“The best evidence of the intent of parties to a contract is their conduct after the contract is formed”
How later courts described this case
- “The best evidence of the intent of parties to a contract is their conduct after the contract is formed”
Written by the judges who cited it.
The opinion
USDC SDNY ATTORNEYS AT LAW
DOCUMENT
September 23, 2022 99 GARNSEY ROAD
P , ELECTRONICALLY FILED PITTSFORD, NEW York 14534
DOC #: 585.419.8800
Via ECF Only ce
DATE FILED: 9/26/2022, Darius P. CHAFIZADEH
Hon. Nelson S. Roman CRC 914.683.1212
United States District Judge □□ raat accor
United States Courthouse
300 Quarropas Street
White Plains, NY 10601
RE: Clear Channel Outdoor, LLC v. City of New Rochelle, et al.
Index No. 7:20-cv-09296
Dear Justice Roman:
= I write on behalf of Defendants with respect to their Objections to certain parts of the
Report and Recommendation issued by Magistrate Judge Andrew E. Krause on September 9,
= 2022 on Plaintiff's motion for partial summary judgment. More specifically, I write to request
permission to file limited portions of Defendants’ Memorandum of Law under seal.
In Defendants’ Memorandum of Law there are references to—and quotes from—certain
documents from Plaintiff's discovery productions upon which Plaintiff has placed various levels
of confidentiality designations. Judge Krause granted Defendants leave to seal this information
during briefing on the underlying motion. See ECF Doc. No. 117. Defendants seek the same
relief here. Accordingly, Defendants respectfully request leave to file the Memorandum of Law
whereby specific references to documents that have been designated by Plaintiff as confidential
are redacted.
In accordance with the rules of the Court, we are contemporaneously filing a publicly
available version of the Memorandum of Law in redacted form and a separate entry of the
Memorandum of Law filed under seal with the proposed redactions shown with highlights.
I appreciate your time and attention to this matter. Please let me know if you have any
questions.
e redacted document at ECF No. 176 is accepted as the public full
of this filing at this time, and Defendants' request to file Respectfully,
portions of Defendants' Memorandum of Law under seal is
If, however, the Court determines that the specific
that has been withheld in this filing is integral to the HARRIS BEACH PLLC
ruling on the motion for partial summary judgment, the Court
reconsider the decision to allow this information to remain under
Defendants are also directed to provide two courtesy copies via
and one electronic copy of their unredacted Memorandum of —=
to Chambers.
Clerk of the Court is directed to terminate the motion number at Darius P. Chafizadeh
No. 176.
° SO ORDERED:
September 26, 2022
White Plains, NY ai
fog ee
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
CLEAR CHANNEL OUTDOOR, LLC,
Plaintiff,
Case No.: 20-cv-09296-PMH
v.
CITY OF NEW ROCHELLE; LUIZ ARAGON, in
his official capacity as Commissioner of
Development; and PAUL VACCA, in his official
capacity as Building Official,
Defendants.
DEFENDANTS’ OBJECTIONS TO THE REPORT AND RECOMMENDATION OF
MAGISTRATE JUDGE ANDREW E. KRAUSE REGARDING PLAINTIFF’S MOTION
FOR PARTIAL SUMMARY JUDGMENT ON COUNT IX
HARRIS BEACH PLLC
Attorneys for Defendants
445 Hamilton Avenue, Suite 1206
White Plains, NY 10601
TABLE OF CONTENTS
Page
SUMMARY OF ARGUMENTS MADE TO JUDGE KRAUSE ON CLEAR CHANNEL’S
MOTION FOR PARTIAL SUMMARY JUDGMENT. □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ L
THE LEGAL ERRORS IN THE R&R THIS COURT SHOULD □□□□□□□□□□□□□□□□□□□□□ eee 4
POINTI THE COURT SHOULD CORRECT THE R&R’S
MISINTERPRETATION OF UNAMBIGUOUS PROVISIONS
IN THE STIPULATION AND CITY CODE □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □□
A. The R&R Incorrectly Found that the Stipulation and Code
Section 270-16 Does Not Alone Require Removal of I-95
BillDOAIAS □□□□□□□□□□□□□□□□□□□□□□ cese cece □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LL
B. Although the R&R Determined that The Issue Was “Beyond
the Scope” Given Clear Channel’s Decision to Move With
Respect to the Meaning of Section 270-16 Only, it Should Be
Noted that Section 270-4 Also Requires REMOVAL □□□□□□□□□□□□□□□□□□□□□□□□□□□□ 13
POINT IIT THE COURT SHOULD CORRECT THE R&R’S FAILURE TO
CONSIDER CLEAR CHANNEL’S COURSE OF CONDUCT
TO RESOLVE ANY AMBIGUITIES IN THE STIPULATION
AND SECTION □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ □□
A. Clear Channel’s RFP Response Establishes its Agreement
that the I-95 Billboards Were Required to Be Removed as of
December 31, 2020 □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LD
B. Clear Channel’s Internal Documents Reveal it Has Always
Agreed the Stipulation and City Code Require it to Remove
Its I-95 Billboards by December 31, 2020 □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LT
POINT HI THE COURT SHOULD CORRECT THE R&R’S MISTAKE ON
THE LAW OF EQUITABLE ESTOPPEL. □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LO
POINTIV ALTHOUGH NOT BEFORE THE COURT GIVEN THE
TIMING OF AND LIMITED RELIEF SOUGHT IN CLEAR
CHANNEL’S MOTION, IT SHOULD BE NOTED THAT
CLEAR CHANNEL’S BILLBOARDS ARE ALSO
PROHIBITED BY THE ZONING LAW 0... eetettetetertertees 2
il
TABLE OF AUTHORITIES
Page
Cases
Eve Assoc., P.C. v. Incomrx Systems Ltd. Partnership,
912 F.2d 23 (2d Cir. 1990) 0... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LA
Gen. Elec. Cap. Corp. v. Armadora,
37 F.3d 41 (2d Cir, 1994) ooo. □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 2O)
Giarratano v. Edison Hotel,
No. 08 Civ. 1849, 2009 U.S. Dist. LEXIS 14402 (
S.D.N.Y. Feb. 24, 2009) □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LO
Gulf Ins. Co. v Transatlantic Reins. Co.,
69 AD3d 71 (Ist Dep’t 2009)... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LS
