21-2526; 21-2448

Building and Realty Institute v. State of New York, G-Max Management, Inc. v. State of New York

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. 

CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS 

PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 

32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY 

ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER 

THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE 

NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER 

MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 

At a stated term of the United States Court of Appeals for the Second 

Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, 

in the City of New York, on the 12th day of March, two thousand twenty-four.

PRESENT:

GUIDO CALABRESI,

DENNY CHIN,

EUNICE C. LEE,

Circuit Judges.

_____________________________________

BUILDING AND REALTY INSTITUTE OF 

WESTCHESTER AND PUTNAM COUNTIES, INC.,

APARTMENT OWNERS ADVISORY COUNCIL,

COOPERATIVE AND CONDOMINIUM COUNCIL,

STEPPING STONES ASSOCIATES, L.P., LISA 

DEROSA, as Principal of Stepping Stones, 

L.P., JEFFERSON HOUSE ASSOCIATES, L.P.,

SHUB KARMAN, INC., DILARE, INC.,

PROPERTY MANAGEMENT ASSOCIATES,
2

NILSEN MANAGEMENT CO., INC.,

Plaintiffs-Appellants,

v. 21-2526

STATE OF NEW YORK, RUTHANNE 

VISNAUSKAS, in her official capacity as 

Commissioner of New York State Homes 

and Community Renewal, DIVISION OF 

HOMES AND COMMUNITY RENEWAL,

Defendants-Appellees,

COMMUNITY VOICES HEARD (CVH),

Intervenor-Defendant-Appellee.

_____________________________________

G-MAX MANAGEMENT, INC., 1139

LONGFELLOW, LLC, GREEN VALLEY REALTY,

LLC, 4250 VAN CORTLANDT PARK EAST 

ASSOCIATES, LLC, 181 W. TREMONT 

ASSOCIATES, LLC, 2114 HAVILAND 

ASSOCIATES, LLC, SILJAY HOLDING LLC, 125

HOLDING LLC, JANE ORDWAY, DEXTER 

GUERRIERI, BROOKLYN 637-240 LLC, 447-9

16TH LLC,

Plaintiffs-Appellants,

66 EAST 190 LLC,

Plaintiff,
3

v. 21-2448

STATE OF NEW YORK, LETITIA JAMES, in her 

official capacity as Attorney General of the 

State of New York, RUTHANNE 

VISNAUSKAS, in her official capacity as 

Commissioner of the New York State 

Division of Housing and Community 

Renewal, WOODY PASCAL, in his official 

capacity as Deputy Commissioner of the 

New York State Division of Housing and 

Community Renewal,

Defendants-Appellees,

N.Y. TENANTS AND NEIGHBORS (T&N),

COMMUNITY VOICES HEARD (CVH),

Intervenors-Defendants-Appellees,

COUNTY OF WESTCHESTER, CITY OF 

YONKERS, CITY OF NEW YORK,

Defendants.

_____________________________________

DOROTHY M. FINGER, Finger & Finger, 

White Plains, NY (Kenneth J. Finger, 

on the brief) for Plaintiffs-Appellants 

Building and Realty Institute of 

Westchester and Putnam County, et al.
4

RANDY M. MASTRO, King & Spaulding 

LLP, New York, NY (Akiva Shapiro 

and William J. Moccia of Gibson, Dunn 

& Crutcher LLP, New York, NY, on the 

brief), for Plaintiffs-Appellants G-Max 

Management, Inc., et al.

ESTER MURDUKHAYEVA, Assistant

Deputy Solicitor General (Barbara D. 

Underwood, Solicitor General, on the 

briefs; Steven C. Wu, Deputy Solicitor 

General, on the brief in 21-2448; Stephen 

J. Yanni, Assistant Solicitor General, on 

the brief in 21-2526), for Letitia James, 

Attorney General of the State of New 

York, New York, NY, for DefendantsAppellees State of New York, et al.

