Opinion
# 2012-010-009
11-27-2012
MAZUR BROTHERS REALTY, LLC v. THE STATE OF NEW YORK, NEW YORK STATE ATTORNEY GENERAL NEW YORK STATE COMPTROLLER, COUNTY OF WESTCHESTER CITY OF WHITE PLAINS, BANK OF NEW YORK (Now known as JPMorgan Chase) MAZUR BROTHERS, INC., MICHAEL RIKON, ESQ. and THE CITY OF WHITE PLAINS SCHOOL DISTRICT
Synopsis
Distribution of advance payment in commercial properties. Case information
UID: 2012-010-009 Claimant(s): MAZUR BROTHERS REALTY, LLC Claimant short MAZUR BROTHERS name: Footnote (claimant name) : THE STATE OF NEW YORK, NEW YORK STATE ATTORNEY GENERAL, NEW YORK STATE COMPTROLLER, COUNTY OF WESTCHESTER, CITY OF WHITE Defendant(s): PLAINS, BANK OF NEW YORK (Now known as JPMorgan Chase), MAZUR BROTHERS, INC., MICHAEL RIKON, ESQ. and THE CITY OF WHITE PLAINS SCHOOL DISTRICT Footnote (defendant name) : Third-party claimant(s): Third-party defendant(s): Claim number NONE (s): Motion number SP-120 (s): Cross-motion number(s): Judge: Terry Jane Ruderman Claimant's GOLDSTEIN, GOLDSTEIN, RIKON & GOTTLIEB, P.C. attorney: By: Michael Rikon, Esq. HON. ERIC T. SCHNEIDERMAN Defendant's attorney: Attorney General for the State of New York By: J. Gardner Ryan, Assistant Attorney General Third-party defendant's attorney: Signature date: November 27, 2012 City: White Plains Comments: Official citation: Appellate results: See also (multicaptioned 2012-010-010 case) Decision
The following papers numbered 1-12 were read and considered by the Court on petitioner's motion SP-120:
Order to Show Cause, Verified Petition and Exhibits.............................................1
Verified Answer of State of New York, New York State Attorney General, New York State Comptroller............................................................................................2
Amended Verified Answer of State of New York, New York State Attorney General, New York State Comptroller....................................................................................3
Verified Answer of the City of White Plains............................................................4
Verified Answer of JPMorgan Chase.......................................................................5
Verified Answer of Mazur Brothers, Inc...................................................................6
Memorandum of Law of State of New York............................................................7
Petitioner's Verified Reply and Memorandum of Law..............................................8
Attorney Affirmation of Peter R. Bonchonsky of JPMorgan Chase........................9
Amended Verified Answer of Mazur Brothers, Inc................................................10
Petitioner's Memorandum of Law............................................................................11
Petitioner's Brief.....................................................................................................12
The following papers numbered 1-12 were read and considered by the Court on petitioner's motion SP-121:
Order to Show Cause, Verified Petition and Exhibits.............................................1
Verified Answer of State of New York, New York State Attorney General, New York State Comptroller............................................................................................2
Amended Verified Answer of State of New York, New York State Attorney General, New York State Comptroller....................................................................................3
Verified Answer of the City of White Plains............................................................4
Verified Answer of JPMorgan Chase.......................................................................5
Verified Answer of Mazur Brothers, Inc...................................................................6
Memorandum of Law of State of New York............................................................7
Petitioner's Verified Reply and Memorandum of Law..............................................8
Attorney Affirmation of Peter R. Bonchonsky of JPMorgan Chase........................9
Amended Verified Answer of Mazur Brothers, Inc................................................10
Petitioner's Memorandum of Law............................................................................11
Petitioner's Brief.....................................................................................................12
Mazur Brothers Realty, LLC (petitioner or MBR) seeks an order (SP-120) for the distribution of the advance payment, together with interest at a rate of 9%, for the appropriation of 80 Lake Street, White Plains, New York (80 Lake Street). Petitioner seeks a second order (SP-121) for the distribution of an award, together with interest at a rate of 9%, for the appropriation of 90 Lake Street, White Plains, New York (90 Lake Street).
