New York State Court of Claims

New York State Court of Claims

OVERSEAS AMERICAN v. THE STATE OF NEW YORK, #2004-028-0005, Claim No. 101771


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:
SIEGEL FENCHEL & PEDDY, P.C.BY: Saul R. Fenchel, Esq.
Defendant's attorney:
BY: J. Garner RyanAssistant Attorney General
Third-party defendant's attorney:

Signature date:
June 21, 2004

Official citation:

Appellate results:

See also (multicaptioned case)

This is a timely served and filed claim for damages resulting from the partial appropriation of real property owned by Claimant and a temporary easement thereon located in the Town of Islip, Suffolk County. Such premises were appropriated in proceedings entitled "Bay Shore-Brookhaven Town Line, S.H. 5301" Map 143, Parcel 163 and Map 261, Parcel 261, respectively, pursuant to section 30 of the Highway Law and the Eminent Domain Procedure Law. The Maps describing the appropriated parcel and temporary easement were stipulated into evidence by the parties (Exhibit 2 and Exhibit 3, respectively) and said map and the descriptions set forth thereon are adopted by the Court and incorporated herein by reference. The parties stipulated that the date of vesting was December 8, 1999, but that the State entered the property on May 7, 1999 and the Court so finds. The parties further stipulated and the Court finds that Claimant was the fee owner on the date of vesting and the Defendant has complied with all necessary procedures under the EDPL with regard to service.
The Court has viewed the subject property.
The subject property is a 10.78 acre plot located on the northwest corner of the intersection of Montauk Highway (State Route 27A) and Saxon Avenue. It is generally rectangular in shape. The subject has approximately 801 feet of frontage on its southerly property line along Montauk Highway (State Route 27A) and 472 feet of frontage on its easterly property line along Saxon Avenue. The property is level and at grade. At time of vesting, the subject was improved with 114,737 sq.ft. of retail space and two outlying pad sites occupied by a Dunkin' Donuts and a Checkers restaurant. The taking consisted of 6,405 sq.ft. (0.15 acres +/-) along the southern property line adjacent to SR 27A. The taking was approximately eight feet deep and included a 27' x 32' incursion into the subject property approximately midway between the two entrances located on Montauk Highway. The Temporary Easement of 4,368 sq.ft. was directly behind the fee and was terminated on March 13, 2002.
party called their respective real estate appraiser and engineer to testify. The parties stipulated that each professional was an expert in their respective field. Claimant also introduced testimony of the Claimant's property manager, Ralph Banks.
Steven Schneider,
a licensed professional engineer, testified for Claimant and prepared a report (Exhibit 5), regarding the impact of the taking on the subject. Schneider testified that the subject had a variance which reduced the minimum number of required parking spaces. According to Schneider the taking resulted in the physical loss of three parking spaces and the additional loss of 20 parking spaces along the Montauk Highway frontage due to noncompliance with the Town of Islip's eight foot land buffer requirement. Schneider further testified that the loss of parking spaces rendered the existing building in noncompliance as it exceeded the square foot to parking ratio required by the Town of Islip. Schneider calculated the loss to be 4,025 sq.ft. of building. He also testified that the utility of the site was diminished during the period of construction due to the temporary and intermittent closure of certain of the subject's points of ingress & egress.
Ronald Haberman (Haberman) testified for the Claimant. Haberman identified his appraisal report ( Exhibit 4) and a supplemental report (Exhibit 4A). In his opinion the highest and best use of the subject parcel in both the before and after situation was its existing use as a community shopping center. Using the market data approach and four comparable sales, Haberman, following adjustments, arrived at a before taking range of value from $165.40 per sq.ft. to $168.18 per sq.ft. and assigned a value of $167 per sq.ft. to the subject parcel as improved resulting in a before market value of $19,160,000 (R). Haberman also utilized the income approach to value the subject in the before situation, deeming this to be the better valuation approach. To do so, Haberman examined the retail space as three categories- the supermarket, the largest retail space (drug store) and the satellites - and concluded the subject's before value to be $19,475,000 (Exhibit 4, p-62). Haberman then set the appraised market value of the subject in the before situation at $19,350,000 of which $7,040,000 was attributable to the land (Exhibit 4, p-67). In the after situation, Haberman determined the subject's site was not damaged thereby retaining the $15 per sq.ft. value as in the before situation. Haberman viewed the subject in the after situation as less desirable due to the impact the loss of land had on parking and buildable area, resulting in a loss in utility. Using the same comparable sales as the before, the adjustments remained the same except that Haberman applied a 10% reduction in utility resulting in a range of value from $149.39 to $152.33 per sq.ft. (Exhibit 4, p-74). Haberman concluded that the after value was $152 per sq.ft. (
id.). Using the income approach, Haberman, for the same reasons, applied an 8% downward adjustment in the "utility factor" to the same comparables, and while using the same methodology, arrived at an after value for the subject of $17,840,000 and determined the appraised market value to be $17,700,000 of which $6,945,000 was attributable to the land.
Haberman supplemented his appraisal with an additional report (Exhibit 4-A) that increased the severance damages for the temporary easement from $232,000 to $680,000 by increasing the percentage that Net Income was reduced from 7.5% to 15%[1]
(Exhibit 4-A). Haberman attributes this increase in loss to reductions in rent provided to 36% of the subject's tenants as a consequence of construction activities (Exhibit 4-A, pp 85-85A). Finally, he valued the temporary easement at $555 per month (Exhibit 4, p-83).
Claimant's expert allocated damages as follows: total damages of $2,343,300 (R) consisting of the taking, $96,075 (6,405 sq.ft. @ $15 per sq.ft.), plus site improvements of $36,146 (Exhibit 4-A, p-86) for direct damages totaling $132,221, plus severance damages from the fee taking of $1,517,779 ($19,350,000 [before], minus $ 17,832,221 [$17,700,000] [after], plus $132,221 [direct damages]), plus $ 680,000 from the temporary easement taking, plus the temporary easement of $13,300 equals damages of $2,343,300.

