Property Rights Foundation of America®

Speech from Proceedings of the Seventh Annual New York Conference
on Private Property Rights
(2003)

PROPERTY RIGHTS

The Court of Appeals of New York

By Stuart R. Shamberg

 

In 2002 the Court of Appeals sent a very clear message to all of the courts in New York that they were not to substitute their decision for the determination of the local zoning board if there was any evidence in the administrative record to support its decision.

The three cases involved applications by property owners for a use variance, an area variance and a special permit. These were routine legal issues which have been decided in hundreds of cases in the New York courts and had no statewide significance. In each instance, the Court of Appeals reversed the lower court's decisions and reinstated the Zoning Board's denials. Our firm represented the plaintiff in the case of P.M.S. Assets Ltd. v. The Zoning Board of Appeals of the Village of Pleasantville, 98 N.Y.2d 683, 774 N.E.2d 204 (2002). Our client, the owner and operator of an electrical lighting contracting business purchased a building in the Village of Pleasantville to relocate his business. The building had a long history of being a preexisting, nonconforming use in a modest residential neighborhood that had grown up around it. The building resembled a stone fortress and had been utilized since 1921 for storage and warehouse purposes and for an office. Portions of the building had been leased out to contractors and other businesses who conducted their businesses from the building.

Prior to purchasing the building, our client, with the prior owner, went to the Building Inspector and discussed the long history of the use of the building and the use to which the building was to be utilized by the purchaser. Our client explained to the Building Inspector that he was paying a huge sum of money for the building, that he would expend more than $250,000 in improvements, and that he would not purchase the building or undertake to make the improvements unless he received a letter from the Building Inspector saying that his use was a continuation of the legal nonconforming use of the warehousing and storage business that had been conducted in the building. The Building Inspector issued such a letter, issued a building permit for the improvements, and issued a Certificate of Occupancy to our client. 80 percent of the inventory that the client stored in the building was there for a period of more than three years.

Approximately one year later, the neighbors complained that the contractors' trucks, which arrived early in the morning, were an extreme nuisance and the Building Inspector, under pressure from the neighbors, reversed his decision and issued a violation saying that the use of the building no longer complied with the prior legal nonconfonming use.

Our client applied to the Zoning Board of Appeals for a use variance and also an interpretation from the Zoning Board that its use of the building was legally consistent with the prior nonconforming use.

The Zoning Board of Appeals denied both applications and we commenced an Article 78 in the Supreme Court of Westchester County. The Supreme Court reversed the Zoning Board of Appeals on both the interpretation of the ordinance denying that our client's use was permitted under the prior nonconforming use of the building, and reversed on the grounds that our client had proved that he was entitled to a use variance. The Appellate Division affirmed the decision in the Supreme Court that the use was permissible under the legal nonconforming character of the building and did not decide the issue of the use variance. The Court of Appeals reversed in a memorandum decision in which they did not even discuss the equities of the case and merely stated that:

In this case, there is record evidence supporting the Board's conclusion that the current use of the warehouse is not qualitatively similar to the previous use and, consequently petitioner impermissibly exceeded the scope of the prior nonconforming use ... The Board could rationally find that the warehouse is no longer utilized for commercial moving and storage purposes because petitioner now uses the building in connection with the operation of its lighting design and installation business. Accordingly, the Zoning Board's determination as to nonconforming use should not have been disturbed.

The message that the Court was giving to the lower courts was quite clear, and the Appellate Division then reversed the lower court and upheld the Zoning Board's decision to deny the use variance.

The second case is in the Matter of Phillippe Ifrah v. W. Charles Utschig, Jr., et al., 98 N.Y.2d 304, 774 N.E.2d 732 (2002). In this matter, the plaintiff sought four area variances in a residential district from the Zoning Board of Appeals of the Town of Harrison. Plaintiff proved that the two lots for which he sought the variances were larger than 33 of the 39 lots within a 500 foot radius of his parcel. The Zoning Board of Appeals denied the application on the grounds that the creating of two substantially substandard lots would have a significant impact on the character of the neighborhood. Neighbors argued all the usual objections to the variances — increased traffic, increased off-site flooding, and a challenge to the architectural integrity of the neighborhood. The Zoning Board held that the last was one of the factors in denying the application in spite of the fact that Harrison has an Architectural Board of Review which reviews all applications before a building permit may be issued.

The owner filed an Article 78 proceeding in the Supreme Court of Westchester County which was dismissed. The owner then took an appeal to the Appellate Division, Second Department, which decided to reverse the decision of the Zoning Board of Appeals on the grounds that a substantial majority of the lots in the immediate neighborhood were smaller than the lots applied for by the plaintiff.

The Court of Appeals unanimously reversed the Appellate Division citing a number of factors that the Zoning Board of Appeals considered in its denial in spite of the fact that a substantial majority of the lots in the immediate neighborhood were smaller than the lots applied for.

