State of New York OPINION
Court of Appeals This opinion is uncorrected and subject to revision
before publication in the New York Reports.
No. 16
In the Matter of Larchmont
Pancake House,
Appellant,
v.
Board of Assessors &c., et al.,
Respondents.
(And Three Other Proceedings.)
Kevin M. Clyne, for appellant.
William Maker, Jr., for respondents.
Stop & Shop Supermarket Company, LLC; International Council of Shopping Centers;
New York State School Boards Association; New York State Conference of Mayors and
Municipal Officials et al., amici curiae.
GARCIA, J.:
The Real Property Tax Law sets out a tiered scheme for the review of property tax
assessments. Initially, a complainant who is dissatisfied with a property assessment may
seek administrative review by filing a grievance complaint with the assessor or the board
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of assessment review (see RPTL 524). The requirements for initiating administrative
review of a tax assessment are set forth in RPTL article 5 (see RPTL 524 [“Complaints
with respect to assessment”]). RPTL section 524 provides that “a complaint with respect
to an assessment . . . 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 a
statement who has knowledge of the facts stated therein” (RPTL 524 [3]).
Once a grievance complaint has been properly filed and the board of assessment
review has made a determination, any “aggrieved party” may seek judicial review of the
assessment pursuant to RPTL article 7 (see Matter of Waldbaum, Inc. v Finance Adm’r of
City of N.Y., 74 NY2d 128, 132 [1999]; RPTL 704 [“Commencement of proceeding”]).
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” (RPTL 706 [2]). In other words, the proper filing of an administrative
grievance pursuant to RPTL article 5 is a condition precedent to judicial review pursuant
to RPTL article 7.
The dispute in this case concerns the pool of appropriate challengers at each stage
of assessment review. In particular, the parties dispute (1) whether petitioner is qualified,
as a non-owner, to seek administrative review pursuant to RPTL 524 (3), and (2) whether
petitioner is an “aggrieved party” with standing to maintain a tax certiorari proceeding
pursuant RPTL article 7.
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I.
This appeal arises out of four tax certiorari proceedings challenging annual tax
assessments on real property located in the Town of Mamaroneck. Petitioner, the
Larchmont Pancake House, is a family-owned corporation that operates an International
House of Pancakes franchise on that property. The corporation was formed by Frank and
Susan Carfora. The Carforas owned the real property together until Frank’s death, when
Susan became the sole owner. Upon Susan’s death in October 2009, the property was
transferred to a revocable trust (the Carfora Trust) pursuant to the terms of Susan’s will.
Nearly four years later, in June 2013, the real property was transferred to Susan’s
daughters, Irene Corbin and Portia DeGast, pursuant to the terms of the Carfora Trust. In
the interim, petitioner continued to operate the restaurant on the property and to pay all of
the operating costs, including the real estate taxes.
In the tax years 2010, 2011, 2012, and 2013, petitioner timely filed administrative
grievance complaints, challenging the real property assessments for each of those years.
Each complaint attached an authorization signed by Portia DeGast in her capacity as the
president or owner of the Larchmont Pancake House. The board of assessment review
confirmed the tax assessments, and petitioner thereafter commenced tax certiorari
proceedings – a separate one for each year – pursuant to RPTL article 7. Respondents (the
Board of Assessors, the Assessor of the Town of Mamaroneck, and the Board of
Assessment Review) moved to dismiss the petitions, arguing that (1) Supreme Court lacked
subject matter jurisdiction because petitioner was not the owner of the real property and
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therefore had not satisfied RPTL 524 (3)’s requirements for commencing the
administrative proceeding, and (2) petitioner lacked standing to challenge the tax
assessments because petitioner was not an aggrieved party, as required by RPTL 704 (1).
Supreme Court denied respondents’ motion to dismiss the petition in each
proceeding. The Court first rejected respondents’ argument that petitioner failed to comply
with a “precondition of the assessment challenge” provided by RPTL 524. Even though
the petition was “not signed by the owner of the property,” the Court declined to “hang the
decision on that simplistic peg,” noting that Portia DeGast “was one of the beneficiaries of
a Trust which owned the property.” The Court also rejected respondents’ standing
argument, holding that “Portia DeGast was an aggrieved party with the necessary standing”
to institute the judicial proceeding.
The Appellate Division unanimously reversed and granted respondents’ motions to
dismiss (153 AD3d 521 [2d Dept 2017]). The Court agreed that petitioner had standing as
an “aggrieved party” for purposes of RPTL article 7 – reasoning that the tax assessments
had a “direct adverse affect” on petitioner’s pecuniary interests – but determined that
Supreme Court nonetheless “lacked subject matter jurisdiction to review the assessments”
(id. at 522). The Court noted that “the filing of a grievance complaint” is a “condition
precedent and jurisdictional prerequisite to obtaining judicial review” and, pursuant to
RPTL article 5, the “property owner” must “file the complaint or grievance to obtain
administrative review of a tax assessment” (id.). In this case, petitioner “never owned the
subject property” and, consequently, the Court determined that petitioner was not
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authorized to file the grievance complaint (id.). Accordingly, the Court held that petitioner
“failed to satisfy a condition precedent to the filing of the petitions” and therefore Supreme
Court “should have granted [respondents’] motion[] to dismiss the petition in each
proceeding” (id.).
This Court subsequently granted petitioner’s motion for leave to appeal (31 NY3d
907 [2018]). We now hold that petitioner is not an aggrieved party within the meaning of
RPTL article 7 and, accordingly, that petitioner lacks standing to maintain this proceeding.
We affirm on that ground.
II.
