Matter of Shoppingtown Mall LLC v Assessor

[*1] Matter of Shoppingtown Mall LLC v Assessor 2015 NY Slip Op 52032(U) Decided on December 4, 2015 Supreme Court, Onondaga County Greenwood, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 4, 2015
Supreme Court, Onondaga County

IN THE MATTER OF THE APPLICATION OF Shoppingtown Mall, LLC, Petitioner,

against

The Assessor, THE BOARD OF ASSESSORS AND THE BOARD OF ASSESSMENT REVIEW OF THE TOWN OF DEWITT AND THE TOWN OF DEWITT, Respondents, For Review of a Tax Assessment Under Article 7 of the Real Property Tax Law



2015EF2946



ERIN A. O'BRIEN, ESQ., OF CRONIN, CRONIN, HARRIS

& O'BRIEN, P.C.

For Petitioner

KATHLEEN M. BENNETT, ESQ., OF BOND, SCHOENECK & KING

Intervenor-Respondent Jamesville DeWitt Central School District

THOMAS J. CERIO, ESQ., OF CERIO LAW OFFICES

For Town of DeWitt
Donald A. Greenwood, J.

The Jamesville DeWitt Central School District ("the District"), the Intervenor-[*2]Respondent here, moves to dismiss the Real Property Tax Law Article 7 Petition filed by petitioner which challenges the assessed valuation as set forth on the 2015 final assessment roll of two properties located at 3649-3691 Erie Boulevard East, known as the "Shoppingtown Mall Property" and the "Lot Property." The Town of DeWitt cross-moves and joins in the motion. Petitioner's predecessors, Shoppingtown Mall, LLC and LBUBS 2001-C3 Erie Retail, LLC, commenced tax certiorari proceedings challenging the valuation of the properties for the tax years 2008, 2009, 2010, 2011, 2012 and 2013. Those proceedings were subsequently consolidated. Petitioner acquired the properties on September 20, 2013. However, LBUBS retained ownership and control over the Real Property Tax Law (RPTL) proceedings on the mall property. Petitioner did not acquire an assignment of certain rights associated with the RPTL proceedings from LBUBS; petitioner and LBUBS agreed only to share proportionately any refunds that may have resulted from the 2012 and 2013 proceedings on the mall property. Petitioner then filed a motion to intervene in the 2012 and 2013 proceedings over six months after its acquisition of the properties. This Court denied the motion to intervene and the decision was unanimously affirmed for reasons stated therein by the Appellate Division, Fourth Department. See, Shoppingtown v. Board of Assessment of DeWitt, et al, 129 AD3d 1554 (4th Dept. 6/12/15). Following the denial of the motion to intervene, the consolidated proceeding was discontinued with prejudice pursuant to a stipulation of settlement so ordered by this Court on July 9, 2014. The stipulation of settlement established the assessed value of the mall property on the 2008-2013 final assessment rolls.

Petitioner then filed a petition on July 11, 2014 challenging the 2014 assessment and this Court granted the District's motion to dismiss the petition as being barred by RPTL §727(1) by Decision and Order dated December 10, 2014. The statute provides that "where an assessment being reviewed pursuant to this article is found to be unlawful, excessive or misclassified by final court order or judgment, the assessed valuation so determined shall not be changed for the next three succeeding assessment rolls prepared on the basis of the three taxable status dates next occurring on or after the taxable status date of the most recent assessment under review in the proceeding subject to such final order or judgment." RPTL §727(1). In addition, when a stipulation has been executed and a court approves the settlement, the assessment may not be changed by the assessing unit or challenged by the property owner during the succeeding three years. See, Owens Corning v. Board of Assessors of Town of Bethlehem, 279 AD2d 118 (3rd Dept. 2001). Only when one of the seven statutory exceptions occurs is the application of §727 lifted. See, Akey v. Town of Plattsburg, 300 AD2d 871 (3rd Dept. 2002). Despite this dismissal of the 2014 petition, petitioner filed a petition on July 13, 2015 challenging the 2015 assessment. Like the 2014 petition, the 2015 petition does not allege a statutory exception to the three year moratorium. In its answer, the District has raised the affirmative defense that the petitioner is bound by RPTL §727 and thus the burden shifts to petitioner to show an exemption under RPTL §727. See, Akey, supra.

