Opinion
601051/05.
Decided February 3, 2006.
Plaintiffs, East Sixties Property Owners Association, Inc., Samuel F. Lek, and Helen Roosevelt, move, by order to show cause, for a preliminary injunction directing the defendants to cease their commercial operations at the 218 East 61st Street property because such commercial operations allegedly violate recorded restrictive covenants as well as applicable New York City zoning regulations. Alternatively, plaintiffs seek the following provisional relief, pending a determination on the merits: (i) an order directing expedited discovery to be followed by an expedited trial; and ii) an order directing the segregation of all revenue, proceeds and profits arising from defendants' allegedly unauthorized commercial use of the property into an attorney's escrow account.
Defendant, Jak Cohane (defendant or Cohane), cross-moves, pursuant to CPLR 2213 and CPLR 3211 (a) (1), (2), (3), (5), and (7), for an order dismissing the action in its entirety, and for such other and further relief as the court may deem just, proper and equitable.
Defendants Paul Tannenbaum, D.D.S., Susan Karabin, D.D.S., P.C., Susan Karabin D.D.S., Edward Gottesman, D.D.S., and Jackie Nussbaum, D.D.S. (collectively, dental group defendants), cross-move, pursuant to CPLR 3211 (a) (1), (2), (3), (5), and (7), for an order dismissing the complaint in its entirety. They also seek an order granting a preliminary and permanent injunction enjoining plaintiffs from instituting any further challenges or filing any further complaints with any court or administrative agency concerning defendants' use of the subject premises without first seeking leave of the court; pursuant to 22 NYCRR 130-1.1, assessing sanctions against plaintiffs in an amount no less than the costs, including attorneys' fees incurred by plaintiffs; and for other such relief as the court deems just and proper. While defendant Robert Gottsegen, D.D.S., has retired from the dental practice and does not participate in these proceedings, the court deems him to have joined in this cross-motion, as the same underlying issues are involved.
After the parties' lengthy adjournments, the motion and cross-motions were submitted to this court on December 19, 2005.
Plaintiff, East Sixties Property Owners Association, Inc., is a not-for-profit corporation, organized for the purpose of preserving and protecting, among other things, the allegedly exclusively residential nature of the neighborhood on 61st and 62nd Streets between 2nd and 3rd Avenues, known as the "Treadwell Farm Historic District." Plaintiff Samuel F. Lek is a member of the Homeowners Association, and the owner of a residence located at 212 East 61st Street, New York, New York, within the Treadwell Farm Historic District. Plaintiff Helen Roosevelt is a director and member of the Homeowners Association and the owner of a residence located at 235 East 61st Street, New York, New York, within the Treadwell Farm Historic District.
Defendant Jak Cohane is the owner of the first two stories (also referenced as the basement and first floor) of a four-story brownstone townhouse (the brownstone) located at 218 East 61st Street, within the Treadwell Farm Historic District. Plaintiffs allege that Cohane leases the basement and first floor of the brownstone to several dentists: Dr. Paul Tannenbaum, Dr. Susan Karabin, Dr. Robert Gottsegen, and Dr. Jackie Nussbaum to operate their respective dental practices. Plaintiffs allege that the dental practices are a commercial use of the property that is prohibited by recorded restrictive covenants dating back to 1868, as well as by the applicable zoning regulations. Plaintiffs contend that, pursuant to the restrictive covenants, all real estate located within the Treadwell Farm District is limited to exclusively residential use.
Plaintiffs allege that the historic restrictive covenants encumbering this area, which were recorded in 1868, provide in pertinent part as follows:
[The] several parties are desirous of making said lots of land desirable places for residence and of preventing any nuisance or objectionable business from being created on any part of said lots of land. . . .
Therefore, the parties to these presents, in consideration of premises and one dollar, covenant and agree . . .
That no . . . business or occupation known as nuisances in the law or which may be dangerous or offensive to the neighboring inhabitants shall ever be made, erected or permitted on said lots of land.
The complaint alleges that the defendants' commercial use of the restricted property, as an "Integrated Multi-Story Medical Facility" is "offensive and objectionable to the neighboring inhabitants of the Treadwell Farm Historic District" and violates the language of the restrictive covenants.