A taxpayer is aggrieved under article 7 where the tax assessment has a “direct
adverse affect on the challenger’s pecuniary interest” (Matter of Waldbaum, Inc. v Finance
Adm’r of City of N.Y., 74 NY2d 128, 132 [1999]; see also Matter of Steel Los III/Goya
Foods, Inc. v Board of Assessors of County of Nassau, 10 NY3d 445, 452-453 [2008];
Matter of Walter, 75 NY 354, 357 [1878]). The quintessential aggrieved party under RPTL
article 7 is a taxpaying owner of real property (see Garth v Board of Assessment Review
for Town of Richmond, 13 NY3d 176, 178 [2009]; Matter of Gantz, 85 NY 536, 538
[1881]; Walter, 75 NY at 357). Naturally, when an assessment is laid, it is “[t]he owner of
the land” whose property is “rendered much less the valuable to him” and “worth so much
the less in the market” (Walter, 75 NY at 357). Besides the property owner, the lessee of
an undivided assessment unit may be aggrieved by a tax assessment “if legally bound by
the lease to pay the entire assessment on behalf of the owner at the time it is laid”
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(Waldbaum, 74 NY2d at 133; see also Matter of Burke, 62 NY 224, 227-228 [1875]).
Much like an owner, a lessee who is “bound by his lease to pay an assessment” is “likely
to be put to litigation and expense” as a direct result of its legal obligation (Burke, 62 NY
at 227-228).
In Matter of Waldbaum, the Court considered whether a partial commercial lessee
may be an “aggrieved party” if responsible, under the terms of its lease, to pay a pro rata
share of the property taxes (Matter of Waldbaum, Inc. v Finance Adm’r of City of N.Y.,
74 NY2d 128, 132 [1999]). There, the petitioner entered into a 20-year lease with a
shopping center. The shopping center paid the property taxes, but the petitioner’s lease
required it to pay a formulated share, such that a tax increase would cause an increase in
the petitioner’s annual rent costs (id.). The petitioner later instituted successive tax
certiorari proceedings challenging several real property tax assessments levied against the
shopping center.
Adhering to established aggrievement principles, the Court in Waldbaum
determined that “[a] fractional lessee lacks standing to maintain a tax certiorari proceeding
unless the lease expressly confers the right to assert the lessor’s undivided property interest
in a challenge of the assessment, or unless the lessee is required to pay directly the taxes
levied against the lessor’s undivided parcel” (Waldbaum, 74 NY2d at 132). The petitioner
in Waldbaum was not, “by contractual rearrangement of the obligation,” made wholly
responsible for the tax liability; legal responsibility for the assessment instead remained
with the shopping center (id. at 131, 133, 134). Even though, as a practical matter, the
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property assessment had an adverse financial impact on the petitioner, it had, “in the legal
sense,” only a “remote and consequential impact” on the petitioner’s pecuniary interest –
“not the required direct adverse affect necessary to confer standing” (id. at 131).
Here, the parties agree that, during the relevant years, petitioner was not the owner
of the subject property, nor was petitioner legally bound to pay the real property taxes.
Petitioner contends, however, that the tax assessments had a direct impact on its pecuniary
interest sufficient to render it “aggrieved” within the meaning of RPTL article 7: Unlike
the petitioner in Waldbaum, petitioner here is the sole occupant of the property – not a
partial lessee – and, during the relevant years, petitioner paid the entirety of the real
property taxes directly to the taxing authority – not merely a pro rata share. But the critical
fact remains the same: Like the petitioner in Waldbaum, petitioner here was not “legally
responsible” for paying the undivided tax liability (Waldbaum, 74 NY2d at 134).
A contractual obligation to assume the undivided tax liability ensures the requisite
direct pecuniary impact, irrespective of whether the taxpayer is a fractional lessee (Matter
of Big “V” Supermarkets v Assessor of Town of E. Greenbush, 114 AD2d 726, 727 [3d
Dept 1985]) or a nonfractional lessee (Matter of Malik v Tax Commission of the City of
New York, 68 AD3d 870, 871 [2d Dept 2009]). Of course, like any taxpaying tenant,
petitioner is not immune from the impact of an increased tax obligation. That burden may
be sizeable, particularly in the case of a longstanding occupant. But like any tenant – long-
term or not – petitioner could have ceased paying the property taxes at any time without
incurring any direct legal consequence vis-à-vis the taxing authority or the property owner.
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Instead, it was the property owner – the Carfora Trust – that risked loss of the property if
the taxes were not paid (Walter, 75 NY at 357; see also Burke, 62 NY at 227-228). In other
words, only a lessee who is “obligated to pay” an assessment is sure to “lose something
from his own property or means” (Walter, 75 NY at 357). For those reasons, while “paying
taxes always has a direct adverse effect on one’s pecuniary interest” (dissenting op at 10),
that alone has never been enough (see Waldbaum, 74 NY2d at 131). Accordingly, in the
absence of a direct contractual obligation, the assessment’s remote and consequential
impact on petitioner is inadequate to confer standing.1
A direct legal obligation also promotes the goals of clarity, efficiency, and judicial
economy embodied in the RPTL. As we have noted before, article 7’s standing
requirement serves a number of salutory purposes: avoiding a fracturing of challenges
against an assessment; preventing duplicative petitions; and protecting the taxing authority
from multiple litigations as to the same parcel by parties of unknown relation to the taxed
premises (Waldbaum, 74 NY2d at 134). To those ends, article 7’s aggrievement provision
consolidates the authority to seek judicial review of a challenged assessment, generally
requiring non-owners to assume a direct obligation to pay the owner’s taxes, or to obtain a
1
The informal, de facto “arrangement” described in the affidavits of Portia DeGast and the
trustee – whereby petitioner paid the operating costs while occupying the property rent-
free – does not amount to a contractual obligation, regardless of whether it involved
members of a “happy family” (dissenting op at 23), or generated “smiles of . . . satisfied
customers” (dissenting op at 7). Nor does petitioner contend that the arrangement imposed
any sort of legal obligation with regard to payment of the real property taxes (contra
dissenting op at 16 [reasoning that petitioner’s arrangement constituted a “classic
bargained-for exchange”]).
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contractual authorization to pursue a tax certiorari proceeding. By narrowing the field of
appropriate challengers, this bright line rule avoids needless confusion and thereby
minimizes the risk of fractured and duplicative assessment challenges. Here, petitioner
lacks any legal obligation to assume the undivided tax liability or authorization to pursue
this proceeding and, as such, lacks standing under article 7.
Nor is Portia DeGast an aggrieved party based on her status as a beneficiary of the
Carfora Trust. The parties agree that, during the relevant years, the trust itself – not Ms.
