Pac. Carlton Dev. Corp. v. N.Y.S. Urban Dev. Corp.

206 A.D.3d 931

171 N.Y.S.3d 522

PACIFIC CARLTON DEVELOPMENT CORP., et al., appellants,

v.NEW YORK STATE URBAN DEVELOPMENT CORPORATION, etc., respondent.

2018–03325, 2019–04529

Index No. 1693/12

Supreme Court, Appellate Division, Second Department, New York.

Submitted—March 18, 2022

June 22, 2022

Biersdorf & Associates, P.A. (Dan Biersdorf and Joseph Muallem, New York, NY, of counsel), for appellants.

Applebaum Katz Brodsky, PLLC, New York, NY (Charles S. Webb III, Kenneth J. Applebaum, Judith Z. Katz, and Adam H. Brodsky of counsel), for respondent.

BETSY BARROS, J.P., ANGELA G. IANNACCI, CHERYL E. CHAMBERS, DEBORAH A. DOWLING, JJ.

DECISION & ORDER

In a claim pursuant to EDPL article 5 for compensation arising from the condemnation of real property, the claimants appeal from (1) a judgment of the Supreme Court, Kings County (Wayne Saitta, J.), dated December 13, 2017, and (2) an order and amended judgment (one paper) of same court dated January 31, 2019. The order and amended judgment, insofar as appealed from, upon a decision of the same court dated November 15, 2017, made after a nonjury trial, and a decision of the same court dated March 19, 2018, in effect, denied that branch of the claimants’ motion which was, in effect, pursuant to CPLR 4404(b) to set aside so much of the decision dated November 15, 2017, as determined their award and for a new trial, and is in favor of the claimants and against the condemnor in the principal sum of only $22,206,000.

Motion by the respondent, inter alia, to dismiss the appeal from the judgment on the ground that it was superseded by the order and amended judgment. By decision and order on motion of this Court dated August 2, 2019, that branch of the motion which is to dismiss the appeal from the judgment on the ground that it was superseded by the order and amended judgment was held in abeyance and referred to the panel of Justices hearing the appeals for determination upon the argument or submission thereof.

Upon the papers filed in support of the motion and the papers filed in relation thereto, and upon the submission of the appeals, it is

ORDERED that the branch of the respondent's motion which is to dismiss the appeal from the judgment on the ground that it was superseded by the order and amended judgment is granted; and it is further,

ORDERED that the appeal from the judgment is dismissed; and it is further,

ORDERED that the order and amended judgment is affirmed insofar as appealed from; and it is further,

ORDERED that one bill of costs is awarded to the respondent.

On March 1, 2010, as part of the Atlantic Yards project, the Empire State Development Corporation (hereinafter the ESDC) condemned several adjoining parcels of real property (hereinafter collectively the condemned property) located at Block 1129, Lots 4, 5, 6, and 13, at the intersection of Pacific Street and Carlton Avenue in Brooklyn. Lot 13 was owned by the claimant Pacific Carlton Development Corp., and improved by an office building with six above-ground levels, one subterranean level, and a separate one-story garage. The claimant 535 Carlton Realty Corp. owned Lots 4, 5, and 6, which fronted Carlton Avenue. Lots 4, 5, and 6 were minimally improved and used for either parking or refuse storage. The condemned property was located in an M1–1 manufacturing district, which allowed light commercial and manufacturing uses.

The claimants thereafter commenced this claim pursuant to EDPL article 5 for compensation for the condemnation. At a nonjury trial on the issue of compensation, the claimants proffered experts who opined that there was a reasonable probability that the condemned property would have been rezoned to C6–2A, which permits commercial uses up to a floor area ratio (hereinafter FAR) of six along with residential and community facility uses, and that the highest and best use of the condemned property was a mixed-use structure spanning all four lots. The ESDC, by contrast, proffered an exert opinion that it was unlikely that the condemned property would have been rezoned to C6–2A, and that the highest and best use of the condemned property was an office building on Lot 13 with adjoining parking on Lots 5 and 6, and holding Lot 4 for future use, which did not require a rezoning from its current M1–1 designation. The ESDC contended in the alternative that, if any portion of the condemned property were to have been rezoned, it would have been more likely that Lot 13 would have been rezoned to C4–4A, which permits commercial uses up to a FAR of four, than that the condemned property as a whole would be rezoned to C6–2A. The parties also disagreed, among other things, as to whether the subterranean level of the existing structure on Lot 13 qualified as a "basement" under the New York City Zoning Resolution (hereinafter the Zoning Resolution) (see N.Y. City Zoning Resolution § 12–10 ["Basement," "Cellar"]), the degree to which the claimants’ proposal required adjustments to account for the time, cost, and risk associated with obtaining a rezoning, and the value added by fixtures on the fifth and sixth floors of the existing structure on Lot 13.

