Zheng v. City of New York

• Decision Date: 20 March 2012
• Citation: 93 A.D.3d 510,940 N.Y.S.2d 582,2012 N.Y. Slip Op. 02033
• Parties: Jasmine ZHENG, et al., Plaintiffs–Appellants, v. The CITY OF NEW YORK, et al., Defendants–Respondents.Sanctuary for Families, New Destiny Housing Corporation, Center Against Domestic Violence, Safe Horizon, Violence Intervention Program, Inc., New York Asian Women's Center, Good Shepherd Services, Barrier Free Living and Homeless Services United, Amici Curiae.
• Court: New York Supreme Court — Appellate Division

2012 N.Y. Slip Op. 02033

93 A.D.3d 510

940 N.Y.S.2d 582

Jasmine ZHENG, et al., Plaintiffs–Appellants,

v.The CITY OF NEW YORK, et al., Defendants–Respondents.Sanctuary for Families, New Destiny Housing Corporation, Center Against Domestic Violence, Safe Horizon, Violence Intervention Program, Inc., New York Asian Women's Center, Good Shepherd Services, Barrier Free Living and Homeless Services United, Amici Curiae.

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

March 20, 2012.

The Legal Aid Society, New York (Steven Banks of counsel), and Weil, Gotshal & Manges LLP, New York (Konrad L. Cailteux of counsel), for appellants.

Michael A. Cardozo, Corporation Counsel, New York (Alan G. Krams of counsel), for respondents.

Gibson, Dunn & Crutcher LLP, New York (Randy M. Mastro of counsel), for amici curiae.GONZALEZ, P.J., SWEENY, MOSKOWITZ, RENWICK, RICHTER, JJ.

Order and judgment (one paper), Supreme Court, New York County (Judith J. Gische, J.), entered October 6, 2011, after a nonjury trial, dismissing the causes of action for specific performance, injunction and deprivation of due process, and declaring that defendants are not contractually obligated to continue making rent subsidy payments under the Advantage Program, affirmed, without costs.

In this action for specific performance, and declaratory and injunctive relief, plaintiffs seek to bar termination of a rent subsidy program run by the NYC Department of Homeless Services even though federal and state funding was withdrawn effective April 2011. Plaintiffs argue that the various documents appertaining to the subsidy program (Certification Letters, Participation Agreements and Lease Riders) contractually obligate the City to continue the subsidies.

We sympathize with plaintiffs and recognize that an adverse outcome could place them at risk of again ending up in the New York City emergency shelters for the homeless and battered women—a system undoubtedly already overcrowded and overburdened. Unfortunately, this cannot constitute a valid reason to reverse the trial court's determination because we are constrained to apply cardinal principles governing the construction of contracts to the course of conduct and communications between the parties. Accordingly, we find that the trial court correctly found that the Advantage rent subsidy program for the homeless was simply a social services program, and that defendants did not intend to be bound contractually.

Brown Bros. Elec. Contrs. v. Beam Constr. Corp. (41 N.Y.2d 397, 399, 393 N.Y.S.2d 350, 361 N.E.2d 999 [1977] ) reiterates the rule applicable here that the existence of a binding contract is not dependent on the subjective intent of the parties, but on the objective manifestations of intent. Brown Bros. cautions that, in seeking a practical interpretation of the expression of the parties, disproportionate emphasis should not be placed on any single act, phrase or other expression, but on their totality given the attendant circumstances, the situation of the parties and the objectives they were striving to obtain ( see also Four Seasons Hotels v. Vinnik, 127 A.D.2d 310, 317, 515 N.Y.S.2d 1 [1987] ). Although the question of contractual intent is essentially factual in nature, this does not mean that a court is obliged to accept at face value every conclusory assertion of fact regarding intent ( id. at 318, 515 N.Y.S.2d 1).

Here, plaintiffs and the dissent place undue emphasis on the trappings of contract language such as “guarantee” or “will pay,” construing them as legal promises rather than mere assurances; it was reasonable to understand “guarantee” as defendants do, as intending to allay fears that rents would not be paid in the absence of public assistance, as had often happened under previous subsidy programs. Plaintiffs and the dissent also rely too heavily on the signing procedure, which was meant to accomplish no more than ensure that participants were aware of the terms of the program.

Accordingly, the dissent's analysis of the course of conduct and communications between the parties suffers from one fundamental flaw. Even if the tenant participants and the landlords intended to be contractually bound, there is no enforceable contract in either instance because defendants profess to have understood the documents differently with respect to their basic material nature, i.e., that the City was undertaking a governmental social services obligation that was within its discretion to terminate rather than a contractual obligation; there was no meeting of the minds ( cf. Gessin Elec. Contrs., Inc. v. 95 Wall Assoc., LLC, 74 A.D.3d 516, 518, 903 N.Y.S.2d 26 [2010] [no contract if parties have differing understanding of a material term] ).

