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City Club of N.Y. v. Extell Dev. Co.

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK : PART IAS MOTION 12EFM
Jun 11, 2019
2019 N.Y. Slip Op. 31645 (N.Y. Sup. Ct. 2019)

Opinion

INDEX NO. 154205/2019

06-11-2019

THE CITY CLUB OF NEW YORK, 10 WEST 66TH STREET CORPORATION, JAMES BERRY, JAN CONSTANTINE, VICTOR KOVNER, AGNES MCKEON, ARLENE SIMON, RICHARD GOTTFRIED, Plaintiffs, v. EXTELL DEVELOPMENT COMPANY, WEST 66TH SPONSOR LLC, Defendants.


NYSCEF DOC. NO. 55 MOTION DATE __________ MOTION SEQ. NO. 001

DECISION AND ORDER

HON. BARBARA JAFFE: The following e-filed documents, listed by NYSCEF doc. no. (Mot. 001) 2, 18-27, 29-50, 52-54 were read on this motion for preliminary injunction. BARBARA JAFFE, J.:

In this action, plaintiffs seek declaratory judgments and injunctive relief with respect to defendant Extell's construction of a building at 36 West 66th Street which is within the Special Lincoln Square District. They assert that Extell's calculation of the height of the building's tower violates several zoning regulations.

I. BACKGROUND

In May 1993, the Department of City Planning undertook the Special Lincoln Square District Zoning Review, and proposed, as pertinent here, regulations that "combined would result in building heights in the range of the mid-20 to 30 stories tall, which would complement the district's existing neighborhood character." (NYSCEF 7). And, "to foster a positive relationship between [a building's] tower and base and a more successful massing of a development's bulk, and to avoid excessive height," the Department also proposed controls to govern the massing and height of new buildings throughout the district. The proposed regulations would require a minimum of 60 percent of a development's total floor area to be located below an elevation of 150 feet and result in a better relationship between the base and tower portions of buildings, producing building heights ranging from the mid-20 to 30 stories.

On December 20, 1993, the regulations were enacted. They, inter alia, limit the amount of floor area that may be built on a lot and prescribe how the floor area is to be distributed within a building. (Special District rules ZR §§ 82-34 ["Within the Special District, at least 60 percent of the total floor area permitted on a zoning lot shall be within stories located partially or entirely below a height of 150 feet from curb level"]; and 82-36 ["At any level at or above a height of 85 feet above curb level, a tower shall occupy in the aggregate: (1) not more than 40 percent of the lot area of a zoning lot; and (2) not less than 30 percent of the lot area of a zoning lot"]).

I. AMENDED VERIFIED COMPLAINT (NYSCEF 51)

In April 2015, Extell, owner of a site of four lots in the Special District, completed a plan for the construction of a 775-foot tall building, premised on the anticipated acquisition of two additional lots. The plan includes a 160-foot high mechanical space and a tower of a height based on the bulk of all of the lots within the site even though the site straddles two zoning districts, one of which does not permit towers. (NYSCEF 6).

Instead of seeking a permit for the 775-foot building, Extell applied to the New York City Department of Buildings (DOB) on November 24, 2015 for a permit to build a smaller, 292-foot tall building.

In June 2016, the New York State Attorney General approved Extell's 2016 acquisition of another lot.

On June 7, 2017, the DOB granted Extell's application to build the smaller building, upon which construction commenced.

On December 13, 2017, Extell filed with the DOB the April 2015 plan for the taller building in issue here.

In February 2018, the City Planning Department considered a proposal to eliminate, as pertinent here, the exemption from a building's allowable floor area of mechanical spaces taller than 25 feet.

On July 26, 2018, the DOB approved Extell's plan for the 775-foot tall building.

