Rent Stabilization Ass'n v. Dinkins
Decision Date | 08 October 1992 |
Docket Number | No. 91 Civ. 4386 (LLS).,91 Civ. 4386 (LLS). |
Citation | 805 F. Supp. 159 |
Parties | RENT STABILIZATION ASSOCIATION OF NEW YORK CITY, INC., on behalf of its members, Plaintiff, v. David N. DINKINS, as Mayor of the City of New York; the City of New York; the New York City Rent Guidelines Board; Aston L. Glaves, as Chairman of the Rent Guidelines Board; Joseph L. Forstadt, Oda Friedheim, Ellen Gesmer, Galen Kirkland, Harold Lubell, Victor Marrero, Agustin River, and Janice Robinson, as members of the Rent Guidelines Board; Angelo Aponte, as Commissioner of the New York State Division of Housing and Community Renewal; and Elliot Sander, as Deputy Commissioner for Rent Administration of the New York State Division of Housing and Community Renewal, Defendants. |
Court | U.S. District Court — Southern District of New York |
Thelen, Marrin, Johnson & Bridges, New York City (Jonathan E. Polonsky, of counsel), for plaintiff.
Atty. Gen., New York State Dept. of Law, New York City (Dennis J. Saffran, of counsel), for defendants Angelo Aponte and Elliot Sander.
Corp. Counsel, City of New York Law Dept., New York City (Julian Bazel, of counsel), for New York City defendants.
Defendants move to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted.
Plaintiff Rent Stabilization Association brings this action on behalf of its members to challenge certain provisions of the New York City Rent Stabilization Law, and the rent stabilization regulations of the New York State Division of Housing and Community Renewal, as an unconstitutional taking1 and denial of due process2 in violation of the Fifth and Fourteenth Amendments to the United States Constitution.
In 1969, citing "a serious public emergency" in housing, the City of New York enacted the Rent Stabilization Law (the "RSL") to supplement its existing regime of rent control.3 In 1983 the administration of the RSL was transferred from the city to the New York State Division of Housing and Community Renewal (the "DHCR"), and the RSL has been codified under the DHCR's Rent Stabilization Code (the "RSC").4
With some exceptions, the RSL applies to apartments in buildings of six or more units which are not subject to rent control. RSL §§ 26-504 to 26-507. Under the RSL the Mayor of New York appoints a nine member board5 which establishes mandatory annual rent increase guidelines. In reaching its determination, the board considers the following factors under RSL § 26-510(b):
(1) the economic condition of the residential real estate industry in the affected area including such factors as the prevailing and projected (i) real estate taxes and sewer and water rates, (ii) gross operating maintenance costs (including insurance rates, governmental fees, cost of fuel and labor costs), (iii) costs and availability of financing (including effective rates of interest), (iv) over-all supply of housing accommodations and overall vacancy rates, (2) relevant data from the current and projected cost of living indices for the affected area, and (3) such other data as may be available to it.
The RSL provides two procedures which permit individual owners to obtain rent increases beyond the board's established rates: "comparative" and "alternative" hardship rent increases, which are available with the qualifications that 1) the landlord must have owned the property for at least three years; 2) the building's income must fall below a specified level;6 3) the increase cannot exceed 6% in any year; and 4) an order adjusting rent cannot be issued more than once every three years. RSL § 26-511(c)(6) and (c)(6-a).
Plaintiff Rent Stabilization Association, Inc. ("RSA") is a not-for-profit corporation which represents over 25,000 landlords in New York City. It conducts investigations, participates in hearings and prosecutes litigation on behalf of owners of rent stabilized apartments (Complaint ¶ 4). RSA brings this suit on behalf of its members.
In its first claim for relief plaintiff alleges that the RSL effects a taking, both "on its face" and "as applied,"7 by depriving owners of rent-stabilized property of the opportunity to obtain a just and reasonable return on their property (Complaint ¶¶ 23-84). Plaintiff particularly challenges the board's disregard of the effect of inflation on owners' revenue (Id. ¶¶ 29-36), and contends that the hardship provisions are "incapable of correcting the confiscatory effects of the board guidelines" since they also ignore inflation and are limited measures beset by delay and expense (Id. ¶¶ 37-84).
