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Goldstein v. New York State Urban Development Corp.

November 24, 2009

IN THE MATTER OF DANIEL GOLDSTEIN, ET AL., APPELLANTS,
v.
NEW YORK STATE URBAN DEVELOPMENT CORPORATION, D/B/A EMPIRE STATE DEVELOPMENT CORPORATION, RESPONDENT.



The opinion of the court was delivered by: Lippman, Chief Judge

This opinion is uncorrected and subject to revision before publication in the New York Reports.

We are asked to determine whether respondent's exercise of its power of eminent domain to acquire petitioners' properties for purposes of the proposed land use improvement project, known as Atlantic Yards, would be in conformity with certain provisions of our State Constitution. We answer in the affirmative.

On December 8, 2006, respondent Empire State Development Corporation (ESDC) issued a determination pursuant to Eminent Domain Proceedings Law (EDPL) § 204, finding that it should use its eminent domain power to take certain privately owned properties located in downtown Brooklyn for inclusion in a 22-acre mixed-use development proposed, and to be undertaken, by private developer Bruce Ratner and the real estate entities of which he is a principal, collectively known as the Forest City Ratner Companies (FCRC).

According to the record upon which the ESDC determination was based and by which we are bound (see Matter of Levine v New York State Liq. Auth., 23 NY2d 863, 864 [1969]), the development will extend eastward from the junction of Atlantic and Flatbush Avenues, and include blocks now occupied by the subgrade Vanderbilt Rail and MTA bus yards as well as certain blocks bordering the yards to the south. The project is to involve, in its first phase, construction of a sports arena to house the NBA Nets franchise, as well as various infrastructure improvements -- most notably reconfiguration and modernization of the Vanderbilt Yards rail facilities and access upgrades to the subway transportation hub already present at the site. The project will also involve construction of a platform spanning the rail yards and connecting portions of the neighborhood now separated by the rail cut. Atop this platform are to be situated, in a second phase of construction, numerous high rise buildings and some eight acres of open, publicly accessible landscaped space. The 16 towers planned for the project will serve both commercial and residential purposes. They are slated to contain between 5,325 and 6,430 dwelling units, more than a third of which are to be affordable either for low and or middle income families.

The project has been sponsored by respondent ESDC as a "land use improvement project" within the definition of Urban Development Corporation Act (McKinney's Uncons Laws of NY) § 6253 (6) (c), upon findings that the area in which the project is to be situated is "substandard and insanitary" (see id.; and see also McKinney's Uncons Laws § 6260 [c]) or, in more common parlance, blighted. It is not disputed that the project designation and supporting blight findings are appropriate with respect to more than half the project footprint, which lies within what has, since 1968, been designated by the City of New York as the Atlantic Terminal Urban Renewal Area (ATURA). To the south of ATURA, however, and immediately adjacent to the Vanderbilt Rail Yard cut, are two blocks and a fraction of a third which, although within the project footprint, have not previously been designated as blighted. FCRC has purchased many of the properties in this area, but there remain some that it has been unsuccessful in acquiring, whose transfer ESDC now seeks to compel in furtherance of the project, through condemnation. In support of its exercise of the condemnation power with respect to these properties, some of which are owned by petitioners, ESDC, based on studies conducted by a consulting firm retained by FCRC, has made findings that the blocks in which they are situated possess sufficient indicia of actual or impending blight to warrant their condemnation for clearance and redevelopment in accordance with a section 6253 (6) (c) land use improvement plan, and that the proposed land use improvement project will, by removing blight and creating in its place the above-described mixed-use development, serve a "public use, benefit or purpose" in accordance with the requirement of EDPL § 204 (B) (1).

