Realty Law Digest

August 2019New York Law Journal

Development—Petitioner Granted License Pursuant to Real Property Actions and Proceedings Law §881 to Enter Adjoining Property to Construct Hotel—Petitioner Must Pay Attorney Fees, Other Professional Fees, Provide Insurance and Indemnity

A petitioner had commenced a special proceeding, pursuant to Real Property Actions and Proceedings Law (RPAPL) §881 (§881) against an adjacent land owner (respondent), to obtain a license “to enter the adjoining property to erect, maintain and deconstruct scaffolding, sidewalk bridges/sheds, roof protection and overhead protections for the purpose of ensuring the safety of the public and respondent’s adjoining property during the construction of petitioner’s property (Work).”

The petitioner is building a nine-story hotel adjacent to the respondent’s property, has building plans approved by the NYC Dept. of Buildings (DOB) and has commenced construction. The petitioner alleged that it cannot continue construction above the second story level without doing the Work and the Work requires the respondent’s consent for the petitioner to access the respondent’s property. The respondent allegedly refused to consent to provide the access, despite several “reasonable requests.” The petitioner had allegedly drafted and sent to the respondent for its review and negotiation an access agreement. However, its efforts were allegedly met with “silence and cancelled appointments to meet.”

The petitioner submitted an affidavit from its general contractor (GC) which described the Work. The respondent argued that the Work would prevent its automotive repair garage tenant from operating its business.

The court explained “§881 allows a property owner to petition for a license to enter the premises of an adjoining owner “when such entry is necessary for making improvement or repairs to the petitioner’s property and the adjoining owner has refused such access. A proceeding pursuant to…§881 is addressed to the sound discretion of the court…which must apply a reasonableness standard in balancing the potential hardship to the applicant if the petition is not granted against the inconvenience to the adjoining owner if it is granted….” Courts are to consider “the nature and extent of the requested access, the duration of the access, the protections to the adjoining property that are needed, the lack of an alternative means to perform the work, the public interest in the completion of the project, and the measures in place to ensure the financial compensation of the adjoining owner for any damage or inconvenience resulting from the intrusion….”

Based on the foregoing factors and “the respective interest of the two sides,” the court granted the petition. The court noted that the new construction “has the potential to benefit greatly the surrounding business in this area.”

Moreover, the affidavits of the petitioner and it’s GC established that the “limited access and placement of structures would protect the respondent’s property and would not unduly interfere with the use of the premises; that the access would be limited and is expected by the petitioner to last no more 15 months; that the temporary structures to be erected would not be unduly invasive and unnecessary in order for the petitioner to build the nine-story hotel while protecting the adjoining property as required by the New York City Building Code; that the public interest would be served by the development of the project; and that the respondent would be financially protected by the naming of the respondent as an additional insured on the relevant construction insurance policies and by petitioner’s promise to identify it for any loss….”

Thus, the court concluded that the petitioner would “suffer an undue hardship if the license pursuant to…§881 were to be denied.” In contrast, the respondent “would experience only temporary and relatively minor inconvenience as a result of its issuance.”

The court explained that a decision whether to award a license fee is “discretionary” and §881 provides that a “license shall be granted…in an appropriate case upon such terms as justice requires….” Prior judicial decisions awarded license fees and ordered that petitioners pay all of the respondent’s legal and engineering costs.

In the subject case, the court ordered the petitioner to pay all of the respondent’s “legal fees sustained and to be sustained,” as well as “engineering or other technical support services fee sustained by respondent.” The court also ordered that during demolition or construction, the petitioner not “prevent the respondent or its tenant from gaining access” to the respondent’s property or prevent the respondent’s tenant from using its property as an auto body shop. The court warned, inter alia, that any disruption to the tenant’s “ability to conduct business may result in the revocation of this license.”

Accordingly, the court’s order provided that the license was to continue for up to 18 months, the petitioner must obtain insurance naming the respondent as an additional insured in the minimum amount of 8 million dollars, and the petitioner also obtain insurance naming the respondent in the amount of $500,000 for any interruption to the tenant’s business.

