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Rite Aid Corp. v. Town of Irondequoit Bd. of Assessment Review

STATE OF NEW YORK SUPREME COURT COUNTY OF MONROE
Feb 27, 2018
2018 N.Y. Slip Op. 33878 (N.Y. Sup. Ct. 2018)

Opinion

Index No.: E2017001377

02-27-2018

In the Matter of the Application of RITE AID CORPORATION, Petitioner, v. TOWN OF IRONDEQUOIT BOARD OF ASSESSMENT REVIEW, THE ASSESSOR OF THE TOWN OF IRONDEQUOIT, THE TOWN OF IRONDEQUOIT, MONROE COUNTY, NEW YORK. Respondents. For review of a Tax Assessment under Article 7 of the Real Property Tax Law

Appearances Jacobson Law Firm (Robert I. Jacobson, Esq., of counsel) for the Petitioner Davidson Fink (Thomas A. Fink Esq. and Jayla R. Lombardo Esq., of counsel) for the Respondents


NYSCEF DOC. NO. 35

Decision and Order

Appearances Jacobson Law Firm (Robert I. Jacobson, Esq., of counsel) for the Petitioner Davidson Fink (Thomas A. Fink Esq. and Jayla R. Lombardo Esq., of counsel) for the Respondents Daniel J. Doyle, J.

Before the Court are two motions: (1) The Respondents' pre-answer motion to dismiss the petition; and (2) The Petitioner's cross-motion to amend the petition.

Rite Aid, the Petitioner in this matter, operates a retail drug store at 689 East Ridge Road. Rite Aid filed a tax grievance complaint with Respondent Town of Irondequoit on May 18, 2017. Rite Aid does not own the property in fee; instead, the property is owned by Pontus RAD Portfolio, LLC, and is leased by Rite Aid. The lease signed by Rite Aid's predecessor-in-interest provides that Rite Aid "shall have the right... to appeal the amount of any real estate tax assessed against the Leased Premises." The Board of Assessment Review did not dismiss the complaint, and instead, considered the complaint on its merits before denying the complaint. Rite Aid then commenced this action pursuant to RPTL Article 7 seeking review of the Board's decision.

The Respondents' motion to dismiss is rather straightforward. Relying principally on the Second Department's holdings in Larchmont Pancake House v Bd. of Assessors, 153 AD3d 521 [2d Dept 2017] and Circulo Hous. Dev. Fund Corp. v Assessor of City of Long Beach, 96 AD3d 1053, 1056 [2d Dept 2012], the Respondents argue here that because the complaint was made by Rite Aid and not the property owner, the Petitioner failed to comply with a jurisdictional condition precedent set forth in RPTL § 524[3] that a complaint be made by the property owner. Respondents argue that because the Fourth Department has not ruled on this application of RPTL 524[3] this Court is bound to apply the Second Department's holdings in Larchmont and Circulo (Mtn. View Coach Lines, Inc. v Storms, 102 AD2d 663, 664 [2d Dept 1984]).

The Petitioner opposes the motion to dismiss and has made a cross-motion to amend the petition seeking nunc pro tunc relief of providing the authorization of the property owner and amending the complaint by adding the property owner to the petition.

The applicable provisions and their purposes

It is well-established that the tax law "relating to review of assessments is remedial in character and should be liberally construed to the end that the taxpayer's right to have [its] assessment reviewed should not be defeated by a technicality" Matter of Great Eastern. Mall v. Condon, 36 NY2d 544, 548 [1975] quoting People ex rel. New York City Omnibus Corp. v Miller, 282 NY 5, 9 [1939]).

Under Article 7, "any person claiming to be aggrieved by any assessment of real property upon any assessment roll may commence a proceeding under this article" (RPTL § 704[1] (emphasis added)). The Fourth Department has held that a tenant obligated by its lease to pay real estate taxes is "an aggrieved person" that has standing to commence a tax certiorari petition (see Ames Dept. Store, Inc., No. 418 v Assessor, Bd. of Assessors, 261 AD2d 835, 835 [4th Dept 1999]).

