New York State Court of Claims

New York State Court of Claims

ELLSWORTH v. THE STATE OF NEW YORK, #2009-13-503, Claim No. 105618 and 105622


Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
105618 and 105622
Motion number(s):

Cross-motion number(s):

Claimant’s attorney:
Defendant’s attorney:
Attorney General of the State of New YorkBY: REYNOLDS E. HAHN, ESQ.
Third-party defendant’s attorney:

Signature date:
June 30, 2009

Official citation:

Appellate results:

See also (multicaptioned case)


This decision addresses two claims which were joined for trial, and sequentially tried. Both claims arise out of the appropriation by the State of New York of a strip of land across the front of property owned by Claimants Robert Ellsworth and Suzanne Ellsworth (Ellsworths) which housed a gift shop owned and operated by The Five Seasons Corp. (Five Seasons), which leased the property and appurtenance structures. The corporation was wholly owned by the Ellsworths at the time of taking. This decision will deal with the Ellsworths’ claim (Claim No. 105618)[1] in the first instance and then the claim of Five Seasons (Claim No. 105622) for loss of the market value of its stock as a consequence of the appropriation, construction and location of the median blocking direct access to Claimants’ property by the southbound traffic.

The taking by the State was pursuant to the Eminent Domain Procedure Law and §30 of the Highway Law. The appropriation map and description are entitled S.H. 474, Canandaigua-Victor Road Map No. 158, Parcel No. 207. The date of the taking in fee was stipulated to by the parties as January 28, 1999, the same date that the aforesaid map was filed with the Ontario County Clerk’s Office. The Court adopts the description contained therein as accurate. There is no dispute that the Ellsworths were the owners of the premises on the date of acquisition and that Five Seasons occupied the premises.

Robert Ellsworth and Suzanne Ellsworth - Claim No. 105618

Prior to the appropriation the subject property consisted of 2.296± acres on the easterly side of Route 332 in the Town of Canandaigua and was improved with a one-story log cabin type structure which contained a loft area, and, sometime prior to the taking, an auxiliary storage area was added to the main structure. At the time of the appropriation, the building complex had an area of 5,117 square feet. I note there is a discrepancy between the parties of 17 square feet in calculating the area for the improvements, and I have adopted the Defendant’s finding as it relates to this issue. According to Mrs. Ellsworth, as the business grew prior to the taking, an additional storage shed was erected on the property. She testified similarly that, prior to the taking, the parking area had been expanded to accommodate additional customer traffic. Sometime prior to September 16, 1992, the Ellsworths formed The Five Seasons Corp., which, as noted above, was wholly owned by them. On that date, the Ellsworths entered into a lease agreement with the corporation, which thereafter operated the business known as Five Seasons Unique Gifts.

While there is a minor disagreement between the parties regarding the subject property’s acreage (.002 acres), I adopt as accurate the Claimants’ calculation of 2.296± acres as the subject property’s area. It had 209± feet of frontage along the east side of Route 332. It had a depth of 500± feet on its north and south lines and was generally at grade. The parking lot was separated from the roadway by lawn and landscaping on which was erected a rail fence and a lighted sign. The entrance to the property was improved with a black-topped drive which was divided into entrance and exit lanes for traffic, and extended west and south of the buildings. There was an adjoining stone-covered parking area south and east of the paved area for buses and overflow traffic, as well as for turning.

The vicinity in general was a growing commercial area with abundant land for development, and Route 332 was heavily traveled both in northerly and southerly directions. Moreover, there are a number of secondary roads that intersect Route 332, generally running east-west, making it attractive for commercial development. In addition, Finger Lakes Raceway, a thoroughbred horse racing track, is located just to the north of the subject property, and in season draws people from the western New York area. Year round the facility also draws patrons wishing to play video gaming (“slot”) machines located on the premises.

The fee taking consisted of a total of 0.431± acres of frontage that Claimants enjoyed on Route 332 and to a depth of 100± feet on the east, tapering to 92±feet on the south and west of the subject property. Included in the taking was a portion of the driveway entrance, landscaping, lamp posts and lights, as well as signs and a planter. In addition the building setback has been reduced from approximately 215 feet to 115 feet. The property no longer conforms to the zoning requirements. The reduction in depth, according to Claimants, had the effect of creating problems for trucks and larger vehicles in turning into and exiting from the parking area. Moreover, according to Mrs. Ellsworth, during the period of construction some delivery vehicles could not enter the parking apron due to the presence of construction equipment and debris.

