Matter of City of New York
Annotate this CaseDecided on June 16, 2006
Supreme Court, Kings County
In the Matter of City of New York, Relative to Acquiring Title in Fee Simple, where not heretofore acquired for the Essex-Linwood Urban Renewal Area First Amended Plan.
15095/87
Abraham Gerges, J.
Upon the foregoing papers, claimant Alexander Fischer moves for an order, pursuant to Eminent Domain Procedure Law §§ 303 and 304 (A) (1), directing the City of New York (the City) to pay him interest on an advance payment of $175,000 made available on December 23, 1994 for the condemnation of Block 4068, Lot 1 (the property).
Facts and Procedural Background
In the instant condemnation proceeding, title to Block 4068, Lot 1 vested in the City on July 2, 1987 as part of the Essex-Linwood Urban Renewal Plan. At that time, the property was owned by MMRR Construction Corp. (MMRR), subject to a mortgage in the amount of $8,000,000 held by Chemical Bank. At the time of the taking, Chemical Bank had commenced foreclosure proceedings against MMRR; the City had been named [*2]as a party in that proceeding. On January 20, 1988, Chemical Bank assigned its mortgage to Fischer and Fischer filed a notice of claim in the instant condemnation proceeding, dated June 9, 1988. By appraisal dated February 13, 1990, the City assigned a fair market value of $175,000 to the property and on July 5, 1990, authorized an advance payment in that amount to the fee owner, MMRR. On September 17, 1990, Fischer moved for an order directing that the money be paid directly to him; he obtained an order so providing on October 31, 1990. On December 23, 1994, after years of litigation, the City paid Fischer $226,176.71, i.e., an advance payment of $175,000, plus $52,176.71 in interest.
After further litigation, on February 9, 2005, the court awarded Fischer $1,600,000 for the property, plus simple interest at 6% per annum. In May 2005, the City paid Fischer that amount, plus $1,425,000 in interest. The interest payment was calculated by subtracting the $175,000 advance payment from the $1,600,000, and paying 6% interest thereon.
The Parties' Contentions
In support of his application, Fischer argues that when the City made the advance payment to him on December 23, 1994, he was entitled to interest in the amount of $78,476.71, calculated from the July 2, 1987 vesting date through December 23, 1994, when the payment was made available to him. Instead, he received interest in the amount of $51,176.71, calculated from the date of vesting through the date that the advance payment was made available to MMRR. Fischer contends that since the City was aware that his claim to the condemnation award had priority over MMRR's claim by reason of having been named as a party in the foreclosure action, the advance payment should have been paid to him. Instead, the City litigated the issue of whether Fischer' s lien was subordinate to the City's tax liens, a claim that the City subsequently lost after appeal (In re City of New York, 204 AD2d 719, 720 [1994]). Accordingly, Fischer claims that he is entitled to interest on the additional $27,300 that he should have been paid, calculated from December 23, 1994. Further, he claims that 6% statutory interest, as provided in General Municipal Law § 3-a, is insufficient, so that interest should instead be calculated at the rate of 7.18%.
In opposition, the City argues that Fischer was paid the appropriate amount of interest, since interest ceased to accrue when the payment was made available to the fee holder. The City thus concludes that Fischer is not entitled to any additional interest on the advance payment. In addition, the City contends that Fischer's claim is precluded by the terms of the stipulation of settlement that he entered into with the City, dated February 9, 2005, which provides that:
"any and all claims arising from the acquisition of said property by the City of New York, be and the same are hereby limited to the sum of THREE MILLION TWO HUNDRED THOUSAND DOLLARS AND NO CENTS ($3,200,000.00), plus interest on the entire amount of said award, including any advance payments, at the rate of 6% per annum from the title vesting date, July 2, 1987, until date of availability of payment."
The decision and the final decree, also dated February 9, 2005, provide that the court made [*3]its award pursuant to the parties' stipulation. The City further argues that since Fischer waited more than 11 years to raise the issue of whether an additional sum of interest is due on the advance payment, and did not so contend during settlement negotiations, he should now be precluded from succeeding on his claim.
