Eminent Domain and New York’s Requirement for an Advance Payment: Stop the Monkey Business

We wrote on several occasions of the State of New York’s improper conduct of depositing the authorized advance payment into the State’s Comptroller’s Office.

The State fails to provide any advance notice and refuses to tell the claimant when the deposit was made or why.  The claimant first learns the “when” and the “why” when the State submits an Answer.  And often times the purported rationale is questionable.

Unless a court intervenes and stops this improper conduct, the State’s automatic deposits of the advance payment will continue unabated and a constant stream of distribution proceedings is guaranteed.  The Eminent Domain Procedure Law (“EDPL”) and the Rules of the Court of Claims state that money is only to be deposited when there is a conflict of title.

For the State to automatically deposit the advance payment when there is an  absence of any conflict in title, and without prior notice, without explanation, and as a matter of course in each and every appropriation matter regardless of the circumstances is clearly in bad faith, just as the State was recently found to have acted in bad faith by the Second Department in Matter of Zutt v State of New York, 99 AD3d 85 (2d Dept 2012).

Absent court intervention, this procedure will continue to the substantial detriment of private property owners who have had their property appropriated against their will pursuant to the State’s power of eminent domain.  The EDPL mandates expeditious payment of just compensation.  EDPL Sec. 301.

New York law requires an advance payment.  In fact, as characterized long ago by In Matter of Mayor of City of NY, 99 NY 569, 577 (1885), the Court of Appeals wrote: While it is not necessary, in advance of taking, to pay to the landowner his [or her] compensation, it is necessary that the act which invades his [or her] ownership shall provide for certain and definite and adequate source and manner of payment…This necessity is vital and of the most essential character, since if unheeded or disregarded, it transforms the right of eminent domain into a legalized plunder of the citizen.  (Citation omitted.)

Thus, pursuant to the EDPL, the condemnor is required to appraise the real property taken, to make an advance payment, and to do so, making “every reasonable and expeditious effort.”  See EDPL §§ 101, 301, 302, 303 and 304.  Of great importance is “[protecting] the interests of property owners and [ensuring] that their property is taken only in accord with proper procedure and for just compensation.”  East Thirteenth Street Community Assoc. v New York State Urban Dev., 84 NY2d 287, 296 (1994).

The advance payment is “mandatory and seek[s] to alleviate the hardship imposed on owners in financing the purchase, rental or replacement of the property taken by eminent domain.”  In re William Cullen Bryant Park & Preserve, 87 Misc2d 1004, 1005 (N.Y. Sup. Ct. 1976); see City of New Rochelle v Sigel, 65 Misc2d 962, 965 (N.Y. Sup. Ct. 1970) (“the property owner should be placed in a position where at the time the title is divested he receives some moneys to enable him to do what is necessary to compensate him for his loss”); see also, e.g., Whitehall Corners Inc. v State, 210 AD2d 398, 399 (2d Dept 1994).

Federal law provided by the Uniform Relocation Assistance Act of 1970 also prohibits delay in payment of just compensation.  “[W]hen a condemnor avails itself of the formidable power of eminent domain, which is so often directed against people who, if it were up to them, would insist that the condemnor go elsewhere…the condemnor should do everything possible to reduce the adverse effects of the condemnation.”  See 1974 Report of the State Commission on Eminent Domain and Real Property Tax Assessment Review, Comment § 304, p. 27 (emphasis added).

The State demands that a claimant execute its paperwork without alteration.  But these requirements are unlawful.  This, and the improper seemingly automatic deposit of advance payments without reason, requires litigation.  The State always loses, but never change their ways.

The Attorney General always claims that deposit is necessary because of a federally aided project.  This improper practice requires unnecessary filing of a separate distribution proceeding.  In a decision written by Court of Claims Judge Stephen J. Mignano, 292 Piermont, LLC v The State of New York (Decision filed December 29, 2014), the Court noted that the State deposited the advance payment the day after vesting title.  It held that the deposit was not pursuant to any of the terms of the statute.  The Court also discussed the fact that a claimant could appropriately refuse to sign an agreement which contained improper language was consistent with the statute which required the condemnor to make every reasonable effort to justify compensate persons for such real property by negotiation and agreement.  EDPL Sec. 301.  Judge Mignano held that claimant’s letter adequately accepted the offer in its letter and the amount on deposit should have been released to claimant.

In another decision, Court of Claims Judge Scuccimarra held that there was no basis for the State to claim that the deposit was necessary because of a federal basis.  In addition, Judge Scuccimarra wrote, “[a]dditionally, the Court cannot help but agree that there is an uncomfortable pattern on the part of the State in making such deposits as a matter of course, and with impunity, since it is not required to give notice or provide a reason initially, but rather provides a rationale for the deposit after the fact, when the citizen has been put to the expense of initiating a distribution proceeding in this Court.  This is suggested by the sea of distribution proceedings recently assigned throughout the Court of Claims, brought by the same attorney with analogous factual iterations.  Citations omitted.”

Surely after all the litigation regarding the State’s improper conduct, sanctions are appropriate.

Posted in Advance Payments, Distribution Proceeding, Eminent Domain
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