Supreme Associates Llc v. Suozzi

• Decision Date: 21 October 2011
• Citation: 932 N.Y.S.2d 835,34 Misc.3d 255,2011 N.Y. Slip Op. 21370
• Parties: SUPREME ASSOCIATES, LLC; Manhasset Isle Yacht Club Corp.; Manhasset Bay Yacht Sales Corp.; Annette Oestreich; Segall Associates, LLC; BFS Realty, LLC; 4B's Harbor Park Drive LLC; Ressa Family LLC; Ressa, Cuneo, Lokay, a Partnership; Bayles Properties, Inc.; Seaatoag Properties, LLC; SNR Realty Corp.; C.P.C. Pools, Inc.; 1 Valley Road, LLC; and Almas Development, LLC., Plaintiffs,v.Thomas R. SUOZZI, as Nassau County Executive; Harvey B. Levinson, as Chairman of the Nassau County Board of Assessors; Dennis L. Brown, Michael G. Norman, Michael M. Freeman, Thomas P. Dejesu, as Members of the County Board of Assessors; the County of Nassau; Port Washington Union Free School District; the State of New York, and George Pataki, as Governor of the State of New York, Defendants.
• Court: New York Supreme Court

34 Misc.3d 255

932 N.Y.S.2d 835

2011 N.Y. Slip Op. 21370

SUPREME ASSOCIATES, LLC; Manhasset Isle Yacht Club Corp.; Manhasset Bay Yacht Sales Corp.; Annette Oestreich; Segall Associates, LLC; BFS Realty, LLC; 4B's Harbor Park Drive LLC; Ressa Family LLC; Ressa, Cuneo, Lokay, a Partnership; Bayles Properties, Inc.; Seaatoag Properties, LLC; SNR Realty Corp.; C.P.C. Pools, Inc.; 1 Valley Road, LLC; and Almas Development, LLC., Plaintiffs,

v.Thomas R. SUOZZI, as Nassau County Executive; Harvey B. Levinson, as Chairman of the Nassau County Board of Assessors; Dennis L. Brown, Michael G. Norman, Michael M. Freeman, Thomas P. Dejesu, as Members of the County Board of Assessors; the County of Nassau; Port Washington Union Free School District; the State of New York, and George Pataki, as Governor of the State of New York, Defendants.

Supreme Court, Nassau County, New York.

Oct. 21, 2011.

E. Christopher Murray, Esq., for plaintiffs.John Ciampoli, County Attorney of Nassau County, Martin E. Valk, Esq., Eric Schneiderman, Attorney General of NYS, Ralph Pernick, Esq., for defendants.STEVEN M. JAEGER, J.

Motion pursuant to CPLR 3212 by the defendants Thomas R. Suozzi, as Nassau County Executive, Harvey Levinson, as Chairman of the Nassau County Board of Assessors, Dennis L. Brown, Michael G. Norman, Michael M. Freeman, Thomas P. Dejesu, as members of the County Board of Assessors, and the County of Nassau, for summary judgment dismissing the complaint insofar as interposed against them.

Cross motion by the plaintiff for an order: (1) amending the caption; and (2) for summary judgment pursuant to CPLR 3212.

Cross motion by the defendants the State of New York and Andrew M. Cuomo, as Governor of the State of New York to dismiss the action pursuant to CPLR 3211[a][2], [10], and/or for summary judgment dismissing the complaint insofar as interposed against them.

The plaintiffs own commercial properties located in the Port Washington Union Free School District [“the District”], which is situated in defendant County of Nassau [“Nassau” or the “County”]. In 2006, the plaintiffs commenced the instant declaratory judgment action alleging, inter alia, that Real Property Tax Law Article 18, is facially—and as applied to them—unconstitutional under the due process and equal protection clauses of the Federal and New York State Constitutions (U.S. Const., 14th Amend., § 1; N.Y. Const., art. I, §§ 6, 11).

The plaintiffs' complaint contains three, separately captioned causes of action. The first cause of action is predicated on the theory that as applied the them, the formulas prescribed by Article 18 for calculation of “base proportion” ratios—which are then used to allocate class tax shares within a special assessing unit—are outdated, arbitrary and thereby violative of their due process rights, since these proportions bear no rational relation to “actual” class share values within the District (Cmplt., ¶¶ 44–46, 54–55). The second cause of action alleges that differences in legislatively enacted, increase “caps”—which limit, by prescribed percentages, annual increases in class-share, base proportions ratios—create an unconstitutional disparity between them and other, unspecified, but similarly situated taxpayers (Cmplt.,¶¶ 47–51)( see generally, RPTL § 1803–a[1][c]–[w] ).

Lastly, the third cause of action alleges that the defendants, collectively, have failed to satisfy the command of New York Constitution, article XVI, § 2, which directs the Legislature, inter alia, to “provide for the supervision, review and equalization of assessments” (Cmplt., ¶¶ 52–56).

The defendants, including the New York State defendants, have answered, denied the material allegations of the complaint and interposed various affirmative defenses.

In 2007, the County defendants moved to dismiss the complaint insofar as interposed against them, pursuant to CPLR 3211[a][7], which motion was denied in its entirety by order of this Court (McCarty, III, J.) dated July 3, 2007 ( see, Supreme Associates, LLC v. Suozzi, 16 Misc.3d 1136(A), 2007 WL 2598883 [Supreme Court, Nassau County 2007] ).

