Third Church of Christ v. City of New York

• Decision Date: 02 December 2008
• Docket Number: No. 07 Civ. 10962 (DAB).,07 Civ. 10962 (DAB).
• Citation: 617 F.Supp.2d 201
• Parties: THIRD CHURCH OF CHRIST, SCIENTIST, OF NEW YORK CITY, Plaintiff, v. CITY OF NEW YORK, and Patricia J. Lancaster, in her official capacity as Commissioner of the New York City Department of Buildings, Defendants.
• Court: U.S. District Court — Southern District of New York

617 F.Supp.2d 201

THIRD CHURCH OF CHRIST, SCIENTIST, OF NEW YORK CITY, Plaintiff, v. CITY OF NEW YORK, and Patricia J. Lancaster, in her official capacity as Commissioner of the New York City Department of Buildings, Defendants.

No. 07 Civ. 10962 (DAB).

United States District Court, S.D. New York.

December 2, 2008.

John R. Cuti, Monica Pa, Victor A. Kovner, Davis Wright Tremaine LLP, New York, NY, for Plaintiff.

Ave Maria Brennan, Corporation Counsel Office City of New York, New York, NY, for Defendants.

Neil G. Sparber, Brian Wayne Tilker, Fulbright & Jaworski L.L.P., New York, NY, for Movant.

Charles Palella, Kurzman, Karelsen & Frank, LLP, Alexander Fausto Ferrini, Barry B. Lepatner & Associates LLP, New York, NY, for Interested Parties.

MEMORANDUM & ORDER

DEBORAH A. BATTS, District Judge.

This case arose as a Motion for a Temporary Restraining Order (TRO) and Preliminary Injunction filed on December 3, 2007. The Court held a hearing on the same day and granted a TRO to Plaintiff, the Third Church of Christ, Scientist ("the Church"), preventing the City of New York from enforcing the Department of Buildings' ("DOB") decision to revoke pre-consideration for the Rose Group to hold catered social events in the Church building pursuant to a lease with the Church. The Court signed a more detailed TRO on December 7, 2007.

On March 3, 2008, the Court permitted the Plaintiff to conduct discovery of non-parties similar to Plaintiff that conduct catered social events. A hearing was held on July 10, 2008 to attempt to resolve discovery issues arising from the subpoena of documents from non-parties. Finally, the Court held a Preliminary Injunction hearing on November 6, 2008. Prior to the hearing, the Court gave notice that, pursuant to Federal Rule of Civil Procedure Rule 65, the hearing would be a consolidated hearing on Plaintiffs Motion for a Preliminary Injunction and a trial on the merits.

For the reasons stated herein. Plaintiffs Motion for a Preliminary Injunction, deemed to be a Motion for a Permanent Injunction, is GRANTED, enjoining the City from enforcing its revocation of pre-consideration that catered social events at 583 Park Avenue are an accessory use to the community facility, the Third Church of Christ, Scientist.

I. FACTUAL BACKGROUND

The Church purchased property at 583 Park Avenue in 1920, and completed construction of the church building at issue in this litigation ("the Building") in or around 1924. (Draper Supp. Decl. at ¶¶ 2,3.) The Church has used the Building as its primary place of worship since then, with membership peaking at around one thousand people in or about the 1940s and 1950s. (Id. at ¶ 5.) Over the years, the Church's membership has declined and it currently has fewer than one hundred members. (Id. at ¶ 6.) According to Thomas Draper, the Vice Chairman of the Board of Trustees for the Church, "[a] contributing factor to the decline in membership was the growing state of disrepair of the Building and the prohibitive costs of the necessary major capital repairs and renovations to the Building's aging infrastructure, many of which were necessary to bring the Building into compliance with the New York City Building Code." (Draper Decl. at ¶ 1; Draper Supp. Decl. at ¶ 7.) According to Draper, the costs of maintaining the building were significant and starting in at least the late 1990's the Church considered many different options to raise capital. (See Draper Supp. Decl. at ¶¶ 10-24.) Faced with having to sell the Building, the Church "resolved instead to find a long-term lease arrangement with a third party." (Id. at ¶ 29.)

In January 2006, the Church entered into a Lease Agreement ("the Lease") with the Rose Group Park Avenue LLC (the "Rose Group"). (Draper Decl. at ¶ 16, Ex. B.) The Lease permits the Rose Group to hold catered events at the Church for the next twenty years (with two five-year renewal options) in exchange for the Rose Group investing millions of dollars in capital repairs to the Church building and paying rent and ongoing maintenance costs. (Id.) The Lease prohibits the Rose Group from hosting events at any time that conflicts with the Church's religious services or activities. (Id.) According to the Church, it "permits us to continue owning the Building and using it at least the same extent we did in the past, while accomplishing much needed building repairs and ongoing relief from many operating expenses." (Draper Supp. Decl. at ¶ 37.) Indeed, the Church engaged a third-party appraiser, The Staubach Company, to evaluate the Lease; Staubach found that the lease was fair, and noted that a Lease providing for use of the premises for all of the Church's current needs "is atypical in the market and is viewed as extremely favorable for the Church." (Id. at ¶ 41.)

