New York Law Review

Tag: eminent domain

  • Matter of City of New York, 61 N.Y.2d 843 (1984): Establishing Highest and Best Use in Condemnation Proceedings

    Matter of City of New York, 61 N.Y.2d 843 (1984)

    In condemnation proceedings, the condemnee bears the burden of proving the highest and best use of the condemned property, demonstrating a reasonable probability, not merely a possibility, that the proposed use is economically feasible and could be realized in the reasonably near future.

    Summary

    In a dispute over the valuation of condemned land, the Court of Appeals affirmed the Appellate Division’s decision regarding the highest and best use of the property. The city condemned vacant land, and the claimant argued its highest and best use was as a shopping center. The court emphasized that the claimant bears the burden of proving the economic feasibility and realistic probability of the proposed use, not just a hypothetical possibility. The court found the claimant presented sufficient evidence, including a city planning commission determination regarding a nearby property, to support the shopping center use. The dissent argued the claimant failed to demonstrate realistic plans or economic feasibility.

    Facts

    The City of New York condemned vacant land owned by Jomar Real Estate Corp. as part of the Staten Island Industrial Park project. Jomar claimed the highest and best use of the property was for a community shopping center, seeking a higher valuation. Jomar presented aerial photographs, population estimates, and blueprints created after notification of condemnation. They also referenced a City Planning Commission report concerning a different property noting the ability to support commercial space nearby. No formal economic feasibility study was conducted, nor were financing arrangements or construction contracts secured.

    Procedural History

    The trial court determined a value based on a lower and best use than a shopping center. The Appellate Division reversed, finding the highest and best use was for a shopping center, leading to a higher valuation. The City of New York appealed to the Court of Appeals.

    Issue(s)

    Whether the claimant, Jomar Real Estate Corp., met its burden of proving that the highest and best use of the condemned land was for a shopping center.

    Holding

    Yes, because the claimant presented sufficient evidence, including the city planning commission’s determination regarding a nearby property, which tended to establish the economic feasibility of a shopping center use.

    Court’s Reasoning

    The Court of Appeals affirmed the Appellate Division’s order, adopting its reasoning that the claimant had adequately demonstrated the economic feasibility of a shopping center. The court highlighted the claimant’s introduction of the city planning commission’s determination regarding another property on Victory Boulevard, within a half-mile of the subject parcel. This determination indicated the market’s ability to support a significant amount of commercial space, thereby supporting the economic feasibility of a shopping center on the condemned land.

    The dissenting judge argued that the claimant failed to meet the burden of proving a reasonable probability of the shopping center’s development. The dissent emphasized the lack of an economic feasibility study, financing arrangements, construction contracts, or other concrete steps toward development. The dissent argued, “Here, claimant has done little more than raise the hypothetical possibility of a community shopping center and the record is devoid of evidence establishing a reasonable probability that such a use could have or would have been made in the reasonably near future.” The dissent noted that the few actions the claimant took, such as purchasing sewer hookups and leveling the land, were consistent with any development, including the intended industrial park use. The dissent distinguished the other Victory Boulevard property, citing its location at a busier intersection with limited convenience services, making it unsuitable for direct comparison.

    The court’s decision underscores the importance of presenting concrete evidence of economic feasibility and realistic development plans when arguing for a specific highest and best use in condemnation proceedings. Mere speculation or hypothetical possibilities are insufficient to meet the condemnee’s burden of proof.

  • Matter of Rochester Urban Renewal Agency v. Patchen Post, Inc., 45 N.Y.2d 1 (1978): Admissibility of Appraisal as Evidence of Value

    Matter of Rochester Urban Renewal Agency v. Patchen Post, Inc., 45 N.Y.2d 1 (1978)

    An appraisal used by a governmental entity to obtain funding can be admitted as evidence of value, but its consideration on appeal is improper if it was not properly admitted into evidence at the trial level.

    Summary

    This case concerns the admissibility of an appraisal used by the State to obtain federal highway funding (the Pomeroy appraisal) as evidence of damages in a condemnation proceeding. The Court of Claims initially failed to consider the appraisal due to an oversight. Although it later acknowledged the oversight, it refused to consider the appraisal as evidence of value. The Appellate Division vacated the Court of Claims decision but then improperly awarded damages based on the appraisal. The Court of Appeals held that while the appraisal could be admitted as evidence, the Appellate Division erred in considering it because it was not properly admitted at trial. The case was remitted for further proceedings.

