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Falls Riverway Realty Inc. v. City of Niagara Falls

decided: April 9, 1984.

FALLS RIVERWAY REALTY, INC. AND FOREST CITY DEVELOPMENT CORP., PLAINTIFFS-APPELLANTS,
v.
THE CITY OF NIAGARA FALLS, NEW YORK AND NIAGARA FALLS URBAN RENEWAL AGENCY, DEFENDANTS AND THIRD-PARTY PLAINTIFFS-APPELLEES. V. SAMUEL PIERCE, AS SECRETARY OF THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND JOSEPH MONTICCIOLO, AS REGIONAL ADMINISTRATOR, REGION II, OF THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND RICHARD W. LIPPOLD, AS BUFFALO AREA MANAGER, BUFFALO AREA OFFICE, REGION II, OF THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, THIRD-PARTY DEFENDANTS



Appeal from a summary judgment of the United States District Court for the Western District of New York, Curtin, J., dismissing the complaint.

Lumbard, Meskill, and Pratt, Circuit Judges.

Author: Pratt

PRATT, Circuit Judge:

Plaintiffs Falls Riverway Realty, Inc. and Forest City Development Corp. appeal from a summary judgment of the United States District Court for the Western District of New York, Curtin, J., dismissing their complaint for damages resulting from loss of suitable street access to their property. Because the suitability of plaintiffs' access presents issues of fact under New York law, the judgment is reversed and the case remanded for further proceedings.

FACTS

Plaintiffs' property is a roughly rectangular parcel in downtown Niagara Falls, New York, bounded 266 feet on the north by Falls Street and 168 feet on the east by Main Street. It is improved with a two-story L-shaped structure running along the entire frontage of Falls Street and 123 feet along Main Street. The remaining Main Street frontage is a 45 foot driveway providing the only access to plaintiffs' interior parking lot located on that part of the parcel not covered by the building.

In earlier days the building was occupied by retail stores, including such major tenants as J.C. Penney, Sears and Singer Sewing Machine. It is now substantially, if not entirely, vacant. Before the urban renewal project that precipitated this lawsuit, Main Street was the main vehicular artery connecting the Rainbow Bridge Plaza and Niagara Street, on the north, with Buffalo Avenue, First Street, and the entrance to Goat Island, on the south. Falls Street, also a major commercial artery, ran easterly from the subject property's westerly boundary and intersected Main Street at the northeast corner of the subject property.

The urban renewal plan contemplated major revisions in traffic patterns and land uses in the vicinity of the subject property. Some of the changes have been implemented; others appear to have been abandoned, at least for the present. The actual changes relevant to this appeal involve Falls Street and Main Street. Falls Street has been closed to all vehicular traffic and converted into Rainbow Mall, a street devoted exclusively to pedestrian use.

Main Street is no longer a commercial artery. North of Rainbow Mall it has been abandoned. South of Rainbow Mall, opposite the subject property, the street can be reached only from the south, and it dead ends at Rainbow Mall. That portion of the street abutting the subject property is used as a parking area, although vehicles still have access to the subject property over the same 45 foot driveway. While Main Street has been physically unchanged south of Rainbow Mall, it nevertheless has changed in character and function because it is closed off at Rainbow Mall, leads to the subject property only from the south, carries no through vehicular traffic, and attracts only people seeking the subject property or wishing to use the street for parking purposes.

More than seven years ago plaintiffs commenced an action in New York State Supreme Court, Niagara County, against the city and the Niagara Falls Urban Renewal Agency to recover damages claimed to have been caused by the urban renewal project. The first two of its three causes of action were premised on theories that Falls Street and Main Street had been abandoned, causing title to the center line of each street to revert to plaintiffs as the abutting owners, and that subsequent use of the former streets for the pedestrian mall and parking area constituted a taking of plaintiffs' property for which they were entitled to compensation. Plaintiffs' third cause of action sought damages on the theory that defendants had deprived the subject property of reasonable and suitable access consistent with its highest and best use, which was retail commercial.

In January 1977 defendants moved to dismiss all three causes of action. The state court granted the motion as to the first cause of action, concluding that Falls Street had not been abandoned but simply converted to pedestrian rather than vehicular use. The court denied the balance of the motion, finding that the second and third causes of action presented questions of fact requiring a trial. As to the second cause of action, there was at that time a possibility that part of Main Street would be formally abandoned and sold to commercial developers, so the court left that matter for greater factual development at a trial. On the third cause of action the court concluded that the extent of defendants' interference with access and the suitability of what had been allowed to remain presented a triable issue.

The case then meandered along until September 1981 when, on the eve of the state court trial, defendants served a third-party summons and complaint on officials of the United States Department of Housing and Urban Development (HUD). On behalf of the HUD officials, the U.S. Attorney removed the entire action to the United States District Court for the Western District of New York pursuant to 28 U.S.C. ยงยง 1441 and 1442. Plaintiffs moved to sever the state claims from the federal third-party claims and to have the state claims remanded, but the district court denied that motion. HUD then moved to dismiss the third-party claims, and defendants moved to dismiss the complaint's remaining two causes of action.

Judge Curtin granted HUD's motion, and believing that "the speediest resolution of this case may be had if this court continues jurisdiction" over the state law claims, even though the basis for removal to federal court had now disappeared from the case with dismissal of the federal agency, he turned his attention to defendants' motions, permitting additional papers and oral argument. Defendants established that the possible abandonment of Main Street, which had prompted the state court to deny summary judgment on the second cause of action, had not occurred. They also established that there had been no direct taking of any part of the subject property, and that the 45 foot entrance from Main Street to the parking area of the subject property had not been physically altered.

In opposing summary judgment, plaintiffs abandoned the second cause of action and concentrated their attention on the third, claiming that the access remaining to their property as a result of the street closings and changes was unsuitable. In support, plaintiffs presented, among other things, an affidavit by the former planning director for the City of Niagara Falls in which he asserted that, while the subject property had "excellent vehicular access" through Falls Street and Main Street prior to the urban renewal plan, "abandonment" of the streets and the failure to implement other aspects of the original plan made the access remaining to the subject property "very poor". Plaintiffs also submitted the affidavit of a professional engineer who asserted that with the elimination of vehicles from Falls Street and the dead-ending of Main Street at the south line of Falls Street the "vehicular access to the subject property at the rear of said building * * * cannot accommodate sufficient vehicular traffic to support the prior use of the building which was department store commercial." ...


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