The complaint further alleges that defendants' use of the property independently violates New York City zoning laws, since the Treadwell Farm Historic District is located within an area zoned for residential use by its inhabitants. Although § 12-10 of the New York City zoning laws provides a "home occupation exception" to the relevant zoning regulations (New York City Zoning Resolution § 12-10 defines "home occupation" as permitting commercial professional offices, such as medical offices, that do not occupy more than 25% of the total floor area of a residential dwelling, plaintiffs argue that this exception is unavailable to defendants, since none of the defendants has ever used the "second story," i.e., the first floor of the building, as a "primary residence" and because defendants have failed to comply with the applicable floor area requirements of the "home occupation exception" to the relevant zoning regulations.
In their first cause of action, plaintiffs request an order granting a permanent injunction, based on the "Historical Restrictive Covenants" allegedly prohibiting the commercial use of the restricted property by the defendants as an "Integrated Multi-Story Medical Facility" and for other impermissible commercial purposes. In their second cause of action, plaintiffs request an order granting a permanent injunction, on the independent ground of enforcement of the New York City zoning laws. In their third cause of action, plaintiffs request that the court impose a constructive trust on all business revenue, funds, proceeds and/or other compensation received by defendant Cohane, which shall be placed into a court-ordered escrow account. In their fourth cause of action, plaintiffs request that the court impose a constructive trust on all business revenue, funds, proceeds and/or other compensation received by defendants Tannenbaum, Karabin, Gottesman, and Nussbaum, which shall be turned over into a court-ordered escrow account. In their fifth cause of action, plaintiffs request a money judgment against all defendants, jointly and severally, for legal fees, expenses and damages incurred by plaintiffs as a result of the allegedly illegal commercial use of the property.
Plaintiffs also move, by order to show cause, for a preliminary injunction directing that the defendants cease their commercial operations as violative of the recorded restrictive covenants, as well as the relevant zoning regulations. In the alternative, plaintiffs move for provisional relief: an order directing expedited discovery, to be followed by an expedited trial; and an order directing the segregation of all revenue, proceeds and profits arising from the allegedly unauthorized commercial use of the property, into an escrow account.
In their description of the circuitous, switch back procedural path of this matter through the Departmental of Buildings and the Environmental Control Board, plaintiffs concede that a previously placed violation has been removed, after a hearing before the Environmental Control Board. This administrative determination, which determined that defendants' use of the premises is not violative of the relevant zoning regulations or the restrictive covenants, has not been challenged.
Defendant Cohane cross-moves, pursuant to CPLR 2213 and 3211 (a) (1), (2), (3) (5) and (7), for an order dismissing the complaint in its entirety. Defendant argues, inter alia, that plaintiffs' claims fail to state a cause of action. Defendant contends that, insofar as plaintiffs seek a review of the determinations by the Department of Buildings and the Environmental Control Board, plaintiffs' remedy is an administrative appeal. Having failed to challenge the various administrative determinations, defendant argues that plaintiffs may not seek to juridically relitigate these issues at this juncture, since they would be barred by the statute of limitations and issue preclusion.
In his affidavit submitted in support of the cross-motion, defendant Cohane states that he owns the basement and first floor of the subject brownstone. After he retired from the dental profession in 1996, he leased this space to the other defendants in this action to be used as a residence and a dental office. No changes to the exterior of the townhouse were made by Cohane or by any of the other defendants. Cohane states that there is a small, discreet brass plate on the exterior of the building, which lists the names of the individuals in the dental group.
The dental group defendants also cross-move, pursuant to CPLR 3211 (a) (1), (2), (3), (5), and (7), for an order dismissing the complaint in its entirety, and for a preliminary and permanent injunction enjoining plaintiffs from instituting any further challenges or filing any further complaints with any court or administrative agency concerning defendants' use of the subject premises without first seeking leave of the court. They also cross-move, pursuant to 22 NYCRR 130-1.1, for an order assessing sanctions against plaintiffs in an amount no less than the costs, including attorneys' fees, incurred by defendants in connection with plaintiffs' allegedly frivolous conduct.
In cross-moving to dismiss the complaint in its entirety, defendants argue that plaintiffs are bound by previous administrative determinations, which found that the existence of the dental practice on the first floor is authorized, as well as by their own concession that medical offices are permitted in the basement level of the building. Defendants also argue that plaintiffs' third and fourth causes of action seeking the imposition of a constructive trust is frivolous and sanctionable. Defendants urge that the court enjoin plaintiffs from any further interference with their lawful use of the premises.
