Opinion
2012-12-19
NEW YORK CENTRAL LINES, LLC, respondent-appellant, v. STATE of New York, appellant-respondent.
Eric T. Schneiderman, Attorney General, New York, N.Y. (Richard Dearing and Simon Heller of counsel), for appellant-respondent. Goldstein, Rikon & Rikon, P.C., New York, N.Y. (Jonathan Houghton of counsel), for respondent-appellant.
Eric T. Schneiderman, Attorney General, New York, N.Y. (Richard Dearing and Simon Heller of counsel), for appellant-respondent. Goldstein, Rikon & Rikon, P.C., New York, N.Y. (Jonathan Houghton of counsel), for respondent-appellant.
WILLIAM F. MASTRO, J.P., PETER B. SKELOS, ANITA R. FLORIO, and THOMAS A. DICKERSON, JJ.
In a claim to recover damages arising from, inter alia, a partial taking of certain real property, the State of New York appeals, as limited by its brief, on the ground of excessiveness, from so much of a judgment of the Court of Claims (Marin, J.), dated January 11, 2011, as, upon a decision of the same court dated August 26, 2010, made after a nonjury trial, in effect, awarded the claimant the principal sum of $12,104,106 in damages for the permanent takings in fee and by easement, and the claimant cross-appeals, as limited by its brief, on the ground of inadequacy, from so much of the same judgment as only awardedit this sum for the permanent takings in fee and by easement.
ORDERED that the judgment is affirmed insofar as appealed from, without costs or disbursements; and it is further,
ORDERED that the judgment is reversed insofar as cross-appealed from, on the law and the facts, without costs or disbursements, and the matter is remitted to the Court of Claims for a determination as to the appropriate corridor factor to apply to the $12,104,106 “across-the-fence” estimate of the value of the subject property as furnished by the claimant's expert, for the valuation and calculation of 5% of the market value of certain subject parcels of real property designated as Parcels 130A, 193F, 194J, and 195H, based on the “across-the-fence” value of these parcels as set forth in the claimant's expert's supplemental report, which shall include application of the appropriate corridor factor, representing direct damages for the State's taking of permanent easements over these parcels, and for the entry of an appropriate amended judgment thereafter.
In January 2000, the State of New York appropriated, partially in fee and partially through permanent easement, several parcels of the claimant's real property (hereinafter the appropriated property) for the purpose of expanding the Brooklyn–Queens Expressway. The appropriated property was part of a rail corridor owned by the claimant. In June 2000, the claimant filed a claim in the Court of Claims to recover damages for the taking of the appropriated property. The State appeals, on the ground of excessiveness, and the claimant cross-appeals, on the ground of inadequacy, from so much of the judgment of the Court of Claims, made after a nonjury trial, as awarded damages for the permanent takings, both in fee and by easement.
“The measure of damages in a case involving the partial taking of real property is the difference between the value of the entirety of the premises before the taking and the value of the remainder after the taking” ( Gyrodyne Co. of Am., Inc. v. State of New York, 89 A.D.3d 988, 989, 933 N.Y.S.2d 375;see Diocese of Buffalo v. State of New York, 24 N.Y.2d 320, 323, 300 N.Y.S.2d 328, 248 N.E.2d 155;Chester Indus. Park Assoc., LLP v. State of New York, 65 A.D.3d 513, 884 N.Y.S.2d 243). “The measure of damages must reflect the fair market value of the property in its highest and best use on the date of the taking, regardless of whether the property is being put to such use at the time” ( Gyrodyne Co. of Am., Inc. v. State of New York, 89 A.D.3d at 989, 933 N.Y.S.2d 375 [internal quotation marks omitted] ).
At a nonjury trial on the issue of damages, the claimant and the State each presented the testimony of experts with regard to valuation of the appropriated property. The experts agreed that the highest and best use of the appropriated property was as a rail corridor. They disagreed, however, as to the proper method for valuation.
The State's expert advocated a cost, or reproduction cost less depreciation, approach to valuation, which is employed in valuing “specialty” properties ( see generally Matter of Allied Corp. v. Town of Camillus, 80 N.Y.2d 351, 357, 590 N.Y.S.2d 417, 604 N.E.2d 1348;Matter of Al Turi Landfill, Inc. v. Town of Goshen, 93 A.D.3d 786, 941 N.Y.S.2d 177). However, the Court of Claims properly rejected this approach because, inter alia, the evidence demonstrated that the appropriated property did not constitute a specialty property. Additionally, the Court of Claims properly rejected the State's lump-sum reduction of the market value of the appropriated property to 15% of the estimated value. Since the opinion of the State's expert as to this particular issue was not supported with sufficient facts, figures, and calculations, his opinion in this regard lacked probative value ( see Matter of County of Dutchess [ 285 Mill St.], 186 A.D.2d 891, 891–892, 588 N.Y.S.2d 936;Matter of Northville Indus. Corp. v. Board of Assessors of Town of Riverhead, 143 A.D.2d 135, 136, 531 N.Y.S.2d 592).