DeGast – owned the subject property. Like petitioner, Ms. DeGast was not authorized to
pursue an article 7 proceeding on the property owner’s behalf. And, like petitioner, Ms.
DeGast lacked any legal obligation to pay the real property taxes; to the contrary, the terms
of the Carfora Trust explicitly authorized beneficiaries to “enjoy the assets held by the trust
without rent or other compensation to the trust, such as by occupying the trust’s real
property” (emphasis added). In any event, the petitioner in this matter is the Larchmont
Pancake House – not Ms. DeGast.2
III.
Petitioner is a non-owner with no legal authorization or obligation to pay the real
property taxes and, as such, petitioner is not an aggrieved party within the meaning of
RPTL article 7. Because petitioner lacks standing, we have no occasion to consider the
2
This case is also not about a “clerical” error or “technicality” (dissenting op at 2, 22).
Petitioner does not contend that Ms. DeGast intended to sign (or had the capacity to sign)
the authorization on behalf the Carfora Trust.
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parties’ dispute concerning the scope of appropriate challengers under RPTL 524.
Accordingly, the order of the Appellate Division should be affirmed, with costs.
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Matter of Larchmont Pancake House v Board of Assessors,
Assessor of the Town of Mamaroneck, and the Board of Assessment Review
No. 16
WILSON, J. (dissenting):
Real Property Tax Law § 704(1) provides, in relevant part, that “any person
claiming to be aggrieved by any assessment of real property upon any assessment roll”
may seek judicial review of that assessment. The majority holds that a person who,
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pursuant to a longstanding arrangement, pays 100% of the property taxes on a piece of
land, cannot “claim[] to be aggrieved” even by the improper inflation of the property taxes
they pay.
That conclusion is as wrong as it sounds. Worse still, the mistake relied on to divest
these aggrieved taxpayers of their right to judicial review is purely clerical: hardworking
pancake proprietors, following their mother’s death, listed the name of their business
instead of the name of the trust that temporarily held legal (but not equitable) title to the
land on which their business sat. The trust filed an affidavit saying it would have approved
of the tax proceedings when they were filed, and executed authorizations of the
proceedings once the problem was brought to its attention. To top it off, the Town knew
all along who owned the property and did not see fit to mention it until four years had
passed. All agree the claimed error was harmless, yet the Court dismisses the proceedings
anyway.
For almost a century, we have followed the rule that courts should disregard errors
like this, so that taxpayers can vindicate their rights to an accurate and equitable property
tax assessment (NY Const, art XVI, § 2; NY Const, art I § 11). “The Tax Law,” we have
explained, “relating to review of assessments is remedial in character and should be
liberally construed to the end that the taxpayer’s right to have [its] assessment reviewed
should not be defeated by a technicality” (People ex rel. New York City Omnibus Corp. v
Miller, 282 NY 5, 9 [1939]). Putting the wrong name on a tax assessment challenge is the
kind of “technicality” the courts should disregard if no one is prejudiced (People ex rel.
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Durham Realty Corp. v Cantor, 234 NY 507, 508 [1922]) and the party in whose name the
proceeding should have been brought consents. If our own precedent were not enough
reason to permit this error to be corrected and the challenge to proceed as filed, the
Legislature has repeatedly directed the courts to ignore defects in petitions, complaints,
and pleadings “if a substantial right of a party is not prejudiced” (CPLR 2001, CPLR 3026).
These provisions embody “an enlightened system of civil procedure and eschews the
elevation of form over substance” (Vincent Alexander, Practice Commentaries,
McKinney’s Cons Laws of NY, Book 7B, CPLR 2001). The late Professor David Siegel,
“a preeminent expert in New York civil practice” (Rodriguez v City of New York, 31 NY3d
312, 318 n 3 [2018]) described one of these statutes, CPLR 3026, as “the philosopher, the
oracle, to which all disputants turn for advice . . . [declaring that] if the defect prejudices
no one, it must be ignored” (David D. Siegel, Practice Commentaries, McKinney’s Cons
Laws of NY, Book 7B, CPLR C3026:1).
The majority abandons our rule of lenity and renders CPLR 3026 a Cassandra.
Relying on hypertechnicalities to close the courthouse doors to aggrieved taxpayers
undermines the Constitutional mandate that tax assessments be neither inaccurate nor
inequitable (Burrows v Board of Assessors for Town of Chatham, 64 NY2d 33, 36 [1984]),
replacing the Legislature’s liberal scheme for challenging local government decisions with
a new, gloomier rule: you can’t fight City Hall.
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I
The family-owned International House of Pancakes franchise at 1375 Boston Post
Road is a Larchmont institution. In 1985, Frank and Susan Carfora purchased the parcel of
land there and opened their restaurant, incorporated as Larchmont Pancake House, Inc.
(“LPH”). Two of Mr. and Ms. Carfora’s daughters—Portia DeGast and Irene Corbin—
became co-owners of LPH with their parents in 1995, and from that date Ms. DeGast served
as LPH’s president (for ease of reference, I will call the entire family “the Carforas”).
Shortly after Ms. DeGast assumed her leadership role at LPH, her parents took steps
to ensure the business stayed in the family after their passing. Mr. Carfora provided in his
will that his stock in the business and ownership of the Boston Post Road property would
go to his wife upon his death. After Mr. Carfora died, Ms. Carfora sought to transfer her
stock in LPH as well as ownership of the land to her daughters. Exactly how Ms. Carfora
accomplished the transfer of the land, however, needs some explanation. Rather than
simply deeding the Boston Post Road property to her children directly while she was alive,
or willing it to them directly upon her death, Ms. Carfora willed the property to a trust (“the
Carfora Trust”), with Kimberly Corbin (Ms. Carfora’s granddaughter) and Kevin
O’Donnell (Ms. Carfora’s lawyer) as Trustees and executors of her estate. The Carfora
Trust was a temporary stopping-point for the land. When Ms. Carfora died, her will
transferred the land to the Trust; the Trust’s declaration in turn instructed the trustees to
transfer the land to Ms. Corbin and Ms. DeGast as tenants in common upon Ms. Carfora’s
death.
