UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK ............................................................... X 

JOHN E. ANDRUS MEMORIAL, INC. (d/b/a : filed electronically 

ANDRUS ON HUDSON), 

07-CV-3432 (CLB) (KNF) 

Plaintiff, 

REPLY AFFIDAVIT OF JOHN 

- against - GASIOR IN SUPPORT OF 

DEFENDANT'S MOTION FOR 

RICHARD F. DAINES, as Commissioner of the : SUMMARY JUDGMENT 

New York State Department of Health, 

Defendant. : 

............................................................... X 

STATE OF NEW YORK ) 

: ss.: 

COUNTY OF NEW YORK ) 

JOHN GASIOR, being duly sworn, deposes and says: 

1. I am an Assistant Attorney General in the Office of Andrew M. Cuomo, Attorney 

General of the State of New York, attorney for the defendant in this action. 

2. I submit this affidavit in support of defendant's motion for summary judgment 

pursuant to Fed. R. Civ. P. Rule 56(b). 

3. Annexed hereto as Exhibit A is a true and accurate copy of St. Joseph Hospital of 

Cheektowana v. Novello, 2007 WL 2044870,2007 N.Y. Slip Op. 06090 (4th Dep't July 18, 

2007). 

4. Annexed hereto as Exhibit B is a true and accurate copy of W. 95 Hous. Corn. v. 

N.Y. City Dep't of Hous. Pres., 2001 WL 664628 (S.D.N.Y. 2001). 

WHEREFORE, I respectfully request that the Court grant defendant's motion for 

summary judgment and that the Court grant defendant such other and further relief as the Court 

deems just and proper. 

Case 7:07-cv-03432-CS-MDF Document 18-2 Filed 08/22/2007 Page 1 of 26
Dated: New York, New York 

August 2 1,2007 

\I 

JOHN GASIOR 

Assistant Attorney General 

Sworn to before me this 

2 1 st day of August, 2007 

CARRELL A. GlLES 

ROTARY PUBLIC STATE OF NEW YORK 

NO. 01 GI48761 34 

QUALIFIED IN KINGS COLlNTY 

TERM EXPIRES APRIL 20, @// 

Case 7:07-cv-03432-CS-MDF Document 18-2 Filed 08/22/2007 Page 2 of 26
GASIOR REPLY AFFIDAVIT - EXHIBIT A 

Case 7:07-cv-03432-CS-MDF Document 18-2 Filed 08/22/2007 Page 3 of 26
--- N.Y.S.2d ---- --- N.Y .S.Zd ----, 2007 WL 2044870 (N.Y .A.D. 4 Dept.), 2007 N.Y. Slip Op. 06090 

(Cite as: - N.Y.S.2d -) 

Affirmed as modified. 

H 

St. Joseph Hosp. of Cheektowaga v. Novello 

N.Y.A.D. 4 Dept.,2007. 

Supreme Court, Appellate Division, Fourth 

Department, New York. 

ST. JOSEPH HOSPITAL OF CHEEKTOWAGA and 

Catholic Health System, Inc., Plaintiffs-Appellants, 

v. 

Antonia C. NOVELLO, as New York State Health 

Commissioner, New York State Commission on 

Healthcare Facilities in the 2 1 st Century, George E. 

Pataki, as Governor of State of New York, and State 

of New York, Defendants-Respondents. 

July 1 8,2007. 

~ack~round: Hospital sued to prevent state Health 

Commissioner from implementing Commission on 

Healthcare Facilities' recommendation toclose hospital. 

The Supreme Court, Erie County, 15 Misc.3d 333.828 

N.Y.S.2d 877,Joseph D. Mintz, J., granted summary 

judgment for state, and hospital appealed. 

Holdings: The Supreme Court, Appellate Division, 

Centra, J., held that: 

enabling legislation did not violate procedural due 

process as applied to hospital; 

(2J enabling legislation did not violate substantive due 

process; 

(3J"legislativeveto" section ofenabling legislation was 

severable from remainder of act; 

Page 1 

Fahev. J., filed dissenting opinion. 

JlJ Constitutional Law 92 -1004 

- 92 Constitutional Law 

- 92VI Enforcement of Constitutional Provisions 

92VltC) Determination of Constitutional 

Questions 

92VI(C)3 Presumptions and Construction as 

to Constitutionality 

92k 100 1 Doubt 

92k1004 k. Proof Beyond a Reasonable 

Doubt. Most Cited Cases 

Challenge to facial constitutionality of statute requires 

that plaintiff surmount presumption of constitutionality 

accorded to legislative enactments by proof beyond 

reasonable doubt. 

pJ Constitutional Law 92 -3875 

- 92 Constitutional Law 

92XXVII Due Process 

92XXVlKB) Protections Provided and 

Deprivations Prohibited in General 

92k3875 k. Factors Considered; Flexibility 

and Balancing. Most Cited Cases 

Factors in determining what process is constitutionally 

due are: (I) private interests affected by proceeding; (2) 

risk of error created by state's chosen procedure; and 

(3) counte~ailinggovernmental interest supportinguse 

of challenged procedure. U.S.C.A. Const.Amend. 14; 

McKinnev's Const. Art. 1. 6 6. 

enabling legislation comported with state Constitutional Law 92 -4329 

constitution's Free Exercise Clause; and 

- 92 Constitutional Law 

enabling legislation comported with federal 92XXVll Due Process 

constitution's Contract Clause. 92XXVIltG) Particular Issues and Applications 

92XXVII(G)14 Environment and Health 

92k4329 k. Health Care; Hospitals and 

O 2007 ThomsonIWest. No Claim to Orig. U.S. Govt. Works. 

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--- N.Y.S.2d ---- 

--- N.Y.S.2d ----, 2007 WL 2044870 (N.Y.A.D. 4 Dept.), 2007 N.Y. Slip Op. 06090 

(Cite as: - N.Y.S.2d -) 

Nursing Homes. Most Cited Cases 

Health 198H -105 

Health 

198HI Regulation in General 

198HI(A) In General 

198Hk 102 Constitutional and Statutory 

Provisions 

198Hk105 k. Validity. Most Cited Cases 

Legislation providing for implementation by Health 

Commissioner of Commission on Healthcare Facilities' 

recommendations absent rejection by both houses of 

legislature did not violate procedural due process as 

applied to hospital recommended for closure, even 

though hospital's operators did not receive 

individualized warning of possible closure and 

individualized hearing prior to recommendation; 

operators were aware that hospital's closing was 

possibility, and had opportunity to appear at regional 

hearing prior to recommendation and to submit 

unlimited documents. U.S.C.A. Const.Amend. 14; 

McKinnev's Const. Art. 1. 8 6; McKinnev's Public 

Health Law 6 2806; Laws of 2005, Ch. 63, Pt. E, 5 3 1. 

Legislation providing for implementation by Health 

CommissionerofCommission on Healthcare Facilities' 

recommendations absent rejection by both houses of 

legislature did not violate procedural due process as 

applied to hospital recommended for closure, even 

though hospital's operators did not receive 

individualized warning of possible closure and 

individualized hearing prior to recommendation; 

operators were aware that hospital's closing was 

possibility, and had opportunity to appear at regional 

hearing prior to recommendation and to submit 

unlimited documents. U.S.C.A. Const.Amend. 14; 

McKinney's Const. Art. 1. 6 6; McKinney's Public 

Health Law 8 2806; Laws of 2005, Ch. 63, Pt. E, 5 3 I. 

Constitutional Law 92 -4329 

- 92 Constitutional Law 

92XXVII Due Process 

92XXVII(G) Particular Issues and Applications 

92XXVll(G)14 Environment and Health 

92k4329 k. Health Care; Hospitals and 

Nursing Homes. Most Cited Cases 

Health 198H -1 05 

Page 2 

Health 

- 198HI Regulation in General 

198HI(A) In General 

198Hk102 Constitutional and Statutory 

Provisions 

198Hk 105 k. Validity. Most Cited Cases 

Legislation providing for implementation by Health 

Commissionerof Commission on Healthcare Facilities' 

recommendations did not violate substantive due 

process as applied to hospital recommended for closure; 

recommendation was not without legal justification or 

outrageously arbitrary, given legitimacy of 

Commission's task of "right-sizing" health care and 

recommendation's comporting with that purpose. 

U.S.C.A. Const.Amend. 14; McKinnev's Const. Art. 1, 

6; McKinnev's Public Health Law 8 2806; Laws of 

2005, Ch. 63, Pt. E, 5 3 1. 

Legislation providing for implementation by Health 

Commissionerof Commission on Healthcare Facilities' 

recommendations did not violate substantive due 

process as applied to hospital recommended for closure; 

recommendation was not without legal justification or 

outrageously arbitrary, given legitimacy of 

Commission's task of "right-sizing" health care and 

recommendation's comporting with that purpose. 

U.S.C.A. Const.Amend. 14; McKinney's Const. Art. 1, 

6; McKinnev's Public Health Law 6 2806; Laws of 

2005, Ch. 63, Pt. E, 5 3 1. 

Constitutional Law 92 -3896 

- 92 Constitutional Law 

92XXVII Due Process 

92XXVII(B) Protections Provided and 

Deprivations Prohibited in General 

92k3892 Substantive Due Process in General 

92k3896 k. Egregiousness; "Shock the 

Conscience" Test. Most Cited Cases 

Only the most egregious official conduct can be said to 

be arbitrary, for purposes of claim of violation of 

substantive due process. U.S.C.A. Const.Amend. 14; 

McKinnev's Const. Art. I. 6 6. 

O 2007 ThomsonlWest. No Claim to Orig. U.S. Govt. Works. 

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(Cite as: - N.Y.S.2d --) 

Statutes 361 -64(2) 

- 361 Statutes 

- 36 11 Enactment, Requisites, and Validity in General 

361k64 Effect of Partial invalidity 

361 k64(2) k. Acts Relating to Particular 

Subjects in General. Most Cited Cases 

Section of legislation providing for implementation by 

Health Commissioner of Commission on Healthcare 

Facilities' recommendations absent "legislative veto" of 

entire Commission report was severable from remainder 

of legislative act, and thus, even if violative of state 

constitution's Presentment Clause or doctrine of 

separation of powers, section did not invalidate entire 

act; act contained severance clause, and legislature did 

not intend validity of act to depend on validity of 

legislative veto, given its specific directives and 

appointments to Commission. McKinnev's Const. Art. 

u; McKinney's Public Health Law 8 2806; Laws of 

2005, Ch. 63, Pt. E, 5 3 1. 

