Decided on March 1, 2010.
Charles Webb, Esq. (plaintiff — NY State Development Corp.), Kenneth Appelbaum, Esq., Berger Webb, New York, NY.
Peter Karmel, Esq. (plaintiff — NY State Development Corp.), Bryan Caves, LLP, New York, NY.
Joshua Rikon, Esq. (defendant), Philip Sanchez, Esq., Goldstein, Rikon, Rikon, New York, NY.
Bruce Lederman, Esq. (defendant), Todtman, Nachamie, Spizz Johnson, New York, NY.
Matthew Brinckerhoff, Esq. (defendant), Emery, Celli, Brinckerhoff Abady, New York, NY.
Petitioner New York State Urban Development Corporation (UDC) d/b/a Empire State Development Corporation (ESDC) seeks leave to file acquisition maps for the condemnation of certain properties located in downtown Brooklyn for use as a mixed development project commonly referred to as the Atlantic Yards Project (the Project). By motion returnable the same day as the petition, respondents Peter Williams Enterprises, Inc.; 535 Carlton Ave. Realty Corp.; Pacific Carlton Development Corp.; Daniel Goldstein; and Chadderton's Bar and Grill, Inc., d/b/a Freddy's Bar and Backroom (collectively referred to as respondents) move for an order: (1) dismissing the petition, with prejudice, pursuant to CPLR 3211 or 3212, on the ground that the Determination and Findings (D F), made pursuant to Eminent Domain Proceeding Law (EDPL) § 204, dated December 8, 2006 (the 2006 D F), can no longer serve as the predicate for the seizure of respondents' homes and businesses because (a) the Modified General Project Plan (MGPP), dated December 8, 2006 (the 2006 MGPP), upon which the 2006 D F were based, was nullified and superceded by a new MGPP, dated September 17, 2009 (the 2009 MGPP), thus vitiating the 2006 D F; (b) the 2006 D F and the now superceded 2006 MGPP provide for the acquisition of all properties simultaneously, while the 2009 MGPP provides for the acquisition of properties in two stages; and (c) it is undisputed that the factual underpinnings of the determination of public use, benefit and purpose set forth in the 2006 D F have materially changed during the more than three years that have passed; or, alternatively (2) dismissing the petition without prejudice based on procedural defects, failure to state a claim and lack of subject matter jurisdiction, pursuant to CPLR 3211 or 3212, because the petition does not comply with the strict requirements contained in EDPL Article 4 and CPLR Article 4, and is thus defective on multiple grounds, including: (a) the petition does not comply with EDPL 402(b)(3)(a), which mandates that the petition contain a statement alleging compliance with the requirements of article two of the EDPL, because the article two predicate, i.e., the 2006 D F, have been nullified, superceded and/or materially undermined as set forth above; (b) the petition is premature or unripe because respondents' EDPL 207 challenge to the 2006 D F has not been finally determined in that respondents filed a timely "Motion to Reargue Appeal and/or Hold Motion in Abeyance Pending Hearing and Determination of a Related Appeal" (the Motion to Reargue) to the Court of Appeals, which was served on petitioner before this action was commenced; (c) the petition does not state the public use, benefit or purpose for which the property is required, as mandated by EDPL 402(b)(3)(d), since the words public use, benefit or purpose are not found in the petition; (d) the petition does not comply with EDPL 402(b)(3)(a) and (b)(3)(d) because the 2006 D F are incomplete and because petitioner intentionally omitted the list of properties contained in the 2006 D F in order to conceal the fact that the 2006 D F were premised upon a single acquisition, which was recently changed to a staged acquisition, without any amendment to the 2006 D F; (e) the petition allegedly served upon each respondent is incomplete and inconsistent with the petition filed in this court and differs from one respondent to the next because it does not contain true and complete copies of the proposed acquisition maps; (f) the notice of petition and petition seek inconsistent relief with regard to the number of days in which respondents can file a claim; and (g) a condition precedent to the relief requested in the petition as set forth in the 2009 MGPP has not been met since petitioner has not received assurances that the Project will be funded and completed in accordance with the 2009 MGPP; (3) staying this action, pursuant to CPLR 2201, until such time as petitioner demonstrates that it has corrected the numerous deficiencies outlined above, including without limitation, demonstrating that the adjudication of respondents' current EDPL 207 proceeding or any subsequent proceeding to challenge any subsequent amended or modified EDPL 204 D F is final; (4) granting leave to respondents to conduct pretrial disclosure, pursuant to CPLR 408, including without limitation, discovery concerning the recent revelations that firmly establish that petitioner has consistently misrepresented the timing of the Project; and (5) directing that a trial will be held, pursuant to CPLR 410, in order for the court to resolve any material factual disputes concerning the various issues raised by this motion and in respondents' verified answer, affirmative defenses and counterclaims. Respondents also file an answer in which they interpose 14 affirmative defenses and three counterclaims seeking substantially the same relief sought in their motion. Respondents Daniel Goldstein, Heron Real Estate Corp., and Pack It Away Storage Systems, Inc. (hereinafter collectively referred to as the Goldstein respondents), file an answer in which they request that in the event that the petition is granted, they should be given three years from the date of service of a notice of acquisition to file a claim and that advance payments should be made available within 90 days of the date that title vests.
The Atlantic Yards Project has a long and tortuous history, including numerous court challenges in several forums. As has been set forth in detail in the prior decisions, the Project was conceived in 2002 by Bruce Ratner and several affiliated companies, the Forest City Ratner Companies (collectively referred to hereinafter as FCRC) and was publicly announced on December 11, 2003; the Project is intended to redevelop a 22 acre area located south of Atlantic Avenue near downtown Brooklyn. At sometime thereafter, FCRC joined with UDC and ESDC. Approximately 40% of the site is occupied by the Vanderbilt Rail Yard, owned by the Metropolitan Transit Authority (the MTA), which is situated below grade and provides an active storage and maintenance yard for Long Island Rail Road (LIRR) equipment and retired MTA buses. Approximately 63% of the site is located within the Atlantic Terminal Urban Renewal Area, which was so designated in 1968 because of its substandard and unsanitary conditions. The Project envisions the construction of a publicly owned arena to serve as the home for the New Jersey Nets professional basketball team, owned by Ratner (the Arena); a new subway connection; a platform over and reconfiguration of the rail yard; 16 buildings which will include residential units, office space, retail space and community facilities offering health and child care; and the creation of eight acres of publicly accessible open space.
On December 8, 2006, petitioner UDC adopted the Findings Statement pursuant to the New York State Environmental Quality Review Act (SEQRA); affirmed the 2006 MGPP under the Urban Development Corporation Act (the UDCA); and issued the 2006 D F, premised upon the 2006 MGPP. The 2006 D F stated that the principal public use, benefit and purpose of the Project was to eliminate the blighted conditions on the Project Site and the blighting influence of the below-grade rail yard and alleged that the Project would also provide other public uses, benefits and purposes, including, inter alia, constructing the Arena that would allow the Nets to relocate to Brooklyn and that would provide a venue for community uses; providing 2,250 units of affordable housing; upgrading the LIRR yard to provide a state-of-the-art rail storage, cleaning and inspection facility that would enable the LIRR to better accommodate its new fleet of cars; constructing a new subway entrance; and providing eight acres of publicly accessible open space. The 2006 D F further stated that the Project would provide certain economic benefits, including, among other things, net tax revenues in excess of the public contribution to the Project.
In June 2009, petitioner revealed its intention to modify the 2006 MGPP. On June 23, 2009, the ESDC directors adopted the 2009 MGPP, along with a 63 page "Technical Memorandum" that details the changes sought and obtained by FCRC, and authorized the publication of public hearing notices as required by the UDCA. On July 29, 2009 and July 30, 2009, ESDC held public hearings pursuant to sections 6 and 16 of the UDCA (Unconsol Laws §§ 6256 and 6266) to receive comments on the 2009 MGPP and on ESDC's proposed disposition of certain parcels of real property in connection with the Project. ESDC accepted written comments through August 31, 2009. On September 17, 2009, the ESDC directors affirmed the 2009 MGPP.
The Federal Challenge
On January 5, 2007, respondents challenged the 2006 D F pursuant to EDPL 207 in federal district court, asserting primarily that the proposed condemnation of their properties violated the public use clause of the Fifth Amendment to the United States Constitution, since the government officials who had approved it were substantially motivated by a desire to confer a private benefit on Ratner and that the public uses identified by ESDC were pretexts for a private taking. By decision dated June 6, 2007, the District Court determined that respondents could not establish that the sole purpose of the Project was to transfer property to a private party, since there will be some tax gain, some jobs will be created, the area is blighted and the Project will create affordable housing ( Goldstein v Pataki, 488 FSupp2d 254, 286-287); that they could not establish a plausible grounds to infer an actual purpose to bestow a private benefit ( Goldstein, 488 FSupp2d at 287-290); and found no merit to respondents' equal protection and due process claims ( Goldstein, 488 FSupp2d at 290-291). The District Court accordingly dismissed the complaint for failure to state a claim upon which relief could be granted, without prejudice to respondents' state claims being re-filed in state court ( Goldstein, 488 FSupp2d at 291).
By decision dated February 1, 2008, the Second Circuit rejected respondents' claim that all of the public uses advanced for the Project were pretexts for a private taking that violates the Fifth Amendment, finding that "that viewed objectively, the Project bears at least a rational relationship to several well-established categories of public uses, among them the redress of blight, the creation of affordable housing, the creation of a public open space, and various mass-transit improvements" ( Goldstein v Pataki, 516 F3d 50, 58-59); rejected respondents' contention that the "taking had been effectuated "under the mere pretext of a public purpose, when [the] actual purpose was to bestow a private benefit"'" ( Goldstein, 516 F3d at 60, quoting Goldstein, 488 FSupp2d at 282, quoting Kelo v City of New London, 545 US 469, 478); and affirmed the judgment of the District Court dismissing the federal claims with prejudice and the state claim without prejudice ( Goldstein, 516 F3d at 65). The Supreme Court denied certiorari ( 76 USLW 3674).
The Pendent State Claims
On August 1, 2008, respondents re-filed their EDPL 207 claim in the Appellate Divsion, Second Department, asserting that the proposed taking of their properties is unlawful because it violates the public use clause of New York Constitution, article I, § 7; that the Project contravenes New York Constitution, article XVIII, § 6, because state funds are to be used to defray infrastructure costs associated with the construction of new housing units without restricting those housing units to use by low-income persons; and that the condemnation of their properties violates their due process and equal protection rights. On May 12, 2009, the Appellate Division, Second Department, denied the challenge ( Goldstein v UDC, 59 AD3d 312). As a threshold issue, the court held that the 30-day time period in which persons aggrieved by a condemnor's determination may seek judicial review pursuant to EDPL 207(A) does not operate as a condition precedent, so that respondents would be afforded the benefit of CPLR 205(a), which is a remedial statute that provides a litigant with a six-month grace period within which to recommence an action which has been dismissed on grounds other than voluntary discontinuance, lack of personal jurisdiction, neglect to prosecute, or the entry of a final judgment on the merits ( Goldstein, 64 AD3d at 177).
Turning to the merits, the court rejected respondents' contention that the state can only use its eminent domain power where the condemned property is to be held open for use by all members of the public ( Goldstein, 64 AD3d at 178-181); held that where land is found to be substandard, its taking for urban renewal is for a public purpose, and there is an adequate foundation in the record to support a finding that the Project area is substandard ( Goldstein, 64 AD3d at 181-184); recognized that the Project also serves the additional public purposes of creating an arena, publicly accessible open space, affordable housing, improvements to public transit, and new job opportunities ( Goldstein, 64 AD3d at 182); found that respondents' argument that some of these public benefits may never actually be realized was conclusory and speculative ( Goldstein, 64 AD3d at 183); held that the record did not support a finding that the Project's public benefits were incidental or pretextual in comparison with benefits to particular, favored private entities ( Goldstein, 64 AD3d at 183-184); held that Article 6 of the Constitution does not require that all units of housing constructed will be occupied by persons of low income in order to receive public funding ( Goldstein, 64 AD3d at 184-185); and rejected respondents' due process and equal protection claims ( Goldstein, 64 AD3d at 185-186).
On November 24, 2009, the Court of Appeals affirmed the denial of respondents' EDPL 207 claim ( Goldstein v UDC, ___ NY3d ___, 2009 NY Slip Op 8677). In that decision, the majority of the court affirmed the finding that CPLR 205(a) tolls the running of the 30-day period in which a condemnee can challenge a condemnation determination in the Appellate Division pursuant to EDPL 207(A) where that proceeding had been timely commenced but was dismissed on grounds other than voluntary discontinuance, lack of personal jurisdiction, neglect to prosecute, or the entry of a final judgment on the merits ( 2009 NY Slip Op 8677 at 4-7) and held that ESDC is vested with condemnation power by the Legislature, pursuant to McKinney's Unconsolidated Laws of New York §§ 6260 and 6263, and has sought to exercise the power for the constitutionally recognized public purpose or use of rehabilitating a blighted area (2009 NY Slip Op 8677 at 8-11); that it is indisputable that the removal of urban blight is a proper and constitutionally sanctioned predicate for the exercise of the power of eminent domain (2009 NY Slip Op 8677 at 7); and that the creation of low income housing is not constitutionally required as an element of a land use improvement project that does not entail substantial slum clearance (2009 NY Slip Op 8677 at 11-12). Respondents then made their Motion to Reargue that decision, which was denied by the Court of Appeals on February 18, 2010, after the instant petition was submitted to this court for decision.
