Opinion
4000/07.
Decided November 10, 2008.
In this eminent domain proceeding, the City of New York (the City) moves for an order precluding claimants Lori A. Ricco and Joseph and Carole Aloi from offering into evidence at trial those portions of their appraisal reports dated January 14, 2008 and January 29, 2008, respectively, prepared by Brent Lally of Master Associates, Inc., that purport to estimate the amount of severance damages caused by the subject taking. Claimants cross-move for an order precluding the City from offering into evidence at trial its appraisal reports dated March 12, 2007 and prepared by Henry Arlin Salmon.
The attorneys are: Corporation Counsel, New York, NY.
ACC Tamara Jackson, Goldstein Goldstein Rikon Gottlieb, New York, NY, Joshua Rikon, Esq.
Facts and Procedural Background
By order dated February 23, 2007, the City acquired title to the subject properties, located in the Huguenot neighborhood of Staten Island, for the purpose of installing new sanitary and storm sewer lines, as well as upgrading existing water mains in the area.
More specifically, the City acquired title to a portion of 153 Darlington Avenue (Block 6309, Lot 53), owned by Riccio. Before the taking, the lot was 64 feet in width by 100 feet in length and was improved with a 2,850 square foot, two-family, detached residence. In this proceeding, the City took title to a portion of the property that measures 28 feet in width and 100 feet in length along the easterly portion of the side yard; a one foot strip remains on the far side of the parcel taken by the City. After the taking, the parcel measures 35 feet in width and 100 feet in length, plus the one foot sliver.
The City also acquired title to a portion of 540 Lamont Avenue (Block 6311, Lot 13), owned by the Alois. Before the taking, the lot was 90 feet in width and 100 feet in length and was improved with a 3,450 square foot, two-family, detached residence. In this proceeding, the City took title to a portion of the property that measures 28 feet in width and 100 feet in length along the western portion of the property; a one foot strip remains on the far side of the parcel taken by the City. After the taking, the parcel measures 61 in width and 100 feet in length, plus the one foot sliver.
Both properties are located in an R3X zoning district, which requires a minimum 40 foot lot width and a minimum lot area of 3,800 square foot.
Claimants' Appraisal Reports
In their respective appraisal reports, both Riccio and the Alios value those portions of their properties taken by the City at $379,000. In reaching his valuation, utilizing the sales comparison approach, Lally first determines the "appraised value before." Accordingly, in reliance upon four comparable sales for the property formerly owned by the Alois, Lally values it at $910,000 and in reliance upon three comparable sales, Lally values the property formerly owned by Riccio at $779,000. Lally then values the land as vacant, without improvements, also using the sales comparison approach. In so doing, Lally determines that the "median value indicator" is $85 per square foot and he calculates the direct damages by multiplying that value by the number of square feet in the portion of property taken. Lally accordingly determines that the direct damages for each parcel is $246,000, i.e., 2,900 square feet X $85 per square foot. Accordingly, the "indicated remainder value" for the Alios' property is $663,000 ($910,000 — $246,000) and the "indicated remainder value" for Riccio's property is $532,000 ($779,000 — $246,500).
Lally further determines that severance damages should be applied to the remainder of each lot because, as a result of the taking, each lot is rendered con-conforming with regard to zoning regulations. Accordingly, Lally multiplies the remainder value of the Alois property by 20%, for severance damages of $133,000, and the remainder value of Riccio's property by 25%, for severance damages in the same amount.
Hence, Lally determines that both the Alios and Riccio are entitled to recover $379,000 in damages, after adding severance damages to direct damages.
The Alios' property is valued at $910,000 before the taking, minus direct damages of $246,500, for a value of $663,500; subtracting severance damages of $133,000 from this amount equals $530,500; the $910,000 before taking value, minus the total amount of damages of $530,500, equals $379,500. Riccio's property is valued at $779,000 before the taking, minus direct damages of $246,500, for a value of $532,500; subtracting severance damages of $133,000 from this amount, equals $399,500; the $779,000 before taking value, minus the total amount of damages of $399,500, equals $379,500.
The City's Appraisal Reports
The City's appraiser, Equity Valuation Associates (Equity), first calculates the direct damages for each parcel, i.e., the value of the parcel taken, as if it was a single, free-standing parcel, using the sales comparison approach, premised upon the City's contention that both of the condemned parcels are non-buildable lots because of their small size. Accordingly, to calculate direct damages, Equity considers the sale of three properties that range in size from 1,200 square feet to 2,016 square feet, which were also non-buildable lots. In reliance upon these comparable sales, the City values the property taken from both Riccio and the Alios at $42,000 (2,800 square feet X $15 per square foot).
