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County of Oneida v. Estate of Kennedy

Other Lower Courts

November 15, 2001

County of Oneida, by Its Health Department, et al., Plaintiffs,
v.
Estate of John A. Kennedy, Deceased, et al., Defendants.

Page 690

COUNSEL

Randall B. Caldwell, County Attorney (Raymond F. Bara of counsel), for County of Oneida, plaintiff.

John Dylan, Corporation Counsel (Harry M. Scaramella of counsel), for City of Utica, plaintiff.

Gustave J. DeTraglia, Jr., for defendants.

OPINION

Robert F. Julian, J.

Relief Requested

Plaintiffs seek judgment providing for the demolition of a burned, unsalvageable building; compensation for the costs thereof; and an injunction restraining the expenditure of insurance proceeds derived from the fire. Defendant seeks a judgment holding it does not owe the cost of demolition.

Holding

Judgment granted to plaintiffs, County of Oneida and City of Utica. The court finds:

Defendant is liable for the cost of demolition. An inquest shall be held to determine the amount owed. The defendant is enjoined from expending $15,000 of the fire insurance proceeds collected pending determination of the amount owing for demolition.

A contract implied in law between the City and the defendant by which the City would demolish defendant's structure at no cost to the defendant is void because the contract bestows an unconstitutional gift of services upon the defendant. The City cannot demolish private property and not charge the owner (defendant) for the cost of its services because a failure

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to charge is an unconstitutional gift in violation of article VIII, § 1 of the New York Constitution.

There was no contract between the parties that released the defendant from responsibility for the cost of demolition because there was no meeting of the minds, no consideration, and certain provisions of the proposed contracts violate New York Constitution, article VIII, § 1.

To satisfy the gifts and loans provision of New York Constitution, article VIII, § 1, the City and County must attempt to collect the cost of demolition from the property owner personally and cannot solely resort to a special assessment pursuant to section 20 (35) of the General City Law against the property for repayment where the cost of demolition exceeds the value of the property.

The common practice engaged in for years by the City and County that permitted a property in long-standing codes noncompliance to be taken for unpaid real estate taxes and then demolished at taxpayers' expense is an abuse of discretion and violative of article VIII, § 1 of the New York Constitution. The court takes judicial notice that there are a significant number of properties in the City significantly out of codes compliance that fall within this category.

Discussion

Procedural Status

The County of Oneida (County) commenced this action against the Estate of John Kennedy et al. (the Estate) the owner(s) of certain fire-damaged property at 603 Saratoga Street, Utica, New York, on May 23, 2001, seeking a judgment ordering the demolition of the property and payment therefor by the owner(s). The Estate commenced a third-party action against R.E .B . Enterprises, Inc. (REB) and Ron Borek (apparently a principal in REB) and the City of Utica (City). There has been no appearance by REB, and it is unknown to the court whether or not REB has been served; the court finds that it has no jurisdiction over REB and makes no findings or rulings regarding it. The City was granted permission to intervene in this case as a plaintiff at a hearing before the court on July 23, 2001 without opposition by either party. Although discussion at that time indicated the City was intervening as a defendant, that was clarified at the continued hearing on July 27, 2001. The City intervenes as a plaintiff and has adopted the complaint of the County as its pleading. The County's complaint is ordered deemed to be the complaint of the City, and

Page 692

the answer and other pleadings are deemed, and ordered, amended accordingly. This also has been stipulated to by the parties. The amended pleadings are in the court's file.

In the verified complaint the County and City further request injunctive relief freezing the funds obtained or to be obtained from fire insurance by the Estate or its decedent.

The County is proceeding pursuant to the Public Health Law and the County Sanitary Code and the City seeks relief pursuant to the City Housing Standards Code. The Estate and its individual defendants seek a dismissal of the complaint, and as further discussed below the enforcement of an alleged contract to demolish the property, and judgment on their counterclaim against the City for the cost of demolition.

