Council for Owner Occupied Housing, Inc. v. Koch

• Decision Date: 25 April 1983
• Citation: 462 N.Y.S.2d 762,119 Misc.2d 241
• Court: New York Supreme Court
• Parties: COUNCIL FOR OWNER OCCUPIED HOUSING, INC., Edward Sulzberger and Robert Gold, Aaron Ziegelman and William Langfan, Robert J. Ettinger, Lawrence E. Goldschmidt, Charles Ramat and Stanoff Corporation, doing business as Townsley Associates, a limited partnership, and Jack Salomone, Michael Salomone, Louis Salomone and Ernest Salomone, doing business as Salomone & Company, a general partnership, Plaintiffs, v. Edward KOCH, in his capacity as the Mayor of the City of New York, Anthony Gliedman, in his capacity as The Commissioner of the Department of Housing Preservation and Development of the City of New York, Carol Bellamy, in her capacity as the President of the Council of the City of New York, The City of New York and Robert Abrams, in his capacity as the Attorney General of the State of New York, Defendants.

Page 762

462 N.Y.S.2d 762

119 Misc.2d 241

COUNCIL FOR OWNER OCCUPIED HOUSING, INC., Edward Sulzberger

and Robert Gold, Aaron Ziegelman and William Langfan, Robert

J. Ettinger, Lawrence E. Goldschmidt, Charles Ramat and

Stanoff Corporation, doing business as Townsley Associates,

a limited partnership, and Jack Salomone, Michael Salomone,

Louis Salomone and Ernest Salomone, doing business as

Salomone & Company, a general partnership, Plaintiffs, v. Edward KOCH, in his capacity as the Mayor of the City of New

York, Anthony Gliedman, in his capacity as The Commissioner

of the Department of Housing Preservation and Development of

the City of New York, Carol Bellamy, in her capacity as the

President of the Council of the City of New York, The City

of New York and Robert Abrams, in his capacity as the

Attorney General of the State of New York, Defendants.

Supreme Court, Special Term,

New York County, Part I.

April 25, 1983.

Norman L. Faber, Hall, Dickler, Lawler, Kent & Howley, New York City, for plaintiffs.

Robert Abrams, Atty. Gen., New York City, defendant pro se.

Frederick A.O. Schwarz, Corp. Counsel of the City of N.Y., Lorraine Mohr, Asst. Corp. Counsel, New York City, for defendants.

EUGENE R. WOLIN, Justice:

Local Law No. 70 of 1982 was enacted by the Council of the City of New York and approved by the Mayor in October, 1982; it became effective on February 1, 1983. The law amends Chapter 51 of the Administrative Code of the City of New York by adding a new title, YYYY51-1.0 et seq. to the chapter. By its terms Title YYYY regulates certain aspects of the conversion of rental units to co-operative or condominium status within the City of New York. Specifically, YYYY requires the sponsor of a conversion to do the following: first, within thirty days after the closing of the conversion, the sponsor must establish a reserve fund equal to three per cent (3%) of the total purchase price of the conversion. This fund must then be transferred to the co operative corporation or the Board of Managers of the condominium for their exclusive use for capital repairs, replacements or improvements, YYYY51-3.0; and second, during the period beginning thirty days after the acceptance of the conversion plan by the Attorney General until the closing of the conversion, the sponsor must post a listing of all violations of record filed against the building by the Department of Housing Preservation and Development of the City of New York. The notice must be in an area accessible to all tenants and new violations must be posted within forty-eight (48) hours of issuance, YYYY51-5.0. Failure to comply with either of these provisions is a misdemeanor punishable by fines which may be imposed cumulatively. YYYY51-8.0. Enforcement of this law is vested in the Department of Housing Preservation and Development. YYYY51-8.0(e).

