Contested disclosure motion in appropriation claim involving an active quarry. Court notes likelihood that capitalization of income approach to value will be applicable and grants some disclosure into the records of the business, but less than defendant requested. Defendant's claims of need, and claimant's claims of privilege, were both insufficiently supported in the mot
|Claimant(s):||TILCON MATERIALS, INC|
|Claimant short name:||TILCON MATERIALS|
|Footnote (claimant name) :|
|Defendant(s):||THE STATE OF NEW YORK|
|Footnote (defendant name) :|
|Claim number(s):||115409, 115731|
|Judge:||STEPHEN J. MIGNANO|
|Claimant's attorney:||DELBELLO DONNELLAN WEINGARTEN WISE &
By: Patrick M. Reilly, Esq.
|Defendant's attorney:||ANDREW M. CUOMO, ATTORNEY GENERAL
By: J. Gardner Ryan, Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||September 10, 2010|
|See also (multicaptioned case)|
Defendant moves for an order compelling compliance with its Demand for Discovery and Interrogatories and Notice of Deposition, both dated October 6, 2009 and for an extension of time in which to file appraisals. Claimant opposes the motion.
According to defense counsel, and not disputed by claimant, the subject partial takings involve property used by claimant as an active quarry and asphalt plant. Claimant seeks direct damages arising from both fee and temporary takings, as well as consequential damages to its remainder.
In October, 2009, defendant served the disclosure demands at issue seeking a wide variety of financial and other records of the business for a five year period, as well as a deposition. Claimant responded to the demands by objecting that they "unnecessarily require the disclosure of confidential and proprietary information" and also that they were unnecessary, cumulative and not calculated to lead to relevant information.(1) Nevertheless, claimant indicated that it would be willing to provide responsive information upon the execution of a confidentiality agreement. According to defense counsel, some discussion concerning a confidentiality agreement ensued but no agreement was reached. In support of the motion to compel compliance, defendant maintains that its demands are reasonable and that records related to the business's productivity, reserves, inventory, pricing and future plans and projections are necessary in order to reasonably appraise the fair market value of this income-producing property.
Opposing the motion claimant, although conceding that it "does not object to certain of defendant's demands" (without specifying which demands), contends generally that the information sought is irrelevant to an appraisal of the property and that defendant has made no demonstration of relevance. Claimant further argues that some of the information sought is "highly confidential" and would be of value to its competitors.
Claimant correctly points out that defendant's claim of need for the requested information finds less than compelling basis in its motion papers, which are supported only by an affirmation from counsel and lack any input from an appraiser demonstrating a need for the information. This argument is apt, but also reciprocal. Claimant's protestations of confidentiality and privilege are also contained in a mere affirmation from counsel as opposed to a representative of the claimant corporation with actual knowledge of what is at issue. Neither party has provided the court with a factual predicate to sustain its position.
Nevertheless, despite generally arguing that defendant has not demonstrated a need for any of the requested material, claimant does not dispute defendant's characterization of the property as "income producing" or defendant's assertions that the property has been and continues to be operated as a quarry and asphalt plant and that analysis of the earnings and expenses of the business is indispensable to a determination of highest and best use - both before and after the partial takings - and to a determination of value based on the "income approach."
In analyzing the fair market value of property taken by eminent domain (i.e., in fixing "just compensation" as required by the United States and New York State constitutions), courts and appraisers utilize three approaches:
"(1) sales analysis and comparison, also known as the market value approach and the most commonly used method; (2) income capitalization; and (3) replacement cost (Matter of Merrick Holding Corp. v Board of Assessors, 45 NY2d 538, supra; Matter of City of New York [Salvation Army], 43 NY2d 512; Matter of Great Atl. & Pac. Tea Co. v Kiernan, 42 NY2d 236, 240). The income capitalization approach is generally regarded as the preferred method for determining the value of income-producing property, which is what is at issue in this case (1 Bonbright, Valuation of Property, at 216; see also, Matter of Merrick Holding Corp. v Board of Assessors, 45 NY2d 538, supra). Understandably, the income capitalization method can be effective only with thorough data, including accurate actual income and operating expenses . . ."
(41 Kew Gardens Road Associates v Tyburski, 70 NY2d 325, 330-331).
At this point in the litigation, neither party has provided the court with any concrete data or argument in support of their respective positions. Based on the property's actual use as a quarry both before and after the partial takings at issue herein - i.e., the property itself is used to generate income as distinct from being simply the locus of a business that could be operated anywhere - the court can only conclude that it is likely that at least some of the information sought by defendant on this motion will be integral to both parties' claims in their appraisals and at trial. However, pending further demonstration of specific need, defendant's notice appears overly broad and somewhat duplicative.
Accordingly, the court directs claimant to comply with items 5, 6, 7, 9, and 10 of defendant's demand dated October 6, 2009 within 30 days of receipt of this decision and order. These materials can then serve as a predicate for an initial deposition of claimant, after which any further request for materials may be addressed to the court upon an adequate factual background. Defense counsel is directed to maintain confidentiality of these materials except for attorneys employed by the Department of Law and the appraiser(s) retained by defendant for these cases. The motion is granted to the extent indicated and is otherwise denied. The parties deadline for filing appraisals is extended to March 1, 2011.
September 10, 2010
White Plains, New York
STEPHEN J. MIGNANO
Judge of the Court of Claims
Notice of Motion, Affirmation and Exhibits
Affirmation in Opposition
1. Claimant's Response and Objection to Defendant's Demand for Discovery and Interrogatories dated November 2, 2009.