The scope of the highway design included expanding Route 332 from two lanes (one running north and one running south) to a four-lane divided highway with two lanes now running in each direction. Prior to the taking, southbound traffic had direct access to the subject property. However, the new highway eliminated this direct access for southbound traffic and now requires southbound traffic to travel eight-tenths of a mile further south to a U-turn area and then north eight-tenths of a mile to gain access to the subject property. Initially, the construction project caused a significant interruption and reduction in business. The construction of the median in front of the Five Seasons shop involving the U-turn eight-tenths of a mile south of the subject property has resulted in a continuing loss of business for the gift shop from which, according to the testimony and exhibits at trial, it has never recovered.

The proof in this record establishes that the gross sales associated with the business increased each year prior to the taking. It had gross sales of $915,000 for the fiscal year ending in March 1999, the year of the taking. After that year the gross sales fell to a low of $499,000 for the fiscal year ending March 2003. It was during this time that the construction to widen and redesign Route 332 took place resulting in preventing direct access for southbound vehicles, requiring them to continue south the eight-tenths of a mile past the store to make the U-turn and travel back the eight-tenths of a mile northbound.

Both appraisers agreed that the highest and best use prior to the taking was as improved for retail use, which is consistent with the zoning for the subject property, and I adopt and so find the same to be the highest and best use.

After the taking there is no disagreement that the highest and best use remained the same, except that Claimants’ expert believes that it no longer has use as the unique high-end commercial enterprise it was prior to the taking. He opined that while it is still suited for a commercial use, it would be for a less intense commercial use such as offices or a destination retail use, not a drive-by business such as a gift shop. The Defendant’s expert opined that the subject property retained the same highest and best use it enjoyed before the taking, i.e. retail gift shop. He goes on to acknowledge that the desirability of the property has been diminished by what he termed “functional depreciation” attributable to the resultant internal traffic problems occasioned by merchandise delivery which, in my opinion, is an acknowledgment that the taking has impaired the subject property’s continuation as a drive-by commercial enterprise.

Consequently, I find that after the taking the highest and best use is commercial, but a different commercial enterprise than it was prior to the taking, being more suited to less intense use as either an office or other like commercial use as opposed to a drive-by or drive-in retail commercial establishment which it enjoyed prior to the taking. I also note that as a result of the taking the property no longer meets the zoning setback requirement.

In arriving at the before and after value for the subject property, I relied upon the market data approach utilized by each appraiser, as well as the vacant sales utilized as part of Claimants’ cost approach and the Defendant’s market approach to value. I do not find this property to be a specialty, and therefore did not consider the cost less depreciation analysis in arriving at the subject property’s overall value. I reviewed the cost approach and income approach, limited to vacant land values, and the income approach to valuation offered by each expert, but I have relied upon the market or sales approach for both the land as vacant and as improved in reaching my values for the subject property.

The Claimants’ vacant land value was garnered from three sales all located within the Route 332 corridor. The Defendant’s land sales were also located within close proximity to the subject property and were north of the subject property on Route 332. Interestingly, after each appraiser made what he deemed to be the required adjustments, the Claimants’ expert found the subject property’s vacant land value to be $40,000.00 per acre, while the Defendant’s expert determined it to be $41,000.00 per acre. Based on the record before me, I adopt the subject property’s land value of $41,000.00 per acre as fixed by the Defendant.

I was not fully satisfied with some of the sales proffered by the experts in their whole- to-whole approach to value and accorded less weight to Claimants’ Sale No.7 based on the fact that it was located in Monroe County in an area of markedly different commercial growth. As far as the Defendant’s proffered sales, while they were located closer to the subject property, Sale Nos. 1, 2, and 3 were professional office buildings, while the subject property’s pretaking use was drive-by commercial, and I took that into consideration in my analysis of value.

The Claimants’ expert determined that, based on his analysis of the sales he used, the subject property, as improved, had a value of $550,000.00. The Defendant’s appraiser fixed the subject property’s value at $545,000.00 after comparing the values arrived at using all three valuation processes.

Given the relatively minor difference of $5,000.00 in the before values found by the respective experts using the whole-to-whole market approach, I do not find it necessary to engage in a thorough reanalysis of the comparability of the sales I relied upon. Consequently, I do not feel it is necessary to engage in an intensive discussion of each proffered sale. Based upon the preponderance of the evidence before me and the exhibits and testimony of each expert and lay witness, I find that the subject property’s before value as improved to be $548,300.00, allocated as follows:

Building Improvements $454,200.00

Land value: 2.296± acres @41,000.00/acre $ 94,100.00 (r)

Total Before Value $548,300.00

In arriving at the subject property’s after value, I note that neither party used the subsequent sale of the subject property as a comparable. It goes without saying that the best evidence of a subject property’s value is a recent arm’s length transaction. In this case such a sale might have been the most accurate indicator of the subject property’s after value. Yet Claimants’ expert ignored it and the Defendant’s expert rejected it.

