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Payment for Abandonment
By M. Robert Goldstein and Michael J. Goldstein
Anyone familiar with condemnation proceedings is familiar
with EDPL §701 which provides for additional allowances.
Not many are familiar with §702 with the innocuous title
of "Incidental Expenses." Run Shepards and you find
a total of four cases, one dealing with §702(A)(1) providing
for reimbursement of "recoding fees, transfer taxes and
other similar expenses," one dealing with §702(c),
which provides for reimbursement of expenses incurred in successfully
prosecuting a claim for a "de facto" or "inverse"
condemnation and the third merely noting the section. Not
reported are any decisions dealing with or interpreting §702(B),
except one. Yet, this section of the law, as far as condemnors
are concerned, is a time bomb waiting to go off.
It states in §401: (A) "The condemnor may commence
proceedings under this article to acquire the property necessary
for the proposed public project up to three years after conclusion
of the later of (1) publication of its determination and findings
pursuant to section two hundred four, or (2) the date of the
order or completion of the procedure that constitutes the
basis of exemption under section two hundred six, or (3) entry
of the final order or judgment on judicial review thereof."
(B) "If the condemnor has not commenced the proceedings
under this article to acquire the property prior to the expiration
of such three year period the project shall be deemed abandoned
and thereafter, before commencing proceedings under this article
the condemnor must again comply with the provisions of article
two; . . ."
It states in §701: (B) "In the event the procedure
to acquire such property is abandoned by the condemnor, or
a court of competent jurisdiction determines that the condemnor
was not legally authorized to acquire the property, or a portion
of such property, the condemnor shall be obligated to reimburse
the condemnee, an amount, separately computed and stated for
actual and necessary cost, disbursements and expenses, including
reasonable attorney, appraisal and engineering fees, and other
damages incurred by such condemnee because of the acquisition
procedure."
History of Condemnation
A little background to the subject is in order. Under the
Condemnation Law of the State of New York, since repealed
and replaced by EDPL, when the right of eminent domain was
exercised, title did not pass to the condemnor until the final
judgment was paid. Condemnation proceedings were instituted,
a trial to fix value held, decision rendered and even appeal
heard and decided without there being a vesting of title.
However, under the Condemnation Law, an application could
be made to the court to abandon the proceeding prior to the
vesting of title.
Even under the City of New York's Administrative Code
it was possible for the Board of Estimate, in adopting a resolution
providing for the institution of condemnation proceedings,
to provide for the vesting of title at the time of the entry
of the final decree fixing the amount of the award. Under
such procedure, a proceeding could be abandoned prior to the
vesting of title. Various statutes, including Condemnation
Law §18, provided that in the event of an abandonment
of the proceeding, the owners were entitled to be reimbursed
for expenses they incurred in the aborted condemnation proceedings.
There was no provision to pay the condemnee for any other
damages it may have suffered by reason of the proceeding.
EDPL set up an entirely new procedure in approving projects
and added the right of the condemnee to be paid damages, in
addition to legal and appraisal expenses in the event of the
abandonment of a proceeding. Under EDPL, no longer can there
be a trial fixing just compensation prior to the vesting of
title. Instead there is a public hearing process followed
by "Determinations and Finding" justifying the exercise
of the condemnation power. Proceedings begin with petition
asking for the vesting of title or, in the case of an appropriation,
the filing of the vesting map.
Damages to Condemnee
Because of the damages visited on property owners by the long
delay between the announcement of a project and its approval,
followed by a taking, EDPL put a limit on how long it would
take between approving condemnation and its actual institution
by the vesting of title. Under the common law, damages visited
on the property because of the delay in the planning process
were damnum absque injuria (City of Buffalo v. J.W. Clement
Co., NYS2d 345 (1971)). The Eminent Domain Commission, in
drafting EDPL for the legislature, set in the new statute
an attempt to limit the damage that could be done without
limiting the public discussion stage leading to approval of
the project. It also provided that if condemnation proceedings
are approved, being no longer just in the discussion stage,
and if the project takes more than three years to institute,
thus being abandoned, the condemnee could be paid the damages
he could not get under the common law.
The statute now provides that once a project has gone through
those discussions and procedures and "Determinations
and Findings" have been made by the appropriate body
authorizing the institution of a condemnation proceeding,
that the approved proceeding could not hang over the property
indefinitely. EDPL §401 provides that once the determinations
and findings have been published, the proceeding to condemn
or appropriate the property must have commenced within three
years or the "project shall be deemed abandoned."
In the event the project is being taken in segments, instead
of all at once, the first segment must have been taken within
three years, but the balance may be taken within ten years
or the project is deemed abandoned. There are certain exceptions
not germaine to this discussion.
Some of these provisions have been interpreted by the courts.
In Binghamton Urban Renewal Agency v. Manculich, 503 NYS2d
548 (1986), the court denied the right to condemn when proceedings
were not instituted within three years of the approval of
the project, under exempt substitute procedures for approval
in place of EDPL, even though there were, in the interim,
three different amendments to the project plan approved by
the governing body and a substantial number of properties
being purchased in lieu of condemnation in the interim. Since
the formal public hearing process had not been followed in
approving the amendments, the court ruled the proceedings
were deemed abandoned since no condemnation proceeding had
been instituted within three years of the original project
approval. The court noted that EDPL §401 provides that,
once the determinations and findings have been published,
the proceedings to condemn or appropriate the property must
have commenced within three years or the "project shall
be deemed abandoned." The court noted that the agency
was not foreclosed from acquiring the property, but to do
so, it had to hold all the hearings and make all the findings
required for any new project, the prior project having, in
effect, been abandoned.
It is interesting to note the use of two different terms
in the statute – "procedure" and "proceedings."
"Procedure refers to the steps taken to approve the taking
of the property and "proceedings" refers to the
actual condemnation or appropriation itself. In EDPL §702(B),
it is the abandonment of the "procedure" which gives
rise to the right to reimbursement for fees and damages and
it is the three years to commence "proceedings",
after which there is deemed an abandonment.
Recently, an action was brought for both reimbursement and
damages pursuant to EDPL §702(B) in Buffalo Airport Center
Associates v. Niagara Frontier Transportation Authority (Eric
County Supreme Court, Index No. 1995-1706). The basis of the
action was an abandonment of the project by reason of the
failure to commence proceedings within three years after publication
of the determination and findings. Allegations were made in
the complaint of very extensive damages caused by wholesale
abandonment of the 2,500,000 square foot industrial/warehouse
building by the tenants after approval of the project, to
the point where the building is now a vacant shell. Partial
summary judgment was granted on the issue of liability, despite
a number of defenses, including one that there was no actual
intent to abandon the project and that at an unspecified time
in the future it would go forward. The decision was unanimously
affirmed by the Appellate Division, Fourth Department, based
on the decision below in 649 NYS2d 858 (1996). Since we have
been counsel to plaintiff's attorneys in this case, we
will not comment further except to note that the trial on
the issue of damages has not yet been head and, of course,
the issue of liability along with other issues is still subject
to a possible review in the Court of Appeals when the damage
phase has been finished.
Interestingly, no one has sought to challenge UDC on its
42nd Street project on similar grounds. In 1984, the findings
and determinations for that project were published and thereafter
reviewed on appeal. Later, it was determined to take it in
sections. The first of the takings took place in April 1990,
the application to condemn being made just within the three-year
deadline more than six months previous. Now, more than 10
years later, there is a section of the project, as originally
contemplated, that still has not bee taken. Isn't there
something wrong about keeping a threat of condemnation over
property for 13 years, with no end in sight?
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