111 Constitutional Law 92 -1398(1) 

- 92 Constitutional Law 

92x111 Freedom of Religion and Conscience 

92XIII(B) Particular Issues and Applications 

92k 1394 Health Care 

92k1398 Facilities 

92k1398(1) k. In General. Most Cited 

Cases 

Health 198H -105 

Health 

- 198H1 Regulation in General 

198HI(A) In General 

198Hk102 Constitutional and Statutory 

Provisions 

198Hk105 k. Validity. Most Cited Cases 

Legislation providing for implementation by Health 

CommissionerofCommission on Healthcare Facilities' 

recommendations comported with state constitution's 

Free Exercise Clause, in Catholic hospital's challenge to 

Commission's recommendation for hospital's closing; 

legislation did not target Catholic hospitals, and nothing 

in act imposed any restrictions on religious freedom. 

McKinnev's Const. Art. 1. $ 3; McKinnev's Public 

Page 3 

Health Law $ 2806; Laws of 2005, Ch. 63, Pt. E, 5 3 1. 

Legislation providing for implementation by Health 

Commissionerof Commission on Healthcare Facilities' 

recommendations comported with state constitution's 

Free Exercise Clause, in Catholic hospital'schallenge to 

Commission's recommendation for hospital's closing; 

legislation did not target Catholic hospitals, and nothing 

in act imposed any restrictions on religious freedom. 

McKinnev's Const. Art. 1. 8 3; McKinnev's Public 

Health Law 8 2806; Laws of 2005, Ch. 63, Pt. E, 5 3 1. 

Constitutional Law 92 -1306 

- 92 Constitutional Law 

92x111 Freedom of Religion and Conscience 

92XIIUA) in General 

92k 1 302 Free Exercise of Religion 

92k 1306 k. Burden on Religion. Most 

Cited Cases 

On Free Exercise Clause challenge to statute that 

imposes incidental burden on free exercise, court 

balances incidental burden against interest advanced by 

legislation. McKinnev's Const. Art. 1. 6 3. 

Constitutional Law 92 -745 

- 92 Constitutional Law 

92XXlI Obligation of Contract 

92XXiI(C) Contracts with Non-Governmental 

Entities 

92XXIi(C)2 Particular Issues and 

Applications 

92k2745 k. In General. Most Cited Cases 

Constitutional Law 92 -2753 

- 92 Constitutional Law 

92XX11 Obligation of Contract 

92XXlI(C) Contracts with Non-Governmental 

Entities 

92XXll(C)2 Particular Issues and 

Applications 

92k2753 k. Sales in General. Most Cited 

Cases 

Health 198H -105 

0 2007 ThomsonIWest. No Claim to Orig. U.S. Govt. Works. 

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--- N.Y.S.2d ---- 

--- N.Y.S.2d ----, 2007 WL 2044870 (N.Y.A.D. 4 Dept.), 2007 N.Y. Slip Op. 06090 

(Cite as: - N.Y.S.2d -) 

Health 

198HI Regulation in General 

198HI(A) In General 

1 98Hk102 Constitutional and Statutory 

Provisions 

198Hk 105 k. Validity. Most Cited Cases 

Legislation providing for implementation by Health 

Commissioner of Commission on Healthcare Facilities' 

recommendations comported with federal constitution's 

Contract Clause, even though closing of hospital on 

Commission's recommendation resulted in impairment 

of hospital's contracts with various vendors, suppliers, 

and employees; legislation had legitimate public 

purpose of reconfiguring supply of hospitavnursing 

home facilities to align with demand,and Commission's 

recommendations for closure or downsizing were 

necessary and reasonable to accomplish that end. 

U.S.C.A. Const. Art. 1. 6 10. cl. I. 

Legislation providing for implementation by Health 

Commissionerof Commission on Healthcare Facilities' 

recommendations comported with federal constitution's 

Contract Clause, even though closing of hospital on 

Commission's recommendation resulted in impairment 

of hospital's contracts with various vendors, suppliers, 

and employees; legislation had legitimate public 

purpose of reconfiguring supply of hospitavnursing 

home facilities to align with demand,and Commission's 

recommendations for closure or downsizing were 

necessary and reasonable to accomplish that end. 

U.S.C.A. Const. Art. I, 4 10. cl. I. 

Constitutional Law 92 -671 

- 92 Constitutional Law 

92XXII Obligation of Contract 

92XXII(A) In General 

92k2671 k. Existence and Extent of 

Impairment. Most Cited Cases 

Page 4 

On Contract Clause challenge to state legislation, court 

first determines whether there was substantial 

impairment of contractual relationship; if so, 

impairment is examined in light of nature and purpose 

of legislation, and is upheld if it is reasonable and 

necessary to accomplish legitimate public purpose. 

U.S.C.A. Const. Art. I. 6 10. cl. I. 

Phillips Lytle LLP, Buffalo (Kenneth A. Manning of 

Counsel), for Plaintiffs-Appellants. 

Andrew M. Cuomo, Attorney General, Albany (Victor 

Paladino of Counsel), for Defendants-Respondents. 

PRESENT: SCLIDDER, P.J., CENTRA, LUNN, 

FAHEY, AND JJ-Opinion by 

CENTRA, J. 

*I At issue on this appeal is the constitutionality of 

certain Enabling Legislation, i.e., section 3 1 ofpart E of 

chapter 63 of the Laws of2005 (hereafter, Legislation). 

Pursuant to the Legislation, the Legislature created 

defendant New York State Commission on Healthcare 

Facilities in the 21st Century (Commission) and 

charged it with "examining the supply of general 

hospital and nursinghome facilities,and recommending 

changes that will result in a more coherent, streamlined 

health care system in the state of New York." The 

Commission recommended the closing of plaintiff St. 

Joseph Hospital of Cheektowaga(St. Joseph). We note 

at the outset that the issue whether the Commission's 

recommendation to close St. Joseph was rational is not 

before us. Rather, the sole issue before us on this 

appeal, as framed by the parties, is whether the 

Legislation is constitutional, and we conclude that it is. 

Constitutional Law 92 -2672 

- 92 Constitutional Law 

92XXI1 Obligation of Contract 

92XXIUA) In General 

92k2672 k. Police Power; Purpose of 

Regulation. Most Cited Cases 

Plaintiff Catholic Health System, Inc. (CHS) is a 

not-for-profit corporation that operates an integrated 

network of health care ministries throughout western 

New York, including St. Joseph. Plaintiffs commenced 

this action seeking injunctive, declaratory, and other 

relief, and they thereafter moved forsummaryjudgment 

0 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. 

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--- N.Y.S.2d ---- 

--- N.Y.S.2d ----, 2007 WL 2044870 (N.Y.A.D. 4 Dept.), 2007 N.Y. Slip Op. 06090 

(Cite as: - N.Y.S.2d -) 

Page 5 

seeking a declaration pursuant to several causes of 

action and seeking a permanent injunction enjoining 

defendants from taking any steps to revoke or rescind 

St. Joseph's Certificate of Operation (operating 

certificate), to close St. Joseph, or otherwise to interfere 

with St. Joseph's ongoing operations and business. 

Defendants cross-moved for summary judgment 

declaring that the Legislation does not violate the New 

York and United States Constitutions and dismissing 

the remainder of the amended complaint. Supreme 

Court denied plaintiffs' motion and granted defendants' 

cross motion, stating that the amended complaint "is in 

all respects dismissed" {Sf. Joseph Hosp. of 

Cheekfowapa v. Novello. 15 Misc.3d 333, 349, 828 

N.Y.S.2d 877). Although the court properly declared 

that the Legislation is constitutional, it erred in 

dismissing the amended complaint "in all respects" 

(Id) We therefore conclude that the order and 

judgment should be modified by vacating the provision 

dismissing those causes of action seeking a declaratory 

judgment(see ~ovdv. Allsfale Life Ins. CO. ofN. Y., 267 

A.D.2d 1038, 1039,700N.Y.S.2d 332). 

implemented unless the Governor transmitted the 

Commission's report with his written approval to the 

Commissioner of Health and transmitted a message to 

the Legislature indicating his approval of the 

recommendations on or before December 5, 2006. In 

addition, the recommendations would not be 

implemented if, after receiving the message from the 

Governor, "a majority of the members of each house of 

the legislature vote to adopt a concurrent resolution 

rejecting the recommendations of the [C]ommission ... in their entirety" by December 3 1,2006. 

On November 28,2006, the Commission sent its report 

to Governor Pataki recommending, inter alia, the 

closing of St. Joseph. On November 30, 2006, the 

Governor transmitted a message to the Legislature 

indicating that he approved the Commission's report. 

The Legislature did not adopt a resolution rejecting the 

recommendationsof the Commission by December 3 1, 

2006, and the recommendations therefore became 

effective. 

The Legislature created the Commission to maximize 

return from resources that have been invested in the 

health care system by aligningresources "so that excess 

capacity is minimized" The Legislation set forth nine 

specific factors for the Commission to consider in 

completing its task. A regional advisory committee 

(RAC) was formed for each of six regions, and each 

RAC was charged with conducting public hearings 

within its region and developing"recommendationsfor 

reconfiguring its region's general hospital and nursing 

home bed supply to align bed supply with regional and 

local needs." The RACs were to transmit their 

recommendations to the Commission, including their 

recommendationsconcerningwhich facilities should be 

closed, resized, consolidated, converted, or 

restructured. 

*2 The Legislation further directed the Commission to 

transmit to the Governor a report containing its final 

recommendationson or before December 1,2006. The 

recommendations of the Commission would not be 

In order to prevail on their challenge to the facial 

constitutionality of the Legislation, plaintiffs "must 

surmountthe presumption of constitutionality accorded 

to legislative enactments by proof 'beyond areasonable 

doubt' " (Matter ofMoran Towina Corp. v. Urbach, 99 

N.Y.2d 443.448.757 N.Y.S.2d 513,787 N.E.2d 624). 

121 Plaintiffs first contend that the Legislation violates 

their rights to procedural and substantive due process 

pursuant to the Fourteenth Amendment of the United 

States Constitution and article I, $ 6 of the New York 

Constitution. We agree with plaintiffs that they have a 

protected property interest in St. Joseph's operating 

certificate (see generally Bell v. Burson, 402 U.S. 535, 

539. 91 S.Ct. 1586. 29 L.Ed.2d 90: Honey Dippers 

Septic Tank Servs. v. Landi, 198 A.D.2d 402. 604 

N.Y.S.2d 128). We conclude, however, that the 

Legislation satisfies the minimum procedural due 

process requirements (see Mornenthau v. Citisource, 

Inc., 68 N.Y.2d 211. 221. 508 N.Y.S.2d 152. 500 

N.E.2d 850). "It is not the role of the courts to rewrite 

statutes that have been promulgated by the legislative 

Claim to Orig. U.S. Govt. Works. 

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(Cite as: - N.Y.S.2d -) 

branch of government nor is it our role to comment on 

the wisdom of the statute" lid. at 223. 508 N.Y.S.2d 

152, 500 N.E.2d 850). The determination concerning 

"what process is constitutionally due ... [is] based on 

the balancing of three factors: (I) the private interests 

affected by the proceeding; (2) the risk of error created 

by the State's chosen procedure; and (3) the 

countervailing governmental interest supporting use of 

the challenged procedure" (Matter of Uniform 

Firefighters ofCohoes. Local 2562, IAFF, AFL-CIO v. 

