Petition for Writ of Certiorari — Newport Associates, Inc. v. Solow

DEC 22

IN THE

Supreme Court of the United States

OCTOBER TERM, 1972

No. 72-924

MICHAEL RODAK,

Newport Associates, Inc.,

Petitioner,

against

SHELDon H. Sorow,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

COURT OF APPEALS OF THE STATE OF NEW YORK

Leo Brapy

Counsel for Petitioner

100 East 42nd Street

New York, N. Y. 10017

J. Ropert ELLNeEr,

of Counsel

TABLE OF CONTENTS

a]

B

The Question Presented .............eeceeeceeeees

Constitutional Provisions and Ordinances ..........

Statement of the Case .............. ccc eee eee eee

How Federal Questions Were Presented ..........

Reasons for Granting the Writ ...................

ee eheesbaskee

ANA Oo rP DO NS NY NW

INDEX TO APPENDICES

Appendix A—Opinion and Concurring Opinion of

Court of Appeals of the State of New York ..... la

Appendix A-1—Order of Court of Appeals Reversing

and Reinstating Order and Judgment of Special

ELE TESS <n ELE RE ge en 7a

Appendix A-2—Order of Court of Appeals Denying

Motion for Reargument .....................- 10a

Appendix B—Memorandum Decision of Appellate

Division Reversing Special Term .............. lla

Appendix B-1—Order of Appellate Division Revers-

fsa eduedsewenieewiees 13a

Appendix C—Opinion of Postel, J. at Special Term.. 15a

Appendix C-1—Order and Judgment of Special Term 19a

Appendix D—Constitution and Statutory Provisions

DEE daca cedcuesdhecnetabass vedecovnesseee 22a

In THE

Supreme Court of the United States

OCTOBER TERM, 1972

No.

7%

>

Newport Associates, INc.,

Petitioner,

against

SxHeEutpon H. Sorow,

Respondent.

a

a4

PETITION FOR A WRIT OF CERTIORARI TO THE

COURT OF APPEALS OF THE STATE OF NEW YORK

Petitioner, Newport Associates, Inc., prays that a Writ

of Certiorari issue to review the Order, Judgment and

Opinion of the Court of Appeals entered in the above-en-

titled case on April 26, 1972.

The Opinions Below

The opinion of the Court of Appeals and the concurring

opinion, reported in 30 N.Y. 2d 263, 332 N.Y.S. 2d 617;

the Order of the Court of Appeals reversing, without costs,

and reinstating the Order and Judgment of the Special

Term of the Supreme Court of New York County; and the

Order denying Petitioner’s motion for reargument, noted

in 31 N.Y. 2d 709 are appended hereto as Appendix A, A-1

and A-2, infra, pp. 1a to 10a; the opinion (Memorandum

Decision) of the Appellate Division, First Department of

the Supreme Court of New York State, reported in 36 A.D.

2d 519, 317 N.Y.S. 2d 715; and the Order of the Appellate

Division reversing the Order and Judgment of Special

2

Term are appended hereto as Appendix B and B-1, fra,

pp. lla to 14a; the opinion of Postel, J. (unreported Memo-

randum Decision) at the said Special Term, and the Order

and Judgment of said Court, are appended hereto as Ap-

pendix C and C-1, infra, pp. 15a to 21a.

Jurisdiction

The Order of the Court of Appeals was entered on

April 26, 1972. A timely motion for reargument was

served on July 24, 1972 and duly filed in the Court of

Appeals. The said motion was denied on September 28,

1972. The jurisdiction of this Court is invoked under 28

U.S.C. Section 1257(3).

The Question Presented

Is a zoning ordinance unconstitutional which, enacted

seven years after execution of a lease, grants property

rights not contemplated by the lease to a tenant (re-

spondent) and thereby deprives the owner (petitioner) of

such rights?

Constitutional Provisions and Ordinances

This case involves the Fourteenth Amendment of the

Constitution of the United States and the New York City

Zoning Resolution, and more particularly Section 12.10 of

such Resolution which defines a ‘‘zoning lot.’? The per-

tinent provisions of Section 1 of the Fourteenth Amend-

ment and of the Zoning Resolution are appended hereto as

Appendix D, infra, pp. 22a and 23a.

Statement of the Case

In 1953 the predecessors in interest of the petitioner and

the respondent entered into a lease for premises at 4 West

3

58th Street in the Borough of Manhattan, City of New

York. The lease was for an initial term of 21 years with

options to the tenant to renew in additional 21-year terms

to the year 2052. The leased premises include a building

fully occupied by the tenant.

The Zoning Resolution of the City of New York enacted

in 1960 restricts the size of a building to one whose total

floor area is less than a stated multiple of the ground area

of the plot. The multiple is known as the ‘‘Fioor Area

Ratio.’? In New York City it is referred to as the ‘‘FAR.”’

