Court Holds Restrictive Covenant Provision Limiting Leasing of Units Was Unenforceable

Blue Island Development, LLC, and Posillico Development Company at Harbor Island, Inc. (collectively “Petitioners”), purchased land that had formerly been used as an oil storage facility and developed it into 172 waterfront condominium units.  This required a zoning change, which the Town of Hempstead granted subject to a restrictive covenant allowing Blue Island to sell the condos, but subsequent owners to sell the units for any purpose allowing by Town Law.  The Town later agreed to modify the covenant to allow Petitioners to rent 17 of the units for five years.  Petitioners applied to modify the restrictive covenant again to allow it to maintain 140 of the properties as rentals.  The application was denied, and Petitioners brought an action against the Town, challenging the town's denial. The Supreme Court denied the Town's motion to dismiss, and the Town appealed. The Appellate Division affirmed.  On remand, the Supreme Court denied Petitioners’ motion for summary judgment, and Petitioners’ again appealed.

On appeal, the Court found that Blue Island met its prima facie burden of showing that paragraph seven of the Declaration was of no actual and substantial benefit to the Town. In opposition, the Town failed to raise a triable issue of fact, as it offered no explanation to rebut this showing. Pursuant to RPAPL 1951(1), “a restrictive covenant shall not be enforced if, at the time enforceability of the restriction is brought into question, it appears that the restriction is of no actual and substantial benefit to the persons seeking its enforcement or seeking a declaration or determination of its enforceability.” Accordingly, the Court held that the Supreme Court erred in denying that branch of Blue Island's motion for summary judgment on the second cause of action declaring paragraph seven of the Declaration invalid and unenforceable pursuant to RPAPL 1951.

The case was Blue Island Development, LLC, v Town of Hempstead, 143 A.D.3d 656 (2d Dep’t 2016).

Northern District of New York Finds Claims Arising From Site Plan Application Unripe

Plaintiff made diverse claims that Defendant Town of Ballston (“Town”) used improper, discriminatory and unconstitutional means to thwart its efforts to construct a hot mix asphalt plant in the Curtis Industrial Park (“CIP”) in the Town. At its core, Plaintiff alleged Defendants opposed construction of a legal business under the Town's current zoning plan, and violated local laws and rules in an attempt to prevent the construction of same. As a result, Plaintiff was unable to build the project, and claimed damages. Plaintiff’s specific allegations include (1) Defendants discriminated against it by applying different standards to its project than to those of other similarly situated businesses; (2) the Town’s Planning Board deliberately prolonged consideration of its site plan application and refused, in bad faith, to process same, (3) the Town enacted an ordinance designed to delay or prevent its project, lied about the purpose of said ordinance, and refused to withdraw the ordinance despite public ally acknowledging its defects, forcing Plaintiff to litigate the issue, and (4) the Town purposefully delayed processing the site plan after the Supreme Court struck down the ordinance, and then passed a new ordinance with the same defects as the earlier ordinance.

Despite Plaintiff’s varied claims, the Court found that these allegations, even if taken as true, indicated that the case was not ripe for disposition. The Complaint stated Plaintiff applied for a permit to build an asphalt plant in the CIP, and all of Plaintiff's alleged injuries flowed from the Town's failure to approve that plan. Yet nothing in the Complaint indicated that the Town Zoning Board, let alone Zoning Appeals Board, ever ruled on the application, or that the application had been withdrawn. In addition, the state court decision that established a restraining order against the ordinance Plaintiff cited specifically directed the Town to continue processing the application. Ultimately, nothing in the Complaint indicated that any of Plaintiff’s efforts showed Plaintiff’s abandonment of the initial application or that an appeal of the initial denial had been completed. Accordingly, the court held the issue was not ripe for review.

The case was Dolomite Products Company, Inc. v. Town of Ballston, 2016 WL 5394711 (N.D.N.Y. September 27, 2016).  Please note that an appeal has been filed in this case.

Second Department Upholds Denial of Area Variance

Petitioners applied for a setback variance with the Town of Carmel Zoning Board of Appeals. When the application was denied, Petitioners brought an Article 78 proceeding to appeal the decision. The trial court denied the petition and dismissed the proceeding. Petitioners appealed.

In determining whether to grant an area variance, a zoning board must engage in a balancing test, weighing the benefit to the applicant against the detriment to the health, safety, and welfare of the neighborhood if the variance is granted.  In applying this test, the zoning board is not required to justify its determination with supporting evidence for each of the statutory factors, so long as its determination is rational.  Here, the ZBA performed the balancing test and found that granting the variances would produce an undesirable change in the character of the neighborhood and that the benefit sought by Petitioners could be achieved by other methods.  Accordingly, the Court ruled that the ZBA’s decision that the drawbacks outweighed the benefits to the petitioners had a rational basis and was supported by the record.