On September 9, 2018, plaintiff 10 West 66th Street Corporation and non-party Landmarks West! (LW) challenged the plan on the grounds that (1) the 160-foot high mechanical space violates the intent of the ZR, and (2) the calculation of the height of the tower is based on the entire lot including those portions lying within the zoning district that prohibits towers, thereby violating the split lot regulations (ZR §§ 33-48 ["Whenever a zoning lot is divided by a boundary between a district to which the provisions of Section 33-45 (Tower Regulations) apply and a district to which such provisions to not apply, the provisions set forth in Article II, Chapter 7 shall apply"] and 77-02 ["Whenever a zoning lot is divided by a boundary between two or more districts . . . each portion of such zoning lot shall be regulated by all the provisions applicable to the district in which such portion of the zoning lot is located"]). Construction pursuant to the June 7, 2017 permit for the smaller building continued.

On November 19, 2018, the DOB rejected 10 West's and LW's challenge to Extell's plan, finding that the ZR prescribes no height limit for building floors and that the split lot rules do not apply to the calculation of the bulk package because the Special District rule applies to "all portions of a zoning lot located within the Special District regardless of the zoning district designations." Thus, as the R8 and C4-7/R10 portions of the lot are "within the Special District," the bulk packing calculation must be based on both portions, notwithstanding the split lot rules. LW appealed the DOB's rejection to the Board of Standards and Appeals (BSA).

On January 14, 2019, the DOB issued a notice that it intended, within 15 days, to revoke its approval of the plan, absent information demonstrating that the approval should not be revoked. It stated only that the proposed mechanical space "does not meet the definition of 'accessory use' of § 12-10 of the [ZR]," and that a floor height of 160 feet is "not customarily found in connection with residential uses." (NYSCEF 12). The DOB thereupon rescinded its denial of LW's challenge, and "[a]s a result," LW's appeal to the BSA "ground to a halt." Construction continued and Extell revised the plan to include a single 160-foot void with three smaller voids totaling 176 feet, thereby bringing the height of the mechanical space alone to 196 feet.

On April 4, 2019, the DOB withdrew its notice of intent to revoke based on a letter timely filed by Extell's land use counsel.

On April 9, 2019, the Planning Commission approved the proposal limiting the height of mechanical spaces although it raised the exemption from the proposed 25 feet to 30 feet.

On April 11, 2019, the DOB issued a permit for the 775-foot tower.

Based on the foregoing, Extell's proposed building violates ZR § 82-34, the bulk packing regulation. If completed, the building will be the tallest building on Manhattan's Upper West Side, hundreds of feet taller than allowed in the Special Lincoln Square District, some 95 percent of which is zoned C4-7/R10 which permits "the highest level of residential density in the City" and towers. Towers are not permitted within two blocks comprising 5.3 percent of the district, which is zoned R8. The site in issue is split between the two districts: 64.2 percent of the site is within the C4-7/R10 district and 35.8 percent is within the R8 district.

While Extell properly calculated the total allowable floor area and tower coverage based on the portion of the lot where the tower is allowed, in calculating the required bulk below 150 feet, contrary to the rationale of the regulation and Zoning Resolution (ZR), it included within the floor area the portion of the site where a tower is not allowed, thereby adding to the base and resulting in greater height to the tower and a ratio of the base to the tower of 48 to 52, instead of 60 to 40.

Additionally, the requirement that the total square footage of the tower and base not exceed the total allowable square footage is not met as the total square footage of the tower and base (548,535) "adds up to 30 percent more than the allowed 421,269." Thus, "[t]he excess tower square footage (50,899) increases the height of the tower, while the excess base square footage is in a district where towers are not allowed."

Extell also violated the ZR by including four "cavernous volumes" totaling 196 feet in height, purportedly for mechanical equipment. Two of the voids are each 64 feet high (floors 17 and 18), one is 48 feet high (floor 19), and another is 20 feet high (floor 15). These spaces are "'not customarily found in connection with residential uses,' as the [ZR] requires for an 'accessory use.' Nor are they 'space[s] used for mechanical equipment,' as defined by ZR § 12-10." And on floor 16 is a 42-foot high "residential amenity space."

Plaintiffs allege that Extell deceptively submitted to the DOB its plan for the smaller building notwithstanding its intent to build the taller building, thereby obtaining an opportunity to commence building on the site with the hope of reaching a stage of construction that will effectively moot any violation of the applicable rules by the time of a final agency determination.