In the instant situation, the FAR applicable to the zoning

district within which the premises are located would per-

mit the erection of a building on the leased premises con-

taining 30,000 square feet in excess of the building which

presently is on the premises and leased to the respondent-

tenant.

A section of the Zoning Resolution (Appendix D) in

defining a zoning lot to which the FAR is to be applied,

provides that a zoning lot is one which is under a single

ownership and in effect within a single perimeter. Thus,

two or more tax lots, so long as their borders are con-

tiguous, may constitute a single zoning lot if they are with-

in a “single ownership.” A further provision of this sec-

tion in defining “single ownership” states that it shall in-

clude a lessee under a lease which grants a term of at least

50 years plus an option to renew for an additional 25

years.

Respondent-tenant, already the fee owner of the parcel

of land adjacent to the leased premises, obtained without

the petitioner’s permission, and over its protest, an assign-

ment of the lease on the subject premises. Upon obtaining

such assignment he applied to the municipal authorities

for, and was granted, the right under the Zoning Resolu-

tion to “appropriate’’ the 30,000 square feet of unused

FAR on the leased premises and add such footage to the

FAR of the building he built on the land he owned. It is

4

uncontroverted in the record that such ‘‘transfer’’ of the

FAR from the subject building to the respondent’s own

building was effected 1) without the consent of the peti-

tioner; 2) without payment of any compensation to the

owner beyond the rental provided for in the lease; and 3)

that such use of the FAR by the respondent excludes for-

ever the petitioner’s opportunity to utilize such FAR in

conjunction with the ownership of adjacent land on the

other side of the demised premises. As Judge Breitel, in

his concurring opinion in the New York Court of Appeals

said

“| . it was possible for either . . . whoever first

acted, to use the same air development rights to the

exclusion of the other.”

and as Judge Scileppi said in the principal opinion

‘¢| | . whatever rights that plaintiff [petitioner] may

otherwise have had were not lost by any act of the

defendant [respondent], but rather as a result of the

operation of the ordinance.”

It is uncontroverted in the record that the lease be-

tween the parties was entered into seven years prior to the

passage of the Zoning Resolution, with its peculiar defini-

tion of ‘‘ownership.”

How Federal Questions Were Presented

The Court of Appeals Order, of which review is here

sought, reinstated an Order and Judgment of the Special

Term granting respondent’s motion for summary judg-

ment. The constitutional issue was raised in the affidavit

of the petitioner’s President submitted on that motion

(Record transcript page 34). The affidavit argued that the

defendant’s motion for summary judgment should be de-

nied and the plaintiff’s granted ‘‘upon the ground that the

5

Zoning Regulation in question is unconstitutional, confisca-

tory, arbitrary and capricious, a deprivation of plaintiff’s

property without due process of law... .’’ In its brief

to Special Term, petitioner further challenged the constitu-

tionality of the Zoning Resolution.

The constitutional question was presented to the Appel-

late Division by the record above quoted and as one of the

four questions presented in petitioner’s brief to that Court

(as well as in oral argument).

The second of the four questions presented to the Court

was

‘*2. Does the Zoning Regulation, the sole authority

for such expropriation, violate the Constitutional

rights of plaintiff-appellant [petitioner] ?”’

Again, before the Court of Appeals, in addition to the

Record in Special Term (and oral arguments to the Court),

the petitioner’s brief presented as the second of three

questions :

‘*2. Does the Zoning Resolution, if applicable, vio-

late the constitutiona: rights of plaintiff-respondent

[petitioner] ?”’

Justice Postel in the Special Term did not in any way allude

to the constitutional issue. In the Appellate Division, since

the Special Term decision was unanimously reversed on

the basis of New York real property law, the Court never

reached any constitutional issue. In the Court of Appeals,

neither the principal nor the concurring opinion dealt with,

or alluded to, the constitutional question raised by both

record and brief (and in oral argument).

Again, on the motion for reargument in the Court of Ap-

peals, addressing itself to the fact that neither opinion

of that Court dealt with the constitutional question, the

ieernnnmnnmatsiiietigememasinmannnienn

petitioner’s brief on page 4 urged:

‘The Zoning Resolution can not constitutionally take

away rights from one party and confer the same upon

another.”’

and again on page 10, the petitioner respectfully submitted

‘“‘that the Zoning Resolution authorizes a taking of

property without due process of law and contravenes

provisions of both the Federal and State Constitution.”’

Reasons for Granting the Writ

The Appellate Division of the Supreme Court of the State

of New York (the intermediate appellate court) found it

unnecessary to reach the constituitonal issue raised by the

petitioner. In effect, that Court held that the lease itself

prohibited the respondent's actions (opinion Appendix B).

