State v. KKS Props., LLC

187 A.D.3d 1459

134 N.Y.S.3d 530

In the MATTER OF the ACQUISITION OF REAL PROPERTY BY the STATE of New York.

State of New York, Respondent;

v.KKS Properties, LLC, Appellant.

529374

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

Decided and Entered: October 29, 2020

Calendar Date: September 15, 2020

Harris, Conway & Donovan, PLLC, Albany (Patrick L. Seely Jr. of E. Stewart Jones Hacker Murphy LLP, Troy, of counsel), for appellant.

Letitia James, Attorney General, Albany (Owen Demuth of counsel), for respondent.

Before: Egan Jr., J.P., Mulvey, Aarons, Pritzker and Colangelo, JJ.

MEMORANDUM AND ORDER

Egan Jr., J.P.

Appeal from an amended judgment of the Court of Claims (Collins, J.), entered November 30, 2018, which, in a proceeding pursuant to EDPL articles 4 and 5, determined the compensation due claimant as a result of petitioner's acquisition of certain real property.

In January 2006, claimant, KKS Properties, LLC, acquired title to a 31.77–acre parcel of real property located on New Scotland Road in the Town of Bethlehem, Albany County. In May 2006, as part of the construction of an extension to State Route 85 – also known as the Slingerlands Bypass (hereinafter the bypass) – petitioner, the State of New York, appropriated an approximately 9.5–acre strip of claimant's property pursuant to the EDPL, bifurcating the property from north to south and creating three individual parcels of property – the approximately 9.5–acre strip appropriated for the bypass, a 3.736–acre parcel to the east of the bypass (hereinafter the eastern parcel) and a 18.464–acre parcel to the west of the bypass (hereinafter the western parcel). Following the appropriation, the eastern parcel remained accessible via road frontage along New Scotland Avenue; however, access to the western parcel was reduced to a 43–meter legal right of access, as provided for in a reservation clause contained in petitioner's May 2006 appropriation map of the property.

In 2007, claimant commenced a CPLR article 78 proceeding seeking, among other things, certain injunctive relief, alleging that the proposed construction of the bypass denied it suitable access to the western parcel. In 2008, Supreme Court (Devine, J.) dismissed the petition. In 2009, claimant commenced this proceeding seeking damages, alleging, among other things, that the conditional access to the western parcel resulting from petitioner's appropriation rendered said parcel unsuitable for any development in accord with its highest and best use. Following a trial, the Court of Claims (Weinstein, J.) awarded claimant $532,000 in damages. On appeal, this Court reversed the judgment, determining that the Court of Claims lacked competent proof on which to base its valuation and remitted the matter for a new trial ( 119 A.D.3d 1033, 1037, 990 N.Y.S.2d 105 [2014] ). Upon remittal, claimant moved for summary judgment, seeking a declaration that the western parcel was landlocked. Petitioner cross-moved for partial summary judgment, seeking a declaration that the western parcel was not landlocked, as claimant was explicitly granted a 43–meter legal right of access to the bypass. The Court of Claims (Collins, J.) denied claimant's motion and granted petitioner's cross motion, finding that claimant was collaterally estopped from litigating whether the western parcel was landlocked as this issue had previously been litigated and resolved against claimant in the prior CPLR article 78 proceeding. Claimant appealed, and this Court affirmed ( 149 A.D.3d 1317, 1319–1320, 52 N.Y.S.3d 561 [2017] ).

In January 2018, a four-day trial ensued for purposes of determining the valuation of claimant's property and the appropriate amount of damages to which claimant was entitled as a result of petitioner's appropriation. At trial, the parties introduced, among other things, the appraisal reports of their respective experts and, following trial, the Court of Claims awarded claimant $744,500 in direct and consequential damages. An amended judgment was thereafter entered, and claimant appeals.