Citv ofohoes. 94 N.Y.2d 686.69 1-692.709 N.Y.S.2d 

48 1. 73 1 N.E.2d 137; see Mathews v. Eldridae, 424 

U.S. 319. 334-335. 96 S.Ct. 893. 47 L.Ed.2d 18; 

LaRossa. Axenfeld & Mitchell v. Abrams. 62 N.Y.2d 

583. 588.479 N.Y.S.2d 181.468 N.E.2d 19). 

121 Plaintiffs' private interests involved are substantial 

inasmuch as plaintiffs face the loss of St. Joseph's 

operating certificate. The interest of the State in the 

matter is also substantial, however, inasmuch as the 

State must attempt to contain rising Medicaid costs 

while still maintaining adequate health care facilities. 

"[Dlue process is a flexible constitutional concept 

calling for such procedural protections as a particular 

situation may demand" JLaRossa, Axenfeld & Mitchell, 

62N.Y.2dat588,479NeY.S.2d 181.468N.E.2d 19). 

Plaintiffs were aware of the task of the Commission and 

thus were aware that the closing of a CHS hospital was 

a possibility. Plaintiffs were given the opportunity to 

appear before the western RAC at a public hearing, and 

they in fact did so. Plaintiffs also were entitled to 

submit unlimited documents to the western RAC to 

assist the Commission in its task, and plaintiffs took 

advantage of that procedure by submitting various 

documents. Plaintiffs contend that the Commission 

should have informed them that St. Joseph was targeted 

for closure and then held an extensive hearing to 

discuss that prospect. That additional procedural 

safeguard would create an enormous fiscal and 

administrative burden. In the western region alone, the 

Commission recommended, inter alia, the closing of 

two hospitals, the downsizing of numerous other 

hospitals and nursing homes, and the joining under a 

single unified governance structure the facilities 

controlled by the Erie County Medical Center 

Corporation and Kaleida Health. We thus conclude that 

defendants met their burden on their cross motion with 

Page 6 

respect to plaintiffs' right to procedural due process by 

establishing that the procedure set forth in the 

Legislation, i.e., conducting public hearings to elicit 

comments from all of the health care facilities and 

affording the health care facilities the opportunity to 

submit unlimited documents, was adequate and 

sufficient to protect that right. 

*3 141f51 We further conclude that defendants met their 

burden on their cross motion with respect to the 

contention of plaintiffs that they were denied their right 

to substantive due process. The denial of the right to 

substantive due process occurs only when "the 

governmental action was wholly without legal 

justification" (Bower Assoc. v. Town of Pleasant Val., 

2 N.Y.3d 617, 627, 781 N.Y.S.2d 240, 814 N.E.2d 

410) and, importantly, " 'only the most egregious 

official conduct can be said to be arbitrary in the 

constitutional sense' " {id at 628. 781 N.Y.S.2d 240, 

8 14 N.E.2d 4 10, quoting Citv ofCuvahona Falls. Ohio 

v. Buckeye Communilv Hope Found, 538 U.S. 188, 

198. 123 S.Ct. 1389, 155 L.Ed.2d 349). Plaintiffs 

acknowledge that the Commission's task in 

"right-sizing" health care was a legitimate government 

concern, but they contend that the Commission didnot 

have a compelling interest to achieve that goal by 

closing health care facilities. The test, however, is not 

whetherthe State, through the Commission, had a 

compelling interest in closing health care facilities. 

Rather, the test is whether the Commission's action in 

recommendingthe closure of a health care facility was 

without legal justification, or "outrageously arbitrary" 

(Nutale v. Town ofRidaefield. 170 F.3d 258.263). 

We conclude that plaintiffs were not deprived of their 

right to substantive due process because it cannot be 

said that the Commission'srecommendation to close St. 

Joseph was without legal justification, nor was it 

"outrageously arbitrary" (Id) The Commission was 

charged with the task of "examining the supply of 

general hospital and nursing home facilities, and 

recommending changes that will result in a more 

coherent, streamlined health care system in the state of 

New York." To accomplish that task, the western RAC 

was charged with making "recommendations for 

reconfiguring its region's general hospital and nursing 

home bed supply to align bed supply with regional and 

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Page 7 

local needs." The Legislation contemplated that some 

facilities should be closed and others resized, 

consolidated, convened, or restructured. Thus, the 

Commission's recommendation to close St. Joseph was 

in keeping with the purpose of the creation of the 

Commission. 

j$J Plaintiffs next contend that the Legislation violates 

the Presentment Clause of the New York Constitution 

(N.Y. Const.. art. IV, 6 7)and the separation of powers 

doctrine based on the legislative veto provision of the 

Legislation. Pursuant to the Legislation, the 

Commissioner of Health is required to implement the 

recommendations of the Commission unless the 

Governor does not approve them or the Legislature 

enacts a concurrent resolution rejecting them, which is 

the equivalent of a legislative veto. Plaintiffs contend 

that the legislative veto provision runs afoul of the 

Presentment Clause because a resolution rejecting the 

recommendations would not be presented to the 

Governor. Plaintiffs further contend that the legislative 

veto violates the separation of powers doctrine because 

the Commission's recommendations were subject to the 

disapproval of the Legislature afrer prior approval by 

the Governor, which is "a total inversion of the 

legislative process." 

*4 Plaintiffs contend that the entire Legislation is 

invalid based on the legislative veto. We conclude, 

however, that the legislative veto provision is severable 

from the Legislation. Thus, even if the legislative veto 

provision is unconstitutional, that provision does not 

invalidate the remainder of the Legislation. 

The legislative veto provision may be severed from the 

Legislation unless, as plaintiffs contend, it is 

determined that the Legislature would not have enacted 

were not subject to subsequent review by the 

Legislature. We cannot agree. 

The Legislation contains a severability clause providing 

that, if any part of the act is adjudged to be invalid, 

"such judgment shall not affect, impair, or invalidate 

the remainderthereof. ..." The severability clause firher 

states that "[ilt is hereby declared to be the intent ofthe 

legislature that this act would have been enacted even 

if such invalid provisions had not been included 

herein." The inclusion of a severability clause creates a 

presumption that the Legislature "did not intend the 

validity of the statute in question to depend on the 

validity of the constitutionally offensive provision" 

(Alaska Airlines. 480 U.S. at 686. 107 S.Ct. 1476). 

"[Ulnless there is strong evidence" that the Legislature 

intended otherwise, the unconstitutional provision is 

severable (rd) 

Here, the requisite "strong evidence" that the 

Legislature intended otherwise is plainly lacking. The 

Legislature enacted the Legislation with specific 

directives to the Commission and some control over the 

Commission through appointments. The Legislature set 

forth nine specific factors that the Commission was 

required to consider in making its recommendations. 

The Legislation is also specific with respect to the 

hearings that were required and the input the 

Commission was to receive from each RAC. Some 

members of the Commission and the RAC members 

were appointed by the temporary president of the senate 

and the speaker of the assembly. Because of the 

Legislature's specific directives and appointmentstothe 

Commission, we are compelled to reject plaintiffs' 

contention that it is inconceivable that the Legislature 

intended the Commission to make its recommendations 

without those recommendations being subject to 

subsequent review by the Legislature. 

the Legislation without the legislative veto (see Alaska VI 

Airlines v. Brock, 480 U.S. 678. 685, 107 S.Ct. 1476, 

94 L.Ed.2d 66 1 : CWM Chem. Servs., L. L. C. v. Roth, 6 Plaintiffs further contend that the Commission's 

N.Y.3d 410.423.813 N.Y.S.2d 18.846 N.E.2d 448). recommendations are invalid under the Free Exercise 

Here, plaintiffs contend that it is inconceivable that the Clause ofthe New York Constitution (N.Y. Const.. art. 

Legislature intended to grant the Commission such 1. 6 3). The Court of Appeals has held that "when the 

powers if the recommendations of the Commission State imposes 'an incidental burden on the right to free 

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exercise of religion' [a court] must consider the interest 

advanced by the legislation that imposes the burden, 

and that '[tlhe respective interests must be balanced to 

determine whether the incidental burdening is justified' 

" (Catholic Charities of Diocese of Albany v. Serio, 7 

N.Y.3d 510, 525, 825 N.Y.S.2d 653, 859 N.E.2d 459, 

rearg. denied 8 N.Y.3d 866. 83 1 N.Y.S.2d 767, 863 

N.E.2d 101 9). In determining whether legislation 

violates the Free Exercise Clause, "substantial 

deference is due the Legislature, and ... the party 

[challenging the legislation] bears the burden of 

showing that the challenged legislation, as applied to 

that party, is an unreasonable interferencewith religious 

freedom" (rd). Here, defendants met their burden on 

their cross motion and plaintiffs failed to raise an issue 

of fact whether the Legislation is an u nreasonable 

interference with religious freedom. The Legislation did 

not target Catholic hospitals for closing, and there is 

nothing in the Legislation itself that imposes any 

restrictions on religious fseedom. 

"5 Finally, plaintiffs contend that the Commission's 

recommendations violate the Contract Clause of the 

United States Constitution (U.S. Const., art. I, 4 10, cl. 

[I] ). Plaintiffs contend that, because St. Joseph is 

required to close, there will be substantial impairment 

of CHS contracts with various vendors, suppliers, and 

employees. 

We conclude that the Legislation does not violate 

the Contract Clause. "[Nlot all impairments of contract 

are unconstitutional" (Association of Surropates & 

Supreme Ct. Reporters Within City of N. Y. v. State of 

New York, 79 N.Y.2d 39.46, 580 N.Y.S.2d 153. 588 

N.E.2d 5 1 ). A court must first determine whether there 

was a substantial impairment of a contractual 

relationship (see 19th St. Assoc. v. State of New York, 

79 N.Y.2d 434,442, 583 N.Y.S.2d 81 1, 593 N.E.2d 

265: Association of Surronates & Supreme Ct. 

Reporters Within City of N. Y., 79 N.Y.2d at 46, 580 

N.Y.S.2d 153, 588 N.E.2d 5 1). If there was, then the 

impairment "must be examined in light of the nature 

and purpose of the State legislation, and will be upheld 

if it is reasonable and necessary to accomplish a 

Page 8 

legitimate public purpose" l.4ssociation ofsurropates 

& Sunreme Ct. Reporters Within City of N. Y., 79 

N.Y.2d at 46, 580 N.Y.S.2d 153. 588 N.E.2d 51; see 

United States Trust Co. of N. Y. v. State ofNew Jersq 

43 1 U.S. 1, 22, 97 S.Ct. 1505, 52 L.Ed.2d 92, reh. 

denied43 1 U.S. 975.97 S.Ct. 2942.53 L.Ed.2d 1073; 

Matter of Subwav-Surface Supervisors Assn. v. New 

York Ciw Tr. Auth.. 44 N.Y .2d I0 1. 1 09,404 N.Y.S.2d 

323. 375 N.E.2d 384). "Courts generally defer to 

legislative judgment as to necessity and reasonableness" 

{Association of Surropates & Supreme Ct. Reporters 

Within City of N. Y.. 79 N.Y.2d at 46. 580 N.Y.S.2d 

153.588 N.E.2d 5 12 

Here, the purpose of the Legislation was for the 

Commission to examine the current supply of hospital 

and nursing home facilities and to re configure the 

supply to align with the demand or need. The 

Legislature determined that minimizingexcess capacity 

was necessary to promote stability and efficiency in the 

health care system. That is a legitimate public purpose, 

and the task of the Commission in recommending 

facilities to close, downsize, or consolidate was both 

necessary and reasonable to accomplish that purpose. 

