Development

Good-Faith Reliance

In re Woods

NYLJ 7/5/13, p. 23, col. 3

AppDiv, First Dept.

(memorandum opinion)

In landowner's article 78 proceeding challenging a variance denial by New York City's Board of Standards and Appeals (BSA), landowner appealed from Supreme Court's denial of the petition and dismissal of the proceeding. The Appellate Division reversed and remanded to the BSA, annulling BSA's determination that landowner had not relied in good faith on a determination by the Department of Buildings (DOB).

Landowner's architect believed that section 23-49 of the zoning resolution, as interpreted by DOB, permitted landowner to build a building on landowner's lot line. Landowner then submitted plans based on that belief. DOB reviewed the plans, approved them, and issued construction permits to landowner, who then built a building in accordance with the plans. DOB then changed its interpretation of section 23-49, and issued a stop work order. Landowner then sought a variance from BSA, which BSA denied on the ground that landowner had not relied in good faith on DOB's determination. Landowner subsequently brought this article 78 proceeding, which Supreme Court denied.

In reversing, the Appellate Division held that DOB, not landowner, was in the best position to avoid erroneous issuance of the permit. The court concluded that evidence before BSA established that landowner had acted in good-faith reliance on DOB's permit. As a result, BSA was not entitled to deny the variance based on landowner's lack of good faith. The court remanded to BSA to determine whether landowner satisfied the remaining requirements for grant of a variance.

COMMENT

A landowner may not invoke estoppel against a governmental entity to prevent the entity from discharging its statutory duties or from rectifying an administrative error if reasonable diligence would have disclosed the true facts and the error. For example, in Parkview Associates v. City of New York, 71 N.Y.2d 274 (1988), the court held that where the zoning ordinance unequivocally stated height restrictions, the City was not estopped from revoking that portion of an erroneously issued building permit which violated the long-standing zoning limits. The court required landowner to remove several stories of an already constructed building. In rejecting landowner's argument that the permit was issued in conformity with a reasonable interpretation of an unclear zoning map, the court emphasized that even with municipal error in one map and the mistaken issuance of a permit, reasonable diligence would have readily uncovered the existence of the height limitations in the enabling legislation.

Although, expenditures made in reliance on an erroneously issued building permit will not estop a zoning board from enforcing the applicable zoning laws, zoning boards have the power to consider such expenditures in evaluating a variance application. For example, in Cortodd Homes, Inc. v. Misiakiewicz, 45 A.D.2d 1008, 358 N.Y.S.2d 211 (1974), the court held that when landowner made substantial expenditures in reliance on a building permit to build on less frontage than the ordinance permitted, landowner obtained neither vested rights nor a guarantee of a variance, but the court indicated that expenditures made in good faith could be considered, among other factors, when the board evaluated landowner's variance application. In Pantelidis v. New York City Bd. of Standards & Appeals, 13 A.D.3d 242, the court appeared to take the approach used in Cortodd a step further, holding that good-faith reliance on a permit is a factor the zoning board must consider in evaluating the variance application. The court held whether landowner had erected the disputed structure in good-faith reliance on a subsequently invalidated permit was “relevant to determining if petitioner was entitled to a variance.” Ultimately, when the court concluded that landowner had satisfied all the remaining relevant criteria under applicable resolution, the court held that the board had no discretion to deny the variance.

On the other hand, municipalities have been estopped from applying zoning ordinances where some form of misconduct or extraordinary delay on the part of the municipality has prevented the acquisition of vested rights that would have otherwise been acquired. For example, in Matter of Faymor Dev. Co. v. Board of Stds. & Appeals of City of N.Y., 45 N.Y.2d 560, the Court of Appeals required the municipality to reinstate a building permit despite a recently amended zoning ordinance's provision that the building permit automatically lapsed on effective date of zoning change since foundation of the building had not been completed. The court held that the municipality was estopped from relying on the amendment because city officials had prevented completion of the foundation by revoking the permit on baseless grounds at the insistence of community groups, by failing to provide police, fire, and traffic services to combat the illegal mob of protesting citizens, and by hurriedly amending the zoning regulation so as to prevent developer from vesting its rights. Similarly, a court may estop the city from asserting the landowner's failure to complete the foundations if the city has interrupted construction by illegally suspending the permit. For instance, in Matter of Temkin v. Karagheuzoff, 34 N.Y.2d 324, the Court of Appeals held that where a municipal agency illegally adopted a moratorium ordinance without compliance with charter requirements and thereby unlawfully prevented a landowner from acquiring vested rights, the agency was estopped from denying that vested rights had been acquired.

