Court Opinion

ID: 9959913
Source: CourtListenerOpinion
Date Created: 2024-04-12 20:12:07.306152+00
Date Added: 2024-06-11T08:18:59.506095
License: Public Domain

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
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                       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

             152351/2021 383 WEST BROADWAY CORP. vs. SHERIF SOLOMON, IN HIS                                          Page 1 of 7
             Motion No. 001 002

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                                                                                                    INDEX NO. 152351/2021
  NYSCEF DOC. NO. 83                                                                          RECEIVED NYSCEF: 04/08/2024

            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.

             152351/2021 383 WEST BROADWAY CORP. vs. SHERIF SOLOMON, IN HIS                         Page 2 of 7
             Motion No. 001 002

                                                           2 of 7
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                                                                                                      INDEX NO. 152351/2021
  NYSCEF DOC. NO. 83                                                                          RECEIVED NYSCEF: 04/08/2024

                    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

             152351/2021 383 WEST BROADWAY CORP. vs. SHERIF SOLOMON, IN HIS                           Page 3 of 7
             Motion No. 001 002

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                                                                                                   INDEX NO. 152351/2021
  NYSCEF DOC. NO. 83                                                                       RECEIVED NYSCEF: 04/08/2024

            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.

             152351/2021 383 WEST BROADWAY CORP. vs. SHERIF SOLOMON, IN HIS                        Page 4 of 7
             Motion No. 001 002

                                                              4 of 7
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  NYSCEF DOC. NO. 83                                                                        RECEIVED NYSCEF: 04/08/2024

                    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.

             152351/2021 383 WEST BROADWAY CORP. vs. SHERIF SOLOMON, IN HIS                         Page 5 of 7
             Motion No. 001 002

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  NYSCEF DOC. NO. 83                                                                        RECEIVED NYSCEF: 04/08/2024

                   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

             152351/2021 383 WEST BROADWAY CORP. vs. SHERIF SOLOMON, IN HIS                         Page 6 of 7
             Motion No. 001 002

                                                           6 of 7
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                                                                                                      INDEX NO. 152351/2021
  NYSCEF DOC. NO. 83                                                                            RECEIVED NYSCEF: 04/08/2024

            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

            denied.

                      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

             152351/2021 383 WEST BROADWAY CORP. vs. SHERIF SOLOMON, IN HIS                              Page 7 of 7
             Motion No. 001 002

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