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Pinelawn Cemetery v Metroplitan Transp. Auth. 2013 NY Slip Op 30612(U) March 4, 2013 Supreme Court, Suffolk County Docket Number: 09-4452 Judge: Daniel Martin Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

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SUPREME COC:RT - STATE OF N E W YORK
I.A.S. P . 4 R I 9
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SUFFOLK COLTNTI'

P X E S E LV T :
IlOil

IIAV I E L

MARTIN

Stisticc o f the Siipremt' Court

MOTION DATE 1- 1 1 - I ? 12- 1 s- 12 ADJ. DATE ____ ;/lot. S t ~ l# 004 - Mot11 . # 005 - MotD; CASEDISP

x
PI h E LA LVK C EM ETERY '
~

F' 1ai nt i Tf aiid Co iiii tei-c1ai in De feiidan t , :
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MARK A. CUTHBERTSON, ESQ. At t o i-iiey fo 1- P iiielaw 1 Cemetery 1 434 New York Avenue Huntington, New York 1 1743
JAY SAFAR, ESQ. Attorney for MTA 8( LlRR 267 Carletoii Aveiiue, Suite 301 Central Islip, New York 1 1722 GLYYNN MERCEP & PERCELL. LLP Attorney for N Y & Atlantic Railway 57 North Country Road, P.O. Box 712 Stony Brook, New York I 1790 BOND, SCHOENECK & KING, PLLC Attoniey for Town of Babylon One Liiicoln Center Syracuse, New York 13202

against -

M ET ROPOLITAN TRAN SPORTA'TION .$IJTHORlTY THE LONG ISLAND RAIL ROAD . COMPANY.

I> fend an t and C o iiiit erc 1ai m P lain t i ffs , : e
m c l 2tW j'ORK & ATLANTIC RAILWAY,

Dcfendant/liiterveiior,

0KDE:'REL)that this motion by the plaintiff Pinela\n Ccmetery for an order pursuant to CPLR 32 I2 g m t i i i g summary judgiiient i n i t s favor I S granted to the cutent that tlic defeiidants~cotinte~claim p l c i i i i l i l'fs hlcti-opolitm Transit Authority and I,ong Island Rail Road are found liable to pay to the

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Pinelawn Cemetery v Metropolitan Transit Authority Index No, 09-04452: Page 2 pinintiff the real property taxes. including interest and penalties. assessed for the tax years 2007/2008, 3008~2009, d 2009'20 10. and is otherwise denied; and it is further m

ORDERED that this motion by the additional counterclaim defendant Town of Babylon for an order pursuant to CPLR 3212 granting summary judgment dismissing the counterclaim of the defendanwcounterclaim plaintiffs Metropolitan Transit Authority and Long Island Rail Road is granted to the extent that said defendantsicounterclaim plaintiffs' claims for a tax exemption regarding the tax years 2007/2008, 2008/2009. and 2009i2010 are dismissed as tiine-barred, and is otherwise denied; and it is further ORDERED that upon a search ofthe record pursuant to CPLR 3212(b), summary judgment is granted in favor of clefendants/counterclaim plaintiffs Metropolitan Transit Authority and Long Island Rail to the extent that they are entitled to a declaration that they have no obligation to pay the tax assessment for the 201 0/20 1 1 tax year, and that the property is exempt from future taxation pursuant to Public Authorities L,aw 1275.

1 his is an action for breach of contract, quantum meruit, and declaratory judgment seeking to require the defendardcounterclaim plaintiff' Metropolitan Transit Authority (MTA) to pay certain real property taxes due. The plaintiff, Pinelawn Cemetery (Pinelawn), a New York not-for-profit corporation organized in 1902, i,s the largest cemetery in the State o f N e w York. Pinelawn owns two parcels along New Highway (the property) which were separately leased to the defendant Long Island Rail Road (LIRR), a subsidiary of the MTA. The first lease, dated August 30, 1904 (1 904 Lease), ran for 99 years and expired by its terms on August 30, 2003. The second lease, is dated November 1, 1905 (1905 Lease). Both leases contained renewal provisions whereby the MTA, as tenant, could exercise an option to renew the leases by giving written notice not later than three months prior to the end of the term. Pinelawn contends that the 1904 Lease was not renewed by the MTA. In a separate action before the Court, Pinelawn Cemetery v Coustal Distribution, LLC, et nl., Index No. 04-8599, MTA takes the position that the 1904 Lease has been validly renewed. MTA also takes that position in this action.
The Leases provide in identical paragraphs that: "[Ml`A-LIRR] covenants to bear, pay and discharge all such taxes, duties and assessments whatsoever as shall or may during the said term hereby be granted bc charged, assessed or imposed upon said premises." Pinelawn contends that the Leases leave no room for question that MTA is responsible for the taxes on the property. It is undisputed that taxes were not assessed on the property from 1904 until 2007.
It is undisputed that MTA entered into a Transfer Agreement with the defendanti intervenor New York & Atlantic Railway (NYAR) on or about November 1996. Said agreement transferred M`TA`s