Petitioner has failed to do so and is now collaterally estopped from arguing that § 727 does not apply. Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against the party or those in privity. See, Matter of Corp. Woods Eleven, LP v. Board of Assessment Review of the Town of Colonie, 83 AD3d 1250 (3rd Dept. 2011). To invoke the doctrine two elements must be proved: [*3]there must be an identity of issue which necessarily has been decided in the prior action and decisive on the present action and there must have been a full and fair opportunity to contest the decision now set to be controlling. See, Ryan v. NY Tel. Co., 62 NY2d 494 (1984). This Court decided the identical issue in the 2004 proceeding whether §727 applied to the property, an issue that was essential to that proceeding and resulted in dismissal of that action. Petitioner had a full and fair opportunity to contest that decision. Moreover, petitioner does not assert an exception to the statute and thus it is estopped from relitigating the statute's applicability in this matter. Petitioner's contention that the doctrine of collateral estoppel does not apply because this Court's denial of petitioner's motion to intervene had not yet been affirmed by the Appellate Division is without merit.

In addition, petitioner incorrectly alleges that § 727 only applies to municipalities. The argument ignores that clear language of subsection (3) that provides that "no petition for review of the assessment on such properties shall be filed while the provisions of subdivision (1) of this section are applicable to such property." RPTL §727(3). Where a dispute over valuation has been resolved by court order, both the town and the taxpayer should be allowed to rely on that resolution for a reasonable period of time. See, Matter of Torok Trust v. Town Bd. of Alexandria, 128 AD3d 97 (4th Dept. 2015). The statute clearly prohibits both the increase of an assessment by a municipality and the challenge of an assessment by a taxpayer, and there is no dispute that §727 prohibits a taxpayer from challenging its assessment unless the specific exceptions are present. In addition, petitioner has admitted that the statute is applicable to this case and in support of its motion to intervene in the prior proceedings petitioner argued "petitioner intervenor will be bound by any resolution or judgment of the subject proceeding for the 2012/13 and 2013/14 tax years, and consequently the three years following, pursuant to RPTL §727 (Affirmation of Petitioner-Intervenor Shoppingtown Mall NY, LLC in 2011 and 2013 proceedings, dated 3/4/14, para. 15). Petitioner is also incorrect about the legislative intent concerning the statute. The purpose of the statute is as follows:

The three year moratorium serves a purpose that is well known to the tax certiorari bar and is easily understood. As appellate courts have previously noted, RPTL §727 prevents municipalities from increasing judicially reduced assessments in succeeding years and likewise prevents property owners from perpetually challenging their tax assessments. All parties thereby avoid the time and expense of repeated court interventions. The three year moratorium against successive property challenges also provides a measure of financial certainty to school district that rely upon tax assessments when creating their annual budgets. The Governor's memorandum included in the bill jacket for RPTL §727...notes that by locking in the judicially reduced assessments on most properties for the following three years the bill will spare all parties the time and expense of repeated court intervention and provide much needed relief to the school district and local governments across the state whose finances have been long imperiled by the existing certiorari process.

Matter of ELT Hariman, LLC v. Assessor of Town of Woodbury, 128 AD3d 201 (2d Dept. 2015).

