Development

AppDiv, Third Dept.

(Opinion by Lahtinen, P.J.)

In an action by a community group to enjoin further construction of a 396-unit townhouse project in Sullivan County, developers appealed from Supreme Court's grant of a preliminary injunction. The Appellate Division reversed and denied the injunction, concluding that the community group's delay in bringing the action made it unlikely that the group would prevail on the merits of its claim, which centered on an allegedly improper annexation of the project site to the village that approved the development.

To facilitate construction of the townhouse project, developers sought annexation by the Village of Bloomingburg of 240 acres located in the Town of Mamakating. In 2006, the Village enacted a Local Law annexing the site. Because the 2006 law failed to include the zoning classification for the site, the Village enacted another local law in 2008 correcting the error. The Village then conducted a SEQRA review of the project during 2008 and 2009, and, in 2010, entered into a development agreement, by the terms of which the developers agreed to build a wastewater treatment plant.

The Village Planning Board then granted subdivision approval, and the Village granted building permits for three model townhouses. In 2012, the community group challenged the subdivision approval, but its action was dismissed as time-barred. Developers continued construction, spending $5 million on the wastewater treatment plant and, by January 2014, Developers had begun construction on 84 units. The community group then brought this action, contending that the annexation was invalid because the residents of the annexed area had not voted on the annexation, and that the 2010 development agreement was void because the village's then-mayor had a conflict of interest. Supreme Court granted the community group's request for a preliminary injunction, and developers appealed.

In reversing, the Appellate Division conceded that state law requires a referendum on annexation, but concluded that the community group had failed to establish a likelihood of success in establishing that its claim was not time-barred. The court emphasized the community group's seven-year delay in challenging the annexation, and the $25 million the developers had spent on the project in the interim. Similarly, with respect to the community group's challenge to the 2010 development agreement, the court indicated that despite the community group's allegations of unsavory conduct, they had not established a likelihood of success in defeating the defense of laches. As a result, the court held that the community group was not entitled to a preliminary injunction.

COMMENT

New York courts have never had the occasion to determine which statute of limitations applies to annexation challenges that are based on a municipality's failure to comply with a referendum requirement. However, decisions suggest that these challenges are subject to C.P.L.R. ' 217's four-month statute of limitation because they are aimed at a procedural defect that is properly addressable in an Article 78 proceeding. For instance, the Third Department held that a challenge to an annexation based on a municipality's failure to conduct an environmental impact study was time-barred under C.P.L.R. ' 217 (Connell v. Town Bd. of Town of Wilmington, 113 A.D.2d 359). The court reasoned that failure to conduct the study is a procedural defect addressable in an Article 78 proceeding and as such is subject to the four-month limitation period. Additionally, although not in a context of annexation, the Third Department held that a claim challenging a municipal action based on a municipality's failure to comply with a referendum requirement is a procedural challenge time-barred by C.P.L.R. ' 217 (Atkins v. Town of Rotterdam, 266 A.D.2d 631). In Atkins, the plaintiff argued that Town's agreement, regarding the use of a landfill, constituted a lease of Town's property and according to Town Law ' 64 required a referendum, which was not conducted. The court concluded that the challenge was procedural despite the challenger's attempt to frame the challenge as substantive, and therefore subject to a six-year statute of limitations.

If the challenge were deemed substantive, it would be governed by C.P.L.R. 213's six-year limitation period, unless another statute provided a specific limitation period Accordingly, in Am. Ind. Paper Mills Supply Co., Inc. v County of Westchester, 16 AD3d 443, the Second Department reversed a lower court's determination that the plaintiff's claim was a procedural challenge time-barred by C.P.L.R. ' 217. The court held that the claim, which disputed the constitutionality of a county law that imposed a large fee on recycling stations, challenged the substance of a legislative act and was therefore timely under C.P.L.R. ' 213.

On the other hand, one New York court has held that C.P.L.R. 214's three-year limitation period governs challenges to a municipal agreement that allege a conflict of interest prohibited by General Municipal Law. (Stettine v. Suffolk County, 105 A.D.2d 109) C.P.L.R. ' 214(2) applies to claims arising out of liabilities imposed or created by statute. New York courts have consistently found that this limitation period applies only to actions that did not exist at common law but were created by statute. Accordingly, the Stettine court found that the plaintiff's claim, alleging a conflict of interest, was timely because it arises out of a liability created by statute, General Municipal Law ' 804, and is therefore governed by C.P.L.R. ' 214.

