Court Opinion

ID: 6350310
Source: CourtListenerOpinion
Date Created: 2022-06-16 14:07:37.245199+00
Date Added: 2024-06-11T09:16:25.904934
License: Public Domain

State of New York                                                         OPINION
Court of Appeals                                           This opinion is uncorrected and subject to revision
                                                             before publication in the New York Reports.

 No. 55
 In the Matter of DCH Auto, &c. et
 al.,
         Appellants,
      v.
 Town of Mamaroneck, &c., et al.,
         Respondents.

 Matthew S. Clifford, for appellants.
 William Maker, Jr., for respondents.
 CVS Albany LLC et al., International Council of Shopping Centers, Inc., Stop & Shop
 Supermarket Company, LLC, Wakefern Food Corporation, New York State School
 Boards Association, New York State Conference of Mayors and Municipal Officials et
 al., amici curiae.

 WILSON, J.:

        DCH Auto leased a parcel of real property located in Mamaroneck, New York.

 DCH’s lease with the property’s owner is a “net lease,” which means that DCH must pay,

 in addition to rent, all the real estate taxes associated with the property. Starting in 2009,

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DCH believed that certain tax assessments for the property were too high, so it challenged

those tax assessments by filing grievance complaints with the local board of assessment

review. After the board reviewed and denied the challenges to the assessments, DCH filed

petitions for judicial review. Supreme Court dismissed DCH’s petitions, holding that only

an owner—and not a net lessee—may file the initial grievance complaints pursuant to

RPTL 524 (3) and that the failure of the owner to file the initial grievance precluded judicial

review of the board’s determinations. The Appellate Division affirmed. The question we

address is: does a grievance complaint filed with the assessor or board of assessment review

at the administrative level by a net lessee who is contractually obligated to pay real estate

taxes on the subject property satisfy RPTL 524 (3) such that the net lessee may properly

commence an article 7 proceeding upon rejection of its grievance? We answer in the

affirmative and reverse.

                                               I

       DCH Auto, now known as DCH Investments Inc. (New York) (together, DCH),

operates a car dealership in Mamaroneck. In 2007, DCH entered into a 20-year net lease

with the nonparty owner, 700 Waverly Avenue Corp. (Owner), of a parcel of real property

located at 700 Waverly Avenue in the Village of Mamaroneck (Village), which is located

within the Town of Mamaroneck (Town) (together, Mamaroneck).

       The lease obligates DCH to pay “all ad valorem real estate taxes or other taxes in

the nature thereof . . . levied or imposed against or with respect to” the subject property
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during the lease term. The lease also provides that DCH “shall have the right, at its sole

cost and expense, to contest the amount or validity, in whole or in part, of any [tax] relating

to the [subject property] by appropriate proceedings.”

       By administrative complaints pursuant to RPTL 524 (3), DCH timely challenged

eight tax assessments of the subject property: the Town’s tax assessments for five tax years

(2009, 2010, 2011, 2013, and 2014), and the Village’s tax assessments for three tax years

(2010, 2011, and 2013). DCH filed the 2014 complaint against the Town in Owner’s name

but filed all the other complaints in its own name.

       At the time DCH filed its grievances, the Town’s website stated that “[a]ny person

aggrieved by an assessment,” including a “tenant who is required to pay the real estate

taxes pursuant to a lease” “may file a complaint.” The Town’s website also directed

taxpayers to the website of the New York State Department of Taxation and Finance’s

Office of Real Property Tax Services (ORPTS), which similarly instructed that “[a]ny

person who pays property taxes” including “tenants who are required to pay property taxes

pursuant to a lease or written agreement” may file an assessment challenge. That same

instruction is still on ORPTS’s website today (NY St Dept of Taxation & Fin, Off of Real

Prop Tax Servs, Contesting Your Assessment in New York State 2 [Feb. 2012],

https://www.tax.ny.gov/pdf/publications/orpts/grievancebooklet.pdf [last accessed June 9,

2022]).

       For each complaint challenging the Town’s assessments, the Town Board of

Assessment Review accepted the grievances, considered them, and confirmed the Town’s

assessments.    The Town Board did not dismiss the complaints or indicate that the

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complaints were in any way defective.        Similarly, the Village Board accepted and

considered the complaints and confirmed the Village’s assessments.

