New York Law Review

Tag: Multiple Dwelling Law

  • Guzman v. Haven Plaza Housing Development Fund Co., 69 N.Y.2d 559 (1987): Municipal Liability for Failure to Enforce Regulations

    Guzman v. Haven Plaza Housing Development Fund Co., 69 N.Y.2d 559 (1987)

    In the absence of a special relationship creating a duty to exercise care for the benefit of particular individuals, a municipality cannot be held liable for failure to enforce a statute or regulation designed for the general public’s protection.

    Summary

    This case arose from the collapse of the Broadway Central Hotel, resulting in multiple deaths, injuries, and property damage. The plaintiffs sued the building owners, the net lessee, and the City of New York. The trial court found the city liable for failing to ensure the building’s dangerous condition was remedied, but the Court of Appeals reversed, holding that the city owed no special duty to the plaintiffs. The Court also addressed the liability of the building owners under the Multiple Dwelling Law, affirming their liability due to their retained right to enter for inspection and repairs.

    Facts

    The Broadway Central Hotel building collapsed on August 3, 1973. The City of New York’s Department of Buildings was aware of dangerous structural conditions in the building, specifically an ever-widening crack in a weight-bearing wall. The building contained both residential units and commercial spaces. The owners, Latham and Edwards, had a net lease agreement but retained the right to enter for inspection and repairs.

    Procedural History

    Forty-three actions were consolidated into one case. The Supreme Court held the building owners 25% liable, the net lessee 45% liable, and the City of New York 30% liable. The Appellate Division modified the judgment by granting the city indemnification from the net lessee. The City of New York appealed the finding of liability against them. Latham and Edwards also appealed the finding of liability against them.

    Issue(s)

    1. Whether the City of New York can be held liable for failing to enforce provisions of the city’s Administrative Code relating to building safety in the absence of a special relationship with the plaintiffs.
    2. Whether the owners of a multiple dwelling can be held liable to commercial tenants under Section 78 of the Multiple Dwelling Law for structural defects when they retain a right of entry for inspection and repairs.

    Holding

    1. No, because in the absence of some special relationship creating a duty to exercise care for the benefit of particular individuals, liability may not be imposed on a municipality for failure to enforce a statute or regulation.
    2. Yes, because the owners retained sufficient control over the property through their reserved right to enter for inspection and repairs, and the structural defect had a direct relation to the maintenance of the building as a tenantable habitation.

    Court’s Reasoning

    Regarding the City’s liability, the Court of Appeals relied on the established principle that municipalities are generally not liable for failing to enforce statutes or regulations designed to protect the general public, absent a special relationship creating a duty to specific individuals. The court stated, “it has long been the rule in this State that, in the absence of some special relationship creating a duty to exercise care for the benefit of particular individuals, liability may not be imposed on a municipality for failure to enforce a statute or regulation” (O’Connor v City of New York, 58 NY2d 184, 192). Since no special relationship was established between the city and the plaintiffs, the city could not be held liable.

    Regarding the owners’ liability, the court found that Section 78 of the Multiple Dwelling Law, which requires owners to keep buildings in good repair, applied in this case because the structural defect was central to the entire building and affected its habitability. The court cited Altz v Leiberson, 233 NY 16, 18. The court also emphasized that the owners retained a right of entry for inspection and repairs under the net lease, which constituted sufficient control to subject them to liability. The court noted that “[a]lthough an owner will not be held liable under section 78 where it has completely parted with possession and control of the building, the owners here reserved the right under the terms of the net lease to enter for inspection and repairs. This reservation constituted a sufficient retention of control to subject the owners to liability”. Additionally, the court affirmed the finding that the owners had both constructive and actual notice of the dangerous condition.

  • Central Savings Bank v. City of New York, 280 N.Y. 9 (1939): Constitutionality of Retroactively Impairing Mortgage Liens

    280 N.Y. 9 (1939)

    A municipality cannot enact legislation that retroactively impairs the priority of existing mortgage liens to enforce compliance with housing codes, as this violates the Due Process and Contract Clauses of the U.S. and New York Constitutions.

    Summary

    Central Savings Bank challenged the constitutionality of a 1937 amendment to the Multiple Dwelling Law, which allowed New York City to prioritize liens for housing code violations over existing mortgages. The Court of Appeals held the amendment unconstitutional as applied to prior mortgagees. The court reasoned that the law deprived mortgagees of their contractual rights and property without due process by allowing the city to unilaterally impose liens that diminished the value of their security without providing an opportunity to be heard on the reasonableness of the expenses. The law forced mortgagees to finance improvements without their consent, impairing their existing contractual lien priority.

    Facts

    Central Savings Bank, Emigrant Industrial Savings Bank, and Dry Dock Savings Institution collectively held approximately 4,500 mortgages on old law tenement houses in New York City. Central Savings Bank held a $20,000 first mortgage on a property at 45 First Avenue, dated March 24, 1927. The property had existing violations for failing to comply with the Multiple Dwelling Law. The Department of Housing and Buildings issued an order to remove the violations. The city intended to make the repairs itself and impose a lien of $1,621 on the property that would take priority over the bank’s mortgage.

    Procedural History

    The banks brought a lawsuit challenging the constitutionality of Section 309 of the Multiple Dwelling Law, as amended by Chapter 353 of the Laws of 1937, as it applied to them as mortgagees. The lower court ruled in favor of the City. The banks appealed to the New York Court of Appeals.

    Issue(s)

    Whether Section 309 of the Multiple Dwelling Law, as amended by Chapter 353 of the Laws of 1937, is constitutional under the United States and New York State Constitutions, specifically regarding its impact on the rights of existing mortgagees.

    Holding

    No, because the law impairs the contractual rights of mortgagees and deprives them of property without due process of law, violating both the Federal and State Constitutions.

    Court’s Reasoning

    The court reasoned that the amendment to the Multiple Dwelling Law unconstitutionally impaired the mortgagees’ contractual rights and deprived them of property without due process. The court emphasized that while the state has the power to regulate tenement houses for public health and safety, it cannot force mortgagees to bear the cost of improvements without their consent or an opportunity to be heard. The court stated, “The mortgagee not being in possession, has no option whatever, but must sit idly by while the department or the owner proceeds to diminish the value of his lien. The work being done, and the record and affidavit being filed with the Board of Assessors, as required, the expenses become a lien upon the property ahead of his mortgage, all of which is final as to him. The law affords him no opportunity to be heard as to the reasonableness of the proceeding or the expenses. His property is thus taken without due process of law.” The court distinguished the mortgagee’s situation from the owner’s, noting that the owner could choose to close the building or convert it to other uses, whereas the mortgagee had no such option and was forced to accept a diminished security interest. The court also rejected the argument that the improvements necessarily increased the value of the property, stating, “It is a speculation, with the chances greatly against their doing so. We may fairly assume that the lien given to the city for the required improvements very materially affects the mortgage security, the property of the mortgagee, and abrogates the contract which he has made with the mortgagor.”