Olympic Tower Associates v. City of New York, 79 N.Y.2d 960 (1992)

A settlement agreement in which a party expressly withdraws its claim for a tax reduction and agrees not to institute tax certiorari proceedings is enforceable and bars subsequent claims for tax reductions for the years covered by the agreement, absent a reservation of rights.

Summary

Olympic Tower Associates, a partnership, commenced an Article 78 proceeding challenging tax reductions granted to commercial units in its condominium and seeking tax reductions for prior years under RPTL 421-a. The City of New York had entered into annual settlement agreements with Olympic Tower Associates for the tax years 1978/1979 through 1984/1985, wherein the partnership withdrew its claims for tax reductions in exchange for certain tax concessions. The New York Court of Appeals held that these agreements barred the partnership from later seeking additional tax reductions for those years because they had expressly withdrawn their claims and failed to reserve any rights to pursue further tax reduction claims under RPTL 421-a.

Facts

Olympic Tower Associates owned a mixed-use condominium building known as Olympic Tower.

For the tax years 1978/1979 through 1984/1985, Olympic Tower Associates entered into annual settlement agreements with the City of New York.

In these agreements, Olympic Tower Associates expressly withdrew its “claim for reduction” and agreed not to institute Article 7 (tax certiorari) proceedings in exchange for certain tax reductions granted by the City.

The agreements did not reserve any rights for Olympic Tower Associates to pursue further tax reduction claims under RPTL 421-a.

In 1988, Olympic Tower Associates commenced a CPLR Article 78 proceeding challenging the tax reductions granted for later years and seeking tax reductions for the years covered by the prior settlement agreements.

Procedural History

Olympic Tower Associates commenced a CPLR Article 78 proceeding in Supreme Court.

Supreme Court ordered the City to recalculate tax remissions for certain years and to calculate remissions for the years 1978/1979 through 1984/1985.

The City appealed the latter portion of the order.

The Appellate Division affirmed Supreme Court’s order.

The City appealed to the New York Court of Appeals.

Issue(s)

Whether settlement agreements, in which a party expressly withdraws its claim for a tax reduction and agrees not to institute tax certiorari proceedings, bar subsequent claims for tax reductions for the years covered by the agreement when the party failed to reserve any rights to pursue further claims.

Holding

Yes, because the parties’ intent in executing the settlement agreements was clearly to resolve all disputes concerning the petitioner’s eligibility for tax reductions, and to foreclose the petitioner from instituting further challenges to its annual tax liability. Allowing the petitioner to seek the relief that it otherwise expressly forfeited would contravene the intended purpose and effect of the agreements.

Court’s Reasoning

The Court of Appeals reasoned that the settlement agreements were intended to resolve all disputes concerning Olympic Tower Associates’ eligibility for tax reductions for the specified years.

The court emphasized that Olympic Tower Associates expressly withdrew its claims for tax reductions and agreed not to institute tax certiorari proceedings.

Because Olympic Tower Associates failed to reserve any section 421-a tax reduction claims in the settlement agreements, it could not later escape the effect of the release by bringing an Article 78 proceeding to claim tax reductions that could have been raised in forfeited RPTL Article 7 proceedings. The court cited RPTL 701(4)(b) and Hewlett Assocs. v. City of New York, 57 N.Y.2d 356.

The court stated that allowing Olympic Tower Associates to seek the relief it expressly forfeited would contravene the intended purpose and effect of the agreements, noting that the parties’ intent was to resolve all disputes and foreclose further challenges to annual tax liability.

The court effectively applied the principle of res judicata (though it did not explicitly use the term) by preventing the relitigation of issues that were or could have been raised in the prior proceedings that resulted in the settlement agreements. The court focused on the clear intent of the parties as expressed in the settlement agreements.