Petitioners' initial challenge to ESDC's determination authorizing condemnation of their properties was made in a timely federal court action. The gist of that action was that the disputed condemnation was not supported by a public use and thus violated the Fifth Amendment of the Federal Constitution. In the federal action, petitioners also asserted a pendant state claim, seeking review of the ESDC determination pursuant to EDPL § 207. Petitioners' federal claims were rejected by the Federal District Court (Goldstein v Pataki, 488 F Supp 2d 254 [ED NY 2007]) and the District Court judgment dismissing the complaint was affirmed by the Second Circuit (516 F3d 50 [2008], cert denied __ US __, 128 S Ct 2964 [2008]). With respect to the state law claim, however, the District Court merely declined to exercise its supplemental jurisdiction (488 F Supp 2d at 291) and, accordingly, its judgment, as affirmed by the Second Circuit, dismissed that claim "without prejudice to its being re-filed in state court" (id.). Within six months, petitioners commenced the present proceeding in the Appellate Division, Second Department (see EDPL § 207 [A]). The petition alleged two essential, still surviving*fn1 claims: that the proposed taking was not for a "public use" but for the benefit of a private party and thus would be in violation of article I, § 7 (a) of the New York State Constitution and EDPL § 207 (C) (1); and that the condemnation proceeding was not in conformity with the State Constitution (see EDPL § 207 [C] [1]) for the additional reason that the project it was to advance, although financed with state loans or subsidies, was not limited in occupancy to persons of low income in accordance with the requirement of article XVIII, § 6 of the New York Constitution. In its answer, respondent, while defending the challenged determination on the merits, sought the petition's dismissal on the ground that it had not been timely brought.

The Appellate Division, although rejecting respondent's contention that the proceeding was time-barred, found for respondent on the merits (64 AD3d 168 [2d Dept 2008]). It observed that, while the State Constitution, literally read and in its early construction, permitted the taking of property only for "public use," "public use" had since come to be understood as entailing no more than a dominant public purpose. The Court noted that it was well established that the eradication of blight was such a public purpose and found that ESDC's blight findings were supported by the area studies contained in the administrative record. As to the contention that the proposed project and, consequently, the condemnation proceeding in its behalf, were not in conformity with article XVIII, § 6, the Appellate Division held that that provision should be read to apply only to projects for the construction of low-income housing and not to projects rehabilitating substandard land through improvement, such as Atlantic Yards.

The matter is now before us on petitioners' appeal as of right on constitutional grounds (CPLR 5601 [b] [1]). Petitioners would have us consider the above-described article I, § 7 and article XVIII, § 6 claims. Respondent, however, contends, as it did before the Appellate Division, that the petition should be dismissed without reaching the merits because it was not filed in the Appellate Division within 30 days after the completion of the publication of the challenged findings and determination (see EDPL § 207 [A]).

I.

It is, of course, true that EDPL § 207 (A) provides that a proceeding challenging an EDPL § 204 condemnation determination must be filed in the appropriate Appellate Division within 30 days following the determination's completion and publication. It is, however, also true that the CPLR generally applies to EDPL proceedings (EDPL § 703), and that CPLR 205 (a) effectively tolls the running of a statutory period to permit refiling within six months when an action has been timely commenced but dismissed on grounds other than voluntary discontinuance, lack of personal jurisdiction, neglect to prosecute, or the entry of a final judgment on the merits. It is plain -- indeed, expressly so -- that the federal dismissal of petitioner's state law claim was not upon any of these grounds and that the dismissal explicitly contemplated the re-filing of the state law claim in state court.*fn2 It is also plain that the claim was, in fact, re-filed in the Appellate Division within six months of the federal dismissal.

Respondent's contentions that petitioners should be deprived of the benefit of CPLR 205 (a) because the EDPL specifically displaces it (see EDPL §§ 703, 705), or by reason of policy considerations favoring expedition in condemnation proceedings, are without merit. The EDPL does not, by prescribing a special limitations period within which review of condemnation determinations must be sought, strip a litigant of the benefit of CPLR 205 (a). Indeed, it is the existence of a limitations period, whether of general or specific application, that is the raison d'être of CPLR 205 (a). The provision, founded upon the "sound premise" that a litigant "is entitled to have one adjudication of the substance or merit of his cause where he has initiated a suit in time" (Carrick v Central Gen. Hosp., 51 NY2d 242, 252 [1980] [internal citations and quotation marks omitted]), shares with its venerable predecessor provisions the "broad and liberal purpose" of remedying what might otherwise be the harsh consequence of applying a limitations period where the defending party has had timely notice of the action (Matter of Morris Invs. v Commissioner of Fin. of City of N.Y., 69 NY2d 933, 935 [1987], quoting Gaines v City of New York, 215 NY 533, 537-539 [1915]), and it has long been understood that that purpose "is not to be frittered away by any narrow construction" (id.).

