Washington v Culotta

[*1] Washington v Culotta 2005 NY Slip Op 51404(U) [9 Misc 3d 1105(A)] Decided on July 21, 2005 Civil Court Of The City Of New York, Richmond County Straniere, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 21, 2005
Civil Court of the City of New York, Richmond County

CHARLES WASHINGTON and MARLENE WASHINGTON, Plaintiffs,

against

GIOVANNI CULOTTA a/k/a JOHN CULOTTA, Defendant.



BISI GEORGE, Plaintiff, against

against

GIOVANNI CULOTTA a/k/a JOHN CULOTTA, Defendant.



034230/02



Attorneys for Plaintiffs:Dayo Owotomo, Esq.

Duane C. Felton, Esq.

805 Castleton Avenue

Staten Island, NY 10310

(718) 447-9306

Attorney for Defendant:Andrew John Calcagno, Esq. Calcagno & Garruto, LLP

186 North Avenue East

Suite 101

Cranford, NJ 07016

(212) 244-4100

Philip S. Straniere, J.

Currently before the Court are two separate actions consolidated for trial since they involve the same defendant and common questions of law and fact. In the first, plaintiffs, Charles Washington and Marlene Washington, commenced an action (Index No. 34230/02), against the defendant, Giovanni Culotta a/k/a John Culotta, alleging that the defendant had failed to provide a final Certificate of Occupancy for the premises 243 Elm Street, Staten Island, New York. In the second, plaintiff Bisi George, commenced an action (Index No.35870/03) against Giovanni Culotta, alleging that the defendant had failed to obtain a final Certificate of Occupancy for the premises 245 Elm Street, Staten Island, New York. In each proceeding, the plaintiffs are seeking damages for the defendant's failure to abide by the terms of the contract. A trial was held on June 13, 2005. The plaintiff in each action had individual counsel and the defendant was represented by an attorney. [*2]

Summary judgment on the issue of liability was granted in favor of plaintiffs Washington by decision of Judge Panepinto dated March 3, 2003. The order indicated that the plaintiffs should set the matter down for an Inquest or Trial on damages.

Summary judgment on the issue of liability was granted in favor of plaintiff George by Judge Vitaliano dated September 24, 2003. The order indicated that the plaintiff should set the matter down for an Inquest or Trial on damages.

At the trial on June 13, 2005, defendant conceded that as of that date he had not provided a final Certificate of Occupancy for either premises. A trial was held in each matter on the issue of damages.

A. Washington v Culotta.

On February 23, 1998 plaintiffs entered into a written contract with defendant Culotta to purchase the premises 243 Elm Street. The home was to be constructed by the defendant. Paragraph 28 of the contract of sale provided: Certificate of Occupancy. Seller agrees to deliver a permanent Certificate of Occupancy for the dwelling but title shall not be adjourned for lack of same. It being understood and agreed that a sum not to exceed $2,500.00 from the Seller's money will be held in escrow by the lending institution or the Seller's Attorney pending production and delivery of such permanent certificate. No closing will occur, however, without Seller first obtaining a temporary Certificate of Occupancy.

A handwritten notation at the end of paragraph states: "Seller to deliver $2,000.00 to be held in escrow by his attorney until said time as Seller shall provide a final Certificate of Occupancy."

The contract provided that the closing would take place "on or about April 1, 1998." Paragraph 6 of the contract provided for the closing of title if a temporary Certificate of Occupancy had been issued.

The closing of title took place on May 28, 1998. At the closing a temporary Certificate of Occupancy apparently was provided. No such document was ever put into evidence. However, based on the terms of the contract and the standards and practices of the real estate industry in Richmond County, it would be extremely unlikely for a closing to be scheduled without the issuance of a temporary Certificate of Occupancy. The Court would have said a closing would never have been scheduled, but having witnessed the Red Sox winning the World Series the way that they did, and in other litigation found legal malpractice when such a closing took place, the improbable is no longer impossible. Buildings Department records show that a temporary Certificate of Occupancy expired on [*3]October 27, 1999. Presumably the defendant paid for the temporary Certificates of Occupancy that were issued between May 28, 1998 and October 27, 1999. It is impossible to determine from the record before the Court how many temporary Certificates of Occupancy were issued in that 17 month period. Generally temporary Certificates of Occupancy are issued for three month periods. However, it is not uncommon for builders to let temporary certificates lapse and then obtain new ones. In any case, it is clear that no final Certificate of Occupancy was ever obtained for the premises.

B. George v Culotta.

On December 15, 1997 a written contract was entered into between Giovanni Culotta as the seller and Bisi George as the purchaser of the premises 245 Elm Street, Staten Island, New York. Paragraph 29 of the George contract contains the same language as paragraph 28 of the Washington contract in regard to a permanent Certificate of Occupancy. The George contract kept the Certificate of Occupancy escrow amount at $2,500.00.