The Other State Challenges
By decision dated February 14, 2006, in an Article 78 proceeding commenced by Develop Don't Destroy Brooklyn, Inc. (DDDB), and others against ESDC and FCRC, the Honorable Carol Edmead denied an application to allow additional parties to intervene; granted an application by certain community representatives to file amicus curie briefs; denied an application to annul an Emergency Declaration made by ESDC, which approved the demolition of five parcels of property; denied an application to stay demolition of one of the subject properties; acknowledged the existence of an easement over one of the properties; granted an application to disqualify counsel; and granted respondents' cross motion to dismiss the remainder of the petition ( DDDB v ESDC, New York Co Sup Ct, Index No 100686/06). By decision dated April 20, 2007, in a subsequent Article 78 proceeding commenced by DDDB and others against UDC, the Honorable Joan A. Madden denied an application for a temporary restraining order staying FCRC from proceeding with demolition of certain properties ( DDDB v UDC, 2007 NY Slip Op 30825U ). By decision dated January 11, 2008, Judge Madden denied petitioners' challenges to the Project pursuant to SEQRA, the UDCA and the Public Authorities Law (PAL) ( Matter of DDDB v UDC, 239 NYLJ 15 ). The Appellate Division, First Department, affirmed that decision on February 26, 2009 ( 59 AD3d 312). On December 1, 2009, the Court of Appeals denied petitioners' motion for leave to appeal ( ___ NY3d ___). On February 16, 2010, the Court of Appeals denied petitioners' motion seeking to reargue the denial of their motion for leave to appeal ( ___ NY3d ___).
By decision entered on May 22, 2007, in a declaratory judgment action challenging UDC's authority to condemn multiple dwellings in which plaintiffs resided as rent stabilized tenants, the Honorable Walter B. Tolub granted defendant's motion to dismiss the complaint for lack of subject matter jurisdiction. That decision was affirmed by the Appellate Division, Second Department, on October 16, 2007, with the court holding that since the condemned buildings are located in Kings County, the Appellate Division, Second Department, had exclusive jurisdiction over plaintiffs' challenges to defendant's constitutional and statutory authority to condemn their rent stabilized leasehold interests pursuant to EDPL 207 ( Anderson v UDC, 44 AD3d 437). By decision dated November 7, 2007, the Appellate Division, Second Department, denied petitioners' EDPL 207 challenge to the Project on the ground that respondent failed to establish that UDC did not make a specific finding that there existed a feasible method for relocation of the tenants in violation of UDCA § 10(g) (McKinney's Uncons Laws of NY § 6260) ( Matter of Anderson v UDC, 45 AD3d 583, lv denied 10 NY3d 710).
By decision dated September 23, 2008, in another Article 78 proceeding commenced by two rent regulated tenants in buildings located in the Project footprint against UDC, the Honorable Jane S. Solomon dismissed a petition seeking to void a Funding Agreement dated September 12, 2007 and entered into between ESDC, the Brooklyn Arena, LLC and Atlantic Yard Development Company, LLC, on the grounds that it permits the acquired property to remain undeveloped for a period of more than ten years and that it purports to give respondent the option to re-acquire such property as remained undeveloped for four years, as well as an order requiring respondent to hold public hearings on the announced amendments to the Project, finding that petitioners lacked standing and that they did not prove that the Project would be abandoned, that the property would not be timely improved or that the property would be conveyed to a private user without giving the fee owner a right of first refusal as is required pursuant to EDPL 406 ( Anderson v UDC, New York Co Sup Ct, Index No 102056/08).
By decision dated December 15, 2009, in an Article 78 proceeding commenced against the MTA and FCRC, the Honorable Michael D. Stallman denied a petition seeking to annul a June 24, 2009 resolution of the MTA Board, which approved the sale of property and development rights of the Vanderbilt Railyards to FCRC, based upon the allegation that the MTA violated the Public Authorities Accountability Act of 2005 (Public Authorities Law § 2895 et seq.) (PAAA) in failing to obtain an appraisal of the subject property before approval and that the PAAA's provisions concerning competitive bidding were not followed ( Matter of Montgomery v MTA, 2009 NY Slip Op 52539U (New York Co Sup Ct 2009]). Therein, although Judge Stallman held that petitioners lacked standing to challenge the MTA's action, he rejected petitioners' claims on the merits in an effort to avoid a lengthy appeal.
The Instant Challenge
On December 23, 2009, the petition at issue herein was filed. On January 27, 2010, respondents served their answer with counterclaims. On January 28, 2010, respondents served their motion to dismiss; petitioner rejected the motion as untimely. On January 28, 2010, the Goldstein respondents served their answer. On January 29, 2010, oral argument was heard, the court reserved decision and the matter was submitted.
Respondents' Answer/Motion to Dismiss
The Parties' Contentions
Petitioner argues that it properly rejected respondents' motion to dismiss as untimely and that the motion should not be considered by the court. Petitioner further notes, however, that the contentions and objections raised in the motion are duplicative of those raised in the answer and asks the court to consider its reply to be submitted in opposition to both in the event that the court decides to accept the motion. Petitioner also argues that counterclaims are not properly interposed in a proceeding commenced pursuant to EDPL 402.
Respondents did not address these issues in their papers, but contended during oral argument that their motion is timely and should be considered by the court.
Numerous statutory provisions must be considered in addressing the issues raised by the parties. EDPL 402(b)(4) provides for the service of an answer:
"Upon the presentation of the petition and notice with proof of service thereof, a condemnee may appear and interpose a verified answer, which must contain specific denial of each material allegation of the petition controverted by him, or of any knowledge or information thereof, sufficient to form a belief, or a statement of new matter constituting a defense to the proceeding."
CPLR 404(a) provides for the service of a motion to dismiss:
"The respondent may raise an objection in point of law by setting it forth in his answer or by a motion to dismiss the petition, made upon notice within the time allowed for answer. If the motion is denied, the court may permit the respondent to answer, upon such terms as may be just; and unless the order specifies otherwise, such answer shall be served and filed within five days after service of the order with notice of entry; and the petitioner may re-notice the matter for hearing upon two days' notice, or the respondent may re-notice the matter for hearing upon service of the answer upon seven days' notice."
As is also relevant herein, EDPL 703 provides that ""[t]he civil practice law and rules shall apply to practice and procedure in proceedings under this law except where other procedure is specifically provided by this law or rules governing or adopted by the appropriate court." EDPL 705 provides that "[n]otwithstanding any inconsistent provisions of law, general or special, the provisions of this law shall be controlling and on and after the effective date of this law, any interest in real property subject to acquisition shall be acquired pursuant to the provisions of this law." CPLR 406 provides that "[m]otions in a special proceeding, made before the time at which the petition is noticed to be heard, shall be noticed to be heard at that time."
In addressing the issue of the timeliness of a motion to dismiss in a proceeding commenced pursuant to Article 7 of the Real Property Actions and Proceedings Law (RPAPL), the court held that despite the unfairness of the procedure on litigants opposing substantial motions in landlord-tenant proceedings, respondent correctly argued that any motion in a summary proceeding could be made on little or no notice if it was made returnable at the same time as the petition pursuant to CPLR 406 ( Goldman v McCord, 120 Misc 2d 754, 754-755). The court in Goldman accordingly held that a motion for summary judgment that was served at 1:00 p.m. on the day before the petition was noticed to be heard was timely. This holding is in accord with the Third Preliminary Report of the Advisory Committee on Practice and Procedure (1959 NY Legis Doc No. 17, at 159), which provides that "[t]his rule shortens the time for notice of pre-hearing motions, so that they may be heard at the hearing on the petition" ( 50 E. 191st St Assoc. v Gomez, 148 Misc 2d 560, 561). In interpreting these provisions, it is also recognized that one court has noted that "it is not clear that the EDPL contemplates the usual pre-answer motion practice. EDPL 402(B)(4) does not specifically provide for a motion to dismiss and requires that new matter constituting a defense be set forth in the answer" ( In re Application of Rochester Urban Renewal Agency, 110 AD2d 1086, 1087).
In accordance with the above quoted statutory language and case law precedent, the court holds that respondents can interpose an answer pursuant to EDPL 402(b)(4) and a pre-answer motion pursuant to CPLR 404(a). In the absence of any provisions in the EDPL governing the time for service of a motion, the court finds that CPLR 406 controls, so that a motion is timely if made returnable on the same day as the petition. From this it follows that respondents' motion to dismiss is timely. The court further notes that although the law does not contemplate the simultaneous filing of both an answer and a motion to dismiss, as respondents herein did, both raise the same issues, in reliance upon the same facts, with only minor differences. Accordingly, the court will consider both in addressing the petition.
In so holding, the court rejects petitioner's assertion that counterclaims may not properly be pleaded in an EDPL 402 proceeding as specious. In reaching this conclusion, it is noted that the case relied upon by petitioner in so arguing, Matter of City of New York (Grand Lafayette Props.) ( 6 NY3d 540 ), did not hold that counterclaims cannot be interposed in an eminent domain proceeding, but instead held that the counterclaims interposed therein were properly dismissed as time barred ( see generally In re Consolidated Edison Co., 143 AD2d 1012, 1013-1014 [leave to amend an answer to assert a counterclaim seeking a declaratory judgment pursuant to Article 3 of the EDPL was denied as being totally devoid of merit]). Further, if any demands for relief remain as pleaded in the counterclaims after the petition is granted or denied, the court has the discretion to sever them ( see generally Home Gas Co. v Miles, 46 AD2d 562, 566 [any question of a prior de facto taking could be resolved in the counterclaim which was previously interposed and severed from the proceeding]).
The Vesting Petition
In addressing the issues now before the court, it is necessary to understand that:
"Under the Eminent Domain Procedure Law (EDPL), a two-step process is required before a condemnor obtains title to property for public use. First, under EDPL article 2, the condemnor must make a determination to condemn the property either by using the hearing and findings procedures of EDPL 203 and 204 or by following an alternative procedure permitted by EDPL 206. Second, pursuant to EDPL article 4, the condemnor must seek the transfer of title to the property by commencing a judicial proceeding known as a vesting proceeding. . . .
"EDPL article 2 sets forth a judicial review procedure, which allows a condemnee only 30 days within which to commence a proceeding directly in the Appellate Division for review of the condemnor's section 204 determination ( see EDPL 207). The scope of review is very limited — the Appellate Division must either confirm or reject the condemnor's determination and findings,' and its review is confined to whether (1) the proceeding was constitutionally sound; (2) the condemnor had the requisite authority; (3) its determination complied with SEQRA and EDPL article 2; and (4) the acquisition will serve a public use (EDPL 207 [C])."
( Matter of City of New York [Grand Lafayette Props.], 6 NY3d at 546). Hence, "[w]hile the Appellate Division may only consider four specific questions delineated by statute when reviewing a proposed acquisition after the first step ( see EDPL 207 [C]), the question before the trial court in the second step is mainly limited to the value of the condemned property" ( Hargett v Town of Ticonderoga , 56 AD3d 1016 , 1017, affd 13 NY3d 325).
As is also relevant to the instant dispute, EDPL 402(B)(3) provides that:
"The condemnor shall present to the court a petition verified by an authorized officer of the condemnor setting forth:
"(a) a statement providing either the compliance with the requirements of article two of this law, including a copy of the condemnor's determination and findings or a statement providing the basis of exemption from article two;
"(b) a copy of the proposed acquisition map to be filed and the names and places of residence of the condemnees of the property to be acquired;
"(c) a description of the real property to be acquired and its location, either by metes and bounds of each individual parcel, or section, block and lot number, and by reference to the acquisition map and notice of pendency attached to the petition;
"(d) the public use, benefit or purpose for which the property is required;
"(e) a request that the court direct entry of an order authorizing the filing of the acquisition map in the office of the appropriate county clerk or register and that upon such filing, title shall vest in the condemnor."
Pursuant to EDPL 402(B)(5):
"At the time and place mentioned in such notice, unless the court shall adjourn the application to a subsequent date, and in that event at the time and place to which the same may be adjourned, upon due proof of service of notice and upon filing of such petition and proof to its satisfaction that the procedural requirements of this law have been met, the court shall direct the immediate filing and entry of the order granting the petition, which order the condemnor shall file and enter together with the acquisition map and the bond or undertaking if required, in the office of the county clerk or register in each county in which the real property or any part thereof is situated. Upon the filing of the order and the acquisition map, the acquisition of the property in such map shall be complete and title to such property shall then be vested in the condemnor."
In interpreting these provisions, it has been held that "[t]he role of a trial court on an application pursuant to EDPL § 402(B) is limited and circumscribed, and the trial court is required to grant the Petition if all the procedural requirements have been met" ( Matter of MTA, 2007 NY Slip Op 50541U, 2 [New York Co Sup Ct 2007], citing City of Buffalo Urban Renewal Agency v Moreton, 100 AD2d 20). In discussing the scope of review in an EDPL Article 4 proceeding, it has been held that:
"EDPL 402 (B) (5) provides that, upon the return date of the petition, upon . . . proof to its satisfaction that the procedural requirements of this law have been met, the court shall direct the immediate filing and entry of the order granting the petition . . . Upon the filing of the order and the acquisition map, the acquisition of the property in such map shall be complete and title to such property shall then be vested in the condemnor" (emphasis added). Thus, it has been stated that [t]he power of the condemnation court to entertain claims raised by the pleadings in a condemnation proceeding is limited to matters of procedural compliance not within the scope of review by the Appellate Division of the Supreme Court (EDPL 207, 402[B])' ( Matter of UAH-Braendly Hydro Assoc. v RKDK Assoc., 138 AD2d 493, 493 ). On the return of an application for permission to file an acquisition map and for an order to acquire the property . . ., the court must grant the petition if it finds that all of the procedural requirements of the statute have been met' ( City of Buffalo Urban Renewal Agency v Moreton, 100 AD2d 20, 22 ; see Matter of County of Dutchess v Kendall, 130 AD2d 491, 492 )."
( City of Syracuse Indus. Dev. Agency v ExxonMobil Oil , 5 AD3d 1114, 1115-1116, appeal dismissed 3 NY3d 656).
