Goldstein v. Pataki

Decision Date06 June 2007
Docket NumberNo. 07-CV-152 (NGG)(RML).,No. 06-CV-5827 (NGG)(RML).,06-CV-5827 (NGG)(RML).,07-CV-152 (NGG)(RML).
Citation488 F.Supp.2d 254
PartiesDaniel GOLDSTEIN, et al., Plaintiffs, v. George E. PATAKI, et al., Defendants. Aaron Piller, et al., Plaintiffs, v. George E. Pataki, et al., Defendants.
CourtU.S. District Court — Eastern District of New York

Andrew G. Celli, Jr., Eric Jason Hecker, Matthew D. Brinckerhoff, Emery, Celli, Brinckerhoff & Abady LLP, Mark Gimpel, Perlmutter & Gimpel, PLLC, New York, NY, for Plaintiffs.

Peter A. Sistrom, Office of the Attorney General, Douglas M. Kraus, Preeta Bansal, Skadden, Arps, Slate, Meagher & Flom LLP, Jeffrey L. Braun, Karen Leo Mintzer, Kerri Beth Folb, Kramer Levin Naftalis & Frankel LLP, Richard Guy Leland, Fried Frank Harris Shriver & Jacobson LLP, Susan Elizabeth Amron, Michael Burger, New York City Law Department, New York, NY, for Defendants.


GARAUFIS, District Judge.

Before the court are all parties' objections to the recommendation of The Honorable Robert M. Levy, United Stated Magistrate Judge, that the court dismiss this consolidated case. For the reasons set forth in this Memorandum and Order, this court accepts and adopts those recommendations in part, rejects those recommendations in part, and dismisses this consolidated case in its entirety.

I. Factual Background

Because Defendants move to dismiss pursuant to Fed.R.Civ.P.. 12(b)(1) and 12(b)(6), the court must accept all factual allegations in Plaintiffs pleadings and must draw inferences from those allegations in the light most favorable to the Plaintiffs. U.S. v. The Baylor Univ. Med. Ctr., 469 F.3d 263, 267 (2d Cir.2006) (Rule 12(b)(6)); McGinty v. State, 193 F.3d 64, 68 (2d Cir.1999) (Rule 12(b)(1)).

A. The Parties
1. Plaintiffs

Each Plaintiff owns or rents real estate in Brooklyn, New York located on land intended for use in the Atlantic Yards Arena and Development Project, which is described below.

2. The State Defendants

Defendant New York State Urban Development Corporation d/b/a Empire State Development Corporation ("ESDC") is an agency of New York State that was, at all relevant times, controlled by Defendant George E. Pataki, the Governor of New York State from 1995 until December 2006, and Defendant Charles A. Gargano, the Chief Executive Officer of the ESDC during that period. These Defendants are collectively referred to as the "State Defendants."

3. The FCRC Defendants

Defendant Forest City Ratner Companies ("FCRC") is a New York corporation with a principal place of business in New York. Defendant Bruce C. Ratner is the President and Chief Executive Officer of FCRC. Defendant James P. Stuckey is an Executive Vice President of FCRC and the President of FCRC's Atlantic Yards Development Group. Defendant Forest City Enterprises ("FCE") is a Delaware corporation with a principal place of business in Ohio. Defendant Ratner Group, Inc. is a New York corporation with a principal place of business in New York. Defendants BR FCRC, LLC; Brooklyn Arena, LLC; Atlantic Yards Development Co. LLC; BR Land, LLC; and FCR Land, LLC are New York limited-liability companies with principal places of business in New York. These Defendants are collectively referred to as the "FCRC Defendants."

4. The City Defendants

Defendant Michael Bloomberg has been the Mayor of Defendant New York City from 2002 to the present Defendant Daniel L. Doctoroff has been a Deputy Mayor of New York City from 2002 to the present. Defendant New York City Economic Development Corporation ("EDC") is a New York non-profit corporation with a principal place of business in New York. Defendant Andrew M. Alper was President of the EDC for a portion of the period in which Plaintiffs' claims arose. Defendant Joshua Sirefman was Acting President of the EDC for a portion of the period in which Plaintiffs' claims arose. These Defendants are collectively referred to as the "City Defendants."

B. The Atlantic Yards Arena and Development Project

FCRC intends to build the Atlantic Yards Arena and Development Project (the "Project") on twenty-two acres of land in Brooklyn, New York bounded generally on the north by Atlantic Avenue, the south by Dean Street, the east by Vanderbilt Avenue, and the west by Fourth Avenue (the "Project Area"). The Project is planned to consist of sixteen towers and 8.6 million square feet of floor space, including a sports arena, 6,860 housing units, approximately 600,000 square feet of office space, and a hotel. The Project Area encompasses both land containing property owned and rented by Plaintiffs (the "Takings Area") and land in which Plaintiffs have no interest, which consists primarily of the Vanderbilt Rail Yard site owned by the Metropolitan Transit Authority ("MTA") (the "Non-Takings Area"). The Vanderbilt Rail Yard is part of the Atlantic Terminal Urban Renewal Area ("ATURA"), which New York City has designated as blighted ten times, first in 1968 and most recently in 2004. In all, approximately sixty-three percent of the Project Area is blighted.

