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November 22, 1991


The opinion of the court was delivered by: Ward, District Judge.


Defendants City of New York (the "City"), New York City Planning Commission ("CPC"), New York City Department of City Planning ("DCP"), New York City Transit Authority ("TA"), and Metropolitan Transportation Authority ("MTA") move, pursuant to Rule 56, Fed.R.Civ.P., for summary judgment dismissing the complaint, with costs, including reasonable attorneys' fees. Plaintiffs Peter Sudarsky ("Sudarsky") and Nominee Trading Corporation ("NTC") d/b/a 225-227 East 52nd Street Associates cross-move, pursuant to Rule 56, Fed.R.Civ.P., for partial summary judgment as to liability. For the reasons that follow, defendants' motion for summary judgment is granted and plaintiffs' cross-motion for partial summary judgment is denied.


This action, brought pursuant to 42 U.S.C. § 1983, arises out of a dispute concerning the procedures used by defendants in reviewing plaintiffs' development project. These procedures had the ultimate effect of preventing plaintiffs from developing their property in the manner they desired. The facts are undisputed, except as noted.

At all times relevant to this action, Sudarsky and NTC were the sole partners of 225-227 East 52nd Street Associates (the "Partnership"), a New York partnership engaged in the real estate business. The Partnership is owned 99% by Sudarsky and 1% by NTC. The CPC is a department of the City government established pursuant to the New York City Charter (the "City Charter") and Administrative Code.*fn1 The CPC's responsibilities include, among other things, the regulation of land use in conformity with applicable zoning rules and the preparation of recommendations for changes in zoning. The DCP is a division of the CPC. The TA is a public benefit corporation organized pursuant to N.Y.Pub.Auth.Law §§ 1201 et seq. for the purpose of operating transit facilities within the City. The TA's responsibilities include, among other things, the operation, maintenance and planning of subway stations and access thereto. The MTA is a public authority organized and existing pursuant to N.Y.Pub.Auth.Law §§ 1260 et seq. The MTA's responsibilities include, among other things, the development of commuter transportation facilities within the City of New York and the counties of Dutchess, Nassau, Orange, Putnam, Suffolk and Westchester.

Because Sudarsky's claims concern the process of obtaining the requisite approvals for a real estate development project in the City, some understanding of that approval process is necessary to an analysis of his claims. Therefore, a brief description of the relevant City regulations follows.

The Zoning Resolution

The New York City Zoning Resolution (the "Zoning Resolution") is established under section 200.a.1 of the City Charter. The New York City Department of Buildings (the "Buildings Department") is primarily responsible for enforcing and administering the Zoning Resolution. Zoning Resolution § 71-00. Appeals from administrative interpretations of the Zoning Resolution are heard by the Board of Standards and Appeals. Id. at § 72-01.

Obtaining Approval for a Development Project

In order to obtain approval for a development project within the City, a developer must file an application for a building permit with the Buildings Department. See N.Y. City Charter § 645(b)(1). The Buildings Department then either approves the permit or indicates "objections" to the permit application.

The existence of objections to a development proposal do not necessarily mean the proposal will not ultimately proceed, but rather that the objections must be resolved before a building permit is approved. Exhibit 23 to Affidavit of Peter Sudarsky, filed May 24, 1991 ("Sudarsky aff.") (deposition of Stephen B. Jacobs) ("Jacobs dep."). The objections may simply be requests for additional information, or may be more substantive, such as a requirement that certain agency approvals be obtained or that the proposed building plans be altered to conform with zoning regulations. See Exhibit D to Affidavit of Albert Fredericks, filed April 29, 1991 ("Fredericks aff.") at A00179-81; Jacobs dep.; Affidavit of Mario A. Fristachi, filed June 17, 1991 at ¶¶ 5-10.

If all of the Building Department's objections are successfully resolved, the department will issue a building permit and the developer can then proceed to begin construction on the project.

The TA District

Article 95 of the Zoning Resolution provides for the establishment of a Special Transit Land Use District (the "TA District"). The parties inform the Court that the TA District was created to accommodate the proposed Second Avenue subway line. Among the purposes of the TA District is the reduction of conflict between normal pedestrian traffic on the public sidewalks and persons attempting to gain access to the subway system. Zoning Resolution § 95-00. In furtherance of that purpose, developments within the TA District are required to provide access to the subway. Id.

Any new development within the TA District is required to "provide an easement on the zoning lot for subway-related use," if it is determined that such an easement is required. Id. at § 95-03. A developer either files an application for a transit easement certification himself, pursuant to § 95-041 of the Zoning Resolution, or is notified that a transit easement may be needed when the Buildings Department determines that a proposed development involves "ground level construction within the [TA District]," and makes an objection regarding the need for a transit easement certification on the developer's building permit application. Id. at 95-03. The developer must then apply to the CPC and the TA for their determination as to whether a transit easement will be required. Id. at § 95-04. The CPC and the TA must jointly certify their decision within sixty days after the receipt of the application.

Once the need for a transit easement has been certified, a developer must negotiate a transit easement agreement with the TA and the CPC. Id. at 95-041. The easement application is referred to the DCP, which determines the exact location and dimensions of the proposed easement. This determination requires the DCP to obtain detailed plans of the proposed construction from the developer, as well as to communicate with the developer concerning the required volume of the easement.