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Unfortunately, the land stayed in the Carfora Trust waystation for several years as
the probate process dragged out, as probate proceedings sometimes do.1 Ms. Carfora’s will
was first admitted to probate in Surrogate’s Court in New Jersey in 2009; an ancillary
probate petition in New York (to effectuate the transfer of the Boston Post Road land) was
not commenced until 2012, and the property was finally transferred to Ms. Corbin and Ms.
DeGast in June 2013. The Carfora Trust declaration made express provision for what was
to be done with the land while it was in the care of the Trust, giving the trustees the power
to “permit the beneficiary of any trust [i.e., Ms. Carfora’s children] to enjoy the assets held
by the trust without rent or other compensation to the trust, such as by occupying the trust’s
real property” but otherwise insisting that property the Trust owned be “leased,” if it was
to be occupied by non-beneficiaries, such as LPH.
While all of this was going on, the Carforas had to attend to the other inevitability
of life: taxes. Ms. Carfora died in 2009, right at the height of the housing crisis. Property
prices throughout the State declined precipitously, and many small business owners
understandably sought to have their businesses’ property values re-assessed to reduce their
tax burden, a burden made acute by the general economic downturn. 2 The Carforas,
1
See generally Charles Dickens, Bleak House (1853) (in which the central “scarecrow of
a suit” around which the plot revolved was, at bottom, a will probate proceeding).
2
The Westchester County Clerk records that tax certiorari filings from commercial
landowners like the parties in this case jumped from 3,398 in 2008 to 4,268 in 2011,
attributing the increase to the economic downturn (Westchester County Clerk, Finally! A
Decline in Tax Certiorari Cases [March 9, 2013],
https://www.westchesterclerk.com/news/2013-news/304-finally-a-decline-in-tax-
certiorari-cases).
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attempting to keep their business afloat amid personal tragedy and the worst recession since
the Depression, joined thousands of other Westchester families in seeking property tax
relief by challenging their tax assessment.
Challenging a commercial property tax assessment is a two-step process. First, one
must file an administrative complaint with the Town’s Board of Assessment Review
(RPTL 706[2], see Matter of Onteora Club v Board of Assessors of the Town of Hunter,
17 AD2d 1008, 1009 [3d Dept 1962], aff’d, 13 NY2d 1170 [1964]). That filing is done on
a form provided by the State, and requires, among other things, a statement authorizing the
complaint “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” (RPTL 524[3]). Second, “any person claiming to be
aggrieved” by the property tax assessment and dissatisfied with the result of the town’s
administrative review may file a tax certiorari petition to have the property tax assessment
reviewed by a court (RPTL 704).
The quintessential “aggrieved” person is, as the majority explains, “the taxpaying
owner of real property” (majority op at 5). Here, however, the taxpayer and the owner were
different people. The property taxes owed on the Boston Post Road parcel were paid by
LPH, the family business, and not by the Carforas or the Carfora Trust (the “owners,” in
varying combinations at various times, of the land). LPH paid the taxes as part of a
longstanding and simple arrangement: LPH, wholly owned and operated by the Carforas,
would “reside” on the Boston Post Road property rent-free, and in return would pay all the
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utilities, repairs, and property taxes it, or the land, incurred. The arrangement made sense:
it was LPH that directly benefited from the use of the land. The Carforas’ enjoyment of the
land came indirectly, from the profits realized by LPH and, doubtless, from the smiles of
LPH’s satisfied customers.3 However, as with many family-run small businesses, the
arrangement was not embodied in a formal contract; the Carforas simply paid out of the
LPH account the property taxes and others expenses of maintaining the property used by
the restaurant. Certainly, there is no evidence in the record to suggest that the Town ever
rejected LPH’s tax payments on the grounds that the wrong person was paying the taxes.
Having paid the Boston Post Road property taxes via LPH, the Carforas filed
property tax valuation challenges in the name of LPH that are the subject of this appeal:
one for the each of the 2010 to 2013 tax years. Each filing was accompanied by an
authorization from Ms. DeGast that read as follows:
I, the undersigned, being an aggrieved person within the
meaning of the Real Property Tax Law, or an officer or partner
of such aggrieved person, as complainant, hereby designate
and authorize the below named law firm [Herman, Katz,
Cangemi & Klyne, LLP] or any other attorney designated by
said firm, to act as my representative in any and all proceedings
before the Board of Assessment Review.”
In 2010, and again in 2011, then 2012, then 2013, the Town Board of Assessment
Review (“the Town”) reviewed the complaints and, each year, rejected the challenges to
3
Appellate jurists may particularly enjoy their egg, bacon, sausage, French toast, and
pancake combo, entitled “the Split Decision.”
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the assessments. Each and every year the Town did so, it never queried LPH’s right to
challenge the assessments, even though (as events would demonstrate) the Town’s own
records indicated that LPH had never been the owner of the property. After each
administrative denial, LPH filed a tax certiorari petition pursuant to RPTL 704. Even then,
the Town never questioned LPH’s right to bring either the administrative complaint or the
tax certiorari petition until four years after these proceedings started, when suddenly the
Town sought to throw out all four certiorari actions on two grounds. First, the Town argued
that the administrative complaints were defective because such complaints could only be
brought by an “person whose property is assessed” (RPTL 524). The Town read this
language to mean that only “owners” could bring such challenges, and between 2009 and
2013, it argued, the “owners” of the Boston Post Road property were the trustees of the
Carfora Trust and not the trust beneficiaries (Ms. DeGast or Ms. Corbin). Second, the Town
argued that even if LPH could make the administrative complaint pursuant to an
authorization from the owner, LPH was not an “aggrieved” party able to bring a tax
certiorari proceeding; there too, it argued, only the Carfora Trust had standing to sue
(absent a written agreement between the Trust and LPH assigning property taxes to LPH).