Prior to the commencement of an Article 7 petition, a challenge to the tax assessment to the property must be made to the board of assessment (see RPTL § 512; RPTL § 706[2]). The persons "entitled to file complaints in relation to assessments" are articulated in RPTL § 524 (RPTL § 512[2]). RPTL § 524 governs the submission of complaints to the board of assessment review and provides in pertinent part that:

a complaint with respect to an assessment shall be on a form prescribed by the commissioner and shall consist of a statement specifying the respect in which the assessment is excessive, unequal or unlawful, or the respect in which real property is misclassified, and the reduction in assessed valuation or taxable assessed valuation or change in class designation or allocation of assessed valuation sought. Such statement shall also contain an estimate of the value of the real property. Such statement must be made by the person whose property is assessed, or by some person authorized in writing by the complainant or his officer or agent to make such statement who has knowledge of the facts stated therein (RPTL § 524[3] (emphasis added)).
Larchmont and Circulo and the application of stare decisis

Both Larchmont and Circulo featured petitioner lessees commencing an Article 7 petition after the board of assessment denied their assessment complaints on the merits. In each case, the Respondent moved to dismiss the Article 7 petition on the grounds of subject matter jurisdiction and that the petitioner lacked standing. In each case, the Appellate Division, Second Department held that the petitioner did have standing to commence the action under Article 7 (see Larchmont Pancake House v Bd. of Assessors, 153 AD3d at 522; Circulo Hous. Dev. Fund Corp. v Assessor of City of Long Beach, 96 AD3d at1056). However, the Second Department dismissed the petitions in both matters holding that RPTL § 524[3] "requires that the property owner file a complaint or grievance to obtain administrative review of the tax assessment (Circulo Hous. Dev. Fund Corp. v Assessor of City of Long Beach, 96 AD3d at 1056 (emphasis in the original); Larchmont Pancake House v Bd. of Assessors, 153 AD3d at 522 (citing Circulo). Both Larchmont and Circulo held that Supreme Court lacked the jurisdiction to hear the Article 7 petition, essentially treating the fact that the petitioner's complaint as a nullity. An examination of the facts in Larchmont and Circuolo reveal that though both the petitioners in those cases leased the property and both were contractually responsible for paying the taxes on the property, it was not discussed whether either had a lease in which the owner of the property conferred upon them the right to challenge the tax assessments. Both the decisions in Larchmont and Circulo refer to the requirement that the "property owner" file the complaint, but the statute does not actually use the word owner, but rather "the person whose property is assessed" (RPTL § 524[3]). Finally, neither petitioner sought relief to either amend the petition or for relief nunc pro tunc to provide authorization from the property owner.

While it is true that the Appellate Division is a single statewide court divided into departments for administrative convenience, and, therefore, the doctrine of stare decisis requires this Court follow precedents set by the Appellate Division of another department until the Court of Appeals or the Fourth Department pronounces a contrary rule (Mountain View Coach Lines, Inc. v Storms, 102 AD2d 663, 664 [2d Dept 1984]), that rule is only implicated when the requirements of stare decisis are met and when the Fourth Department has not ruled on the issue. The stare decisis effect of an appellate decision is applied "only as to those questions presented, considered and squarely decided" (People v Bourne, 139 AD2d 210, 216 [1st Dept 1988]). Here, as the decisions in Larchmont and Circulo appear to only involve petitioners who did not have a provision in their leases which authorized them to appeal tax assessments, it does not appear that each decision addressed the factual scenario presented here. Likewise, the petitioner in Larchmont and Circulo did not seek amendment and nunc pro tunc releif Rite Aid seeks in this case.

If the Court were to find that it were bound by the stare decisis application of Mountain View Coach Lines, Inc. v Storms, the Court could look instead to Divi Hotels Mktg. Inc. v Bd. of Assessors of County of Tompkins, 207 AD2d 580, 581 [3d Dept 1994]. In Divi, the Third Department reversed the trial court's order denying the petitioner's cross-motion to amend and granting the respondent's motion to dismiss in a case where the complaint before the board of assessment was in the name of an entity that would otherwise have standing to commence an Article 7 petition but did not, at the time, own the property. The Third Department denied dismissal and allowed the amendment by "adopting a broad and practical view" reasoning:

The petition in both the administrative and judicial proceedings clearly identified the subject realty by tax map section, block and lot number,
thereby permitting precise identification of the owner from respondents' own records, and contained allegations to the effect that the respective matters were being pursued on behalf of the owner of the property, a party with undeniable standing, pursuant to authority duly granted. Thus viewed, there can be no reasonable question, first, that we are dealing with a mere misnomer and, second, that no prejudice to respondents resulted (Divi Hotels Mktg. Inc. v Bd. of Assessors of County of Tompkins, 207 AD2d at 581-82).