Plaintiffs in their opposition to defendants' cross-motions to dismiss (and apparently represented by different counsel), essentially repudiate the underpinnings of their motion for a preliminary injunction by stating, in a footnote contained in the affidavit of Samuel F. Lek: "Pursuant to their Order to Show Cause, Plaintiffs initially sought a preliminary injunction directing Defendants to cease their commercial operations at 218 East 61st Street.' Plaintiffs withdraw that request and now seek an injunction merely enjoining Drs. Tannenbaum, Karabin, Gottesman and Nussbaum from adding any additional doctors to their periodontal practice during the pendency of this lawsuit". In a subsequent footnote contained in the same affidavit, plaintiffs elaborate: "As discussed above, having had an opportunity to further reflect on the situation, Plaintiffs withdraw their request that the Defendant be preliminarily directed to cease their commercial operations' and now seek an injunction solely enjoining the Dentists from adding any additional doctors to their periodontal practice during the pendency of this lawsuit".
Plaintiffs maintain that the Environmental Control Board's determination that defendants' use of the premises did not violate relevant zoning laws, is not a final and binding determination since the Department of Buildings inspector was not present at the hearing. Moreover, plaintiffs argue that they could not appeal the administrative determination because they were not parties to the proceeding and, therefore, did not have standing to challenge the agency's determination.
Discussion
In the context of a CPLR 3211 motion to dismiss, the pleadings are necessarily afforded a liberal construction ( see Leon v. Martinez, 84 NY2d 83). Indeed, the court must accord plaintiffs "the benefit of every possible favorable inference" ( Leon v. Martinez, 84 NY2d at 87; see also Rovello v. Orofino Realty Co., 40 NY2d 633, 634). "[B]are legal conclusions as well as factual claims flatly contradicted by the record are not entitled to any such consideration" ( Mayer v. Sanders, 264 AD2d 827, 828 [2nd Dept 1999]). To prevail on a motion to dismiss based on documentary evidence, however, the documents relied upon must resolve all factual issues as a matter of law and definitively dispose of plaintiff's claims ( Bronxville Knolls, Inc. v. Webster Town Ctr. Partnership, 221 AD2d 248 [1st Dept 1995]; Fern v. International Bus. Machs. Corp., 204 AD2d 907 [3rd Dept 1994]).
The law has long favored free and unencumbered use of real property, and covenants restricting the use of land are strictly construed against those seeking their enforcement "because these covenants are contrary to the general public policy in favor of the free and unobstructed use of real property" ( Kew Forest Neighborhood Assn., Inc. v. M K Mgt., LLC, 12 AD3d 569, 569 [2nd Dept 2004] [citations omitted]; see also Witter v. Taggart, 78 NY2d 234, 237); Ludwig v. Chatauqua Shores Improvement Assn., 5 AD3d 1119 [4th Dept 2004]).
Therefore, a party seeking to enforce a restrictive covenant "must prove, by clear and convincing evidence, the scope, as well as the existence, of the restriction" ( Greek Peak, Inc. v. Grodner, 75 NY2d 981, 982). "The presence of an ambiguity in a restrictive covenant . . . requires the court to construe the covenant to limit, rather than extend, its restriction" ( Turner v. Caesar, 291 AD2d 650, 651 [3rd Dept 2002]). Moreover, where the language used in a restrictive covenant is equally susceptible to two interpretations, the less restrictive interpretation must be adopted ( see Bear Mtn. Books v. Woodbury Common Partners, 232 AD2d 595 [2nd Dept 1996]). The court finds that plaintiffs' evidence fails to meet this burden warranting the enforcement of the subject restrictive covenants.
The two restrictive covenants at issue in this action, recorded in the Civil War era, specifically prohibit the use of the premises as a slaughterhouse, smith shop, brass foundry, tannery, brewery, distillery, circus or menagerie, "or any other noxious or dangerous trade or business" or "any establishment, business or occupation known as nuisances in the law or which may be dangerous or offensive to the neighboring inhabitants". The professional medical practice at issue here cannot be considered a "noxious, dangerous or offensive trade or business" ( Kew Forest Neighborhood Assn. v. M K Management, 12 AD3d at 570).
Indeed, plaintiffs have conceded that medical facilities are allowed to exist in the basement of the subject property, pursuant to the relevant zoning regulations, thereby vitiating their argument that such use would violate the restrictive covenants. Given the limited scope of the prohibition, coupled with the well-settled legal principle that restrictive covenants are to be narrowly construed, plaintiffs' request for a permanent injunction cannot withstand judicial scrutiny. Certainly, this conclusion comports with common sense, since defendants' professional offices, marked only by a small and discreetly positioned brass plate, could hardly be construed as falling under the same rubric as a slaughter-house, smith shop, brass foundry, tannery, brewery, distillery, circus or managerie. Moreover, there is no evidence in the record that the existence of the dental offices, as they are presently configured, are in any way dangerous or offensive, or pose a nuisance to the neighborhood. Therefore, the existence of the dental offices violates neither the precisely-worded, narrow mandate of the restrictive covenant, nor its spirit and underlying intent.