       Once DCH received the Town and Village Board determinations, it timely filed

judicial petitions challenging the Town and Village assessments pursuant to RPTL

article 7. After procedural history not relevant here, in September 2016, the Town and

Village jointly moved to dismiss each proceeding “for lack of subject matter jurisdiction

due to [DCH]’s failure to satisfy a condition precedent for challenging the assessments”—

namely “[t]he failure of the [o]wner to submit [the] RP-524 [c]omplaints.” In opposition,

DCH argued that the complaints were properly filed because RPTL 524 (3) did not provide

that only an “owner” may file a complaint and that the plain text of RPTL 524 (3) and our

case law “recognize the right of a non-owner tenant who is responsible for paying the real

property taxes to seek both administrative and judicial review of the assessment” (Rec at

304-312). DCH alternatively argued that the purported defect was, at most, “technical”;

that the Town and Village were not prejudiced by it; and the defect was not jurisdictional

(Rec at 313-320).

       Based on joint stipulated facts and submitted documentary evidence, Supreme Court

granted the Town and Village’s joint motion and dismissed the petitions. The court held

that it lacked subject matter jurisdiction to review the assessments because, although DCH

was “[u]ndisputedly . . . ‘aggrieved’ by the decisions of the Boards,” it “did not satisfy a

condition precedent to the commencement of these proceedings” because the owner did

not file the complaints pursuant to RPTL 524 (3). Finally, the court held that “the failure

of the owner to raise the RP-524 Complaint in the administrative process is a fundamental

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error which the courts cannot cure because of a lack of subject matter jurisdiction.” The

Appellate Division affirmed (178 AD3d 823 [2d Dept 2019]). It held that DCH “failed to

satisfy a condition precedent to the commencement of an RPTL article 7 proceeding since

it was neither the owner, nor identified in the complaints as an agent of the owner” (id. at

825). We granted leave to appeal (37 NY3d 903 [2021]).

                                             II

                                             A

       The Real Property Tax Law (RPTL) sets out a two-step process for the review of

property tax assessments. First, pursuant to RPTL 524, “a complainant who is dissatisfied

with a property assessment may seek administrative review by filing a grievance complaint

with the assessor or the board of assessment review” (Matter of Larchmont Pancake House

v Board of Assessors, 33 NY3d 228, 235 [2019]). Second, once “the board of assessment

review has made a determination, any ‘aggrieved party’ may seek judicial review of the

assessment pursuant to RPTL article 7” (id.).

       This case concerns the statutory language that governs the first step. The question

presented on this appeal is whether the initial administrative complaints filed by DCH fail

to meet the requirements of RPTL 524 (3) because DCH is not the owner of the property

at issue. Specifically, the parties dispute the meaning of the provision requiring that the

initial complaint be made “by the person whose property is assessed” (RPTL 524 [3]).

RPTL 524 (3), as relevant, provides:

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              “[A] complaint with respect to an assessment shall be on a form
              prescribed by the commissioner and shall consist of a statement
              specifying the respect in which the assessment is excessive,
              unequal or unlawful, or the respect in which real property is
              misclassified, and the reduction in assessed valuation or
              taxable assessed valuation or change in class designation or
              allocation of assessed valuation sought. Such statement shall
              also contain an estimate of the value of the real property. Such
              statement must be made by the person whose property is
              assessed, or by some person authorized in writing by the
              complainant or his officer or agent to make such statement who
              has knowledge of the facts stated therein. Such written
              authorization must be made a part of such statement and bear
              a date within the same calendar year during which the
              complaint is filed” (id. [emphasis added]).

In contrast, RPTL 704 (1)—which governs step two, filing a petition for judicial review of

the assessment pursuant to RPTL article 7—provides:

              “Any person claiming to be aggrieved by any assessment of
              real property upon any assessment roll may commence a
              proceeding under this article by filing a petition described in
              section seven hundred six of this chapter in the manner set forth
              in [CPLR 304]” (RPTL 704 [1] [emphasis added]).