Kosakow v. New Rochelle Radiology Associates, PC,
274 F. 3d 706 (2d Cir. 2001)... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LO
Law Debenture Tr. Co. of N.Y. v. Maverick Tube Corp.,
595 F.3d 458 (2d Cir. 2010)... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LA
Norfolk S. Ry. Co. v. Flexi Van Leasing, Inc.,
No. 99 Civ. 0055, 2000 U.S. Dist. LEXIS 18198
(S.D.N.Y. Dec. 18, 2000) 0... □□ □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LO)
Waverly Corp. v City of New York,
48 AD3d 261 (1st Dep't □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LS
Statutes
City Code § 270-4 □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 4, 14, 21
City Code § □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 459, 13
City Code § 270-4(E)(1) □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 13
City Code § 270-4(E)(3) □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ 13
il
City Code § 270-16... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ PASSLMN
City Code § 270-16(A) oo... eee □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LL
New Rochelle Code Chapter 331 □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ Oy DL
New York Public Authorities Law § 361-4 □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ D
Rules
Fed. R. Civ. P. 72(b)(2).... □□□ □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LO
Fed. R. Civ. P. 72(b)(3).... □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ LO
iv
Defendants (collectively, the “City”) hereby submit these Objections to the Report and
Recommendation of Judge Andrew E. Krause, issued on September 9, 2022 (the “R&R”),
regarding the motion for partial summary judgment on Count IX brought by Plaintiff (“Clear
Channel”). The R&R correctly denied Clear Channel’s motion based on the City’s equitable
defense of laches. The R&R nevertheless contains distinct legal errors wherein it rejects the City’s
additional and independent reasons to deny Clear Channel’s motion. This Court should review
the City’s arguments de novo and issue an Order confirming the denial of Clear Channel’s motion
on these additional grounds.
SUMMARY OF ARGUMENTS MADE TO JUDGE KRAUSE ON CLEAR
CHANNEL’S MOTION FOR PARTIAL SUMMARY JUDGMENT
This case concerns the City’s right to require Clear Channel to finally remove certain
billboards within New Rochelle, something the parties agreed to decades ago in a signed settlement
agreement. More specifically, in 1998, Universal Outdoor, Inc. (“Universal Outdoor”), the corporate
predecessor-in-interest to Clear Channel, challenged the City’s efforts to remove several billboards
in New Rochelle as part of the City’s broad-scale beautification and advertising consolidation efforts.
To settle their dispute, the parties agreed in a Stipulation of Settlement dated as of October 2000 (the
“Stipulation”) that Clear Channel could maintain certain billboards, including a limited number of
new I-95 Billboards in the valuable I-95 Corridor (the “I-95 Billboards”). In return, Clear Channel
agreed that all of these “Remaining Billboards,” as defined in the Stipulation, could remain in place
for many years but would be subject to removal under the City’s Code as of December 31, 2020.
Only now—after many years of internally and externally (directly to the City) agreeing that the
Stipulation and City Code would require removal of I-95 Billboards—Clear Channel suddenly
protested, without merit. Clear Channel moved for partial summary judgment arguing that the City
could not force removal of the I-95 Billboards under one specific provision of the City Code, Section
270-16, because the actual construction date of those billboards provided for in the Stipulation came
later. The City pointed to several independent reasons that Clear Channel’s motion failed, each of
which if viewed alone would be sufficient to overcome the motion.
First, the motion fails based on clear language in the Stipulation and City Code, which
unambiguously afforded Clear Channel immunity for its billboards only through December 31,
2020 and provided that each of the I-95 Billboards were considered erected as of the effective date
of the Stipulation. Two separate portions of the current City Code—Sections 270-16 and 270-4—
require removal of all such billboards, specifically including the I-95 Billboards, as of
December 31, 2020.
Second, the motion fails because, to the extent there are any ambiguities, Clear Channel
has repeatedly conceded in extrinsic evidence that the Stipulation and City Code require it to
remove the I-95 Billboards as of December 31, 2020. Several years ago, the City made clear that
the Stipulation and City Code required Clear Channel to remove the I-95 Billboards as of
December 31, 2020. To that end, in 2015, the City issued a Request for Proposals (“RFP”) for an
advertising company to take over the I-95 Billboard space once Clear Channel’s billboards were
removed as of December 31, 2020. Clear Channel submitted a bid for that open contract to keep
operating past the removal date without any reservation of rights or a single word of protest related
to the removal of its J-95 Billboards or other billboards in the City. Further, Clear Channel
executives repeatedly confirmed (internally—within Clear Channel—and externally—to the City)
that Clear Channel had to remove the I-95 Billboards under the Stipulation and the current City
Code and, indeed, budgeted for the required removal. See, e.g., Exhibit G to the Declaration of
Darius P. Chafizadeh, dated February 2, 2022, located at ECF Doc. Nos. 115-116 (“Chafizadeh
Declaration”) a
ee
Pe) (emphasis added). This clear and damning evidence runs
contrary to Clear Channel’s newfound position in this lawsuit and on this motion, which Clear
Channel never once expressed to the City, or in its course of conduct.