A review of the petition at issue herein reveals that the requirements of EDPL 402(B)(3) have been met. More specifically, the petition contains a statement providing the basis of exemption from compliance with the requirements of article two of the EDPL, including a copy of its determination and findings; a copy of the proposed acquisition map to be filed and the names and places of residence of the condemnees of the property to be acquired; a description of the real property to be acquired and its location; a statement of the public use, benefit or purpose for which the property is required; and a request that the court direct entry of an order authorizing the filing of the acquisition map in the office of the appropriate county clerk or register and that upon such filing, title shall vest in the condemnor. Accordingly, pursuant to EDPL 402(B)(5), this court is required to direct the immediate filing and entry of the order granting the petition unless there is merit to any of the affirmative defenses or counterclaims interposed by respondents. Inasmuch as petitioner does not object to the filing of respondents' answer, the court will begin by addressing that pleading.
Strict Statutory Compliance
As a preliminary issue, respondents contend that an EDPL proceeding is a special proceeding created by statute that allows for the summary and compelled transfer of real property from one owner to another without any of the normal due process protections afforded by a plenary action. They therefore contend that a party seeking such an extraordinary, truncated and expedited remedy must strictly satisfy the statutory requirements, since the modifications of procedural rights in special proceedings is in derogation of the common law, as is the case with summary proceedings under the RPAPL.
While the court appreciates respondents' concern for strict compliance with the law, it must also be recognized that while summary proceedings decided under the RPAPL may be informative in discussing general principles applicable to special proceedings, the instant proceeding is a vesting proceeding commenced pursuant to EDPL 402. Since EDPL 703 provides, as discussed above, that the CPLR applies to practice and procedure in proceedings under the EDPL "except where other procedure is specifically provided by this law or rules governing or adopted by the appropriate court," and EDPL 705 provides that "[n]otwithstanding any inconsistent provisions of law, general or special, the provisions of this law shall be controlling and on and after the effective date of this law, any interest in real property subject to acquisition shall be acquired pursuant to the provisions of this law," the court will look to general principles of law governing special proceedings only when specific procedures and precedents relating to EDPL proceedings cannot be found.
First Affirmative Defense: The Copies of the Petitions Served upon
Respondents are Not the Same as the Petition Filed in Court The Parties' Contentions
With these general principles in mind, respondents allege in their first affirmative defense that a complete and accurate copy of the petition was not served upon each respondent and that the petitions served differ materially from the petition filed with the court in that the petitions served did not contain a complete and accurate set of acquisition maps. They further aver that while EDPL 402(B)(2) allows for notice which contains only those portions of the acquisition map affecting the owners of the subject property, it does not absolve petitioner of its responsibility to serve true, accurate and complete copies of the petition upon all respondents/condemnees.
Petitioner argues that it properly served each respondent pursuant to EDPL 402(B)(2).
EDPL 402(B)(2) provides, in relevant part, that:
"The condemnor shall, at least twenty days prior to the return date of the petition, serve a notice of the time, place and object of the proceeding upon the owner of record of the property to be acquired, as the same appears from the record of the office in which the acquisition map is to be filed. Said notice shall contain a copy of that portion of the proposed acquisition map affecting the owner's property."
As the language of the above quoted provision of the statute makes clear, petitioner need only serve that portion of the acquisition map affecting the owner's property. Accordingly, respondents' contention that the petition should be dismissed on the ground that each respondent was not served with the acquisition map for the entire Project is lacking in merit.
Second Affirmative Defense: The Petition is Premature
The Parties' Contentions
Respondents contend that the petition is premature pursuant to EDPL 401(A)(3), which allows for the commencement of proceedings only after entry of the final order or judgment on judicial review pursuant to EDPL 207. They argue that no final order or judgment has been entered in this matter because their Motion to Reargue is currently pending before the Court of Appeals. In that motion, respondents urge the court to hold the Motion to Reargue in abeyance pending determination of the appeal Kaur v New York State Urban Development Corporation ( ___ AD3d ___, 2009 NY Slip Op 8976).
In opposition, petitioner argues that the Court of Appeals decision rendered in Goldstein (2009 NY Slip Op 8677) on November 24, 2009 constitutes a final order or judgment on judicial review that begins the three-year period provided for in EDPL 401(A)(3) in which a condemnor can commence a vesting proceeding. Petitioner further argues that the filing of a motion to reargue does not alter the finality of the Court of Appeal's decision. From this it follows that this proceeding is not premature in that it was filed within three years of November 24, 2009.
As is relevant to this issue, EDPL 401(A), time for acquisition, provides that:
"The condemnor may commence proceedings under this article to acquire the property necessary for the proposed public project up to three years after conclusion of the later of:
"(1) publication of its determination and findings pursuant to section two hundred four, or
"(2) the date of the order or completion of the procedure that constitutes the basis of exemption under section two hundred six, or
"(3) entry of the final order or judgment on judicial review pursuant to section two hundred seven of this chapter."
In addressing a similar issue and holding that the decision of the appellate court on review of an initial EDPL 207 determination was a final order for purposes of beginning the running of the period within which acquisition could occur, one court rejected a condemnees' argument that because EDPL 207(B) provides that an Appellate Division order is subject to review by the Court of Appeals, and because the condemnee had actually appealed the decision of the Appellate Division, there had not been a final order or judgment on judicial review. In that decision, the court in In re UDC ( 193 Misc 2d 290, 295 [New York Co Sup Ct 2002] [footnote omitted]) reasoned that:
"CPLR article 56 governs appeals to the Court of Appeals. CPLR 5611, entitled When appellate division order deemed final,' states that [i]f the appellate division disposes of all the issues in the action its order shall be considered a final one. . . .' Appellate Division determinations of appeals of special proceedings are final even though they are appealable to the Court of Appeals as of right. ( See Cabrini Med. Ctr. v Desina, 64 NY2d 1059, 1061, n  [reversing Appellate Division's affirmance of a Supreme Court order denying a permanent stay of arbitration].) As the Court of Appeals stated in Da Silva v Musso, ( 76 NY2d 436, 440  [holding that knowledge of pending appeal did not deprive purchaser of real property of bona fide purchaser status in absence of notice of pendency]):
"It is elementary that a final judgment or order represents a valid and conclusive adjudication of the parties' substantive rights, unless and until it is overturned on appeal. Furthermore, while an appeal from a final judgment or order may leave an inchoate shadow on the rights defined therein, those rights are nonetheless fully enforceable in the absence of a judicially issued stay pending disposition of the appeal."
This court finds that the holding in In re UDC ( 193 Misc 2d 290) that a decision of the Appellate Division denying respondents' EDPL 207 challenge to a petitioner's proposed taking can be characterized as a "final order or judgment on judicial review" for purposes of EDPL 401 to be persuasive. The court, however, respectfully disagrees and adopts petitioner's contention that the three-year period provided by EDPL 401(A) in which to commence a vesting proceeding begins to run from the date that the Court of Appeals hands down its decision under circumstances such as these, where the decision rendered by the Appellate Division was promptly appealed. This holding is necessary to avoid the possibility of the Court of Appeals invalidating a decision to take property in a condemnee's EDPL 207 challenge after title has already vested in a condemnor. In so holding, the court also notes that in this case, it is irrelevant whether the three-year period in which to commence an EDPL Article 4 proceeding began to run on May 12, 2009, when the Appellate Division, Second Department, rendered its decision on the EDPL 207 challenge, or on November 24, 2009, when the Court of Appeals affirmed the decision, since the instant petition was filed on December 23, 2009.
Implicit in this holding is the rejection of respondents' contention that the Court of Appeals decision should not be deemed final until their Motion to Reargue is decided. Moreover, as was noted above, the Motion to Reargue was denied by the Court of Appeals on February 18, 2010, so that this argument has been rendered moot.
Third Affirmative Defense: The Petition is Untimely
The Parties' Contentions
In their third affirmative defense, respondents assert that the petition is untimely, since this proceeding was not commenced within three years of publication of petitioner's determination and findings pursuant to EDPL 204 on December 8, 2006, as required pursuant to EDPL 401(A)(1).
In opposition to this claim, petitioner again argues that the Court of Appeals rendered the decision in Goldstein (2009 NY Slip Op 8677) on November 24, 2009 and that that decision constitutes the "entry of the final order or judgment on judicial review pursuant to section two hundred seven of this chapter." Thus, since this proceeding was commenced within three years of the date that the decision was rendered, it is not time barred.
As quoted above, EDPL 401(A) provides that a proceeding to acquire title to property may by commenced up to three years after conclusion of the later to occur of the publication of the condemnor's determination, the date of the order or completion of the procedure that constitutes the basis of exemption or the entry of the final order or judgment on judicial review pursuant to EDPL 207. Accordingly, since respondents' argument ignores the clear language of the statute, it is found to be specious and the petition is held to be timely pursuant to EDPL 401(A)(3).
Fourth Affirmative Defense: The Petition does
Not Designate the Condemnees as Respondents The Parties' Contentions
In their fourth affirmative defense, respondents argue that the petition is defective pursuant to CPLR 401. Accordingly, it must be dismissed because it does not designate the proposed condemnees as respondents.
In opposition to this contention, petitioner alleges that since this is an eminent domain proceeding, Article 4 of the EDPL controls and Article 4 of the CPLR does not apply. Further, since a condemnation proceeding is an in rem proceeding against the property sought to be acquired, it is not necessary to name the proposed condemnees as respondents.
It is well settled that a condemnation proceeding is an in rem proceeding against the land ( In re County of Nassau, 24 NY2d 621, 627, n 1 , citing Watson v New York Cent. R. R. Co., 47 NY 157; Wabst v State of New York, 11 Misc 2d 971). It has also been held that:
"A petition in proper form, filed as required by the statute, is a jurisdictional prerequisite to the authority of the court to entertain a proceeding thereunder. The petition in condemnation proceedings must describe the property sought to be taken, defining the location and quantity required with such certainty that it may be identified and the extent of the petitioner's claim made known to the owner and a failure of the petition to thus describe the property or any uncertainty in this respect will vitiate the proceedings. It has been uniformly held that in proceedings of this character extreme accuracy is essential for the protection of the rights of all parties."
( City of Plattsburg v Kellogg, 254 AppDiv 455, 457 ).
CPLR 401 provides, in relevant part, that "[t]he party commencing a special proceeding shall be styled the petitioner and any adverse party the respondent."
While EDPL 402(B)(3) requires that a condemnor must clearly define the location and quantity of the property to be acquired with such certainty that it may be identified and the extent of the claim made known to the owner, and that extreme accuracy is essential ( see Northwest Quadrant Pure Waters Dist. v Payne Beach Assoc., 38 AD2d 668; City of Plattsburgh, 254 AppDiv 455; Massena v Niagara Mohawk Power, 87 Misc 2d 79; Babylon v Bergen, 69 Misc 574; Onondaga Water Service v Crown Mills, 132 Misc 848), respondents do not cite to any provisions of the EDPL or controlling case law that requires a condenmnor to name the parties holding title to the properties sought to be acquired as respondents in the caption. In fact, the language of EDPL 402(B)(3), which governs the content of a petition in eminent domain proceedings, contains no such requirement. Further, the cases holding that a condemnation proceeding is an in rem proceeding also support this conclusion, i.e., that petitioners need only describe the property sought to be acquired in the petition and in the maps that must be filed in connection with the taking and to identify the owners in the petition. CPLR 401 does not compel a contrary conclusion since, as was discussed above, the provisions of the EDPL take precedence over the provisions of the CPLR.
Fifth Affirmative Defense:
Respondents' EDPL 207 Proceeding is Not Complete The Parties' Contentions
In support of this defense, respondents argue that the petition does not comply with EDPL 402(B)(3)(a), which provides that: "[t]he condemnor shall present to the court a petition verified by an authorized officer of the condemnor setting forth: a statement providing . . . the compliance with the requirements of article two of this law," since their EDPL 207 proceeding is not yet final.
In opposition, petitioner argues that the petition fully complies with the requirement of EDPL 402(B)(3)(a) in that paragraph 9 states that ESDC held a public hearing, upon public notice duly given, in compliance with EDPL Article 2; paragraph 10 states that ESDC issued its D F in accordance with EDPL Article 2; and paragraph 11 describes the challenges to the D F that were brought and dismissed in the federal and state courts. Petitioner thus concludes that the petition contains statements demonstrating ESDC's compliance with the requirements of Article 2 of the EDPL.
Petitioner also reiterates its assertion that this proceeding complies with EDPL 402(B)(3) because Goldstein (2009 NY Slip Op 8677), which was rendered by the Court of Appeals on November 24, 2009, was a final order disposing of respondents' EDPL 207 challenge, notwithstanding the filing of a subsequent motion to reargue.
This argument has been fully discussed and rejected above.
Sixth Affirmative Defense: The Petition Does Not
State the Public Use, Benefit or Purpose for which the Property is Required The Parties' Contentions
In this defense, respondents argue that the petition should be dismissed on the ground that it does not state the public use, benefit or purpose for which the property is required, as mandated by EDPL 402(B)(3)(d), since the terms "public use," "public benefit," and/or "public purpose" are not mentioned therein. Moreover, they aver that petitioner's failure to comply with this statutory mandate is not inadvertent because if petitioner had attempted to comply, in reliance upon the 2006 D F, it would have been forced to materially misrepresent a host of claimed public uses, benefits or purposes that have since proven ephemeral, thus mandating dismissal. In the alternative, if petitioner had attempted to comply with EDPL 402(B)(3)(d) by setting forth its allegations of public use, benefit or purpose as existed at the time that the petition was verified on December 15, 2009, it would have faced certain dismissal because any truthful allegations of public use, benefit or purpose as of that date materially undermine the 2006 D F.
In response, petitioner alleges that the petition complies with EDPL 402(B)(3)(d) because paragraphs 4 and 5 expressly set forth the public use, benefit or purpose for which the property is required:
"ESDC requires the real property interests to be acquired herein for purposes related to the construction of ESDC's Atlantic Yards Land Use Improvement and Civic Project (the Project'), which involves the renewal and redevelopment of a blighted area in the Atlantic Terminal section of Brooklyn through the clearance, replanning and reconstruction of the area and the construction thereon of a major mixed-use development.
