Fourth Department Frenzy: Reversionary Zoning, Sewer Agreements, Site Plan Review, and Constitutional Rights
July 19, 2021
In Riedman Acquisitions, LLC v Town Bd. of Town of Mendon, 194 AD3d 1444, 2021 NY Slip Op 02952 [4th Dept 2021], the Appellate Division, Fourth Department, addressed several significant issues concerning land development projects: (i) reversionary zoning, (ii) mandatory and discretionary site plan review, (iii) sewer agreements, and (iv) due process and equal protection rights. Ultimately, the Court ordered the Town of Mendon (“Mendon”) Town Board to consider the developer’s preliminary site plan.
A. Factual Background
Petitioner-Plaintiff Ryan Homes, Inc. (“Ryan Homes”) proposed to develop a patio home community on an 87-acre parcel situated within Mendon (“Project”). Ryan Homes commenced development of the in 2004 when Ryan Homes submitted a series of conceptual sketch plans to the Mendon Planning Board. Due to the Project’s high density, Ryan Homes sought and obtained rezoning of a majority of the parcel from Residential Agricultural-5 Acres (“RA-5”) to Planned Unit Development (“PUD”). The Project would also require a sewer connection.
In 2005, the Mendon Planning Board approved the Project’s preliminary site plan. In September 2006, Mendon and the Town of Pittsford (“Pittsford”) entered into a Sewer Transmission Agreement and Maintenance Contract (“2006 Sewer Agreement”) to connect the Project to the Pittsford’s sewer system. Pursuant to its terms, the 2006 Sewer Agreement would continue in full force and effect for 40 years, and could only be changed, modified or amended by mutual assent.
Five years later, in 2011, the Mendon Planning Board granted final approval for the first phase of the Project – subject to conditions which, if not met by Ryan Homes, would result in the approval’s expiration. After Ryan Homes obtained several extensions of time to suffice these conditions, in April 2015, Ryan Homes announced it would not proceed with the Project due to economic infeasibility. In December 2017, however, Petitioner-Plaintiff Riedman Acquisitions, LLC (“Riedman,” together with Ryan Homes, “Petitioners”) purchased the parcel from Ryan Homes with the intent to revive the Project. Petitioners requested confirmation from the Mendon Town Board and Mendon Planning Board that the parcel remained zoned for PUD, and that revisions would be submitted for approval under former Mendon Town Code (“Code”) Section 200-17(G) (governing requests for changes to sketch plans).
Around the same time, the Mendon Town Board Supervisor unilaterally declared the 2006 Sewer Agreement null and void, and asked Petitioners for a new agreement. Petitioners, the Mendon Town Board and Pittsford attempted to negotiate a new agreement (“2018 Sewer Agreement”). In June 2018, the Mendon Planning Board issued a favorable report on Petitioners’ revised sketch plans – conditioned on approval of the 2018 Sewer Agreement. In July 2018, however, the Mendon Town Board concluded the parcel’s zoning reverted to RA-5 because the PUD zoning had been conditioned on sufficing the conditions of approval, which deadline expired in 2015.
Petitioners objected to the Mendon Town Board’s conclusion regarding reversion, and argued the parcel’s rezoning was unconditional and that Petitioners were never warned about the possibility of reversion. Petitioners also requested the Mendon Town Board approve the 2018 Sewer Agreement. In August 2018, the Mendon Town Board amended the Code to remove PUD zoning and, in January 2019, voted against the 2018 Sewer Agreement. The Mendon Town Board took no further action on the Project’s revised application.
B. Petitioners’ Hybrid Action-Proceeding, and Judgment
Petitioners commenced this hybrid action-proceeding challenging the Mendon Town Board’s failure to consent to the Project’s revised application, removal of PUD zoning from the Code, termination of the 2006 Sewer Agreement, failure to approve the 2018 Sewer Agreement, and determination that the parcel was no longer zoned for PUD. Petitioners also sought damages and attorneys’ fees pursuant to 42 USC 1983 and 1988 for violations of due process and equal protection.
The Supreme Court, Monroe County, granted Petitioners’ petition-complaint in-part, and issued a judgment which, among other things, (i) declared the parcel remained zoned for PUD, (ii) annulled the amendment of the Code to remove PUD zoning, (iii) directed the Mendon Town Board to review Petitioners’ revised application under the Code that existed at the time of submission, (iv) vacated the Mendon Town Board’s rejection of the 2018 Sewer Agreement as arbitrary and capricious, (v) determined the Mendon Town Board improperly terminated the 2006 Sewer Agreement, and (vi) granted Petitioners attorneys’ fees. The Mendon Town Board appealed from judgment, and the Appellate Division modified.