Nor does the appeal to policy avail respondent. The review procedure set forth in EDPL § 207 was doubtless intended to promote swift resolution of legal challenges to condemnation determinations. But all limitation periods proceed from policy considerations, among which is the particular desirability in certain kinds of cases of expeditious resolution. It cannot be argued from the existence of such policies, any more than it can from the existence of the limitations periods themselves, that litigants are to be denied the remedial benefit of CPLR 205 (a), which itself implements the "vitally important" policy preference for the determination of actions on the merits (Hakala v Deutsche Bank AG, 343 F3d 111, 115 [2d Cir 2003]; see Carrick, 51 NY2d at 252). We have declined to subordinate CPLR 205 (a) and the policy preference it embodies even where the effect of our declination was, as it is here, to toll for a substantial period a designedly brief limitations period (see Matter of Morris Invs., 69 NY2d 933).

In the final analysis, the only legal basis upon which CPLR 205 (a) might be deemed inapplicable is that the 30-day filing period prescribed in EDPL § 207 (A) is to be understood not merely as a limitation upon the time within which a challenge to a condemnation determination may be brought, but as a condition of maintaining any such challenge, i.e., a substantive component of the claim rather than a limitation on the availability of a remedy (see Yonkers Contr. Co. v Port Auth. Trans-Hudson Corp., 93 NY2d 375, 378 [1999]). But such a construction of EDPL 207 (A)'s time limitation is not warranted, either textually or by reason of the provenance of the claim it governs. The statute does not by its terms condition the sufficiency of the claim upon compliance with the 30-day filing period (cf. Yonkers Contr. Co., 93 NY2d at 379), and the claim itself does not owe its existence to the EDPL, which is merely a procedural codification (see EDPL § 101). The right to challenge a condemnation determination, and particularly to do so upon constitutional grounds, plainly predates and does not depend in substance upon the EDPL. To be contrasted are the claims at issue in the cases cited by respondent, in which the cause and the time limit attached to its commencement were the concurrent and substantively integrated consequence of a statutory enactment (see Romano v Romano, 19 NY2d 444, 447 [1967]; Tanges v Heidelberg N. Am., 93 NY2d 48, 55 [1999]).

While the concurrence protests that failure to bar this proceeding because it was not commenced within 30 days of subject condemnation determination will impair the Legislature's comprehensive plan for prompt adjudication of such determinations, this overlooks that it is not in the main the availability of CPLR 205 (a) that has delayed this condemnation, but the availability of a federal forum. Petitioners had every right to litigate their federal claims in federal court and to include in their federal action a supplemental state law cause of action (28 USC § 1367 [a]; City of Chicago v International Coll. of Surgeons, 522 US 156, 169, 171 [1997]). And, even without a state tolling provision, petitioners would have had the right under federal law to recommence their unadjudicated pendant state law claim in state court at the federal action's conclusion (28 USC § 1367 [d]). However much they may have wished to streamline the process, it was not within the power of state legislators to deprive condemnees of access to federal court to litigate federal constitutional public use issues or to limit the federal courts' jurisdiction to adjudicate supplemental state law claims (see TBK Partners v Western Union Corp., 675 F2d 456, 460 n 3 [2d Cir 1982], citing Railway Co. v Whitton's Administrator, 80 US [13 Wall] 270, 286 [1872]; see also Marshall v Marshall, 547 US 293, 298-299, 313 [2006]). This being the case, it is practically beside the point to cavil about the frustration of the state legislative design.