Third, Clear Chamnel’s claims are barred by equitable doctrines, including laches and
estoppel. Clear Channel seeks extraordinary damages and remedies in this case and on this motion,
including the equitable remedy of a permanent injunction against the removal of the I-95 Billboards.
Such remedies, however, are not available to Clear Channel because it has sat on its rights for many
years. The parties have taken many significant actions—including the City entering a contract with
a non-party to operate the billboard space at issue—based on Clear Channel’s and the City’s mutual
agreement that the Stipulation and City Code require removal of Clear Channel’s I-95 Billboards as
of December 31, 2020. Clear Channel manifested its agreement and never once protested, much less
claimed that it would seek extraordinary damages and equitable relief as it does here. The actions
taken by Clear Channel and the City over the past several years cannot be undone for Clear Channel
to suddenly raise an objection with its newfound, and baseless, claims.
Fourth, Clear Channel also brought its motion prematurely before the parties completed
discovery. One of the issues that developed during discovery, but after the motion was briefed, is
the fact that the I-95 Billboards must be removed for the additional reason that they violate the
City’s Zoning Code.!
! The City also demonstrated that Clear Channel’s motion could be defeated by the simple
practicality that the City may amend its Code to require removal if the Court somehow determines it is not
required under the current City Code as written. Notably, the Stipulation provides that Plaintiffs are not “...
entitled to damages, legal fees or compensation of any kind under any Federal or State statute...” should
the City amend or reenact any statute concerning the removal of billboards. See Stipulation at 414. The
R&R did not address the merits of the City’s contention, noting only that the issues was not before the
Court, so the City reserves its right to amend the City Code.
THE LEGAL ERRORS IN THE R&R THIS COURT SHOULD CORRECT
The R&R correctly denied Clear Channel’s motion based on laches. The R&R committed
legal errors with respect to other defenses raised by the City. This Court should review and correct
those errors.
First, with respect to unambiguous language in the Stipulation and Code, the R&R focused
only on City Code Section 270-16 and disregarded Section 270-4, reasoning that Clear Channel’s
complaint (Count IX) and its motion centered only on whether Section 270-16 required removal.
So the issue of removal under Section 270-4 was, according to the R&R, “beyond the scope.”
R&R, p. 19, fn. 15. The R&R also noted in a footnote that Section 270-4 prohibits Billboards
except as allowed under the Stipulation so the I-95 Billboards would “appear” to be allowed
because they arose from that Stipulation. /d. At any rate, the R&R rejected the City’s defense as
to Section 270-16, which was in error, and it found that the issue of removal under Section 270-4
was not before the Court based on the limited relief sought in Clear Channel’s motion. It was not
necessarily error to forgo a determination on Section 270-4 but that issue will ultimately have to
be decided, and the City respectfully submits it may be considered here. Indeed, Section 270-4E
prohibits billboards except pursuant to the Stipulation. But the Stipulation itself, along with the
Immunity Period set forth therein, expired as of December 31, 2020. Accordingly, by the terms
of the Stipulation and the City Code, the Billboards are prohibited after December 31, 2020. To
the extent not addressed in the R&R or in this Court’s review of the R&R, these issues will be the
subject of the City’s motion for summary judgment dismissing the Complaint in this matter.
Second, with respect to extrinsic evidence, the R&R determined the Stipulation was
unambiguous and, at any rate, reyected such evidence by reasoning that Clear Channel’s conduct
2 The City will be filing a letter before this Court seeking permission to file a motion for
summary judgment.
in more recent years does not shed light on what the parties intended many years ago when they
entered the Stipulation. R&R, pp. 17-18. This is error. The R&R itself identified areas of potential
ambiguity—specifically including the effect of Stipulation’s end of immunity period for the
billboards—that call for extrinsic evidence. Contrary to the R&R’s holding, New York law
provides that subsequent course of conduct evidence can be crucial to determine the parties’
understanding as to contractual language. The fact that the course of conduct occurred over the
course of many years strengthens, not weakens, the probative value of this evidence.
Third, although the R&R accepted the City’s laches defense, it rejected its equitable
estoppel defense that was based on Clear Channel repeatedly announcing its understanding that its
billboards would have to be removed as of December 31, 2020 and even bidding on the RFP. In
direct contravention of New York law, the R&R held that Clear Channel would have to make an
affirmative fraudulent misrepresentation about its position to the City, and its erroneous
understanding of the Stipulation and the Code throughout the years was not enough. R&R, p. 29.
That is incorrect. New York law explicitly provides that a party’s mistaken views on its contractual
obligations and its silence in the face of others asserting contrary rights forms the basis of an
equitable estoppel defense. In short, Clear Channel is equitably estopped from asserting rights it
long ago conceded to the City that it did not have.
Fourth, with respect to discovery that was still ongoing at the time of Clear Channel’s
motion, the City’s objection on that point turned out to be well-founded. Following initial briefing
on the motion, the City was able to determine that Clear Channel’s billboards are prohibited under
the City’s Zoning Law — specifically, Chapter 331 of the City Code. The City informed the Court
of this fact while the motion was still pending, ECF Doc. No. 146, but the R&R stated that it did
not consider this issue. R&R, p. 10, fn. 11. Although perhaps not in error, the City believes the
Zoning Law prohibition on billboards (1.e., they are not a permitted use) may be considered here.