Previously, this Court ordered the distribution of the advance payments for 80 Lake Street and 90 Lake Street to be made to MBR (Mazur Bros. Realty, LLC v State of New York, 23 Misc 3d 346).This Court also found the State of New York's (defendant) placement of the advance payments into interest bearing accounts with the New York State Comptroller's Office was proper and declined to increase the interest of the Comptroller's accounts to 9%. In addition, this Court held that the taxing entities had no right to the advance payments since the properties were not in arrears at the time of vesting.
The Court specifically ordered: payment to JPMorgan Chase (Chase), formerly known as Bank of New York (mortgagee of both properties), taken in equal amounts from account numbers W059913 and W059912; payment to be made as soon as practicable after Chase has provided documentation sufficient to satisfy the Comptroller's office; payment of Chase's attorneys' fees in the sum of $7,734.00 to be paid in equal amounts from account numbers W059913 and W059912; the remainder of the award for 80 Lake Street and the advance payment for 90 Lake Street shall be distributed directly to petitioner.
Defendant appealed this Court's Decision and Order to distribute the advance payments. Petitioner appealed that part of this Court's Decision and Order that found defendant had properly deposited the advance payments into the special accounts. The taxing entities did not take an appeal.
The Appellate Division, Second Department reversed this Court's distribution of the advance payments and affirmed this Court's finding that the payments were properly placed in the comptroller's accounts and petitioner was not entitled to 9% interest as to the comptroller's accounts (Matter of Mazur Bros. Realty, LLC v State of New York, 69 AD3d 726). The Appellate Division held that, "[t]he agreements provided that the compensation paid by the State was for the total value of the property appropriated, which included both the real property and the trade fixtures" (id. at 728). The matter was remitted for this Court to determine the validity and amount of the trade fixture claims of Mazur Brothers, Inc. (MBI) in connection with 80 Lake Street and 90 Lake Street.
MBI leased the subject parcels from MBR.
Background
Petitioner is the owner in fee of 80 Lake Street. On April 4, 2006, defendant filed Map Nos. 650, 656 and 657, Parcels 963, 969 and 970 to appropriate property located at 80 Lake Street. Defendant offered $1,369,500.00 as the value of the property appropriated. Petitioner agreed to this value and executed an Agreement of Adjustment.
Petitioner is the owner in fee of 90 Lake Street. On April 4, 2006, defendant filed Map Nos. 638 R-1, 639 R-1, Parcels 951 and 952 to appropriate property located at 90 Lake Street. Petitioner executed an Advance Payment Agreement for 90 Lake Street in the sum of $1,011,500.00.
Prior to authorizing either payment, defendant identified several parties with a potential interest in the properties and those parties further identified other additional parties. The parties identified were: petitioner (fee interest in both properties); MBI (lessee of both properties); Chase (mortgagee of both properties); City of White Plains (taxing authority of both properties); County of Westchester (taxing authority of both properties); petitioner's attorney (attorney lien); Thomas DiNapoli (Comptroller of the State of New York); and the Attorney General's office (a necessary party pursuant to EDPL §304[E] and Court of Claims Act §23).As the interest that each of these parties held was not easily ascertainable, defendant deposited the monies for each of the parcels into an interest bearing account with the Comptroller's office. The Comptroller's office set up accounts W059912 and W059913 for 90 Lake Street and 80 Lake Street, respectively.
Petitioner's attorney waives an alleged interest in the eminent domain account for 80 Lake Street and advance payment for 90 Lake Street (Amended Verified Answer of Mazur Brothers, Inc. [SP-120], ¶ 3; Amended Verified Answer of Mazur Brothers, Inc. [SP-121], ¶ 3).
Subsequently, the City of White Plains School District was also identified.
