9313 Rockaway Beach, LLC v. Niblack

2023 NY Slip Op 50592(U)

In the Matter of the Application of 9313 Rockaway Beach, LLC, Petitioner, For a Judgment Pursuant to CPLR Article 78 of The Civil Practice Law and Rules and/or For a Declaratory Judgment, v. Preston Niblack, in his capacity as THE COMMISSIONER OF FINANCE OF THE CITY OF NEW YORK CITY, and CITY OF NEW YORK, Respondents.

Index No. 727212/2022

Supreme Court, Queens County

June 9, 2023

Unpublished Opinion

Petitioner was represented by Scott Goldberg of Goldberg & Bokor LLP.

Respondent was represented by LaDonna Sharde Sanford of the New York City Law Department.

Tracy Catapano-Fox, J.

The following papers numbered 1 to 11 were read on this petition to direct respondents to correct the Building Class and Tax Code for petitioner's property.

Papers

Numbered

Notice of Petition, Affirmation, Exhibits 1-4

Answer Exhibits, Memorandum of Law 5-8

Reply, Exhibits 9-11

Upon the foregoing papers, it is ordered that this petition is determined as follows:

Petitioner's application to direct respondents to correct the Building Class and Tax Code for petitioner's property for the period of July 1, 2016 through June 30, 2023, and reduce the classification of the property's assessed value is granted, solely to the extent that respondents' determination is reversed and respondents are directed to hold an administrative hearing and permit evidence to be presented with regard to the misclassification of petitioner's property and issue a final written determination, and upon said determination, potentially recalculate the proper tax assessment for petitioner's property.

Petitioner argues that respondents misclassified its property and resulted in overcharging the taxes due for the above period of time. Petitioner alleges it is the owner of a vacant and unimproved residential land located at 90-13 Rockaway Beach Boulevard, Queens, New York. Petitioner argues that respondents erroneously classified the property as Building Class V1, a Tax Class 4 commercial property, rather than Building Class V0, a Tax Class 1 property. It argues that respondents' misclassification has caused it to be improperly assessed, is contrary to precedent, and has resulted in a substantial overcharge for real estate taxes. Petitioner presents trial level decisions where respondents entered into a stipulation of settlement to resolve the misclassification based upon a commercial overlay into a residential classification, and argues that respondents should do the same with petitioner.

Petitioner submits evidence that on December 6, 2021, it submitted a request to respondents to correct the clerical misclassification of its property. It further submits evidence that respondents issued a final administrative decision on September 2, 2022, which denied petitioner's request to correct the clerical error, finding that the property was a vacant lot and appropriately valued. Petitioner argues that it is not challenging the market value, but rather the tax assessment, because it is improperly based upon a commercial classification, rather than a proper residential classification with a Commercial Overlay, and it timely filed the Article 78 petition to declare respondents' determination as arbitrary and capricious.

Respondents oppose the petition and argue it should be dismissed. Respondents argue that petitioner improperly sought relief under Article 78, rather than filing an Article 7 proceeding for its claims, and argues petitioner failed to exhaust all administrative remedies. They further argue that even if the Article 78 petition is valid, it should be dismissed because the property is commercially zoned and correctly classified as a Tax Class 4 property. Respondents argue that the Article 78 petition is improper, as Article 7 is the near exclusive judicial remedy for reviewing real property tax assessment based on claims of excessive, unequal or unlawful assessment, and misclassified property. Respondents argue that petitioner is time barred from commencing an Article 7 petition, which must be commenced prior to October 25th of the year petitioner sought to challenge. They also argue that the petition should fail because petitioner did not exhaust all administrative resources for tax year 2022/2023, a prerequisite to filing an Article 7 petition.

Respondents also argue that the petition should fail because petitioner improperly sought to use a process meant solely for ministerial corrections to overturn a substantive tax assessment. They also argue that petitioner's reliance on case law is without merit, as the Second Department cases cited by petitioner involved Article 7 petitions.

In an Article 78 petition seeking judicial review of administrative action, the court may not substitute its judgment for that of the agency responsible for making the determination, but must decide only whether there is a rational basis for the agency determination, or whether the determination was arbitrary and capricious. (Matter of Weiss v. County of Nassau, 176 A.D.3d 1085, 1086 [2d Dept. 2019].) A decision is arbitrary and capricious when it is taken without sound basis in reason or regard to the facts, and "while judicial review must be meaningful, the courts may not substitute their judgment for that of the agency for it is not their role to weigh the desirability of any action or to choose among alternatives." (Matter of Dom Ben Realty Corp. v. New York City Loft Bd., 177 A.D.3d 731, 734 [2d Dept. 2019].)

Ordinarily, the proper method for challenging excessive or unlawful real property tax assessments is by the commencement of a tax certiorari proceeding pursuant to Article 7 of the Real Property Law. (Matter of Jonsher Realty Corp./Melba, Inc. v. Board of Assessors, 118 A.D.3d 787, 788 [2d Dept. 2014].) Such a proceeding is properly commenced after exhaustion of the administrative grievance remedies, and within 30 days after the filing of the final assessment roll. (Id.)

Petitioner demonstrated a valid claim under Article 78 to seek review and reclassification of tax years 2...