    Facts

    The Rochester Urban Renewal Agency sought to condemn property owned by Patchen Post, Inc. to be used for highway construction. The State had used an appraisal (the Pomeroy appraisal) to obtain federal highway funding for the project. During the trial at the Court of Claims to determine the property’s value, the Pomeroy appraisal figure was received in evidence. However, the Court of Claims initially failed to consider the appraisal in its determination of damages. The claimants moved to vacate the decision or for a new trial, arguing that the Court of Claims erred in not considering the Pomeroy appraisal.

    Procedural History

    The Court of Claims initially failed to consider the Pomeroy appraisal in determining damages. The Appellate Division reversed the Court of Claims’ decision and granted the claimant’s cross-motion to vacate the earlier decision. The Appellate Division then awarded the claimants $45,150 based on the Pomeroy appraisal. The State appealed, and the claimants cross-appealed. The Court of Appeals modified the Appellate Division’s order, reversed the damage award, and remitted the case to the Appellate Division for further proceedings.

    Issue(s)

    Whether the Appellate Division erred in awarding damages based on an appraisal (the Pomeroy appraisal) that was used by the State to obtain federal highway funding, when that appraisal was not formally marked as an exhibit nor fully admitted into evidence at the trial level.

    Holding

    Yes, because the Appellate Division’s consideration of the appraisal, which was not properly admitted into evidence, constituted error. The appraisal figure was received solely as an admission, and not as a full exhibit.

    Court’s Reasoning

    The Court of Appeals reasoned that the Court of Claims erred in failing to give consideration to the damages evidence contained in the Pomeroy appraisal. The court acknowledged that the appraisal figure was received in evidence. The court stated, “The Court of Claims erroneously failed to give any consideration to evidence of damages contained in an appraisal used by the State to obtain Federal highway funding, known as the Pomeroy appraisal, which figure was received in evidence.”

    However, the Court of Appeals also determined that the Appellate Division erred in awarding damages based on the appraisal because it had not been formally admitted into evidence. The court noted, “However, the Appellate Division improperly awarded claimants $45,150. The Pomeroy appraisal was neither marked as an exhibit nor received in evidence. The value stated in it was received solely as an admission. Consideration of the appraisal by the Appellate Division thus constituted error (see Kirby v Mafox Realty Corp., 272 App Div 889) and the matter should be remitted to the Appellate Division for further proceedings.”

    The court distinguished between receiving a figure from the appraisal as an admission versus admitting the entire appraisal as an exhibit. Because the full appraisal was not properly admitted, the Appellate Division’s reliance on it to determine the damage award was improper.

  • In re City of New York (Franklin Record Center), 51 N.Y.2d 53 (1980): Valuation of Property Based on Actual Rental Income

    In re City of New York (Franklin Record Center), 51 N.Y.2d 53 (1980)

    In condemnation proceedings, the compensation due to a claimant who has uniquely improved their property to command higher rental income is properly measured by capitalizing the actual rental income received, absent evidence that a similar property would have a lower market value.

    Summary

    Franklin Record Center (Franklin) sought compensation after the City of New York condemned its building. Franklin argued that its unique setup for record storage allowed it to charge higher rents than standard loft buildings. Both parties used capitalization of net rental income to value the property, but disagreed on the actual rental income. The City argued that a portion of the payments from tenants were for services, not rent, and valued the building lower. The Court of Appeals held that Franklin’s compensation should be based on the actual rental income received, as the building’s highest and best use was as a record storage facility, and there was no evidence the income was an aberration or that services were included in the rental payments.

    Facts

    Franklin owned a 10-story loft building in Manhattan. The building was leased to approximately 90 tenants for record and office supply storage. Franklin utilized portable metal partitions and shelf space, enabling tenants to rent only the precise area needed. Due to this flexibility, Franklin charged a higher per square foot rental rate than other loft buildings in the area. Most tenants had three- to five-year leases.

    Procedural History

    The City condemned Franklin’s building on June 1, 1970. At the initial Special Term hearing, the court adopted the City’s valuation of $635,000. The Appellate Division reversed, finding Franklin’s use was the building’s highest and best use and remanded the case. On remand, Special Term awarded Franklin $1,100,000 based on the rental income testified to by Franklin’s expert. The City appealed this decree to the Court of Appeals.