The prospect of serial federal/state litigation in condemnation proceedings is, in any case, overstated by the concurrence. As respondent itself pointed out in its unsuccessful attempt to have petitioner's federal action dismissed on abstention grounds, serial litigation of condemnation claims is exceedingly rare:

"in the thirty years since New York's Eminent Domain Procedure Law (the 'EDPL') was enacted in 1977, federal district courts sitting in New York have, in decisions published in the Federal Supplement or available through online sources, considered just nineteen suits challenging a condemnor's proposed exercise of eminent domain pursuant to New York law -- only five of which included a claim under the Public Use Clause of the Fifth Amendment . . . By contrast, during that same thirty-year period, the various departments of the Appellate Division of the New York Supreme Court have, in reported decisions alone, adjudicated well over 100 proceedings brought pursuant to EDPL § 207--with many of those proceedings involving the consolidated petitions of multiple allegedly aggrieved parties" (2007 WL 539991).

There is no reason to suppose that serial condemnation litigation will now become the order of the day. Our decision to afford petitioners the benefit of CPLR 205 (a) does, and can do, nothing to affect the essential availability of the federal courts in litigation of this kind. There is every reason to suppose that resort to the federal courts to litigate state condemnation challenges will be as rare subsequent to our decision as it had been before. Nor is there reason suppose that the status quo would be essentially altered by the procedural dismissal the concurrence urges.

II.

Turning now to the merits, petitioners first contend that the determination authorizing the condemnation of their properties for the Atlantic Yards project is unconstitutional because the condemnation is not for the purpose of putting their properties to "public use" within the meaning of article I, § 7 (a) of the State Constitution -- which provides that "[p]rivate property shall not be taken for public use without just compensation" -- but rather to enable a private commercial entity to use their properties for private economic gain with, perhaps, some incidental public benefit. The argument reduces to this: that the State Constitution has from its inception, in recognition of the fundamental right to privately own property, strictly limited the availability of condemnation to situations in which the property to be condemned will actually be made available for public use, and that, with only limited exceptions prompted by emergent public necessity, the State Constitution's takings clause, unlike its federal counterpart, has been consistently understood literally, to permit a taking of private property only for "public use," and not simply to accomplish a public purpose.

Even if this gloss on this State's takings laws and jurisprudence were correct -- and it is not*fn3 -- it is indisputable that the removal of urban blight is a proper, and, indeed, constitutionally sanctioned, predicate for the exercise of the power of eminent domain. It has been deemed a "public use" within the meaning of the State's takings clause at least since Matter of New York City Housing Authority v Muller (270 NY 333 [1936]) and is expressly recognized by the Constitution as a ground for condemnation. Article XVIII, § 1 of the State Constitution grants the Legislature the power to "provide in such manner, by such means and upon such terms and conditions as it may prescribe . . . for the clearance, replanning, reconstruction and rehabilitation of substandard and insanitary areas," and section 2 of the same article provides "[f]or and in aid of such purposes, notwithstanding any provision in any other article of this constitution, . . . the legislature may . . . grant the power of eminent domain to any . . . public corporation ... ." Pursuant to article XVIII, respondent ESDC has been vested with the condemnation power by the Legislature (McKinney's Uncons Laws of NY §§ 6260, 6263) and has here sought to exercise the power for the constitutionally recognized public purpose or "use" of rehabilitating a blighted area.

Petitioners, of course, maintain that the blocks at issue are not, in fact, blighted and that the allegedly mild dilapidation and inutility of the property cannot support a finding that it is substandard and insanitary within the meaning of article XVIII. They are doubtless correct that the conditions cited in support of the blight finding at issue do not begin to approach in severity the dire circumstances of urban slum dwelling described by the Muller court in 1936, and which prompted the adoption of article XVIII at the State Constitutional Convention two years later (see Constitutonal Convention Committee, Reports and Studies, Vol. VI, Part II, p. 636-639 [1938]). We, however, have never required that a finding of blight by a legislatively designated public benefit corporation be based upon conditions replicating those to which the Court and the Constitutional Convention responded in the midst of the Great Depression. To the contrary, in construing the reach of the terms "substandard and insanitary" as they are used in article XVIII -- and were applied in the early 1950's to the Columbus Circle area upon which the New York Coliseum was proposed to be built -- we observed:

"Of course, none of the buildings are as noisome or dilapidated as those described in Dickens' novels or Thomas Burke's 'Limehouse' stories of the London slums of other days, but there is ample in this record to justify the determination of the city planning commission that a substantial part of the area is 'substandard and insanitary' by modern tests." (Kaskel v Impellitteri, 306 NY 73, 78 [1953], cert denied 347 US 934 [1954]).

