In the Matter of Exeter Building Corp., et al., Appellants,v.Town of Newburgh, et al., Respondents.BriefN.Y.January 14, 2016To Be Argued By: MICHAEL H. DONNELLY Time Requested: 30 Minutes APL-2014-00308 Orange County Clerk’s Index No. 347/10 Court of Appeals STATE OF NEW YORK In the Matter of the Application of EXETER BUILDING CORP. and 17K NEWBURGH, LLC, Petitioners-Appellants, —against— TOWN OF NEWBURGH and DEREK BENEDICT, GEORGE WOOLSEY, GIL PIAQUADIO and BETTY GREEN, in their capacities as Town Board members; TOWN OF NEWBURGH PLANNING BOARD, TOWN OF NEWBURGH ZONING BOARD OF APPEALS (ZBA) and GRACE CARDONE, JOHN MCKELVEY, RUTH EATON, RONALD HUGHES, JR., JAMES MANLEY, JR., BRENDA DRAKE and MICHAEL P. MAHER, in their capacities and official capacities as ZBA members, and TILFORD STITELER, in his individual capacity and official capacity as Town Code Enforcement Officer, Respondents-Respondents. BRIEF FOR RESPONDENTS-RESPONDENTS d MICHAEL H. DONNELLY DICKOVER, DONNELLY, DONOVAN, LLP 28 Bruen Place, Box 610 Goshen, New York 10924 Telephone: (845) 294-9447 Facsimile: (845) 294-6553 Attorneys for Respondents- RespondentsMay 14, 2015 – 2 – TABLE OF CONTENTS INTRODUCTION TABLE OF AUTHORITIES. . . . . . 3 COUNTER-STATEMENT OF QUESTION PRESENTED 9 NATURE OF THE CASE. . . . . . . 11 ARGUMENT POINT I THE APPELLATE DIVISION PROPERLY DETERMINED THAT EXETER HAD NOT ACQUIRED VESTED RIGHTS. 35 POINT II ARTICLE 78 AFFORDED EXETER ITS EXCLUSIVE REMEDY. THE APPELLATE DIVISION CORRECTLY CONCLUDED THAT THE DECISION OF THE ZONING BOARD WAS NOT ARBITRARY AND CAPRICIOUS. 56 CONCLUSION . . . . . . . . 62 – 3 – TABLE OF AUTHORITIES Cases ADC Contracting and Const. Corp. v. New York City Dept. of Design and Const., 25 A.D.3d 488 (1st Dept. 2006) .......................................... 57 Alscot Investing Corp. v. Rockville Centre, 64 N.Y.2d 921 (1985) ......... 36 American Bartenders School, Inc. v. 105 Madison Co., 59 N.Y.2d 716 (1983) ..................................................................................................... 42 Amsterdam-Manhattan Associates v. Joy, 42 N.Y.2d 941 (1977) .......... 36 Citizens Against Sprawl-Mart ex rel. Alcuri v. City of Niagara Falls, 35 A.D.3d 1190, 1191, (4th Dept. 2006) ..................................................... 58 Concetta T. Cerame Irrevocable Family Trust v. Town of Perinton Zoning Bd. of Appeals, 27 A.D.3d 1191, 1192, (4th Dept. 2006) ......... 58 Donofrio v. Hasting, 60 A.D.2d 989, 990 (4th Dept. 1978) ..................... 57 Ellington Const. Corp. v. Zoning Bd. of Appeals of Incorporated Village of New Hempstead, 77 N.Y.2d 114, at p. 122 (1990) ........................... 40 Ellington, supra, 77 N.Y.2d 114, at p. 124 .............................................. 41 Exeter Bldg. Corp. v Town of Newburgh, 114 A.D.3d 774 (2d Dept. 2014) ...................................................................................................... 11 Exeter Building Corp. v. Town of Newburgh, 49 A.D.3d 731, 733 (2d – 4 – Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008)............... 18, 22 Exeter Building Corp. v. Town of Newburgh, 49 A.D.3d 731, 734 (2d Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008)..................... 18 Fundamental Portfolio Advisors, Inc. v. Toqueville Asset Management, LLP, 7 N.Y.3d 96, 106–107 (2006) ....................................................... 43 Gittens v. Sullivan, 151 A.D.2d 481 (2d Dept. 1989) .............................. 57 Glacial Aggregates LLC v. Town of Yorkshire, 14 N.Y.3d 127 (2010) ... 45 Greystone Management Corp. v. Conciliation and Appeals Bd. of City of New York 94 A.D.2d 614, 616 (1st Dept. 1983) .................................. 58 Hamptons, LLC v Rickenbach, 98 AD3d 736 (2d Dept. 2012) ............... 36 Kadin v. Bennett, 163 A.D.2d 308 (2d Dept. 1990) ................................. 41 Marasco v. Westbury, 242 A.D.2d 724 (2d Dept. 1997) .......................... 36 Mar-Vera Corp. v Zoning Bd. of Appeals of Vil. of Irvington, 84 A.D.3d 1238, 1240 (2d Dept 2011) .................................................................... 41 Mascony Transport and Ferry Service, Inc. v. Richmond, 71 A.D.2d 896, affd on dec below, 49 N.Y.2d 969 (1980) .............................................. 36 Matter of E.F.S. Ventures Corp. v. Foster, 71 N.Y.2d 359, 368–369 (1988) ..................................................................................................... 42 Matter of Ellington Construction Corp. v. Zoning Board of Appeals of – 5 – New Hempstead, 152 A.D.2d 365, 373 (2d Dept. 1989), affd, 77 N.Y.2d 114 (1990) .............................................................................................. 35 Matter of Ellington Construction Corp. v. Zoning Board of Appeals of the Village of New Hempstead, 77 N.Y.2d 114 (1990) ........................ 39 Matter of Ellington Construction Corp. v. Zoning Board of Appeals of the Village of New Hempstead, 77 N.Y.2d 114, 122 (1990) ................ 40 Matter of Estate of Kadin v Bennett, 163 AD2d 308, 309 (2d Dept. 1990) ............................................................................................................... 56 Matter of Exeter Building Corp. v. Town of Newburgh, 49 A.D.3d 731, 733 (2d Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008) 29, 37, 54 Matter of First National City Bank v. City of New York Finance Administration, 36 N.Y.2d 87 (1975) ................................................... 58 Matter of Hogg v. Cianciulli, 247 A.D.2d 474 (2d Dept. 1998) ............... 60 Matter of Jennings v. New York State Office of Mental Health, 90 N.Y.2d 227, 239 (1997) .......................................................................... 60 Matter of Kar-McVeigh v. Zoning Board of Appeals of Town of Riverhead, 93 A.D.3d 797, 799 (2d Dept. 2012) ............................. 18, 47 Matter of King Road Materials v. Garafalo, 173 A.D.2d 931 (3d Dept. – 6 – 1991) ...................................................................................................... 36 Matter of Mar-Vera Corporation v. Zoning Bd. Of Appeals of the Village of Irvington, 84 A.D.3d 1238 (2d Dept. 2011) ...................................... 60 Matter of Pecoraro v. Board of Appeals of Town of Hempstead, 2 N.Y.3d 608 (2004) .............................................................................................. 60 Matter of Pokoik v. Department of Health Services, County of Suffolk, 220 A.D.2d 13, 16 (2d Dept. 1996) .................................................. 18, 47 Matter of Temkin v. Karagheuzoff, 34 N.Y.2d 324 (1974) ..................... 42 Matter of Temkin v. Karagheuzoff, 34 N.Y.2d 324, 329 (1974).............. 43 Matter of Toys “R” Us v. Silva, 89 N.Y.2d 411, 423 (1996) ..................... 60 Matter of Usen v. Sipprell, 41 A.D.2d 251, 256 (4th Dept. 1973) ............ 58 Moen v. Lansing Cent. School Dist., 257 A.D.2d 846, 848 (3d Dept. 1999) ...................................................................................................... 58 Palsgraf v. Long Island R. Co., 248 N.Y. 339, 341 (1928) ....................... 36 Pete Drown, Inc. v Town Bd. of Town of Ellenburg, 229 AD2d 877, 878 (3d Dept. 1996) ...................................................................................... 42 Pokoik v. Silsdorf, 40 N.Y.2d 769 (1976) ................................................. 36 Pokoik v. Silsdorf, 40 N.Y.2d 769, 774 (1976) ................................... 40, 44 Prentiss v. Bowden, 145 N.Y. 342, 346 (1895) ........................................ 42 – 7 – Pressman v. Gunther, 243 A.D.2d 634 (2d Dept. 1997) .......................... 36 Richfield Oil Corporation of New York v. City of Syracuse, 287 N.Y. 234 (1942) ..................................................................................................... 58 Schulman v. Louis Dejonge & Co., 270 A.D. 147, 149-150 (1st Dept. 1945) ...................................................................................................... 57 Stork Rest. v Boland, 282 NY 256, 267 (1940) ........................................ 60 Town of Orangetown v. Magee, 88 N.Y.2d 41 (1996) .............................. 45 Triangle Inn Inc. v. LoGrande, 124 A.D.2d 737 (2d Dept. 1986) ........... 36 Watergate II Apartments v. Buffalo Sewer Authority, 46 N.Y.2d 52, 57 (1978) ......................................................................................... 47, 57, 58 Statutes CPLR 7804 (h)........................................................................................... 57 CPLR Article 78 ........................................................................................ 31 Town Law 265-a.................................................................................. 40, 52 Town Law Section 265-a .................................................................... 38, 54 Town Law Section 267-c ..................................................................... 47, 57 Other Authorities 4 Rathkopf’s The Law of Zoning and Planning §70:28 [Improper revocation of valid permit] (4th ed.) ...................................................... 43 – 8 – http://www.generalcode.com/ecode360/NY .............................................. 50 Newburgh Code Section 83-7 ........................................................................ 