U & ME Homes, LLC v County of Suffolk

[*1] U & ME Homes, LLC v County of Suffolk 2021 NY Slip Op 50674(U) Decided on July 16, 2021 Supreme Court, Suffolk County Whelan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 16, 2021
Supreme Court, Suffolk County

U & ME Homes, LLC, Plaintiff,

against

County of Suffolk, TOWN OF SOUTHAMPTON LAWRENCE M CLARK JR, JENNIFER GRANT MICHAEL T. ESCUE, SCOTT N WIMBUSH, CITIBANK, TOWN OF SOUTHAMPTON PLANNING BOARD, OLIVER & CLARK, INC, SOUTHAMPTON HILLS III, LLC, WINDEMERE SOUTHAMPTON HILLS, LTD, VERIZON NEW YORK, INC, PSEG LONG ISLAND LLC, STEVEN D HURD, DAYNA FIELD TRUSTEE, JOEL ORGLER TRUSTEE, ROBERT BRENNAN, 90 LAUREL VALLEY, LLC, MATTHEW ROSENBLUM, JENNIFER ROSENBLUM A/K/A JENNIFER SCHAFFER, MOYAC HILLS ESTATES ASSOCIATION, INC, MIDLAND FUNDING NCC-2 CORPORATION, MIDLAND FUNDING LLC, FEDELE T BAUCCIO, STEPHEN R BERTINI CLERK OF THE SUFFOLK COUNTY DISTRICT COURT, SABADELL UNITED BANK, JP MORGAN CHASE BANK, SYNCHRONY BANK, DENNIS LANG, CAPITAL ONE BANK (USA), UNITED STATES OF AMERICA, DEPARTMENT OF THE TREASURY - IRS, PHILLIP REISIG, JACQUELINE REISIG, THE BRIDGEHAMPTON NATIONAL BANK, EVERET A. REISIG, GAYLE A REISIG, CLERK OF THE COUNTY OF SUFFOLK, DAVID EPSTEIN, LOUIS A OLIVER INDIVIDUALLY AND AS EXECUTOR OF THE ESTATE OF AMUND EDWARDS, Defendants.



11760/14



BORCHERT & LaSPINA, PC

19-02 Whitestone Expressway

Whitestone, NY 11357

DENNIS M. BROWN, ESQ.

Suffolk County Attorney

By: Jacqueline Caputi, Esq.

Assist. County Atty

H. Lee Dennis Bldg

100 Veterans Memorial Hwy.

ANDREW McCABE, ESQ.

Atty. For Defendant PSEG

333 Earle Ovington Blvd., 303

Uniondale, NY 11553

NINA B. STRUNK, PLLC

Atty. For Defs. Escue,

Wimbush & 90 Laurel Valley

PO Box 5087

Southampton, NY 11969

JAMES M. BURKE, ESQ

Atty. For Def. Town of

Southampton

116 Hampton Rd.

Southampton, NY 11968
Thomas F. Whelan, J.

Upon the following papers numbered 1 to25read on this motion for summary [*2]judgment, including Notice of Motion/Order to Show Cause and supporting papers NYSCEF No. 3 through 29; Notice of Cross Motion opposition and supporting papers: NYSCEF No. 37 through 61 ; Notice of Cross Motion, opposition and supporting papers NYSCEF 62 through 80; Reply papers: NYSCEF No. 83 through 85; (and after hearing counsel in support and opposed to the motion) it is,

ORDERED that the motion (#007) by Plaintiff, U & Me Homes, LLC, for an order pursuant to CPLR §3212 granting Plaintiff summary judgment on Plaintiff's First, Second, and Fourth causes of action is granted in part and denied in part; and it is further

ORDERED that the portion of Plaintiff's motion (#007) seeking summary judgment on the Fourth cause of action is granted and the purported restrictive covenant on Plaintiff's real property is declared to be void and of no legal effect, and its enforcement constitutes an unconstitutional per se taking of Plaintiff's real property; and it is further

ORDERED that the branch of Plaintiff's motion (#007) seeking summary judgment on the First and Second causes of action are denied as moot; and it is further

ORDERED that the cross motion (#008) by Defendant County of Suffolk, for summary judgment of the entire amended complaint is denied in its entirety; and it is further

ORDERED that the cross motion (#009) by Defendant Town of Southampton, for summary judgment of the entire amended complaint is denied in its entirety; and it is further

ORDERED that Plaintiff is free to pursue its residential development application.

