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: RICHARD B. GOLDEN (Time Requested: 30 Minutes) APL-2014-00308 Orange County Clerk’s Index No. 347/10 Appellate Division–Second Department Docket No. 2012-00615 Court of Appeals of the 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. REPLY BRIEF FOR PETITIONERS-APPELLANTS RICHARD B. GOLDEN, ESQ. KELLY M. NAUGHTON, ESQ. BURKE, MIELE & GOLDEN, LLP Attorneys for Petitioners-Appellants 40 Matthews Street, Suite 209 P.O. Box 216 Goshen, New York 10924 Tel.: (845) 294-4080 Fax: (845) 294-7673 Dated Completed: June 8, 2015 i TABLE OF CONTENTS PRELIMINARY STATEMENT .................................................................... 1 ARGUMENT .................................................................................................. 1 POINT I .................................................................................................... 1 THE TOWN DOES NOT CHALLENGE THE FACTUAL FINDINGS SUPPORTING THE COMMON LAW VESTING TEST ARTICULATED BY THIS COURT. INSTEAD, THE TOWN NOW SUGGESTS A NEW VESTING TEST THAT IS NOT SUPPORTED BY THIS COURT’S LONG LINE OF COMMON LAW VESTING CASES. POINT II .................................................................................................... 5 BOTH THE TOWN AND THE APPELLATE DIVISION BELOW ERR IN LIMITING COMMON LAW VESTING TO THE INDIVIDUAL PERMITS ISSUED. THE PROPER QUERY IS WHETHER THE MAGEE TEST HAS BEEN MET BY WORK ACCOMPLISHED UNDER VALIDLY ISSUED PERMITS THAT WERE IN FURTHERANCE OF THE DEVELOPMENT. POINT III ........................................................................................................ 8 THE DECISION OF THE RESPONDENT TOWN ZONING BOARD OF APPEALS WAS ARBITRARY AND CAPRICIOUS, AND THE TRIAL ORDERED BY THE LOWER COURT WAS PROPER. CONCLUSION ............................................................................................. 11 ii TABLE OF AUTHORITIES CASES Dandomar Co., LLC v. Town of Pleasant Valley Town Board, 86 A.D.3d 83 (2d Dept. 2011) ........................................................................ 9 Ellington Construction Corp. v. Zoning Board of Appeals of New Hempstead, 77 N.Y.2d 114 (1990) ................................................................. 2 Ellington Construction Corp. v. Zoning Board of Appeals of New Hempstead, 152 A.D.2d 365 (2d Dept. 1989) ........................................ 3, 4, 8 Exeter Building Corp. v. Town of Newburgh, 114 A.D.3d 774 (2d Dept. 2014) .................................................................... 1 Glacial Aggregates LLC v. Town of Yorkshire, 14 N.Y.3d 127 (2010) ......... 6 People ex rel. Ortenberg v. Bales, 224 A.D. 87 (2d Dept. 1928) .................. 7 Poczatek v. Zoning Bd. of Appeals of Town of Huntington, 26 A.D. 556 (2d Dept. 1966) ........................................................................ 10 Pokoik v. Silsdorf¸ 40 N.Y.2d 769 (1976) ...................................................... 3 Sterngass v. Town Bd. of Town of Clarkstown, 10 A.D.3d 402 (2d Dept. 2004) .................................................................... 10 Town of Orangetown v. Magee, 88 N.Y.2d 41 (1996) ................... 2, 4, 5, 6, 7 Town of Southampton v. Todem Homes, 43 A.D.2d 593 (2d Dept. 1973) ... 10 STATUTES C.P.L.R. § 7804(h) .......................................................................................... 9 C.P.L.R. Article 78 ......................................................................................... 9 1 PRELIMINARY STATEMENT This Reply Brief is respectfully submitted on behalf of Petitioners- Appellants Exeter Building Corporation and 17K Newburgh, LLC (hereinafter “Exeter”) in further support of Appellant’s appeal from the order and judgment of the Appellate Division, Second Judicial Department.1 Specifically, the Appellate Division below reversed the trial court’s determination, and granted judgment in favor of the Respondent-Appellant Town as follows: Further, the plaintiffs may not ground a claim of common-law vesting upon reliance on the limited permits that were issued to them. * * * At most, the limited permits authorized [Exeter] to complete the work described in the permits . . . . * * * Accordingly, the ZBA’s determination should have been confirmed, and the Supreme Court should have declared that the plaintiffs do not have a vested right to develop the property under the R-3 zoning regulations.2 The Appellate Division’s focus on vesting in individual permits is a radical departure from this Court’s focus on vesting in an authorized plan. ARGUMENT POINT I THE TOWN DOES NOT CHALLENGE THE FACTUAL FINDINGS SUPPORTING THE COMMON LAW VESTING TEST ARTICULATED BY THIS COURT. INSTEAD, THE TOWN NOW SUGGESTS A NEW VESTING TEST THAT IS NOT SUPPORTED BY THIS COURT’S LONG LINE OF COMMON LAW VESTING CASES. Importantly, Town did not challenge in the appeal below, and does not challenge in present appeal, the findings of the lower court that (1) Exeter 1 Exeter Building Corp. v. Town of Newburgh, 114 A.D.3d 774 (2d Dept. 2014). 