63 – 9 – COUNTER-STATEMENT OF QUESTION PRESENTED Question: Did the Appellate Division correctly find that the Town of Newburgh Zoning Board of Appeals did not act in an arbitrary and capricious fash- ion in determining that appellants had not acquired vested rights to build their project where there were no misleading representations by the town, no innocent reliance by appellants and no unconscionable det- riment resulting and where there was competing evidence presented to the zoning board as to whether appellants had made substantial ex- penditures and completed substantial construction rendered valueless without a determination of vested rights in any event? Answer: Yes. To establish a vested right to build a project no longer allowed under local zoning law, a property owner must demonstrate that: The project has received an approval; and that The property owner has undertaken substantial construction and made substantial expenditures that would be valueless without vesting; and that The doctrine of equitable estoppel should be invoked to estop – 10 – the municipality from enforcing its new zoning law because the municipality had, up to the time the approval was issued, en- gendered a clear expectation of continued enjoyment of the benefit conferred and the property owner innocently relied up- on those assurances to his detriment. The Appellate Division, Second Department correctly ruled that the zoning board’s determination that appellants could not have grounded their claim of common-law vesting upon the limited permits they re- ceived because none of those permits—which authorized only demolition of a single-family house and water tanks, the erection of a sign and re- grading and land clearing—either singly or together amounted to the approval by the Town of Newburgh of appellant’s project was not arbi- trary and capricious and because proof of reliance—an essential ele- ment of the vested rights doctrine—was missing in any event. – 11 – NATURE OF THE CASE This is an appeal from a determination by the Appellate Division, Second Department1 that reversed the trials court’s finding that appel- lants, Exeter Building Corp. and 17K Newburgh, LLC (“Exeter”) had established vested rights upon the ground that the zoning board’s de- termination that Exeter could not have grounded its claim of common- law vesting upon the limited permits it received because none of those permits—which authorized only demolition of a single-family house and water tanks, the erection of a sign and regrading and land clearing— either singly or together amounted to the approval by the Town of New- burgh (“Newburgh”) of Exeter’s Madison Green project was not arbi- trary and capricious and because proof of reliance—an essential ele- ment of the vested rights doctrine—was lacking and remitting the mat- ter to the Supreme Court, Orange County, for the entry of an amended judgment dismissing the proceeding on the merits. This following recitation of background facts and procedural history is provided as a contextual reference. It is taken largely from a joint 1 Exeter Bldg. Corp. v Town of Newburgh, 114 A.D.3d 774 (2d Dept. 2014). – 12 – stipulation of agreed facts [A-89–109].2 Factual findings made by the Appellate Division, Second Department are noted with the designation [App-Div-Dec]. Introductory Exeter Building Corp. and 17 K. Newburgh, LLC, (“Exeter”)3 are the proposed developers of a 28.9-acre parcel of land located in the Town of Newburgh. [A-90]. Wilbur Fried is the principal owner of both Exeter entities. [A-93]. At the time of purchase, Exeter’s property was located within the town’s R-3 zoning district which, among other things, per- mitted, with site plan approval from the planning board, multi-family housing. [A-92], [App-Div-Dec]. On March 6, 2006, by local law, the town board rezoned certain R-3 areas of the town to an R-1 district classification, which areas included the R-3 zoning district where Exeter’s property was located. As a result Exeter’s property became—and has, since March 6, 2006, remained— zoned R-1. Construction of multi-family housing of the style proposed 2 Parenthetical references beginning with “A” are to pages of the Appendix. 3 For purposes of this litigation the parties agree that Exeter Building Corp. and 17K Newburgh, LLC shall be treated as if a single entity. – 13 – by Exeter is not permitted in the R-1 zoning district. [A-92]. Exeter re- mains in title. [App-Div-Dec]. Site Plan Application Filing In 2002, while the R-3 zoning classification was in force, Exeter ap- plied to the planning board for site plan approval, allowing it to con- struct a multi-family housing project consisting of 34 residential build- ings, with each residential building containing four single family resi- dential townhouse units, resulting in a proposal totaling 136 residential units. Exeter gave the name “Madison Green” to its proposal. [A-93]. Exeter’s Madison Green project proposed to connect to municipal water and wastewater services through extensions of adjacent and ex- isting water and sewer districts of the Town of Newburgh. Such exten- sions require town board approval. [A-93–94]. At the time Exeter pur- chased the property, neither water service nor wastewater service was available at the property. [A-630]. As part of its site plan application packet, Exeter submitted a letter [A-112] in which it acknowledged awareness of a sewer moratorium preventing development of Exeter’s property as proposed. In that letter, Wilbur Fried (the principal of both Exeter entities) recited his under- – 14 – standing that Exeter was proceeding at its own risk and that final site plan approval could not be granted unless and until the sewer morato- rium was lifted. [A-112; A-93; A-631–633]. In April of 2001, nearly a year before Exeter first made application to the planning board, the town board appointed a comprehensive plan committee and commissioned the preparation of a new comprehensive plan for the town. [A-94–95]. Exeter’s principal, Wilbur Fried, was aware that a comprehensive rezoning of the town was under considera- tion at the time he made application to the planning board [A-634] and became aware, while his application was pending before the planning board, that the town board was considering rezoning portions of the town (including the area of the town where Exeter’s property was locat- ed) from an R-3 to an R-1 classification. [A-637–638], [App-Div-Dec]. On a periodic basis from May of 2002 and until December of 2003, Exeter appeared before the planning board in pursuance of the Madison Green project. The planning board processed Exeter’s application in its usual and customary fashion. [A-94]. Subdivision Approval In December of 2003, during the course of that review, a consultant – 15 – to the planning board recommended that Exeter consider adjusting the boundary line of the Madison Green project property with the property line of an adjoining project (known as “Drury Heights”) in order to pro- vide a better layout for both projects and in order to enhance the spatial buffer between the Madison Green project and an existing, contiguous subdivision known as “Colden Park.” [A-94]. Exeter made an appear- ance before the planning board on March 4, 2004, shortly after the property line adjustment recommendation was made. [A-113–152], [App-Div-Dec]. During that meeting, Stephen Lopez, a member of the project development team representing Exeter stated that [A-119]: With regard to an alternative to this plan, we have dis- cussed with neighboring developer the potential of ac- quiring 100 foot strip at the back of this south leg. That’s not the proposal that’s currently before you, as we have no agreement with our neighbor. This proposal works, it meets all the zoning requirement, if that agreement comes to fruition, it would provide additional buffering along the east side of the south leg for some of the existing homes in Colden Park and we’re more than happy to do that to the extent we can work that agree- ment, we will make every effort to do so. In July of 2005, when the planning board learned of the intent by the town to rezone certain areas of the town (including that area where the Madison Green project was proposed to be constructed) from an R-3 – 16 – zoning classification to in the R-1 zoning classification, the chairman of the planning board wrote to Exeter notifying Exeter of this possibility and putting Exeter on notice as well that—in view of the possible zon- ing district change—Exeter would be pursuing its application at its own risk. The chairman also notified Exeter, however, that the planning board would continue to review the Madison Green application in a timely fashion should Exeter wish it to do so. [A-82; A-98–99; A-637– 638], [App-Div-Dec]. Exeter returned to the planning board and requested subdivision approval. Boundary-line-change subdivision approval was granted by the planning board on October 20, 2005. [A-184–193; A-149]. The ap- proval was granted by written resolution [A-83–88] and included within it the following language: This resolution shall not be deemed to establish any vested right for the applicants to continue with the bal- ance of their projects in view of the proposal pending be- fore the town board to change the zoning requirements in the vicinity in question. [A-99]. The subdivision plat carrying out that approval was filed on January 24, 2006. [A-99]. – 17 – Town Board Rezoning As noted already, in April of 2001, the town appointed a comprehen- sive plan committee and commissioned the preparation of a new com- prehensive plan for the town. When the draft plan was completed, a community survey questionnaire was distributed to a random sample of 600 Town of Newburgh households. The results of that survey were then used to revise the draft plan and to formulate community vision statements, goals and objectives. A reconstituted comprehensive plan update committee was appointed to continue the process. [A-94–95]. Meetings and informal public hearings were then held, resulting in is- suance of a comprehensive plan update status report in March of 2004. [A-95]. Following SEQRA compliance and additional formal public hearings, the town board, by local law [Local Law No. 3 of 2006] enacted on March 6, 2006, effectuated the rezoning of certain R-3 areas of the town, which areas included the R-3 zoning district where Exeter’s property is located. The result of that rezoning was to rezone Exeter’s property to an R-1 designation. [A-97], [App-Div-Dec]. Exeter challenged that rezoning in court. By decision dated March 18, 2008, the New York State Supreme Court, Appellate Division, Sec- – 18 – ond Department, found that the town board, “prior to enacting Local Law 3… took the requisite hard look at areas of environmental concern, including traffic issues, in the proposed rezoning areas.” Exeter Build- ing