The Court of Appeals similarly found no authority within

the corners of the lease, but ruled that by the ordinance the

respondent was granted such right to the exclusion of the

petitioner. This Court is therefore asked to rule on the

question whether an ordinance operating in such a manner,

or such interpretation of an ordinance, does not deprive

the petitioner of property without due process of law.

It is clear that through the years since the passage of the

Fourteenth Amendment, the States have been restricted by

this Court from effecting deprivation of property without

due process. More recently, this Court has held in Civil

Rights cases that the States may not assist a private person

in his attempt to discriminate in a way in which the States

themselves were barred by the ‘‘ privileges and immunities’’

and ‘‘equal protection”’ clauses of the Fourteenth Amend-

ment.

The question this petition seeks to present for the Court’s

consideration is:

Shall the due process clause of the Fourteenth

Amendment be applied in the same way as the “‘privi-

7

leges and immunities’’ clause and the ‘‘equal protec-

tion’’ clause, i.e., Shall the States be restricted from

assisting a person from depriving another of property

without due process of law as they are restricted from

assisting a person in discriminating against another?

For many years criticism abounded that the laws of the

States and of the United States were ‘‘tipped’’ in favor

of the protection of property rights. In recent years in

the Civil Rights cases this Court and, by new statutes, the

Congress have made clear to the world that this Nation is

committed to the protection of the liberties and the civil

rights of its citizens from the incursion by Government or

by private persons assisted by Government.

But such commitment to Civil Rights can not have been

intended to indicate a diminution of the protection to be

afforded property rights. It has been fashionable in some

milieu to denigrate the importance of property rights as

though this Nation and this Court were unable to protect,

simultaneously, both Civil Rights and property rights.

The Fourteenth Amendment, when first enacted, was in-

tended to protect both. We urge that it is now timely for

this Court to determine whether the property rights protec-

tion of the Fourteenth Amendment ought to be updated and

brought to the level of protection afforded Civil Rights.

York.

Respectfully submitted,

Leo Brapy

Counsel for Petitioner

100 East 42nd Street

New York, N. Y. 10017

J. Rosert Ex.yen,

of Counsel

ee rt re mS

la

APPENDIX A

(Opinion and Concurring Opinion of Court of Appeals

of the State of New York)

1. No. 529 71

7%

A

Newport Associates, Iwc.,

Respondent,

vs.

Suetpox H. Sotow,

Appellant.

A

—

Scuzprt, J. This is an action to compel a determination

of a claim to real property pursuant to article 15 of the

Real Property Actions and Proceedings Law. There is no

dispute as to the operative facts. Plaintiff is the owner in

fee of a parcel of New York City land, improved by a

building, known as 4 West 58th Street and defendant is in

ion thereof, pursuant to a long-term lease which,

by the exercise of certain options, will not expire until 2052.

In addition to his leasehold interest in the subject prop-

erty, defendant is the fee owner of two adjoining parcels:

10-40 West 58th Street and 9-25 West 57th Street.

These parcels are contiguous with the leased premises and

defendant is in the process of constructing a 45-story office

building on its fee property. As an incident to this con-

struction, defendant filed plans with the New York City

Buildings Department and secured a building permit. The

controversy between the parties centers upon this building

permit and its effect on plaintiff's property rights.

The New York City Zoning Resolution sets certain lim-

its on the quantum of floor space that a particular building

may have. These limits, called floor area ratios, consist of

a

2a

Appendiz A.

the total floor area on a zoning lot divided by the lot area

of that zoning lot (Zoning Resolution, 412-10). The exist-

ing building on the leasehold property does not represent

a complete utilization of the floor area ratio for that build-

ing and hence there is surplus air space which is appar-

ently buildable. Since defendant’s fee property is con-

tiguous to that which he leases, the municipal authorities,

issuing the building permits, allowed defendant to incor-

porate the unused air space on the leased property in com-

puting the maximum floor space for the building now being

constructed on the fee property.

In this litigation, plaintiff has contended that the lease

did not pass air space rights and that defendant’s con-

struction represents a diminution in the value of its re-

versionary interest; defendant has counterclaimed for a

judgment sanctioning its construction. Both sides moved

for summary judgment and Special Term, rejecting plain-

tiff’s arguments, adopted the position that, under the ap-

plicable zoning ordinance, defendant was the owner of one

zoning lot consisting of that which he held in fee and that

which he leased; as such, the construction project was au-

thorized. Additionally, the court concluded that plaintiff's

damages, if any, were remote and speculative and that the

construction was not violative of the lease. A judgment

and order was entered granting defendant’s motion for

summary judgment, denying plaintiff’s cross motion and

declaring that defendant was authorized to use, in its con-

struction, the unexpended and unused floor area ratio per-

missible and attributable to plaintiff’s property. On ap-

peal, the Appellate Division reversed and granted sum-

mary judgment to the plaintiff on the basis of section 4.03

of the lease which reads as follows: “Lessee may make

such additions, alterations and changes to the Premises as

will suit Lessee’s convenience and requirements of its busi-

ness, and the business of any tenants to whom Lessee may

3a

Appendiz A.