    Issue(s)

    Whether the compensation owed to Franklin in condemnation should be based on the actual rental income received from its record storage facility, or on a lower valuation based on the market value of comparable loft buildings.

    Holding

    Yes, because the highest and best use of the property was its actual use as a record storage facility, and the record did not support the conclusion that the tenants were purchasing anything other than the right to occupy space in the building.

    Court’s Reasoning

    The court held that the measure of damages in condemnation is the fair market value of the condemned property in its highest and best use on the date of taking. The court determined that the Appellate Division correctly concluded that the highest and best use of the property was its actual use as a record storage facility and that the entire income from that use was rental income. The city’s expert opinion was based on the incorrect assumption that the building should be valued as a loft building rather than as a record storage building. The court noted that the city’s expert conceded he had never seen the leases and could not testify what services the tenants were getting.

    The court emphasized that “[a]bsent any evidence that services were supplied by Franklin or any related company without the payment of reasonable compensation therefor over and above the rent, Franklin’s experience and reputation and its relationship with the other companies was simply irrelevant to the determination of the compensation to be paid.” The court found no evidence to support the city’s conclusion that a portion of the tenants’ payments constituted payment for services. Therefore, the court concluded that the proper measure of compensation was based on the capitalization of Franklin’s actual rental income. The court distinguished cases where actual receipts were a “temporary aberration.” Here, there was no such claim by the City. The Court affirmed the decree awarding Franklin $1,100,000.

  • Bronxchester Urban Renewal Project, 56 N.Y.2d 535 (1982): Determining Just Compensation in Condemnation Cases

    Bronxchester Urban Renewal Project, 56 N.Y.2d 535 (1982)

    In condemnation proceedings, while a legislatively fixed interest rate on awards is presumptively reasonable, it is not determinative; a claimant can present evidence of prevailing market rates to prove a higher rate is necessary for just compensation.

    Summary

    The City of New York condemned private property for an urban renewal project. The property owners (claimants) challenged the statutory interest rate of 6% on the compensation award, arguing it didn’t meet the constitutional requirement of “just compensation” due to delays in payment. The trial court awarded 9% interest for 1978-1981, finding the statutory rate inadequate during that period, but retained the 6% rate for 1972-1977. The New York Court of Appeals affirmed, holding that while the statutory rate is presumptively reasonable, claimants can introduce evidence to show a higher rate is needed for just compensation, and that the claimants had only successfully demonstrated the need for a higher rate for the period of 1978-1981.

    Facts

    In June 1972, New York City condemned 51 properties for the Bronxchester Urban Renewal Project.
    The claimants, owners of four parcels, filed fixture claims between April 1974 and January 1975.
    Claimants argued that the 6% statutory interest rate on the award was insufficient to provide just compensation, given the delay between the taking and the payment.
    Claimants presented expert testimony at trial showing that market interest rates on public securities and other investments were higher than 6% during 1972-1981.

    Procedural History

    Special Term rendered a tentative compensation award in August 1980, with 6% interest from the taking date.
    A separate hearing was held on the interest rate issue in April 1981.
    Special Term awarded 9% interest from January 1, 1978, to the payment date, and 6% from June 23, 1972, to December 31, 1977.
    The Appellate Division affirmed the decision without opinion.
    Both the city and the claimants appealed to the New York Court of Appeals.

    Issue(s)

    Whether the statutory interest rate of 6% on condemnation awards adequately provides just compensation, as required by the Fifth Amendment of the U.S. Constitution and Article I, Section 7 of the New York Constitution, or whether a higher rate is required to account for delays in payment and prevailing market interest rates.

    Holding

    Yes, for the period of 1972-1977, and No, for the period of 1978-1981, because while the legislatively fixed rate is presumptively reasonable, the claimant successfully demonstrated that the statutory rate was inadequate to afford just compensation for the period of 1978-1981, but not for the period from 1972-1977.

