Settlement of Zoning Disputes

What power does a municipality's counsel have to settle a zoning dispute on terms that would ordinarily require the exercise of discretionary authority by a zoning board of appeals (ZBA) or by a planning board? In Matter of Commco, Inc. v. Amelkin, 62 NY2d 260, which was decided more than 20 years ago, the Court of Appeals indicated that counsel had no such settlement power, even if counsel acted with the approval of the municipality's elected governing body. The court's recent decision in Matter of Haberman v. Zoning Board of Appeals, 9 NY3d 269 (infra, page 4), imposes modest limits on the scope of Commco and provides an occasion for reconsideration of the issue.

Commco

In Commco, a landowner had sought a use variance to permit conversion of an abandoned school building into a home for senior citizens. The ZBA denied the variance, and the landowner brought an article 78 proceeding challenging the denial. The Supreme Court annulled the denial, and after the town attorney filed a notice of appeal on the ZBA's behalf, the town board replaced the town attorney with separate counsel and authorized settlement negotiations. Special counsel and the landowner entered into a stipulation of settlement granting the variance and imposing conditions on the project. Special counsel then moved to withdraw the ZBA's appeal, and the Appellate Division granted the motion. The ZBA then moved to vacate the withdrawal, but the Appellate Division denied the motion, and the Court of Appeals granted leave to appeal.

In holding that the stipulation of settlement was not binding on the ZBA, a 4-3 majority of the Court of Appeals emphasized that the town board is a separate entity from the ZBA, and that the town board 'may not eviscerate determinations of the Zoning Board or control the course of litigation against it.' 62 NY2d at 263. Chief Judge Lawrence H. Cooke's majority opinion cited two statutory indicia of the ZBA's independence: the state legislature's grant to the ZBA of the exclusive power to grant or deny variances, and the legislature's insistence that ZBA members serve for statutorily specified periods of time, not subject to removal by the town board except for cause. (Town Law, section 267; see also Village Law, section 7-712; General City Law, section 81). In the majority's view, the town board could act to alter the ZBA's determination only in two ways: by seeking a reversal by bringing an article 78 proceeding or by amending the zoning ordinance.

Justice Bernard S. Meyer, dissenting, emphasized that the town board is the 'governing and policy determining body' of the town, invested with the powers and duties 'necessarily incidental thereto.' Town Law, section 51. Moreover, he emphasized that state statutes also give the town board power to control litigation against the town. (Town Law, secs. 65, 67, and 68).

Municipal Liability

When Commco was decided, the principal impetus for settlement of zoning disputes was probably the desire to avoid spending additional municipal funds defending an article 78 proceeding that the municipality might ultimately lose. Since Commco, however, municipal exposure for unauthorized zoning decisions has expanded considerably. First, in 1987, three years after Commco was decided, the United States Supreme Court decided First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, which holds out the prospect of municipal damage liability when municipal zoning decisions constitute an unconstitutional taking. Second, federal statutes, particularly the Religious Land Use and Institutionalized Persons Act (RLUIPA) exert constraints on municipal zoning decisions. Although it is not yet clear whether a municipality can be held liable for a successful landowner's attorneys' fees after a RLUIPA challenge, the Southern District has at least suggested that such fees might be available. See Westchester Day School v. Mamaroneck, 417 F.Supp 477, affd 504 F3d 338 (reserving decision on award of attorneys fees). Attorneys fees are clearly available by statute if a plaintiff prevails against a ZBA in a claim alleging a violation of the federal Fair Housing Act. (42 USC sec. 3613(c)(2)).

Considering this background, elected officials may have significant reason to settle a zoning case against the wishes of a ZBA, which has no responsibility for funding the costs associated with an adverse judicial decision. Yet, the Commco rule precludes such a settlement, leaving the town or village board with the option of amending the ordinance or waiting out the litigation.

Haberman

It is against this backdrop that the Court of Appeals decided Haberman v. Zoning Board of Appeals, 9 NY3d 269. In Haberman, the landowner, the city and the ZBA settled litigation pursuant to a stipulation under the terms of which the landowner would pay the city $200,000 to fund public improvements for the benefit of the project, the city would start construction within two years after receiving the money, and the ZBA would grant variances conditioned upon the landowner's application for building permits within specified time periods. The landowner paid the money, but the city asked for an extension of time for construction of its improvements. The landowner granted the extension, conditioned on extension of its time period for application of the building permits. The city's corporation counsel granted an extension, providing that the stipulated time period would not run until after the city had complied with its obligations. More than 10 years passed without action by the city. When the landowner finally applied for building permits, the building department issued the permit but the ZBA, at the behest of neighbors, revoked the permit, concluding that extension of the variance required ZBA approval. The Appellate Division agreed.

In reversing, a unanimous Court of Appeals distinguished Commco in two ways. First, the court noted that the stipulation in Commco included grant of a variance, which requires ZBA action. By contrast, in Haberman, the ZBA had already issued variance, and the stipulation merely extended the time for the variance. Second, Judge Robert Smith's opinion noted that at the time the stipulation in Haberman was entered, the lawyer who entered it was neither violating the ZBA's instructions nor concealing his actions from his client. That is, he 'had at least apparent, if not actual, authority to act on the ZBA's behalf.' In that situation, the court held that the ZBA was bound by the stipulation.

Haberman does not suggest that Commco is or should be overruled. Haberman, however, does at least limit Commco's scope, particularly if the Haberman exception applies whenever the ZBA does not immediately object to the stipulation entered into by counsel.

Stewart E. Sterk is Editor-in-Chief of this newsletter.

