Toys" R" US v. Silva
89 N.Y.2d 411, 654 N.Y.S.2d 100, 676 N.E.2d 862 (1996)
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Rule of Law:
Under New York City Zoning Resolution § 52-61, a legal nonconforming use is terminated if the 'active operation of substantially all the non-conforming uses' is discontinued for a continuous two-year period. This 'substantial discontinuation' standard does not require complete cessation of all activity, and the property owner's intent to resume the use is irrelevant.
Facts:
- Morgan Manhattan Storage and Warehouse Company (Morgan) owned a 16-story building in Manhattan that it used as a storage and warehouse facility.
- A 1961 zoning change made the warehouse a legal nonconforming use, as a portion of the property was now in a residential zone where warehouses were no longer permitted.
- In August 1989, Morgan contracted to sell the building, at which time it emptied the property and ceased all warehouse operations.
- The sale fell through, and 20 months later in April 1991, Morgan transferred a very limited amount of goods from its other warehouses into the building in an attempt to resume the nonconforming use.
- From April 1991 to July 1991 (the end of the two-year period), the warehouse activity was minimal, occupying approximately one-tenth of one percent of the building's volume with only eight customer accounts compared to the previous 1,500.
- In 1992, Chase Manhattan Bank acquired the property from Morgan, and in 1994, Toys 'R' Us purchased the lower floors with the intent to operate a retail store, which would also be a nonconforming use in the residentially zoned portion.
Procedural Posture:
- Toys 'R' Us received a building permit from the New York City Department of Buildings (DOB) to convert a portion of the premises into a retail store.
- Neighbors-R-Us, a community group, filed an administrative appeal with the Board of Standards and Appeals (BSA) seeking to revoke the permit.
- After public hearings, the BSA found the prior nonconforming use had been discontinued and revoked the building permit.
- Toys 'R' Us commenced an Article 78 proceeding in the New York Supreme Court (the state's trial court) to annul the BSA's determination.
- The Supreme Court granted the petition and reinstated the permit, holding that any minimal activity, absent bad faith, was sufficient to continue the nonconforming use.
- The BSA and Neighbors-R-Us appealed to the Appellate Division (an intermediate appellate court), which affirmed the trial court's decision, with one justice dissenting.
- The Appellate Division granted the BSA and Neighbors-R-Us leave to appeal to the Court of Appeals, New York's highest court.
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Issue:
Does a property owner's resumption of minimal, token activity after a prolonged period of non-use prevent the termination of a legal nonconforming use under a zoning ordinance that requires the 'discontinuance' of 'substantially all' active operations for two years?
Opinions:
Majority - Chief Judge Kaye
No. A property owner's resumption of minimal, token activity is insufficient to prevent the termination of a nonconforming use under an ordinance requiring the discontinuance of 'substantially all' active operations. The plain language of NYC Zoning Resolution § 52-61—specifically the phrases 'active operation' and 'substantially all'—imposes a standard of substantial discontinuation, not complete cessation. Allowing the slightest nonconforming function to preserve the use would ignore the text of the ordinance and the public policy of gradually eliminating nonconforming uses. Furthermore, the ordinance explicitly states that the owner's 'intent to resume active operations shall not affect' the determination, thereby removing any consideration of the owner's good faith from the analysis. The court deferred to the Board of Standards and Appeals' factual findings that Morgan's warehouse activity was insignificant and concluded this constituted substantial discontinuation.
Analysis:
This decision clarifies the standard for abandonment of nonconforming uses under zoning ordinances that contain specific lapse periods and qualifying language like 'substantially all.' It establishes that courts must give effect to such language, distinguishing these cases from those under ordinances that require 'complete cessation.' The ruling empowers zoning boards to terminate nonconforming uses even when a property owner engages in token activities to preserve the use, reinforcing the strong public policy of eventually eliminating such uses. This holding shifts the focus from the owner's subjective intent to an objective assessment of the actual level of nonconforming activity.
