Gramercy Boys' Club Ass'n v. City of New York

Judgment, Supreme Court, Bronx County (Aldo Nastasi, J.), entered December 16, 1986, which assessed damages against defendants in the amount of $2,175,000, plus interest and costs, for the negligent demolition of a specialty building, is reversed, on the law, the facts and in the exercise of discretion, and the matter remanded for a new trial on the issue of damages only, without costs and disbursements, unless plaintiff stipulates, within 20 days of the date of the order to be entered hereon to reduce the verdict against defendants to the principal sum of $950,000, and to the éntry of an amended judgment in accordance therewith. By a prior judgment of the Supreme Court, New York County (Irwin Silbowitz, J.), entered April 5, 1985, defendants-appellants City of New York and Department of Buildings (collectively the City) were found liable for having negligently demolished, in 1981, a building owned by plaintiff-respondent Gramercy Boys’ Club Association, Inc. (Gramercy), a nonprofit corporation. At the time of the demolition, the building, located at 1637 Washington Avenue in The Bronx, had been vacant for nearly one year, due to insufficient funds to repair [366] extensive damage caused by vandals during a one-month vacation closing. Prior to the vandalism, Gramercy had, for nearly 25 years, used the facility to provide educational, social, and recreational services to neighborhood children. In this appeal, the City challenges the sum awarded to Gramercy as compensation for the loss of its building. As a threshold matter, we address whether the building was properly classified as a "specialty”. In Matter of County of Suffolk (C. J. Van Bourgondien, Inc.) (47 NY2d 507, 512), the court set forth criteria that must be met for such a classification, citing, inter alia, the structure’s unique and specific purpose, the special design by which the unique function is met, the lack of a market for, and sales of, such property, the appropriateness of the facility’s use for its special purpose at the time of its demolition, and the reasonable expectation that it would be replaced. The evidence presented by plaintiff’s expert, a civil and structural engineer specializing in unique and specialty property, established that the Gramercy Boys’ Club facility met these criteria. Originally designed and erected as a settlement house, the subject four-story brick building contained such features as a fully equipped stage with dressing rooms, stage lighting, and sound amplification equipment; a wood floor gymnasium used as a basketball court as well as for other games and activities; locker and shower rooms; a boxing ring; game rooms with ping pong and pool tables; music rooms and classrooms with blackboards; and a library. The building also had floors of inlaid tiles designed to be used for shuffleboard games, and marble stairways. Further evidence established that Gramercy used the building for its special purpose and that, although badly vandalized, the bulding remained appropriate for such use at the time of its demolition. In addition, relevant testimony made clear that Gramercy fully intended to replace the facility in order to continue its work. On this record, and in light of the principle that "[cjhurches, hospitals, clubhouses and like structures held by nonprofit agencies as centers for community service commonly fall within [the specialty] category” (Matter of Rochester Urban Renewal Agency [Patchen Post], 45 NY2d 1, 9), we conclude that the court properly deemed the demolished structure to have been a specialty building. Having determined that the building demolished was a specialty, we now turn to the appropriate method of valuation. [367] It is well established that because of its unique and specific function, a specialty property has "no readily recognizable market and [that] testimony as to a fair market price is not usually available”, for "[w]hile this property might be worth to the owners all that it cost, it would not be ’marketable’ * * * because there is no similar group in the area which would offer to buy the [property] for its reproduction value”. (Keator v State of New York, 23 NY2d 337, 339-340.) Thus, "the use of the fair market value approach becomes unworkable”, and the rule which has evolved is that value should be determined with reference to the cost of reproduction less depreciation (Keator v State of New York, supra, at 339), or, where appropriate, the cost of replacement less depreciation. (See, Matter of County of Suffolk [C. J. Van Bourgondien, Inc.], supra, at 511.) Replacement, rather than reproduction, of a building is particularly appropriate where, as here, the building has structural features which would be expensive to reproduce and are not necessary to the facility’s purpose. (See, Lapides v State of New York, 37 AD2d 755.) In the case at bar, plaintiff presented expert testimony solely with respect to the replacement, and not reproduction, value of the building. Defendants’ expert on this issue took the position that the demolished structure had no economic value whatsoever because it had been severely damaged by flooding and vandalism, and because its immediately surrounding area was largely depopulated. While we reject defendants’ assessment of "zero” value, we are equally troubled by plaintiff’s expert’s valuation of $2,115,000 at the time of the demolition. The record establishes that plaintiff’s building had, for nearly a quarter of a century, served as a facility which provided educational, social, and recreational services to young boys and girls. Although extremely vandalized at the time of its razing, the solid brick building was structurally sound, and possessed of its specialty components. However, the record also reveals that the damage which the building sustained during the nearly year-long period it was closed was severe and extensive. This damage included missing doors, radiators, pipes, and electrical fixtures; broken windows; ripped-out plumbing and wiring; and nonfunctioning boilers. In addition to the structure’s damaged state, the nature and value of surrounding realty are helpful in fairly assessing plaintiff’s loss. Defendants’ evidence established that the building’s immediate area had been largely depopulated, and [368] that only 10% of the housing which once stood within a 6-to-8-block radius was still in existence. Given all of these circumstances, we find the award to plaintiff of $2,175,000 for the loss of its building to be so grossly excessive as to shock the conscience of the court. (See, Matter of City of New Rochelle [Gucker], 305 NY 897.) Accordingly, the judgment is reversed and the matter remanded for a de novo trial on damages, unless plaintiff stipulates to a reduction to the principal sum of $950,000. Concur — Kupferman, J. P., Sullivan, Milonas and Kassal, JJ.