The contract provided for a closing to take place "on or about February 1, 1997." This is obviously a mistake since the contract is dated December 15, 1997. The closing date in the contract should be 1998. Paragraph 6 of the contract provided for the closing of title if a temporary Certificate of Occupancy had been issued.

The closing of title took place on May 12, 1998. Attached to plaintiff's previously filed motion papers is a copy of the temporary Certificate of Occupancy issued by the Buildings Department on April 16, 1998. This would have been the temporary Certificate of Occupancy in existence on the date of closing. It expired on July 15, 1998. This temporary Certificate of Occupancy has a handwritten notation that it was extended on July 20, 1999 for an additional 90 days. Buildings Department records show the last temporary Certificate of Occupancy expiring on October 16, 2000. In any case, it is clear that no final Certificate of Occupancy was ever obtained for the premises.

C. Remedies Under Each Contract

A review of each contracts reveals that the plaintiffs as purchasers only have a cause of action for breach of contract if the seller failed to deliver title. Clear title was delivered to the plaintiffs. The failure to deliver a final Certificate of Occupancy does not affect title. A Certificate of Occupancy goes to the legality of the structure in that it verifies that the building was constructed in conformity with local codes. The document insures that the premises is safe for human occupation. Although Certificate of Occupancy searches are routinely provided by title insurance companies, the reports issued in that regard are "for information only." Deficiencies in that regard are not exceptions to title.

Neither the above cited "Certificate of Occupancy" escrow paragraphs nor any [*4]other clause of the agreement creates a cause of action in favor of the plaintiffs in the event there is a failure of the seller to procure the final Certificate of Occupancy. The paragraph only requires that a sum of money from the seller be held in escrow either by the seller's attorney or the lending institution pending the production of the final Certificate of Occupancy. The contract also does not set forth a time by which the seller agrees to obtain the final Certificate of Occupancy. A Court could conclude that therefore the contract required the procurement of a Certificate of Occupancy within a "reasonable" time. Having observed the real estate industry on Staten Island for a number of years, the Court would be hard pressed to determine what is a "reasonable" time based on the extremely long delays in obtaining delivery of this document experienced by purchasers. It is safe to conclude however, that the seven years it has taken the defendant to still fail to perform is manifestly "unreasonable" and "shocks the conscience" of the Court.

The problem of course is that the Buildings Department has created a system of issuing temporary Certificates of Occupancy and then utterly failed to monitor the process once temporary Certificates of Occupancy expired. Apparently once World War II ended, Sgt. Schultz from "Hogan's Heros," who "knows nothing," was placed in charge of the Certificate of Occupancy compliance section of the Buildings Department on Staten Island.

Neither contract creates a remedy for the purchaser in the event the seller fails to deliver a final Certificate of Occupancy as agreed. The record also confirms that the seller failed to continue to file for extensions of the temporary Certificate of Occupancy for each home which would at least make the respective plaintiffs' continued occupancy legal since the closing of title. It can be argued as this was an arm's length transaction between parties represented by counsel, a specific clause giving the purchaser's a remedy could have been negotiated. Although as a practical matter it is unlikely that the seller would agree to this, it cannot be concluded that the failure to have such a clause makes the agreement an adhesion contract. There were and are numerous other new homes being constructed on Staten Island. Absent a showing that all builders would refuse to include such a clause, the Court cannot label this an adhesion contract.

Plaintiffs are left with a common law breach of contract action and must establish the actual damages they have suffered. Unlike the builder's failure to deliver a specifically contracted for fixture, appliance, or some other item with a fixed cost, the failure to deliver a final Certificate of Occupancy is more nebulous. The builder's breach has caused a continuing harm to exist with the plaintiffs facing the threat of having to vacate the premises should the Buildings Department decide to enforce the provisions of the New York City Administrative Code (NYCAC). If each of the plaintiffs had obtained the final Certificate of Occupancy on their own, then the Court could determine the reasonableness of the expenses incurred and calculate the damages. Neither plaintiff has done so.

Plaintiffs hired an architect and had him testify as to what in his opinion remained to be done on each premises in order to obtain a final Certificate of Occupancy from the [*5]Buildings Department and what he estimates would be the cost to accomplish that task. The architect testified credibly as to all the details of the project, including numerous attempts to contact the defendant, all of which were ignored. The problem with the expert's cost estimate is that the defendant has failed to file proof of the installation of the dry well for each premises. If the dry well was properly installed and the seller can prove that to the satisfaction of the Buildings Department, the costs to the plaintiffs to obtain a final Certificate of Occupancy would be substantially reduced. If the dry well has not been installed or its installation cannot be verified by documents, then the architect estimated the costs involved to be $14,300.00 for the Washington home and $15,728.00 for the George premises. The architect testified that there were more items listed as "open" in the Buildings Department file for the George premises than for the Washington house although he presumed most of those items had probably been completed and just not signed off since these are semi-attached homes.