This eight-year litigation, which has spanned two counties, arises from, in essence, the legal malpractice of one governmental entity and the environmental land use overreach of another governmental body. The combined actions of these two governmental bodies have deprived the plaintiff of a bedrock constitutional right and have brought about a per se taking of an important "stick" in the "bundle of sticks," the power to exclude people from one's real property. Here, an owner's property has been "sterilized," without compensation, due to the improper, defective and unconstitutional actions of two layers of government. It is time to correct that wrong.

Plaintiff is the owner of a 5.85-acre parcel located in the hamlet of North Sea in the Town of Southampton, defendant herein (Town). The parcel is undeveloped, but it is split-zoned by the Town, with a portion permitting 2-acre residential development and a larger portion permitting 5-acre residential development. The parcel has a driveway access easement across property to the east. Plaintiff purchased the property for $575,000.00 on January 9, 2013 by deed that did not contain any reference to any developmental restrictions. The title search report that supported the contract of sale also lacked any such restrictions. Plaintiff immediately proceeded to obtain a Health Department permit and an engineering permit from Defendant County of Suffolk (County), and sought architectural plans for the construction of a one-family home which would leave 85% of the property as undeveloped open space. Yet, after Plaintiff applied for the building permit from the Town, a neighbor complained to the Town that there existed a developmental restriction on the property, which the Town sought to confirm with the County (see Burke aff., exhibit 8 [NYSCEF Doc No. 49]). After time passed, the two governmental entities agreed that the proposed home could not be built and plaintiff was stopped from pursuing the pending permit applications despite paying property taxes for the parcel designated for [*3]residential development.

One of the critical reasons for stopping the application is that the parcel "contains a blazed section of a public trail known as the Paumanok Path" (Smith aff., par. 3 [NYSCEF Doc No. 40]). Prior to the purchase by Plaintiff, the Town's Principal Environmental Analyst on April 12, 2012 promoted the notion that the Town should purchase the parcel from the County with the following admission (see Smith Aff., exhibit A [NYSCEF Doc No. 40]):

The property contains three separate trails, most notably, the Paumanok Path. Acquisition of the lot will insure that this section of the trail remains open to the public. Failure to preserve this portion of the trail would effectively dead end the trail in this location and would require a major re-route of the Paumanok Path.

No mention was made, at that time, of any developmental restrictions by either the Town or the County. In fact, the County had issued a quitclaim deed, dated December 7, 2010, to a predecessor in title, that did not include any restrictive language.

The controversy begins with a bargain and sale deed dated March 21, 2000, upon a sale arising from the nonpayment of taxes from whom the County describes as an unknown owner. The sale was part of a block of tax lien parcels being auctioned off by the County. Prior to the sale, the opinion of various County agencies was offered as to the properties to be sold to the public. By letter dated July 16, 1997, the then County Director of Planning offered his advice with regard to the various parcels (see Burke Aff. exhibit 7). As to this particular parcel, he suggested that it should be transferred to "General County Purposes" for preservation since it was within the South Fork Special Groundwater Protection Area. That did not occur. The County instead decided to sell the parcel to the public.

Remarkably, just two lines above the Director of Planning's recommendation regarding the parcel, the Director recommends the inclusion of the specific language absent from the deed that conveyed this particular parcel, to describe another, substandard parcel that should not be developed. The Director sets forth a proposed restrictive covenant that can be enforced by the County and includes the following critical language (see Burke Aff. exhibit 7, p. 2):

This covenant and restriction shall run with the land and shall be binding upon the grantee, its successors and assigns, and upon all persons claiming under them.

