New York State Court of Claims

New York State Court of Claims

MAZUR v. THE STATE OF NEW YORK, #2007-030-543, Claim No. 112658, Motion No. M-72808


Synopsis


Claimants’ motion for a protective order [M-72808] is in all respects denied, except to the extent that if the documentation requested exists, only one such copy of same need be furnished to Defendant within thirty (30) days of the filing date of this decision and order. Given the fluidity of defining what a trade fixture is, it can hardly be said that the authorizations referred to in the lease agreement by which the entities sought to define what each would own are not “relevant” to the fixture and fee claims before the court.

Case Information

UID:
2007-030-543
Claimant(s):
MAZUR BROTHERS, INC.
Claimant short name:
MAZUR
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
112658
Motion number(s):
M-72808
Cross-motion number(s):

Judge:
THOMAS H. SCUCCIMARRA
Claimant’s attorney:
GOLDSTEIN, GOLDSTEIN, RIKON & GOTTLIEB, P.C.BY: MICHAEL RIKON, ESQ.
Defendant’s attorney:
HON. ANDREW M. CUOMO, NEW YORK STATE ATTORNEY GENERAL
BY: J. GARDNER RYAN, ASSISTANT ATTORNEY GENERAL
Third-party defendant’s attorney:

Signature date:
May 17, 2007
City:
White Plains
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)
2007-030-544, 2007-030-545, 2007-030-546

Decision

The following papers were read and considered on Claimants’ joint motion for a protective order pursuant to Civil Practice Law and Rules §3103 relative to Defendant’s discovery demands:
1,2 Notice of Motion, Affirmation in Support of Motion by Michael Rikon, Attorney for Claimants and attached exhibits[1]

  1. Affirmation by J. Gardner Ryan, Assistant Attorney General
  1. Reply Affirmation by Michael Rikon, Attorney for Claimants, dated January 22, 2007
5-8 Filed papers: Claim Numbers 112658, 112659, 112660, 112661

This motion concerns four (4) filed claims surrounding the partial taking of property at 80 Lake Street and 90 Lake Street in the City of White Plains taken by the State in connection with a highway project along the Cross-Westchester Expressway. Title to all properties was appropriated by the State of New York on April 4, 2006. Two of these claims[2] are trade fixture claims brought by the tenant, Mazur Brothers, Inc., with reference to the claimed trade fixtures at 80 Lake Street, where it operated its furniture showroom [Claim No. 112661], and with reference to claimed trade fixtures at 90 Lake Street, where it operated its warehouse [Claim No. 112658]. Although a separate building it leased at 62 Lake Street for a children’s furniture retail store was not appropriated, the tenant includes allegations that it is entitled to compensable damage to fixtures there in Claim Number 112661.

Claimants seek a protective order relative to Notices to Produce apparently served on all claimants by the State of New York on the four claims. The State of New York, according to the moving papers, “ seek[s] ‘a copy of each written “consent” issued by the claimant, Mazur Brothers Realty, Inc., or its successor, Landlord to the Tenant, the Claimant Mazur Bros., Inc., for “changes and alternations” of the demised premises, under the terms of Article 10 of a lease between them dated, August 1, 1998.’ ” [Affirmation in Support of Motion by Michael Rikon, ¶ 2].

Claimants - all of them - apparently responded to the request indicating that there were no such documents, in that the president of each entity was Herman Press, and he “. . . did not seek his own written approval to conduct alterations. The documents do not exist. As is set forth in the documents which are annexed as Exhibit C[3], the two entities conducted their businesses and conduct appropriately and consistent with legal requirements imposed by the law.” [Ibid. ¶9]. Counsel then continues with “[t]he validity of the Claimants’ ownership to the trade fixtures is not at issue and there have been no competing claims filed for the trade fixtures.” [Ibid. ¶10]. Counsel further states “[a] trade fixture Claimant is only required to prove that it was the owner of the property acquired on the date of title vesting,” and then cites to EDPL §505[4] and Matter of Village of Port Chester v Sorto, 14 AD3d 570 (2d Dept 2005) in support of this precept. [Affirmation in Support of Motion by Michael Rikon, ¶ 14]. To say that a trade fixture claimant is “only” required to prove that it was the owner of the property at the time title vested somewhat begs the question, however, and does not appear to be what was required of the claimant in the case cited. Matter of Village of Port Chester v Sorto, supra.