Corp. v. Town of Newburgh, 49 A.D.3d 731, 733 (2d Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008). [A-536–538]. The appellate division, in that same decision, however, declared that Exeter’s property was exempt [Town Law §265-a] “from the rezoning effected by Local Law 3 for a three-year period.” That exemption period expired on Janu- ary 24, 2009 (three years from map filing). Exeter Building Corp. v. Town of Newburgh, 49 A.D.3d 731, 734 (2d Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008). [A-98; A-538], [App-Div-Dec]. Conditional Site Plan Approval On June 7, 2007, while the earlier appeal was pending, Exeter re- turned to the Town of Newburgh Planning Board and was granted pre- liminary site plan approval.4 [A-101]. Exeter returned again to the 4 No automatic stay was in effect. While the town was an appellant in that earlier case, no automatic stay of the lower court’s judgment ever existed because the judgment appealed from did not “command… an act.” Matter of Kar-McVeigh v. Zoning Board of Appeals of Town of Riverhead, 93 A.D.3d 797, 799 (2d Dept. 2012); Matter of Pokoik v. Department of Health Services, County of Suffolk, 220 A.D.2d 13, 16 (2d Dept. 1996). The town obtained a discretionary stay from the appellate [Footnote Continued on Next Page] – 19 – planning board on December 20, 2007 and was granted conditional final site plan approval. [A-101], [App-Div-Dec]. The resolution of conditional final site plan approval included 18 conditions. [A-275–287]. Eleven of those conditions (1, 2, 3, 7, 8, 9, 12, 13, 14, 15 & 16) were required to be satisfied before the final approval would be effective and the plans could be signed. [A-278–285]. Wilbur Fried was aware that no building permit for construction of the town- house project could be issued until the approval was effective and the plans were signed [A-642–643], [App-Div-Dec]. No building permit for a townhouse building was ever issued by the Town of Newburgh. [A-660– 661]. Condition “1” of the resolution required Exeter to amend its plans to show lighting poles no higher than 16 feet and to have that plan change verified by the Town of Newburgh landscaping consultant [A-520]. Alt- hough Exeter’s principal testified at trial that “we believe[d] submitted a… revised site plan that included that,” [A-645–646], the Town of Newburgh condition-compliance gatekeeper (Bryant Cocks) testified division on December 24, 2007 that remained in effect for three months until March 18, 2008. [A-539]. – 20 – that no such revised plans were ever submitted. [A-660–661]. Condition “2” required the applicant to obtain the approval of the planning board engineer of a revised phasing plan. [A-520]. Exeter’s representative at trial testified that he was “pretty sure that we did” submit a phasing plan. [A-646]. The Town of Newburgh condition- compliance gatekeeper testified that no approval letter of a phasing plan was ever received. [A-661]. Condition “3” of the resolution of site plan approval required Exeter to modify its plans showing a properly labeled pedestrian access to an adjoining project (Drury Heights) to the satisfaction of the Town of Newburgh traffic engineer. [A-520]. Exeter’s trial witness was equivo- cal in his answer first stating that “I believe we did [provide this] on the revised plan,” later correcting himself by saying “it was not acted on by the planning board because of the litigation that was going on at this time.” [A-646]. The Town of Newburgh condition-compliance gatekeep- er testified that the condition was not satisfied. [A-661]. Condition “7” of the resolution of approval required that Exeter ob- tain the approval of the town board of the proposed roadway names within the project. [A-521]. Exeter’s witness testified that Exeter – 21 – “submitted the names.” [A-647]. The Town of Newburgh condition- compliance gatekeeper testified that road name approval was ever granted by the town board. [A-662]. Condition “8” of the resolution of approval required the applicant to submit proposed condominium association bylaws to the Town of New- burgh attorney. [A-521–522]. Exeter’s witness testified that while his “condominium attorney had conversations with the town attorney… [he did not] know how far they got.” [A-647–648]. The town’s condition- compliance gatekeeper testified that, to his knowledge, the condomini- um association bylaws were never delivered to the town attorney. [A- 662]. Condition “9” of the resolution of approval required the applicant to deliver a petition, pursuant to New York State Vehicle and Traffic Law Section 1660-a, authorizing the Town of Newburgh Police, Parking En- forcement and Code Compliance personnel to enforce vehicle and traffic violations on the site. [A-522]. Exeter’s witness testified that while it was not “a big deal writing up a petition…[he did not] believe we got that far.” [A-648]. The Town of Newburgh condition-compliance gate- keeper verified that the required petition was never delivered. [A-662]. – 22 – Conditions “12” through “16” of the resolution required the applicant to post various types of financial security and to pay a fee in-lieu-of- parkland [A-523–526]. Exeter’s witness testified emphatically that he did not pay those fees. [A-649–651]. The Town of Newburgh condition- compliance gatekeeper confirmed that no such fees were paid. [A-663]. The First Appeal On March 18, 2008, in the context of earlier litigation between the parties, the appellate division ruled that the lot line change approval granted by the planning board constituted a subdivision within the meaning of Town Law Section 276 (4)(a), thus entitling Exeter to a three-year exemption from the rezoning effected by the local law. Exe- ter Building Corp. v. Town of Newburgh, 49 A.D.3d 731, 733 (2d Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008). [A-536]. [A-101]. Building Permit [Demolition of Single Family Residence] On July 19, 2007, a building permit authorizing demolition of a sin- gle family residence on Exeter’s property was issued by the code com- pliance department. [A-102; A-556]. The town board had no involve- ment in the review or issuance of this permit. [A-102]. Building Permit [Removal of Water Tanks] Exeter submitted an application for issuance of a building permit – 23 – authorizing it to remove certain water tanks located on property adjoin- ing its Madison Green holdings. [A-102]. The building permit applied for was issued on April 4, 2008. [A-557]. The town board had no in- volvement in the review or issuance of that permit. [A-102]. Clearing and Grading Permit On June 3, 2008, Exeter submitted an application for issuance of a clearing and grading permit authorizing it to perform certain clearing and grading activities on its Madison Green property. [A-102; A-374– 382]. On July 17, 2008, the Town of Newburgh Planning Board approved the clearing and grading permit application as required by code. [A- 102–103; A-374–382]. The clearing and grading permit applied for was itself issued by the code compliance department on August 29, 2008. [A- 103; A-374–382]. The town board had no involvement in the review or issuance of this permit. A clearing and grading permit was required to conduct earth moving activities because the conditions of the site plan approval earlier grant- ed remained unsatisfied, thus leaving that approval conditional and in- choate. Had the approval conditions been satisfied—thus converting the – 24 – conditional inchoate approval into a final and unconditional one—no clearing and grading permit would have been required because clearing and grading activities carried out pursuant to an approved site plan are exempt5 from the requirement of obtaining a clearing and grading per- mit. Building Permit [Signs] On October 9, 2008, a building permit authorizing erection of signs on Exeter’s property was issued by the code compliance department. [A- 103]. Further Planning Board Appearances In March of 2009, after the three-year exemption period granted by this court expired,6 Exeter applied to the planning board for amended site plan approval in order to adjust its plan within the context of the former R-3 zoning, and to request that certain conditions of the resolu- tion of final site plan approval regarding bonding and fees for non- 5 No clearing and grading permit is required under the Newburgh Code for clearing and grading activities carried out pursuant to an approved site plan, such activities being exempt from the permitting requirement. See Section 83-7 [Activities exempt from permit requirements], subparagraph “P,” reproduced as an addendum to this brief at pp. 63–64. 