This opinion is uncorrected and subject to revision before

publication in the New York Reports.

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No. 39 

In the Matter of Perlbinder 

Holdings, LLC,

 Appellant-Respondent,

 v.

Meenakshi Srinivasan, &c., et 

al.,

 Respondents-Appellants.

Howard Grun, for appellant-respondent.

Jane L. Gordon, for respondents-appellants.

PIGOTT, J.:

At issue in this appeal is whether petitioner

Perlbinder Holdings LLC, by virtue of its reliance on an

erroneously issued permit for a large outdoor advertising sign

that was later revoked by the New York City Department of

Buildings (DOB), acquired a vested right to maintain the sign on

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its property. We hold that it did not. We further conclude that

the proper procedure to resolve the issue of its asserted

good-faith reliance on the erroneously issued permit is an

application for a zoning variance. Therefore, we modify the

order of the Appellate Division and dismiss the petition.

I.

Petitioner is the owner of property located at 663-669

Second Avenue in Manhattan. For many years, petitioner

maintained a large illuminated advertising sign on the side of

its building at that location. The DOB had issued a permit for

that sign in 1980. Thereafter, the New York City zoning

regulations were amended in such a way that no longer permitted

the advertising sign. The original sign was, however,

"grandfathered" in as a legal, non-conforming use. 

In May 2002, petitioner sought, and the New York City

Board of Standards and Appeals (BSA) granted, a zoning variance

for the construction of a new 34-story mixed-use building on the

property. The BSA also approved petitioner's request to relocate

the original sign, with slightly modified dimensions, as part of

petitioner's plans to construct the mixed-used building on the

property. To date, petitioner neither built the mixed-use

building nor constructed the advertising sign approved under the

2002 zoning variance. 

In 2008, the DOB issued petitioner a violation for its

failure to maintain the then-vacant building on which the

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original sign was affixed. After a July 2008 emergency

declaration, the building was demolished, and, with it, the sign. 

Petitioner then filed two applications with the DOB to

erect a new support structure and a new sign. The DOB granted

the support structure application, but objected to the proposed

sign on the bases that the new sign was different than the

original sign because it was a double-sided sign; it was not

located in the same position as the original sign; and the

replacement sign was 25 feet lower than the original. The DOB

noted that, in order to be "grandfathered" in as a legal nonconforming use the new sign must be single-sided and in the same

location as the original sign. 

Petitioner sought reconsideration of its application. 

The then-Manhattan Borough Building Commissioner overruled DOB's

objections and approved the new sign permit, stating: "OK to

accept prior sign as grandfathering of existing non-conforming

sign. OK to accept lower sign as no increase in degree of

noncompliance." Shortly thereafter, DOB issued a permit for the

installation of petitioner's new sign on the support structure.

In the spring of 2010, after petitioner had installed

the structure and new sign, the DOB audited its earlier permit

approvals. In the course of that audit, the DOB determined that

petitioner's sign had not been lawfully approved. Accordingly,

it revoked the permits for both the support structure and the

sign, determining that its prior approval was improperly granted. 

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Petitioner appealed the DOB's determination to the BSA. 

Following a public hearing, the BSA affirmed the determination of

the DOB, agreeing that the sign violated the Zoning Resolution. 

It further concluded that any right to continued use of the

advertising sign as a non-conforming use had been lost since that

use had been discontinued for more than two years when the

original sign was demolished along with the building in July

2008. The BSA noted that petitioner's good-faith reliance on the

DOB's approvals did not estop the agency from enforcing its

ordinances.

II.

Petitioner then commenced this CPLR article 78

proceeding to, among other things, annul the BSA's resolution and

reinstate the permits revoked by the DOB, thereby restoring

petitioner's right to maintain the new sign on its property.

Petitioner argued that it had relied in good faith on the

Commissioner's approval and the subsequently-issued permits in

expending substantial funds to install the new sign. 

Supreme Court denied the petition and dismissed the

proceeding. The court found the BSA's determination upholding

the revocations rational and not arbitrary or capricious. The

court also rejected petitioner's argument that the DOB or the BSA

should have considered its good-faith reliance on the permits

issued by the DOB, concluding that estoppel is not available

against an agency even when correction of its prior erroneous

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determination leads to harsh results.

The Appellate Division reversed Supreme Court's

judgment and "remanded to BSA for further proceedings consistent"

with the court's decision (114 AD3d 494 [1st Dept 2013]).1 The

Appellate Division noted that the BSA's conclusion that "it could

not consider the issue of [petitioner's] good faith under its

appellate jurisdiction . . . was incorrect" (id.). Thus, the

court determined that remand to the BSA was required so that it

could determine, "in its appellate capacity . . . whether

[petitioner] is entitled to a variance applying the factors set

forth in City Charter section 666 (7)" (id.). The court further

determined that, "[b]ecause the record was not fully developed as

to these criteria . . . the BSA shall permit the parties to make

further submissions" (id.). Moreover, the Appellate Division

determined that the record established "as a matter of law" that

petitioner relied in good-faith upon the 2008 determination by

the Manhattan Borough Building Commissioner to grant its permit

applications (id. at 494-495). Thus, the court concluded that in

deciding whether to grant a variance on remand, the BSA must

consider, along with the section 666 (7) factors, petitioner's

"good-faith reliance" (id. at 495, citing Matter of Pantelidis,

1 The Appellate Division had issued a prior order granting

the petition and directing the DOB to reinstate the permits and

vacate the fines that had been imposed in connection with the

sign (110 AD3d 611 [1st Dept 2013]). However, upon reargument,

the Appellate Division recalled and vacated that order and

substituted in its place the order now before us. 