The court further ordered that the tenant may apply to the court to either vacate or modify the license if there is any disruption to the respondent or it’s tenant’s business. The court also directed that the Work be done only by “licensed contractors,” that the petitioner remain liable for any damage caused to the respondent’s building, that the Work be limited to the scope of work approved by the NYC Dept. of Buildings and that the petitioner “not block or obstruct any access to the premises.” Further, the petitioner was directed to pay all of the respondent’s reasonable legal, engineering and technical services, professional and consulting fees incurred in connection with this matter.

Additionally, the petitioner was required to provide an additional undertaking in the amount of $1.5 million to secure payment for any damage to the respondent’s property and to secure payment for the respondent’s professional fees and for payment of the petitioner’s obligation to indemnify the respondent for any liabilities, claims, damages or losses that the respondent incurs as a result of the Work. The court also directed that if the petitioner did not complete its work during an 18-month period, the petitioner could seek an extension, but such extension will be granted only for “good cause shown.”

The court further directed that the petitioner notify the respondent in writing when the work has been completed and it has removed all protection from the respondent’s property. The order also directed that the petitioner not interfere with the respondent’s access to its property and “quality of life” and take the necessary “steps, measures and precautions to prevent any damage to respondent’s property.”

The petitioner was required to “immediately report, in writing, to the respondent, any damage to the respondent’s property cause[d] by the…(Work)” and the petitioner is to “cure any violation placed against the respondent’s property by a governmental or administrative agency as a result of the…(Work).” The petitioner also must “reimburse the respondent for any fines or penalties imposed as a result of such violations.” Moreover, upon completion of the Work, the respondent’s property is to be “returned to its original condition” and all material used in construction and any resultant debris be removed from the licensed area.

Finally, the court held that the amount of reasonable attorney’s and professional’s fees, as well the amount of any actual provable damages would be referred to a Referee and be based on “hourly rates.”

Comment: This decision is of interest because these disputes have become very common in New York City, the decision delineated conditions necessary to protect the adjoining property owner and many of these disputes are resolved through negotiated agreements which are not available to the public.

Matter of AIH Grp. v. C.J.F. & Sons Enters., Supreme Court, Queens Co., Case No. 339/2019, decided May 29, 2019, Modica, J.

Landlord-Tenant—Court Denied Occupant’s Claim For Succession Rights—the Occupant and His Ex-Wife Engaged in a Systematic Pattern of Deception Purposely Concealing the Occupancy Status for More Than 20 Years

A respondent appealed from a judgment which had been entered after a non-jury trial, which awarded possession to landlord in a holdover proceeding. The respondent and the “non-party tenant, (respondent’s former wife), engaged in a persistent and systematic pattern of deception whereby they purposefully concealed respondent’s occupancy status for more than two decades.”

The trial court had found that neither the respondent nor the tenant had “ever informed the petitioner that they divorced in 1987 and that the tenant vacated the apartment and moved to Florida in the early-1990s.” The respondent had signed the tenant’s “name on renewal leases, money orders for rent payments and apartment-work orders for many years after tenant moved out.” Although the divorce and the tenant’s relocation had occurred many years earlier, the tenant had “faxed a letter to the petitioner in November 2003, stating, ‘Please allow my husband (respondent) to pick up our apt keys. I am unable to do so because I am in Florida on a business matter.’” In August 2013, the tenant sent the landlord a letter stating she was vacating the apartment where “I have resided with my husband, (respondent) since approximately 1980.”

The court observed that the respondent’s “course of deception also continued through August 2013, when he intentionally held himself out as tenant’s current ‘husband’—even supplying (landlord) with a copy of his marriage certificate—long after the parties were legally divorced and residing separately.”

The court reasoned that “considering the severity and duration of the deceptive conduct, respondent must be deemed to have waived any claim that he might have had to succeed to the tenancy…. The law is settled that succession rights are not automatically vested in a potential successor upon the departure of a stabilized tenant, but remain inchoate until the occupant’s ‘status as a qualified successor is ratified by judicial determination at a time after the tenant’s death’…, with the evidentiary burden on the succession issue resting with the claimed successor…. To ensure the fair and orderly resolution of succession disputes, the governing Code provision (NYCRR §2523.5[b][1]) contemplates the timely interposition of succession claims via a procedure described in the case law as follows:

in the ordinary course of events, a family member, who remains in the apartment following the departure of the named tenant, will receive a renewal notice toward the end of the lease term, directed to the named tenant; the recipient will thereupon inform the landlord of the tenant’s departure as well as his status as a family member; and, assuming there is no dispute regarding his status, the surviving family member will receive a renewal lease designating him as tenant of record….

