Development

Taking Claim Reinstated

Blue Island Development, LLC v. Town of Hempstead

NYLJ 8/14/15, p. 24, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In landowner's action to declare invalid the town board's denial of landowner's application to modify a restrictive covenant, the town appealed from Supreme Court's denial of the town's motion to dismiss, and landowner cross-appealed from Supreme Court's dismissal of its taking claim. The Appellate Division affirmed the denial of the town's motion to dismiss, but reversed dismissal of the taking claim, holding that landowner had sufficiently alleged that the restrictive covenant limiting rentals bore no substantial relation to the public health, safety, morals, or general welfare.

In 2008, landowner petitioned the town board for a zoning amendment to permit redevelopment of an oil storage facility as 172 waterfront condominiums. The town granted the requested zoning change, but imposed restrictive covenants, including one requiring landowner to sell all of the units as condominiums, but permitting subsequent owners to lease the units to the extent otherwise permissible under town law. In 2010, landowner petitioned for a modification of the covenant, and the tow agreed to permit landowner to rent up to 17 of the units. In 2013, landowner sought a further modification to permit it to retain 140 units as rentals. The town denied the application, and landowner brought this action seeking a declaration that the refused modification was invalid, and also seeking a determination that the town's action constituted a taking. The town moved to dismiss, but Supreme Court granted that motion only with respect to the taking claim. The town appealed and landowner cross-appealed dismissal of its taking claim.

In holding that Supreme Court had properly denied the town's motion to dismiss, the Appellate Division emphasized that zoning deals with land use and not with the person who occupies or owns land. Here, the court noted that in light of the provision permitting subsequent owners to lease the units, landowner had properly alleged that the restrictive covenant bears no substantial relation to the public welfare. The court also relied on RPAPL 1951(1), which authorizes removal of any covenant that no longer generates any substantial benefit. The court did hold, however, that a grant of summary judgment to landowner would be premature because the town had not yet submitted an answer.

The Appellate Division also held that Supreme Court should not have dismissed landowner's taking claim, noting that landowner had alleged that the denial of the modification left landowner without any economically viable use of the land. While questioning whether landowner could ultimately prove that claim, the court held that the claim was sufficient to withstand a motion to dismiss.

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Taking Claim Reinstated

Blue Island Development, LLC v. Town of Hempstead

NYLJ 8/14/15, p. 24, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In landowner's action to declare invalid the town board's denial of landowner's application to modify a restrictive covenant, the town appealed from Supreme Court's denial of the town's motion to dismiss, and landowner cross-appealed from Supreme Court's dismissal of its taking claim. The Appellate Division affirmed the denial of the town's motion to dismiss, but reversed dismissal of the taking claim, holding that landowner had sufficiently alleged that the restrictive covenant limiting rentals bore no substantial relation to the public health, safety, morals, or general welfare.

In 2008, landowner petitioned the town board for a zoning amendment to permit redevelopment of an oil storage facility as 172 waterfront condominiums. The town granted the requested zoning change, but imposed restrictive covenants, including one requiring landowner to sell all of the units as condominiums, but permitting subsequent owners to lease the units to the extent otherwise permissible under town law. In 2010, landowner petitioned for a modification of the covenant, and the tow agreed to permit landowner to rent up to 17 of the units. In 2013, landowner sought a further modification to permit it to retain 140 units as rentals. The town denied the application, and landowner brought this action seeking a declaration that the refused modification was invalid, and also seeking a determination that the town's action constituted a taking. The town moved to dismiss, but Supreme Court granted that motion only with respect to the taking claim. The town appealed and landowner cross-appealed dismissal of its taking claim.

In holding that Supreme Court had properly denied the town's motion to dismiss, the Appellate Division emphasized that zoning deals with land use and not with the person who occupies or owns land. Here, the court noted that in light of the provision permitting subsequent owners to lease the units, landowner had properly alleged that the restrictive covenant bears no substantial relation to the public welfare. The court also relied on RPAPL 1951(1), which authorizes removal of any covenant that no longer generates any substantial benefit. The court did hold, however, that a grant of summary judgment to landowner would be premature because the town had not yet submitted an answer.

The Appellate Division also held that Supreme Court should not have dismissed landowner's taking claim, noting that landowner had alleged that the denial of the modification left landowner without any economically viable use of the land. While questioning whether landowner could ultimately prove that claim, the court held that the claim was sufficient to withstand a motion to dismiss.

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