    Court’s Reasoning

    The court emphasized that just compensation in condemnation includes a sum for the delay between taking and payment, entitling the owner to a fair return for the deprivation of the property’s use.
    The determination of just compensation is a judicial function, making the interest rate a matter for judicial review. The court stated, “because the ascertainment of just compensation is a judicial question, the amount of interest to be paid as an additional component of such compensation is also a matter for judicial determination”.
    The legislative rate is presumptively reasonable but can be challenged with evidence of prevailing market rates.
    Previous cases rejected challenges to the statutory rate because claimants failed to prove it was “unreasonably low.”
    In this case, affirmed findings of fact showed the 6% rate was inadequate from 1978-1981, when average interest rates on stable investments were significantly higher.
    The court noted, “At that time, average interest rates on stable investments, such as medium term public securities, ranged between 8.3% in 1978 and 12.5% in 1981. Because this evidence supports the trial court’s affirmed findings concerning the inadequacy of the statutory rate they are beyond review here”.
    For 1972-1977, claimants didn’t prove the statutory rate was unreasonably low, as interest rates fluctuated around 6% during that period.
    The court distinguished this case from the presumption of constitutionality afforded legislative enactments, stating, “Thus, the statutory rate is entitled to a presumption of reasonableness, not a presumption of constitutionality.”
    The decision rests on the specific factual finding that market rates significantly exceeded the statutory rate during the later period.

  • H.G.V. Associates, Inc. v. City of New York, 64 N.Y.2d 966 (1985): Determining Just Compensation in Eminent Domain

    H.G.V. Associates, Inc. v. City of New York, 64 N.Y.2d 966 (1985)

    In eminent domain cases, just compensation for condemned property, including fixtures, is measured by what the owner has lost, ensuring fair reimbursement for the taking.

    Summary

    The City of New York condemned property as part of the College Point Industrial Park Urban Renewal Project. Several claimants sought compensation, including H.G.V. Associates (the land owner), other amusement park operators, and Adventurers Whitestone Corp. (a restaurant tenant). The central issues concerned the valuation of the fee interest, particularly land formerly part of tidal creekbeds, and the proper method for calculating compensation for fixtures owned by a tenant. The Court of Appeals affirmed the Appellate Division’s ruling, holding that the landowner was entitled to compensation for the former creekbeds and that the tenant was entitled to the sound value of its fixtures since it did not remove them.

    Facts

    H.G.V. Associates owned and operated an amusement park in Queens County. Several other claimants operated amusement rides within the park. Adventurers Whitestone Corp. leased and operated a restaurant on the premises. The City of New York condemned the property on April 4, 1974, as part of an urban renewal project. A portion of the land owned by H.G.V. Associates included areas that were once tidal creekbeds.

    Procedural History

    A condemnation proceeding was initiated in the Supreme Court, Queens County, to determine property ownership and compensation. The Appellate Division modified the Supreme Court’s decision on two specific awards but affirmed the rest of the judgment. The City of New York appealed to the Court of Appeals.

    Issue(s)

    1. Whether H.G.V. Associates is entitled to compensation for damage parcels located on the former site of Mill Creek and Old Creek.

    2. Whether the fixture award to Adventurers Whitestone Corporation should be limited to reasonable moving expenses, or whether the proper award is the sound value of the fixtures.

    Holding

    1. Yes, because the City did not provide sufficient proof that the damage parcels were part of the creekbeds when the City acquired title and because a provision of the Administrative Code made the property alienable.

    2. No, because the proper award is the sound value of the fixtures situated on the condemned property since the tenant did not remove them.

    Court’s Reasoning

    Regarding the creekbeds, the Court found the City failed to prove these parcels were part of the creekbeds at the time of condemnation. The Court also noted that § D51-48.1 of the Administrative Code of the City of New York made the property alienable, meaning the City could convey the land to a private citizen. Because the claimants presented a deed to the property and the City raised no other objections to its validity, an award of compensation was appropriate.

    Regarding the fixtures, the Court clarified the proper method for determining compensation for fixtures in condemnation cases. Quoting Rose v. State of New York, 24 NY2d 80, 87, the Court emphasized that “just compensation is properly measured by determining what the owner has lost.” Because the tenant did not remove the trade fixtures, the Court held they were entitled to compensation for the sound value of the property, citing Matter of City of New York (Allen St.), 256 NY 236, 243: a tenant is entitled to compensation “for his interest in any annexations to the real property which but for the fact that the real property has been taken, he would have had the right to remove at the end of the lease.” The Court distinguished this situation from cases where the tenant removes the fixtures, in which case the compensation is limited to either the difference between salvage value and present value or the cost of removal, whichever is less.