The Estate did not dispute that the property should be demolished nor did it oppose the demolition of the premises. The court, with the consent of the parties on July 23, 2001, issued an order and judgment compelling demolition of the premises. The building was demolished by the County of Oneida in August of 2001 pursuant to that order. The defendant disputes the plaintiff municipalities' contention that the Estate is responsible for the cost of demolition. The Estate asserts, as defenses to this action:

A third party, REB, had a contract with the Estate to demolish the property and breached that contract. REB is not before the court, and thus the court is not empowered to rule in any way upon this claim except to find it not material or relevant to this proceeding. Any third-party action in existence is deemed, and ordered, severed on the court's own motion.

There was either an oral or a written agreement or a contract implied in law between the Estate and the City which provided that the Estate would not be held responsible for paying any costs of demolition. Two written forms of agreement were prepared, but neither was ever executed by any authorized representative of the City. The defendant in its verified answer, and at trial, alleged the existence of the oral contract with the City. The Estate asserted at trial the existence of a written agreement signed by the executrix only.

The defendant's failure to demolish this building or to act to enforce its contract with REB at a reduced price was based upon the plaintiff City's promise to demolish it, thus creating a contract implied in law between the City and defendant, as the defendant relied upon the City's promise to its detriment.

The property was lost for back taxes, and thus, the Estate is not a proper party as it does not have title. The record does

Page 693

not support this assertion and this defense is dismissed and not further considered.

The defendant is being unfairly singled out by the plaintiffs and thus is the victim of selective enforcement.

Facts

The property in issue, 603 Saratoga Street, was severely damaged in a fire on December 15, 1997 and was deemed irreparable. The building was insured and the fire insurance carrier paid the Estate's decedent in excess of $40,000 within several months of the fire. Those funds remain in the Estate's savings account.

The court took proof on July 23, July 27, August 7, and August 13, 2001.

The attorneys appearing for both the City and Estate testified, and by stipulation of all parties, conflicts on this basis were expressly waived.

Two purported written contracts were introduced into evidence. The first (Contract One) was a proposed, unsigned contract prepared by the City and presented to the Estate in the spring of 2000. It provided that the City may seek restitution for demolition costs. Contract One also permits the City, in the alternative, to file a lien against the property for the demolition costs. The second contract (Contract Two) was prepared by the Estate and is a modification of the City's proposed Contract One and was signed by the executrix only. The modification eliminated any requirement that the property owner pay for the demolition, but did provide for the filing of a special assessment pursuant to the General City Law for the cost of demolition. This contract was sent to the City with the signature of the executrix but was never acted on by any City body or official and remained unsigned.

The Assistant City Corporation Counsel who negotiated the contracts testified that a final demolition agreement was not entered into between the City and the Estate either in writing or orally. The executrix in her testimony did not dispute this contention and testified that she was unaware of any final agreement with the City to demolish the property. The Assistant Corporation Counsel further testified that, while the City had previously entered into a number of agreements utilizing Contract One, he had advised the attorneys for the Estate that the City of Utica had not perfected either a personal judgment against any owner who had made, or a special assessment against any property that was the subject of, such an

Page 694

agreement. Moreover, he advised the Estate that he was unaware of any proceeding wherein the City of Utica had pursued either a personal judgment against the offending property owner or a special assessment against the property. The Assistant Corporation Counsel acknowledged that his purpose in discussing with the Estate's representative the City's past practice of not acting to collect costs of demolition from private individuals was to induce the Estate to enter into an agreement. The attorney for the Estate confirmed that this conversation occurred and testified that he relied upon the conversation as a basis for his assertion that there was an oral contract or a contract implied in law. Moreover the executrix testified that the Estate did not act to demolish the house because the Estate believed that the City had agreed to demolish it and not charge the Estate.

