Administrative Law - Judicial Review - Challenge to Small Claims Assessment Review Hearing Officer Determinations - Failure to Provide Basis for Determinations

Kenneth L. Gartner, Mark H. Miller and Arielle Carla for Irma Heredia, petitioner.

[*2]Arielle Carla for remaining petitioners.

Theodore F. Goralski for respondents.

Petitioners move for an order pursuant to CPLR 7803 (3), reversing, annulling, and setting aside the 41 identical Small{**87 Misc 3d at 734} Claims Assessment Review (SCAR) Hearing Officer decisions on the ground that the SCAR Hearing Officer decisions were made in violation of lawful procedure, were affected by an error of law, and were arbitrary and capricious and/or an abuse of discretion. Respondents submit opposition.

Petitioners contend that during the month of February of 2024, petitioners, through their respective authorized representatives, appeared at SCAR Hearings pertaining to their respective properties' 2023/24 Village of Freeport assessments. Each petitioner appeared before Elyssa Slutzky, Esq. (the Hearing Officer), and presented arguments and evidence for a reduction in their 2023/24 final assessed value. In each of petitioners' cases, claims were asserted of both excessive assessment—an overvaluing of the property—and unequal assessment, pursuant to RPTL 730 (1). The instant petition concerns solely petitioners' claims of unequal assessment.

Petitioners submitted to the Hearing Officer, among other things, a ratio study demonstrating that the actual level of assessment was less than that indicated by the New York State Office of Real Property Tax Services' (ORPTS) Residential Assessment Ratio (RAR). Petitioners contend that in rendering the SCAR Hearing Officer decisions, the Hearing Officer: (1) performed no independent evaluation of the unequal assessment evidence presented, but instead relied upon a misunderstanding of a federal doctrine of "presumption of regularity" afforded to government actions, despite the fact that the Second Department has held that under New York law, in a tax case, this presumption "disappears from the case" as soon as the petitioner comes forward with evidence (see Mobil Oil Corp. v Tax Commn. of City of N.Y., 60 AD2d 910, 911 [2d Dept 1978]); (2) having mistakenly relied upon an interpretation of federal doctrine, the Hearing Officer did not view it necessary to, and so did not, provide findings of fact on the unequal assessment claims, or a specification of the evidence upon which any findings would have been based; and (3) the Hearing Officer rejected controlling precedent from this court and misinterpreted the holding by the Appellate Division in determining that the petitioners lacked standing to challenge the RAR established by ORPTS.

Petitioners contend that for all of the petitioners named herein, the Hearing Officer issued identical determinations,{**87 Misc 3d at 735} explaining that the unequal assessment claims were denied based upon the Hearing Officer's legal interpretation of a federal doctrine entitled "presumption of regularity." The Hearing Officer stated that under this doctrine, the government—whether in civil or criminal venues—always wins, and a private citizen/taxpayer always loses. Petitioners argue that by failing to consider any New York State authority on the "presumption of regularity" and instead utilizing only two federal cases—one from 1926—the Hearing Officer acted contrary to governing New York law. Petitioners cite to Mobil Oil Corp. v Tax Commn. of City of N.Y. (60 AD2d 910, 911 [2d Dept 1978]), which held that, in regard to the presumption of regularity, "this presumption of validity does not take the place of evidence but serves solely to shift the burden of going forward; it disappears from the case as soon as credible evidence to the contrary is received."

Petitioners argue that the ratio study presented was performed in a statistically sound manner, in accordance with ORPTS' own methodologies for such studies, conducted using SPSS statistical software, which is the same software used by ORPTS when it performs ratio studies based upon actual sales. Therefore, petitioners further argue that their ratio study was more than sufficient to satisfy their minimal burden of proof to overcome any presumption that the level of assessment allegedly utilized by the Village of Freeport was accurate or reflected the true level of assessment of residential property within the Village of Freeport.

Petitioners additionally contend that the Hearing Officer decisions contain no finding of fact with respect to any of the unequal assessment issues raised by petitioners, and the decisions merely announce that the Hearing Officer was relying on ORPTS RAR. Petitioners argue that this is a direct violation of RPTL 733 (4), which provides that "[t]he decision of the hearing officer shall state the findings of fact and the evidence upon which it is based." Petitioners maintain that the decisions should therefore be vacated, and petitioners should be granted hearings de novo before new hearing officers, and new hearing dates selected in compliance with 22 NYCRR 202.58 (e) and RPTL 731 (1).