Furthermore, even if the plaintiff brings the action against a municipality within the appropriate limitation period, the claim might be barred by laches if the plaintiff's unreasonable delay in bringing the claim prejudiced the municipality. For example, in Summers v. City of Rochester, 60 A.D.3d 1271, the plaintiff brought an action challenging municipal agreements regarding purchase and operation of a ferry service. The Fourth Department found that the plaintiff's constitutional claim was barred by the defense of laches because he unreasonably delayed bringing an action and the delay prejudiced the city.

Landowner's Defamation Action Was A SLAPP Suit

Southampton Day Camp Realty, LLC v. Gorman

NYLJ 6/27/14, p. 32, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In landowner's defamation action against the president and vice-president of a civic organization opposing landowner's development plans, landowner appealed from Supreme Court's grant of summary judgment dismissing the defamation claim and awarding attorneys' fees to the organization's officers. The Appellate Division affirmed, holding that landowner's defamation action was a SLAPP suit, entitling the organization's officers to attorneys' fees.

Landowner purchased land previously used as a tennis and racquet club, and planned to convert the property into a children's day camp. Both the tennis club and the day camp were non-conforming uses, so landowner sought and obtained from the building inspector a determination that landowner's plan did not constitute a change or expansion of the existing nonconforming use. A civic organization then filed an application with the Zoning Board of Appeals, seeking review of the building inspector's determination. The organization circulated a flier in the community, listing the names and addresses of its president and vice-president, and asserting that landowner did not care about and had lied about the environmental impact of the proposed day camp. Landowner then brought this defamation action against the organization's president and vice president, and the organization's officers counterclaimed, contending that the action was a strategic lawsuit against public participation (SLAPP suit), and seeking attorneys fees and punitive damages. Supreme Court awarded summary judgment dismissing the defamation action, and granting attorneys fees to the officers. The court denied summary judgment on the claim for punitive damages. Both parties appealed.

In affirming, the Appellate Division emphasized that landowner was a public applicant, and that the suit concerned a communication materially related to the officers' efforts to oppose landowner's application. Landowner failed to demonstrate a substantial basis to support its allegation that the statements were known to be false or were made with reckless disregard for truth. As a result, Supreme Court properly dismissed the defamation claim and awarded summary judgment on the counterclaim for attorneys fees. The court also held that Supreme Court had properly denied summary judgment on the punitive damages counterclaim because the officers failed to demonstrate that the lawsuit was commenced only to harass, intimidate, punish or inhibit their free speech rights.

Enclosure of Porch Constitutes a Renovation

Matter of Greentree Country Club v. City of New Rochelle

NYLJ 7/7/14, p. 23, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an article 78 proceeding to annul a determination denying a use variance, the city appealed from Supreme Court's grant of the petition. The Appellate Division affirmed, holding that landowner's proposed construction constituted a renovation permitted by the city's zoning code.

Landowner operates a beach club overlooking Long Island Sound. Landowner added two walls to enclose two partially enclosed outdoor porches on the second floor of the clubhouse. The city issued a violation for enclosing the porches without a permit. Landowner then applied for, and was denied, a permit when the building inspector concluded that enclosure of the porches was not a renovation within the meaning of the zoning code, which allows membership clubs do renovate the premises as of right. Landowner then applied to the zoning board of appeals for a use variance to legalize the enclosure, but the ZBA denied the application, leading to this article 78 proceeding. Supreme Court granted the petition, and the city appealed.

In affirming, the Appellate Division emphasized that the enclosures did not increase the footprint of the building or increase the club's capacity to add membership. The court acknowledged that the enclosures increased the club's square footage for zoning purposes, but reiterated that the enclosure would not increase the building's footprint, and noted the absence of evidence that the renovation would cause any detriment to neighboring properties.

'

Delay Bars Improper Annexation Claim

Rural Community Coalition, Inc. v. Village of Bloomingburg

NYLJ 6/18/14, p. 21, col. 1

AppDiv, Third Dept.