“In order to maintain an article 7 tax certiorari proceeding, the aggrieved party must allege

in its petition that ‘a complaint was made in due time to the proper officers to correct such

assessment’” (Larchmont Pancake House, 33 NY3d at 235, quoting RPTL 706 [2]). That

is, “the proper filing of an administrative grievance pursuant to RPTL article 5 is a

condition precedent to judicial review pursuant to RPTL article 7” (Larchmont Pancake

House, 33 NY3d at 235).

       Mamaroneck’s position is that RPTL 524 (3) is a condition precedent that must be

satisfied for judicial review of a Board’s determination of an assessment complaint to lie,

and that the plain language of RPTL 524 (3) requires the administrative complaint be filed

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“by the person whose property is assessed”—which it argues means the property owner,

and only the property owner. Once the owner files the administrative complaint, according

to Mamaroneck, then any aggrieved person, including a net lessee, can challenge the result

of the administrative grievance in court. In opposition, DCH argues that RPTL 524 (3)

does not limit the filing of a complaint to a property owner and that it satisfied the condition

precedent requirement in RPTL 706 (2) to file for judicial review.

                                               B

       “When presented with a question of statutory interpretation, our primary

consideration ‘is to ascertain and give effect to the intention of the Legislature’” (Matter

of DaimlerChrysler Corp. v Spitzer, 7 NY3d 653, 660 [2006], quoting Riley v County of

Broome, 95 NY2d 455, 463 [2000]). Although the text itself is generally the clearest

indicator of legislative intent, where “the language is ambiguous, we may examine the

statute’s legislative history” (Roberts v Tishman Speyer Props., L.P., 13 NY3d 270, 286

[2009], citing Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583 [1998]).

       Here, RPTL 524 (3) presents an ambiguity. The clause “person whose property is

assessed” is not defined in the RPTL, and it lends itself to more than one reasonable

interpretation (see Matter of Golf v New York State Dept. of Social Servs., 91 NY2d 656,

662-663 [1998]). As Mamaroneck points out, the RPTL uses different language to

delineate who may seek administrative review of a tax assessment by filing a grievance

complaint with the assessor or the board of assessment review—“the person whose

property is assessed” (RPTL 524 [3])—versus who may seek judicial review of the tax

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assessment—“[a]ny person claiming to be aggrieved” (RPTL 704 [1]). A colorable reading

of the difference in that statutory language is that only an “owner” is a “person whose

property is assessed” under the narrower language RPTL 524 (3).

       As DCH urges, however, RPTL 524 (3) does not clearly require that a complaint be

brought by an “owner” (or, e.g., “title holder”) of “real” property. Had the legislature

intended to require that only “owners” (or agents of owners) could initiate a grievance

under RPTL 524 (3), it would have been simple to use that word. Indeed, in RPTL article

5, the legislature used the word “owner” myriad times (RPTL 500; 502; 504 [6]; 510-a;

510 [1]; 511; 512 [4]; 518; 520; 522 [4] [b]; 523 [3]; 523-b; 524 [4]; 525 [4]; 543; 551-a;

553; 554; 556 [2] [b]; 556-b; 560 [1]; 562; 564 [1]; 566 [1]; 574 [1]; 575-a [3]; 575-b; 582;

586; 588 [2]; 589 [1]; 592 [1] [c]; 594; 596 [3]). “We have firmly held that the failure of

the Legislature to include a substantive, significant prescription in a statute is a strong

indication that its exclusion was intended” (People v Finnegan, 85 NY2d 53, 58 [1995]

[citations omitted]). Here, the statutory language is broader—it provides that a complaint

must contain a statement “by the person whose property is assessed” (RPTL 524 [3]).

Similarly, RPTL 524 (3) provides that if a complaint is not filed by “the person whose

property is assessed,” then it may be filed by “some person authorized in writing by the

complainant” (RPTL 524 [3]). Again, the legislature used the broad term “complainant,”

rather than the term “owner,” and the statute gives no indication that the class of people

who can authorize a third party to make the complaint is different from the class of people

who may themselves file a grievance complaint.          Moreover, the word “whose” can

reasonably be used and understood as denoting possession, not only ownership (see

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Webster’s Third New International Dictionary, Unabridged 2612 [Merriam-Webster 2002]

[“of or belonging to whom as possessor or possessors : due to whom : inherent in whom :

associated or connected with whom”]). Thus, DCH, also advances a colorable argument

that it, as the holder of an exclusive net lease for the subject property, falls within the term

“person whose property is assessed” in RPTL 524 (3).              We therefore examine the

legislative history to aid in interpreting that provision.

