383 W. Broadway Corp. v. Solomon

2024 NY Slip Op 31183(U)

• Court: New York Supreme Court, New York County
• Decided: April 8, 2024
• Status: Unpublished

Opinion

383 W. Broadway Corp. v Solomon 2024 NY Slip Op 31183(U) April 8, 2024 Supreme Court, New York County Docket Number: Index No. 152351/2021 Judge: Arlene P. Bluth Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 152351/2021 NYSCEF DOC. NO. 83 RECEIVED NYSCEF: 04/08/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. ARLENE P. BLUTH PART 14 Justice ---------------------------------------------------------------------------------X INDEX NO. 152351/2021 383 WEST BROADWAY CORP., MOTION DATE N/A, N/A Petitioner, MOTION SEQ. NO. 001 002 -v- SHERIF SOLOMON, IN HIS CAPACITY AS THE COMMISSIONER OF FINANCE OF THE CITY OF NEW DECISION + ORDER ON YORK, CITY OF NEW YORK MOTION

Respondent. ---------------------------------------------------------------------------------X

The following e-filed documents, listed by NYSCEF document number (Motion 001) 2, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 64, 66, 67, 73, 75, 77, 78, 79, 80, 81 were read on this motion to/for ARTICLE 78 .

The following e-filed documents, listed by NYSCEF document number (Motion 002) 58, 59, 60, 61, 62, 63, 65, 68, 69, 70, 71, 72 were read on this motion to/for CONSOLIDATE/JOIN FOR TRIAL .

Motion Sequence Numbers 001 and 002 are consolidated for disposition. The cross-

motion to dismiss the petition (MS001) is granted and the motion (MS002) by petitioner to

consolidate this proceeding with a separate tax certiorari proceeding and to conduct discovery is

denied.

Background

Petitioner seeks to reverse a determination by respondents that denied petitioner’s request

for the correction of a clerical error related to the tax classification of its property. It also seeks

declaratory relief that respondents adjust the tax assessment for the property from fiscal year

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2017 through 2022 and that it receive a tax classification that identifies its property as one with

fewer than 11 residential units.

Petitioner explains that under the relevant Real Property Tax Law, properties that have

less than 11 residential units cannot have the assessed value of their property increase by more

than 8% in any one year or by more than 30% in a five-year period. It contends that respondents

erred by counting the total number of units when classifying petitioner’s building instead of

counting only the residential units. Petitioner explains that it attempted to correct this issue by

submitting a clerical error request but that respondents rejected that request.

Respondents cross-move to dismiss on the ground that petitioner waived any arguments it

had about the majority of these tax years when it reached a settlement with the Department of

Finance. They explain that petitioner filed applications seeking to challenge its tax assessments

and also specifically complained about the increase in its assessments. Respondents contend that

the tax commission evaluated these applications and affirmed the assessments for 2016 through

2020. They observe that petitioner also filed Article 7 tax certiorari petitions for these years and

that petitioner also filed another application for the 2020/21 tax year.

In September 2020, in an attempt to resolve petitioner’s requests, respondents issued a

notice of offer and acceptance agreement; it offered to settle the matter by adjusting the

assessment for both the 2019/20 and 2020/21 tax years. Respondents stress that this offer

included a reduction in petitioner’s tax assessment in exchange for petitioner’s assent to the

terms of the agreement. Respondents maintain that part of this agreement contained a waiver of

all challenges to current and prior assessments and required petitioner to discontinue any Article

7 proceedings. They insist that petitioner, through its counsel, signed this agreement in October

2020.

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Despite signing this settlement agreement, petitioner filed a separate application (through

new counsel) in which it demanded that respondents change its classification from the tax years

2016 through 2021 under the auspices of a clerical error request. Respondents denied that

application and this proceeding followed.

Petitioner contends that the settlement agreement is unconscionable and that there is no

question that there was a clerical error relating to its misclassification. It argues that the tax

settlement agreement constitutes fraudulent conduct, a “contract of adhesion,” and should be

ignored. It also claims that respondents are treating petitioner differently from other applicants

and that this disparate treatment is a basis upon which this Court can grant the relief requested in

the petition.

The Court observes that this proceeding was pending before a different judge for a couple

of years (the parties even had a robust oral argument [NYSCEF Doc. No. 73]) prior to its transfer

to the undersigned. The parties then appeared before this Court, where this Court apologized

profusely on behalf of the court system for the absurd delay, and the Court permitted them to

submit additional briefing because so much time had elapsed.

The supplemental briefing shows that while this case was waiting to be decided, the

Appellate Division, First Department issued a relevant decision concerning the tax settlement

agreement at issue here. However, petitioner contends that this Court should not follow this

appellate ruling. Respondents insist that this Court should follow the First Department’s

decision.

Discussion

“It is a long-standing, well-established standard that the judicial review of an

administrative determination is limited to whether such determination was arbitrary or capricious

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or without a rational basis in the administrative record and once it has been determined that an

agency's conclusion has a sound basis in reason, the judicial function is at an end. Indeed, the

determination of an agency, acting pursuant to its authority and within the orbit of its expertise,

is entitled to deference and even if different conclusions could be reached as a result of

conflicting evidence, a court may not substitute its judgment for that of the agency when the

agency's determination is supported by the record” (Partnership 92 LP v State Div. of Hous. and

Community Renewal, 46 AD3d 425, 428-29 [1st Dept 2007], affd 11 NY3d 859 [2008] [internal

quotations and citations omitted]).

