New York State Court of Claims

New York State Court of Claims

JWD REALTY v. THE STATE OF NEW YORK, #2003-030-034, Claim No. 102213


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:
Defendant's attorney:
Third-party defendant's attorney:

Signature date:
September 15, 2003
White Plains

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Appellate results:

See also (multicaptioned case)


JWD Realty Associates, the Claimant herein, seeks damages for the permanent and temporary partial appropriation of its property, pursuant to Eminent Domain Procedure Law and Highway Law §30, in a proceeding known as P.I.N. 0188.02.223, Sunrise Highway Extension, 7-B, S.H.52-12; the property being located in the County of Suffolk, as reflected in two Maps numbered Map 284, Parcel 334 [Exhibit 2] and Map 352, Parcel 402 [Exhibit 3], respectively, in Claim Number 102213, filed on April 3, 2000,[1] [Exhibit 1]. The parties stipulated that the taking date was January 12, 1994 and that the claim was duly filed. The appropriation maps and descriptions contained therein are adopted by the Court and incorporated herein by reference. The Court has made the required viewing of the property which is the subject of this claim.

Both parties' appraisers conclude that the Claimant is the owner of the subject property [Exhibits 4 and A]. The Court finds that the Claimant has established title to the subject property.

To this Court's knowledge, this claim has not been assigned or submitted to any other court, tribunal or officer for audit or determination.
The parties stipulated to the following factual issues, and the Court adopts such findings as its own:

(1) The value of the land as vacant in the before situation is $1,500,000.00.

(2) the value of the land as improved in the before situation is $2,225,000.00.

(3) Direct damages are in the total amount of $325,000.00 broken down as follows: (a) The direct damage to the site improvement is $80,000.00.
(b) The compensable direct damage for the expenses involved with the acquisition of re-permitting and zoning applications is $26,000.00.
(c) The temporary easement extended for a period of forty (40) months, from January 12, 1994 to May 16, 1997, when the certificate of completion was filed [Exhibit C], resulting in direct damages of $19,000.00 as found by the State's appraiser.

(d) Direct damage for the land acquired is in the amount of $200,000.00.

(4) Thirty (30) display spaces were lost as a result of the taking.

(5) The engineering reports of both parties are submitted without objection, and the testimony is limited to the respective parties' expert appraisers. [See, Exhibits 5 and B].
Pursuant to the stipulation, the issues remaining for the Court's resolution are:

(1) Whether the acquisition of the spaces in front of the property has resulted in compensable severance damage. In the event that the Court finds that the value of the remainder has been diminished, the parties have agreed that the severance damage is in the amount of $350,000.00.

(2) Whether the temporary easement resulted in compensable severance damage. In the event the Court finds that the temporary easement caused such damage, the severance damage is in the amount of $150,000.00.
The subject property, utilized as an automobile dealership, is located on the south side of Sunrise Highway, ± 750 feet west of the southeast corner of Sunrise Highway and Broadway Avenue, and ± 480 feet east of Raft Avenue. As of the date of vesting, it was an irregularly shaped parcel consisting of ±149,823 sq. ft. (3.44 acres) improved with a one story commercial building. It had 249.80 feet of frontage along Sunrise Highway. As part of the reconstruction project widening Sunrise Highway, the State appropriated a strip along the frontage totaling ± 20,544 sq. ft. (±.47 acre). A temporary easement of ± 5,319 sq. ft. (± .122 acre) - running adjacent to the property taken in fee - was imposed on the property from the date of vesting until termination. The property is zoned B-3 under the applicable Town of Islip zoning code, allowing for general retail business and, by special permit, motor vehicle dealerships among other uses.[Exhibit 4]. As of the date of vesting, the property was in conformance with zoning regulations, and was used as an automobile dealership selling Audi, Volkswagen and Subaru brands.

Ronald Haberman, Claimant's expert appraiser, testified that in 1987 the property was improved with an automobile dealership of 15,000 sq. ft. designed with a deep setback of 150 to 175 feet off of Sunrise Highway to "maximize out the area in the front of the building that could be used for the display of cars, which is typical for an automobile dealership." [T 14].[2] In his opinion, the highest and best use for the property as of the taking was as an automobile dealership. A site plan prepared in 1986 shows 63 spaces in the front of the building, a state of affairs that continued until the taking. [See, Exhibit 6]. It was his opinion that the taking of spaces across the front of the property - the taking of from 65 feet to 105 feet across the frontage, leaving 85 feet on the west and about 70 feet on the east - caused severance damages to the remainder over and above the direct damages. [T 17].

