NYCTL 1997-1 Trust v Hirakis

[*1] NYCTL 1997-1 Trust v Hirakis 2007 NY Slip Op 50629(U) [15 Misc 3d 1113(A)] Decided on March 28, 2007 Supreme Court, Kings County Harkavy, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 28, 2007
Supreme Court, Kings County

NYCTL 1997-1 Trust and The Bank Of New York as collateral agent and custodian for the NYCTL-1 Trust, Plaintiffs,

against

Peter Hirakis, Sarah Denis, New York City Department of Housing Preservation & Development, Environmental Control Board of The City of New York, New York City Transit Adjudication Bureau, The People of The State of New York, The City of New York, and "John Doe No.1 - John Doe #100," Defendants.



21154/01



Plaintiff Attorney:

Michael A. Cardozo

Corporation Counsel of the City of New York

100 Church Street

New York, New York 10007

(212) 788-0461

Defendant Attorney:

George J. Faeth, Esq.

38-50 Bell Boulevard, Suite A

Bayside, New York 11361

(718) 687-4926

Ira B. Harkavy, J.

This action was commenced by plaintiffs to foreclose certain liens purchased from the City of New York. The liens arose as a result of unpaid real estate taxes and unpaid water and wastewater charges on the property located at 595 Sutter Avenue, Brooklyn, New York, designated on the Kings County Tax Map as Block 3753, Lot 43. By Amended Notice of Motion, dated July 10, 2006, plaintiffs, by the Corporation Counsel of the City of New York, seek an Order directing summary judgment pursuant to CPLR 3212. Defendant Peter Hirakis opposes the motion.

On May 22, 1997, the liens on the subject premises were sold to the Plaintiffs. The liens on the subject property at the time of the sale totaled $36,129.75 and were comprised of a variety of Department of Finance ("DOF") charges, including, among other things, real property taxes, in the amount of $32,757.39 with interest, plus some $3,372.37 in Department of Environmental Protection ("DEP") water and wastewater charge with interest, plus a 5% surcharge. After acquiring the tax liens, Plaintiffs referred them to a servicing agent, J.E. Robert Company ("JER") for collection. As a result of continued delinquency, JER commenced foreclosure proceedings against the property.

On or about June 8, 2001, plaintiffs commenced this action by the filing of a Summons and Complaint. On or about January 9, 2002, plaintiff filed an Amended [*2]Summons and Complaint. On or about February 18, 2002, Peter Hirakis appeared in the action with the service of an Answer. In his Answer, Mr. Hirakis asserted, as affirmative defenses, that the water charges imposed upon the property were improperly doubled-billed and that the plaintiffs should be barred from enforcing the lien on the ground of laches.

On or about December 17, 2004, plaintiffs moved for summary judgment on the grounds that Mr. Hirakis was disputing the amount owed, and that such a dispute was not a valid defense to a foreclosure action. On February 23, 2005, this Court denied plaintiff's motion for summary judgment and directed that the matter would proceed to trial for a determination of the amount owed by Mr. Hirakis.

Subsequent to this Court's decision of February 23, 2005, the City, through the Office of the Corporation Counsel, filed a motion for summary judgment on plaintiffs behalf, as authorized by § 11-347 of the Administrative Code of the City of New York.[FN1] In support of the new motion, the City argues that Mr. Hirakis' claims should be dismissed because the submitted evidence shows that water charges imposed upon the property were not improper or erroneous, because the evidence also shows that Mr. Hirakis failed to exhaust his administrative remedies in challenging the charges, and because laches does not apply to New York City liens.

Defendant Hirakis argues, preliminarily, that the Court has already denied a motion by plaintiffs for summary judgment and determined that an issue of fact exists, and that plaintiff's second motion for summary judgment is thus improper. Plaintiff has neither appealed the Decision and Order of February 23, 2005, nor moved for reargument and/or reconsideration. Mr. Hirakis further contends that the City's records and billing are erroneous and inconsistent, and raise questions of fact.

Mr. Hirakis is the current owner of the premises. He purchased the premises at auction in 1997, subject to the liens held by plaintiffs. Mr. Hirakis claims that after he purchased the premises, he attempted to establish with the City the amount of unpaid water charges which he owed on the property. He claims that premises had been erroneously billed for usage based upon both "frontage" and "metered" billing, rather than one or the other. DEP also informed Mr. Hirakis that payment would have to be made to JER, the servicing agent for the liens. When Mr. Hirakis contacted JER, he was told that they had no record of the downward adjustment. Mr. Hirakis contends that he has been attempting to clarify the amount of the liens for the water charges, and that his attempts to clarify the amount of the liens and resolve them predates this foreclosure action. [*3]

While multiple motions for summary judgment are generally discouraged, a new motion for summary judgment is permissible when it is based upon new evidence (see 2009 85th St. Corp. v WHCS Real Estate Ltd. Partnership, 292 AD2d 520 [2002]; LaFreniere v Capital Dist. Transp. Auth., 105 AD2d 517 [1984]). In this action, plaintiff's first motion for summary judgment was denied and the court directed that the matter proceed to trial for a determination of the monies owed by Mr. Hirakis. Subsequent to that decision, counsel for the plaintiffs contacted the City of New York and requested assistance in clarifying the amount of the lien. The second motion for summary judgment was been filed by the City, through the Office of the Corporation Counsel and on behalf of the plaintiffs, as authorized by § 11-347 of the Administrative Code of the City of New York. In support of the new motion, Corporation Counsel has submitted new evidence, including evidence regarding the billing to Mr. Hirakis for the water and wastewater charges. Corporation Counsel further makes new arguments, on plaintiff's behalf, based upon the new evidence.

