Opinion
4004/08.
Decided May 29, 2009.
Matthew Cutler, Esq., Asst. Corp. Counsel, City of NY Law Dept., Condemnation Div., NY, NY.
Michael Rikon, Esq., Goldstein Goldstein Rikon Gottlieb, NY, NY.
Upon the foregoing papers, claimant Ramfis Realty, Inc., moves for an order directing the City of New York (the City) to authorize and to pay an advance payment to it, with interest thereon.
Facts and Procedural Background
This condemnation proceeding was commenced to acquire title to the subject property as part of the South Beach Bluebelt project. Title to the property, Block 3491, Lots 19, 20, 41 and 81 in Staten Island (the "Property") vested in the City on May 29, 2008.
The Parties' Contentions
Claimant
In support of its motion, claimant argues that the City first prepared a City Planning Report for this project as early as 1989 and filed plans with the New York City Planning Commission in November 2004. Accordingly, the City has had ample time to prepare an appraisal. Claimant further argues that Eminent Domain Proceeding Law (EDPL) §§ 302, 303 and 304 require that an advance payment be made. Claimant also points out that in the case of Matter of New York City (Stapelton Branch Library) (Kings County Sup Ct, Index No. 8822/02, June 30, 2003) ( Stapelton), this court held that the City was obligated to make an advance payment.
The City
In opposition, the City argues that it cannot issue an advance payment to claimant because it does not have an appraisal. In so arguing, the City relies upon New York City Administrative Code § 5-328, which provides that the City is authorized to offer a condemnee "a sum to be determined by the corporation counsel after an appraisal of the damages sustained by such person by the expert or experts employed by the corporation counsel less any liens or encumbrances on the property." Further, EDPL 303 provides that "[t]he condemnor shall make a written offer to acquire the property for one hundred per centum of the valuation so established."
The City further avers that although it hired two experts to assist in the valuation of the property, i.e., Robert Sterling of Sterling Appraisals, Inc., to appraise the property, and Magnus Sjoberg of Henningson, Durham Richardson Architecture and Engineering, P.C., to prepare an environmental analysis, a development assessment and site plan reports, the reports have not yet been completed. To substantiate this claim, the City annexes affidavits from Sterling and Sjoberg in which each alleges that he has been retained by the City to prepare reports for other acquisitions in Staten Island; that the valuation of the subject property, which is encumbered by wetlands regulations, necessitates an increased amount of work because it is more complicated than appraising property that is not so encumbered; that each has many commitments in addition to preforming the work for the City; and that it is difficult to project a precise date for these projects, but each will do the work as quickly and efficiently as possible.
The City also argues that claimant incorrectly relies upon EDPL 302, since it quotes only that portion that of the statute that provides that "[r]eal property to be acquired by the exercise of the power of eminent domain shall be appraised on behalf of the condemnor by an appraiser," while ignoring the language that states that "[i]n order to adequately prepare such appraisal upon which the condemnor's offer is based, the condemnor shall have the right to inspect such property prior to vesting." The City accordingly concludes that this provision is intended to give the condemnor the right of access to property that is being considered for condemnation, not to impose upon it the duty to conduct a pre-vesting appraisal. Similarly, the City avers that claimant ignores the language in EDPL 303 that states that "[w]henever practicable, the condemnor shall make an offer prior to acquiring property." The City thus concludes that there is no mandate within the EDPL that a condemnor must make an offer or an advance payment prior to vesting.
Finally, the City contends that claimant misconstrues the facts of this proceeding by arguing that EDPL 304 is "intended to alleviate the hardship of owners in financing the purchase or replacement of property," since claimant herein is not in possession of the subject property, which is vacant, so that it will not face any hardship in replacing it. In addition, claimant will be compensated for any delay in payment by receiving interest at the statutory rate of 6%, which far exceeds any interest that could be earned from a bank. In this regard, the City also maintains that claimant's reliance upon Stapelton is misplaced, since in that case, claimant was at risk of suffering irreparable harm because it was in danger of defaulting on a construction mortgage loan for work that was in progress at the time of the taking and the property was not encumbered by wetlands regulations.