Petitioners also contended that the Board denying their application for an area variance was arbitrary and capricious because it had granted similar applications. “The fact that one property owner is denied a variance while others similarly situated are granted such variances, does not, in and of itself, indicate that the difference in result is due to impermissible discrimination or to arbitrariness.” Here, Petitioners failed to establish that the Board “reached a different result on essentially the same facts.” While the vice chairman of the ZBA arguably should have recused himself if he felt that he had any bias against Petitioners, there was no “proof that the outcome flowed from the alleged bias.”

The Court thus affirmed the lower court’s decision, holding that the ZBA had a rational basis for denying owners' the setback variance and that the denial of the area variance was not arbitrary and capricious.

The case was Matter of Harris v. Zoning Bd. of Appeals of Town of Carmel, 137 A.D.3d 1130 (2d Dep’t 2016).

Eastern District Denies Equal Protection and Retaliation Claims against Village

Plaintiff sought to build upon his property, which was subject to a restrictive covenant that protects his neighbors’ views of Oyster Bay.  Plaintiff brought claims under 42 U.S.C. § 1983 and state law against the Incorporated Village of Centre Island (“Village”), the Village's Board of Zoning Appeals (“BZA”), Deputy Mayor Lawrence Schmidlapp, the Village’s Board of Trustees (collectively, “the Village defendants”), and Laura Sweeney Chuba (“Chuba”), plaintiff’s neighbor and a member of the Village's Board of Trustees. Plaintiff alleged that the Defendants purposefully frustrated his efforts to seek zoning variances and building permits. The Village defendants and Chuba separately filed and were granted motions to dismiss. Plaintiff was then granted leave to file an amended complaint “to address the pleading deficiencies identified by the Court with respect to his substantive due process, equal protection, and First Amendment retaliation claims.”

For his substantive due process claim, Plaintiff claims the denial of his “as-of-right” application was arbitrary and capricious because his architect and the Village building inspector believed that the proposed construction did not violate the covenant. As the Court previously held Plaintiff plausibly alleged that his building plans did not violate the covenant, the Court focused on the second prong of a substantive due process claim: whether Plaintiff’s amended complaint plausibly alleged that the Village’s view that the covenant barred Plaintiff’s application was entirely baseless or in bad faith. The Court ruled it did not, and dismissed the claim.

Plaintiff’s Equal Protection claim similarly failed.  While Plaintiff asserted similarly situated applicants were treated differently, his assertions were conclusory and did not show “that the Village granted virtually identical applications submitted by other persons in comparable zoning districts.” The Court also rejected Plaintiff’s retaliation claim, holding that requesting a building permit and variance did not constitute protected speech. As Plaintiff failed to adequately plead a constitutional claim, the Court also held that he failed to plead a conspiracy claim. Having dismissed all federal constitutional claims, the Court declined jurisdiction over the remaining state law claims and dismissed the case.

The case was Gregory v Incorporated Village of Centre Island, 2016 WL 4033171 (EDNY July 27, 2016)

Second Department Holds Zoning Board Lacked Authority to Impose Durational Limits on Permit

Petitioners own property in a split-zone lot in the Town of North Hempstead.  The property had a restaurant within the Town's business district, and an adjoining parking lot that extends into the Town's residential district. The Zoning Board of Appeals (“ZBA”) granted Petitioners a permit pursuant to the Code of the Town of North Hempstead (“Town Code”) § 70–225(E) to continue use of the parking lot in the residence district for a period of five years. Petitioners commenced an Article 78 proceeding to annul the five-year durational limit. The Supreme Court denied the petition and dismissed the proceeding. Petitioners appealed.

On appeal, the Appellate Division, Second Department reversed, finding that the Board lacked the authority to impose a durational limit on a permit granted pursuant to Town Code § 70–225(E). Noting that conditions imposed by a zoning board of appealed must be authorized by the zoning ordinance, the Court held that as the Town Code did not explicitly provide the Board with the authority to impose durational limits upon permits granted pursuant to that section, it was improper for the Board to include a five-year durational limit. Thus, the Court annulled the condition.

The case was Citrin v Board of Zoning Appeals of the Town of North Hempstead, 143 A.D.3d 893 (2d Dep’t 2016).