Bruce Savik, of Savik & Murray, a licensed professional engineer testified for Defendant. In approaching this project, Savik testified he researched the subject's history and did field confirmation of "critical areas" but not the entire site. His research disclosed a declaration of covenants and restrictions filed in 1953 which provided for the potential dedication of a 25-foot- wide strip the length of the subject's frontage on Saxon Avenue and Montauk Highway (Exhibit B, Appendix A). Savik testified he could find no dedication of the Montauk Highway strip but that such a dedication was made in 1956 of the Saxon Avenue strip. Savik testifed that the subject lost a total of 13 parking spaces - 9 physical spaces and 4 "landbanked spaces" which were described as spaces which did not exist in the parking field but could be carved from landscaping provided on the subject as a result of the taking. Savik testified there was more than eight feet of distance between the right-of-way line or property line and the start of the parking spaces in the area west of Dunkin' Donuts.

The appraisal report of Defendant's expert, Richard Marchitelli's (Marchitelli), was admitted as Exhibit A. Marchitelli testified the highest and best use of the subject parcel in both situations was its current use as a community shopping center. Using the sales comparison [market data] approach and four comparable sales, Marchitelli, following adjustments, arrived at a before taking range of value from $138.67 per sq.ft. to $163.85 per sq.ft. and assigned a value of $160 per sq. ft. to the subject as improved, resulting in a before market value of $18,400,000 (R). Marchitelli, like Haberman, valued the land as vacant the same in both the before and after situation, albeit at $2.00 less per square foot or $13 per sq.ft. Marchitelli also utilized the income capitalization approach and in arriving at his conclusion of value, Marchitelli, like Haberman, preferred the income capitalization approach for valuing the subject. Marchitelli's before value examined the subject as two components - anchor and satellite space - and concluded the subject had a before value of $19,100,000 (R) (Exhibit A, p-48). Marchitelli then concluded that the value of the subject in the before situation was $19,000,000.

In the after situation, Marchitelli made an additional downward adjustment to the comparables in the "utility factor" to reflect the subject's nonconformity with the Town of Islip's parking requirements and did so in reliance upon the engineering report (Exhibit B). Marchitelli also used the same comparables for each valuation approach as he had in the before situation. Using the sales comparison approach, Marchitelli calculated a range per square foot of building of $135.67 to $160.85 and assigned a value of $157 per sq.ft. or $18,000,000 (R) to the subject in the after situation. Turning to the income approach, Marchitelli determined the after value to be $18,800,000 (R) and upon reconciliation set the after value of the subject at $18,650,000. Marchitelli determined the rental value of the temporary easement to be $1,290 per month as he included within the monthly rental value the net income loss of $626.43 attributable to the two parking spaces rendered unusable for the duration of the easement (Exhibit A, p-64).