  • Matter of City of New York (MHG Corp.), 56 N.Y.2d 356 (1982): Trade Fixture Compensation in Condemnation Proceedings

    Matter of City of New York (MHG Corp.), 56 N.Y.2d 356 (1982)

    When a lease specifies that improvements become the property of the landlord upon annexation, the tenant is not entitled to compensation for trade fixtures annexed to the property when the property is condemned.

    Summary

    MHG Corporation leased land from the City of New York to provide free parking for its adjacent amusement park. The lease stipulated that any improvements would become the City’s property upon annexation. MHG installed amusement rides on the leased land. When the City condemned the land as part of an urban renewal project, MHG sought compensation for the annexed rides (trade fixtures). The court held that because the lease explicitly stated that all improvements became the City’s property upon annexation, MHG was not entitled to compensation for the trade fixtures, as the City owned them at the time of condemnation. The court emphasized the importance of contractual agreements in determining ownership in condemnation cases.

    Facts

    MHG Corporation operated an amusement park. To alleviate parking problems, MHG leased adjacent City-owned land for “no charge parking.” The lease term was 30 days, automatically renewable with 30 days’ notice. The lease stated that MHG could not make improvements without the City’s written consent, and all improvements would become the City’s property upon annexation. The lease also had a condemnation clause allowing the City to recover possession through condemnation. MHG installed amusement rides (trade fixtures) on the leased land without explicit written consent from the City.

    Procedural History

    The City condemned the leased land as part of the College Point Industrial Park Urban Renewal Project. MHG sought compensation for the trade fixtures. The Supreme Court denied compensation, stating MHG took a calculated risk. The Appellate Division reversed, awarding compensation for the fixtures. The City appealed to the New York Court of Appeals.

    Issue(s)

    Whether tenants are entitled to compensation for trade fixtures annexed to leased land when the lease specifies that all improvements become the landlord’s property upon annexation and the land is subsequently condemned by the City.

    Holding

    No, because the lease explicitly stated that all improvements made by the tenant would become the property of the landlord (the City) upon annexation, the City owned the trade fixtures at the time of condemnation, thus the tenant is not entitled to compensation.

    Court’s Reasoning

    The Court of Appeals reversed the Appellate Division, reinstating the Supreme Court’s original decision denying compensation. The court acknowledged the general rule that tenants are typically entitled to compensation for annexed fixtures condemned with the realty, if they would have had the right to remove them at the end of the tenancy. However, the court emphasized the critical importance of the lease terms. In this case, the lease explicitly stated that “[a]ll improvements [made would] become the property of the landlord [City] on annexation.” Both lower courts found that the amusement rides were permanently annexed to the property before the condemnation. Therefore, according to the lease, the City owned the fixtures when the title vested. The court distinguished this case from Matter of City of New York (Allen St.), 256 N.Y. 236 (1931), where the tenant owned the fixtures until the end of the lease. Here, ownership transferred to the City upon annexation. The court found nothing unconscionable about the lease provisions, noting that the lease was negotiated at arm’s length, and the City’s actions did not estop it from relying on the lease terms. The court stated, “[I]t is the duty of the State, in the conduct of the inquest by which the compensation is ascertained, to see that it is just, not merely to the individual whose property is taken, but to the public which is to pay for it.”

  • In re City of New York (Public School No. 223), 51 N.Y.2d 921 (1980): Valuation of Property in Condemnation Proceedings

    51 N.Y.2d 921 (1980)

    In condemnation proceedings, the valuation of property may consider its highest and best use, including potential governmental financing and zoning changes, provided there is evidentiary support and no contrary proof is offered.

    Summary

    This case concerns the valuation of two parcels of land acquired by the City of New York through condemnation. One parcel was for Public School No. 223, and the other was part of an Urban Renewal Project. The primary issue concerned the valuation of the Public School No. 223 parcel, specifically whether the court properly considered its potential use as a governmentally financed apartment building, including anticipated zoning changes and tax abatements. The Court of Appeals affirmed the lower court’s valuation, finding sufficient evidentiary support for the factual determinations regarding the parcel’s highest and best use. Because the city did not provide proof of the proper discount to apply to the market value of the land, the Court of Appeals affirmed the ruling.

