E.F.S. Ventures Corp. v. Foster

• Citation: 526 N.Y.S.2d 56,520 N.E.2d 1345,71 N.Y.2d 359
• Decision Date: 09 February 1988
• Docket Number: No. 1,No. 2,1,2
• Parties: , 520 N.E.2d 1345 In the Matter of E.F.S. VENTURES CORP., Appellant, v. Debra FOSTER et al., Constituting the Planning Board of the Town of East Hampton, Respondents. (Proceeding) In the Matter of E.F.S. VENTURES CORP., Appellant, v. Joseph DeCRISTOFARO, as Building Inspector of the Town of East Hampton, Respondent. (Proceeding)
• Court: New York Court of Appeals

Page 56

526 N.Y.S.2d 56

71 N.Y.2d 359, 520 N.E.2d 1345

In the Matter of E.F.S. VENTURES CORP., Appellant, v. Debra FOSTER et al., Constituting the Planning Board of the

Town of East Hampton, Respondents. (Proceeding No. 1.)

In the Matter of E.F.S. VENTURES CORP., Appellant, v. Joseph DeCRISTOFARO, as Building Inspector of the Town of

East Hampton, Respondent. (Proceeding No. 2.)

Court of Appeals of New York Feb. 9, 1988.

Edward N. Costikyan, Samuel J. Silverman, Bruce Birenboim and Cary B. Samowitz, New York City, for appellant.

Richard E. DePetris, Riverhead, for respondents.

OPINION OF THE COURT

SIMONS, Judge.

Petitioner, a developer of an oceanside resort in East Hampton, Long Island, challenges the power of respondents, local Town officials, to reexamine its project and impose substantial new conditions on its development after construction had been completed. The construction had proceeded in two phases and the site plans for both had been approved by the Town Planning Board. The resolution approving the second, or modified, site plan, was successfully attacked in court because of the failure of the Planning Board to follow the requirements of the State Environmental Quality Review Act (SEQRA), however, and petitioner was ordered to submit a new modified site plan application. When it did, there had been a political change in the leadership of the Town and of the membership of its Planning Board. The newly appointed Planning Board reexamined petitioner's entire development de novo, although challenge of the first phase was time barred, and substantially changed the requirements for developing and using the improvements authorized in the first site plan. Petitioner contends that the local officials should be equitably estopped from reexamining the site plans as initially approved and that certificates of occupancy for all of the motel units should be issued. It further contends that even if respondents had the power to reexamine the entire development upon the required resubmission of the modified site plan, that power was exercised in an arbitrary and capricious manner in this case.

We agree with respondent officials that they are not estopped from reviewing the entire development even though construction according to the originally approved plans had been completed prior to the determination that SEQRA had been violated. The exercise of that power under the circumstances presented was arbitrary and capricious, however, because respondents in reviewing the application for modification, which proposed improvements largely unrelated to the completed portion of the development, required changes in the completed development solely to accommodate perceived deficiencies in it that had been previously reviewed and approved and which were protected from further challenge by the Statute of Limitations.

I

The appeal arises from the following facts and is more easily understood by referring to a map of the site annexed to the opinion.

In August 1982, petitioner, E.F.S. Ventures Corporation, obtained title to a 5.2-acre tract of land zoned for motel development and located along Old Montauk Highway in the Town of East Hampton. At the time petitioner acquired the property, known as the Beachcomber, it had been improved by a 12-unit motel building, a Accordingly, petitioner submitted a second application in late January 1983 seeking to modify the original site plan. The modifications concerned only the area in the front of the property and included removal of the six cottages containing the 11 motel units, construction of a new 28-unit motel structure along Old Montauk Highway, to be known as Oceanside, and construction of a swimming pool and tennis courts in the center of the property between Oceanside and the Ocean East and Ocean West buildings.