The attorney for the Estate testified, in what the court finds to be a conclusory manner, that Contract Two was accepted, or that there was an oral contract or that there was a contract implied in law. The Estate's attorney did not specify any communication of an acceptance by the City of Contract Two or any evidence of a meeting of the minds regarding an oral contract. He acknowledged that the Estate had rejected Contract One. Without citing specific facts regarding the acceptance or meeting of the minds, the attorney for the Estate testified that he thought both oral and written agreements with the City provided that the City would demolish the building and not charge the Estate. When pressed by the court, he could point to no specific written or oral acceptance of either written contract or the alleged oral contract by any employee of the City, much less an authorized agent or body of the City. The executrix of the Estate and the attorney for the Estate testified that, based upon the totality of their discussions with the City, they did not expect the Estate to be charged for the demolition. The attorney for the Estate testified that when he had asked the Assistant Corporation Counsel for the status of Contract Two he was not able to obtain a specific answer. When the attorney for the Estate was asked if there was any act that he could point to that indicated an acceptance by the City, he testified, " it just went into limbo and that maybe they lost their steam taking all these buildings down."

The attorney for the Estate and the executrix each testified that the Estate expected the City to take the building down at no cost to the Estate based on the discussions between the parties. The County estimated the cost to demolish this property

Page 695

to be $18,000.T he Estate claims it did not act to enforce a contract with REB contractors to demolish the property for $7,100 because of the alleged promise made by the City to demolish this property for free. REB had gutted the property after having been paid $3,500, but never completed the demolition. Since the estimated cost of the County's demolition exceeds this contract by $10,900, the defendant asserted that detrimental reliance and equity created a contract implied in law.

I. There is No Enforceable Contract or Contract Implied in Law

The court finds that no contract was formed between the parties.

" A contract is simply a promise supported by consideration (Curtis Props. Corp. v Greif Cos., 212 A.D.2d 259, 264), which arises, in the normal course of events, when the terms of an offer are accepted by the party to whom it is extended (see, Calamari and Perillo, Contracts § 11, at 13)." (Matter of Express Indus. & Term. Corp. v New York State Dept. of Transp., 252 A.D.2d 376, 377 [1st Dept. 1998]; see also Anderson v Strong Mem. Hosp., 151 Misc.2d 353, 359 [Sup Ct, Monroe County 1991] [referencing " the three dimensions of contract law, offer, acceptance and consideration" ].)

The court further finds that while the defendant does make a prima facie case for a contract implied in law, the same is not enforceable because it violates the New York Constitution.

A. There is No Acceptance or Consideration

There is no evidence in the record of the acceptance of either written form of contract by both parties. Neither the City nor the Estate or its decedent executed Contract One. Contract Two is signed by the executrix of the Estate, but there is no proof in the record of any acceptance by the City. Additionally, there is no proof of any consideration for this contract flowing to the City. There is no proof of any benefit the City would receive from any of the alleged contracts; it would only assume the defendant's burden. The defendant agreed to do nothing of value for the City, with the possible exception of allowing the City onto land to do the Estate the favor of demolishing a structure that violates codes and is worse than worthless. The executrix testified that she believed she had already lost this property for taxes and acknowledged that this property was nothing but a burden to the Estate. To the extent the Estate even claims to have agreed to do anything, it was limited to agreeing to accept a benefit.

Page 696

With respect to the claim of oral contract, there was no proof that any authorized agent of the City entered into an agreement with the Estate or the individuals associated therewith. There was no proof of any transaction between the parties that constituted a meeting of the minds and mutual promises supported by consideration.

B. The Putative Written Contracts and the Claimed Contract Implied in Law, as Well as the Alleged Oral Contract are Unconstitutional

The defendant's claim that there was a contract implied in law fails because the claimed implied contract violates article VIII, § 1 of the New York Constitution. Moreover, assuming, arguendo, there were the necessary elements to find the existence of a contract between the City and the Estate, and there are not, the court is nevertheless compelled by the significant public policy considerations at stake to comment at length on the constitutional issue. It is certain that this issue will arise again, given the consistent pattern of the City and the County failing to impose any burden on the owners of distressed properties for the cost of demolition. Nor does it appear that the City has considered whether or not putative ...


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