    Facts

    The City of New York initiated condemnation proceedings to acquire two parcels of land: one for Public School No. 223 and another for a Stage II Urban Renewal Project. Regarding the Public School No. 223 parcel, the Supreme Court determined that its highest and best use was for a governmentally financed apartment house. This determination factored in the likelihood of a zoning change and tax abatement. The parties agreed on a land valuation based on this potential use.

    Procedural History

    The Supreme Court made factual determinations regarding the highest and best use of the Public School No. 223 parcel, including the probability of zoning changes and tax abatements. The Appellate Division affirmed these determinations. The City of New York appealed to the Court of Appeals. Regarding the Urban Renewal parcel, the Appellate Division dismissed the City’s appeal due to a failure to file a notice of appeal from the partial final decree of the Supreme Court.

    Issue(s)

    1. Whether the courts below erred in considering the potential use of the Public School No. 223 parcel as a governmentally financed apartment house, including anticipated zoning changes and tax abatements, when determining its valuation in condemnation proceedings.
    2. Whether the Appellate Division properly dismissed the appeal concerning the Urban Renewal parcel due to the City’s failure to file a timely notice of appeal.

    Holding

    1. No, because the factual determinations regarding the parcel’s highest and best use were supported by evidence, and the city failed to provide proof of an appropriate discount given that the rezoning had not been formally accomplished.
    2. Yes, because no notice of appeal from the relevant decree was filed, as required for appellate review.

    Court’s Reasoning

    The Court of Appeals affirmed the lower court’s decision regarding the Public School No. 223 parcel. The court emphasized that the factual determinations made by the Supreme Court regarding the use of the parcel as a governmentally financed apartment house, zoning changes, tax abatement, and governmental financing were affirmed by the Appellate Division and had evidentiary support in the record. These determinations were thus beyond the scope of the Court of Appeals’ review. Although the rezoning had not been formally accomplished at the time of valuation, the court noted that normally, this would call for “at least some discount”. However, the city failed to offer evidence demonstrating what this discount should be. Therefore, the court found no reason to disturb the valuation determined by the lower courts. Regarding the Urban Renewal parcel, the court held that the Appellate Division correctly dismissed the appeal because the City had not filed a notice of appeal from the relevant decree. Because that failure deprives an appellate court of jurisdiction, the lower court was affirmed.

  • Purchase Hills Realty Corp. v. State, 45 N.Y.2d 836 (1978): Consequential Damages and Limited Access After Partial Taking

    Purchase Hills Realty Corp. v. State, 45 N.Y.2d 836 (1978)

    In a partial taking case, consequential damages for limited access are not recoverable if the reduced access was not caused by the taking itself, and “cost to cure” damages are not available as an alternative when there’s no basis for consequential damages.

    Summary

    Purchase Hills Realty Corp. sought consequential damages from the State of New York following a partial taking of their property, alleging the taking caused limited access. The Court of Claims found that the limited access was not caused by the taking, and the Appellate Division ordered a new trial on valuation. The Court of Appeals affirmed, holding that the factual determination that the taking did not cause the limited access was supported by sufficient evidence and was thus not reviewable. Consequently, consequential damages were properly denied, and “cost to cure” damages (as an alternative) were also unavailable. The Court also upheld the Appellate Division’s decision to order a new trial on the issue of valuation due to dissatisfaction with the claimant’s evidence.

    Facts

    Purchase Hills Realty Corp. owned property that was partially taken by the State of New York. The Realty Corp. sought consequential damages, arguing that the taking resulted in limited access to the remaining property. The Court of Claims, the trial court in this matter, determined the limited access was *not* caused by the taking.

    Procedural History

    The Court of Claims ruled against Purchase Hills Realty Corp. The Appellate Division ordered a new trial concerning the valuation of the property taken, finding the evidence presented by claimants unsatisfactory. The appeal to the Court of Appeals was predicated upon this prior non-final determination of the Appellate Division, meaning the scope of review was limited. The Court of Appeals affirmed the judgment.

