TIME FOR THE STATE OF NEW YORK TO STOP ITS OUTRAGEOUS CONDUCT IN EMINENT DOMAIN CASES

The Attorney General of the State of New York promotes himself as the “People’s Lawyer” which is the guardian of the legal rights of the citizens of New York.  I submit that property owners whose property is appropriated by the New York State Department of Transportation are within the ambit of protection.

The Attorney General’s office defends the State when an appropriation claim is filed.  But as advocates for NYSDOT, it would appear that the legal rights of claimants mean nothing in the effort to keep compensation awards as low as possible.

From time to time, courts have had to remind the Attorney General of its duty in an appropriation claim.  The State has an “independent obligation to pay just compensation.”  Chase Manhattan Bank v State of New York, 103 AD2d 211, 221 (2d Dept 1984), or more recently, “Indeed, as the United States Court of Appeals for the Second Circuit has observed, ‘ “[J]ust as the Government’s interest in a criminal prosecution is not that it shall win a case, but that justice shall be done, so its interest as a taker in eminent domain is to pay the full and perfect equivalent in money of the property taken, neither more nor less – not to use an incident of its sovereign power as a weapon with which to extort a sacrifice of the very rights the [Fifth] Amendment gives’ ” (United States v Certain Property, 306 F2d 439, 452-453 (2d Cir. 1962), Matter of Mazur Bros. Realty, LLC v State of New York, 117 AD3d 949, 952 (2d Dept 2014).

I have written before on condemnor abuse, see for example, “Games Condemnors Play: When Appraisers Lose Credibility” Blog, October 15, 2014.  But I believe things are getting worse.

I just completed a trial in the Court of Claims where the State’s appraiser found damages in a partial taking for $420,000.  Upon inspecting his file produced pursuant to subpoena, a prior appraisal by the same expert who testified found a value of $1,100,000.  His file also contained an appraisal prepared by another appraiser which violated that appraiser’s conditions.  What was the purpose of providing that other appraisal?  It appears that the appraiser selected to testify used many of the comparables of the other appraiser’s report.

Not only that, but the State’s witness was not a licensed appraiser.  I kid you not.  This violates not only a very specific NYSDOT requirement, Chapter 11.3.4.2[1], but also violates federal regulations that require that an appraiser be licensed in any federally assisted project.

This incredible conduct on behalf of the State is not unique.  Two weeks prior, I tried another Court of Claims case.  The Attorney General defending the claim fought to strike my subpoena of their appraiser’s file, but the Court which made a careful study of the law directed the file turned over.  The file indicated two prior reports by the same appraiser delivered to NYSDOT just months prior to his final version.  The prior reports indicated $760,000 more in compensation.

Certainly, this is improper.  There is absent the complete lack of the State’s duty to assure that justice is done.  The State really doesn’t understand that an eminent domain claim is not private litigation.

A related problem common to litigating against the State is that if an offer is rejected as compensation in full, the State will file a lower appraisal when a claim is filed.  See Condemnors Behaving Badly, Goldstein and Rikon, N.Y.L.J., April 29, 2013.

This is a problem for the claimant because the claimant is being punished for asserting its constitutional right to just compensation.  This coercive practice is prohibited by law.  Additionally, the trial court does not know of the other and higher appraisal, and it cannot be used for impeachment unless the State’s appraiser at trial wrote the earlier higher appraisal.  Nor can it be introduced into evidence.  The condemnor will often argue that the higher appraisal is protected from discovery because it was used for settlement purposes, although one New York court has found otherwise, ruling the higher appraisal an admission against interest.  Conk v State of New York, 100 Misc2d 680 (Ct. Cls. 1979).

Other jurisdictions do not allow this unfair practice.  New Jersey courts hold that once a condemnor makes an offer of just compensation, it is judicially estopped from taking a different position at trial and is not permitted to urge that the property was worth less than this amount.  Michigan takes a similar approach.

There is a critical need for legislation to stop this improper practice.  But for a start, the Attorney General should review what his office has allowed.

[1] Appraisers – MUST be properly licensed to appraise the types of property being acquired and meet all USPAP requirements. Experience with “before & after” and condemnation appraising is preferable. Appraisers should submit a detailed résumé indicating education, experience and professional affiliations. Appraisers are to be available for court appearances, if necessary. Samples of prior appraisal reports are to be provided upon request. Those individuals on the NYSDOT appraiser list are considered pre-approved.

Posted in Bad Faith, Just Compensation, License Requirements, Prior Appraisals
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