Marchitelli found the total damages to be $350,000 and allocated the damages as follows: direct damages of $93,500 comprised of $83,000 (R) for land taken (6,405 sq.ft. at $13 per sq.ft.) and $10,500 (R) for site improvements plus severance damages of $256,500 ($19,000,000 [before value] minus $18,650,000 [after value], minus direct damages).

The Court is required to value the subject property according to its highest and best use as of the date of vesting
(Matter of Town of Islip [Mascioli], 49 NY2d 354, 360; Matter of County of Clinton [Gagnon], 204 AD2d 898, 899). "Highest and best use" is generally defined as the "reasonably probable and legal use . . . that is physically possible, appropriately supported, and financially feasible and that results in the highest value" (Appraisal Institute, The Appraisal of Real Estate [12th ed.], 305). Both appraisers agreed on this standard and concurred that the subject's highest and best use, both in the before and after situation, was as developed and the Court so finds.
As a general rule, the measure of damages for a partial taking is the difference between the property's value before condemnation and the value of the remainder thereafter (
Mil-Pine Plaza v State of New York , 72 AD2d 460, 462). Upon a partial taking of property, as here, an owner is entitled to any consequential damages which arise from the State's use of the parcel taken" (Williams [E.] v State of New York, 90 AD2d 882, 883, citing Dennison v State of New York, 22 NY2d 409). Consequential damages consist of "the diminution in the value of the remainder resulting from the taking of a part and from the condemnor's use of the property taken"
(Williams v State of New York, supra at 883). Similarly, upon the taking of a temporary easement, the landowner is entitled to recover his loss in rental value during the term of such easement plus further loss, if any, resulting from damage to the fee arising from the use of the easement (Spencer v State of New York, 206 App Div 376, 377; see also Kauffman v State of New York, 43 AD2d 1004, affd 36 NY2d 745; Matter of Kadlec v State of New York, 264 AD2d 420).
The parties have little dispute in the before situation regarding valuation and as noted above, each party's expert approached the valuation task in the same fashion, ultimately crafting their final values from the income capitalization method and using the market data approach as a check or reference marker. The appraisers' before values were within five percent of each other with values ranging from $19,000,000 to $19,350,000[2]. Upon review of the evidence, the Court will not nitpick the appraisers' work; however, the Court is persuaded that Haberman's analysis of the subject as three distinct income streams yields a more accurate picture of the subject's value in the before and as such, the Court finds the before value of the subject to be $19,350,000. Claimant's and Defendant's experts valued the land as vacant at $15 per sq.ft. and $13 per sq.ft., respectively, in both the before and after situation. The Court adopts their reasoning that the land was not damaged by the taking and therefore finds the land as vacant to be worth $14.25 per sq.ft. in both the before and after situation. Accordingly, the Court finds the Claimant suffered direct damages in the amount of $91,271.25 (6,405 sq.ft. times $14.25 per sq.ft.) for the land taken.
In the after situation[3]
, the appraisers part company based primarily upon the differing conclusions of the engineers as to the number of parking spaces lost by the subject. As noted, Claimant's engineer found that the subject had physically lost 3 spaces in the taking and 20 more due to nonconformity with the setback requirements, while Defendant's engineer found there were 9 physical spaces lost and 4 additional spaces that were landbanked - a difference of 10 parking spaces. Regardless of the number of spaces lost, or the number of spaces on the ground at the time of the taking[4], there was agreement that the subject was rendered nonconforming in the after and that the subject had a parking variance in the before, and based upon their analyses, each appraiser made utility adjustments to their comparables in the after situation which resulted in a finding of severance damages.
Defendant's engineer determined that only 13 spaces would be lost based upon his reconfiguration of the parking plan, which included changing stall and aisle widths to maximize parking. Savik acknowledged that he did not know whether his revised parking plan would be approved. On this basis alone, the Court cannot credit his determination that only 13 total parking spaces would be lost. As Claimant correctly points out, in order for the Court to accept the posited plan, Defendant bears the burden of establishing the likelihood that the plan would be approved and here, there is no evidence to support such a conclusion (
compare Turiano v State of New York, Ct Cl, Nadel, J., Claim No. 70854, UID #2000-014-102, July 7, 2000, [the opinion of Claimant's expert architect and zoning expert, that approvals would have been obtained "were expressed fully and cogently in their testimony and in their reports"]).
Claimant's engineer, on the other hand finds an additional ten spaces are lost along the frontage immediately west of the Dunkin' Donuts because he has calculated the setback in that area to be only 7 feet deep. However, Schneider's measurement of 7 feet was challenged and on cross-examination he measured the setback in the critical area to be 8 feet. Schneider and Savik applied the tools of their trade to plot the taking and create their after situation diagrams (
see Exhibit 5, Appendix D-2; Exhibit A and Exhibit B, respectively). However, Schneider, unlike Savik, did not take the additional step of obtaining field measurements along the frontage. The Court accordingly credits the measurements taken by Savik and finds that the setback is 8 feet at the area west of Dunkin' Donuts (see also Jaffin v State of New York, Ct Cl, Ruderman, J., Claim No. 104314, UID #2003-010-046, February 17, 2004). As such, the Court necessarily finds that the number of parking spaces lost to the taking to be 13[5].
The Court now turns to value the subject in the after situation and will do so using the income capitalization method. As previously noted, the Court relies upon the Claimant's appraisal based upon the use of three income streams in computing the subject's value. However, given the Court has found that the number of lost parking spaces is the same as used by Defendant's appraiser, the Court will examine the utility adjustment made by both in determining an appropriate adjustment. Haberman made an across the board downward adjustment of 8% due to the impact of the parking while Marchitelli made a $0.25 per sq.ft. deduction for the anchor space and $0.35 per sq.ft. deduction for the satellites, which approximates a 1.5% to 2.5% deduction depending on the base square foot rental price. The Court is of the view that a percentage adjustment as opposed to a flat rate discount is more appropriate and given the smaller loss found by the Court and its lessened impact upon the subject, the Court will increase Haberman's appraised gross economic rents to $21.20 per sq.ft., $18.28 per sq.ft., and $16.84 per sq.ft., for the satellites, the large store and the supermarket, respectively. Following the Haberman approach, this results in Projected Gross Income totaling $2,112,873 (R). After deductions for expenses ($168,100) and the 5% vacancy rate ($105,644 [R]), the projected net income is $1,839,129 and applying the 10% capitalization rate, yields an after value of the subject parcel of $18,391,290 and the Court so finds.[6]

