Opinion
Index No. 257161/2017 Motion Seq. Nos. 003 004 005
09-12-2024
POOH BEAR 59, LLC Petitioner, v. THE TAX COMMISSION OF THE CITY OF NEW YORK, AND THE COMMISSIONER OF FINANCE OF THE CITY OF NEW YORK, Respondent.
Unpublished Opinion
MOTION DATE 03/22/2024, 03/27/2024, 04/09/2024.
PRESENT: HON. LORI S. SATTLER, Justice
DECISION + ORDER ON MOTION
LORI S. SATTLER J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 003) 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61,62, 63, 64, 65, 66, 67, 68, 69, 75, 91,93, 94, 95, 96, 97, 98, 99, 100, 101, 102 were read on this motion to/for DISCOVERY.
The following e-filed documents, listed by NYSCEF document number (Motion 004) 70, 71, 72, 73, 74, 76, 77, 78, 92, 103, 104, 105, 106, 107 were read on this motion to/for DISCOVERY.
The following e-filed documents, listed by NYSCEF document number (Motion 005) 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 108, 109, 110 were read on this motion to/for DISCOVERY.
This is an Article 7 tax certiorari proceeding in which Petitioner Pooh Bear 59, LLC ("Petitioner"), the owner of a tax class 4 property in New York County, is challenging its real estate tax assessment pursuant to Real Property Tax Law ("RPTL") § 706 based on assessment inequality. In a separate matter, Rivercross Tenants' Corporation v Tax Commission, Index No. 253799/2017, the petitioner, who owns a tax class 2 property in New York County, challenges its assessment on the same grounds. The parties have agreed to pursue the two proceedings on parallel tracks and on January 17, 2024, pursuant to a scheduling order and in accordance with 22 NYCRR § 202.60(g), exchanged market-value appraisal reports and reports on the issue of ratio. Petitioner in this matter then fded Motion Sequence Nos. 003, 004, and 005, which seek additional discovery relating to the parties' report exchange. Identical motions were filed in the Rivercross proceeding. Respondents the Tax Commission of the City of New York and the Commissioner of Finance of the City of New York ("Respondents") oppose the motions in both proceedings. The motions are consolidated for disposition.
Article 7 proceedings are special proceedings in which leave of court is required for discovery pursuant to CPLR 408. The trial court has broad discretion in granting or denying disclosure (Town of Pleasant Valley v New York State Bd. of Real Prop. Servs., 253 A.D.2d 8, 16 [2d Dept 1999]; Matter of South Cent. Plaza, Inc. v Village of Spring Valley, 159 A.D.3d 915, 916 [2d Dept 2018]). "[F]or a court to direct disclosure, the information sought must be found to be material and necessary" (General Elec. Co. v Macejka, 117 A.D.2d 896 [3d Dept 1986]).
In Motion Sequence No. 003, Petitioner seeks an order compelling non-party New York State Department of Tax and Finance, Office of Real Property Tax Services ("ORPTS") to produce certain documents and confirm that it has no other information regarding the equalization rate in the 2017/2018 tax year, or in the alternative precluding Respondents from relying on ORPTS information or statistics. According to Petitioner, Respondents' expert report stated that the City's ratio of assessed value to market value is confirmed by ORPTS but did not supply any documentation to support that statement. Thereafter, Petitioner obtained documentation from ORPTS via FOIL request. Petitioner concedes that ORPTS complied and indicated that all information was provided. Petitioner's request is denied. Petitioner has already obtained documentation directly from ORPTS. Respondents, who are New York City agencies, cannot be compelled to produce documentation controlled by a non-party New York State agency, nor can they be precluded from relying on statements contained in their report simply because Petitioner maintains it has not seen proof to support those statements.
In Motion Sequence No. 004, Petitioner moves to strike Respondents' expert report, prepared by Alan Salzberg ("Salzberg Report"), or in the alternative for an order directing Respondents to produce three studies referenced therein. Petitioner argues the Salzberg Report should be stricken because it does not use one of the methodologies permitted by statute in proceedings challenging an assessment as unequal. In opposition, Respondents argue the Salzberg Report is a critique of Petitioner's expert report and is not being used to affirmatively prove ratio. They maintain that the statute only requires use of specific methodologies for expert reports seeking to prove ratio, and that a report critiquing the other party's report is not subject to the same restrictions. When the parties exchanged reports, Petitioner submitted a market-value appraisal of the property, a sales verification study, and a sales ratio study. Respondents submitted a market-value appraisal of the property along with the Salzberg Report, which it concedes is a critique of Petitioner's sales ratio study rather than a study of its own. "Assessment review proceedings involving the issue of inequality are limited to determining whether the property at issue has been assessed at a different percentage of its full value than other properties within the same taxing unit" (Consolidated Edison Co. v State Bd. of Real Prop. Servs., 255 A.D.2d 8, 10 [3d Dept 1999]). A petitioner must prove a proper ratio of assessed value to fair market value, and then must establish the fair market value of the subject property (Ed Guth Realty Inc. v Gingold, 34 N.Y.2d 440, 446 [1974]). Pursuant to RPTL § 720(3)(b), "evidence on the issue of whether an assessment is unequal shall be limited to" certain enumerated methodologies. Both parties are constrained to use one of these methods of determining ratio, however each may use whichever method they choose (Standard Brands, Inc. v Walsh, 92 Misc.2d 903, 906 [Sup Ct, Westchester County 1977]).