"Pursuant to ESDC's Modified General Project Plan, the Project calls for the development of a new arena for the New Jersey Nets National Basketball Association Team, sixteen mixed-use buildings and a newly reconfigured Long Island Rail Road train yard to be developed in two or more phases. The properties that ESDC presently seeks to acquire pursuant to the Petition are necessary for the first phase of the Project, which involves construction of the arena and buildings surrounding the arena as well as construction, development and operation of the upgraded LIRR yard." Petitioner further avers that here is no requirement that the words "public use, benefit or purpose" be used in describing the Project. In addition, the D F, attached as Exhibit C to the Petition, set forth in detail the Project's public uses, benefits or purposes.
The court agrees that the above quoted paragraphs of the petition adequately set forth the "public use, benefit or purpose" for which the property is required. In so holding, the court rejects respondents' contention that the words "public use, benefit or purpose" must be used in the petition. Moreover, the petition includes a copy of the 2006 D F, which also sets forth the public use, benefit or purpose which the Project is intended to serve.
Seventh Affirmative Defense: The Public Use ,
Benefit or Purpose of the Project has Changed The Parties' Contentions
In this affirmative defense, respondents argue that the petition does not comply with EDPL 402(B)(3)(d) because the public use, benefit or purpose described therein has changed materially from what was described in the 2006 D F.
In opposition, petitioner again cites the above quoted paragraphs of the petition and refers to the fact that the 2006 D F were annexed thereto to argue that the petition sets forth the Project's public uses, benefits and purposes. Petitioner further contends that respondents' allegations concerning the alleged changes in the public use, benefit or purpose of the Project are not properly raised in an EDPL Article 4 proceeding. Moreover, petitioner argues that even if the modifications were subject to judicial review, the 2009 MGPP did not change the elements of the Project that have already been determined to constitute a public use by both the Second Circuit and the Court of Appeals. More specifically, petitioner asserts that the 2009 MGPP and 2006 MGPP are virtually identical, as they both involve the same project site (2006 MGPP at 2, Exhibit A-2; 2009 MGPP at 2, Exhibit A-2); the same 17 buildings at the same locations (2006 MGPP, Exhibit A-l; Exhibit 3, Exhibit E); the same uses in these 17 buildings ( id.; 2006 MGPP at 3-16; 2009 MGPP at 3-17); the same eight acres of publicly accessible open space (2006 MGPP at 16-17; 2009 MGPP at 17-18); compliance with the same set of comprehensive Design Guidelines for the 17 Project buildings and eight acres of open space (2006 MGPP at 6, 7, Exhibit B; 2009 MGPP at 6,7, Exhibit B); a new LIRR yard with a new, direct portal to the Atlantic Terminal (2006 MGPP at 12-14; 2009 MGPP at 13-14); a new subway entrance at the southeast corner of Atlantic and Flatbush Avenues, on the Arena Block (2006 MGPP at 10-11, 35-37; 2009 MGPP at 10-12, 30, 37-38); and the same private developer (2006 MGPP at 1; 2009 MGPP at 1). Petitioner further argues that the principal change to the 2006 MGPP by the 2009 MGPP is that the Project site properties will be acquired in phases, instead of being acquired in their entirety at one time (2009 MGPP at 22), and that such a change in the phasing of property acquisition does not trigger the need for a new D F under the EDPL, citing to Leichter v UDC ( 154 AD2d 258), and does not re-open the public use issues that have already been decided by the Second Circuit and by the Court of Appeals.
Petitioner further argues that although respondents contend that the EDPL findings with respect to the Project were materially undermined by the 2009 MGPP, they fail to identify a single change that had such a result. Instead, their argument focuses on modifications to the business arrangement between FCRC and the MTA that were approved on June 24, 2009. In this regard, petitioner argues that while respondents did not contest this modification, a challenge made by other parties was rejected in Mattter of Montgomery ( 25 Misc 3d 1241). Moreover, petitioner asserts that the MTA business arrangement has no relevance to the validity of the 2006 D F because those findings relate to the public purposes of the Project, which have not changed. They also note that FCRC's obligations to ESDC are dictated not by a transaction with the MTA, but by the 2009 MGPP and the implementing agreements between FCRC and ESDC. The essential terms of the Development Agreement obligate FCRC to construct the Project as described in the 2009 MGPP and to use commercially reasonable efforts to do so by 2019 (2009 MGPP at 9).
Pursuant to EDPL 207:
"(A) Any person or persons jointly or severally, aggrieved by the condemnor's determination and findings made pursuant to section two hundred four of this article, may seek judicial review thereof by the appellate division of the supreme court, in the judicial department embracing the county wherein the proposed facility is located by the filing of a petition in such court within thirty days after the condemnor's completion of its publication of its determination and findings pursuant to section two hundred four herein. . . .
"(B) The jurisdiction of the appellate division of the supreme court shall be exclusive and its judgment and order shall be final subject to review by the court of appeals in the same manner and form and with the same effect as provided for appeals in a special proceeding. All such proceedings shall be heard and determined by the appellate division of the supreme court, and by the court of appeals, as expeditiously as possible and with lawful preference over other matters."
It must also be noted that pursuant to EDPL 208:
"Except as expressly set forth in section two hundred seven, and except for review by the court of appeals of an order or judgment of the appellate division of the supreme court as provided for therein, no court of this state shall have jurisdiction to hear and determine any matter, case or controversy concerning any matter which was or could have been determined in a proceeding under this article."
In interpreting these provisions, it has been held that a party's challenge to a petitioner's condemnation determination on the grounds of bad faith and/or lack of public purpose is properly raised and addressed in a proceeding commenced pursuant to EDPL 207 and cannot be raised in a proceeding pursuant to EDPL 402 ( see e.g. Matter of Town of Southold [Town Hall Expansion Project] , 50 AD3d 1045, 1045, citing Matter of City of New York [Grand Lafayette Props.] , 6 NY3d 540 ; Matter of 49 WB v Village of Haverstraw , 44 AD3d 226 ; Matter of City of New Rochelle v O. Mueller, Inc., 191 AD2d 435; Matter of Village of Johnson City v Bolas, 157 AD2d 1009; MTA v Pinelawn Cemetery, 135 AD2d 686; City of Buffalo Urban Renewal Agency, 100 AD2d 20). Stated differently:
"[P]ursuant to EDPL 207(A), persons aggrieved by a condemnor's determination and findings must seek judicial review in the appropriate Appellate Division within 30 days after the condemnor's completion of its publication of its determination and findings'. [The Appellate Division] has exclusive original jurisdiction to hear and determine a condemnee's objections ( see, EDPL 207[B]; Matter of Farmington Access Rd. of Town of Farmington, 156 AD2d 936; Matter of Incorporated Vil. of Patchogue v Simon, 112 AD2d 374). Having failed to comply with the requirements of EDPL 207 by filing a timely petition for review of the condemnor's determination in this court, the appellants may not circumvent the command of the statute with respect to the procedures governing judicial review by raising [their] objection . . . within the context of an article 4 vesting proceeding' ( Metropolitan Transp. Auth. v Pinelawn Cemetery, 135 AD2d 686, 688, citing Matter of Incorporated Vil. of Patchogue v Simon, supra, at 375; see also, Matter of Broome County [Havtur], 159 AD2d 790; Matter of Farmington Access Rd. of Town of Farmington, supra)."
( City of New Rochelle, 191 AD2d at 436).
Also relevant to the disposition of this issue is the Leichter case ( 154 AD2d 258). Therein, the Appellate Division, First Department, addressed the condemnees' contention that amendments to the 42nd Street development project as originally proposed had materially affected the public justification for its completion, so that the original hearings conducted by respondent and approved by the Court of Appeals as complying with EDPL requirements were insufficient with respect to the amended plan, thereby requiring new hearings pursuant to EDPL 203. In that case, the amendments involved an expansion of the proposed use of a site originally designated as a wholesale facility mart in the original plan to encompass a commercial office tower and a provision for the sequential acquisition of sites as they became available for development, rather than the simultaneous acquisition originally contemplated. In rejecting petitioners' contention that a de novo review was necessary, the court held that:
"The only question before this court is whether respondent's determination to proceed with its redevelopment plan was made in compliance with statutory procedures (EDPL 207[C]). As noted, the statute does not bar changes in a public project subsequent to the publication of the findings and determination of the condemning authority pursuant to EDPL 204. However, in view of the omission of specific procedures to be followed upon modification, it is the responsibility of the courts to fill the interstices in the statutory scheme. In this regard, we agree with Supreme Court that it is sufficient that the agency hold a hearing, limited to consideration of the amendments in the plan, during which the factors enumerated in EDPL 204(B) are open to discussion. This procedure is sufficient to promote the statutory purpose to establish opportunity for public participation in the planning of public projects necessitating the exercise of eminent domain' (EDPL 101). . . .
"Our holding is further supported by a consideration of the practicalities surrounding a project of this scale. As appellants point out in their brief, during the time that this project has been delayed due, in no small part, to attendant litigation, the real estate market in Midtown Manhattan dramatically changed.' In addition, several developers withdrew from the project for financial and other reasons. It is clear to this court that if respondent is required to start the hearing process anew, conditions will very likely have changed again by the time the amended plan emerges from the approval process with the attendant legal challenges, thereby extending the review procedure ad infinitum. The hearing requirements set forth in the Eminent Domain Procedure Law and the Urban Development Corporation Act are designed to solicit community involvement in the planning process, not to serve as a vehicle by which public development can be effectively foreclosed."
( Leichter, 154 AD2d at 259-260).
The court in Leichter also rejected petitioners' contention that respondent could not take advantage of the exemption afforded by EDPL 206(C) because the agency violated UDCA § 16(2)(f), which requires that the agency modify its plan in the manner provided for the initial filing of such plan in paragraph (a) of this subdivision, because that section contemplates only modifications in the plan which arise out of the initial public hearings. The court thus concluded that "[l]ike the Eminent Domain Procedure Law, the UDC Act is silent on the subject of the procedure to be followed when a plan is modified subsequent to its initial approval" ( Leichter, 154 AD2d at 260). Although respondents do not raise any arguments under the UDCA, the court would reach the same result and find the claim to be lacking in merit if such a claim was raised.
Further, in commenting on the decision in Leichter, another court observed that:
"[T]he UDC Act envisions a single review of a proposed project which, upon affirmance by the UDC, will then be undertaken without unnecessary delay so as to require no further proceedings (UDC Act § 16). Indeed, as the Court of Appeals has pointed out, the legislative intent behind this statute is the elimination of long and costly delays in urban development projects resulting from regulations imposed by various levels of government, and from local disputes regarding how a project is best to be carried out ( Matter of Waybro Corp. v Board of Estimate, supra, at 356)."
( Toh Realty v City of New York, 154 AD2d 267, 268, lv denied 75 NY2d 705).
The court also recognizes that pursuant to the doctrine of res judicata, a judgment on the merits by a court of competent jurisdiction is conclusive upon parties in a litigation and those in privity with them in any subsequent action with regard to issues of fact and questions of law necessarily decided in the earlier action ( see e.g. Gramatan Home Investors v Lopez, 46 NY2d 481, 485; Watts v Swiss Bank, 27 NY2d 270). In contrast, the doctrine of collateral estoppel, or issue preclusion, "precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity" ( Buechel v Bain, 97 NY2d 295, 303, cert denied 535 US 1096, citing Ryan v New York Tel. Co., 62 NY2d 494, 500). "The party seeking the benefit of collateral estoppel bears the burden of proving that the identical issue was necessarily decided in the prior proceeding, and is decisive of the present action ( see e.g. City of New York v College Point Sports Assn. , 61 AD3d 33 , 42, citing Buechel, 97 NY2d at 304; D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, 664). The party against whom preclusion is sought bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination ( see e.g. City of New York, 61 AD3d at 42, citing Buechel, 97 NY2d at 304; Matter of Juan C. v Cortines, 89 NY2d 659, 667; Kaufman v Eli Lilly Co., 65 NY2d 449, 456).
It has already been determined that the petition adequately sets forth the public use for which the subject property is needed. The court also finds, as argued by petitioner, that the public purpose to be served by the Project was not changed by the 2009 MGPP. Moreover, to the extent that the Project has changed, the above discussed holdings in Leichter ( 154 AD2d 258) and Toh Realty ( 154 AD2d 267) clearly establish that petitioner is not obligated to begin a de novo review proceeding ( see also Binghamton Urban Renewal Agency v Manculich, 67 NY2d 434, 438, appeal denied 68 NY2d 808 [since EDPL 401(A)(2) provides for a limitations period of up to three years from the date of the order or completion of the procedure that constitutes the basis of exemption under section two hundred six, the three-year period commenced running when the ordinance adopting and approving the plan was approved and the requirements of EDPL 206(A) were satisfied, since no new consideration of the factors enumerated in EDPL 204 was evidenced in the subsequent amendment to the plan]). In this regard, it must also be noted that the numerous judicial challenges to the Project resulted in extensive delay, as was the case in Leichter. More significantly, it cannot be disputed that the economic conditions in which the Project was proposed in 2002 have changed drastically in that the world-wide economy is now in one of the worst downturns in history.
Further, to the extent that respondents' argument can be construed as challenging the public use, benefit or purpose of the Project, this challenge is time barred in that the claims were not interposed in an EDPL 207 proceeding commenced in the Appellate Division within 30 days of September 17, 2009, the date that the 2009 MGPP was affirmed ( see e.g. Matter of City of New York [Grand Lafayette Props.] , 6 NY3d 540 ; Matter of Haverstraw v Ray River Co. , 62 AD3d 1016; Matter of Town of Southold [Town Hall Expansion Project] , 50 AD3d 1045; Matter of 49 WB , 44 AD3d 226 ; Matter of City of New Rochelle, 191 AD2d 435; Matter of Broome County [Havtur], 159 AD2d 790; Matter of Village of Johnson City v Bolas, 157 AD2d 1009; Matter of Farmington Access Rd. of Town of Farmington, 156 AD2d 936; Matter of Incorporated Vil. of Patchogue v Simon, 112 AD2d 374; MTA, 135 AD2d 686; City of Buffalo Urban Renewal Agency, 100 AD2d 20).