The Parties' Stipulation of Settlement
The Law
It is well settled that a stipulation of settlement is enforceable in the same manner as is a contract (see generally McKenzie v Vintage Hallmark, 302 AD2d 503 [2003]). Hence, "a stipulation is generally binding on parties that have legal capacity to negotiate, do in fact freely negotiate their agreement and either reduce their stipulation to a properly subscribed writing or enter the stipulation orally on the record in open court" (McCoy v Feinman, 99 NY2d 295, 302 [2002], citing CPLR 2104; Siegel, NY Prac § 204, at 323). "Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation" (City of New York v 130/40 Essex St. Dev. , 302 AD2d 292, 293 [2003] [citations omitted]).
As is also relevant herein, " [s]tipulations of settlement are essentially contracts and will be construed in accordance with contract principles and the parties' intent'" (see e.g. Charter Realty & Dev. v New Roc Assocs., 293 AD2d 438, 439 [2002], quoting Serna v Pergament Distribs., 182 AD2d 985, 986 [1992], appeal dismissed 80 NY2d 893 [1992],
recons denied 80 NY2d 926 [1992]). "[W]hen an agreement between parties is clear and unambiguous on its face, it will be enforced according to its terms and without resort to extrinsic evidence" (see e.g. Rebell v Trask, 220 AD2d 594, 596-597 [1995], citing W.W.W. Assocs. v Giancontieri, 77 NY2d 157 [[1990]). "It is also well settled that the issue of whether an agreement is ambiguous is a question of law for the courts" (see e.g. Chester Music v Schott Musik Intl. GmbH & Co. (In re Estate of Stravinsky), 4 AD3d 75, 81 [2003] [citations omitted].
Discussion
In relying upon the stipulation of settlement, the City is not arguing that there are grounds upon which to set it aside. Instead, the City contends that the clear language precludes Fischer from now claiming that he is owed additional interest on the advance payment. The court does not agree.
In this regard, the language of the stipulation provides that Fischer in entitled to receive interest "on the entire amount of said award, including any advance payments" (emphasis added). To accept the City's contention that Fischer is not entitled to claim additional interest on the advance payment would render the above quoted language meaningless, a result not favored by the courts in interpreting contracts (see e.g. Travelers Cas. & Sur. Co. v Certain Underwriters at Lloyd's of London, 96 NY2d 583, 594 [2001] [as established precedent of contract interpretation, meaning must be given to every sentence, clause and word]; Vitanza Sons v New York City Hous. Auth., 7 AD3d 398 [2004 [in interpreting a contract, the plain meaning of words and phrases should be determined and the [*4]language construed so as to give full meaning and effect to all provisions of the agreement]; Petracca v Petracca, 302 AD2d 576, 577 [2003] [a contract should not be interpreted in such a way as to leave one of its provisions substantially without force or effect]; Albanese v Conrail, 245 AD2d 475, 476 [1997] [it is a cardinal rule of construction that a contract should not be interpreted in such a way as would leave one of its provisions substantially without force]).
Accordingly, the issue to be resolved becomes the proper amount of interest to which Fischer is entitled to receive on the advance payment.
Entitlement to Interest
The Law
As this court has recently held:
"In discussing the award of interest, it has been held that it is well established that in condemnation proceedings the constitutional requirement of just compensation necessarily includes a sum in addition to the bare value of the property to account for the delay between the taking and the ultimate payment to the property owner' (In re New York, 58 NY2d 532, 536-537 [1983], citing Jacobs v United States, 290 US 13 [1933]; City of Buffalo v Clement Co., 28 NY2d 241, 265-266 [1971], reh denied 29 NY2d 640 [1971], reh denied 29 NY2d 649 [1971]; Matter of City of New York [Bronx Riv. Parkway], 284 NY 48, 54-55 [1940], affd sub nom A. F. & G. Realty v City of New York, 313 US 540 [1941]; see US Const, 5th Amdt; NY Const, art I, § 7).
"In accordance with this rationale, Eminent Domain Procedure Law § 514 (A) provides in pertinent part that subject to the provisions of this chapter, a condemnee shall be entitled to lawful interest from the date of acquisition to the date of payment.' This provision is consistent with New York City Administrative Code § 5-327 (a), which provides, in relevant part, that:
" all damages awarded by the court, with interest thereon from the date title to the real property acquired shall have vested in the city and all costs, charges and expenses which may have been taxed shall be paid by the city to the respective owners mentioned or referred to in the final decree or to the persons in whose favor such costs, charges and expenses were taxed.'"