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freight operations to NYAR, including use of the property. On or about February 2002, NYAR entered into a contract with nonparty Coastal Distribution, LLC (Coastal) to operate a transloading facility on the propert). Transloading is the practice of transferring a shipment from one mode of transportation to another, for cxample, from trucks to rail cars. Coastal is a for-profit New York corporation. Pinelawn first received a tax bill from the additional counterclaim defendant Town of Babylon (Town) for the 2007-2008 Tax Yeai. and the Town issued a tax bill for the property each year thereafter. Pinelawn made written demand on the MTA for payment of the 2007-2008 Tax Bill, and for each subsequent year.

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Pinelaan Cemetery v Metropolitan Transit Authority Index No. 05-04452 Page 3

MTA has not made paymenl. of any taxes demanded.
Pinelawn now moves for summary judgment. MTA and NYAR contend that they are exempt from property taxes pursuant to Public Authorities Law (PAL) 1275 which provides:
[ Plroperty owned by the authority, property leased by the authority and used for transportation purposes, and property used for transportation purposes by or for the benefit of the authority exclusively pursuant to the provisions of a joint service arrangement or of a joint facilities agreement or trackage rights agreement shall all be exempt from taxation and special ad valorem levies. The authority shall be required to pay no fees, taxes or assessments, whether state or local, including but not limited to fees, taxes or assessments on real estate ... upon any of its property ...

Pinelawn contends that whether or not MTA is entitled to a tax exemption it is obligated to pay the outstanding real estate taxes based on the express terms of the 1905 Lease, and pursuant to the thleory of quantum meruit for the parcel governed by the 1904 Lease. When the terms of a written contract are clear and unambiguous, the contract should be enforced in accordance with the plain meaning of its terms (see Greenfield v Pltilles Records. 98 NY2d 562, 750 NYS2d 565 [2002]; W. W.W. Assoc. v Ciancontieri, 77 NY2d 157, 565 NYS2d 440 [1990]; Willsey v Gjuraj, 65 AD3d 1228,885 NYS2d 528 [2d Dept 20091). Extrinsic evidence as to what the parties really intended, but omitted from or missi.ated in the contract, generally is not admissible to create an ambiguity in a contract that is unambiguous on its face (see W. W.W. Assoc. v Giarzcontieri, supra; Chimart Assocs. v Paul, 66 NY2d 570, 498 NYS2d 344 [ 19861; Krystal Investigations & Sec. Bur., Inc. v United Parcel Serv., Inc., 35 AD3d 8 17, 826 NYS2d 727 [2d Dept 20061). "The best evidence of what parties to a written agreement intend is what they say in their writing" (Slamow v Del Col, 79 NY2d 1016, 10 18, 584 NYS2d 424 [ 19921; see ulso Coldman v White Plains Ctr.for Nursing Care, LLC, 11 NY3d 173, 867 NYS2d 27 [2008]). However, the issue is whether the terms of the lease or leases require MTA to pay the subjeci tax assessments whether or not those assessments are legal or void. In general, a court must endeavor to give the words in a contract a fair and reasonable interpretation (Sutton v East River Sav. Bank, 5 5 NY2d 550.450 NYS2d 460 119821; Frame v Maynard, 83 AD3d 599,922 NYS2d 48 [lst Dept 201 11; E s s a Ins. Co. v Pitzgley, 41 AD3d 774, 839 NYS2d 208 [2d Dept 20071). It is well settled that a contract should be interpreted so as to avoid unfair and anomalous consequences (Nassau Cli., Civ. Serv. Empls. Assti. v Nassau County, 77 AD2d 563,430 NYS2d 98 [2d Dept 19801; Matter o f Friedmati, 61 AD2d 70, 407 NYS2d 999 [2d Dept19781; River View Assoc. v Slteraton Corp. o A m , f 33 AD2d 187. 306 NYS2d 153 [lst Dept 19691). Even when the terms o f a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties' reasonable expectations (Franklin Apt. Assoc., Inc. v. Westbrook Tetzarits Corp., 43 AD3d 860, 841 NYS2d 673 [2d Dept 20071; Matter 01Matco-Norca, Inc.. 22 AD3d 495, 802 NYS2d 707 [2d Dept 20051; Del Vecchio v Colretz, 288 AD2d 326. 733 NYS2d 479 [2d Dept 20011).
A review of the leases between Pinelawn and MTA reveals that the rental for each parcel is set at

