Matter of City of New York

[*1] Matter of City of New York 2006 NY Slip Op 50629(U) [11 Misc 3d 1080(A)] Decided on April 12, 2006 Supreme Court, Queens County Rios, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through April 18, 2006; it will not be published in the printed Official Reports.

Decided on April 12, 2006
Supreme Court, Queens County

In the Matter of the Application of the City of New York, relative to acquiring title in fee simple absolute to certain real property where not heretofore acquired for UDALL'S COVE PARK PRESERVE ADDITION located in the area generally bounded by Little Neck Parkway, 34th Avenue, Brookside Street and Little Neck Bay, in the Borough of Queens, City and State of New York ANN TURIANO as the executor of the Estate of CHARLES TURIANO, and ANN TURIANO, Claimants, THE CITY OF NEW YORK, Condemnor.

Ann Turiano as the executor of the Estate of CHARLES TURIANO, Block 8162, Lots 255, 264, 268, 272, 280 & 310 and ANN TURIANO, Block 8162, Lot 276 Claimants,

- against -

The City of New York, Condemnor.





19619/00

Jaime A. Rios, J.

At issue in this valuation proceeding under the Eminent Domain Procedure Law is whether Charles and Ann Turiano, former owners of property located in Queens, New York and condemned by the City of New York, are entitled to interest at the statutory rate of six percent per annum on the principal amount of an advance payment award from the date of acquisition to the date payment is released by the City.

Background [*2]

On or about October 11, 2000, title to property known as Queens Block 8162, Lots 255, 264, 268, 272, 276, 280 and 310 (the subject of this condemnation proceeding) vested in the condemnor, City of New York (The City). Charles Turiano owned Lots 255, 264, 272, 280 and 310. Lot 276 was owned by him and his wife, Ann Turiano. Mr. Turiano has since passed away and the claim is being pursued by Ann Turiano, as executor of his estate (Turiano).

The City provided Turiano with a Notice of Award setting forth that the amount of $2,735,000.00 with interest in the amount of $432,055.07 was available for pick up on May 30, 2003 provided that the title objections as set forth in the Certification of Advance Payment had been satisfied.

The Certification lists ten objections to title which had to be cleared by Turiano, before the advance payment may be picked up. According to the City, title objections 2c and 2d refer to lands now or formerly underwater lying within Lot 255 and are not covered by letters of patent issued by the State of New York. It is undisputed that the remaining title objections had either been omitted or waived until final payment by the City.

In response to the objections set forth in 2c and 2d, Turiano contended by letter dated July 20, 2004 that whether a portion of Lot 255 is actually land underwater is a valuation issue and not a title objection, suggesting that an advance payment be made without the portion of Lot 255 in dispute, and that the objection be waived until trial or final payment.

By letter to the City dated August 31, 2004, Turiano asserted that Turiano dredged the portion of Lot 255 in dispute for a bulkhead and marina and thus they had valid title to that portion of the lot; however, should the City continue to dispute title, the City should make the advance payment less an amount representing the value of the square footage for the contested portion of Lot 255, thereafter waiving this objection until trial or final payment.

Arguments

Turiano currently moves for an order compelling the City to release the advance payment in this matter with interest at a statutory rate of six percent from the date title vested until the date the payment is released on the basis that all title objections have or will be satisfied.

The City opposes this motion on the basis that Turiano had not established their ownership of the contested portion of the land and that following the making of this motion, an offer was made by the City to release the advance payment to Turiano less $25,000.00, which was to be held in escrow pending the resolution of the title dispute.

Turiano contends in a memorandum of law dated January 20, 2006 that: (1) the offer made by the City was declined because it was conditioned upon Turiano's waiver of rights; (2) interest continues to accrue at the statutory rate of 6% on the principal amount of the advance payment because title to the property condemned has been reasonably proven and the City refuses to release [*3]the advance payment; and (3) Turiano did not unreasonably fail to provide the City with all papers necessary to clear title. Turiano argues that the conditions for release of advance payment include: (a) placing an arbitrary amount into escrow as opposed to the actual square footage value of the disputed property; (b) requiring Turiano to pay a monthly escrow fee; and (c) forfeiting statutory interest on the amount placed in escrow until the remaining title objections are waived or omitted.

In opposition, the City argues in its supplemental memorandum of law dated February 5, 2006 that: (1) requiring the City to pay interest on the advance payment after the date it was made available to Turiano conflicts with the purpose of advance payments; (2) the City did not err in refusing to release the disputed amount of the advance payment because Turiano failed to provide the necessary title papers; (3) it is inconsequential that the City did not place the disputed amount of the advance payment in an account with the court; (4) the City should not be liable for any interest after its offer to release the advance payment less 25,000.00, which was to be held in escrow pending resolution of the title dispute; (5) Turiano' s refusal to accept the City's offer was unreasonable.