Supreme Court denied the Town’s motion to dismiss the petitions, finding that LPH,
as the payer of the taxes, was sufficiently “aggrieved” under RPTL 704 and Ms. DeGast,
who authorized the complaints, was a “person whose property is assessed” by virtue of her
status as a beneficiary of the Carfora Trust and president of LPH. Supreme Court also
observed that “the fact that the Town waited so many years after the filing for the
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municipality to complain of this technicality seems a bit disingenuous.” The Appellate
Division agreed with Supreme Court that LPH was a “person claiming to be aggrieved”
and could file the tax certiorari proceeding because “the assessments had a direct adverse
effect on its pecuniary interests” (153 AD3d 521, 522 [2017]). However, the Appellate
Division held that because LPH “never owned the subject property,” (id) it could not have
commenced the administrative proceedings in the first place, and therefore Supreme Court
lacked jurisdiction over the tax certiorari petitions.
II
I have three principal points of disagreement with the majority’s rationale for
affirmance. First, our decision in Matter of Waldbaum, Inc. v Finance Admr. of City of
N.Y. (74 NY2d 128, 132 [1999]) does not require that a taxpayer be “legally bound to pay”
property taxes to be “aggrieved” such that they can challenge that assessment (majority op
at 5-7). Second, even if Waldbaum did hold that “aggrieved” means “legally bound to pay,”
there is sufficient—and uncontroverted—record evidence here to raise a question of fact
as to whether LPH was legally bound to pay the property taxes. Third, the entity the
majority concludes was legally bound to pay the taxes—the Carfora Trust—consented to
the tax certiorari petitions and thus the use of LPH’s name on the petition should be
disregarded (or a right to amend to make a technical correction should be allowed) under
our precedents, CPLR 2001, and CPLR 3026.
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A
The majority and I agree that a party can “claim to be aggrieved” under RPTL 704
only if the tax assessment has a “direct adverse effect on the challenger’s pecuniary
interest” (Waldbaum, 74 NY2d at 132).4 That is precisely what has occurred here: because
LPH actually paid the entirety of the taxes owed on the Boston Post Road land, the
assessment (which determined the amount paid) had a “direct adverse effect on the
challenger’s pecuniary interest” in the same way that paying taxes always has a direct
adverse effect on one’s pecuniary interest. If you don’t believe me, you have never paid
taxes.
Contrast the petitioner in Waldbaum, which we held could not “claim[] to be
aggrieved” under RPTL 704. Waldbaum, a grocery store lessee, never paid the property
taxes on the subject property; the property taxes were always paid by the owner of the
shopping mall in which the Waldbaum’s grocery store was located. Instead, Waldbaum’s
lease specified that its rental payments to the landlord might fluctuate depending on a
complex formula that took into account changes to the landlord’s property tax obligations
in such a way that Waldbaum paid “additional rent” only if property tax increases that year
were a certain proportion larger than the amount of rent Waldbaum would pay as a function
of its gross annual sales (Waldbaum, 74 NY2d at 134-35).
4
Waldbaum refers to an “adverse affect,” but the Court plainly meant “adverse effect”—
although a taxpayer’s affect may be affected (or even effected) by an overlarge tax bill.
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In addition, Waldbaum was just one of several tenants occupying a single tax parcel.
Because a property tax assessment challenge reviews the assessed value of the entire
parcel, and not the value of smaller pieces of the parcel that happen to be occupied by
individual tenants, it was fundamentally unfair for one lessee to steer the course of a
litigation that would affect the property taxes for all lessees, not to mention the property’s
owner (id at 134). Under those circumstances, we explained, “[i]t seems necessary to us as
a matter of sound policy and interpretation to condition a partial lessee’s procedural
standing in such matters on a direct obligation to pay the lessor's taxes or on a contractual
authorization to pursue a tax certiorari proceeding, representing the undivided assessment
unit, in the lessor's stead in order to avoid a fracturing of challenges against an assessment”
(id.).
However, the majority misreads Waldbaum to impose the requirement that one must
be “legally responsible” for paying the property taxes owed in order to be “aggrieved” by
an assessment. Waldbaum did require that “partial lessee’s procedural standing in such
matters” be conditioned on “a direct obligation to pay the lessor’s taxes” (id [emphasis
added]), but that obligation arose as an alternative sufficient condition for aggrievement.
That is, even a fractional lessee, such as Waldbaum, would be sufficiently aggrieved if it
had a direct obligation to pay the entire tax bill of the landlord rather than just its own
portion of that tax bill. That is why the Waldbaum Court cited Matter of Burke (62 NY 224
[1875]), which the majority in this case misleadingly claims stands for the proposition that
only threatened pecuniary losses that the “direct result of its legal obligation” (majority op
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at 6) constitute “aggrievement.” Instead, Burke supported the conclusion in Waldbaum that
tax proceedings should be open to more than owners, because, as the Burke Court
explained, the tax certiorari proceeding “was meant to afford an early, speedy and cheap
mode of testing the legality. It is open to any one, owner or lessee, who is likely to be put
to litigation and expense by reason of it” (id. at 228).
Contrary to the majority’s contention (majority op at 6-7), Waldbaum is silent on
the question of whether a person who actually pays the entirety of the taxes on a tax lot—
which Waldbaum did not do—can “claim to be aggrieved” under RPTL 704. However, in
Matter of Walter (75 NY 354 [1878]) a case Waldbaum cited in support of its analysis, we
explained that although a lessee who paid the entirety of property taxes “loses nothing in
the diminished value of the land in market, by reason of the lien put upon it” if he does not
pay, “he will lose something from his own property or means, if he must pay” (Walter, 75
NY at 357). That conclusion precisely describes LPH’s situation. Waldbaum, which never
considered the aggrievement of an actual payor of all property taxes on the challenged
assessment, does not.
The majority’s aggrievement rule does not merely ignore our prior cases; it ignores
reality. Suppose a couple of my colleagues and I order coffees. I gratuitously pay for all,
and later realize the barista has overcharged me. Surely I am aggrieved by the overcharge,
even though I had no legal obligation to pay for my colleagues’ coffee. The same rule
should apply here: a person who pays the entirety of someone else’s property tax is as, if
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not more, aggrieved as the lucky beneficiary of that payment, even if at the time the taxes
were paid the payor had no “legal obligation” to do so.