Accordingly, although the court properly declared that 

the Legislation is constitutional, we conclude that the 

order and judgment should be modified by vacating the 

provision dismissing those causes of action seeking a 

declaratory judgment. 

It is hereby ORDERED that the order and judgment so 

appealed from be and the same hereby is modified on 

the law by vacating the provision dismissing those 

causes of action seeking a declaratory judgment and as 

modified the order and judgment is affirmed without 

costs. 

SCUDDER, P.J., LUNN and PERADOTTO, JJ., 

concur with CEN'TRA, J.FAHEY, J., dissents and votes 

to reverse in accordance with the following Opinion: 

I respectfilly dissent because 1 cannot agree with the 

majority that the Enabling Legislation at issue, i.e., 

section 3 1 of part E of chapter 63 of the Laws of 2005 

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(hereafter, Legislation) is constitutional. The manner in 

which the Legislation has been implemented and the 

procedural history of this case have been set out by the 

majority and I shall not repeat them here. I disagree 

with the majority on two grounds and thus conclude that 

the statute should be declared unconstitutional on those 

grounds. I agree with plaintiffs that defendant New 

York State Commission on Healthcare Facilities in the 

2 1 st Century (Commission) violated their right to 

procedural due process, and I further agree with 

plaintiffs that the Legislation violates the Presentment 

Clause oftheNew York Constitution and the separation 

of powers doctrine. 

*6 The Legislation provides for six regional advisory 

committees (RACs) to hold public hearings and then to 

make recommendations to the Commission. The 

Commission would then determine which hospitals 

were to lose their Certificates of Operation (operating 

certificates). The Commission recommended changes 

with respect to the operation of 57 hospitals, 

approximately one quarter ofthe state's total number of 

hospitals. It is uncontested that "[elach interested party, 

includingplaintiffCatholic Health System, Inc. (CHS), 

was limited to a ten (1 0) minute address" at a public 

hearing conducted by the western RAC, and plaintiffs 

also submitted numerous documents to the RAC. The 

actual decision-making body, the Commission, did not 

hear testimony from any of the affected health care 

providers or conduct any public hearings. Thus, none of 

the parties potentially affected by the recommendations 

of the RACs was afforded an opportunity to make a 

presentation to the final decision-making body. 

At stake is the continued operation of plaintiff St. 

Joseph Hospital of Cheektowaga (St. Joseph) that is in 

fact a solvent health care provider. For the first three 

quarters of 2006, St. Joseph operated at a surplus of 

approximately $2 million. It serves approximately 

30,000 patients per year and employs 800 people. 

Pursuant to the Legislation, plaintiffs were provided 

with the opportunity to express their opinions at a 

public hearing and through unlimited document 

Page 9 

submissions to the western RAC, which then presented 

its recommendationsto the Commission. Significantly, 

none of the hospitals in the region covered by the 

western RAC was told which were to be closed prior to 

the public hearing held by the western RAC. St. Joseph 

did not receive notice of its potential closing prior to 

the announcement ofall hospital closingsrecommended 

by the Commission. Further, St. Joseph was given no 

opportunity to be heard by the Commission before it 

made its decision. 

In determining whether there was a violation of the 

right to procedural due process under the United States 

Constitution, a court must make a two-part inquiry. 

First, the court must consider whetherthere is in fact a 

constitutionally protected property interest and, if so, 

the court must then determine whether constitutionally 

suff~cient due process has been provided with respect to 

the protected property interest (see Logan v. 

Zimmerman Brush Co., 455 U.S. 422.428. 102 S.Ct. 

1148. 71 L.Ed.2d 265). "Many controversies have 

raged about the cryptic and abstract words of the Due 

Process Clause, but there can be no doubt, that at a 

minimum they require that deprivation of life, liberty or 

property by adjudication be preceded by notice and 

opportunity for hearing appropriate to the nature of the 

case" JMullane v. Central Hanover Bank & Trust Co., 

339 U.S. 306. 313. 70 S.Ct. 652. 94 L.Ed. 865). The 

majority correctly states the minimum standard for 

ensuring procedural due process in New York, as set 

forth in Matter of Uniform Firefiahters of Cohoes, 

Local 2562. IAFF, AFL-CIO v. City of Cohoes, 94 

N.Y.2d 686.691-692.709 N.Y.S.2d 481.731 N.E.2d 

- 137. 

*7 Neither the parties nor Supreme Court contested the 

fact that St. Joseph had a constitutionally protected 

property interest in its operating certificate. Likewise, 

the majority concludes that plaintiffs have a protected 

property interest in St. Joseph's operating certificate, 

but further concludes that the procedures provided by 

the Legislation are constitutionally sufficient under the 

United States Constitution and the New York 

Constitution. 

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The majority'sconclusion is that agovernment'sinterest 

in restructuring the health care system can override the 

minimal requirements of notice and a hearing. I do not 

agree that this additional safeguard would create an 

overwhelming burden for the government. The history 

of the procedure governing such closings supports this 

conclusion. 

Prior to the enactment of the Legislation, section 

2806(6Ma) of the Public Health Law set forth the 

procedure to be followed by respondent New York 

State Health Commissioner (Health Commissioner) in 

revoking a hospital's operating certificate. That section 

afforded the Health Commissioner the right to "revoke 

a hospital['s] operating certificate, after taking into 

consideration the total number of beds necessary to 

meet the public need ... and after finding that ... revokingthe operating certificate of such facility would 

be within the public interest in order to conserve health 

resources by restricting the number of beds andlor the 

level of services to those which are actually needed." 

The remainder of section 2806(61 sets forth a detailed 

procedure to be followed by the Health Commissioner, 

including providing notice and a hearing, before 

revoking any operating certificate. 

Thus, as noted, Public Health Law 6 2806(2) provides 

a hospital with a statutory right to notice of a hearing 

before its operating certificate may be revoked. In 

providing the protections afforded by that statute, the 

Legislature wrote: "It is the intentionof the legislature 

to provide a mechanism to protect the rights of patients 

to proper health care while taking due consideration of 

the due process and property rights of the operators of 

such facilities" (L. 1978, ch. 71 3, $ I). The Legislature 

itself clearly recognized that hospital operators have 

property rights in their operating certificates and that 

they are entitled to due process when those rights are 

threatened. 

Of course, this is the case with all manner of licenses 

that are issued by the State of New York (see generally 

O'Brien v. O'Brien, 66 N.Y.2d 576. 583-584. 498 

N.Y.S.2d 743, 489 N.E.2d 712 [medical license]; 

Matter of Moore v. MacduK 309 N.Y. 35-38-39, 127 

N.E.2d 741 [driver's license]; Matter of Bender v. 

Board of Regents of Univ. of Sfafe of N. Y., 262 

Page 10 

A~p.Div. 627.63 I. 30 N.Y.S.2d 779 [dental license] ). 

Thus, the relevant case law and the Public Health Law 

clearly indicate that CHS has a significant property 

interest in St. Joseph's operating certificate. 

The Legislation at issue herein, specifically sections 9 

and 11, suspends the rights to notice and the hearing 

guaranteed by Public Health Law 6 2806(2) for a 

temporary period of time. The suspension of those 

rights is to remain in effect until June 2008, at which 

time St. Joseph is to be closed. In essence, the 

Legislature is suspending a party's right to procedural 

due process in order to implement a policy decision on 

a one-time basis. 

*8 Notice, to be meaningful, must be actual notice. To 

close a health care facility without at least allowing the 

facility to explore the basis for the government's 

decision is a violation of constitutionally protected due 

process rights. St. Joseph should have been given a 

pretermination notice and an opportunity for a hearing. 

That is not to say that the Commission is required to 

conduct adversarial proceedings. Rather, it must 

publicly state its recommendations and allow those 

affected to explore the basis for its decisions through a 

hearing process. I recognize that an additional round of 

hearings by the Commission thus would have been 

required but, given the serious nature of the 

Commission's decision, this is the minimum necessary 

to satisfy plaintiffs' constitutional procedural due 

process rights. 1 am compelled to conclude that the 

Legislation is unconstitutional inasmuch as the 

Legislature suspended the requirements for revocation 

of a hospital's operating certificate set forth in Public. 

Health Law 6 2806 without providing even minimal 

procedural due process protections. 

Further, the implementation of the Commission's 

recommendations violates the Presentment Clause of 

the New York Constitution as well as the separation of 

powers doctrine. The Legislation requires the Health 

Commissioner to cany out the Commission's 

recommendations unless the Governor does not approve 

them, which did not occur here, or the Legislature 

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adopts a "concurrent resolution" rejecting them. The 

Legislature's concurrent resolution is a veto of the 

Commission's recommendations and must be a veto of 

the entirety of the Commission's~recommendations. 

It is apparent that the Legislation inverts the usual 

procedure utilized for the passage of a bill. According 

to the usual procedure, a bill is presented to the 

Governor for his or her signature or veto after passage 

by the Senate and the Assembly. Should the Governor 

sign the bill, it becomes law; should the bill be vetoed, 

the veto may be overridden by a two-thirdsvote of the 

Legislature. Here, the Legislation creates a process that 

allows the recommendations of the Commission to 

become law without ever being presented to the 

Governor after the action of the Legislature. Further, 

the Governor must transmit his or her message of 

approval of the Commission's recommendations before 

action by the Legislature instead of afier action by the 

Legislature. The Legislation then allows for a veto of 

the Governor's proposal by a majority vote of the 

Legislature rather than by a two-thirds vote, and the 

Governor has no right to veto such legislative action. 

Stated differently, the Legislature has in effect assumed 

the veto powers of the Governor. 

Although, as I have concluded, section 9 of the 

Legislation violates both the Presentment Clause and 

the separation of powers doctrine, I further note that 

section 10 contains a severability clause providing that, 

"[ilf any clause, sentence, paragraph, subdivision, 

section or part ofthis act shall be adjudged by any court 

of competent jurisdiction to be invalid, such judgment 

shall not affect, impair, or invalidate the remainder 

thereof, but shall be confined in its operation to the 

clause, sentence, paragraph, subdivision, section or part 

thereof directly involved in the controversy in which 

such judgment shall have been rendered. It is hereby 

declared to be the intent of the legislature that this act 

would have been enacted even if such invalid 

provisions had not been included therein." 