However, the City points out, the Lease permits the Rose Group to exercise a high degree of control over the premises. (Brennan Decl. at ¶¶ 13-31.) For example, the Rose Group may cover the existing signs on the building facade indicating that the building is a Church¹ and give and withhold approval to the Church's hiring of custodial and maintenance employees. (Brennan Decl. at ¶ 23.) The Lease covers the entire "land and building known as 583 Park Avenue" rather than any portion or time period specific to the catered events. (Id. at ¶ 13.) In addition, the Lease requires the Rose Group to pay real estate taxes that become due if the current religious exemption is lost because of the catering business. (Id. at ¶ 14) The Lease permits the Rose Group to "contract directly with the local utility companies for all electric, gas, and water". (Id. at ¶ 15.) The Lease also provides for the "removal and storage off site of the pews from the main floor of the auditorium and the first (lowest) row of the balconies". (Id. at ¶ 16.) The Lease even restricts Plaintiffs use of the front door to "Sunday services, Wednesday evening services, Christmas Eve and Thanksgiving services, and church corporate and organizational meetings." (Id. at ¶ 26.)

After the Lease was initially entered into, prior to commencing any of the agreed-upon activities, the Church and the Rose Group sought permission from the City. According to Draper, "[f]rom the inception of this project in 2005, we made clear that a precondition of the Lease was obtaining the necessary municipal permission for this tremendous undertaking." (Draper Supp. Decl. at ¶ 105.) On April 19, 2006, the City issued a pre-consideration determination, permitting catered events with certain restrictions, including "that the Accessory Social Hall is to be use and operated exclusively and only by the Church and for its members." (Brennan Decl. Ex. F.) The Church then wrote a letter, requesting modifications and stating that:

For limited periods when the church is not being utilized for our congregation, we have provided for various catered events which will also contribute to the church's ability to sustain itself. These functions will be operated by a highly qualified, fully insured professional caterer who will be under contract with the Church . . . The functions will be restricted by the contract with the Church . . .

(Brennan Decl. Ex. G; Draper Supp. Decl. Ex FFF.) The letter was endorsed by Christopher Santulli, the Manhattan Borough Commissioner of the DOB, with a notation reading "OK to accept catered events under contract with the Church as complying with `Accessory Social Hall' requirement of April 10, 2006 determination by L. Osorio." (Id.)

The Church sought this permission because, under the City's zoning rules for 10 zoned districts (where the Church is located), only residences, community facilities (such as the Church), and uses that are "accessory" to residences and community facilities are permitted. (Zoning Resolution ("ZR") 12:10; ZR 22:00-14.) By the notation quoted above. Borough Commissioner Santulli found that catering at the Church was a permissible accessory use. As far as the Church was aware, this was the final determination. The attorney for the Defendant City of New York at this Court's hearing on November 6, 2008, noted that,

When also [sic] Manhattan Borough Commissioner issues any determination, that is the determination. You don't then have to appeal it or get a second approval. It is only when a `determination is challenged and the deputy commissioner would look at the determination and make another determination. But, no, I didn't mean to imply that the determination by the Manhattan Borough Commission [sic] was not final in this case.

(Nov. 6, 2008, Hearing Tr. 47:17-23.)

Therefore, on July 3, 2006, in reliance on Borough Commissioner Santulli's pre-consideration, the Rose Group and the Church executed the Lease Commencement Date Agreement expressly stating that the Lease was effective, commencing that day, because the necessary "Approval" had been obtained. (Draper Supp. Decl. at ¶ 107; Ex. GGG.)

According to Plaintiff, work was "well underway" in early 2007, with several million dollars having been spent to begin making the required capital repairs. (Kovner. Supp. Decl. at ¶¶ 3, 4.) At that point, Plaintiff submits, complaints began about the arrangements between the Church and the Rose Group. (Id.) The Plaintiff has submitted extensive paperwork and multiple declarations outlining a "campaign" by the Church's neighbors that Plaintiff alleges eventually caused the City to withdraw Commissioner Santulli's pre-consideration. (Id. at ¶ 14) Plaintiff alleges that, "[u]nlike most NIMBY crusades, this one had political clout." (Id. at ¶ 14.) Indeed, Plaintiff catalogs the influential people involved in opposing the Church's plan.²

Whatever the reasons for revoking the pre-consideration, it is uncontroverted that the only reason this particular issue was raised beyond the level of the Manhattan Borough Commissioner, was that neighbors made complaints. (Nov. 6, 2008, Hearing Tr. 47:17-23 noting that "[i]t's only when a...