Indeed, under the majority’s rule, it might be that no one could bring a tax certiorari
petition under the circumstances present here. Because the challenged assessments were
uniformly paid by LPH, neither Ms. DeGast nor the Trust (and certainly not the Trustees)
experienced a “loss of something from [her or its] own property or means” because of the
challenged assessment. Although failure to pay the property taxes would have resulted in
enforcement action by means of a lien, the trustees are personally immune under Lien Law
§ 77 and the possibility of harm to the trust or to Ms. DeGast because of a chain of causation
that begins with nonpayment might be deemed “remote and consequential” (Walter, 75 NY
at 357), and thus insufficient, under Waldbaum and the majority’s opinion today. Whatever
the purposes of the RPTL, it surely cannot be said that it intended taxpayers like the
Carforas to find themselves mired in a judicial Catch-22.
Indeed, the majority’s rule does not even advance the purposes it claims are
embedded in the RPTL: “clarity, efficiency, and judicial economy” (majority op at 8).
Determining who paid the challenged taxes is a simple task. Determining who had a “legal
obligation” to pay them may not be. Even here, as I explain below, there is a triable issue
as to whether the arrangement between the trust and LPH is a sufficient legal obligation to
render LPH aggrieved. Many other, more difficult scenarios await.
Consider, for example, an instance in which the Carfora Trust did not have sufficient
cash on hand to pay the taxes. If the trustees—mindful of their need to avoid breaching
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their fiduciary duties by defaulting on their tax obligations—pay the property taxes out of
pocket, is their fiduciary duty a sufficient legal obligation to render them aggrieved? Or
consider land divided between life estates and partial fee owners with various vested and
unvested contingent remainders: who is “legally obligated” to pay taxes then? What if the
validity of the life estate is disputed? What if the division of ownership interests in fact
violates the Rule Against Perpetuities (EPTL 9.1.1[b]) but no one has noticed it yet? 5 I
repeat the warning Judge Fuchsberg gave more than thirty years ago: resort to
5
The majority, in a citation-free paragraph of pure dicta, dismisses the possibility that Ms.
DeGast might be an aggrieved party based on her status as a beneficiary of the Trust
because “the parties agree that the trust itself—not Ms. DeGast—owned the subject
property” when these petitions were filed (majority op at 9). The parties agreed (as do I)
that the Carfora Trust possessed legal title, but that is beside the point. It is an elemental
principle of trust law that when real property is put in trust, the ownership interest is
divided—the trustees hold legal title and the beneficiary holds equitable title (EPL 7-2.1).
The question is whether the equitable/beneficial title Ms. DeGast held in the subject land
as a trust beneficiary carried with it sufficient ownership interest in the subject parcel such
that one would be “aggrieved” by the taxes levied upon it. It does. Because beneficiaries
still hold substantial incidents of title, their interest in the property is superior, in many
ways, to that of the trust or the trustees (Restatement [Second] of Trusts § 88, Restatement
[Third] of Trusts § 42). New York Jurisprudence goes so far as to declare that “an executor
or fiduciary is not the ‘owner’ of realty” (87 NY Jur 2d, Property § 11; accord People ex
rel. Brownell v Board of Assessors of City of Buffalo, 109 NYS 991 [Sup 1908], affd, 127
AD 851 [4th Dep't 1908], revd on other grounds, 193 NY 248 [1908] [trustee whose trust
held legal title to residence could not sign petition for street improvement because statute
required signatures of “resident owners”]). Here, the Trust Declaration gave Ms. DeGast
and Ms. Corbin one of the major branches in the classic bundle of rights making up
property rights in land—use and enjoyment of the land rent-free—while keeping only legal
title in the hands of the trustees. To say then that only the Trust would be harmed by a
failure to pay property taxes is to ignore the express terms of the Trust Declaration and the
beneficiaries’ equitable ownership interests. At the end of the day, the ultimate losers of
the Carfora Trust’s hypothetical default on its tax obligations would have been its
beneficiaries—which means that Ms. DeGast, as a beneficiary, is as good, if not a better, a
candidate for “aggrieved” party than the Trust itself.
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“hypertechnical punitive processes . . . impacts unfavorably on the desirable goal of judicial
economy. Such adventures should not receive our encouragement, surely not in the absence
of a more telling context” (A & J Concrete Corp. v Arker, 54 NY2d 870, 873 [1981]
[Fuchsberg, J., concurring]). Recognizing that someone who pays a tax bill is aggrieved is
simpler to administer, fairer and more consistent with our precedents than the rule the
majority announces today.
B
Even under the majority’s rule that LPH must have a “legal obligation to pay” the
entirety of the property tax assessment to be sufficiently aggrieved, LPH should still win.
On summary judgment—the posture of this case—there is sufficient evidence of the
existence of an agreement to create a triable issue of fact. Uncontroverted record evidence
supports the existence of an agreement that obligated LPH to pay property taxes and other
costs of maintaining the real property in exchange for use of the premises.
The affidavit of Kimberly Corbin, a trustee of the Carfora Trust, explains that “Prior
to Susan Carfora’s death, the Larchmont Pancake House operated out of the subject
property on a rent-free basis and paid all of the operating costs for the property including
utilities, repairs, and property taxes. Following Susan Carfora’s death, the estate and her
trust continued that arrangement with Irene Corbin and Portia DeGast, who were owners
of the Larchmont Pancake House.” Ms. DeGast filed an affidavit to the same effect.
According to the declaration of trust and the will of Susan Carfora, the Carfora
Trustees are without power to permit anyone other than Irene Corbin and Portia DeGast—
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including LPH—to use the subject property rent free. Indeed, the trustees had a fiduciary
duty to the beneficiaries to obtain income from the property if possible. The affidavits
explain (albeit perhaps subject to challenge at trial) how LPH complied with the declaration
and met its fiduciary duty: it charged LPH “rent” for the land by allowing it to reside on
the land in exchange for the payment of taxes and all other incidents and costs of the land.
That is a classic bargained-for exchange (Restatement [Second] of Contracts § 17)—use of
land in exchange for payment of the costs incurring from such use—that served to assign
legal responsibility to pay real property taxes to LPH.