Plaintiffs' claim that the dental group's professional practices violate various zoning laws has already been determined in defendants' favor by the Department of Buildings and the Environmental Control Board. After repeated inspections, the Department of Buildings concluded that defendants' current use of the first floor of the premises, satisfies all relevant zoning requirements and is permissible as a "home exception". Following a hearing on the issues raised in plaintiffs' second cause of action, the Environmental Control Board dismissed a violation concerning defendants' use of the premises for their dental practices, specifically holding that:
Patrick Jones, attorney for Respondent, appeared and credibly testified that the C of O (No. 102426206) permits 25% of the cited first floor premises to be used for "Home Occupation," that plans approved by DOB indicate "treatment rooms" within the premises and that respondent uses the designated 25% of the premises for a periodontic practice. Mr. Jones testified that he walked through the premises and found they were used as living quarters and for the home occupation. Mr. Jones submitted a copy of the C of O, approved plans and a letter from the tenant of the premises in support of the testimony.
I find that the actual use of the premises correctly reflects the home occupation permitted by the C of O and shown in the approved plans. Accordingly, the violation is DISMISSED.
Pursuant to the New York City Charter, the Department of Buildings (DOB) and, ultimately, the Board of Standards and Appeals of the City of New York (BSA) are the administrative bodies vested with the authority and responsibility for enforcing New York City zoning resolutions. The Environmental Control Board (ECB) is charged with hearing and deciding zoning, building code and other similar violations; Matter of Byrne v. Board of Stds. and Appeals of City of NY, 5 AD3d 261 [1st Dept 2004]); Matter of Wilkins v. Babbar, R.A., 294 AD2d 186 [1st Dept 2002]). Pursuant to the City Charter, the BSA "is the ultimate administrative authority charged with enforcing the zoning resolutions (City Charter § 666 [6]).
Plaintiffs instituted this proceeding without appealing any of the DOB or ECB determinations adverse to their position regarding defendants' use of the premises over a period of nearly six years. Plaintiffs' attempt to invoke this court's jurisdiction, without first exhausting their administrative remedies with the appropriate agencies, is unavailing. "The exhaustion doctrine furthers the salutary goals of relieving the courts of the burden of deciding questions entrusted to an agency . . . preventing premature judicial interference with the administrators' efforts to develop . . . a co-ordinated, consistent and legally enforceable scheme of regulation and affording the agency the opportunity, in advance of possible judicial review, to prepare a record reflective of its expertise and judgement" ( Matter of Grieco v. Turner, 289 AD2d 88, 89 [1st Dept 2001]).
Plaintiffs' failure to appeal the DOB and ECB rulings to the BSA, or to commence an Article 78 proceeding, renders the instant action fatally defective. The ECB decision relating to the defendants' use of the subject premises, as well as the DOB's dismissal of prior complaints, mandates dismissal of the action, pursuant to CPLR 3211 (a) (5), under the doctrines of collateral estoppel and res judicata. In Ryan v. New York Telephone Co. ( 62 NY2d 494), the Court of Appeals applied the doctrines of collateral estoppel and res judicata to preclude the regulation of an issue previously decided by an administrative agency. In so doing the Court of Appeals held that "[w]hat is controlling is the identity of the issue which has necessarily been decided in the prior action or proceeding" ( id. at 500).
Plaintiffs' decision not to participate in the administrative process, by failing to appear at the ECB hearing, and their failure to seek the proper administrative review of DOB and ECB determinations through the commencement an Article 78 proceeding, do not refute the fact that plaintiffs always had a full and fair opportunity to contest the DOB and ECB determinations in the administrative process ( see Matter of Newsday, Inc. v. Ross, 80 AD2d 1). Although plaintiffs repeatedly characterize the administrative determinations as flawed and based on erroneous, misleading and mistaken information, these conclusory, collateral attacks are unavailing, since plaintiffs never pursued their administrative remedies.
