An ad for Law Offices of John J. Ciafone Esq.

An attorney from Queens who was indirectly fined $380,000 after he advertised his law practice on buildings he owned through a handful of corporations had his challenge to the penalty heard Tuesday by the New York Court of Appeals, which is set to decide if the fines were justified by law.

A handful of judges on the state's highest court appeared skeptical that the attorney, John Ciafone, could escape the fines by showing that he indirectly owned the buildings.

Ciafone wasn't represented before the Court of Appeals on Tuesday because, despite his direct involvement, he wasn't actually a party in the case. The challenge was brought, instead, by the corporate entities because they were fined by New York City over the signs, not him.

The corporations were represented before the Court of Appeals by Lindsay Garroway, a partner at Cohen, Hochman & Allen in Manhattan.

At issue in the case is a section of the New York City Administrative Code on outdoor advertising companies. The law requires those companies to obtain permits from the city before posting signs that promote the services of another entity.

In this case, that separate entity was Ciafone's law practice. Signs were posted on five buildings in Brooklyn and Queens advertising the Law Offices of John J. Ciafone Esq. 

Those five buildings are owned by four corporations, all of which are owned by Ciafone, according to his attorneys.

The New York City Environmental Control Board fined the corporate entities over the signs because, as they argued, Ciafone is not the actual owner of the buildings. The corporations technically own the buildings, the city said.

Garroway argued that the fine imposed over the signs wasn't consistent with what lawmakers in New York City intended when they enacted the law. 

"In defining an outdoor advertising company, the New York City Council would have never envisioned fining a small business owner like John Ciafone in the amount of $380,000," Garroway argued.

She challenged the notion that the corporations could be considered outdoor advertising companies based on the text of the law. To qualify as such, those companies have to engage in activities that essentially make space available for advertising. 

Associate Judge Leslie Stein was skeptical whether the corporations could escape the label, pointing to a section of the law that says such companies are entitled to offer that space, "or otherwise," make it available.

"That's pretty broad, right?" Stein asked.

Garroway conceded that case law interpreting the statute says "the bar is very low to be considered an outdoor advertising company," but argued that the corporate entities owned by Ciafone align with another case that allowed an individual to escape the city's fines. 

In that case, the fines weren't applicable because the owner, Joseph Nativo, was advertising a business that he owned. Nativo, in that case, directly owned the building, rather than through a corporate entity.

Garroway argued that the situation involving Ciafone should be interpreted the same way by the Court of Appeals. While the corporate entities own the buildings, he owns them, she said.

"We're asking for a very narrow exception here," Garroway said.

New York City was represented before the Court of Appeals by assistant corporation Counsel Barbara Graves-Poller. She argued that there was no room for interpretation in the case because the direct owners of the buildings and Ciafone's law practice were not the same.

"He does not own any property at issue in these proceedings," Graves-Poller said. "Mr. Ciafone also doesn't owe New York City one dollar for these violations."

Graves-Poller argued that the Court of Appeals couldn't rationally align Ciafone's case with that of Nativo because the facts were different. Ciafone's corporate entities have no interest in his law practice, she said. 

"Petitioners are the owners of the properties, not the individual as Mr. Nativo was in that case, and petitioners do not allege that they have any ownership interest in the advertised entity," Graves-Poller said. "For those two reasons, Nativo is simply not applicable."

Associate Judge Eugene Fahey pushed back on the disconnect alleged by the city between Ciafone and the buildings where his signs were posted. He asked how it would be a burden for the city to determine who the actual owner of the properties was behind the corporations.

"It seems to me something the agency does all the time, and looking behind that form to enforce a whole broad range of building code violations is commonly done by municipalities around the state," Fahey said.

Graves-Poller said the city had determined the ownership of the buildings, but that it was officially the corporate entities, not Ciafone. The fact that Ciafone owned those corporations didn't make a difference, she said.

"The city did find out who owned these properties, and the owners of these properties were the petitioners," she said.

The case is an appeal from the Appellate Division, First Department, which ruled last year that the fines couldn't be avoided by showing that Ciafone owned the buildings through corporate entities. They upheld the penalty in a 3-2 vote.

The two dissenting justices, in that decision, called it "logically absurd" for city officials to leave the fines in place, while an attorney would not be held to such a penalty if they advertised their firm on a building they owned outright.

The Court of Appeals will likely hand down a decision in the case next month.

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