That critical language is missing in the deed before the Court. The County cannot claim that it did not know how to create a deed restriction, since one was provided by the Director of Planning.

When the parcel was conveyed to a predecessor in title, for $110,000.00, far above the

upset price and the fair market value, it contained only the following deed restriction: There shall be no development rights as to this parcel other than the right to construct a 50" westward extension of Laurel Valley Drive, subject to approval by the Town of Southampton.

Since that time, the parcel has been transferred numerous times, but never with the restriction noted above. The County even re-obtained the parcel by way of a tax deed and allowed the parcel to be redeemed by the delinquent owner, despite various and contradictory recommendations from differing agencies of the County. The County could have kept the parcel and transferred it to the Parks Department or even placed the prior restriction back into the new [*4]deed, but instead sold the parcel for $22,276.06, not subject to any restrictions. The Department of Planning had no environmental or floodplain objections to the sale, at that time, in December of 2010.

As noted above, once Plaintiff began the application process, some individuals complained to the Town.

Although Plaintiff moves for summary judgment on the First, Second and Fourth causes of action, the Court need only look to the Fourth cause of action to resolve the various motions. Plaintiff's motion advances only two claims, that is, that the covenant is defective because (1) it fails to run with the land and fails to bind the grantee's successors or assigns, and (2) that such a restriction is offensive to public policy. The Court agrees.[FN1]

Here, no proof is offered that the original grantor and the grantee intended the covenant to run with the land (see generally, RPL 240[3]; see also Neponsit Prop. Owners' Assn. v Emigrant Indus. Sav. Bank, 278 NY 248 [1938]). There exists no language in the 2000 deed from the then purchaser, BPC Holding, Inc. showing an intention to bind successors in title to the property (see Kingston Model R.R. Club, Inc. v Eleven Main Group, LLC, 123 AD3d 1193, 1194 [2014]). The "running with the land" language that one finds in Eagle Enters. v Gross, 39 NY2d 505, 507 (1976), is missing from the deed at issue. When the purpose and effect of a covenant is to substantially alter the legal rights which otherwise would flow from the ownership of land and which are connected with the land, such requires a clear showing that the original grantee and grantor intended the covenant to run with the land. Here, the "intent" prong, set forth in Neponsit Prop. Owners' Assn., supra, has not and cannot be met. As in the Kingston Model case, "[a]bsent from the deeds is any 'language immediately preceding the covenant language which expresses intent that the promise be binding' on the [owners] and their heirs and assigns" (citations omitted). Without such language, it only binds the direct parties to the agreement. Without such a showing, the covenant does not run with the land and is, at best, a personal covenant that does not run with the land (see generally, Miller v Clary, 210 NY 127. 136 [1913]).

Basic real property rules must be acknowledged. Simply put, the law favors the free and unencumbered use of real property. All restrictive covenants must be strictly construed against the party seeking to enforce it and must be interpreted in the manner most favored to promoting the free and unobstructed use of real property. These basic rules lead to the conclusion that the faulty drafting of the March 21, 2000 deed by the County calls into question whether a restrictive covenant was even created. While the parties do not spend much time on this issue, it must be noted that there is no expressed dominant estate, to contrast with plaintiff's parcel, as the servient estate. No common plan of development, like a subdivision map, is applicable. The parcel does not derive from a common grantor or a larger, original common parcel from which plaintiff's parcel is derived. No language is included as to who can enforce the covenant, and how such enforcement is to be rendered.

The County has offered no statutory authority to support its ability to enter into such a [*5]restriction. In New York, towns are bestowed with the authority to regulate land use within their borders (see Town Law §261). This grant of authority is broad and includes the system of filing subdivision plats. No such authority has been bestowed upon counties, aside from possible conservation easements, which this is not (see also General Municipal Law §247[2]). Such lack of statutory authority is contrary to public policy. In any event, even if one were to consider such a restrictive covenant, which this Court does not, the lack of language to ensure that same runs with the land must cause it to fail.

