Franklin St. Realty Corp. v. Nyc Envtl. Control Bd.

• Decision Date: 17 December 2019
• Docket Number: No. 100,100
• Citation: 34 N.Y.3d 600,122 N.Y.S.3d 567,145 N.E.3d 204
• Parties: In the Matter of FRANKLIN STREET REALTY CORP., Appellant, v. NYC ENVIRONMENTAL CONTROL BOARD, et al., Respondents. (And Three Other Proceedings.)
• Court: New York Court of Appeals Court of Appeals

34 N.Y.3d 600
145 N.E.3d 204
122 N.Y.S.3d 567

In the Matter of FRANKLIN STREET REALTY CORP., Appellant,
v.
NYC ENVIRONMENTAL CONTROL BOARD, et al., Respondents.

(And Three Other Proceedings.)

No. 100

Court of Appeals of New York.

December 17, 2019

Cohen, Hochman & Allen, New York City (Lindsay I. Garroway and Nicole Beletsky of counsel), for appellants.

Zachary W. Carter, Corporation Counsel, New York City (Bar- bara Graves-Poller, Richard Dearing and Devin Slack of counsel), for respondents.

OPINION OF THE COURT

WILSON, J.

34 N.Y.3d 602

Petitioners are four corporations: 23–06 Jackson Avenue Realty Corporation,

122 N.Y.S.3d 568

145 N.E.3d 205

41–03 31 Avenue Realty Corporation, Franklin Street Realty Corporation, and J.P. and Associates Properties Corporation. Each owns a relatively small residential or mixed-use building in Brooklyn or Queens; J.P. and Associates Properties Corporation owns two. John J. Ciafone and/or his spouse have ownership interests in each of petitioner corporations. Each of the five buildings had signage affixed to it advertising Mr. Ciafone's law practice, organized as the professional corporation John J. Ciafone, P.C. The New York City Department of Buildings cited the corporations for violations of the Administrative Code of the City of New York §§ 28–105.1, 28–415.1, and 28–502.6, as well as New York City Zoning Resolution §§ 22–32 and 32–63, which require, among other things, those who hang signs on buildings to be licensed to do so. The fines attendant to those violations were enhanced on the ground that the corporations were "outdoor

34 N.Y.3d 603

advertising companies" ("OACs") engaged in the "outdoor advertising business" under Administrative Code § 28–502.1.

Under Administrative Code § 28–502.1, an OAC is "[a] person, corporation, partnership or other business entity that as a part of the regular conduct of its business engages in or, by way of advertising, promotions, or other methods, holds itself out as engaging in the outdoor advertising business." The Code defines "outdoor advertising business" as:

"[t]he business of selling, leasing, marketing, managing, or otherwise either directly or indirectly making space on signs situated on buildings and premises within the city of New York available to others for advertising purposes, whether such advertising directs attention to a business, profession, commodity, service or entertainment conducted, sold, or offered on the same or a different zoning lot, whether such advertising direct attention to a business, profession, commodity, service or entertainment conducted, sold, or offered on the same or a different zoning lot and whether such sign is classified as an advertising sign pursuant to section 12–10 of the zoning resolution" (emphasis added).

The notices of violation were reviewed in hearings held by the Office of Administrative Trials and Hearing's Environmental Control Board ("ECB") division. Petitioner corporations appealed the fines on the ground that they were not OACs under the Code. They argued that because Mr. Ciafone owned the corporations, the advertisements of his law practice did not constitute the provision of advertising to "others." In several decisions, the hearing officers dismissed most of the violations at each of the properties, concluding that petitioner corporations were not OACs because they did not make space "available to others" but instead, Mr. Ciafone, albeit under a corporate name, advertised only himself.

On administrative appeal, the Environmental Control Board disagreed with the hearing officers' decisions, concluding that petitioner corporations were OACs because they made advertising space available to a different legal entity, John J. Ciafone, P.C. Petitioner corporations filed CPLR article 78 proceedings seeking to annul the ECB's determinations, which Supreme Court transferred to the Appellate Division. The Appellate Division, with two Justices dissenting, confirmed the ECB's determinations, holding that "petitioners, which are corporations, made space on signs available to Ciafone's law practice (a professional corporation), a separate and distinct entity" (see

34 N.Y.3d 604

Franklin St. Realty Corp. v. NYC Envtl. Control Bd., 164 A.D.3d 19, 24–25, 83 N.Y.S.3d 41 [1st Dept. 2018] ). The Appellate Division reasoned

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