Three P. Corp. v. Town of E. Hampton, 2006 NY Slip Op 52619(U) (N.Y. Sup. Ct. 3/6/2006), 03/12821

• Decision Date: 06 March 2006
• Docket Number: 03/12821
• Citation: 2006 NY Slip Op 52619
• Parties: THE THREE P. CORP., Petitioner, v. TOWN OF EAST HAMPTON, Respondent.
• Court: New York Supreme Court

Page 1

2006 NY Slip Op 52619(U)

THE THREE P. CORP., Petitioner, v.TOWN OF EAST HAMPTON, Respondent.

03/12821

Supreme Court of the State of New York, Suffolk County.

Decided March 6, 2006.

Flower, Medalie & Markowitz, Esqs., Holtsville, NY, Attorneys for Petitioner.

Goldstein Goldstein Rikon & Gottlieb, P.C., New York, NY, Attorneys for Respondent.

JOHN C. BIVONA, J.

In this condemnation proceeding the Respondent-Town moved for an Order striking the appraisal report of the Claimant.The Court(Lifson, J.) by Order dated January 8, 2004 noted "a degree of discord between the parties over whether the taking by the Town was legitimate or was an attempt to frustrate construction by the claimant on that parcel".That Court framed the issue as follows:

The major bone of contention is recoupment of the enhanced value of the property which occurred due to improvements undertaken after knowledge of the intended condemnation, but before the issuance of the restraining order or the filing of the vesting order.

The final paragraph of said Order prepared the battlefield as follows:

Based on the foregoing, the court concludes that the motion must be granted only to the extent that a triable issue exists as to whether the claimant acted in bad faith in making improvements to the parcel with knowledge of the intended proceedings prior to the loss of enjoyment of his property rights.The claimant is therefore precluded from offering proof of any improvements made in violation of any lawful order and improvements found to have been made in bad faith.The bare allegation that he did not believe the taking was for a bona fide public purpose, absent other circumstances not yet known, is insufficient to negate a finding of bad faith.(underline added)

The Court at that time made no finding as requested and referred it to the Trial Court.

The issue was tried before this Court on February 8, 9 and concluding on February 28, 2005.Claimant/Petitioner placed seventeen (17) documents and Respondent placed nineteen (19) documents into evidence.

The following witnesses testified:

Howard Morris(Claimant's real estate appraiser)Donald Thomas Sharkey(Chief Building Inspector)Eric Bregman, Esq.(Former Town Attorney)Mary Acquino(Respondent's real estate appraiser)Regine Starr (sole officer and owner of claimant Corporation

Post-Trial Memoranda were submitted by both parties and received prior to the submission date of July 1, 2005.

Title to the real property vested in the Respondent-Town on or about December 19, 2001.The Claimant-Petitioner, Three P. Corp, purchased two (2) sub-standard lots designated on the Suffolk County tax map as District 0300, Section 162, Block 05, Lot 13, 14.Lot 13 was purchased by deed dated November 3, 1999(Exhibit "B").Lot 14 was purchased by deed dated November 11, 1999(Exhibit "A").When combined these substandard lots became a building plot in the Town of East Hampton, hamlet of the Springs, located to the North of the incorporated Village of East Hampton, located within one-half mile of the Town dump.

The testimony established that in October 2000 the owner entered into a contract to build a modest affordable home as depicted on the plans in evidence labeled "Affordable Homes".(Exhibits "C-D")

The Claimant, an experienced builder, filed for and received the necessary permits to build a one family home containing approximately 1,878 square feet.A Town Building Permit was issued October 6, 2000, reflecting an estimated cost of construction of $75,000.00.This calculation was computed by the building inspector after reviewing the plans (Exhibit "I").A road widening easement was issued (Exhibit "6").The road was improved in the front of the property by Claimant.

CONDITION OF PROPERTY ON TITLE VESTING

The Claimant through its principal and sole officer Regine Starr, filed a Affidavit (Exhibit "F") in which she recites that the Health Department approval was received in March 2000.In her un-contradicted Affidavit she states that she first learned of a proposed condemnation at the end of October 2000, the same month in which the Building Permit was issued.It is noted that the Permit was never revoked.The Town, as required scheduled a public hearing, held December 14, 2000(Exhibit "9").

