New York Law Review

Tag: vested rights

  • Matter of Rockaway Care Center v. Guida, 42 N.Y.2d 326 (1977): Vesting Rights and Illegal Zoning Amendments

    Matter of Rockaway Care Center v. Guida, 42 N.Y.2d 326 (1977)

    A municipality is estopped from denying a developer’s right to complete construction under existing zoning regulations when the developer has obtained necessary permits, commenced substantial construction, and the municipality illegally prevents completion, after which the municipality attempts to claim the developer failed to meet the vesting deadline.

    Summary

    Rockaway Care Center obtained permits to build a nursing home. After substantial construction began, the City of New York enacted a stop-gap resolution halting such construction, effectively preventing Rockaway from completing the foundation before a zoning change. Rockaway sued, seeking to compel the issuance of permits. The New York Court of Appeals held that the city’s illegal act of preventing completion of the foundation estopped it from claiming Rockaway’s rights had not vested under the prior zoning regulations. The Court emphasized that the city could have amended the zoning ordinance legally, but it did not.

    Facts

    Rockaway Care Center received all necessary state and municipal approvals to construct a health-related and nursing home facility.

    On September 17, 1973, the Department of Buildings issued a foundation permit.

    Construction commenced, and by December 7, 1973, Rockaway had spent or committed approximately $700,000, with foundation work nearly complete (approximately five days from completion).

    On December 6, 1973, the Board of Estimate adopted a “stop-gap” resolution suspending permits for nursing homes and health-related facilities where substantial work was incomplete, pending consideration of legislation affecting such construction.

    This resolution halted Rockaway’s project.

    Procedural History

    Rockaway initiated a proceeding to compel the issuance of foundation and building permits.

    The initial petition was dismissed.

    The Appellate Division reversed the order and judgment, granting the petition.

    The case reached the New York Court of Appeals.

    Issue(s)

    Whether the City of New York can prevent a developer from completing construction under a valid permit by enacting an illegal stop-gap zoning resolution, and then claim the developer’s rights did not vest under the original zoning ordinance because the foundation was not completed in time?

    Holding

    No, because the city unlawfully barred construction, and is therefore estopped from using its own illegal acts as a basis for claiming the foundations were not completed in time for Rockaway’s rights to vest under the city zoning regulations.

    Court’s Reasoning

    The court found the city’s action in adopting the stop-gap resolution without complying with charter requirements, and directing the suspension of issued permits, was improper and illegal.

    The court emphasized that Rockaway had a right to vest its interest by completing the foundation under the existing zoning ordinances and the progress made.

    The court distinguished this case from others where a zoning change was applied before a permit was issued or substantial work commenced.

    In this case, Rockaway had received all necessary approvals and commenced construction with the city’s permission, changing its position to its detriment by spending a substantial sum of money.

    The court acknowledged the city’s power to amend zoning ordinances but stressed that it must be done in accordance with the law.

    The Court of Appeals explicitly stated, “Having unlawfully barred construction, respondents should now be estopped from using their own illegal acts as a basis for claiming the foundations were not completed in time for petitioners’ rights under the city zoning regulations to vest.”

    The court reinforced the importance of lawful procedure, noting, “Respondents properly could have amended the zoning ordinance if it were done in accordance with the law and the powers granted under the statute. This was not the case.”

  • Lefrak Forest Hills Corp. v. Galvin, 40 N.Y.2d 792 (1976): Vested Rights and Zoning Permit Extensions

    Lefrak Forest Hills Corp. v. Galvin, 40 N.Y.2d 792 (1976)

    A property owner does not acquire a vested right to complete construction based on a building permit when the permit was issued during a grace period after a zoning law change, and the owner fails to meet reasonable conditions attached to permit extensions.

    Summary

    Lefrak sought an extension of building permits to construct apartment buildings. The Board of Standards and Appeals denied the extension, finding Lefrak had not substantially completed the foundations by the required date. The Appellate Division reversed, holding that prior extensions and reliance on the permits created vested rights. The New York Court of Appeals reversed, holding that Lefrak did not acquire a vested right because the original permit was issued during a grace period after a zoning change, and Lefrak failed to meet the condition of substantial foundation completion for further extensions. The dissent argued the equities favored the community’s right to benefit from the updated zoning resolution.

    Facts

    In 1960, New York City adopted a zoning resolution prohibiting high-rise apartments in Forest Hills-Kew Gardens, effective December 15, 1961. During the grace period, the Long Island Rail Road sold property to Adson Industries, which filed building plans in 1961 for two 18-story buildings. Permits were issued in July 1963. Adson obtained extensions in 1964, 1965, and 1966. Franklin National Bank, the mortgagee, acquired the property in 1967 after Adson defaulted and secured extensions in 1967, 1968, 1969 and 1970. In 1971, Franklin contracted to sell to Lefrak, who modified the plans to include two 20-story towers and obtained amended permits in August 1971. In December 1971, Lefrak applied for another extension, which the Board denied.

    Procedural History

    The Board of Standards and Appeals denied Lefrak’s application for a building permit extension. The Appellate Division reversed the Board’s decision, directing that the extension be granted. The New York Court of Appeals reversed the Appellate Division, reinstating the Board’s determination.

