Court Opinion

ID: 2753527
Source: CourtListenerOpinion
Date Created: 2014-11-20 16:07:35.989804+00
Date Added: 2024-06-11T12:16:38.510422
License: Public Domain

State of New York
                    Supreme Court, Appellate Division
                       Third Judicial Department
Decided and Entered: November 20, 2014                  518098
________________________________

STONE MOUNTAIN PRIME LLC,
                    Appellant,
      v
                                             MEMORANDUM AND ORDER
UICC HOLDING LLC et al.,
                    Respondents,
                    et al.,
                    Defendants.
________________________________

Calendar Date:    October 14, 2014

Before:    Peters, P.J., Stein, Rose, Egan Jr. and Clark, JJ.

                              __________

      Menter, Rudin & Trivelpiece, PC, Syracuse (Teresa M.
Bennett of counsel), for appellant.

      Fischer, Bessette, Muldowney & Hunter, LLP, Malone (Matthew
H. McArdle of counsel), for UICC Holding LLC and others,
respondents.

                              __________

Rose, J.

      Appeals (1) from an order of the Supreme Court (Demarest,
J.), entered June 21, 2013 in Franklin County, upon a decision of
the court in favor of certain defendants, and (2) from an amended
order and amended judgment of said court, entered September 9,
2013 in Franklin County, which granted plaintiff's motion for,
among other things, a deficiency judgment against certain
defendants.

      Defendant UICC Holding LLC defaulted on a $4,000,000 loan
from plaintiff secured by, among other things, two parcels of
real property in the Town of Malone, Franklin County. Plaintiff
                              -2-                518098

obtained a judgment of foreclosure and, as the sole bidder,
purchased the parcels at the foreclosure sale for $500,000. The
parcels were improved with a six-story brick and masonry building
that historically had been a hotel for many years until a fire in
1997, as well as an annex building that contained commercial and
residential space. Both buildings were undergoing extensive
renovations for combined use as a hotel at the time of the
foreclosure. The referee computed the amount due on the mortgage
as $5,207,462.96 and plaintiff moved, pursuant to RPAPL 1371 (2),
for a deficiency judgment. UICC and various guarantors of the
mortgage (hereinafter collectively referred to as defendants)
opposed the motion and Supreme Court held an evidentiary hearing.
Plaintiff's expert appraiser opined that the highest and best use
of the property was as mixed residential and retail or office
space and that, based on a sales comparison approach, the
property was worth $600,000. On the other hand, defendants'
expert appraiser concluded that the highest and best use of the
property was as a hotel and, using an income capitalization
approach, he valued the property at $4,900,000. Supreme Court
issued an order accepting the opinion of defendants' expert and
thereafter issued a judgment in plaintiff's favor of $307,462.96
plus interest. Plaintiff appeals.

      We affirm. RPAPL 1371 (2) requires the court to determine
"the fair and reasonable market value of the mortgaged premises
as of the date such premises were bid in at auction" (RPAPL 1371
[2]; accord Trustco Bank v DeCaro, 80 AD3d 1094, 1095 [2011];
Trustco Bank v Gardner, 274 AD2d 873, 873 [2000]). In
determining such a motion, "'the trial court enjoys broad
discretion in that it can reject expert testimony and arrive at a
determination of value that is either within the range of expert
testimony or supported by other evidence and adequately explained
by the court'" (BTC Mtge. Invs. Trust 1997-SI v Altamont Farms,
284 AD2d 849, 850 [2001], quoting ARC Machining & Plating v
Dimmick, 238 AD2d 849, 850 [1997]).

      Here, the evidence established that the main parcel had
always been used as a hotel and, as such, was a landmark in the
region. Although the hotel ceased operating in 1997 due to a
fire, the building had undergone extensive renovation for future
use as a hotel, including a new roof, debris removal, lead and
                              -3-                518098

asbestos abatement and clearing of the floors and partitions.
Accordingly, Supreme Court's determination to accept the
conclusion of defendants' expert that the highest and best use of
the property was as a hotel is amply supported by the record
evidence. In contrast, plaintiff's expert offered no evidence to
support his conclusion that the highest and best use of the
property was as mixed residential and retail or office space, and
only one of his comparable sales was a hotel – but it was used as
part of an educational institution and was operated at a loss.

      Having determined that the highest and best use of the
property was as a hotel and given the apparent dearth of sales of
similar properties, Supreme Court had a justifiable basis for
accepting defendants' method of valuation. Although certain
assumptions had to be made by defendants' appraiser in using the
income capitalization method to determine the value of the
property as a functioning hotel, those assumptions were based on
the appraiser's research and evidence in the record, including
evidence that the hotel restoration project had been awarded a
grant of $2.2 million. Further, as explained by defendants'
expert, the income capitalization approach to valuation was
appropriate in this case despite the fact that the hotel was not
yet operating because it reflected what a hypothetical investor
would be willing to pay for the property as of the date of
foreclosure. In light of the evidence supporting the testimony
of defendants' expert, plaintiff's claim that it should have been
rejected as lacking a reasonable basis merely reflects the
conflicts in the expert evidence that we consider to be within
Supreme Court's discretion to resolve (see Adirondack Trust Co. v
Farone, 282 AD2d 910, 912-913 [2001], lv denied 96 NY2d 721
[2001]; Hudson City Sav. Inst. v Drazen, 153 AD2d 91, 92-93
[1990]).

      Further, Supreme Court did not err in allowing defendants
to use three recent appraisals of the property obtained at
plaintiff's direction and while the property was under
renovation, each of which also used the income capitalization
approach, for the limited purpose of attacking plaintiff's
expert's reliance on the sales method approach (see e.g. BTC
Mtge. Invs. Trust 1997-SI v Altamont Farms, 284 AD2d at 851). In
short, Supreme Court adequately explained its reasons for
                              -4-                  518098

accepting defendants' expert valuation of the property, and we
are not persuaded to disturb the court's determination (see id.;
Adirondack Trust Co. v Farone, 282 AD2d at 913; ARC Machining &
Plating, Inc. v Dimmick, 238 AD2d at 851).

     Peters, P.J., Stein, Egan Jr. and Clark, JJ., concur.

      ORDERED that the order, amended order and amended judgment
are affirmed, with costs.

                             ENTER:

                             Robert D. Mayberger
                             Clerk of the Court