"The law has long favored free and unencumbered use of real property, and covenants restricting use are strictly construed against those seeking to enforce them" (Witter v Taggart, 78 NY2d 234, 237[1991]). "A party seeking to enforce a restriction on land use must prove, by clear and convincing evidence, the scope, as well as the existence, of the restriction" (Greek Peak v Grodner, 75 NY2d 981, 982 [1990]). "Restrictive covenants will be enforced when the intention of the parties is clear and the limitation is reasonable" (Chambers v Old Stone Hill Rd. Assoc., 1 NY3d 424, 431 [2004]).

Here, the County and the Town cannot establish the existence of a restrictive covenant by clear and convincing evidence (see generally, Fiore v Fabozzi, 180 AD3d 678 [2d Dept 2020]; 9394 LLC v Farris, 10 AD3d 708 [2d Dept 2004]). As noted above, the record does not establish that the covenant ran with the land so as to be enforced against Plaintiff as a successor in interest to BPC Holding, Inc. (see 328 Owners Corp. v 330 W. Oaks Corp., 8 NY3d 372, 382-384[2007]).

Further, this is not a case where all the property owners within a subdivision are subject to covenants and restrictions. The record does not show that the County retained a dominant estate which benefitted from the covenant at issue (see e.g., Fleetwood Chateau Owners Corp. v Fleetwood Garge Corp., 153 AD3d 1238, 1240 [2d Dept 2017]). The 2000 deed was not part of a common development scheme created for the benefit of subdivision property owners. And even in such cases, Courts are reluctant to enforce restrictions where the party seeking to enforce the restriction fails to present clear and convincing proof (see e.g., Kleist v Stern, 174 AD3d 1451 [4th Dept 2019]).

Reliance upon caselaw that involves affirmative covenants, for instance, to provide free power (see Niagara Mohawk Power Corp. v Allied Healthcare Products, Inc., 137 AD3d 1539 (3d Dept 2016), is misplaced. Initially, a promise to do an affirmative act contained in a deed is generally not binding upon subsequent grantees. But even when it is sought to run with the land, such covenants are often found to be an "undue restriction on alienation or an onerous burden in perpetuity" (Eagle Enters. v Gross, 39 NY2d 505, 510 [1976]), which are disfavored by the law. Here, the County and the Town seek such a perpetual restriction.

The case of 328 Owners Corp. v 330 West 86 Oak Corp., 8 NY3d 372 (2007) does not support the position of the County and Town, since that case involved detailed land use restrictions set forth in Article 16 of the General Municipal Law, which were referenced in the various recitals to the original deed. The language of the habendum clause was not as precise as it could have been but it did contain "running with the land" language. Here, the 2000 deed is completely devoid of such critical and necessary language.

So, even conceding that the County wanted to restrict the development of this 6-acre parcel, as the drafter of the deed, it could have easily crafted a deed binding successors of BPC [*6]Holdings, Inc., to the use restrictions. As noted above, the County's Director of Planning provided the required language in his review letter (see Burke Aff. exhibit 7, p. 2 [NYSCEF Doc No. 48]), however, the County did not include such language here. This is not a case of exalting technical form over substance, but of a complete failure of substance, on the part of the County.

Alternatively, the government-imposed restriction must fail as not only offensive to public policy but to our Constitution. Not only are two levels of government seeking to eliminate the productive use of the real property by depriving all future development rights, but these governments are also promoting a public right to invade one's private property, which constitutes a per se physical taking, requiring just compensation under the Takings Clause of the Fifth and Fourteenth Amendments (see Cedar Point Nursery v Hassid, 141 S. Ct. 2063 [June 23, 2021]).