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5 I ( I O I J C I  C J I I t is t~t1displ~ted the L7roperty L;LS ee1iipt tioiii t;t:itio1i fi-0111 the d d t C that VITA tool th`it pobxssioii u n t i l the 3007 200s tax p r . The Court finds th`it the parties to the leases contcniplcited tli`it thc piopct t  oulcl be iised tor public purposes. mct that the laiigticige iii the leases ieq~iires MTL4to pay oil11 those ~,trs lc+ll> imposed i f the property I S not used for same Thus the parties ,igeecl that m y t`ikcb iiiipcxc`il \ eie the iesponsibility of MTA and the legality o f s m i e was for that entity to dispute. In ,idditiou. A C , I I I ~ C of'xtioii lor qiiantum meruit, grounded i n qiiasi coiitrnct. is only viable i n the absence .iyecmeiit. mcl IS not really a contract at all, but i-ather a legal oblig:,itioii imposed i n ordeito pic ciit `I p , i i ~ 's uiijiist el-ii-icliment(Clarli-Fit~~ritrick, v Loizg Is. R.R. Co., 7 0 NY2d 3S3, 331 Iiic. Sl`S3d 0 5 3 [ 19S71, Scott v Fields, 92 AD3d 666, 93s NYS2d 575 [2d Dept 20121) Assuming for the ptirpoies o f t h i s niotion only that the 1904 Lease has iiot been properly renewed, whether or not MTA Ii`is beeii Liiijiistl> enrichcd depends on MTA's riglit to a tax eueiiiption herein

The record reveals that MTA has asserted a coiiiiterclaim against Pinelawn and the Town seeking ;I declaratory judgment that the leased properties are tax exempt. Thus, MTA's opposition to Pi ne 1aw n 's i i i o ti o i i I o r sti m in ary j udgmeiit and MTA 's count erc 1aim both rest on t 1 e Co iirt 's 1 interpretatioii of PAL 127.5. In essence, tlie issue is whether the use by Coastal is for "transportation piii-poses by or for the benefit of tlie authority " under PAL 1275. Piiielawii contends that a series of` S u i ~ f i cTi-ansportation Board (STB) decisions are controlling regarding the issues herein. Those cases ~` iiivol~edtlie question whether Coastal's efforts to construct a building on the property were subject to local mniiig I-egulatioiis. The Interstate Commerce Commission Temiinatioii Act of 1995 (ICCT'4) g m t s the STB cxcliisiiejiirisdictioii over "transportation by rail carriers" 49 USC 5 1 OS01 (b) (1). The issues before tlie STB included whether it had jurisdiction over Coastal's activities, and whether federal Ian; preemptcd the Town's zoning laws. The STB deteniiined that it did not have exclusive jurisdici ion tinder tlic ICCTA because Coastal was iiot a rail carrier, and NYAR did not exercise sufficient control of Coastal 's act I ties.
Ti

N`,AR clialleiigcd the STB decisioiis vhich found that federal law did not preempt the Towi's cnroiwiieiit d f its /onlng rcsulatioiis. 111New York CG Atlantic RJI. Co. IJ Surface Tramp. Bd., 6 3 5 F3d 00 (211 ( 11' 20 1 1 ). tlie Second Circuit denied NYAR's petition stating that Coastal's actt'ities constitute t i `iii5poi l ` i t i o i i I i t l i i n the meming of the ICCTA, but that i t did not have jtirisdiction because the "oilly  .iigtinicnt I S \hcthcr the acti ities were perfoniied by or under the control o f a rail carrier " Here, a I e I C   of' the I-ecord I cvcals that Coastal's activities are conducted for "ti-anspoitatioii put poses" tinder 1'41 1375
-1 lie i-i:niaining issue i:j whether Coastal's acti.ities are "f`or the benelit" of MTA. A t-c,icw of the Ti-ansload Faci lities Operations Agreement between N Y A R and Coastal re direct bciiclit 1.1-oiii tlic current ai-rangeinelit as it receives a fee for each rail car which is transloaded hy (`oastal. ;itid that thi: its Ti-ansf`erAgreement with NYAR rclicvcs it o f its obligations 2 s a rail cai-ria- t o 1 pix) idc I'rcigIiL seiniccs throughout Long Island. It lias been held that a public autliority's Icasc o l ` t a x c`sciiipt piuiiiscs to ;i Ibr-prolit entity benefits that authority and entitles the authority to a continued csciiiption tinder PiZL 1275 (Mctiwpolitari Trriirsp. Autli. 1' City uj'New York, 70 AD3d 55 1 , 4 16 Ul'S2d 0 I2 I I s t Dcpt 1079].

