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January 31, 1986

PAUL MILSTEIN, individually and as a partner of MART ASSOCIATES, and MART ASSOCIATES, Plaintiffs,
THE CITY OF NEW YORK, EDWARD I. KOCH, as Mayor of the City of New York, CHARLES M. SMITH, as Commissioner of Buildings of the City of New York, HERBERT STURZ, as Chairman of the New York City Planning Commission, STEVEN SPINOLA, as President of the New York City Public Development Corporation, and PAUL A. CROTTY, as Commissioner of Finance of the City of New York, Defendants

The opinion of the court was delivered by: CARTER


Plaintiffs' voluminous amended complaint alleges that "defendants' concerted actions, under color of state law," seek to deprive them of property and due process rights by "refusing to issue permits to which plaintiffs are entitled as a matter of state law and precluding plaintiffs from obtaining future and further permits to which they are or will become entitled under state law, undermining and depriving plaintiffs of their right and opportunity to obtain federally insured F.H.A. mortgage, and attempting to deprive plaintiffs of generally available public financing." (Par. 1, amended complaint). In that paragraph plaintiffs go on to allege that the above actions were "part of a plan and scheme to coerce plaintiffs to desist from and to abandon their lawful exercise of their right of access to judicial processes to vindicate personal and property rights" under the federal and state constitutions and federal, state and local law. Id.

In paragraph 2 it is asserted that the claims arise under the First and Fourteenth Amendments and 42 U.S.C. § 1983. Paragraphs 14-44 are entitled BACKGROUND FACTS. These paragraphs take us through developments in the 42nd Street Development Project--a joint City-State venture to construct a merchandise mart on 42nd Street and its environs--as plaintiffs view them to March, 1985. To summarize, these allegations give a history of plaintiffs' attempt to be designated developer of the project, and their frustration in the designation of another applicant, George Klein, who allegedly was one of the Mayor's financial supporters.

 Paragraph 45 et seq. set out the facts upon which the amended complaint is based. Plaintiffs assert that although they had lost designation as Mart Developer, they had acquired property slated for development and on or about November, 1984, publicly announced their interest in constructing on this site a mixed use, 35 story building with 300,000 square feet of office space and 504 rental apartments, 20% of which would be available to moderate income families. (Par. 45, 46 amended complaint).

 Paragraph 47 alleges that in an effort to mitigate losses to the City which would result from political favoritism afforded Klein, "he defendants have embarked on a systematic campaign to destroy the value of plaintiffs' Property."

 Paragraph 48 alleges that beginning in September, 1984, plaintiffs began requisite filings with the Department of Buildings of the City for approvals and permits seeking to allow construction on the property, and, contemporaneously, plaintiffs sought to obtain financing through F.H.A. mortgage insurance.

 Paragraph 49 alleges that among their permit applications, plaintiffs requested in November, 1984, that the Department of Buildings issue an excavation permit. Paragraph 50 alleges that the application has never been rejected nor approved by the Department of Buildings and that no written objections were made by the Department as of December, 1984. Paragraph 51 alleges that on or about March 12, 1985, defendants learned that plaintiffs had begun to put their construction program into effect and that defendants began to effectuate plans to thwart plaintiffs' construction "efforts and to destroy or minimize the value of the Property and its proper utilization."

 Paragraph 52 alleges that Joseph White, Assistant Commissioner of the Department of Buildings, on March 12, 1985, "acting for the City, directed that no approvals or permits be issued to plaintiffs and placed an endorsement on plaintiffs' file prohibiting any approvals of any kind absent prior consultation with White." Reference is made to Exhibit A which is a handwritten notation stating "No Approvals of any kind w/o checking with Asst Comm J White", initialed and dated 3/12/85.

 Paragraph 53 alleges that White's order has been complied with and that to date the Department of Buildings has failed and refused to take action on the application for an excavation permit within 40 days as it is required to do by law, citing Milstein v. O'Neill, 25 N.Y.2d 757, 303 N.Y.S.2d 512, 250 N.E.2d 573 (1969).

 Paragraph 54 alleges that plaintiffs have acquired a vested property right entitling them to the excavation permit and that defendants have knowingly, willfully and maliciously deprived them of that property right.

 Paragraph 55 alleges that as a result of refusal to issue the excavation permit and the decision to disapprove all other applications with respect to the property, plaintiffs have been unable to commence construction and each day the property remains unimproved, plaintiffs are deprived of full value of the property, a value set by the United States Department of Housing and Urban Development at $1200 per square foot.

 Paragraph 56 alleges that their efforts to secure residential and commercial tenants for the building has been impeded and each month delay cost plaintiffs $2,915,300 or more in lost rentals.

 Paragraph 57 alleges that rising market costs in the building industry and a dramatic increase in construction costs will result from this delay and because of a commitment to middle income housing, plaintiff will not be able to recoup these losses through increased rent.

 Paragraphs 58-63 allege plaintiffs filed an application with the Federal Housing Administration ("F.H.A.") for F.H.A. mortgage insurance; that in September, 1984, The United States Department of Housing and Urban Development ("HUD") indicated that the mortgage would be forthcoming subject to plaintiffs obtaining the requisite permits; that in furtherance of its plan "the City together with various of the defendants" undertook steps to have HUD and F.H.A. withdraw or terminate that favorable action. (Par. ...

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