RUDEY v. LANDMARKS COMMN.
137 A.D.2d 238 (1988)
John M. Rudey et al., Individually and as Shareholders in 1030 Fifth Avenue Corporation, Appellants,
Landmarks Preservation Commission of the City of New York et al., Respondents, et al., Respondent
Appellate Division of the Supreme Court of the State of New York, First Department.
May 26, 1988
James G. Greilsheimer of counsel (Paul E. Breene, Robert S. Davis and Diane Penneys Edelman with him on the brief; Stroock & Stroock & Lavan and Berle, Kass & Case, attorneys), for appellants.
Fay S. Ng of counsel (Pamela Seider Dolgow and Robin Binder with her on the brief; Peter L. Zimroth, Corporation Counsel, attorney), for Landmarks Preservation Commission of the City of New York and another, respondents.
John P. Rooney for 1030 Fifth Avenue Corporation, respondent.
SANDLER, J. P., ASCH, ROSENBERGER and SMITH, JJ., concur.
Petitioners herein are shareholder-tenants of respondent 1030 Fifth Avenue Corporation and hold a proprietary lease on apartment 5W of the subject building, which is located across the street from the Metropolitan Museum of Art. In 1979, petitioners, contemplating renovation of their apartment, including replacement of the original multipaned, double-hung wood windows with single-paned aluminum windows, commissioned an architect to undertake the project and obtain the necessary permits. Thereafter, the cooperative corporation's managing agent, acting on behalf of the corporation and its Board of Directors, authorized petitioners to proceed with the proposed alterations, and the work was completed by October of 1980. It should be noted that the corporation had the preceding year given permission to the shareholder-tenants of apartment 14W to install windows almost identical to those selected by petitioners. In addition, the original windows in a twelfth-floor apartment had been previously replaced.
On September 23, 1981, respondent Landmarks Preservation Commission issued a notice of violation, No. V-761, advising that windows had recently been installed at the premises in violation of chapter 8-A of the Administrative Code of the City of New York, which provides that no work may be performed in historic districts designated as such by the Commission without first obtaining therefor a certificate of appropriateness or a permit for minor work. The notice did not indicate whether it related to the apartment on the fifth or the fourteenth floor, or both, and was addressed directly to the managing agent. Moreover, it incorrectly set forth the historic designation date as being September 20, 1981 when, in fact, the building had been designated as part of the Metropolitan Museum Historic District on September 20,
1977. According to petitioners, they were assured by the cooperative corporation's managing agent that because their windows had been installed in 1980, and were, thus, "grandfathered", their apartment could not be the subject of a violation. Petitioners further allege that they did not discover until the fall of 1985 that the building was in a historic district and that none of their architects or consultants, despite a search having been undertaken of the files of the New York County Clerk's office and the New York City Department of Buildings, were aware of any restrictions on the property. The Landmarks Preservation Commission, however, states that representatives of all the buildings located within the area had received notice of a public hearing conducted prior to its designation as a historic district in 1977 and were subsequently informed of the Commission's final action. Notwithstanding petitioners' claim that their architect was unable to find a record of the designation in the County Clerk's office or with the Department of Buildings, the Commission insists that the required notification was provided.
Petitioners, apparently based upon the managing agent's mistaken advice, ignored the 1981 notice of violation, and, in March of 1982, they carried out some "minor" repair work to an interior hinging mechanism on two of the windows. The result was another notice of violation, No. V-1003, dated March 25, 1982, which was directed to the cooperative corporation. The notice neither referred to the prior notice of violation nor did it correct the erroneous designation date specified therein. Therefore, management again counseled petitioners not to worry about their renovations but, since the new notice expressly mentioned the fifth-floor apartment, did agree to raise the matter with the Landmarks Preservation Commission in an attempt to have the violations removed. Although it is unclear what transpired next, it seems that the situation remained unchanged until October 17, 1985, some five years following the installation of petitioners' windows. At that time, the Commission rejected an application for work to be performed on yet another apartment in the building until the outstanding violations were discharged. It now became evident that because the violations impacted negatively upon other shareholder-tenants, something would have to be done to alleviate the problem. The cooperative corporation, consequently, finally determined to effectuate a settlement with the Commission.
There then ensued a series of negotiations between the
Landmarks Preservation Commission and the cooperative's Board of Directors, during which the building failed in its initial effort to obtain an exemption for the existing replacement windows on the ground of good-faith reliance upon the Commission's erroneous designation date. The Board thereafter submitted applications with respect to the restoration of the windows in each of the apartments in question. While the corporation had first urged that petitioners be permitted to replace the windows within five years of the sale of the apartment, it now agreed to ensure that the windows in petitioners' apartment would be restored to a condition duplicating their original state. When petitioners learned of the proposal, and the great expense involved, they were disturbed, particularly in view of the differential in treatment between the three affected apartments. In that regard, it appears that while the Commission demanded immediate restoration of the fifth-floor windows, it was willing to wait for the fourteenth-floor windows to be replaced at the next sale and only insisted that some, not all, of the twelfth-floor windows be restored at once. Petitioners requested in writing that the Commission make the same provision for them as that being allowed to the fourteenth-floor tenant-shareholder and offered to put in a temporary grid which would render the windows similar in configuration to the way they were originally. Moreover, petitioners, appearing by their attorney at a public hearing held on March 25, 1986 in connection with the matter, opposed the cooperative corporation's plans for the fifth-floor windows.
At executive sessions on March 25th and April 15th, the Landmarks Preservation Commission considered and rejected petitioners' application to have a muntin grid placed on their windows or have the windows treated in the same manner as those in the fourteenth-floor apartment. The cooperative corporation's proposal, however, the terms of which were evidently dictated by the Commission, was accepted on April 15, 1986. On May 16, 1986, the Commission issued a formal notice of approval. Meanwhile, also at the behest of the Commission, the cooperative corporation and the shareholder-tenants of the fifth-, twelfth- and fourteenth-floor apartments entered into an escrow agreement, dated April 30, 1986. It seems that the Commission compelled the execution of this agreement by threatening to withhold approval of any further construction in the building if the corporation did not accede. Pursuant to the escrow agreement, petitioners committed themselves to
complete all restoration work within 275 days. On June 9, 1986, petitioners posted a bond in the amount of $50,000 to satisfy their obligation under the escrow agreement.
Petitioners commenced the instant proceeding pursuant to CPLR article 78 on August 14, 1986. In granting the cross motion to dismiss by respondents Landmarks Preservation Commission and its Chairman, Gene A. Norman, the Supreme Court held that petitioners were precluded from disputing respondents' determination since "the act which has caused petitioners the hardship complained of was the decision of the Cooperative Corporation's Board of Directors, dated February 25, 1986", whereas the Commission's decision of April 15, 1986 merely accepted a proposal which had been submitted by the Board of Directors and, further, that petitioners had waived any right to attack the action of the Commission by virtue of their signing an escrow agreement with the cooperative and failing to reserve in writing their right to challenge its contents. However, the municipal respondents' cross motion asserted different grounds than those relied upon by the Supreme Court although one of their arguments — that petitioners, as shareholders of the corporation, lack the capacity to bring this petition, which must properly be instituted by the corporation itself — is related to the court's finding that petitioners' real grievance is against the cooperative rather than the Commission. Respondents also claim that dismissal is mandated since the proceeding is time barred.