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Business Corporation Law § 1008. cont

On January 29, 2007, plaintiff and defendant entered into a stipulation of settlement on the record before Supreme Court.

The stipulation of settlement also contained provisions requiring plaintiff to assume all of the outstanding liabilities concerning the parcels. The parties apparently intended that plaintiff would pay defendant 55% of the net appraised value of both parcels and, in consideration for that payment and plaintiff’s assumption of responsibility for the outstanding liabilities concerning the parcels, defendant would assign his interest in the parcels to plaintiff, giving plaintiff sole ownership of both parcels. However, no provision requiring defendant to assign his interest in the parcels to plaintiff was included in the stipulation of settlement.

Supreme Court requested appraisals for both parcels from Skyline Appraisals Inc. and East Coast Appraisals, and the appraisals were performed. While neither party objected to the appraisals performed by Skyline, defendant sent a letter to Supreme Court objecting to the appraisal performed by East Coast. Defendant was concerned that the East Coast appraisal was inaccurate and greatly undervalued the parcels. injury Defendant requested a conference between the parties and the court to resolve issues relating to the East Coast appraisal; no motion was made by either party for any relief.

Although, as the court noted, plaintiff was willing to accept the East Coast appraisal, it also is clear that plaintiff did not object to the selection of a third appraiser. To the contrary, plaintiff acquiesced in defendant’s request that another appraisal be performed.

Following the August 7 conference, the court requested that the third appraisal be performed by Jacob Gold Realty. The Jacob Gold Realty appraisal valued both the Bronx and Brooklyn parcels higher than the appraisals from Skyline and East Coast. Plaintiff viewed the Jacob Gold appraisal as unreasonably high, but sought no relief from the court with respect to it.

Without the prompting of a motion, Supreme Court determined the value of the parcels. The court noted that, based on the three appraisals, it had “three possible methods of determining the market value of each property. One option is to average out the three appraised market values of each property. The second medical option is to discard the lowest appraised market value for each property, as provided by East Coast, and to then average out the two remaining appraised market values for each property as provided by Skyline and Jacob Gold The third option is to discard both the lowest appraised market values, as provided by East Coast, and the highest appraised market values, as provided by Jacob Gold, and thus to rely exclusively upon the middle appraised market values for each property, as provided by Skyline. The court determined that it would average the values of all three appraisals for both parcels. The court stated that while defendant has qualms about the relatively low assessment market values provided by East Coast viz-a-viz those provided by Skyline, the Court, in good conscience, cannot summarily jettison East Coast’s appraisals. Indeed, the appraised evaluations were supported by more than East Coast’s bald expression of values and East Coast provided the supporting data as to the method by which it arrived at its conclusion and the factors which entered into its judgment. The preponderance of its comparable properties were located in immediate areas and were representative of the same residential market as the property in question, both in size and usage. Under the circumstances, East Coast’s assessments are credible and entitled to be given probative weight equal to the other two appraisals of the Bronx and Brooklyn properties. The court did not discuss the terms of the stipulation of settlement that required the court to determine the value of the properties by averaging two appraisals, and did not explain how its decision to average the three appraisals was consonant with the terms of stipulation of settlement. Nor did the court explain why it believed that one of the valuation methods was to discard the lowest and highest appraisals, a medical method that would entail no averaging. This appeal by defendant ensued.

Prior to oral argument on this appeal, defendant moved to vacate the stipulations of settlement-both defendant and the court that heard and decided that motion treated the court’s August 7, 2007 on-the-record statements as a stipulation; plaintiff, however, asserts that the court gave directives to which the parties did not stipulate. After oral argument of the appeal, Supreme Court granted the motion to vacate. The court concluded that no binding stipulations existed, and stated that the parties were free to conduct disclosure and file a note of issue when the matter was ready for trial. Thus, although the order appears not to have expressly vacated the order on appeal determining the value of the properties, it implicitly does so. Moreover, of course, the order on appeal depends entirely on the existence and validity of the stipulations.

to Be Cont…

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