Matter of 520 East 81st Street Associates v. Baum, 68 N.Y.2d 647 (1986)

In proceedings challenging property tax assessments, discovery is limited to information relevant to the issues raised, and where a statutory amendment eliminates the use of a particular method of proof, discovery related to that method is no longer permissible.

Summary

This case addresses the scope of permissible discovery in a proceeding challenging a real property tax assessment. The Court of Appeals held that it was an abuse of discretion to grant discovery of data related to a method of proof (actual sales) that had been eliminated by a statutory amendment. The court reasoned that because the data sought (sales/insignificance notations) was only relevant to the outdated method, it lacked relevance to the current issues in the proceeding. The court emphasized that assessment review proceedings are limited to determining the correctness of the assessment, not reviewing the assessor’s methodology.

Facts

Petitioner, 520 East 81st Street Associates, initiated proceedings to review the correctness of assessments on its property. During discovery, the petitioner sought production of various data, including sales verifications with sales/insignificance (S/I) notations made by the assessment staff. The S/I notations reflected the staff’s assessment of the significance of reported property transfers. The petitioner also requested computation sheets, guidelines, reports showing fractional assessment rates and to examine city employees.

Procedural History

The Supreme Court granted a modified discovery order, which was affirmed by the Appellate Division. The Appellate Division certified the question of whether the Supreme Court’s order, as affirmed, was properly made. The Finance Administrator and Tax Commission appealed, and the taxpayer cross-appealed. The New York Court of Appeals modified the Appellate Division order by reversing the portion that granted discovery of the S/I notations.

Issue(s)

Whether it was an abuse of discretion to grant discovery of sales verification data with S/I notations when a statutory amendment eliminated the admissibility of actual sales data as proof of unequal assessment.

Holding

No, because the requested data had no relevance to any issues that could be raised in the proceeding after the statutory amendment.

Court’s Reasoning

The Court of Appeals reasoned that the 1986 amendment to Real Property Tax Law § 720(3) limited admissible evidence in assessment review proceedings. The amendment permitted the use of class ratios promulgated by the State Board of Equalization and Assessment (SBEA) to prove the assessment ratio, effectively eliminating the use of actual sales data for this purpose. Because the S/I notations were only relevant to proving the assessment ratio through actual sales, the court found that the data lacked relevance after the amendment. The court stated, “The information provided by S/I notations is only relevant to proof of ratio by actual sales, a method no longer available to prove inequality of assessments. Under these circumstances, the requested data would have no relevancy to any issues that may be raised in this proceeding (CPLR 3101).”

The court emphasized that the assessment review proceeding is limited to determining the correctness of the assessment, not reviewing the assessor’s methodology. The court stated that “the assessment review proceeding is limited to a determination of the correctness of the assessment and not a review of what the assessor did or how he arrived at his conclusion (RPTL 720 [3]).” Therefore, the computation sheets, guidelines, and reports used by the city assessors were deemed irrelevant. Similarly, examinations before trial of city employees were also denied, finding no abuse of discretion as a matter of law (CPLR 3101).