Thus in Matter of Village of Port Chester v Sorto, supra, the Second Department found that a restaurant operator’s claim for compensation for trade fixtures he had installed - now supported by discovery and a “developed record” - should be reinstated despite his not being a named tenant on the lease. The concern there was whether the operator was a “condemnee” [EDPL §103(C)] within the meaning of the Eminent Domain Procedure Law, sufficient to survive a motion to dismiss. In reinstating the claim, the Court said that the restaurant operator
“. . . presented evidence that, although the lease to the subject parcel was in the name of his brother-in-law, he had operated the restaurant on the parcel with the knowledge and consent of his brother-in-law and the landlord (whose office was also located on the property) for several years prior to the condemnation. Further, during that time, he made and paid for significant improvements to the restaurant, including the installation of valuable fixtures taken in the condemnation. These assertions, if credited, would be sufficient to support a finding that the . . . [operator] was a condemnee within the meaning of . . . [the statute] as to the fixtures. The Village’s focus on the fact that the . . . [restaurant operator] was not the named tenant and did not have a written assignment or sublease was misplaced in light of the broad and inclusive definition of condemnee (citations omitted).” Matter of Village of Port Chester v Sorto, supra, at 571.
While the foregoing might be significant were the record more developed here, all elements of a trade fixture claim are still to be established, including that a claimed trade fixture is indeed a trade fixture.

As to the reasons why a protective order should issue, counsel for Claimants indicates that the documents sought “are irrelevant to the value of the real property and fixtures on the appropriation date of April 4, 2006,” and that numerous documents have already been produced. [Affirmation in Support ¶ 7].

Civil Practice Law and Rules §3101, setting forth the scope of disclosure in a civil case and applicable in the Court of Claims [See Court of Claims Act §9(9)], provides in pertinent part that “[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof . . .”

With regard to the present motion, it is Claimants’ burden to show that the matters sought are not material and necessary, or are protected by privilege, barred or exempted by law, available by other means, or that the request is palpably improper.

Assuming that, as stated by Claimants, there do not appear to be competing claims for the alleged trade fixtures, thus ownership is likely not an issue - although it is still an element of a trade fixture claim generally - Claimants will, nonetheless, need to show that the items listed on the exhaustive schedules appended to the claims are trade fixtures as opposed to part of the leasehold estate. As argued persuasively by the State of New York, “. . . [m]any of those claimed ‘trade fixtures’. . . are the interior appointments of the buildings that . . . [Mazur Brothers, Inc.] occupied: doors; partitions; lighting; storage and display platforms; stairways; railings; closets; electrical systems; etc. . . Neither the assertion of ownership, nor the mere inclusion of particular items on a list of alleged ‘trade fixtures’ establish either ownership or the nature of the items.” [Affirmation by J. Gardner Ryan, ¶¶10,11].

Under a lease between Mazur Brothers Realty, LLC[5] and Mazur Brothers, Inc., dated August 1, 1998,[6] the tenant is required to “. . . make all necessary repairs . . . , interior and exterior, structural and non-structural, ordinary and extraordinary, and unforseen and foreseen. When used in this Article, the term ‘repairs’ shall include all necessary replacements, renewals, alterations, additions and betterments. All replacements required under this Article, of personal property shall be made by Tenant but said replacements or repairs shall become the property of the Landlord . . . ” [Section 8.01]. In a later section the lease provides that “Tenant shall have the right at any time during the term of this lease to make, at its sole cost and expense changes and alterations in and to the interior of the demised premises, provided, however, that no change or alteration shall be undertaken without the written consent of Landlord . . . ” [Section 10.01].

As argued by the Defendant, the lease does not define to which entity - the landlord or the tenant - “authorized interior ‘changes and alterations’ of the leasehold by the tenant belong. Repair items, including ‘replacements, renewals, alterations, additions and betterments,’ to existing features are not the tenant’s ‘trade fixtures,’ and must be included in any award to the fee owner to the extent that they contribute to the fair market value of the property in its highest and best use. Authorized interior ‘changes and alterations’ belonging to the tenant . . .” could be the claimed, separately compensable, trade fixtures. [Affirmation by J. Gardner Ryan, ¶15].

“Generally, a lessee is entitled to compensation for the value of trade fixtures installed on the leased property upon the condemnation of that property . . . (citations omitted). [A] condemnor is obliged to pay for trade fixtures installed by a tenant ‘on the basis that they are part of the real property being appropriated, but, as between the owner and his tenant . . . they are the property of the tenant who has retained the right to remove them’ (emphasis in original) . . . [A] lessee is not entitled to compensation for the value of trade fixtures where the lease expressly provides that ‘improvements’ are to become the property of the landlord upon installation . . . (citations omitted).” Interlake Service Station, Inc. v State of New York, 249 AD2d 275, 276 (2d Dept 1998), lv denied 92 NY2d 809 (1998); cf. Whitehall Corners v State of New York, 210 AD2d 398, 399 (2d Dept 1994).[7]

Given the fluidity of defining what a trade fixture is, it can hardly be said that the authorizations referred to in the lease agreement by which the entities sought to define what each would own are not “relevant” to the fixture and fee claims before this court. See Marraro v State of New York, 12 NY2d 285(1963); Interlake Service Station, Inc. v State of New York, supra; Whitehall Corners v State of New York, supra.

