Matter of Bronco Dev. Corp. v Assessor of the Town of Bethlehem

[*1] Matter of Bronco Dev. Corp. v Assessor of the Town of Bethlehem 2010 NY Slip Op 50173(U) [26 Misc 3d 1219(A)] Decided on February 3, 2010 Supreme Court, Albany County Platkin, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 3, 2010
Supreme Court, Albany County

In the Matter of the Application of Bronco Development Corporation and ELM ESTATES CONDOMINIUM ASSOCIATION, Petitioners,

against

Assessor of the Town of Bethlehem; BOARD OF ASSESSMENT REVIEW OF THE TOWN OF BETHLEHEM; and THE TOWN OF BETHLEHEM, NEW YORK, Respondents.



6511-08



Daniel G. Vincelette, Esq.

Attorney for Petitioners

21 Everett Road Extension

Albany, New York 12205

The Effron Law Firm

Attorneys for Respondents

(Joshua J. Effron, of counsel)

425 Kenwood Avenue

Delmar, New York 12054

Richard M. Platkin, J.

Petitioners Bronco Development Corporation ("Bronco") and Elm Estates Condominium Association ("the Association") bring this proceeding pursuant to Article 7 of the Real Property Tax Law ("RPTL") and Article 78 of the Civil Practice Law & Rules ("CPLR") challenging the assessed valuation of certain real property located in the Town of Bethlehem ("the Town"). Petitioners now move for summary judgment pursuant to CPLR 3212. Respondents oppose the motion and further request that the Court search the record and grant summary judgment in their favor dismissing the petition.

BACKGROUND

According to petitioners, Bronco is the owner of certain condominium properties known as Elm Estates, which consists of 197 residential units situated on 150 individual parcels. On December 28, 2007, Tower Management Services Acquisition, Inc.("Tower") acquired Bronco for the sum of $17 million. A copy of the confidential stock-purchase agreement is attached to petitioners' moving papers. On February 27, 2008, the Elm Estates units allegedly were converted into condominiums pursuant to documents filed and recorded in the Office of the Albany County Clerk ("County Clerk").

Petitioners contend that although the property at issue was classified as a condominium as of March 1, 2008 — the Town's taxable status date — the respondent assessor erroneously failed to classify the subject property in that manner on the 2008 assessment roll. Petitioners also contend that the full value of the subject property does not exceed its appraised value of $17,120,000, a figure supported by a "Restricted Use Appraisal of Real Property" with a valuation date of December 19, 2007. Further, petitioners argue that their appraisal report is supported by the recent acquisition of Bronco for $17 million. On the basis of the foregoing, petitioners contend that the 2008 assessed value of $26,099,200 is excessive as a matter of law.

In opposition to the motion, respondents acknowledge that the taxable status date of the property was March 1, 2008. However, they rely upon the July 1, 2007 valuation date for the property, arguing that the property was not a condominium as of the valuation date. Since the property did not enjoy condominium status as of July 1, 2007, respondents claim that petitioners were required to file separate grievances with respect to each separate parcel.

Respondents further claim that petitioners' appraisal does not comply with 22 NYCRR § 202.59 (g) (2), which requires the report to set forth "the facts, figures and calculations by which the [appraiser's] conclusions were reached." Respondents note that petitioners' "Restricted Use Appraisal Report" specifically states that it was intended only for Tower's "internal business strategies" and that it "presents only nominal discussions of the data, reasoning, and analyses used in the appraisal process. . . . Due to the abbreviated reporting format, the results should be used with caution and only for the identified intended use" (emphasis in original). Respondents further assert that an appraisal as of December 19, 2007 is not probative of the value of the subject property on July 1, 2007.

Respondents also claim that the Declaration of Condominium ("Declaration") filed by Bronco contains a number of defects and discrepancies. First, respondents argue that the Declaration fails to designate the Secretary of State as agent for service of process, as required by Real Property Law ("RPL") § 339-n (7). Second, respondents claim that the petitioners failed to file the Declaration with the Department of State, as required by RPL § 339-s (2). Third, according to Patricia McVee, the Town Assessor, Schedule B of the Declaration states that there [*2]was 81 buildings and a total of 150 units on the property, where the property actually contains 79 buildings and 197 units. Finally, the Assessor states that there "is a serious question" as to whether the Declaration was filed in accordance with the requirements of Real Property Law § 339-s (1), which provides, in pertinent part:

the recording officer shall not accept such an instrument constituting a condominium map unless it has endorsed thereon or attached thereto a certificate of the county director of real property tax services that the fee authorized by section five hundred three of the real property tax law, if any, has been paid. Neither the declaration nor any amendment thereof shall be valid unless duly recorded.

In reply, petitioners observe that the determination of the Town's Board of Assessment Review states only two reasons for declining to reduce the assessment on the subject property: (1) insufficient supporting data; and (2) lack of evidence "that the declaration complies with all aspects of RPL 339-y". Thus, petitioners argue that the challenged denial was not based on the number of grievances filed with the board or any defects associated with the Declaration.

