Opinion
2004-1791.
Decided on February 1, 2008.
Lewis B. Oliver Esq., for Petitioner.
Parisi Saccocio, PLLC, For Respondents Roth, Highbridge Plank.
Corporation Counsel, John VanNorden, Esq., for Respondents City of Schenectady, Brian U. Stratton and City Council of the City of Schenectady.
Carl F. W. Adamec Esq., for Respondents Quality Roofing Siding Supplies of Albany and Quality Roofing Supplies Supplies.
Respondent City of Schenectady acquired title to three vacant parcels of real property located at 416 Broadway, 420 Broadway and 459 Edison Avenue in Schenectady through in rem tax foreclosure proceedings conducted in late 1997 and early 1999. The properties were not publically offered for sale until April 2004 when the City issued a request for proposals, which invited the submission of purchase and development proposals on various tax foreclosed properties. In the request for proposals, the City required that all proposals be submitted in writing no later than May 14, 2004 and include a detailed business plan explaining projections of project impact to the property and surrounding area, the expected benefits to the community, the planned number of jobs created by the project and the type of business planned. The request for proposals also indicated that the City's Property Disposition Committee would evaluate the proposals pursuant to various criteria, not limited to the offered purchase price, and recommend a decision to the Mayor and City Council for final approval.
Petitioner, who owns residential property and a used car business located adjacent to and generally in between the three disputed lots, submitted a written purchase and development proposal in which he offered to purchase all three lots for the sum of $4,000.00 each, or $12,000, for the purpose of expanding his existing used car business. Respondent Quality Roofing Supplies Inc. offered the sum of $2,500.00 for the purchase of 459 Edison Avenue, with the intent to use the property as additional parking for its expanding business. Respondent John Roth, a member of respondents Highbridge Broadway and Plank Construction Company (hereinafter collectively referred to as the Roth respondents), also submitted a proposal in which he offered $4,500.00 to purchase 416 and 420 Broadway, to be used as the site for an office building to be constructed as part of a large-scale redevelopment plan to revitalize the Broadway corridor. The proposals were presented to the Property Disposition Committee which, on July 19, 2004, declined to make a recommendation and referred the matter to the City Council for determination. At an August 2, 2004 meeting of the City Development and Planning Committee, respondent Mayor Brian U. Stratton recommended that the City Council accept the Quality Roofing and Roth proposals and reject petitioner's higher-priced proposal. On August 9, 2004, the City Council passed legislation approving the sale of the properties to Quality Roofing and the Roth respondents.
On November 1, 2004, petitioner commenced this CPLR article 78 proceeding alleging that the determination must be declared null and void because it violates statutory mandates and established lawful procedures, is arbitrary and capricious and affected by an error of law, and is unsupported by any rational basis. Specifically, the petition alleges that the City, Mayor Brian U. Stratton and the City Council (hereinafter collectively referred to as the City respondents) were statutorily required to sell the property at a public auction and award it to him as the highest bidder, that the Property Disposition Committee violated lawful procedure by failing to make any recommendation to the City Council, that the determination to sell 416 Broadway and 420 Broadway to the Roth respondents was arbitrary and capricious because the proposal submitted by said respondents is impossible to achieve, that the City respondents lacked any rational basis to accept Quality Roofing's proposal, and that the City failed to issue a memorandum demonstrating a rational basis for the determination. Petitioner seeks relief in the form of a judgment directing the City respondents to sell the properties to him as the highest bidder at a public auction, declaring null and void any action taken by the City respondents in furtherance of selling the property to Quality Roofing and the Roth respondents, prohibiting the City respondents from conveying the properties to anyone other than petitioner, and awarding one million dollars in direct and consequential damages for lost profits and business opportunities.
The City respondents interpose an original and supplemental verified answer in which they allege that the petition is time-barred by the statute of limitations, fails to state a cause of action and seeks an inappropriate remedy. Quality Roofing and the Roth defendants also interpose their respective answers, with Quality Roofing asserting a counterclaim against petitioner for intentional interference with its business. Respondent Quality Roofing and Siding Supplies of Albany LLC., an entity separate from though related to Quality Roofing, cross-moves to dismiss the petition upon the ground that it lacked any involvement with the matters alleged in the petition. Petitioner counterclaims against Quality Roofing challenging its counterclaim on grounds that it violates his constitutional rights.
