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In re Wagner & Stoll, LLC

Supreme Court of New York, Third Department

June 13, 2013

In the Matter of WAGNER & STOLL, LLC, Respondent,
v.
CITY OF SCHENECTADY et al., Respondents. SCHENECTADY CITY SCHOOL DISTRICT, Proposed Intervenor- Appellant. (And Another Related Proceeding.)

Calendar Date: April 16, 2013

Whiteman, Osterman & Hanna LLP, Albany (Jonathan P. Nye of counsel), for proposed intervenor-appellant.

Cooper, Erving & Savage LLP, Albany (Paul J. Goldman of Goldman Attorneys PLLC, Albany), for Wagner & Stoll, LLC, respondent, and Schenectady Industrial Properties, LLC.

Before: Rose, J.P., Stein, Spain and McCarthy, JJ.

MEMORANDUM AND ORDER

Stein, J.

Appeal from an order of the Supreme Court (Kramer, J.), entered March 12, 2012 in Schenectady County, which, in two proceedings pursuant to RPTL article 7, among other things, granted petitioner's motion to direct the Schenectady City School District to refund certain payments made by petitioner.

In March 1999, petitioner entered into a payment in lieu of taxes (hereinafter PILOT) agreement with the City of Schenectady Industrial Development Agency with respect to certain real property that was exempt from real property taxes (see General Municipal Law § 874; RPTL 412-a) [1]. Under the PILOT agreement, petitioner was obligated to make annual payments to various taxing entities, including the Schenectady City School District, and the amount of those payments was based upon the assessment of the property as determined by the assessor of respondent City of Schenectady. The PILOT agreement also provided for arbitration of any disputes with regard to the assessed value of the property. In 2009, petitioner filed a grievance with respondent Board of Assessment Review of the City of Schenectady and requested that the assessment on the property be reduced. Following the Board's denial of such request, petitioner commenced these two RPTL article 7 proceedings for the tax years 2009 and 2010, alleging that the assessment was excessive and unequal. Petitioner provided notice of both petitions to the school district (see RPTL 708 [3]). The school district did not move to intervene or otherwise appear in the proceedings at that time (see RPTL 712 [2-a]).

Approximately two years later, in July 2011, Supreme Court issued an order memorializing a stipulation between the City and petitioner to reduce the assessed value of the property. The order further required the City and various other taxing entities, including the school district, to refund to petitioner "excess taxes" paid. The City thereafter refunded to petitioner the excess amount that it was paid pursuant to the PILOT agreement for the years 2009 and 2010. The school district, however, refused to make any refund to petitioner asserting, among other things, that "excess taxes" did not include payments made pursuant to the PILOT agreement.

Consequently, petitioner moved to resettle Supreme Court's July 2011 order to direct the school district to refund the excess payments made by petitioner under the PILOT agreement for the 2009 and 2010 tax years. The school district cross-moved for permission to intervene pursuant to RPTL 712 and to oppose petitioner's motion. Citing the school district's "recalcitrance" in its challenge to the RPTL article 7 petitions, Supreme Court denied the school district's cross motion to intervene [2]. Additionally, the court granted petitioner's motion and directed the school district to refund to petitioner excess payments made under the PILOT agreement for 2009 and 2010. The court also directed the school district to issue a corrected 2011-2012 PILOT bill using the reduced assessment [3]. The school district now appeals.

We affirm. Initially, we are unpersuaded by petitioner's claim that the school district lacks standing to pursue this appeal. The school district is clearly aggrieved by the order on appeal, which not only denied its cross motion to intervene, but also affirmatively required it to make refund payments to petitioner (see CPLR 5511; Petroski v Petroski, 6 A.D.3d 1194, 1195 [2004]; Brady v Ottaway Newspapers, 97 A.D.2d 451, 452 [1983], affd 63 N.Y.2d 1031 [1984]).

Turning to the merits of the appeal, we reject the school district's contention that the PILOT agreement's arbitration clause prevents petitioner from seeking a refund of payments made pursuant to the PILOT agreement in the context of an RPTL article 7 proceeding. It is undisputed that the school district was not a party to the PILOT agreement and the City did not assert any challenge to petitioner's use of an RPTL article 7 proceeding to challenge the assessment of the property. As a result, the arbitration clause was waived (compare Matter of Birchwood Vil. LP v Assessor of the City of Kingston, 94 A.D.3d 1374, 1375 [2012]).

The school district's primary argument on appeal is that the instant proceedings sought a refund of excess taxes — not payments made under the PILOT agreement — and, as a result, the school district had no obligation to refund any payments it received from petitioner. Indeed, the school district contends

that such a refund could not be compelled in an RPTL article 7 proceeding. The school district also argues that, inasmuch as the RPTL article 7 petitions did not reference the PILOT agreement or a refund of payments made thereunder, the school district did not receive adequate notice of petitioner's intent to seek a refund of the excess payments made under the PILOT agreement. Supreme Court rejected the school district's claim of lack of notice and also rejected as untimely its challenge to petitioner's use of an RPTL article 7 proceeding to seek a PILOT refund. We concur in both respects.

The school district received notice of the RPTL article 7 petitions, which expressly challenged the assessed value of the property and sought return of excess money paid in connection therewith. While the petitions did not specify that petitioner sought return of excess payments made under the PILOT agreement — as opposed to tax payments — the school district was aware that the subject property was exempt from taxation and that payments were made in connection with the PILOT agreement based on the property's assessed value. The school district was in possession of a copy of the PILOT agreement and had computed its PILOT bill annually. Simply put, we are unconvinced by the school district's argument that the RPTL article 7 petitions were not sufficient to advise the school district that petitioner was challenging the basis on which the payments due under the PILOT agreement were being calculated or that petitioner was seeking a refund for any excess payments made under such agreement. ...


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