Court Finds Code Enforcement Officer Rationally Concluded Bulk of Proposed Activities Was Not Activity Subject to Further Site Plan Review

The Town of Harpersfield Planning Board granted site plan approval for Respondent New York Safety Track LLC to operate a motorcycle safety training facility at a converted former airport. In January 2013, Safety Track was advised by Respondent Town of Harpersfield Code Enforcement Officer (“CEO”) that the races and other large events occurring at the track were not authorized uses pursuant to the site plan. Safety Track and the Planning Board then executed an agreement that “purported to outline Safety Track's approved land uses for May 1, 2013 to December 31, 2013.” The agreement was challenged in a combined CPLR article 78 / declaratory judgment action. The Supreme Court “annulled it and made declarations regarding the scope of Safety Track's permissible land uses.” During the pendency of this appeal, the court reversed the part of the judgment that made declarations regarding the uses permitted under the site plan approval.

Safety Track then requested a determination by the CEO whether specified activities at the track would require further site plan approval. The CEO declined to rule whether the activities were permitted under the terms of the January 2014 judgment, and found most would not require further review. Petitioners, a group of concerned landowners, commenced the instant proceeding to challenge the CEO's determination. The Supreme Court granted the petition annulling certain portions of the CEO's determination. Safety Track, respondent Mountain Top Airfield LLC, and the CEO appealed.

Respondents argued the Supreme Court erred in concluding that the CEO irrationally refused to take a position on whether the specified uses ran afoul of the January 2014 judgment. However, as the court subsequently reversed that part of its judgment, the CEO could not be faulted for failing to adhere to or otherwise interpret judicial declarations that no longer existed. Absent the January 2014 judgment, the court found nothing irrational in the CEO’s determination that the bulk of the proposed activities did not constitute a “change in the use” of the property or otherwise constitute activity that would be subject to further site plan review.  The Second Department thus reversed to the extent the petition had been partially granted, and dismissed the petition in its entirety.

The case was Ballard v New York Safety Track, LLC, 134 A.D. 3d 1322 (2 Dep’t 2015).

Second Department Restores Action by Citizen Taxpayers To Enjoin Defendant From Using Subject Property For Receipt Of “Land-Clearing Debris”

Plaintiffs were resident taxpayers of the Town of Southampton. In 2005, they commenced an action to enjoin Defendant, Sand Land Corporation, pursuant to Town Law § 268(2), from using its property, located in a residential district, for the annual receipt of “thousands of tons” of clearing debris, including trees, brush, stumps, and leaves; the processing of such clearing debris into topsoil and mulch; the storage, sale, and delivery of mulch, topsoil, and wood chips; and the receipt, processing, and/or disposal of concrete, demolition debris, asphalt pavement, brick, rock, and metals. Plaintiffs claimed this violated the Town’s zoning laws.  In 2012, the Zoning Board of Appeals (“ZBA”) separately ruled in that Defendant’s use was not a pre-existing nonconforming use.  The lower court dismissed the instant action, and Plaintiffs appealed while Defendant’s CPLR Article 78 challenge to the ZBA's determination was pending. During the pendency of this appeal, the lower court granted Defendant’s petition, finding that the processing of brush, trees, stumps, leaves, and other clearing debris, and the sale of topsoil, mulch, and wood were not legal preexisting nonconforming uses.

Subsequent to that holding, Plaintiffs acknowledge that with respect to these specific uses, because the local officials found no zoning violation, there was no “official lassitude or nonfeasance in the enforcement of zoning laws which citizen taxpayers may overcome” and no action pursuant to Town Law § 268(2) could be maintained. However, the ZBA made no such “legal pre-existing nonconforming use” finding with regard to the use of the property for the processing of trees, brush, stumps, leaves, and other land-clearing debris into topsoil or mulch. Since there was no finding by the zoning officials that these uses were legal, the court found that there was no reason why either the Town or the citizen taxpayers could not seek to enforce compliance with the zoning code in an action brought pursuant to Town Law § 268(2). As to the second cause of action, since Defendant made no claim that Plaintiffs could not prove special damages, and Defendant offered no other ground for dismissing the common-law claim in its entirety. Accordingly, the dismissal of these two causes of action was reversed.

The case was Phair v. Sand Land Corporation, 137 A.D.3d 1237 (2d Dep’t 2016).

Appellate Division Finds 12-Story Budget Hotel To Be Highest And Best Use of Condemnee’s Property Following Rezoning

Claimant, 730 Eq. Corp., owned a 20,738 square foot, irregularly shaped, vacant parcel of real property in Brooklyn.  The property was in an M1–1 manufacturing district, and had previously been improved with a gas station. The property was subject to a long-term lease with Amoco, which intended to build a gas station on the property. In December 2009, New York State Urban Development Corporation d/b/a Empire State Development Corporation (“ESDC”), used eminent domain to take the subject property, among others, for the Atlantic Yards project. The trial court granted the condemnation, and awarded Claimant $6,906,000 as just compensation for the taking. Claimant appealed from the award as being inadequate (for reference, the trial appraisals were $20 million for Claimant and $2.8 million for ESDC).

