London Terrace Gardens, L.P. v. City of New York

• Decision Date: 23 October 2012
• Court: New York Supreme Court — Appellate Division
• Parties: In re LONDON TERRACE GARDENS, L.P., Petitioner–Appellant, v. The CITY OF NEW YORK, et al., Respondents–Respondents. London Terrace Gardens, L.P., Plaintiff–Appellant, v. The City of New York, et al., Defendants–Respondents.

101 A.D.3d 27
953 N.Y.S.2d 28
2012 N.Y. Slip Op. 07078

In re LONDON TERRACE GARDENS, L.P., Petitioner–Appellant,
v.
The CITY OF NEW YORK, et al., Respondents–Respondents.
London Terrace Gardens, L.P., Plaintiff–Appellant,
v.
The City of New York, et al., Defendants–Respondents.

Supreme Court, Appellate Division, First Department, New York.

Oct. 23, 2012.

[953 N.Y.S.2d 29]

Borah, Goldstein, Altschuler Nahins & Goidel, P.C., New York (Robert D. Goldstein, Richard M. Goldstein, Harry Frischer and Paul N. Gruber of counsel), for appellant.

Jeffrey D. Friedlander, Acting Corporation Counsel, New York (Joshua M. Wolf, Paul T. Rephen and Vincent D'Orazio of counsel), for The City of New York and New York City Department of Housing Preservation and Development, respondents.

Eric T. Schneiderman, Attorney General, New York (Sudarsana Srinivasan and Michael S. Belohlavek of counsel), for New York State Division of Housing and Community Renewal, respondent.

PETER TOM, J.P., ANGELA M. MAZZARELLI, KARLA MOSKOWITZ, DIANNE T. RENWICK, and SHEILA ABDUS–SALAAM, JJ.

ABDUS–SALAAM, J.

[101 A.D.3d 29]Petitioner/plaintiff London Terrace Gardens, L.P., seeks to rescind its participation in the City's J–51 tax incentives program following the Court of Appeals decision in Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d 270, 890 N.Y.S.2d 388, 918 N.E.2d 900 [2009]. That decision held that the owners of rent-stabilized apartments in New York City “[are] not entitled to take advantage of the luxury decontrol provisions of the Rent Stabilization Law (RSL) [Administrative Code of City of N.Y. § 26–501 et seq.] while simultaneously receiving tax incentive benefits under the City of New York's J–51 program” ( id. at 280, 890 N.Y.S.2d 388, 918 N.E.2d 900). This Court has given retroactive effect to Roberts ( see Roberts v. Tishman Speyer Props., L.P., 89 A.D.3d 444, 932 N.Y.S.2d 45 [1st Dept.2011];Gersten v. 56 7th Ave. LLC, 88 A.D.3d 189, 198, 928 N.Y.S.2d 515 [1st Dept.2011] ).

This proceeding and plenary action were commenced after defendant New York City Department of Housing Preservation and Development (HPD) refused London

[953 N.Y.S.2d 30]

Terrace's offer to “unwind” its J–51 arrangement with HPD and to tender repayment of all J–51 benefits, in consideration for which HPD would deem the certificates granting tax abatement benefits to be void and of no effect, thereby nullifying its prior determination of eligibility for J–51 benefits. Petitioner/plaintiff proposed that HPD declare that London Terrace “is no longer subject to the provisions of the J–51 program, including but not limited to any [101 A.D.3d 30]rent regulatory provisions contained therein.” The “unwinding” agreement would be conditioned upon entry of a final order and judgment by a court of competent jurisdiction, “directing and binding DHCR to treat [London Terrace] as subject to no other rent stabilization laws and requirements than would have been applicable had [London Terrace] never been granted J–51 benefits, with said order and judgment being binding upon the tenants as well.” HPD took the position that there is no provision for voluntary withdrawal, and that rescission is not effective.

London Terrace's argument in support of rescission is that the Court of Appeals decision...