The defendant testified that he had in fact installed the dry wells as required but he just never got around to picking up the required papers from the engineer he hired or filing them with the Buildings Department. He apparently was "too busy."

Seven years is a long time to be busy. It took Ferdinand Magellan's expedition less than half that time to circumnavigate the world in wooden ships almost five hundred years ago (1519-1522). Cal Ripken Jr.(1981-2001) played consecutive 1134 games of baseball in seven years, about half of his final total of 2632. World War II in Europe lasted only six years (1939-1945). Yet the defendant was unable to complete his contractual obligation to the plaintiffs in seven years.

Unlike other breaches of contract where the cost of remedying the damages is readily ascertainable, the failure to deliver a final Certificate of Occupancy fails into a separate category. Occupancy of the premises is illegal. In fact, both premises, 243 Elm Street in 2002 and 245 Elm Street in 1999 and 2003 were issued violations by the Buildings Department because the plaintiffs were occupying the houses without a final Certificate of Occupancy. The seller's failure to deliver the final Certificate of Occupancy makes the plaintiffs' occupancy illegal and subject to a vacate order. A vacate order would defeat the purpose of purchasing a new home and in effect makes the contract a nullity. If the purchasers actually obtained the final Certificate of Occupancy then money damages would be ascertainable and could be awarded to the plaintiffs. The way this contract is written, at that point the escrow agent would be authorized to release the money which was being held until the final Certificate of Occupancy was delivered to the seller since the contract does not give the purchaser the right to receive that money. The contract provides for payment to the seller when the final Certificate of Occupancy is obtained, not to the procuring party.

Perhaps the proper remedy is for the plaintiffs to elect to declare that a forfeiture has occurred which would make the contract a nullity and entitle them to a refund of all [*6]the monies expended for the purchase and for occupying the premises since the date of closing and all foreseeable expenses arising from that occupancy.

After hearing the evidence in this case, it must be concluded that the issue of what damages have been incurred by each plaintiff is too speculative. Damages cannot be speculative; they must be certain and ascertainable. If the defendant has in fact completed all of the work as set forth in the filed plans and all that remains is the ministerial act of submitting proof and getting final approvals from the Buildings Department, then awarding the plaintiffs damages in the higher amounts would be unjust. If all the work that the architect stated might need to be done to obtain the final Certificate of Occupancy still had to been done, then awarding the plaintiffs only their out of pocket expenses would likewise be unfair. Defendant's lack of action and cavalier attitude in regard to his obligations to these plaintiffs and to the people of the City of New York may be so egregious so as to rise to the level to warrant punitive damages.

The Court cannot award the plaintiffs damages at this point. The Court will preserve the plaintiffs' rights to re-apply to the court once either the final Certificate of Occupancy is obtained or the Buildings Department issues a vacate order.

D. Is There Another Remedy Available to the Plaintiffs?

In view of the fact that the defendant herein has failed to obtain a final Certificate of Occupancy since May 1998 in regard to both the Washington home and the George home, it would seem that a practical remedy would be for the Buildings Department to cease issuing any more building permits to this defendant or to any corporation in which the defendant is a principal or an officer. This would afford him time from his "busy" work schedule to resolve his past obligations. The Buildings Department should also temporarily revoke any permits currently issued to the defendant. If he is "too busy" to have fulfilled his contractual commitment to these purchasers, why should he have time to build more homes and perhaps strand other innocent consumers? As set forth below, it is readily apparent that the Buildings Department has the legal authority to regulate the defendant's activities. Why it would allow him to continue to build at other sites when he failed to obtain Certificates of Occupancy at these premises as he agreed to is beyond comprehension. The Buildings Department issued permits and temporary Certificates of Occupancy to the defendant for 243 and 245 Elm Street. What did this agency think happened? Were the buildings transported to another dimension to provide housing for the "4400?" If the project was abandoned, then why did not the Buildings Department discover that? Why cannot the Buildings Department have some reasonable and rational method for checking on open temporary Certificates of Occupancy, determining their status, and pursuing builders who fail to deliver final Certificates of Occupancy as agreed? In this case, the Buildings Department knew that the project was not abandoned. It issued violations to the plaintiffs for occupying the premises without final Certificates of Occupancy. How about issuing a violation to the builder to whom it issued the building [*7]permits and to whom it issued a temporary Certificate of Occupancy so he could close title and make his profits on the transaction? The permit holder is the entity in violation of the New York City Administrative Code and is the entity in privity with the Buildings Department. Why not pursue him and punish him and not the innocent purchaser?