C. The Appellate Division’s Decision
The Appellate Division affirmed the Supreme Court’s determinations holding the parcel remained zoned for PUD, the Mendon Town Board must review Petitioners’ revised application, and that the Mendon Town Board improperly terminated the 2006 Sewer Agreement. The Appellate Division, however, disagreed with the Supreme Court regarding the 2018 Sewer Agreement and the award of attorneys’ fees.
1. The Parcel’s Zoning Did Not Revert
The Appellate Division rejected the Mendon Town Board’s claim that the parcel automatically reverted from PUD to RA-5 when Ryan Homes ceased working on the Project. Zoning regulations must be strictly construed against the municipality, and any ambiguity must be resolved in favor of the property owner. The zoning instruments (e.g. ordinance, zoning map, etc.) must clearly set forth the possibility of a parcel’s automatic reversion to a prior designation. When deciding whether zoning instruments contain the requisite clear language, Courts construe the entire ordinance as a whole, reading all of its parts together to determine the legislative intent and avoid rendering its language superfluous. Even where automatic reversion language is clear, notice and a public hearing are required before the reversion may be confirmed by the legislative body.
Here, the Appellate Division concluded the parcels’ zoning never automatically reverted because the zoning instruments did not contain any express language warning Petitioners that the PUD zoning would automatically revert if certain conditions were not met. Specifically, neither the ordinance rezoning the parcel from RA-5 to PUD nor the local law which effectuated the parcel’s zoning change on the zoning map expressly mentioned the possibility of automatic reversion. Accordingly, Petitioners were not sufficiently placed on notice of the possibility, so the parcel did not automatically revert to RA-5, and remained zoned for PUD.
2. The Mendon Town Board Must Review the Revised Application
The Appellate Division affirmed the Supreme Court’s decision to compel the Mendon Town Board to review Petitioners’ revised application because, under the applicable Code provision, the Mendon Town Board’s action is mandatory, not discretionary, and Petitioners had a clear legal right to the relief sought.
The applicable Code, former Section 200-17(G), provided, “if, in the site plan development, it becomes apparent that certain elements of the sketch plan are unfeasible and in need of significant modification, the applicant shall then present a proposed solution to the Planning Board as the preliminary site plan.” The Code also provided that, after a proposed solution is approved by the Planning Board, it shall so notify the Town Board, at which point the preliminary site plan approval may then be given only with the consent of the Town Board.
The Mendon Town Board argued it was not required to review Petitioners’ revised application because Petitioners did not submit it to the Mendon Town Board in the form of a preliminary site plan, but rather as a sketch plan. Petitioners argued the Mendon Planning Board issuance of a favorable report on their revised sketch plans in June 2018 required the Mendon Town Board to review the revised application.
The Appellate Division held the Code was ambiguous, resolved the ambiguity in favor of Petitioners, and held, under former Section 200-17(G), Petitioners’ revised sketch plans submitted to the Mendon Planning Board effectively served a preliminary site plan. Further, upon the Mendon Planning Board’s issuance of a favorable report, the Mendon Town Board became obligated to review Petitioners’ revised application for approval; Petitioners were not required to submit a whole new preliminary site plan for review. Therefore, the Mendon Town Board had a clear, nondiscretionary obligation to consider the Mendon Planning Board’s favorable report and Petitioners’ revised application.
Notably, former Code Section 200-17(J) set forth procedures for submitted a revised application. The Appellate Division, however, held the Mendon Town Board was estopped from denying that former Code Section 200-17(G) applied because of the Mendon Town Board’s failure to dispel Petitioners’ reasonable belief that the latter section governed consideration of their revised application.
3. The 2006 Sewer Agreement Remains in Full Force and Effect
The Appellate Division affirmed the Supreme Court’s holding that the 2006 Sewer Agreement was not properly terminated. The Appellate Division noted clear, complete writings should be enforced according to their terms, and, where the language of a contract is clear and unambiguous, interpretation of the contract and construction of its provisions are questions of law; Courts must ascertain the intent of parties from the plain meaning of the language employed, and give the terms their plain, ordinary, popular, and nontechnical meanings.