MBI is the commercial tenant at both properties. MBI filed two claims (Claim Nos. 112661 and 112658) against the State of New York for damages to its trade fixtures as a result of the appropriation. The trade fixtures were used in conjunction with the business conducted at 90 Lake Street and 80 Lake Street. The fixtures have been rendered useless as a result of the taking (Mazur Bros., Inc. v State of New York, Ct Cl, May 16, 2007, Scuccimarra, J., Claim Nos. 112661 & 112658, Motion No. M-72859). While this matter was before this Court and then heard on appeal by the Appellate Division, the underlying appropriation claims were tried before the Honorable Thomas H. Scuccimarra and heard on appeal (Mazur Bros. Realty, LLC v State of New York, 36 Misc 3d 1234[A], mod Matter of Mazur Bros., Inc. v State of New York, 97 AD3d 826). The Appellate Division modified Claim No. 112658, the trade fixture claim of 90 Lake Street, downward to $156,600.00 and as modified, affirmed the decision. The Appellate Division affirmed the fixture claim of 80 Lake Street (Claim No. 112661). The Appellate Division held:
"[t]he State contends that the Court of Claims improperly considered MBI's claims for trade fixtures in the instant proceedings because the prior rulings relating to Mazur Realty's agreement to accept $1,369,500 in settlement of its claim relating to 80 Lake Street affect MBI's rights to compensation for its trade fixtures in the instant proceedings. Since MBI was not in privity with Mazur Realty for the purposes of the previous litigation, it is not estopped from asserting its current claims with respect to its trade fixtures (see Ryan v New York Tel. Co., 62 NY2d 494, 500 [1984]; Breslin Realty Dev. Corp. v Shaw, 72 AD3d 258, 262 [2010]; Buechel v Bain, 275 AD2d 65, 73-74 [2000], affd 97 NY2d 295 [2001], cert denied 535 US 1096 [2002]; cf. Matter of West Bushwick Urban Renewal Area Phase 2, 69 AD3d at 182-184). MBI was a '[c]ondemnee' pursuant to EDPL 103 (C), with the right to bring its own separate claims in the Court of Claims (see Matter of Village of Port Chester v Sorto, 14 AD3d 570, 571 [2005]). Accordingly, the Court of Claims properly considered MBI's claims for trade fixtures in the instant proceedings."(Matter of Mazur Bros., Inc. v State of New York, 97 AD3d 826, supra at 829-30).
Analysis
The relief requested in the SP-120 petition was that the $1,369,500.00 on account for 80 Lake Street be distributed first to Chase in full satisfaction of the mortgage on 80 Lake Street and 90 Lake Street.Petitioner now asks that the account be distributed to petitioner. While it is petitioner's position that MBI has no interest in these funds because they were offered as part of the fee taking and not part of the trade fixture claim, the Appellate Division has found differently. This Court previously determined that none of the taxing authorities have a right to any distribution of the money. The Appellate Division did not disturb that part of this Court's finding.
During the pendency of the action, petitioner has satisfied the mortgage owed to Chase on the subject properties as noted by an affirmation from Chase's attorney (Affirmation of Peter R. Bonchonsky of JPMorgan Chase). This Court deems that MBR is requesting that the money to be paid to itself.
Petitioner asks that the entire $1,011,500.00 held on account for 90 Lake Street be distributed to petitioner. Again, it is petitioner's position that MBI has no interest in these funds because they were offered as part of the fee taking and not part of the trade fixture claim. However, as previously noted, this argument has been determined, by the Appellate Division, to be without merit.
Pursuant to a conference held subsequent to the Appellate Division's decision regarding Judge Scuccimarra's trial Decision, petitioner has submitted a further brief to this Court. Defendant relies upon its original filings.
Petitioner has consistently argued that the Appellate Division's reversal of this Court's initial decision was "egregiously in error" and was "implicitly overruled by the Second Department opinion following the trial and decision on the fee claim of 90 Lake Street and the separate trade fixture claims for 90, 80 and 62 Lake Street, White Plains, New York by the Honorable Thomas H. Scuccimarra" (Petitioner's Brief Dated October 25, 2012, pp 1-2).
This Court sees merit to petitioner's argument that the first Appellate Division decision ruling (Matter of Mazur Bros. Realty, LLC v State of New York, 69 AD3d 726, supra) was implicitly overruled by the second Appellate Division decision (Matter of Mazur Bros., Inc. v State of New York, 97 AD3d 826, supra). Indeed, the first Appellate Division decision found that the advance payment agreements provided for the total value of the real property including the trade fixtures and the second Appellate Division decision held that MBI "is not estopped from asserting its current claims with respect to its trade fixtures" (id. at 831). Thus, this Court is left to reconcile two seemingly conflicting Appellate Division decisions and yet is constrained to follow the Appellate Division's reversal of this Court's initial decision.