Although the text of the City's appraisal reports states that the parcel taken from the Alios measures 14 feet by 100 feet, its calculation of damages indicates that the width of the parcel taken was 28 feet across both Riccio's and the Alios property.
Equity then employs the "before and after" valuation method to determine if any severance damages are incurred, again using the sales comparison approach. In reliance upon three comparable sales, the City concludes that the before value of Riccio's property is $810,000 and the after taking value is $635,000, for a difference of $175,000. In reliance upon three different sales, Equity concludes that the before value of the Alios' property is $1,030,000 and the after taking value is $830,000, for a difference of $200,000.
Charles Land then values the minor improvements located on each portion of the property that was taken and determines that the damages for lost improvements located on Riccio's property, including tress, pavers, fencing and lighting, is $13,724. Land values the damages for lost improvements located on that portion of the Alios' property that was taken, including grass, fencing, retaining wall and trees, at $9,212.
The City accordingly concludes that the differences between the before and after values of the damage parcels is greater than the direct value of the subject parcels. Hence, the total damages for Riccio's property is $188,724 ($175,00, the difference in the before and afer values, plus $13,724 as the value for the improvements made to the portion of the property that was taken), and the total damages for the Alios' property is $209,212 ($200,000, the difference in the before and after value, plus $9,212 as the value for the improvements made to the portion of the property that was taken).
The City's Motion
The City's Contentions
In support of its motion, the City argues that Lally's reports do not contain any facts, figures or calculations to support his estimates of severance damages, since neither report values the properties, as each existed after the taking, including the improvements that were not touched by the taking. More specifically, the City contends that Lally's calculation of severance damages is improper, since his reports purport to describe the effect of the taking of the two remainders by reference to the effect that the taking would have on their development potential, if they were vacant, although both are improved. The City further avers that Lally's valuation is based upon nothing more than his opinion. Hence, the City concludes that claimants fail to provide adequate proof of severance damages.
Claimants' Contentions
In opposition to the City's motion, claimants argue that Lally properly values the subject properties in accordance with controlling law, i.e., he measures the damages for the partial taking by computing the difference between the value of the property before the taking and he then values the remainder after the taking. Similarly, he properly values consequential or severance damages as the difference between the before and after values, less the value of the land and improvements appropriated.
In addition, Lally provides a basis for his determination of severance damages, i.e., the remainder of the properties are rendered non-confirming in that the legal side yard is eliminated, the existing building floor area is oversized for the remainder of the lot, legal access along the property line of the remainder to the rear yard is eliminated, rights of access for the repair of the subject properties over the property taken by the City are questionable, there is loss of the easement area as yard, questions regarding maintenance of the taken land are raised and part of the off street parking is lost. Hence, based upon the foregoing, and in reliance upon his 43 years of experience, Lally reduces the value of the property by 20% for the Alios property and by 25% for Riccio's property as severance damages.
Claimants' Cross Motion
Claimants' Contentions
Claimants contend that the City's appraisal reports are defective in that the City bases its valuations upon comparable sales of properties that are "non-developable" lots in poor neighborhoods, which Equity describes as "inferior" in location. In addition, each of the three comparable sales considered is of a small home, far from the subject properties. More specifically, the comparable sales are zoned R3A, while the subject properties are zoned R3X; none adjoin a major sewer line; none lost side yards; none are nonconforming under existing zoning law; none are adjacent to a permanent sewer easement; and none lost off street parking. Claimants also argue that all of the comparable sales are substantially adjusted downwards, i.e., by $83,500, $83,900 and $2,800, which further calls into question whether the sales can be considered comparable in the first instance. Finally, claimants contend that Equity utilizes a "split-and-isolate technique" in valuing the properties, which methodology is improper.
Claimants accordingly conclude that the City's appraisal reports are defective as a matter of law for its appraiser's failure to value direct damages based upon the highest and best use, since the values are based upon vastly inferior comparable sales that are then further devalued.
The City's Contentions
In opposition, the City argues that it correctly calculates the value of the subject properties in their before states, with improvements, prior to the taking, and then values the subject parcels in their after states, with improvements, after the taking. Hence, it concludes that it utilizes the proper methodology in determining just compensation. The City further argues that while the thrust of claimants' argument appears to be that the comparable sales that the City relies upon in valuing the properties are not suitable, the issue of the suitability of comparable sales is an issue of fact to be determined at trial.