At the least, the City would like to make clear it 1s not precluded from raising it in the future on its
motion for summary judgment seeking dismissal of the Complaint and the removal of the
billboards.
Based on the foregoing, the Court should affirm the R&R’s decision to deny Clear
Channel’s motion based on laches and it should further deny Clear Channel’s motion for these
additional and independent reasons.
BACKGROUND
The facts relevant to the instant motion are set forth in the Chafizadeh Declaration
submitted with respect to the City’s original opposition papers, located at ECF Doc. Nos. 115-116,
and they are summarized below for the Court’s convenience. Certain documents and statutory
provisions referenced below, including the Stipulation, City Code and Clear Channel
correspondence regarding the same, are quoted throughout the Argument Section and are attached
to the Chafizadeh Declaration. Where appropriate, and for the sake of brevity, those documents
and statutory provisions are not also quoted in this Section.
On July 26, 1996, in furtherance of its urban renewal goals, the City amended its Code to
remove billboards within the City. See Chafizadeh Declaration at § 2. On June 2, 1998, Clear
Channel’s corporate predecessor filed a complaint in this Court seeking to invalidate the City
Code. /d. at 93. To settle their dispute, the parties entered into the Stipulation, filed in this Court
on October 16, 2000. Jd. at Exhibit B.
The Stipulation provides, inter alia, for Clear Channel’s immediate removal of certain
billboards, its continued use of certain other billboards, and its construction of a limited number
of new billboards along the highly-valuable I-95 Corridor. See Exhibit B at 5-7. The Stipulation
defines each of the allowable billboards as a “Remaining Billboard,” irrespective of when such
billboard was, or is, erected. See id. at J 1(p).
By the Stipulation’s plain language, Clear Channel’s right to maintain these billboards was
not absolute. See id. at § 10. Rather, Clear Channel agreed that it would eventually remove its
billboards after receiving compensation through amortization for the billboards for approximately
20 years and it also agreed that it would not be entitled to any damages or compensation after
December 31, 2020. Jd; see also § 14. To be sure, the Stipulation provided for the “Immunity of
Remaining Billboards,” which ran from the date of the Stipulation’s entry through December 31,
2020. Jd. In return for being allowed to maintain certain billboards and erect the I-95 Billboards,
Clear Channel agreed that all such “Remaining Billboards” would be subject to all City codes,
rules and regulations requiring their removal as of December 31, 2020. /d.; see also § 14.
On March 20, 2001, the City amended its Code in two pertinent ways to effectuate
the settlement reached in the Stipulation. See Exhibit C. First, the City amended City Code
Section 270-4—-which prohibits billboards in the City except in specified instances—to add
subsection E. /d. This subsection created a carve-out to the blanket prohibition on billboards to
allow for the Remaining Billboards specified in the Stipulation. Jd. This subsection further
provides that the billboards constructed under the Stipulation must be proposed no later than
December 31, 2020, incorporating the immunity period in the Stipulation. /d. Second, City Code
Section 270-16 was amended to specify that all legally existing billboards within the City shall be
removed as of December 31, 2020. /d. Concurrently, New York State provided that up to six (6)
billboards could be erected in the J-95 Corridor via New York Public Authorities Law Section
361-a, which likewise effectuates the terms of the Stipulation. See Chafizadeh Declaration at
4 10.° The Public Authorities Law and the City Code, operating in tandem, codify the purpose of
the Stipulation: to allow the Remaining Billboards to exist only for the Immunity Period.
After delays and an unsuccessful challenge by Clear Channel in this Court over certain
zoning issues, Clear Channel ultimately received approval and erected five (5) of the six (6) I-95
Billboards in the early 2000s. Jd. at § 11; see also id. at Exhibit A. The City’s Code meanwhile
remained in place for many years to require Clear Channel’s billboards to be removed as of
December 31, 2020. /d. at 11.
The indisputable evidence produced during discovery demonstrates that Clear Channel
understood that once the Immunity Period lapsed, the City Code would require removal of the
I-95 Billboards as of December 31, 2020. /d. at ¢ 12. Clear Channel’s course of conduct and its
internal documents make this clear. /d.
For example, in 2015, the City issued an RFP to collect bids from advertising companies
to operate billboards in the I-95 Corridor after the removal of Clear Channel’s billboards as of
December 31, 2020. J/d. at Exhibit D. The RFP and the public Questions and Answers that
followed, (id. at Exhibit E), both specify that the contract winner would be permitted to operate
the full number of billboards only after Clear Channel’s billboards were removed as of
December 31, 2020. See id. at Exhibits D and E. Notably, Clear Channel did not object to this
interpretation when submitting its response to the RFP, reserve any rights, nor protest the City’s
RFP. See Chafizadeh Declaration at § 16 and Exhibit F. To the contrary, Clear Channel
participated in the process and submitted a bid to the RFP despite its newfound position on this
motion that City Code Section 270-16 does not require its I-95 Billboards to be removed (ignoring
3 The number of billboards permitted by New York Public Authorities Law Section 361-a
was later amended to permit nine (9) billboards along I-95.
that the immunity and Stipulation expired on December 31, 2020 and ignoring Section 270-4E and
the City Zoning Code). Id.4
Clear Channel was not the highest bidder to the RFP, and it did not win the contract
awarded thereunder. /d. at § 17. Based on the recommendation of its consultant, New Rochelle
chose non-party Outfront Media as the RFP winner and it entered a contract with that company to
operate the full amount of allowable billboards on I-95 as of January 1, 2021 (limited to nine (9)
under New York Public Authorities Law Section 361-a). /d. Tellingly, Clear Channel did not
challenge, through an Article 78 proceeding or otherwise, the RFP process or the award of the
contract to Outfront. /d. at § 18. Since being awarded the RFP, Outfront has erected two (2) of
the billboards along the I-95 Corridor, is waiting to construct a third and is waiting for removal of
Clear Channel’s billboards so that it may operate the full amount of billboards awarded in the RFP
contract and permitted under the Public Authorities Law. Jd.