In the past, the Buildings Department has contended that the Civil Court lacks the jurisdiction to grant the equitable relief of an injunction or to order the Buildings Department to revoke permits. The Civil Court does have the jurisdiction to act in such a manner having been given that authority both in the New York State Constitution Article 6 Section 15 which states that "(t)he court of city-wide civil jurisdiction shall further exercise such equity jurisdiction as may be provided by law...," and in the Civil Court Act which at section 203 provides:

The court shall have jurisdiction of the following actions provided that the real property involved or part of it is situate within the county in the city of New York in which the action is brought....(k) An action brought to impose and collect a civil penalty for a violation of state or local laws for the establishment and maintenance of housing standards, including but not limited to, the multiple dwelling law, and the housing maintenance code, building code and health code of the administrative code of the city of New York...(n) Actions and proceedings for the removal of housing violations recorded pursuant to any law described in subdivision (k) of this section or for the imposition of such violation or for the stay of any penalty thereunder.(o) An action or proceeding for the issuance of an injunction, restraining orders or other orders for enforcement of housing standards under any law described in subdivision (k) of this section....

The New York City Administrative Code directly grants the Civil Court jurisdiction to render decisions involving alleged violations of the code. It should be noted that in the sections of the Administrative Code cited below, Title 26 refers to Housing and Buildings; chapter one to the Department of Buildings; subchapter one to General Provisions; subchapter two to Licenses and subchapter three to Building Construction. Reference to Title 27 is to Construction and Maintenance with chapter one of Title 27 being the Building Code for the City of New York. NYCAC 26-120 provides:Enforcement proceedings. a. Upon the violation of any law, rule or regulation [*8]enforceable by the department...the commissioner may, in his or her discretion, request the corporation counsel to institute legal proceedings to restrain, correct or abate such violation...and the corporation counsel shall thereupon institute such actions or proceedings as may be necessary and appropriate for such purposes.b. Such actions and proceedings may be instituted...in the name of the city in any court of civil jurisdiction in the city (emphasis added) and shall be given preference over pending causes therein.

NYCAC 26-125 provides: Violations of building law; punishments; penalty. a. Except as otherwise provided in subsection b and f of this section, section 26-126 or 26-148 of this title, every person who shall violate any provisions of any laws, rules or regulations enforceable by the department or who shall knowingly take part or assist in any such violation shall be guilty of any offense and upon conviction thereof shall be punishable by a fine of not more than five thousand dollars. Such person shall also be subject to the payment of a penalty of not more than five thousand dollars in a civil action brought in the name of the city in any court of record in the city (emphasis added)....f. As an alternative to the penalties provided in subdivision b of this section, any person who violates the provisions of such subdivision may be subject to a civil penalty...to be recovered in a civil action brought in the name of the city in any court of record in the city....

NYCAC 26-126.1 provides:

Environmental Control Board; civil penalties. a. In addition to or as an alternative to any of the remedies and penalties provided in subchapters one, two and three of chapter one of this title or chapter one of title twenty-seven any person who shall violate or fail to comply with any provisions of subchapters one, two and three of chapter one of this title or chapter one of title twenty -seven or the rules and regulations promulgated hereunder shall,...be liable for a civil penalty in a proceeding before the environmental control board....

NYCAC 26-246 provides: Judicial remedies.... c. Courts having jurisdiction. All courts of civil jurisdiction in the city shall have full legal and equitable jurisdiction over any and all suits and proceedings (emphasis added) authorized by the subchapter or chapter one of title twenty-seven of the code to be brought for the recovery of any fine or enforcement of any provision of this subchapter of chapter one of title twenty-seven of the code, and to make appropriate orders and render judgment therein according to law, so as to give force and effect to the provisions of this subchapter or chapter one of title twenty-seven of the code. Such courts shall give preference to such suits and [*9]proceedings over all others....

NYCAC 26-248 provides: Punishments....e. Jurisdiction of actions to recover fines. For the recovery of any such fine, an action may be brought in the name of the city in the New York city civil court (emphasis added), or other court of record, in the city;...

The Civil Court Act grants to the Civil Court the jurisdiction over an action to impose or collect a civil penalty for violation of the building code (CCA 203(k)). These actions would presumably arise as a result of the Buildings Department using the Civil Court for enforcement proceedings arising above. The Buildings Department has issued violations to the plaintiffs for occupying the premises without a final Certificate of Occupancy, and the matter has been adjudicated before the Environmental Control Board (NYCAC 26-126.1). Each plaintiff has paid the penalty imposed. If no payment had been made then the Buildings Department would be required to bring an action in Civil Court to impose or collect a civil penalty (NYCAC 26-125 and NYCAC 26-248) or the commissioner could bring an action directly in Civil Court to impose the penalty for violating the building code (NYCAC 26-246). Why did not the Buildings Department issue the violations against the builder to whom it had issued the permits? NYCAC 26-125 holds that the penalty may be extracted from "every person" who violated the law. Clearly the defendant in this case is the "person" who created the violation of the law and the "person" who continued to participate in the on-going violation of the code by failing to obtain the final Certificate of Occupancy as he agreed to do.

