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Sadowsky v. City of New York

decided: April 19, 1984.


Expedited appeal from an order of the United States District Court for the Southern District of New York, Robert L. Carter, Judge, denying a motion for a preliminary injunction against the enforcement of one aspect of a New York City ordinance governing the renovation and demolition of single room occupancy dwellings. Judgment affirmed.

Timbers and Cardamone, Circuit Judges, and Tenney, Senior District Judge.*fn*

Author: Tenney

TENNEY, District Judge:

Harold Sadowsky and Vincent Ruisi are general partners in the limited partnership, Chelsea West Associates, which owns two vacant and run-down single room occupancy buildings ("SRO's") in New York City. Sadowsky, Ruisi and Chelsea West Associates take this expedited appeal from an order denying their application for a preliminary injunction. They sought to enjoin enforcement as against them of one aspect of a local ordinance, New York City Local Law 19, Act of May 31, 1983, no. 19, 1983 N.Y. City Local Laws ("Law"). The Law governs the renovation and demolition of SRO's, and requires certification that no harassment of tenants has occurred on the premises during a three-year inquiry period preceding application for plan approval or permits for renovation or demolition. However, a waiver of the certification requirement may be granted for those SRO's purchased under contracts entered into and recorded prior to the date on which the bill was approved by legislative committee.

Appellants allegedly entered into a contract to purchase the SRO's at issue prior to the cutoff date but did not record the contract. They now contend that the recordation requirement results in a violation of their fifth and fourteenth amendment rights. Since we agree with the court below, 578 F. Supp. 1577, that appellants have failed to make a showing which would entitle them to a preliminary injunction, we affirm.


On March 18, 1983, appellants allegedly entered into a written contract to purchase two vacant SRO's at 332-334 West 19th Street in Manhattan. On May 5, 1983, a committee of the New York City Council ("Council") held hearings on and recommended passage of the proposed Law. The court below noted that the committee's action on the bill on May 5th received significant news coverage. On May 12th the bill was adopted by the full Council, and on May 31st it was signed by the Mayor.

The Law's declaration of findings and intent states that the occupants of SRO's "are generally poor and elderly, and often suffer from physical and mental infirmities and social problems which make them particularly vulnerable to . . . harassment," Law, supra, § 1, and states further that "it is the policy of the city to encourage the preservation of these dwellings as housing resources for such occupants and to protect these occupants against such harassment." Id. The general thrust of the new Law is to set up a scheme under which the presence of tenant harassment will be investigated before plan approval or permits will issue for the renovation or demolition of any SRO, and under which harassment will be penalized where it is found to have occurred. To this end, the Law requires that owners obtain a "certification of no harassment," 4 N.Y. CITY CHARTER & ADMIN. CODE ANN., ch. 26, tit. D, subtit. IV, art. 40, § D26-40.06 (Williams Supp. 1983-1984) ("§ D26-40.06"), before converting such properties "to more profitable uses." Law, supra, § 1. The City's Department of Housing Preservation and Development ("DHPD") will not provide such certification unless it is determined that there has been no harassment of the occupants during the three-year period preceding the application for certification. See § D26-40.06(c), (d)(3). If it is found that harassment has occurred during this inquiry period, certification will be denied and the application for plan approval or for an alteration or demolition permit will be rejected. Furthermore, for a period of three years following the date of denial of certification, no further application for plan approval or for an alteration or demolition permit will be considered by the City. See 3-A N.Y. CITY CHARTER & ADMIN. CODE ANN., ch. 26, tit. C, pt. II, art. 1, sub-art. 118.0, § C26-118.8(b)(5), (7) (Williams Supp. 1983-1984).