6 The three-year exemption period expired on January 24, 2009. – 25 – public improvements be deleted as they were not, in Exeter’s view, in conformance with town code. [A-103]. On April 14, 2009, the code enforcement officer wrote to the plan- ning board advising it that “this office has determined that the statuto- ry vesting period established by the Appellate Court’s [sic] March 18, 2008 decision… has expired” and further that, as a result, “[t]he use of the property proposed in the… applicant’s Request [sic] for amended site plan approval is not permitted in the R-1 zoning district.” [A-274]. The town board had no involvement in the issuance of this letter. [A- 104]. On April 16, 2009, Exeter appeared before the planning board for review of its proposed amended site plan. The planning board, in light of the code compliance supervisor’s letter and the advice of counsel, de- termined that unless, before expiration of the three-year exemption pe- riod, there was a determination by some official or board of the town that common law vested rights have been established, Exeter’s amend- ed site plan application was not approvable. [A-104; A-544–555]. On De- cember 3, 2009, Exeter’s subsequent request for an extension of its con- ditional final site plan approval was denied for the same reason. [A- – 26 – 104]. Work Performed & Costs Incurred By Exeter The first decision of the appellate division [A-482–486], dated March 18, 2008, gave Exeter protection from the town’s rezoning law for a three-year period ending on January 24, 2009. [A-105]. Before expira- tion of that protection period, and pursuant to the permits issued to Ex- eter as outline above, Exeter performed work on its property. [A-105]. The single-family home was demolished pursuant to the building per- mit issued on July 19, 2007. [A-105]. The water towers and concrete foundation pad were removed pursuant to the building permit issued on April 4, 2008. Clearing and grading was carried out pursuant to the clearing and grading permit issued on August 29, 2008. The work done was found—after trial—to be substantial and to have involved substan- tial expenditures. The work done was also found by the trial court to be essentially valueless if Exeter could not build its condominium project. [A-37]. Proceedings Before the Zoning Board On June 4, 2009, Exeter appealed the code compliance supervisor’s letter-ruling of April 14, 2009 to the zoning board and also sought an in- terpretation of certain provisions of the Code of the Town of Newburgh. – 27 – [A-106; A-299–394; A-493–502]. The town also made a submission to the zoning board in response. [A-106; A-469–492]. The record before the zoning board was full and complete7 and in- cluded Exeter’s presentation regarding substantial expenditures and construction rendered valueless without vesting [A-106; A-299–394; A- 493–502] as well as the presentation of Newburgh on that score. [A-106; A-469–492]. Exeter offered the opinion of its engineer that, without vesting, “the improvements that have already been made on the proper- ty [will become] essentially valueless.” [A-385]. Newburgh’s consultants opined, to the contrary that “the relatively small public improvements Exeter has made… can, in general, be modified and utilized for any number of uses which are permitted under the new zoning law” [A-489] and that “[t]he clearing and grading performed by Exeter… constituted a minor alteration in the land and topography… [and] will not be ren- dered ‘essentially valueless’ unless [Exeter] is allowed to go forward with its development plans under the old zoning law.” [A-491]. 7 Fully 259 pages of the appendix are dedicated to reproducing the record before the zoning board. In addition, a myriad of photographs, maps and diagrams have been left out of the appendix but were also before that board. – 28 – Proceedings before the zoning board were held on July 23, 2010, Au- gust 27, 2010, September 24, 2010 and on November 24, 2010. [A-106; A-395–468]. The zoning board issued its decision on November 24, 2010. [A-106; A-288–298]. The zoning board ruled that because the building inspector “is not permitted to issue a building permit allowing construction of the im- provements allowed by the conditionally approved site plan… Exeter would… need[] to satisfy all conditions attached to the resolution of site plan approval…” before it could acquire vested rights in the project. 295-296. The zoning board ruled further that, while Exeter might argu- ably have achieved vested rights in the “demolition permit and the clearing and grading permit… none of the work that was done pursuant to those permits ‘vests’ [Exeter] in a Site Plan approval that remains a conditional approval and that, now, authorizes uses outside those al- lowed by the current Town zoning ordinance.” [A-295]. As a result, the zoning board did not reach the issue of substantial construction and ex- penditures. – 29 – Litigation History The 2006 Challenge Exeter commenced a hybrid action/proceeding against the town board and planning board in 2006 following enactment of the rezoning local law by the town board and the lot line change approval by the planning board. [A-107]. On November 6, 2006, special term invalidated the town’s rezone on SEQRA grounds, returning Exeter’s property to its R-3 zoning classification and ruled that Exeter was not entitled to the protection of Section 265-a of the Town Law of the State of New York. [A-107; A-531–535]. As noted above, by decision8 dated March 18, 2008, the appellate di- vision found that the town board, “prior to enacting Local Law 3… took the requisite hard look at areas of environmental concern, including traffic issues, in the proposed rezoning areas” and also ruled that the lot line change approval granted by the planning board constituted a sub- division within the meaning of Town Law Section 276 (4)(a), thus enti- tling Exeter to a three-year exemption from the rezoning effected by the 8 Matter of Exeter Building Corp. v. Town of Newburgh, 49 A.D.3d 731, 733 (2d Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008). – 30 – local law under Town Law Section 265-a. [A-107; A-536–539]. The 2010 Challenge Following issuance by the zoning board of its November 24, 2009 de- cision Exeter commenced a second hybrid action/proceeding against var- ious officials and boards of the Town of Newburgh. Exeter filed that ac- tion/proceeding on January 8, 2010. [A-107–108]. The first cause of ac- tion set forth the petitioner’s claim for article 78 relief. In this cause of action, Exeter sought judgment annulling determinations of the zoning board of appeals, the planning board and the code enforcement officer of the town relating to its condominium project known as Madison Green, asserting that the failure of each to recognize its substantial- expenditure claim of common law vesting was an arbitrary and capri- cious act affected by an error of law. In this same cause of action Exeter sought, as well, judgment declaring that the plaintiff has, by virtue of construction work carried out on site during the time that the property was zoned R-3, acquired common law vested rights allowing it to con- struct its project under that former zoning classification. [A-108]. In its second cause of action, the plaintiff requested judgment de- claring that it had the right, by virtue of special facts (bad faith and di- – 31 – latory tactics allegedly engaged in by certain town officials but not in- volving the planning board), to build its project under the former R-3 zoning classification. [A-108]. The third and fourth causes of action sought redress for claimed vio- lations of the plaintiff’s constitutional rights. [A-108–109]. The town moved, pre-answer, to dismiss the third and fourth causes of action. [A- 109]. Its motion was granted and those causes of action were dismissed by order of May 12, 2010. [A-109].See, A-42-51. Issue was then joined, with the town seeking dismissal of the first cause of action upon the ground that there was no arbitrary and capri- cious conduct and on the further ground that declaratory relief was not available, the exclusive remedy being article 78 of the CPLR. [A-109]. On September 16, 2010, special term ruled that the article 78 claims would be held in abeyance pending a trial of the declaratory judgment claims at law at which time “an evidentiary hearing shall be held… pursuant to CPLR Article 78.” [A-109; A-541–543]. A trial was held in February of 2011. The Trial Court Decision The trial court saw its charge as to decide “whether [Exeter’s] ex- – 32 – penditures were ‘substantial’ and whether those expenditures would be ‘valueless’ if [the town’s] determinations were to be upheld.” [A-29]. Thus, the court made no findings as to whether equity should inter- vene.9 Ignoring that both Exeter [A-313; A-383–385; A-495–497] and the town [A-490–492] had placed evidence relating to substantial construc- tion and expenditures rendered valueless without vesting before the zoning board, the trial court viewed this issue as one beyond the record (“the record was not developed below with respect to substantial ex- penditure or the rendering of those expenditures valueless by [the town’s] determinations” [A-30]) and thus determined to hold a trial to develop the issue. [A-40]. The trial court never made a determination of whether the ruling of the zoning board was arbitrary and capricious or affected by an error of law. Without explanation, the court substituted its judgment for that of the zoning board and decided the issue of substantial construction on a clean slate. The court did not explain why—if it was correct that the 9 The trial court, in a passing comment, found it “noteworthy that the doctrine of vested rights is grounded, in part, by [sic] the principals of equitable estoppel.” [A- 36]. However, the court, in its decision, never made findings as to whether the ele- ments of equitable estoppel were established. – 33 – zoning board had not made a determination as to substantial construc- tion vesting—it did not remand the matter to that board for a determi- nation consistent with the guidance of the court announced within its decision. The Second Appeal On February 13, 2014, the appellate division reversed the trial court ruling that Exeter has “no vested right to develop the property under the R–3 zoning regulations in effect prior to March 6, 2006… [and re- mitting the matter] to the Supreme Court, Orange County, for the entry of an amended judgment, inter alia, dismissing the proceeding on the merits…”10 In its decision, the appellate division ruled that the zoning board’s determination that Exeter could not have grounded its claim of common-law vesting upon the limited permits it received because none of those permits—which authorized only demolition of a single-family house and water tanks, the erection of a sign and regrading and land clearing—either singly or together amounted to the approval by the Newburgh of Exeter’s Madison Green project was not arbitrary and ca- 10 Exeter Bldg. Corp. v Town of Newburgh, 114 AD3d 774 (2d Dept. 2014). – 34 – pricious and because proof of reliance—an essential element of the vest- ed rights doctrine—was lacking. – 35 – POINT I THE APPELLATE DIVISION PROPERLY DETERMINED THAT EXETER HAD NOT ACQUIRED VESTED RIGHTS. ___________________________________________________ It is a basic principle of New York law that a municipality is free to amend11 its local zoning law at any time. Absent some form of legisla- tive grandfathering, the new zoning law applies immediately to all property in the municipality, including property under construction. So unyielding is the rule that it has been held that a zoning amendment “constitutes, ipso facto, a revocation of any building permit issued up to that time for a use or structure prohibited by the amendment.”12 Special Facts and Vested Rights As with all general rules, there are, of course, exceptions. Two im- portant exceptions are vested rights and special facts. Exeter attempted to claim the benefit of both in its pleadings [A-57–66 (vested rights); 11 Of course, the changes made must be consistent with a well-ordered plan for the community and must comply with all procedural requirements (including SEQRA). 