Initially addressing several preliminary matters, the Court concludes that no competent proof has been offered in opposition to the cross motion filed by Quality Roofing and Siding Supplies of Albany LLC. and that, therefore, the relief requested therein is granted and the petition is dismissed against said respondent. Moreover, to the extent that this proceeding may be construed as one seeking relief pursuant to CPLR article 78 alone, petitioner is not entitled to recover the compensatory damages he seeks because they are not merely incidental to the primary relief sought ( see, CPLR 7806; LaDuke v Lyons, 250 AD2d 969; Fridella v Coughlin, 177 AD2d 872). Even if the proceeding may be considered one in which compensatory damages are recoverable, such damages may not be awarded in this case because petitioner's claims of lost profits and business opportunities are wholly speculative. Finally, to the extent that petitioner seeks redress for a violation of his constitutional rights in his direct claim and counterclaim, the Court determines that no such violation could have occurred because petitioner's offer to buy the properties did not confer any constitutional rights upon him ( see, Davis v City of Syracuse, 158 AD2d 976). Accordingly, any claim premised upon such a violation must be dismissed.
Turning to the parties' primary arguments, petitioner first contends that the City respondents illegally rejected his proposal because, pursuant to Second Class Cities Law § 37 and General City Law § 23 (2) (b), they were statutorily required to sell the properties at a public auction and to award said properties to him as the highest bidder. The Court is not persuaded. Although Second Class Cities Law § 37 and General City Law § 23 (2) (b) require the sale of "city real estate" "at public auction to the highest bidder", the term "city real estate" has been limited to only those properties assigned to the City for a public use or purpose. "The term city real estate' was never intended by the Legislature to apply to land, such as this property, acquired as the result of tax sales" ( Maxwell v Kristensen, 15 Misc 2d 875, 880; see, McSweeney v Bazinet, 269 App Div. 213). Similarly, the Court rejects the notion that the determination at issue violated the real property disposition procedures outlined in the Schenectady City Code § 215-2 (B), which by its specific terms applies only to property "acquired by a means other than in rem foreclosure". Contrary to petitioner's contention, these statutes provide no authority for the proposition that the City was required to offer the properties for sale at a public auction and to award them to the highest bidder.
Petitioner next contends that the procedure leading to the rejection of his proposal violated Schenectady City Code § 234-4, which specifically applies to the disposition of in rem foreclosed properties and provides in pertinent part that:
(A) The City of Schenectady shall first determine which properties shall be necessary for municipal or public use or community betterment, and said properties may be withheld from sale; such withheld properties may also be conveyed to the Schenectady Urban Renewal Agency, or said withheld properties may also be sold by the City in conformity with the rules of sale of the Schenectady Urban Renewal Agency * * *.
(B) All remaining properties shall be offered for sale at public auction within four months from the date of acquisition by the city * * *
Petitioner argues that the City failed to comply with Schenectady City Code § 234-4 (A) in that it failed to render an official determination that the subject properties were necessary for public use or community betterment prior to withholding them from sale for a period of years, and that its failure to make such a determination within the first four months following acquisition of the properties required it to sell them at a public auction to the highest bidder in accordance with Schenectady City Code § 234-4 (B). It is unclear whether petitioner asserts that the method by which the properties were actually sold, namely by soliciting sealed proposals for review and approval by the City respondents, may be characterized as a public auction. But nevertheless, petitioner clearly argues the City's failure to comply with Schenectady City Code § 234-4 (A) and (B) requires that the Court deem that a public auction should have and did occur.
The City respondents and the Roth respondents counter that compliance with Schenectady City Code § 234-4 (A) and (B) was not required because the City had absolute discretion to withhold the properties from sale and dispose of them as it deemed fit pursuant to Real Property Tax Law
§ 1166, which provides in relevant part:
(1) Whenever any tax district shall become vested with the title to real property by virtue of a foreclosure proceeding brought pursuant to the provisions of this article, such tax district is hereby authorized to sell and convey the real property so acquired, either with or without advertising for bids, notwithstanding the provisions of any general, special or local law (Emphasis supplied).
(2) No such sale shall be effective unless and until such sale shall have been approved andconfirmed by a majority vote of the governing body of the tax district, except that no suchapproval shall be required when the property is sold at a public auction to he highest bidder.
According to the Roth respondents, this language requires the conclusion that the City need not comply with Schenectady City Code § 234-4 (A) and (B) prior to offering tax foreclosed properties for sale and has unfettered discretion to determine the manner in which any such sale shall occur. In contrast, the City respondents argue that they complied with Schenectady City Code § 234-4 (A) by rendering a timely determination to withhold the subject properties from sale for the purpose of community betterment and that the properties were ultimately sold in compliance with Real Property Tax Law § 1166.
