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In re Metropolitan Transportation Authority

Supreme Court of New York, Second Department

January 16, 2013

In the Matter of Metropolitan Transportation Authority, respondent-appellant; and Washed Aggregate Resources, Inc., appellant-respondent. Index No. 2674/98

Watkins & Watkins, LLP, White Plains, N.Y. (John E. Watkins, Jr., Liane V. Watkins, and Matthew S. Clifford of counsel), and Gellert & Rodner, White Plains, N.Y. (Jeffrey S. Rodner of counsel), for appellant-respondent (one brief filed).

Gibbons P.C., New York, N.Y. (Susan B. Kalib of counsel), for respondent-appellant.

MARK C. DILLON, J.P., CHERYL E. CHAMBERS, SANDRA L. SGROI, ROBERT J. MILLER, JJ.

DECISION & ORDER

In a condemnation proceeding, the claimant appeals, as limited by its brief, on the ground of inadequacy, from so much of a judgment of the Supreme Court, Dutchess County (LaCava, J.), dated January 20, 2011, as, upon a decision of the same court entered October 14, 2010, made after a nonjury trial, awarded it the sum of only $65, 000 in direct damages and $435, 000 in consequential damages, and the condemnor cross-appeals, as limited by its brief, on the ground of excessiveness, from so much of the same judgment as awarded the claimant consequential damages in the sum of $435, 000.

ORDERED that the judgment is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

The claimant in this condemnation proceeding, Washed Aggregate Resources, Inc. (hereinafter Washed Aggregate), owned two parcels of land in the Town of Amenia. The parcels had previously been used as a sand and gravel quarry. Washed Aggregate's owner, Dominick Peburn, who purchased the assets of Washed Aggregate approximately two months before portions of its property were condemned by Metropolitan Transportation Authority (hereinafter the MTA), intended to recommence mining the land for sand and gravel.

Washed Aggregate's two parcels, referred to by the parties as "the northern parcel" and "the southern parcel, " respectively, were separated by a third parcel known as "the Luther parcel." All three parcels were situated between New York State Route 22 (hereinafter Route 22) to the west and Dutchess County Route 81 (hereinafter Route 81) to the east. The southern parcel ran the full width between Routes 22 and 81 and was served by a gravel haul road connecting it to both Routes 22 and 81, which ran approximately along the length of its northern border. The northern parcel bordered Route 81 to the east, but was separated from Route 22 by a small intervening parcel. (The Luther parcel also ran the full width between Routes 22 and 81). Nevertheless, the northern parcel had access to Route 22 via a road, apparently established by custom, which ran along a portion of its southern border and through the northern portion of the Luther parcel.

In connection with the northern extension of the Metro-North Railroad and the construction of the Metro-North Wassaic station, the MTA condemned strips along the western, i.e., Route 22, edges of both the northern and southern parcels for the purpose of extending its railroad tracks. The MTA offered Washed Aggregate the sum of $37, 611 for the condemned portions of both parcels, but offered no compensation for consequential damages arising from the taking of the remaining portions of Washed Aggregate's land. Washed Aggregate rejected the MTA's offer, and filed a claim alleging that, as a result of the taking, it had suffered loss, inter alia, of road access to the remainder of both of its parcels and the ability to exploit the land's gravel deposits.

The MTA commenced the instant condemnation proceeding, and Washed Aggregate's claim was thereupon evaluated at a nonjury trial, at which the primary issues were whether Washed Aggregate retained suitable access to its parcels, whether it was entitled to consequential damages, and, if so, how the value of the land, including its mineral deposits, should be assessed. The Supreme Court awarded Washed Aggregate a greater sum in direct damages than that offered by the MTA, based upon the court's evaluations of the parties' competing appraisals. The court also awarded Washed Aggregate consequential damages, based upon its determination that the MTA's taking had eliminated access suitable for vehicles used in mining, which was the property's highest and best use. However, the court awarded consequential damages based upon its assessment of the fair market value of the property, rather than, as Washed Aggregate urged, based upon the projected value of the land's mineral resources. Washed Aggregate appeals, seeking an increase in the court's consequential damages award, and the MTA cross-appeals, contending that no consequential damages award was warranted. On the appeal and the cross appeal, the controversy centers primarily around the methodology used to determine the value of Washed Aggregate's land and the question of whether the MTA's taking resulted in a compensable diminution of access to Washed Aggregate's land.