This Court’s analysis begins with the tax commission settlement agreement. The terms

and conditions provide that “If you sign the acceptance agreement, you agree to all of the stated

terms and waive your rights to further review of the current and prior assessments, including

further review of claims relating to determinations by the Department of Finance of exemption

and classification” (NYSCEF Doc. No. 28, ¶ 1 [emphasis added]). It also states that “The

applicant accepts the assessment proposed by this offer and will not commence a proceeding to

review the current assessment. Upon acceptance, the application for correction is deemed

withdrawn, effective as of the date it was filed. A withdrawn application cannot serve as the

predicate for a judicial proceeding” (id. ¶ 9).

Respondents offered a reduction in petitioner’s tax assessment in exchange for petitioner

agreeing to the aforementioned terms and conditions (NYSCEF Doc. No. 29) – and finality. And

petitioner, through its then-counsel, signed that agreement (id.). The Court therefore grants the

cross-motion to dismiss as there was a clear and unambiguous agreement between petitioner and

respondents that included valid consideration. That agreement included that petitioner waive its

right to challenge tax assessments and classification for the current and prior tax years.

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And, as petitioner acknowledges, the First Department has already ruled in a substantially

similar case, Oversight Mgt. Services, LLC v Soliman, 220 AD3d 445, 446, 198 NYS3d 2 [1st

Dept 2023]), that these tax settlement agreements preclude further challenges to tax

classifications. In that case, the First Department held that “petitioner waived its right to seek

judicial review of respondent's tax assessments” based on petitioner’s assent to the same type of

settlement agreement at issue here (id.). And, just as here, the petitioner in Oversight sought to

challenge the denial of its request to change its classification (id.).

Petitioner’s supplemental briefing did not sufficiently explain how this proceeding is

distinguishable from the aforementioned appellate decision. Instead, petitioner insists,

essentially, that the First Department’s decision is incorrect as it “departed from long-standing

Court of Appeals precedent with no explanation” (NYSCEF Doc. No. 80 at 1). This Court sees

no reason to ignore binding precedent that is directly on point. As the First Department made

clear, “settlement agreements are generally favored by the courts, and we perceive no public

policy or other reason for setting aside the parties' agreements” (Oversight, 220 AD3d at 446).

In this Court’s view, petitioner’s instant proceeding is simply an expression of regret for

entering into this settlement agreement without first fixing the classification issue. Petitioner

does not dispute that it could have challenged its classification before the tax commission or that

the terms and conditions specifically included a waiver of that type of challenge. That petitioner

may have now changed its mind is not a basis for it to get another chance to raise these

arguments for the tax years that are subject to the settlement.

The Court dismisses the petition with respect to the 2021/22 tax year as respondents

demonstrated that petitioner did not exhaust its administrative remedies for that tax year.

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The Court also denies motion sequence 002, which seeks to consolidate this proceeding

with a separate tax certiorari case, to conduct discovery, for an evidentiary hearing and to

conform the pleadings. The settlement agreement at issue here renders petitioner’s claims for the

tax years through 2021 as moot and, as respondents point out, petitioner failed to utilize the

proper procedures for subsequent tax years. Moreover, the settlement agreement negates any

need for discovery about disparate treatment or for consolidation.

Summary

The Court observes that petitioner insists that there is some sort of disparate treatment in

that other property owners are sometimes provided with the changes requested here. But that is

not a basis upon which this Court can ignore a valid settlement agreement. The fact is that

petitioner was represented by counsel before the tax commission and it signed an agreement in

order to get a reduction in its assessment. That agreement contained a clear waiver of its right to

bring a future proceeding about its classification for those tax years and yet that is precisely what

petitioner did here.

To grant the petition, as petitioner acknowledges, would require this Court to both ignore

binding appellate precedent and to void the settlement agreement as unconscionable or as the

product of fraud. Petitioner wholly failed to cite a basis for this Court to make either finding. It

did not show, for instance, that there was some type of fraud, did not adequately address the fact

that it got valid consideration for entering into the agreement; nor did it claim that the attorney

who represented petitioner before the tax commission was “duped” into signing the subject

agreement which, as is evidenced on this record, is a routine part of procedure before the tax

commission. More specifically, petitioner did not sufficiently address why it signed the

agreement instead of pursuing the classification argument before the tax commission. Quite

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simply, having settled the matter for certain tax years without changing the classification, that

issue was waived for those settled years.

Accordingly, it is hereby

ORDERED that respondents’ cross-motion to dismiss the petition (MS001) is granted;

and it is further

ADJUDGED that the petition is denied and this proceeding is dismissed without costs or

disbursements; and it is further

ORDERED that petitioner’s motion (MS002) for inter alia consolidation and discovery is

4/8/2024 $SIG$ DATE ARLENE P. BLUTH, J.S.C. CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION

□ GRANTED DENIED GRANTED IN PART X OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE

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