The third case is in the Matter of Retail Property Trust v. Board of Zoning Appeals of Town of Hempstead; Incorporated Village of Garden City, Intervenor; and Hardy F. Glass, Inc., Intervenor-Respondent, 98 N.Y.2d 190, 774 N.E.2d 727 (2002). The plaintiff in this case sought a special exception permit to construct a three story Saks Fifth Avenue department store containing approximately 150,000 square feet and to erect an additional level of outdoor parking deck of 187,000 square feet and the construction of a two level retail area connecting the mall to Saks of approximately 34,000 square feet, a total expansion of approximately 371,000 square feet, Roosevelt Field Mall, which is the largest shopping mall in the center of Long Island. The Board of Zoning Appeals of the Town of Hempstead denied the application on the grounds that the plaintiff had not met the standards of a special exception and that the additional construction would create undue traffic congestion and a hazard to the nearby elementary school, in addition to noise aid other environmental impacts. The Supreme Court of Nassau County upheld the Zoning Board's determination.

The Appellate Division, Second Department, unanimously reversed the Supreme Court on the grounds that the plaintiff s expert testimony established that none of the environmental impacts would occur and that the opinions as to the environmental impact were the general conclusions of the neighbors and those opposing the expansion of the mall. The Court of Appeals unanimously reversed the Appellate Division, Second Department, and sent the case back to the Second Department to decide issues which the Court of Appeals did not decide and the Appellate Division getting the message denied the property owner's request on the other issues.

In Matter of Tall Trees Construction Corp. v. Zoning Board of Appeals of the Town of Huntington, 97 N.Y.2d 86, 761 N.E.2d 565 (2001), in an application for an area variance, a quorum of the Zoning Board of Appeals was in attendance (four members of a seven member board). The vote on the application was two in favor and two against. The Court of Appeals decided that in such situations a tie vote on an application when a four member quorum of the board is present is the equivalent of a denial of the application. The Court of Appeals considered General Construction Law 41 and Town Law Section 267-a as the statutes which govern this procedure. Under the General Construction Law, a majority of the members of a public board constitute a quorum and "not less than a majority of the whole number may perform and exercise such power, authority or duty." Town Law § 267-a(4) provides that "the concurring vote of a majority of the members of the zoning board of appeals shall be necessary to reverse any determination of any administrative official charged with the enforcement of any zoning ordinance or local law or to grant a use variance or area variance." Interestingly enough, in this case, the Court of Appeals reversed the denial by the Zoning Board of Appeals and granted the area variance.

There is some good news, however.

In Matter of Edward S. Gordon v. Edward T. Rush, et al., 100 N.Y.2d 236, 792 N.E.2d 168 (2003), the plaintiff requested permission from the Town to install shore hardening structures, steel bulkheads, on the seaward toe of a primary dune to prevent further erosion. The plaintiff asked that this project be undertaken as an emergency measure so that they could build a house on the property. The Town of South Hampton had a Town of South Hampton Coastal Erosion Hazard Board of Review to review the issuance of permits for such a structure. Since the Department of Environmental Conservation of the State of New York had jurisdiction over bulkheads built on the seaward side of the land, it also had jurisdiction over the issuance of the permits and the administrator of the CEHA requested that the DEC act as lead agency in a coordinated review under SEQRA (State Environmental Quality Review Act). DEC issued a negative declaration for the project. The plaintiff then changed the design of the project to build the bulkheads on the leeward side of the dune and again applied for permits. Under the local statute the Coastal Erosion Hazard Board of Review had jurisdiction over the issuance of such permits and made a positive declaration under SEQRA to compel the plaintiff to prepare a DEIS (Draft Environmental Impact Statement). The plaintiff then brought an Article 78 challenging the requirement to prepare a draft DEIS and the Court of Appeals held that the Town Administrator had waived his right to have jurisdiction in the environmental review process and, since DEC had conducted a coordinated review and came forth with a negative declaration, the town could not compel the plaintiff to prepare a DEIS.

There is also some bad news on the environmental law front. In the case of Matter of Bath Petroleum Storage Inc. v. New York State Department of Environmental Conservation, 289 A.D.2d 883 (2002), the Appellate Division of the Fourth Department reversed the Supreme Court in Livingston County, which held that the continual demand for additional information by DEC and its refusal to review an application for a SPDES (State Pollutant Discharge Elimination System) permit required the matter to be sent back to the DEC for an adjudicatory hearing to be conducted by a different administrative law judge, who refused to grant a hearing in the first place. In this case, the applicant filed an application for the renewal of the SPDES permit which had been renewed on two separate occasions and was about to expire in September of 1999. The DEC continued to demand additional information after each submission made by the applicant and included in its demand conclusions that were contrary to the facts of the case. The applicant requested an adjudicatory hearing to determine whether or not it had fulfilled its requirements and for review of its application. The administrative law judge held that no hearing was necessary and the permit expired under the safe harbor provisions which hold that while a permit is considered for renewal, the prior permit continues to be in existence. The Supreme Court of Livingston County, after reviewing in detail all of the submissions made by the applicant, held that the DEC had acted arbitrarily and capriciously in denying an adjudicatory hearing. The Fourth Department, however, reversed the Supreme Court and held as follows.

