In re Enforcement of Tax Liens ex rel. County of Orange
| Decision Date | 25 May 2010 |
| Citation | 903 N.Y.S.2d 60,75 A.D.3d 224 |
| Parties | In the Matter of ENFORCEMENT OF TAX LIENS, etc., by COUNTY OF ORANGE, appellant-respondent; Al Turi Landfill, Inc., respondent-appellant. |
| Court | New York Supreme Court — Appellate Division |
David L. Darwin, County Attorney, Goshen, N.Y. (Matthew J. Nothnagle of counsel), for appellant-respondent.
McCullough, Goldberger & Staudt, LLP, White Plains, N.Y. (Robert J. Hecker of counsel), for respondent-appellant.
MARK C. DILLON, J.P., HOWARD MILLER, DANIEL D. ANGIOLILLO, and THOMAS A. DICKERSON, JJ.
In this appeal and cross appeal we are asked to determine whether the County of Orange timely petitioned for leave to institute a supplementary proceeding pursuant to Real Property Tax Law § 990 and § 1138(5) for the collection of delinquent taxes after having discontinued foreclosure proceedings on the ground that acquisition of the subject property, a landfill, could subject the County to a significant risk of liability substantially in excess of any recoverable, unpaid taxes. We are further asked to determine whether, in light of the valuation issue suggested by the County's discontinuance of the foreclosure proceedings, this proceeding should have been transferred to be consolidated or joined with a separate, ongoing tax certiorari proceeding pursuant article 7 of the Real Property Tax Law brought by the landowner to challenge the assessed value. We conclude that the County properly withdrew the subject property from the foreclosure proceedings and timely filed its petition for leave to institute the supplementary proceeding, which may be litigated independently of the tax certiorari proceeding.
Al Turi Landfill, Inc. (hereinafter the landowner), is a domestic corporation which owns four parcels of real property located in the Town of Goshen, Orange County, designated on the tax map as Lots 17.1, 17.2, 21.1, and 23.1 of Section 12, Block 1 (hereinafter the subject property). In January of each of the years 2004, 2005, and 2006, the Town of Goshen issued tax bills for the subject property which, by operation of law, became liens against the property ( see RPTL 902). The landowner concedes that it has not paid these bills, which amount to a total unpaid sum of $3,008,733.31 for the subject property.
Joel Kleiman, the Commissioner of Finance for the County, is the designated "enforcing officer" for the collection of taxes ( see RPTL 1102[3] ), and Maryanne Hesse is the Real Property Tax Supervisor for the County. The responsibilities of these County officials include the collection of real property taxes which remain unpaid after the expiration of the Town collection period of January 1 through March 31 of each year. The County's usual practice is to send an initial notice to the taxpayer in April, followed by a notice in September if the account remainsunpaid. Thereafter, as was done in this case, a "list of delinquent taxes" is filed with the County Clerk. In November 2004 and November 2005, for the 2004 and 2005 tax liens, respectively, Kleiman filed such lists with the Orange County Clerk, which included the tax map designation of the lots within the subject property, identified the landowner as record title holder, and stated the amount due for each lot. These filings were the first step in the commencement of proceedings to foreclose the 2004 and 2005 tax liens, and had the same force and effect as a notice of pendency pursuant to article 65 of the CPLR ( see RPTL 1120, 1122[7] ). The County subsequently served foreclosure petitions on the landowner, who failed to answer or respond.
According to the 2006 tax roll, the assessed value of the subject property isapproximately $18 million. In January 2006, Director John McCarey and Assistant Director Eric Ruscher of the Real Property Tax Service Agency for the County inspected the subject property and determined that it was a landfill where garbage had been dumped. McCarey and Ruscher did not conduct a formal market analysis or appraisal but determined, based upon their visual inspection alone, that the subject property was undesirable because environmental issues could expose the County to liability if it acquired the property. They did not quantify the extent of the potential risk to the County or the cost of remediation. On a worksheet, McCarey made the notation "$1" next to each of the landowner's lots and wrote the recommendation, "withdraw from list." In a subsequent meeting with Kleiman and Hesse, McCarey and Ruscher recommended that the subject property be withdrawn from the tax lien foreclosure proceedings.