Indeed, the Second Department's view that an improper or missing authorization on a complaint before the board of assessment review was not so sacrosanct as to not allow nunc pro tunc amendment. In Astoria Fed. Sav. & Loan Ass'n v Bd. of Assessors, 212 AD2d 600 [2d Dept 1995], the Second Department permitted the nunc pro tunc amendment of the administrative complaint that had a defective authorization holding:

The only things necessary to the exercise of jurisdiction are that within the time specified a complaint under oath in writing be presented stating the objection and the grounds thereof. Contrary to the appellants' contention, defects in the form of the complaint have expressly been held not to be jurisdictional. The appellants received adequate notice of the commencement of the proceeding, and no substantial right of the appellants would 'be prejudiced by disregarding the defect. The defect may thus be properly cured by submission of a properly dated authorization nunc pro tunc (Astoria Fed. Sav. & Loan Ass'n v Bd. of Assessors, 212 AD2d at 601 (internal citations and quotations omitted)

Thus, as the Second Department did not overrule Astoria in Larchmont and Circulo and the Third Department also permitted the nunc pro tunc relief sought by the Petitioner in this case, Larchmont and Circulo do not mandate dismissal in this case. Moreover, as set forth below, the Fourth Department is not silent on this issue.

The Law of the Fourth Department

In discussing Supreme Court's jurisdiction over a tax certiorari petition, the Fourth Department has held that for the purposes of Supreme Court's jurisdiction, all that is required is that:

if a complaint or a reasonable substitute therefore has been timely filed with the Review Board, that gives jurisdiction, and that other requirements are procedural and may be supplied by amendment or may be deemed waived by action of the Board (Raer Corp. v Vil. Bd. of Trustees of Vil. of Clifton Springs, 78 AD2d 989, 989 [4th Dept 1980]).
The Fourth Department's holding was consistent with the Court of Appeals holding in W.T. Grant Co v Srogi:
the primary purpose of the tax petition is to give notice to the taxing authority so that it may take such steps as may be advisable to defend the claim. That being the case, where adequate notice has been given, we see no good reason to adhere blindly to a rule which precludes a court from granting the relief justified by the proof (W. T. Grant Co. v Srogi, 52 NY2d 496, 513 [1981]).

Applying the requirements that only the timely service of a written complaint is a jurisdictional requirement and that the other requirements imposed by RPTL are procedural in nature, the Fourth Department has repeatedly held that a board of assessment's decision on the merits and failure to dismiss the complaint constitutes a subsequent waiver of any claimed defects (see Skuse v Town of S. Bristol, 99 AD2d 670 [4th Dept 1984] (board's deciding the complaint on the merits waived the alleged lack of written authorization for the board of managers to represent the property owners); City of Little Falls v Bd. of Assessors of Town of Salisbury, 68 AD2d 734, 740 [4th Dept 1979] (the board's deciding the complaint on the merits waived the failure to state the extent of the overvaluation and file a single application for each parcel); Henderson v Silco, 36 AD2d 439, 440 [4th Dept 1971] (the board by acting on complaint that was not verified and was given to the Supervisor instead of the Assessor, waived any jurisdictional claim)).

Thus, the Fourth Department has held that should the board of assessment act on the merits of a timely filed complaint, any alleged defects (even those otherwise going to jurisdiction) are waived. Here, the Respondent Board of Assessment received a timely complaint and rather than dismissing it for the reasons sought in their motion, they ruled on its merits. Therefore, even if Larchmont and Crisculo were correctly decided that a lessee's complaint to a board of assessment is a jurisdictional defect, the law of the Fourth Department holds that such a jurisdictional defect is waived if the board of assessment rules on the merits.