"The court erred in granting the petition in part. It had settled that in a proceeding seeking judicial review of an administrative action, the court may not substitute its judgment for that of the agency responsible for making the determination, but must ascertain only whether there is a rational basis for the decision or whether it is arbitrary and capricious."

The Court of Appeals refused to hear an appeal and the applicant lost its SPDES permit. Here is a perfect example where the message given by the Court of Appeals back in July of 2002 was heeded by the Appellate Division, Fourth Department.

In the Matter of Jack Cohen v. Board of Appeals of the Village of Saddlerock, and in the Matter of Frank Russo v. Irving Black, et al., 100 N.Y.2d 395 (2003), consisting of the Board of Appeals of the Village of North Hills, the Court of Appeals sought review of two companion cases in order to determine whether or not local municipalities could supersede the standards of Village Law Section 7-712b(3) in setting forth different and more stringent standards for the review of area variance applications. The Court of Appeals upheld the decision of the Supreme Court of Nassau County and the Appellate Division, Second Department, in both cases in holding that the standards set forth in Village Law Section 7-712-b(3), which set the standards of review for area variances evidence the intent of the State legislature to preempt the field of area variance review from local municipality standards. All three courts held that the State legislature intended Village Law § 7-712b to preempt enactment of conflicting laws in setting the standards for area variances. Section 7-712-b(3) of the Village Law states in part that:

In making its determination, the Zoning Board of Appeals shall take into consideration the benefit to the applicant if the variance is granted as weighed against the detriment to the health, safety and welfare of the neighborhood or community by such a grant.

This section of the Village Law then sets forth five standards by which the Zoning Board of Appeals shall make a determination in balancing the equities set forth above. The local ordinances in these two cases required the applicant to prove "practical difficulty" or "undue hardship" as a standard for obtaining the area variance. The plaintiffs in both cases argued that the Board of Appeals in both instances should have used the "balancing test" contained in Village Law § 7-712-b(3)(b), which preempted the two previous standards when the State Legislature enacted that statute. The Boards contend that the standards contained in the local zoning laws are authorized by the supersession power granted in the Municipal Home Rule Law and further argued that Village Law § 7-712 merely represented an effort by the Legislature to clarify and codify various common law requirements for area variances which existed at the time of its enactment.

Matter of John L. Karedes v. Michael E. Colella, as Mayor of Village of Endicott, 100 N.Y.2d 45, 790 N.E.2d 257 (2003).

There is a long line of cases in New York that states that a municipal board may not contract for professional services beyond its term limiting that board's ability to bind future boards ability to hire professionals such as accountants, lawyers, architects and engineers, etc. There is also the question in this case as to whether the Village was acting in a governmental or proprietary interest in contracting for the management of a golf course which it owned.

In March of 1996, the Village of Endicott entered into a contract with Mr. Karedes to be the general manager of a golf course owned by the Village. The contractor afterwards extended until March of 2000. Mr. Karedes then sent a letter asking the Village Board to extend his contract for another four years, and on March 14, 2000, the trustees voted four to two to approve a four year extension of the Karedes contract. The mayor refused to sign the contract. Karedes commenced an Article 78 proceeding to compel the mayor to sign the contract on December 27, 2000. In the Article 78 proceeding he also asked that the contract be declared valid and enforceable against the Village. The Supreme Court declared that the mandamus action was time-barred as more than four months had elapsed from the refusal of the mayor to sign the agreement and the commencement of the action. However, the Supreme Court converted the Article 78 proceeding into an action for a Declaratory Judgment.

The Supreme Court held that the mayor had, under the Section of Village of Law, an absolute obligation to sign the contract. It also held that the Plaintiff had a right to seek the court's validation of the contract as the statute of limitations under a declaratory judgment action in a contract dispute is six years. The court held that the limitation on a municipal board's ability to contract for professional services beyond its term was limited to governmental functions by the municipality and not to proprietary functions. The court in this case held that the operation of the golf course was a proprietary action in the regular course of business and was not a governmental function and upheld the validity of the contract.

The Appellate Division for the Third Department affirmed the dismissal of the Article 78 mandamus proceeding as being time barred and upheld the determination that an action for a declaratory judgment on the contractual rights was not barred by the statute of limitations. The Appellate Division, however, ruled that there is no distinction between a contract for precisely governmental services or a proprietary contract for running a business and that the Village Board could not enter into a contract to bind future boards beyond the term of the members of the board who voted for the contract and declared the contract to be null and void and unenforceable.

The Court of Appeals reversed. The court held: "The term limits rule prohibits one municipal body from contractually binding its successors in areas relating to governance unless specifically authorized by statute or charter provisions to do so . . . elected officials must be free to exercise legislative and governmental powers in accordance with their own discretion and ordinarily may not do so in a manner that limits the same discretionary right of its successors to exercise those powers . . . the function of this Club for many years as a private facility and the Village's use of the club to generate revenue including its various rental agreements, signal its operation as a business enterprise." The court concluded that the Village Board of Trustees was acting in its proprietary capacity in contracting with Karedes for management of the club and held that the Village was bound by the contract.

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