If the City has the right to commence proceedings to enforce alleged violations, why then cannot a homeowner act to prevent the imposition of the civil penalty by resorting to the Civil Court? The Buildings Department has in the past notified each plaintiff by issuing violations that they are in violation of the law because the premises they occupy lacks a final Certificate of Occupancy. Plaintiffs have paid fines in that regard. At any time the Buildings Department could take additional steps to enforce the Administrative Code against the plaintiffs for their continuing occupancy of the premises without a final Certificate of Occupancy. So why cannot the plaintiffs now act prospectively and enjoin the Buildings Department from issuing further violations or a vacate order?

Due process of the law and common sense tells us that if the Buildings Department has access to the court system, including in this situation the Civil Court, to enforce the Buildings Code, the public, in the appropriate situation, must have equal access to the courts to prevent the City from acting. Since the City has the right to levy fines and enjoin violations of the code, the plaintiffs herein as alleged perpetrators of the violation must have equal access to the courts to enjoin the City from acting or to remove a violation prior to the institution of administrative or legal proceedings by the City. [*10]

If the Buildings Department can resort to the Court to enforce a penalty, why cannot the plaintiffs utilize the Court to adjudicate the matter on the merits before going through the administrative process? It cannot be asserted that the plaintiffs must exhaust their administrative remedies since the Building Code does not give the plaintiffs such a remedy. It gives the right to commence an action at the Environmental Control Board to the Buildings Department and not to the property owner. The property owner's only redress is to the court system. Since the Civil Court has the jurisdiction to enforce violations of the building code, it stands to reason it has the power to prevent enforcement of such violations under the proper circumstances. Among them would be issues arising from the occupying a premises without a final Certificate of Occupancy.

The Buildings Department has argued that CCA 203 applies only to landlord-tenant proceedings. This is not correct. Although there are specific rules promulgated for the redress of these issues in the Housing Part of the Civil Court (CCA 110), the jurisdictional grant to the Civil Court in CCA 203 contains no limiting language. CCA 203 refers to violations of the building and housing maintenance code; what can be a more basic violation of the Building Code than occupying a premises without a final Certificate of Occupancy? In fact, CCA 110 does not strip the Civil Court of jurisdiction for the items designated in that section; it merely creates a special part of the Civil Court with defined specialized jurisdictional parameters. The jurisdiction granted to the Civil Court under CCA 110 is actually greater than that specified in CCA 203. For instance CCA 110(c) gives the Court the power to "recommend or employ any remedy, program, procedure or sanction authorized by law for the enforcement of housing standards, if it believes they will be more effective to accomplish compliance or to protect and promote the public interest;..." Nowhere in CCA 110 is it specified that the action set forth must be commenced only by a governmental agency. This leads to the conclusion that any person or entity has access to the court system to enforce housing standards.

The jurisdiction of the Civil Court to grant injunctive relief is even more clearly set forth in CCA 203(n). Here the Civil Court is given jurisdiction over "actions and proceedings"which are "for the removal of housing violations recorded pursuant to any law" set forth in CCA 203(k) or for the "imposition of such violation" or if the relief sought is a "stay of any penalty thereunder." The Buildings Department has in the past issued a formal violation by serving a "notice of violation" against the premises. It notified the plaintiffs that they were in violation of the building code by occupying the premises without a final Certificate of Occupancy. The Buildings Department has not issued a vacate order as of yet. The Court applauds the Buildings Department for not taking a Draconian stance in such situations, recognizing that the homeowners are for the most part the victims of developer-builders who failed to deliver a final Certificate of Occupancy as they agreed to do so when issued the building permit and temporary Certificate of Occupancy. Since the plaintiffs are still potentially subject to a vacate order, they have the standing to seek to enjoin the Buildings Department from issuing such an order against them. They also have the standing to ask the Buildings Department to revoke any permits currently issued to the [*11]defendant as a method to compel the builder to deliver their final Certificates of Occupancy.

The Civil Court does have the power to grant injunctions in regard to the enforcement of housing standards (CCA 203(o)). The existence of a proper Certificate of Occupancy clearly is the basic housing standard from which or to which all others flow. In fact, the case of Broome Realty Associates v Sek Wing Eng, 182 Misc 2d 917 (1999), specifically recognized that the Civil Court does have injunctive powers under CCA 110(a)(4) and 203(o); two of the sections upon which this Court is relying.

It must be concluded that the Civil Court has the jurisdiction to grant the injunctive relief to plaintiffs since this proceeding involves the enforcement of housing standards under the building code.

E. Can the Court Compel the Buildings Department to Act?

It can be argued that the gravamen of plaintiffs' assertions is that Culotta failed to carry out the terms of the contract between the parties, that is, to deliver a final Certificate of Occupancy and that the Buildings Department has no role to play in the matter. On its face this contention seems to have merit; however, as set forth below, such a position cannot withstand any rational scrutiny.