In so holding, the court rejects respondents' assertion that they should be permitted to raise their arguments concerning the changes made to the Project in this proceeding because petitioner successfully convinced the Appellate Division, Second Department, and/or the Court of Appeals that their EDPL 207 challenge could not address any issues outside the record, i.e., any facts that became known after the petition was filed or that came into existence thereafter or, more specifically, that petitioner adopted the 2009 MGPP on September 17, 2009, which they argue fatally undermined the 2006 D F. In this regard, respondents, who have been represented by counsel throughout these proceedings, were aware of the 30-day time period, since they timely interposed a proceeding in federal court to contest the 2006 D F.
Moreover, in the decision that the Appellate Division, Second Department, rendered on respondents' state claims on May 12, 2009, the court specifically addressed the issue of whether the 30-day time limit in EDPL 207 in which to challenge ESDC's determination precluded respondents from maintaining a challenge in state court after the Second Circuit dismissed their federal challenge. Thus, since this decision was rendered before the Project was modified on September 17, 2009, any claim by respondents that they were not aware of the time requirements of EDPL 207 is specious. The court therefore concludes that if respondents wished to challenge the Project on the ground that after the 2009 MGPP was adopted, the Project was no longer supported by an acceptable public use, purpose or benefit, they should have commenced a separate proceeding in the Appellate Division pursuant to EDPL 207 within 30 days of September 17, 2009. Having failed to do so, respondents' arguments concerning whether the 2009 MGPP is sufficient to support a constitutional public purpose are now time barred.
Even if a challenge to the 2009 MGPP could be characterized as an Article 78 challenge, such a proceeding is also time barred in accordance with the four-month Statute of Limitations set forth in CPLR 217(1) ( see e.g. Matter of City of New York (Grand Lafayette Props), 6 NY3d at 547; Matter of Sanitation Garage Brooklyn Dists. 3 3A , 32 AD3d 1031 , lv denied, motion dismissed 7 NY3d 92 ; In re Acquisition of Real Prop. by the County of Tompkins, 237 AD2d 667, 668 ).
Similarly, inasmuch as the question of the public use to be served by the project is a matter that could have been determined in a proceeding under EDPL Article 2, jurisdiction to hold such a hearing is limited to the Appellate Division or the Court of Appeals pursuant to the express mandate of EDPL 207(b) and 208 ( see e.g. In re Broome County, 159 AD2d at 791, citing Matter of Waldo's v Village of Johnson City, 74 NY2d 718, 720 [because respondents' answer raised constitutional questions as to petitioner's authority to acquire lands for purposes of their public project in contravention of respondents' right to equal protection, jurisdiction to resolve such issues rested exclusively in the appropriate Appellate Division]; In re Farmington Access Rd., 156 AD2d 936 [the Appellate Division has exclusive original jurisdiction to hear and determine a condemnee's objections pursuant to EDPL 207[B]).
As an alternative grounds for dismissing this affirmative defense as being without merit, it must also be recognized that the Second Circuit dismissed respondents' constitutional challenges to the 2006 D F, as premised upon the 2006 MGPP, and that the Court of Appeals dismissed their challenge as predicated upon state law. Inasmuch as the public purposes to be served by the Project have not changed, the holdings of the Second Circuit and the Court of Appeals preclude another challenge of the public use, purpose or benefit of the Project pursuant to the doctrines of res judicata and/or collateral estoppel. As is relevant to this issue, in an action in which a respondent sought to raise claims of private purpose, bad faith and taint, the court held that:
"It is evident that the appeal by [respondent] addresses the same issues concerning private purpose, due process, bad faith and the taint of private monetary contribution to the proposed project which were specifically raised, considered and rejected in the prior proceeding in this court. Significantly, the Court of Appeals considered and rejected each of these points in affirming. Since a final conclusion bars all other claims arising out of the same transaction, even if phrased under a different theory or seeking a different remedy ( see, e.g., O'Brien v City of Syracuse, 54 NY2d 353, 357; Matter of Reilly v Reid, 45 NY2d 24, 27), we are of the view that [condemnee] is precluded from relitigating under any guise the private taking, bad faith and other issues heretofore raised and rejected ( see, Chesterfield Homes v City of New York, 92 AD2d 578)."
( Johnson City, 157 AD2d at 1010).
Eighth Affirmative Defense: The 2006 D F have been Proven False
The Parties' Contentions
In this affirmative defense, respondents again argue that the petition does not comply with EDPL 402(B)(3)(d), which requires it to state "the public use, benefit or purpose for which the property is required" because the original 2006 D F have been proven to be false with the passage of time. They further aver that if any portion of the 2006 D F "could arguably survive after excising all that has proven to be false over time," the petition would still be defective and subject to dismissal because this proceeding is premised upon those determinations and findings, which petitioner has chosen not to amend, supplement or reissue. They thus conclude that since the 2006 D F have "been vitiated by subsequent events," including without limitation, petitioner's adoption of a new 2009 MGPP, it can no longer serve as the predicate for an action under EDPL Article 4.
In opposition, petitioner reiterates the arguments that it made in opposition to the previous two affirmative defenses.
In arguing that the factual predicates of the 2006 D F have proven false, respondents restate that the Project has changed since those findings were approved, so that a new hearing and D F are required. As so stated, this affirmative defense is premised upon the same contentions discussed above. Accordingly, this defense has already been addressed and found to be lacking in merit.
Ninth Affirmative Defense:
Petitioner's Decision to Acquire Property in Stages The Parties' Contentions
Respondents next argue that the petition fails to comply with CPLR Article 4 and EDPL 402(B)(3)(a), which requires "a statement providing either the compliance with the requirements of article two of this law" and/or EDPL 401(C), which provides that if property is "acquired for a public project in stages," such staged acquisition must be proposed at the public hearing. In this case, however, petitioner's decision to provide for a two stage acquisition was made when it adopted the 2009 MGPP, when the change was described in the 2009 Technical Memorandum. Accordingly, they conclude that petitioner should not be permitted to rely upon the 2006 D F and the Technical Memorandum to support the adoption of the 2009 MGPP.
In opposition, petitioner asserts that since this is an EDPL Article 4 proceeding, CPLR Article 4 does not apply. Petitioner further avers that the petition complies with EDPL 402(B)(3)(a), as is discussed above with regard to petitioner's entitlement to a vesting order and in discussing respondents' fifth affirmative defense. Further, even if the argument was properly raised, the petition fully complies with EDPL 401(C). More specifically, paragraph 9 of the petition states that ESDC held a public hearing on August 23, 2006 concerning the Project and the proposed acquisition by eminent domain of the property located within the Project site, that this public hearing met the requirements of EDPL 401(C) and that no additional EDPL public hearing or new D F are now required.
The reasoning and holding in Leichter ( 154 AD2d 258) has been fully discussed above. Further, EDPL 401(C) provides that:
"In the event property is to be acquired for a public project in stages, the condemnor after conducting a required public hearing for the entire project need not conduct additional hearings for subsequent stages, provided that proceedings under this article with respect to the property necessary for the first stage were commenced within such three year period and provided further, that all proceedings under this article with respect to property for the project are commenced within ten years from the dates hereinabove set forth in paragraphs one, two and three of subdivision (A)."
In interpreting this provision, the Appellate Division, First Department, held that "the language and intent of the legislation . . . is not to provide a means of foreclosing development, but to assure that development is preceded at appropriate intervals by an environmental review process involving the affected community" ( 250 W. 41st St. Realty v UDC, 277 AD2d 47, 48, lv denied 96 NY2d 705, citing Bryant v New York City Health Hosps. Corp., 93 NY2d 592, 609-610; Matter of Leichter, 154 AD2d at 261).
As was fully discussed above, the holding in Leichter ( 154 AD2d 258) clearly establishes that petitioner is not required to commence a de novo approval process because the proposed Project changed since the date that the 2006 D F were adopted. In this regard, it is emphasized that one of the changes in Leichter ( 154 AD2d 258) involved a decision to acquire the subject property in stages. Moreover, EDPL 401(C) states that additional hearings are not required if a condemnor decides to acquire property in stages, provided that the vesting proceeding is timely commenced. Thus, as discussed above, respondents' claim that this vesting proceeding cannot be maintained because petitioner decided to acquire title to the subject properties in stages is specious.
Tenth Affirmative Defense:
Failure to List the Properties Being Acquired The Parties' Contentions
In this affirmative defense, respondents argue that the petition does not comply with EDPL 402(B)(3)(a) and (d) in that it fails to attach a true and correct copy of the 2006 D F, which intentionally omitted materially adverse information, i.e., the initial list of properties targeted for acquisition in a single stage. Respondents further argue that if petitioner had attached a complete and accurate copy of the 2006 D F, it would have immediately revealed the material change from a one stage acquisition plan to a two stage acquisition plan, thus jeopardizing its attempt to obtain a quick order from the court granting its petition, notwithstanding this material and intentionally concealed defect.
In opposition, petitioner asserts that the petition fully complies with the requirements of EDPL 402(B)(3)(a) and (d). Petitioner further contends that the omission of a two-page schedule to the 2006 D F that listed the properties to be acquired for the Project is not substantive, since respondents were not harmed by its omission. In this regard, paragraph 5 of the petition clearly indicates that the properties to be acquired in this proceeding are necessary for the first phase of the Project and, in addition, Exhibit A to the petition contains a Project Map provided to all of the respondents, which clearly identifies all of the properties in the Project site and the subset of those properties which ESDC seeks to acquire in this proceeding. Furthermore, as set forth in paragraph 10 of the petition, ESDC caused the complete 2006 D F, with the property list schedule exhibit, to be published on December 11 and 12, 2006. ESDC also served a copy of the 2006 D F with the property list schedule exhibit on each condemnee. Accordingly, respondents clearly had notice of the schedule, which conclusion is further supported by their participation in the above discussed judicial challenges.
As discussed above, the petition complies with EDPL 402(B)(3). To the extent that this affirmative defense is predicated upon petitioner's decision to acquire the property needed for the Project in stages, the court has held that no additional hearings are required pursuant to the holding in Leichter ( 154 AD2d 258). Accordingly, this affirmative defense adds no additional facts or issues that have not already been discussed and is therefore found to be lacking in merit for the same reasons.
In addition, the omission of a two-page list of the properties targeted for acquisition in a single stage is properly construed as error pursuant to CPLR 2001. Moreover, respondents clearly had notice of the properties to be acquired pursuant to paragraph 5, which indicates that the properties to be acquired in this proceeding are necessary for the first phase of the Project; pursuant to Exhibit A, which includes a Project Map that clearly identifies all of the properties in the Project site and the subset of those properties which ESDC seeks to acquire in this proceeding; and pursuant to the statement in paragraph 10, which provides that ESDC caused the complete 2006 D F, with the property list schedule exhibit, to be published on December 11 and 12, 2006. Further, as is also alleged by petitioner, respondents undeniably had notice of the contents of the 2006 D F, since the findings were challenged in both federal and state courts.
Eleventh Affirmative Defense:
Inconsistency in the Notice of Petition and the Wherefore Clause The Parties' Contentions
In support of this affirmative defense, respondents argue that the petition does not comply with EDPL Article 4 because it seeks inconsistent relief, i.e., in paragraph 6 of the notice of petition, it seeks an order "directing that each condemnee shall have a period of one hundred twenty (120) days . . . to file a written claim for damages," while paragraph (f) of the wherefore clause seeks an order "directing that each condemnee shall have a period of ninety (90) days . . . to file a written claim for damages."
In response, petitioner contends that the petition fully complies with Article 4 of the EDPL and that the inadvertent error in requesting that the order to be entered provides for the service of claims within 90 days after service of the notice of acquisition in the wherefore clause, instead of 120 days as stated in the notice of petition, is immaterial. In this regard, there is no requirement under Article 4 of the EDPL that the petition set out the number of days for service of claims that the condemnor seeks to include in the condemnation order. Furthermore, the notice of petition and petition both contain a savings clause praying for "such other and further relief as this Court deems just and proper."
As discussed above, EDPL 402(B)(3) sets forth the requirements for a petition in a vesting proceeding. A review of the statute reveals that there is no requirement that a petition set forth the time in which a respondent can file a claim. Moreover, as is more fully discussed hereinafter, the time in which a claim can be filed is subject to the discretion of the court pursuant to EDPL 503, so that any request by petitioner for a specified time period is not dispositive of the issue. From this it follows that petitioner's error in listing two different periods is without effect and can be corrected, since no prejudice inured to any of the condemnees ( see generally CPLR 2001).
Twelfth Affirmative Defense:
Petitioner's Failure to Satisfy a Condition Precedent The Parties' Contentions
In support of this affirmative defense, respondents allege that the 2009 MGPP provides that the acquisition of the subject properties by condemnation will not occur until such time as petitioner receives commitments, guaranties and other satisfactory evidence that FCRC will: (i) promptly commence construction of the Arena and all of the infrastructure necessary for it, (ii) complete such construction within agreed-upon time periods, and (iii) commence and complete construction of the upgraded rail yard in accordance with and subject to the schedule agreed to with the MTA. Respondents assert that notwithstanding this public commitment, petitioner commenced this proceeding on December 23, 2009, at almost precisely the same time that the Bond Offering Statement established that FCRC needs an additional $324.8 million; that it cannot provide any assurance that the funds will be raised; and if the funds cannot be raised, the Project will unquestionably be "scotched." Respondents thus conclude that because a condition precedent to the relief petitioner seeks has not been met, the petition should be dismissed and petitioner should be prohibited from seeking to confiscate respondents' homes and businesses until petitioner provides compelling evidence that the Arena, rail yard and acres of parking lots will actually be built as is required by the 2009 MGPP.