The temporary easement was comprised of 4,368 sq.ft. running the length of the property line on Montauk Highway and included two parking spaces. Claimant argues that it is entitled to severance damages flowing from the temporary easement due to the legal and physical blockage of access to the subject during the period of the easement (Claimant's Post-Trial Memorandum of Law at Point IV). Relying on the trilogy of cases cited, Claimant argues that it need not suffer a complete or total denial of access to its property to be entitled to severance damages for the temporary easement. The Court disagrees[7]
. " Damages are not recoverable for causing inconvenience in access to property abutting on a highway or the diversion of traffic therefrom. . . ‘Damages resulting merely from circuity of access are considered as damnum absque injuria. . .' " (Mayflower Rests. of Cent. Park Ave. v State of New York, 51 AD2d 489, 492 [citations omitted], affd 43 NY2d 804; see also Matter of County of Nassau, [Minkin] 148 AD2d 533). Regardless of the extent of the interference with the entrances to Claimant's property as testified to by Claimant's property manager, Ralph Bank, the Court finds that at no time were all four entrances blocked to traffic. Moreover, the temporary easement did not impact the two entrances to the subject parcel located on Saxon Avenue (see Exhibit 3). As to the issue of the reduction in rents, it bears noting that the reduction of rents relied upon by Claimant in support of its position are unsupported in the record as to amount and duration[8] and as such could not form the basis of an award (see e.g. J.W. Mays, Inc. v State of New York, 300 AD2d 545, 546-547 [Claimant failed to carry its burden to furnish a basis from which a reasonable estimate of its purported consequential damages could be made]; see also Zappavigna v State of New York, 186 AD2d 557). Equally important, the rent reductions, which were afforded to approximately one third of Claimant's tenants, were made as a result of Claimant's choice. Claimant could have continued, in the Court's view, to receive the "full rental" (see Great Atlantic & Pacific Tea Co. v State of New York, 22 NY2d 75, 87) as the necessity of rent reduction is belied by the fact that a majority of tenants did not receive a reduction. Accordingly, the Court finds that Claimant is not entitled to severance or consequential damages for the temporary easement[9].
The temporary easement terminated on March 13, 2002. For reasons unknown, Claimant did not fully value the temporary easement as it omitted the monthly net income loss attributable to the two parking spaces occupied by the easement (
see Exhibit 4, p-83). Therefore, the Court adopts Defendant's analysis for valuing the temporary easement, including its rate of return of 12%. Using the Court's value of the land of $14.25 per sq.ft. the monthly rental value of the easement is $622.44 (4,368 sq.ft. at $14.25 per sq.ft. equals $62,244 times 1.0% equals $622.44). The Court finds the net income loss per month to be $614.68 (R) calculated as follows: Net operating income divided by 12 months ($1,844,035 ÷ 12 equals $153,669.58) multiplied by the percentage the lost spaces represent 0.4% ( $153,669.58 x 0.4% equals $614.6783). Adding those two totals to the pro rata taxes of $95.14 results in a temporary easement value of $1,332.26 per month.
Lastly, the parties presented no testimony to assist the Court in determining the value and extent of the site improvements for which compensation is sought, although both appraisers assigned values for those direct damages to the property. However, their appraisals likewise fail to provide elucidation[10]
. Faced with this dilemma, the Court might opt to treat this as a failure of proof by the Claimant and adopt Defendant's values or the Court could simply guess. Instead, the Court will adopt the approach of Solomon (see Brunner v State of New York, Ct Cl, NeMoyer, J., Claim No. 99369, UID #2000-006-99369, January 25, 2001). Accordingly, the Court finds the subject lost curbing with a value of $459.00 (51 lin.ft. at $9 per lin.ft.); asphalt with a value of $3,400 (1,700 sq.ft. at $2.00 per sq.ft. [the appraisers agreed on the price of asphalt]) and the Court makes no award for the trees, shrubs and landscaping (see Zaremba v State of New York, 29 AD2d 723, 723-724) for site improvement damages of $3,859.00.
To summarize, Claimant is entitled to direct damages from the taking in the amount of $95,130 (R) ($91,271.25 [land] plus $3,859.00 [site improvements]) and consequential damages of $863,580 ($19,350,000 [before value], minus $18,391,290 [after value], minus $95,130 [direct damages]). Damages from the temporary easement are $45,563.29(R) ($1,332.26 times 34.2 months). Thus, the Court awards Claimant the sum of $1.004,273.29 with interest thereon from May 7, 1999 (the stipulated date of entry upon Claimant's lands) to the date of this decision and thereafter to the date of entry of judgment herein, pursuant to CPLR 5001 and CPLR 5002; EDPL § 514; Court of Claims Act § 19(1); subject to Court of Claims Act § 19(4).

