Committee to Save Montague Street, Inc. v. Board of Estimate

No. 2767/86 (N.Y. Sup. Ct. February 19, 1986)

The court holds that a citizens' group is barred by the doctrines of laches and virtual representation from moving to enjoin a major development project in Brooklyn, New York, on the grounds that city officials and the developer violated the National Environmental Policy Act (NEPA) and the National Historic Preservation Act (NHPA). The project, which qualified for federal funding under the Urban Development Action Grant Program, was first challenged in federal court by a different plaintiff on NEPA and NHPA grounds. A settlement agreement was reached in the federal suit modifying the original project plan. The court holds that petitioner's three-and-one-half month delay in filing this suit after the federal settlement was unreasonable, and thus petitioner's action is barredby the doctrine of laches. It is highly unlikely that petitioner's members, intimately involved in the efforts to block this project from the outset, were unaware of the federal settlement, and any additional delay would doom the project. The court holds that petitioner is collaterally estopped from obtaining injunctive relief. Although petitioner was not a named party in the federal suit, the court holds that it was so closely aligned with the federal plaintiffs that its state court action is barred by the doctrine of virtual representation. Petitioner chose to participate in community opposition to the project and to monitor and assist in the federal litigation instead of exercising its right to intervene and thus is bound by the federal settlement.

Even if petitioner is only estopped from raising issues related to the original plan, the court holds that respondents have substantially complied with the requirements of the law for the modified plan. Respondent's decision not to prepare a supplemental environmental impact statement after the plan was modified to narrow the building to reduce the blockage of light and air and to add two floors was not arbitrary and capricious. Respondents also substantially complied with the notice requirements of the city's Uniform Land Use Review Procedure and the safety requirements in the federal settlement. Finally, the court rejects petitioner's claims of political influence and lack of competitive bidding.

Counsel for Petitioner
Thomas M. Kennedy
Lewis, Greenwald, Kennedy & Lewis
232 W. 40th St., New York NY 10018
(212) 382-0029

Counsel for Respondents
David Paget
Sive, Paget & Riesel
425 Park Ave., New York NY 10022
(212) 421-2150

[16 ELR 20773]

Ascione, J.:

Petitioner moves for a preliminary injunction staying enforcement and implementation of Resolutions R-3083 and R-2932, approved by the Board of Estimate on December 5, 1985.

The Plan

This case arises out of one of the most ambitious and controversial development projects for the Borough of Brooklyn in the last ten years. It involves a variety of federal and state laws addressing both environmental and historic preservation concerns. Plaintiff, the Committee to Save Montague Street Inc., ("CSMS") is a nonprofit corporation which seeks to prevent the project from being implemented.

The project in question is to be constructed on City owned land bordering a Brooklyn Heights historical district. The original proposal was for a 19 story office building, approximately 375 feet high, providing 600,000 square feet of space. In addition, there is to be a three story parking garage providing space for 225 cars. The City will give a 99 year lease to the Public Development Corporation, which will assign its interest to respondent Forest City Pierrepont Associates, ("Forest City"). Forest City has already agreed to lease a major portion of the space to Morgan Stanley & Co. The project is designed to meet the changing economic picture of the City. Many companies have found that Manhattan rants have become prohibitive. At the same time, New Jersey and other suburban areas have attempted to lure firms to relocate there, offering an ample supply of space, lower rents and considerably lower tax rates. One of the ways in which the City can successfully compete with these localities is to offer attractive arrangements for corporations who wish to locate their "back-office" functions in the outer boroughs. Morgan Stanley, which had contemplated a move to New Jersey, instead accepted this opportunity to locate its back office computer operations in downtown Brooklyn. The construction project, and the businesses to be located in the completed building, could create thousands of badly needed jobs and millions of dollars of revenues for the City.

On June 14, 1985, the City, the Public Development Corporation ("PDC") and Forest City entered into a "letter of intent" relating to the project. The letter required that the Board of Estimate approve the plan no later than December 5, 1985. On July 31, 1985, the City and the developer applied to the federal government (Dept. of Housing and Urban Development) for assistance under the Urban Development Action Grant ("UDAG") program. The applicants answered "no" to the question on the application form which asked whether historic properties would be affected. At about the same time, the parties prepared and made public a Draft Environmental Impact Statement ("DEIS"). On September 11, 1985, a public hearing was held with respect to the DEIS. There were five speakers at the meeting. In addition, a written comment period was kept open until September 30, 1985.