Claimant's Reply
In reply, claimant argues that the City offers no valid reason why it should not be ordered to make an advance payment. Instead, the City alleges only that it is not practicable to do so, an argument that claimant contends is always raised. Claimant again emphasizes that the City has had more than four years to appraise vacant land. In addition, the affidavits submitted from Sterling and Sjoberg fail to advise the court when they were hired.
The Law
It is well settled that "[w]hen the State takes property by eminent domain, the Constitution requires that it compensate the owner so that he may be put in the same relative position, insofar as possible, as if the taking had not occurred'" ( Matter of City of New York v City of New York, 11 NY3d 353, rearg denied 2009 NY LEXIS 395 [2009], quoting City of Buffalo v Clement Co., 28 NY2d 241, 258; accord Rose v State of New York, 24 NY2d 80, 67 [1969] [in condemnation proceedings the condemnee is being deprived of property which must be replaced as soon as possible so that he may be put in the same relative position as if the taking had not occurred]). Accordingly, it has been held that:
"While it is not necessary, in advance of the taking, to pay to the landowner his compensation, it is necessary that the act which invades his ownership shall provide for a certain and definite and adequate source and manner of payment. ( Sage v City of Brooklyn, 89 NY 189.) This necessity is vital and of the most essential character, since if unheeded or disregarded, it transforms the right of eminent domain into a legalized plunder of the citizen."
( In re Mayor, 99 NY 569, 577). It has also been held that "[i]t is clear, beyond doubt, that the statutory authority for advance payments does not require that any demand be made by the claimant" ( In re Hempstead, 78 Misc 2d 1090).
As is also relevant herein, the "Eminent Domain Procedure Law codifies the constitutional requirement that just compensation be paid to all persons whose property rights are acquired by eminent domain" ( Village of Port Chester v Sorto , 14 AD3d 570 , 571 [ 2005], citing EDPL 101; 520 E. 81st St. Assoc. v State of New York, 99 NY2d 43, 47; City of Buffalo, 28 NY2d at 258-261). In this regard:
"The EDPL was enacted in 1977 and superseded several statutes granting eminent domain powers to various governmental bodies ( see, EDPL 104, and cited Cross References in McKinney's Cons Laws of NY, Book 16A, at 73 et seq.). It was intended to standardize the means for the public acquisition of property and for determining just compensation for those whose property is taken."
( East Thirteenth St. Cmty. Assn. v New York State Urban Dev. Corp., 84 NY2d 287, 293-294). The "eminent domain statutes seek primarily to protect the interests of property owners and to ensure that their property is taken only in accord with proper procedure and for just compensation" ( id. at 296, citing Fifth Ave. Coach Lines v City of New York, 11 NY2d 342). "The policy behind EDPL article 3 is to ensure that the condemnor, at all stages prior to or subsequent to an acquisition . . . shall make every reasonable and expeditious effort to justly compensate persons . . . by negotiation and agreement'" ( Matter of New York City Tr. Auth., 160 AD2d 705, 709, citing EDPL 301).
In addressing the statutory requirements of a condemnation proceeding pertinent to the instant dispute, EDPL 301 states that the policy of the law requires that "[t]he condemnor, at all stages prior to or subsequent to an acquisition by eminent domain of real property necessary for a proposed public project shall make every reasonable and expeditious effort to justly compensate persons for such real property by negotiation and agreement." EDPL 302 requires that the condemnor conduct an appraisal of the subject property. EDPL 303 provides that the condemnor shall establish an amount which it believes to be just compensation for the property and whenever practicable, make an offer of 100% of this amount to the condemnee prior to acquisition. "The mandate of EDPL 303 is that the condemnor establish and offer an amount which it believes to represent just compensation'" ( Matter of Lateral Sewer 2005, 113 AD2d 799, 802). Further, "[t]he property owner should be placed in a position where at the time title is divested he receives some moneys to enable him to do what is necessary to compensate him for his loss" ( City of New Rochelle v Sigel, 65 Misc 2d 962). EDPL 304 set forth the procedures to be followed in making, accepting and/or rejecting an advance payment.