MICHAEL DUKE, Selendy Gay PLLC, 

New York, NY (Caitlin J. Halligan, 

Sean P. Baldwin, Babak Ghafarzade, 

Sophie Lipman, Samuel Breidbart, 

Selendy Gay PLLC, New York, NY; 

Judith Goldner, Attorney in Charge, 

Edward Josephson, Supervising 

Attorney, The Legal Aid Society, Civil 

Law Reform Unit, New York, NY, on 

the briefs; Ekaterina Stynes of Paul, 

Weiss, Rifkind, Wharton & Garrison 

LLP, on the brief in 21-2526) for 

Intervenors-Defendants-Appellees

Community Voices Heard and N.Y. 

Tenants and Neighbors.
5

Appeal from a September 14, 2021 judgment of the United States District 

Court for the Southern District of New York (Karas, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, 

ADJUDGED, AND DECREED that the judgment of the district court is

AFFIRMED. 

Plaintiffs-Appellants Building and Realty Institute of Westchester and 

Putnam Counties, Inc., et al. (“BRI”) and G-Max Management, Inc., et al. (“GMax”) (collectively, “Appellants”) appeal from the district court’s judgment 

dismissing their challenge to the New York Rent Stabilization Laws (“RSL”). On 

appeal, Appellants argue that the 2019 amendment to the RSL, known as the 

Housing Stability and Tenant Protection Act (“HSTPA”), violates the Fifth and 

Fourteenth Amendments of the Constitution, as it effects a taking of their property 

and violates their substantive due process rights. Appellants also allege a 

violation of the Contracts Clause of the Constitution.1 

In an opinion and order dated September 14, 2021, the district court granted 

1 Appellants made various other claims at the district court which they do not 

raise on appeal and are therefore not addressed by this Court.
6

the Defendants’ and Defendants-Intervenors’ motions to dismiss all of Appellants’ 

claims for failure to state a claim and lack of jurisdiction. See Bldg. & Realty 

Institute of Westchester & Putnam Cntys., Inc. v. New York (“BRI”), Nos. 19-CV-11285

(KMK) and 20-CV-634 (KMK), 2021 WL 4198332 (S.D.N.Y. Sept. 14, 2021) (“BRI”). 

The district court addressed the motions filed in both cases in a single opinion 

“[b]ecause of the overlapping claims and issues.” Id. at *1. For the same reason, 

we address both Appellants’ appeals in this single order.

In affirming the district court’s judgment, we note that a majority of the 

issues before us are controlled by our recent decisions in Community Housing 

Improvement Program v. City of New York, 59 F.4th 540 (2d Cir.), cert. denied, 144 S. 

Ct. 164 (2023), and 74 Pinehurst LLC v. New York, 59 F.4th 557 (2d Cir. 2023), cert. 

denied, --- S. Ct. ---, 2024 WL 674658 (2024), which analyzed substantially similar 

claims against the HSTPA amendments to the RSL. We write primarily for the 

parties and assume their familiarity with the facts, procedural history, and issues 

on appeal, which we reference only as necessary to explain our decision to affirm.

* * *
7

We review de novo a district court’s grant of a Rule 12(b)(6) motion to dismiss 

for failure to state a claim, “accepting all factual allegations in the complaint as 

true, and drawing all reasonable inferences in the plaintiff’s favor.” Chambers v. 

Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). Likewise, we review a district 

court’s grant of a Rule 12(b)(1) motion to dismiss for lack of subject matter 

jurisdiction de novo where, as in this case, the motion was granted “based solely on 

the complaint and the attached exhibits” and where “the question we address on 

review is exclusively a question of law.” SM Kids, LLC v. Google LLC, 963 F.3d 

206, 210–11 (2d Cir. 2020). 

I. Physical Taking Claims

a. Facial Challenge

Appellants argue that, facially, the RSL effects a physical taking by granting 

tenants a “collective veto right over conversions”—thereby denying landowners 

the right to dispose of their property and exit the rental market; and by limiting 

owner reclamations for personal use. G-Max Appellant Br. at 44. For the 

reasons outlined below, we disagree. 

