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NATIONAL HELICOPTER CORP. OF AMERICA v. CITY OF NE

January 3, 1997

NATIONAL HELICOPTER CORPORATION OF AMERICA, Plaintiff, against THE CITY OF NEW YORK, THE COUNCIL OF THE CITY OF NEW YORK, THE CITY PLANNING COMMISSION OF THE CITY OF NEW YORK, AND THE NEW YORK CITY ECONOMIC DEVELOPMENT CORPORATION, Defendants.


The opinion of the court was delivered by: SOTOMAYOR

 Plaintiff National Helicopter Corporation of America ("National") brings this action, against the City of New York and various of its subdivisions (the "City"), seeking preliminary and permanent injunctive relief against enforcement of Resolution 1558, a City ordinance setting a variety of restrictions upon the use and operations of the 34th Street Heliport (the "Heliport"). For the reasons to follow, plaintiff's request for a permanent injunction is granted in part, and denied in part.

 BACKGROUND

 The Heliport, located on the waterfront adjacent to the FDR drive, was constructed on City owned property in 1972. (Model Aff. P 3). The Heliport has several parking spaces for helicopters; it has no permanent terminal building, no hangar, and no maintenance facilities. In 1972, the City obtained a special permit, effective for a period of five years, authorizing the commencement of operations at the Heliport. In 1973, National and the City entered into a lease, with a ten year term, pursuant to which National became the fixed-base operator of the Heliport. (McGann Aff. P 10). Though its original lease term has expired, National continues to use and operate the Heliport, providing commercial sightseeing and commuter flights, as well as a range of other services. (McGann Aff. P 38).

 On March 6, 1996, New York City's City Council enacted Resolution 1558 (the "Resolution"), approving the issuance of a special permit imposing several conditions upon future operations at the Heliport. (Model Aff. P 29; McGann Aff. P 81). The measure requires a 47% reduction in operations at the Heliport, restricts hours of operation throughout the week, phases in a ban on weekend operations, mandates flight paths of sightseeing helicopters, imposes marking requirements on helicopters, and prohibits certain types of aircraft from using the Heliport. (Model Aff. PP's 26, 29; McGann Aff. PP's 83, 84). The City's Economic Development Corporation ("EDC") has since incorporated these conditions into a Request For Proposals ("RFP"), issued on May 6, 1996, seeking a new fixed base operator for the Heliport. *fn1" (McGann Aff. P 92; Model Aff. P 33).

 According to plaintiff's current president, Peter McGann, National would suffer significant financial harm if the City were to enforce the Resolution, and if the EDC were to proceed with its RFP. Specifically, Mr. McGann anticipates that the required reductions in operations would precipitate "plummeting" revenues for National, and would result in depleted good will between National and its customers, most notably tour operators and travel agents. (McGann Aff. PP's 102, 104, 109). More particularly, plaintiff estimates that revenues would decline by roughly $ 6 million annually, and that -- shortly after the start of enforcement -- National would be forced to layoff over half of its approximately 200 employees. (Id. PP's 111, 112). Perhaps most strikingly, Mr. McGann predicts that, if Resolution 1558 is enforced, National "will likely file for bankruptcy." (Id. P 111).

 Plaintiff opposes enforcement of Resolution 1558 on the grounds, inter alia, that it was passed in violation of the Supremacy Clause of the United States Constitution, U.S. Const. Art. VI, cl. 2, and in violation of the laws of the City of New York. The City responds that National does not have standing to object to the City's enforcement of Resolution 1558, both because plaintiff is subject to eviction at the City's discretion, and because plaintiff has waived any right to pursue whatever claims it might otherwise have. Furthermore, the City contends that the enactment and enforcement of Resolution 1558 amounts to a valid exercise of its proprietary rights in the Heliport.