2 Id. at 780-781. 2 performed certain changes/improvements to the property (clearing, grading and demolition work) pursuant to permits legally issued by the Respondent-Appellant Town, (2) Exeter effected substantial changes/improvements to the property, and incurred substantial expenses, to further the development of its project, and (3) the new zoning enacted by the Town resulted in rendering the changes/improvements performed by Exeter essentially valueless. (A.13-A.18; A.24).3 Based upon these findings, the Supreme Court below held that Exeter satisfied the vesting test set forth in Town of Orangetown v. Magee, 88 N.Y.2d 41 (1996), a test that has been consistently applied by this Court’s other vesting cases. See, e.g., Ellington Construction Corp. v. Zoning Board of Appeals of New Hempstead, 77 N.Y.2d 114 (1990). (A.24-A25). The Town attempts in its responding Brief to this Court to establish a new vesting test, grafting onto the tests in Magee and Ellington, and all others, two additional requirements: (1) the project must have satisfied all required conditions in the final resolution of approval, and (2) an equity pre-test to determine at the outset whether the developer is deserving of its vested rights, which ought only to be granted if the property owner has demonstrated “innocent reliance on that municipality-engendered expectation” (see, e.g., Town Brief at 38-39 and 52). It 3 Numbers in parenthesis preceded by “A.” refer to pages from the Appendix filed with this Court by Exeter. 3 also faults the lower Supreme Court decision for not making any specific findings as to whether equity should intervene. (Town Brief at 32). The Town cites no legal authority that a project must have satisfied all required conditions in the final resolution of approval or else it is not entitled to vesting, and none exists. Indeed, the property owner in Ellington, had not complied with all conditions of its approval and this Court held it was still eligible to receive vested rights in its development. See Ellington Construction Corp. v. Zoning Board of Appeals of New Hempstead, 152 A.D.2d 365, 376-377 (2d Dept. 1989), aff’d, 77 N.Y.2d 114 (1990). Several of the conditions in Exeter’s final site plan resolution of approval could not even be accomplished until construction was under way (e.g., water and sewer infrastructure) (A.669-A.670), and included some of the work that Exeter performed pursuant to its permits (e.g., demolition of the water towers). (A.667-A.668). The equity pre-test espoused by the Town is also lacking in authority in the common law vesting cases, instead the Town cites to general equity cases outside of the law of vested rights, and such cases as Pokoik v. Silsdorf, 40 N.Y.2d 769 (1976), which is not a common law vesting case, but a “special facts exception” case. (Id. at 772-773). The common law vesting cases that are cited by the Town do not hold that a developer must pass a threshold equity test just to get in the common law vesting door. If the three-part common law vesting test set forth in 4 Magee4 is met, then vested rights have attached. Equitable principles generally referenced in the common law vesting cases are simply satisfied if the Magee test is met. The Town purports to derive the source for its equity pre-test in part from Ellington, quoting that “[t]he doctrine of vested rights . . . [is] grounded on principals of equitable estoppel.” (Town Brief at 40). However, Ellington does not state such a rigid finding. In fact, Ellington states that some say that the doctrine of vested rights is rooted in the common law, and others say it is rooted in equity, but regardless of its roots “the operation and effect of the vested rights doctrine is the same . . . .” In other words, regardless of the genesis of the doctrine, this Court has held that if you satisfy the test you are entitled to vested rights. Ellington does not hold, as the Town argues, that there is a separate equity inquiry that must be conducted before consideration will be given to a claim of vested rights. The full quote of Ellington on this point is as follows: “The New York rule, both before and after the exemption statutes, has been that where a more restrictive zoning ordinance is enacted, an owner will be permitted to complete a structure or a development which an amendment has rendered nonconforming only where the owner has undertaken substantial construction and made substantial expenditures prior to the effective date of the amendment. The doctrine of vested rights has generally been described as an application of the constitutionally based common-law rule protecting nonconforming uses. But the doctrine is also said to have been 4 Vested rights in pre-rezone zoning is established if (1) the developer had made improvements pursuant to validly issued permits, (2) the developer incurred substantial expenses and made substantial changes to the property (i.e., substantial construction not required), and (3) municipal action (e.g., imposing new zoning regulations on the property) would result in serious loss to the developer in that it would render the improvements “essentially valueless.” 