“New York takes a broad view in evaluating what improvements are to be regarded as fixtures. Not only is machinery deemed a fixture ‘where it is installed in such manner that its removal will result in material injury to it or the realty, or where the building in which it is placed was specially designed to house it, or whether there is other evidence that its installation was of a permanent nature’(citations omitted), but also those improvements which are used for business purposes and which would lose substantial value if removed (City of Buffalo v Michael, 16 NY2d 88 . . .; Marraro v State of New York , . . . [supra] . . . (balance of citations omitted).” Rose v State of New York, 24 NY2d 80, 86 (1969).

The demand at issue is that claimants produce “[a] copy of each written ‘consent’ issued by the claimant, Mazur Brothers Realty, Inc., or its successor, Landlord to the Tenant, the claimant, Mazur Bros., Inc., for ‘changes and alterations’ of the demised premises, under the terms of Article 10 of a lease between them, dated August 1, 1998.” [Affirmation by J. Gardner Ryan, ¶5; see also Affirmation in Support by Michael Rikon, ¶ 9]. If such authorizations do exist, they are relevant [see Interlake Service Station, Inc. v State of New York, supra], and no other grounds for a protective order have been asserted. Interestingly, according to Claimants’ moving papers, “[t]he documents do not exist.” [Affirmation in Support by Michael Rikon, ¶ 9]. If in the many documents already furnished Claimants have already indicated that the documents do not exist, then the Court is at a loss as to the necessity for this motion, since such is a response - albeit a negative response - to the demand, and no motion to compel is before the court.

Claimants’ motion for a protective order [M-72808] is in all respects denied, except to the extent that if the documentation requested exists, only one such copy of same need be furnished to Defendant within thirty (30) days of the filing date of this decision and order.

The Claims herein were filed on August 21, 2006. Given the pendency of the several motions filed in connection with same, the six (6) month time frame for filing appraisals has passed, and no appraisals appear to have been filed with the Chief Clerk. See 22 NYCRR §206.21 (b).

Accordingly, the parties are directed to furnish separate stipulations[8] for the four (4) claims to be so ordered by the Court if approved, providing for a time frame within which to file appraisal reports, no later than six (6) months after the filing date of this decision and order. Such stipulations are to be filed within twenty (20) days of the filing date of this decision and order.


May 17, 2007
White Plains, New York

HON. THOMAS H. SCUCCIMARRA
Judge of the Court of Claims




[1]. The attached exhibits are seemingly not collated properly and/or misnumbered, include well over one thousand pages of material, such as additional copies of the claims and their attachments, cancelled checks, bank statements and the like, and are thus almost impossible to adequately review. Moreover, the court has only found one copy of a Notice to Produce containing case captions for both Claim No. 112660 and Claim No. 112661 apparently filed in the clerk’s office as required, but only under two of the claim numbers, and no copies have been appended to the present motion papers by Claimants, a normal practice with discovery motions. This particular Notice to Produce, filed on September 29, 2006, does not appear to contain the disputed request. Disclosure demands - which are by nature documents served on another party - are required to be filed with the Chief Clerk of the Court of Claims. See 22 NYCRR §206.5(c).
[2]. Claim Number 112658 and 112661.
[3]. It is impossible to ascertain where this referenced exhibit is in the over 1,000 pages attached.
[4]. This is the provision concerning conflicting claims, and provides for interpleader and/or the right to serve and file a claim given to all condemnees [see EDPL §103(C)] in the Court of Claims.
[5]. The actual signatory appears to be Mazur Brothers Realty, Inc., the predecessor to Mazur Brothers Realty, LLC.
[6]. One of several leases between various incarnations of the respective tenants attached to Claimants’ moving papers, and the lease referred to by Defendant in the papers submitted in opposition to Claimants’ motion as Exhibit 2 - although no such exhibit is appended to the Defendant’s papers. [Affirmation by J. Gardner Ryan, ¶¶ 13-16].
[7].After installation, did the fixtures lose “. . . their identity as separable trade fixtures by becoming ‘structural part[s]’ of the subsequently condemned premises (Marraro v State of New York, supra, 12 NY2d, at 292). The claimant’s proof that the fixtures would lose substantial value if removed was uncontradicted . . . ,” and it was uncontroverted that the “floor tiles, paneling, ventilation and air conditioning equipment” and other items claimed were installed at the tenant/claimant’s sole expense. (Whitehall Corners v State of New York, supra at 399, 400).
[8].Counsel are reminded that although these are related claims, they have not been consolidated, and the continued use of combined captions is discouraged given the procedural morass it engenders.