At the underlying trial before Judge Scuccimarra, the trade fixture claims were held to be valid and their values adjudicated. Judge Scuccimarra found the following damages (as they apply to this special proceeding):
80 Lake Street:
$508,600.00 to MBI for direct damages for the loss of trade fixtures, and
$ 39,700.00 to MBI for consequential damages for the loss of the trade fixtures.
90 Lake Street:
$1,118,600.00 to MBR for fee taking, and
$ 219,700.00 to MBI for loss of trade fixtures.
In addition, while this matter has been sub judice, the Appellate Division has decided the appeal of Judge Scuccimarra's trial decision (Matter of Mazur Bros., Inc. v State of New York, 97 AD3d 826, supra). The Appellate Division modified Judge Scuccimarra's decision by reducing the sum awarded for the trade fixtures at 90 Lake Street (Claim No. 112658) from $219,700.00 to $156,600.00.
As previously noted, the Appellate Division has held that the advance payment was in contemplation of the fee interest and the trade fixtures, as the agreements did not state otherwise. Thus, this Court must now determine what portion of the advance payments are attributable to the fee interest and what portions are attributable to the trade fixtures.
MBR signed an agreement of adjustment for 80 Lake Street and therefore did not bring a claim against defendant for damages related to the fee taking. The agreement of adjustment was signed by MBR to signify its belief that the offer of $1,369,500.00 was fair compensation for the fee taking of 80 Lake Street. However, as found by the Appellate Division, the $1,369,500.00 advance payment was in contemplation of both the fee interest and the trade fixture taking.
It is for this Court to determine, by way of the special proceeding, the respective interests of MBI and MBR as to the $1,369,500.00 deposited in the comptroller's account. Petitioner has remained steadfast in its assertion that MBI is not entitled to any portion of the $1,369,500.00. Despite the first Appellate Division ruling and relying on the second Appellate Division ruling, neither petitioner nor MBI have alleged what portion of the payment for 80 Lake Street is attributable to the fee interest and what portion is attributable to the trade fixtures.Thus, this Court is left with no alternative but to find that the trade fixture damage must be drawn from the total damage to the property which MBR set at $1,369,500.00 by signing the agreement of adjustment.
The Court held a conference with the parties on October 11, 2012, to afford the parties a further opportunity to submit what their respective interests as to the payment were. Petitioner submitted a memorandum to the Court dated October 25, 2012. As stated in the body of the decision, petitioner still does not apportion or provide any evidence to this Court as to the respective interests between MBR and MBI at 80 Lake Street.
This Court recognizes MBR's position that the offer made by defendant was solely for MBR's fee interest. However, this Court is constrained by the first Appellate Division ruling which indicated the offer contemplated the fee interest and the trade fixtures.
The total fixture damage to 80 Lake Street found by Judge Scuccimara was $548,300.00. As the advance payment is attributable to the fee interest and the fixture claim, since it did not state otherwise (Mazur Bros. Realty, LLC v State of New York , 69 AD3d 726, supra), this Court finds $548,300.00 of the advance payment shall be paid to MBI in satisfaction of the trade fixture claim. The remainder of $821,200.00 shall be paid to MBR.
The total damages found by Judge Scuccimara for 90 Lake Street, as modified by the Appellate Division, are $1,275,200.00 (fee interest plus trade fixtures). The trade fixture damages of 90 Lake Street are 12% (trade fixture damages divided by total damages). This Court will attribute that percentage to the advance payment and accordingly determines that MBI's interest in the advance payment of $1,011,500.00 is $121,380.00 (12% of $1,011,500.00). Thus, this Court finds $890,120.00 of the advance payment for 90 Lake Street shall be distributed to MBR ($1,011,500.00 minus $121,380.00) and $121,380.00 shall be distributed to MBI.
Based upon the foregoing, this Court directs the Comptroller to distribute the following from account W059913 for the advance payment of 80 Lake Street: $821,200.00 to petitioner and $548,300.00 to Mazur Brothers, Inc. This Court further directs the Comptroller to distribute the following from account W059912 for the advance payment of 90 Lake Street: $890,120.00 to petitioner and $121,380.00 to Mazur Brothers, Inc. The awards are made with statutory interest from the date of vesting (April 4, 2006) to the deposit of the advance payments with the Comptroller and whatever interest applies to the Comptroller's accounts from the date of deposit until payment.
November 27, 2012
White Plains, New York
Terry Jane Ruderman
Judge of the Court of Claims