Court Opinion

ID: 3188488
Source: CourtListenerOpinion
Date Created: 2016-03-24 13:06:06.269978+00
Date Added: 2024-06-11T11:25:27.364119
License: Public Domain

This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 39
In the Matter of Perlbinder
Holdings, LLC,
             Appellant-Respondent,
        v.
Meenakshi Srinivasan, &c., et
al.,
           Respondents-Appellants.

          Howard Grun, for appellant-respondent.
          Jane L. Gordon, for respondents-appellants.

PIGOTT, J.:
          At issue in this appeal is whether petitioner
Perlbinder Holdings LLC, by virtue of its reliance on an
erroneously issued permit for a large outdoor advertising sign
that was later revoked by the New York City Department of
Buildings (DOB), acquired a vested right to maintain the sign on

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its property.   We hold that it did not.      We further conclude that
the proper procedure to resolve the issue of its asserted
good-faith reliance on the erroneously issued permit is an
application for a zoning variance.       Therefore, we modify the
order of the Appellate Division and dismiss the petition.
                                  I.
            Petitioner is the owner of property located at 663-669
Second Avenue in Manhattan.   For many years, petitioner
maintained a large illuminated advertising sign on the side of
its building at that location.    The DOB had issued a permit for
that sign in 1980.   Thereafter, the New York City zoning
regulations were amended in such a way that no longer permitted
the advertising sign.   The original sign was, however,
"grandfathered" in as a legal, non-conforming use.
            In May 2002, petitioner sought, and the New York City
Board of Standards and Appeals (BSA) granted, a zoning variance
for the construction of a new 34-story mixed-use building on the
property.   The BSA also approved petitioner's request to relocate
the original sign, with slightly modified dimensions, as part of
petitioner's plans to construct the mixed-used building on the
property.   To date, petitioner neither built the mixed-use
building nor constructed the advertising sign approved under the
2002 zoning variance.
            In 2008, the DOB issued petitioner a violation for its
failure to maintain the then-vacant building on which the

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original sign was affixed.   After a July 2008 emergency
declaration, the building was demolished, and, with it, the sign.
           Petitioner then filed two applications with the DOB to
erect a new support structure and a new sign.   The DOB granted
the support structure application, but objected to the proposed
sign on the bases that the new sign was different than the
original sign because it was a double-sided sign; it was not
located in the same position as the original sign; and the
replacement sign was 25 feet lower than the original.   The DOB
noted that, in order to be "grandfathered" in as a legal non-
conforming use the new sign must be single-sided and in the same
location as the original sign.
           Petitioner sought reconsideration of its application.
The then-Manhattan Borough Building Commissioner overruled DOB's
objections and approved the new sign permit, stating: "OK to
accept prior sign as grandfathering of existing non-conforming
sign.   OK to accept lower sign as no increase in degree of
noncompliance."   Shortly thereafter, DOB issued a permit for the
installation of petitioner's new sign on the support structure.
           In the spring of 2010, after petitioner had installed
the structure and new sign, the DOB audited its earlier permit
approvals.   In the course of that audit, the DOB determined that
petitioner's sign had not been lawfully approved.   Accordingly,
it revoked the permits for both the support structure and the
sign, determining that its prior approval was improperly granted.

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           Petitioner appealed the DOB's determination to the BSA.
Following a public hearing, the BSA affirmed the determination of
the DOB, agreeing that the sign violated the Zoning Resolution.
It further concluded that any right to continued use of the
advertising sign as a non-conforming use had been lost since that
use had been discontinued for more than two years when the
original sign was demolished along with the building in July
2008.   The BSA noted that petitioner's good-faith reliance on the
DOB's approvals did not estop the agency from enforcing its
ordinances.
                                II.
           Petitioner then commenced this CPLR article 78
proceeding to, among other things, annul the BSA's resolution and
reinstate the permits revoked by the DOB, thereby restoring
petitioner's right to maintain the new sign on its property.
Petitioner argued that it had relied in good faith on the
Commissioner's approval and the subsequently-issued permits in
expending substantial funds to install the new sign.
           Supreme Court denied the petition and dismissed the
proceeding.   The court found the BSA's determination upholding
the revocations rational and not arbitrary or capricious.    The
court also rejected petitioner's argument that the DOB or the BSA
should have considered its good-faith reliance on the permits
issued by the DOB, concluding that estoppel is not available
against an agency even when correction of its prior erroneous

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determination leads to harsh results.
          The Appellate Division reversed Supreme Court's
judgment and "remanded to BSA for further proceedings consistent"
with the court's decision (114 AD3d 494 [1st Dept 2013]).1   The
Appellate Division noted that the BSA's conclusion that "it could
not consider the issue of [petitioner's] good faith under its
appellate jurisdiction . . . was incorrect" (id.).   Thus, the
court determined that remand to the BSA was required so that it
could determine, "in its appellate capacity . . . whether
[petitioner] is entitled to a variance applying the factors set
forth in City Charter section 666 (7)" (id.).   The court further
determined that, "[b]ecause the record was not fully developed as
to these criteria . . . the BSA shall permit the parties to make
further submissions" (id.).   Moreover, the Appellate Division
determined that the record established "as a matter of law" that
petitioner relied in good-faith upon the 2008 determination by
the Manhattan Borough Building Commissioner to grant its permit
applications (id. at 494-495).    Thus, the court concluded that in
deciding whether to grant a variance on remand, the BSA must
consider, along with the section 666 (7) factors, petitioner's
"good-faith reliance" (id. at 495, citing Matter of Pantelidis,

     1
        The Appellate Division had issued a prior order granting
the petition and directing the DOB to reinstate the permits and
vacate the fines that had been imposed in connection with the
sign (110 AD3d 611 [1st Dept 2013]). However, upon reargument,
the Appellate Division recalled and vacated that order and
substituted in its place the order now before us.