After a nonjury trial, the Supreme Court determined in a decision dated November 15, 2017, inter alia, that it was more reasonably probable that the entirety of the condemned property would have been rezoned to C4–4A, rather than to C6–2A as advanced by the claimants, and that the subterranean level of the existing structure on Lot 13 was a "cellar" rather than a usable basement. The court determined just compensation for the condemned property to be $21,935,384, rounded off to $21,935,000, and a judgment dated December 13, 2017, was entered in favor of the claimants and against the ESDC in the principal sum of $21,935,000 less the ESDC's total advanced payments.

The claimants moved, inter alia, in effect, pursuant to CPLR 4404(b) to set aside so much of the decision dated November 15, 2017, as determined their award and for a new trial on the grounds, among others, that the Supreme Court failed to consider the value added to Lot 13 by fixtures on the fifth and sixth floors that had been left by a former tenant, failed to consider evidence showing that the condemned property would have been rezoned to C4–4A but for the announcement of the Atlantic Yards project, and erroneously omitted the area of the existing structure's subterranean level from the value of Lot 13. In a decision dated March 19, 2018, the court determined that the claimants’ motion should be granted only to the extent of correcting a mathematical error in the decision dated November 15, 2017, and otherwise denied, and determined just compensation for the condemned property to be $22,206,083, rounded off to $22,206,000. The court thereafter entered an order and amended judgment dated January 31, 2019, which, inter alia, in effect, denied that branch of the claimants’ motion which was, in effect, pursuant to CPLR 4404(b) to set aside so much of the decision dated November 15, 2017, as determined their award and for a new trial, and is in favor of the claimants and against the ESDC in the principal sum of $22,206,000 less the ESDC's total advanced payments. The claimants appeal.

" ‘In condemnation cases, the authority of this Court to review findings of fact after a nonjury trial is as broad as that of the trial court’ " ( Matter of Village of Haverstraw [Ray Riv. Co., Inc.], 191 A.D.3d 994, 995, 141 N.Y.S.3d 131, quoting Matter of Mazur Bros., Inc. v. State of New York, 97 A.D.3d 826, 828, 949 N.Y.S.2d 160 ). " ‘This court may render the judgment it finds warranted by the facts, taking into account that in a close case the trial court had the advantage of seeing and hearing the witnesses’ " ( Matter of Village of Haverstraw [Ray Riv. Co., Inc.], 191 A.D.3d at 995, 141 N.Y.S.3d 131, quoting Matter of Mazur Bros., Inc. v. State of New York, 97 A.D.3d at 828, 949 N.Y.S.2d 160 [internal quotation marks omitted]). "The measure of damages in a condemnation case ‘must reflect the fair market value of the property in its highest and best use on the date of the taking, regardless of whether the property is being put to such use at the time’ " ( Matter of 730 Equity Corp. v. New York State Urban Dev. Corp., 142 A.D.3d 1087, 1088, 37 N.Y.S.3d 599, quoting Chester Indus. Park Assoc., LLP v. State of New York, 65 A.D.3d 513, 514, 884 N.Y.S.2d 243 [internal quotation marks omitted]; see Matter of Village of Haverstraw [Ray Riv. Co., Inc.], 191 A.D.3d at 995–999, 141 N.Y.S.3d 131 ). "The determination of highest and best use must be based upon evidence of a use which reasonably could or would be made of the property in the near future" ( Matter of 730 Equity Corp. v. New York State Urban Dev. Corp., 142 A.D.3d at 1088, 37 N.Y.S.3d 599 ; see Matter of City of New York [Broadway Cary Corp.], 34 N.Y.2d...