New York State Court of Claims

New York State Court of Claims

HERRICKS v. THE STATE OF NEW YORK, #2009-036-402, Claim Nos. 106368, SP-128


Synopsis



Case Information

UID:
2009-036-402
Claimant(s):
HERRICKS FORE PLAN, INC.
Claimant short name:
HERRICKS
Footnote (claimant name) :

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

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
106368, SP-128
Motion number(s):

Cross-motion number(s):

Judge:
MELVIN L. SCHWEITZER
Claimant’s attorney:
FOR HERRICKS FORE PLAN, INC.:
SIEGEL FENCHEL & PEDDY, P.C.
By: Saul R. Fenchel, Esq.

FOR ELIZABETH S. MILLER AND MARJORIE S. GROCHOLAS, AS TRUSTEES:
MEYER, SUOZZI, ENGLISH & KLEIN, P.C.By: Edward J. Gutleber, Esq.
Defendant’s attorney:
ANDREW M. CUOMO, ATTORNEY GENERAL
By: Donald E. Shehigian, Esq. Assistant Attorney General
Third-party defendant’s attorney:

Signature date:
October 28, 2009
City:
New York
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

In this eminent domain proceeding, a dispute has arisen with respect to the amount of interest to be awarded to claimant on funds deposited with the Comptroller pursuant to Eminent Domain Procedure Law (“EDPL”) § 304 (E).[1] Claimant Herricks Fore Plan, Inc. (“claimant”) contends statutory 9% interest runs from the date of deposit with the Comptroller on February 7, 2007 to payment. Defendant contends payment of statutory interest on the amount deposited is terminated at the time of the deposit, presumably resulting in defendant’s obligation to pay interest at the investment pool rate actually earned by the interest bearing account, which is likely to be a nominal amount.



By way of background, claimant is the long-term land and building lessee of a commercial retail property that has multiple tenants located on Hillside Avenue, New Hyde Park in the Town of North Hempstead, Nassau County (the “Property”). On May 8, 2002, a portion of the Property was taken by defendant in connection with a highway project. Thereafter, on July 16, 2002, claimant filed a claim for compensation for the taking. On July 12, 2006, claimant and defendant entered into a settlement agreement (“Agreement of Adjustment”) whereby defendant agreed to pay $160,000 plus the appropriate interest from the date of the taking of the Property. As a prerequisite to such payment, claimant agreed to provide defendant with any documents deemed necessary by the Attorney General to secure to defendant a full release of all claims by reason of the appropriation. In furtherance of this agreement, defendant requested claimant to obtain releases from the tenants that occupied the premises pursuant to valid leases in effect as of the date of the taking. When claimant did not provide releases from two of those tenants, W. Dank, Inc. (“Dank”) and Sweat Pea Fruit Exchange, Inc. (“Sweet Pea”), defendant refused to pay claimant the funds set forth in the Agreement of Adjustment.

Then, on February 7, 2007, defendant deposited the amount of the settlement in a special interest bearing account with the State Comptroller pursuant to EDPL § 304 (E) in that defendant deemed a conflict existed rendering it unable to certify the persons legally entitled to the amount payable.

Claimant commenced an Article 78 proceeding in the nature of mandamus seeking to compel defendant to disburse the proceeds of the settlement and also to pay counsel fees. The Supreme Court, Albany County, granted claimant’s petition to the extent that it directed defendant to disburse the proceeds to claimant, but denied claimant’s request for counsel fees. On appeal the Appellate Division reversed and held:
Given the validity of Dank and Sweet Pea’s interest in the premises as of the date of the taking and their right, no matter how minimal, to share in the proceeds of the condemnation award, a writ of mandamus cannot issue and the petition, including claimant’s request for counsel fees, must be dismissed.

Matter of Herricks Fore Plan, Inc. v State of New York
, 58 AD3d 904, 906 (3d Dept 2009) (citations omitted).

On June 19, 2009, claimant then moved by Order to Show Cause pursuant to EDPL § 304 (E) and Court of Claims Act § 23 for an order of this court determining that it is entitled to the $160,000 deposited, plus interest, and directing defendant to pay this amount. In response, defendant initially requested that payment of the funds be stayed until “final adjudication of any appeals or the expiration of the time to appeal from the order of any person or party aggrieved thereby” (Verified Answer, ¶ 8), but ultimately did not object to payment as long as its position on the appropriate amount of interest was acknowledged. In its reply, claimant points out that the statute of limitations already has run on any objection that could be made by Dank or Sweet Pea. Verified Reply, ¶¶ 6-11.

On September 22, 2009, claimant submitted an order of distribution providing for payment of $160,000, together with statutory interest from the date of the partial taking of the Property by defendant on May 8, 2002 to the date of deposit, plus additional statutory interest at 9% from the date of deposit on February 7, 2007 to the date of payment. Defendant objected to the provision in the proposed order providing for post-February 7, 2007 interest at 9% as being contrary to sections 304 (E) (1) and (4) of the EDPL. Letter of Donald E. Shehigian, dated September 28, 2009.

Section 514 (A) of the EDPL provides that “a condemnee shall be entitled to lawful interest from the date of acquisition to the date of payment.” This statute further provides “Where the condemnor . . . has deposited all or any part of the compensation owing to a condemnee in an interest bearing account . . . the condemnor’s obligation to pay interest on the amount so . . . deposited shall terminate as of the date of such . . . deposit.” Id. The issue presented here is whether defendant was justified in invoking the deposit procedure to deny payment to claimant and, if so, whether the deposit stops the running of interest at the statutory rate of 9% in this case.