The language of the Bond Offering Statement relied upon by respondents provides that: "As one of the Vacant Possession Release Conditions, and as required under the Arena Lease Agreement, ArenaCo will be obligated to pay or cause to be paid the Additional Rent Amount (presently anticipated to be $324.8 million, which amount may ultimately be reduced to reflect prior expenditures made for the Arena Project and included in the budget for the Arena Project on and after November 1, 2009) to the Issuer (for deposit with the PILOT Bond Trustee). . . .At the time of the issuance of the Series 2009 PILOT Bonds, ArenaCo will not have funds sufficient to pay the Additional Rent Amount, but ArenaCo expects to raise sufficient funds prior to the Arena Project Effective Date . . . Although ArenaCo expects that the necessary funds will be timely raised, there can be no assurance that the funds will be raised or that the amount of such funds will be sufficient to make the full payment of the Completion Cost."
In opposition, petitioner argues that respondents' allegations concerning whether ESDC has received certain assurances called for by the 2009 MGPP is not appropriately raised in an EDPL Article 4 proceeding. More specifically, respondents' assertion that ESDC has not complied with EDPL Article 4 because the Project developer must provide assurances that it will raise funds to construct the Project, or a part thereof, is without merit, as there is no such requirement in EDPL Article 4.
Petitioner further alleges that notwithstanding that it has no obligation to demonstrate that it received sufficient assurances that the Project will go forward as contemplated, ESDC reasonably determined that it had obtained satisfactory assurance that the Project developer will raise funds sufficient to construct the Arena and related components of the Project. In this regard, petitioner alleges that ESDC, FCRC and others participated in a master closing completed on December 23, 2009 (the Master Closing), during which more than 600 contracts and related documents were executed and delivered or placed in escrow. These documents contain firm commitments that FCRC will promptly commence construction of the Arena and will complete such construction within agreed upon time periods, and will commence and complete construction of a new rail yard for the MTA. It also emphasizes that on December 23, 2009, the Brooklyn Arena Local Development Corporation successfully completed the issuance and sale of approximately $511 million of tax-exempt bonds for the Arena, which demonstrates a significant commitment to the construction of the Arena, since upon the issuance of the bonds, FCRC became obligated to pay for the cost of issuance, as well as to pay interest at the rate of approximately 6.5% per annum. Further, until the Arena is complete and operating, FCRC will not be receiving income from the Project to offset this obligation. ESDC reasonably considered this obligation, among others, to provide sufficient assurance that the Arena will be promptly constructed.
Petitioner also explains that construction documents and significant security for the completion of the new rail yard for the MTA were provided at the Master Closing. FCRC delivered to an escrow agent a $20 million letter of credit in favor of the MTA to secure its obligation to purchase the MTA-owned property on which the Arena will be built. FCRC also delivered to an escrow agent an $86 million letter of credit in favor of the MTA to secure its obligation to build the new rail yard. These letters of credit are to be released from escrow and delivered to the MTA when ESDC acquires title to the properties that it is condemning in this proceeding. Petitioner also points out that respondents' statement that FCRC cannot provide any assurance that the funds will be raised is taken from the risk factors portion of the 600 page Official Offering Statement, which was designed to advise investors of the downside risk of purchasing the securities.
Accordingly, ESDC considered the foregoing in determining that it had more than satisfactory comfort that the construction of the Arena would be completed, as did Goldman, Sachs Co and Barclays Capital when they decided to underwrite the offering. Moreover, the bond market itself expressed confidence that the Arena would be completed by over-subscribing the offering. Petitioner therefore concludes that it is these Master Closing documents and transactions that constituted the commitments, guaranties and other evidence satisfactory to ESDC referenced in the 2009 MGPP and that ESDC filed this petition on December 23, 2009, only after the successful completion of the Master Closing on that day.
Respondents point to no statutory or case law authority that allows a condenmee to oppose an EDPL 402 vesting proceeding in reliance upon a challenge to the financial arrangements made by the condemnor to finance the Project and/or to assure its completion ( see generally Matter of Byrne, 101 AD2d 701, 701-702 [the court held that the proposed acquisition of certain real property for development of a safe boat refuge would serve a public use, benefit or purpose, despite the fact that federal funding had not yet been appropriated for the project, where Environmental Impact Statements had been filed and state funds had been committed for property acquisition and construction]). That such authority does not exist is supported by the fact that EDPL 402(B)(3) does not obligate a condemnor to include any statements guaranteeing financing and/or completion of a proposed project in its vesting petition.
Further, to the extent that respondents are seeking to challenge the modifications to the business arrangement between FCRC and the MTA that were approved on June 24, 2009, they should have commenced a timely Article 78 proceeding in which they sought to do so. Such a challenge is now time barred, since an Article 78 proceeding must be commenced within four months after the determination to be reviewed becomes final and binding upon the petitioner in accordance with CPLR 217(1) ( see e.g. Matter of City of New York [Grand Lafayette Props], 6 NY3d at 547; Matter of Sanitation Garage Brooklyn Dists. 3 3A , 32 AD3d 1031; In re Acquisition of Real Prop. by the County of Tompkins, 237 AD2d at 668).
Moreover, in the Article 78 proceeding that was commenced to challenge the June 24, 2009 resolution, Judge Stallman noted that "[t]he subject 2009 resolution approved modification of various business terms to essentially the same plan approved with FCRC on December 13, 2006, when the MTA Board authorized the MTA staff to negotiate and execute binding agreements with FCRC and adopted SEQRA findings" ( Matter of Montgomery, 2009 NY Slip Op 52539U at 1). As is also relevant herein, Judge Stallman went on to hold that petitioners in that proceeding, who were not bidders for the Project, lacked standing to challenge the resolution, having failed to meet the two prong test set out in Society of Plastics Industry, Inc. v County of Suffolk ( 77 NY2d 761, 774):
"A petitioner must show that (1) it has suffered specific injury in fact — itself, as distinct from that allegedly suffered as a member of the public at large; and (2) the claimed injury falls within the zone of interests, sought to be protected by the statute, that the petitioner invokes."
( Matter of Montgomery, 2009 NY Slip Op 52539U at 2 ). This holding is also consistent with Judge Solomon's denial of the challenge made by tenants to the September 12, 2007 Funding Agreement ( Anderson, New York Co Sup Ct, Index No 102056/08). Any challenge made by respondents herein would suffer from the same infirmity.
Finally, it is also significant to recognize that the Second Circuit noted that "the Atlantic Yards Project: may not be successful in achieving its intended goals. But "whether in fact the [Project] will accomplish its objectives is not the question: the [constitutional requirement] is satisfied if . . . the . . . [state] rationally could have believed that the [taking] would promote its objective"'" ( Goldstein, 516 F3d at 63-64, quoting Hawaii Hous. Auth. v Midkiff, 467 US 229, 242, quoting Western Southern Life Ins. Co. v State Bd. of Equalization, 451 US 648, 671-672 [emphasis in Midkiff]). Similarly, the District Court noted that:
"Whether the Project will in fact [result in fewer units of affordable housing than predicted and whether the affordable units proposed from the Project will not remotely offset the impact of the luxury housing or fail to] achieve this or any other objective is not a matter that this court may consider. Kelo, 545 US at 488 (rejecting the argument that courts should require a reasonable certainty' that expected public benefits will accrue; reasoning that [a] constitutional rule that required postponement of the judicial approval of every condemnation until the likelihood of success of the plan had been assured would unquestionably impose a significant impediment to the successful consummation of many such plans')."
( Goldstein, 488 FSupp2d at 254).
The court also notes that even if petitioner is unable to complete the Project after having acquired title to the property:
"[T]he fact that a project may not ultimately come to fruition does not negate the power of eminent domain. Rather, [p]ursuant to the established rule, as long as the initial taking was in good faith, there appears to be little limitation on the condemnor's right to put the property to an alternate use upon the discontinuation of the original planned public purpose' ( Vitucci v New York City School Constr. Auth., 289 AD2d 479, 480 , lv denied 98 NY2d 609 )."
( Matter of City of Syracuse Indus. Dev. Agency (J.C. Penney Corp., Inc.\MCarousel Ctr. Co.), 32 AD3d 1332, 1334 ). In Vitucci ( 289 AD2d 479) the court held that there is little doubt that the City would be authorized to condemn property for a school and then decide to use the property for a different public purpose such as a library or a museum, since in general, the power of eminent domain may be exercised to take property as long as there is a legitimate public purpose for the taking. Accordingly, as long as the initial taking was in good faith, there appears to be little limitation on the condemnor's right to put the property to an alternate use upon the discontinuation of the original planned public purpose.
Thirteenth Affirmative Defense: Unclean Hands
The Parties' Contentions
Respondents fail to particularize this defense. In opposition, petitioner asserts that the allegation concerning the doctrine of unclean hands is not appropriately raised in an EDPL Article 4 proceeding and is not a defense to the petition. Moreover, there is no factual support for this allegation. The Law
"[W]hen equitable relief is sought . . . "moral considerations of fundamental importance require that the litigant come into court with clean hands"'" ( Thompson v 76 Corp. , 37 AD3d 450 , 453, quoting Tepfer v Berger, 119 AD2d 668, 669, quoting Pecorella v Greater Buffalo Press, 107 AD2d 1064, 1065). "Unclean hands in participating in a course of conduct of deception and deceit is an effective bar to [an action]" ( Chun Wang v Chun Wong, 163 AD2d 300, 302, appeal denied 77 NY2d 804, cert denied 501 US 1252). "The doctrine of unclean hands applies when the complaining party shows that the offending party is guilty of immoral, unconscionable conduct and even then only "when the conduct relied on is directly related to the subject matter in litigation and the party seeking to invoke the doctrine was injured by such conduct"'" ( Kopsidas v Krokos, 294 AD2d 406, 407, quoting National Distillers Chem. v Seyopp Corp., 17 NY2d 12, 15-16; accord Jara v Strong Steel Door , 58 AD3d 600 , 602). "[A]ny willful conduct which would be condemned and pronounced wrongful by honest and fair-minded men, will be sufficient to make the hands of the applicant unclean' as long as the conduct pertains to the matter in litigation'" ( Pecorella, 107 AD2d at 1065, quoting 20 NY Jur, Equity, § 107; Agati v Agati, 59 NY2d 830; Seagirt Realty v Chazanof, 13 NY2d 282, 285-286). "The person seeking to invoke the doctrine of unclean hands has the initial burden of showing, prima facie, that the elements of the doctrine have been satisfied" ( Fade v Pugliani, 8 AD3d 612, 614, citing Kaufman v Kehler , 5 AD3d 564 ).
Although it is well established that the equitable doctrine of clean hands does not strictly apply in actions at law ( see Rocks Jeans v Lakeview Auto Sales Serv., 184 AD2d 502, 503 , citing Board of Educ. v Rettaliata, 78 NY2d 128 ), it is equally well established that "[i]n determining what is just compensation', the courts apply equitable principles and endeavor to weight the justice and fairness between the condemnor and the condemnee, and attempt to arrive at a valuation which they deem to be fair and equitable to both parties'" ( Municipal Housing Auth. v Harlan, 24 AD2d 633, 635 , citing Jahr, Eminent Domain, pp. 93-94). Accordingly, it cannot be successfully argued that the court cannot apply equitable principles in granting relief in an eminent domain proceeding ( see generally Seaboard A. L. R. Co. v United States, 261 US 299, 304 ; Johnson v State, 10 AD3d 596, 597 ; Vinciguerra v State of New York, 22 AD2d 9 ; Huie v Campbell, 281 AppDiv 275, 277 ; Champlain Stone Sand Co. v State, 66 Misc 434, 447 ).
As a threshold issue, the court agrees that respondents cannot oppose a vesting petition based on the doctrine of unclean hands. Further, their attempt to interpose such a defense is lacking in merit. In so holding, the court notes that respondents' claim is fundamentally flawed in that they fail to allege or articulate any immoral or illegal conduct on petitioner's part ( see e.g. National Distillers Chem., 17 NY2d at 15-16; Kopsidas, 294 AD2d at 407; Jara, 58 AD3d at 602), or conduct which would be condemned and pronounced wrongful by honest and fair-minded men or women ( see e.g. Agati, 59 NY2d 830; Seagirt Realty, 13 NY2d at 285-286; Pecorella, 107 AD2d at 1065).
To the extent that respondents' claim appears to be premised upon its contention that FCRC has participated in the Project for the purpose of realizing significant profits, it must be noted that neither Ratner nor any of the affiliated companies involved in the Project are parties to this vesting proceeding, nor will a desire to realize a profit be construed as sufficient to establish conduct that is immoral, illegal or wrongful to any fair-minded person. Finally, as discussed above, the Second Circuit found that "the mere fact that a private party stands to benefit from a proposed taking does not suggest its purpose is invalid because [q]uite simply, the government's pursuit of a public purpose will often benefit individual private parties'" ( Goldstein, 516 F3d at 64, quoting Kelo, 545 US at 485).
Accordingly, this affirmative defense is found to be lacking in merit.
Fourteenth Affirmative Defense: Unjust Enrichment
The Parties' Contentions
In support of this affirmative defense, respondents argue that the relief sought by the petition is barred because it will unjustly enrich FCRC.
In opposition, petitioner again asserts that respondents' allegation concerning unjust enrichment is not appropriately raised in an EDPL Article 4 proceeding and is not a defense. Furthermore, there is no support for the assertion that the Project will unjustly enrich Ratner or FCRC. Moreover, such allegations were rejected by the Court of Appeals and by the Second Circuit and cannot be raised here based on principles of res judicata and collateral estoppel.