This subsequent sale of the subject property’s remainder occurred in December 2003 between the Ellsworths and Robert and Suzanne Rauscher,[2] transferring the land and business known as Five Seasons (Exhibits 8 and 9). The Ellsworths had moved to Arizona some time earlier and, according to Mrs. Ellsworth, it was becoming a burden for her to travel back to New York on a regular basis to oversee the running of the business. As I noted, Defendant’s expert gave no weight to this sale since, in his opinion, it was not an arm’s length transaction.

Defendant’s appraiser arrived at this conclusion after speaking only with the Rauschers, but not the Claimants, to determine if the parties were acting prudently and with full knowledge in arriving at the purchase price. He did not divulge the content of that discussion. He mentioned in his appraisal (Exhibit A - p. 39) that he also spoke with one Donald F. Collins, the Canandaigua Town Assessor, who allegedly told him this sale was not an “arm’s length” transaction, but does not elaborate on how Collins came to this conclusion. Based on this limited investigation, he then concluded that the sale was a tainted transaction, apparently because the seller and buyer were related. While there may have been some basis to reach this conclusion, he failed to support that opinion either in his appraisal or in his testimony at trial by having truncated his inquiry into the after sale.

Defendant’s expert stated that, in arriving at the subject property’s highest and best use after the taking, he took into consideration the impact the median in front of the subject property had on its value after the median’s construction. However, he made no specific reference to it other than acknowledging that it resulted in permanent inefficiency to the subject property after the taking and he apparently included this factor under the penumbra of “functional obsolescence” (Transcript - pp. 507-511). He sought to buttress his opinion by stating that the subject property still had suitable access after the taking, yet admitting both in his appraisal and in his testimony that the subject property was less desirable as a drive-by or drive-in commercial business as a result of the taking and the redesign of Route 332 (Transcript - p. 513; Exhibit A - p. 118). He goes on to find that the subject property was consequently damaged without affecting his opinion that its highest and best use was unchanged. I found his testimony on this issue of the post-taking highest and best use of and the extent of the consequential damages to the subject property to be unconvincing, and as a result have accorded it less weight.

In reaching the subject property’s after value, I considered the sales as proffered by both experts with limited weight given to those of Defendant for the reasons mentioned above. Claimants’ expert was able to find only one whole-to-whole sale in the area of the subject property, and that was in the City of Canandaigua. The remaining two sales were both located in Monroe County. However, the Defendant’s expert used the same whole-to-whole sales he used in his before analysis of the subject property’s value, three of which were located in the City of Canandaigua. I have utilized both parties’ sales in an attempt to reach the subject property’s fair market value after the taking. I note that both appraisers adopted the same vacant land values they used in their before taking analyses, and I therefore find the subject property’s land value after the taking to be $41,000.00 per acre or $76,500.00 (r).

Each appraiser made an allocation for the value of the improvements to the land itself such as paving, landscaping and sign(s). At trial, Claimants’ expert testified that under “value of improvements taken” that it should be amended to reflect a value of $23,400.00 (r), which I permitted. The Defendant valued the improvements taken at $24,900.00. Again I note that the difference is $1,500.00, and as a consequence I adopt the mean of $24,150.00 as the value of these improvements taken as a consequence of the appropriation.

Claimants’ Sale No. 8 was the only comparable sale located on a four-lane highway. In the appraiser’s opinion, the only adjustment required was under the category captioned “condition.” I find that there should be a further upward adjustment to this sale, as well as Sale Nos. 9 and 10, to more appropriately reflect the subject property’s better condition, location and construction. In addition, an upward adjustment is supported to reflect the passage of time between the date of the sales and the date of the taking.

After making adjustments to the Claimants’ comparable sales, the subject property’s per square foot value for its improved portion would be $48.00 per square foot, or $245,600.00 (r), based on Claimants’ proffered sales, for a total after value of $322,100.00 (r).

