In Madison Partners, LLC v. Louis Martin Hubrecht , Madison filed suit (based on the terms of a indemnification clause which appeared in the parties' lease) to recover a transfer tax payment it had made to the City of New York. [Hubrecht agreed to pay all property transfer taxes and to indemnify Madison if the latter remitted payment (in the event of Hubrecht's failure to do so).]
Hubrecht challenged the assessment, and when the New York City Department of Finance (DOF) rejected the claim that no tax was owed, Hubrecht appealed to the New York City Tax Appeals Tribunal (TAT) , by way of a proceeding that was then open and pending.
Hubrecht's failure to provide Madison with copies of the DOF 's decision, or the TAT filings, forced Madison to pay the transfer tax to the City (in order to protect its leasehold interests), and triggered the reimbursement claim
When Madison asked the New York County Supreme Court to decide the case in its favor, Hubrecht countered with a request that the lawsuit be stopped or "stayed" pending resolution of Hubrecht's TAT appeal. After Madison's request was granted, and Hubrecht's was denied, an appeal to the Appellate Division, First Department, ensued.
Since it was indisputable that Hubrecht had an obligation to pay the tax, and that Madison was entitled to protect its interests by remitting payment and seeking restitution, the AD1 concluded that relief had been appropriately awarded in Madison's favor.
How taxing was that?
To download a copy of the Appellate Division's decision, please use this link: Madison Partners, LLC v. Louis Martin Hubrecht