Furthermore, petitioners note that in the Hearing Officer's decisions, she states that petitioners do not have standing to challenge an RAR in a SCAR proceeding pursuant to RPTL 1218. However, petitioners argue that pursuant to RPTL 1218,{**87 Misc 3d at 736} a recalculation of the RAR by the ORPTS can only be compelled via a CPLR article 78 proceeding: (a) brought directly in the Appellate Division; (b) under the Appellate Division's original jurisdiction; and (c) by one of the assessing entities which use the RAR. Petitioners argue that the Hearing Officer misinterpreted RPTL 1218, because petitioners were not seeking to compel a recalculation of the RAR by ORPTS, and article 7 of the RPTL provides homeowners with the opportunity to challenge their own individual assessments in SCAR proceedings, citing to RPTL title 1-a and RPTL 729-739.

In opposition, respondents argue that this action should be dismissed inasmuch as the decisions of the Hearing Officer were neither arbitrary nor capricious and were all supported by findings of law and fact. Respondents contend that the Hearing Officer properly ruled that standing to challenge the RAR is limited by RPTL 1218 and that applying a different RAR to petitioners' properties is prohibited as it would create unequal assessments within the Village of Freeport. Respondents argue that this court lacks subject matter jurisdiction in this action as RPTL 1218 is the exclusive avenue for judicial review of the State Board's determination of the ratio at issue and requires challenges to ORPTS determinations to be reviewed solely by the Appellate Division.

Respondents contend that the Hearing Officer properly rejected petitioners' arguments at their respective hearings, finding that petitioners have not established that each individual petitioner was assessed unequally, citing to Matter of Chasalow v Board of Assessors of County of Nassau (202 AD2d 499, 501 [2d Dept 1994] ["It is well settled that in the area of real property taxation, rough equality, not complete uniformity, is all that is required"]). Respondents argue that case law suggests that taxpayers don't have to be treated the same as everyone else, but [*3]similarly situated taxpayers must be treated uniformly, citing to Matter of Sullivan Farms, II, Inc. v Assessor of the Town of Mamakating (179 AD3d 1176 [3d Dept 2020]). Respondents maintain that this court lacks subject matter jurisdiction pursuant to RPTL 1218, which is the exclusive avenue for judicial review of the State Board's determination of the ratio at issue in this action. Respondents additionally argue that, even assuming petitioners did have standing to challenge the RAR, they have failed to show that they have been denied an opportunity to show inequality of their tax assessments.{**87 Misc 3d at 737}

In reply, petitioners argue that respondents request that this court act contrary to established law in five categories of constitutional, statutory, and case law, without providing proper support to any of these requested deviations, and therefore respondents' opposition lacks merit. Petitioners further argue that pursuant to CPLR 7804, respondents are required to submit either a verified answer to the verified petition, or make a pre-answer motion to dismiss, neither of which has been done. Instead, petitioners contend that respondents have simply submitted an affirmation and memorandum of law in opposition to the petition and are technically in default for noncompliance with CPLR 7804.

SCAR Hearing Officers have an obligation to provide the basis of their determinations so that there is opportunity for their decision to be reviewed to determine if the decision was arbitrary, capricious, or otherwise unsupported by substantial evidence. (See RPTL 733 [4].) Additionally, "[i]t is well settled that in the area of real property taxation, rough equality, not complete uniformity, is all that is required." (Matter of Chasalow v Board of Assessors of County of Nassau, 202 AD2d 499, 501 [2d Dept 1994] [emphasis added].) This court notes that respondents themselves quote this case law.

In the instant matter, the Hearing Officer's decisions are nearly identical, though each individual taxpayer's application should have been treated individually, and not with complete uniformity. Additionally, the Hearing Officer does not provide the basis of her determinations regarding petitioners' unequal assessment claims; in fact, said claims are not addressed at all. Thus, the matters must be reconsidered on an individual basis.

Accordingly, it is hereby ordered that the petition pursuant to CPLR 7803 (3) to reverse, annul, and set aside the 41 identical SCAR Hearing Officer decisions on the ground that the SCAR Hearing Officer decisions were made in violation of lawful procedure, were affected by an error of law, and were arbitrary and capricious and/or an abuse of discretion is granted, and these matters are remitted for new hearings before a different Hearing Officer. Upon the completion of the new hearings, should any party be aggrieved by any future decision, that party must commence their own individual proceeding,{**87 Misc 3d at 738} with each individual proceeding having a separate index number.