DCH Auto v. Town of Mamaroneck
| Decision Date | 16 June 2022 |
| Docket Number | 55 |
| Citation | 38 N.Y.3d 278,192 N.E.3d 1141,172 N.Y.S.3d 662 |
| Parties | In the Matter of DCH AUTO as Tenant Obligated to Pay Taxes, et al., Appellants, v. TOWN OF MAMARONECK, a Municipal Corporation, et al., Respondents. |
| Court | New York Court of Appeals Court of Appeals |
Griffin, Coogan, Sulzer & Horgan, P.C., Bronxville (Matthew S. Clifford, William E. Sulzer and Kevin M. Brady, Jr. of counsel), for appellants.
William Maker, Jr., Mamaroneck, for Town of Mamaroneck and others, respondents.
McCullough, Goldberger & Staudt, LLP, White Plains (Kevin E. Staudt of counsel), for Village of Mamaroneck and others, respondents.
Koeppel Martone & Leistman, L.L.C., Mineola (Donald F. Leistman, Michael P. Guerriero and Jason M. Penighetti of counsel), for CVS Albany LLC and others, amici curiae.
Forchelli Deegan Terrana LLP, Uniondale (Peter Basil Skelos, John V. Terrana, Nathan R. Jones and Douglas W. Atkins of counsel), for International Council of Shopping Centers, Inc., amicus curiae.
Cronin & Cronin Law Firm, PLLC, Mineola (Sean M. Cronin of counsel), for Stop & Shop Supermarket Company, LLC, and others, amici curiae.Cronin & Cronin Law Firm, PLLC, Mineola (Sean M. Cronin of counsel), for Stop & Shop Supermarket Company, LLC, and others, amici curiae.
Herman Katz Cangemi Wilkes & Clyne, LLP, Melville (Kevin M. Clyne of counsel), for Wakefern Food Corp., amicus curiae.
New York State School Boards Association, Inc., Latham (Jay Worona and Jeffrey Mongelli of counsel), for New York State School Boards Association, Inc., amicus curiae.
Association of Towns of the State of New York, Albany (Sarah Brancatella of counsel), and New York State Conference of Mayors and Municipal Officials, Albany (Rebecca Ruscito of counsel), for Association of Towns of the State of New York and another, amici curiae.
DCH Auto leased a parcel of real property located in Mamaroneck, New York. DCH's lease with the property's owner is a "net lease," which means that DCH must pay, in addition to rent, all the real estate taxes associated with the property. Starting in 2009, DCH believed that certain tax assessments for the property were too high, so it challenged those tax assessments by filing grievance complaints with the local board of assessment review. After the board reviewed and denied the challenges to the assessments, DCH filed petitions for judicial review. Supreme Court dismissed DCH's petitions, holding that only an owner —and not a net lessee—may file the initial grievance complaints pursuant to RPTL 524(3) and that the failure of the owner to file the initial grievance precluded judicial review of the board's determinations. The Appellate Division affirmed. The question we address is: does a grievance complaint filed with the assessor or board of assessment review at the administrative level by a net lessee who is contractually obligated to pay real estate taxes on the subject property satisfy RPTL 524(3) such that the net lessee may properly commence an article 7 proceeding upon rejection of its grievance? We answer in the affirmative and reverse.
DCH Auto, now known as DCH Investments Inc. (New York) (together, DCH), operates a car dealership in Mamaroneck. In 2007, DCH entered into a 20–year net lease with the nonparty owner, 700 Waverly Avenue Corp. (Owner), of a parcel of real property located at 700 Waverly Avenue in the Village of Mamaroneck (Village), which is located within the Town of Mamaroneck (Town) (together, Mamaroneck).
The lease obligates DCH to pay "all ad valorem real estate taxes or other taxes in the nature thereof ... levied or imposed against or with respect to" the subject property during the lease term. The lease also provides that DCH "shall have the right, at its sole cost and expense, to contest the amount or validity, in whole or in part, of any [tax] relating to the [subject property] by appropriate proceedings."
By administrative complaints pursuant to RPTL 524(3), DCH timely challenged eight tax assessments of the subject property: the Town's tax assessments for five tax years (2009, 2010, 2011, 2013, and 2014), and the Village's tax assessments for three tax years (2010, 2011, and 2013). DCH filed the 2014 complaint against the Town in Owner's name but filed all the other complaints in its own name.