    Issue(s)

    1. Whether the Court of Appeals can review the factual finding of the Court of Claims, affirmed by the Appellate Division, that the partial taking did not cause the limited access to the claimants’ property.
    2. Whether the claimants are entitled to consequential damages stemming from the claimed lack of access.
    3. Whether the claimants are entitled to damages for “cost to cure” as an alternative to consequential damages.
    4. Whether the Appellate Division abused its discretion by ordering a new trial due to its dissatisfaction with the evidence presented concerning the valuation of the property taken.

    Holding

    1. No, because the Appellate Division did not disturb the factual finding made by the Court of Claims based on legally sufficient evidence.
    2. No, because the limited access was not caused by the taking.
    3. No, because “cost to cure” damages are merely an alternative to consequential damages and cannot be awarded where there is no basis for any consequential damages.
    4. No, the Appellate Division did not abuse its discretion.

    Court’s Reasoning

    The Court of Appeals stated that its review was limited to the prior “non-final determination of the appellate division.” Because the Appellate Division affirmed the Court of Claims’ factual finding that the limited access was not caused by the taking, that factual determination was not subject to review by the Court of Appeals. As such, the court had to accept that the taking did not cause the limited access.

    Given this factual premise, the court found that the claimants were not entitled to consequential damages for the claimed lack of access. The court further reasoned that “cost to cure” damages were unavailable because such damages are “merely an alternative to consequential damages” and “may not be awarded where there is simply no basis for any consequential damages.” In essence, the court reasoned that you cannot receive cost-to-cure damages if you cannot receive consequential damages. The court cited Mayes Co. v State of New York, 18 NY2d 549 in support of this proposition.

    Finally, the Court of Appeals deferred to the Appellate Division’s discretion in ordering a new trial on the issue of valuation because the Appellate Division was unsatisfied with the evidence presented by the claimants. This highlights the significant deference appellate courts grant to trial courts in matters of evidence assessment and valuation.

  • Town of Islip v. Harrison Ventures, Inc., 41 N.Y.2d 334 (1977): Increment for Probability of Rezoning in Condemnation

    41 N.Y.2d 334 (1977)

    In condemnation cases, if there’s a reasonable probability that zoning restrictions on a property will be lifted or overturned by the courts, the property owner is entitled to an increment above the property’s value as currently zoned to reflect that potential.

    Summary

    The Town of Islip condemned land owned by Harrison Ventures, Inc. The land was zoned residential, but Harrison Ventures argued it was best suited for commercial development. The trial court awarded an increment above the residential value, recognizing the land’s unsuitability for residential use and the possibility of successful rezoning through a court challenge. The Court of Appeals affirmed, holding that the potential for rezoning, even through litigation, can increase a property’s market value in condemnation proceedings. The court emphasized that the increment was justified because of the reasonable probability that a court would invalidate the existing residential zoning.

    Facts

    Harrison Ventures owned a parcel of land in Islip, NY, uniquely shaped and bordered by public thoroughfares on all sides. The surrounding area featured mixed residential and business uses, but the parcel was zoned residential. Harrison Ventures sought rezoning to Business I for an office building, but the town planning board recommended denial and suggested condemnation. The town condemned the property in 1974, maintaining compensation should be based on the residential zoning. Harrison Ventures’ experts argued the property was commercially valuable, unsuitable for residential use, and rezoning was probable, warranting an increment above residential value. The town argued against rezoning probability and presented a residential development plan, limiting their valuation to residential value.

    Procedural History

    The Supreme Court, after trial, found the property unsuitable for residential use and awarded an increment above its residential value. The Appellate Division affirmed. The Town appealed to the Court of Appeals, arguing against any increment. Harrison Ventures cross-appealed, seeking a larger increment, but the cross-appeal was dismissed. The Court of Appeals then considered only the town’s appeal regarding the propriety of any increment at all.

    Issue(s)

    Whether, in a condemnation proceeding, a property owner is entitled to an increment above the property’s residential value to reflect the reasonable probability that the existing zoning restrictions could be overturned by a court.

    Holding

    Yes, because a reasonable probability of successful rezoning through a court challenge should be considered when determining the fair market value of property taken in condemnation.

