Goldstein v. New York State Urban Development Corp.
13 N.Y.3d 511, 2009 NY Slip Op 8677, 921 N.E.2d 164 (2009)
Rule of Law:
The state's power of eminent domain may be exercised for a 'public use,' which includes the clearance and redevelopment of areas found to be 'substandard and insanitary' (blighted), even if the blight is less severe than traditional slums, provided the agency's finding is not irrational or baseless. Additionally, the 30-day time limit for challenging condemnation determinations under EDPL 207(A) is a statute of limitations, not a condition precedent, and can be tolled by CPLR 205(a) when a timely action is dismissed on grounds other than the merits or specific procedural defects.
Facts:
- Empire State Development Corporation (ESDC) planned a 22-acre mixed-use development called Atlantic Yards in downtown Brooklyn, proposed by private developer Bruce Ratner and Forest City Ratner Companies (FCRC).
- The Atlantic Yards project was designed to include a sports arena for the NBA Nets, various infrastructure improvements, a platform spanning rail yards, and 16 high-rise buildings for commercial and residential use.
- More than a third of the project's residential units were slated to be affordable for low and/or middle-income families.
- More than half of the project footprint was located within the Atlantic Terminal Urban Renewal Area (ATURA), which had been designated as blighted since 1968.
- The remaining portion of the project footprint, encompassing two blocks and part of a third where petitioners owned properties, had not been previously designated as blighted.
- ESDC, relying on studies conducted by an FCRC-retained consulting firm, made findings that the blocks containing petitioners' properties possessed sufficient indicia of actual or impending blight to warrant condemnation.
- The project received approximately $100 million in state financing and was expected to be a recipient of additional state aid earmarked for affordable housing.
Procedural Posture:
- On December 8, 2006, Respondent Empire State Development Corporation (ESDC) issued a determination pursuant to Eminent Domain Procedure Law (EDPL) § 204, finding it should use eminent domain to acquire properties for the Atlantic Yards project.
- Petitioners filed a timely federal lawsuit challenging the condemnation, asserting both Fifth Amendment violations (federal public use) and a pendant state law claim seeking review of the ESDC determination under EDPL 207.
- The Federal District Court for the Eastern District of New York (ED NY) rejected the federal claims and declined to exercise supplemental jurisdiction over the pendant state claim, dismissing it without prejudice (Goldstein v Pataki, 488 F Supp 2d 254 [ED NY 2007]).
- The Second Circuit Court of Appeals affirmed the District Court's judgment (516 F3d 50 [2008], cert denied 554 US —, 128 S Ct 2964 [2008]).
- Within six months of the federal dismissal, petitioners commenced the present proceeding in the New York Supreme Court, Appellate Division, Second Department, pursuant to EDPL 207.
- In this state proceeding, petitioners alleged that the proposed taking was not for a 'public use' under Article I, § 7(a) of the New York State Constitution and EDPL 207(C)(1), and that the condemnation was not in conformity with Article XVIII, § 6 (requiring low-income occupancy for state-subsidized projects).
- Respondent ESDC moved for dismissal, arguing the petition was not timely filed within 30 days after the publication of its determination.
- The Appellate Division rejected ESDC's timeliness argument but found for ESDC on the merits, holding that 'public use' only required a dominant public purpose (which blight eradication satisfied) and that Article XVIII, § 6 did not apply to projects rehabilitating substandard land through improvement (64 AD3d 168 [2d Dept 2009]).
- Petitioners appealed to the New York Court of Appeals as of right on constitutional grounds (CPLR 5601 [b] [1]).
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Issue:
1. Does the New York State Constitution permit the use of eminent domain for a land use improvement project where the condemnation relies on a finding of 'blight' that is less severe than traditional slum conditions, and where the project receives state funding but does not exclusively provide low-income housing? 2. Does CPLR 205(a) toll the 30-day time limit under EDPL 207(A) for filing challenges to condemnation determinations, allowing a refiling in state court after dismissal of a related federal claim?
Opinions:
Majority - Chief Judge Lippman
Yes, the New York State Constitution permits the exercise of eminent domain for the Atlantic Yards project, as the ESDC's blight findings were reasonable, and the project's housing component does not violate Article XVIII, § 6's low-income restriction. Additionally, CPLR 205(a) properly tolled the 30-day filing period for the state law challenge. First, regarding the procedural issue, the 30-day filing period prescribed in EDPL 207(A) is a statute of limitations, not a condition precedent to suit, and is therefore subject to the tolling provision of CPLR 205(a). CPLR 205(a) allows a litigant to refile an action within six months if it was timely commenced but dismissed on grounds other than voluntary discontinuance, lack of personal jurisdiction, neglect to prosecute, or final judgment on the merits. The federal court's dismissal of petitioners' state law claim without prejudice explicitly contemplated refiling in state court, and this dismissal did not fall under any of the exceptions precluding CPLR 205(a) application. The EDPL, a procedural codification, does not displace CPLR 205(a), which embodies a vital policy preference for determination of actions on the merits and has a broad, liberal purpose of remedying harsh limitations periods. While the EDPL aims for expeditious resolution, this policy does not override CPLR 205(a), nor does it negate the availability of federal forums or the similar federal tolling provision (28 USC § 1367[d]). Second, on the merits, the determination authorizing condemnation is constitutional. The removal of urban blight is a proper and constitutionally sanctioned 'public use' under Article I, § 7(a) and Article XVIII, §§ 1 and 2 of the State Constitution, as established since Matter of New York City Hous. Auth. v Muller (1936). The definition of 'substandard and insanitary' or blight has evolved beyond the dire slum conditions of the Great Depression era to include economic underdevelopment and stagnation (Kaskel v Impellitteri, 1953; Yonkers Community Dev. Agency v Morris, 1975). The judiciary’s role in assessing blight findings is limited; courts will only intervene if the legislative or administrative body's finding is 'corruptly or irrationally or baselessly' made, or if there is 'no room for reasonable difference of opinion.' Here, ESDC's blight findings were extensively documented and, while open to differing opinions, do not meet the high bar for judicial intrusion. The task of reweighing public against private interests and reassessing the definition of blight is properly a legislative, not a judicial, function. Third, the proposed project conforms with Article XVIII, § 6 of the State Constitution. This provision, which restricts occupancy of state-aided housing projects to persons of low income, was crafted during the 1938 Constitutional Convention to assure replacement low-rent housing for those directly displaced by substantial slum clearance. The Atlantic Yards project, which addresses relatively mild urban blight and involves minimal direct displacement (146 persons within the project footprint), does not trigger this low-income occupancy restriction. Applying the restriction to projects without substantial slum clearance would 'arbitrarily tether land use improvement to the creation of low rent housing' and encumber the article's 'separate grants of power' in a manner unintended by the framers.