(Opinion by Lahtinen, P.J.)

In an action by a community group to enjoin further construction of a 396-unit townhouse project in Sullivan County, developers appealed from Supreme Court's grant of a preliminary injunction. The Appellate Division reversed and denied the injunction, concluding that the community group's delay in bringing the action made it unlikely that the group would prevail on the merits of its claim, which centered on an allegedly improper annexation of the project site to the village that approved the development.

To facilitate construction of the townhouse project, developers sought annexation by the Village of Bloomingburg of 240 acres located in the Town of Mamakating. In 2006, the Village enacted a Local Law annexing the site. Because the 2006 law failed to include the zoning classification for the site, the Village enacted another local law in 2008 correcting the error. The Village then conducted a SEQRA review of the project during 2008 and 2009, and, in 2010, entered into a development agreement, by the terms of which the developers agreed to build a wastewater treatment plant.

The Village Planning Board then granted subdivision approval, and the Village granted building permits for three model townhouses. In 2012, the community group challenged the subdivision approval, but its action was dismissed as time-barred. Developers continued construction, spending $5 million on the wastewater treatment plant and, by January 2014, Developers had begun construction on 84 units. The community group then brought this action, contending that the annexation was invalid because the residents of the annexed area had not voted on the annexation, and that the 2010 development agreement was void because the village's then-mayor had a conflict of interest. Supreme Court granted the community group's request for a preliminary injunction, and developers appealed.

In reversing, the Appellate Division conceded that state law requires a referendum on annexation, but concluded that the community group had failed to establish a likelihood of success in establishing that its claim was not time-barred. The court emphasized the community group's seven-year delay in challenging the annexation, and the $25 million the developers had spent on the project in the interim. Similarly, with respect to the community group's challenge to the 2010 development agreement, the court indicated that despite the community group's allegations of unsavory conduct, they had not established a likelihood of success in defeating the defense of laches. As a result, the court held that the community group was not entitled to a preliminary injunction.

COMMENT

New York courts have never had the occasion to determine which statute of limitations applies to annexation challenges that are based on a municipality's failure to comply with a referendum requirement. However, decisions suggest that these challenges are subject to C.P.L.R. ' 217's four-month statute of limitation because they are aimed at a procedural defect that is properly addressable in an Article 78 proceeding. For instance, the Third Department held that a challenge to an annexation based on a municipality's failure to conduct an environmental impact study was time-barred under C.P.L.R. ' 217 ( Connell v. Town Bd. of Town of Wilmington, 113 A.D.2d 359). The court reasoned that failure to conduct the study is a procedural defect addressable in an Article 78 proceeding and as such is subject to the four-month limitation period. Additionally, although not in a context of annexation, the Third Department held that a claim challenging a municipal action based on a municipality's failure to comply with a referendum requirement is a procedural challenge time-barred by C.P.L.R. ' 217 ( Atkins v. Town of Rotterdam, 266 A.D.2d 631). In Atkins, the plaintiff argued that Town's agreement, regarding the use of a landfill, constituted a lease of Town's property and according to Town Law ' 64 required a referendum, which was not conducted. The court concluded that the challenge was procedural despite the challenger's attempt to frame the challenge as substantive, and therefore subject to a six-year statute of limitations.

If the challenge were deemed substantive, it would be governed by C.P.L.R. 213's six-year limitation period, unless another statute provided a specific limitation period Accordingly, in Am. Ind. Paper Mills Supply Co., Inc. v County of Westchester, 16 AD3d 443, the Second Department reversed a lower court's determination that the plaintiff's claim was a procedural challenge time-barred by C.P.L.R. ' 217. The court held that the claim, which disputed the constitutionality of a county law that imposed a large fee on recycling stations, challenged the substance of a legislative act and was therefore timely under C.P.L.R. ' 213.