Under certain circumstances, however, a waiver of the certification requirement will be granted despite a determination that harassment has occurred during the inquiry period. The waiver is available where the Commissioner of the DHPD finds that "the owner of record of the multiple dwelling with respect to which such certification is sought was the owner of record of such multiple dwelling prior to May fifth nineteen hundred eighty-three or had entered into a contract of sale for the purchase of such multiple dwelling which was recorded prior to [May 5, 1983]. . . ." § D26-40.06(e)(1)(a) (emphasis supplied). In order to grant a waiver on these grounds, the Commissioner must also find that the purchaser or owner of record was not the owner of record when the harassment took place and did not participate in or encourage the harassment on the premises, and that the purchase was bona fide and not intended to effect an evasion of the statute. See § D26-40.06(e)(1)(b). On an alternative ground altogether, a waiver may be provided where the owner acquired the multiple dwelling by sale pursuant to foreclosure by mortgage or pursuant to a deed in lieu of such foreclosure. See § D26-40.06(e)(2).

On June 24, 1983, over three weeks after the Law was signed, appellants allegedly closed on the two SRO's on West 19th Street. Subsequently, appellants submitted their applications for certification of no harassment and requested a waiver of the certification requirement for each building on the ground that they had contracted to purchase the properties before the May 5th cutoff date. The DHPD, however, rejected the waiver applications on the ground that the contract had not been timely recorded. The agency also informed appellants that there was reasonable cause to believe that harassment had occurred on the premises during the inquiry period, and that a hearing would be held on the matter. The latter hearing was held on February 16, 1984, and a decision was issued on April 5, 1984. The hearing officer concluded that harassment had occurred during the relevant period, and that certification should not be granted to appellants. According to the statutory scheme, the penalties for harassment will now come into play and, since appellants have already been denied a waiver, the three-year moratorium on development will be imposed.*fn1

Appellants brought suit in the district court seeking, inter alia, preliminary injunctive relief from enforcement of the statute on the ground that, as applied to them, it effected a taking without just compensation in violation of the fifth and fourteenth amendments. The lower court found that the Law was a valid exercise of the City's police powers, and that the buildings on the property would have a remaining economically viable use as SRO's if the three-year moratorium on development were imposed. Applying the general standards regarding takings as set out in Agins v. City of Tiburon, 447 U.S. 255, 65 L. Ed. 2d 106, 100 S. Ct. 2138 (1980), and Andrus v. Allard, 444 U.S. 51, 62 L. Ed. 2d 210, 100 S. Ct. 318 (1979), the court found that appellants had not raised a substantial question going to the merits, and that they had failed to make the showing required for preliminary injunctive relief. We agree.


On a motion for a preliminary injunction, a showing must be made of "(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979) (per curiam). Appellants argue that the court below erred in determining that they had failed to make an adequate showing regarding the merits of the underlying action, and that they have shown irreparable harm, an issue which the district court did not reach. Like the court below, we find it unnecessary to reach the issue of irreparable harm since appellants have shown neither a likelihood of success on the merits nor the presence of serious questions going to the merits.

Initially, however, we must address the fact that for the first time on appeal appellants raise a full-blown due process claim based on the four-factor test set out in Nachman Corp. v. Pension Benefit Guar. Corp., 592 F.2d 947, 960 (7th Cir. 1979), aff'd on other grounds, 446 U.S. 359, 64 L. Ed. 2d 354, 100 S. Ct. 1723 (1980), and recently applied by this court in Textile Workers Pension Fund v. Standard Dye & Finishing Co., 725 F.2d 843 (2d Cir. 1984) (" Textile Workers ").*fn2 Since the district court has not had an opportunity to consider this argument, and since the merits of appellants' claims will again be considered by the district court at the trial of the main action, we decline to consider it now. See Radix Org., Inc. v. Mack Trucks, Inc., 602 F.2d 45, 48 (2d Cir. 1979); Adato v. Kagan, 599 F.2d 1111, 1116 (2d Cir. 1979); Women in City Gov't United v. City of New York, 563 F.2d 537, 542 (2d Cir. 1977). Appellants further argue, however, that the recordation provision of the waiver ...

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