12 Matter of Ellington Construction Corp. v. Zoning Board of Appeals of New Hemp- stead, 152 A.D.2d 365, 373 (2d Dept. 1989), affd, 77 N.Y.2d 114 (1990). – 36 – and A-66–68 (special facts)]. Exeter’s special facts cause of action was dismissed pre-answer [A- 26]. However, the special facts doctrine13 loomed large over every deci- sion the town made in this matter because the town was wedged be- tween a vested-rights-rock and a special-facts-hard-place in processing Exeter’s various planning board applications: had the planning board chosen to delay processing of Exeter’s application until the zone change 13 Under the special facts exception, a property owner may be permitted to obtain approval under the former zoning law, despite its amendment, if he can prove that municipal officials deliberately delayed the processing of his application in order to prevent the accrual of rights before the zoning law change could be made effective. Mascony Transport and Ferry Service, Inc. v. Richmond, 71 A.D.2d 896, affd on dec below, 49 N.Y.2d 969 (1980); Pokoik v. Silsdorf, 40 N.Y.2d 769 (1976); Hamptons, LLC v Rickenbach, 98 AD3d 736 (2d Dept. 2012). Usually, this requires proof of “malice, oppression, manipulation or corruption” [Matter of King Road Materials v. Garafalo, 173 A.D.2d 931 (3d Dept. 1991)] or a showing of “bad faith” conduct [Tri- angle Inn Inc. v. LoGrande, 124 A.D.2d 737 (2d Dept. 1986)] or, at the very least, “administrative procrastination of [high] magnitude.” Amsterdam-Manhattan Asso- ciates v. Joy, 42 N.Y.2d 941 (1977) (a fifteen month delay in processing of ministeri- al permit)]. See, also, Alscot Investing Corp. v. Rockville Centre, 64 N.Y.2d 921 (1985); Pressman v. Gunther, 243 A.D.2d 634 (2d Dept. 1997); Marasco v. Westbury, 242 A.D.2d 724 (2d Dept. 1997). It is not enough that there might have been delay or even that there has been delay coupled with bad faith. The character of bad faith required to establish special facts is much like the concept of negligence described in Palsgraf v. Long Island R. Co.—bad faith in “in the air, so to speak, will not do.” Palsgraf v. Long Island R. Co., 248 N.Y. 339, 341 (1928). For bad faith delay to au- thorize a declaration of special facts, the bad faith involved must have been deliber- ately intended to delay the processing of the challenger’s application in order to prevent the accrual of rights before the zoning ordinance change could be made ef- fective. Mascony Transport and Ferry Service, Inc. v. Richmond, 71 A.D.2d 896, affd on dec below, 49 N.Y.2d 969 (1980). Pokoik v. Silsdorf, 40 N.Y.2d 769 (1976). – 37 – was final rather than (as it did) merely advise Exeter of that imminent zone change,14 it risked a finding of special facts; yet, by processing Exe- ter’s application while the three-year clock of Town Law 265-a15 was ticking (in order to avoid adding fodder to Exeter’s special facts claim) the town arguably opened its flank to Exeter asserting a claim of vested rights. The town and its planning board, therefore, elected to process Exe- ter’s application with standard dispatch while repeatedly reminding Exeter of the imminent zone change [A-82, 98–99, 634, 637–638]. There was no bad faith or administrative procrastination in the town’s review of Exeter’s applications and its special facts claim was properly dis- missed by the trial court. [A-26]. Nor, as will be discussed below, was there municipal conduct engendering a clear expectation of continued enjoyment of Exeter’s (inchoate and conditional) site plan approval be- 14 Significantly, no claim was made in the pleadings that the planning board de- layed processing of Exeter’s application in any fashion. Indeed, the planning board was not even named in the special facts cause of action [A-68–69]. 15 Exeter was judicially granted a three year protection from the town’s amended zoning law provisions. See, Matter of Exeter Building Corp. v. Town of Newburgh, 49 A.D.3d 731, 733 (2d Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008). That protection expired on January 24, 2009. – 38 – yond expiration of the judicially declared section 265-a protection war- ranting invocation of equitable estoppel against the town. The trial court declared that Exeter “demonstrated a commitment to the purpose for which it was granted subdivision approval16 and [that it]… effected substantial changes to [its] property, including substantial expenditures, which would be rendered essentially valueless if the mu- nicipal action of the zone change were to be applied” [A-37] based upon clearing and grading work performed on its property during the three- year protection period of Town Law Section 265-a. In doing so, that court apparently believed that all that was required to establish vested rights was a demonstration of substantial expenditures and construc- tion, ignoring the need to demonstrate that the powers of equity should be invoked. The appellate division correctly reversed that ruling determining that Exeter could not have grounded its claim of common-law vesting upon the limited permits it received because none of those permits— 16 Subdivision approval was granted in 2003, four years before Exeter received site plan approval and at a time when its proposal to build a multifamily residential project was in its infancy. – 39 – which authorized only demolition of a single-family house and water tanks, the erection of a sign and regrading and land clearing—either singly or together amounted to the approval by Newburgh of Exeter’s project and because proof of reliance—an essential element of the vest- ed rights doctrine—was missing. Exeter’s Claims on This Appeal Exeter asserts that if the decision of the appellate division is allowed to stand it will “eviscerate the long-standing common law vesting doc- trine, a doctrine critical to the constitutional property rights of New Yorkers”17 and because its holding is inconsistent with this Court’s deci- sion in Matter of Ellington Construction Corp. v. Zoning Board of Ap- peals of the Village of New Hempstead. 18 Exeter is incorrect. The appellate division did not hold—as Exeter claims—that one cannot obtain a vested right to complete a project un- der an inchoate permit. Rather, it held that it was not arbitrary and ca- pricious for the zoning board to have determined that Exeter could not, 17 Exeter’s prime brief at p. 2. 18 Matter of Ellington Construction Corp. v. Zoning Board of Appeals of the Village of New Hempstead, 77 N.Y.2d 114 (1990). – 40 – under the circumstances presented, vest in the inchoate permit it re- ceived in this matter. And it so held because it determined that the cru- cial element of good faith reliance was missing here. The Vested Rights Doctrine is Rooted in Equity The doctrine of vested rights was forged in the crucible of equity. In Matter of Ellington Construction Corp. v. Zoning Board of Appeals of the Village of New Hempstead,19 this Court announced that New York vested rights jurisprudence must be viewed against its backdrop as a “constitutionally based” doctrine “grounded on principals of equitable estoppel.”20 Noting that the Governor’s memorandum approving enact- ment of Town Law 265-a, a statute establishing a durational element to the vested rights doctrine, “stated that the ‘purpose of these bills is to reconcile the interests of home builders and developers who have made financial commitments relying on existing zoning ordinances, and the 19 Matter of Ellington Construction Corp. v. Zoning Board of Appeals of the Village of New Hempstead, 77 N.Y.2d 114, 122 (1990). 20 Ellington Const. Corp. v. Zoning Bd. of Appeals of Incorporated Village of New Hempstead, 77 N.Y.2d 114, at p. 122 (1990). The Court there relied, in describing the grounding of this doctrine, upon the dissenting opinion of Chief Judge Breitel in Pokoik v. Silsdorf, 40 N.Y.2d 769, 774 (1976): “The doctrines of vested rights or es- toppel… rest in the equity and justice jurisprudence of a court…” – 41 – interests of towns and villages in not being unduly restrained from up- grading zoning requirements,’ ”21 this Court concluded that the statute must be applied in a fashion that will not “produce[]… unreasonable and potentially unjust consequences.”22 Courts have since continued to emphasize the equitable nature of the vested rights doctrine by tying issuance of that remedy to a finding “that the facts of the case render it inequitable that… [government] im- pede the individual from taking certain action.23 The hallmark elements of equitable estoppel—misleading representations by the municipality, innocent reliance on those representations by the property owner and resulting unconscionable detriment—are thus all in play. A reading of nearly every reported case dealing with vested rights reveals the rule’s equitable roots.24 21 Ellington, supra, 77 N.Y.2d 114, at p. 124 22 Ellington, supra, 77 N.Y.2d 114, at pp. 124–125. 23 See, e.g., Kadin v. Bennett, 163 A.D.2d 308 (2d Dept. 1990). 24 See, e.g., the recent characterization of the rule by the Appellate Division, Second Department, in Mar-Vera Corp. v Zoning Bd. of Appeals of Vil. of Irvington, 84 A.D.3d 1238, 1240 (2d Dept 2011): “[T]here is no fixed formula which measures the content of all the circumstances whereby a party is said to possess ‘a vested right.’ Rather, it is a term which sums up a determination that the facts of the case render it inequitable that the State impede the individual from taking certain action. Each [Footnote Continued on Next Page] – 42 – “Equity intervenes always for a reason and never needlessly.”25 The doctrine of vested rights, guided by that tenet, employs the rubric of eq- uitable estoppel. Equitable estoppel may, under appropriate circum- stances, be invoked in order to estop or prevent a party from enforcing a right or exercising authority when “another rightfully relie[d] upon [the] word or deed [of that party] and, as a result, change[d] position to his injury.”26 However, estoppel is not automatic and may be invoked only when “it would be inequitable to permit the party to enforce [his] rights”27 or in order “to prevent the infliction of unconscionable injury and loss upon one who has relied upon the promise of another.”28 In the absence of affirmative representations innocently relied upon to one’s detriment, an essential element of equitable estoppel is lacking and its case must be determined according to its own circumstances.”; Pete Drown, Inc. v Town Bd. of Town of Ellenburg, 229 AD2d 877, 878 (3d Dept. 1996)(the change in zoning law must “inequitably cause a serious hardship or loss”). 25 Prentiss v. Bowden, 145 N.Y. 342, 346 (1895). 26 Matter of E.F.S. Ventures Corp. v. Foster, 71 N.Y.2d 359, 368–369 (1988). 27 Matter of E.F.S. Ventures Corp. v. Foster, 71 N.Y.2d 359, supra, at p. 369. 28 American Bartenders School, Inc. v. 105 Madison Co., 59 N.Y.2d 716 (1983); Mat- ter of Temkin v. Karagheuzoff, 34 N.Y.2d 324 (1974). – 43 – protection is unavailable.29 Not only are the powers of equity to be invoked sparingly and only when needed as to natural persons, equitable estoppel may be invoked against a municipality only in rare circumstances and only in “ ‘unusual factual situations’ [in order] to prevent injustice.”30 Equity Should Not Intervene Here for There Were No Misleading Representations by the Town, No Innocent Reliance by Exeter and No Unconscionable Detriment Resulting—There is Simply No Unfairness To Be Redressed. Exeter argued in the Appellate Division—and now to this Court— that the traditional elements of equitable estoppel should not be strictly applied here—that it was enough that Exeter was granted site plan ap- proval (inchoate though it may have been), had received a clearing and grading permit, a demolition permit, and a sign permit. Work per- formed under those ancillary permits, Exeter argues, vested it in full 29 See, e.g., Fundamental Portfolio Advisors, Inc. v. Toqueville Asset Management, LLP, 7 N.Y.3d 96, 106–107 (2006); Matter of Temkin v. Karagheuzoff, 34 N.Y.2d 324, 329 (1974). 30 Matter of E.F.S. Ventures Corp. v. Foster, 71 N.Y.2d 359, supra, at p. 369, quot- ing from Matter of Hamptons Hosp. & Med. Center v. Moore, 436 NYS2d 239at 93– 94, n. 1; 4 Rathkopf’s The Law of Zoning and Planning §70:28 [Improper revocation of valid permit] (4th ed.). – 44 – and permanent rights to build what is shown on its inchoate site plan approval. Exercise of equitable powers here—upon this record—is not war- ranted. Indeed, to apply the doctrine here would be to fulfill the warn- ing of Judge Breitel in Pokoik.31 While Exeter might not be quite the malefactor of whom Judge Breitel warned, Exeter is just as certainly not deserving of equitable relief, precisely because it seeks to twist an engine of justice to its own opportunistic advantage. To grant the relief that Exeter seeks would result in unreasonable and unjust consequenc- es. Exeter knew since August of 2005—in the very early stages of the application review process—that its property was likely to be rezoned in a fashion that would prohibit the condominium project that it had pro- posed to build from being approved or constructed. [A-634]. Indeed, from the day that Exeter purchased the property, its principal, Wilbur Fried, was aware that a sewer moratorium in the town prohibited his project from being built. [A-632]. The planning board carefully warned 31 Pokoik v. Silsdorf, 40 N.Y.2d 769, 774 (1976). – 45 – Exeter of the impending zoning change as soon as it learned of the pro- posal in order that the petitioner would not unwittingly pursue a nonvi- able project. [A-82]. The pending zone change was discussed frequently at planning board meetings. The subdivision approval resolution issued by the planning board in 2006 warned Exeter that its rights would be affected by the imminent zone change placing Exeter on notice that it was pro- ceeding at its own risk. [A-83–87]. Exeter knew well that its plans were in clear jeopardy. In holding that the zoning board’s determination that Exeter had not established vested rights was not arbitrary and capricious, the ap- pellate division rejected Exeter’s formulation of the vested rights rule. In doing so, it carefully reviewed existing New York vested rights deci- sions and embraced the equitable nature of the remedy, referencing this Court’s decisions in Magee32 and Glacial Aggregates,33 ruling that “ ‘[n]either the issuance of a permit… nor the landowner’s substantial improvements and expenditures, standing alone, will establish the 32 Town of Orangetown v. Magee, 88 N.Y.2d 41 (1996). 33 Glacial Aggregates LLC v. Town of Yorkshire, 14 N.Y.3d 127 (2010). – 46 – right’ ”34 and recognizing further that reliance35—an equitable concept— is at the heart of the vested rights doctrine. Aware that Exeter’s constitutional violation claims had all been dismissed by special term [A-42–45] (which dismissal was not appealed by Exeter) and noting that Exeter had “placed the issue of common-law vesting directly before the ZBA,”36 the Appellate Division ruled that the determination of the zoning board that Exeter had not established its vested rights was “neither arbitrary and capricious nor an abuse of dis- cretion”37 because Exeter could not have reasonably relied upon the “limited permits that were issued”38 as the source of its claim of vested rights, finding further that “reliance on those limited permits could not satisfy the prerequisite for common-law vesting of the right to construct the entire project.”39 This holding is fully consistent with existing vested 34 Decision of the Appellate Division, Second Department, p. 5, second full para- graph. 35 Citing Glacial Aggregates LLC v. Town of Yorkshire, 14 N.Y.3d 127 (2010). 36 Decision of the Appellate Division, Second Department, p. 5, final paragraph. 37 Decision of the Appellate Division, Second Department, p. 5, final paragraph car- rying over to page 6. 38 Decision of the Appellate Division, Second Department, p. 6, first full paragraph. 39 Decision of the Appellate Division, Second Department, p. 6, first full paragraph. – 47 – rights jurisprudence as well as with the rule that any challenge to the determination of a zoning board of appeals must be brought by way of a CPLR article 78 proceeding.40 See Point II. What is odd about Exeter’s last minute play to manufacture vested rights is that Exeter never needed to do so. When one looks at the time line of this project—from its inception in 2002 until expiration of the ju- dicially-declared vesting in 2009, there was only an eleven month peri- od41 when Exeter’s property was under control of the R-1 zoning classifi- cation. At all other times Exeter’s property was under an R-3 designa- tion. Despite this, Exeter waited from November 6, 2006 (when special term rescinded the re-zoning, thus returning Exeter’s property to its 40 See, Town Law Section 267-c [Article seventy-eight proceeding]; Watergate II Apartments v. Buffalo Sewer Authority, 46 N.Y.2d 52, 57 (1978). 41 Exeter’s property was zoned R-3 when it first applied to the planning board in 2002. It remained R-3 until the town re-zoned it to an R-1 classification on March 6, 2006. That re-zoning was undone by judgment of special term issued eight months later, on November 6, 2006. The legal effect of the subsequent proceedings is that Exeter’s property remained zoned R-3 until January 24, 2009, when the judicially- declared vesting period finally expired. And, while the town was an appellant in that earlier case, no automatic stay of the lower court’s judgment ever existed be- cause the judgment appealed from did not “command… an act.” Matter of Kar- McVeigh v. Zoning Board of Appeals of Town of Riverhead, 93 A.D.3d 797, 799 (2d Dept. 2012); Matter of Pokoik v. Department of Health Services, County of Suffolk, 220 A.D.2d 13, 16 (2d Dept. 1996). The town obtained a discretionary stay from the appellate division on December 24, 2007 that remained in effect for three months until March 18, 2008. [A-539]. – 48 – former R-3 classification) until June 7, 2007 [A-101] to return to the planning board for processing of its site plan application. When it did return, Exeter promptly received preliminary [A-101; A-544] and condi- tional final [A-101; A-275] site plan approval. In the more than one year that elapsed after that conditional final approval was granted until the judicially-ordered vesting expired on January 24, 2009 (during which time a discretionary stay was in effect for only three months), Exeter failed to satisfy even the simplest of the site plan conditions that would have converted its inchoate and conditional approval into a viable one [A-642–651], Wilbur Fried, Exeter’s principal, testifying that he “set all these requirements aside…” [A-651] during this time period. Satisfying the site plan resolution conditions would have allowed Exeter to obtain a meaningful building permit—one based upon a municipal authoriza- tion to construct its townhouse project. Exeter chose, instead, to wait until the last minute and, then, to do no more than apply for and obtain unrelated, standalone sign, demoli- tion and earth-moving permits that it now claims should protect its rights forever. In obtaining this last-minute authorization to carry out this site work—work it could have carried out even if it had not yet ap- – 49 – plied for site plan approval42—Exeter hoped to manufacture a claim of vesting. Equity should not intervene in such circumstances. A fair reading of the record plainly shows that the petitioner, sud- denly realizing that