Appellate Division Second Department Renders Important Decision in Mazur Brothers

The Appellate Division, Second Department, handed down a decision on May 21, 2014, effectively ending 8 years of litigation and awarding compensation to the Claimants, Mazur Brothers Realty, LLC. Mazur Brothers Realty LLC were the fee owner of property located at 80 Lake Street and 90 Lake Street, White Plains, New York. Mazur Brothers, Inc., was the tenant at both properties and operated a well-known furniture business on the premises prior to title vesting. The property was taken in connection with a project to improve the Cross Westchester Expressway.

Litigation in this matter has resulted in a total of 7 separate appeals taken. This particular appeal arose from two relating special proceedings for the distribution of money pursuant o the Court of Claims Act sections 22 and 23. Mazur Brothers Realty, LLC (“MBR”), the fee claimant, appealed from a November 26, 2012 Order of the Court of Claims (Ruderman, J.). Therein, Judge Ruderman granted the petitions for distribution only to the extent of directing the distribution of the principal sum of $821,000 with respect to property at 80 Lake Street, White Plains NY; and $890,120 with respect to real property at 90 Lake Street, White Plains, NY, with 9% interest on those sums from the date they were deposited by the State into the special eminent domain accounts until the date of payment.

Yesterday, the Appellate Division modified the award from 80 Lake street to $1,369,500 and the award for 90 Lake Street to $1,011,500.

The history of the proceedings:

Pursuant to the agreement of adjustment (See EDPL 304(A)(2)), MBR settled the claim for 80 Lake Street for $1,369,500. Prior to the payment of the settlement, the State required MBR produce an assignment of claim and release from MBI. MBI would not sign the release and filed a separate claim for its trade fixtures. Thus, the State argued, the award was subject to conflicting claims of ownership, so it deposited the amount into an interest bearing escrow account, requiring the commencement of a special proceeding to release it.

The same series of events occurred with respect to the 90 Lake Street property, although agreement for adjustment contemplated an amount of of $1,011,500, which was not a settlement and MBR was not precluded from seeking additional compensation from the State. Claiming a conflict of claims, the State deposited the money, requiring a special proceeding.

Meanwhile, Judge Scuccimarra of the Court of Claims conducted a non-jury trial and awarded $548,300 to MBI for its fixtures at 80 Lake Street and $219,700 for the trade fixtures at 90 Lake Street. As to fee claims, Judge Scuccimarra awarded $1,118,600 for 90 Lake Street ($107,100 more than the $1,011,500 placed in the escrow account by the state pursuant to the agreement of adjustment). Mazur Bros. Realty LLC v State of New York, 36 Misc.3d 1234(A) (Ct Cl 2010)

The Appellate Division modified the award for the fixtures at 90 Lake Street down from $219,700 to $156,600, excluding the mezzanine platform as a compensable trade fixture but otherwise affirming the award. Mazur Brothers Inc. v State of New York, 97 AD3d 826 (2d Dep’t 2012).

Judge Ruderman in the Court of Claims then issued an order subtracting MBI’s trade fixture award for 80 Lake Street out of the sum offered to MBR in the agreement for adjustment ($1,369,500); and subtracted a portion of the trade fixture award for 90 Lake street out of the $1,011,500 offered to MBR in the advance payment agreement. In so doing, the court acknowledged that the amounts in the agreements for adjustment were only for real property and did not include trade fixtures, but felt that it was constrained by a prior order of the Appellate division that the compensation was for the total value of the property. The Court also denied the motion for interest at 9% until the date of payment, holding that interest ran from the date of vesting to the date of deposit into the escrow account, along with whatever interest was applicable to money in the comptroller accounts.

On appeal, MBR argued that the awards for MBI should not have been carved out of its fee awards, and the Appellate Division agreed, stating:

Notwithstanding any prior conclusions drawn by this court that were based solely on certain language in the agreement, the current record reflects that, in fact, the offer amounts did not include compensation for both the real property and trade fixtures. Rather, the offer amounts only covered the real property. Thus, no valid basis exists for diminishing Mazur’s awards. (citations omitted) (emphasis in original)

The Court also rejected the State’s argument that the “law of the case” doctrine should control, noting that the “law of the case is necessarily amorphous in that it direct’s a court’s discretion, but does not restrict its authority.” Here, the court noted, the fully developed record “justified a new determination with respect to the extent of the compensation that was offered in the agreements.” (citations omitted.)

The Court concluded its decision:

Accordingly, Mazur is entitled to distribution of the entire amounts in both of the special eminent domain escrow accounts, established pursuant to the agreement of adjustment and agreement of advance payment, respectively. Our determination is consistent with the rule that the State has an “independent obligation to pay just compensation.” Indeed, as the United States Court of Appeals for the Second Circuit has observed, “just as the Government’s interest in 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 of the [Fifth]; Amendment gives” (citations omitted)


Posted in Eminent Domain, New York, Offer & Compensation, Recent cases, Trade fixtures
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