II. PROCEDURAL BACKGROUND

This case commenced on April 25, 2019, with the filing of the pleadings with a proposed order that would require defendants to show cause as to why they should not be enjoined and temporarily restrained from proceeding with the construction pending a final resolution of the action. (NYSCEF 2). Oral argument was held, after which the request for a temporary restraining order was denied based on defendants' guarantee that no significant construction would be performed that would render any ultimate determination moot by May 28, 2019, the date then set for oral argument on plaintiffs' application for a preliminary injunction.

On May 7, 2019, six of the seven plaintiffs sought from the BSA an expedited appeal of the DOB's determination and on May 13, 2019, LW filed its own appeal. (NYSCEF 30, 31).

On May 21, 2019, defendants filed a cross motion to dismiss the complaint. (NYSCEF 28). On May 26, 2019, plaintiffs filed their opposition to the cross motion to dismiss. (NYSCEF 53).

After oral argument on the cross motion to dismiss and the motion for the preliminary injunction, decision was reserved. (NYSCEF 54). The appeals before the BSA pend. (Id.).

In light of the potentially dispositive nature of defendants' cross motion, it is first addressed.

III. DEFENDANTS' CROSS MOTION TO DISMISS

A. Contentions

1. Defendants (NYSCEF 28-50)

Defendants argue that as a threshold matter, plaintiffs' failure to exhaust their administrative remedies mandates the dismissal of the complaint in its entirety, and maintain that an adjudication by me as to whether defendants' plan violates the ZR would "usurp the BSA's role as the expert agency with exclusive jurisdiction to decide appeals from DOB determinations."

In reliance on Watergate II Apartments v Buffalo Sewer Authority, 46 NY2d 52, 57 (1978), defendants maintain that although plaintiffs need not exhaust administrative remedies when "resort to an administrative remedy would be futile" or where pursuing the administrative remedy "would cause irreparable injury," plaintiffs show neither. They moreover deny that a failure to exhaust is excused where the claim presents a purely legal interpretation of statutory terms, and assert that, in any event, no purely legal interpretation of statutory terms is presented here. Rather, they observe, an adjudication of this case would require "a careful analysis of multiple [ZR] provisions, the interplay of those provisions with each other, and their application to the Project Site," and that "plaintiffs' reliance on legislative history to support their interpretation of the statute belies their claim that the relevant provisions are straightforward."

Defendants also claim a further restriction on the right to seek judicial relief, namely, where the Legislature has, as here, specifically delineated exclusive steps for seeking it. They assert that as the City Charter provides that the DOB has the "exclusive" power, subject to review only by the BSA to "examine and approve or disapprove plans for the construction or alteration of any building or structure" and to "require that the construction or alteration of any building or structure . . . shall be in accordance with the provisions of law" (Charter § 645(b), plaintiffs are foreclosed from seeking an adjudication here without first appealing to the BSA.

Defendants also argue that pursuant to CPLR 3211(a) (10), plaintiffs' failure to join the DOB or the City of New York as a party defendant is fatal "because the complaint seeks to annul a DOB determination," and that the DOB must have an opportunity to defend its issuance of the permit sought to be annulled.

2. Plaintiffs (NYSCEF 53)

Plaintiffs claim that they are excused from exhausting administrative remedies due to the futility of doing so, relying on Lehigh Portland Cement Co. v NYS Dept. of Envtl. Conservation, 87 NY2d 136, 141 (1995), and defendants' statement in its memorandum of law that the DOB and BSA have "recognized on multiple occasions that nothing in the [ZR] regulates or limits the height of a building's mechanical spaces." They distinguish Bankers Trust as an inapposite tax case.

Irreparable injury also remains viable as an exception to the exhaustion requirement, plaintiffs assert, relying on Watergate II Apartments, 46 NY2d at 57, and Haddad v Salzman, 188 AD2d 515, 516 (2d Dept 1992), among other decisions. They maintain that their claim "could well become moot before it could be adjudicated in this Court, let alone on appeal," and that defendants do not dispute that appeals to the BSA can take a year or more.

