423 South Salina Street, Inc. v. City of Syracuse

• Decision Date: 20 November 1986
• Citation: 503 N.E.2d 63,68 N.Y.2d 474,510 N.Y.S.2d 507
• Parties: , 503 N.E.2d 63 423 SOUTH SALINA STREET, INC., Appellant, v. CITY OF SYRACUSE et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 507

510 N.Y.S.2d 507

68 N.Y.2d 474, 503 N.E.2d 63

423 SOUTH SALINA STREET, INC., Appellant, v. CITY OF SYRACUSE et al., Respondents.

Court of Appeals of New York.

Nov. 20, 1986.

Appeal Dismissed and Certiorari Denied April 20, 1987. See 107 S.Ct. 1880.

[503 N.E.2d 64] Justin L. Vigdor, James S. Grossman and David M. Dollinger, Rochester, for appellant [503 N.E.2d 65] C. Frank Harrigan, Corp. Counsel (James L. Gelormini, Syracuse of counsel), for City of Syracuse, respondent

[68 N.Y.2d 479] William L. Allen, Jr., Syracuse for Metropolitan Development Foundation of Central New York, Inc., and another, respondents.

OPINION OF THE COURT

MEYER, Judge.

Although plaintiff, 423 South Salina Street, Inc., lacked standing necessary to enjoin the City of Syracuse (City), from transferring real property taken by the City for nonpayment of taxes, it has standing to maintain an action pursuant to the Federal Civil Rights Act of 1871 (42 U.S.C. § 1983) for damages resulting from the City's alleged misuse of its taxing power. Moreover, its complaint states a cause of action under that section which, being governed as to limitations by CPLR 214(5), was timely brought. The action is, however, barred by plaintiff's failure to serve a notice of claim as required by General Municipal Law § 50-i, which failure likewise barred any claim based upon violation of the New York State Constitution. The order of the Appellate Division should, therefore, be affirmed, with costs.

I

In September 1976, plaintiff purchased from the University of Rochester (University), property which the University had leased to the W.T. Grant Company in 1944. Grant constructed a five-story building on the property which it then sold to and leased back from the University. The lease required Grant to pay an annual rent of $77,322.32 and all taxes, utility charges, insurance and maintenance costs.

The City assessed the property for each year since 1964 at $1,135,700. Assessment review proceedings for the years 1971-1976 were begun, but Grant's tenancy ended in 1976 when it went bankrupt and vacated the premises.

The University then sold the property to plaintiff for $25,000, plaintiff agreeing to assume liability for the unpaid 1976 taxes, penalties and interest on the property, which brought the total consideration to $175,774.32. Plaintiff, however, neither paid those taxes, nor the taxes for ensuing years 1977-1979, nor when tax sales were conducted for the 1976-1978 arrearages did it seek to redeem the property within a year after the sale as permitted by Real Property Tax Law § 1010. On April 9, 1979, the City of Syracuse took a tax deed to the property, but in the following month plaintiff obtained a preliminary injunction restraining the City from transferring title to the property until completion of the 1976-1979 assessment review proceeding.

That proceeding ended on April 9, 1981 with our affirmance of the Appellate Division's modification of the property assessments for the years 1971-1976, in an opinion which noted the "aggravated pattern of misuse of the taxing power" by the City (Grant Co. v. Srogi, 52 N.Y.2d 496, 518, 438 N.Y.S.2d 761, 420 N.E.2d 953). The order affirming the grant of the preliminary injunction was, however, reversed. The opinion held that there is equitable power to enjoin collection of a tax when there is a clear showing of intentional overassessment tantamount to fraud and the taxpayer was without relief from the imminent deprivation of his property. It concluded, however, that while Grant may have been entitled to such an injunction, plaintiff, by reason of its failure to pay the 1976-1979 taxes, lacked "equitable standing to assert the aggravated pattern of tax abuse to which its predecessor in interest was subject as the basis for injunctive relief" (52 N.Y.2d, at p. 518, 438 N.Y.S.2d 761, 420 N.E.2d 953).

On April 2, 1982 plaintiff commenced a section 1983 action in Federal court as to which a lis pendens was recorded. That action was, however, dismissed on grounds of comity (566 F.Supp. 484) and that dismissal was affirmed by the Second Circuit (724 F.2d 26) on December 14, 1983. Plaintiff then commenced the present action on an essentially identical complaint, well within the six-month period allowed by CPLR 205(a) (Gross v. Newburger Loeb & Co., 85 A.D.2d 709, 445 N.Y.S.2d 830; 1 Weinstein-Korn-Miller, N.Y.Civ.Prac. p 205.09) and promptly thereafter recorded a lis pendens as to it. On November 22, 1983 the City conveyed the property to defendant Metropolitan Development Foundation and on December 19, 1983 the Foundation conveyed the property to defendant Amlea (New York), Inc.

