In the Matter of New York State Urban Dev. Corp., 2010 NY Slip Op 50301(U) (N.Y. Sup. Ct. 3/1/2010)

Decision Date01 March 2010
Docket Number32741/09.
Citation2010 NY Slip Op 50301
PartiesIN THE MATTER OF THE APPLICATION OF THE NEW YORK STATE URBAN DEVELOPMENT CORPORATION D/B/A EMPIRE STATE DEVELOPMENT CORPORATION TO ACQUIRE TITLE IN FEE SIMPLE ABSOLUTE TO CERTAIN REAL PROPERTY AND A TEMPORARy EASEMENT IN CERTAIN REAL PROPERTY, REQUIRED FOR THE ATLANTIC YARDS LAND USE IMPROVEMENT AND CIVIC PROJECT — PHASE 1
CourtNew York Supreme Court

Charles Webb, Esq., Kenneth Appelbaum, Esq., Berger & Webb, New York, NY, plaintiffNY State Development Corp.

Peter Karmel, Esq., Bryan Caves, LLP, New York, NY, plaintiffNY State Development Corp.

Joshua Rikon, Esq., Philip Sanchez, Esq., Goldstein, Rikon, Rikon, New York, NY, defendant.

Bruce Lederman, Esq., Todtman, Nachamie, Spizz & Johnson, New York, NY, defendant.

Matthew Brinckerhoff, Esq., Emery, Celli, Brinckerhoff & Abady, New York, NY, defendant.

ABRAHAM G. GERGES, J.

Petitioner New York State Urban Development Corporation (UDC) d/b/a Empire State Development Corporation (ESDC) seeks leave to file acquisition maps for the condemnation of certain properties located in downtown Brooklyn for use as a mixed development project commonly referred to as the Atlantic Yards Project (the Project). By motion returnable the same day as the petition, respondents Peter Williams Enterprises, Inc.; 535 Carlton Ave. Realty Corp.; Pacific Carlton Development Corp.; Daniel Goldstein; and Chadderton's Bar and Grill, Inc., d/b/a Freddy's Bar and Backroom (collectively referred to as respondents) move for an order: (1) dismissing the petition, with prejudice, pursuant to CPLR 3211 or 3212, on the ground that the Determination and Findings (D & F), made pursuant to Eminent Domain Proceeding Law (EDPL) § 204, dated December 8, 2006 (the 2006 D & F), can no longer serve as the predicate for the seizure of respondents' homes and businesses because (a) the Modified General Project Plan (MGPP), dated December 8, 2006 (the 2006 MGPP), upon which the 2006 D & F were based, was nullified and superceded by a new MGPP, dated September 17, 2009 (the 2009 MGPP), thus vitiating the 2006 D & F; (b) the 2006 D & F and the now superceded 2006 MGPP provide for the acquisition of all properties simultaneously, while the 2009 MGPP provides for the acquisition of properties in two stages; and (c) it is undisputed that the factual underpinnings of the determination of public use, benefit and purpose set forth in the 2006 D & F have materially changed during the more than three years that have passed; or, alternatively (2) dismissing the petition without prejudice based on procedural defects, failure to state a claim and lack of subject matter jurisdiction, pursuant to CPLR 3211 or 3212, because the petition does not comply with the strict requirements contained in EDPL Article 4 and CPLR Article 4, and is thus defective on multiple grounds, including: (a) the petition does not comply with EDPL 402(b)(3)(a), which mandates that the petition contain a statement alleging compliance with the requirements of article two of the EDPL, because the article two predicate, i.e., the 2006 D & F, have been nullified, superceded and/or materially undermined as set forth above; (b) the petition is premature or unripe because respondents' EDPL 207 challenge to the 2006 D & F has not been finally determined in that respondents filed a timely "Motion to Reargue Appeal and/or Hold Motion in Abeyance Pending Hearing and Determination of a Related Appeal" (the Motion to Reargue) to the Court of Appeals, which was served on petitioner before this action was commenced; (c) the petition does not state the public use, benefit or purpose for which the property is required, as mandated by EDPL 402(b)(3)(d), since the words public use, benefit or purpose are not found in the petition; (d) the petition does not comply with EDPL 402(b)(3)(a) and (b)(3)(d) because the 2006 D & F are incomplete and because petitioner intentionally omitted the list of properties contained in the 2006 D & F in order to conceal the fact that the 2006 D & F were premised upon a single acquisition, which was recently changed to a staged acquisition, without any amendment to the 2006 D & F; (e) the petition allegedly served upon each respondent is incomplete and inconsistent with the petition filed in this court and differs from one respondent to the next because it does not contain true and complete copies of the proposed acquisition maps; (f) the notice of petition and petition seek inconsistent relief with regard to the number of days in which respondents can file a claim; and (g) a condition precedent to the relief requested in the petition as set forth in the 2009 MGPP has not been met since petitioner has not received assurances that the Project will be funded and completed in accordance with the 2009 MGPP; (3) staying this action, pursuant to CPLR 2201, until such time as petitioner demonstrates that it has corrected the numerous deficiencies outlined above, including without limitation, demonstrating that the adjudication of respondents' current EDPL 207 proceeding or any subsequent proceeding to challenge any subsequent amended or modified EDPL 204 D & F is final; (4) granting leave to respondents to conduct pretrial disclosure, pursuant to CPLR 408, including without limitation, discovery concerning the recent revelations that firmly establish that petitioner has consistently misrepresented the timing of the Project; and (5) directing that a trial will be held, pursuant to CPLR 410, in order for the court to resolve any material factual disputes concerning the various issues raised by this motion and in respondents' verified answer, affirmative defenses and counterclaims. Respondents also file an answer in which they interpose 14 affirmative defenses and three counterclaims seeking substantially the same relief sought in their motion. Respondents Daniel Goldstein, Heron Real Estate Corp., and Pack It Away Storage Systems, Inc. (hereinafter collectively referred to as the Goldstein respondents), file an answer in which they request that in the event that the petition is granted, they should be given three years from the date of service of a notice of acquisition to file a claim and that advance payments should be made available within 90 days of the date that title vests.