Clear Channel executives meanwhile corresponded and repeatedly agreed over the course
of several years that the Stipulation and the current City Code require removal of the I-95
Billboards. See id. at § 19, Exhibits G-K. Documentary evidence reveals that Clear Channel has
even budgeted for its planned removal of these billboards. /d. Clear Channel also attempted to
negotiate a fee or swap from Outfront to have it pay for taking over the I-95 Billboards as they
currently exist. Id.
When its negotiations with Outfront apparently failed, Clear Channel filed the instant
lawsuit just before the required removal of its billboards. /d. at § 20. It was not until this lawsuit
that Clear Channel has suddenly invented an argument that the Stipulation and the Code somehow
4 Clear Channel bid on an RFP for a contract with the City for billboards it now amazingly claims
are not subject to removal. Further, no reasonable reading of any statute or the RFP leads anyone to the
conclusion that the RFP did not include the billboards along I-95 or that the RFP was the subject of nine
(9) additional billboards along 1-95, in addition to the existing billboards.
do not require removal of the I-95 Billboards, ignoring the language of the Stipulation and the City
Code. /d.
Clear Channel moved for partial summary judgment with respect to certain of its I-95
Billboards, focusing only on the effect of Section 270-16. The R&R denied Clear Channel’s
motion based on laches. The City now respectfully submits these Objections to the R&R on other
grounds.
APPLICABLE STANDARD
Any party may serve and file written objections to a report and recommendation of a
magistrate judge on a dispositive matter within fourteen (14) days after being served with a copy
thereof. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2). Any portion of such a report and
recommendation to which a timely objection has been made is reviewed de novo. 28 U.S.C. §
636(b)(1); Fed. R. Civ. P. 72(b)(3).
With respect to the standard on the underlying motion, summary judgment is appropriate
only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law.” Giarratano v. Edison Hotel, No. 08 Civ.
1849, 2009 U.S. Dist. LEXIS 14402, *10 (S.D.N.Y. Feb. 24, 2009). To defeat a motion for
summary judgment, the non-moving party need only produce “sufficient evidence supporting the
claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing versions
of the truth at trial.” /d. With respect to contract disputes, summary judgment is only appropriate
where the language of the contract is wholly unambiguous. Norfolk S. Ry. Co. v. Flexi Van
Leasing, Inc., No. 99 Civ. 0055, 2000 U.S. Dist. LEXIS 18198 *14 (S.D.N.Y. Dec. 18, 2000). On
a motion for summary judgment, any ambiguity must be construed against the moving party. /d.
10
ARGUMENT
POINT I
THE COURT SHOULD CORRECT THE R&R’S MISINTERPRETATION
OF UNAMBIGUOUS PROVISIONS IN THE STIPULATION AND CITY
CODE
A. The R&R Incorrectly Found that the Stipulation and Code Section 270-16 Does Not Alone
Require Removal of I-95 Billboards
The Stipulation explicitly provides the City with the right to require removal of all of Clear
Channel’s billboards. See Stipulation, Exhibit B to the Chafizadeh Declaration, at 14 (“From
and after the Entry Date, the City shall have the right to repeal, amend, and/or in its sole and
absolute discretion, to re-enact any provision of the Sign Ordinance . . . or to enact any other local
law or ordinance governing the erection, maintenance and removal of Billboards.”). The limitation
on the City’s right to require Clear Channel to remove its billboards is an Immunity Period set
forth in paragraph 10 of the Stipulation that explicitly expires as of December 30, 2020. See id. at
4 10 (“The immunity provided Remaining Billboards by the terms of this Stipulation shall, in all
events, expire on December 31, 2020, at which time all Billboards covered by this Stipulation shall
become subject to all City codes, rules, and regulations then in effect.”). The Stipulation thereby
manifests the clear intent of the parties: to allow Clear Channel to operate the billboards allowed
under the Stipulation until December 31, 2020, but not any longer.
Although the R&R recognized that the Stipulation allows the City to require Clear Channel
to remove the I-95 Billboards, it mistakenly found that Section 270-16 does not effectuate that
removal. The Court focused on language in Section 270-16 wherein that provision requires
removal of billboards that existed on March 20, 2001. Enacted on March 20, 2001, City Code
Section 270-16(A) treats “legally existing billboards” as follows:
(1) Legally existing billboards. A legally existing billboard, solely in the
same location and with the same sign area and height of sign
1]
which existed on March 20, 2001, without any enlargement at any time
thereafter permitted, may remain in existence until and shall be
removed on or before the earlier to occur of the following events: ...
(2) December 31, 2020.
See Chafizadeh Declaration, Exhibit C.