The rules of statutory construction and decisional authority do not favor the Respondents' restrictive construction of the Second Department's reading of RPTL § 524[3]

As discussed above, the Court of Appeals has held that the statutory scheme regarding tax assessment challenges is remedial in nature. The interpretation of a remedial statute requires that it " must be liberally construed to effect or carry out the reforms intended and to promote justice "(Dewine v State of New York Bd. of Examiners of Sex Offenders, 89 AD3d 88, 92 [4th Dept 2011] quoting McKinney's Statutes § 321). A liberal construction of a statute "is one that is in the interest of those whose rights are to be protected, and if a case is within the beneficial intention of a remedial act it is deemed within the statute, though actually it is not within the letter of the law" (Dewine v State of New York Bd. of Examiners of Sex Offenders, 89 AD3d at 92 (providing a liberal interpretation of the SORA statute)).

Here, the Respondents urge the Court to read RPTL § 524[3] to require that the property owner sign the authorization portion of the grievance complaint. First, the text of RPTL § 524[3] is not so restrictive. The text of RPTL § 524 [3] states in pertinent part:

Such statement must be made by the person whose property is assessed, or by some person authorized in writing by the complainant or his officer or agent to make such statement who has knowledge of the facts stated therein (RPTL § 524[3] (emphasis added)).

While the Respondents would read the language that the statement " must be made by the person whose property is assessed" as only consisting of the property owner, such a construction is not favored by the decisional authority that holds that a lessee who is obligated to pay taxes as part of a lease and the right to challenge the assessment possesses the" requisite unitary property interest" necessary to maintain an Article 7 action (Ames Dept. Store, Inc., No. 418 v Assessor, Bd. of Assessors, 261 AD2d 835, 835 [4th Dept 1999] quoting Waldbaum, Inc. v Fin. Adm'r of City of New York, 74 NY2d 128, 134 [1989]).

To interpret RPTL § 524[3] to require that the deeded property owner sign the authorization on the grievance complaint would also lead to objectionable results in that there are times in which the interests of the deeded property owner and lessee are not aligned. For example, in Ames Dept. Store, Inc., No. 418 v Assessor, Bd. of Assessors, the Fourth Department permitted the lessee to maintain an Article 7 petition even when the deeded owner and the municipality reached an agreement on the issue (Ames Dept. Store, Inc., No. 418 v Assessor, Bd. of Assessors 261 AD2d at 835). And again in Big V Supermarkets, Inc., Store No. 217 v Assessor of Town of E. Greenbush, 114 AD2d 726 [3d Dept 1985], the Third Department held that a lessee could maintain an Article 7 petition even where the deeded property owner and municipality agreed to arbitrate the issue (Big V Supermarkets, Inc., Store No. 217 v Assessor of Town of E. Greenbush, 114 AD2d at 728).

Reading RPTL §524[3] to require that the deeded property owner sign the authorization of the grievance complaint would have precluded the petitioners in Ames and Big V from challenging their tax assessments. It is a fundamental rule of statutory construction that "of two constructions which might be placed upon an ambiguous statute one which would cause objectionable consequences is to be avoided" (People v Ortega, 127 Misc 2d 717, 724 [ Sup Ct 1985], affd, 118 AD2d 523 [1st Dept 1986], affd, 69 NY2d 763 [1987]; McKinney's Statutes § 141).

The Respondents also argue that RPTL § 524[3] ("the person whose property is assessed") is found in Article 5 and pertains to administrative complaints before the board of assessment review and that the standing provision of RPTL § 704[1] ("Any person claiming to be aggrieved by any assessment of real property upon any assessment roll may commence a proceeding under this article by filing a petition") is found in a different article and should, therefore, be construed separately. The filing of a grievance complaint under Article 5 and its review by the board of assessment is a jurisdictional prerequisite to filing a petition under Article 7 (RPTL § 706; Grossman v Bd. of Trustees of Vil. of Geneseo, 44 AD2d 259, 263 [4th Dept 1974]). The two articles are interlocking and pertain to the same subject matter and, as such, the pari materia rule of statutory construction (see Statutes § 221) requires that both articles be "construed together and applied harmoniously and consistently" (Baldine v Gomulka, 61 AD2d 419, 422 [3d Dept 1978] (internal citations omitted)). In interpreting the phrase "person claiming to be aggrieved by an assessment," one court held that it should not be so narrowly construed:

The statute requires that the petition be brought by a "person claiming to be aggrieved by an assessment" (RPTL § 704 [1]). It does not state that a person may only be aggrieved if he has a statutory obligation to make tax payments. An individual may be "aggrieved" as a result of a contractual assessment. Such individuals include lessees who are bound to make payments to a landlord, contract vendees, and indemnitors. The key is
whether the party's pecuniary interests are or may be adversely affected' by an assessment not whether the adverse effect is the result of a contract or direct tax liability (Pass & Seymour, Inc. v Town of Geddes, 126 Misc 2d 805, 807 [ Sup Ct 1984] (internal citations and quotations omitted)).