The Buildings Department has adopted an 18th Century Deist philosophy in regard to Certificates of Occupancy. Like Deists, who believe that God created the world and then left, leaving mankind to its own devices, the Buildings Department, as mandated by the city charter, has created a system for the issuance of building permits, temporary and final Certificates of Occupancy and asserts that it has no responsibility for the failure of the party with which it is in privity to enforce that party's failure to perform.

Article 10 of the New York City Administrative Code governs the issuance of permits.

NYCAC 27-147 provides: When permits required. No building construction...shall be commenced,...unless and until a written permit shall have been issued by the commissioner (emphasis added).

NYCAC 27-150 provides: Application for permit. All applications for permits shall be submitted on forms furnished by the department, and shall be accompanied by the required fee. The application shall contain a general description of the proposed work...,or as the commissioner may require (emphasis added).[*12]

NYCAC 27-151 provides: Applicant. Applications for permits shall be made by or on behalf of the owner or lessee of the buildings: and if made by a person other than the owner, the application shall be accompanied by a signed statement of the applicant declaring that he or she is authorized by the owner to make the application. The full names of the owner, lessee, and applicant, and of the principal officers thereof, if a corporation, shall be set forth in the application.

Article 11 of the Administrative Code governs applications for new building permits.

NYCAC 27-156 provides: General requirements. All applications for new building permits shall be subject to the requirements of articles nine and ten of this subchapter. In addition, each application shall set forth the name and business address of the person who is to perform the proposed work, and shall be accompanied by satisfactory evidence of compliance with the provisions of the worker's compensation law.

Article 19 of the New York City Administrative Code governs the issuance of permits.

NYCAC 27-191 provides: Approval of permit application...,applications complying with the provisions of this code and other applicable laws and regulations shall be approved by the commissioner and the permit issued promptly and not later than forty calendar days after the submission thereof, and applications failing to comply with the requirements of this code and other applicable laws and regulations shall be rejected and written notice of rejection, stating the grounds of rejection shall be given the applicant promptly....(emphasis added).

NYCAC 27-193 provides: Signature to permit. Every permit issued by the commissioner shall have his or her signature affixed thereto; but the commissioner may authorize any subordinate to affix such signature (emphasis added).

NYCAC 27-197 provides: Revocation of permit. The commissioner may, on notice to the applicant, revoke [*13]any permit for failure to comply with the provisions of this code or other applicable laws and regulations;...(emphasis added).

Article 20 of the New York City Administrative Code governs the conditions for issuance of a permit.

NYCAC 27-200 provides:

Compliance with the code etc. Permits shall be deemed to incorporate the proviso that the applicant, his or her agent, employees, and contractors shall carry out the permitted work or use in accordance with the provisions of this code and other applicable laws and regulations, whether specified or not, except insofar as variations therefrom have been legally permitted or authorized.

Article 21 of the New York City Administrative Code governs department inspections.

NYCAC 27-205 provides: Right of entry and inspection. The commissioner or his or her authorized representatives, in the discharge of their duties, shall have the authority to enter upon and examine and inspect at all reasonable times any building,...for the purpose of determining compliance with the provisions of this code and other applicable laws and regulations (emphasis added).

NYCAC 27-207 provides: General provisions. All examinations and inspections, including all tests in connection therewith, as required by the provisions of this code and other applicable laws and regulations shall be made and conducted under the direction of the commissioner....(emphasis added).

NYCAC 27-210 provides: Final inspection. Upon completion of the work, and before the issuance of any certificate of occupancy..., a final inspection of the work shall be made by the department,...and any and all failures to comply with the provisions of this code or other applicable laws and regulations shall be noted and the owner or lessee promptly notified thereof in writing (emphasis added).

Article 22 of the New York City Administrative Code governs the issuance of [*14]certificates of occupancy.

NYCAC 27-213 provides: General provisions. All certificates of occupancy shall be issued by the commissioner and the issuance thereof shall be governed by the provisions of this section,...(emphasis added).

NYCAC 27-214 provides: New buildings: ...a. ...no building hereafter constructed shall be occupied or used, in whole or in part, unless and until a certificate of occupancy shall have been issued certifying that such building conforms substantially to the approved plans and the provisions of this code and other applicable laws and regulations.

NYCAC 27-218 provides: Temporary occupancy. The commissioner may, upon request, issue a temporary certificate of occupancy,...provided that such part or parts may be occupied safely prior to the completion of the building and will not endanger public safety, health or welfare, and further provided that the temporary certificate of occupancy shall be issued initially for a period of between ninety and one hundred eighty days... subject to renewal for additional ninety-day periods at the discretion of the commissioner (emphasis added).

NYCAC 27-219 provides: Application for certificates of occupancy. All applications for certificates of occupancy shall be submitted on forms furnished by the department....(emphasis added).