Here, if the deed restriction is deemed to be a legally crafted instrument by the County, its sole purpose is to eliminate all rights to develop the parcel. As shown, the Town insists that it and the public have the right to enter and use various trails that are located on the property. Both governmental bodies advance these claims in direct contradiction of public policy that just compensation must be afforded in light of such governmental regulation.

As will be explained below, upon an examination of the two cross motions, the governmental bodies here overstepped their bounds and reversed the role of government in response to issues that implicate the Bill of Rights. It is the role of government to enforce the natural, God-given rights as expressed in the Bill of Rights. It is not the role of government to either take away or give back these rights, as expressed in the cross motions before the Court. To enforce this covenant, as desired by the two governmental bodies, would violate public policy by unreasonably restricting the use of the parcel, particularly in contravention of constitutional dictates.

Just as the union organizing access regulations in Ceder Point Nursery, supra, was found to be an unconstitutional per se physical taking, the deed restriction and the use of the parcel for the public as part of a trail system raises the same public policy issues. The land is being appropriated for the enjoyment of third parties despite the owner's right to exclude and to use. These are fundamental elements of the property right. The uncompensated appropriation of the right to physically invade the property of another is counter to all notions of public policy.

The Founding Fathers took seriously their business of preserving liberty through the protection of property rights. They viewed such rights as undeniable rights of human beings critical to the maintenance of life, liberty and the pursuit of happiness and they recognized that property rights as defined must be enforced if they are to be effective. The bottom line is that government must pay for what it takes. That is not the position of the governments here.

The governmental cross motions for summary judgment miss the mark. Initially, it is noted that the cross motions raise factual and legal inaccuracies. The Town and the County constantly mis-describe the parcel as being "surrounded by approximately 120 acres of undeveloped land." Such is not true. There is residential development to the north, east and south of the parcel, and it is the lands to the west that is Town-owned open space. Additionally, the Town and the County constantly state that the parcel is land-locked, which is not true, as it possesses an easement for driveway access, like many parcels on the east-end of Long Island.

Nevertheless, the cross motions are directed almost exclusively against the First cause of action pursuant to RPAPL §1951 and claim that Plaintiff is seeking to extinguish a restrictive [*7]covenant. As repeatedly noted by this Court throughout this litigation, the Court believes that such a claim is fact intensive and must be resolved at a non-jury trial (see Short Form Order, dated February 16, 2017). Therefore, this Court denies all branches of the motion and cross motions that address the RPAPL §1951 claim.

The governmental bodies both argue that "[r]emoving the restrictive covenant to allow development on the Property would be contrary to public policy," but, as set forth above, the failure to acknowledge the legal wrong would be contrary to the founding principles of the Bill of Rights, in particular, the Fifth Amendment's prohibition against the taking of property without just compensation.

The cross motions by each governmental body further focus on interesting but irrelevant environmental legislation enacted since 1993 on the State, County and Town levels and the eventual creation of the Aquifer Protection Overlay District. Much argument is addressed to this irrelevant but feel-good language and demand is now made that "[p]rinciples of equity, justice, fairness and public policy demand that the restrictive covenant be enforced" (Burke aff., par. 6). Based upon the County's own failures, as detailed above, this Court cannot oblige that "demand."The Town argues that the restriction "benefits the Town, the County, the surrounding properties and the overall public interest" (Burke aff., par. 33). But there has been no demonstration of a common plan of development in the creation of the challenged restriction. More importantly, it does not appear that the Town possesses the necessary standing to raise any issues before the Court. The Town is certainly not a party to the instrument containing the restriction and has not been shown to be a third-party beneficiary of the deed in question. In any event, as set forth above, the restriction did not run with the land and is at best, a personal covenant that has long expired with the subsequent transfers of the parcel.

If the Town believed it possessed "a superior governmental purpose," it lost the opportunity when, in 1998, the County took title by a tax deed but failed to insist upon a transfer of the property pursuant to NY General Municipal Law §72-a, which allows for governmental acquisition of forest lands. Moreover, this is not a "conservation easement" as defined by Suffolk County Code §25. The Town offers no proof that such was ever approved as one and simply seeks to mislead the Court.

