New York State Court of Claims

New York State Court of Claims

GLADSTONE v. THE STATE OF NEW YORK, #2000-017-612, Claim No. 92827, Motion No. M-61967


Claimant's motion for an additional allowance for attorneys' fees and appraiser's fees in this appropriation claim, pursuant to EDPL section 701, granted.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
Cross-motion number(s):

Claimant's attorney:
McGovern, Connelly & Davidsonby: John. A. Vasile, Esq.
Defendant's attorney:
Eliot Spitzer, Attorney Generalby: J. Gardner Ryan, AAG
Third-party defendant's attorney:

Signature date:
December 22, 2000
White Plains

Official citation:

Appellate results:

See also (multicaptioned case)


In connection with claimant's motion for an additional allowance pursuant to Eminent Domain Procedure Law §701, the court considered the following papers:

Notice of Motion, Affidavits and Exhibits

Affirmation in Opposition

Reply Affidavit

Trial Decision filed December 2, 1999

Judgment entered January 19, 2000

Claimant was awarded the sum of $282,629.75 (exclusive of interest) for the partial appropriation of its property, which was comprised of $112,587.25 in direct damages, $150,250.00 in consequential damages (resulting from the loss of eleven parking spaces) and $19,792.50 for a temporary easement. With interest at the statutory rate of 9%, the total amount awarded was $404,602.16. Claimant now seeks an additional allowance of $10,600 in appraiser's fees and $88,915.48 in attorneys' fees.

EDPL §701 authorizes the award of an additional allowance to reimburse a successful claimant for costs and expenses incurred in litigating a claim for damages resulting from the State's appropriation of its property, provided that the amount awarded in the underlying claim was substantially in excess of what the State offered as just compensation, and provided the court finds that the additional allowance is necessary to achieve just and adequate compensation (see, Lee-Hi Fuel Corp. v State of New York, 179 AD2d 494; Matter of New York City Transit Auth. [Superior Reed & Rattan Furniture Co.], 160 AD2d 705). Here, the State, in fulfilling its constitutional and statutory duty to tender fair market value to a condemnee, offered the claimant the sum of $92,950.00. The amount awarded after trial was $282,629.75, or more than three times the amount offered by the State and clearly substantially in excess of that offer. Indeed, defendant does not argue otherwise, but rather opposes this motion by contending that the additional allowance sought by claimant is not necessary, under the specific circumstances present herein, to provide just and adequate compensation. Defendant raises two arguments in support of its contention: (1) that the expenses for which claimant seeks reimbursement were incurred as part of an effort to urge adoption of an inappropriate measure of damages, and (2) that claimant has received interest on the amount awarded at the statutory rate of 9% (from September 1993, the appropriation date, to the entry of judgment in January, 2000, less an 18-month period where interest was suspended pursuant to Court of Claims Act §19[1]), and that such interest rate has exceeded the rate of return on Treasury bills during that period, thus providing claimant with a windfall that should be used to offset any entitlement to an additional allowance for litigation expenses under EDPL §701. Neither argument withstands analysis.

The major point of difference between the claimant's proof and that of the defendant was on the issue of consequential damages. Defendant's position was that the property did not suffer consequential damage by virtue of the loss of the parking spaces, thus accounting for its unreasonably low offer. Claimant's position, that the loss of eleven parking spaces did cause consequential damage to this small retail shopping plaza, was accepted by the court and was almost entirely the basis for the difference between the defendant's offer and the amount of damages found by the court. That claimant sought a greater amount of consequential damages than what was ultimately awarded is totally irrelevant for the purpose of §701 analysis. Hakes v State of New York (184 AD2d 1035, affd 81 NY2d 392), upon which the defendant relies, as well as its companion case First Bank & Trust Co. of Corning v State of New York (184 AD2d 1034, affd 81 NY2d 392), both stand for the proposition that unreasonable litigation expenses incurred in a quixotic and futile effort to establish a legal or factual theory that was rejected by the court need not be awarded as a §701 allowance, notwithstanding that the claimant in question did receive an award of damages that was substantially in excess of the condemnor's offer. The facts of those cases[1] have absolutely no similarity to the facts of the instant claim merely because the claimant sought more than was awarded or because the court did not fully accept claimant's appraiser's mathematical analysis. This was not a case where claimant sought unsuccessfully to establish some novel or fanciful theory, but rather was a case where claimant's theory (i.e., that the appropriation caused consequential damages) was accepted by the court but the proof justified an award that was less than what claimant sought. The principles set forth in the Hakes and First Bank decisions have no application to the litigation expenses claimant seeks to recover on this motion.