There is no dispute that subsection (2) of the statute does not list a change in ownership as an exception to a three year moratorium. To grant such an exception to a new owner would [*4]ameliorate the statute's purpose and allow a property owner to circumvent the three year moratorium by transferring the property to a "straw buyer." Id. As in this case, the new property owner in ELT Hariman, supra, was aware of the prior tax proceedings, failed to negotiate in its contract to purchase any rights or protections regarding the prior proceedings, failed to intervene in the prior proceedings for almost a year, ultimately moved to intervene when a settlement of the prior proceedings was awaiting judicial approval, and had its motion to intervene denied as untimely. See, id. The court held the new property owner was a "complicit transferee" and upheld the application of the statute. Likewise, petitioner admits it was aware of the prior proceedings as of the time of the transfer in September of 2013, that it failed to negotiate in its contract any rights or protection regarding the prior proceedings, waited six months to make a motion to intervene and the motion to intervene was denied. Petitioner is thus a complicit transferee. See, id. ELT Harriman, supra also addresses why petitioner's reliance a lower court decision is misplaced. See, Susquehanna Development, LLC v. Assessor of the City of Binghamton, 186 Misc 2d 267 (Tompkins Co., 2000). In interpreting Susquehanna, the Second Department noted that the lower court held that the statute cannot be constitutionally applied where the following elements are present: 1) there is a successful challenge to the property's assessment; 2) the property is sold to a new owner; 3) the sale occurs within three years of the reduction, 4) the new owner is no way complicit in the prior reduction; and 5) the assessment unconstitutionally exceeds the fair market value of the property. See, ELT Harriman.,supra. In addition to petitioner failing on the fourth element since there is no factual dispute that petitioner was in fact a "complicit transferee", petitioner also fails on the fifth element and cannot establish an unconstitutional increase of the full value. The burden on petitioner to show the assessment is clearly in excess of full value is very high and even an appraisal report may be insufficient to demonstrate it. See, id. Petitioner's conclusory allegations regarding market value relies solely on a September 2013 sale price which involved a distress sale, which was a short term online auction by a special servicer. A court may ignore evidence of a distress sale, a sale motivated by an owner having financial difficulties or a sale motivated by unique circumstances. See, Continental Assurance Co. V. Mayor of Lynbrook, 113 AD2d 795 (2d Dept. 1985); see also, Marine Midland Properties Corp. v. Sgroi, 91 AD2d 824 (4th Dept. 1982). The circumstances of the sale were analyzed and discussed during settlement discussions between respondents, the District and petitioner's predecessor in interest. The District has demonstrated that the issue was sufficiently addressed in settlement negotiations, and that since there was substantial doubt about whether the online sale constituted evidence of fair market value, the parties took the sale into consideration when agreeing to settle the proceedings for the amount set forth in the agreement. Petitioner has provided no proof to the contrary and thus failed in its burden in demonstrating that the agreed upon and negotiated assessment unconstitutionally exceeds the fair market value of the property. Thus, "the facts here are distinguishable from those in Susquehanna..." Harriman, supra.

NOW, therefore, for the foregoing reasons, it is

ORDERED, that the Intervenor-Respondent's motion for summary judgment dismissal is granted, and it is further

ORDERED, that the respondent's cross-motion is granted.

ENTER

Dated: December 4, 2015

Syracuse, New York

DONALD A. GREENWOOD

Supreme Court Justice

Papers Considered:

1. Notice of Motion of Intervenor-Respondent Jamesville DeWitt Central School District, dated August 20, 2015;

2. Memorandum of Law in Support of Intervenor-Respondent's Motion, undated;

3. Affirmation of Kathleen M. Bennett, Esq. in Support of Intervenor-Respondent's Motion for Summary Judgment, dated August 20, 2015, and attached exhibits;

4. Notice of Cross-Motion of the Town of DeWitt, dated September 24, 2015;

5. Affirmation of David W. Herkala, Esq. in Support of Respondent's Motion, dated September 24, 2015, and attached exhibits;

6. Affirmation of Richard P. Cronin, Esq. in Opposition to Respondent's Motion to Dismiss, dated October 20, 2015;

7. Reply Affirmation of Kathleen M. Bennett, Esq. in Further Support of Intervenor-Respondent's Motion for Summary Judgment, dated October 22, 2015, and attached exhibits; and

8. Statement of Uncontested Material Facts submitted by Intervenor-Respondent, dated October 22, 2015.