During the pendency of this motion, petitioners sought to correct two of these alleged deficiencies. On May 21, 2009, Bronco executed a "Correction Amendment" to the Declaration to designate the Secretary of State as agent for service of process on the board of managers. The Correction Amendment purports to be retroactive to the original execution of the Declaration. And on or about June 30, 2009, petitioners filed the Declaration with Department of State.

Thereafter, the Court received supplemental briefing from the parties concerning the legal effect of the alleged defects in the Declaration. This Decision & Order follows.

ANALYSIS

As an initial matter, respondents argue that petitioners were required to file separate grievances for each tax map parcel because the parcels did not enjoy condominium status on July 1, 2007, the relevant valuation date. The Court disagrees. Respondents' argument ignores the distinction between "taxable status date" and "valuation date". Pursuant to RPTL §§ 301 and 302, the taxable status of the property, including its condition and ownership, is determined as of March 1, 2008, whereas the property must be valued as of July 1, 2007, taking into account the property's status as of the later taxable status date (Matter of Beisner v Campbell, 137 Misc 2d 296, 297 [Sup Ct Dutchess Cty 1987]). Thus, the only relevant date for determination of the property's status as a condominium is March 1, 2008.

The Court observes, however, that Real Property Law ("RPL") § 399-y, part of the Condominium Act (RPL art 9-b), provides that "each unit and its common interest, not including any personal property, shall be deemed to be a parcel and shall be subject to separate assessment and taxation by each assessing unit." One of the stated bases for the challenged determination was lack of compliance with the cited statute. Had the Town recognized the subject property as a condominium as of the taxable status date and issued the required separate assessments, its contention that petitioner was required to file separate grievances might have some force. However, having issued a single assessment for the entire property, respondents cannot be heard to complain that petitioners did not object to such determination by filing hundreds of separate [*3]grievances.

The Court then turns its attention to whether petitioners have sustained their burden of demonstrating a prima facie entitlement to judgment as a matter of law. "[A]a property valuation by the tax assessor is presumptively valid . . . [h]owever, when a petitioner challenging the assessment comes forward with `substantial evidence' to the contrary, the presumption disappears" (Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92 NY2d 179, 187 [1998] [internal quotations omitted]). "In the context of tax assessment cases, the substantial evidence' standard merely requires that petitioner demonstrate the existence of a valid and credible dispute regarding valuation, which will most often be accomplished by submission of a detailed, competent appraisal based on standard, accepted appraisal techniques and prepared by a qualified appraiser" (Matter of Eckerd Corp. v Semon, 35 AD3d 931, 933 [3d Dept 2006]).

The Court begins with petitioners' appraisal. As an initial matter, the Court observes that there is no affidavit from the appraiser, and the report itself is unsworn. To obtain summary judgment, it is the movant's obligation to come forward with proof in admissible form. Further, the report itself bears a conspicuous legend indicated that it is a "restricted use" report that was intended only for petitioners' "internal business strategies" and which "presents only nominal discussions of the data, reasoning, and analyses used in the appraisal process." Pursuant to the Uniform Standards for Professional Appraisal Practices, a restricted appraisal report "is not designed to address the needs of any third-party users," including, presumably, a judicial tribunal. Under these circumstances, the Court concludes that the restricted appraisal report submitted by petitioners falls well short of the "detailed, competent appraisal based on standard, accepted appraisal techniques and prepared by a qualified appraiser" needed to overcome the presumption of validity that attaches to the Assessor's determination.[FN1]

In support of their motion, petitioners also claim that the recent sale of Bronco for $17 million supports a reduced assessment. It is well established that a recent arm's length sale of a property is the "best evidence" of its value (FMC, supra, at 189), so long as it is "not explained away as abnormal in any fashion (Plaza Hotel Assoc. v Wellington Assoc., 37 NY2d 273, 277 [1975]). However, the sale relied upon by petitioners was Tower's acquisition of Bronco, and the record does not disclose sufficient information concerning the assets and liabilities of Bronco at the time of the corporate transaction that would permit the Court to conclude that $17 million represented the consideration for the subject property.

Based on the foregoing, the Court concludes that the unsworn restricted appraisal report and the Stock Purchase Agreement are insufficient to entitle petitioners to judgment as a matter of law.

The Court then must turn its attention to respondents' contention that the property at issue did not enjoy condominium status as of March 1, 2008 due to Bronco's alleged failure to file a Declaration in compliance with the Condominium Act.

Respondents' primary contention in this regard is that the Declaration fails to designate [*4]the Secretary of State as agent for service of process, as required by RPL § 339-n (7), and that petitioners failed to file the Declaration with the Department of State, as required by RPL § 339-s (2). Both of these requirements were added to the Real Property Law by Chapter 346 of the Laws of 1997 ("Chapter 346"). The legislative history of Chapter 346 reveals that by making available a designated agent to accept service of process on behalf of condominiums, the statute was intended to ensure that litigants seeking to sue a condominium do not encounter unnecessary obstacles.