collection of 6 cottages containing 11 motel units, a storage shed and another building known as Hill House. Prior to petitioner's acquisition, as early as 1977, the Town Planning Board had approved several applications for further development by previous owners, but no action pursuant to these approvals had been taken. Petitioner made its first of two applications to develop the property in early September 1982. The 1982 site plan dealt primarily with construction on the rear or northern half of the property. Petitioner sought to remove the metal storage building, renovate the existing 12-unit motel building, relocate and renovate Hill House, and construct two new motel buildings. It proposed a new 30-unit building known as Ocean East on the east side of the property facing Old Montauk Highway and the Atlantic Ocean and a similar 20-unit building, Ocean West, on the west side. The six existing cottages on the front of the property were to remain. No environmental assessment form (EAF) accompanied petitioner's site plan application, apparently because petitioner concluded that SEQRA was not applicable to this project. On September 29, 1982, the East Hampton Planning Board approved the site plan application subject to several conditions. For example, petitioner was required to grant the Town a 50-foot scenic easement surrounding a .1-acre pond found in the northeast corner of the property, relocate Hill House at least 75 feet from the pond, set back all septic systems and leaching pools a minimum of 100 feet from the pond, and take certain measures to control the storm water run off. A new roadway to provide motor vehicle access to Old Montauk Highway and roadways and walkways within the site were approved. Building permits were issued in November 1982, construction began immediately and by January 1983 the proposed construction had been substantially completed.

On February 18, 1983, the Town Planning Board, based on a recommendation of its own consultant, informed petitioner by letter that the Board had made an informal negative declaration under SEQRA. Following this informal negative declaration, on March 12, 1983, petitioner prepared and filed an EAF. The Planning Board's consultant promptly prepared part two of the EAF. On March 16, 1983, the Planning Board after reviewing the EAF, determined that the proposed modification of the Beachcomber complex would result in an over-all small to moderate impact on the environment and that any adverse environmental impact could be mitigated by measures outlined in the EAF. The Board then issued a formal negative declaration under SEQRA (thus obviating the need for petitioner to prepare an environmental impact statement) and approved the application for site plan approval. On March 31, building permits were issued for the Oceanside structure and petitioner promptly proceeded with construction in the hope that the resort could open for the summer 1983 season.

On April 14, 1983, adjoining landowners and a group entitled the Concerned Citizens of Montauk commenced an article 78 proceeding against petitioner and the Planning Board (the Nielsen proceeding) in an attempt to prevent implementation of the January 1983 modified site plan. The Nielsen petition alleged that the approval was invalid because the Planning Board had issued its informal negative declaration prior to considering the factors contained in the EAF. Indeed, an EAF had not even been prepared until after the Board's informal negative declaration had been made. On April 15, 1983, Supreme Court granted a temporary restraining order enjoining further construction.

At this time 90% of the development proposed in the original site plan had been completed. Of particular importance, the Hill House relocation and rehabilitation and Ocean East construction were completed. Additionally, a commitment to construct Oceanside pursuant to the modified site plan approval had been made, the six cottages had been demolished, the site had been excavated and the footings and foundation for Oceanside had been laid and a portion of the first story of the building had been framed.

Petitioner discontinued work until April 20, 1983, when Supreme Court lifted the temporary restraining order and, finding that there was no likelihood of success on the merits, denied the Nielsen petitioners' request for a preliminary injunction. The Nielsen petitioners did not seek leave to appeal the denial of preliminary injunctive relief and no stay of the vacatur of the temporary restraining order was sought from the Appellate Division pursuant to CPLR 5518. Petitioner recommenced construction and the project was completed in June 1983.

One month later, however, Supreme Court granted the Nielsens' article 78 petition to the extent of setting aside the resolution of the Planning Board approving the modified site plan. It remitted the matter to the Planning Board and directed it to make its decision on whether to issue a negative or positive declaration under SEQRA after considering the factors found in the EAF and taking a "hard look" at the potential environmental impact. The court also enjoined the issuance of certificates of occupancy for the 64 units constructed or renovated pursuant to the original site plan submitted in September 1982. Petitioner appealed this decision but while its appeal was pending, it resubmitted to the Planning Board, in November 1983, an application for modified site plan approval which included an EAF. This time, however, the Planning Board, now composed of several new members, issued a positive declaration under SEQRA (ECL 8-0109; 6 NYCRR 617.2 [cc] ) and ordered preparation of a draft environmental impact statement (6 NYCRR 617.2 [n] ). In September 1984, after public hearings and the preparation of a final environmental impact statement (EIS), the Planning Board approved the modified site plan, but did so subject to several conditions found objectionable by petitioner. The most significant of these included: (1) the destruction of relocated Hill House to provide an area behind Ocean East and Ocean West where emergency vehicles could turn around, (2) the...