FMC Corp. (Peroxygen Chemicals Div.) v. Unmack

• Decision Date: 07 July 1998
• Docket Number: No. 2,No. 1,1,2
• Citation: 92 N.Y.2d 179,699 N.E.2d 893,677 N.Y.S.2d 269
• Parties: , 699 N.E.2d 893, 1998 N.Y. Slip Op. 6626 In the Matter of FMC CORPORATION (PEROXYGEN CHEMICALS DIVISION), Appellant, v. David UNMACK, as Assessor of Town of Tonawanda, et al., Respondents, et al., Intervenor-Respondent. In the Matter of SOUTH SLOPE HOLDING CORP. et al., Appellants, v. BOARD OF ASSESSMENT REVIEW OF the TOWN OF JERUSALEM et al., Respondents. (Appeal) In the Matter of SOUTH SLOPE HOLDING CORP. et al., Appellants, v. BOARD OF ASSESSMENT REVIEW OF the TOWN OF JERUSALEM et al., Respondents. (Appeal)
• Court: New York Court of Appeals Court of Appeals

Page 269

677 N.Y.S.2d 269

92 N.Y.2d 179, 699 N.E.2d 893, 1998

N.Y. Slip Op. 6626

In the Matter of FMC CORPORATION (PEROXYGEN CHEMICALS

DIVISION), Appellant, v. David UNMACK, as Assessor of Town of Tonawanda, et al.,

Respondents, et al., Intervenor-Respondent.

In the Matter of SOUTH SLOPE HOLDING CORP. et al., Appellants, v. BOARD OF ASSESSMENT REVIEW OF the TOWN OF JERUSALEM et al.,

Respondents. (Appeal No. 1.)

In the Matter of SOUTH SLOPE HOLDING CORP. et al., Appellants, v. BOARD OF ASSESSMENT REVIEW OF the TOWN OF JERUSALEM et al.,

Respondents. (Appeal No. 2.)

Court of Appeals of New York.

July 7, 1998.

Gates & Adams, Rochester (Douglas S. Gates, of counsel), for appellant in the first above-entitled proceeding.

Brown & Kelly, L.L.P., Buffalo (Lisa T. Sofferin and Karen Cook Serotte, of counsel), for David Unmack and another, respondents in the first above-entitled proceeding.

Michael D. Hess, Corporation Counsel of New York City (Paul T. Rephen, Elizabeth Dvorkin, Robert P. Carver and Leslie Wright, of counsel), for City of New York, amicus curiae in the first above-entitled proceeding.

Woods, Oviatt, Gilman, Sturman & Clarke, L.L.P., Rochester (William G. Bauer, of counsel), for Institute for Professionals in Taxation, amicus curiae in the first above-entitled proceeding.

Sutton, DeLeeuw, Clark & Darcy, Pittsford (John J. Darcy, of counsel), for appellants in the second and third above-entitled proceedings.

Underberg & Kessler, L.L.P., Rochester (Paul F. Keneally and Sharon P. Stiller, of counsel), for respondents in the second and third above-entitled proceedings.

OPINION OF THE COURT

SMITH, Judge.

In these appeals, petitioners commenced proceedings under article 7 of the Real Property Tax Law to challenge tax assessments made upon their properties. The primary issue in both cases is whether petitioners have proffered sufficient evidence to rebut the presumption of validity of the tax assessments. We conclude that in both cases, petitioners have met their burden of production and have brought before the court substantial evidence that a valid dispute exists concerning the current valuation of their properties. Therefore, in both cases, the orders of the Appellate Division should be reversed.

I. Matter of FMC Corp. v. Unmack

Petitioner, Food Machinery and Chemical Corp. (FMC), sought review of property tax assessments for the years 1992 through 1994. The subject property was an industrial complex operating as a chemical processing plant and comprised of 15 buildings on a 12-acre site adjacent to the Niagara River in the Town of Tonawanda. To demonstrate the value of its property during the relevant years, petitioner offered market sales data of seven allegedly comparable properties in western New York, Pennsylvania and New Jersey.

Supreme Court discounted sale number seven as a comparable property, examined sale numbers one, two and five for "some guidance," and relied upon sale numbers three, four and six as directly comparable. The court also took note of official New York State documents which listed the same sale price and valuation for the property that petitioner had argued was proper. Finally, the court made other calculations and findings regarding the valuations and arrived at an assessment which was lower than respondent's assessment but higher than petitioner's estimate.