At the time DCH filed its grievances, the Town's website stated that "[a]ny person aggrieved by an assessment," including a "tenant who is required to pay the real estate taxes pursuant to a lease" "may file a complaint." The Town's website also directed taxpayers to the website of the New York State Department of Taxation and Finance's Office of Real Property Tax Services (ORPTS), which similarly instructed that "[a]ny person who pays property taxes" including "tenants who are required to pay property taxes pursuant to a lease or written agreement" may file an assessment challenge. That same instruction is still on ORPTS's website today (N.Y. St Dept of Taxation & Fin, Off of Real Prop Tax Servs, Contesting Your Assessment in New York State 2 [Feb.2012], https://www.tax.ny.gov/pdf/publications/orpts/grievancebooklet.pdf [last accessed June 9, 2022]).
For each complaint challenging the Town's assessments, the Town Board of Assessment Review accepted the grievances, considered them, and confirmed the Town's assessments. The Town Board did not dismiss the complaints or indicate that the complaints were in any way defective. Similarly, the Village Board accepted and considered the complaints and confirmed the Village's assessments.
Once DCH received the Town and Village Board determinations, it timely filed judicial petitions challenging the Town and Village assessments pursuant to RPTL article 7. After procedural history not relevant here, in September 2016, the Town and Village jointly moved to dismiss each proceeding "for lack of subject matter jurisdiction due to [DCH]’s failure to satisfy a condition precedent for challenging the assessments"—namely "[t]he failure of the [o]wner to submit [the] RP–524 [c]omplaints." In opposition, DCH argued that the complaints were properly filed because RPTL 524(3) did not provide that only an "owner" may file a complaint and that the plain text of RPTL 524(3) and our case law "recognize the right of a non-owner tenant who is responsible for paying the real property taxes to seek both administrative and judicial review of the assessment" (Rec at 304–312). DCH alternatively argued that the purported defect was, at most, "technical"; that the Town and Village were not prejudiced by it; and the defect was not jurisdictional (Rec at 313–320).
Based on joint stipulated facts and submitted documentary evidence, Supreme Court granted the Town and Village's joint motion and dismissed the petitions. The court held that it lacked subject matter jurisdiction to review the assessments because, although DCH was "[u]ndisputedly ... ‘aggrieved’ by the decisions of the Boards," it "did not satisfy a condition precedent to the commencement of these proceedings" because the owner did not file the complaints pursuant to RPTL 524(3). Finally, the court held that "the failure of the owner to raise the RP–524 Complaint in the administrative process is a fundamental error which the courts cannot cure because of a lack of subject matter jurisdiction." The Appellate Division affirmed ( 178 A.D.3d 823, 111 N.Y.S.3d 553 [2d Dept. 2019] ). It held that DCH "failed to satisfy a condition precedent to the commencement of an RPTL article 7 proceeding since it was neither the owner, nor identified in the complaints as an agent of the owner" ( id. at 825, 111 N.Y.S.3d 553 ). We granted leave to appeal ( 37 N.Y.3d 903, 2021 WL 2250393 [2021] ).
The Real Property Tax Law (RPTL) sets out a two-step process for the review of property tax assessments. First, pursuant to RPTL 524, "a complainant who is dissatisfied with a property assessment may seek administrative review by filing a grievance complaint with the assessor or the board of assessment review" ( Matter of Larchmont Pancake House v. Board of Assessors, 33 N.Y.3d 228, 235, 100 N.Y.S.3d 680, 124 N.E.3d 230 [2019] ). Second, once "the board of assessment review has made a determination, any ‘aggrieved party’ may seek judicial review of the assessment pursuant to RPTL article 7" ( id. ).
This case concerns the statutory language that governs the first step. The question presented on this appeal is whether the initial administrative complaints filed by DCH fail to meet the requirements of RPTL 524(3) because DCH is not the owner of the property at issue. Specifically, the parties dispute the meaning of the provision requiring that the initial complaint be made "by the person whose property is assessed" ( RPTL 524[3] ). RPTL 524(3), as relevant, provides:
(id. [emphasis added]).
In contrast, RPTL 704(1) —which governs step two, filing a petition for judicial review of the assessment pursuant to RPTL article 7—provides:
"Any person claiming to be aggrieved by any assessment of real property upon any assessment roll may commence a proceeding under this article by filing a petition described in s...
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