The owner of a vacant six-story commercial warehouse at 160 Imlay St. in Red Hook can go forward with plans for residential development, after the appellate court dismissed challenges to a zoning variance granted by the city.

The Red Hook/Gowanus Chamber of Commerce recently lost the chance to block the zoning use variance. The Appellate Division, Second Department dismissed its case because the Chamber failed to join a necessary party: the property owner.

The Zoning Variance

The property owner, 160 Imlay Real Estate, LLC, claimed that they had tried but failed to market the building for permissible use to dozens of potential buyers or tenants, before seeking a variance for residential use in September 2002.

The owners also submitted a “dollars and cents� analysis showing a return on equity of 1.56 percent for permissible use, and 11.41 percent return on equity for a nonconforming residential use.

On Dec. 23, 2003, the New York City Board of Standards and Appeals (BSA) granted Imlay’s application for a use variance. Thirty days later, the Red Hook/Gowanus Chamber of Commerce filed a CPLR article 78 proceeding to annul the determination. This coalition group named the city and the BSA as respondents, but not Imlay.

The respondents moved to dismiss the petition for failing to join Imlay, a necessary party, and the coalition group moved to amend their petition.

The amended petition added Imlay as a responded and instead of seeking to vacate the variance, sought additional hearings before the BSA on whether its determination was made according to New York City Zoning Resolution § 72-21.

On an earlier appeal, the Appellate Division, Second Department found that the coalition had not explained its failure to name Imlay in the first place, and could not proceed under CPLR 1001(b). The Court of Appeals reversed, however, finding that remittal to the Supreme Court was necessary to consider whether the proceeding could continue in Imlay’s absence.

Back in the trial court, Justice Yvonne Lewis granted Imlay’s motion to dismiss the case against it as time-barred, since it had not been joined until after the 30-day statute of limitations had expired. The court then found that the case could continue against the other respondents, granting Imlay the right to intervene.

The city and BSA appealed again, and a majority of the Appellate Division, Second Department, dismissed the case. Both the trial and appellate courts considered the five factors listed in CPLR 1001(b), regarding the joinder of a necessary party.

Joinder of a Necessary Party

“A court may excuse the failure to join a necessary party and allow an action to proceed in the interest of justice upon consideration of five factors enumerated in CPLR 1001(b): (1) whether the petitioner has another remedy if the action is dismissed for nonjoinder, (2) the prejudice that may accrue from nonjoinder to the respondent or to the nonjoined party, (3) whether and by whom prejudice might have been avoided or may in the future be avoided, (4) the feasibility of a protective provision, and (5) whether an effective judgment may be rendered in the absence of the nonjoined party,� the appellate court wrote.

The appellate court acknowledged that the coalition would have no effective way to challenge the use variance if the proceeding were dismissed for failure to join Imlay; however, it found that the remaining factors weighed in favor of dismissing the case.

“Imlay will suffer great prejudice if the variance is vacated,� the appellate majority wrote. Although the other respondents also wanted to dismiss the case, the city’s interests in regulatory and administrative issues were significantly different from the real estate developer’s potential multi-million dollar loss. Even though Imlay could avoid prejudice by intervening in the action, the appellate court noted, this was outweighed by the coalition’s failure to provide a reasonable excuse for failing to join Imlay as a respondent, in the first place. Vacating the variance directly affects Imlay’s economic interests, the court said, concluding that “it is questionable whether an effective judgment may be rendered without Imlay’s participation in the proceeding.�

Citing several case precedents, the appellate court found that the trial court erred in denying the respondents’ motion to dismiss the case and also in remitting the matter to BSA for a more extensive analysis.

“A court may overturn a zoning board’s determination only if it was irrational, arbitrary, or capricious,� the appellate panel wrote. The panel cited Imlay’s “dollars and cents� analysis and said it was not required to examine each permissible use within the “manufacturing� category if such uses were unlikely to provide any reasonable return.

‘A Substantial and Lasting Impact’

Justice Robert Lifson dissented, finding that the Board of Standards and Appeals should consider the issue de novo.

First, the appellate judge found that the failure to join Imlay was not fatal. He reviewed the five factors listed under CPLR 1001(b) and two decisions by the Court of Appeals and the First Department. “The critical factor [in the First Department] appears to be that the applicant was afforded an opportunity to be heard, notwithstanding the passage of the limitations period against it and that the appropriate remedy employed was to grant the applicant leave to intervene,� Lifson wrote. He found that the trial court in this case did not abuse its discretion.

“Great weight should be placed on the reality that the proposal will have a substantial and lasting impact on large areas of the Red Hook community,� Lifson wrote. “Changes of such magnitude are more susceptible to prompt implementation and community acquiescence where legitimate judicial oversight has not been aborted by an otherwise avoidable legal technicality.�

Lifson went on to find that the BSA did not properly consider whether the property could be used for manufacturing, industrial, or commercial purposes, and whether this was the minimum variance that could be granted.

“In addition, given the applicants’ alleged purchase of a second warehouse in the immediate vicinity, BSA’s review of whether the hardship was purposefully self-created is wholly inadequate,� Lifson added.

Leonard Koerner, Pamela Seider Dolgow, and Louise Moed, for Corporation Counsel, represented the appellants-respondents. Michael S. Hiller, of Weiss & Hiller, P.C., represented the respondent-appellant. In the Matter of Red Hook/Gowanus Chamber of Commerce, respondent-appellant, v. New York City Board of Standards and Appeals, et al., appellants-respondents, 2008 NY Slip Op 02600.

— Elizabeth Stull
Brooklyn Daily Eagle

© Brooklyn Daily Eagle 2008
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