NY Appellate Court Upholds Damages for Partial Takings

This post was authored by Ashlee Vega- Slattery, Touro University Jacob D. Fuchsberg Law Center

The question in 20 Rewe Street, LTD v State of New York is whether a landowner was adequately compensated by the State for the partial taking of their Brooklyn property. The property, located in a manufacturing/industrial zone and totaling 39,900 square feet, was primarily unimproved; it consisted only of a concrete wall and chain-link fence, and was used for storage and parking. In January of 2012, the New York State Department of Transportation seized 27,041 square feet of the northern side of the property, leaving 12,859 square feet to the landowner. The landowner subsequently filed a claim seeking damages as just compensation for the partial taking.

The landowner and the State each hired an appraisal firm, and each firm reached a different value, using distinct methods of approach to the valuation. The Court of Claims believed that the State’s appraiser’s approach to valuation was more persuasive than that of the landowner’s appraiser. The court also rejected the time, zoning, and size adjustments made by the claimant’s appraiser, as they were not supported by the evidence. The claimant’s challenges to the State’s comparable sale properties were not particularly compelling to the court either. The court entered judgment for damages in the amount of $3,310,500.00; the award was based on the pre-taking value of the property, $4,389,000.00, along with an upward modification to account for a mistake in the appraiser’s access adjustment. The landowner appealed to the Appellate Division.

The Takings Clause of the Fifth Amendment provides that “private property shall not be taken for public use, without just compensation.” With respect to a partial taking, damages are measured by the difference between the value of the whole prior to the taking and the value of the remainder after the taking. Damages may be direct, indirect, or consequential. The Appellate Division, quoting Lerner Pavlick Realty v. State of New York (an earlier case it decided, in which it held that an award to a landowner who sued for consequential damages resulting from a fee taking and temporary easement to construct a highway was adequate, but subject to an offset for any enhancement), maintained that consequential damages are, “measured by the difference between the before and after values, less the value of the land and improvements appropriated.” An award must also be within the range of expert testimony or supported by other evidence and explained by the court. The appellate court further noted that a trial court’s explanation of an award that is supported by the evidence is “entitled to deference and will not be disturbed on appeal.”

The Appellate Division contends that the determination of the Court of Claims to side with the State’s appraiser was both supported by the record and adequately explained. Moreover, they noted that assessing the aptness of comparable sales is within the Court of Claims’ own discretion, and the sales selected were similar enough to serve as a guide to the market value of the property. The State’s appraiser’s explanation of the basis for his selection of comparable properties and relevant adjustments made to their valuation was adequate and credible. In addition, the rejection by the Court of Claims of certain adjustments made by the claimant’s appraiser was supported by the evidence. As such, the Appellate Division believes the court properly accepted the pre-taking value of the property proffered by the State’s appraiser, with an upward adjustment that was adequately explained.

Although the landowner asserted that the Court of Claims based its determination of the amount of consequential damages to the remainder property on a finding as to its highest and best use, it actually applied a percentage reduction to the value of the remainder parcel per square foot of floor area ratio, utilizing the higher 20% figure proffered by the State as an admission against the State’s interest. The landowner did not challenge the percentage diminution method applied by the court, and because the landowner proffered a lower diminution figure, it fell short of meeting its burden of establishing an entitlement to higher severance damages. Accordingly, the Appellate Division found that the determination of the Court of Claims to award $3,310,500 as just compensation for the taking was proper and not to be disturbed.

20 Rewe Street, LTD v State of New York, 2022 WL 4230493 (NYAD 2 Dept. 9/14/2022)