On January 30, 2006, Kleiman executed and caused to be filed with the Orange County Clerk two certificates of withdrawal in the foreclosure proceedings related to the 2004 and 2005 tax liens. Each certificate, after identifying the lots comprising the subject property, contained the following preprinted language:
"Pursuant to section 1138 of the Real Property Tax Law, I hereby withdraw the parcel from foreclosure for the following reason[ ]"
On a list of preprinted reasons, Kleiman made a check mark next to the following:
"If the tax district were to acquire the parcel, there is a significant risk that it might be exposed to a liability substantially in excess of the amount that could be recovered by enforcing the tax lien."
In addition, on each certificate Kleiman wrote the word "landfill" after preprintedlanguage asking for the "specific facts which render the parcel eligible for withdrawal."
By petition filed on or about October 25, 2006, the County petitioned the Supreme Court pursuant to Real Property Tax Law § 990 and § 1138(5) for leave to institute a supplementary proceeding for the collection of $3,008,733.31 in unpaid taxes, interest, and penalties for the tax years 2004, 2005, and 2006 with respect to the subject property. The County appended evidentiary support for the amount due, the landowner's nonpayment, the institution of tax foreclosure proceedings, and the reason for withdrawing the subject property from foreclosure.
The landowner served an answer in which it admitted ownership and actual possession of the subject property, failure to pay the taxes due, and the County's filing of the two certificates of withdrawal in the foreclosure proceedings. By way of affirmative defense, the landowner asserted that the County's claims were time-barred and precluded by the doctrines of laches, estoppel, and waiver. The landowner further asserted the affirmative defense of unjust enrichment, alleging that the unpaid taxes were based upon an inflated assessment of the value of the subject property, which the landowner is currently challenging in a separate tax certiorari proceeding pursuant to article 7 of the Real Property Tax Law, pending in the same court (LaCava, J.), under Index No. 7195/08 (hereinafter the tax certiorari proceeding). The landowner alleged that the County's withdrawal of the subject property from the foreclosure proceedings negated its assessed value on the tax roll and was tantamount to anadmission that the subject property was without value.
By notice of motion dated April 30, 2008, the County moved for summary judgment on the petition and dismissing the landowner's affirmative defenses. In support of its motion, the County submitted, among other things, its petition, with the supporting affidavit of Kleiman and attached exhibits, as well as the deposition testimony of Kleiman, McCarey, and Ruscher concerning the inspection of the subject property and the basis for withdrawing it from the foreclosure proceedings. The Countycontended that its petition was timely filed pursuant to Real Property Tax Law § 1138(5) (hereinafter Section 1138[5] ), which allows the commencement of a supplementary proceeding within one year of filing a certificate of withdrawal from a foreclosure proceeding. The County further argued that the defenses of laches, estoppel, and waiver were without merit, and that the alleged improper assessment of the subject property was not a defense to payment of the taxes or a ground for staying the County's enforcement proceedings. The landowner was required to challenge the assessment in the separate tax certiorari proceeding, which is the exclusive procedure for review of real property assessments, while the County pursued this supplementary proceeding independently.
The landowner cross-moved for summary judgment dismissing the proceeding, or in the alternative, in effect, to transfer the proceeding to be consolidated or joined with the tax certiorari proceeding. The landowner submitted, among other things, Hesse's deposition testimony that the Town "returned" unpaid tax bills to the County for collection on March 31 of each year, and argued that the County's petition was time-barred pursuant to Real Property Tax Law § 990(1) (hereinafter Section 990[1] ), which requires commencement of the supplementary proceeding within one year after a tax "is returned by the proper collecting officer uncollected." The landowner reasoned that the latest date to commence a supplementary proceeding is March 31 of the year following return of the warrant from the Town and, thus, the County's commencement of this proceeding on October 25, 2006, was time-barred as to the 2004 and 2005 tax liens.
The landowner further contended that the County's reliance upon the limitations period in Section 1138(5) was unavailing because the County had failed to submit any evidence in support of its reason for withdrawing the subject property from the foreclosure proceeding. Although the landowner conceded that the subject property was a landfill, it contended that the County had the burden of stating the ultimate facts and circumstances which constitute...
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