Matter of Highbridge Broadway, LLC v. Assessor of the City of Schenectady , 2 N.Y.S.3d 679 ( 2015 )

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: January 29, 2015 518851
________________________________
In the Matter of HIGHBRIDGE
BROADWAY, LLC,
Appellant-
Respondent,
v MEMORANDUM AND ORDER
ASSESSOR OF THE CITY OF
SCHENECTADY,
Respondent.
SCHENECTADY CITY SCHOOL
DISTRICT,
Respondent-
Appellant.
________________________________
Calendar Date: November 21, 2014
Before: McCarthy, J.P., Garry, Lynch, Devine and Clark, JJ.
__________
Brian D. Mercy, PLLC, Schenectady (Brian D. Mercy of
counsel), for appellant-respondent.
Whiteman Osterman & Hanna, LLP, Albany (Jonathan P. Nye of
counsel), for respondent-appellant.
__________
Lynch, J.
Cross appeals from an order of the Supreme Court (Reilly,
J.), entered June 18, 2013 in Schenectady County, which, among
other things, in a proceeding pursuant to RPTL article 7, denied
petitioner's motion to hold the Schenectady City School District
in civil contempt.
-2- 518851
Petitioner owns commercial real property in the City of
Schenectady, Schenectady County, which became eligible for the
business investment property tax exemption provided for by RPTL
485-b based on improvements made in 2005. The exemption is for a
period of 10 years, measured by a gradually decreasing percentage
"of the increase in assessed value thereof attributable to such
construction, alteration, installation or improvement"
(RPTL 485-b [2] [a] [i]). Although eligible, petitioner did not
apply for the exemption until 2008, at which time the exemption
was granted. In July 2008, petitioner commenced this proceeding
pursuant to RPTL article 7, alleging that the property was
overassessed on the 2008 tax roll because respondent had
undervalued the exemption (see RPTL 701 [4] [b]). Petitioner put
the Schenectady City School District on notice (see RPTL 708
[3]), but the District did not appear (see RPTL 712 [2-a]). In
2011, Supreme Court granted summary judgment to petitioner,
determining that the value used to calculate the exemption should
be increased and that petitioner was entitled to the exemption
for years 2008 through 2014.1 After applying the statutory
percentages pursuant to RPTL 485-b (2) (a) (iii), the court
directed respondent "to issue refunds to petitioner for
previously paid tax years in accordance with [its]
calculations."2
The City and County of Schenectady issued refunds to
petitioner in accordance with Supreme Court's 2011 judgment and,
although petitioner sent a copy of the judgment to the District,
it did not respond. Petitioner therefore moved to hold the
District in civil contempt. Supreme Court declined to hold the
District in contempt, but determined that petitioner did not have
to file a separate application for each year in which it sought
to apply the exemption and that the judgment properly applied the
exemption through 2014. Recognizing that the District utilized
the 2007, and not the 2008, assessment roll to levy and collect
1
Petitioner acknowledged that it waived the exemption for
2005 through 2007.
2
Supreme Court later clarified that the reference to "tax
years" meant the assessments for each year.
-3- 518851
school taxes for the 2008-2009 school year (see RPTL 1302 [4]),
the court determined that no refund was due from the District
based on the 2008 assessment. Both the District and petitioner
have appealed.3
The District maintains that Supreme Court lacked
jurisdiction to order the issuance of refunds for 2009, 2010 and
2011 because petitioner never filed a separate challenge to the
assessments for each of those years. Put another way, the issue
here is whether petitioner was required to annually commence
separate proceedings while its 2008 challenge was pending in
order for the court's 2011 judgment increasing the RPTL 485-b
exemption to be binding on the subsequent years. Citing to our
decision in Matter of Scellen v Assessor for City of Glens Falls
(300 AD2d 979 [2002]), the District asserts that petitioner is
not entitled to relief because no challenges were made to the
2009 through 2011 assessments. We agree.
In Matter of Scellen, we determined that "the statutory
scheme underlying RPTL article 7 evinces a clear legislative
intent that a separate proceeding be timely commenced to
challenge each tax assessment for which relief is sought" (id. at
980). There, the petitioner's 1998 assessment challenge was
resolved in 2000 but, having failed to challenge the 1999 and
2000 assessments, the petitioner could not obtain an assessment
reduction by operation of RPTL 727, which freezes judicially
determined assessment valuations for the next three assessment
rolls. Finding our analysis in Matter of Scellen "persuasive,"
the Second Department recently reached the same conclusion in
Matter of Jonsher Realty Corp./Melba, Inc. v Board of Assessors
(118 AD3d 787 [2014]) with respect to the calculation of a
transition assessment pursuant to RPTL 1805 (3) (id. at 789).
3
Although the District did not appear and was thus not a
party to the proceeding, the application to hold the District in
contempt, coupled with Supreme Court's directive that the
District issue refunds, qualifies the District as aggrieved and,
thus, a proper appellant (see CPLR 5511; Matter of Currier v
Honig, 50 AD2d 632, 632 [1975]).
-4- 518851
We are mindful that an RPTL 485-b exemption may be obtained
upon a single application (see Schulman Master Ltd. Partnership I
v Town/Village of Harrison, 162 AD2d 674, 675 [1990]; Matter of
Sitterly Rd. Assoc. v Board of Assessment Review of Town of
Clifton Park, 142 AD2d 243, 246 [1988]). The separate point
here, however, is that property owners must preserve their right
to relief through annual challenges to the assessment pending a
determination of the original assessment challenge. Since
petitioner failed to do so here, Supreme Court lacked
jurisdiction to direct the District to refund payments made based
on the 2009 through 2011 assessments (see RPTL 726 [1] [c]).
Because disobeying a court's order issued without subject matter
jurisdiction may not be punishable as a contempt (see Matter of
Schulz v State of New York, 86 NY2d 225, 232 [1995], cert denied
516 U.S. 944 [1995]; see also Lacks v Lacks, 41 NY2d 71, 75
[1976]), petitioner's motion for contempt was properly denied.
McCarthy, J.P., Garry, Devine and Clark, JJ., concur.
ORDERED that the order is modified, on the law, without
costs, by reversing so much thereof as ordered the Schenectady
City School District to issue refunds based on the 2009 through
2011 assessment rolls, and, as so modified, affirmed.
ENTER:
Robert D. Mayberger
Clerk of the Court