Court Opinion

ID: 9956337
Source: CourtListenerOpinion
Date Created: 2024-04-01 20:11:49.466726+00
Date Added: 2024-06-11T08:15:52.517508
License: Public Domain

Union Terrace Condominium v New York City Dept.
                         of Fin.
               2024 NY Slip Op 31025(U)
                     March 27, 2024
           Supreme Court, New York County
        Docket Number: Index No. 162031/2023
                  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.
  FILED: NEW YORK COUNTY CLERK 03/27/2024 03:52 PM                                                                   INDEX NO. 162031/2023
  NYSCEF DOC. NO. 28                                                                                           RECEIVED NYSCEF: 03/27/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. ARLENE P. BLUTH                                            PART                              14
                                                                                      Justice
            ---------------------------------------------------------------------------------X   INDEX NO.          162031/2023
             UNION TERRACE CONDOMINIUM
                                                                                                 MOTION DATE             N/A
                                                         Petitioner,
                                                                                                 MOTION SEQ. NO.         001
                                                 -v-
             NEW YORK CITY DEPARTMENT OF FINANCE,                                                  DECISION + ORDER ON
                                                                                                         MOTION
                                                         Respondent.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 001) 1- 10, 11, 14, 15, 16,
            17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27
            were read on this motion to/for                                                       ARTICLE 78                       .

                      Respondent’s cross-motion to dismiss the petition is granted.

            Background

                      Petitioner brings this case arising out of various tax liens issued against certain tax lots it

            owns. These tax lots were created for parking spots on petitioner’s roof as referenced in the

            offering plan. However, because easements to permit access to the roof were not secured, no

            parking spots were ever actually created and sold. Apparently, petitioner did not pay the taxes

            associated with these lots and, eventually, liens were issued and then sold.

                      Petitioner observes that the tax liens were acquired by the Bank of New York Mellon

            (“BNY”) and that BNY commenced a tax lien foreclosure case in Queens in 2022 for some of

            these lots (BNY subsequently discontinued that matter). It claims that it then asked respondent to

            modify the tax classifications for these lots. Petitioner complains that respondent refused to

             162031/2023 UNION TERRACE CONDOMINIUM vs. NEW YORK CITY DEPARTMENT OF                                   Page 1 of 7
             FINANCE
             Motion No. 001

                                                                           1 of 7
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  FILED: NEW YORK COUNTY CLERK 03/27/2024 03:52 PM                                                  INDEX NO. 162031/2023
  NYSCEF DOC. NO. 28                                                                        RECEIVED NYSCEF: 03/27/2024

            eliminate the tax lots related to the parking spaces even though the spaces were never actually

            created.

                   Respondent cross-moves to dismiss on numerous grounds. First, it contends that

            petitioner did not properly serve respondent. It observes that respondent must be served pursuant

            to CPLR 311(a)(2), which requires that the commencing papers be served on the City’s

            Corporation Counsel and the affidavit of service does not allege that the Corporation Counsel

            was served.

                   Respondent also argues that petitioner failed to exhaust its administrative remedies. It

            points out that there is a specific form that a landowner must fill out in order to request the

            modification. It also observes that as part of this application, petitioner would have to include a

            condominium declaration amendment submission and an acceptance letter from the Attorney

            General. Respondent emphasizes that it does not have the power to remove tax lots on its own

            because the condominium declaration has not been amended to remove them.

                   Respondent observes that it has included a link to an informational brochure about how to

            seek an amendment to a condominium declaration on its website and stresses that the Attorney

            General must approve the amendment before respondent can take action. It insists that

            petitioner’s submission of a letter was not a sufficient request for the relief petitioner seeks.

            Respondent also argues that the only amendment to condominium declaration on file was from

            1985 and that amendment did not alter the number of units or parking spaces.

                   It also argues that to the extent that petitioner complains about the taxes themselves,

            petitioner was required to bring a proceeding under Article 7 of the Real Property Tax Law and

            cannot challenge the imposition of those taxes in this proceeding.