The new evidence reveals, inter alia, that the lien at issue was not comprised solely of DEP charges, i.e. water and wastewater charges, but that it was comprised almost entirely of DOF charges, including unpaid real estate taxes. Of the approximately $36,000 lien, it appears that $32,745.38 was a DOF lien and $3,372.37 was a DEP lien. DEP records submitted as evidence reveal that of the $3,371.37 DEP lien, the DEP reversed $2,210.06, so that only $1,162.31, plus interest, in DEP charges should have been included as part of the lien sale.[FN2] The Court notes that Mr. Hirakis has not challenged the DOF charges, which includes unpaid real estate taxes and which makes up the bulk of the lien held by plaintiffs.

Furthermore, DEP records submitted as evidence is support of the motion reveal that the DEP account for the subject property was not double-billed on both a frontage and metered basis, but rather that the subject property had two separate accounts. The subject property is a three story building comprised of two residential units and one commercial unit. One account (Account No. 5000332811001) was designated for two residential units on the property and was billed on a frontage basis from July 1, 1995 to June 30, 1998. The other (Account No. 0000332810001) was designated for a commercial unit on the property, which was used as a laundromat, and billed on a metered basis from November 9, 1994, to April 19, 1998. Only the account for the residential units, the account billed on a frontage basis, was the subject of the lien sale.

Moreover, the evidence now before the Court reveals that Mr. Hirakis failed to exhaust his administrative remedies prior to challenging the DEP charges before this [*4]court (see e.g. NYCTL 1996-1 v Andrew-Zuck Realty Corp., 305 AD2d 157 [2003], lv denied 1 NY2d 558 [2003]; CPLR § 7801). The Water Board's Rate Schedule outlines the administrative appeals procedure for challenging DEP water and wastewater charges. These rules provide for three steps, or levels of appeal. The first step requires an initial appeal in writing to the DEP Borough Office Manager; the second requires an appeal in writing to the DEP Customer Appeals Unit; and the final step requires an appeal in writing to the Executive Director of the Water Board. The final determination of the Executive Director can then be challenged in a proceeding brought pursuant to CPLR Article 78.

On or about May 16, 1997, Mr. Hirakis contacted DEP by telephone regarding the account for the commercial unit. He was told that DEP would investigate to determine if any lines had been capped or destroyed, and that he would have to submit a written complaint. It appears that Mr. Hirakis failed to submit a written complaint regarding the account for the commercial unit, and did not administratively challenge the charges to either account. Being that Mr. Hirakis failed to exhaustive the administrative process in challenging the DEP charges, he cannot do so here.

Finally, the Court notes that the defense of laches does not apply to New York City liens. An action to foreclose a City lien is not subject to any time limitation, but is in effect a perpetual claim as set forth by Administrative Code § 11-301 [FN3] (see also L.K. Land Corp. v Gordon, 1 NY2d 465, 467-471 [1956]; cert denied sub nom. Greenfield v L.K. Land Corp., 352 U.S. 989 [1957]; Russell v New York, 22 AD2d 706 [1964], affd 16 NY2d 641 [1965]).

Plaintiffs' motion for summary judgment is granted.

Plaintiffs shall settle an order on notice appointing a Referee to ascertain and compute the total sum due and owing to the plaintiffs, and for such other relief as is consistent with this Decision, Opinion and Order of this Court.

This constitutes the Decision, Opinion and Order of this Court.

Dated: March 28, 2007

ENTER,

_________________________

IRA B. HARKAVY

J.S.C. [*5] Footnotes

Footnote 1: "[T]he corporation counsel in his or her discretion may represent the purchaser of a tax lien or the holder of a tax lien certificate in any action in which the corporation counsel believes it to be in the interest of the City to do so, by reason of any matter arising under or relating to any tax lien or tax lien certificate, or advertisement of sale of tax lien" (Administrative Code § 11-347, as amended by Local Law 98 of 1997).

Footnote 2: On or about November 25, 1997, a DEP inspection of the commercial unit revealed that the laundromat was vacant and that the meter for the corresponding account had been removed. On March 4, 1998, based upon the removal of the meter and the vacancy in the commercial unit, DEP reversed $2,210.06 of the charges against that account.

Footnote 3: "All taxes and assessments and all sewer rents, sewer surcharges and water rents, and the interest and charges thereon, which may be laid or may have heretofore been laid, upon any real estate now in the city, shall continue to be, until paid, a lien thereon" (Administrative Code § 11-301).