New York Law Review

Tag: Good Faith Reliance

  • Perlbinder Holdings, LLC v. City of New York, 27 N.Y.3d 118 (2016): Vested Rights and Erroneously Issued Permits

    27 N.Y.3d 118 (2016)

    A party cannot acquire a vested right to develop property in accordance with a permit that was issued in error; any such permit can be revoked by the issuing agency, even if the party relied on the permit in good faith.

    Summary

    The New York Court of Appeals addressed whether Perlbinder Holdings, LLC, acquired a vested right to maintain a large advertising sign after the New York City Department of Buildings (DOB) revoked the permit for the sign. The DOB had initially approved the sign based on an erroneous interpretation of zoning regulations. Perlbinder argued it relied on the permit in good faith, incurring substantial expenses. The Court held that because the permit was issued in error, Perlbinder could not establish a vested right. It reversed the Appellate Division’s decision and dismissed the petition, finding no grounds to compel the city to allow the sign.

    Facts

    Perlbinder owned property with a pre-existing advertising sign. Zoning regulations changed, but the original sign was grandfathered. In 2002, Perlbinder obtained a variance to build a mixed-use building, also seeking to relocate and modify the sign. The original sign was demolished in 2008 due to building violations. Perlbinder applied for new sign permits, which were initially granted by the DOB. However, after a DOB audit, the permits were revoked because the sign violated zoning regulations. Perlbinder appealed to the Board of Standards and Appeals (BSA), which affirmed the revocation. Perlbinder claimed it relied in good faith on the DOB’s approvals, spending substantial funds on the new sign.

    Procedural History

    Perlbinder filed an Article 78 proceeding in Supreme Court, which denied the petition and upheld the BSA’s decision. The Appellate Division reversed, remanding the case to the BSA to determine whether Perlbinder was entitled to a variance based on the New York City Charter, finding the BSA’s denial of considering good faith incorrect. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether Perlbinder acquired a vested right to maintain the new advertising sign despite the fact that the permit was erroneously issued.

    2. Whether the Appellate Division correctly remanded to the BSA to determine if a variance should be granted based on NY City Charter § 666(7).

    Holding

    1. No, because the permit was erroneously issued.

    2. No, because a variance determination was not the appropriate remedy.

    Court’s Reasoning

    The court reiterated the principle that a party can acquire a vested right if they rely on a valid permit, make substantial changes, and incur significant expenses. However, the court emphasized that “Vested rights cannot be acquired, however, where there is reliance on an invalid permit.” The court found the DOB’s initial approval was incorrect as the new sign did not qualify as a grandfathered replacement. The court also held that since the 2008 permit was unlawfully issued, Perlbinder could not rely on it to acquire vested rights. Furthermore, the court held that the Appellate Division erred by effectively converting Perlbinder’s appeal into a variance application under NY City Charter § 666(7) because that provision covers general authority while the request involved a zoning variance which requires different standards and procedures. The court directed that a determination of good faith, if a variance was sought, should be made by the agency.

    Practical Implications

    This case reinforces the importance of valid permits in establishing vested rights. Property owners and developers must ensure permits are properly issued under existing zoning regulations. Reliance on an invalid permit, even in good faith, does not create vested rights. Local government agencies are able to revoke permits issued in error to correct errors, even when the property owner has spent money in reliance on them. This case illustrates how significant a proper zoning analysis is to development. If the permit is invalid from the start, no amount of reliance will save it.

  • Pantelidis v. New York City Board of Standards and Appeals, 10 N.Y.3d 846 (2008): Estoppel Against Revocation of Building Permits

    10 N.Y.3d 846 (2008)

    A municipality can be estopped from revoking a building permit if the permit holder relied in good faith on the validity of the permit and incurred substantial expenditures as a result.

    Summary

    George Pantelidis sought a variance to complete construction of a building. The New York City Board of Standards and Appeals (BSA) initially denied the variance, but the Supreme Court reversed, finding Pantelidis had acted in good faith reliance on the initial building permit. The Appellate Division affirmed, holding that Supreme Court was the proper venue for the hearing on good faith reliance. The Court of Appeals affirmed, finding that the Supreme Court was the proper venue for the hearing and that the record was sufficiently developed to conclude that Pantelidis satisfied the criteria for the variance.

    Facts

    Pantelidis obtained a building permit from the Department of Buildings (DOB) to construct a building.

    He then proceeded with construction, incurring significant expenses.

    Later, the DOB revoked the permit, contending that the construction violated zoning regulations.

    Pantelidis then applied to the BSA for a variance to allow the construction to proceed, which was denied.

    Procedural History

    Pantelidis appealed the BSA’s denial to the Supreme Court, which reversed the BSA’s decision.

    The Supreme Court found that Pantelidis had relied in good faith on the initial building permit.

    The BSA appealed to the Appellate Division, which affirmed the Supreme Court’s decision.

    The BSA then appealed to the New York Court of Appeals.

    Issue(s)

    Whether the Supreme Court, rather than the BSA, was the proper venue to conduct a hearing on whether Pantelidis relied in good faith upon the permit issued by the Department of Buildings.

    Whether the record was sufficiently developed for the Supreme Court to conclude that Pantelidis satisfied the criteria for the requested variance.

    Holding

    Yes, because an issue of fact existed regarding Pantelidis’s good faith reliance, and the courts below properly concluded that the hearing on that issue could be conducted by the Supreme Court and not the agency.

    Yes, because the record was sufficiently developed and Supreme Court, after conducting the good faith hearing, properly concluded as a matter of law that Pantelidis had satisfied the criteria set forth in the Zoning Resolution and that the Board of Standards and Appeals should issue the requested variance.

    Court’s Reasoning

    The Court of Appeals affirmed the lower courts’ decisions, holding that the Supreme Court was the proper venue for the hearing on Pantelidis’s good faith reliance.

    The Court reasoned that an issue of fact existed regarding whether Pantelidis relied in good faith on the permit.

    Because the record was sufficiently developed, the Supreme Court could determine that Pantelidis satisfied the criteria for the variance as a matter of law.

    The court implicitly recognized the principle of equitable estoppel against the government, preventing the revocation of a permit when a party has detrimentally relied on it in good faith. This aligns with the policy consideration of fairness and preventing injustice when individuals rely on official approvals.

    The Court did not provide an extensive legal analysis but focused on the procedural aspects and the sufficiency of the record to support the lower court’s findings.