Moreover, since both damage parcels, standing alone, are non-buildable lots, its appraiser properly finds comparable sales of properties that are also non-buildable lots. Further, that claimants do not agree with the adjustments made for comparable sales that were located, claiming that they are in inferior areas, does not compel the conclusion that the sales should be eliminated from consideration as a matter of law. In this regard, the City points out, for example, that the gross building area of Riccio's lot is 2,850 square feet and the size of the comparable sales relied upon were 2,350 square feet, 2,750 square feet and 2,530 square feet, so that the size of the comparable sales were similar. Further, R3A and R3X zoning districts are similar in that the minimum lot widths are 25 feet and 35 feet, the minimum lot areas are 2,375 square feet and 3,325 square feet and the minimum side yards are 8 and 10 feet, respectively. Accordingly, Equity properly determines that no adjustments are warranted for these minor differences. Moreover, the takings do not render the homes on remainder of the parcels unlawful, since they will continue to be nonconforming uses that can be maintained as long as they are not destroyed or abandoned. The City further avers that it does not employ the "split-and-isolate" technique, as argued by claimants.
Sufficiency of the Parties' Appraisal Reports
In the recent case of In re City of New York [Jones Woods Park Addition] ( 20 Misc 3d 1143 (A), 2008 NY Slip Op 51839U, 2008 NY Misc LEXIS 5962, 2008 WL 4193123), this court denied a similar motion made by the City, i.e., a motion seeking to preclude the introduction of an appraisal report at trial on the ground that it was based on the false assumption that a claimant had a vested right to develop the subject property in accordance with plans previously approved by the City and a cross motion by a claimant seeking to preclude the introduction into evidence of the City's appraisal report on the ground that it did not address the issue of the maximum return that claimant could earn by developing the property. For the reasons fully discussed therein, the court finds that both the City's and claimants' appraisal reports adequately set forth the data upon which the respective valuations are based and sufficiently articulate the basis for the proposed values, as required by 22 NYCRR 202.61 (id. at 5-6). Thus, "any inadequacies in the appraisal report disclosed during the valuation hearing go to the weight to be given to the report, not its admissibility" ( National Fuel Gas Supply v Goodremote , 13 AD3d 1134 , 1135, citing Champlain Natl. Bank v Brignola, 249 AD2d 656, 657). Accordingly, neither claimants nor the City will be precluded from introducing their appraisal reports at trial. In so holding, the court emphasizes, as was held in In re City of New York [Jones Woods Park Addition], that "the City points to no rule or case law precedent that requires claimant to lay bare its evidentiary proof in its appraisal report" ( In re City of New York [Jones Woods Park Addition], 2008 NY Slip Op 51839U at 6).
Moreover, as was also discussed in In re City of New York [Jones Woods Park Addition], in arguing that the opposing party should be precluded from introducing their appraisal report at trial on substantiative grounds, the motion and cross motion are more properly characterized as seeking summary judgment, not seeking to preclude admission of an appraisal report on procedural grounds ( In re City of New York [Jones Woods Park Addition] (2008 NY Slip Op 51839U at 5).Hence, to be entitled to summary judgment, each party has to make a prima facie showing that the opposing party cannot value the property in reliance upon its appraisal report as a matter of law.
In this regard, the court notes that this is the fourth motion made by the City in recent months in which it seeks to obtain summary dismissal of a claimant's appraisal report premised upon its contention that the report fails to comply with the court rules ( see In re City of New York [Jones Woods Park Addition], 2008 NY Slip Op 51839U [2008]; In re City of New York [Congregation Adas Yereim], Kings Co Sup Ct, Index no. 37905/03, Nov. **, 2008; In re City of New York [60 Nostrand LLC], Kings Co Sup Ct, Index no. 37905/03, Nov. **, 2008). In so moving, the City is seeking to shift the burden to claimant to make a prima facie showing of the validity and legal sufficiency of its appraisal report on papers, prior to trial, which procedure is not contemplated by either the Eminent Domain Procedure Law or the New York City Administrative Code. While the court has addressed the merits of the City's arguments on the motions made to date because claimants have done so, the City is cautioned that if it again moves for an order precluding the introduction of an appraisal report at trial on the procedural ground that a the report is not in compliance with court rules, this court will deny the motion if the appraisal report is facially sufficient, and will not require claimant to refute a demand for substantive relief that is not properly interposed by the City in a notice of motion or notice of cross motion ( see generally CPLR 2214 and 2215).
