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Representative Cases and Matters for Stephen Davis

Surrogate's Court Litigation - Trusts & Estates - Contested Accountings - Tax Apportionment - Equitable Adjustment

Matter of Compulsory Interim Accounting Proceeding in the Estate of Jacob Heller, Surrogate’s Court, Westchester County (2011)

Sometimes, litigation in the Surrogate's Court involves actions taken in another estate or trust that harm our clients. Stephen Davis, representing the executors of a surviving spouse's estate, settled a dispute with the trustees of the estate of the first spouse to die, resulting from the requirement under the Internal Revenue Code (IRC) for inclusion in the taxable estate of a surviving spouse the testamentary trust created by her pre-deceased husband for her lifetime benefit (QTIP Trust). Although the IRC specifically apportions the increase in taxes solely to the QTIP Trust, the IRC nonetheless creates conflict between next generation beneficiaries when executors are called upon to make a tax election unfavorable to them personally, but resulting in a greater tax benefit to the QTIP Trust.  Reaching back to past estate litigation experience, Steve, now chair of the firm’s Tax Certiorari & Condemnation group, in collaboration with Frank W. Streng, chair of the firm’s Surrogate's Court Litigation group, asserted at Surrogate’s Court and to the Trustee of the QTIP Trust, ancient and esoteric rules of fairness to achieve recoupment of the Estate’s $44,000 tax advantage (compared to a date of death valuation). In this instance, equitable adjustment, a form of implied contract, manifested itself as the duty of the QTIP Trust to make whole the beneficiaries of the surviving spouse's estate from a loss imposed to achieve the Trust’s greater $345,000 tax benefit. Although equitable adjustment had been applied to other types of tax elections made by fiduciaries, e.g., a Warms Adjustment (1041 deduction vs. 706 deduction), there exists no reported case in New York applying the concept to a surviving spouse's estate's conflict with a QTIP Trust.


Tax Certiorari & Condemnation - Valuation of Ancient Theater

Westchester Playhouses v. Assessor of Town of Rye (Supreme Court, Westchester Co. 2011)

In order to succeed for their clients, tax certiorari lawyers must focus on whether a property has current rental value. In multiple annual assessment proceedings in which Stephen Davis sought tax refunds based on a high tax assessment of $950,000, Steve successfully negotiated a reduction in the assessment of an ancient theatre to $480,000. The lowered assessment reflects treatment of an older theatre (circa 1922) in Port Chester as though it were vacant land. Steve successfully presented to the Assessor and the Town’s tax certiorari counsel evidence that this almost 90 year old building possessed virtually zero value. The theater, occupying approximately 75% of the building, supported no uses, as it had gone dark in the late 1970s, had reached a state of utter deterioration, and would have required a further investment of many hundreds of thousands of dollars to rehabilitate just to render it rentable. The assessor recognized the argument that a property owner need not essentially rebuild the property in order to make it income producing for creation of assessable value.


Tax Certiorari & Condemnation - Floods Sink Mamaroneck Values

Delvito Realty v. Assessors of the Town & Village of Mamaroneck, Supreme Court, Westchester Co. (2010 & 2011); 603 Fenimore ) Rd Corp. v. Assessors of the Town and Village of Mamaroneck, Supreme Court, Westchester Co. (2010 & 2011).

Our lawyers’ familiarity with Mamaroneck’s flooding conditions benefitted clients seeking reduction of their assessments when those conditions adversely impact their property. Representing the owner of a high end, two tenant, 20,000 sq. ft. industrial building in Mamaroneck’s “Flats,” the Village’s industrial area, Stephen Davis, who chairs our Tax Certiorari & Condemnation group, successfully negotiated settlements of multiple annual tax certiorari proceedings, reducing the Town assessments by 45% and the Village assessments by 55%. In the second case, Steve achieved comparable reductions for another warehouse in “The Flats.” Steve successfully presented to the two Assessors and to the Town’s and Village’s tax certiorari counsel, evidence that the 2007 March and April floods significantly depressed market value in the area, and continues to do so. Adding to the prior flooding the deluge created by recent Hurricane Irene, these days “The Flats” of Mamaroneck seem to be referred to as the Sheldrake River flood plain. This reputation for repeated severe flooding engenders greatly reduced values for the many warehouse buildings of this once prime lower Westchester industrial area.


Tax Certiorari & Condemnation - Appellate Practice - Prior Negative Declarations Support Long, Hard Look

Sylvan Development Corp. v. Westchester Joint Water Works, 853 N.Y.S.2d 918 (2d Dep't 2008).

As part of their work, Tax Certiorari and Condemnation lawyers must understand environmental issues and their impact on a property's valuation. Representing Westchester Joint Water Works (WJWW), Stephen Davis successfully upheld WJWW's condemnation against attack from an alleged failure of WJWW to undertake adequate environmental considerations. Exercising its original jurisdiction, the Appellate Division sustained the argument that WJWW properly relied upon three prior negative declarations for the affected subdivision in discharging WJWW’s obligation to take and consider the required long, hard look at the project’s effect upon the environment.