*9 A severability clause creates the presumption that 

the Legislature intended the act to be divisible (see 

Page 11 

Alaska Airlines v. Brock. 480 U.S. 678.686, 107 S.Ct. 

1476. 94 L.Ed.2d 66 1 ; National Ah. Co. v. Town of 

Niaaara, 942 F.2d 145. 148). New York courts, 

however, have declared an entire act unconstitutional 

even though it contained a severability clause (see e.g. 

Matter of New York State Superfund Coalition v. New 

York State Dept. of Envtl. Conservation. 75 N.Y .2d 88, 

94.550 N.Y .S.2d 879.550N.E.2d 155). In determining 

whether to give effect to the severability clause, courts 

must look to the intent of the Legislature in including 

the clause in the Act. This Court has before it the 

affidavit of the former Majority Leader of the New 

York State Assembly who oversaw the debate and 

voting on this issue. He stated therein that he believed 

that neither he nor his colleagues would have voted for 

this legislation had it not contained the veto provision. 

I can only conclude therefrom that the inclusion of the 

veto provision permeated all the decisions made by the 

Legislature in enacting the Legislation. Thus, the 

severability clause should not be given effect because 

the Legislature would not have enacted the Legislation 

without the veto (see Alaska Airlines. 480 U.S. at 685, 

107 S.Ct. 1476; CWM Chem. Servs.. L.L.C. v. Roth. 6 

N.Y.3d 410,423,813 N.Y.S.2d 18, 846 N.E.2d 448). 

In refusing to credit the affidavit of the former Majority 

Leader, the court relied on Civil Serv. Empls. Assn. v. 

Counhl of Oneida. 78 A.D.2d 1004. 1005. 433 

N.Y.S.Zd907,Iv. denied53N.Y.2d603.439N.Y.S.2d 

1027. 421 N.E.2d 854, in which this Court wrote that 

"postenactment statements or testimony by an 

individual legislator, even a sponsor, [are] irrelevant 

and [were] properly excluded." In failing to rely on the 

affidavit of the former Majority Leader, the majority 

implicitly concludes that postenactment statements 

cannot be considered. Such a conclusion, however, 

ignores the fact that "[tlhis postenactment rule does not 

apply ... when such testimony might be appropriate in 

extraordinary circumstances, such as when the 

constitutionality of a particular measure is challenged 

and the existence of a discriminatory purpose, or 

motivation, becomes relevant" (rd. citing Village of 

Arlington Has. v. Metropolitan Hous. Dev. Corp., 429 

U.S. 252.97 S.Ct. 555. 50 L.Ed.2d 4502 Although this 

case does not involve the existence of any 

discriminatory purpose, the circumstances are clearly 

"extraordinaryW(Id The magnitudeofthe deprivation 

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and the minimal nature of the protection offered by the 

Legislation to the property interest of St. Joseph 

demand that this Court apply the exception to the 

postenactment rule and consider the affidavit of the 

former Majority Leader. 

Given that the veto provision is not severable from the 

remainder of the Legislation, I conclude that the entire 

Legislation is unconstitutional for the further reasons 

that it violates the Presentment Clause and the 

separation of powers doctrine. Further, even assuming, 

arguendo, that the legislative veto provision was , 

severable, I conclude that the Legislation may 

nevertheless constitute an improper delegation of 

legislative authority to the Commission (see generally 

~ireali v. ~xelrod, 7 1 N.Y .2d 1. 9-1 1, 523 N.Y.s.~~ 

464.5 17 N.E.2d 1350; Matter ofLevine v. Whalen, 39 

N.Y.2d 510.515-516,384 N.Y.S.2d 721.349 N.E.2d 

*I0 The decision whether to close a hospital can never 

be easy, and the Legislature and the Governor were 

faced with difficult choices. The procedures for 

approval of the Commission's recommendations set 

forth in the Legislation do not, however, provide the 

minimal procedural due process rights to which 

plaintiffs are entitled, and the Legislation violates the 

Presentment Clause of the New York Constitution and 

the separation ofpowers doctrine. Accordingly, I would 

reverse the order and judgment, deny defendants' cross 

motion for summary judgment, reinstate the amended 

complaint, grant plaintiffs' motion for summary 

judgment in part, grant judgment in favor of plaintiffs 

declaring that the Legislation is unconstitutional and 

grant the injunctive relief sought. 

N.Y.A.D. 4 Dept.,2007. 

St. Joseph Hosp. of Cheektowaga v. Novello 

--- N.Y.S.2d ----, 2007 WL 2044870 (N.Y.A.D. 4 

Dept.), 2007 N.Y. Slip Op. 06090 

END OF DOCUMENT 

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GASIOR REPLY AFFIDAVIT - EXHIBIT B 

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Page 2 of 10 

Not Reported in F.Supp.2d Page l 

Not Reported in F.Supp.2d, 2001 WL 664628 (S.D.N.Y.) 

(Cite as: Not Reported in F.Supp.2d) 

H 

West 95 Housing Corp. v. New York City Dept. of 

Housing Preservation and Development 

S.D.N.Y.,2001. 

Only the Westlaw citation is currently available. 

United States District Court, S.D. New York. 

WEST 95 HOUSMG CORP.; West Side 95 Manor 

Associates; and Mid State Management 

Corporation, Plaintiffs, 

v. 

NEW YORK CITY DEPARTMENT OF 

HOUSMG PRESERVATION AND 

DEVELOPMENT; New York City Housing 

Development Corporation; the City of New York; 

New York State Division of Housing and 

Community Renewal; Joseph B. Lynch, as 

Commissioner of the New York State Division of 

Housing and Community Renewal; and the State of 

New York, Defendants. 

No. 01 CIV 1345 SHS. 

June 12,200 1. 

OPMION AND ORDER 

STEIN, District J. 

*1 West 95 Housing Corp., West Side 95 Manor 

Associates, and Mid State Management Corp. 

(collectively, "West 95'7, owners of property 

developed pursuant to Article I1 of New York's 

Private Housing Financing Law-commonly known 

as the Mitchell-Lama Law-brought this action 

against city and state regulatory agencies alleging 

various violations of their constitutional rights in 

connection with their plan to withdraw their 

property from the Mitchell-Lama program. West 95 

moved for a preliminary injunction, and defendant. 

have cross-moved to dismiss the complaint pursuant 

to Fed.R.Civ.P. 12(b)(6) for failure to state a claim 

upon which relief can be granted. 

At a hearing on March 7, 2001, the Court denied 

West 95's motion for a preliminary injunction 

without prejudice to its renewal at a later date. Now, 

for the reasons set forth below, the Court grants in 

part and denies in part defendants' motion to 

dismiss the complaint. 

I. BACKGROUND 

A. The Mitchell-Lama Law 

The Mitchell-Lama Law was originally enacted in 

1955 for the purpose of encouraging and inducing 

private real estate investors to build and operate low 

and middle income housing in the state of New 

York. See N.Y. Priv. Hous. Fin. Law § 11 

(McKinney's 1987). Pursuant to the law, developers 

are offered long-term government-hnded mortgage 

loans, real estate tax abatements, and other financial 

incentives to purchase property in blighted areas 

and build and maintain housing projects. In 

exchange, the developers agree to abide by 

regulations on profits, rent increases, the tenant 

selection process, and their ability to transfer the 

property for so long as the property continues to 

receive the benefits of the Mitchell-Lama program. 

See generally id. 11 -37. In particular, 

corporations organized for the purpose of building 

and managing Mitchell-Lama projects must include, 

in their bylaws, a provision stating that "the 

company has been organized to serve a public 

purpose" and that all land acquired by the 

corporation "shall be deemed to be acquired, 

rehabilitated. or created for the DroDer effectuation 

of the purpdses of [the itche ell-iarAa Law]." Id fj 

13(13). 

In its original form, the Mitchell-Lama law 

provided that the corporations organized to build 

and manage Mitchell-Lama projects-i.e., limited 

profit housing companies-were prohibited from 

voluntarily dissolving and withdrawing the property 

from the program for a period of thirty-five years. 

See id § 35(1). Moreover, even after the thirty-five 

year waiting period, the prior consent of the New 

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Not Reported in F.Supp.2d Page 2 

Not Reported in F.Supp.2d. 2001 WL 664628 (S.D.N.Y.) 

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York State Commissioner of Housing or other 

supervising agency was required before limited 

profit housing companies could dissolve. See id. By 

1960, however, the law had been amended to permit 

limited profit housing companies to voluntarily 

withdraw from the Mitchell-Lama program twenty 

years from the project's "occupancy date" without 

first seeking the consent of regulatory officials. See 

id fj 35(2). According to Senator MacNeil Mitchell, 

one of the principal sponsors of the law, the 

amendment was motivated by a legislative finding 

that "the prohibition of voluntary dissolution for 35 

years, and then only with the consent of the housing 

commissioner, was the primary disincentive to 

private sector development." Aff. of MacNeil 

Mitchell, In re Application of Winthrop Gardens, 

Inc., No. 9381187, N.Y. Sup.Ct. Albany Co., dated 

Feb. 22, 1988 (Comp1.E~. 2), at 19. 

B. The Rent Stabilization Laws 

*2 New York's Rent Stabilization Law ("RSL"), 

N.Y.C. Adrnin. Code 5 26-501 et seq. (McKinney's 

1987), was enacted in 1969. Pursuant to that law, 

limits were placed on the percentage by which rents 

could be raised each time an apartment is vacated or 

a new lease is signed. By its terms, the law excepted 

buildings for which a certificate of occupancy is 

obtained after March 10, 1969, from its limits on 

rent increases. See N.Y.C. Adrnin. Code 5 

26-504(a)(l)(d). The Emergency Tenant Protection 

Act of 1974 ("ETPA"), N.Y. Unconsol. Law 5 

862 1 et seq. (McKinney's 1987), however, amended 

the RSL and, among other things, extended 

application of the RSL to buildings constructed 

before January 1, 1974. See N.Y. Unconsol. Law 5 

8625(a)(5); N.Y.C. Admin. Code 5 26-504(b); 

Central Park Assocs. v.. Haynes, 17 1 Misc.2d 463, 

465-66, 654 N.Y.S.2D 967, 968 (N.Y.Civ.Ct. Dec. 

23, 1996). 

Mitchell-Lama projects are exempted from the RSL 

and the ETPA. See N.Y. Unconsol. Law 5 

8625(a)(3); N.Y.C. Admin. Code 5 26-504(a)(l)(a). 

When a project withdraws from the program, 

however, its exemption expires. Because those laws 

set the "initial legal regulated rent" as that rent 

charged pursuant to the last effective lease or rental 

agreement, see N.Y. Unconsol. Law 5 8 626(b)(2); 

N.Y.C. Admin. Code 5 26-512(b)(3), their 

application to former Mitchell-Lama projects results 

in an "initial legal regulated rent" based on the 

below-market Mitchell-Lama rents. 