The majority rejects this “informal, de facto arrangement” in a footnote bereft of
analysis, declaring it “does not amount to a contractual obligation” (majority op at 8 n 1).6
The majority does not say why for a simple reason: it cannot. The RPTL contains no
requirement that an agreement requiring a tenant to pay taxes be in writing, nor does
Waldbaum or any of our decisions so hold. Even if the Town were to attempt to raise the
Statute of Frauds as a basis to disallow proof of the oral contract (which it has never
asserted), because each of LPH and the Carfora Trust (the contractees) “admit[ted] in its
pleading, testimony, or otherwise in court that a contract was made” (General Obligation
6
The majority notes that the Caforas did not use the phrase “legal obligation” to describe
the “arrangement” by which LPH paid property taxes and other expenses (majority op at 8
n 1), but the Carforas also did not use the terms “de facto” or “informal” the majority uses
to characterize the arrangement’s legal status. The uncontested testimony as to the
existence of the arrangement and its apparently flawless performance over many years
creates a triable issue of fact as to the legal effect of the arrangement sufficient to defeat
summary judgment.
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Law § 5-701[3][c]) by filing sworn affidavits below, the contract is excepted from the
Statute of Frauds.
Furthermore, year after year, LPH fully performed its obligations under the
“informal, de facto” agreement, creating a course of performance from which a contractual
obligation could be established. In Canda v Totten (157 NY 281 [1898]) we confronted
exactly this situation: a third party paid property taxes on behalf of owner but without a
written agreement, and the question before us was whether that arrangement was legally
enforceable. We held it was; even in absence of a writing “as required by the provisions of
the Statute of Frauds, there was performance of the agreement on the part of the plaintiff,
and acceptance thereof by the defendant, and this fact operated to take the case out of the
statute [of frauds]” (id. at 287). Likewise, in Matter of Burke (62 NY at 227), we relied on
an affidavit that averred that the leaseholder had a legal obligation to pay the property tax
assessment at issue, rather than insisting on the production of a written lease.7
7
Indeed, even if the LPH’s payment of the property taxes was a gratuitous payment (as the
majority seems to imply), and even if the Statute of Frauds applied, a gratuitous promise
to pay a sum on behalf of another causing a detrimental reliance can give rise to a “legal
obligation to pay” as a matter of promissory estoppel—indeed, we so held just last year (In
re Estate of Hennel, 29 NY3d 487 [2017]). The affidavits explain in no uncertain terms
that the Carfora Trust relied on those payments to preserve its unencumbered legal title to
the land so that it could execute the trust declaration’s command that legal title in the land
be transferred to Ms. DeGast and Ms. Corbin. Had LPH failed to pay the taxes, the Carfora
Trust could well have sued LPH for the harms it would incur as a consequence (accepting
the majority’s assumption that we ought to assign no significance to LPH’s principal
officers and stockholders being the same persons as the Carfora Trust’s beneficiaries). Thus
LPH had a “legal obligation to pay” the taxes arising out of the Carfora Trust’s detrimental
reliance on its preexisting agreement to pay it under settled promissory estoppel principles.
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Even were there some doubt as to the binding nature of LPH’s contract with the
Carfora Trust, there is ample record evidence of the agreement to satisfy LPH’s burden at
the summary judgment stage. On summary judgment, “facts must be viewed in the light
most favorable to the non-moving party” (Vega v Restagno Constr. Corp., 18 NY3d 499,
503 [2012], quoting Ortiz v Varsity Holdings, LLC, 18 NY3d 335, 339 [2011]), and
“summary judgment should not be granted where there is any doubt as to the existence of
a factual issue or where the existence of a factual issue is arguable” (Forrest v Jewish Guild
for the Blind, 3 NY3d 295, 315 [2004], citing Glick, 22 NY2d at 441]). Only two years
ago, we held that when two home renovators disputed the exact nature of the
“arrangements” they entered into in the course of various construction projects, triable
issues of fact on the existence and nature of the “arrangement” precluded summary
judgment (Utica Mut. Ins. Co. v Style Mgt. Assoc. Corp., 28 NY3d 1018, 1020 [2016]).
The majority makes no mention of the summary judgment posture of the case or our
holding in Utica. On these facts, however, LPH easily surmounts the summary judgment
threshold even under the majority’s new “legal obligation” test.8
8
Because I would hold that LPH’s proceeding should not be dismissed and reject the
majority’s aggrievement holding, I must explain why the administrative complaints issued
here were valid. The majority has no need to, and does not, address that question, so I
summarize my views briefly. RPTL 524(3) does not require that an administrative
complaint be filed by “the person whose property is assessed.” Indeed, RPTL 524(3) states
that the complaint may be filed either “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.” I would hold that LPH could file the complaints as a person authorized to do
so by the “owner:” the beneficial owner, Ms. DeGast. It is not necessary for me to reach
the larger question presented by the parties and amici—whether “person whose property is
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C
Even if the petitioner in a tax certiorari proceeding must have a legal obligation to
pay the taxes to be “aggrieved,” and even if LPH had no legal obligation to pay taxes (that
is, accepting the majority’s proposition that the Carfora Trust was the only party able to
bring this action), LPH should still prevail under our well-established technical error
doctrines.
CPLR 2001 provides that “at any stage of an action including the filing of a . . .
petition to commence an action . . . if a substantial right of a party is not prejudiced, the
mistake, omission, defect or irregularity shall be disregarded.” Here, proceeding on the
assumption above, the only mistake was submitting the action in the name of LPH rather
than the majority’s identified “aggrieved party:” the Carfora Trust.
Only three people could possibly be prejudiced by the correction of that technical
error: the Carfora Trust, its beneficiaries, or the Town. The Carfora Trust would not be
prejudiced by correction of the error. Its Trustee, Kimberly Corbin, affirmed that “had I
been asked to authorize a grievance and/or petition to review the subject property’s
assessment for the 2010, 2011, 2012, or 2013 tax year, I would have agreed to do so.” She
then did so retrospectively, on behalf of the Trust, authorizing the proceedings for those
years in the course of this litigation.9 The beneficiaries also would not be prejudiced. Ms.
assessed” means only an “owner”—because even if it did, an “owner” approved the
complaint here.