And, subsequently, in Yonkers Community Dev. Agency v Morris (37 NY2d 478, 481-482 [1975]), in reviewing the evolution of the crucial terms' signification and permissible range of application, we noted:

"Historically, urban renewal began as an effort to remove 'substandard and insanitary' conditions which threatened the health and welfare of the public, in other words 'slums' (see NY Const, art XVIII, §1), whose eradication was in itself found to constitute a public purpose for which the condemnation powers of government might constitutionally be employed. Gradually, as the complexities of urban conditions became better understood, it has become clear that the areas eligible for such renewal are not limited to "slums" as that term was formerly applied, and that, among other things, economic underdevelopment and stagnation are also threats to the public sufficient to make their removal cognizable as a public purpose. (See Cannata v City of New York, 11 NY2d 210; Matter of Murray v La Guardia, 291 NY 320; Kaskel v Impellitteri, 306 NY 73, supra.; Levin v Township Committee of Twp. of Bridgewater, 57 NJ 506; Schenck v City of Pittsburgh, 364 Pa 31; Berman v Parker, 348 US 26, 32; and see, generally, 482 Bosselman, Alternatives to Urban Sprawl: Legal Guidelines for Governmental Action, Research Report No. 15 to the National Commission on Urban Problems, Wash, DC, 1968, for the historical development of these concepts of urban renewal.)"

It is important to stress that lending precise content to these general terms has not been, and may not be, primarily a judicial exercise. Whether a matter should be the subject of a public undertaking -- whether its pursuit will serve a public purpose or use -- is ordinarily the province of the Legislature, not the Judiciary, and the actual specification of the uses identified by the Legislature as public has been largely left to quasi-legislative administrative agencies. It is only where there is no room for reasonable difference of opinion as to whether an area is blighted, that judges may substitute their views as to the adequacy with which the public purpose of blight removal has been made out for that of the legislatively designated agencies; where, as here, "those bodies have made their finding, not corruptly or irrationally or baselessly, there is nothing for the courts to do about it, unless every act and decision of other departments of government is subject to revision by the courts" (Kaskel, 306 NY at 78).

It is quite possible to differ with ESDC's findings that the blocks in question are affected by numerous conditions indicative of blight, but any such difference would not, on this record, in which the bases for the agency findings have been extensively documented photographically and otherwise on a lotby-lot basis, amount to more than another reasonable view of the matter; such a difference could not, consonant with what we have recognized to be the structural limitations upon our review of what is essentially a legislative prerogative, furnish a ground to afford petitioners relief (see id. at 79-80; see also Matter of Waldo's, Inc. v Village of Johnson City, 74 NY2d 718, 720 [1989]; Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 418 [1986]).

It may be that the bar has now been set too low -- that what will now pass as "blight," as that expression has come to be understood and used by political appointees to public corporations relying upon studies paid for by developers, should not be permitted to constitute a predicate for the invasion of property rights and the razing of homes and businesses. But any such limitation upon the sovereign power of eminent domain as it has come to be defined in the urban renewal context is a matter for the Legislature, not the courts. Properly involved in redrawing the range of the sovereign prerogative would not be a simple return to the days when private property rights were viewed as virtually inviolable, even when they stood in the way of meeting compelling public needs, but a re-weighing of public as against private interests and a reassessment of the need for and public utility of what may now be out-moded approaches to the revivification of the urban landscape. These are not tasks courts are suited to perform. They are appropriately situated in the policy-making branches of government.

