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Atlantic Yards Case: Blueprint for Delaying Condemnation

Justice Abraham Gerges on March 2, 2010 signed an order of condemnation in Matter of New York State Urban Development Corp. 32741/09 and directed its filing in the county clerk’s office together with the taking map accompanied by an 82 page decision. It dealt not only with a motion made by potential condemnees to dismiss the petition on a variety of grounds, but 14 affirmative defenses and three counter-claims seeking substantially the same relief as in the motion. (We represent various claimants in the condemnation proceeding as to their ‘just compensation.’)

The ruling ended the latest legal hurdle for developer Bruce Ratner’s Atlantic Yards project in Brooklyn by dismissing renewed claims by opponents that the $5 billion plan violates the state’s eminent domain law.

As the decision states, the Atlantic Yards project was conceived in 2002 and was publicly announced in December 2003. It has taken over six years since its announcement to actually start a condemnation proceeding. Since a variety of challenges by different parties took place over this extended period of time, it is only when they were recited in the decision of Justice Gerges that one could appreciate the tenacity of the opponents to the project, as well as those who defended against them.

Even though one would expect that, with title now having passed to New York State Urban Development Corporation d/b/a Empire State Development Corporation (UDC), this is the end of the line for the opposition, one should not be surprised, solely based upon the history of this project, if we find there are further legal challenges, although what they might be is beyond our ability to imagine.

A review of the issues raised and dealt with in this decision is a road map for others seeking to, at a minimum, delay a condemnation proceeding, assuming they have deep enough pockets to pay for the numerous challenges. Using the court’s decision as a guide, we set them forth, because listed together it is impossible to appreciate what has gone on since 2003.

On Jan. 5, 2007 a challenge was launched to the 2006 determination and findings made pursuant to EDPL §207 in U.S. District Court decided against the challengers, without prejudice to a state court challenge.

The decision was appealed and, on Feb. 1, 2008, the Second Circuit Court of Appeals affirmed the lower court decision.

The U.S. Supreme Court denied certiorari in 2009. On Aug. 1, 2008 there was a challenge in the Appellate Division to those same determination and findings on various grounds including an allegation of no ‘public use.’

On May 1, 2009, the Second Department denied the challenge and on Nov. 24, 2009, the Court of Appeals affirmed the Appellate Division decision.

On Feb. 18, 2010, the Court denied a motion to reargue.

Meanwhile, an Article 78 proceeding was decided on Feb. 13, 2006, involving a number of issues, including an attempt to stay demolition of a property previously bought without condemnation.

On April 26, 2007 another Article 78 proceeding was decided denying a stay of the demolition of other properties.

On Jan. 11, 2008, the Supreme Court denied a challenge to the project pursuant to State Environmental Quality Review Act.

On Feb. 26, 2009 that decision was affirmed by the Appellate Division. On Dec. 1, 2009, the Court of Appeals denied a motion for leave to appeal. On Feb. 16, 2010, the Court denied a motion to re-argue.

On May 22, 2007, Justice Walter Tolub, in a declaratory judgment action in the Supreme Court, decided against a challenge of the right to condemn multiple dwellings with rent stabilized tenants.

On Oct. 16, 2007 that decision was affirmed by the Second Department.

On Nov. 7, 2007, the Second Department denied an EDPL §207 challenge based on a failure to make a specific finding that there existed a feasible method for relocation of tenants in violation of the UDC Act. Leave to appeal that decision was denied by the Court of Appeals in 2008.

On Sept. 23, 2008, there was another unsuccessful Article 78 proceeding by two rent regulated tenants seeking to void a funding agreement with the developer, dated Sept. 12, 2007, on the ground it permitted the acquired property to remain vacant for 10 years, among others issues.

On Dec. 15, 2009, an Article 78 proceeding unsuccessfully sought to challenge the approval of the sale of the rail yards in the project area by MTA to the developer on the ground it violated the Public Authorities Law in failing to get an appraisal of the property before the approval and there being no competitive bidding.

All of these preceded the challenge to the petition to condemn and were recited by Justice Gerges in his decision, albeit in greater detail. Believe it or not there is still one unresolved issue and that is only because it became moot before it was decided and thus that part of the decision is dicta.

One of the affirmative defenses to the court signing the order of condemnation was that the proceeding challenging the right to condemn had not been finally decided. EDPL §401(A)(3) provides the condemnor may commence proceedings to condemn up to three years after, ‘(3) entry of the final order or judgment on judicial review pursuant to section two hundred seven of this chapter.’ At the time of the petition to condemn, there was pending a motion to reargue in the Court of Appeals in the EDPL §207 challenge. The claim was that while that was undecided, the ‘judicial review’was not final.

In re UDC, 193 Misc.2d 280, 295 (NY Supt. Ct. 2002, Schoenfeld, J.) held that pursuant to CPLR §5611 when the Appellate Division order disposes all the issues in the action its order shall be considered a final one. The occasion for that decision was an application to stay the vesting of title in Site 8 of the 42nd Street condemnation proceeding because a notice of appeal to the Court of Appeals had been filed. Prior to the motion, a stay had been sought in the Court of Appeals and denied without an opinion. Despite the pendency of that appeal, Justice Martin Schoenfeld signed an order of condemnation and title vested in the condemnor (the same UDC, as here). The court noted that there appeared to be no dispositive case law as to EDPL §207 on the subject.

The appeal to the Court of Appeals in that case never get to first base. The New York Times building now sits on that site. Thus, we never got to find out how you unwind a vesting of title in a condemnation proceeding. Even though the almost certainty was that the appeal would go nowhere it would be an interesting scenario if it did not work out that way. How would you restore an owner to a demolished building?

Justice Gerges was faced with a similar scenario, with even longer odds that the Court of Appeals would even hear the case. At the time of the petition to condemn, the Court of Appeals had already ruled against the challenge.

However, there was extant a motion to reargue in the Court of Appeals and sometimes the unthinkable does happen. Judge Gerges after reciting Judge Schoenfeld’s decision and quoting parts of it, stated:

The Court finds the holding in In re UDC (193 Misc.29 290), that a decision of the Appellate Division denying respondent’s EDPL §207challenge 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 the condemnor.

We find this language confusing, when the court found Justice Schoenfeld’s reasoning ‘persuasive.’ Because of the last sentence, we take it to mean title could not vest until the decision on the motion to reargue, despite Justice Schoenfeld’s reasoning being ‘persuasive.’ However, we will not get to know if that is the correct interpretation as, prior to this decision, the Court of Appeals denied the application to reargue and this part of the decision became moot and is only dicta.

When EDPL was adopted and a substantive challenges to the taking was limited to a 30 day window of opportunity, the whole idea was to create a certainty to the process so that a condemnor would know that having gotten past that 30-day challenge period there would be no uncertainties or delays. This case shows what really determined objectors can do to delay a condemnation, if we had not already seen it in the first taking in the 42nd Street project which suffered a similar delay.

Reprinted with permission from the March 24, 2010 edition of the New York Law Journal © 2011 Incisive Media Properties, Inc. All rights reserved. Further duplication without permission is prohibited.