All three defendants moved to dismiss the complaint, the City upon the grounds that the plaintiff lacked standing, that the complaint failed to state a cause of action and that the action was barred by plaintiff's failure to serve a notice of claim within the applicable Statute of Limitations; defendants Metropolitan and Amlea on the grounds that the complaint stated no cause of action against them and that any action was barred by limitations. Special Term dismissed the complaint holding the action barred as to the City by plaintiff's failure to comply with the notice of claim provisions of the City Charter and by the one-year 90-day limitation provision of General Municipal Law § 50-i(1)(c), and as to defendants Foundation and Amlea that no cause of action was stated against them. On appeal to the Appellate Division that court affirmed, concluding, in light of our prior holding in Grant Co. v. Srogi 52 N.Y.2d, at p. 518, 438 N.Y.S.2d 761, 420 N.E.2d 953, supra, that plaintiff "was not the one subjected to this unlawful conduct", that the City had not violated plaintiff's civil rights and that, therefore, the complaint failed to state a cause of action (112 A.D.2d 745, 492 N.Y.S.2d 241). Plaintiff's appeal to this court was dismissed on the ground that no substantial constitutional question was directly involved (66 N.Y.2d 914, 498 N.Y.S.2d 1026, 489 N.E.2d 772), but its motion for leave to appeal, thereafter made, was granted (67 N.Y.2d 605, 501 N.Y.S.2d 1024, 492 N.E.2d 795).

Before us plaintiff argues that it has standing to maintain the action, that the complaint states a cause of action, that the applicable Statute of Limitations is three years, that the notice of claim provision is inapplicable but in any event was substantially complied with, and that the courts below abused their discretion in failing to grant it leave to replead its State constitutional claims. We conclude that plaintiff has standing to seek damages from the City, but not against the Foundation and Amlea, that the complaint states a cause of action to which the three-year statute applies, but that both the present action and any action that could be pleaded under the State Constitution are barred by plaintiff's failure to give the required notice of claim. ¹ We, therefore, affirm.

II

The Appellate Division erred in extending our holding in Grant Co. v. Srogi (supra) beyond the facts on which it was based (see, Preston Corp. v. Fabrication Enters., 68 N.Y.2d 397, 509 N.Y.S.2d 520, 502 N.E.2d 197). As the language quoted above from the Grant opinion makes clear, we held only that plaintiff "lacks equitable standing to assert the aggravated pattern of tax abuse to which its predecessor in interest was subject as the basis for injunctive relief." But as the discussion preceding that conclusion evidences, the factual basis of the claimed abuse of the taxing power set forth in the papers before the court was "quite compelling" (52 N.Y.2d, at p. 517, 438 N.Y.S.2d 761, 420 N.E.2d 953) and might have been sufficient to justify restraining the City from transferring the Grant property, notwithstanding that restraints on enforcement of revenue collection are, and must be if government is to continue to function, the exception rather than the rule. Grant of the injunction was reversed not alone because plaintiff's predecessor, rather than plaintiff, had been "subjected to this unlawful conduct" (52 N.Y.2d, at p. 518, 438 N.Y.S.2d 761, 420 N.E.2d 953), but also because plaintiff, having purchased the property with the understanding that it would assume all tax liability then owing, had never paid the taxes. Thus, it was not a lack of likelihood of success on the merits, but a balancing of the equities, which favored the City rather than plaintiff, that was the basis for the conclusion that plaintiff was without standing to obtain equitable relief.

It was not, however, a holding that plaintiff had no standing to sue for damages or had not sufficiently stated a cause of action for damages. Notwithstanding CPLR 103(a) and its predecessor provisions, "the distinctions between law and equity * * * are still very much with us" (McLaughlin, Practice Commentaries, McKinney's Cons.Laws of N.Y., Book 7B, CPLR 103, p. 14). A section 1983 plaintiff who, because he has not demonstrated irreparable injury is not entitled to injunctive relief, is not thereby barred from recovery of damages in the action (City of Los Angeles v. Lyons, 461 U.S. 95, 111-113, 103 S.Ct. 1660, 1670-71, 75 L.Ed.2d 675). Likewise, as a matter of State procedure we have long recognized that " 'a court of equity * * * may order a sum of money to be paid to the plaintiff and give him a personal judgment therefor when that form of relief becomes necessary in order to prevent a failure of justice and when it is for any reason impracticable to grant the specific relief demanded' " (Doyle v. Allstate Ins. Co., 1 N.Y.2d 439, 443, 154 N.Y.S.2d 10, 136 N.E.2d 484; Ungewitter v. Toch, 26 N.Y.2d 687, 308 N.Y.S.2d 858, 257 N.E.2d 40, affg. 31 A.D.2d 583, 294 N.Y.S.2d 1013; Kaminsky v. Kahn, 23 A.D.2d 231, 237, 259 N.Y.S.2d 716).

Thus, plaintiff has standing to maintain its cause of action for damages. It does not, however, have standing to obtain equitable relief in the form of vacatur of the deed taken...