"The theory of unjust enrichment lies as a quasi-contract claim'" ( IDT v Morgan Stanley Dean Witter Co. , 12 NY3d 132 , 142, rearg denied 12 NY3d 889, quoting Goldman v Metropolitan Life Ins. Co. , 5 NY3d 561 , 572). Unjust enrichment involves a claim by a party that it performed services on behalf of another at his or her behest, resulting in that party receiving an unjust benefit ( see e.g. Fountoukis v Geringer , 33 AD3d 756 , 757; Clark v Daby, 300 AD2d 732, 732, lv denied 100 NY2d 503; Liberty Marble v Elite Stone Setting, 248 AD2d 302, 304). "It is well settled that [t]he essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'" ( Sperry v Crompton Corp. , 8 NY3d 204 , quoting Paramount Film Distrib. v State of New York, 30 NY2d 415, 421, cert denied 414 US 829). Unjust enrichment "rests upon the equitable principle that a person shall not be allowed to enrich himself unjustly at the expense of another . . . The general rule is that the plaintiff must have suffered a loss and an action not based upon loss is not restitutionary'" ( State v Barclays Bank of New York, 76 NY2d 533, 540-541, quoting Restatement of Restitution § 128, comment f, at 531 [emphasis added]; accord Edelman v Starwood Capital Group, ___ AD3d ___, 2009 NY Slip Op 9309, 3). Stated differently, "under a theory of unjust enrichment, recovery is available not only where there has been an actual benefit to the other party but, in the instance of a wrongdoing defendant, to restore the plaintiff's former status, including compensation for expenditures made in reliance upon defendant's representations'" ( Martin H. Bauman Assoc. v H M Intl. Transp., 171 AD2d 479, 484, quoting Farash v Sykes Datatronics, 59 NY2d 500, 505; accord Spector v Wendy , 63 AD3d 820 , 822 [to prevail on a claim of unjust enrichment, a plaintiff must establish that the defendant benefitted at the plaintiff's expense and that equity and good conscience require restitution]).
It is also well settled that a party may not recover in unjust enrichment where the parties have entered into a contract that governs the subject matter ( see e.g. Cox v NAP Constr. Co. , 10 NY3d 592 , 607, citing Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388; accord Goldman, 5 NY3d at 572; Gateway I Group v Park Ave. Physicians , 62 AD3d 141 , 149), or where a party has an adequate remedy at law ( see e.g. Samiento v World Yacht , 10 NY3d 70 , 81).
The court again finds that respondents cannot oppose a vesting petition based on the doctrine of unjust enrichment. Further, in view of the above discussion of the elements of a cause of action sounding in unjust enrichment, it is clear that this defense is also without merit. Most significantly, respondents do not allege that they performed any services at the behest of petitioner. From this it follows that there can be no claim by respondents for restitution.
Again, to the extent that respondents seem to be arguing the FCRC will be unjustly enriched by the financial agreements underlying the construction of the Project, neither Ratner nor any of the companies affiliated with by him are parties to this vesting proceeding. Similarly, as discussed above, the District Court and the Second Circuit both held that the fact that the Project will confer a private benefit upon Ratner and/or FCRC does not serve to compel a finding that the taking does not serve a public purpose so that it cannot withstand constitutional scrutiny ( see Goldstein, 516 F3d at 64, quoting Kelo, 545 US at 485; Goldstein, 488 FSupp2d at 254). Finally, inasmuch as all of the agreements relating to the financing and construction work to be performed by FCRC are governed by written agreements, any claim premised upon unjust enrichment cannot stand ( see Cox, 10 NY3d at 607; Samiento, 10 NY3d at 81; Clark-Fitzpatrick, Inc., 70 NY2d at 388; Goldman, 5 NY3d at 572; Gateway I Group, 62 AD3d at 149).
The First and Second Counterclaim
In support of their three counterclaims, respondents allege that pursuant to the 2006 D F, the principal public use, benefit and purpose of the Project was to eliminate the blighted conditions on the Project Site and the blighting influence of the below-grade rail yard; to provide 2,250 units of affordable housing and a state-of-the-art rail storage, cleaning and inspection facility for the LIRR; and to provide net tax revenues in excess of the public contribution to the Project. They further note that the 2006 D F did not provide for the condemnation of respondents' properties in stages.
Respondents then allege that in June 2009, after it believed that all litigation hurdles had been cleared, petitioner revealed that it intended to modify the 2006 MGPP. Further, at the time that UDC voted to adopt the 2009 MGPP, it knew, or should have known additional significant facts: (1) in a memorandum, dated September 17, 2009, Dennis Mullen (Mullen Memo) the then-designated, but not confirmed, Chairman of the UDC Board, requested that the Board adopt the 2009 MGPP, and approved an amendment of UDC's funding agreement with FCRC so as to accelerate the state's last cash payment of $25 million, for a total of $100 million, to pay soft costs and demolition costs, which were previously disallowed in earlier funding agreements signed in 2007; (2) a report of the New York City Independent Budget Office dated September 10, 2009 concluded that the Project/Arena will cost the City a minimum of $39.5 million (a figure that balloons to $220 million when opportunity costs are considered), the state will gain $25 million in new tax revenues (only $9 million when opportunity costs are considered), the MTA will gain $6 million (but will lose $16 million when opportunity costs are considered), and FCRC will receive $726 million in government subsidies and benefits for the Arena alone; (3) the deal between FCRC and the MTA had been materially altered to reduce the initial cash payment from $100 million to $20 million; to restructure and extend the full acquisition of the balance of the MTA property beyond 2030; to allow FCRC to abandon the planned further acquisition at any time, in its sole discretion, with virtually no penalty; to extend the payments for the acquisition of the MTA air rights to the year 2030; and to reduce the size of the replacement rail yard from nine tracks with a 76 car capacity to seven tracks with a 56 car capacity; (4) the City had or would agree to amend its funding agreement with FCRC to accelerate its scheduled payment of $15 million, for a total of $205 million, plus other unquantifiable payments for "extraordinary infrastructure costs"; (5) the 2009 Technical Memorandum anticipated that the Project would total 7,961,000 square feet, yet the Project had since been reduced to include only 5,145,000 square feet, a reduction of approximately 35%; and (6) although the 2009 MGPP anticipates that as many as 2,250 affordable housing units will be built over the next 30 years, the development agreement between UDC and FCRC provided that every unit of affordable housing would be contingent upon governmental authorities making affordable housing subsidies available.
Although respondents' counterclaims refer to Ratner, individually, it is presumed that the claims are intended to refer to Ratner and FCRC, collectively.
Respondents thus conclude that at the time of the UDC Board meeting on September 17, 2009, its members knew or should have known that the MTA deal had been radically restructured, so that the alleged benefit to the public engendered by the 2005 deal between the MTA and FCRC had been utterly gutted by the new deal in 2009. More specifically, under the terms of the new deal, FCRC is only required to pay $20 million for the rights to the MTA's property required for the construction of Phase I and is not required to make any additional payments to the MTA until June 2012, at which time it must make an additional payment of $2 million. Thereafter, FCRC must make further payments of $2 million on June 1, 2013, 2014 and 2015. Commencing on June 1, 2016, the annual payments to the MTA increase to $11 million per year and continue for 15 years until 2030. The MTA also agreed to a redesigned and reduced scope of the replacement yard for the LIRR and required that construction of the replacement yard commence by June 30, 2012 and be completed by September 1, 2016. The new agreement with the MTA also provides that it will convey the parcel necessary for the construction of the Arena upon the payment of the initial $20 million. In addition, the conveyance of the MTA air rights will only occur upon the payment of the subsequent amounts associated with each parcel.
Respondents accordingly conclude that the result of the new MTA agreement has direct impacts on the timing of the completion of Phase II and the potential that it will be completed at all. The structure of the deal assures that the final payment for the air rights over the rail yard will not be made until June 2030, when the construction of Phase 2 will begin. The deal is also structured so that FCRC can decide to abandon the project at virtually any time, mitigate its potential financial loss and limit its up front investment. In this regard, FCRC can decide as early as June 1, 2012 to abandon Phase II and avoid the first of the additional payments, or it could walk away from the obligation to complete the permanent replacement rail yard and forfeit the $86 million letter of credit, which is far less than the estimated cost of $147 million to complete the downgraded rail yard. If FCRC decides not to build Phase II, the rail yard will not be covered by a platform and the blight that supposedly dominates the Project area will continue without any plan for redevelopment. Further, both the 2006 MGPP and the 2006 D F contemplated that the Project would be completed in 2016, with the vast majority of the purported benefits of the Project being realized in Phase II, including the majority of the housing, the publicly accessible open space, the majority of the community facilities and the majority of the economic benefits associated with construction jobs, tax revenue and permanent employment. Respondents further point out that the Mullen Memo revealed, for the first time, that the construction of affordable housing is wholly contingent on the availability of government subsidies and assert that utilizing finite government subsidies does nothing to increase the overall number of available affordable housing units in the City of New York, so that the claim of affordable housing was wholly eviscerated by the Mullen Memo.
Respondents further aver that it was not until mid January 2010 that UDC made the Master Closing documents available, although they were executed more than a month before the return date of the petition. A review of the voluminous and complex documents reveals that the deadlines imposed by petitioner on FCRC allow six years to build the Arena; three or four years to start construction of the first tower; five or six years to start construction of the second tower; ten years to start construction of the third tower; 12 years to build Phase 1, which can be much smaller than officially promised; 15 years to start construction of the platform over the rail yard; and 25 years to finish the project, which can be much smaller than officially promised. Further, the damages FCRC faces in most cases, i.e., less than $10 million for an Arena that is up to three years late and $5 million for each of three buildings if they are late, does not represent a lot of money, especially given that the developer just got a cash flow boost of $31 million to buy land.
Respondents accordingly conclude that the public use, purpose and benefits claimed by the 2006 D F have been materially undermined by no later than September 17, 2009, when the 2009 MGPP was approved, since the determination and findings relied upon by petitioner were made in 2006, premised upon the 2006 MGPP. Respondents further assert that since the 2006 MGPP has been replaced and superceded by the 2009 MGPP, UDC has a legal obligation to issue a new or amended determination and findings pursuant to EDPL 204, since the findings of public use, purpose or benefits are in substantial doubt. In this regard, although respondents further aver that although they attempted to raise the material alterations to the grounds cited as creating a public use, benefit or purpose in the 2006 D F, including the effect of the new 2009 MGPP, in their EDPL 207 challenge to the 2006 D F, the court did not allow them to do so.
Thus, in their first counterclaim, respondents argue that since the underpinnings of the 2006 D F have been vitiated by petitioner's decision to amend and supercede the 2006 MGPP with the 2009 MGPP, the 2006 D F are a nullity and can no longer serve as the basis for the condemnation of respondents' properties, so that they are entitled to a judgment denying the petition and nullifying and setting aside the 2006 D F. In their second counterclaim, respondents rely upon the same assertions to argue that they are entitled to a judgment, pursuant to CPLR 3001, declaring that the legal viability of the 2006 D F have been vitiated by subsequent events and thus may no longer serve as the predicate for the condemnation of their properties.
In opposition to these contentions, petitioner alleges, as was discussed above with regard to the seventh, eighth and ninth affirmative defenses, that with immaterial exceptions, the 2009 MGPP sets forth "land use improvement project" and "civic project" findings for the Project that are identical to those set forth in the 2006 MGPP, citing to the 2006 MGPP at 34-40 and the 2009 MGPP at 34-41. It thus contends that the 2009 MGPP did not change the "land use improvement project" and "civic project" elements of the Project that have been determined to be a public use by the Court of Appeals (2009 NY Slip Op 8677) and by the Second Circuit ( 516 F3d 50).
Petitioner further argues that respondents' claim that the MTA agreement could allow FCRC to delay completion of the Project does nothing to diminish the validity of the D F regarding the Project's public uses, since the benefits of the Project will be realized as the Project proceeds, i.e., blighted conditions in the area will be eliminated step-by-step, as substandard buildings are taken down and Project-related improvements are constructed in their place. It also notes that the many civic benefits afforded by the Arena, the LIRR yard and subway entrance will be provided at the earliest stages of Project construction and all the Project benefits will come to fruition at the point of Project completion. Whatever the pace may be for the delivery of the many public benefits of the Project, the nature of those benefits remains the same. Similarly, respondents' allegation that the MTA Agreement may induce FCRC to abandon the portion of the Project over the rail yard does not undermine the 2006 D F, since the 2009 MGPP, like the 2006 MGPP, calls for the completion of the Project in its entirety. Moreover, the first-phase properties sought in the instant proceeding are to be developed in accordance with the 2009 MGPP, thus eliminating the substandard and insanitary conditions on the first-phase properties and providing significant civic facilities, irrespective of any hypothetical risk that future phases of the Project might not be completed.
Petitioner also interposes four affirmative defenses with regard to each counterclaim: (1) counterclaims may not be pleaded in an EDPL 402 proceeding; (2) the counterclaims are barred by EDPL 208; (3) the counterclaims are barred by the applicable Statute of Limitations; and (4) the counterclaims are barred by res judicata and collateral estoppel in that the claims are inconsistent with the final decisions rendered by the New York State Court of Appeals and the Second Circuit.
In support of their counterclaims, respondents set forth a detailed version of the facts to support their conclusion that the Project has changed, so that a de novo review process is mandated. All of the facts and claims interposed, however, are duplicative of the arguments raised and rejected in finding that all of respondents' affirmative defenses are lacking in merit. Accordingly, these counterclaims are similarly found to be specious.
Third Counterclaim: Declaratory Judgment
In support of their third counterclaim, respondents argue that the petition is inconsistent with the 2009 MGPP because ESDC failed to receive "commitments, guaranties and other evidence satisfactory to ESDC that FCRC will . . . promptly commence construction" in reliance upon the same facts alleged in their twelfth affirmative defense. They argue that they are therefore entitled to a judgment dismissing the petition and declaring, pursuant to CPLR 3001, that petitioner is prohibited from seeking to confiscate their homes and businesses until it provides compelling evidence that the Arena, rail yard and acres of parking lots will actually be built as is required by the 2009 MGPP. Respondents also request that any resolution of the petition be postponed until they have had the opportunity to review the many volumes of crucial documents, conduct discovery pursuant to CPLR 408, and then conduct a trial to resolve disputed issues of fact pursuant to CPLR 410.