Plaintiffs also cite authority for their contention that pure questions of law are exempt from the exhaustion requirement where the facts are not in dispute.

In response to defendants' claim that their complaint must be dismissed for failure to join the DOB, plaintiffs maintain that absent any relief sought from the DOB, it is not a necessary party.

Alternatively, plaintiffs ask that if it is determined that they must exhaust their administrative remedies before proceeding here, this action should be stayed instead of dismissed, pending the BSA's decision and an adjudication on the merits here.

B. Oral argument (NYSCEF 54)

Plaintiff's counsel observed that defendants' argument that the split lot rules do not apply in calculating the bulk packing rule is solely based on the rule's initial words, "[w]ithin the Special District" which, according to defendants, mandates that the rule apply "everywhere" in the Special District, thereby superseding the split lot rules. He argued that such an interpretation is inconsistent with the legislative history and that the phrase "within the Special District" was intended to distinguish the Special District versions of the bulk packing rule from others.

It was also argued by plaintiff's counsel that notwithstanding defendants' position that the case will not be moot given the request for a preliminary injunction, to his knowledge, no private party has succeeded in obtaining even the partial demolition of a completed building for a zoning violation, and he distinguished Matter of Parkview Assocs. v City of New York, 71 NY2d 274 (1988), for the City's having issued a stop work order on the suspicion that a building inspector had been bribed.

Defendants' counsel explained that for properties within a Special District, "the underlying zoning remains in effect." Thus, the split lot rules are superseded.

C. Analysis

While it is well-settled that available administrative remedies must be exhausted before litigating the propriety of an administrative determination, the rule is not absolute, such as where, as here, it is alleged that resort to an administrative remedy would be futile or when its pursuit would cause irreparable injury (Watergate II Apartments, 46 NY2d at 57), or when the zoning rule in issue is so clear and unambiguous that deference to administrative expertise is not warranted (Matter of Raritan Dev. Corp. v Silva, 91 NY2d 98 [1997]).

1. Futility

In Lehigh Portland Cement Co., the Court excused the plaintiff from exhausting administrative remedies, finding that "[u]nder the particular circumstances" of the case, "any resort by plaintiff to administrative remedies would have been futile." (87 NY2d at 141). There, the plaintiff had demonstrated that the administrative agency had "clearly and unequivocally stated its long-established position" in issue, "both in correspondence with plaintiff and through the affidavit of the Chief Permit Administrator" who consulted with his counterparts and with his Division of Legal Affairs, and thereby "affirmed" the agency's "longstanding position." Moreover, the Court observed, the agency had "arrived at a definitive position which concretely affected the status" of the plaintiff's petitions which was communicated to the plaintiff. (Id.).

Since Lehigh, other courts have found futility in attempting to exhaust an administrative remedy when the agency has "dug in its heels and made clear that all such applications will be denied." (Murphy v New Milford Zoning Commn, 402 F3d 342, 349 [2d Cir 2005]; Matter of Cornwall Commons, LLC v Town of Cornwall, 163 AD3d 810, 814 [2d Dept 2018]; East End Resources, LLC v Town of Southold Planning Bd., 135 AD3d 899, 900-901 [2d Dept 2016]).

Here, the DOB's notice of intent to revoke its approval of the plan signals that it had been open to plaintiffs' position with respect to the mechanical spaces, notwithstanding the subsequent success of defendants' land use counsel in persuading it otherwise. That the DOB and BSA have recognized "on multiple occasions that nothing in the Zoning Resolution regulates or limits the height of a building's mechanical spaces" constitutes a simple statement of fact which falls short of a clear and unequivocal statement of a long-established position that concretely affects plaintiffs' challenge. Rather, it remains possible that the BSA will agree with plaintiffs that an aggregation of mechanical spaces, where one or all are used solely as voids to increase the building's height, violates at least the spirit of the ZR.