Valuation of Property in Cases of Partial Takings
It is well settled that "the measure of damages in partial taking cases is the difference between the value of the whole before the taking and the value of the remainder after the taking" ( Diocese of Buffalo v State, 24 NY2d 320, 323, citing Matter of City of New York [Fourth Ave.], 255 NY 25). Stated differently, "[w]here there is a partial taking of land, the measure of damages to which a claimant is entitled is the market value of the entire tract and improvements before the taking, less the value of the remainder after the taking" ( Donaloio v State, 99 AD2d 335, 338, affd 64 NY2d 811, citing Acme Theatres v State of New York, 26 NY2d 385). "Where the before and after approach is used, both the before' and the after' valuations must be calculated by the same method" ( Mil-Pine Plaza v State, 72 AD2d 460, 462, citing Diocese of Buffalo, 24 NY2d at 326).
Further, "it is well settled in this State that, where there is a partial taking, consequential damages which ensue upon the taking are to be considered in determining the award and that, among other things, damages which arise from the use of the parcel taken are entitled to consideration" ( Dennison v State, 22 NY2d 409, 412, citing South Buffalo Ry. Co. v Kirkover, 176 NY 301):
"Consequential damages, also known as severance damages, reflect the fact that in addition to the loss of value of the property actually taken, the condemnee's remaining property may suffer a diminution in value as a result of the loss of the condemned parcels ( see Town of Fallsburgh v Silverman, 260 AppDiv 532, affd 286 NY 594; see generally 8A Nichols, Eminent Domain § 16.02). The measure of severance damages is what the condemnee has lost, not what the condemnor has gained ( see 8A Nichols, Eminent Domain § 16.02 [4])."
(Murphy v State, 14 AD3d 127, 132).
"Consequential damages are measured by the difference between the before and after values, less the value of the land and improvements appropriated" ( Chem. Corp. v Town of E. Hampton, 298 AD2d 419, 420, citing Matter of Estate of Haynes v County of Monroe, 278 AD2d 823, 825, appeal denied 96 NY2d 712; Mil-Pine Plaza, 72 AD2d at 462; accord Coldiron Fuel Ctr. v State , 8 AD3d 779 , 780; Hewitt v State, 54 AD2d 812, 812-813). As is also relevant herein," [i]t is widely accepted that partial taking does not itself cause a consequential loss . . . Damages for such a loss must be based upon either the opinion of an experienced, knowledgeable expert . . . or on actual market data showing a reduction in the value of the remainder as a result of the appropriation'" ( Chemical Corp., id. at 422, quoting Zappavigna v State of New York, 186 AD2d 557, 560). "[T]he burden is upon the claimant to prove consequential damages and to furnish a basis from which a reasonable estimate of those damages can be made" ( Mil-Pine Plaza, 72 AD2d at 464, citing 4A Nichols, Eminent Domain [3d ed], § 14.21, subd 2; Wickham Lake Homes v State of New York, 55 AD2d 976).
Accordingly, it has been held that "[l]oss of enhancement due to the location and esthetic qualities of a claimant's property is readily cognizable as consequential damage" ( Monser v State, 96 AD2d 702, citing City of Yonkers v State of New York, 40 NY2d 408, 413). Hence, it has been held that consequential damages or severance damages were properly awarded where access to the remaining property was found to be unsuitable ( Schreiber v State, 56 NY2d 760, 762; Priestly v State, 23 NY2d 152, 155; where there was a loss of access from the street to a garage on the remaining property ( Meyers v State, 215 AD2d 357, 357-358; where the remaining parcel of property had an irregular shape as a result of the taking ( Niagara Mohawk Power v Olin, 138 AD2d 940, 941; where the remaining property lost a setback ( Monser, 96 AD2d 702); and where the remaining property lost a buffer zone ( Cummings v State of New York, 62 AD2d 1084 lv denied 44 NY2d 648; appeal dismissed 44 NY2d 948]1978]).
As is also relevant herein, in charactering the motion made by the City and the cross motion made by claimants as seeking summary judgment, it must be recognized that "[s]ummary judgment is a drastic remedy that deprives a litigant of his or her day in court, and it should only be employed when there is no doubt as to the absence of triable issues" ( see e.g. Kolivas v Kirchoff , 14 AD3d 493 , 493, quoting Andre v Pomeroy, 35 NY2d 361, 364). A proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case ( see e.g. Winegrad, 64 NY2d at 853). Hence, to be entitled to summary judgment, the moving party has to make a prima facie showing that the subject property may not be valued using the methodology employed by the other as a matter of law. Neither party can, therefore, sustain the burden by merely pointing to gaps in other's proof, rather than by affirmatively demonstrating the merit of its claim ( see e.g. In re City of New York [Jones Woods Park Addition], 2008 NY Slip Op 51839U at 8, citing Vittorio v U-Haul Co. , 52 AD3d 823 ; Gonzalez v Beacon Term. Assoc. , 48 AD3d 518 , 519; Velasquez v Gomez , 44 AD3d 649, 650-651). Further, "[t]he function of the court on a motion for summary judgment is not to resolve issues of fact or determine matters of credibility, but merely to determine whether such issues exist" ( see e.g. Kolivas, 14 AD3d at 393-394; Doize v Holiday Inn Ronkonkoma , 6 AD3d 573, 573-574).