lease portions of the Building, provided that such addition,

change or alteration will not change the character of the

Building and provided further that, no structural addition,

alteration or change, the estimated cost of which is in ex-

cess of $25,000 will be made without prior approval of

Lessor, which Lessor covenants shall not be unreasonably

withheld.” Inasmuch as defendant was utilizing the un-

used part of the floor area ratio for the leased premises on

its fee property, the construction was not an alteration

within the meaning of section 4.03. On the contrary, the

court viewed it as an elimination of a valuable property

right not vested in defendant by the lease. We reverse and

reinstate the order and judgment of Special Term.

Although we agree that section 4.03, limited as it is to

alterations of the leased building, should not be deemed a

source of power authorizing defendant’s utilization of un-

used air space in the construction of the office building on

its property, we conclude that the court below has errone-

ously treated the section as dispositive of the litigation at

bar.

The rather limited question presented in this appeal is

whether defendant’s construction of the office building on

his fee property constitutes a wrong to plaintiff for which

it may be given redress in this action. As previously

stated, floor area ratios are computed on the basis of the

size of a particular zoning lot. In section 12-10 of the

Zoning Resolution a zoning lot is defined in the following

manner: “(a) A lot of record existing on the effective date

of this resolution or any applicable subsequent amendment

thereto, or (b) A tract of land, either unsubdivided or con-

sisting of two or more contiguous lots of record, located

within a single block, which on the effective date of this

resolution or any applicable amendment thereto, was in

single ownership, or (c) A tract of land, located within a

single block, which at the time of filing for a building per-

MERE TOs

da

Appendiz A.

mit (or, if no building permit is required, at the time of fil-

ing for a certificate of occupancy), is designated by its

owner or developer as a tract all of which is to be used,

developed, or built upon as a unit under single ownership.

A zoning lot therefore may or may not coincide with a lot

as shown on the official tax maps of the City of New York,

or on any recorded subdivision plat or deed.” Thus, where

several contiguous lots are in single ownership, they may

be lumped together and treated as a “zoning lot” for the

purpose of the floor area ratio computation. Ownership is

defined to include long-term leasehold interests: “For the

purposes of this definition, ownership of a zoning lot shall

be deemed to include a lease of not less than 50 years dura-

tion, with an option to renew such lease so as to provide a

total lease of not less than 75 years duration.” (Jd.)

Though defendant’s lease, executed in 1953, had a mini-

mum term of 21 years with options to renew for additional

periods until the year 2052, it would appear that in issuing

the building permit, the municipal authorities found that

the lease satisfied the requirements of section 12-10. De-

fendant was, therefore, the owner of contiguous lots under

the Zoning Resolution and as such was entitled to full uti-

lization of air space rights. Inasmuch as there is no pro-

vision in the lease which precludes defendant’s exercise of

rights under the Zoning Resolution, it cannot be said that

he has wronged plaintiff.

It is, of course, plaintiff's argument that with the 45-

story building on the defendant’s fee property, a valuable

asset is destroyed since it loses the right to sell its air

rights to owners of parcels adjoining the other side of the

leased property. But this overlooks the fact that, in view

of defendant’s ownership of the adjoining building, his

lease from plaintiff and the Zoning Resolution itself, plain-

tiff possesses no such right of sale. There is nothing in

the ordinance which treats its reversionary interest as

5a

Appendix A.

ownership for the purpose of floor area ratios or air space

rights. In other words, whatever rights that plaintiff may

otherwise have had were not lost by any act of the defend-

ant, but rather as a result of the operation of the ordinance.

Since defendant did not violate any of the provisions of the

lease, plaintiff is not entitled to relief.

Accordingly, the order appealed from should be reversed,

without costs, and the order and judgment of Special Term

reinstated.

Breiret, J. (concurring). Plaintiff has lost by defend-

ant’s action, albeit without being wronged, a valuable asset

in the air development rights over its building. It has

thereby lost its right to “transfer” or use its air develop-

ment rights by alienation of the reversion to an abutting

owner, or by acquiring an abutting property. That right

to transfer or exploit the air development rights required

no warrant in the zoning ordinance. Air rights, including

the special floor area ratios defined in the ordinance, are

valuable and transferable, even if only as an adjunct to a

reversion or to a long-term leasehold.

