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In re Eagle Creek Land Resources, LLC

Supreme Court of New York, Third Department

April 13, 2017

In the Matter of the Acquisition by EAGLE CREEK LAND RESOURCES, LLC, et al. WOODSTONE LAKE DEVELOPMENT, LLC, Appellant; EAGLE CREEK LAND RESOURCES, LLC, et al., Respondents. (And Another Related Proceeding.)

          Calendar Date: February 16, 2017

          Richard A. Stoloff, PLLC, Monticello (Richard A. Stoloff of counsel), for appellant.

          Barclay Damon, LLP, Buffalo (Mark R. McNamara of counsel), for respondents.

          Before: Peters, P.J., Lynch, Rose, Devine and Mulvey, JJ.

          MEMORANDUM AND ORDER

          Peters, P.J.

         Appeals (1) from an order of the Supreme Court (McGuire, J.), entered December 14, 2015 in Sullivan County, which, in a proceeding pursuant to EDPL article 5, determined the compensation due claimant as a result of the acquisition of an easement on real property, and (2) from a judgment entered thereon.

         The facts underlying this property dispute are set forth in greater detail in this Court's related decision in Matter of Eagle Cr. Land Resources, LLC v Woodstone Lake Dev., LLC (108 A.D.3d 71');">108 A.D.3d 71 [2013]). Respondents are the owners and operators of a hydroelectric facility known as the Swinging Bridge Project (hereinafter the project) under a license from the Federal Energy Regulatory Commission (hereinafter FERC). The project encompasses three reservoirs, including the Toronto Reservoir, located in the Town of Bethel, Sullivan County. As one of the conditions of the FERC license, the owner-operator of the project is required to maintain a public recreational area on the southeast bank of the Toronto Reservoir consisting of a boat launch and a 15-car parking area. Respondents' predecessor in interest, AER NY-GEN, LLC (hereinafter AER), provided access to the recreational area via a utility access easement (hereinafter UAE).

         Claimant, Woodstone Lake Development, LLC, acquired the property surrounding the Toronto Reservoir in 2000, following which purchase the public continued to use roads that traversed the property to access the recreational area. In the meantime, claimant developed the property into an exclusive, private, gated residential community called Chapin Estate. Disputes arose regarding the public's use of the private roads and, ultimately, claimant began to block the public's access to the recreational area across its property.

         In 2010, while the issue of the public's access through claimant's property was still being disputed, AER filed an application to transfer its license to operate the project to respondents. That application was dismissed on the ground that AER had not met the requirement of the license that it ensure public access to the recreational area. As a result, AER commenced an EDPL article 4 proceeding seeking to acquire by condemnation a public access easement (hereinafter PAE) to the recreational area across the subject roads through claimant's property. Supreme Court (Melkonian, J.) granted the petition and directed AER to, among other things, file an undertaking in the amount of $402, 000. On appeal, this Court affirmed the taking, as well as the amount of the bond (id. at 80). The resulting PAE is a 50-foot-wide limited [1] easement over 1.8 miles of existing private gravel roads abutting 22 parcels, encompassing 36 properties, owned by claimant.

         In 2012, claimant and Chapin Estate Homeowners Association each commenced a proceeding pursuant to EDPL article 5 by filing a claim for additional compensation for the taking. Following a trial, as well as a physical inspection of the PAE and the property through which it passes, Supreme Court (McGuire, J.) ordered that respondents pay compensation to claimant in the amount of $297, 000 with interest as of the date of the taking, as determined by respondents' appraiser. Claimant appeals.

         When private property is taken for public use, the condemnor must "compensate the owner so that he [or she] 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 [2008] [internal quotation marks and citation omitted]; see U.S. Const, 5th Amend; NY Const, art I, § 7 [a]). The award "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 Queens W. Dev. Corp. [Nixbot Realty Assoc.], 139 A.D.3d 863, 865 [2016] [internal quotation marks and citation omitted], lv denied 28 N.Y.3d 901');">28 N.Y.3d 901 [2016]; see Matter of County of Suffolk [Firester], 37 N.Y.2d 649, 652 [1975]). Fair market value of real property is "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" (Matter of Board of Water Supply of City of N.Y., 277 NY 452, 457 [1938] [internal quotation marks and citation omitted]; see Matter of Metropolitan Transp. Auth. [Longridge Assoc., L.P.], 122 A.D.3d 856, 857 [2014]).

         "Where, as here, there is a partial taking of real 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" (Matter of County of Orange v Monroe Bakertown Rd. Realty, Inc., 130 A.D.3d 823, 825 [2015] [internal quotation marks and citation omitted]), plus "consequential damages, which consist of the diminution in value of the owner's remaining land as a result of the taking or the use of the property taken" (Matter of State of New York [KKS Props., LLC], 119 A.D.3d 1033, 1034 [2014]). "Consequential damages are measured by the difference between the before and after values, less the value of the land and improvements appropriated, " and "[t]he burden of proof is on the claimant to establish indirect damages and to furnish a basis upon which a reasonable estimate of those damages can be made" (Lerner Pavlick Realty v State of New York, 98 A.D.3d 567, 568 [2012]; see Rose Park Place, Inc. v State of New York, 120 A.D.3d 8, 10 [2014]). In determining a damages award, "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 State of New York [KKS Props., LLC], 119 A.D.3d at 1037 [internal quotation marks, brackets and citation omitted]; see Matter of City of New York [Reiss], 55 N.Y.2d 885, 886 [1982]). Although this Court's authority to review findings of fact made after a nonjury trial in condemnation cases is as broad as that of the trial court, "taking into account that in a close case the trial court had the advantage of seeing and hearing the witnesses, where 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 730 Equity Corp. v New York State Urban Dev. Corp., 142 A.D.3d 1087, 1089 [2016] [internal quotation marks, brackets and citations omitted]).

         Preliminarily, we note that the PAE travels along existing roads within Chapin Estate beginning at the intersection of Pine Grove Road and Moscoe Road, runs along Moscoe Road for approximately one mile, and then turns left and proceeds down Toronto Dam Road for approximately 0.8 mile to the public recreational area. It is undisputed that the Moscoe Road portion of the PAE had already been burdened by the UAE pre-condemnation, which provided the public with the right to use that route to access the recreational area, and that both segments of the PAE were also subject to the cross easements by the 480 current and future property owners of Chapin Estate, including their families and guests.

         At trial, the parties offered the testimony and reports of their expert appraisers, both of whom utilized a comparable sales methodology to valuate the subject properties and agreed that the highest and best use of the property was for residential subdivision development [2]. The report of claimant's expert, Daniel Sciannameo, included an "extraordinary assumption" [3] that the pre-taking public access along Moscoe Road was limited by the nature of the road. Sciannameo testified that he considered the environment of Chapin Estate in his pre-condemnation valuation as a "private, gated, exclusive community, " the "exclusive nature [of] which was really created by the fact of being gated." According to his analysis, the pre-condemnation value of all of the 36 affected properties was $6, 060, 000. Sciannameo further testified that the properties used for the pre-condemnation valuation would no longer be relevant for a post-condemnation appraisal, as they would no longer be contained within a gated community and the loss of exclusivity would significantly impact the desirability of such properties. Accordingly, Sciannameo utilized relatively recent ...


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