9
The majority never addresses this authorization by the Carfora Trustee; even if one
accepted that Ms. DeGast did not intend to sign on behalf of the Carfora Trust or in her
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DeGast approved of the proceeding—she signed the authorizations that started the matter.
Finally, the Town has never suggested, including in its briefing to this Court, that it suffered
a whit of prejudice because the wrong party was named. It knew the identity of the lot and
the basis of the claim of overassessment, and evaluated and rejected the claims on the
merits.10
The Court offers no explanation for disregarding CPLR 2001 (majority op at 9 n 2)
and ignores our settled precedents by doing so. In People ex rel. Schwarz v Miller (281 NY
554 [1939]) we held that the owner’s failure to sign the administrative complaint
verification would be forgiven notwithstanding the mandatory nature of the verification.
Discussing that case in People ex rel. New York City Omnibus Corp. v Miller (282 NY 5
[1939]) we held that errors in administrative proceedings should be treated (and forgiven)
in the same fashion as errors in a tax certiorari proceeding. We disregarded an error nearly
identical to the one present here in People ex rel. Durham Realty Corp. v Cantor (234 NY
507 [1922]). There, the property under consideration was owned by one James B. Duke.
The petition should have been verified by Mr. Duke, but by mistake it was verified by
Durham Realty Corp—a mistake discovered three years later. We reversed the Appellate
Division’s dismissal of the case and adopted the opinion of the dissenting Justice, who
capacity as its beneficiary (majority op at 9 n 2), the Trustee did sign—it simply did so
only after the lawsuit was commenced, once the “error” had been identified.
10
CPLR 2001 applies to tax proceedings (Great E. Mall, Inc. v Condon, 36 NY2d 544, 548
[1975]) and applies to the commencement of proceedings, including mistakes in the name
under which a proceeding was filed (Ruffin v Lion Corp. (15 NY3d 578, 581 [2010]).
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stated that “under the liberal provisions of the statutes of this state in regard to practice, the
amendment should have been allowed” (201 AD 834, 835). Finally, and perhaps most
relevant here, in Miller v Board of Assessors (91 NY2d 82 [1997]), we held, citing CPLR
2001, that petitioner’s “error in naming the prior owner of the Robinson property in the
petition was a technical defect that was corrected when a written authorization from
Robinson was filed” (id at 87; accord People ex rel. Floersheimer v Purdy, 221 NY 481,
483 [1917] [“Under such circumstances it would be unjust to hold that because the
corporation was unauthorized to act in the first instance, or the attorney was unauthorized
to procure the issuance of the writ, the relator should be punished by denying him any relief
whatever”]; Tagliaferri v Weiler, 1 NY3d 605, 606 [2004] [wrong name in notice of appeal
should be disregarded because all understood who was actually taking the appeal]).
Moreover, in light of the Trust’s authorization of the LPH lawsuits, the error is
technical and not jurisdictional under our “two-pronged test . . . consonant with modern
rational thinking toward pleading and procedure” that looked simply to whether (1) the
proper party received notice, and (2) whether that party would be prejudiced by
disregarding the defect (Great E. Mall, Inc. v Condon, 36 NY2d 544, 548 [1975]). The
Carfora Trust had proper notice and approved this proceeding brought to defend the
interests the majority holds it, and only it, has. No one can explain how anyone in the
subject proceeding was prejudiced even trivially by this error. Certainly the Town cannot;
the Trust cannot; the Carforas cannot; even the majority cannot. I am at a loss to explain
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its silent deviation from our long line of cases establishing lenity for this type of technical
defect in tax proceedings.
III
The majority’s retreat from our “civil harmless error” doctrine is my gravest
concern. In 1875, we described the tax certiorari proceeding as “open to any one, owner or
lessee, who is likely to be put to litigation and expense by reason of it” (Burke, 62 NY at
228). In the decades since then, we have repeated our command that “the Tax Law relating
to review of assessments is remedial in character and should be liberally construed to the
end that the taxpayer's right to have his assessment reviewed should not be defeated by a
technicality. No substantial rights of the town were prejudiced by the granting of the
amendment” (People ex rel. New York City Omnibus Corp. v Miller, 282 NY 5, 9 [1939];
accord W. T. Grant Co. v Srogi, 52 NY2d 496, 513 [1981]; Matter of Great Eastern Mall
v Condon, 36 NY2d 544 [1975]). Exactly ten years ago, we reaffirmed that “mere technical
irregularities in the commencement process should be disregarded if a substantial right of
a party is not prejudiced. . . . [to] require strict compliance with [the statute] in this context
would mean that, under certain circumstances, petitioners would be foreclosed from
judicial review of their tax assessments through no fault of their own. We find that approach
unduly harsh and contrary to our historically liberal construction of pleading and procedure
in tax certiorari proceedings” (Garth v Bd. of Assessment Review for Town of Richmond,
13 NY3d 176, 181 [2009]). The majority refuses even to cite to these enduring legal
principles.
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Lenity is especially appropriate because this case involves the presence of a type of
party we rarely see in our Court: a happy family. Happy families are alike in a way
particularly germane to the application of lenity here. The members of happy families often
do not execute formal written agreements with each other, though they clearly understand
and perform the bargained-for agreements between and among them. Our decisional law
has consistently emphasized the importance of lenity as applied to taxpayers, and our
state’s constitution prohibits the overassessment of real property (NY Const, art XVI, § 2).
It is unfortunate that we bar these taxpayers from seeking judicial review because the
beneficial owner, instead of the trustee, signed the authorization, or because the family
business that actually paid the taxes, instead of the trust, was listed as “owner” on a form.
That is particularly so when the taxing authority fully considered the administrative
challenges to the assessment, ruled on them, was not prejudiced by any of the defects it
now alleges, and belatedly raised them.
I respectfully dissent.
* * * * * * * * * * * * * * * * *
Order affirmed, with costs. Opinion by Judge Garcia. Chief Judge DiFiore and Judges
Stein, Fahey and Feinman concur. Judge Wilson dissents in an opinion in which Judge
Rivera concurs.
Decided April 2, 2019
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