its inchoate, conditional site plan approval would expire before the Town Law Section 265-a time-window awarded to it by this court would close by statutory command (and that it had not satis- fied and could not, within the time remaining, satisfy the conditions of that inchoate, conditional approval that would allowing it to ripen into a viable approval authorizing the signing of its plans and the issuance of building permits allowing actual project-related work to begin), ap- plied for and obtained limited authorization to carry out generic site work in the hope of manufacturing a claim of vesting. What is clear from Exeter’s brief is that Exeter rails against its per- ception of unfair treatment. However, the unfairness it protests is not the result of the town’s actins but rather flows from the unfairness in- 42 No clearing and grading permit is required under the Newburgh Code for clearing and grading activities carried out pursuant to an approved site plan, such activities being exempt from the permitting requirement. See Section 83-7 [Activities exempt from permit requirements], subparagraph “P,” reproduced as an addendum to this brief at pp. 63–64. Demolition and sign permits may likewise be issued without site plan approval being obtained. – 50 – herent in the rule that authorizes municipalities to amend their zoning codes periodically in order to ensure protection of public safety and wel- fare. Thus Exeter’s claim that the appellate division has endorsed the town’s unfair conduct here and has charted a new vested rights course is misplaced. In reality, it is Exeter and not the appellate division that is pushing an extensive change in the law. And, the stripping of the equitable roots from the remedy in the new formulation of the vested rights doctrine that Exeter urges removes from the remedy the reason for its existence. Exeter’s formulation has never been—and cannot be—the rule. Such a rule would allow every developer in this state to manufacture his vested rights claim simply by applying for an ancillary permit43 at the begin- ning of the site plan review process and performing substantial and ex- pensive work under that permit with the result that that developer be- comes automatically and permanently vested in a site plan approval 43 Nearly every municipality in this state issues permits unrelated to site plan ap- provals. A cursory review of the online listing of local municipal codes at http://www.generalcode.com/ecode360/NY will reveal the ubiquity and breadth of such permits: excavation and topsoil removal permits, clearing and grading permits, stormwater management disturbance permits, tree removal permits, demolition permits, sign permits, etc. – 51 – that has not yet been issued or finalized and may not have even yet been applied for! This is so for nearly all of the ancillary permits availa- ble under the typical municipal code in this state are unrelated—as in Newburgh’s code44—to site plan review or approval. This is not what vested rights is about. Instead, as the zoning board and the Appellate Division found, while Exeter might have vested—if equity saw an injustice in need of a remedy45—in the permits it received 44 Indeed, Exeter needed to obtain a clearing and grading permit precisely because it had not received completed site plan approval for no clearing and grading permit is required under the Newburgh Code for clearing and grading activities carried out pursuant to an approved site plan, such activities being exempt from the permitting requirement. See Section 83-7 [Activities exempt from permit requirements], sub- paragraph “P,” reproduced as an addendum to this brief at pp. 63–64. Demolition and sign permits may likewise be issued without site plan approval being obtained. 45 And, there was no reason for equity to intervene here. The resolution of condi- tional final site plan approval included 18 conditions. [A-275–287]. Eleven of those conditions (1, 2, 3, 7, 8, 9, 12, 13, 14, 15 & 16) were required to be satisfied before the final approval would be effective and the plans could be signed. [A-278–285]. Wilbur Fried, Exeter’s corporate president, was aware that no building permit for construction of the townhouse project could be issued until the approval was effec- tive and the plans were signed [A-642–643]. No building permit for a townhouse building was ever issued by the Town of Newburgh. [A-660–661]. In the more than one year that elapsed after conditional final site plan approval was granted until the judicially-ordered vesting expired on January 24, 2009 (during which time a discretionary stay was in effect for only three months), Exeter failed to satisfy even the simplest of the site plan conditions that would have converted its inchoate and conditional approval into a viable one [A-642–651], Wilbur Fried testifying that he “set all these requirements aside…” [A-651] during this time period. Satisfying the site plan resolution conditions would have allowed Exeter to obtain a meaningful building permit—one based upon a municipal authorization to construct its town- house project. Exeter chose, instead, to wait until the last minute and, then, to do [Footnote Continued on Next Page] – 52 – (authorizing removal of a water tank and limited clearing and grading of its site) thus allowing that work to be completed if those permits had been rescinded, issuance of those permits could not lead to a vesting in the larger, inchoate site plan approval, the conditions of which Exeter has never satisfied, for there is no reasonable basis upon which the town engendered a clear expectation of continued enjoyment of that ap- proval by Exeter beyond expiration of the Town Law 265-a protection period. The vested rights rule, seen in this light, is but an expression of the principal that underlies it: where a municipal entity issues a permit up- on which a property owner relies in good faith, that municipality has engendered a clear expectation of continued enjoyment of the benefit conferred. When a property owner, in reasonable and innocent reliance on that municipality-engendered expectation, thereafter performs sub- stantial construction in furtherance of the permit’s authorization, the no more than apply for and obtain unrelated, standalone sign, demolition and earth- moving permits that it thereafter claimed should protect its rights forever. In ob- taining this last-minute authorization to carry out this site work—work it could have carried out even if it had not yet applied for site plan approval—Exeter hoped to manufacture a claim of vesting. Equity should not intervene in such circum- stances. – 53 – right to complete construction vests and may not thereafter be rescind- ed, even if the zoning law that allowed the work in the first instance is repealed or amended. Here—consistent with this well-honed rule—the appellate division correctly concluded that equity should not intervene here for there were no misleading representations by the town, no innocent reliance by Exe- ter46 and no unconscionable detriment resulting—there is simply no un- fairness present. Harkening back to its special facts claim—a claim ruled unfounded by special term—Exeter further complains of the “unprecedented” direc- tion by the “Town Attorney… [to] the Code Enforcement Officer to sign a letter concluding that Exeter’s statutory vesting period had ex- 46 Moreover, Exeter did not demonstrate to the zoning board that it had made sub- stantial expenditures and completed substantial construction rendered valueless without a determination of vested rights. The record before the zoning board in- cluded Exeter’s presentation [A-106; A-299–394; A-493–502] as well as the presen- tation of Newburgh on that score. [A-106; A-469–492]. Exeter offered the opinion of its engineer that, without vesting, “the improvements that have already been made on the property [will become] essentially valueless.” [A-385]. Newburgh’s consult- ants opined, to the contrary that “the relatively small public improvements Exeter has made… can, in general, be modified and utilized for any number of uses which are permitted under the new zoning law” [A-489] and that “[t]he clearing and grad- ing performed by Exeter… constituted a minor alteration in the land and topogra- phy… [and] will not be rendered ‘essentially valueless’ unless [Exeter] is allowed to go forward with its development plans under the old zoning law.” [A-491]. Thus, an- other essential element of vested rights entitlement was not established. – 54 – pired…,” a directive “focused [on]… undo[ing] Exeter’s hard-earned vested rights.”47 Given the unique factual background of this case, as well as its long procedural history, the directive of the town attorney hardly seems so suspect. Rarely does a developer receive the three-year benefit of a declaration of Town Law Section 265-a protection48 and yet fail to satisfy the conditions of a resolution of site plan approval within that protected time period. More rarely still does a developer who has not tried to satisfy the conditions of an inchoate site plan approval in order to convert that inchoate approval to a final one attempt, on the eve of approval expiration, to manufacture a vested rights claim by spending money and performing grading work on its site and then claim that such work has no utility except to support its now-expired site plan approval. Exeter warns of dire consequences for property owners throughout the state if the decision of the appellate division is not reversed. This warning is misplaced. To the extent that the appellate division decision 47 Exeter’s prime brief at p. 12. 