The parties were required to comply with the Uniform Land Use Review Procedure ("ULURP"; City Charter § 197-C). The project required, inter alia, a waiver of the height and set back requirements of the zoning district and the approval of the lease to the PDC. ULURP involves a three-tiered review by the Community Board, the City Planning Commission and the Board of Estimate. The ULURP procedure began when the application was submitted to the City Planning Commission, which, in turn, referred the matter to Community Board 2.

On September 11, 1985, Community Board 2 held a public hearing. Some speakers supported the project, some advocated a scaled down project and some opposed it in its entirety. The Community Board, inter alia, passed a resolution supporting Morgan Stanley's move to the downtown Brooklyn area but urging redesign of the project so that the interests of community residents could be protected. The City Planning Commission conducted a hearing on October 2, 1985, and on October 16, 1985, submitted a report to the Board of Estimate. The project was also approved by the Borough Board of October 17, 1985. Since the project involved federal funding, the parties were required to comply with the National Environmental Policy Act ("NEPA"; 42 U.S.C. § 4321 et seq) and the National Historic Preservation Act ("NHPA"; 16 U.C.C. § 470 et seq). In accordance with 36 CFR § 801.6 and 801.7(a), the PDC forwarded an evaluation of the effect of the project on historic properties to the State Historic Preservation Officer ("SHPO"). The designated SHPO, who was the Deputy Commissioner for Historic Preservation, notified the PDC that in the opinion of the SHPO, the project would have no effect upon historical and cultural resources. In addition, the "Lead Agencies" (Department of Environmental Protection and the City Planning Commission), prepared a Final Environmental Impact Statement (FEIS), which was submitted to the appropriate federal authorities.

Federal Lawsuit

An action entitled Brooklyn Heights Association, St. Ann's School et al. v. City of New York (CV-85-3726) was commenced in the United States District Court for the Eastern District of New York. That lawsuit, in substance, alleged the following: (1) The FEIS does not comply with federal or state law in that it presented the plan in a favorable light by reason of economic factors even though it acknowledged that the proposed building would significantly alter the historic character of the area, significantly intrude upon the sky exposure plane and adversely affect traffic air quality in the area; (2) On the UDAG application, the parties falsely stated that the project would have no effect on historic properties, thus evading the requirement of federal law that comments be obtained from the Federal Advisory Council on Historic Preservation; (3) The State Historic Preservation Officer erroneously stated that the project did not have an adverse impact upon historic properties even though the DEIS indicated that there was a significant impact; (4) members [16 ELR 20774] of the community were not afforded an adequate opportunity to participate in the ULURP process.

On October 25, 1985 the litigants entered into a stipulation of settlement which provided for a dismissal of the action, with prejudice, on the following conditions: (1) The width of the building was to be narrowed so as to reduce the impact on light and air but the number of stories was increased from 19 to 21 and the total height increased from 375 feet to 397 (so that the building would still contain about 600,000 square feet of space); (2) Forest City was to provide certain community amenities, including a computer facility for St. Ann's School; (3) A safety committee would be created and would include representatives from the litigation plaintiffs, the City of New York and Forest City. Forest City was them to consult with the Safety Committee with respect to the selection of a qualified independent engineer to prepare a study on the impact of construction in line with requirements of the New York City Landmarks Preservation Commission. Forest City would cause the preparation of a Site Safety Plan in consultation with the Safety Committee. In addition, a flagman would be present to direct trafic whenever St. Ann's School was in session.

Post Settlement Proceedings

On October 24, 1985, the Board of Estimate conducted a public hearing and subsequently approved applications in connection with the project. The Board was made aware of the terms of the settlement.

Since the original plan was now being modified, further proceedings were necessary. On October 28, 1985, the Lead Agencies, after a review of the proposed modifications, determined that a Supplemental Environmental Impact Statement was not necessary. On October 28, 1985, the City Planning Commission certified the application for modification of the project and referred the ULURP applications to Community Board 2. After a public hearing, which was held on November 13, 1985, the Community Board voted 31 to 1 to approve the project in its modified form. The City Planning Commission held a public hearing on November 20, 1985 and approved the modified plan five days thereafter. The Board of Estimate caused a notice of public hearing to be printed in the City Record on October 29, October 30 and October 31, 1985 and November 4 and November 5, 1985 and a notice was printed in the comprehensive City Planning Calendar (which is available to the public) for November 6, 1985. The Board conducted a public hearing on December 5, 1985 and then unanimously approved the project.

