Better World Real Estate Grp. v.

Decision Date13 August 2014
Citation992 N.Y.S.2d 247,2014 N.Y. Slip Op. 05786,122 A.D.3d 27
PartiesIn the Matter of Better WORLD REAL ESTATE GROUP, appellant, v. NEW YORK CITY DEPARTMENT OF FINANCE, et al., respondents.
CourtNew York Supreme Court — Appellate Division


Schroder & Strom, LLP, Mineola, N.Y. (Michael J. Scarpa of counsel), for appellant.

Zachary W. Carter, Corporation Counsel, New York, N.Y. (Vincent D'Orazio, Steven Tishco, and Brooke Zacker of counsel), for respondents.



In January 2008, while the petitioner was in the midst of building a new two-family house and garage on its property in Queens, the New York City Department of Finance (hereinafter the DOF) classified the property as a three-family house with one store or office. As a result of this apparently mistaken classification, the petitioner's property tax bill increased more than $50,000 for the tax year 2008/2009. Although the proper method for challenging an excessive real property tax assessment is ordinarily the commencement of a tax certiorari proceeding pursuant to Real Property Tax Law article 7, Administrative Code of the City of New York § 11–206 provides taxpayers with an alternative administrative method for seeking correction of a limited class of errors that result in overassessments. This provision authorizes the DOF to correct a real property tax assessment that is based upon a clerical error or an error in description. The primary issues raised on this appeal are whether the petitioner's claim that the DOF mistakenly classified its property for the tax year 2008/2009 constituted a clerical error or an error in description within the scope of Administrative Code § 11–206, and whether the petitioner's challenge to the DOF's determination refusing to correct the assessment for the tax year 2008/2009 is time-barred. We hold that the alleged mistaken classification of the petitioner's property constituted a clerical error or error in description and, thus, the petitioner has stated a valid cause of action to review the DOF's determination that is not time-barred.

The property at issue on this appeal is located in Jamaica, Queens. When the petitioner, Better World Real Estate Group, purchased the property in 2003, it was improved with a one-family house and frame garage. The petitioner obtained a permit to demolish the existing structures in 2005, and in February 2006 the petitioner began construction of a new two-family house and garage.

During the tax year 2007/2008, the subject property was classified as Class 1B, V0, which applies to properties improved with a one- to three-family residential structure. The subject property had an estimated market value of $153,000 during the tax year 2007/2008, and the assessment ratio for Class 1 properties at that time was 6% of full market value. Construction of the new two-family house and garage was not completed until November 2008.

Meanwhile, in January 2008, while the construction was still in progress, the DOF reclassified the property for the tax year 2008/2009 as Class 2A, Building Code: “S3”; “Description: primarily three family with one store or office.” Class 2 properties are defined as all other residential properties which are not designated as Class 1, save for hotels, motels, and other similar commercial property ( seeRPTL 1802[1] ). The assessment ratio for Class 2 property at the time was 45% of full market value. The relevant “Notice of Property Value” for the tax year 2008/2009, dated January 15, 2008, stated that the property consisted of four units, “3 Residential, 1 Non–Residential.” The “Notice of Property Value” further stated that, although the property had a full market value of $1,497,000, the real property tax was actually based on an adjusted value of $1,197,566, and that the property had a taxable value of $538,905, or 45% of $1,197,566. According to the petitioner, as a result of the DOF's error in the subject property's classification, its 2008/2009 tax bill increased from approximately $8,300 to more than $60,000.

In January 2009, without any action by the petitioner, the DOF reclassified the subject property for the tax year 2009/2010 as a Class 1, 2–family residential property. The “Notice of Property Value” stated that the property had a full market value of $810,000 and a taxable value of $48,600. The DOF did not, however, correct the classification for the tax year 2008/2009, nor did the DOF cancel any of the taxes due on the subject property for that tax year.