After considering the parties' arguments, the proof submitted and the applicable law, the Court rejects petitioner's contention that the City violated Schenectady City Code § 234-4. Initially, petitioner waived any challenge to any alleged failure to comply with Schenectady City Code § 234-4 by actively participating in the bid proposal process without objecting or demanding that the properties be sold at a public auction ( see, Reilly v Progressive Ins. Co., 5 AD3d 776; Matter of Staten Island Realtors v Smith, 298 AD2d 592). In any event, to the extent that the procedural restrictions of Schenectady City Code § 234-4 (A) and (B) are inconsistent with the general powers of sale granted by Real Property Tax Law § 1166, they are preempted and invalid pursuant to Municipal Home Rule Law § 10 (1) (ii). The language of Real Property Tax Law § 1166 authorizing the City to sell tax foreclosed real property "either with or without advertising for bids, notwithstanding the provisions of any general, special or local law" clearly expresses the State Legislature's intent to occupy this entire field and preclude any local regulation ( see generally, Zorn v Howe, 276 AD2d 51; Town of Hoosick v Eastern Renss. County Solid Waste Mngmt. Auth., 182 AD2d 293). Moreover, there is authority for the proposition Section 234-4 is a "mere device for regulating the intramural affairs of the city" and any violation thereof is a "mere irregularity" because the code provision is silent as to the consequences of a failure to comply and the City has not observed the outlined procedures for several years ( Van Curler Dev. Corp. v City of Schenectady, 59 Misc 2d 621). Accordingly, petitioner's arguments grounded upon a violation of Schenectady City Code § 234-4 do not require annulment of the City respondents' determination. In view of ths conclusion, whether petitioner's claim pursuant to that code provision is barred by the Statute of Limitations is irrelevant.
Similarly, the Court concludes that the Property Disposition Committee's failure to make a recommendation regarding the proposals, as was promised in the City's request for proposals, was at most a mere irregularity that does not require annulment of the determination.
Having rejected petitioner's arguments regarding procedure, the Court must now address his contention that the City respondents' determination to accept the proposal submitted by the Roth respondents was arbitrary, capricious and irrational because the proposal was impossible to achieve. As explained in their proposal, the Roth respondents intended to purchase the 416 and 420 Broadway for the purpose of constructing a 3-three-story 33,000 square foot office building. However, the plan drawings submitted along with the proposal indicate that the footprint of the proposed office building extends beyond the boundaries of the Broadway lots and onto properties owned by others, including petitioner. The evidence indicates that the Roth respondents have no realistic expectation of purchasing these properties from their current owners, and there is nothing to indicate that the City is in the process of obtaining title to the properties through condemnation. The City respondents do not dispute that they accepted the Roth proposal with knowledge that the proposed office building was to be constructed on property that was not owned by the City or offered for sale in the request for proposals. Because the request for proposals pertained only to the specific lots that the City was offering for sale, the Roth respondents' proposal did not meet the specifications of the request and was an invalid proposal.
Although Roth submits an affidavit in which he states that the proposed structure can be built within the confines of the lots awarded to him, this conclusory assertion is unsupported by any evidence and suggests a type of structure that differs from the one depicted in his actual proposal to the City. Under the facts as they existed at the time the City accepted the Roth proposal, it would be wholly speculative to conclude that the proposal could be achieved utilizing only the lots for sale. Although the Court is mindful that it should be hesitant to question the wisdom of the City Council's decision to accept the proposal, in this case it was wholly irrational for the City to accept the proposal when it knew or should have known that it could not be performed as stated. As for petitioner's argument that the Court should compel the City to accept his proposal in lieu of Roth's, there is nothing in the law or the request for proposals that would require the City to accept any of the proposals and the Court declines to substitute its judgment for that of the City in this regard. Accordingly, the City respondents' determination to accept the Roth proposal is annulled but the Court provides no further direction with regard to the future disposition of 416 and 420 Broadway.
Finally, because petitioner raises no further arbitrary and capricious claims regarding the determination to accept Quality Roofing's proposal to purchase 459 Edison Avenue, the Court declines to annul that determination. As for Quality Roofing's counterclaim against plaintiff for interference with contract, that claim fails to state a cause of action and must be dismissed ( see, Quail Ridge Assoc. v Chemical Bank, 162 AD2d 917).
For the foregoing reasons, it is
ORDERED that the petition is granted only to the extent that the determination is annulled, without costs, and it is further
ORDERED that cross motion to dismiss the petition is granted, without costs, and it is further
ORDERED that the counterclaims are dismissed, and it is further
ORDERED that defendant provide plaintiffs with a copy of the IME report no later than March 21, 2005.
This Decision Shall Constitute the Order of the Court.