C. West Side Manor and the Dispute that Led to 

this Case 

West 95 owns West. Side Manor, a middle-income 

rental housing development located at 70 West 95th 

Street, New York, NY. Compl. n 7-10. West 

Side Manor was constructed as a Mitchell-Lama 

project in 1969 and has been in the Mitchell-Lama 

program since that time. Id. fl 15, 40-45. The 

New York City Department of Buildings issued a 

certificate of occupancy for the building on August 

7, 1969; accordingly, West 95's right to withdraw 

the project from Mitchell-Lama pursuant to section 

35(2) of the Private Housing Finance Law vested 

twenty years later, i.e., in August 1989. Id. 1 46. 

In the summer of 2000, a dispute arose between the 

New York City Depament of Housing 

Preservation and Development ("HPD") and West 

95 over vacancies at West Side Manor. According 

to HPD, West 95's failure to timely rent apartments 

upon vacancy to prospective tenants who had earlier 

been placed on waiting lists is violative of section 

3-16 of the Mitchell-Lama rules. According to West 

95, however, neither section 3-16 nor any other rule 

requires it to rent vacant apartments. Rather, says 

West 95, the rules merely dictate to whom it must 

rent if it does elect to fill a vacancy. 

In September 2000, this dispute came to a head 

when HPD wrote to West 95 threatening to remove 

and replace the Board of Directors of West 95 

Housing Corp. pursuant to -section 3-13 of the 

Mitchell-Lama rules unless West 95 provided a 

schedule for renting vacant apartments by October 

6, 2000. Compl. Ex. 12. Rather than provide that 

schedule, West 95 informed HPD on October 6, 

2000, that it would "immediately proceed to 

exercise the statutory and contractual rights granted 

to privatize the project." Id. Ex. 7. West 95 claims 

that since giving that notice, it has complied or has 

prepared to comply with every regulatory 

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requirement for dissolution. Compl. 77 62-68. 

*3 According to West 95, HPD has taken a series of 

action designed to delay or thwart the withdrawal of 

West Side Manor from Mitchell-Lama. First, HPD 

has pressed its position with respect to vacancies at 

West Side Manor and has scheduled a hearing with 

the intent of replacing the Board of Directors. See 

Compl. Ex. 13. Second, HPD has taken the position 

that certain provisions of a Land Disposition 

Agreement dated October 5, 1966 ("LDA") and the 

Deed to the land upon which West Side Manor was 

built preclude dissolution until June 25, 2002. See 

id 7 85; Ex. 15. According to the complaint, 

however, HPD has thus far refused to identify any 

provision in either the LDA or the Deed that restrict 

the right to dissolve, and the LDA explicitly states 

that "Nothing expressed in or to be implied from 

this agreement is intended or shall be construed to 

prevent, foreclose or prohibit the housing company .. . [from] voluntarily dissolving the housing company 

pursuant to ... [the Mitchell-Lama Law]." Id. 71 

42, 86, Ex. 3 (LDA Article IV, 8 408(B), at 7083). 

Third, HPD's Inspector General commenced an 

investigation into West 95's financial affairs, which 

investigation, says West 95, is "selectively directed" 

and "patently intended to chill West 95's 

privatization plans and implicitly threaten sanctions 

against West 95" for proceeding with privatization. 

Id 7 7( 87-90, EX. 16. 

In response, West 95 filed this action pursuant to 42 

U.S.C. tj 1983 against HPD, the New York City 

Housing Development Corporation, and the City of 

New York, alleging that their actions violated or 

threatened to violate its rights pursuant to the 

Contracts Clause in Article I, section 10 of the 

United States Constitution, the Takings Clause of 

the Fifth Amendment, and the Equal Protection and 

Due Process Clauses of the Fourteenth Amendment. 

West 95 also named the New York State Division 

of Housing and Community Renewal ("DHCR") 

and the State of New York as defendants, 

contending that the RSL, as modified by the ETPA, 

violates the Contracts Clause, the Takings Clause, 

and the Equal Protection Clause. West 95 

subsequently amended its complaint to name Joseph 

B. Lynch as a defendant in his official capacity of 

Commissioner of DHCR. 

West 95 sought a preliminary injunction prohibiting 

HPD from conducting the hearing scheduled for the 

purpose of removing the board and from otherwise 

removing the board of directors, and defendants 

cross-moved to dismiss the complaint pursuant to 

Fed R. Civ. P. 12(b)(1) on the grounds that West 

95's claims are not ripe for review and that the state 

defendants are immune from suit pursuant to the 

Eleventh Amendment and pursuant to Fed.R.Civ.P. 

12(b)(6) for failure to state a claim. The city 

defendants also requested that the Court abstain 

from exercising jurisdiction over this case. At a 

hearing on March 7, 2001, the Court denied West 

95's motion for a preliminary injunction without 

prejudice to its renewal at a later date. This opinion 

resolves defendants' motions to dismiss. 

11. DISCUSSION 

A. Subject Matter Jurisdiction 

*4 Because a motion to dismiss for lack of subject 

matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(l) 

concerns a court's "very power to hear the case," 

that issue should be decided first. United States ex 

rel. Kreindler & Kreindler v. United Tech. Corp., 

985 F.2d 1 148, 1 155-56 (id Cir. 1993); Greenberg 

v. Trace Int'l Holdings, Inc., No. 99 Civ. 0306, 

1999 WL 587935, at '1 n. 1 (S.D.N.Y. Aug. 4, 

1999). In resolving such a motion, a court may 

consider evidence outside the pleadings. See 

Marakova v. United States, 201 F.3d 1 10, 1 13 (2d 

Cir.2000); Kamen v. American Tel. & Tel. Co., 791 

F.2d 1006, 101 1 (2d Cir.1986). A plaintiff bears the 

burden of proving the existence of subject matter 

jurisdiction by a preponderance of the evidence. 

Marakova, 201 F.3d at 1 13. In this case, defendants 

contend principally that none of plaintiffs' claims 

are ripe for review. 

Ripeness is a "constitutional prerequisite to exercise 

of jurisdiction by federal courts." Marchi v. Board 

of Coop. Educ. Sews., 173 F.3d 469, 478 (2d 

Cir. 1999) (quoting Federal Election Comm'n v. 

Central Long Island Tax Reform Immediately 

Comm., 6 16 F.2d 45, 5 1 (2d Cir. 1980)). "Where a 

party seeks to challenge a statute or policy prior to 

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its enforcement, the ripeness doctrine requires that 

the challenge grow out of a 'real, substantial 

controversy between parties' involving a 'dispute 

definite and concrete." ' Id. (quoting Babbitt v. 

United Farm Workers Nat'l Union, 442 U.S. 289, 

298 (1979)). In other words, federal courts must 

avoid "entangling themselves in abstract 

disagreements." Abbott Labs. v. Gardner, 387 U.S. 

136, 148-49 (1 967), overruled on other grounds, 

Califano v. Sanders, 430 U.S. 99 (1977). In 

evaluating whether a claim is ripe, a court must 

consider: (I) the fimess of the issues for judicial 

review, and (2) the injury or hardship to the parties 

of withholding judicial consideration. Nutritional 

Health Alliance v. Shalala, 144 F.3d 220, 225 (2d 

Cir.1998); see also Abbott Labs., 387 U.S. at 149. 

West 95's claims against the city defendants and the 

state defendants will be examined in turn. 

1. West 95's claims against the city defendants are 

ripe with the exception of its takings claim. 

As against the city defendants, West 95 claims that 

(I) HPD's alleged efforts to prevent West 95 from 

withdrawing from the Mitchell-Lama program 

constitutes an impermissible interference with West 

95's vested contract rights, in violation of the 

Contracts Clause; (2) any requirement that West 95 

rent apartments that it would prefer to keep vacant 

constitutes an physical taking of its property without 

compensation in violation of the Takings Clause; 

(3) HPD is selectively enforcing Mitchell-Lama 

regulations against West 95 for no legitimate 

governmental purpose, in violation of the Equal 

Protection Clause; and (4) HPD has predetermined 

the outcome of the hearing regarding vacancies, in 

violation of the Due Process Clause. The city 

defendants contend that none of these claims are 

ripe for review because, according to them, they 

arise out of actions West 95 predicts they will take, 

and not actions they have already taken. 

Specifically, the city defendants note that the board 

has not yet been removed, none of the vacant 

apartments have,. as yet, been leased against the 

wishes of West 95, and HPD has not "formally" 

refused to issue of Letter of No Objection to West 

95's withdrawal from Mitchell-Lama. 

*5 Ordinarily, a plaintiff need not "await the 

consummation of threatened injury to obtain 

preventative relief." Valmonte v. Bane. 18 F.3d 

992, 999 (2d Cir. 1994); accord Lipsman ex rel. 

Lipsman v. New York City Bd. of Educ., No. 98 

Civ.2008, 1999 WL 498230, at '3 (S.D.N.Y. Jul. 

14, 1999). Rather, a "claim is ripe if the perceived 

threat due to the putatively illegal conduct ... is 

sufficiently real and immediate to constitute an 

existing controversy." Valmonte, 18 F.3d at 999; 

Lipsman, 1999 WL 498230, at *3. As further 

explained below, however, a takings claim, by its 

nature, has additional ripeness requirements. 

Accordingly, the ripeness of West 95's takings 

claim will be analyzed separately. 

a. West 95's non-takings claims against the city 

defendants are ripe. 

The crux of West 95's non-takings claims is that 

HPD is unlawfully attempting to interfere with its 

right to privatize by (I) unlawfully withholding the 

Letter of No Objection; and (2) undertaking to 

remove the Board of Directors at a "hearing" whose 

outcome is predetermined in violation of its right to 

due process; and (3) selectively investigating West 

95 in violation of its right to equal protection of the 

laws. In support of these claims, West 95 has 

produced letters from HPD which flatly state that " 

HPD has concluded that the Housing Company is in 

violation of the Mitchell-Lama Rules and that such 

violation justifies removal of the Housing 

Company's Board of Directors" and "HPD cannot 

issue the letter of no objection ... [because] the LDA 

and Deed prohibit such dissolution at this time." 

Compl. Exs. 13, 15. These letters demonstrate that 

the threat perceived by West 95 due to the allegedly 

illegal conduct is "sufficiently real and immediate 

to constitute an existing controversy." 