In a letter dated March 17, 2011, the petitioner informed the DOF that it was seeking “a reclassification of the [subject] parcel for the 2008/2009 tax year and classification of the 2008/2009 tax arrears levied against the parcel which represent excess and illegal taxes billed as a result of misclassification of the parcel.” The petitioner explained that the subject property was never improved with a three-unit residence with a single commercial structure. The petitioner stated that, while the DOF correctly classified the subject property for the tax year 2009/2010, the DOF “failed to retroactively correct the misclassification on the 2008/09 tax assessment by correction of error as provided by § 11–206 of the New York City [Code] and cancel the excess taxes and interest on the unpaid taxes.” The petitioner argued that the 2008/2009 tax levy was a “windfall” to the City which could not be justified “under any method of assessment or legal theory.”

In a letter dated March 24, 2011, the DOF, in effect, denied the petitioner's request to correct the allegedly mistaken classification of the subject property for the 2008/2009 tax year, taking the position that it was not a clerical error that could be corrected pursuant to Administrative Code § 11–206:

“Your letter requests that the [DOF] reduce the market and assessed values of this property for the fiscal year 2008/2009. The [DOF] has limited authority to change the values on prior assessment rolls. The authority is limited to clerical errors pursuant to Administrative Code § 11–206. ‘Clerical error’ is limited to transcription errors and errors in arithmetic and mathematics. The [DOF] is not authorized to act when the property owner maintains that the property is overvalued. Such issues are resolved upon review by the Tax Commissioner and/or the courts.

“Consequently, [the DOF] will not take action on the property's assessment of building valuation for the 2008/2009 tax year” (emphasis added).

On July 13, 2011, the petitioner commenced the instant proceeding pursuant to CPLR article 78, primarily seeking to review the determination of the DOF, in effect, denying its application pursuant to Administrative Code § 11–206 to correct an error of description with respect to the subject property on the 2008/2009 final assessment roll, to reduce the assessed value of the property for the tax year 2008/2009, and to issue a revised 2008/2009 tax bill in accordance with those changes. The petition alleges, inter alia, that the DOF erroneously described the subject property during the tax year 2008/2009, that the DOF's erroneous assessment for that tax year should be corrected pursuant to Administrative Code § 11–206, and that the Supreme Court should correct the DOF's error in the interest of justice.

Prior to interposing an answer ( seeCPLR 7804[f] ), the DOF and the City of New York (hereinafter together the respondents) moved pursuant to CPLR 3211(a)(5) and (7) to dismiss the petition on the grounds that it failed to state a cause of action and was time-barred. In support of their position that the petition failed to state a cause of action, the respondents argued that claims of property misclassification and overassessment could only be reviewed in a RPTL article 7 proceeding, not by way of a proceeding seeking a correction pursuant to Administrative Code § 11–206. Accordingly, the respondents maintained that RPTL article 7 provided the petitioner's exclusive remedy for the relief sought. In the alternative, the respondents contended that, even had the petitioner commenced a proceeding pursuant to RPTL article 7, the petitioner failed to file, as a condition precedent, an applicationfor correction of an assessment with the Tax Commission by March 1 of the tax year for which the assessment was to be reviewed ( see N.Y. City Charter § 163[f]; 1 RCNY 37–01).

The respondents also noted that the petitioner did not seek to challenge the 2008/2009 assessment of the subject property until more than three years after the final assessment was recorded. The respondents then argued that the instant proceeding was time-barred because the 2008/2009 tax assessment became final on May 25, 2008 ( see N.Y. City Charter § 165), and the proceeding was not commenced until July 13, 2011. Lastly, the respondents argued that, even if a CPLR article 78 proceeding was the appropriate method for seeking reclassification of the subject property and the proceeding was not time-barred, any reclassification could not be applied retroactively.

In an order and judgment dated December 29, 2011, the Supreme Court granted the respondents' motion, and dismissed the proceeding. The Supreme Court agreed with the respondents' contention that RPTL article 7 was the petitioner's exclusive remedy. Additionally, the Supreme Court held that the CPLR article 78 proceeding was time-barred because it was commenced more than three years after the tax assessment became final. The petitioner appeals.

On appeal, the petitioner argues that the Supreme Court erred in granting the respondents' motion to dismiss the petition because the DOF committed a clerical error in the physical description of the subject property, which resulted in an erroneous tax classification and tax bill. The petitioner maintains that such an error is correctable under Administrative Code § 11–206. The petitioner further...

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