Facts

The Atlantic Yards Project has a long and tortuous history, including numerous court challenges in several forums. As has been set forth in detail in the prior decisions, the Project was conceived in 2002 by Bruce Ratner and several affiliated companies, the Forest City Ratner Companies (collectively referred to hereinafter as FCRC) and was publicly announced on December 11, 2003; the Project is intended to redevelop a 22 acre area located south of Atlantic Avenue near downtown Brooklyn. At sometime thereafter, FCRC joined with UDC and ESDC. Approximately 40% of the site is occupied by the Vanderbilt Rail Yard, owned by the Metropolitan Transit Authority (the MTA), which is situated below grade and provides an active storage and maintenance yard for Long Island Rail Road (LIRR) equipment and retired MTA buses. Approximately 63% of the site is located within the Atlantic Terminal Urban Renewal Area, which was so designated in 1968 because of its substandard and unsanitary conditions. The Project envisions the construction of a publicly owned arena to serve as the home for the New Jersey Nets professional basketball team, owned by Ratner (the Arena); a new subway connection; a platform over and reconfiguration of the rail yard; 16 buildings which will include residential units, office space, retail space and community facilities offering health and child care; and the creation of eight acres of publicly accessible open space.

On December 8, 2006, petitioner UDC adopted the Findings Statement pursuant to the New York State Environmental Quality Review Act (SEQRA); affirmed the 2006 MGPP under the Urban Development Corporation Act (the UDCA); and issued the 2006 D & F, premised upon the 2006 MGPP. The 2006 D & F stated that the principal public use, benefit and purpose of the Project was to eliminate the blighted conditions on the Project Site and the blighting influence of the below-grade rail yard and alleged that the Project would also provide other public uses, benefits and purposes, including, inter alia, constructing the Arena that would allow the Nets to relocate to Brooklyn and that would provide a venue for community uses; providing 2,250 units of affordable housing; upgrading the LIRR yard to provide a state-of-the-art rail storage, cleaning and inspection facility that would enable the LIRR to better accommodate its new fleet of cars; constructing a new subway entrance; and providing eight acres of publicly accessible open space. The 2006 D & F further stated that the Project would provide certain economic benefits, including, among other things, net tax revenues in excess of the public contribution to the Project.

In June 2009, petitioner revealed its intention to modify the 2006 MGPP. On June 23, 2009, the ESDC directors adopted the 2009 MGPP, along with a 63 page "Technical Memorandum" that details the changes sought and obtained by FCRC, and authorized the publication of public hearing notices as required by the UDCA. On July 29, 2009 and July 30, 2009, ESDC held public hearings pursuant to sections 6 and 16 of the UDCA (Unconsol Laws §§ 6256 and 6266) to receive comments on the 2009 MGPP and on ESDC's proposed disposition of certain parcels of real property in connection with the Project. ESDC accepted written comments through August 31, 2009. On September 17, 2009, the ESDC directors affirmed the 2009 MGPP.

Judicial Challenges
The Federal Challenge

On January 5, 2007, respondents challenged the 2006 D & F pursuant to EDPL 207 in federal district court, asserting primarily that the proposed condemnation of their properties violated the public use clause of the Fifth...

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