The Appellate Division reversed and dismissed the petitions. The Court concluded that petitioner had failed to overcome the presumption that the assessments were valid and it, therefore, found no need to evaluate the adequacy of respondent's appraisal. The Court rejected all of petitioner's evidence of comparable sales because the appraiser "failed to account adequately for the unique features of the subject property in his selection and analysis of comparable sales" (242 A.D.2d 904, 905, 662 N.Y.S.2d 907). As such, the Court concluded that petitioner had "failed to establish that the properties analyzed as comparable in its appraisal are sufficiently similar to the subject property to yield an accurate assessment of its value." The Court also rejected petitioner's alternate appraisal based upon the cost approach because it failed to "include the entire complex in the calculation of reproduction costs" and did not "account adequately for the calculation of depreciation."

Matter of South Slope Holding Corp. v. Board of Assessment Review

Petitioners sought review of tax assessments involving four properties in 1989 and three properties in 1990. According to petitioners, the properties were originally purchased in order to develop a subdivision, but development could not progress because of sustained opposition from various local individuals and groups. It is alleged that since 1986 this campaign against petitioners' use of the property created a "value-depressing cloud" or "blight" upon the land which detrimentally affected its marketability.

Supreme Court noted "that for whatever reason, the market for the property was depressed in the subject years" and sustained the petitions. In reversing, the Appellate Division dismissed the petitions and held that petitioners had failed to meet their burden of showing by substantial evidence that their property was overvalued, stating that the "appraiser for petitioners failed to set forth any objective data in his appraisal to support his opinion that the value of petitioners' property was depressed due to an alleged 'blight,' and he was unable to testify to a value in the absence of blight" (244 A.D.2d 891, 665 N.Y.S.2d 147).

This Court granted petitioners' leave to appeal.

II.

Our analysis begins with the recognition that a property valuation by the tax assessor is presumptively valid (People ex rel. Wallington Apts. v. Miller, 288 N.Y. 31, 33, 41 N.E.2d 445; Farash v. Smith, 59 N.Y.2d 952, 955, 466 N.Y.S.2d 308, 453 N.E.2d 537) and thus "obviates any necessity, on the part of the assessors, of going forward with proof of the correctness of their valuation" (People ex rel. Wallington Apts. v. Miller, 288 N.Y. at 33, 41 N.E.2d 445, supra). However, when a petitioner challenging the assessment comes forward with "substantial evidence" to the contrary, the presumption disappears (id.; Matter of Carriage House Motor Inn v. City of Watertown, 136 A.D.2d 895, 524 N.Y.S.2d 930, affd. 72 N.Y.2d 990, 534 N.Y.S.2d 663, 531 N.E.2d 295).

While we have not defined the precise contours of "substantial evidence" in this context, we have held that, generally speaking:

"a determination is regarded as being supported by substantial evidence when the proof is 'so substantial that from it an inference of the existence of the fact found may be drawn reasonably.' * * * [I]t means such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact * * *. Essential attributes are relevance and a probative character * * *. In final analysis, substantial evidence consists of proof within the whole record of such quality and quantity as to generate conviction in and persuade a fair and detached fact finder that, from that proof as a premise, a conclusion or ultimate fact may be extracted reasonably--probatively and logically" (300 Gramatan Ave. Assocs. v. State Div. of Human Rights, 45 N.Y.2d 176, 179-181, 408 N.Y.S.2d 54, 379 N.E.2d 1183).

The substantial evidence standard is a minimal standard. It requires less than "clear and convincing evidence" (Matter of Carriage House Motor Inn v. City of Watertown, 136 A.D.2d 895, 524 N.Y.S.2d 930, supra), and less than proof by "a preponderance of the evidence, overwhelming evidence or evidence beyond a reasonable doubt" (300 Gramatan Ave. Assocs. v. State Div. of Human Rights, 45 N.Y.2d at 180, 408 N.Y.S.2d 54, 379 N.E.2d 1183,supra).

In the context of tax assessment cases, the "substantial evidence" standard merely requires that petitioner demonstrate the existence of a valid and credible dispute regarding valuation. The ultimate strength, credibility or persuasiveness of petitioner's arguments are not germane during this threshold inquiry. Similarly, the weight to be given to either party's evidence is not a relevant consideration at this juncture. Instead, in answering the question whether substantial evidence exists, a court should simply determine whether the documentary and testimonial evidence proffered by petitioner is based on "sound theory and objective data" (Matter of Commerce Holding Corp. v. Board of Assessors, 88 N.Y.2d 724, 732, 649 N.Y.S.2d 932, 673 N.E.2d 127) rather than on mere wishful thinking. Though the substantial evidence standard is low, it "does not rise from bare surmise, conjecture, speculation or rumor" (300 Gramatan Ave. Assocs. v. State Div. of Human Rights, supra, at 180, 408 N.Y.S.2d 54, 379 N.E.2d 1183).

In the absence of "substantial evidence" to the contrary, the tax assessment should be upheld as presumptively valid. On the other hand, once petitioner has met its initial burden and...