Although certain I-95 Billboards were constructed by Clear Channel after March 20, 2001,
they have always been treated by the parties as having come into existence as of the date of the
Stipulation in October of 2000. Indeed, the billboards at issue here were constructed only as the
result of and in accordance with the terms of the Stipulation. Notably, the Stipulation defines a//
billboards authorized under its terms, specifically including the I-95 Billboards, as “Remaining
Billboards,” irrespective of when such billboards were erected. Jd. at ¥ 1(p) (“Remaining
Billboards” shall mean the Existing Billboards, any new Billboards permitted to be erected in the
I-95 Corridor pursuant to this Stipulation, and such of the Contingent Billboards as are permitted
to remain pursuant to this Stipulation”); see also § 5 (“Erection of I-95 Billboards: . . . Once
erected, such Billboards shall, for purposes of this Stipulation, be deemed Remaining
Billboards.”).
By proactively denominating all later-erected billboards as “Remaining Billboards,” the
parties agreed in the Stipulation that the I-95 Billboards (regardless of when erected) would be
treated as legally existing as of the entry of the Stipulation on October 16, 2000. Had the parties
wished otherwise, they could have easily defined Remaining Billboards to not include the I-95
Billboards, or included specific language that the I-95 Billboards should be deemed legally
existing when actually erected. To be sure, the Stipulation makes no distinction between those
Remaining Billboards erected prior to the Stipulation’s entry, within a month of the Stipulation’s
entry, or within years of the Stipulation’s entry, indicating unambiguously that all “Remaining
12
Billboards” came into effect as of the date of the Stipulation’s entry. Thus, the Court should correct
the R&R’s incorrect finding with respect to Section 270-16.
B. Although the R&R Determined that The Issue Was “Beyond the Scope” Given Clear
Channel’s Decision to Move With Respect to the Meaning of Section 270-16 Only, it Should
Be Noted that Section 270-4 Also Requires Removal
Section 270-4(E)(1), also enacted in March of 2001, requires Clear Channel to remove the
1-95 Billboards. Section 270-4(E) states in relevant part that “Billboards shall be prohibited,
except for: [1] Legally existing billboards or [2] [pursuant to the court-ordered settlement in that
matter entitled Universal Outdoor, Inc. et al v. City of New Rochelle et al (U.S.D.C. 98 Civ
3908)].” Jd. (emphasis added).
Under the plain terms of the City Code, billboards are prohibited except in certain limited
instances. The first instance is if the billboards were “legally existing” as of March 20, 2001. The
entire basis of Clear Channel’s motion is that certain billboards along I-95 were not erected and
therefore not legally existing until after March 20, 2001. Therefore, according to Clear Channel’s
newfound reading of the Stipulation and the City Code—which the City emphatically disagrees
with—the only exception to City Code § 270-4(E) that these billboards could fit in is they were
authorized by the Stipulation. In a provision nowhere addressed by the R&R, however, the
Stipulation, by its explicit terms, has expired as of December 31, 2020, and is no longer of any
force or effect. See Stipulation at § 18. The Stipulation’s Immunity Period also has expired and
now the City Code applies which prohibits billboards unless there is an agreement with the City.
Id., at § 10; See City Code Section 270-4E(3). Importantly, after the award of the RFP to Outfront
Media, the City amended § 270-4E to permit billboards “... pursuant to a City granted license [the
Outfront license]...” See City Code § 270-4E(3). Billboards are no longer authorized pursuant to
an expired Stipulation but they are permitted pursuant the City’s license with Outfront.
13
This Court may determine it is appropriate to decide the issue of Section 270-4 now. At
the least, since the R&R is limited only to the meaning of Section 270-16, the City reserves its
right to maintain and raise its Section 270-4 defense in the future on a motion for summary
judgment to dismiss the Complaint.
POINT I
THE COURT SHOULD CORRECT THE R&R’S FAILURE TO CONSIDER
CLEAR CHANNEL’S COURSE OF CONDUCT TO RESOLVE ANY
AMBIGUITIES IN THE STIPULATION AND SECTION 270-16
Language utilized in the Stipulation and Code is ambiguous if the terms “could suggest
more than one meaning when viewed objectively by a reasonably intelligent person who has
examined the context of the entire integrated agreement and who is cognizant of the customs,
practices, usages and terminology as generally understood in the particular trade or business.” Law
Debenture Tr. Co. of N.Y. v. Maverick Tube Corp., 595 F.3d 458, 466 (2d Cir. 2010). “Where
contract language is susceptible of different meanings, the nonmovant on a summary judgment
motion must be given an opportunity to present extrinsic evidence to establish what was intended
by the written words.” Eye Assoc., P.C. v. Incomrx Systems Ltd. Partnership, 912 F.2d 23, 28 (2d
Cir. 1990).
The R&R incorrectly adopted Clear Channel’s interpretation of the Stipulation as it applies
to Section 270-16. The City respectfully submits that interpretation is incorrect or, at the very
least, there is a good faith disagreement as to the meaning of the Stipulation and that Code
provision that requires an examination of extrinsic evidence, and therefore, the R&R was incorrect.
As detailed below, Clear Channel and the City mutually operated on the understanding that the
Stipulation and Code required removal of the I-95 Billboards as of December 31, 2020.
14
The R&R incorrectly found that much of the evidence detailed below would be of limited
value to the parties’ intent because it encompasses conduct that occurred many years after the
drafting of the Stipulation and Code undertaken by persons not associated with the drafting of
either one. R&R, pp. 17-18. Contrary to the R&R’s holding, New York law provides that extrinsic
evidence need not come from the person or persons that were involved in the drafting. Indeed, the
parties’ post-contract course of performance is “highly probative of their state of mind at the time
the contract was signed.” See Gulf Ins. Co. v Transatlantic Reins. Co., 69 AD3d 71, 85-86 (Ist
Dep’t 2009); Waverly Corp. v City of New York, 48 AD3d 261, 265 (1st Dep’t 2008) (“The best
evidence of the intent of parties to a contract is their conduct after the contract is formed”). The
fact that the conduct at issue here occurred over the course of many years following the drafting
of the Stipulation and Code strengthens it probative value. Accordingly, the City respectfully
requests this Court correct the R&R and consider the following evidence.