Events Leading to the Instant Dispute

In 1985 and 1986, plaintiffs bought eight lots consisting of buildings at 220-224 East 53rd Street and 223-233 East 52nd Street, between Second and Third Avenues in the Borough of Manhattan. The properties were located in a residential zoning district designated as "R8" under the Zoning Resolution. This zoning classification permits a floor area ratio (i.e., the ratio of total interior floor space to the zoning lot area) ("FAR") of up to 6.5.

For the purpose of their development plans, plaintiffs merged the various parcels into a single zoning lot as permitted under § 12-10 of the Zoning Resolution. The merger allowed the plaintiffs to use the development rights of the 53rd Street portion of the property for the construction of a new building that was proposed for the 52nd Street portion of the property. Plaintiffs developed a plan to construct a 17-story building on the 52nd Street portion of the lot in place of six existing buildings, which were to be demolished. The 53rd Street buildings were to be preserved and renovated.

At the time plaintiffs were formulating their development plans, the DCP was studying a proposal to "down-zone" the area in which plaintiffs' property was located from R8 to R8B. Under R8B zoning, the maximum FAR is 4.0. This ratio was too small to permit the total floor area in plaintiffs' proposed building. Plaintiffs were aware of the existence of this proposal. Exhibit I to Fredericks aff.; Exhibit L to Fredericks aff. (deposition of Victor Marrero).

A small part of the TA District is located along East 53rd Street. According to defendants, this "spur" was created to allow for the eventual construction of a pedestrian subterranean passageway connecting the proposed Second Avenue subway and the existing Lexington-Third Avenue subway station located at 53rd Street. The 53rd Street section of plaintiffs' property was located in this section of the TA District. Although plaintiffs' proposed development was not planned for this portion of the lot, due to the fact that the lot had been merged for zoning purposes, a question arose as to whether plaintiffs' project was subject to a determination as to whether a transit easement was required.*fn2

On or about December 5, 1986, plaintiffs filed an application and plans with the Buildings Department, requesting permission to construct a 17-story residential building on the 52nd Street portion of their property. On or about December 12, 1986, the Department of Buildings issued a series of objections to plaintiffs' application, one of which indicated that the development proposed by plaintiffs could not be approved until the CPC and the TA determined whether plaintiffs would be required to provide a transit easement on the lot. On or about December 22, 1986, plaintiffs applied to the CPC and the TA for certification as to whether or not a transit easement would be required.

Following the receipt of plaintiffs' application, a TA official wrote a letter dated January 12, 1987, advising the DCP that a transit easement was not needed for the location of Sudarsky's proposed development. A copy of this letter was sent to plaintiffs. Exhibit 7 to Sudarsky aff. This letter was superseded by a second letter from the TA, dated February 13, 1987, which stated: "upon reconsideration, the Transit Authority has determined that a transit easement is required [on plaintiffs' proposed development]." Exhibit 17 to Sudarsky aff. Plaintiffs also received a copy of the second letter. On or about February 19, 1987, the DCP wrote to the Buildings Department, stating that CPC and the TA jointly certified that a transit easement was required on the subject zoning lot. Exhibit 20 to Sudarsky aff.

Although plaintiffs disagreed with the determination of the TA and CPC that a transit easement was needed, they did not seek review of the decision by the Board of Standards and Appeals as permitted by the Zoning Resolution. Instead, following certification of the easement requirement, plaintiffs submitted a draft of the easement conveyance agreement and certain other documentation to the DCP and the TA on or about May 5, 1987. Exhibit L to Affirmation of Mario A. Fristachi, filed April 29, 1991. Plaintiffs and the DCP never exchanged the information necessary to determine the exact dimensions of the easement. The parties disagree as to who is responsible for this failure of communication.

In October 1987, the New York City Board of Estimate approved an amendment to the Zoning Resolution, by which the area surrounding plaintiffs' property was down-zoned from R8 to R8B. As pointed out above, the 17-story building proposed by plaintiffs was no longer permitted under the new classification. In 1988, plaintiffs sold the property for approximately $12,000,000. The DCP thereafter formally terminated the application for easement certification.

Plaintiffs initiated the instant lawsuit on July 28, 1989 and subsequently amended their complaint on September 26, 1990. The Amended Complaint alleges that the DCP and CPC, in furtherance of a City policy of discouraging mid-block real estate development in east midtown, adopted a plan designed to prevent plaintiffs' development project, by illegal or unconstitutional means if necessary. According to the Amended Complaint, pursuant to this plan, the DCP determined that it would claim a transit easement through plaintiffs' proposed development site, delay the City's action on such easement administratively and delay issuance of plaintiffs' building permit, until such time as the area including the site had been down-zoned so as to make plaintiffs' proposed development illegal. Plaintiffs claim that defendants' actions violated their rights to substantive and procedural due process and equal protection of the laws and amounted to an unconstitutional taking, in addition to violating their rights under the New York State constitution. The complaint seeks compensatory damages in the amount of $26,000,000, for losses plaintiffs claim they sustained on their investment as well as for lost profits had the project gone forward as planned. Plaintiffs also seek reasonable attorneys' fees pursuant to 42 U.S.C. § 1988.

Following the completion of discovery, defendants moved for summary judgment, claiming that they are entitled to judgment as a matter of law, or alternatively, that the evidence produced in discovery reveals that they acted legally at all times. Plaintiff subsequently ...

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