Additionally, courts have allowed party experts to opine on the opposing party's expert reports, as opposed to requiring that parties only present evidence within the parameters of RPTL § 720(3)(b) (see, e.g, Matter of Markus v Assessors of Town of Taghkanic, 24 A.D.3d 1066, 1067 [3d Dept 2005] [considering respondent's expert's critique of the timeframe used in petitioner's sales ratio study]; Standard Brands, 92 Misc.2d at 910 ["As to the methodology used by petitioner, Mr. Elby, speaking as an expert statistician, criticized the material submitted by the petitioner's expert since there was no random selection."]). The Court therefore finds that the Salzberg Report need not be stricken. To the extent that it critiques a preliminary sales ratio study rather than the final sales ratio study exchanged pursuant to the Court's Scheduling Order, its probative value may be explored at trial.
In the alternative, Petitioner seeks disclosure of three studies mentioned in the Salzberg Report. In the Report, Salzberg states: "My experience in statistics spans multiple industries, and I have worked extensively with real estate data" (NYSCEF Doc. No. 104, 3). As examples, he states he has "performed a study of the use of sales prices as a substitute for market value, on behalf of the City of New York" and "developed statistical models for valuing real estate on behalf of the Federal Government and on behalf of private entities" (id.). Additionally, his annexed resume states: "In a series of matters on behalf of the law department for a major city, created and analyzed a massive real estate database, modeled market and sales values, and wrote expert reports to determine potential biases of alternative methods of valuing commercial real estate" (id. at 37).
Petitioner argues it requires these studies in order to cross-examine Salzberg as to his expertise on the issue of ratio. Respondents maintain that Petitioner has not shown it has a need for them, especially since Petitioner concedes the studies do not relate to the subject properties or to the issue of ratio and is asking for the studies only to impeach Salzberg's qualifications on cross-examination. Petitioner's request is granted. The studies are relevant to Petitioner's argument that Salzberg lacks experience on the issue of ratio, and Defendants have not demonstrated that providing the requested discovery would be prejudicial or unduly burdensome, would violate confidentiality, or would unduly delay the case (Town of Pleasant Valley, 253 A.D.2d at 16).
In Motion Sequence No. 005, Petitioner moves to compel the New York City Department of Finance to produce "all data regarding sales-based market value referenced in the New York City Advisory Commission on Property Tax Reform Table 10 on a parcel identifier basis" for the tax years 2018/2019 and 2020/2021. As set forth in Petitioner's papers, in 2021 the foregoing commission published a report in which it made recommendations for reforming New York City's property tax system as it relates to certain properties, some of which are currently included in tax class 2 (NYSCEF Doc. No. 81). This report contained a table called "Table 10: Share of DOF Value, Tax Levy, and Sales-Based Market Value by Property Type, Fiscal Year 2019 vs. Fiscal Year 2021" (NYSCEF Doc. No. 82). The table references a "DOF Market Value" and a "Sales-Based Market Value." Petitioner argues that this indicates that the agency uses a different market value than true market value, which in turn affects ratio, and seeks the data substantiating the "sales-based market value" figures in the table. Petitioner fails to demonstrate how data substantiating figures in a table in an unrelated report are material and necessary. The data sought is from tax years occurring after the tax year at issue in this case (see People ex rel. Hilton v Fahrenkopf, 279 NY 49 [ 1938]["It is of the essence of an assessment that it fixes value as of a certain time. Each annual proceeding is separate and distinct from every other."]). Accordingly, Petitioner's motion is denied.
Accordingly, for the reasons set forth herein it is hereby:
ORDERED that Motion Sequence Nos. 003 and 005 are denied in their entireties; and it is further
ORDERED that Motion Sequence No. 004 is granted to the extent of directing Defendants to produce the three studies discussed herein within thirty days and is otherwise denied.
This constitutes the Decision and Order of the Court.