    Issue(s)

    Whether Lefrak acquired a vested right to complete construction of its apartment buildings based on prior building permit extensions, despite failing to substantially complete the foundations by the deadline.

    Holding

    No, because the original building permit was issued during a grace period following a zoning change, and Lefrak failed to meet the reasonable condition of substantial foundation completion attached to permit extensions.

    Court’s Reasoning

    The Court reasoned that the traditional vested rights doctrine, which protects property owners who have substantially relied on a validly issued permit before a zoning change, did not apply. The original building permit was not issued before the adoption of the 1960 Zoning Resolution; it was issued during the grace period. As such, Lefrak was subject to reasonable conditions for permit extensions. The key condition was the “substantial construction of foundations.” Because Lefrak failed to meet this condition by the deadline, the Board was justified in denying the extension. The Court distinguished this case from situations where the original permit was issued before the zoning change. In those cases, a property owner could argue that their right to build had already vested. Here, the permit was issued under a specific grace period provision. The Court also noted that prior extensions granted by the Board did not bind the Board to perpetuate past errors, stating that “an administrative agency is not bound to perpetuate past errors. On the contrary, it has the power and the duty to correct an erroneous interpretation of the governing statute or even an unwise policy.” The dissenting opinion argued that the equities favored the community’s right to benefit from the 1960 Zoning Resolution. The dissent also pointed out Lefrak’s modifications to the building plans and the numerous prior extensions granted without substantial progress.

  • Sarnow v. Moving Picture Machine Operators’ Union Local 306, 29 N.Y.2d 505 (1971): The Right to Amend Union Pension Plans

    29 N.Y.2d 505 (1971)

    A union constitution’s power to amend allows for reasonable changes to pension plans, even for members who joined before the amendment, as long as the changes are made in good faith and do not affect those already receiving benefits or with approved applications.

    Summary

    Morris Sarnow, a member of the Moving Picture Machine Operators’ Union, sued to recover pension benefits he claimed he should have received between ages 60 and 65, arguing that a 1956 amendment increasing the retirement age from 60 to 65 did not apply to him because he had joined the union before the amendment. The Court of Appeals reversed the lower court’s decision, holding that the union constitution reserved the power to amend the pension plan, and the 1956 amendment was a reasonable change made in good faith. The court also found no evidence to support Sarnow’s claim that the trustees abused their discretion by not waiving the requirements due to his alleged inability to engage in gainful employment.

    Facts

    Morris Sarnow joined the Moving Picture Machine Operators’ Union in 1929. In 1944, he moved to Florida for health reasons. Prior to his move, the union incorporated a retirement plan providing weekly benefits to members aged 60 with 20 years of continuous membership. In 1951, a jointly administered pension fund was established, financed by employer contributions. Members not employed by contributing employers, like Sarnow, could participate by paying contributions. In 1956, due to financial difficulties, the union amended its constitution to increase contributions and defer the retirement age from 60 to 65 for members not working for contributing employers. Sarnow paid the increased assessments without protest until filing a complaint in 1964. He turned 65 in 1967 and began receiving a pension while pursuing his claim for benefits from ages 60 to 65.

    Procedural History

    Sarnow sued to recover pension benefits from age 60 to 65 and the contributions he paid during that time. Special Term denied the defendant’s motion to dismiss, holding that Sarnow had a vested right to his pension at the original terms. Special Term later granted partial summary judgment for Sarnow, ruling that the amendment could not affect his vested interest. The Appellate Division affirmed both orders. Sarnow then obtained final summary judgment against the fund but not the union. The Court of Appeals reviewed the intermediate appellate affirmance.

    Issue(s)

    Whether the 1956 amendment to the union constitution, which increased the retirement age from 60 to 65 for certain members, validly applied to a member who joined the union before the amendment but had not yet satisfied the original retirement requirements.

    Holding

    No, because the union constitution contained a clear reservation of the power to amend, and the 1956 amendment was a reasonable change made in good faith to address the fund’s financial difficulties. It did not affect members already receiving pensions or with approved applications.

    Court’s Reasoning

    The Court of Appeals relied on Everett v. Supreme Council, Catholic Benevolent Legion, 236 N.Y. 62 (1923), stating: “Where the reservation of authority to amend a charter or the constitution and by-laws of a society is clear, the right to have the rate of assessment and amount of benefit continued as originally provided is not vested or fixed beyond the possibility of reasonable changes to meet new conditions.” The court found that Article XI of the union’s constitution specifically reserved the power to amend. The court rejected Sarnow’s argument that the 1944 constitution didn’t reserve the power to amend the pension plan, noting that the constitution itself contained a general amendment power. The court emphasized that amendments are permissible to meet new conditions, implying the financial strain on the fund justified the change. The court also dismissed Sarnow’s argument that the trustees should have waived the retirement requirements based on his alleged disability, finding insufficient evidence to prove he was incapable of any gainful employment. The court stated the only evidence was a 1944 union letter requesting assistance finding him work, which did not demonstrate the required inability to perform “any gainful employment”.