“Having rejected the State's appraisal, the trial court was bound to either accept the claimant's appraisal or explain the basis for any departure” ( Gyrodyne Co. of Am., Inc. v. State of New York, 89 A.D.3d at 989, 933 N.Y.S.2d 375;see Matter of City of New York [ Reiss], 55 N.Y.2d 885, 886, 449 N.Y.S.2d 18, 433 N.E.2d 1266;Matter of City of New York v. Estate of Levine, 196 A.D.2d 654, 655, 601 N.Y.S.2d 620).
The claimant's expert, Charles W. Rex III, specialized in the appraisal of rail corridors. In offering his testimony and appraisal,he relied on, among other things, a number of scholarly articles on corridor valuation in support of his opinion as to the proper methodology for corridor valuation ( see e.g. Charles F. Seymour, The Continuing Evolution of Corridor Appraising [Back to the Basics], Right of Way, May/June 2002, at 12–20; Arthur G. Rahn, The Enhancement Factor in Transportation Corridor Sales and Appraisals, Appraisal J., January 1999, at 89–92; John P. Dolman and Charles F. Seymour, Valuation of Transportation/Communication Corridors, Appraisal J., Oct. 1978, at 509–522).
Rex valued the appropriated property pursuant to a comparable sales approach, which “is generally the preferred measure of a property's value for assessment” (Matter of Allied Corp. v. Camillus, 80 N.Y.2d at 356, 590 N.Y.S.2d 417, 604 N.E.2d 1348;see Matter of Al Turi Landfill, Inc. v. Town of Goshen, 93 A.D.3d at 792, 941 N.Y.S.2d 177). The specific comparable sales approach advocated by Rex was the “corridor valuation” method, which is, at its essence, a two-step process. First, the “across-the-fence” value (hereinafter the ATF value) of the land is estimated based on, among other things, the location of the corridor and market conditions. The ATF value is then multiplied by a “corridor factor.” According to Rex, the “purpose of the corridor factor is to convert [ATF] value into the value of the corridor. Into market value. The corridor factor measures the importance of the corridor.” In other words, when a property's highest and best use is as a corridor, and the property is to remain as a corridor, that property will generally sell for more than the ATF value of the land, and the corridor factor figures this into the valuation.
The Court of Claims, in its decision dated August 26, 2010, upon which the judgment was entered, properly “accept[ed] the validity of the comparable sales method” advocated by Rex on behalf of the claimant. However, the court elected not to apply any corridor factor in reviewing the valuation. The Court of Claims' determination in this regard was neither “supported by [the] evidence [nor] adequately explained by the court” (Matter of City of New York [ Reiss], 55 N.Y.2d at 886, 449 N.Y.S.2d 18, 433 N.E.2d 1266). Accordingly, we must remit the matter for a determination as to the appropriate corridor factor to be applied to the ATF value as estimated by the claimant's expert, and for the entry of an appropriate amended judgment thereafter.
We also agree with the claimant that the Court of Claims erred in failing to award it direct damages for the State's taking of permanent easements over those parcels of real property designated as Parcels 130A, 193F, 194J, and 195H. Rex testified,as supported by his supplemental appraisal report, that the State's acquisition of those permanent easements caused a loss of 50% of the value of those parcels. The State's appraiser testified, as supported by his report, that the State's acquisition of permanent easements only caused a 5% loss of their overall value. The Court of Claims, however, found no loss in value with respect to these parcels.
As a general matter, “[u]pon a condemnation of a permanent easement, the landowner is entitled to the difference in value of the premises without the burden of the easement and with the burden of the easement, together with the further direct and consequential damage, if any, occasioned to the lot arising from the use of the easement” ( City of Yonkers v. A. & J. Cianciulli, Inc., 117 N.Y.S.2d 792, 794;see Matter of City of New York, 269 N.Y. 64, 69–70, 199 N.E. 5;Donaloio v. State of New York, 99 A.D.2d 335, 338, 472 N.Y.S.2d 946,affd.64 N.Y.2d 811, 486 N.Y.S.2d 924, 476 N.E.2d 323). Upon the taking of a permanent easement, the damages must be determined based upon what the condemnor has the right to do under the terms of the easement as appropriated ( see Morton v. State of New York, 8 A.D.2d 49, 52, 185 N.Y.S.2d 321). On the evidence before the Court of Claims, we conclude that the State is correct that the claimant is entitled to 5% of the market value of the aforementioned parcels for the State's taking of these permanent easements. Accordingly, upon remittal, the Court of Claims shall determine this amount, based on the ATF value of these parcels, as set forth in Rex's supplemental report, and shall include, in its calculations, what it deems to be the appropriate corridor factor.