I conclude, however, that because the lease to defendant

failed or was then unable to reserve air development rights

to the fee owner, there is no restriction on defendant quali-

fying his abutting property under the ordinance and thus

exploiting the otherwise unused air development rights of

the leasehold. Plaintiff’s mischance is that the rights were

never reserved in the lease, and the ordinance, as a part

of zoning design, allows them to be used in a special way

as an adjunct to a fee or long-term leasehold, and thus

gives them value. Indeed, under the ordinance it was pos-

sible for either the owner of the reversion or the holder of

the long-term leasehold, whoever first acted, to use the

same air development rights to the exclusion of the other.

The significance of the distinction is that lessors of long-

term leaseholds may and perhaps would be wise to reserve

6a

Appendia A.

to themselves the use of the air space rights, including the

floor area ratios.

Accordingly, I concur that the order appealed from

should be reversed.

Chief Judge Fup and Judges Bercan, Jasen and Grsson

concur with Judge Scitepr1; Judge Brerret concurs in a

separate opinion in which Judge Burke concurs.

Order reversed, ete.

7a

APPENDIX A-1

(Order of Court of Appeals Reversing and Reinstating

Order and Judgment of Special Term)

COURT OF APPEALS

State of New York, ss:

Puxas in the Court of Appeals, held at Court of Appeals

Hall, in the City of Albany, on the 26th. day of April in

the year of our Lord one thousand nine hundred and sev-

enty-two, before the Judges of said Court.

WITNEss,

The Hon. Stantey H. Fvutp,

Chief Judge, Presiding.

Raymonp J. Cannon, Clerk.

Remirtirur April 26, 1972.

7%

v

No. 529. 71

Newport Associates, Inc.,

Respondent,

vs.

Sheldon H. Solow,

Appellant.

7%

v

Be tr ReMeMBERED, That on the 10th. day of December in

the year of our Lord one thousand nine hundred and sev-

enty-one, Sheldon H. Solow, the appellant—in this cause,

came here unto the Court of Appeals, by Parker, Duryee,

Zunino, Malone & Carter, his attorneys, and filed in the

said Court a Notice of Appeal and return thereto from the

8a

Appendix A-1

order of the Appellate Division of the Supreme Court in

and for the First Judicial Department. And Newport As-

sociates, Inc., the respondent—in said cause, afterwards

appeared in said Court of Appeals by McLaughlin & Stern,

Ballen and Miller, its attorneys.

Which said Notice of Appeal and the return thereto, filed

as aforesaid, are hereunto annexed.

Wuereupon, The said Court of Appeals having heard

this cause argued by Mr. David W. Peck, of counsel for

the appellant—, and by Mr. Leo Brady, of counsel for the

respondent—, and after due deliberation had thereon, did

order and adjudge that the order of the Appellate Division

of the Supreme Court appealed from herein be and the

same hereby is reversed, without costs, and the order and

judgment of Special Term reinstated.

And it was also further ordered, that the records afore-

said, and the proceedings in this Court, be remitted to the

Supreme Court of the State of New York, there to be pro-

ceeded upon according to law.

THEREFORE, it is considered that the said order be

reversed, without costs, &., as aforesaid.

And hereupon, as well the Notice of Appeal and return

thereto aforesaid as the judgment of the Court of Appeals

aforesaid, by it given in the premises, are by the said

Court of Appeals remitted into the Supreme Court of the

State of New York before the Justices thereof, accord-

ing to the form of the statute in such case made and

provided, to be enforced according to law, and which

record now remains in the said Supreme Court, before

the Justices thereof, &.

Raymonp J. Cannon

Clerk of the Court of Appeals of

the State of New York.

Court or Apprats, CLERK’s OFFICE,

Albany, April 26, 1972.

I Heresy Certiry, that the preceding record

(Seat)

9a

Appendta A-1

contains a correct transcript of the pro-

ceedings in said cause in the Court of

Appeals, with the papers originally filed

therein, attached thereto.

Raymonp J. Cannon

Clerk.

10a

APPENDIX A-2

(Order of Court of Appeals Denying Motion

for Reargument)

STATE OF NEW YORK,

In Court or APPEALS

At a Court of Appeals for the State of New

York, held at Court of Appeals Hall in

the City of Albany on the Twenty-eighth

day of September A. D. 1972.

Present, Hon. Stantey H. Fuup, Chief Judge, presiding.

7’

7

1 Mo. No. 580

Newport Associates, Inc.,

Respondent,

vs.

Sheldon H. Solow,

Appellant.

+

bd

A motion for reargument of the above cause &. having

heretofore been made upon the part of the respondent

herein and papers having been submitted thereon and due

deliberation having been thereupon had, it is

OrpvereD, that the said motion be and the same hereby

is denied.

(Szat) <A copy

Gearon KIMBALL

Deputy Clerk

lla

APPENDIX B

(Memorandum Decision of Appellate Division Reversing

Special Term)

SUPREME COURT

OF THE STATE OF NEW YORK

APPELLATE Division—F rst DEPARTMENT

By Capozzoli, J.P., McGivern, Nunez and McNally, JJ.