                                               C

       The legislative history of the origin of the clause “the person whose property is

assessed” demonstrates that a net lessee obligated to pay real estate taxes of the leased real

property may file a grievance under RPTL 524 (3).

       Before 1896, any person “conceiving himself aggrieved” could complain to a board

of assessors. For example, in 1799, the governing tax law provided that “assessors shall

meet, and on application of any person conceiving himself aggrieved, shall review the said

assessment” (L 1799, ch 72 [emphasis added]), and in 1851, the tax law similarly provided

that “[o]n the application of any person conceiving himself aggrieved, it shall be the duty

of the said assessors on such day to meet at the time and place specified, and hear and

examine all complaints in relation to such assessments that may be brought before them”

(L 1851, ch 176, § 4 [emphasis added]).

       While the “any person conceiving himself aggrieved” statutory language was in

force, our Court’s decisions similarly reflected that any aggrieved person could complain

to the local assessor. For instance, in Jewell v Van Steenburgh, we held that assessor’s

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failure to give notice upon the completion of an assessment was a jurisdictional defect

rendering the tax invalid because “[t]his is the only mode by which persons interested have

an opportunity to be heard” (58 NY 85, 91 [1874] [emphasis added]).

       During that same time period, when the “any person conceiving himself aggrieved”

statutory language was still in force, we also used the language “parties whose property is

assessed” to describe who may file grievance complaints with a local board of assessors

(People ex rel. New York v McCarthy, 57 Sickels 631 [1886] [“Except for the provision of

the statute authorizing parties whose property is assessed to appear before the town, ward,

or city assessors, and make affidavit as to the circumstances and value of property assessed

to them respectively, no provision is made for the hearing of such parties by any of the

administrative bodies engaged in perfecting the valuations of taxable property”]). The

issue in People ex rel. New York v McCarthy was different from the issue presented here—

the petitioner was seeking a review of the state board of equalization’s proceedings in

equalizing property appraisals in the state among several counties—but it is nevertheless

instructive that we appear to have considered the two phrases to be synonymous.

       Then, in 1896, the “person . . . whose property is assessed” language first appeared

in the tax law. That year, the legislature enacted a provision governing the hearing of

grievance complaints. The new provision provided:

              “Such complainants shall file with the assessors a statement,
              under oath, specifying the respect in which the assessment
              complained of is incorrect, which verification must be made by
              the person assessed or whose property is assessed, or by some
              person authorized to make such statement, and who has
              knowledge of the facts stated therein” (L 1896, ch 908, § 36
              [emphasis added]).

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Although the clause “person assessed or whose property is assessed” was new, the New

York State Commissioners of Statutory Revision explicitly stated that the change was not

substantive:

               “The provision that the complaint shall be in writing and filed
               with the assessors is new. L. 1857, ch. 176, § 6, requires the
               examination to be subscribed by witness and filed in town
               clerk’s office, while § 36 merely requires the minutes of the
               testimony to be so filed. Otherwise there is no change of
               substance” (1896 Rep of Commrs of Statutory Revision,
               reprinted in 1896 Annual Rep of Commrs of Statutory Rev of
               the      St     of     NY      at    39,      available      at
               https://www.google.com/books/edition/Annual_Report_of_th
               e_Commissioners_of_St/bH44AAAAIAAJ?hl=en&gbpv=0
               [emphasis added]).1

That the clauses “any person conceiving himself aggrieved” and “person assessed or whose

property is assessed” were interchangeable is also supported by the text of the 1896 bill

itself, which provided that in the event that a board of assessors failed to meet, “any person

aggrieved by the assessment” could instead seek relief from the municipality’s board of

supervisors (L 1896, ch 908, § 40).

       Thus, based on this evolution of the statutory text, and our Court’s contemporaneous

interpretations, it is clear that it was not the legislature’s intent to limit the meaning of

“person whose property is assessed” to owners of real property.

