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CONEY ISLAND RESORTS, INC. v. GIULIANI

July 13, 2000

CONEY ISLAND RESORTS, INC., PLAINTIFF,
V.
RUDOLPH GIULIANI, INDIVIDUALLY AND AS MAYOR OF THE CITY OF NEW YORK, AND THE CITY OF NEW YORK, DEFENDANTS.



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

  MEMORANDUM and ORDER

This action is before the Court on the defendants' motion for summary judgment, arising out of earlier proceedings on the plaintiffs application for declaratory and injunctive relief, decided against it for reasons set forth in a memorandum and order dated May 10, 2000, familiarity with which is assumed. See Coney Island Resorts, Inc. v. Giuliani, No. 00-CV-2233, 2000 WL 804636 (E.D.N.Y. May 10, 2000). For the reasons that follow, the defendants' motion is granted, and the Complaint is dismissed.

BACKGROUND

Both the relevant factual background, and the parties' legal contentions have been supplemented by submissions from the parties, and by arguments made before the Court since the proceedings on plaintiffs earlier application. Thus, at the risk of some repetition of findings already made in the memorandum and order of May 10, a new and fully consolidated statement of that background, and of those arguments, follows.

The relationship between the plaintiff, Coney Island Resorts, Inc. ("CIR"), and the City began with a Request for Proposals in 1984 by the Parks Department, aimed at stimulating economic development in the Coney Island area of Brooklyn.*fn1 Plaintiff responded with a proposal to develop an amusement park on Steeplechase Park and Steeplechase Pier, and in response, the City entered into a license agreement with plaintiff, permitting it to operate such a park on City-owned property in the area.*fn2 Of Significance to the factual issues on this motion is a provision of the license agreement concerning CIR's obligation to obtain project financing:

This License is conditioned upon Licensee [i.e., CIR] securing a loan, syndication, cash, offering or other financing (in form and substance reasonably satisfactory to City) in an aggregate gross amount of not less than Three Million Dollars. . . .

Bullard Aff., Exh. A at ¶ 6.

The Developer [i.e., CIR] will submit to PDC and Parks, within 180 days after the execution of this letter, binding financial commitments, satisfactory to PDC and Parks, to develop, as applicable, the Initially Complete Project as described [elsewhere in the letter of intent]. PDC and Parks may require the Developer's binding financial commitments to be sufficient to take into account the possibility of operating losses during the first years of the Project. What shall constitute sufficient financing to allow for such operating losses shall be determined by PDC and Parks in the reasonable exercise of their discretion.

Brown Aff., Exh. A at 9-10.

From the outset, CIR encountered obstacles to the procurement of financing, and from the outset, PDC and the City evinced a willingness to work with CIR in overcoming those obstacles. Thus, when the letter of intent deadline for obtaining financing — May 1, 1987 — came and went, PDC extended it to October 1, 1987. Brown Aff., Exh. B. The PDC and the Parks Department also cooperated actively in efforts to secure certain preliminary legislative and municipal clearances for the project. In conjunction with efforts to convert the Steeplechase Park site into "mapped parkland," the City lobbied for, and obtained legislation from the New York State Legislature authorizing the leasing of such parkland, with specific reference to Steeplechase Park, CIR, and the contemplated transaction between CIR, the PDC, and the Parks Department. See Act of Sept. 1, 1988, ch. 632, 1988 N.Y.Laws 1231.

During several months of 1988, CIR engaged in some initially promising talks about financing with Security Pacific National Bank, in the light of which the outlines of the contemplated project became more expansive and ambitious. That initial promise faded by early 1989, however, when Security Pacific withdrew from talks, never to return. Nevertheless, when the Board of Estimate authorized the City to enter into a long-term lease with CIR of City-owned property in Steeplechase Park for the purpose of developing an amusement park, it was the more ambitious plan formulated in collaboration with Security Pacific that was envisioned in its Resolution. See Bd. of Estimate Resolution, Cal. No. 21, May 23, 1989 (attached to Brown Aff., Exh B.). The Resolution recapitulates in some detail the material terms of the development leases that had been previously worked out between CIR and the City concerning the City-owned property, and two contiguous CIR-owned properties in the Steeplechase area. The Resolution concludes:

RESOLVED, That the terms and conditions of the Development Leases and other legal instruments as hereinbefore stated are satisfactory, and that the Mayor, or Deputy Mayor, the Commissioner of Parks and Recreation and the Commissioner or Deputy Commissioner of General Services, as appropriate, are authorized to execute and deliver the instruments herein described and other instruments which may include such provisions, consistent with such terms and conditions, as the applicable above-named official shall determine to be necessary, appropriate or desirable to effect the transactions herein authorized and the Project herein described, provided that such instruments are approved as to form by Corporation Counsel and that the same are executed and delivered within 18 months after the date of this resolution, provided that such time may be extended for up to three years from the date of this resolution on account of litigation.

Id. at 7.

By November, 1990, CIR and the City had substantially concluded negotiating the terms of the lease referred to in the Board of Estimate Resolution, and the City delivered a draft copy of such a lease to CIR. At that point, however, CIR had not succeeded in procuring financing for the development project satisfactory to the City in form and amount, and in a letter to CIR President Horace Bullard, dated November 22, 1990, the City, by Deputy Mayor Sally Hernandez-Piñero, signified as much:

This letter confirms that the undersigned have concluded negotiating in material respects a ground lease between The City of New York . . ., as Landlord, and Coney Island Resorts, Inc. . . ., as Tenant, for the project known as the Steeplechase Amusement Park. The procurement of financing by CIR in form and amount satisfactory to the City remains as one of the conditions to execution and delivery of such ground lease.

Brown Aff., Exh. C. In the same letter, the City extended the deadline for execution and delivery of a lease to November 25, 1991, and also imposed monthly payment obligations on CIR, in consideration of that extension, amounting to $5,000 for each month that passed without execution and delivery of the lease. Id.

A year later the parties were in essentially the same situation: waiting for the procurement of satisfactory financing. Once again, this was reflected in a letter from the Ms. Hernandez-Piñero to CIR's Bullard, dated November 25, 1991, granting another extension for execution and delivery of the lease, this time to May 25, 1992:

This letter reconfirms that the undersigned [namely, CIR and the City] have concluded negotiating in material respects a ground lease between the City of New York . . . and [CIR] . . . for the project known as Steeplechase Amusement Park. The procurement of financing by CIR in form and amount satisfactory to the City ...

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