In making its award, the trial court determined that Claimant had established that, absent the project, there was a reasonable probability that the property would have been rezoned to C6–2A. The court found many of the area’s buildings had been converted to commercial and residential use, and noted that New York City policy was to rezone underutilized industrial sites for commercial or residential development. Furthermore, the lease on the property did not prohibit finding a different highest and best use than contemplated in the lease, as the property must be valued at “its highest and best use on the date of the taking, regardless of whether the property is being put to such use at the time.”

On appeal, the Appellate Division, Second Department held that the trial court’s determination that a 12–story budget hotel would be legally and physically possible, and financially feasible, was supported by the record. Specifically, the Court cited testimony by ESDC’s own expert regarding alternate designs for such a hotel that would meet the zoning requirements, and evidence of an increased demand for and development of hotels in Brooklyn around the vesting date. It further held that the trial court need not accept the opinions of ESDC’s experts on the financial feasibility issue. Accordingly, the Court held that the Supreme Court properly rejected ESDC’s appraisal and based its award on Claimant’s appraisal with such adjustments as the evidence supported.

The case was 730 Eq. Corp. v. New York State Urb. Dev. Corp., 37 N.Y.S.3d 599 (2d Dep’t 2016).

Appellate Court Upholds Determination That Nonconforming Use Was Discontinued

Petitioner OTR Media Group (“Petitioner”) applied to the New York Department of Buildings (“DOB”) to register a sign as a nonconforming advertising sign.  DOB denied the application, finding it was a nonconforming use that had been discontinued for more than two years after being replaced by an accessory sign in 1981. This determination was subsequently upheld by a resolution of the Board of Standards and Appeals of the City of New York (“BSA”).  In response, Petitioner brought an Article 78 proceeding against the BSA to annul the resolution.  The trial court denied the petition, and the Petitioner appealed.

The Appellate Division, First Department found that the BSA’s determination was supported by substantial evidence, noting the two-year discontinuance of the nonconforming use. Furthermore, the Court found there was no basis to disturb the BSA’s decision to discredit affidavits submitted by Petitioner, which contradicted the documents submitted in support of the accessory sign application granted by DOB in 1981. Accordingly, since the record showed that the BSA's determination was supported by substantial evidence and had a rational basis, the court held that petitioners were not entitled to a hearing pursuant to CPLR 7804(h).

The case was OTR Media Grp. v. Bd. of Standards & Appeals of City of New York, 35 N.Y.S.3d 76 (1st Dep’t 2016)

Second Circuit Upholds Regulation Prohibiting Illuminated Peace Sign in Upper West Side Window

Plaintiff was fined pursuant to a City of New York Zoning Resolution for affixing an illuminated peace symbol to the exterior frame of the window of her seventeenth-floor condominium unit on the Upper West Side of Manhattan.  Plaintiff sued the City, claiming the Zoning Resolution and fine thereunder violated her right to free speech.  In a previous decision, the Second Circuit held that Plaintiff lacked standing to challenge the regulations as content-based, but remanded the case to address whether the zoning regulations “constituted an unduly restrictive time, place, [or] manner restriction on speech.” See Vosse v. City of New York, 594 F. App'x 52, 53 (2d Cir. 2015)). On remand, the district court rejected Plaintiff’s argument that the regulations, even if content-neutral, still do not pass constitutional muster due to the manner of the restriction. See Vosse v. City of New York, 144 F. Supp. 3d 627 (S.D.N.Y. 2015).

In the instant case, the Second Circuit affirmed the lower court’s finding that the City Zoning Resolution was a content-neutral restriction on speech that was narrowly tailored to serve a significant government interest, namely the City’s interest in “maintaining an aesthetically pleasing cityscape and preserving neighborhood character.” The Court held that the Resolution left ample forms of communication available, as the height restriction in the Resolution does not prohibit non-illuminated, non-commercial signs.  Moreover, both sides agreed that the Plaintiff was free to display the same sign in her window so long as it was not illuminated.  Finally, while the Court acknowledged Plaintiff’s argument that an unilluminated sign would be harder for passers-by to see at night, it noted that “the First Amendment does not guarantee the right to communicate one's views at all times and places or in any manner that may be desired.” Heffron v. Int'l Soc'y for Krishna Consciousness, Inc., 452 U.S. 640, 647 (1981).

The case was Vosse v The City of New York, 2016 WL 6037372 (2d Cir. October 14, 2016)

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