On appeal, the Appellate Division, Second Department modified the Court's July 3, 2007 order. Specifically, in a brief memorandum decision, the Appellate Division dismissed both the due process (first) cause of action and third cause of action based on alleged violations of New York Constitution, article XVI, § 2 ( Supreme Assoc., LLC v. Suozzi, 65 A.D.3d 1219, 1220, 886 N.Y.S.2d 430). However, and with the stated caveat that it was not “expressing any opinion” as to the plaintiffs' ability to substantiate their allegations, the Court sustained the second cause of action grounded upon an equal protection theory of recovery ( Supreme Assoc., LLC v. Suozzi, supra, 65 A.D.3d at 1221, 886 N.Y.S.2d 430, citing, 219 Broadway Corp. v. Alexander's, Inc., 46 N.Y.2d 506, 509, 414 N.Y.S.2d 889, 387 N.E.2d 1205 [1979] ).

RPTL Article 18 as amended, creates two so-called “special assessing units”—New York City and Nassau County—in which commercial and residential properties are divided into four separate classes, each of which may then be permissibly and uniformly taxed based upon different fractional assessment percentages ( see, RPTL §§ 1801[a]; 1802[1]; 102[1]; see, O'Shea v. Board of Assessors of Nassau County, 8 N.Y.3d 249, 254, 832 N.Y.S.2d 862, 864 N.E.2d 1261 [2007]; Matter of New York Tel. Co. v. Nassau County, 267 A.D.2d 629, 630, 699 N.Y.S.2d 616). In general, and to ultimately arrive at an individual's property tax obligations, an assessor must compute the total assessed value of all property within a stated class, and then compare that value to the total assessed value of all property within an assessing unit. The resulting ratio—or so-called “base proportion,” as later adjusted—is then utilized to allocate each respective property class's proportionate share of the overall annual tax levy ( see generally, Matter of New York Tel. Co. v. Nassau County, supra, 267 A.D.2d 629, 630, 699 N.Y.S.2d 616).

In both Nassau County and New York City, however, a stated class's proportionate share of all assessed value—its “base proportion”—is computed by reference to a highly complex statutory formula, which utilizes in the first instance, fixed or static, base-line, class share proportions derived from prior tax years; primarily—and as adjusted: (1) the 1981–1982 final assessment roll in Nassau County; and (2) the 1984 final roll in the City of New York ( see generally, O'Shea v. Board of Assessors of Nassau County, supra; RPTL § 1801[f][1], [2] ).

By express Legislative design, this computational methodology was intended in part, to prevent dramatic increases in residential property taxes by “locking in”—subject to adjustment—specific class share relationships as they existed in the previously filed assessment rolls referenced above ( see, RPTL §§ 1801 [f][1], [2]; RPTL §§ 1801; 1803; 1803–a;1803–b; O'Shea v. Board of Assessors of Nassau County, supra, 8 N.Y.3d at 254, 832 N.Y.S.2d 862, 864 N.E.2d 1261; Foss v. City of Rochester, 65 N.Y.2d 247, 251–253, 491 N.Y.S.2d 128, 480 N.E.2d 717 [1985] ).

The Court of Appeals has recently summarized the historical background and legislative genesis of Article 18 by observing that RPTL Article 18 was originally adopted in response to its landmark holding in Matter of Hellerstein v. Assessor of Town of Islip, 37 N.Y.2d 1, 3, 371 N.Y.S.2d 388, 332 N.E.2d 279 (1975), which struck down as improper, the previously widespread practice of utilizing fractional assessment valuation methodologies—a computational process at odds with the express requirement of former RPTL § 306, which then directed that, inter alia, “all real property in New York State be assessed at full market value and taxed at a uniform rate within a single taxing jurisdiction” ( O'Shea v. Board of Assessors of Nassau County, supra, 8 N.Y.3d at 252, 832 N.Y.S.2d 862, 864 N.E.2d 1261; New York Tel. Co. v. Nassau County, 1 N.Y.3d 485, 491, 776 N.Y.S.2d 205, 808 N.E.2d 340 [2004]; Foss v. City of Rochester, supra; Matter of Hellerstein v. Assessor of Town of Islip, supra, 37 N.Y.2d at 3–4, 371 N.Y.S.2d 388, 332 N.E.2d 279; see, RPTL former, § 306).

As described by the Court of Appeals, the Hellerstein decision generated “widespread fear that, without ameliorative legislative action,” the “elimination of fractional assessment “would shift * * * a significant portion of the property tax burden from businesses to homeowners” ( O'Shea v. Board of Assessors of Nassau County, supra, 8 N.Y.3d at 253, 832 N.Y.S.2d 862, 864 N.E.2d 1261; New York Tel. Co. v. Nassau County, supra, 1 N.Y.3d at 491, 776 N.Y.S.2d 205, 808 N.E.2d 340; Colt Industries, Inc. v. Finance Adm'r of City of New York, 54 N.Y.2d 533, 544, 446 N.Y.S.2d 237, 430 N.E.2d 1290 [1982]; Foss v. City of Rochester, supra ).

In response, and after several years of moratoria coupled with “fits and starts”, the Legislature in 1981 repealed former section 306, and enacted RPTL § 305, which, in sum, authorized fractional assessments at a “uniform percentage of value.” At the same time, the Legislature added a new Article 18, entitled, “Preservation of Class Shares of Taxes * * * and Limitation on Increases of Assessment Therein,” whose purpose was, in part, “to maintain the stability of relative property class tax burdens” ( O'Shea v. Board of Assessors of Nassau County, supra, 8 N.Y.3d at 254, 832 N.Y.S.2d 862, 864 N.E.2d 1261, citing, Budget Report on Bills, at 1, Bill Jacket, L. 1981, ch. 1057). To achieve this stated objective, the new enactment, among other things, “authorized a special assessing unit [in Nassau County] to fix class shares using the tax roll for the 1981–1982 levy, with leeway to increase or decrease shares in subsequent years up to five percent to accommodate changes in the roll or new construction” ( O'Shea v. Board of Assessors of Nassau County, supra, 8 N.Y.3d at 254, 832 N.Y.S.2d 862, 864...