The court reasoned that the “long-term rouse carried out by respondent and tenant ‘represented a substantial departure from the ordinary course’…and, by necessity, unduly prejudiced petitioner in the prosecution of its eviction claim. Indeed, the prolonged efforts to actively conceal the 1987 divorce and tenant’s early-1990s departure from the premises prevented petitioner from undertaking a contemporaneous investigation into the emotional and financial underpinnings of respondent’s ‘non-traditional’ family member succession claim …. The prejudice to the landlord of having to defend against the quarter of a century old succession claim interposed here is self-evident.”

The court distinguished a prior court decision which involved the son of a stabilized tenant who had resided in an apartment for approximately 30 years with the knowledge of the landlord. The son was listed as an occupant of the apartment on all lease renewals and the tenant had made repeated unsuccessful efforts to her landlord to add her son to the lease.

Accordingly, the court awarded a judgment of possession for the landlord.

186 Norfolk LLC v. Euvin, Appellate Term, First Dept., Case No. 570315/18, decided June 6, 2019, Shulman, P.J., Gonzalez, Edmead, JJ., All concur.

Land Use—Board of Zoning Appeals Improperly Based Decision on Post-Hearing Submissions That Were Not Provided to the Petitioner

A petitioner sought an order vacating and annulling a decision by a respondent town Board of Zoning Appeals (BZA). The BZA had granted the application of a respondent hospital for variances in connection with a planned surgical center (project) and had issued a “negative determination regarding environmental impacts of the…project.”

The petitioner alleged violations of the NYS Environmental Quality Review Act (SEQRA) review process and the BZA’s failure to properly assess the hospital’s application. The town’s Dept. of Building Safety had initially issued a notice of disapproval. Thereafter, it issued a revised notice of disapproval, based on issues involving “height, setbacks, parking and landscaping.” The hospital then appealed to the BZA.

An environmental assessment form was completed and public hearings were held. Following the public hearings, additional documents were provided to the BZA. Those documents included responses to the petitioner’s testimony, in addition to “letters and additional information regarding various topics including sewer availability, traffic, and sun shading devices.” Additionally, the town Dept. of Planning and Environmental Protection had requested additional information relating to environmental issues and the hospital had provided “detailed explanations.”

The BZA thereafter issued a “negative declaration,” finding that the project would not result in any significant “adverse impact on the environment.” Thus, an environmental impact statement was not prepared.

The court explained:

[t]he Court of Appeals has held that a [BZA] performs a quasi-judicial function, and as such, all parties, including applicants and opponents alike, must be given the opportunity to present evidence or facts for [BZA] members to consider in rendering a determination…. Where evidence has been received under circumstances which would deny a party the opportunity to appraise or rebut it, the courts have expressed disapproval of the practice…. Reliance on evidence received after the close of a hearing or on materials outside the record has resulted in the annulment of a municipal board’s action….

The court rejected the petitioner’s claim that the BZA had been misled as to the size of project. However, the court explained that the BZA acknowledged that it had “accepted and relied upon documents which were submitted after the public hearing and not provided to the petitioner. Specifically, by requesting inter alia, ‘additional information in order to assist in formulating a Determination of Significance pursuant to (SEQRA)’ the record is clear that the BZA improperly relied on such post hearing submissions, which were substantial in nature rather than de minimis, in making its determination….”

The court stated that “even if the public hearing had remained open, a contention which is not supported by the record here, fairness requires that petitioner be given the opportunity to rebut such evidence,” “even though petitioner was not the applicant in the matter, as petitioner’s standing has not been challenged….”

Accordingly, the court vacated the petition, annulled the BZA determinations and remanded the matter to the BZA for further consideration and a determination, pursuant to a public hearing wherein the petitioner “is granted a proper opportunity to submit and rebut evidence upon which board members can render the proper determination based upon the evidence….”

Matter of Greentree Found. v. Mammina, Supreme Court, Nassau Co., Case No. 90/19, decided June 17, 2019, Feinman, J.

Scott E. Mollen is a partner at Herrick, Feinstein LLP.

This article originally appeared in the August 6, 2019 edition of New York Law Journal.