In addition to relying upon the above discussed arguments, petitioner contends that respondents' request for discovery of the Master Closing documents is inappropriate since the documents, with immaterial exceptions, have been made available to the public under the Freedom of Information Law. More fundamentally, the documents are totally irrelevant to the issues that are properly subject to review in this proceeding because they have no bearing on ESDC's compliance with the EDPL.
This counterclaim, being virtually identical to the twelfth affirmative defense, is dismissed for the reasons discussed above in finding the affirmative defense to be without merit.
The court also finds respondents' request for discovery and a trial to be lacking in merit. In this regard, the Second Circuit addressed and rejected respondents' demand for discovery, premised upon their claim that one or more of the government officials who approved the Project was actually and improperly motivated by a desire to confer a private benefit on Ratner, in reliance upon the purported excesses in the costs of the plan as measured against its benefits and their disagreement with various plausible assumptions underlying the Project's budget, reasoning that:
"Allowing such a claim to go forward, founded only on mere suspicion, would add an unprecedented level of intrusion into the process. See Kelo, 545 US at 488 (remarking that the disadvantages of a heightened form of review are especially pronounced in this type of case. Orderly implementation of a comprehensive redevelopment plan obviously requires that the legal rights of all interested parties be established before new construction can be commenced.'). Prior to Kelo, it was well settled that it is only the taking's purpose, and not its mechanics that must pass scrutiny under the Public Use Clause.' Midkiff, 467 US at 244.
"Accordingly, we must reject the notion that, in a single sentence, the Kelo majority sought sub silentio to overrule Berman ( 348 US 26 ), Midkiff, and over a century of precedent and to require federal courts in all cases to give close scrutiny to the mechanics of a taking rationally related to a classic public use as a means to gauge the purity of the motives of the various government officials who approved it. See Kelo, 545 US at 483 (characterizing more than a century of Public Use Clause jurisprudence as having wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures broad latitude in determining what public needs justify the use of the takings power'). . .
"We do not read Kelo's reference to pretext' as demanding, as the appellants would apparently have it, a full judicial inquiry into the subjective motivation of every official who supported the Project, an exercise as fraught with conceptual and practical difficulties as with state-sovereignty and separation-of-power concerns."
( Goldstein, 516 F3d at 62-63).
The court adopts this reasoning and denies respondents' request for discovery and a trial for the same reasons. In so holding, the court notes that the cases cited by respondents, Valvo v UDC ( 71 Misc 2d 335) and Mets Parking Incorporated v UDC ( 58 NY2d 1094) do not compel a contrary conclusion, since those cases pertain to the sufficiency of a public hearing conducted pursuant to UDCA § 16(2)(c).
Respondents' Motion to DismissThe Motion
A review of respondents' motion to dismiss reveals, as noted above, that the claims and demands interposed therein are duplicative of the claims and demands for relief interposed in their answer, expect for their request that the court issue an order staying the instant proceeding. In support of their request for a stay, respondents rely upon CPLR 2201, which provides that "the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just." More specifically, they argue that the instant proceeding should be stayed until such time as petitioner demonstrates that it has corrected the numerous deficiencies discussed above, including without limitation, demonstrating that the adjudication of respondents' current EDPL 207 proceeding or any proceeding to challenge any subsequent amended or modified EDPL 204 determination and findings is final.
In this regard, respondents' argument that their Motion to Reargue is currently pending before the Court of Appeals has been rendered moot. They further argue that two actions are pending in Supreme Court, New York County, which challenge UDC's 2009 MGPP, including a motion for a preliminary injunction; the court in these actions has indicated that it will either rule on the merits or on the preliminary injunction by the end of February because UDC and FCRC have indicated that there is no further demolition work scheduled until March. Respondents thus conclude that it would be both unwise and unfair to grant the relief sought by the petition while the other actions challenging the Project as a whole remain pending.
This demand for relief relies upon essentially the same facts advanced by respondents in their second and fifth affirmative defenses, which have already been rejected as lacking in merit, adding the reference to the pendency of challenges to the 2009 MGPP in New York County Supreme Court. The court declines to stay this proceeding pending resolution of the actions commenced in New York County. In so holding, the court notes that EDPL 401 makes no reference to pending challenges to a proposed project plan in discussing when a vesting petition can be filed. Moreover, in view of this court's holding, in reliance upon Leichter ( 154 AD2d 258) and Toh ( 154 AD2d 267), that a Project may be changed without triggering the need for a de novo review, it is highly questionable that the pending challenges are meritorious. This court's finding that petitioner has made an adequate showing that the public purpose of the Project has not changed since the 2006 D F were adopted also undermines respondents' apparent belief that the pending proceedings will be successful. The court also notes that respondents offer no details with regard to the arguments raised in those proceedings.
Accordingly, the court declines to stay this vesting proceeding.
The Goldstein Respondents' Request to
Set the Time in Which they Can File their Claims The Parties' Contentions
In their answer, the Goldstein respondents argue that the 120 day period of time for each condemnee to file a claim, commencing from the date of service of a notice of acquisition, as requested by petitioner, is inadequate. Respondents instead request that they be given three years from the date of service of a notice of acquisition to file a claim. In so arguing, the Goldstein respondents assert that EDPL 503(A) and Court of Claims Act, Article II, § 10 provide for a three-year period in which to file a claim in acquisitions of real property by or in the name of the people of the State of New York. They argue that it therefore follows that since Unconsolidated Laws § 6254(1) provides that petitioner-condemnor is a governmental agency of the state, constituting a political subdivision and public benefit corporation, petitioner is acquiring property in the instant proceeding in the name of the people of the State of New York.
The Goldstein respondents further aver that EDPL 503(C) and 22 NYCRR § 202.61(d) require that a trade fixture schedule or inventory be annexed to each trade fixture claim and that 120 days is not enough time to prepare such a claim with a schedule, since trade fixture schedules are complex documents that are time consuming to prepare. Additionally, there are only a limited number of experts who are qualified to prepare the schedules and many of the experts are already engaged in other condemnation proceedings. Respondents also argue that in prior applications where this court had discretion to fix the time for filing claims pursuant to EDPL 503(B), it has typically allowed claimants a period of one year ( see e.g. Matter of City of New York (Fifth Amended Brooklyn Center Urban Renewal Project, Phase 2 [Kings Co Sup Ct, Index No 33132/08]).
These respondents further argue that petitioner's request to limit condemnees' time to file a claim in order to seek just compensation to 120 days is particularly unfair, since petitioner makes no mention of a time-frame in which it will make written offers. In this regard, they contend that in practical terms, they cannot know if they will pursue claims for additional compensation pursuant to EDPL 304(3) until offers are made.
During oral argument, petitioner asserted that since respondents have known about this proposed taking for years, 120 days should provide them with adequate time to file a claim.
The filing of claims is governed by EDPL 503. Pursuant to EDPL 503(B):
"In a claim for damages arising from the acquisition of real property under subdivision (B) of section five hundred one herein, a condemnee shall, within the time specified by the court, file a written claim, or notice of appearance with the clerk of the court having jurisdiction of the matter and a copy of the same shall be served upon either the condemnor's chief legal officer or upon such other official designated in the notice of acquisition."
(Emphasis added; see generally Grandinetti v MTA, 74 NY2d 785, 787). EDPL 501(B) pertains to all claims arising from the acquisition of real property in supreme court.
Pursuant to EDPL 503(C):
"In the event that a claim is made for compensation for fixtures or for any interest other than the fee in the real property acquired, a copy of such claim together with a schedule of fixture items, where applicable, shall also be served by such claimant upon the fee owner of the real property, and the condemnor's chief legal officer or upon such other official designated in the notice of acquisition."
Pursuant to 22 NYCRR § 202.61(d):
"All appraisals of fixtures submitted on behalf of the claimants and the condemnor for which claim is made shall be filed and distributed as provided by these rules with respect to appraisal reports and shall set forth the appraisal value of each item in the same numerical order as in the inventory annexed to the claim.
"(1) Where the condemnor puts in issue the existence of any item in the inventory, the appraisal submitted on its behalf shall so state.
"(2) Where the condemnor puts in issue the description of any item in the inventory, the appraisal submitted on behalf of the condemnor shall state its appraiser's description of such item and his or her estimate of value.
"(3) Where the condemnor puts in issue the compensability of any item in the inventory, the appraisal report submitted by the condemnor shall so state and shall state the ground therefor, as well as its appraiser's estimate of the value of such item for consideration in the event that the court should determine that it is compensable."
Applying the above provisions of law, the court finds that it is reasonable that respondents shall be permitted to file claims pertaining to real property no later than September 1, 2010, and that they shall be permitted to file fixture claims no later than April 1, 2011. In so holding, the court finds that respondents' reliance upon EDPL 503(A) is misplaced, since that provision governs claims filed in the court of claims pursuant to EDPL 501(A), i.e., claims arising from the acquisition of real property by or in the name of the people of the State of New York. The court accordingly rejects respondents' assertion that UDC is acting in the place of the state in this proceeding, so that EDPL 503(A) applies.
The Goldstein Respondents' Request for Advance Payments
The Parties' Contentions
The Goldstein respondents further contend that the petition does not provide a time frame for making advance payments available. They accordingly request an order directing petitioner to make advance payments within 90 days of the date that title vests.
During oral argument, petitioner alleged that advance payments would likely be made within 20 to 30 days of vesting, provided that title is clear.
It is well settled that "[t]he policy behind EDPL article 3 is to ensure that the condemnor, at all stages prior to or subsequent to an acquisition . . . shall make every reasonable and expeditious effort to justly compensate persons . . . by negotiation and agreement" ( Matter of New York City Tr. Auth., 160 AD2d 705, 709, citing EDPL 301). EDPL 302 provides, in pertinent part, that "[r]eal property to be acquired by the exercise of the power of eminent domain shall be appraised on behalf of the condemnor by an appraiser." EDPL 303 provides that:
"The condemnor shall establish an amount which it believes to represent just compensation for the real property to be acquired. The condemnor shall make a written offer to acquire the property for one hundred per centum of the valuation so established. In no event shall such amount be less than the condemnor's highest approved appraisal. Wherever practicable, the condemnor shall make the offer prior to acquiring the property and shall also wherever practicable, include within the offer an itemization of the total direct, the total severance or consequential damages and benefits as each may apply to the property."
The purpose of the provisions in the EDPL pertaining to payment of just compensation are intended "to insure that condemnors quickly and justly compensate individual owners whose property has been acquired under the power of eminent domain" ( In re Vill. of Port Chester, 2004 NY Slip Op 51654U, 8 , quoting Chapter 839, Laws of 1977 Legislative Bill Jacket at p 9, Ten Day Bill Budget Report On Bills, para 2). The court therein went on to state that:
"[W]hile there may be no express language in EDPL §§ 301- 304 stating when the advance payments should be made it is clear from the Legislative History [ to insure that condemnors quickly and justly compensate individual owners whose property has been acquired under the power of eminent domain'] and case law ( see e.g., Rose v State of New York, supra, at 24 NY2d 89 ; Matter of the City of New York, supra, at 71 Misc 2d 1022-1024 ; City of New Rochelle v Sigel, supra, at 65 Misc 2d 963 ; Matter of County of Nassau, 87 Misc 2d 1004, 1005 ; Matter of Cullen Bryant Park and Preserve, supra, at 87 Misc 2d 1004 [Nassau Sup 1976]; Matter of Town of North Hempstead, supra, at 70 Misc 2d 351 ) that such payments should be made sooner rather than later."
( In re Vill. of Port Chester, 2004 NY Slip Op 51654U at 12).
As is also relevant to the Goldstein respondents' request for relief:
"The Eminent Domain Procedure Law provides no specific time requirement for advance payments to be made. Therefore, since the claimants offered no proof that the condemnor was not complying with EDPL 301 and 303, and since the condemnor acknowledged its obligation to make advance payments and has begun to do so, the motion to direct the condemnor to make advance payments was properly denied."
( In re Vill. of Port Chester, 294 AD2d 510, 510-511). Further:
"There is no requirement that petitioner plead or prove, as a prerequisite to the acquisition of property by eminent domain, that it negotiated in good faith with the [property] owner[s]' ( Oswego Hydro Partners L.P. v Phoenix Hydro Corp., 163 AD2d 829, 829, citing Matter of Consolidated Edison Co. of NY [Neptune Assoc.], 143 AD2d 1012, 1014). If a property owner believes that an offer is inadequate, the remedy is to commence an action . . . pursuant to EDPL article 5."
( National Fuel Gas Supply v Town of Concord, 299 AD2d 898, 899).
Inasmuch as a condemnor is not obligated to plead or prove that it negotiated in good faith with a condemnee in making an advance payment as a prerequisite to the acquisition of property by eminent domain ( see generally National Fuel Gas Supply, 299 AD2d at 899), the EDPL provides no specific time requirement for advance payments to be made ( see generally In re Vill. of Port Chester, 294 AD2d at 510-511), and petitioner represented during oral argument that advance payments will be made promptly after title vests, the court declines to issue an order directing petitioner to make all advance payments by a date certain. The court holds, however, that in the event that advance payments are not made within a reasonable period of time, it will entertain a motion seeking to compel petitioner to make such payments ( see generally Matter of City of New York v South Beach Bluebelt, 2009 NY Slip Op 51066U, 7 ).
All relief requested by Peter Williams Enterprises, Inc.; 535 Carlton Ave. Realty Corp.; Pacific Carlton Development Corp.; Daniel Goldstein; and Chadderton's Bar and Grill, Inc., d/b/a Freddy's Bar and Backroom is denied. The relief requested by respondents Daniel Goldstein, Heron Real Estate Corp., and Pack It Away Storage Systems, Inc., is granted to the extent of permitting all respondents to file claims for real property no later than September 1, 2010 and permitting all respondents to file fixture claims no later than April 1, 2011. The petition is granted and the vesting order submitted by petitioner is signed simultaneously herewith.
The foregoing constitutes the order of this court.