Aside from the Council for Owner Occupied Housing, Inc. which is a not-for-profit corporation, the individual plaintiffs and partnerships suing herein are owners of residential buildings which are projected to be converted to co-operative or condominium status in the future and which will be affected by the operation of the Local Law. ¹ Arguing that the regulation of co-operative and condominium conversions is a matter exclusively within the jurisdiction of the State, the plaintiffs have brought the instant action for a judgment declaring Local Law No. 70 unconstitutional. Although the matter was before the Court on the motion of plaintiffs for a preliminary injunction and the cross-motions of defendants to dismiss, all parties have agreed that as no triable issues exist, the Court may properly treat the motion and the cross-motions as one for summary judgment. Joseph E. Seagram & Sons, Inc. v. Hostetter, 45 Misc.2d 956, 258 N.Y.S.2d 442, affd. 23 A.D.2d 933, 259 N.Y.S.2d 644, affd. 16 N.Y.2d 47, 262 N.Y.S.2d 75, 209 N.E.2d 701, affd. 384 U.S. 35, 86 S.Ct. 1254, 16 L.Ed.2d 336 reh. den. 384 U.S. 967, 86 S.Ct. 1583, 16 L.Ed.2d 674 (1966).

In approaching the question of the constitutionality of a statute, the Court is guided by several bright-line concepts: first, the burden is on the party challenging the statute to prove beyond a reasonable doubt that the statute is constitutionally infirm, Joseph E. Seagram & Sons, Inc. v. Hostetter, supra; Defiance Milk Products Co. v. Dumond, 309 N.Y. 537, 132 N.E.2d 829 (1956); Patterson v. University of the State of New York, 14 N.Y.2d 432, 252 N.Y.S.2d 452, 201 N.E.2d 27 (1964); Matter of Andrew Catapano Co., Inc. v. New York City Finance Administration, 40 N.Y.2d 1074, 392 N.Y.S.2d 255, 360 N.E.2d 934, dsmd. 431 U.S. 910, 97 S.Ct. 2165, 53 L.Ed.2d 221 (1977); McKinney's Cons.Laws of N.Y., Book 1, Statutes § 150; next each legislative enactment carries with it a strong presumption of constitutionality and a court should strike down a statute only as a last resort, Defiance Milk Products Co. v. Dumond, supra; Matter of Spielvogel v. Ford, 1 N.Y.2d 558, 154 N.Y.S.2d 889, 136 N.E.2d 856, dsmd. 352 U.S. 957, 77 S.Ct. 362, 1 L.Ed.2d 316, reh. den. 352 U.S. 1019, 77 S.Ct. 555, 1 L.Ed.2d 561 (1957); Matter of Ahern v. South Buffalo Ry. Co., 303 N.Y. 545, 104 N.E.2d 898, affd. 344 U.S. 367, 73 S.Ct. 340, 97 L.Ed. 395 (1953); McKinney's Cons.Laws of N.Y., Book 1, Statutes § 150 and finally that a court of first instance should not exercise that transcendent power to set aside a statute as unconstitutional except in those rare cases where life or liberty is involved and where the invalidity of the statute is apparent on its face. National Psychological Ass'n. for Psychoanalysis, Inc. v. University of the State of New York, 18 Misc.2d 722, 188 N.Y.S.2d 151, affd. no opn., 10 A.D.2d 688, affd. 8 N.Y.2d 197, 203 N.Y.S.2d 821, 168 N.E.2d 649, app. dism, 365 U.S. 298, 81 S.Ct. 691, 5 L.Ed.2d 688 (1961); People v. Webb, 78 Misc.2d 253, 356 N.Y.S.2d 494 (Cr.Ct.N.Y.Cty.1974); Grimm v. City of New York, 56 Misc.2d 525, 289 N.Y.S.2d 358 (Sup.Ct.Qns.1968); McKinney's Cons.Laws of N.Y., Book 1, Statutes § 150.