The affidavit of the Town's Director of Planning (Wilcox aff. [NYSCEF Doc No. 39]) is remarkable. While admitting the Town purchased the adjacent subdivision parcel, he states that the County utilized the Transfer of Development Rights (TDR) program when it removed the development rights from this parcel. If so, where did these TDR's go? The Director of Planning is confusing TDR with his new approach, that is, EDR, the elimination of development rights.

The Director of Planning offers expert legal conclusions in paragraphs 17, 18 and 23 of his affidavit, which is beyond his expertise. But the most troubling statement of all is "[o]nce those Property rights were removed, they could not be conveyed to any subsequent owner unless the County granted the development rights back" (Wilcox aff., par. 23). Even the County refuses to claim that it possesses such magician-like powers, to take away important rights and then restore them at will. Such just shows either a disturbing lack of understanding of real property and land use law or an overblown belief in the power of government.

Finally, as to the Town's cross motion, the Town's title expert acknowledges that the original deed restriction is lacking in language that would bind successors or assigns, but states [*8]that an evaluation of the circumstances "makes it clear that, the County of Suffolk intended to run with and affect the land and its future use ..." (Lynch aff., par. 22 [NYSCEF Doc No. 41]). However, as we all know, Bill Buckner, the Boston Red Sox first baseman, "intended" to catch the ground ball that went through his legs, which error eventually led to the New York Mets winning the 1986 World Series.

As to the County's cross motion, much is made of the auction brochure language set forth in the auction booklet for the November 15 and 16, 1999 auction. However, such is not a recorded deed and it does not help to address the deed error of not having the restriction run with the land and be binding on successors and assigns. The County merely argues that there is a restrictive covenant but fails to address the claim as to its underlying defects. Notably, the County does acknowledge that this is not a situation of dealing with dominant and servient lots (Azzato aff. par. 40 [NYSCEF Doc No. 63]).

The County policy with regard to quitclaim deeds for redeemed tax properties does not change the initial bargain and sale deed or the fact that the County could have included restrictive language in the redeemed deed, if it believed the property could not be developed. The affidavit of the Chief Planner for the Division of Planning and Environment, while an interesting historical look at environmental legislation for the area, loses its objectivity when it claims that the development of a single home on this 6-acre site "would have a negative impact on the people of the County of Suffolk by impacting their drinking water" (Freleng aff., par. 40 [NYSCEF Doc No. 64]). Additionally, this parcel is not impressed with a public trust.

Here, the County failed to adequately protect the initial deed and as such that deed restriction does not run with the land. The Town and the County cannot turn to bureaucratic intent, either then or now, to alter the language of the deed and cover for the many years of delay and unauthorized use of the property "for superior governmental purpose." Suffolk's drafting of the deed cannot be protected by parol evidence and the volumes of extrinsic evidence offered by the governmental bodies. The equities, and the Constitution, favor Plaintiff. Plaintiff is free to pursue its long-delayed residential permit application.

Finally, both the Town and the County attack a title insurance company for not "honoring its insurance policy and paying Plaintiff's claim" (Burke aff., par. 5), an interesting shift of the burden of compensation. Yet, the Court notes that on two occasions, the Hon. Vito M. DeStefano questioned the legality of the restrictive language (see Order, dated July 30, 2014, at p. 5 and Order, dated June 30, 2015, at p.4). Justice DeStefano was correct in his reluctance to proceed with the Nassau County action. If money is ever to be paid, it will be from government funds, not an insurance policy.

Submit judgment.

DATED: July 16, 2021

THOMAS F. WHELAN, J.S.C. Footnotes

Footnote 1:The instant action has been discontinued against several parties throughout the course of this litigation via several stipulations, although no motions have been entertained to amend the caption to reflect the removal of such defendants.