The logic in interpreting the language of RPTL § 704[1] applies equally to the language of RPTL 524[3]. The Respondents' argument that since a leasehold is personalty and not an estate in land it is not subject to taxation under RPTL § 300 the phrase in RPTL § 524[3] "the person whose property is assessed" can only apply to the property owner. The assessment of real estate tax under RPTL Article 3, administratively challenged under RPTL Article 5 and judicially challenged under RPTL Article 7 is an assessment against the real property. As such, the Court of Appeals has held that where there is an agreement by a leaseholder to pay taxes, a tax assessment may properly be entered against the leaseholder despite the fact that a leasehold is personalty and not an estate in land (see Oak Is. Beach Ass'n, Inc. v Mascari, 47 Misc 2d 21, 26 [ Sup Ct 1965], affd sub nom. W. Gilgo Beach Assn., Inc. v Mascari, 25 AD2d 497 [2d Dept 1966], affd sub nom. W. Gilgo Beach Assn. v Mascari, 18 NY2d 861 [1966]).

Finally, RPTL § 524[3] delegates to the Commissioner of the Department of Taxation and Finance to create the grievance complaint form used by property owners in making complaints. The Commissioner promulgated both the form RP-524 grievance complaint, as well as its instructions. The instructions to the form under the heading "GRIEVANCE PROCEDURES" state:

Any person who pays property taxes can grieve an assessment, including:

• property owners
• purchasers
• tenants who are required to pay property taxes pursuant to a lease or written agreement

The instructions do not advise the reader that purchasers or tenants have to obtain the property owner's authorization to use the grievance process, rather, the instructions explicitly state that "tenants who are required to pay property taxes" can grieve the assessment. The RP-524 form and the RP-524 form instructions do not, in fact, distinguish between property owners, purchasers and tenants. Lastly, in explaining Part four (("Designation of representative") of the RP-524 form (the portion of the form the Respondents' contend the property owner needed to designate Rite Aid to represent them on the grievance), the instructions simply state that if "you designated someone to represent you before the BAR, then list your name, your representative's name, sign and date." If Respondents' interpretation is correct, then the Commissioner's instructions to the RP-524 form are incorrect and should have advised that only a property owner can grieve an assessment and that a purchaser and tenant was required to be designated by the property owner. Because the Legislature deferred to the Commissioner of the Department of Taxation and Finance to promulgate the RP-524 form and its instructions, the Commissioner's determination that a tenant can grieve the assessment is instructive and is entitled to some deference (see Koch v Sheehan, 95 AD3d 82, 89 [4th Dept 2012], affd, 21 NY3d 697 [2013]).

Conclusion

Based upon the foregoing, it is hereby

ORDERED that the Respondents' motion to dismiss is denied in its entirety; and it is further

ORDERED that the Petitioner's cross-motion is granted in its entirety. Dated: February 27, 2018

/s/_________

The Honorable Daniel J. Doyle

Supreme Court Justice


Summaries of

Rite Aid Corp. v. Town of Irondequoit Bd. of Assessment Review

STATE OF NEW YORK SUPREME COURT COUNTY OF MONROE
Feb 27, 2018
2018 N.Y. Slip Op. 33878 (N.Y. Sup. Ct. 2018)
Case details for

Rite Aid Corp. v. Town of Irondequoit Bd. of Assessment Review

Case Details

Full title:In the Matter of the Application of RITE AID CORPORATION, Petitioner, v…

Court:STATE OF NEW YORK SUPREME COURT COUNTY OF MONROE

Date published: Feb 27, 2018

Citations

2018 N.Y. Slip Op. 33878 (N.Y. Sup. Ct. 2018)