The Takings Clause of the Fifth Amendment provides that “private 
8

property [shall not] be taken for public use, without just compensation.” U.S. 

Const. amend. V; see also id. amend. XIV, § 1. When the government effects a 

physical appropriation of property, a per se taking has occurred. See Cedar Point 

Nursery v. Hassid, 594 U.S. 139, 147–49 (2021). A successful facial challenge “must 

establish that no set of circumstances exists under which the Act would be valid.” 

United States v. Salerno, 481 U.S. 739, 745 (1987). “The government effects a 

physical taking only where it requires the landowner to submit to the physical 

occupation of his land.” Yee v. City of Escondido, 503 U.S. 519, 527 (1992). 

In Community Housing, this Court held that “no provision of the RSL effects, 

facially, a physical occupation of the Landlords’ properties.” 59 F.4th at 551. 

Relying on Yee, we made clear that “when, as here, ‘a landowner decides to rent 

his land to tenants’ the States ‘have broad power to regulate housing conditions in 

general and the landlord-tenant relationship in particular without paying 

compensation for all economic injuries that such regulation entails.’” Id. (quoting 

Yee, 503 U.S. at 528–29); see also Fed. Home Loan Mortg. Corp. v. New York State Div. 

of Hous. & Cmty. Renewal, 83 F.3d 45, 47–48 (2d Cir. 1996) (explaining that “where 

a property owner offers property for rental housing, the Supreme Court has held 
9

that government regulation of the rental relationship does not constitute a physical 

taking”). Neither the co-op and condo conversion amendments, nor the 

limitations on owner reclamation of units, “involve unconditional requirements 

imposed by the legislature,” but rather are provisions that must be adhered to 

“when certain conditions are met.” Community Housing, 59 F.4th at 552. 

Appellants’ reliance on Cedar Point Nursery and Horne v. Department of 

Agriculture, 576 U.S. 350 (2015), is misplaced because neither case is relevant given 

neither “concerns a statute that regulates the landlord-tenant relationship.” 

Community Housing, 59 F.4th at 553. Instead, Community Housing is directly on 

point and dictates our decision that Appellants have not plausibly alleged a facial 

physical taking.

b. As-Applied Challenge

Appellants next argue that, as applied to them, the HSTPA amendments to 

the RSL effect a physical taking. Specifically, with respect to two landlords, they 

argue that “the HSTPA precluded [them] from changing the use of their property 

despite their having served a lawful non-renewal notice over a year earlier.” GMax Appellant Br. at 50. Pinehurst analyzed as-applied physical takings claims 
10

under the RSL and controls our decision to affirm here.

Pinehurst held that nothing in the RSL “compel[s] landlords to refrain in 

perpetuity from terminating a tenancy. Instead, the statute sets forth several 

bases on which a landlord may terminate a tenant’s lease, such as for failing to pay 

rent, creating a nuisance, violating the lease, or using the property for illegal 

purposes.” Pinehurst, 59 F.4th at 563 (internal quotation marks and citation 

omitted). While Appellants make the conclusory assertion that a taking has been 

effected because, under the RSL, tenants purportedly can “continue demanding 

renewal leases in perpetuity” even after being served non-renewal notices, G-Max 

Appellant Br. at 51, their argument falls for the same reason given in Pinehurst: 

they “have [not] alleged that they have exhausted all the mechanisms 

contemplated by the RSL that would allow a landlord to evict current tenants.” 

59 F.4th at 564. 

Because Appellants have not demonstrated that they have attempted to use 

all available methods to either exit the rental market or evict tenants, save serving 

a non-renewal notice, Pinehurst demands that the as-applied physical takings 

challenge must fail.
11

II. Regulatory Taking Claims

a. Facial Challenge

Community Housing also controls our analysis of Appellants’ facial 

regulatory taking claims.2 A facial regulatory taking is effected when legislation 

goes “too far” in restricting the use of property. Horne, 576 U.S. at 360 (quoting 

Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922)). In assessing whether a restriction 

is in fact a regulatory taking, we employ a flexible “ad hoc, factual inquir[y],” 

looking to important factors such as (1) “[t]he economic impact of the regulation 

on the claimant,” (2) “the extent to which the regulation has interfered with 

distinct investment-backed expectations,” and (3) “the character of the 

governmental action.” Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 

(1978). 