The city defendants attempt to blunt the effect of 

these letters by contending that they do not 

constitute sufficiently "final" decisions of HPD 

because there are unspecified "administrative 

remedies" as well as state court procedures pursuant 

to Article 78 of New York's Civil Practice Law and 

Rules available to West 95. The city defendants 

have not, however, identified any administrative 

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procedures available with respect to HPD's refusal 

to issue the Letter of No Objection, and there is no 

indication that the HPD official presiding over the 

hearing regarding the vacancies-an official who 

ultimately reports to HPD's commissioner-is 

empowered to reverse HPD's longstanding 

interpretation of the Mitchell-Lama Rules, rather 

than to merely resolve any factual disputes between 

the agency and West 95. Moreover, even if the 

positions taken by HPD were not final, West 95 has 

demonstrated, "by more than mere allegations," that 

resort to additional procedures before the agency 

would be futile. See Honess 52 Corp. v. Town of 

Fishkill, 1 F.Supp.2d 294, 301 (S.D.N.Y.1998). 

Thus, the possibility that West 95 might convince 

HPD to reverse its position through an 

administrative process does not render its 

non-takings claims unripe. 

*6 The city defendants' reference to Article 78 is 

similarly unavailing. Pursuant to New Yo* law, an 

Article 78 proceeding is not a continuation of an 

administrative review process, but rather is a new 

proceeding challenging a decision by an 

administrative body or officer. See N.Y. C.P.L.R. 5 

7804; Meachem v. Wing, 77 F.Supp.2d 43 1, 442 

(S.D.N.Y.1999). Thus, whether a party pursues an 

Article 78 action is immaterial to the determination 

of whether an administrative action is sufficiently 

final so as to be ripe for review. 

West 95's non-takings claims against the city 

defendants are ripe not only because they are fit for 

review, as discussed above, but also because 

withholding review would work a hardship against 

it. In particular, the city defendants' suggestion that 

the Court require West 95 to complete every single 

step in the dissolution process-presumably 

including paying off West Side Manor's subsidized 

mortgages-and await the pro forma issuance of a " 

formal" rejection of its request for a Letter of No 

Objection would place West 95 in the position of 

having given up the benefits of the Mitchell-Lama 

program while still being subject to all lawful 

Mitchell-Lama regulations. The doctrine of ripeness 

does not require that parties engage in 

self-destructive behavior in order to ripen their 

claims. 

b. West 95's takings claims agaimt the city 

defendants are not ripe. 

Because the Fifth Amendment prohibits only 

uncompensated takings, a takings claim is not ripe 

for federal court review "until the owner has 

unsuccessfully attempted to obtain just 

compensation through the procedures provided by 

the State." Villager Pond, Inc. v. Town of Darien, 

56 F.3d 375, 379 (2d Cir.1995) (quoting 

Williamson County Reg'l Planning Comm'n v. 

Hamilton Bank, 473 U.S. 172, 195 (1985)). An 

attempt to obtain relief pursuant to a state 

compensation procedure must be attempted even if 

that procedure is "unsure and undeveloped," so 

long as there is a colorable basis in state law for the 

owner to seek compensation. Southview Assocs. v. 

Bongartz, 980 F.2d 84, 99-100 (2d Cir. 1992); see 

also Villager Pond. 56 F.3d at 380. 

New York law permits property owners to seek 

compensation for municipal takings in its courts. 

See Goldfine v. Kelly, 80 F.Supp.2d 153, 161 

(S.D.N.Y.2000); see also, e.g., Ward v. Bennett (In 

re Ward), 214 A.D.2d 741, 743-44, 625 N.Y.S.2d 

609, 6 12- 13 (2d Dep't 1995). Accordingly, because 

West 95 has not attempted to obtain compensation 

in state court, its takings claim against the city 

defendants is not ripe for review here. See Rivervale 

Realty Co. v. Town of Orangetown, 816 F.Supp. 

937,943 (S.D.N.Y. 1993). 

2. West 95's claims agaimt the state defendants are 

ripe. 

As against the state defendants, West 95 claims that 

(1) the RSL impairs its right to voluntarily withdraw 

from Mitchell-Lama in violation of the Contracts 

Clause; (2) the RSL constitutes a regulatory taking 

of its property without compensation in violation of 

the Takings Clause; and (3) the RSL distinguishes 

between Mitchell-Lama projects built before 1974 

and those built after 1974 without a rational basis in 

violation of the Equal Protection Clause. The state 

defendants contend that none of these claims are 

ripe for review because the RSL does not yet apply 

to West Side Manor and they have not yet 

determined whether they will enforce the RSL 

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against West Side Manor when it withdraws from 

the Mitchell-Lama program. 

*7 Although the state defendants' argument might 

have merit if West 95 was mounting an "as applied 

challenge to the RSL, West 95 has chosen to mount 

a facial challenge. See Pl.'s Mem. at 10. Facial 

challenges to regulation "are generally ripe the 

moment the challenged regulation or ordinance is 

passed." Suitum v. Tahoe Regional Planning 

Agency, 520 U.S. 725, 736 n. 10 (1997); see also 

Kittay v. Guiliani, 112 F.Supp.2d 342, 350 

(S.D.N.Y.2000). Accordingly, West 95's facial 

challenges to the RSL are ripe for review. 

3. The State of New York and the Division of 

Housing and Community Renewal must be 

dismissedfrom this action pursuant to the Eleventh 

Amendment. 

The state defendants contend that they are immune 

from suit in federal court pursuant to the Eleventh 

Amendment, even where, as here, the suit seeks 

only injunctive relief. See Seminole Tribe v. Florida, 

517 U.S. 44, 54-55 (1996); Pennhurst State Sch. & 

Hosp. v. Halderman, 465 U.S. 89, 99-101 (1974). 

West 95 responds that its claims fall under the 

exception to Eleventh Amendment immunity first 

recognized in Ex parte Young, 209 U.S. 123 (1908). 

See Pennhurst, 465 U.S. at. 104-05. 

In general, the Young exception applies to "suits 

seeking declaratory and injunctive relief against 

state officers" whose ongoing action or threat of 

action would violate federal law. Idaho v. Coeur 

d'Alene Tribe, 521 U.S. 261, 267-77 (1997). The 

exception does not apply, however, to suits against 

states or state agencies. See, e.g., Santiago v. New 

York State Dep't of Corr. Sews., 945 F.2d 25, 3 1 

(2d Cir.1991). Accordingly, West 95's claims 

challenging the RSL must be dismissed as against 

the State of New York and Division of Housing and 

Community Renewal pursuant to the Eleventh 

Amendment. West 95 may proceed against 

Commissioner Lynch in his individual capacity 

pursuant to the Young exception. 

B. Failure to State a Claim 

Having resolved defendants' challenges to the 

Court's subject matter jurisdiction, the Court now 

turns to their motions to dismiss the complaint 

pursuant to Fed.R.Civ.P. 12@)(6) for failure to state 

a claim. In deciding these motions, the Court 

accepts, as it must, all of the well-pleaded facts as 

true and draws all reasonable inferences from those 

allegations in favor of the plaintiff. See Scheuer v. 

Rhodes, 416 U.S. 232, 236 (1974). A complaint 

will survive a motion to dismiss unless "it appears 

beyond doubt that the plaintiff can prove no set of 

facts in support of his claim which would entitle 

him to relief." Conley v. Gibson, 355 U.S. 41, 

45-46 (1957). Each of West 95's claims will be 

examined in turn. 

1. The Contracts Clause claims 

Article I, Section 10, CI. 1 of the U.S. Constitution 

provides that "[nlo State shall ... pass any ... Law 

impairing the Obligation of Contracts." By its 

terms, the clause "is aimed at the legislative power 

of the State, and not at ... the acts of administrative 

or executive boards or officers." New Orleans 

Waterworks v. Louisiana Sugar Refining Co.. 125 

U.S. 18, 30 (1888). In other words, whether a 

statute violates the contracts clause "must be 

determined by examining the statute itself and 

asking whether it breached or substantially impaired 

a contract or whether it required state ofticials to do 

so." Association of Surrogate's & Supreme Court 

Reporters v. New York, No. 92 Civ. 4004, 1995 WL 

555777, at *2 (S.D.N.Y. Sept. 19, 1995). 

*8 To state a claim for violation of the Contracts 

Clause, a plaintiff must allege facts sumcient to 

demonstrate that a state law has "operated as a 

substantial impairment of a contractual relationship. 

" General Motors Corp. v. Romein, 503 U.S. 181, 

186 (1992) (quoting Allied Structural Steel Co. v. 

Spannaus, 438 U.S. 234, 244 (1978)). There are 

three components to this inquiry: (I) "whether there 

is a contractual relationship"; (2) "whether a change 

in law impairs that contractual relationship"; and (3) 

"whether the impairment is substantial." Id. Even if 

a state law constitutes a substantial impairment, 

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however, it will survive a Contracts Clause 

challenge if it serves "a significant and legitimate 

public purpose" and "the adjustment of 'the rights 

and responsibilities of contracting parties [is based] 

upon reasonable conditions and [is] of a character 

appropriate to the public purpose justifying [the 

legislation's] adoption." Energy Reserves Group, 

Inc. v. Kansas Power & Light Co., 459 U.S. 400, 

4 1 1-12 (1 983) (quoting United States Trust Co. v. 

New Jersey, 43 1 U.S. I, 22 (1 977)). 

With respect to the city defendants, West 95 claims 

that HPD's efforts to delay or prevent West Side 

Manor's withdrawal from the Mitchell-Lama 

program impair its "contractual" rights to do so. 

The acts complained of, however-enforcement of 

broadly (and allegedly unlawfully) interpreted 

Mitchell-Lama regulations, refusal to issue a Letter 

of No Objection, commencement of an audit for the 

purpose of harassment-are executive "acts of 

administrative ... officers," and not acts of 

legislation. Accordingly, they cannot form the basis 

of a claim pursuant to the Contracts Clause. See 

New Orleans Waterworks, 125 U.S. at 30. 

The gravamen of West 95's Contracts Clause claim 

against the state defendants, in contrast, is that the 

RSL-a legislative act-unconstitutionally impairs its 

contractual rights to withdraw from the 

Mitchell-Lama program. Assuming without 

deciding, however, that West 95 has pled facts 

sufficient to establish the existence of a contractual 

relationship and an impairment of that relationship, 

its Contracts Clause against the state defendants 

nevertheless fails because it has not established that 

any impairment is substantial. 

When considering the severity of an impairment, 

the Court must consider "whether the industry the 

complaining party has entered has been regulated in 

the past." Energv Reserves Group, 459 U.S. at 41 1; 

accord Kraebel v. New York City Dep't of Housing 

Preservation and Dev., 959 F.2d 395, 403 (2d 

Cir. 1992). West 95's industry-rental of residential 

property in New York City-has been called "heavily 

regulated" by the United States Court of Appeals 

for the Second Circuit. See Kraebel, 959 F.2d at 403 

. Thus, West 95 "cannot claim surprise that [its 

contractual] relationships ... are affected by 

governmental action." Id. 

Moreover, the RSL, as amended by the ETPA, 

contains provisions pursuant to which property 

owners may apply for an adjustment of the initial 

legal regulated rent where there are "unique or 

peculiar circumstances materially affecting the 

initial legal regulated rent [that have] resulted in a 

rent which is substantially different from the rents 

generally prevailing in the same area for 

substantially similar housing accommodations." 