88 N.Y.2d at 47-48. 5 grounded on principles of equitable estoppel. Whether rooted in equity or the common law, the operation and effect of the vested rights doctrine is the same and it has been applied alike to a single building or a subdivision.” 77 N.Y.2d at 122 (internal citations omitted). There simply is no equity pre-test.5 POINT II BOTH THE TOWN AND THE APPELLATE DIVISION BELOW ERR IN LIMITING COMMON LAW VESTING TO THE INDIVIDUAL PERMITS ISSUED. THE PROPER QUERY IS WHETHER THE MAGEE TEST HAS BEEN MET BY WORK ACCOMPLISHED UNDER VALIDLY ISSUED PERMITS THAT WERE IN FURTHERANCE OF THE DEVELOPMENT. As noted in Exeter’s principal Brief, the common law vested rights jurisprudence only requires that the work that is performed must be accomplished pursuant to legally issued permits that “demonstrates a commitment to the purpose for which the permit was granted by effecting substantial changes and incurring substantial expenses to further the development.” Orangetown v. Magee, 88 5 In furtherance of this equity pre-test, the Town argues that Exeter is undeserving of the protections of equity because Exeter was aware at the early stages of its Planning Board application process that there was a sewer moratorium, and that the Town was considering a new comprehensive plan that might consider rezoning certain properties in the Town. (Town Brief at 13-14). Both of these points lack merit. Although the Town had and extended the sewer moratorium for years, it lifted the moratorium on March 7, 2006 – the day after it rezoned Exeter’s property, which was more than one year prior to Exeter’s final site plan approval on December 20, 2007, so it had no effect on Exeter; by the time of Exeter’s final site plan approval, there was no sewer moratorium. (A.11-A.12; A.336). Further, the Town did not propose to rezone Exeter’s property until August 10, 2005 – 4 years after it filed its Planning Board applications – and it did not enact that rezone until March 6, 2006. Importantly, prior to the time of that zoning enactment on March 6, 2006, Exeter was statutorily vested in the prior zoning, as of January 24, 2006, which exempted Exeter from the rezone for three years. (A.9- A.10; A.13). 6 N.Y.2d 41, 47 (1996). It is the furtherance of the development that is the critical test, not the subject matter of an individual permit. The work performed by Exeter was precisely the type of work that is to be considered in determining whether there has been “a commitment to the purpose for which the permit was granted by effecting substantial changes and incurring substantial expenses to further the development.” Glacial Aggregates LLC v. Town of Yorkshire, 14 N.Y.3d 127, 136 (2010) (emphasis added). In accordance with this test, and in light of the changes made to the property and the amount of money that was expended in furtherance of the Madison Green project, the Supreme Court found that the Appellants had established common law vested rights in the pre-rezone zoning. (A.13-A.18; A.24-A.25). The Orangetown v. Magee 6 case is commonly cited for guidance in determining whether vested rights have been established, as it sets forth the vesting test clearly, as quoted above. In that case, this Court held that vested rights in pre- rezone zoning are established if (1) the developer had made improvements pursuant to validly issued permits, (2) the developer incurred substantial expenses and made substantial changes to the property, and (3) municipal action (e.g., imposing new zoning regulations on the property) would result in serious loss to 6 88 N.Y.2d 41,47 (1996). 7 the developer in that it would render the improvements “essentially valueless.” Orangetown v. Magee, 88 N.Y.2d at 47-48. Among the cases cited by this Court in Magee in support of its main holding was an older case in which building construction had also not taken place, but in which the court held that vested rights had nonetheless been established. See Magee, 88 N.Y.2d at 47. That case is People ex rel. Ortenberg v. Bales, 224 A.D. 87 (2d Dept. 1928), aff’d, 250 N.Y. 598 (1929) in which the Second Department held that vested rights were established even though only demolition and excavation in preparation for foundation work had taken place. The Second Department noted in Ortenberg that building construction itself was not the trigger to finding that vested rights had been established. It found that it would be unfair if: [e]xcavating to a full foundation depth over more than half of [the property owner’s] land for building purposes is claimed to [the property owner] no rights, [but] where had he excavated but a fraction of what her actually has done and had placed a foundation footing