             162031/2023 UNION TERRACE CONDOMINIUM vs. NEW YORK CITY DEPARTMENT OF                   Page 2 of 7
             FINANCE
             Motion No. 001

                                                           2 of 7
[* 2]
  FILED: NEW YORK COUNTY CLERK 03/27/2024 03:52 PM                                                 INDEX NO. 162031/2023
  NYSCEF DOC. NO. 28                                                                       RECEIVED NYSCEF: 03/27/2024

                   In opposition to the cross-motion and in reply, petitioner claims that it is not proper for

            the City to levy taxes on petitioner based on an easement that never existed. It argues that

            respondent’s cross-motion is filled with “alleged technical defaults” and insists that only if the

            easement was actually secured would the petitioner have to amend its documents to state that the

            parking lots were for sale.

                   Petitioner admits that it did not pay the taxes but argues that this should not be controlling

            because the taxes were issued against illusory tax lots. It contends that respondent essentially

            committed fraud, except for the scienter element, when it sold the tax liens to BNY. Petitioner

            argues that any limitations period relating to past tax years has not expired because it is merely

            challenging respondent’s decision.

                   With respect to service, petitioner’s counsel claims he gave the task to a “legal intern”

            and claims the intern confirmed that the papers could be served directly to respondent’s offices

            on John Street in Manhattan.

            Service of Process

                   CPLR 311(a)(2) provides that “Personal service upon a corporation or governmental

            subdivision shall be made by delivering the summons as follows: upon the city of New York, to

            the corporation counsel or to any person designated to receive process in a writing filed in the

            office of the clerk of New York county.”

                   There is no dispute that petitioner did not comply with the above provision of the CPLR.

            Instead, petitioner asserts that the legal intern who was supposed to serve the commencing

            papers called respondent and was told he could serve papers at 66 John Street and that

            respondent’s website says papers can be served this way. The problem with these assertions is

             162031/2023 UNION TERRACE CONDOMINIUM vs. NEW YORK CITY DEPARTMENT OF                 Page 3 of 7
             FINANCE
             Motion No. 001

                                                          3 of 7
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  FILED: NEW YORK COUNTY CLERK 03/27/2024 03:52 PM                                                  INDEX NO. 162031/2023
  NYSCEF DOC. NO. 28                                                                         RECEIVED NYSCEF: 03/27/2024

            that petitioner provided no support for them. Petitioner did not include an affidavit from the

            legal intern and instead only includes entirely hearsay arguments about what the legal intern said

            or did. Nor did petitioner include screenshots of the portions of the websites upon which it

            relies.

                      Simply put, more was required in order for this Court to set aside the clear directive in the

            CPLR section cited above. Accordingly, the Court finds that it did not acquire jurisdiction over

            respondent.

            The Merits

                      Even if the Court could consider the merits, the Court would grant the cross-motion to

            dismiss. The petition, as respondent points out, is notably silent on many of the key actions and

            inactions that led to the issuance and sale of the subject tax liens. Petitioner does not contest the

            fact that the latest condominium declaration on file is a 1985 amendment which specifically lists

            the tax lots for the parking spaces at issue here (NYSCEF Doc. No. 18 at 6-7). Petitioner does

            not dispute that it never sought to amend the condominium’s declaration to remove the tax lots

            nor does it dispute that it has to get approval from the Attorney General in order to effectuate

            such an amendment.

                      It is axiomatic that offering plans and subsequent amendments fall under a statutory

            scheme administered, in large part, by the state Attorney General. This detailed statutory

            scheme includes General Business Law § 352-e (a section entitled “Real estate syndication

            offerings”) and regulations (see 13 NYCRR 20.1-20.5) promulgated by the Attorney General.

            As respondent point out, condominiums are taxed pursuant to Real Property Law § 339-y.

            Specifically, Real Property Law § 339-y(1)(a) provides that “each unit and its common interest,

             162031/2023 UNION TERRACE CONDOMINIUM vs. NEW YORK CITY DEPARTMENT OF                   Page 4 of 7
             FINANCE
             Motion No. 001

                                                            4 of 7
[* 4]
  FILED: NEW YORK COUNTY CLERK 03/27/2024 03:52 PM                                                  INDEX NO. 162031/2023
  NYSCEF DOC. NO. 28                                                                        RECEIVED NYSCEF: 03/27/2024

            not including any personal property, shall be deemed to be a parcel and shall be subject to

            separate assessment and taxation by each assessing unit.” In addition, Real Property Law § 339-

            s provides that amendments to a declaration have to be recorded and filed with the New York

            Department of State.

