Harlem Urban Renewal, the Statute of Limitations, and the Doctrine of Stare Decisis

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The Supreme Court, New York County recently issued an interesting  decision by the Hon. Shlomo S. Hagler. The case was in the Matter of City of New York, Fifteenth Amended Harlem-E. Harlem Urban Renewal Plan (East 125th Street), Stage 1. The Decision and Order was issued August 13, 2015 and dealt with several motions by the respondent condemnees, which will be discussed herein. The condemnees collectively included City Lights Properties Three LLC, 2305-07 Third Avenue LLC, 2017 East 125th Street LLC, and 205 East 125th Street LLC.

The procedural background of the case is important in order to understand the instant Decision: the City sought to acquire four parcels in connection with the project and held a public hearing, made determination and findings, and published them. The condemnees brought a petitioner to annul the Determination and findings, and the Appellate Division denied. The Appellate Division found that the City had complied with its obligations, that the acquisition was made for the public benefit, and that the Condemnees had not presented a valid basis to annul the determination and findings. The Petitioners further appealed to the Court of Appeals, which dismissed the appeal on February 17, 2011 sua sponte on the ground that “no substantial constitutional question was directly involved.” This date became a central focus for the instant motions…

Almost three years later, the condemnor brought a petition to condemn, dated February 12, 2014. Under the EDPL (section 401[A][3]), a Condemnor must commence acquisition proceedings “within three years of the entry of a final order or judgment on judicial review” pursuant to EDPL 207.

The Condemnees answer sought dismissal of the Condemnation petition based on three arguments:

• that the condemnation would destroy minority owned businesses and the accompanying jobs and livelihoods they provide
• that the acquisition will promote gentrification of the neighborhood with no benefit to the minority population currently living there and
• that there is no articulated public purposes for the exercise of eminent domain

Moreover, the Condemnees raised six affirmative defenses which were:

1.  the petition is barred by the three year statute of limitations
2. the city engaged in “schemes and machinations” and is guilty of “unclean hands”
3. lack of personal or in rem jurisdiction
4. improper notice and insufficient proof thereof
5. equitable relief based on foregoing defenses
6. failure to comply with EDPL 402

The Court’s most in-depth analysis came with respect to the statute of limitations argument. Under the EDPL (section 401[A][3]), a Condemnor must commence acquisition proceedings “within three years of the entry of a final order or judgment on judicial review” pursuant to EDPL 207.  The central issue became, when did the cause accrue? Did it run from the date of the Appellate Division’s decision, as the condemnees argued? If so, the petitioner/condemnor would be time-barred. But if it ran from the Court of Appeals’ dismissal of the appeal, the Petition was timely commenced.

Hon. Shlomo Hagler began his analysis by noting that the First Department had not conclusively decided the issue, but the Fourth Department, in Matter of City of Syracuse Indus. Dev. Agency (JC Penney Corp), 32 AD3d 13332 [4th Dept 2006], lv denied 7 NY3d 714 [2006] had determined that the statute of limitations began to run on the date the Court of Appeals denied respondents leave to appeal and dismissed the appeal. The Appellate Division affirmed.

Citing the doctrine of stare decisis, Hon. Shlomo Hagler noted that “where the issue has not been addressed within the Department, [the] Supreme Court is bound by the doctrine of stare decisis to apply precedent established in another Department, until a contrary rule is established by the Appellate Division in its own Department or by the Court of Appeals.” (citing D’Alessandro v Carro, 123 AD3d 1 [1st Dept 2014]).

The Court further noted that, from a practical standpoint, using the date the Court of Appeals issued a decision on the matter

[B]etter safeguards due process rights by permitting the condemnee’s challenge to be fully heard prior to commencement of condemnation proceedings; it provides an easier demarcation for the public and litigants to recognize that the accrual date begins when the Court of Appeals’ finally rules upon the legal issues’ and it promotes judicial economy by requiring finality so that the condemnor will not needlessly commence proceedings, and litigate for months or years, only to have the Court of Appeals reverse the Appellate Division’s order permitting the taking of the condemnee’s property.

Thus, the Court concluded that the Petition to Condemn was not time-barred by the Statute of Limitations, as the clock began to run upon the Court of Appeals issuance of its February 17, 2011 decision.

As to the other arguments raised as affirmative defenses, the Court found that, inter alia, a vesting petition cannot be opposed by on unclean hands or any other equitable remedy under NY law; there was not sufficient evidence presented to affirmatively show non-compliance with the publication and notice requirements under the EDPL at this stage; and the arguments regarding a lack of public purpose for the project were previously raised and rejected by the Appellate Division.

The full text of the Supreme Court’s Decision in Harlem Renewal can be read by clicking here.