What power does a municipality's counsel have to settle a zoning dispute on terms that would ordinarily require the exercise of discretionary authority by a zoning board of appeals (ZBA) or by a planning board? In Matter of Commco, Inc. v. Amelkin , 62 NY2d 260, which was decided more than 20 years ago, the Court of Appeals indicated that counsel had no such settlement power, even if counsel acted with the approval of the municipality's elected governing body. The court's recent decision in Matter of Haberman v. Zoning Board of Appeals , 9 NY3d 269 (infra, page 4), imposes modest limits on the scope of Commco and provides an occasion for reconsideration of the issue.

Commco

In Commco, a landowner had sought a use variance to permit conversion of an abandoned school building into a home for senior citizens. The ZBA denied the variance, and the landowner brought an article 78 proceeding challenging the denial. The Supreme Court annulled the denial, and after the town attorney filed a notice of appeal on the ZBA's behalf, the town board replaced the town attorney with separate counsel and authorized settlement negotiations. Special counsel and the landowner entered into a stipulation of settlement granting the variance and imposing conditions on the project. Special counsel then moved to withdraw the ZBA's appeal, and the Appellate Division granted the motion. The ZBA then moved to vacate the withdrawal, but the Appellate Division denied the motion, and the Court of Appeals granted leave to appeal.

In holding that the stipulation of settlement was not binding on the ZBA, a 4-3 majority of the Court of Appeals emphasized that the town board is a separate entity from the ZBA, and that the town board 'may not eviscerate determinations of the Zoning Board or control the course of litigation against it.' 62 NY2d at 263. Chief Judge Lawrence H. Cooke's majority opinion cited two statutory indicia of the ZBA's independence: the state legislature's grant to the ZBA of the exclusive power to grant or deny variances, and the legislature's insistence that ZBA members serve for statutorily specified periods of time, not subject to removal by the town board except for cause. (Town Law, section 267; see also Village Law, section 7-712; General City Law, section 81). In the majority's view, the town board could act to alter the ZBA's determination only in two ways: by seeking a reversal by bringing an article 78 proceeding or by amending the zoning ordinance.

Justice Bernard S. Meyer, dissenting, emphasized that the town board is the 'governing and policy determining body' of the town, invested with the powers and duties 'necessarily incidental thereto.' Town Law, section 51. Moreover, he emphasized that state statutes also give the town board power to control litigation against the town. (Town Law, secs. 65, 67, and 68).

Municipal Liability

When Commco was decided, the principal impetus for settlement of zoning disputes was probably the desire to avoid spending additional municipal funds defending an article 78 proceeding that the municipality might ultimately lose. Since Commco, however, municipal exposure for unauthorized zoning decisions has expanded considerably. First, in 1987, three years after Commco was decided, the United States Supreme Court decided First English Evangelical Lutheran Church v. County of Los Angeles , 482 U.S. 304, which holds out the prospect of municipal damage liability when municipal zoning decisions constitute an unconstitutional taking. Second, federal statutes, particularly the Religious Land Use and Institutionalized Persons Act (RLUIPA) exert constraints on municipal zoning decisions. Although it is not yet clear whether a municipality can be held liable for a successful landowner's attorneys' fees after a RLUIPA challenge, the Southern District has at least suggested that such fees might be available. See Westchester Day School v. Mamaroneck , 417 F.Supp 477, affd 504 F3d 338 (reserving decision on award of attorneys fees). Attorneys fees are clearly available by statute if a plaintiff prevails against a ZBA in a claim alleging a violation of the federal Fair Housing Act. (42 USC sec. 3613(c)(2)).

Considering this background, elected officials may have significant reason to settle a zoning case against the wishes of a ZBA, which has no responsibility for funding the costs associated with an adverse judicial decision. Yet, the Commco rule precludes such a settlement, leaving the town or village board with the option of amending the ordinance or waiting out the litigation.

Haberman

It is against this backdrop that the Court of Appeals decided Haberman v. Zoning Board of Appeals , 9 NY3d 269. In Haberman, the landowner, the city and the ZBA settled litigation pursuant to a stipulation under the terms of which the landowner would pay the city $200,000 to fund public improvements for the benefit of the project, the city would start construction within two years after receiving the money, and the ZBA would grant variances conditioned upon the landowner's application for building permits within specified time periods. The landowner paid the money, but the city asked for an extension of time for construction of its improvements. The landowner granted the extension, conditioned on extension of its time period for application of the building permits. The city's corporation counsel granted an extension, providing that the stipulated time period would not run until after the city had complied with its obligations. More than 10 years passed without action by the city. When the landowner finally applied for building permits, the building department issued the permit but the ZBA, at the behest of neighbors, revoked the permit, concluding that extension of the variance required ZBA approval. The Appellate Division agreed.

In reversing, a unanimous Court of Appeals distinguished Commco in two ways. First, the court noted that the stipulation in Commco included grant of a variance, which requires ZBA action. By contrast, in Haberman, the ZBA had already issued variance, and the stipulation merely extended the time for the variance. Second, Judge Robert Smith's opinion noted that at the time the stipulation in Haberman was entered, the lawyer who entered it was neither violating the ZBA's instructions nor concealing his actions from his client. That is, he 'had at least apparent, if not actual, authority to act on the ZBA's behalf.' In that situation, the court held that the ZBA was bound by the stipulation.

Haberman does not suggest that Commco is or should be overruled. Haberman, however, does at least limit Commco's scope, particularly if the Haberman exception applies whenever the ZBA does not immediately object to the stipulation entered into by counsel.

Stewart E. Sterk is Editor-in-Chief of this newsletter.