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I lo\ -  ci. tlic Court linds that its inquiry should not end there The To\ i i Ii`is nio ed for >iiiiini,ii 1 iidsnieiit scc1,iii~ to dismiss tlie PITA'S couiiteicl,ilm on tlie s,inie grounds <IS Piiicl<i\n In ciilditioii. the I o\ 11 contends that said counterclaim is tinie-barrcd piiisuant to the l`otii-nioiith I i m i t c i t l o i i p c i ind loi J pioceediiig uiidcr CPLR article 78,and/or should be dismissed pimuant to CPLR 321 1 ( a ) (4) Lheic I > ,inother x t i o i i peiicliiig A defendant seeking to dismiss the complaint insofar as zsei-ted `15 +iiii[ i t c ~imr-bai-i-ed has tlie i n i t i a l burden of PI oving through docuiiient,ii-y e icicnce that tlic x t i o i i I j   `15 uiitiiiiclc coiiiniciiced alter its ciccrticil date (see iMorris 1' Cirrizelli, 7 1 AD3d 965. 807 NYS2cI 2 IO 12~1 ) ~ p t301 01- Lc'\qff I! 26 Court Street ASSOC., L LLC, 5 5 AD3d 610, 872 NYS2ci 144 [2nd Dcpt 20001. Sribrrilic Brrike, 37 AD3d 9 13, 849 NYS2d 440 [2d Dept 20081). Thereafter, the burden sliilis t o the p L i i n t i I < to er evideiatiary l-acts establishing that the action was timely or to i-~ise issw of f x t an `15 to \ lictlici the LIctioli  V ~ I Stiiiiely ( L L ` S S 26~Ct. St. ASSOC., U ~V LLC, . S [ ~ / O ~ L ) .
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I I is tindisputed that tlic MTA's cotinterclaim vas brought on May 10, 2010, more than four
iiioiiths `1ftt.x the

date that the tax rolls were finalized for the tax years 2007/2008, 2008/2009, and

2000 201 0. `I'lic Tonn asseris that the tax roll for the tax year 2010/201 1 was finalized on December 9, 201 0 The C`oiii-t finds that the MTA timely asserted its counterclam regarding the 2010/201 1 tax year. Ho\ c ci-, t h y Town has established its prima facie entitlement to summary judgment dismissing MTA's

couiitrrclaim i-egai-dingthe first three tax years herein.