Here, the 2006 Sewer Agreement clearly and unambiguously provided it shall continue in full force and effect for 40 years and shall not be changed, modified or amended without a writing duly made, executed and acknowledged by the parties or their successors-in-interest. Therefore, Mendon could not unilaterally terminate the 2006 Sewer Agreement, it remained in full force and effect, and it allows the Project to be connected to Pittsford’s sewer system.
4. The Mendon Town Board’s Decision Not To Approve the 2018 Sewer Agreement Was Not Arbitrary and Capricious
The Appellate Division modified the Supreme Court’s vacatur of the Mendon Town Board determination not to approve the 2018 Sewer Agreement. Initially, the Appellate Division found the Mendon Town Board’s determination not to approve the 2018 Sewer Agreement was an exercise of its legislative power under N.Y. Town Law Section 64(6) – not an administrative decision (e.g. not subject to an Article 78 challenge); however, its validity was subject to review by virtue of Petitioners’ plenary action for declaratory relief vis-à-vis the determination.
In evaluating the validity of the Mendon Town Board’s determination not to approve the 2018 Sewer Agreement, the Appellate Division analyzed whether the determination was arbitrary and capricious. The Appellate Division held the Mendon Town Board’s determination was not arbitrary and capricious because, in light of its general power to execute and award contracts on behalf of Mendon, the Mendon Town Board could decide that it did not want to purchase sewer services from a neighboring town.
5. No Attorneys’ Fees; Failure to Show Violations of Substantive Due Process or Equal Protection
The Appellate Division also modified the Supreme Court’s decision to award attorneys’ fees pursuant to 42 USC 1983 and 1988 for violation of Petitioners’ rights of substantive due process and equal protection. Attorneys’ fees are recoverable under 42 USC 1983 and 1988 where relief is sought on both State and Federal grounds, even where relief is awarded only on State grounds.
In the land use context, 42 USC 1983 protects against municipal actions that violate a property owner’s right to due process and equal protection. Attorneys’ fees may be awarded if the constitutional claim is substantial and arises out of a common nucleus of operative facts as the State claim. The Appellate Division held Petitioners’ were not entitled to attorneys’ fees because their federal due process and equal protections claims were insubstantial.
i. Petitioners’ Failed to Establish a Substantive Due Process Claim
There is two-part test for substantive due process violations. First, the plaintiff must establish a cognizable property interest (i.e. vested property interest), or more than a mere expectation or hope to obtain approval (i.e. a legitimate claim of entitlement to obtain approval; virtually assured approval). Second, the plaintiff must establish governmental action was wholly without legal justification. Here, the Appellate Division held Petitioners failed to show certainty or a very strong likelihood that their application would have been granted. The Mendon Town Board retained significant discretion in ultimately approving or denying the Project, so Petitioners did not have clear entitlement to approval. The Appellate Division declined to reach the second part of the test.
ii. Petitioners Failed to Establish an Equal Protection Claim
Violation of equal protection also have a two-part test. First, the plaintiff must show selective treatment as compared to others similarly situated. Second, the plaintiff must show such treatment is based on impermissible considerations (e.g. malicious or bad faith intent to injure a person). Here, the Appellate Division held Petitioners failed to establish the parcel and the Project were similarly situated to any other property within Mendon. Accordingly, the Appellate Division found Petitioners’ substantive due process and equal protection claims were insubstantial, and were not entitled to attorneys’ fees.
Riedman navigates the complex nuances of land development projects, and provides noteworthy insights for interpreting and understanding municipal regulations and actions.
 The Appellate Division noted that because the Mendon Town Board did not argue on appeal against the Supreme Court’s nullification of the Mendon Town Board’s recodification of the Code to remove PUD zoning, PUD zoning is currently permitted by the Code. Accordingly, the Appellate Division held the Mendon Town Board’s argument that the Supreme Court erred in determining Petitioners revised application should be reviewed under the Code existing prior to recodification was rendered academic.
 The Supreme Court issued a supplemental judgment awarding Petitioners $41,090.00 in attorneys’ fees. The Mendon Town Board appealed form both judgments.
 The Appellate Division noted the Supreme Court’s judgment did not declare the rights of the parties with respect to the 2006 Sewer Agreement, so the Appellate Division modified the Supreme Court’s judgment by declaring the 2006 Sewer Agreement was not properly voided and remains in full force and effect.
 The Appellate Division noted that, ordinarily, the failure of a legislative body to exercise its powers is not subject to the review in the courts.
 The Appellate Division modified appeal from the judgment and reversed the supplemental judgment.