The dissenter, after thoughtful review of the evolution of the concept of public use -- an evolution that even he acknowledges has sapped the concept of much of its limiting power -- urges that there remains enough left in it to require that this case be decided differently. We cannot agree. The Constitution accords government broad power to take and clear substandard and insanitary areas for redevelopment. In so doing, it commensurately deprives the Judiciary of grounds to interfere with the exercise. We have recognized this (see Matter of Murray v LaGuardia, 291 NY 320 [1943]; Kaskel, 306 NY 73; Yonkers Community Dev. Agency, 37 NY2d 478).

While there remains a hypothetical case in which we might intervene to prevent an urban redevelopment condemnation on public use grounds -- where "the physical conditions of an area might be such that it would be irrational and baseless to call it substandard or insanitary," (Kaskel, 306 NY at 80) -- this is not that case. The dissenter looks at the "Blight Study" contained in the administrative record and sees only a "normal and pleasant residential neighborhood," but others, it would appear not irrationally, have come to very different conclusions. This is not a record that affords the purchase necessary for judicial intrusion. The situation in the end is remarkably like that presented in Kaskel where Judge Desmond, writing for the Court said:

"Plaintiff does not dispute with defendants as to the condition of these properties or of the whole area. He is simply opposing his opinion and his judgment to that of public officials, on a matter which must necessarily be one of opinion or judgment, that is, as to whether a specified area is so substandard or insanitary, or both, as to justify clearance and redevelopment under the law. It is not seriously contended by anyone that, for an area to be subject to those laws, every single building therein must be below civilized standards. The statute (and the Constitution), like other similar laws, contemplates that clearing and redevelopment will be of an entire area, not of a separate parcel, and, surely, such statutes would not be very useful if limited to areas where every single building is substandard. A glance at the photographs, attached to the city's affidavit on these motions, shows that a considerable number of buildings in this area are, on a mere external inspection, below modern standards because of their age, obsolescence and decay. The other exhibits confirm this (id. at 79-80).

Here too, all that is at issue is a reasonable difference of opinion as to whether the area in question is in fact substandard and insanitary. This is not a sufficient predicate for us to supplant respondent's determination.

III.

Petitioners' remaining contention is that the proposed condemnation should not have been authorized because the land use improvement project it is to advance is not in conformity with Article XVIII, § 6 of the State Constitution, which states:

"No loan, or subsidy shall be made by the state to aid any project unless such project is in conformity with a plan or undertaking for the clearance, replanning and reconstruction or rehabilitation of a sub-standard and unsanitary area or areas and for recreational and other facilities incidental or appurtenant thereto. The legislature may provide additional conditions to the making of such loans or subsidies consistent with the purposes of this article. The occupancy of any such project shall be restricted to persons of low income as defined by law and preference shall be given to persons who live or shall have lived in such area or areas" (emphasis added).

Petitioners understand this provision as requiring that any housing built as part of a land use improvement project receiving a state loan or subsidy be reserved for low income tenants. In alleging that Atlantic Yards, as presently configured, does not comply with article XVIII, § 6, they point out that although it is a land use improvement project expressly governed by article XVIII (see McKinney's Uncons Laws § 6253 [6] [c]) that has already received some $100 million in state financing and is expected to be the recipient of additional state aid earmarked for affordable housing, the majority of the project's housing units are slated to be rented or sold at market rates.

Petitioners' understanding of section 6 does not capture the provision's intendment. The principal objectives of article XVIII were to facilitate the clearance of slums and the construction of low rent housing (art XVIII, ยง 1). We have recognized that these objectives were not under the article necessarily, or even ordinarily, to be pursued in tandem --indeed, in Matter of Murray (291 at 331-332) we held that slums might, in accordance with the article, be replaced by non-low rent housing. Matter of Murray, however, did not concern a project to which state funds had been committed (id. at 331; and see Dorsey v Stuyvesant Town Corp., 299 NY 512, 521 [1949], cert denied 339 US 981 [1950]), and the issue petitioners would now have us determine is whether the commitment of such funds to ...


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