I n opposition to the Town's motion for summary judgment, MTA contends tli`it its countcrclciini is sul7ject to the six-year liiiiitation period foi- a declaratory judgment action, not the four-month limitation peiiod 111 a CPLR article 75 proceeding In addition, the MTA asserts that it biousJit its counterclaiiii 111 a tiiiiely inaiiiier as it could not have challenged the Town's assessiiient regal-ding the property until this action was comiiienced by Pinelawn. It is well settled that a tax .isscssment c m be challenged iii an article 75 proceeding or i n a declaratory judgment action ( K d i a l S i i c i Eiiiiiriiiii & Tcrliiiiid Torr111 Bnei Simon Israel 11 Toivii of Fcrllsbiirg, 78 NY2d 194, 573 N Y S Y 47 [ 109 1 1 ) Hoveci, the sll-yeai- limitation period for declaratory judgmeiits does not necessai-ily go ei 11 ,111 si~cli `ictions If an exaiiimatlon of the substance of the relationship out ofwhich the cl`iini `11 iic I c e d s tli`it the i ights of the parties sought to be established i n the declaratory judgment actioii `ire, oi could Iici c becii, iesol ed through a form of proceeding for which a specilic limitation period is jtLitutoiI ly pi 0 1 idccl. then that statutorily specified period limits the time for coiiimenccment of tlie ciccl,ti.itoi-y judgment x t i o n ( I d , dt 205, 573 NYS2d at 49; Solrziclc v Wli~leri, NY2d 224, 425 49 UYS3d OS [ 1 `ISO]) Tliiis, M TA wcis required to bring its cotinterclaim asserting its right to a t`ix cciiiptinii it l i i i i lbtii- months of the date that a particular tau assessment becamc final (Krrlial Biiei i Eiiiiriiiiii & 7irliiiirrl Torah Biiei Simon Israel v Town of Firllsburg, m p m ;Suffolk Fcrniilj Eqiii[i. Iuc. C`oiiiity of 2Vrrstciir.233 AD2d 436, 650 NYS2d 21 [2d Dept 19961; Matter of New J o i ~ s q ~ R k l Tr. Oprrifiori I' Corriir)?of Rochlaiicl, 187 AD2d 430, 5S9 NYS2d 549 [2cl Dept 19921, set' ulo  l c t i w p ~ I i t ~ i iTrriii$p.Aiitli. i ,sesor of the City of Moiiiit Verriorr, 3 0 Misc 3 d 470, 9 13 UYS2cl 509 [ 5Llp ( t. 1 eilchcstci ('ounty 20101)
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Uc)ico el. MTA's coiltention that i t could not have challenged the subject tdk asscssmcnt `is it I S ilic lcisce 0 1 the piopcrty, and not the owner, I S without merit. The lessee of an entire parcel, who is i~ontrcictii:illyobl~gatccl its lease to make payment of property taxes, has standing to challenge tax by `issessmcnts I t x p ding tliat property (Mutter of Wddbaiwi, Iiic. v Fiiimce Adinin., 132 Misc 2d 36-4,

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4ccoicIingl!, the TOM motion for sLiiiiiiiaryjiidgiueiit dismissing M TA's cotinterclaim IS ii's 21,iiitccl to tlic nteiit that the c1,iiins regarding the tax years 2007/2008, 200S/2009, aiid 2009/2010 d 1 i i i i i sseci ' i s t i me-barred

1 4 0 e er, a court may search the record and grant summary judginent i n favor of a noiiiiioving ~ party \ it11 respcct to a cause of action or issue that is the subject of the motions before the court (CPLR 3 2 12 161, Diiiilirriii 1' Hilco Coiistriictioii Co., Iiic., 89 NY2d 425, 654 NYS2d 335 [ 19961; Yiisiii v Srrrlrllc Lrrkij Hoiiie O~vizers~4ssocintioii, 73 AD3d 1168, 902 NYS2d 139 [2010]). Upon Iiic., IT icn 1ng the entirety of the records submitted, tlie Court detennines as a matter of law that MTA is eiitillecl to summary J tidgineiit on its counterclaim for declaratory judgment that the property, vhethcipossessed by MT.4 by lease or otherwise, is tax exeiiipt regarding the 2010/201 1 tax year aiid thereaftel (lirrlial Bit& Eiiiuniiii & Td~iiiitl Torah Bizei Siiiioiz Israel v Towri of Fcillsbiirg, supi-ri).
I n light of tlie Court's findings herein, Pinelawn lias established its prima facie entitlement to sumiiixy J tidgineiit regarding its cause of action for breach of contract regarding the tax years 2OM, 200SQ009, and 2009/2010. The subject tax assessments became the legal obligation of MTA upon its failtire to challenge those assessments in a timely manner. MTA has failed to raise an issiie of fict ieyi-ding Pinelawn's entitlement to summary judgment as set forth herein However, Ptiicl.n ii's cLitiseof x t i o n ror declaratory jtidgiiient is denied as academic. Said cause of action seelts ci clcclciicitioii th'it "MTA-LIRR must pay any taxes imposed on the Property for tlie life of the Lease " Tlic I cclticsted i cliefhas been fully addressed in tlie Court's detei-mination that Pinelawn is ciititled to  t i i n i i i c i i ) jtidyiicnt herein, and that MTA is entitled to suiiiiiidry judgli-zent on its counteiclaini
I S granted to tlie extent that MTA is fotiiid liable to pay to the thc i c c i l propci-ty t'ixcs, including interest and penalties, assessed for the tax years 20071200>1. 300s 2009, ~ i i d 2000/2010, a i d MTA is entitlcd to enti-y of ludgineiit declaring that it has no obligLitloii ssiiicnt for rhe 20 10/201 1 tax year, and that the property is exempt from future t ~ l  c ~ t l o ~ lL I Iwrit to PAL I275 l plciiiili[ f

Accoi tliiigl~. Pinclavn's motion

Scttlc

JLlci~ilicilt

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