 Relationship Between The Parties

 In 1989, in settlement of another rent dispute, National and the City entered into another agreement, this one providing for the cessation of all operations at the Heliport, except for emergency flights, between 11:00 p.m. and 7:00 a.m. (Model Aff. P 7; McGann Aff. P 25). Also, National agreed to resume its diligent pursuit of the special permit application process. Conditioned upon National's satisfaction of its monetary obligations under the lease, and its submission of a duly certified permit application, the City granted National an extension of the lease for a period of two years, with termination of the lease extended to October 3, 1995. (Model Aff. P 7; McGann Aff. P 30).

 By 1993, National had commenced work on an Environmental Impact Statement ("EIS") required in connection with its application for the special permit. (Model Aff. P 8). However, the City was not satisfied with National's progress. Accordingly, in connection with yet another rent dispute between the parties, the City -- through the EDC -- assumed responsibility for completing the EIS, with National committing to reimburse the City for related costs. (Model Aff. P 8). This April 1, 1993 agreement reiterated that National's tenancy could continue through October 3, 1995, conditioned upon the company's satisfaction of its obligations under the lease. (Model Aff. P 8; Second McGann Aff. P 9).

 Shortly after the parties executed the April 1993 agreement, yet another dispute developed regarding the sufficiency of National's rent payments. (Model Aff. P 9; Second McGann Aff. P 10). On July 2, 1993, the City sent National a Notice of Termination of Agreement and Lease Default. (Model Aff. P 9). National responded by bringing a State Court action to prevent the City from accelerating the payments due, and terminating the lease. (McGann Aff. P 11). A January 10, 1994 stipulation, which simply reaffirmed the terms of the April 1, 1993 agreement, proved inadequate to resolve the dispute. The parties subsequently entered into an August 1994 stipulation, which included a waiver by National of any claims which it could have raised in the 1993 State Court action, as well as any claims relating to the "EDC's acts or omissions" in connection with the special permit application. (Second McGann Aff. P 19).

 By June of 1995, it became clear that a special permit would not issue until after the contemplated and agreed upon October 3, 1995 termination date of National's tenancy at the Heliport. (Second McGann Aff. P 25). Accordingly, the parties negotiated and agreed upon another stipulation -- this one executed on February 13, 1996 -- providing for: (i) National's continued tenancy at the Heliport, on a month-to-month basis, until July 31, 1996; (ii) an immediate issuance of an Order of Ejectment which could be executed and enforced on July 31, 1996, without further notice to National; (iii) an agreement by National not to commence any suit or proceeding or to bring any order to show cause to vacate the judgment of possession or to stay execution thereof; and (iv) an agreement by National to:

 (Model Aff. Ex. F). It is this language, adopted approximately one month prior to the passage of Resolution 1558, which -- in the City's view -- amounts to a waiver by National of any claims it might have relating to that Resolution.

 Adoption Of Section 1558

 As the preceding discussion suggests, many of the events bearing upon the relationship between National and the City related also to the regulatory status of the Heliport -- i.e., whether it was operating under a valid special permit. As noted, National continued its operations at the Heliport after the expiration of the special permit secured by the City in 1971, but agreed -- pursuant to the 1985 stipulation between the parties -- to submit an application for renewal of the permit. As part of the stipulation, National assumed responsibility for obtaining the EIS that was required in connection with the application process. Under the 1993 stipulation between the parties, however, the City assumed responsibility, under the auspices of the EDC, for the EIS, with National agreeing to reimburse the City for the related costs.

 On June 29, 1995, the EDC and the Department of Business Services ("DBS"), filed, as co-applicants, an application for a special permit for the Heliport (the "Application") with the City Planning Commission ("CPC"). (McGann Aff. P 73; Model Aff. P 20). The Application set forth the City's goal of redistributing tourist sightseeing flights from the Heliport to other City heliports and of limiting the number of these flights to achieve a 47% reduction in the total number of helicopter operations at the Heliport. (Model Aff. Ex. K). Submission of the Application triggered the Uniform Land Use Review Procedure ("ULURP") process, which occurs in collection with significant land use decisions. (Model P 11; McGann Aff. P 76).