A. Clear Channel’s RFP Response Establishes its Agreement that the I-95 Billboards Were
Required to Be Removed as of December 31, 2020
In 2015-2016, with the removal of Clear Channel’s billboards on the horizon, New
Rochelle issued an RFP seeking an advertising company to come in and operate up to nine (9)
billboards in the I-95 Corridor after the removal of Clear Channel’s on December 31, 2020. See
Chafizadeh Declaration, Exhibit D. Given the limits on the number of billboards under the Public
Authorities Law, the RFP specified that the winner would be able to begin operations of six (6) of
the nine (9) billboards only after the forthcoming removal of Clear Channel’s billboards on
December 31, 2020. Jd.
Indeed, with respect to Clear Channel’s billboards, the RFP makes clear that “[u]nder the
current City ordinance all billboards must be removed by 2020.” Id. (emphasis added). Questions
submitted by companies such as Clear Channel and publicly answered by the City after the initial
15
RFP similarly make clear that Clear Channel’s I-95 Billboards must be removed as of
December 31, 2020:
Q: Will the City affirmatively seek to remove or have removed
any of the existing billboards by the 2020 sunset date?
A: All billboards must be removed by 2020. The City will
use its enforcement powers to remove any billboards requiring
removed|[al| by the 2020 sunset date.
See Chafizadeh Declaration, Exhibit E (emphasis in original).
Actively acknowledging that its billboards would be removed as of December 31, 2020,
Clear Channel was one of three companies to submit a response to the RFP. See Chafizadeh
Declaration, Exhibit F. Clear Channel responded to the City’s RFP—essentially bidding on
billboards it now claims it does not have to remove—without any reservation of rights or a single
word of protest. /d. Tellingly, Clear Channel did not raise any argument that the Stipulation or
the City Code did not apply to its I-95 Billboards, whether through correspondence with the City,
or an Article 78 proceeding to seek a declaration of the validity of the RFP process and/or Clear
Channel’s rights under the Stipulation. See Chafizadeh Declaration, {| 18.
Based on recommendations from its consultant, the City ultimately chose to—and did—
enter a contract with non-party Outfront in 2016 to operate the billboards in the I-95 Corridor once
Clear Channel’s billboards were removed. /d. at § 17. When the City entered its contract with
Outfront, Clear Channel again did not raise any protest whatsoever or file a lawsuit to argue that
its I-95 Billboards were exempt from removal. /d. at § 18. To the contrary, Clear Channel
conceded it would lose its I-95 Billboards and apparently attempted to negotiate a payment or swap
from Outfront to transition its assets over. See Chafizadeh Declaration, Exhibit K. Indeed, in early
2020, Clear Channel’s Area Sales Manager for the New York Market wrote:
ee
16
See id.
It was only on the eve of removal—after receiving nearly 20 years of revenue under the
Stipulation—that Clear Channel suddenly protested the removal of the I-95 Billboards. Jd. at § 20.
Apparently unable to extract a payment from Outfront, Clear Channel decided to attempt to
challenge the City’s removal. Jd. And for the first tume, Clear Channel suddenly invented the
theory found in the instant motion (ignoring the Stipulation and other sections of the City Code)
that the I-95 Billboards are exempt from removal under the Stipulation and the Code. /d.
Clear Channel’s bid on the City’s RFP to operate billboards in the I-95 corridor beyond
December 31, 2020 alone establishes it has always understood that the Stipulation and City Code
require their removal. But there is much more.
B. Clear Channel’s Internal Documents Reveal it Has Always Agreed the Stipulation and City
Code Require it to Remove Its I-95 Billboards by December 31, 2020
ee
ee
ee
ee
See Chafizadeh Declaration, Exhibit G.
Clear Channel has held this plain reading of the Stipulation and the Code for many years.
ee
17
8¢¢ Chafizadeh Declaration,
exhibit
Id. (emphasis added).
See Chafizadeh Declaration, Exhibit I.
Clear Channel’s Senior Vice President also discussed the Stipulation in a separate
Td.
Yet another Clear Channel executive—its Vice President of Real Estate—confirmed the
same plain reading of the Stipulation and the City Code. ee
18
ee
See Chafizadeh Declaration, Exhibit J.
This evidence is damning to Clear Channel’s newfound interpretation of the Stipulation
and City Code. The City respectfully requests the Court consider this evidence and correct the
R&R’s interpretation of the Stipulation and Code.
POINT III
THE COURT SHOULD CORRECT THE R&R’S MISTAKE ON THE LAW
OF EQUITABLE ESTOPPEL
Based on the overwhelming evidence set forth above, the R&R correctly denied Clear
Channel’s motion based on laches. Indeed, Clear Channel knew—and agreed—that its billboards
were going to be removed and it sat on its newfound rights to protest that removal for several
years. The R&R misinterprets New York law, however, wherein it rejects the City’s equitable
estoppel defense by holding that an “actual misrepresentation” is required and “misrepresentations
regarding legal opinions or interpretations” do not qualify. R&R, p. 29.
