| Matter of John Jay Coll. of Criminal Justice of the City Univ. ofN.Y. |
| 2010 NY Slip Op 04714 [74 AD3d 460] |
| June 3, 2010 |
| Appellate Division, First Department |
| In the Matter of John Jay College of Criminal Justice of the CityUniversity of New York. River Center LLC et al., Appellants-Respondents, v DormitoryAuthority of the State of New York, Respondent-Appellant. |
—[*1] Kramer Levin Naftalis & Frankel, LLP, New York (James G. Greilsheimer of counsel), forBlackacre Bridge Capital, L.L.C. and SWH Funding Corp., appellants-respondents. Berger & Webb, LLP, New York (Charles S. Webb III of counsel), forrespondent-appellant.
Judgment, Supreme Court, New York County (Jane S. Solomon, J.), entered June 5, 2008,awarding claimant River Center LLC the principal sum of $15,065,000, based on a decision,same court (Leland G. DeGrasse, J.), dated April 16, 2008, which, after a nonjury trial, valuedRiver Center's property at $97,250,000 and deducted the condemnor's advance payments of$82,185,000, unanimously modified, on the law and the facts, to vacate that portion of the awardwhich is for $14,800,000 in enhanced value for the zoning change and permits obtained by RiverCenter, the matter remanded for recalculation of the interest, and otherwise affirmed, withoutcosts. Order, same court (Jane S. Solomon, J.), entered May 29, 2008, which denied RiverCenter's motion to reopen the trial for submission of additional evidence or for a new trial,unanimously affirmed, without costs.
The trial court's findings in this condemnation valuation case are based on a fairinterpretation of the evidence and we discern no basis to disturb those findings (see W.T.Grant Co. v Srogi, 52 NY2d 496, 510 [1981]). While fair market value should be based onthe highest and best use of the property even though the owner may not have been utilizing it toits fullest potential at the time of the taking (see Matter of Town of Islip [Mascioli], 49NY2d 354, 360 [1980]), a use must be established as reasonably probable and not a "speculativeor hypothetical arrangement in the mind of the claimant" (see Matter of City of New York[Rudnick], 25 NY2d 146, 149 [1969], remittitur amended 26 NY2d 748 [1970]). Thespeculative nature of the proposed development was shown here by, among other things, thetestimony of River Center's principal admitting that at the time of the taking he had yet to obtainany financing commitment [*2]or any signed leases for theproposed development or, in fact, any of the requirements that would bring the project to fruitionin the near future. To the extent that the appraisal rejected by the court was based oncapitalization of income, it too was speculative (see Matter of City of New York [Atl.Improvement Corp.], 28 NY2d 465, 470 [1971]; Arlen of Nanuet v State of NewYork, 26 NY2d 346, 354-355 [1970]).
Although the trial court cited the rule that "the purchase price set in the course of an arm'slength transaction of recent vintage, if not explained away as abnormal in any fashion, isevidence of the 'highest rank' to determine the true value of the property at that time" (PlazaHotel Assoc. v Wellington Assoc., 37 NY2d 273, 277 [1975]), and thus considered the priceset forth in the 1998 purchase agreement for the property, the court properly recognized that suchevidence is not determinative and took into account other factors (see Matter of KingsMayflower v Finance Adm'r of City of N.Y., 63 AD2d 970 [1978]). Such qualified relianceon the 1998 purchase agreement was shown by the trial court's statements that such evidencewas recent enough "to warrant consideration" and that it was the "starting point" of anydetermination of value. In view of such limited use of the recent sale, any exclusion of theevidence proffered by River Center to show that the sale was not at arm's length would have hada minimal effect on the outcome.
The amount of the mortgage loan, with interest at 18½%, did not necessarily reflect thevalue of the property (see Farash v Smith, 59 NY2d 952, 955 [1983]; see also Matterof City of New York, 222 App Div 554, 559 [1928], affd 250 NY 588 [1929]).Evidence of offers for the property was properly excluded because, among other reasons, offersof such nature are inadmissible on the issue of value (see Brummer v State of New York,25 AD2d 245, 248-249 [1966]). Contrary to River Center's contention, the trial court did notmisapply the rule in Frye v United States (293 F 1013 [1923]) to the two-grid analysis ofits appraiser; the court did not exclude this evidence, and merely drew an apt analogy to the rulein finding that the appraiser's analysis was unreliable because it was not based on a generallyaccepted methodology. The trial court properly rejected River Center's appraiser's addition of$37.8 million in value for entrepreneurial profit, since any claimed developer enhancementswere only at the preliminary stage and there was testimony, found to be credible, that the planswere not compliant with the zoning or the special permits for the property. Thus, while the plansmight have been useful as a marketing tool, the court reasonably found that no purchaser wouldhave paid for them as an added element of the purchase price for the property. The claim fordelay damages as a result of the State's alleged interference in River Center's eventuallysuccessful efforts to obtain rezoning was properly dismissed as not an appropriate element invaluation, properly subject to the jurisdiction of the Court of Claims, and duplicative of a claimalready before that court.
The motion court properly exercised its discretion (CPLR 4404 [b]) in denying RiverCenter's motion to reopen the record or for a new trial. There was insufficient explanation for thefailure to present at trial the testimony of a union official knowledgeable about River Center'spredecessor's 1992 option and the 1998 purchase of the property (see Fischer v RWSP Realty, LLC, 63AD3d 878 [2009]). Moreover, given that the trial court's discretion to reopen a case after aparty has rested should be sparingly exercised (see Lindenman v Kreitzer, 7 AD3d 30, 33 [2004]), such discretionshould be exercised even more sparingly where, as here, the motion is made after a decision hasbeen rendered. Finally, as noted, it was unlikely that the evidence would have made anydifference.[*3]
We modify the judgment solely on the ground, based onour review of the record, that the amount awarded for enhanced value for obtaining rezoning andspecial permits was duplicative, since it was already factored into the condemnor's appraisal thatwas accepted by the court; in addition, the costs were not documented.Concur—Friedman, J.P., Nardelli, Moskowitz, Freedman and Manzanet-Daniels, JJ.