Defendant, citing (Serf Realty Co. v State of New York, 228 AD2d 428 [2d Dept 1996]), argues that its deposit of the funds terminates defendant’s obligation to pay the statutory rate of interest, and that it was justified here in depositing them. In its Verified Answer, defendant had denied that any claims by Dank or Sweet Pea were time-barred by the passage of six years from the taking because the Appellate Division decision “makes clear that the time in which to file a claim does not begin to run until the claimant is properly served by the State.” Verified Answer, ¶ 7. In response, claimant submits an affidavit of service filed with the County Clerk, Nassau County, showing that on May 10, 2002, Dank and Sweet Pea, in fact, were served with notice of the appropriation of the Property by defendant. See Verified Reply, dated September 8, 2009, Ex. R-1. From this, it was theoretically possible for Dank or Sweet Pea to move for leave to file a late claim pursuant to Court of Claims Act § 10 (6), up until six years from the accrual of their claim, that is, until May 10, 2008, but not beyond that date. The court concludes that even if defendant initially was correct in insisting that claimant obtain releases from Dank and Sweet Pea before it would release the funds to claimant, by May 10, 2008 it was clear these entities then were barred by the statute of limitations from filing a claim even if they had sought to invoke the late claim remedy.

Defendant also argues claimant contributed to the delay in releasing the funds by bringing an Article 78 proceeding which ultimately proved unsuccessful when the Appellate Division reversed the Albany Supreme Court’s decision. Even if that is the case, it would be unfair to deprive claimant of the benefits mandated by EDPL § 514 (A) when defendant was the party that unnecessarily delayed releasing the deposited funds to claimant under EDPL § 304 (E). The court thus concludes that while claimant is not entitled to the full 9% statutory interest rate under EDPL § 514 (A), it should be awarded more than the nominal interest earned on the deposited funds once the statute of limitations foreclosed the possibility of viable claims by Dank and Sweet Pea.

Defendant argues nonetheless that the court does not have discretion to award interest above the amount actually earned in the Comptroller’s interest bearing account. The court does not agree. A number of courts have awarded statutory interest under circumstances where EDPL § 304 (E) was not properly or fairly invoked, as the court finds to be the case here. See Mazur Brothers Realty, LLC v State of New York, 23 Misc 3d 346, 359-60 (Ct Cl 2008) (court rejected a provision in an agreement under which funds were deposited not requiring the State to pay interest as unenforceable under EDPL § 514 (A)); Matter of City of New York, 17 Misc 3d 715 (Sup Ct, Kings County, 2007) (the City’s refusal to pay interest on deposited funds inconsistent with EDPL § 514 (A)); Matter of City of New York, 2006 NY Slip Op 50629U, 11 Misc 3d 1080A, * 4-5 (Sup Ct, New York County, 2006) (citing EDPL § 514 (A), the court held City must pay claimant interest where it failed to follow procedures outlined in EDPL §§ 303 and 304).

Accordingly, claimant’s motion is granted to the extent defendant is directed to pay claimant the funds deposited with the Comptroller, plus interest at the actual investment pool rate from February 7, 2007 to May 10, 2008, and at the statutory rate of 9% from May 10, 2008 until payment. The court directs claimant to re-submit an Order consistent with this Decision within thirty days of the filing of this Decision.[2]


October 28, 2009
New York, New York

HON. MELVIN L. SCHWEITZER
Judge of the Court of Claims




[1]. In connection with this motion, the court read and considered the Order to Show Cause Pursuant to CCA §23 and EDPL §304(E), dated June 19, 2009, and the Verified Petition, dated June 16, 2009, together with exhibits annexed thereto; Defendant’s Verified Answer, dated August 6, 2009; claimant’s (Miller) Affirmation in Support of Petition Pursuant to EDPL §304(E) and CCA §23, dated September 9, 2009, together with Ex. A annexed thereto; claimant’s Verified Reply, dated September 8, 2009, together with exhibits annexed thereto; letter from claimant’s attorney, Saul R. Fenchel, dated September 22, 2009; letter from Defendant’s attorney, Donald E. Shehigian, dated September 28, 2009; letter from claimant’s attorney, Saul R. Fenchel, dated October 2, 2009; letter from Defendant’s attorney, Donald E. Shehigian, dated October 5, 2009; letter from claimant’s attorney, Saul R. Fenchel, dated October 16, 2009; letter from Donald E. Shehigian, dated October 20, 2009; email from Donald E. Shehigian to court, dated October 22, 2009, with attached letter to Chief Clerk, dated August 6, 2009; letter from Saul R. Fenchel, dated October 28, 2009; email from Donald E. Shehigian, dated October 30, 2009; email from court to parties, dated November 23, 2009; and email from Saul R. Fenchel, dated November 23, 2009.
[2]. Counsel for claimant Herricks Fore Plan, Inc. has represented that claimant and Trustees Elizabeth S. Miller and Marjorie S. Grochola, who also asserted a claim (Claim No. 110841) which was consolidated with Claim No. 106368, and claimant have agreed to allocate the amount determined by the court’s decision in this matter. The court directs that claimant’s Order include the allocation.