When private property is taken for public use, the condemning authority must "compensate the owner so that he may be put in the same relative position, insofar as this is possible, as if the taking had not occurred'" (Matter of City of New York [ Kaiser Woodcraft Corp. ], 11 N.Y.3d 353, 359, quoting City of Buffalo v Clement Co., 28 N.Y.2d 241, 258; see 520 E. 81st St. Assoc. v State of New York, 99 N.Y.2d 43, 47; Matter of City of New York [ Glantz ], 55 N.Y.2d 345, 351; Rose v State of New York, 24 N.Y.2d 80, 87; Matter of West Bushwick Urban Renewal Area Phase 2, 69 A.D.3d 176, 181). Where, as here, there is a partial taking of the condemnee's property, the measure of damages is the difference between the value of the whole before the taking and the value of the remainder after the taking (see Matter of Village of Dobbs Ferry v Stanley Ave. Props., Inc., 95 A.D.3d 1027, 1029; Matter of Board of Commr. of Great Neck Park Dist. of Town of N. Hempstead v Kings Point Hgts., LLC, 74 A.D.3d 804, 805; Coldiron Fuel Ctr., Ltd. v State of New York, 8 A.D.3d 779, 780; Chemical Corp. v Town of E. Hampton, 298 A.D.2d 419, 420; 627 Smith St. Corp. v Bureau of Waste Disposal of Dept. of Sanitation of City of N.Y., 289 A.D.2d 472, 473). "The measure of damages 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 Board of Commr. of Great Neck Park Dist. of Town of N. Hempstead v Kings Point Hgts., LLC, 74 A.D.3d at 805; see Matter of Rochester Urban Renewal Agency [ Patchen Post ], 45 N.Y.2d 1, 8; Keator v State of New York, 23 N.Y.2d 337, 339; Matter of Village of Dobbs Ferry v Stanley Ave. Props., Inc., 95 A.D.3d at 1029; Chemical Corp. v Town of E. Hampton, 298 A.D.2d at 420; 627 Smith St. Corp. v Bureau of Waste Disposal of Dept. of Sanitation of City of N.Y., 289 A.D.2d at 473; see also Matter of Saratoga Water Servs. v Saratoga Water Auth., 83 N.Y.2d 205, 213; Arlen of Nanuet v State of New York, 26 N.Y.2d 346, 354; Wolfe v State of New York, 22 N.Y.2d 292, 295).

A property's market value is defined as " the amount which one desiring but not compelled to purchase will pay under ordinary conditions to a seller who desires but is not compelled to sell'" (936 Second Ave. L.P. v Second Corporate Dev. Co., Inc., 10 N.Y.3d 628, 632, quoting Plaza Hotel Assoc. v Wellington Assoc., 37 N.Y.2d 273, 277; see W.T. Grant Co. v Srogi, 52 N.Y.2d 496, 510; Matter of Rochester Urban Renewal Agency [ Patchen Post ], 45 N.Y.2d at 8). "[T]he purchase price set in the course of an arm's length transaction of recent vintage, if not explained away as abnormal in any fashion, is evidence of the highest rank' to determine the true value of the property at that time" (Plaza Hotel Assoc. v Wellington Assoc., 37 N.Y.2d at 277, quoting Matter of F. W. Woolworth Co. v Tax Commn. of City of N.Y., 20 N.Y.2d 561, 565; see W.T. Grant Co. v Srogi, 52 N.Y.2d at 511; Matter of Adler v Nassau County, 52 A.D.3d 506, 507; Matter of Village of Port Chester, 42 A.D.3d 465, 467; Matter of Lovett v Assessor of Town of Islip, 298 A.D.2d 521; Briarcliff Assoc. v Town of Cortlandt, 272 A.D.2d 488, 493; see also Matter of City of New York [ Atl. Improvement Corp. ], 28 N.Y.2d 465, 472).

" In determining an award to an owner of condemned property, the findings must either be within the range of the expert testimony or be supported by other evidence and adequately explained by the court'" (Matter of Board of Commr. of Great Neck Park Dist. of Town of N. Hempstead v Kings Point Hgts., LLC, 74 A.D.3d at 805-806, quoting Matter of City of New York [ Reiss ], 55 N.Y.2d 885, 886; see Matter of Town of E. Hampton [ Windmill II Affordable Hous. Project (9 Parcels) ], 44 A.D.3d 963, 964; Rockland Dev. Assoc. v State of New York, 15 A.D.3d 381, 381-382). The assessment of the suitability of proposed comparable sales submitted in support of competing appraisals is a matter resting within the court's sound discretion (see Matter of Metropolitan Transp. Auth., 86 A.D.3d 314, 326; Chase Manhattan Bank v State of New York, 103 A.D.2d 211, 222; see also Chemical Corp. v Town of E. Hampton, 298 A.D.2d at 422-423). Likewise, "[w]here the trial court's explanation of its award is supported by the evidence, it is entitled to deference and will not be disturbed on appeal" (Matter of Board of Commr. of Great Neck Park Dist. of Town of N. Hempstead v Kings Point Hgts., LLC, 74 A.D.3d at 806; see Chemical Corp. v Town of E. Hampton, 298 A.D.2d at 423; 627 Smith St. Corp. v Bureau of Waste Disposal of Dept. of Sanitation of City of N.Y., 289 A.D.2d at 473-474).

While a court, in determining a property's fair market value, should consider the effect of expected profits from planned development or exploitation of resources on the land's value, it may not award damages based upon projected profits minus projected expenses (see Matter of City of New York [ Atl. Improvement Corp. ], 28 N.Y.2d at 470; Arlen of Nanuet v State of New York, 26 N.Y.2d at 354; Levin v State of New York, 13 N.Y.2d 87, 89-92; Sparkill Realty Corp. v State of New York, 268 NY 192, 196-197; New York Cent. R.R. Co. v Maloney, 234 NY 208, 217-218; Briarcliff Assoc. v Town of Cortlandt, 272 A.D.2d at 493; Matter of Pickerell v Town of Huntington, 272 A.D.2d 331, 332; Belott v State of New York, 26 A.D.2d 749, 750). As the Appellate Division, Third Department, has explained,

"Unquestionably a prospective buyer would not pay for these rights [to extract mineral resources] an amount equal to all he could ever hope to realize in business profits. He would be likely, however, to pay a price based on his appraisal of the present worth of the rights as influenced by expected profits to be realized, taking into account the various business risks ...

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