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43 AD3d at 314).   Lastly, the court rejected petitioner's
argument that no variance was required, reasoning that the new
sign is in a different location and position than the original.
          This Court granted both petitioner and the City leave
to appeal.
                               III.
          The zoning resolution did not permit display of
advertising signs in the zoning district at issue and the new
sign did not qualify as a grandfathered replacement.   Thus, the
determination that the 2008 permit was invalid and the BSA's
action in revoking the invalid permit were rational (see Matter
of Parkview Assoc. v City of New York, 71 NY2d 274, 282 [1988]).
          However, petitioner maintains that it is entitled to
maintain the sign because it acquired a common-law vested right
to do so based on the fact that it had spent substantial funds to
erect the new sign and did so in good-faith reliance on the 2008
permit.
          We recently held that "[a]n owner of real property can
acquire a common law vested right to develop property in
accordance with prior zoning regulations when, in reliance on a
'legally issued permit,' the landowner 'effect[s] substantial
changes and incur[s] substantial expenses to further the
development' and '[t]he landowner's actions relying on [the]
valid permit [are] so substantial that the municipal action
results in serious loss rendering the improvements essentially

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valueless'" (Matter of Exeter Building Corp. v Town of Newburg, -
- NY3d --, 2016 NY Slip Op 00999 [decided February 11, 2016]
[emphasis added] [citations omitted]).
           Vested rights cannot be acquired, however, where there
is reliance on an invalid permit (see Matter of Natchev v Klein,
41 NY2d 833 [1977]; see also Matter of Perrotta v City of New
York, 107 AD2d 320, 325, affd for reasons stated, 66 NY2d 859
[1985]).   When a permit is wrongfully issued in the first
instance, the vested rights doctrine does not prevent the
municipality from revoking the permit to correct its error.
Because the 2008 permit was unlawfully issued, petitioner could
not rely on it to acquire vested rights.
                                 IV.
            For its part, the City argues that the Appellate
Division erred in remanding the case for a variance determination
and in ruling "as a matter of law," that petitioner has acted in
good-faith.    It contends that the determination of good-faith in
seeking relief from a Zoning Resolution should be decided by the
DOB or the BSA in the event petitioner submits a variance
application.   We agree.
           Petitioner admits that it never sought a variance and
is not seeking one now.    It was the Appellate Division, sua
sponte, that decided petitioner's appeal was "in essence, a
request for a variance" under New York City Charter § 666 (7) and
based its remand on that Charter provision.

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           Charter § 666 (7) provides the BSA with the general
authority to vary or modify a rule or regulation relating to a
wide range of areas, including the construction of buildings or
structures.   Similarly, section § 666 (6) (a) separately
authorizes the BSA to broadly hear and decide interpretative
"appeals" from decisions of the DOB.
           Subdivision 5 of § 666, on the other hand, pertains to
zoning variances and provides that BSA "shall have [the] power .
. . [t]o determine and vary the application of the zoning
resolution as may be provided in such resolution and pursuant to
section [668]."   Section 668 sets forth specific mandatory
procedures by which the BSA "shall review applications to vary
the zoning resolution and applications for special permits."
Among other things, section 668 requires the filing of an
application, notification to the public, a public hearing (or
waiver thereof), determination whether an environmental impact
statement is required, and a hearing by BSA.   Thus, the language
of section 666 (5) of the Charter is specifically limited to
applications for a variance of a Zoning Regulation.
           Under principles of statutory construction, whenever
there is a general and a specific provision in the same statute,
the general applies only where the particular enactment is
inapplicable (see McKinney's Cons Laws of NY, Book 1, Statutes,
§ 238).   Thus, the interpretative appeal process necessarily
applies in instances other than a zoning variance and does not

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extend to matters requiring a variance, for which different
standards and different procedures are set forth.        The Appellate
Division therefore erred in remanding the matter for a
determination of a variance application pursuant to Charter § 666
(7).
                                  V.
            Finally, a determination as to petitioner's good-faith
reliance should not be resolved by the Court, but rather by the
administrative agency, should petitioner seek a variance (see
generally Jayne Estates, Inc. v Raynor, 22 NY2d 417 [1968]).
            Accordingly, the order of the Appellate Division should
be modified, with costs to the City of New York respondents, by
dismissing the petition in its entirety and, as so modified,
affirmed.
*   *   *    *   *   *   *   *    *      *   *   *   *   *   *   *    *
Order modified, with costs to the City of New York respondents,
by dismissing the petition in its entirety and, as so modified,
affirmed. Opinion by Judge Pigott. Chief Judge DiFiore and
Judges Rivera, Abdus-Salaam, Stein, Fahey and Garcia concur.

Decided March 24, 2016

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