Moreover, their attacks on the administrative findings are unsubstantiated by evidentiary proof in the record. Plaintiffs' argument that the administrative rulings are not final and, therefore, not binding, since the inspector was not present at the hearing, is unpersuasive, since the record reflects the fact that the ECB based its determination after a full review of the facts.
In any event, if plaintiffs wished to challenge the ECB determination that defendants' use of the premises is permissible, their remedy was to commence an Article 78 proceeding. Contrary to plaintiffs' inaccurate characterization of the law, an adjoining land owner or interested neighborhood association enjoys standing as a matter of law to institute an Article 78 proceeding to challenge an administrative determination, even if such party were not a party to the underlying administrative proceeding or determination ( see Matter of Wittenberg Sportsmen's Club, Inc. v. Town of Woodstock Planning Bd., 16 AD3d 991 [3rd Dept 2005]; Matter of Center Square Assn., Inc. v. City of Albany Bd. of Zoning Appeals, 9 AD3d 651 [3rd Dept 2004]).
Thus, with regard to their request for a permanent injunction based on violation of restrictive covenants and zoning regulation, the court grants defendants' request to dismiss these claims, based on CPLR 3211 (a) (5) and (7).
Plaintiffs' third and fourth causes of action, for imposition of a constructive trust, are also dismissed, pursuant to CPLR (a) (7). To state a legally sufficient cause of action for the imposition of a constructive trust, it is well established that a plaintiff must plead and prove four essential elements: "(1) confidential or fiduciary relationship, (2) a promise, (3) a transfer in reliance thereon and (4) unjust enrichment" caused by breach of the promise ( Sharp v. Kosmalski, 40 NY2d 119, 121). It has been stated, however, that these elements are not talismanic. What must be alleged, is that the property is being held under circumstances that render unconscionable and inequitable the continued holding of the property, and the remedy is essential to prevent unjust enrichment ( Miller v. Schloss, 218 NY 400). In the instant case, plaintiffs never had any prior interest in or made a conveyance of, the subject property ( Liselli v. Liselli, 263 AD2d 468 [2nd Dept 1999]). There are absolutely no facts in the instant case that would justify imposition of a constructive trust.
Plaintiffs' fifth cause of action for attorney's fees is dismissed as moot, the complaint having been dismissed. Nor does there appear to be any basis for this cause of action.
Having abandoned their original request that defendants be directed to cease their commercial operations, plaintiffs have all but eviscerated their motion for a preliminary injunction. Of course, having eschewed the original grounds for a preliminary injunction, plaintiffs may not, in a footnote to their opposition papers, attempt to substitute alternative injunctive relief, i.e., their request to enjoin the dentists from adding any additional doctor to their periodontal practice during the pendency of the lawsuit.
The dental group defendants' cross-motion also seeks to enjoin plaintiffs from commencing any additional legal proceedings, as well as to impose sanctions, based on plaintiffs' allegedly "frivolous and malicious conduct." While troubled by the paucity of merit to the complaint and motion, as well as plaintiffs' attempt to shuffle the grounds for its requested preliminary injunction, the court declines, at this juncture, to impose sanctions and grant defendants' requested injunctive relief. The court can not conclude now that plaintiffs' causes of action were so frivolous that they could not be supported by a reasonable argument for an extension, modification or reversal of existing law, or that the case was undertaken primarily to delay or prolong the resolution of the ligation, or to harass or maliciously injure another, so as to justify either granting defendants' request for a preliminary injunction to bar further litigation, or the imposition of sanctions, whether as costs or attorneys' fees, or in the nature of a fine ( 22 NYCRR 130-1.1 [c]; LaRussa v. LaRussa, 232 AD2d 297 [1st Dept 1996]; Matter of Bozer v. Higgins, 204 AD2d 979 [4th Dept 1994]).
Accordingly, it is hereby
ORDERED that the plaintiffs' motion is denied; and it is further
ORDERED that the cross-motion of defendant Jak Cohane is granted to the extent that the complaint is dismissed as against said defendant with costs and disbursements to defendant as taxed by the Clerk of the Court; and it is further
ORDERED that the cross-motion of defendants Paul Tannenbaum, D.D.S., Susan Karabin, D.D.S., P.C., Edward Gottesman, D.D.S. and Jackie Nussbaum, D.D.S., is granted to the extent that the complaint is dismissed as against said defendants, with costs and disbursements to said defendants as taxed by the Clerk of the Court, and the complaint is dismissed as against defendant Robert Gottsegen, D.D.S.; and it is further
ORDERED that the Clerk is directed to enter judgment accordingly.