In its second claim for relief plaintiff challenges the hardship provisions on the basis that their administration deprives plaintiff's members of property without due process of law (Id. ¶¶ 85-89).
Plaintiff seeks to enjoin the enforcement and administration of the RSL unless adequate provisions are made either to compensate the owners or to correct the inequities of the system; to enjoin the board from establishing maximum rent increases that do not provide owners with a just and reasonable return; and to order the state defendants to review hardship applications without delay and with a full and fair opportunity for owners to be heard.
In considering a 12(b)(6) motion to dismiss,8 the allegations in the complaint must be taken as true. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1973). Accord, Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957) ()
Counts I.C., I.D., and I.F. challenge the facial validity of the RSL on the grounds that it effects a taking. Plaintiff argues that to state a claim it need only allege that the statute cannot be validly applied to "one or more" landlords (Plaintiff Memorandum at 71). Defendants counter that to be facially invalid the laws and regulations must be deficient as to "all" owners of rent stabilized apartments (City Memorandum at 23, 32; State Memorandum at 29).
A facial challenge to a legislative act "is, of course, the most difficult challenge to mount successfully, since the challenger must establish that no set of circumstances exists under which the act would be valid." General Elec. v. New York State Dept. of Labor, 936 F.2d 1448, 1456 (2d Cir.1991), quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 2100, 95 L.Ed.2d 697 (1987). As the Supreme Court stated in Salerno, the fact that legislation "might operate unconstitutionally under some conceivable set of circumstances is insufficient to render it wholly invalid since we have not recognized an `overbreadth' doctrine outside the limited context of the First Amendment." Salerno, 481 U.S. at 745, 107 S.Ct. at 2100. See also, California Coastal Comm'n v. Granite Rock Co., 480 U.S. 572, 580, 107 S.Ct. 1419, 1424, 94 L.Ed.2d 577 (1987) ( ); Witzke v. Withrow, 702 F.Supp. 1338, 1355 (W.D.Mich. 1988) ( ); Fisher v. City of Berkeley, 37 Cal.3d 644, 683, 209 Cal.Rptr. 682, 714, 693 P.2d 261, 293 (1984) (), aff'd, 475 U.S. 260, 106 S.Ct. 1045, 89 L.Ed.2d 206 (1986).
In its facial challenge, plaintiff does not claim that the RSL is invalid under all circumstances. Rather, plaintiff claims that the law violates the constitutional rights of "many" of its members (Complaint ¶¶ 24-25, 37, 42). Assuming the RSL is unconstitutional as to "many" owners, but not as to others, the proper recourse is for the aggrieved individuals themselves to bring suit.
By their nature, challenges to statutes as being "takings" tend to involve factual determinations concerning specific properties rather than the text of the statute on its face. The Supreme Court stated in Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 495, 107 S.Ct. 1232, 1247, 94 L.Ed.2d 472 (1987) ( ):
This Court has generally been unable to develop any set formula for determining when justice and fairness require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons. Rather, it has examined the taking question by engaging in essentially ad hoc, factual inquiries.... Because appellees' taking claim arose in the context of a facial challenge ... the only issue properly before the District Court and, in turn, this Court, is whether the mere enactment of the Surface Mining Act constitutes a taking. The test to be applied in considering this facial challenge is fairly straightforward. A statute regulating the uses that can be made of property effects a taking if it `denies an owner economically viable use of his land....'
Keystone, 480 U.S. 470, 495, 107 S.Ct. 1232, 1247 (1987), quoting Agins v. Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (1980) and Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332 (1979) (citations omitted).
A regulatory taking requiring compensation occurs when: (1) it does not substantially advance legitimate state interests, or (2) it denies an owner economically...
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