The Instant Action

In February 1985,three and one-half months after the federal action was settled, the instant action was commenced. The first cause of action alleges that the FEIS failed to deal adequately with the effect of the plan on light and air traffic and pollution, that the City and the developer violated federal law by failing to obtain comment from the Federal Advisory Council on Historic Preservation, that the determination of the State Historic Preservation Officer was erroneous, that there was an absence of adequate citizen participation in the ULURP process, and that the City and the Public Development Corporation gave the site to Forest City without competitive bidding and were motivated by political considerations including compaign contributions. The second cause of action alleges that the consulting engineer was appointed without the approval of the Safety Committee and the Landmarks Preservation Commission, in violation of both the federal court stipulation of settlement and the resolutions passed by the Board of Estimate. The third cause of action alleges that the independent engineer failed to comply with certain requirements, set forth by the Board of Estimate, prior to the commencement of construction. The fourth cause of action seeks injunctive relief prohibiting further construction. The fifth cause of action alleges that the developer failed to prepare a Site Safety Plan, and that a fence erected at the perimeter of the site has created an attractive nuisance and has blocked traffic, thus endangering pedestrians and children at St. Ann's School.

Petitioner's challenge to the building project can be divided into two categories: (1) those grounds which relate to the original plan and which were raised in the prior federal action; (2) those grounds which relate to the modified plan and the requirements set forth in the federal stipulation of settlement and the Board of Estimate resolution.

Respondents maintain that the doctrines of estoppel and laches bar petitioner from obtaining injunctive relief at this late date. In addition, respondents contend that they substantially complied with the law as to both the original and the modified plan.

Where a grant of interim relief may adversely affect the public interest and the compensation provided by a bond is likely to be inadequate, the courts will hold movant to a very strict standard. The purpose of NEPA, which requires the preparation of an Environmental Impact Statement, is to insure a well-informed decision. The court will not interject itself into the decision making process, so long as stubborn problems and serious criticism are not swept "under the rug" (LSS Leasing Corp v. U.S. General Services Admin., 579 F. Supp. 1565, [14 ELR 20482] S.D.N.Y. 1984). NEPA was not intended to permit a party, after an inexcusable delay, to demand injunctive relief to the prejudice of other parties after substantial funds have been spent (Iowa Student Public Interest Research Group v. Gallaway, 379 F. Supp. 714, [4 ELR 20360] S.D. Iowa 1974); see also Woida v. U.S., 446 F. Supp. 1377 [8 ELR 20305] (D. Minn. 1978, where the plaintiff waited three years before commencing an action and was held to be barred by laches). An Environmental Impact Statement is not required to be "perfect"; it is sufficient so long as the agency carefully went through the individual considerations involved and made a good faith balancing of the relevant factors (East 63rd Street Association v. Coleman, 414 F. Supp. 1318, [7 ELR 20459] S.D.N.Y. 1976, aff'd 538 F.2d 309 [7 ELR 20465]). The court will not strike down a plan by reason of relatively minor imperfections, where plaintiff is guilty of laches and the project has gone irreversibly far (East 63rd St. Assn. v. Coleman, supra). In LSS Leasing, the court set forth the elements of laches: (1) a delay in the assertion of claims; (2) the lack of reasonable excuse for the delay; (3) substantial prejudice to the defendants.

Res judicata and collateral estoppel apply where the party in question had been a party to the prior action. However, courts have recognized the doctrine of virtual representation so that the doctrine of res judicata will not be emasculated by a mere nominal change of parties (Environmental Defense Fund v. Alexander, 501 F. Supp. 742 (E.D. Miss. 1980). Where the parties to the original case sought recognition not of interests peculiar to themselves but of the right of the public to demand compliance with environmental laws, a non-party who is closely aligned with the prior litigants can be barred by the doctrine of virtual representation (Sierra Club v. Block, 576 F. Supp. 959, [14 ELR 20009] D. Ore. 1983). In applying the doctrine, the court considers whether the non-party has a sufficiently close interest to the matter being litigated. Where, for example, a non-party sits on the sidelines monitoring and assisting in the litigation and at all times has the ability to intervene to protect its interest, the non-party may well be bound by the prior judgment (Treasure Salvors Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 495 F. Supp. 507, S.D. Fla. 1979).