3001. Newport Associates, Inc., plf-ap, v. Sotow, def-

res—Order and judgment (one paper), Supreme Court,

New York County (Postel, J.), entered on July 21, 1970,

unanimously reversed, on the law; appellant shall recover

of respondent $50 costs and disbursements of this appeal ;

and declaratory judgment directed restraining the defend-

ant from utilizing the unused floor area ratio. applicable to

plaintiff’s real property located at 4 West Forty-eighth

Street in the Borough of Manhattan for the benefit of de-

fendant’s property located at 10-40 West Fifty-eighth

Street. Absent any provision in the lease authorizing it,

defendant may not for its own purposes sever from and

appropriate for the benefit of defendant’s real property

any part of plaintiff’s property or the bundle of rights

incident thereto. Defendant relies on section 4.03 of its

lease which enables it to make additions, alterations and

changes to the premises as will suit its convenience and

requirements of its business or the business of any tenant

of the lessee, provided the character of the plaintiff’s build-

ing is not changed, the prior approval of the plaintiff being

necessary to any such alteration or change involving an

expenditure in excess of $25,000. Defendant’s attempt to

utilize the floor area ratio of plaintiff’s building for de-

fendant’s building adjacent thereto does not constitute an

addition to or alteration of the plaintiff’s premises for the

12a

Appendix B

benefit of the lessee thereof or of the lessee’s tenants. It is

rather the permanent disposition or elimination of the

right to enlarge plaintiff's building. It is incontrovertible

that the value of plaintiff’s property will be less if its floor

area ratio is severed and utilized for the benefit of the

defendant's property. ‘“‘The real inquiry in all cases is,

whether there is damage done which injures the reversion.

* * © This injury may be immediate, though the enjoyment

of the reversion is postponed. The value of the property

may be so much diminished that it will not bring the price

in market that it would previously have commanded. This

is a sufficient injury. * * * Good faith on the part of the

tenant is no defense * * *” (Agate v. Lowenbein, 57 N. Y.

604, 614).

Order filed.

13a

APPENDIX B-1

(Order of Appellate Division Reversing Special Term)

At a term of the Appellate Division of the Su-

preme Court held in and for the First Judi-

cial Department in the County of New York,

on the 2ist day of January, 1971.

Present—Hon. Louis J. Capozzoli, Justice Presiding,

Owen McGivern,

Emilio Nunez,

James B. H. McNally, Justices.

3001

05763/1970

és

—

Newport Associates, Lxc.,

Plaintiff-Appellant,

against

Suewpon 8. Soiow,

Defendant-Respondent.

é

—

An appeal having been taken to this Court by the

plaintiff-appellant from an order and judgment (one paper)

of the Supreme Court, New York County (Postel, J.),

entered on July 21, 1970, granting defendant’s motion for

summary judgment dismissing the complaint and denying

plaintiff’s cross-motion for summary judgment, and said

appeal having been argued by Mr. Leo Brady of counsel

for the appellant, and by Mr. Milton R. Friedman of counsel

for the respondent; and due deliberation having been had

l4a

Appendiz B-1

thereon, and upon the memorandum decision of this Court

filed herein,

It is unanimously ordered that the order and judgment

(one paper) so appealed from be and the same is hereby

reversed, on the law; appellant shall recover of respondent

$50 costs and disbursements of this appeal; and declaratory

judgment directed restraining the defendant from utilizing

the unused floor area ratio applicable to plaintiff’s real

property located at 4 West 58th Street in the Borough of

Manhattan for the benefit of the defendant’s property

located at 10-40 West 58th Street. The Clerk is directed to

enter judgment accordingly, with costs.

Enter:

Hymaw W. Gamso

Clerk.

15a

APPENDIX C

(Opinion of Postel, J., at Special Term)

SUPREME COURT

New Yoru Country |

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Newport Associates, Lyc.,

Poster, J.:

In this action to compei the determination of a claim to

real property pursuant to Real Property Actions & Pro-

ceedings Law, Article 15, each of the parties moves for

summary judgment.

The facts are substantially undisputed. Plaintiff is the

owner of premises located at 4 West 58th Street in Man-

hattan, and by mesne assignments, the defendant is the

entire lessee thereof. The defendant has exercised options

to renew the lease until the year 2052. Under the terms

of the lease, the tenant may make such alterations, addi-

tions and improvements as it requires, subject to the ap-

proval of the landlord. Although the building on the fee

is many stories tall, under the New York City Zoning Law

there exists an unused floor area ratio available for further

construction. The defendant owns the property contiguous

to this leasehold and has obtained a substantial mortgage

loan together with municipal approval for the construc-

tion of a 45-story building theron. As part of such muni-

cipal approval, the defendant has been permitted to adopt

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Appendix C

for his own building the unused floor area ratio or ‘‘air

rights’’ of the adjoining premises he leases from the plain-

tiff. The floor area ratio, determined under the zoning law,

gives the defendant an additional 30,000 square feet of floor

area to his new building.