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Good-Faith Reliance

In re Woods

NYLJ 7/5/13, p. 23, col. 3

AppDiv, First Dept.

(memorandum opinion)

In landowner's article 78 proceeding challenging a variance denial by New York City's Board of Standards and Appeals (BSA), landowner appealed from Supreme Court's denial of the petition and dismissal of the proceeding. The Appellate Division reversed and remanded to the BSA, annulling BSA's determination that landowner had not relied in good faith on a determination by the Department of Buildings (DOB).

Landowner's architect believed that section 23-49 of the zoning resolution, as interpreted by DOB, permitted landowner to build a building on landowner's lot line. Landowner then submitted plans based on that belief. DOB reviewed the plans, approved them, and issued construction permits to landowner, who then built a building in accordance with the plans. DOB then changed its interpretation of section 23-49, and issued a stop work order. Landowner then sought a variance from BSA, which BSA denied on the ground that landowner had not relied in good faith on DOB's determination. Landowner subsequently brought this article 78 proceeding, which Supreme Court denied.

In reversing, the Appellate Division held that DOB, not landowner, was in the best position to avoid erroneous issuance of the permit. The court concluded that evidence before BSA established that landowner had acted in good-faith reliance on DOB's permit. As a result, BSA was not entitled to deny the variance based on landowner's lack of good faith. The court remanded to BSA to determine whether landowner satisfied the remaining requirements for grant of a variance.

COMMENT

A landowner may not invoke estoppel against a governmental entity to prevent the entity from discharging its statutory duties or from rectifying an administrative error if reasonable diligence would have disclosed the true facts and the error. For example, in Parkview Associates v. City of New York, 71 N.Y.2d 274 (1988), the court held that where the zoning ordinance unequivocally stated height restrictions, the City was not estopped from revoking that portion of an erroneously issued building permit which violated the long-standing zoning limits. The court required landowner to remove several stories of an already constructed building. In rejecting landowner's argument that the permit was issued in conformity with a reasonable interpretation of an unclear zoning map, the court emphasized that even with municipal error in one map and the mistaken issuance of a permit, reasonable diligence would have readily uncovered the existence of the height limitations in the enabling legislation.

Although, expenditures made in reliance on an erroneously issued building permit will not estop a zoning board from enforcing the applicable zoning laws, zoning boards have the power to consider such expenditures in evaluating a variance application. For example, in Cortodd Homes, Inc. v. Misiakiewicz, 45 A.D.2d 1008, 358 N.Y.S.2d 211 (1974), the court held that when landowner made substantial expenditures in reliance on a building permit to build on less frontage than the ordinance permitted, landowner obtained neither vested rights nor a guarantee of a variance, but the court indicated that expenditures made in good faith could be considered, among other factors, when the board evaluated landowner's variance application. In Pantelidis v. New York City Bd. of Standards & Appeals, 13 A.D.3d 242, the court appeared to take the approach used in Cortodd a step further, holding that good-faith reliance on a permit is a factor the zoning board must consider in evaluating the variance application. The court held whether landowner had erected the disputed structure in good-faith reliance on a subsequently invalidated permit was “relevant to determining if petitioner was entitled to a variance.” Ultimately, when the court concluded that landowner had satisfied all the remaining relevant criteria under applicable resolution, the court held that the board had no discretion to deny the variance.

On the other hand, municipalities have been estopped from applying zoning ordinances where some form of misconduct or extraordinary delay on the part of the municipality has prevented the acquisition of vested rights that would have otherwise been acquired. For example, in Matter of Faymor Dev. Co. v. Board of Stds. & Appeals of City of N.Y., 45 N.Y.2d 560, the Court of Appeals required the municipality to reinstate a building permit despite a recently amended zoning ordinance's provision that the building permit automatically lapsed on effective date of zoning change since foundation of the building had not been completed. The court held that the municipality was estopped from relying on the amendment because city officials had prevented completion of the foundation by revoking the permit on baseless grounds at the insistence of community groups, by failing to provide police, fire, and traffic services to combat the illegal mob of protesting citizens, and by hurriedly amending the zoning regulation so as to prevent developer from vesting its rights. Similarly, a court may estop the city from asserting the landowner's failure to complete the foundations if the city has interrupted construction by illegally suspending the permit. For instance, in Matter of Temkin v. Karagheuzoff, 34 N.Y.2d 324, the Court of Appeals held that where a municipal agency illegally adopted a moratorium ordinance without compliance with charter requirements and thereby unlawfully prevented a landowner from acquiring vested rights, the agency was estopped from denying that vested rights had been acquired.

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