Surrogate’s Court Litigation - Appellate Practice - Post Nuptial Agreement Contest - Replacing Condo Unit Triggers Ademption

Davis v. Willinger, 31 A.D.3d 429 (2d Dep't 2006)

Our lawyers represent clients on dispute on prenuptial and post  nuptial agreements. Here, in a declaratory judgment action involving an esoteric point of law, Stephen Davis and Joel M. Aurnou achieved an abatement of a surviving spouse’s contract with her husband to bequeath the proceeds of sale of the couple’s Miami Beach oceanfront condominium residence to her late husband’s daughter. Applying the ademption concept, the trial court - unanimously affirmed by the appellate court - ruled that the promise to bequeath pertained only to the condominium owned by the couple at the time of the promise, notwithstanding that they replaced their original condominium with another in the very same Collins Avenue condominium building.


Business Litigation - Municipal Regulation - Sprinkler System Retrofit Ordinance Invalid

Peo. (Vil. Of Mamaroneck) v. Argueso, Justice Court of the Town of Harrison, Johnston, J. aff’d Appellate Term. 9th & 10th Judicial Districts (1993) and Zaccagninio v. Village of Rye Brook, Supreme Court, Westchester County, Lefkowitz, J. (2004)

Stephen Davis successfully invalidated in both cases a retrofit sprinkler system ordinance on the basis that the legislation creating the State Uniform Building Code, which except under certain very limited circumstances, precludes both the Code and local governments from requiring retrofitting to pre-1984 structures. And, in regard to local governments, precludes enactment of any local law at variance with the State Code.


Tax Certiorari & Condemnation - Appellate Practice - Cooperative Apartment Conversion Valued By Imputing Rental Value

Southern Westchester Associates v. Assessor of City of Yonkers, 122 A.D.2d 212 (2d Dep’t 1986)

Tax Certiorari and Condemnation cases almost always involve the use of experts to establish value. Here, Stephen Davis successfully used an expert to establish rental value for apartments in a cooperative apartment buildling conversion as part of the capitalization of income process. At the taxpayer’s behest, the court applied a remedial statute designed to avoid use of sales prices for each unit, the effect of which would make the sum of the parts worth more than the whole, i.e., worth more than a neighboring similar apartment building. Instead, the rental value, rather than the so-called conversion value, was considered to be the best measure of value. Then, Steve convinced the Appellate Division to affirm the lower court ruling.


Tax Certiorari & Condemnation - Appellate Practice - User Owned Building Valued By Rental Value, Not Cost

Sear, Roebuck & Co. v. Assessor of City of White Plains, 66 A.D.2d 777 (2d Dep’t 1978)

The valuation technique used by Tax Certiorari & Condemnation lawyers is the key to success or failure of their cases. Here, Stephen Davis successfully obtained a tax assessment reduction for property owned by the user department store permitted by capitalizing rental value. He did so through the use of expert testimony on rental values, rather than employing a cumbersome reconstruction cost methodology that would have likely resulted in a higher valuation for the client's property. Steve then won on the appeal.


Business Litigation - Appellate Practice - Landlord/Tenant - Tax Base Mutual Ignorance Fails To Support Reformation

Almar Realty Corp. v. Sockolof Bros., 35 A.D.2d 986 (2d Dep't 1970), aff'd, 29 N.Y.2d 735 (1971)

Stephen Davis and Joel M. Aurnou prevailed in a reformation action by distinguishing mutual ignorance from mutual mistake of fact.  The result was their client’s warehouse tenant paying a  real estate tax escalation rental over a base of a vacant land assessment and not against a base assessment of the completed warehouse building.


Business Litigation - Appellate Practice - Foreclosure - Surplus Monies for General Creditors

Ercolani v. Sam & Al Realty Co., 17 N.Y.2d 299 (1966)

Representing a creditor, Stephen Davis successfully persuaded the Court of Appeals to reverse a decision of the Appellate Division, Second Department. Upon reversal, the lower court was compelled to recognize the right of general creditors to intervene in opposition to a referee’s report of sale, in order to restore what should have been surplus moneys from which the creditors’ claims could then be paid.


Tax Certiorari & Condemnation - Adjustment By Equalization Rate Comes To Westchester

Longport Realty Corp., v. Eklund, 44 Misc. 2d 1020 (Sup. Ct., Westchester 1964)

McCarthy Fingar's Tax Certiorari & Condemnation lawyers have also represented local towns and municipalities to defend their assessments. Here, on behalf of the Town of Rye, Stephen Davis established for Westchester County tax certiorari practice avoidance of artificially depressed value through overstatement of tax expense when capitalizing net income. Steve persuaded the court to adopt the Nassau County methodology of adjusting the actual tax rate by the ratio of assessed value to full value.