FCRC conceived of the Project in or before the summer of 2002 and announced it publicly on December 11, 2003. In the interim, it purchased the New Jersey Nets basketball franchise, which it intends to move into the sports arena that is part of the Project, and solicited and received the support of Governor Pataki, Mayor Bloomberg, and Deputy Mayor Doctoroff. In December 2003, Mayor Bloomberg announced that FCRC would develop the Project with the ESDC. On February 18, 2005, Defendants memorialized their plans for the Project in two memoranda of understanding.

Prior to September 2003, the MTA stated more than once that it had sold to FCRC the right to develop the Vanderbilt Rail Yard. In September 2003, the MTA retracted those statements. On February 24, 2005, the MTA entered an agreement with FCRC indicating that the MTA had not sold to FCRC the right to develop the Vanderbilt Rail Yard. On May 25, 2005, the MTA issued a request for proposals ("RFP") to purchase the right to develop the Vanderbilt Rail Yard. The RFP provided that proposals must include twenty-year profit-and-loss projections. Only two entities submitted proposals. The first, FCRC, offered to pay $50 million and did not submit a twenty-year profit-and-loss projection. The second, the Extell Development Company ("Extell"), offered to pay $150 million and submitted the required profit-and-loss projection. Extell's proposal, unlike FCRC's, did not require the taking of any private property.

On July 27, 2005, the MTA granted FCRC the exclusive right to negotiate, during a forty-five-day period, for the right to develop the Vanderbilt Rail Yard. On September 14, 2005, the MTA announced that it would sell that development right to FCRC for $100 million.

C. New York's Eminent Domain Procedure Law

Article Two of New York's Eminent Domain Procedure Law ("EDPL") sets forth procedures for determining the need for and location of public projects prior to the condemnation of private property. Defendants have availed themselves of those procedures, as described below. Article Four of the EDPL sets forth the procedures governing post-condemnation acquisition of private property for public projects. Defendants have not yet availed themselves of those procedures.

1. Article Two

New York law requires a condemnor1 to conduct a pre-acquisition public hearing "in order to inform the public [of the proposed public project] and to review the public use to be served by a proposed public project." EDPL § 201. At the Section 201 hearing, the condemnor must announce the purpose and location of the proposed project, and those in attendance must be given an opportunity to present oral or written statements and to submit other documents concerning the project. EDPL 203. The hearing must be conducted on the record, and the record must include a transcript of all oral statements made at the hearing and copies of all written statements and other documents submitted at the hearing. Id.; EDPL § 207(A) (indicating that the record includes "a written transcript" of the public hearing).

The ESDC issued a Notice of Public Hearing on July 24, 2006 and held a public hearing on August 23, 2006. In addition, on September 12, 2006, the ESDC held a community forum to discuss the Project.

Within ninety days of a public hearing, a condemnor must publish a synopsis of its determination and findings. EDPL § 204(A). The synopsis must specify (1) the public use, benefit, or purpose to be served by the proposed public project; (2) the location of the project and the reason(s) that location was selected; (3) the general effect of the project on the environment and residents of the locality; and (4) other factors the condemnor considers relevant. EDPL § 204(B). The ESDC issued its determination and findings on December 8, 2006, indicating that ESDC should and would use its power of condemnation to acquire Plaintiffs' properties. (Determination and Findings (12/15/06 Kraus Decl. (Docket No. 51) Ex. E) (available at http:// AtlanticYards/Determination andPindings.pdf (last visited June 5, 2007)).) The ESDC identified the following as the public purposes to be served by the Project:

(1) The elimination of blight in both the Takings and Non-Takings Areas (Determination and Findings) (Id. at 1, 4, 5), which is the purported "principal" public purpose of the Project (Id. at 4);

(2) An arena to be used by a major-league sports franchise, for athletic contests featuring local academic institutions, and for other entertainment and civic events (Id. at 5);

(3) Approximately 2,250 units of "affordable" rental housing and between 3,075 and 4,180 units of "market rate" housing (Id.);

(4) Between 336,000 and 1,606,000 square feet of office space (Id.);

(5) "Possibly" a hotel (Id.);

(6) Eight acres of publicly accessible space (Id.);

(7) Ground-level retail space "to activate the street frontages" (Id.);

(8) "Community facility spaces", including those...

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