EDPL 302 provides that:
"Real property to be acquired by the exercise of the power of eminent domain shall be appraised on behalf of the condemnor by an appraiser. In order to adequately prepare such appraisal upon which the condemnor's offer is based, the condemnor shall have the right to inspect such property prior to vesting. The owner, his agents or employees, tenants or other occupants shall upon reasonable notice by a written request by the condemnor, provide pertinent data or information including books and records necessary to prepare such appraisal. A party affected by such request may, where the request for such information is objected to as unreasonable or burdensome, petition a court of competent jurisdiction for relief.
"Failure of the owner to comply with this section shall suspend the condemnor's obligation to make an offer to such owner pursuant to article three until such time as this information is provided."
EDPL 303 provides that:
"The condemnor shall establish an amount which it believes to represent just compensation for the real property to be acquired. The condemnor shall make a written offer to acquire the property for one hundred per centum of the valuation so established. In no event shall such amount be less than the condemnor's highest approved appraisal. Wherever practicable, the condemnor shall make the offer prior to acquiring the property and shall also wherever practicable, include within the offer an itemization of the total direct, the total severance or consequential damages and benefits as each may apply to the property."
It is also noted that this court previously addressed the issue of whether a claimant is entitled to demand an advance payment in Stapelton. Therein, the court dismissed the City's reliance upon New York City Administrative Code § 5-328 to excuse its violation of the EDPL as unpersuasive, finding that the City offered no support for its contention that the provision was intended to abrogate its obligations or the rights of a condemnee as established by the EDPL, particularly since the language of the provision itself expressly states that an advance payment shall be made "pursuant to the requirements of article three of the eminent domain procedure law." This court went on to hold that:
In pertinent part, New York City Administrative Code § 5-328 provides that:
"The mayor may authorize the comptroller to pay to the person entitled to an award for real property acquired in a proceeding, in advance of the final determination of such person's damages pursuant to the requirements of article three of the eminent domain procedure law, a sum to be determined by the corporation counsel, after an appraisal of the damages sustained by such person by the expert or experts employed by the corporation counsel less any liens or encumbrances of record upon such property, which amount shall be certified to the comptroller by the corporation counsel."
"[T]he court must address the issue of what remedy is available to a claimant when a condemnor refuses to conduct an appraisal and make an advance payment as required by EDPL 302 and 303. While the language of the two provisions clearly contemplates that these steps should be taken prior to acquisition of condemned property, it is equally clear that § 303 provides that an advance payment shall be made prior to the vesting of title only when practicable.' Moreover, in addressing the issue of a claimant's entitlement to an advance payment, it has been held that [w]hile payment need not precede the taking, the provision for compensation must not only pre-exist, but it must be so definite and certain as to leave nothing open to litigation except the title to the property taken and the amount of damages which the owner may recover' ( Litchfield v Bond, 186 NY 66, 74-75, citing Sweet v Rechel, 159 US 380, 398; Sage v City of Brooklyn, 89 NY 189, 195; In re Mayor, 99 NY 569, 577; Brewster v Rogers Co., 169 NY 73, 80). Although advance payment or the provision of security for payment of compensation is the general rule when property is taken for a private use, neither is an absolute in the law of just compensation' ( Loretto v Teleprompter Manhattan CATV, 58 NY2d 143, 153, rearg denied 59 NY2d 761, citing Brickett v Haverhill Aqueduct Co., 142 Mass 394). Thus, since there is no requirement that there be payment of just compensation in advance so long as a certain, convenient and adequate source and means of payment is provided, there may be a separation in time between appropriation and determination of just compensation' ( Zember v State, 5 Misc 2d 216, 218). Nonetheless, these holdings need not be interpreted to require a finding that the City is permitted to ignore the dictates of the law and refuse to make an advance payment in a timely manner.