    Court’s Reasoning

    The Court of Appeals affirmed that just compensation for condemned property is its market value at the time of appropriation, reflecting its highest and best use. While potential uses are typically limited by current zoning, a reasonable probability of rezoning necessitates an adjustment to the property’s value. This adjustment can be an increment if rezoning to a less restrictive category is likely. The court emphasized that the reasonable probability of rezoning is a relevant factor even if rezoning requires a court action to remove zoning restrictions. The court found sufficient evidence demonstrating a reasonable probability that a challenge to the zoning regulations could succeed in court, based on the property’s unique characteristics and the surrounding area. It compared the facts to those in Matter of Grimpel Assoc. v Cohalan, where similar residential zoning was deemed unconstitutional due to the property being an “island” surrounded by business operations and major vehicular thoroughfares. The court acknowledged the town’s argument that placing two houses on the land was possible, but reiterated that physical possibility does not equate to suitability for residential development, thus validating the trial court’s decision to award an increment.

  • In re County of Suffolk, 47 N.Y.2d 507 (1979): Establishing ‘Specialty’ Property Valuation in Eminent Domain

    In re County of Suffolk, 47 N.Y.2d 507 (1979)

    When private property taken by eminent domain qualifies as a ‘specialty’ due to its unique nature and lack of a market, just compensation is determined by the summation method: land value plus replacement cost of improvements, less depreciation.

    Summary

    Suffolk County condemned property owned by the Van Bourgondien family, which had operated a flower-growing nursery for over 50 years. The key issue was how to value the property. The County argued for residential development value, while the owners claimed it was a ‘specialty’ property. The Court of Appeals held that the property qualified as a specialty because of its unique greenhouse complex and the absence of a market for flower-growing businesses in the area. The court affirmed the Appellate Division’s decision to value the property using the summation method, which considers the land value plus the replacement cost of the improvements, less depreciation. This case clarifies the criteria for determining specialty property status in eminent domain cases.

    Facts

    The Van Bourgondien family owned a 19-acre parcel in Suffolk County, zoned for residential use. They operated a wholesale flower-growing nursery with a large greenhouse complex (125,000 sq ft under glass) since 1920. The main residence contained special instruments to monitor greenhouse conditions. The family had prior unsuccessful attempts to rezone the property for multiple residences. At the time of condemnation in 1974, the business was profitable, with increasing gross sales. The County argued the highest and best use was residential development due to high taxes making the flower business unfeasible.

    Procedural History

    The County condemned the property. At Special Term, the court determined the highest and best use was residential development and assigned no value to the greenhouse complex. The Appellate Division modified this ruling, deeming the property a specialty and ordering valuation accordingly. Upon remand, the parties stipulated the reproduction cost less depreciation. The County appealed the amended order to the Court of Appeals.

    Issue(s)

    Whether the Van Bourgondien family’s nursery property qualified as a ‘specialty’ property for valuation purposes in an eminent domain proceeding, thus requiring valuation based on the summation method (land value plus replacement cost less depreciation) rather than market value for residential development.

    Holding

    Yes, the property was a specialty because it met the criteria for uniqueness, special use, lack of a market, and economic appropriateness. Therefore, the summation method was the correct valuation approach.

    Court’s Reasoning

    The Court of Appeals affirmed the Appellate Division’s ruling, emphasizing the constitutional requirement of just compensation for private property taken for public use. The court applied the four-part test for determining whether a property is a specialty, as established in Matter of County of Nassau (Colony Beach Club of Lido), 43 A.D.2d 45 (1973) and refined in Matter of Great Atlantic & Pacific Tea Co. v Kiernan, 42 N.Y.2d 236 (1977). The court found that the greenhouses were unique and specially built for growing plants and flowers, constituting a unique structure adapted to the business conducted. The property was actively used for its specialized purpose. Crucially, there was no market for the property as a whole for flower-growing businesses in western Suffolk, as other such properties had been converted to residential use. Finally, the business was economically feasible and not outmoded at the time of the taking. The court distinguished Colony Beach Club, noting that the beach club property was underutilized and surrounded by single-family residences, making its commercial use inappropriate. Here, the flower business was profitable and on the upswing. The Court stated, “a specialty may perhaps be best defined as a structure which is uniquely adapted to the business conducted upon it or use made of it and cannot be converted to other uses without the expenditure of substantial sums of money”. The Court also held that the main residence was an integral part of the nursery complex and properly valued as part of the specialty, and the greenhouses qualified as compensable fixtures because they were annexed to the land with the intention of permanence and would lose substantial value if removed. Ultimately, the court concluded that all elements of the property including the plants, were compensable.