(Matter of City of New York, 10 Misc 3d 749, 753 [2005] [emphasis added]).
As is also relevant to the instant dispute, New York City Administrative Code § 5-328 provides that "[b]efore any such advance payment shall be made, the comptroller shall procure the certificate of the corporation counsel showing . . . that the person to whom payment is to be made is the person legally entitled to receive the same." The section goes on to provide that "[w]hen any such advance payment shall have been made, the comptroller, on paying the awards made for the real property acquired, shall deduct from the total amount allowed as compensation the sum advanced plus interest thereon from the date of the [*5]payment of such advance to the date of the final decree."
Discussion
In addressing the issue of Fischer's entitlement to interest, it must first noted that he was not an owner of the subject property when the City took title. Instead, he is the assignee of the mortgage holder, or a lien holder, who did not acquire his interest until six months after title vested in the City. As such, Fischer was not entitled to receive direct payment of the condemnation award until he moved for such relief, which he conceded when he so moved in September 1990.
Fischer now seeks to use his status as an assignee to obtain greater compensation than that to which the fee owner was entitled by demanding an award of interest after the advance payment was made available to MMRR. Such a result will not be permitted. In so holding, the court is guided by those cases which hold that after title vests in the City in a condemnation proceeding, the mortgagee is limited to the statutory interest rate paid by the City on the award (see e.g. Fliegel v Manhattan Sav. Bank, 296 NY 214, 219 [1947] [since the lien of the mortgage upon the land taken was destroyed when title vested in the condemnor, the mortgagee was awarded a right to resort to the compensation which must be paid to the owner of the land; since the obligation of the sovereign had been substituted for the contractual obligation in the bond, the mortgagee was entitled only to such interest as the sovereign may be required by statue to pay to the owner after vesting of title]). In fashioning such a rule, the clear underlying purpose was to preclude a lienor from compelling the payment of more than the condemnor would be required to pay to the former owner of the fee (see In re Stephen Wise Housing Project, 38 Misc 2d 455, 458 [1962], citing Fliegel v Manhattan Sav. Bank, id.).
From this it follows that Fischer will not be awarded any more interest on the advance payment than the fee holder would have been entitled, which is interest until the advance payment was made available to MMRR on September 7, 1990. The fact that additional litigation ensued to determine the right to payment does not compel a contrary finding (see generally id.; Matter of City of New York, 10 Misc 3d at 754-755, citing In re City of New York (George Washington Houses), NYLJ, June 12, 1953, vol 129, p 1985, col 6 M [the running of interest ceased on dates when the City was ready to make payment under the awards]; In re City of New York (Hamilton Ave., D.P. 65), NYLJ, August 15, 1941, vol 106, p 354, col 4 F [inasmuch as the final decree in condemnation made the award payable to the owner, subject to the first mortgage, and the mortgagee failed to move upon entry of the decree for amendment thereof so as to make the amount of the mortgage payable to it, the mortgagee was entitled to interest on the award only to date the award was ready for payment, and not to the date payment was actually made]; In re Dry Dock Sav. Inst. (1st and 3rd Aves., &c.), NYLJ, October 1, 1940, vol 104, p 875, col 2 T [interest on a condemnation award would continue only until the date the City was ready to pay the award in full, and not until such time as the mortgagee chose to move to collect the amount of its claim]; In re Stoker Realty Corp. (E. River Dr., Grand St. to Montgomery St.), NYLJ, October 3, 1940, [*6]vol 104, p 915, col 1 T [mortgagee who refused to accept payment of his mortgage on the date that the City was ready to make payment on the ground that he was not satisfied with the amount offered and because he would have been obliged to accept a check made payable to the corporate owner and indorsed over to him was not entitled to interest beyond the date when the City was ready to make payment]). This conclusion is further supported by New York City Administrative Code § 5-328, which specifically requires the corporation counsel to certify the proper person to receive the award and provides that the advance payment shall be deducted from the total amount allowed as compensation prior to calculating interest. Similarly, Fischer cites no authority to support his claim that the City is obligated to pay him interest on an award of interest.