NYCAC 27-220 provides: Applicant. The application for a certificate of occupancy shall be made by or in behalf of the owner of the building premises; and if made by a person other than the owner, the application shall be accompanied by a signed statement of the applicant stating that he or she is authorized by the owner to make the application. The full names of the owner, lessee, and applicant, and of the principal officers thereof, if a corporation shall be stated in the application.

NYCAC 27-222 provides: [*15] Issuance of certificates of occupancy. (a) All applications for certificates of occupancy and accompanying papers shall be examined promptly after their submission. If the building is entitled to the certificate of occupancy applied for, the application shall be approved and the certificate of occupancy issued by the commissioner....(emphasis added).

NYCAC 27-223 provides: Contents of certificates. In addition to the required certification by the commissioner, each certificate of occupancy shall state....(emphasis added).

Having reviewed the above cited sections, it becomes abundantly clear that not only does the Buildings Department have the authority to regulate the final issuance of a certificate of occupancy and to compel the builder to obtain it, but it has a legal obligation to do so. To assert that the Buildings Department is remediless against the holders of the permits it issues is ludicrous.

At every stage of the construction process the Buildings Department is involved with the issuance, supervision of the work, and compliance with the building code by applicants for permits and Certificates of Occupancy. The commissioner is ultimately responsible for the issuance of the Certificate of Occupancy which is a certification that the premises is constructed in conformity with the code and safe for human habitation. In fact, the commissioner retains the right to revoke a permit for the failure to comply with the code (NYCAC 27-197).

Since the Buildings Department requires disclosure of the name of an individual applicant and the principal officers of a corporate applicant, it follows that the commissioner has the authority to deny permits to individuals, corporations and subsequent corporations made up of the same individuals who had previously received permits, if they did not deliver Certificates of Occupancy as agreed to under prior permits.

The permit process is in effect a contract between the Buildings Department and the applicant, which in the case of new construction at the permit and temporary Certificate of Occupancy stage, is the builder. If the builder does not deliver the premises in conformity with the terms of the permit or allows the temporary Certificate of Occupancy to expire without renewal, the Buildings Department has the duty and the obligation to discipline the applicant. The only effective method of doing so is to deny the issuance of further permits until compliance with the terms of the prior contract or contracts has been met. In addition, the Buildings Department as set forth above, has the power to levy fines and enjoin further actions by a defaulting applicant.

Let us examine the process. An individual developer-builder of a piece of property such as defendant Culotta, files the appropriate papers for a building permit (27-147;27-[*16]150; 27-151;27-156). It is obvious from the submission that the applicant is in the business of constructing new homes for sale to third parties. The papers are reviewed by the Buildings Department and a permit is issued by the commissioner(27-191; 27-193). Employees of the Buildings Department have the right to inspect the premises (27-205). If the inspector finds that the work is not being done in conformity with the permit or the application, the commissioner may revoke the permit (27-197). Presumably working in violation of the permit would allow the commissioner to seek civil penalties against the applicant and any other parties involved in committing the violating activities (26-120; 27-125; 27-126.1; 26-246 7 26-248). In fact a claim by the commissioner that any law, rule or regulation has been violated is presumptive evidence that the matters contained in the commissioner's finding are true (27-121). As is permitted by the building code, a temporary Certificate of Occupancy is issued and delivered to the third party purchaser at closing of title.

Why does not the failure of the developer-builder to procure the final Certificate of Occupancy for which he previously applied create a violation of the building code to be enforced by the Buildings Department? The developer-builder is the person in privity with the Buildings Department, not the purchaser of the premises, since the developer-builder has agreed to construct the premises according to plans filed with the Buildings Department. In fact, the Buildings Department is the only entity that can initially determine if the premises has been constructed in compliance with those plans. The Buildings Department has the authority to stop the construction and revoke the permits. Where does it say that such oversight ends when the premises is sold to the purchaser or when the final Certificate of Occupancy is issued? The Buildings Department has a continuing obligation to insure the public safety and can inspect the premises at any time and issue violations if changes are made to the premises not in conformity with the building code.

Another interesting sidelight is the fact that the developer-builder is the initial applicant, yet when the final Certificate of Occupancy is issued, there is a new owner. Under the building code should not the new owner be the applicant for the final Certificate of Occupancy? If the new owner is not the applicant, where is the authority of the developer-builder to obtain the Certificate of Occupancy? NYCAC 27-220 requires that if the application is made by someone other than the owner, the applicant must file a signed statement from the owner authorizing the developer-builder to obtain the final Certificate of Occupancy as well as for additional temporary Certificates of Occupancy. Without such signed statement, the developer-builder would still be the only person in privity with the Buildings Department. Again the point must be made, why does the Buildings Department not think it has the authority and duty to compel the developer-builder to obtain the final Certificate of Occupancy when they contracted with the Buildings Department to do so and to construct the premises in conformity with the code?