Moreover, plaintiffs do not assert that the BSA has clearly and equivocally stated a position concerning the interplay among the bulk package rule, the split lot rules, and any other provision in the ZR limiting a building's height. Thus, it is not demonstrated that the DOB or BSA has dug in its heels.

For these reasons, plaintiffs do not demonstrate that an appeal to the BSA would be futile.

2. Irreparable injury

Plaintiffs' assertion that they will be irreparably injured should they be required to exhaust their administrative remedies before seeking judicial relief relies on an anticipation that ongoing construction by defendants will render their challenge moot should a point be reached where demolition would not be ordered.

In revisiting the issue of mootness as it relates to the substantial completion of construction, the Court in Matter of Citineighbors Coalition of Historic Carnegie Hill v New York City Landmarks Preserv. Commn., 2 NY3d 727, 729 (2004), reiterated its observations in Matter of Dreikausen v Zoning Bd. of Appeals of City of Long Beach, 98 NY2d 165, 172 (2002), that while the progress of construction must be considered in determining mootness, a '"race to completion [of a building] cannot be determinative . . ." Other factors to be considered as to mootness in the construction context is whether a plaintiff had sought injunctive relief "to prevent construction from commencing or continuing during the pendency of the litigation," "whether work was undertaken without authority or in bad faith, and whether substantially completed work is 'readily undone, without undue hardship.'" (Matter of Citineighbors, 2 NY3d at 173).

Although there is apparently an astonishing possibility that the BSA will take more time to render a decision than it would take to build a 775-foot building notwithstanding the parties' joint request for an expedited ruling, it is by no means assured that, given the variety of factors that can stall construction, the building's height will reach a point where a finding by the BSA would become moot.

In any event, having sought an injunction, plaintiffs preserved their right to seek demolition of the building should the BSA uphold their challenge to the plan. (See e.g., Matter of Parkview Assocs. v City of New York, 71 NY2d 274 [1988] [city not estopped from revoking building permit even though owner engaged in substantial construction in reliance thereon]; Matter of Micklas v Town of Halfmoon Planning Bd., 170 AD3d 1483 [3d Dept 2019] [substantial completion of building addition did not render appeal moot as addition could be razed]; Town of N. Elba v Grimditch, 131 AD3d 150 [3d Dept 2015], lv denied 26 NY3d 903 [2015] [given defendants' violations of zoning code, requiring them to dismantle and remove offending buildings provident exercise of court's discretion]; Matter of Massa v City of Kingston, 284 AD2d 836 [3d Dept 2001], lv denied 97 NY2d 603 [2001] [affirming court-ordered demolition of illegally constructed addition]).

That defendants intended from the outset to build the 775-foot building does not prove that they did so in bad faith as it is undisputed that the plan for the taller building was contingent upon the acquisition of the other two lots, and plaintiffs cite no authority for the proposition that Extell was foreclosed from seeking a permit for the smaller building in order to commence building what it hoped would become a taller building. Nor is it disputed that defendants were not obliged to disclose their ambition in that regard. The jump on construction that defendants had thereby obtained is insufficient justification for halting the project based on the possibility that the building will reach a point of no return by the time the BSA rules on plaintiffs' challenge.

Plaintiffs are not alone in facing a risk. If defendants complete or substantially complete the building before the BSA renders a determination, they assume the risk that they will be obliged to demolish it. (See Matter of Micklas, 170 AD3d at 1485 [Supreme Court made clear that injunctive relief remained possible if petitioners prevailed; thus respondent had "every incentive to limit its construction activity" and was "on notice that completion was undertaken at its own risk"]; Shumaker v Town of Cortlandt, 143 AD2d 999, 1001 [2d Dept 1988] [order requiring defendant to remove building if adverse decision issued against him under amended zoning ordinance proper, as "hardship was self-imposed in that he engaged in a reckless effort to complete" building before decision rendered]; Queens Neighborhood United v New York City Dept. of Bldgs., 62 Misc 3d 1210[A], 2019 NY Slip Op 50082[U] [Sup Ct, NY County 2019] [as respondents contended that completion not equivalent to mootness, they cannot later argue mootness once building finished which would be "disingenuous" and "dishonest abuse of court system").