Discussion
Herein, the court concludes that both claimants and the City properly calculate the damages that each sustained by reason of the taking in their respective appraisal reports, utilizing the "before and after" method. More specifically, both claimants and the City considered comparable sales to arrive at the fair market value of the property before the taking, valued the remainder of the property after the taking and determined whether an award of consequential and/or severance damages was appropriate ( see generally Coldiron Fuel Ctr., 8 AD3d at 780-781; Hewitt, 54 AD2d at 812-813; Goldsmith v State, 32 AD2d 607, 607-608, affd 26 NY2d 899).
Further, to the extent that the City and claimants object to the appraisal report relied upon by the other on the ground that the comparable sales considered are not sufficiently similar to the subject parcel, the law is well settled that "the evaluation of the suitability of allegedly comparable' sales is a matter within the sound discretion of the trial court" ( In re Acquisition of Real Prop. by the Village of Johnson City, 241 AD2d 874, 876, lv denied 91 NY2d 802, citing Levin v State of New York, 13 NY2d 87, 92; Chase Manhattan Bank v State of New York, 103 AD2d 211, 222; accord Caldor v Board of Assessors, 227 AD2d 400 [the suitability of comparable sales is a matter for resolution by the trial court]; Consolidated Edison Co. v Neptune Assocs., 190 AD2d 669 [the trial court did not improvidently exercise its discretion in accepting the comparable sales offered by the respondent's appraiser]; Phelps Dodge Indust. v Kondzielaski, 131 AD2d 675, 678, appeal denied 70 NY2d 613 [the degree of comparability is a question of fact to be resolved by the trial court]).
Similarly, since the degree of comparability presents a question of fact, adjustments on account of differences are to be weighted and evaluated by expert witnesses ( see e.g. Latham Holding Co. v State, 16 NY2d 41, 46). Hence, differences between comparable sales and the property to be valued are the proper subject of adjustment by expert witnesses and create a question of fact as to the degree of comparability ( see e.g. In re Acquisition of Real Property by County of Dutchess, 186 AD2d 891, 892).
The above discussion of controlling law also compels the conclusion that an issue of fact exists as to whether the subject taking resulted in a change of value to the remainder of the property, so that claimants are entitled to an award of consequential or severance damages. In this regard, it is not disputed that the taking significantly reduced the size of the side yards on the properties, limited access to the remaining lots and rendered the improvements existing thereon to be non-conforming uses. Accordingly, in view of the opinion of the City's expert that no such damages were sustained and the opinion of claimants' expert that significant consequential damages exist, issues of credibility that cannot be determined upon the papers now before the court are raised ( see generally Chem. Corp., 298 AD2d at 422-423).
In so finding, it has also been held that such award of consequential or severance damages must be based upon either the opinion of an experienced, knowledgeable expert or on actual market data showing a reduction in the value of the remainder as a result of the appropriation ( see e.g. Estate of Haynes, 278 AD2d at 824; Zappavigna, 186 AD2d at 560, citing City of Yonkers v State of New York, 40 NY2d 408; Miller v State of New York, 117 Misc 2d 444, 449-450). Herein, since Lally has 43 years of experience in the field, with offices located on Staten Island, claimants make a prima facie showing that he is a knowledgeable expert qualified to offer an opinion with regard to whether they sustained consequential or severance damages. Further, although the City correctly argues that the burden is on claimants to establish an entitlement to consequential and/or severance damages at trial, on a motion seeking summary judgment on the ground that no such damages were sustained, the burden of proof is on the City, as movant. The City fails to sustain this burden.
Finally, claimants' assertion that the City improperly values the property in reliance upon the "split-and-isolate" technique rejected by the court in Frank Micali Cadillac-Oldsmobile, Inc. v State ( 104 AD2d 477) is without merit. Therein, the State's appraiser valued each of two buildings located on the subject lot separately and then added the two together ( id. at 480-481). In this case, the City valued both properties, as one entire whole, before and after the taking. Thus, the methodology followed therein is clearly distinguishable.
Conclusion
Accordingly, for the above stated reasons, both the motion and the cross motion are denied.
The foregoing constitutes the decision and order of the court.