Ultimately, as the court properly found at the nonjury trial, all of the surrounding circumstances lead to the ineluctable conclusion that the Advantage program was a social service program no different from any other, and not a contractual obligation undertaken by government. Absent a contract, there is no merit to plaintiffs' contention that the City is required to grant a second year of rent subsidies if participants meet previously established criteria.

Absent a contractual meeting of the minds, it is unnecessary to address the parties' arguments regarding the existence of consideration for plaintiffs' becoming participants in the Advantage program. In any event, contrary to the dissent's suggestions, it is a fundamental principle of contract law that a promise to perform an existing obligation is not valid consideration ( see Goncalves v. Regent Intl. Hotels, 58 N.Y.2d 206, 220, 460 N.Y.S.2d 750, 447 N.E.2d 693 [1983]; Nam Tai Elecs., Inc. v. UBS PaineWebber, Inc., 46 A.D.3d 486, 487, 850 N.Y.S.2d 11 [2007] ). Pursuant to 18 NYCRR 352.35, plaintiffs were obligated to cooperate and accept the housing offered by the Advantage program ( see McCain v. Giuliani, 252 A.D.2d 461, 676 N.Y.S.2d 151 [1998], lv. dismissed 93 N.Y.2d 848, 688 N.Y.S.2d 494, 710 N.E.2d 1093 [1999] ). Thus, their claim of providing consideration by suffering the detriment of leaving shelters and of leasing apartments that cost more than they could afford is also without merit.

All concur except MOSKOWITZ, J. who dissents in a memorandum as follows:

MOSKOWITZ J. (dissenting).

Plaintiffs are a class of formerly homeless families and individuals for whom the City paid rent through a program called Advantage. The City induced these plaintiffs, many of whom are victims of domestic violence, to leave the relative safety of the shelter system and to enter into leases for apartments they could not afford. The City accomplished this by agreeing to pay all or a portion of plaintiffs' rent for a year with the promise of a second year if they met the eligibility requirements for the Advantage program. However, once plaintiffs took the City up on its offer and moved, the City terminated that funding during the lease term.

The trial court refused to hold the City liable for the remaining rent. The trial court held that the Advantage program was merely a social benefit program that the City had a right to terminate. However, as the trial court recognized, the City can, and often does, implement a social benefit program through enforceable contracts.

Here, the City did implement the Advantage program through enforceable contracts. The City clearly agreed to pay plaintiffs' rent in return for plaintiffs' leaving the shelter system. The City also agreed to pay rent so the landlords would provide housing for the Advantage program. These bargained for exchanges support the existence of a contract, primarily between the participants and the City, but also between the landlords and the City. Thus, because the City agreed to be bound, and, because plaintiffs, by vacating the domestic violence shelter system, and landlords, by supplying apartments, provided consideration for that agreement, I dissent.

The following facts are undisputed or are from the findings of fact the trial court adopted. In February 2007, the New York City Department of Homeless Services (DHS) proposed the Advantage program, whereby it would provide rent subsidies to shelter residents who meet public assistance requirements and work at least 20 hours per week at minimum wage or above. In May 2010, DHS amended the program to increase participants' work and financial contribution requirements.

When homeless families became eligible to participate in Advantage, the City issued them a Certification Letter setting forth the terms of the program and providing that the program

“ guarantees that the subsidy portion of the rent will be paid directly to your landlord for one year. You may receive a second year of rental assistance under Advantage if you meet the eligibility criteria for a second year” (emphases added).

Those eligible for Advantage were expected to seek suitable apartments, with the loss of shelter eligibility as a possible sanction if they failed to do so. However, as the trial court found, “[t]he Advantage Tenants were not under a legal duty to rent Advantage apartments they could not afford, and they could not have been sanctioned for refusing an apartment they could not afford.”

In addition, Advantage participants were often required to sign a Participant Statement of Understanding, that the City drafted and a DHS representative witnessed and signed. Right above the signature line for DHS, the Participant Statement refers to itself as “this agreement.” The Participant Statement also provides that “[u]nder the Advantage program, the City of New York will pay a portion of my monthly rent (over and above my family's monthly rent contribution) directly to my [l]andlord (emphasis added).” It further states that if the City finds a participant eligible for a second year, “the City will pay a second year of Advantage Rent Payment to [the] Landlord on a monthly basis (emphasis added).”

When an Advantage...