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HONESS 52 CORP. v. TOWN OF FISHKILL

April 6, 1998

HONESS 52 CORP., Plaintiff, against THE TOWN OF FISHKILL, THE TOWN BOARD OF THE TOWN OF FISHKILL and THE PLANNING BOARD OF THE TOWN OF FISHKILL, Defendants.

William C. Conner, Senior United States District Judge.


The opinion of the court was delivered by: CONNER

OPINION AND ORDER

Conner, Senior D.J.:

 This civil rights action arises out of a dispute between plaintiff Honess 52 Corp. and the Town of Fishkill (the "Town"), the Town Board of the Town of Fishkill (the "Town Board"), and the Planning Board of the Town of Fishkill (the "Planning Board") -- collectively, the "Defendants" -- over development of property owned by Plaintiff (the "Property"). In its complaint, Plaintiff alleges that the defendants arbitrarily and capriciously deprived it of a constitutionally protected property interest in violation of its substantive due process rights. Plaintiff seeks redress for the defendants' alleged conduct pursuant to 42 U.S.C. § 1983 and on various state law grounds.

 Defendants now move, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the federal claims for failure to state a claim upon which relief can be granted. Defendants also seek dismissal of the pendent state claims pursuant to 28 U.S.C. § 1367(c)(3). For the reasons discussed below, Defendants' motion is granted.

 BACKGROUND

 For purposes of the motion to dismiss, the Court must accept as true the facts alleged in the complaint and appended documents. See Hertz Corp. v. City of New York, 1 F.3d 121, 125 (2d Cir. 1993); Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991) (discussing Fed. R. Civ. P. 10(c)). To the extent, however, that the allegations in the complaint are contradicted by annexed documents, the Court need not accept the allegations as true. See International Customs Assocs., Inc. v. Ford Motor Co., 893 F. Supp. 1251, 1255 n.2 (S.D.N.Y. 1995); Sazerac Co. v. Falk, 861 F. Supp. 253, 257 (S.D.N.Y. 1994).

 In setting out the facts underlying this dispute, the complaint reaches back in time some thirty years. The long and convoluted story begins in 1965, at which time the Town's Zoning Ordinance permitted construction of approximately 337 residential dwelling units as of right on the Property. In 1966, the Town Board amended the Zoning Ordinance to allow only 31 units (the "1966 Zoning Amendment"). This amendment was never incorporated, in writing, into the book containing the Zoning Ordinance.

 In 1972, Green Mountain Estates, Inc. ("Green Mountain"), one of Plaintiff's several predecessors in interest, purchased the Property and met with the Planning Board to discuss development of 500 condominium units on the Property. It was not until this meeting that Green Mountain learned of the 1966 Zoning Amendment. In early 1973, Green Mountain filed a rezoning petition to permit construction of up to 500 units (the "1973 Rezoning Petition"). The Town Board denied the petition.

 Green Mountain subsequently commenced an Article 78 proceeding in the Supreme Court of the State of New York seeking to annul and set aside the denial of the 1973 Rezoning Petition and to declare the 1966 Zoning Amendment unconstitutional. In its March 7, 1974 decision, the state court (Justice Joseph Hawkins) ruled that the Town Board had improperly denied the 1973 Rezoning Petition but that the record did not permit a ruling on the constitutionality of the 1966 Zoning Amendment. The court referred the matter back to the Town Board for reconsideration of the 1973 Rezoning Petition. (See March 7, 1974 Decision, attached to Compl. as Exh. A.)

 In February 1975, almost one year after the state court's opinion had issued, the Town Board again denied Green Mountain's 1973 Rezoning Petition. Accordingly, Green Mountain renewed its Article 78 proceeding, seeking to have this second denial set aside and to have the 1966 Zoning Amendment declared unconstitutional. In a decision dated December 4, 1975, Justice Hawkins again concluded that the record was insufficient to determine the constitutional issues. However, given the "protracted delay" and failure to compile an adequate record that had ensued on the previous remand to the Town Board, the court ordered a trial. (See December 4, 1975 Decision, attached to Compl. as Exh. B.)

 After a four-day bench trial before Justice James Caruso, the state court declared the 1966 Zoning Amendment unconstitutional and ordered the Town Board to rezone the Property. The court also recommended that the parties reach an agreement as to the number of units that would be permitted on the Property. (See July 21, 1976 Decision, attached to Compl. as Exh. C.)

 In 1977, Green Mountain and the Town entered into a Stipulation of Settlement which was "so ordered" by the state court (the "1977 Stipulation"). The Stipulation set forth the rights and obligations of the respective parties and their successors with respect to the development of the Property. Specifically, the parties agreed that 337 residential units would be permitted on the Property, a right that was to "remain constant and unimpaired until the year ending December 31, 2000," at which time the Stipulation would terminate. (1977 Stipulation, attached to Compl. as Exh. E, PP 1, 3.) However, the Town Board retained the right

 
. . . to determine the zoning in relation to the subject parcel in the future so long as said determination is not discriminatory as to this parcel and is part of a comprehensive plan of rezoning or redesignation for the area that encompasses East of the Fishkill Bridge and South of the Fishkill Creek . . . . [The Town Board also] shall have a right to make determinations in relation to the site plan ordinances and rules, subdivision regulations, road, drainage and sewer specifications so long as said determinations are not discriminatory against the property.

