Opinion
35057/04.
Decided August 1, 2008.
Upon the foregoing papers in this eminent domain proceeding, condemnor the City of New York (the City) moves for an order dismissing the fixture claims of 534 Bushwick Avenue Corporation (534) and Sound and Security Solutions, Inc. (Sound and Security), (hereinafter collectively referred to as claimants) or, in the alternative, assuming that claimants would be entitled to compensation for their fixture claims, ordering that such compensation be limited to the salvage value of the items found to be fixtures.
Corporation Counsel, New York, NY and Goldstein, Goldstein, Rikon Golttlieb, New York, NY.
Facts and Procedural Background
On February 28, 2005, the City acquired title to the subject properties, located at 532-534 and 540-550 Bushwick Avenue, Block 3137, Lots 1, 6 and 9. Prior to the date of vesting, by separate agreements, Sound and Security and 534 leased the subject properties to J T Auto Sales (J T) (the Leases).
On November 21, 2005, Sound and Security and 534 filed a claim for fixtures including gates, sidewalks, asphalt and signs. On June 20, 2006, claimants filed an amended notice of fixture claim. On August 30, 2006, the parties exchanged appraisal reports. Both the City's appraiser and claimants' appraiser agree that the highest and best use for the properties is for mixed residential and commercial development.
As is also relevant herein, by decision dated January 29, 2008, this court denied a motion made by the City for an order dismissing the fixture claims filed by claimants on the ground that they were not entitled to compensation because the properties were actually occupied by J T (the January 2008 Decision).
In another decision rendered in this condemnation proceeding and dated April 17, 2008, this court granted a motion made by the City for an order dismissing the fixture claims of Yan Yun Chen, Pei Li Rong Chen and George Chu, finding that since the land was valued for mixed residential and commercial development, its highest and best use, claimants were not entitled to compensation for fixtures which were inconsistent with that use (the April 2008 Decision).
The Parties' Contentions
In support of its motion, the City argues that as the court held with regard to the Chens and Chu, claimants herein should not be compensated for the trade fixtures on their properties because the fixtures are inconsistent with the highest and best use for mixed residential and commercial development. Hence, since the fixtures would have to be demolished to make way for the development, they have no value in this condemnation proceeding. In the alternative, the City argues that in the event that the court determines that claimants are entitled to be compensated for the fixtures, the award should be limited to the salvage value of the items found to be fixtures, because claimants leased the subject properties to J T prior to the date of vesting, so that claimants were no longer operating a business at the premises.
In opposition, claimants argue that since the City was willing to pay compensation for the taking of the fixtures when it believed that they were owned by J T, as is established by the fact that it sent J T an advance payment certification sheet, it should not now be permitted to refuse to pay compensation because it learned that title passed to claimants. In so arguing, claimants contend that the City's refusal to pay under these circumstances is tantamount to interfering with the parties' freedom of contract. Claimants further argue that the potential use of the fee should be irrelevant to the value of the fixtures, so that the fact that the highest and best use of the property is inconsistent with the fixtures should not work to deprive claimants of compensation.
Discussion
The issues raised herein can be decided upon the rationale and holdings of the January 2008 and April 2008 Decisions. As is relevant to the issues now before the court, in the January 2008 Decision, this court found that pursuant to their terms, claimants' Leases with J T terminated upon condemnation of the demised premises and any improvements made became the property of the landlords at the conclusion of the Leases ( see Cooney Bros. v State of New York, 24 NY2d 387; Matter of City of New York [Allen St.], 256 NY 236; Interlake Serv. Sta. v State of New York, 249 AD2d 275, 276, lv denied 92 NY2d 809). Accordingly, Sound and Security and 534, as owners and landlords of the property, became owners of the fixtures upon title passing to the City in the instant condemnation proceeding. This holding is law of the case and is binding herein.
"`"[L]aw of the case is a rule of practice, an articulation of sound policy, that, when an issue is once judicially determined, that should be the end of the matter as far as Judges and courts of co-ordinate jurisdiction are concerned"'" ( Abbas v Cole , 44 AD3d 31 , 37 [2007], quoting Thomas v Dietrick, 284 AD2d 325 [2001], quoting Martin v City of Cohoes, 37 NY2d 162, 165 [1975]).
Further, in the April 2008 Decision, the court reasoned that since claimants and the City valued the property for development for mixed commercial and residential use, and the fixtures for which the Chens and Cho sought compensation were inconsistent with that use, claimants were not entitled to be compensated for the improvements that had to be demolished in order to so develop the property ( see In re Hempstead, 56 NY2d 1020, 1022; Acme Theatres, 26 NY2d 385, 388-389; Van Kleeck v State of New York, 18 NY2d 897; Matter of Erlanger, 237 NY 159, 164; In re County of Nassau, 43 AD2d 45, 51, affd Colony Beach Club v County of Nassau, 39 NY2d 958; Irv-Ceil Realty v State, 43 AD2d 775, 776; Spano v State of New York, 22 AD2d 757). Applying the same precedents and rationale herein, the court holds that Sound and Security and 534, as owners of fixtures that are incompatible with the highest and best use of the subject property for development as mixed residential and commercial property, are similarly not entitled to any compensation for the fixtures.
In so holding, the court notes that such an interpretation of applicable law and the terms of the parties' Leases does not interfere with the parties' contractual rights and obligations, since the holding requires the City to distribute the proceeds of the condemnation award as agreed to between the landlords and tenant in the Leases. In this regard, it is well established that a landlord and tenant are free to allocate the ownership of fixtures and condemnation awards by agreement ( see generally In re New York, 55 NY2d 353, rehearing denied 56 NY2d 805; Matter of City of New York (Allen St.), 256 NY 236; Matter of Arverne Second Amended Urban Renewal Project , 44 AD3d 760 ; Village of Port Chester v Martinez , 5 AD3d 692 , appeal dismissed 2 NY3d 823). From this it follows that since J T's ownership interest in the fixtures terminated upon condemnation, so that Sound and Security and 535 are owners of both the fee and the fixtures, the trade fixture owners are not being denied compensation.
The court also rejects claimants' contention that the City is now estopped from refusing to pay just compensation to Sound and Security and 534 because it sent J L an advance payment certification sheet. "Absent an unusual factual situation, estoppel is not available against a governmental agency engaging in the exercise of its governmental functions'" ( Advanced Refractory Techs. v Power Auth., 81 NY2d 670, 677, quoting D'Angelo v Triborough Bridge Tunnel Auth., 65 NY2d 714, 715-716; Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30, 33). The exercise of eminent domain is clearly an example of a municipal governmental function ( see generally In re Ely Ave. in New York, 217 NY 45, 53, rehearing denied 217 NY 665; In re County of Monroe's Compliance with Certain Zoning Permit Requirements, 131 AD2d 74, 78, affd 72 NY2d 338). While unusual circumstances may be found to exist "where a governmental subdivision acts or comports itself wrongfully or negligently, inducing reliance by a party who is entitled to rely and who changes his position to his detriment or prejudice" ( Bender v New York City Health Hosps. Corp., 38 NY2d 662, 668), no such circumstances are present here.
Conclusion
Accordingly, for the above discussed reasons, the City's motion to dismiss the fixture claims of Sound and Security and 534 is granted.