"Neither the EDPL nor the City Code, however, address the issue of when the condemnor is obligated to provide the requisite appraisal or to make an offer to the claimant ( see In re Hudson Tubes, 50 Misc 2d 613, 621, affd as modified on other grounds 27 AD2d 32, affd as modified 20 NY2d 457, remittitur amended 20 NY2d 968, remittitur amended 20 NY2d 971, cert denied 390 US 1002; see also Carmody-Wait 2d, NY Prac, ch 108:135). Similarly, neither provides a sanction to be imposed if a condemnor fails to comply with the obligations imposed upon it. In exploring the issue, however, it has been recognized that the requirements that all property owners are to be treated equally and are to receive 100% of the condemnor's appraised value as an advance payment is an attempt to alleviate some of the injustice by providing the condemnee with the maximum funds possible during the early stages of a condemnation proceeding. To deny to him the full benefits of clearly expressed legislative intent upon unfounded grounds constitutes an attitude which is arbitrary and capricious and which exemplifies bureaucracy at its worst.'
"( In re Roslyn, Town of North Hempstead, 70 Misc 2d 350, 361). Thus, the requirements are mandatory and seek to alleviate the hardship imposed on owners in financing the purchase, rental or replacement of the property taken by eminent domain'( In re William Cullen Bryant Park Preserve, 87 Misc 2d 1004, 1005, citing id.).
"Moreover, it is axiomatic that the court has the authority to direct a condemnor to make a payment, which inherently requires the completion of an appraisal ( see e.g. Matter of Lateral Sewer 2005, 113 AD2d 799; In re William Cullen Bryant Park Preserve, id.; Application of City of New York Spuyten Duyvil Shorefront Park, 71 Misc 2d 1019). Thus, the claimant is not without a remedy. Indeed, under the circumstances of this case, where the City . . . offers no explanation with regard to why an appraisal could not be completed in well over four months, it appears that a court order is necessary to put an end to the City's dilatory tactics."
( Stapelton, pp 6-9).
Discussion
Herein, the City does not dispute claimant's contention that it began the steps necessary to approve the project for which the subject property was acquired as early as 1989 and title vested on May 29, 2008, approximately one year ago. Further, although the instant motion was served on September 17, 2008, the City did not complete its appraisal by the date that the motion was submitted, nor has it advised the court or claimant when it believes the report will be completed so that an advance payment can be made. In view of this time frame, the court finds the City's assertion that it has not completed the appraisal because valuing wetlands is very difficult to be unpersuasive. Finally, the fact that the subject property was vacant when title vested in the City or whether claimant is in danger of defaulting on a loan by reason of the taking is irrelevant and does not relieve the City of its obligation to tender just compensation in a timely fashion. Under these facts, the court therefore finds, as it did in Stapelton, that the City is obligated to make an advance payment forthwith.
Since title already vested, the court will not address the parties' arguments with regard to whether the City is obligated to make a pre-vesting advance payment.
Accordingly, for the reasons fully set out above and as was discussed in Stapelton, the City is directed to provide claimant and the court with its appraisal within 30 days of service upon it of a copy of this order with notice of entry, and to make an advance payment of 100% of the value set forth therein within 15 days thereafter ( see City of New Rochelle v Sigel, 65 Misc 2d 962 [just compensation includes a partial advance payment to the property owner at the time title vests in the municipality]; In re Hudson Tubes, 50 Misc 2d 613 [the constitution mandates payment to the owner of condemned property of its value at the time of the taking plus an amount sufficient to produce the full equivalent of that value contemporaneously with the taking]; see generally Carmody-Wait 2d, NY Prac, ch 108:135). If the City fails to comply with this direction, the court will entertain a motion to hold it in contempt ( see In re Hudson Tubes, id.; see generally McCain v Dinkins, 84 NY2d 216, motion to amend denied 84 NY2d 846; New York City Coalition to End Lead Poisoning v Giuliani, 248 AD2d 120).
The foregoing constitutes the decision and order of the court.