                   Petitioner does not address any of these statutes and regulations in reply or explain why it

            is not bound by them. Instead, petitioner appears to blame respondent for following the

            documents on file. The Court recognizes that the original offering plan specifically mentioned

            that these parking spaces were the subject of an ongoing litigation and that the spaces were not to

            be sold until that litigation was resolved (NYSCEF Doc. No. 2 at 3). And so the offering plan

            never promised that parking spaces would be available and, evidently, they were never sold to

            anyone. But petitioner does not explain why it never sought to amend the declaration at any time

            prior to this proceeding, why it didn’t seek to rectify this issue when it received tax bills for the

            parking spaces or why it failed to pay those taxes.

                   And, of course, petitioner did not sufficiently explain in reply how respondent has the

            power to “redact” these tax lots. Tax lots were created and there is an offering plan (as well as an

            amendment to the declaration) that refers to them; it is not up to respondent to sua sponte erase

            them from the tax map. Respondent simply followed the records on file and its opposition

            papers make clear that there is a dedicated procedure to amend a condominium declaration.

            Petitioner ignored that procedure and merely sent a letter to respondent, which is not the agency

            that has the power in the first instance to make such a change.

                   Petitioner’s remaining requests for relief are also wholly without merit. Petitioner did not

            meet its burden to adequately allege a sufficient basis to challenge the sale of the tax liens or to

            “redact the tax liens.” As noted above, parking spaces are taxed under the Real Property Law so

             162031/2023 UNION TERRACE CONDOMINIUM vs. NEW YORK CITY DEPARTMENT OF                   Page 5 of 7
             FINANCE
             Motion No. 001

                                                           5 of 7
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  FILED: NEW YORK COUNTY CLERK 03/27/2024 03:52 PM                                                 INDEX NO. 162031/2023
  NYSCEF DOC. NO. 28                                                                        RECEIVED NYSCEF: 03/27/2024

            it was proper for respondent to tax these “tax lots.” And petitioner admits it did not pay the taxes

            nor did it utilize the correct procedure to challenge tax assessments (an Article 7 proceeding). It

            also appears the time to challenge those tax assessments long passed as they are from years ago.

            Summary

                   The Court understands petitioner’s central point—that, practically, it makes no sense to

            issue taxes for parking spaces that never existed. But the tax lots existed and continue to exist.

            The burden was on petitioner to follow the right procedure to rectify the relevant documents to

            reflect that reality; it was not respondent’s task to monitor the administration of petitioner’s

            building. And petitioner, for whatever reason, did not bother to follow its obligations under the

            law to 1) amend its declaration, 2) pay its taxes or 3) properly challenge tax assessments. And

            petitioner did not properly serve respondent.

                   Clearly, this has become a big mess; tax liens were issued and sold as if petitioner has

            over a dozen parking spaces on the roof of the garage. But that is because there are

            corresponding tax lots. Unfortunately for petitioner, the problem cannot be resolved in ways the

            petitioner has already tried – by seemingly pretending it doesn’t exist, by ignoring tax bills, by

            writing letters or by bringing an Article 78. This forty-year-old issue cannot be cleaned up with

            an Article 78 proceeding against this respondent. Luckily, respondent provided in its papers a

            roadmap to petitioner about how to remove the tax lots.

                   Accordingly, it is hereby

                   ORDERED that respondent’s cross-motion to dismiss is granted; and it is further

             162031/2023 UNION TERRACE CONDOMINIUM vs. NEW YORK CITY DEPARTMENT OF                  Page 6 of 7
             FINANCE
             Motion No. 001

                                                            6 of 7
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  FILED: NEW YORK COUNTY CLERK 03/27/2024 03:52 PM                                                  INDEX NO. 162031/2023
  NYSCEF DOC. NO. 28                                                                          RECEIVED NYSCEF: 03/27/2024

                    ADJUDGED that the petition is denied and this proceeding is dismissed with costs and

            disbursements to be awarded to respondent by the Clerk upon presentation of proper papers

            therefor.

                   3/27/2024                                                          $SIG$
                        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

             162031/2023 UNION TERRACE CONDOMINIUM vs. NEW YORK CITY DEPARTMENT OF                     Page 7 of 7
             FINANCE
             Motion No. 001

                                                           7 of 7
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