2 BRI also alleges that the district court erred in dismissing their claims that the 

RSL effects a per se categorical taking. This claim is completely devoid of merit. 

A per se categorical taking occurs when the “property owner . . . suffer[s] a physical 

‘invasion’ of his property” or where “regulation denies all economically beneficial 

or productive use of land.” Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 

1015 (1992). The district court correctly found that Appellants “do not allege facts 

to support that they have been deprived of all economical[ly] viable use of their 

property” and dismissed this claim. BRI, 2021 WL 4198332, at *21. 
12

In finding that a facial regulatory taking challenge to the RSL failed in 

Community Housing, we looked to the Penn Central factors. There, we concluded 

that the plaintiffs had “not plausibly alleged that every owner of a rent-stabilized 

property has suffered an adverse economic impact,” Community Housing, 59 F.4th 

at 554, that they had “failed to establish that the RSL interferes with every property 

owner’s investment-backed expectations,” id., and that the character of the 

government action sought to promote general welfare and public interest through 

a “comprehensive regulatory regime that governs nearly one million units,” id. at 

555. 

Our holding and reasoning in Community Housing apply just as strongly 

here. Appellants have not shown that, for all affected property holders, the 

economic impacts are universally negative and that investment-backed 

expectations were subverted. Thus, Appellants’ facial regulatory taking claims

must fall.

b. As-Applied Challenge

In dismissing Appellants’ as-applied regulatory taking claims, the district 

court concluded that they were “not ripe because the property owners have not 
13

tried to take advantage of available hardship exemptions.” BRI, 2021 WL 

4198332, at *25. Similarly, with regard to Appellants’ assertions that they have 

been unable to convert their buildings to condominiums or cooperatives, the 

district court noted that they had not “tried to obtain the requisite tenant 

agreements for conversions.” Id. We agree with the district court. 

While it is true that “a claim for a violation of the Takings Clause [becomes 

ripe] as soon as a government takes [] property for public use without paying for 

it,” Knick v. Twp. of Scott, 139 S. Ct. 2162, 2170 (2019), a claim may be unripe where 

“avenues still remain for the government to clarify or change its decision, 

including where the plaintiff has an opportunity to seek a variance,” Pinehurst, 59 

F.4th at 565 (internal quotation marks omitted). Here, Appellants have not 

alleged that they have availed themselves of any opportunities to seek a variance 

for their properties. Instead, they argue that seeking a variance is unnecessary 

for their claims to be ripe because “hardship increases are one-offs that do not 

remedy the underlying restrictions,” and “conversions are no longer feasible” with 

the “51% tenant-approval requirement.” G-Max Appellant Br. at 42–43. 

These arguments are substantially similar to those we rejected in Pinehurst,
14

where we held that “[s]peculation of this sort is insufficient” to circumvent the 

requirement that parties pursue available administrative relief. 59 F.4th at 565. 

Appellants’ allegations that the remedies available to them are not feasible amount 

to conclusory speculation. Pinehurst confirmed that the district court was correct 

in finding that, for any as-applied regulatory takings claims to be ripe, Appellants 

must show they availed themselves of the remedies which were available, and we 

follow suit.

While we agree that Appellants’ as-applied challenges are not ripe, we 

briefly address the merits of their claims and apply the Penn Central factors. 