In arguing that claimant's receipt of interest at the statutory rate of 9% represents some type of windfall that should be considered on this motion, defendant relies on the recent decision in Auer v State of New York (Ct Cl, Claim No. 86167, unreported decision and order filed June 22, 2000, Read, P.J.), in which the court applied interest rates of 5.23% (pre-judgment) and 6.375% (post-judgment) to an $18 million judgment entered on behalf of a guardian of a severely injured person. That decision, which proceeded under the authority of Rodriguez v New York City Housing Authority (91 NY2d 76), was based on the submission of proof by the parties, in a post-judgment proceeding, as to the prevailing rates of return on various investment vehicles (e.g., Treasury bills as opposed to common stocks) for the period at issue.

The Rodriguez decision did not change the principle that the 9% interest rate set forth in State Finance Law §16 is "presumptively fair and reasonable" (id., 81); in fact, the principle is specifically reaffirmed, with the court citing City of Buffalo v Clement Co. (28 NY2d 241), notwithstanding the recognition of the power of the legislature to vest discretion in courts to apply a lower rate in appropriate cases. Indeed, such is in accord with the typical operation of any procedural presumption, "which operates to require production of credible evidence to refute the presumption, after which the presumption disappears" (Blacks Law Dictionary, sixth edition, 1186).

In Auer, the court found that the credible evidence produced by the parties was sufficient to overcome the statutory presumption and a lower interest rate was applied. Here, judgment was entered, including interest at the statutory 9% rate, and no request was ever made by the defendant, either at trial or in a post-trial or post-judgment application, for a reduced rate of interest. Defendant having thus waived whatever right it had to submit proof that the statutory rate should not apply to this claim, it cannot now be heard to argue, in opposition to claimant's application for an additional award of litigation expenses, that the application of the "presumptively reasonable" statutory rate is somehow a factor to be considered in the analysis required by EDPL §701. If defendant's position was that claimant herein was entitled to less than 9% interest, it should have made an appropriate application. Its failure to do so requires the conclusion that claimant received fair and appropriate interest, a conclusion that in no way militates against an award pursuant to EDPL §701.

The appraisal fees totaling $10,600.00 appear to the court to be reasonable within the context of this litigation. The counsel fees were determined on a contingency basis; i.e. one-third of the amount recovered in excess of the advance payment, amounting to $88,915.48. This contingency fee arrangement, typical in appropriation claims, is entirely proper within the context of a §701 application (Matter of Hoffman v Town of Malta, 189 AD2d 968) and it is the only appropriate basis for an award of additional litigation expenses in this claim.

Accordingly, for the foregoing reasons, the motion is granted. The clerk of the court is directed to enter judgment in favor of the claimant, pursuant to EDPL §701, in the amount of $99,515.48.

December 22, 2000
White Plains, New York

Judge of the Court of Claims

[1]In Hakes, the court affirmed Judge Hanifin's refusal to award reimbursement of fees incurred in attempting to establish a " ‘preposterous' value that was of no use to the court" (81 NY2d 392, 395) and in First Bank, the fees in question were incurred in an "unrealistic attempt to prove consequential damages to a nonappropriated parcel" (id., 396).