To the contrary, an affirmative or actual misrepresentation is not required under New York
law top set forth an equitable estoppel defense. “Application of the doctrine requires only reliance
and prejudice; it does not require the existence of fraud or an intent to deceive.” Indeed, “[t]he
doctrine of equitable estoppel is properly invoked where the enforcement of the rights of one party
would work an injustice upon the other party due to the latter’s justifiable reliance upon the
former’s words or [even] conduct.” Kosakow v. New Rochelle Radiology Associates, PC, 274 F.
3d 706, 725 (2d Cir. 2001).
New York courts routinely invoke equitable estoppel where, as here, one party to a contract
asserts rights thereunder and the other party remains silent but then seeks to challenge those rights
19
at a later time. Indeed, “silence in the face of an explicit contrary assumption by an innocent party
may constitute a concealment of facts or a false misrepresentation for estoppel purposes.”
Gen. Elec. Cap. Corp. v. Armadora, 37 F.3d 41 (2d Cir. 1994) (applying New York law)
(“Armadora’s silence in the face of GECC's assertion of its interpretation of Section 2.09 of the
Loan Agreement falsely misrepresented its intent to challenge that calculation.”).
This is a textbook case to invoke equitable principles to bar Clear Channel’s claims in this
case in their entirety or, at minimum, the newfound theory it attempts to raise on this motion
regarding the I-95 Billboards. The Stipulation and the relevant Code provisions have been in place
for approximately two decades. The City has repeatedly announced that it would require Clear
Channel to remove its I-95 Billboards under the Stipulation and Code as of December 31, 2020.
Clear Channel has internally agreed that it would have to remove its I-95 Billboards as of
December 31, 2020. See Chafizadeh Declaration, Exhibits G-K. Clear Channel outwardly
announced this same understanding to the City in 2015-2016 when it bid on the RFP to operate
I-95 Billboards beyond the December 31, 2020 sunset date. /d. at Exhibit F. The City could not
have been clearer that the RFP and the subsequent contract it entered with Outfront were based on
and required removal of Clear Channel’s I-95 Billboards as of December 31, 2020. Jd. at
Exhibits D and E. Yet Clear Channel did not say a word in protest and it actively participated in
the RFP process.
In sum, Clear Channel remained silent in the face of the City asserting its rights to require
Clear Channel to remove its billboards. Clear Channel never once challenged the City’s RFP or
its contract with Outfront via an Article 78 proceeding or otherwise. Further, Clear Channel
effectively ratified the City’s RFP contract with Outfront by attempting to negotiate with Outfront
to benefit from that contract. /d. at Exhibit K.
20
The City has expended significant time, effort, and money and it now has a contract with
Outfront to take over the operations of billboards in the I-95 Corridor. Clear Channel now seeks
to reverse years of its conduct on which the City has justifiably relied which would harm the City
in myriad ways. Thus, the Court should correct the R&R and find that Clear Channel’s motion—
raising its newfound position—should be denied not just on laches but on the additional ground of
equitable estoppel.
POINT IV
ALTHOUGH NOT BEFORE THE COURT GIVEN THE TIMING OF AND
LIMITED RELIEF SOUGHT IN CLEAR CHANNEL’S MOTION, IT
SHOULD BE NOTED THAT CLEAR CHANNEL’S BILLBOARDS ARE
ALSO PROHIBITED BY THE ZONING LAW
Discovery was ongoing at the time Clear Channel made its motion for partial summary
Judgment. The City objected to the timing of the motion based on Federal Rule 56 because the
parties had not yet developed facts relevant to the motion. One of the issues that developed
subsequent to the initial briefing 1s that Clear Channel’s billboards must be removed because they
violate New Rochelle’s Zoning Law. The City promptly alerted Magistrate Krause of this issue
via letter at ECF Doc. No. 146. The R&R limited its analysis to Section 270-16 based on the
nature of Clear Chanel’s motion and did not consider the Zoning Law argument. R&R 10, fn. 11.
The City respectfully submits this Court may consider the City’s Zoning Law argument.
Indeed, as discovery progressed, it became apparent that a// of Plaintiff's billboards, as of
January 1, 2021, were illegal under the New Rochelle Zoning Law and therefore, must be removed.
Indeed, billboards are not a permitted use, specially permitted use or permitted accessory use in
the districts where the billboards are currently located. See New Rochelle Code Chapter 331. As
such, the billboards are subject to removal not only under the Sign Code at Chapter 270 (270-16
and 270-4) but also the Zoning Code at Chapter 331. While the billboards may have been immune
21
from removal under the Zoning Code up until December 31, 2020, that immunity has expired.
This is an additional reason Plaintiff's motion should be denied and it must remove its billboards.
For these reasons, the Court may find that the billboards must be removed based on the
Zoning Law. Alternatively, the City will raise this issues on a motion for summary judgment
dismissing the Complaint.
CONCLUSION
For the foregoing reasons, the Court should affirm the R&R’s denial of Clear Channel’s
motion for partial summary judgment but it should correct legal errors and affirm that denial based
on the additional grounds set forth herein, and grant the City such other and additional relief it
deems just and proper.
Dated: September 23, 2022
White Plains, NY
Respectfully submitted,
HARRIS BEACH PLLC
By: J Y, OOS © L? Chifewadih
Darius P. Chafizadeh, Esq.
James P. Nonkes, Esq.
Katerina M. Kramarchyk, Esq.
Attorneys for Defendants
445 Hamilton Avenue, Suite 1206
White Plains, New York 10601
Phone: (914) 683-1212
Fax: (914) 683-1210
dchafizadeh@harrisbeach.com
jnonkes@harrisbecah.com
kkramarchyk@harrisbeach.com
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319562\4883-3683-9476\ v2