There is nothing in the Condominium Act or the case law that speaks directly to the consequence of a failure to designate the Secretary of State as agent for service of process. However, with respect to the filing of the Declaration with the Department of State, RPL § 339-s does provide some guidance. Prior to the enactment of Chapter 346 into law, the cited statute contained a single, undesignated subdivision, which read as follows:

The declaration, any amendment or amendments thereof, and every instrument affecting the property or any unit included within the meaning of "conveyance" as used in article nine of this chapter, shall be entitled to be indexed and recorded pursuant to and with the same effect as provided in said article nine. The recording officer shall not accept such an instrument constituting a condominium map unless it has endorsed thereon or attached thereto a certificate of the county director of real property tax services that the fee authorized by section five hundred three of the real property tax law, if any, has been paid. Neither the declaration nor any amendment thereof shall be valid unless duly recorded. (emphasis added).Chapter 346 designated the foregoing language as subdivision one, and then added a new subdivision two that reads as follows: "Each such declaration, and any amendment or amendments thereof shall be filed with the department of state." Thus, while RPL § 339-s (1) commands that a declaration shall not be valid "unless duly recorded", the second subdivision of the statute imposes no similar consequence for the failure to file a condominium declaration with the Department of State.

Additional guidance is found in RPL § 339-ii, which provides that the Condominium Act "shall be liberally construed to effect the purposes thereof." As noted above, the purpose of Chapter 346 was to provide litigants with an efficacious means of service of process upon a condominium. There is nothing in the record to suggest that the municipal respondents in this proceeding have been prejudiced by the absence of the required designation in the Declaration. Nor is this a case where an entity ineligible for condominium status seeks to enjoy powers or privileges unauthorized by law (cf. People ex rel. Blossom v. Nelson, 46 NY 477 [1871]). Further, accepting respondents' position that technical defects in a declaration necessarily are fatal errors that result in the denial of condominium status could, in some cases, produce results at odds with settled expectations of unit owners, condominium managers, taxing authorities and others (see Board of Managers of Gen. Apt. Corp. Condominium v Gans, 72 Misc 2d 726 (NY Civ Ct 1972]).

Based on the foregoing, the Court is not persuaded that the failure to designate the Secretary of State as agent for service of process in a condominium declaration or to file such declaration with the Department of State necessarily results in the denial of condominium status. In so concluding, the Court expresses no view on whether other types of omissions from a [*5]declaration would be deemed fatal errors,[FN2] or the remedy available to a litigant who can demonstrate actual prejudice from a condominium's failure to designate an agent for service of process. Thus, the Court denies the non-movants' request to award summary judgment in their favor.[FN3]

Accordingly, it is

ORDERED that petitioners' motion for summary judgment is denied in accordance with the foregoing; and it is further

ORDERED that parties shall, within thirty (30) days from the date of this Decision & Order, either: (i) stipulate to a scheduling order, which shall be submitted to the Court for approval; or (ii) request a conference with the Court after conferring in good-faith.

All papers, including this Decision and Order are being returned to the attorneys for thepetitioner. The signing of this Decision and Order shall not constitute entry or filing underCPLR § 2220. Counsel are not relieved from the applicable provisions of that section respecting filing, entry and notice of entry.

Dated: Albany, New York

February 3, 2010

RICHARD M. PLATKIN

A.J.S.C.

Papers Considered:

Notice of Motion, dated February 11, 2009;

Affirmation of Daniel G. Vincelette, Esq., dated February 11, 2009, with attached exhibits A-G;

Petitioners' Memorandum of Law, dated February 11, 2009;

Affirmation of Joshua J. Effron, Esq,. dated April 30, 2009, with attached exhibits;

Affidavit of Patricia C. McVee, sworn to May 1, 2009, with attached exhibit;

Affirmation of Donald Zee, Esq., dated May 1, 2009, with attached exhibit;

Affirmation of Daniel G. Vincelette, Esq., dated May 8, 2009, with attached exhibit A;

Affirmation of Daniel G. Vincelette, Esq., dated August 14, 2009, with attached exhibits A-B;

Affirmation of Donald Zee, Esq., dated August 25, 2009;

Affirmation of Joshua J. Effron, Esq., dated August 26, 2009, with attached exhibit;

Respondents' Memorandum of Law, dated August 26, 2009;

Respondents' Memorandum of Law, dated November 13, 2009, with attached exhibit;

Petitioners' Position Memorandum, dated November 16, 2009, with attached exhibits A-B.

Footnotes

Footnote 1: The Court further notes that the report values the property as of December 17, 2007, rather than July 1, 2007, and does not speak to the property's alleged status as a condominium as of the taxable status date.

Footnote 2: RPL § 339 requires that a condominium declaration contain nine specified elements. In addition to the designation of an agent for service of process, the declaration must include: a statement of intention to submit the property to the Condominium Act; a description of the land on which the building and improvements are or are to be located; a description of the buildings, including their location; information concerning each unit of the condominium; a description of the common elements; and a statement of the uses for which the building and each of the units are intended.

Footnote 3: The Court has considered respondents' remaining arguments but finds them unsupported by proof sufficient to warrant directing judgment as a matter of law in their favor or without merit.