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43 AD3d at 314). Lastly, the court rejected petitioner's

argument that no variance was required, reasoning that the new

sign is in a different location and position than the original. 

This Court granted both petitioner and the City leave

to appeal.

III.

The zoning resolution did not permit display of

advertising signs in the zoning district at issue and the new

sign did not qualify as a grandfathered replacement. Thus, the

determination that the 2008 permit was invalid and the BSA's

action in revoking the invalid permit were rational (see Matter

of Parkview Assoc. v City of New York, 71 NY2d 274, 282 [1988]).

However, petitioner maintains that it is entitled to

maintain the sign because it acquired a common-law vested right

to do so based on the fact that it had spent substantial funds to

erect the new sign and did so in good-faith reliance on the 2008

permit. 

We recently held that "[a]n owner of real property can

acquire a common law vested right to develop property in

accordance with prior zoning regulations when, in reliance on a

'legally issued permit,' the landowner 'effect[s] substantial

changes and incur[s] substantial expenses to further the

development' and '[t]he landowner's actions relying on [the]

valid permit [are] so substantial that the municipal action

results in serious loss rendering the improvements essentially

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valueless'" (Matter of Exeter Building Corp. v Town of Newburg, -

- NY3d --, 2016 NY Slip Op 00999 [decided February 11, 2016]

[emphasis added] [citations omitted]). 

Vested rights cannot be acquired, however, where there

is reliance on an invalid permit (see Matter of Natchev v Klein,

41 NY2d 833 [1977]; see also Matter of Perrotta v City of New

York, 107 AD2d 320, 325, affd for reasons stated, 66 NY2d 859

[1985]). When a permit is wrongfully issued in the first

instance, the vested rights doctrine does not prevent the

municipality from revoking the permit to correct its error. 

Because the 2008 permit was unlawfully issued, petitioner could

not rely on it to acquire vested rights.

IV.

 For its part, the City argues that the Appellate

Division erred in remanding the case for a variance determination

and in ruling "as a matter of law," that petitioner has acted in

good-faith. It contends that the determination of good-faith in

seeking relief from a Zoning Resolution should be decided by the

DOB or the BSA in the event petitioner submits a variance

application. We agree. 

Petitioner admits that it never sought a variance and

is not seeking one now. It was the Appellate Division, sua

sponte, that decided petitioner's appeal was "in essence, a

request for a variance" under New York City Charter § 666 (7) and

based its remand on that Charter provision. 

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Charter § 666 (7) provides the BSA with the general

authority to vary or modify a rule or regulation relating to a

wide range of areas, including the construction of buildings or

structures. Similarly, section § 666 (6) (a) separately

authorizes the BSA to broadly hear and decide interpretative

"appeals" from decisions of the DOB. 

Subdivision 5 of § 666, on the other hand, pertains to

zoning variances and provides that BSA "shall have [the] power .

. . [t]o determine and vary the application of the zoning

resolution as may be provided in such resolution and pursuant to

section [668]." Section 668 sets forth specific mandatory

procedures by which the BSA "shall review applications to vary

the zoning resolution and applications for special permits." 

Among other things, section 668 requires the filing of an

application, notification to the public, a public hearing (or

waiver thereof), determination whether an environmental impact

statement is required, and a hearing by BSA. Thus, the language

of section 666 (5) of the Charter is specifically limited to

applications for a variance of a Zoning Regulation. 

Under principles of statutory construction, whenever

there is a general and a specific provision in the same statute,

the general applies only where the particular enactment is

inapplicable (see McKinney's Cons Laws of NY, Book 1, Statutes, 

§ 238). Thus, the interpretative appeal process necessarily

applies in instances other than a zoning variance and does not

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extend to matters requiring a variance, for which different

standards and different procedures are set forth. The Appellate

Division therefore erred in remanding the matter for a

determination of a variance application pursuant to Charter § 666

(7).

V.

Finally, a determination as to petitioner's good-faith

reliance should not be resolved by the Court, but rather by the

administrative agency, should petitioner seek a variance (see

generally Jayne Estates, Inc. v Raynor, 22 NY2d 417 [1968]). 

Accordingly, the order of the Appellate Division should

be modified, with costs to the City of New York respondents, by

dismissing the petition in its entirety and, as so modified,

affirmed.

* * * * * * * * * * * * * * * * *

Order modified, with costs to the City of New York respondents,

by dismissing the petition in its entirety and, as so modified,

affirmed. Opinion by Judge Pigott. Chief Judge DiFiore and

Judges Rivera, Abdus-Salaam, Stein, Fahey and Garcia concur.

Decided March 24, 2016

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