The award to Claimant herein is exclusive of the claims, 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, 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 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.

To the extent that claimant has paid a filing fee, it may be recovered pursuant to Court of Claims Act §11-a(2).
All motions not previously ruled upon are now DENIED.

June 21, 2004
Albany, New York

Judge of the Court of Claims

[1] The increase also reflects eight additional months of damage.
[2] Each appraiser applied a capitalization rate of 10% and a vacancy rate of 5% which the Court accepts as appropriate (see Matter of Town of Islip v Mustamed Assocs., 222 AD2d 682).
[3] Neither appraiser made adjustments based upon a dedication of frontage on Montauk Highway (see Exhibit B, Appendix A), and as such, the Court likewise declines to do so, despite Defendant's urging to the contrary. It would appear to the Court, that by proceeding by eminent domain rather than exercising its purported rights under the dedication, the State has elected its remedy and thereby opted to waive any purported detrimental affect the dedication could have on the subject parcel.
[4] The engineers did not agree on the number of spaces present at the time of taking - Claimant counted 564 ( Exhibit 5, Appendix D-1) while Defendant counted 497 (Exhibit B, p-4); however, both agreed that all lost spaces came along the subject's frontage on Montauk Highway.
[5] In all other respects, the engineers, upon review of their drawings, agreed on the parking spaces lost in the taking.
[6] Neither appraiser addressed the impact of the landscaping as it related to the after value or severance damages and the Court declines to make an adjustment for same.
[7] Assuming arguendo Claimant has correctly stated the law applicable to severance damages for a temporary easement, the Court would nevertheless find that the access to the subject parcel while at times impaired, was not unsuitable.
[8] One year after entry onto the property and five months after the date of vesting, only one tenant had rent reduced (see Exhibit C [Banks Deposition]).
[9] Claimant chose not to pursue a trespass or de facto taking claim with regard to the use of additional spaces beyond the temporary easement by the Defendant (see T-95 et seq [stipulation regarding Exhibits 12A-12M]).
[10] Defendant did introduce Ralph Bank's deposition transcript (Exhibit C) in which Banks testified the irrigation system was damaged and asphalt needed to be replaced (Exhibit C, pp 25-26) with no further specificity.