3. Need for BSA's expertise

The parties disagree as to the meaning of the words "[w]ithin the Special District" in the bulk packing rule set forth in ZR § 82-34 and its interplay with the split lot rules set forth in ZR §§ 77-01 and 77-02. Plaintiffs insist both that defendants' reading of the rules is wrong and that their meaning is so clear and unambiguous that the expert input of the BSA is unnecessary. Defendants deny that their interpretation of the rules is wrong and otherwise insist that their meaning is sufficiently ambiguous to require the BSA's expert input.

Whether the words "[w]ithin the Special District" render the split lot rules inapplicable depends on an interplay of other rules. Thus, the provision is not so clear and unambiguous that deference to the BSA is not needed. (See Beekman Hill Assn. v Chin, 274 AD2d 161, 166-167 [1st Dept 2000], lv denied 95 NY2d 767 [provision of ZR not clear and unambiguous, thus deference to administrative expertise warranted on CPLR article 78 proceeding]; cf Matter of Raritan Dev. Corp. v Silva, 91 NY2d 98, 103 [1997] [statutory language "could not be clearer"]) Thus, the issue should be first presented to the BSA, which has been described as having "primary jurisdiction" in resolving zoning issues. (See Matter of Weissman v City of New York, 96 AD2d 454, 457 [1st Dept 1983], lv dismissed 50 NY2d 815 [1983] [whether building subject to restrictive provisions of Special Clinton District is within BSA's primary jurisdiction, particularly where issue complex and involving interpretation of zoning resolutions; petitioners should have exhausted administrative remedies before commencing CPLR article 78 proceeding]). Consequently, the BSA's alleged exclusive authority to rule on plaintiffs' challenge need not be addressed.

4. Finding

Absent findings of futility and irreparable injury, and given the need for the BSA's expertise, plaintiffs have not demonstrated that they should be excused from exhausting their administrative remedies. Thus, there is no need to consider their application for a preliminary injunction. (See Koultukis v Phillips, 285 AD2d 433, 435 [1st Dept 2001] [injunction denied as parties failed to exhaust administrative remedies, where DOB's "determination will not be based on pure questions of law alone"]; Haddad v Salzman, 188 AD2d 515, 517 [2d Dept 1992] [as plaintiffs' claim for declaratory judgment required finding as to legality of construction, matter should be first addressed by BSA, as application of zoning ordinance to facts peculiarly within specialized knowledge and experience of "administrative bodies authorized to administer and enforce the ordinance"]). In any event, they do not allege special damages. (See Little Joseph Realty v Town of Babylon, 41 NY2d 738, 741-742 [1977] [although private property owner may seek to enjoin a continuing zoning violation, it may do so if it has suffered special damages]). There is also no need to address defendants' motion to dismiss for the failure to name a necessary party.

IV. CONCLUSION

Accordingly, it is hereby

ORDERED, that defendants' cross motion to dismiss is granted, the complaint is dismissed in its entirety, and the clerk is directed to enter judgment accordingly; and it is further

ORDERED, that plaintiffs' motion for a preliminary injunction is denied as academic. 6/11/2019

DATE

/s/ _________

BARBARA JAFFE, J.S.C.


Summaries of

City Club of N.Y. v. Extell Dev. Co.

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK : PART IAS MOTION 12EFM
Jun 11, 2019
2019 N.Y. Slip Op. 31645 (N.Y. Sup. Ct. 2019)
Case details for

City Club of N.Y. v. Extell Dev. Co.

Case Details

Full title:THE CITY CLUB OF NEW YORK, 10 WEST 66TH STREET CORPORATION, JAMES BERRY…

Court:SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK : PART IAS MOTION 12EFM

Date published: Jun 11, 2019

Citations

2019 N.Y. Slip Op. 31645 (N.Y. Sup. Ct. 2019)