Decision

Pursuant to EDPL 304(D) if an owner accepts an offer as an advance payment for property in an acquisition and the condemnor determines that there is a conflict of title, then "the condemnor shall, unless it is otherwise agreed, deposit the full or advance payment as the case may be, with the Clerk of the Supreme Court having jurisdiction of the claim. This deposit shall be placed in an interest bearing account until payment of such sum, including accumulated interest, is directed to be made by the court on application of any person claiming an interest in the amount deposited" (see EDPL 304[D]; see also Lateral Sewer 2005 v Martin Construction Corp. (113 AD2d 799 [1985] (the condemnor sought an order permitting it to deposit the principal sum plus specified interest with the County Treasurer to extinguish the condemnor's liability for interest as of the date of the deposit because it was unable to establish clear title); see also Matter of New York Convention Center Development Corp., 88 AD2d 574 [1982]). EDPL 304(D) further provides that no sum paid into court or deposited shall be charged fees, commissions or poundage (see EDPL 304[d]).

Pursuant to EDPL 304(A)(4) the "right of the condemnee to the advance payment shall not be conditioned on the waiver of any other right" (see EDPL 304(A)(4); see also Cronk v State of New York (100 Misc 2d 680 [1979]). In Cronk v State of New York (100 Misc 2d 680 [1979]), where the condemnor conditioned its offer of the advance payment upon the condemnee's waiver of its right to file and prosecute a claim, the court held that the condemnor unlawfully conditioned the advance payment on the waiver of the condemnee's right.

Here, the City failed to deposit the advance payment with this court after determining that there was a conflict of title and refused to release the advance payment to the claimant until the conflict of title was resolved. Moreover, the City conditioned release of the advance payment upon the claimant's consent and signing of an escrow agreement drafted by the City which contains the following: (1) an amount of $25,000, deducted from the advance payment held by [*4]the Comptroller's office, will be made payable to the City until conflict of title for Block 8162, Lot 255 is resolved; (2) said $25,000.000 will be placed in an escrow account whereby the City shall act as escrow agent; and (3) an escrow agent fee of 2% per annum will be applied to the principal deposit and the minimum monthly fee shall be $5.00 and the maximum monthly fee shall be $25.00.

Although the escrow agreement indicates that the money deposited with the escrow agent shall be placed in an interest bearing account, the agreement fails to state whether the interest rate complies with the statutory interest rate of six percent per annum entitled to by Turiano pursuant to NY General Municipal Law 3-a(2) (see NY General Municipal Law 3-a[2]); see also Levine v State of New York, 106 AD2d 709, 710 [1984]; Matter of Incorporated Village of Hempstead, 33 AD2d 1036 [1970]).

Furthermore, under EDPL 303 the condemnor "shall make a written offer to acquire the property for one hundred per centum of the valuation so established. In no event shall such amount be less than the condemnor's highest approved appraisal" (see EDPL 303; see also ERA Realty v State of New York, 281 AD2d 388 [2001]; Village of Port Chester v Marino, 118 AD2d 638, 639 [1986]; Cronk v State of New York,100 Misc 2d 680).

It is undisputed that the City did not base its withholding of 25,000.00 of the advance payment on the highest appraised value of the property in dispute. The City claimed that a $25,000.00 withholding was reasonable because it is less than 1% of the entire amount of the advance payment. Turiano objected to the $25,000.00 reduction in the advance payment because it was not based on the highest appraised value of the property in dispute as required by EDPL 303.

Additionally, the City's escrow agreement violated EDPL 304(D) by requiring Turiano to pay a monthly fee to deposit the 25,000.00 withholding from the advance payment into an escrow account (see EDPL 304[D]).

With respect to the City's argument that it did not err in refusing to release the disputed amount of the advance payment because Turiano failed to provide the necessary title papers, the court finds that Turiano acted reasonably in providing the necessary title papers. The conflict of title issue involving Block 8162, Lot 255 was raised by the City in May 2003 along with conflict of title issues involving Lots 264, 268, 272, 276, 280, and 310 as the City's basis for withholding the payment of award issued to Turiano on May 30, 2003. It is undisputed that the City and counsel for Turiano have remained in contact regarding the conflicts of title disputes consistently since May 2003 via telephone and letters. Moreover, the City conceded at the hearing before this court (J. Rios) on May 25, 2005 that the title issue involving Block 8162, Lot 255 was very complicated.

Additionally, the City's argument that requiring it to pay interest on the advance payment after the date it was made available to Turiano conflicts with the purpose of advance payments also must fail. EDPL 514 provides that a condemnee shall be entitled to lawful interest from the date of acquisition to the date of payment (see EDPL 514[A]). Here, the City did not make payment [*5]available to Turiano because the City conditioned its release of the advance payment upon Turiano's waiver of rights in accordance with Eminent Domain Procedure Law (see EDPL 303, 304).

The City has failed to follow the procedures outlined in EDPL 303 and 304. The City did not deposit the advance payment with the court in an interest bearing account and conditioned release of the advance payment upon Turiano's agreement to place a portion of the advance payment in an escrow account monitored by the city with a monthly fee to be paid by Turiano. Additionally, the City's offer to withhold $25,000.00 of the advance payment until conflict of title was resolved for Block 8162, Lot 255 was not based on the appraised value of the property in dispute.

Accordingly, the court finds in favor of the claimant, Turiano and grants the claimant 6% interest on the advance payment in its entirety from the date of acquisition to the date of payment.

Settle order returnable before the Court on April 21, 2006.

Dated: April 12, 2006_________________________

J.S.C.