On the other hand, one New York court has held that C.P.L.R. 214's three-year limitation period governs challenges to a municipal agreement that allege a conflict of interest prohibited by General Municipal Law. ( Stettine v. Suffolk County, 105 A.D.2d 109) C.P.L.R. ' 214(2) applies to claims arising out of liabilities imposed or created by statute. New York courts have consistently found that this limitation period applies only to actions that did not exist at common law but were created by statute. Accordingly, the Stettine court found that the plaintiff's claim, alleging a conflict of interest, was timely because it arises out of a liability created by statute, General Municipal Law ' 804, and is therefore governed by C.P.L.R. ' 214.

Furthermore, even if the plaintiff brings the action against a municipality within the appropriate limitation period, the claim might be barred by laches if the plaintiff's unreasonable delay in bringing the claim prejudiced the municipality. For example, in Summers v. City of Rochester, 60 A.D.3d 1271, the plaintiff brought an action challenging municipal agreements regarding purchase and operation of a ferry service. The Fourth Department found that the plaintiff's constitutional claim was barred by the defense of laches because he unreasonably delayed bringing an action and the delay prejudiced the city.

Landowner's Defamation Action Was A SLAPP Suit

Southampton Day Camp Realty, LLC v. Gorman

NYLJ 6/27/14, p. 32, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In landowner's defamation action against the president and vice-president of a civic organization opposing landowner's development plans, landowner appealed from Supreme Court's grant of summary judgment dismissing the defamation claim and awarding attorneys' fees to the organization's officers. The Appellate Division affirmed, holding that landowner's defamation action was a SLAPP suit, entitling the organization's officers to attorneys' fees.

Landowner purchased land previously used as a tennis and racquet club, and planned to convert the property into a children's day camp. Both the tennis club and the day camp were non-conforming uses, so landowner sought and obtained from the building inspector a determination that landowner's plan did not constitute a change or expansion of the existing nonconforming use. A civic organization then filed an application with the Zoning Board of Appeals, seeking review of the building inspector's determination. The organization circulated a flier in the community, listing the names and addresses of its president and vice-president, and asserting that landowner did not care about and had lied about the environmental impact of the proposed day camp. Landowner then brought this defamation action against the organization's president and vice president, and the organization's officers counterclaimed, contending that the action was a strategic lawsuit against public participation (SLAPP suit), and seeking attorneys fees and punitive damages. Supreme Court awarded summary judgment dismissing the defamation action, and granting attorneys fees to the officers. The court denied summary judgment on the claim for punitive damages. Both parties appealed.

In affirming, the Appellate Division emphasized that landowner was a public applicant, and that the suit concerned a communication materially related to the officers' efforts to oppose landowner's application. Landowner failed to demonstrate a substantial basis to support its allegation that the statements were known to be false or were made with reckless disregard for truth. As a result, Supreme Court properly dismissed the defamation claim and awarded summary judgment on the counterclaim for attorneys fees. The court also held that Supreme Court had properly denied summary judgment on the punitive damages counterclaim because the officers failed to demonstrate that the lawsuit was commenced only to harass, intimidate, punish or inhibit their free speech rights.

Enclosure of Porch Constitutes a Renovation

Matter of Greentree Country Club v. City of New Rochelle

NYLJ 7/7/14, p. 23, col. 5

AppDiv, Second Dept.

(memorandum opinion)

In an article 78 proceeding to annul a determination denying a use variance, the city appealed from Supreme Court's grant of the petition. The Appellate Division affirmed, holding that landowner's proposed construction constituted a renovation permitted by the city's zoning code.

Landowner operates a beach club overlooking Long Island Sound. Landowner added two walls to enclose two partially enclosed outdoor porches on the second floor of the clubhouse. The city issued a violation for enclosing the porches without a permit. Landowner then applied for, and was denied, a permit when the building inspector concluded that enclosure of the porches was not a renovation within the meaning of the zoning code, which allows membership clubs do renovate the premises as of right. Landowner then applied to the zoning board of appeals for a use variance to legalize the enclosure, but the ZBA denied the application, leading to this article 78 proceeding. Supreme Court granted the petition, and the city appealed.

In affirming, the Appellate Division emphasized that the enclosures did not increase the footprint of the building or increase the club's capacity to add membership. The court acknowledged that the enclosures increased the club's square footage for zoning purposes, but reiterated that the enclosure would not increase the building's footprint, and noted the absence of evidence that the renovation would cause any detriment to neighboring properties.

'