on some excavated spot he would be regarded as having commenced the construction of his building [and thereby be entitled to vested rights]. Id. at 90. Thus, the mere act of beginning construction or installing infrastructure is not the key to establishing vested rights, nor is the type of permit obtained important. Instead, a devotion of the property to the proposed project (i.e., “substantial changes”), coupled with substantial expenditures and the valueless of 8 the changes if new zoning is implemented, are the keys to obtaining vested rights. Exeter was clearly performing work in accordance with validly issued permits in furtherance of its final subdivision and final site plan approvals. In its findings of Fact, Conclusions of Law and Judgment, the Supreme Court below found that: “The physical changes and modifications to the land accomplished by [Exeter] were substantial, were authorized by valid permits granted by [the Town], and were in accordance with, and in furtherance of, [Exeter’s] final site plan as approved by the [Town]. By these changes and modifications to the land [Exeter has] demonstrated a commitment of the land to the purpose for which [Exeter was] granted subdivision and final site plan approval, and for which they were issued the associated permits by [the Town].” (A.15-A.16). As noted in Exeter’s principal Brief, the Town’s position, as well as the position of the Appellate Division below, is that the common law vesting doctrine is limited to whatever the specific permits were authorized at any particular time. This Court in Ellington characterized and rejected this argument as one that “would produce an extensive change in the law.” Ellington, supra, 77 N.Y.2d at 123. This Court should adhere to that sound holding, and reverse the decision of the Appellate Division below. POINT III THE DECISION OF THE RESPONDENT TOWN ZONING BOARD OF APPEALS WAS ARBITRARY AND CAPRICIOUS, AND THE TRIAL ORDERED BY THE LOWER COURT WAS PROPER. The lower court held that the determination of the Respondent Zoning Board of Appeals was “based on an out of hand rejection of petitioners’ claim of common 9 law vesting rights on the ground that petitioners had not satisfied all conditions attached to the site plan approval, [thus] the record was not developed below with respect to substantial expenditures or the rendering of those expenditures valueless by respondents’ determinations.” (A.30). An out of hand rejection is one that is clearly arbitrary and capricious. In any event, because the Zoning Board of Appeals failed to consider the legal standard of common law vested rights, its decision was also in error of law. A zoning board of appeals has no power to alter the common law vesting standard; only courts can modify a common law right. The lower court ordered an evidentiary hearing “since there [were] issues of fact presented which cannot be determined on the present record.” (A.40). C.P.L.R. § 7804(h) provides: “If a triable issue of fact is raised in a proceeding under this article, it shall be tried forthwith.” See also, Dandomar Co., LLC v. Town of Pleasant Valley Town Board, 86 A.D.3d 83 (2d Dept. 2011) (discussion of differences between C.P.L.R. Article 78 proceedings and declaratory judgments, including: “While many CPLR article 78 proceedings are resolvable by the court on the papers as a matter of law, as if determining a motion for summary judgment, CPLR article 78 proceedings may also involve questions of fact requiring trial.”). In considering cases involving issues of vested rights, the Second Department has, on occasion, remanded matters to the lower courts for further proceedings after determining that the records were inadequate to make such a 10 determination. Town of Southampton v. Todem Homes, 43 A.D.2d 593 (2d Dept. 1973); Poczatek v. Zoning Bd. of Appeals of Town of Huntington, 26 A.D. 556 (2d Dept. 1966)(“the record is inadequate for this purpose, and a hearing is necessary to properly to resolve the factual issue as to said vesting or non-vesting of rights.”); Sterngass v. Town Bd. of Town of Clarkstown, 10 A.D.3d 402 (2d Dept. 2004). Upon its evidentiary hearing, the Supreme Court below found that Exeter had factually satisfied each of the necessary elements of a claim of common law vesting, overruling the Zoning Board of Appeals decision that was both arbitrary and capricious and in error of law. CONCLUSION F or all of the foregoing reasons, we respectfully request that this Court issue an Order reversing the Second Department's Decision and reinstating the Judgment of the Supreme Court granting Appellants their common law vested rights, together with any such further relief as the Court deems just and equitable. Dated: June 8, 2015 Goshen, New York 1 1 RIC~ B. GOLDEN Burke, Miele & Golden, LLP Attorneys for Petitioners-Appellants Exeter Building Corp. and 17K Newburgh, LLC 40 Matthews Street, Suite 209 Post Office Box 216 Goshen, New York 10924 (845) 294-4080