It is well settled that "[w]hen private property is appropriated for public use, just compensation must be paid, which requires that the owner be placed in the financial position that he or she would have occupied had the property not been taken" ( Matter of County of Warren [Forest Enters. Mgt., Inc.], 182 A.D.3d 729, 730–731, 122 N.Y.S.3d 403 [2020] [internal quotation marks and citations omitted]; see U.S. Const, 5th Amend; NY Const, art I, § 7 [a]; Matter of City of New York [Kaiser Woodcraft Corp.], 11 N.Y.3d 353, 359, 870 N.Y.S.2d 827, 899 N.E.2d 933 [2008] ). As relevant here, where the subject appropriation "involves a partial taking of real property, the claimant is not only entitled to the value of the land taken – i.e., direct damages – but also to consequential damages, which consist of the diminution in value of the claimant's remaining land as a result of the taking or the use of the property taken" ( DiGiacomo v. State of New York, 182 A.D.3d 977, 979, 122 N.Y.S.3d 807 [2020] [internal quotation marks, brackets and citations omitted]; see Matter of Eagle Cr. Land Resources, LLC [Woodstone Lake Dev., LLC], 149 A.D.3d 1324, 1326, 52 N.Y.S.3d 160 [2017], lv denied 29 N.Y.3d 916, 2017 WL 3908596 [2017] ). In ascertaining the appropriate measure of damages, the courts must consider "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 Eagle Cr. Land Resources, LLC [Woodstone Lake Dev., LLC], 149 A.D.3d at 1325–1326, 52 N.Y.S.3d 160 [internal quotation marks and citations omitted]; see Matter of County of Warren [Forest Enters. Mgt., Inc.], 182 A.D.3d at 731, 122 N.Y.S.3d 403 ). Ultimately, the court's final damages award "must either be within the range of the expert testimony, or be supported by other evidence and adequately explained by the court" ( Woehrel v. State of New York, 178 A.D.3d 1169, 1171, 111 N.Y.S.3d 756 [2019] [internal quotation marks and citations omitted]; see Matter of City of New York [Reiss], 55 N.Y.2d 885, 886, 449 N.Y.S.2d 18, 433 N.E.2d 1266 [1982] ).

Claimant contends that the Court of Claims' determination as to the preappropriation value of the property lacks factual support in the record. We disagree. The parties agree that the highest and best use of the property prior to the appropriation was mixed used development, comprising office, retail and residential development. To that end, each party's appraiser utilized the sales comparison approach to calculate the property's preappropriation value. Claimant offered the expert testimony and appraisal report of Kenneth Gardner, a real estate appraiser, who set forth two alternative valuation scenarios with respect to the preappropriation value of the property. The first scenario, Alternative A, entailed dividing the property into two parcels for purposes of valuation – an approximately 23.3–acre parcel that Gardner determined was commercially developable and an 8.47–acre parcel that he determined was "surplus acreage," not amenable to development. Gardner reviewed comparable sales and determined that the commercially developable portion of the property had a value of $92,000 per acre and the surplus acreage had a value of $9,500 per acre, resulting in a total preappropriation value of $2,224,065. The second scenario, Alternative B, entailed dividing the property into two separate parcels along the approximate boundary line between the zoning districts encompassed by the property, resulting in an 11–acre "hamlet" zoning parcel and a 20.77–acre "commercial-hamlet" zoning parcel. Gardner determined that the hamlet zoning parcel had a value of $136,000 per acre and the commercial-hamlet zoning parcel had a value of $35,000 per acre, resulting in a total preappropriation value of $2,223,000. In contrast, petitioner offered the expert testimony and appraisal report of Todd Thurston, a real estate appraiser. Thurston inspected the property, researched comparable sales and, after making certain adjustments for various constraints on the property, calculated the property's preappropriation value to be $45,000 per acre, for a total preappropriation valuation of approximately $1,430,000.

In determining the property's preappropriation valuation, the Court of Claims largely rejected the two valuation scenarios that Gardner relied upon. With respect to Alterative A, the court determined, among other things, that certain comparable sales relied upon by Gardner were not relevant or comparable to the subject property and his allocations and adjustments for surplus land/acreage were subjective, unverified and not supported by facts in the record, rendering them unreliable. With respect to Alternative B, the court found said valuation to be unreliable because many of the comparable sales that...