The Claimant's attorney appeared at the public hearing and noted his client's opposition to the proposal.The Town Board was informed that Claimant"improved Ocean Parkway.We cleared it, we graded it, stabilized it, put down most of the paving.We've contracted to bring water in at great expense.And reducing from four lots to three lots does impact the cost of the other houses because they now have to cover the cost without the dilution factor."(Exhibit "9" atpg. 16), Thereafter, as developed in testimony through the Chief Building Inspector and the former Town Attorney, conversations occurred, letters were exchanged, a proceeding pursuant to Eminent Domain Procedure Law §207 was commenced by the Claimant, the Town moved for a contempt of Court citation of Claimant and ultimately on July 2, 2001 the principal, Ms. Starr was personally served with a copy of an Order of the Appellate Division, Second Department enjoining her from conveying the property or continuing construction on it.

At the Trial Claimant introduced three (3) 8x10 color glossy photographs showing a cleared site with a partially constructed home and septic system under construction.(Exhibit "3").Respondent placed in evidence three (3) photographs: Exhibit "N" dated June 29.2001; Exhibit "O" dated July 2, 2001 and Exhibit "P" dated July 2, 2001, showing the subject construction site and the home under construction with finished roof shingles, pressed wood calls with cut-outs for windows and door supported by wood support structures.

Each party offered the testimony of real estate appraisers.In rebuttal the Claimant offered the testimony of Regine Starr.The Respondent also offered the testimony of David Thomas Sharkey, Chief Building Inspector.

BAD FAITH/MITIGATION OF DAMAGES

The principal issue of concern is the value of the property rights taken by the Respondent under its exercise of the power of Eminent Domain.In this proceeding an additional issue is whether the Claimant, once informed of a potential condemnation proceeding, was obliged to mitigate damages, and when did that duty arise, if at all.

Attached to Exhibit "F" were copies of bills and invoices for labor and materials incurred by the Claimant in the course of construction through July 2, 2001.The out-of-pocket bills total $66,000 (*/-) and do not include the cost of the installation of the foundation.The pouring of the foundation is a bone of contention because it occurred subsequent to the issuance of the temporary injunction issued by the Appellate Division, Second Department.The testimony supports the conclusion that it was inadvertent and not a further bad faith attempt, if any, on the part of the Claimant to build a claim or enhance a damage claim in condemnation.(SeeIn re Briggs Ave., 196 NY 255(1909).As was stated by the CourtIn re Mayor of etc., New York, 24 A.D. 7, 49 N.Y.S. 119(1st Dept., 1897):

From the time of the passage of the act until the commissioners had finally acted, there was, to be sure, a possibility or even a probability that his land would be taken, but this probability imposed no duty upon the city or upon the commissioners to take the land and pay for it, nor did it interfere with the right of La Maida to use the land in any way in which the owner of the property might use it.He was not called upon by reason of that probability to refrain from any act which the owner of the property might do by way of making his land more valuable or better fitted for the purposes for which he had been in the habit of using it.Whatever he might do upon the land by way of enhancing its value, which any other owner might do, was lawful and proper, and the public authorities could not restrain him it, nor would they be a liberty to say that he was going beyond his legal rights, unless, perhaps, it should appear that, with the certainty that the land was to be used, he was acting in bad faith simply for the purpose of enhancing the damages which he was to receive for it.But nothing of that kind is presented in this case.We have simply the case of a landowner whose land may probably be taken for the public use, who, without regard to that probability, makes improvements upon his land which are proper and fitting for the business in which he is engaged.We see no reason, under such circumstances, why, when the land is finally taken, he should not be entitled to recover whatever the value of it may be at that time.

See also, Frontier Town Properties Inc. V. State, 58 Misc 2d 388, 296 NYS2d 90(Ct. ofCl., 1968).

The expert appraisal witnesses agreed that the highest and best use (HBV) of the subject property on vesting date was a one family home site.But, while the Claimant attempted to value the land and improvement, Respondent valued the land as vacant land only, giving no recognition to the improvement under construction and imposing a charge of $12,500.00 for demolition of the incomplete structure.

On vesting date the property was a finished building plot ready to go and in the process of metamorphosis from vacant land to finished habitable affordable housing.Until vesting date the property owner carried all expenses of the land including real estate taxes and premises liability.

On a time line analysis the property was acquired in November, 1999.A Building Permit was issued in October of 2000, and the property owner was informed verbally of a potential condemnation in October of 2000.A public hearing was held in December of 2000.An offer is made and rejected in March of 2001, reflecting mixed signals between the parties and reasonably raising valid concerns as to the good or bad faith of eachparty.Claimant after...