Moreover, the order directing that the advance payment be paid to Fischer was signed by the Honorable Sebastian Leone on October 31, 1990; that order specifically provided that Fischer was to receive $175,000, "plus lawful interest." Fischer admittedly received the advance payment on December 23, 1994. Nonetheless, he waited until April 20, 2005 to first raise his contention that he was not paid appropriate interest on the advance payment. In this regard, Fischer does not refute the City's assertion that this issue was never raised during settlement discussions. Hence, the court finds that Fischer's delay of 11 years in asserting his claim is unreasonable, so that he now barred from seeking to recover additional interest by the equitable doctrine of laches (see Dreikausen v Zoning Bd. of Appeals, 98 NY2d 165, 173 [2002]; see generally Saratoga County Chamber of Commerce v Pataki, 100 NY2d 801, 816 [2003] [laches has been defined as an equitable bar, based on a lengthy neglect or omission to assert a right and the resulting prejudice to an adverse party]). In the alternative, since the City settled the proceeding without knowledge that Fischer would be seeking additional interest dating back to 1990, the City relied upon his failure to assert such a claim in settling the action and it would be prejudiced if Fischer is now allowed to interpose a new demand. Accordingly, Fischer is also estopped from now arguing that he is entitled to additional interest (see generally River Seafoods v JPMorgan Chase Bank, 19 AD3d 120, 122 [2005] [in order to prevail on the theory of equitable estoppel, the party seeking estoppel must demonstrate a lack of knowledge of the true facts; reliance upon the conduct of the party estopped; and a prejudicial change in position]).
Amount of Interest
The Law
"Under usual principles of claim preclusion, plaintiff is barred from raising in a second action an issue which it could have raised in the condemnation proceeding" (Adventurers Whitestone v New York, 65 NY2d 83, 89-90 [1985], appeal dismissed 474 US 935 [1985], citing Matter of City of New York [Roteeco Corp.], 33 NY2d 970 [1974]; Matter of Huie [Furman], 20 NY2d 568 [1968]; Matter of City of New York [Brooklyn-Queens Highway], 300 NY 265 [1949]; Tandoi v State of New York, 87 AD2d 816 [1982]; Matter of City of New York [Squitieri], 39 AD2d 669 [1972]; Restatement [Second] of Judgments § 18; see generally Glantz v New York, 116 AD2d 498, 499 [1986] [claimant was [*7]precluded from litigating in a second action an issue which it could have raised in the condemnation proceeding]).
In this regard, in addressing a claimant's demand for additional interest after a condemnation proceeding was settled by the parties pursuant to a stipulation, the court held that: "in Adventurers Whitestone Corp. v City of New York (65 NY2d 83, revg 102 AD2d 769), the Court of Appeals held that where there was no challenge by the plaintiff to the statutory rate in the condemnation proceeding, the plaintiff could not commence an independent action for such additional interest and could recover only the statutory rate.
"As in Adventurers Whitestone (supra, p 91), plaintiff herein neither raised the question of the rate of interest constitutionally required in the condemnation proceeding nor preserved by stipulation its right to litigate the issue in another forum', and is, therefore, barred by res judicata from any further claim. (See also, Glantz v City of New York, 116 AD2d 498 [1st Dept])." (Balfour Concessions v New York, 121 AD2d 247, 247-248 [1986], affd 68 NY2d 966 [1986]).
Discussion
In addressing this issue, the court finds that even if Fischer had succeeded in establishing a right to additional interest, his claim that interest should be calculated at 7.18% is without merit. In this regard, the parties' stipulation of settlement unequivocally provides that "interest on the entire amount of said award, including any advance payments, [shall be paid] at the rate of 6% per annum from the title vesting date, July 2, 1987, until the date of availability of payment." This provision can only be interpreted as limiting the amount of interest to which Fischer is entitled to 6%.
In the alternative, the decision and final decree, both of which are premised upon the parties' stipulation, provide that the interest payable to Fischer is 6%. Accordingly, applying the rationale of the above discussed cases, Fischer's demand for additional interest at a rate exceeding 6% is barred by the doctrine of res judicata.
Conclusion
For the above stated reasons, Fischer's application is denied in its entirety.
The foregoing shall constitute the order and decision of this court.
E N T E R
J. S. C.
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