Concurring - Justice Read
No, the petition challenging the condemnation was jurisdictionally deficient and should be dismissed because the 30-day time limit in EDPL § 207 (A) is a condition precedent for judicial review, not a statute of limitations, and thus CPLR 205 (a) cannot toll it. Justice Read argued that EDPL § 207 establishes a comprehensive and exclusive regime for expedited judicial review of condemnation determinations. This regime places a premium on speed, mandating initiation in the Appellate Division, limiting the scope of review, and imposing a strict 30-day filing deadline. Sections 208, 703, and 705 of the EDPL further emphasize that the EDPL's specific procedures control over the CPLR, including any inconsistent provisions. The legislative history of the EDPL unequivocally demonstrates an intent to prevent prolonged litigation that could delay public projects, leading to the enactment of the 30-day limit as a condition precedent for review. Such a time limit, which is an 'ingredient of the cause' and an 'inherent part of the statute' creating the right, is not susceptible to tolling by CPLR 205(a), as held in Romano v Romano and Yonkers Contr. Co. v Port Auth. Trans-Hudson Corp. Therefore, the petitioners' lawsuit, filed more than 18 months after ESDC's determination, was jurisdictionally deficient. Furthermore, even if CPLR 205(a) applied, it would not benefit petitioners. Their EDPL 207(C)(1) claim in federal court, which asserted a violation of the federal Takings Clause, was substantively identical to their 42 USC § 1983 claim, which the federal District Court dismissed on the merits. Although the EDPL claim was dismissed 'without prejudice,' the effective resolution on the merits would preclude the application of CPLR 205(a), which is designed for technical, curable defects, not substantive dismissals. Petitioners also failed to comply with federal tolling provisions (28 USC § 1367[d]) by waiting too long (13 months from District Court dismissal) to refile, regardless of CPLR 205(a)'s potential applicability.
Dissenting - Justice Smith
No, the determination authorizing the condemnation is unconstitutional because the record does not support a bona fide finding of 'blight' severe enough to justify the taking under the New York State Constitution's public use restriction, and the majority is overly deferential to the ESDC's determination. Justice Smith argued that the 'public use' restriction in Article I, § 7(a) of the New York State Constitution has independent vitality and offers greater protection to property owners than its federal counterpart, which was effectively 'eviscerated' by cases like Berman v Parker and Kelo v New London. While a 'blight exception' allows transfers to private developers, it should be strictly limited to conditions posing a danger to public health and safety, consistent with centuries of New York jurisprudence. Nineteenth-century cases severely limited eminent domain for private transfers, and twentieth-century cases like Muller justified expanded 'public use' only for the most severe 'slum clearance' due to dire health and economic evils. The ESDC's blight study in this case was a pretext. The area where petitioners live appears to be a 'normal and pleasant residential community,' and the conditions cited do not approach the 'dire circumstances of urban slum dwelling' that historically justified blight takings. Deference to the agency's findings on a constitutional right is inappropriate; courts must perform their judicial role by independently determining whether the public use requirement is satisfied. Allowing the agency to decide the facts upon which constitutional rights depend renders those protections 'impotent.' The purpose of the public use limitation is to prevent takings, even if a state agency deems them desirable, and the agency should not be a judge in its own cause.
Analysis:
This case reinforces the New York Court of Appeals' highly deferential approach to state agency determinations of 'blight' in eminent domain cases, effectively aligning state law more closely with the broader federal interpretation of 'public use' in urban redevelopment. It significantly narrows the application of Article XVIII, § 6, limiting the constitutional mandate for low-income housing to projects directly tied to substantial slum clearance and significant displacement of low-income populations. The decision also clarifies that CPLR 205(a) can toll specific EDPL time limits, underscoring a policy preference for adjudicating claims on their merits over strict procedural bars when timely notice was initially provided. Overall, the ruling provides substantial latitude for state public corporations to partner with private developers on large-scale urban development, even where 'blight' conditions are not severe slums, while offering a procedural safety net for litigants whose initial challenges are dismissed on non-substantive grounds.