By way of explaining that opinion, Mr. Haberman contrasted the relative interest potential tenants or purchasers for an office building might have, as compared to entities looking for automobile dealership space. He opined that for an office building, it is the building itself which "sells" the potential tenant or purchaser, not the position of the parking. For an automobile dealership however, the amount of display area available for new and used cars is paramount. Boat sellers, furniture dealers, pool sellers and those selling Christmas trees all share the same interest in a display area toward the front of whatever building rests on the property. [T 19-23].

With respect to the temporary easement during the construction phase of the project, Mr. Haberman indicated that the area imposed upon was approximately 20 feet deep and located behind the fee taking line. [See Exhibit 3]. Construction work started in the spring of 1994, and intensified "through 1995 and into 1996 . . .[T]he bridge over Broadway, . . . immediately to the east [of the subject property] was open December . . . ‘95, and the new Sunrise Highway . . . was not open until October, ‘96, . . . over two years after the vesting date . . . the final one-and-a-half inches of Macadam was . . . put down along the service road in front of the subject property. . . in October, ‘96 [as well]." [T30; See also photographs in Exhibit 8]. In his report the witness further stated that trucks and heavy equipment placed within the temporary easement further impeded access. Access was limited throughout the relevant period, and ". . . at times there was no access to the site." [See Exhibit 4, Page 84]. Because the surface was composed of dirt and sand for the extended period, display vehicles were washed more frequently. Impassable areas of standing water were created during construction and noise and vibration caused by the use of heavy equipment was . . . disruptive to the business. [See Id T 36-38].

On cross-examination, the witness admitted that he did not have information concerning specific dates complete access was denied [T 39], that the dirt areas depicted in some of the photographs were on the property taken in fee as opposed to the temporary easement area [T 40-43]; and that the site plan created in 1986 for the dealership contemplated a future taking by the State of New York, [See Exhibit 6; T 45-46], at some unspecified date. [T 56]. On re-direct he explained that in his experience many proposed takings never occur. [T-57].

Mr. Haberman also explained why he was of the opinion that there is a separate item of damage caused by the temporary easement - rather than simply increasing the percentages applied to valuing the site under traditional methodology suggested by the cross-examiner. He stated that the first step in valuation is establishing the rate of return attributable to the area of the temporary easement over the applicable term, based on rental figures. Then, he opined, ". . . we're not only saying . . . what is the rent for the . . . [temporary easement] area. We're talking about the diminution in the remaining property, how that's impacted by everything that's happened on . . . the . . . [temporary easement] area . . . and then around it." [T 51]. He stated that altering the percentage ". . . would not be practical, it would not be a true measure of the rental value for that piece of land. If that piece of land is worth X amount of dollars per square foot, and now you want to find out what it's going to be rented at, you merely take a rate of return and you find that out. All we're doing with the . . . severance during the roadwork and during the . . . [temporary easement] is we're saying that because of this tremendous interruption in the whole business, in the whole piece of real estate, that it interferes with its highest and best use, that it impacts the remaining value of the property and we take a rental . . . loss . . . we find out what the rent should be and what the rent is net of . . . all this interruption, and we capitalize that rental loss." [T 52-53].

Lawrence M. Indimine, the State's expert appraiser also testified. He stated that valuation of an automobile dealership will take into account the presence of some display area in the front of any structure, but the primary concern is that there be enough space to accommodate the inventory. Automobile dealerships, he opined, are "destination" type businesses. When an individual is in the market to purchase a car, he consults other sources before actually heading to the dealer. Although there are some cars out front for display, to "catch your eye," parking areas can be ". . . at the side . . . at the front . . . [and/or] at the rear of the property." [T 67-68]. Mr. Indimine noted that the most expensive appraisal in Claimant's expert's report was for a dealership that had ". . . probably only about 20 parking spaces available at the front." [T 68].

When Mr. Indimine did his analysis of the subject property, he did not include any severance damages with regard to the loss of parking. He stated: ". . . the site was developed with the construction in mind. Severance damages . . . would result in a negative value to the property above and beyond what the direct damages were. With this property being designed with the construction in mind, they were able to certainly accommodate enough cars at the side and at the front to still have a viable automobile dealership use in the after situation." [T 69]. He reiterated that some of the comparable sales used do not have as much frontage as the subject property in the after situation, yet still remain ". . . viable auto dealership uses." [T 70]. What differences did exist were attributable to "normal land-to-building ratios, . . . building size, which may appeal to various different auto dealerships because . . . [for example] a Subaru would need a smaller site than say a Ford." [Id].