N.Y.C. Admin. Code 5 26-513. Because these 

provisions provide a mechanism by which property 

owners may seek adjustments of the regulated rent 

to reflect market conditions, the impairment "cannot 

be described as substantial or severe for purposes of 

the contract clause" even if resort to that mechanism 

imposes some burden and delay. Cf Kraebel, 959 

F.2d at 403. 

*9 Even if the RSL were to substantially impair 

West 95's contractual expectations, it would 

nevertheless survive scrutiny pursuant to the 

Contracts Clause because it was enacted for a 

legitimate state purpose-"to 'prevent exactions of 

unjust, unreasonable and oppressive rents" during a 

housing "emergency," see N.Y.C. Admin. Code Fj 

26-501-and the mechanism cited above that ensures 

that initial regulated rents reflect market conditions 

satisfies the requirement that any adjustment of the 

rights of property owners be based upon " 

reasonable conditions." See Energy Reserves, 459 

U.S. at 41 1-12; Kreabel, 959 F.2d at 403. 

Accordingly, West 95's Contracts Clause claims are 

dismissed. 

2. The remaining Takings Clause claims 

The Takings Clause of the Fifth Amendment 

prohibits the taking of "private property ... for 

public use, without just compensation ." U.S. Const. 

amend. V. In general, to state a claim pursuant to 42 

U.S.C. Fj 1983 for violation of the Takings Clause, a 

plaintiff must allege facts sufficient to establish: " 

(1) a property interest (2) that has been taken under 

color of state law (3) without just compensation." 

Frooks v. Town of Cortlandt, 997 F.Supp. 438, 452 

(S.D.N.Y.1998). A claim that a statute works a 

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taking on its face-such as West 95's takings claim 

against the state defendants-however, requires 

more: a plaintiff "must establish that no set of 

circumstances exists under which the [challenged 

a]ct would be valid." Rent Stabilization .Assln v. 

Dinkim, 5 F.3d 591, 595 (2d (3.1993) (quoting 

General Elec. Co. v. New York State Dep't oflabor, 

936 F.2d 1448, 1456 (2d Cir. 1991)) (emphasis and 

alteration in original). The fact that a statute might 

work an uncompensated taking under some 

conceivable set of circumstances is insufficient to 

render it unconstitutional on its face. ~d.' (quoting 

United States v. Salerno, 48 1 U.S. 739, 745 (I 987)). 

It is beyond peradventure that application of the 

RSL is constitutional in at least some 

circumstances. See, e.g., Federal Home Loan 

Mortgage Corp. v. New York State Div. of Housing 

& Cmty. Renewal, 83 F.3d 45, 47-48 (2d Cir. 1996). 

Thus, West 95's facial challenge-in essence, a claim 

that the law is overbroad, see Rent Stabilization 

Ass'n, 5 F.3d at 595-must fail. See id 

3. The Equal Protection Clause claims 

West 95 asserts two distinct types of equal 

protections claims: (1) a claim that the RSL violates 

the equal protection clause on its face by 

distinguishing between Mitchell-Lama units built 

before 1974 and those built after 1974 "without a 

rational basis"; and (2) a claim that the city 

defendants are selectively enforcing Mitchell-Lama 

regulations against it. Each will be examined in turn. 

a. The RSL does not violate the Equal Protection 

Clause on its face. 

Although West 95 characterizes the RSL as 

distinguishing between classes of Mitchell-Lama 

buildings, on its face it does no such thing. Rather, 

the statute distinguishes between all buildings built 

before 1974 and those built thereafter. See N.Y. 

Unconsol. Law 8625(a)(5); N.Y.C. Admin. Code g 

26-504(b). The former are subject to the law; the 

latter are not. N.Y. Unconsol. Law § 8625(a)(5); 

N.Y .C. Admin. Code § 26-504(b). 

*10 Where, as here, a challenged statute implicates 

neither a hndamental right nor a suspect class, its 

treatment of different classes enjoys "a heavy 

presumption of constitutionality." Kittay v. Giuliani, 

112 F.Supp.2d 342, 353 (S.D.N.Y.2000). Such a 

statute will survive an equal protection challenge so 

long as "the classification scheme embodied in the 

[statute] is rationally related to a legitimate state 

interest." Pennell v. City of Sun Jose, 485 U.S. 1, 

14 (1988). Moreover, the Court need not-and 

should not-decide whether the legislature's decision 

was correct; "[rlather, 'those challenging the 

legislative judgment must convince the court that 

the legislative facts on which the classification is 

apparently based could not reasonably be conceived 

to be true by the governmental decisionmaker." ' 

Minnesota v. Clover Leaf Creamery Co., 449 U.S. 

456, 464 (1981) (quoting Vance v. Bradlqy, 440 

U.S. 93, 11 1 (1979)). 

The RSL and EPTA were enacted to combat the ill 

effects of a perceived housing shortage-clearly a 

valid governmental concern. See N.Y. Unconsol. 

Law § 8622; N.Y.C. Admin. Code 26-501. The 

legislature could reasonably have concluded that the 

statutes' exemption from regulation of buildings 

built or rehabilitated after January 1, 1974, furthers 

that purpose because the promise of freedom from 

regulation encourages construction of new housing 

stock. Accordingly, the RSL does not violate the 

equal protection clause on its face. 

b. West 95 has stated a claim for selective 

enforcement. 

In order to state a claim for selective enforcement, a 

plaintiff must plead facts sufficient to show: (1) that 

it was "selectively treated" compared with others 

similarly situated; and (2) that the selective 

treatment was carried out with malicious or bad 

faith intent to injure. See LaTrieste Rest, & Cabaret 

v. Village of Port Chester, 40 F.3d 587, 590 (2d 

(3.1994). A plaintiff may satisfy the first prong by 

alleging that the government suddenly began 

enforcement against it after a lengthy period of 

non-en forcement. See id. 

West 95 has alleged that HPD had knowledge of the 

0 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. 

Case 7:07-cv-03432-CS-MDF Document 18-2 Filed 08/22/2007 Page 24 of 26
Page 10 of 10 

Not Reported in F.Supp.2d Page 9 

Not Reported in F.Supp.2d, 2001 WL 664628 (S.D.N.Y.) 

(Cite as: Not Reported in F.Supp.2d) 

vacant apartments at West Side Manor for some 

time, and took no action to compel West 95 to rent 

those units. Compl. 11 80. However, after West 95 

sought to withdraw from the Mitchell-Lama 

program, HPD allegedly: (1) scheduled a hearing 

for the purpose of removing the Board of Directors; 

(2) launched an audit of West Side Manor's 

financial records; and (3) stated that it would refuse 

to provide a Letter of No Objection based on 

purported restrictions in the LDA and Deed without 

identifying those restrictions or addressing express 

language in the LDA preserving West 95's right to 

withdraw. West 95 has also alleged that by these 

actions, the city defendants are treating it differently 

than other Mitchell-Lama projects, and that these 

actions were taken with the bad faith intent to 

interfere with West 95's right to withdraw from the 

Mitchell-Lama program. These allegations are 

sufficient to state a claim for selective enforcement 

in violation of the Equal Protection clause. 

4. The Due Process Clause claim 

*I 1 The essence of West 95's procedural due 

process claim is that HPD has predetermined the 

result of the hearing scheduled for the purpose of 

removing the Board of Directors, thus depriving it 

of a meaningful opportunity to be heard. Thus, 

West 95 is claiming not that the statutory 

procedures for removal of Mitchell-Lama boards 

are constitutionally infirm in and of themselves, but 

instead that HPD is acting in a manner unauthorized 

by the relevant statutes, rendering their protection 

ineffective. 

Where the random, unauthorized acts of 

government employees deprive an individual of 

property or liberty, "the Due Process. Clause of the 

Fourteenth Amendment is not violated ..., so long as 

the State provides a meaningful postdeprivation 

remedy." Hellenic Am. Neighborhood Action 

Comm. v. City of New York, 101 F.3d 877, 880 (2d 

Cir.1996). With respect to the unauthorized acts of 

employees or agencies of the City of New York, the 

United States Court of Appeals for the Second 

Circuit has explicitly held that New York's Article 

78 proceeding is "a perfectly adequate 

postdeprivation remedy" that suffices to satisfy the 

Due Process Clause. Id. at 881. Accordingly, West 

95's due process claim is dismissed. 

C. Abstention 

The city defendants contend that the Court should 

abstain from exercising its jurisdiction in this case 

pursuant to the doctrines first set forth in Younger v. 

Harris, 401 U.S. 37 (1971), Railroad Comm'n v. 

Pullman Co., 312 U.S. 496 (1941), and Buford 

v.Sun Oil Co., 319 U.S. 315 (1943). As the city 

defendants concede, however, because the Court 

denied West 95's motion for a preliminary 

injunction prohibiting HPD from conducting the 

hearing regarding vacancies, and that hearing has 

now taken place, its application for Younger 

abstention is now moot. 

The city defendants' applications for Pullman and 

Buford abstention were directed at West 95's 

constitutional challenges to the RSL. All of West 

95's claims related to the RSL, however, are being 

dismissed. Accordingly, the city defendants' 

applications for Pullman and Buford abstention are 

also moot. 

111. CONCLUSION 

For the reasons set forth above, the city defendants' 

motion to dismiss the complaint is denied with 

respect to West 95's equal protection claim, and is 

in all other respects granted, and the state 

defendants' motion to dismiss the complaint is 

granted. 

SO ORDERED: 

S.D.N.Y.,200I. 

West 95 Housing Corp. v. New York City Dept. of 

Housing Preservation and Development 

Not Reported in F.Supp.2d, 2001 WL 664628 

(S.D.N.Y.) 

END OF DOCUMENT 

O 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. 

Case 7:07-cv-03432-CS-MDF Document 18-2 Filed 08/22/2007 Page 25 of 26
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07-CV-3432 (CLB) (KNF) 

UNITED STATES DISTRICT COURT 

SOUTHERN .. . DISTRICT OF NE'W YORK 

JOHN E. 'ANDRUS MEMORIAL, INC. 

(dkb/a .ANDRUS ON HUDSON) , 1. . . Plaintiff, 

- against - 

RICHARD F. DATNES, as Comm'r 

of the N.Y.S. Dept. of Health 

Defendant. 

REPLY AFFIDAVIT OF JOHN 

GASIOR IN SUPPORT OF 

DEFENDANT'S MOPION FOR 

SUMMARY JUDGMENT 

. . . ANDREW M . . CIIOMO 

Allorlrpy Cc~lctrl ' 

... Defendant 

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I20 Hmrtlwny, Ncw Yo&, N.Y. I0271 

Td. ' (212) 416-8570 

I'c~s~JI~ wvh' d~f a tVJl,y 4fl 

Allor~uy for 

Case 7:07-cv-03432-CS-MDF Document 18-2 Filed 08/22/2007 Page 26 of 26