 (Id. PP 3, 5.) The Stipulation provided that it would run with the land as a permanent covenant and would bind the parties' assigns and successors. (See id. PP 3, 9, 10-11.)

 For a decade after entering the 1977 Stipulation, Green Mountain, which had bought the Property as an investment, was unsuccessful in finding a joint venture partner to develop the Property or a purchaser to buy it outright. Finally, in 1987, Ridgeview Associates ("Ridgeview"), which would become one of Plaintiff's several predecessors in interest, purchased the Property in reliance on representations by the Town and its representatives that the 1977 Stipulation was in full force and that no zoning change would be necessary to build a 337-unit residential development on the Property. Prior to the purchase, Ridgeview had posted a letter of credit in the amount of $ 824,000 to cover its share of the municipal sewer system upgrades that would be needed for a 337-unit development (the "Sewer LOC").

 In October 1987, pursuant to the Zoning Ordinance, Ridgeview submitted an application to the Planning Board for site plan approval of a 337-unit condominium development on the Property (the "1987 Site Plan Application"). Toward the end of that month, the Planning Board, acting pursuant to the New York State Environmental Quality Review Act, N.Y. Envtl. Conserv. Law § 8-0101 et seq. ("SEQRA"), determined that an Environmental Impact Statement ("EIS") was required before it could act on Ridgeview's application. Despite its belief that the 1987 Site Plan Application was exempt from SEQRA, Ridgeview submitted a draft EIS in December 1987. After a July 1988 public hearing on the draft EIS, the Town issued a sight draft against the Sewer LOC in the amount of $ 660,000 which was allocated toward sewer improvements in contemplation of a 337-unit development. A few months thereafter, Ridgeview submitted a final EIS for review by the Planning Board.

 In April 1989, after several public meetings, the Planning Board adopted environmental findings pursuant to SEQRA (the "SEQRA Findings") and conditionally granted Ridgeview preliminary site plan approval (the "1989 Preliminary Site Plan Approval"). The Preliminary Site Plan Approval set out some ten pages of conditions that Ridgeview would have to satisfy before receiving final approval. It also excerpted provisions of the 1977 Stipulation pertaining to the respective rights of the parties in developing the Property. (See 1989 Preliminary Site Plan Approval, attached to Compl. as Exh. H.) The Planning Board made clear that it still had environmental concerns regarding the proposed development, and indicated that the 1977 Stipulation prevented an optimal response to these concerns:

 
The Planning Board must point out that its ability to review the subject project in the normal manner pursuant to [SEQRA] was severely hampered by the Stipulation of Settlement. That is, for example, lower density alternatives were not analyzed due to the possible legal right of [Ridgeview] to 337 dwelling units on the subject property.
 
Wherever possible, the Planning Board has, however, sought some form of mitigation of the impacts associated with the project, within the constraints to the Planning Board of the Stipulation of Settlement. Given this legal right to 337 dwelling units, greater mitigation than has been and will be required by the Planning Board cannot occur. Only if the total number of dwelling units is decreased, can further mitigation than that required by the Planning Board take place.

 (SEQRA Findings, attached to Compl. as Exh. G.)

 In June 1989, third parties (citizens of Dutchess County) commenced an Article 78 proceeding challenging the validity of the 1977 Stipulation and seeking to overturn the 1989 Preliminary Site Plan Approval. The Preliminary Site Plan Approval was stayed pending the outcome of the litigation; nevertheless, the Town issued another sight draft in an amount constituting the remainder of the funds available under the Sewer LOC. In April 1990, the state court (Justice Judith Hillery) dismissed the action, finding that the 1977 Stipulation was binding and that, with respect to the issue of unit density, the 1987 Site Plan Application was exempt from SEQRA.

 The following June, the Planning Board granted Ridgeview final site plan approval, subject to several conditions (many of which required approvals from the Town Board) and a one-year time period within which to satisfy the conditions (the "1990 Final Site Plan Approval"). Over the course of the following year, Ridgeview and its successor in interest, H.B.R., Inc. ("HBR"), sought to satisfy the conditions. By May 1991, it became apparent to HBR that it would not be able to satisfy all of the conditions, in part because of alleged delays by the Town Board. The following month, the Planning Board granted HBR an indefinite extension of the period for compliance with the conditions.

 In August 1991, the Property was taken over by the Federal Deposit Insurance Corporation (the "FDIC") as receiver for HBR's parent company. Shortly thereafter, the Town Board adopted a local law requiring the Town Board's approval of any extensions of time (within which to satisfy conditions contained in a final site plan approval) granted by the Planning Board. Despite the Planning Board's prior extension of the ...


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