With regard to the alleged severance damage caused by the temporary easement, Mr. Indimine disagreed with the concept, saying the construction did not deny access or " . . . change the use of the property or the utility of the property afterwards . . . [R]oad construction . . . is not compensable." [T 71]. Similarly, he found that even assuming that there was a category of severance damages caused by the temporary easement - which he would interpret as damage to the remainder - there did not seem to be any damage. He said that the State "did not obstruct access, people were permitted to go to travel the property, . . . [he] was not notified of any dates that access was not permitted onto this property, so . . . [he didn't] see then why there would be a reason for temporary easement severance damages." [T 74]. Because there was no damage to the remainder - or damage to any improvements - there is no severance damage.

On cross-examination, Mr. Indimine concurred with the statement that display is important for the automobile dealership use, and that he had made adjustments in his analysis of comparables based upon the adequacy of display areas. [T 75-76]. He defined "front display" as a first row of parking, ". . . because that's about all you can see from the road when you're traveling on it." [T 79]. He conceded that the greater the amount of setback, the greater the adequacy of the site might be for accommodating more car brands, calling it "super adequacy." [T 82]. He agreed - albeit unenthusiastically - that to the extent an owner had this "super adequacy" it could give them a greater ability to accommodate other brands. [Id]. He noted that - including display and storage of cars - between 120 and 150 spaces would be required for an adequate car dealership, [T 83], in some cases the spaces would be necessary for each brand of automobile. [T 84]. Indeed, he agreed that the manufacturer would have requirements for how many cars could be displayed and stored on a site in order to allow the dealer to sell the particular brand. [T 85]. He agreed that a high volume brand such as Toyota - while it could have been handled in the before situation on the subject property - could not be accommodated in the after situation as an additional brand, although he disagreed that the reduction in front display area would be the cause, opining instead that reduction in storage area would prevent it. [T 86].

Additionally, he had to concur that car dealerships are generally located on busy thoroughfares, are generally clustered together, are rarely on secondary roads, because the busier locations have the ". . . highest volume of traffic . . .", and that location adjustments are made should the dealership be at a lesser location, somewhat belying the significance of the subject property's characterization as a "destination" type business. [T 87-88].
As noted, both parties essentially agree that the highest and best use of the subject property, both in the before and after situation, is as an automobile dealership. The differences lie in how each expert views the impact of the taking on the viability of the use. Certainly, unlike the automobile dealership in the most relevant case cited, Enmac Realty Corp. v State of New York, 38 AD2d 650 (3d Dept 1971),[3] the Claimant here did not lose all frontal display area, nonetheless, after carefully considering the two perspectives, the Court cannot help but agree that there is severance damage to the remainder attributable to the loss of half the original frontal display area.

By way of a somewhat inexact analogy, while the owner of property abutting a public highway generally has a compensable right of access, it is not absolute. Raj v State of New York, 124 AD2d 426 (3d Dept 1986). The issue is whether the taking resulted in a loss of suitable access detracting from the highest and best use of the property. See e.g., 224 Troup Realty, Inc. v State of New York, 88 AD2d 773 (4th Dept 1982). When the effect of ". . . a taking is to make access to the property merely circuitous, but nevertheless adequate for the pretaking highest and best use, an award of consequential damages will not be sustained. However, if it is shown that the taking rendered the access unsuitable in addition to circuitous, compensability follows (Priestly v State of New York, 23 NY2d 152; Baan v State of New York, 75 AD2d 919). Suitability of access is directly related to the highest and best use of the property, and when the highest and best use is changed as a result of the remaining access, the damage is compensable." Weinstein v State of New York, Claim Number 64786 (unreported decision, September 29, 1982, Silverman, J.).

Thus in Weinstein v State of New York, supra, the Court found that the taking at issue changed the highest and best use from a commercial one requiring a high traffic volume, to a residential one allowing construction of a two-family dwelling. The Court then concluded that the loss of direct access from Sunrise Highway - the major road at issue there - was compensable.