While Appellants alleged specific facts in their complaints tending to show a 

negative economic impact due to the HSPTA, the “mere diminution in the value 

of property, however serious, is insufficient to demonstrate a taking.” Concrete 

Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Tr. for S. Cal., 508 U.S. 602, 645 

(1993). Indeed, in Pinehurst we confirmed that “[w]e have repeatedly rejected the 

notion that loss of profit . . . alone could constitute a taking.” 59 F.4th at 566 

(internal quotation marks omitted). As such, even the HSTPA’s “aggregate 

effect,” G-Max Appellant Br. at 33, on Appellants’ properties do not show that the 
15

economic impact of the regulation weighs in favor of it being deemed a regulatory 

taking.

We can also look to Pinehurst in assessing the investment-backed 

expectations prong of the Penn Central test. Because the RSL has been adjusted 

and changed many times since it was initially enacted in 1969, we stated in 

Pinehurst that any reasonable investor “would have anticipated their rental 

properties would be subject to regulations, and that those regulations in the RSL 

could change yet again.” 59 F.4th at 567. Given the history of the RSL, 

Appellants’ claim that that they could never have “expected this change” is not 

plausible. G-Max Appellant Br. at 36. This factor weighs against Appellants’ 

as-applied regulatory takings claim.

The character of the governmental action at issue also weighs strongly 

against Appellants’ claims. As we discussed in Community Housing, the RSL is 

concerned with “broad public interests” and “the legislature has determined that 

[it] is necessary to prevent ‘serious threats to the public health, safety and general 

welfare.’” 59 F.4th at 555 (quoting N.Y.C. Admin. Code § 26-501). Upon 

balancing the Penn Central factors, both Community Housing and Pinehurst demand 
16

that, even if Appellants’ claims were ripe, their as-applied regulatory taking claims 

fail on the merits.

III. Contract Clause Claim

BRI additionally argues that the HSTPA amendment to the RSL violates the 

Constitution’s Contract Clause because it “interferes with existing contracts and it 

does not advance its alleged purposes.” BRI Appellant Br. at 13. We disagree. 

The Constitution provides that: “No State shall . . . pass any . . . Law 

impairing the Obligation of Contracts.” U.S. Const., art. I, § 10, cl. 1. To state a 

claim for a violation of the Contract Clause, a plaintiff must show that a state law 

has “operated as a substantial impairment of a contractual relationship.” Gen. 

Motors Corp. v. Romein, 503 U.S. 181, 186 (1992) (quoting Allied Structural Steel Co. 

v. Spannaus, 438 U.S. 234, 244 (1978)). Significantly, though, a law “is out of [the 

clause’s] true meaning, if the law is made to operate on future contracts only.” 

Ogden v. Saunders, 25 U.S. 213, 327 (1827). 

In dismissing Appellants’ claims, the district court reasoned that their 

claims were based on “future, rather than existing, contracts.” BRI, 2021 WL 

4198332, at *32. On appeal, BRI contends that this reasoning was faulty in that it 
17

did not reflect the fact that landlords are now required to renew leases at 

permanent preferential rates, which means that the law was affecting an existing, 

not future, contractual relationship. It is true that under New York state law, 

“[w]here the original lease includes an option to renew, the exercise of it by the 

tenant does not create a new lease; rather it is a prolongation of the original 

agreement.” Dime Sav. Bank of N.Y., FSB v. Montague St. Realty Assocs., 90 N.Y.2d 

539, 543 (1997). However, where the original lease does not include a renewal 

option, a “lease extension [is] a new agreement rather than a continuation of the 

old agreement.” Id. BRI has provided no facts for a court to infer that it held 

existing contracts affected by the HSTPA, i.e., whether it (1) held a pre-2019 lease 

(2) with a renewal option that was (3) renewed after 2019 and affected by the 

HSTPA. 

In its complaint, BRI simply contends that one of the Plaintiffs “has been 

forced to offer renewal leases.” BRI App’x at 27. While it is theoretically 

possible that those leases, upon which Appellants do not elaborate in the 

complaint, had renewal clauses in them from the start—and thus could potentially 

implicate the Contract Clause—we cannot find that BRI has stated a claim based 
18

on an assumption from an already conclusory statement when “a complaint [does 

not] suffice if it tenders naked assertion[s] devoid of further factual enhancement.” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (second alteration in original) (internal 

quotation marks omitted). The district court correctly dismissed Appellants’ 

Contract Clause claims.