In the instant case, the principals of CSMS have been intimately involved in the proceedings from the very beginning. Forest City's development proposals, and the resulting community opposition, were given substantial publicity in the newspapers covering Brooklyn and the entire New York metropolitan area. One of the affiants to the petition, Pam Miller, was quoted in more than one newspaper. At least two of the affiants, Jon Henry James and Sara Dolgin, appeared at hearings of Community Board 2 (James on behalf of a group known as SOS Brooklyn Heights and Dolgin on behalf of a small business group). Numerous newspaper articles described the stipulation of settlement when it was made; it is highly unlikely that petitioner's principals did not know about it. Moreover, the named plaintiffs in the federal case admitted to Judge Constantino that they were de facto class representatives. The instant petition complains of unsafe conditions for children of St. Ann's School, yet St. Ann's was a named plaintiff in the federal action. In addition, petitioner's papers include several affidavits which are nothing more than photocopies submitted in the prior action. In light of the above, and in light of the unreasonable delay (from June 1985 until October 1985, the time of settlement, and then not until February 1985, approximately three and one-half months after the announcement of the settlement) petitioner is barred by the doctrines of virtual representation and laches from moving for an injunction. The parties have already spent approximately five percent ($5 million) of the total project budget of $100 million). The parties worked long and [16 ELR 20775] hard to effect a settlement of the federal action so that the project could go forward. The equities clearly favor respondents. Petitioner chose to stay in the background, knowing that the federal case was being actively litigated. Any significant further delay would doom the project, and petitioner's concerns were, or should have been, resolved in the federal action.

Even if the estoppel did not extend beyond matters relating to the original plan, respondents have substantially complied with the law as it relates to the modified plan and to events occurring from October 1985 to date.

Petitioner maintains that once the building plan was modified, a Supplemental Environmental Impact Statement (SEIS) should have been filed. Under 40 CFR § 1502.9 (c)(1)(i) and 1502.9 (c)(1)(ii), an agency is required to prepare an SEIS where the agency makes substantive changes in the proposed action that are relevant to environmental concerns or there are significant new circumstances relevent to environmental concerns which affect the project or its impact. The decision not to file an SEIS will be upheld so long as it is not arbitrary or capricious (State of Wisconsin v. Weinberger, 745 F.2d 412 [14 ELR 20744]). The court will not "second-guess" the result reached, so long as there was careful consideration as to whether new circumstances require a change in the EIS. In the instant case, the narrowing of the building apparently will result in less blockage of light and air. Petitioner has not shown that the addition of two floors to the original 19 floors will result in a material adverse change in the environment compared to the original plan. The decision not to file an SEIS was not arbitrary or capricious.

In determining the instant case, the action of the Board of Estimate is deemed legislative in character. (Lai Chun Chai Jen v. Board of Estimate, 92 A.D.2d 218, aff'd 62 N.Y.2d 900). The court will not pass upon the wisdom of the Board's decision, so long as the law has been obeyed and there is no abuse of discretion (Coalition Against Lincoln West v. City of New York, 94 A.D.2d 483, aff'd 60 N.Y.2d 805; cf. Lemur Realty Corp v. Larkin, 11 N.Y.2d 20). Petitioner claims that the applicable law (ULURP) was violated in that the City Record did not contain a notice of hearing on the date of the hearing. Although this may be the case, respondents have substantially complied with the notice requirements by placing a notice in the City Record on five occasions shortly before the hearing and by placing a notice in the Comprehensive City Planning Calendar. It would be unreasonable to force cancellation of the entire project by reason of a de minimis error (see Tribeca Community Ass'n v. Board of Estimate, Sup. Ct., New York Co., Nov. 8, 1984, Justice Stecher, Index No. 19695-84, where the law required a notice of hearing 10 days before the hearing and a 9-day notice was given).

An examination of the motion papers indicates that respondents have substantially complied with the safety requirements set forth in both the federal court stipulation of settlement and the Board of Estimate Resolution. Forest City has even obtained supporting affidavits from such persons as Willis DeLaCour, Jr., who is an architect, the Chairman of the Safety Committee set up pursuant to the stipulation of settlement and an official of the Brooklyn Heights Association (Forest City's former adversary). A flagman has been present at all times since construction began. Engineering studies have been conducted by Mueser Rudledge Consulting Engineers; the choice of that firm was approved by both the Landmarks Preservation Commission and the Safety Committee. There have been Site Safety Plans approved by both the Safety Committee and the appropriate governmental authorities.

Petitioner complains of the lack of competitive bidding and of political influence. First, the City may dispose of land, without competitive bidding, to the Public Development Corp, which in turn is not bound by competitive bidding (§ 1411 of the Not-for-Profit Corporation Law). Second, the campaign contributions referred to by petitioner are from public documents. These claims could have and should have been raised long ago. Moreover, if petitioner claims that the project is politically or economically improper or unsound, its remedy is to take its case to the voters at election time, not to the courts.

In short, the office building project has been widely known for a considerable period of time. Petitioner's principals chose to participate in community opposition to the project yet remained silent during the federal lawsuit and the settlement negotiations. There has been extensive community participation and study of environmental and safety factors every step of the way. The court will not allow a dissident group, whose members chose to remain silent in the past (when they could have intervened) to destroy the project at this late date after millions of dollars have been spent.

Accordingly, the petition is denied and the proceeding is dismissed. Settle judgment.