In this case, "spontaneous" type of access that might be required of a lot to be developed as a fast food chain, for example, is not an integral part of the highest and best use. But the visibility of new products and used automobiles, as well as a variety of brands, is a part of the use. Indeed, some brands of automobiles require that their dealers have specific display areas available in order to sell their brand. Thus while the taking did not change the highest and best use from one use to another, it did diminish the value of the use. A better analogy may be found in Ross v State of New York, 89 AD2d 709 (3d Dept 1982), where the frontal display area of a retail establishment was impacted by a taking, and the loss was made an item of severance damages. The Appellate Division approved of the finding.

In the case at bar, the State takes the position that as a "destination" type business, an automobile dealership does not need the frontal display area in order to maintain that highest and best use, and compensation in the form of direct damages suffices as reparation. Additionally, the fact that there was some awareness as early as 1986 - when the site plans were put in place - that there might be a future taking, is urged as a reason why the loss of some frontal display area is not separately compensable.[4] As noted by the Claimant's expert, however, many proposed takings never occur, and while an automobile dealership has some aspects of a destination type business, it also is the type of business that directly benefits from substantial frontal display areas to highlight new products and show brand variety.

Compensation for loss of access as it relates to the claimed diminution of the parcel's highest and best use will be awarded herein. The parties have stipulated to an amount as severance damage within the range of evidence provided [See Exhibit 4], and, accordingly, the Court finds that Claimant has suffered severance damages for the loss of thirty (30) frontal display spaces in the amount of $350,000.00.

With respect to Claimant's argument that it is entitled to further severance damages attributable to the temporary easement, the Court concurs with the State's position. Whatever inconvenience Claimant may have suffered because of the construction or other use of the temporary easement area by the State, it was not of a permanent nature. By definition, a temporary easement is just that: temporary. The State adequately paid for the privilege of using the strip of land, and it has been returned to Claimant. Claimant has not demonstrated that permanent damage to the remainder has been sustained, nor that any inconvenience has not been adequately compensated for. There has been no showing that the temporary easement rendered the remaining property inaccessible and unavailable for development for the entire period of the easement in the manner contemplated in the relevant case in this area, Kadlec v State of New York, 264 AD2d 420 (2d Dept 1999). There, the claimant established that there was no access to his property for the entire temporary easement period, amounting to a de facto taking of his entire remaining property. Here, Claimant has presented only very general evidence of inconvenience.

Accordingly, total damages found by the Court within the range of testimony and evidence submitted are as follows: (1) direct damages in the amount of $325,000.00, broken down as (a) loss of land $200,000.00; (b) damage to the site improvement in the amount of $80,000.00; (c) the cost of re-permitting and zoning $26,000.00; and (d) the use of the temporary easement from January 12, 1994 to May 16, 1997 in the amount of $19,000.00; (2) severance damages in the amount of $350,000.00 for the loss of thirty (30) frontal display/parking spaces, or $675,000.00 total, together with statutory interest thereon from the vesting date of January 12, 1994 to July 12, 1994, and from April 3, 2000 to the date of decision herein and thereafter to the date of entry of judgment for the appropriation.

The award to Claimant herein is exclusive of the claim, if any, of persons other than the owners of the appropriated property, their tenants, mortgagees and lienors having any right or interest in any stream, lake, drainage and irrigation ditch or channel, street, road, highway or public or private right-of-way or the bed thereof within the limits of the appropriated property or contiguous thereto; and is exclusive also of claims, if any, for the value of and/or damage to easements and appurtenant facilities for the construction, operation and maintenance of publicly owned or public service electric, telephone, telegraph, pipe, water, sewer and railroad lines.

All other motions on which the Court may have previously reserved or which were not previously determined, are hereby denied.

It is ordered that to the extent Claimant has paid a filing fee, it may be recoverable pursuant to Court of Claims Act § 11-a(2).

Let Judgment be entered accordingly.

September 15, 2003
White Plains, New York

Judge of the Court of Claims

[1] See, JWD Realty Associates v State of New York, Claim No. 102213, Motion No. M-62984, Cross-Motion CM-63112 (Nadel, J., June 15, 2001), re: timeliness of claim.[Exhibit 9].
[2] Transcript pages are designated by the letter T.
[3] The Appellate Division recognized that there was severance damage for the loss of frontal display space, but reversed the Court of Claims decision based upon an improper calculation of damages.
[4] Although the State submitted a post-trial Memorandum of Law, it cited one case for the proposition that the Court has the discretion to award consequential damages, and quoted from a textbook on valuation in the litigation context without citing a page number, or including a copy of the quoted material to otherwise place it in context. No other cases were cited, nor were any other treatises referred to.