1
 “L 1857, ch 176” is a mis-citation. The correct citation is to L 1851, ch 176, § 6, which,
as accurately described in the 1896 Report of the Commissioners of Statutory Revision,
did not contain a requirement that a complaint to the local assessors be filed in writing.
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                                              D

       In keeping with the legislature’s intent, we therefore hold that a grievance complaint

filed with the assessor or board of assessment review at the administrative level by a net

lessee who is contractually obligated to pay real estate taxes on the subject property

satisfies RPTL 524 (3).

       That interpretation is not only in keeping with the legislative history, but it construes

the RPTL “as a whole,” with “its various sections . . . considered together and with

reference to each other’” (Matter of Anonymous v Molik, 32 NY3d 30, 37 [2018], quoting

People v Mobil Oil Corp., 48 NY2d 192, 199 [1979]). Interpreting the RPTL such that a

net lessee may both file the RPTL 524 (3) complaint and (as is undisputed) the RPTL

704 (1) petition, given that the complaint is a prerequisite to filing a petition, harmonizes

the two statutory steps of our tax assessment scheme. Such a result ensures that the party

with the economic interest and legal right to challenge an assessment will not be unable to

raise a challenge because an out-of-possession landlord that lacks economic incentive fails

to file an administrative complaint. It also avoids an inequitable result by which a net

lessee may be precluded from obtaining full review of its assessment if the complaint was

brought by an owner with different interests, because a petitioner in an RPTL article 7

proceeding may not add grounds for review beyond those specified in the original RPTL

524 (3) complaint (see Matter of Sterling Estates, Inc. v Board of Assessors of Nassau

County, 66 NY2d 122, 127 [1985]). Indeed, our conclusion is consistent with guidance

from the New York State Department of Taxation and Finance, which instructs that lessees

who are contractually obligated to pay real estate taxes are eligible to grieve tax

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assessments (see NY St Dept of Taxation & Fin, Off of Real Prop Tax Servs, Contesting

Your Assessment in New York State [Feb. 2012] [“Any person who pays property taxes can

grieve an assessment, including . . . tenants who are required to pay property taxes pursuant

to            a             lease             or             written              agreement”],

https://www.tax.ny.gov/pdf/publications/orpts/grievancebooklet. pdf).

       In support of its restrictive interpretation that “person whose property is assessed”

in RPTL 524 (3) is limited to “owner,” the Appellate Division primarily relied on Matter

of Circulo Housing Development Fund Corp. v Assessor of City of Long Beach (96 AD3d

1053 [2d Dept 2012]). That case is grounded on a misapplication of our decision in Matter

of Sterling Estates (66 NY2d 122). In Circulo, the Appellate Division interpreted RPTL

524 (3) and announced that it contained an ownership requirement: “RPTL article 5

requires that the property owner file a complaint or grievance to obtain administrative

review of the tax assessment” (id. at 1056 [emphasis in original]). The Court gave no

reasoning and cited no rules of statutory construction or legislative history to reach its

holding, but instead cited only our decision in Sterling. In Sterling, however, we did not

suggest—much less decide—that the owner of a property must file the administrative

complaint. Instead, we emphasized that “it is essential that sufficient facts detailing the

taxpayer’s complaint be presented to the assessors so that realistic efforts at adjustment can

be made” (Sterling, 66 NY2d at 125). Our holding in Sterling turned on the substantive

incompleteness of the administrative petition, not the identity of the filer (id. at 127). Thus,

to the extent that Circulo is inconsistent with our holding today, it should not be followed.

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                                           III

      In sum, we hold that DCH, as a net lessee contractually obligated to pay the real

estate taxes of the subject property is included within the meaning of “the person whose

property is assessed” under RPTL 524 (3). Accordingly, the judgment appealed from and

the Appellate Division order brought up for review should be reversed, with costs, and the

motion to dismiss the consolidated proceeding with respect to 700 Waverly Avenue,

Mamaroneck, New York denied.

Judgment appealed from and Appellate Division order brought up for review reversed,
with costs, and motion to dismiss the consolidated proceeding with respect to 700
Waverly Avenue, Mamaroneck, New York denied. Opinion by Judge Wilson.
Chief Judge DiFiore and Judges Rivera, Garcia, Singas, Cannataro and Troutman concur.

Decided June 16, 2022

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