The plaintiff commenced this action to enjoin the de-

fendant from using these air rights, contending, inter alia,

that it will deprive the plaintiff of their future use and

income. By way of defense and counterclaim, the defendant

contends that as the long-term prime tenant of plaintiff’s

existing structure and as the fee owner of the proposed

adjoining structure on a contiguous parcel, he is the

‘*owner’’ of one zoning lot as defined under New York City

Zoning Resolution § 12-10 and that such dominant-servient

air right use is permitted.

On the instant motion, the defendant urges that since

the lease permits the tenant to alter the building, by impli-

cation, alteration includes using the available air rights.

The defendant also offers to give sufficient security to

assure performance of the lease and the use of the air

rights, so that the plaintiff will not be prejudiced in the

event of a default. He further urges that under these

cireumstnces the immediate construction of the new

building with the additional air rights will contribute sub-

stantially to the city’s economy by creating more taxable

property, rental space and jobs.

The plaintiff contends, inter alia, that the use of the air

rights constitutes a deprivation of its property for the

benefit of another premises, and that the air rights con-

stitute a valuable asset saleable to any builder on the parcel

contiguous to the east, because it would enhance the per-

mitted floor area ratio of such contiguous parcel.

The essential question appears whether the tenant has

also rented the plaintiff’s air rights without additional

monetary obligation, and as a corollary whether these

rights are transferable to an adjoining building. Whether

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Appendiz C

the plaintiff can sell his air rights to the fee owner of the

contiguous parcel to the east, as plaintiff suggests, is

speculative, in the absence of a firm offer and acceptance.

Neither counsel has shown, nor has the Court been able to

find any case dealing with these facts. The facts and

peculiar circumstances shown yield, however, in favor of

the defendant, because of his complete physical control of

both buildings for the apparent life of the structures. This

complete physical control effectively welds the two struc-

tures into one floor area ratio. Indeed, this intent is

written into the zoning law by permitting development

under this very circumstance (NYC Zoning Resolution

§ 12-10 Zoning Lot).

A remaining question is raised whether the use of these

air rights was contemplated by the lease and whether a

fair consideration was paid. While the Court will not

rewrite a contract for the parties, it will give a reasonable

construction to its terms. The tenor of the lease lies in

section 4.03 thereof which provides: ‘‘Lessee may make

such additions, alterations and changes to the Premises as

will suit Lessee’s convenience and requirements of its

business * * *’’ the approval of ‘‘* * * which Lessor

covenants shall not be unreasonably withheld.’’ In essence,

the defendant has leased the entire building including the

right to make an ‘‘addition’’. If defendant were to use the

entire available floor area ratio permitted by the zoning

resolution he would do so by making an ‘‘addition’’ to the

plaintiff’s premises. There is no extra rent stipulated in

the lease for this right and no one other than the defendant

ean make the addition. Nor can the plaintiff-landlord

unreasonably withhold this right to make an addition.

The defendant-tenant, because of the contiguity of his own

parcel, has elected to make the addition not to the leased

premises but to his own fee adjoining. The distinction is

ethereal; the damages to plaintiff, if any, are remote and

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Appendiz C

speculative, when viewed in the light of the term of the

lease and probable life of the two structures. Indeed, it

is not unreasonable to assume that the defendant has also

leased the air space to plaintiff’s building when given the

right to make improvements. It is, however, unreasonable

and capricious to deny this improvement upon the insistence

of further rent.

Accordingly, the motion for summary judgment is

granted in favor of the defendant-tenant and the plaintiff’s

cross-motion is denied.

Settle order.

Dated: June 16, 1970

/S/ Poste.

ISL.

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APPENDIX C-1

(Order and Judgment of Special Term)

At a Special Term, Part I, of the Supreme

Court of the State of New York, held in

and for the County of New York, at the

Courthouse, 60 Centre Street, in the Bor-

ough of Manhattan, City of New York, on

the 20th day of July, 1970.

HownoraB_e Georce Poste,

Justice

Newport AssoomaTEs, INc.,

Plaintiff,

against

Sxetpon H. Sotow,

Defendant.