48 Such protection was judicially granted. See, Matter of Exeter Building Corp. v. Town of Newburgh, 49 A.D.3d 731, 733 (2d Dept. 2008), leave to appeal den., 10 N.Y.3d 716 (2008). – 55 – will be relied upon as emphasizing the equitable elements of the vested rights doctrine that must be demonstrated before equity will inter- vene—innocent reliance, misleading municipal representations and un- conscionable detriment—the decision is a salutary one. If it has implica- tions beyond the parties involved, such implications are hardly broad and to the extent that such implications exist at all, the decision—by re- invigorating established law—is helpful to property owners, land use practitioners and trial courts alike. The zoning board’s determination here had a rational basis. Its deci- sion was not arbitrary and capricious. The appellate division correctly ruled that Exeter could not have grounded its claim of common-law vesting upon the limited permits it received because none of those per- mits—which authorized only demolition of a single-family house and water tanks, the erection of a sign and regrading and land clearing— either singly or together amounted to the approval by Newburgh of Exe- ter’s Madison Green project was not arbitrary and capricious and be- cause proof of reliance—an essential element of the vested rights doc- trine—was lacking. Its judgment should be affirmed. – 56 – POINT II ARTICLE 78 AFFORDED EXETER ITS EXCLUSIVE REMEDY. THE APPELLATE DIVISION CORRECTLY CONCLUDED THAT THE DECISION OF THE ZONING BOARD WAS NOT ARBITRARY AND CAPRICIOUS. ___________________________________________________ The Town of Newburgh Building Inspector—the administrative of- ficer charged with the duty of enforcing Newburgh’s zoning regula- tions—was authorized to determine Exeter’s claim of vested rights in the first instance.49 That officer determined that Exeter had no vested right to build its townhouse project. [A-274]. Pursuant to Town Law Section 267-a(4), Exeter was required to appeal that determination to the Town of Newburgh Zoning Board of Appeals. Exeter filed such an appeal. [A-299, et seq.]. Exeter’s appeal was denied. [A-289–298]. An Article 78 Proceeding Was Exeter’s Exclusive Remedy Exeter’s challenge to the determination of the zoning board of ap- peals was required to be brought by way of a CPLR article 78 proceed- 49 Matter of Estate of Kadin v Bennett, 163 AD2d 308, 309 (2d Dept. 1990). – 57 – ing.50 Where a statute authorizes article 78 relief, an article 78 proceed- ing becomes the exclusive remedy51 and a declaratory judgment action 50 See, Town Law Section 267-c [Article seventy-eight proceeding]; Watergate II Apartments v. Buffalo Sewer Authority, 46 N.Y.2d 52, 57 (1978). 51 While CPLR 7804 (h) allows the court to hold a trial when a “triable issue of fact is raised,” the courts have narrowly constrained the nature of such triable issues. Two categories of triable issues appear to exist. The first authorizes a trial based upon need. Thus, when no transcript or formal record exists, the court is authorized to hold a trial in the nature of a reconstruction hearing. See, Gittens v. Sullivan, 151 A.D.2d 481 (2d Dept. 1989) [Or, preferably, if “minutes do not exist… the mat- ter [should be] remitted… for a de novo hearing and determination”]; ADC Con- tracting and Const. Corp. v. New York City Dept. of Design and Const., 25 A.D.3d 488 (1st Dept. 2006). The second category involves claims of impropriety that go be- yond the record upon which the board based its decision. For instance, if a claim is brought upon the ground that the notice advertising a required public hearing be- fore a zoning board failed to comply with statutory command, the court is author- ized to hold a trial to determine whether the notice complied with law in the situa- tion where there was no evidence in the record before that board as to that notice. Similarly, in an article 78 proceeding brought under the Business Corporation Law seeking an order allowing a review of corporate records, a trial is authorized to ex- amine into the good faith basis for the request, even when the record before the cor- porate entity in question makes no mention of the reason for the request. Schulman v. Louis Dejonge & Co., 270 A.D. 147, 149-150 (1st Dept. 1945) (“Though petitioner in his moving papers has met the legal requirements to the extent of showing that he is a stockholder and that he has made a demand upon the officers in charge for an inspection of the books which was refused, there is an issue of fact presented as to whether the proceeding was brought in good faith and for a proper purpose.”). And, in the same vein, in Donofrio v. Hasting, 60 A.D.2d 989, 990 (4th Dept. 1978), the court held that a trial was authorized to determine whether the respondent in an article 78 proceeding, as alleged in the petition, “refused to promote him [solely because]… on a prior occasion petitioner… exercised his right to have his legal rights determined in court.” However, both of these categories [and all of the cases Newburgh has found to authorize a trial under CPLR 7804 (h)] involve beyond the record factual claims that, if proven, establish arbitrary and capricious or illegal conduct. Where all relevant facts were before the board and a full record exists and where no beyond the record factual claims are made, a trial made not be held by the court “in reviewing the underlying determination.” See, Moen v. Lansing Cent. [Footnote Continued on Next Page] – 58 – is not authorized.52 None of the recognized exceptions to this exclusive- remedy rule—a claim of constitutional deprivation,53 a claim that the agency lacked authority to make the determination,54 or a claim of futil- ity55—apply here. In its first cause of action relating to vested rights, Exeter made no such beyond-the-record claims. The record before the zoning board was full and complete56 and included Exeter’s presentation regarding sub- School Dist., 257 A.D.2d 846, 848 (3d Dept. 1999). 52 See, Greystone Management Corp. v. Conciliation and Appeals Bd. of City of New York 94 A.D.2d 614, 616 (1st Dept. 1983) (“a declaratory judgment action is not the proper vehicle to challenge an administrative act, when other remedies, including an Article 78 proceeding are available”); affirmed, 62 N.Y.2d 763 (1984). See also, Citizens Against Sprawl-Mart ex rel. Alcuri v. City of Niagara Falls, 35 A.D.3d 1190, 1191, (4th Dept. 2006) (“We note at the outset that this is properly only a CPLR article 78 proceeding, because the relief sought by petitioners is obtainable under CPLR article 78 and is not available by way of the declaration and injunction also sought by petitioners”); Concetta T. Cerame Irrevocable Family Trust v. Town of Perinton Zoning Bd. of Appeals, 27 A.D.3d 1191, 1192, (4th Dept. 2006) (“We note at the outset that respondents are correct that the court erred in granting declara- tory relief because the proper procedural vehicle for challenging an administrative determination is a proceeding pursuant to CPLR article 78.”). 53 Matter of First National City Bank v. City of New York Finance Administration, 36 N.Y.2d 87 (1975); Richfield Oil Corporation of New York v. City of Syracuse, 287 N.Y. 234 (1942). Significantly, Exeter claimed such constitutional violations sepa- rately in its third and fourth causes of action [A-68–71]. Those claims were dis- missed. [A-42–51]. 54 Watergate II Apartments v. Buffalo Sewer Authority, 46 N.Y.2d 52, 57 (1978). 55 Matter of Usen v. Sipprell, 41 A.D.2d 251, 256 (4th Dept. 1973). 56 Fully 259 pages of the appendix are dedicated to reproducing the record before [Footnote Continued on Next Page] – 59 – stantial expenditures and construction rendered valueless without vest- ing [A-106; A-299–394; A-493–502] as well as the presentation of New- burgh on that score. [A-106; A-469–492]. Exeter offered the opinion of its engineer that, without vesting, “the improvements that have already been made on the property [will become] essentially valueless.” [A-385]. Newburgh’s consultants opined, to the contrary that “the relatively small public improvements Exeter has made… can, in general, be modi- fied and utilized for any number of uses which are permitted under the new zoning law” [A-489] and that “[t]he clearing and grading performed by Exeter… constituted a minor alteration in the land and topogra- phy… [and] will not be rendered ‘essentially valueless’ unless [Exeter] is allowed to go forward with its development plans under the old zon- ing law.” [A-491]. Nothing was missing and nothing needed to be recre- ated. The declaratory relief sought in the first cause of action was thus not available and it was error for the trial court to try that cause of ac- tion. Nor did the existence of conflicting evidence and opinions before the the zoning board. In addition, a myriad of photographs, maps and diagrams have been left out of the appendix but were also before that board. – 60 – zoning board authorize the court to enter the fray and decide the mat- ter: Where there is conflict in the testimony produced before the Board, where reasonable men might differ as to whether the testimony of one witness should be accepted or the testimony of another witness be rejected, where from the evidence either of two conflicting inferences may be drawn, the duty of weighing the evidence and making the choice rests solely upon the Board. The courts may not weigh the evidence or reject the choice made by the Board where the evidence is conflicting and room for choice exists. [citation omitted].57 The appellate division properly concluded that the zoning board’s vested rights determination had a rational basis and was not arbitrary and capricious. In reversing the trial court on this score, the appellate division recognized and honored the rule that a court may not—as the trial court did here—substitute its judgment for that of a zoning board.58 57 Stork Rest. v Boland, 282 NY 256, 267 (1940); See also, Matter of Jennings v. New York State Office of Mental Health, 90 N.Y.2d 227, 239 (1997); Matter of Hogg v. Cianciulli, 247 A.D.2d 474 (2d Dept. 1998). 58 Matter of Mar-Vera Corporation v. Zoning Bd. Of Appeals of the Village of Irving- ton, 84 A.D.3d 1238 (2d Dept. 2011); Matter of Toys “R” Us v. Silva, 89 N.Y.2d 411, 423 (1996); Matter of Pecoraro v. Board of Appeals of Town of Hempstead, 2 N.Y.3d 608 (2004). – 61 – The zoning board’s determination here had a rational basis. Its deci- sion was not arbitrary and capricious. The appellate division correctly ruled that. Its judgment should be affirmed.
