY2d at 411 [Yonkers was awarded consequential damages calculated at 3% of the value of the building and improvements by reason of the appropriation, which resulted in the loss of the high school's campus-like setting]; Estate of Haynes, 278 AD2d at 824 [claimants were properly awarded 20% of the market value found by their appraiser because of the loss of landscaping, trees and setback from the road and because raising the grade of the road resulted in direct headlighting into the house]).
Conclusion
Accordingly, for the above stated reasons, both the Alois and Ms. Riccio are awarded direct damages in the amount of $246,500 for the damage parcels taken by the City. In addition, the Alois are awarded consequential and severance damages in the amount of $103,000, or 10% of the before the taking value of $1,030,000, plus $9,212 for improvements taken, for a total of $358,712, plus applicable interest. Ms. Riccio will be awarded consequential and severance damages in the amount of $121,500, or 15% of the before the taking value of $810,000, plus $13,724 for improvements taken, for a total of $381,724, plus applicable interest.
Settle judgment.