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Defendant having duly moved this Court by order to

show cause dated April 14, 1970, for an order directing that

summary judgment be entered in favor of Defendant and

against the Plaintiff, dismissing the complaint on the

ground that the cause of action alleged in the complaint

has no merit, and Plaintiff having applied for summary

judgment striking the answer herein in its papers in oppo-

sition to this motion,

Now, on reading and filing the complaint, answer and

reply to the counterclaim, the order to show cause dated

April 14, 1970, the affidavit of Sheldon H. Solow sworn to

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Appendix C-1

April 14, 1970, with the exhibits thereunto attached, in sup-

port of the motion, the affidavit of Sol Goldman sworn to

April 27, 1970, with the exhibits thereunto attached, in oppo-

sition to the motion and in support of its cross-motion for

summary judgment in favor of Plaintiff, and said motions

having duly come on to be heard at a Special Term, Part I,

of this Court on the 17th day of April, 1970, and the Defend-

ant having appeared by Parker, Duryee, Zunino, Malone

& Carter, his attorneys, in support of the motion and in

opposition to Plaintiff’s cross-motion for summary judg-

ment, and Plaintiff having appeared by Gordon, Brady,

Keller & Ballen, its attorneys, in opposition to Defendant’s

motion and in support of its cross-motion, and due delibera-

tion having been had thereon and the Court having made

and filed its opinion herein, it is

OrperED that Defendant’s motion for summary judg-

ment be and it hereby is in all respects granted; and it is

further

Orperep that the complaint be and the same hereby is

dismissed; and it is further

Orperep that Plaintiff’s cross-motion for summary judg-

ment be and it hereby is denied; and it is

Adjudged, Decreed and Declared that Defendant, in

erecting a building upon the premises in the Borough of

Manhattan, City, County, and State of New York, known

as and by the street numbers 9-25, inclusive, West 57th

Street and 10-40, inclusive, West 58th Street, is authorized

to use in its construction the unexpended and unused floor

area ratio permissible and attributable to the premises in

the Borough of Manhattan, City, County and State of New

York, known as and by 4 West 58th Street and more par-

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Appendix C-1

ticularly described as follows:

All that parcel of land situate, lying and being in

the Borough of Manhattan, City, County and State of

New York, bounded and described as follows:

Beginning at a point on the southerly side of 58th

Street, distant one hundred thirty-five feet westerly

from the corner formed by the intersection of the :

southerly side of 58th Street with the westerly side of 7

Fifth Avenue; running thence southerly parallel with

Fifth Avenue, one hundred feet five inches to the center

line of the block; thence westerly along the said center

line of the block, sixty-five feet ; thence northerly paral-

lel with Fifth Avenue through a party wall, one hun-

dred feet five inches to the southerly side of 58th Street,

and thence easterly along the southerly side of 58th

Street, sixty-five feet to the point or place of beginning;

‘eta wo Hatt)»

and it is further

OrpERED that judgment be entered herein by the Clerk

of this Court in favor of the Defendant, Sheldon H. Solow,

and against the Plaintiff, Newport Associates, Inc., for the

costs and disbursements of this action to be taxed by the

Clerk of the Court.

PLE PPPOE PA, GOED AN LURE A le Ne Mt

ENTER

ROS RENNES WRIA, NE

/s/ G. P.

Justice of the Supreme Court

Filed July 21, 1970

New York County Clerk’s Office

OR ae ah Date

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APPENDIX D

(Constitutional and Statutory Provisions Involved)

1. The pertinent provisions of the Fourteenth Amend-

ment to the United States Constitution are:

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‘‘No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person

of life, liberty, or property, without due process of

law; nor deny to any person within its jurisdiction the

equal protection of the laws.’’

2. The New York City Zoning Resolution (pp. 18-19)

adopted on December 15, 1960, to become effective one year

later on December 15, 1961, provides as follows:

§ 12-10 Zoning Lot

A ‘‘zoning lot’’ is either:

(a) A lot of record existing on the effective date

of this resolution or any applicable subsequent

amendment thereto, or

(b) A tract of land, either unsubdivided or con-

sisting of two or more contiguous lots of record,

located within a single block, which, on the effective

date of this resolution or any applicable subsequent

amendment thereto, was in single ownership, or

(c) A tract of land, located within a single block,

which at the time of filing for a building permit (or,

if no building permit is required, at the time of

filing for a certificate of occupancy), is designated

by its owner or developer as a tract all of which is

to be used, developed, or built upon as a unit under

single ownership.

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Appendix D

A zoning lot therefore may or may not coincide with

a lot as shown on the official tax maps of the City of

New York, or on any recorded subdivision plat or

deed.

For the purpose of this definition, ownership of a

zoning lot shall be deemed to include a lease of not

less than 50 years duration, with an option to renew

such lease so as to provide a total lease of not less

than 75 years duration.

A zoning lot may be subdivided into two or more

zoning lots, provided that all resulting zoning lots and

all buildings thereon shall comply with all of the ap-

plicable provisions of this resolution. If such zoning

lot, however, is occupied by a non-complying building,

such zoning lot may be subdivided provided such sub-

division does not create a new non-compliance or in-

crease the degree of non-compliance of such building.

(Italicized words so appear in Zoning Resolution. )