 As part of the ULURP process, the CPC certified the EDC's Application as complete on August 7, 1995. (Model Aff. P 21; McGann Aff. P 77). A draft EIS had been certified complete only days earlier, on August 4, 1995. (Model Aff. P 11). On November 29, 1995, the CPC conducted a public hearing for consideration of the Application and the EIS. (McGann Aff. P 78; Model Aff. P 23). One month later, on or about December 29, 1995, the final EIS relating to the Application was certified as complete. (McGann Aff. P 79; Model Aff. P 11). The EIS ostensibly served to provide empirical support for those conditions contemplated by the EDC and the CPC in connection with operations at the Heliport. (Model Aff. Ex. G).

 The final EIS anticipates and assesses the impact to follow from the 47% reduction in Heliport operations provided for in the EDC's application for a special permit. Large sections of the document are devoted to background information, describing the Heliport, and the extent and nature of its operations over time. The report also details the nature of the surrounding community, both as it exists, and as the City anticipates its development. With respect to noise, the EIS describes significant differences between decibel levels during "peak" hours and on "average." (Model Aff. Ex. G at S-7). Both conditions, it was determined, "result in significant noise impacts." (Id.). With respect to mitigating peak impacts, the EIS explores various alternatives, but concludes that: "there are no economically feasible measures that can be implemented to reduce intrusive peak helicopter flyby noise levels within acceptable levels." (Id. at S-13). The EIS does conclude, however, that the EDC's proposed reductions in operations would result in lower noise levels, both in magnitude and significant impact. (Id. at S-7).

 
a. Weekday operations at the Heliport restricted to between 8:00 a.m. and 8:00 p.m.
 
b. A minimum 47% reduction in operations at the Heliport.
 
c. Tourist flights prohibited from flying over Second Avenue, and north-south sightseeing flights restricted to the East and Hudson rivers.

 (McGann Aff. P 83; Model Aff. P 26). The City Council also enacted the following provisions, which modified certain CPC recommendations:

 
d. Saturday and Sunday tourist operations restricted to between 10:00 a.m. and 6:00 p.m., and ultimately, to be phased out entirely.
 
e. Sikorsky S-58T, or helicopters of a similar size, barred from using the Heliport for sightseeing operations.
 
f. All helicopters using the Heliport to be marked for identification from the ground.

 (McGann Aff. P 84; Model Aff. P 29). The restrictions set forth in Resolution 1558 have been incorporated into the RFP issued by the EDC on May 6, 1996. *fn3" (McGann Aff. PP's 88, 92: Model Aff. PP's 33, 36).

 DISCUSSION

 INJUNCTIVE RELIEF

 To obtain a preliminary injunction, "the moving party must show (1) irreparable harm, and (2) either (a) a likelihood of success on the merits, or (b) sufficiently serious questions going to the merits and a balance of hardships tipping decidedly toward the party seeking the injunctive relief." Covino v. Patrissi, 967 F.2d 73, 77 (2d Cir. 1992); see also Richard Feiner & Co., Inc. v. Turner Entertainment Co., 98 F.3d 33, 34 (2d Cir. 1996). The standard for a permanent injunction is "essentially the same" as for a preliminary injunction with the exception that the plaintiff must actually succeed as to the merits rather than merely make a showing that such success is likely in a future proceeding. See Clarkson v. Coughlin, 898 F. Supp. 1019, 1035 (S.D.N.Y. 1995) (citing Amoco Production Co. v. Village of Gambell, 480 U.S. 531, 546 n. 12, 94 L. Ed. 2d 542, 107 S. Ct. 1396 (1993)).

 Though plaintiff initially applied for a preliminary injunction in this matter, the parties agreed, at oral argument, that the record before the Court is sufficiently complete to permit a final decision on the merits. (Tr. of October 18, 1996 Oral Argument at 8). Accordingly, this Court exercises its discretion to treat this matter as a trial, and converts plaintiff's application into one for permanent injunctive relief. See Fed. R. Civ. P. 65(a)(2).

 I. IRREPARABLE HARM

 
A. Damage To ...

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