With respect to the Defendant’s after value analysis, he used the same sales used in his before analysis to determine the square foot value of the subject property’s improvements. He made adjustments to each sale to reflect the effect of the taking on the remaining parcel, with the most significant negative and consistent adjustment to each sale falling under the aegis of “functional utility.” This was intended to reflect the occasional inconvenience and inefficiency of the internal traffic patterns (Exhibit A - p. 123). I determined that, based upon the proof in this record, further adjustments to his sales were necessary in order to reflect the change in the subject property’s highest and best use to a destination commercial use. After these adjustments to the Defendant’s comparables, the after value of the subject property’s improved portion would be $79.00 per square foot, or $404,250.00 (r), for a total value of land and buildings of $480,750.00 (r).

Having heard the various witnesses and giving due consideration to the comparable sales proffered by each party, as well as the adjustments to these sales and a viewing of the subject property[3], as well as several sales, I find the subject property’s value after the taking to be $373,650.00.

I fix Claimants’ total damages at $174,650.00 as follows

Direct Damages:

Land: .431± Acres @ $41,000/acre $17,670.00 (r)

Improvements: $24,150.00

Total Direct Damages: $41,820.00

Indirect Damages
$132,830.00 (r)


Therefore, Claimants Robert and Suzanne Ellsworth are awarded the sum of $174,650.00 for all damages, with appropriate interest thereon from January 28, 1999, the date of taking (Transcript - p. 3). Since the record before me establishes that the notice of acquisition was served by certified mail, return receipt requested on February 22, 1999 (Transcript - p. 3) and not by personal service (see EDPL 514[B] and Sokol v State of New York, 272 AD2d 604), irrespective of colloquy regarding such suspension (Transcript - p. 5), there shall be no suspension of interest, and this award shall be inclusive of interest from the date of this decision, and thereafter to the date of entry of judgment herein, pursuant to CPLR 5001 and CPLR 5002; and subject to Court of Claims Act §19(4).

The award to Claimants herein is exclusive of the claims, if any, of persons other than the owner of the appropriated property, its tenants, mortgagees or 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 or appurtenant facilities for the construction, operation or maintenance of publicly owned or public service electric, telephone, telegraph, pipe, water, sewer or railroad lines.

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

The Five Seasons Corp. - Claim No. 105622

Turning now to the claim of Five Seasons for the loss of market value of its stock as a consequence of the taking and the construction project attendant thereto.

At the outset of this joint trial, the Defendant moved to dismiss this claim on the basis that there can be no recovery of this element of alleged damage as a matter of law, relying on the seminal ruling in Banner Milling Co. v State of New York (240 NY 533). Claimant (Five Seasons) argues that reliance on Banner, supra, is misplaced but offers no case law in support of its theory of damages. Rather it argues that Banner, supra, is distinguishable on its facts from the claim at bar and urges that its claim presents “unique circumstances” thus removing it from the aegis of the Banner ruling.

While the proof offered by Claimant in this case arguably establishes that the deterioration of its business may have been caused in part by the inconveniences of the construction project, this alone does not create, in my opinion, a unique circumstance as envisioned under Banner.

The Defendant in this instance did not acquire any part of the business, being interested only in the land. The subsequent improvement of the highway without doubt caused inconvenience and loss to Claimant, but the law has not considered it an appropriation or damage for which the Defendant should be compelled to respond in cases such as this (Banner Milling Co. v State of New York, 240 NY 533, 540, supra).

Rather, the evidence before me as it relates to the decrease in revenue can be related to many factors present in this case, not the least of which is the Ellsworths effectively becoming absentee owners. Mr. Ellsworth had determined some time prior to the appropriation that he wished to pursue his desire to become a doctor, and thus enrolled in a school in Arizona to pursue his dream. Mrs. Ellsworth ultimately joined him there and returned to Canandaigua once a month to the business. Moreover, there was a confluence of national events that adversely affected our economy at this time and, combined with the inconvenience of the construction at the site of the Claimant’s business, caused the downturn in its profitability. While the admission of testimony relating to the profitability may be germane on issues of adequate and best use of the property (Humbert v State of New York, 278 App Div 1041), such loss is not part of the damages the Defendant must pay for the land acquired (Banner, supra).

Therefore the Defendant’s motion to dismiss this claim is granted and Claim 105622 is hereby dismissed. All motions not heretofore ruled upon are now denied.


June 30, 2009
Rochester, New York

Judge of the Court of Claims

  1. [1]For ease of reference, unless otherwise specified, the term “Claimants” shall refer solely to the Ellsworths.
  2. [2]Mrs. Ellsworth and Mr. Rauscher are siblings.
[3]. The Court has viewed the property (Court of Claims Act § 12[4]).