Landmark West! v. City of New York

9 Misc. 3d 563, 2005 NY Slip Op 25362, 802 N.Y.S.2d 340, 2005 N.Y. Misc. LEXIS 1853
CourtNew York Supreme Court
DecidedSeptember 1, 2005
StatusPublished
Cited by9 cases

This text of 9 Misc. 3d 563 (Landmark West! v. City of New York) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Landmark West! v. City of New York, 9 Misc. 3d 563, 2005 NY Slip Op 25362, 802 N.Y.S.2d 340, 2005 N.Y. Misc. LEXIS 1853 (N.Y. Super. Ct. 2005).

Opinion

OPINION OF THE COURT

Michael D. Stallman, J.

This action is the fourth of five lawsuits1 commenced by [565]*565plaintiff Landmark West! concerning the vacant structure at 2 Columbus Circle, formerly Huntington Hartford’s Gallery of Modern Art.

Plaintiff Landmark West! and others claim inter alla that the City of New York, acting with defendant New York City Economic Development Corporation, violated the State Constitution, the City Charter and the public trust doctrine. Defendants seek dismissal.2

Background

Edward Durell Stone designed 2 Columbus Circle in 1964 as the home of Huntington Hartford’s Gallery of Contemporary Art.3 From 1969 to 1975, Farleigh Dickinson University used the building for its New York Cultural Center. In 1976, Gulf & Western Industries, Inc. purchased it, taking title in the name of Gulf & Western Foundation (G & W).

In 1980, G & W donated the building to the City of New York, its successors, and assigns, by a deed dated March 18, 1980 and a deed of correction dated July 22, 1980. The deeds require the City to use the building as its principal public facility for visitors’ services and cultural affairs for 30 years. If the building were to be used for another purpose, the City would lose title; ownership would automatically revert to G & W (or its successors and assigns).

From 1981 until 1998, the building served as headquarters to the New York City Department of Cultural Affairs and the New York City Convention and Visitors Bureau. In July 1996, defendant New York City Economic Development Corporation (EDC)4 purchased the reverter interest from G & W’s successor. The building has been vacant since 1998.

[566]*566In March 2000, EDC issued a request for proposals for the sale and redevelopment of 2 Columbus Circle. In 2002, EDC conditionally designated the Museum of Arts and Design, a not-for-profit corporation, to renovate and redevelop the building as a museum open to the public. Formerly the American Craft Museum, the Museum specializes in modern and contemporary sculpture, functional objects and new art forms. The Museum’s plan involves the City’s sale of the building to the EDC, which would then sell it to the Museum. Under the terms of the proposed sale, the Museum’s purchase price is $17.05 million, to be paid as $2 million cash and $15.05 million payable pursuant to a note, $4 million of which would not bear interest. If the building is renovated and opened to the public within 24 months from the start of construction, the principal will be reduced by $2 million as of the closing. EDO’s Board of Directors approved the sale to the Museum on August 3, 2004.

Under the City Charter, the proposed sale required approval of the Manhattan Borough Board, because the building was not being sold through competitive bidding. The Manhattan Borough Board approved the sale on August 24, 2004.

The Museum’s intention to replace the building’s exterior and renovate its interior sparked a series of lawsuits by plaintiff Landmark West! and its supporters, who seek to have 2 Columbus Circle designated a landmark.

The aesthetic worth of 2 Columbus Circle and that of the Museum’s planned renovation are not before this court. Neither are the related issues of whether the present structure is worthy of landmark designation or whether the Landmarks Preservation Commission should hold a public hearing.5

On April 7, 2005, plaintiffs commenced this taxpayer suit under General Municipal Law § 51 against the City and EDC,6 asserting three causes of action. Plaintiffs challenge the [567]*567proposed sale as violative of the Gift and Loan Clause of the State Constitution, New York City Charter §§ 283 and 284, and the public trust doctrine. The City and EDC moved to dismiss the complaint.7

I

Defendants initially contend that res judicata bars this action. The doctrine of res judicata (claim preclusion) bars a party from asserting claims that it raised or could have raised in any prior action against the same parties, or parties in privity, based on the same transaction. (See O’Brien v City of Syracuse, 54 NY2d 353, 357 [1981].) Defendants allege res judicata based on the action against the Manhattan Borough Board, but neither the City, the EDC, nor the other plaintiffs here were parties to that case. Moreover, res judicata does not apply to plaintiffs’ taxpayer action under General Municipal Law § 51. (Murphy v Erie County, 28 NY2d 80, 86 [1971].) In Murphy, the Court of Appeals weighed the strong, traditional, policy reasons for applying res judicata against the purpose of a taxpayer action: to “provid[e] a check on abuse of official power.” (Ibid. at 85-86.) As to taxpayer actions, as a policy matter, the Court held, “res judicata applies only as to the matters actually litigated in the prior suit.” (Ibid, at 86.) The merits of a taxpayer action were not actually litigated in the action against the Manhattan Borough Board; the Court addressed only whether the plaintiffs in that action were, in fact, bringing a taxpayer action, as distinct from a challenge under the Open Meetings Law (Public Officers Law § 107). The specific allegations of waste and corruption that plaintiffs allege here were not made in the action against the Manhattan Borough Board. Res judicata does not bar this action.8

[568]*568II

In their first cause of action, plaintiffs claim that the proposed sale violates the Gift and Loan Clause of the State Constitution (NY Const, art VIII, § 1). Plaintiffs allege that the terms of the sale from EDC to the Museum are a “sweetheart deal,” because the Museum will pay $4 million of the purchase price over five years without interest, and the remaining balance will have a maximum interest rate of 6.16%. Plaintiffs also allege that the Museum will receive $2 million under the City’s 2005 capital budget, $75,000 under the City’s expense budget, and another $1 million under the City’s 2006 budget.

Defendants assert that expenditures and grants to a private entity do not violate the Gift and Loan Clause if they further a public purpose. Defendants contend that giving public funds to a private not-for-profit institution for the purpose of maintaining a public museum is also consistent with the General City Law. Defendants maintain that the provisions in the City’s 2005 capital and expense budgets are not part of the proposed sale of the building. They indicate that the capital budget funds were allocated by City Council member Gail Brewer, not the Mayor. Defendants argue that any constitutional challenge to the proposed sale is time-barred. The City maintains that the proposed sale does not violate the Gift and Loan Clause because the building’s purchase price is roughly equal to, or greater than, its appraised value, and because the EDC intends to restrict the Museum’s use of the building to a museum for a period of 15 years.9

The Gift and Loan Clause of the State Constitution provides, in relevant part:

“No . . . city . . . shall give or loan any money or property to or in aid of any individual, or private corporation or association . . . ; nor shall any . . . city . . .

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Bluebook (online)
9 Misc. 3d 563, 2005 NY Slip Op 25362, 802 N.Y.S.2d 340, 2005 N.Y. Misc. LEXIS 1853, Counsel Stack Legal Research, https://law.counselstack.com/opinion/landmark-west-v-city-of-new-york-nysupct-2005.