The applicable state statute regulating the sale of real estate securities is Section 352-e of the General Business Law; and in July, 1982 the state legislature enacted Section 352-eeee which applies to conversions within the City of New York. Pursuant to authority granted in Section 352-e(2-b), (6) the Attorney General has promulgated various rules and regulations setting forth the procedures to be followed for submission of an offering plan; these regulations are contained in Subchapter B, Parts 16-21 of Title 13 of the Official Compilation of Codes, Rules and Regulations of the State of New York. Neither the statutes nor the regulations require the sponsor to create a reserve fund or to post building violations. It is the position of the plaintiffs that the regulatory scheme established by these statutes and regulations evidences an intention by the state to fully occupy the field of co-operative and condominium conversions and preclude varying local legislation. It is further argued that by requiring the sponsor to create a specific reserve fund, the local law prohibits something which is permitted by the state statute, i.e., approval of a conversion or an offering plan which does not provide for a reserve fund. Thus plaintiffs urge that Title YYYY must be struck down as inconsistent with a state law of general application. Finally plaintiffs contend that the failure of the state legislature to enact proposed legislation which would have required similar reserve funds in offering plans is indicative of a rejection of this concept by the legislature. ²

After consideration of the arguments and review of the relevant authority, the Court does not agree with plaintiffs.

The mere fact that a local law may touch upon some of the same matters treated by the state law does not render the local law invalid automatically. Rather it is only when the state has evidenced a desire to occupy the entire field to the exclusion of local law that a municipality is powerless to act. Wholesale Laundry Board of Trade, Inc. v. City of New York, 17 A.D.2d 327, 234 N.Y.S.2d 862, affd. 12 N.Y.2d 998, 239 N.Y.S.2d 128, 189 N.E.2d 623 (1963); People v. Cook, 34 N.Y.2d 100, 356 N.Y.S.2d 259, 312 N.E.2d 452 (1974); People v. Judiz, 38 N.Y.2d 529, 381 N.Y.S.2d 467, 344 N.E.2d 399 (1976); Monroe-Livingston Sanitary Landfill, Inc. v. Town of Caledonia, 51 N.Y.2d 679, 435 N.Y.S.2d 966, 417 N.E.2d 78 (1980); People v. New York Trap Rock Corp., 57 N.Y.2d 371, 456 N.Y.S.2d 711, 442 N.E.2d 1222 (1982). In making such a determination the Court should look to the legislative history of the statute as well as the existing regulatory machinery of the state. Wholesale Laundry Board of Trade, Inc. v. City of New York, supra; Matter of S.H. Kress & Co. v. The Department of Health of the City of New York, 283 N.Y. 55, 27 N.E.2d 431 (1940); F.T.B. Realty Corp. v. Goodman, 300 N.Y. 140, 89 N.E.2d 865 (1949); Robin v. Incorporated Village of Hempstead, 30 N.Y.2d 347, 334 N.Y.S.2d 129, 285 N.E.2d 285 (1972); Builder's Council of Suburban N.Y. Inc. v. City of Yonkers, 106 Misc.2d 700, 434 N.Y.S.2d 566, affd. 79 A.D.2d 696, 434 N.Y.S.2d 450 (2d Dept.1980). While it is true that Sections 352-e and 352-eeee regulate the sale of real estate securities, they are in essence disclosure laws. Matter of Charles H. Greenthal & Co., Inc. v. Lefkowitz, 32 N.Y.2d 457, 346 N.Y.S.2d 234, 299 N.E.2d 657 (1973); Matter of Whalen v. Lefkowitz, 36 N.Y.2d 75, 365 N.Y.S.2d 150, 324 N.E.2d 536 (1975); Apfelberg v. East 56th Plaza, Inc., 78 A.D.2d 606, 432 N.Y.S.2d 176, dsmd. 54 N.Y.2d 680 (1981). Those sections together with the regulations promulgated by the Attorney General mandate disclosure of the minimum facts considered necessary by the legislature to guide potential investors in making a decision. As for those provisions of Section 352-eeee which afford additional protection for elderly or disabled citizens, the Court cannot infer from...