Perhaps the Buildings Department is reluctant to act because 27-214 permits the [*17]issuance of Certificates of Occupancy when there is only substantial compliance with the approved plans and the code. Substantial compliance is a term that is nebulous, without standards and subject to individual interpretation and whim. By shifting its legal obligation to enforce the building code against the developer-builder to the purchaser, the Buildings Department is not exposing itself to litigation by developer-builders for abuse of discretion or arbitrary and capricious actions in the issuance of final Certificates of Occupancy. This court has found in the past that the "conforms substantially" clause of 27-214 is unconstitutionally vague. No reasonable person could determine what this means.

It must be concluded that the Buildings Department under current law has the authority to compel applicants and permit holders to obtain final Certificates of Occupancy. As the defendant Culotta was the initial applicant and received temporary Certificates of Occupancy from the Buildings Department in 1998 which enabled him to close title, the Buildings Department had the legal obligation to insure that Culotta performed as he agreed to when it issued to him a building permit for the premises in question. Culotta failed to adhere to his agreement with the Buildings Department to construct homes in conformity with those plans and permits and to obtain a final Certificate of Occupancy for those structures. The Buildings Department has a legal obligation to compel him to deliver what he agreed and for what he was issued permits to do. The Buildings Department had and still has the authority to deny Culotta building permits in the future and to revoke existing permits because he has failed to perform as agreed in the past.

F. Do the Plaintiffs Have Standing to Seek Relief on Behalf of Other Property Owners?

The Buildings Department has in the past contended that the plaintiffs lack the standing to have the relief they are seeking expanded to other persons similarly situated. Although this Court believes that the Buildings Department has the statutory authority to compel all developer-builders to obtain final Certificates of Occupancy for persons similarly situated, the Court also believes that it should not compel the Buildings Department to act in each and every situation where there are open final Certificates of Occupancy at this time. Since there are various reasons why a final Certificate of Occupancy may not have been issued, the Court will not enjoin the Buildings Department from issuing vacate orders and violations. In some cases, the failure to have a final Certificate of Occupancy issued could be the result of the actions of the purchasers in making unapproved changes to the premises or the fact that the developer-builder did not construct the premises in substantial conformity to the plans, making occupancy dangerous and a threat to the public safety.

However, it is obvious that the defendant herein has been flaunting the rules of the Buildings Department and that he should not be permitted to continue to construct homes in the City of New York and disregard the law and his contractual obligations. It has been [*18]over seven years since Culotta transferred title to these plaintiffs. If he has been too busy to complete the work on these homes because the Buildings Department has let him build other houses, then the Buildings Department has the obligation to act to protect the public from the actions of this defendant. The Buildings Department and the Buildings Industry should want to rid the new construction field of persons like the defendant who flaunt the law and their contractual obligations.

Conclusion:

Plaintiffs have established that the defendant breached their respective contracts and failed to deliver a final Certificate of Occupancy.

Plaintiffs have established that they are entitled to damages from the defendant in that regard. However, until a final Certificate of Occupancy is obtained, any damages awarded would be speculative and might unjustly enrich one of the parties.

Plaintiffs may make application to the Court for an award of damages when the final Certificates of Occupancy are obtained.

The parties are to provide briefs as to whether or not punitive damages may be assessed against the defendant.

Defendant Culotta is ordered to obtain a final Certificate of Occupancy for 243 Elm Street and 245 Elm Street, Staten Island, New York on or before August 15, 2005.

The parties and the Buildings Department will appear on Monday, August 29, 2005 at 9:30 AM at the Courthouse, 927 Castleton Avenue, Staten Island, New York for a hearing on the following issues:

1. Why the Buildings Department should not be enjoined from issuing any further violations or vacate orders to these plaintiffs until a final Certificate of Occupancy is issued?

2. Why the Buildings Department has failed to seek civil remedies under the NYCAC against the defendant for his failure to obtain final Certificates of Occupancy and for his participation in placing the plaintiffs in occupancy of an illegal premises?

3. Why the Buildings Department should not temporarily revoke all outstanding permits to Culotta and any entity in which he is a principal or officer?

4. Why the Buildings Department should not conduct a search of its files and invoke civil penalties against Culotta on all projects in which he is involved which lack final [*19]Certificates of Occupancy?

Jacob labored seven years in order to obtain Rachel's hand in marriage only to learn that Laban had given him Leah instead. Jacob was required to work another seven years before marrying Rachel. These plaintiffs have waited long enough; unlike Jacob they should not have to labor another seven years in order to receive the benefit of their bargain.

The foregoing constitutes the decision and order of the Court.

All exhibits, if any, will be retained by the court pending the afore set hearing.

Court Attorney to notify both sides.

Dated: July 21, 2005

Staten Island, NY HON. PHILIP S. STRANIERE

Judge, Civil Court

A P P E A R A N C E S