IV. Due Process Claims

The district court also dismissed Appellants’ claims that the RSL violated 

the Due Process Clause of the Fourteenth Amendment, concluding that Appellants 

were impermissibly dressing their Takings Clause claim up as a substantive due 

process claim, and that, even if considered on the merits, the RSL would withstand 

rational basis review. We agree with the district court.

While Appellants state that the taking is not “the source of the due process 

violation,” G-Max Appellant. Br. at 53, their due process claims are that the 

“landlord owners . . . [are] deprived of their property without due process.” GMax App’x at 91; see also BRI App’x at 42 (claiming that “Plaintiffs are being 

deprived of their property rights”). Appellants allege no factual differences in 

their due process and Takings Clause claims, and, as we held in Community 
19

Housing, “the Due Process Clause cannot ‘do the work of the Takings Clause’ 

because ‘where a particular Amendment provides an explicit textual source of 

constitutional protection against a particular sort of government behavior, that 

Amendment, not the more generalized notion of substantive due process, must be 

the guide for analyzing these claims.’” Community Housing, 59 F.4th at 556 

(quoting Stop the Beach Renourishment, Inc. v. Fla. Dep’t of Envtl. Prot., 560 U.S. 702, 

720–21 (2010)). 

Regardless, even if Appellants could bring a due process claim, it would fail 

on the merits. Appellants allege that the regulations do not achieve the purposes 

for which they were passed: “to preserve affordable housing in New York.” GMax App’x at 26. Appellants’ complaints argue that, paradoxically, the 

regulations will, in the long term, increase the unaffordability of housing in New 

York. See, e.g., BRI App’x at 53–54 (citing to economists’ studies questioning the 

efficacy of rent-stabilization efforts). However, for the regulation to succeed 

under rational basis review, it must simply be “rationally related to legitimate 

government interests.” Washington v. Glucksberg, 521 U.S. 702, 728 (1997). The 

legislature enacted the challenged regulations for the purpose of “permit[ting] 
20

low- and moderate-income people to reside in New York City” and “[i]t is beyond 

dispute that neighborhood continuity and stability are valid bases for enacting a 

law.” Community Housing, 59 F.4th at 557. Appellants’ assertions amount to 

policy and efficacy disagreements with the legislature, and “rational basis review 

is not a mechanism for judges to second guess legislative judgment even when, as 

here, they may conflict in part with the opinions of some experts.” Id. 

Accordingly, Appellants’ due process challenges fail on their merits as well.

V. Sovereign Immunity

Lastly, Appellants challenge the district court finding that it lacked 

jurisdiction to hear the Takings Clause claim against the State of New York 

because the State is protected by Eleventh Amendment state sovereign immunity. 

For the reasons below, we agree with the district court. 

Except where Congress has abrogated a state’s immunity, or where a state 

has waived its immunity, the Eleventh Amendment “render[s] states and their 

agencies immune from suits brought by private parties in federal court.” In re 

Charter Oak Assocs., 361 F.3d 760, 765 (2d Cir. 2004). Appellants argue that it was 

an error for the “district court [to hold that] sovereign immunity bars [their] 
21

federal takings claim against the State of New York.” G-Max Appellant Br. at 58. 

Notably, the district court’s determination is aligned with our conclusion in 

Pinehurst, and we are thus controlled by that decision. There, we held that 

“sovereign immunity trumps the Takings Clause where, as here, the state provides 

its own remedy for an alleged violation.” Pinehurst, 59 F.4th at 570. Therefore, 

we must reject Appellants’ arguments that the State of New York is not protected 

by sovereign immunity against a Takings Clause claim.

* * *

We have considered Appellants’ remaining arguments and find them to be 

without merit. For the reasons set forth above, the judgment of the district court 

is AFFIRMED.

FOR THE COURT: 

Catherine O’Hagan Wolfe, Clerk of Court