Haberman v. Zoning Bd. of Appeals of the City of Long Beach

Decision The events giving rise to this case took place in 1989, the year that the Berlin wall fell. The wall lasted for 28 years. Litigation related to this matter has lasted for 31 years so far. The history of this case from 1989 through 2007 was best summarized by Judge Smith writing for the unanimous court in Matter of Haberman v. Zoning Bd. of Appeals of City of Long Beach, 9 N.Y.3d 269, 849 N.Y.S.2d 189 (2007): Sinclair Haberman sought a variance from the City of Long Beach Zoning Board of Appeals (ZBA) to build a four-tower residential condominium complex. The ZBA granted the variance, but after one of the towers was built a dispute arose about the other three. Haberman brought a lawsuit against the City, the ZBA and the City’s building commissioner, which was settled by a stipulation in 1989. Paragraph 4 of the stipulation said that Haberman would apply for new variances to permit construction of the remaining three buildings. These variances were to be subject to certain conditions, including time limits in which Haberman must apply for building permits: within five years of the grant of the variance for building 2,61/2 years for building 3 and seven years for building 4. In paragraph 5 of the stipulation, Haberman agreed to pay $200,000 to the City to fund public improvements for the benefit of his project, including the installation of underground utility lines; and the City agreed to begin construction of the improvements not later than two years after receiving the $200,000. Haberman did apply for the new variances, and the ZBA granted them on August 4, 1989. Haberman paid the $200,000 to the City in December 1989, so that, under paragraph 5 of the stipulation, the City was required to install the underground utility lines not later than December 1991. That deadline was not met, and the City asked Haberman for an extension of time. Haberman agreed to grant it, on condition that the paragraph 4 time limits, governing his time to apply for building permits, were also extended. These terms were reflected in a letter dated April 7, 1992 from Haberman to the City’s Corporation Counsel, who represented all the defendants — including the ZBA — in Haberman’s lawsuit. The letter said, in relevant part: “The undersigned Plaintiff-Petitioner in the above entitled action does hereby agree to extend the time of The City of Long Beach (‘The City’), to comply with paragraph ’5′ of the Stipulation of Settlement of the above entitled action, dated March 8,1989 (‘Stipulation’), without time limitation. “In consideration for this extension, it is agreed by the parties that the time limitations contained and set forth in paragraph ’4′ of the Stipulation shall be tolled and shall not run against the Plaintiff-Petitioner until such time as The City has complied with the terms of paragraph ’5′ of the Stipulation…. “Please indicate all of the defendants’ consent to the foregoing by signing and returning the enclosed copy of this letter.” The Corporation Counsel signed an acknowledgment that he “consented and agreed to” the April 1992 letter as attorney for all of the defendants, including the ZBA. The letter agreement was then attached to a new stipulation, providing that the 1989 stipulation “be, and hereby is, modified in accordance with the letter dated April 7th, 1992.” The new stipulation was signed by counsel for all parties and “so ordered” by Supreme Court. For the next decade, it seems, nothing of significance happened. The City did not install the underground utility lines, and Haberman did not apply for a building permit. Finally, in 2002, Haberman’s construction company applied for a permit to begin work on building 2, and in 2003 the City’s Building Department issued the permit. The cooperative corporation that had acquired building 1 back in the 1980s opposed the new construction, and asked the ZBA to revoke the permit; the ZBA did so, relying on Haberman’s failure to meet the schedule contained in the 1989 stipulation. The ZBA rejected the argument that Haberman’s time had been extended by the April 1992 letter agreement, saying that “[s]uch a major change…required a ratification by the ZBA after a public hearing.” Haberman brought this litigation to annul the ZBA’s revocation and reinstate his building permit. Supreme Court annulled the ZBA’s action, but the Appellate Division reversed, holding that the ZBA “had a rational basis for finding that the stipulation purporting to extend the prior variance was unenforceable” (35 AD3d 465, 467 [2006]). We granted leave to appeal, and now reverse the Appellate Division’s order. * * * Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed, with costs, and the matter remitted to the Appellate Division. * * * The matter was remitted to the Appellate Division “for consideration of issues raised but not determined on the appeal to that court” (Id). Upon remittitur the Second Department held, “….only one branch of the motions of the respondents/defendants to dismiss the combined petition and complaint should have been granted — that of the City respondents’/defendants’ motion pursuant to CPLR 3211 (a) which was to dismiss the cause of action alleging fraud and misrepresentation against Ungar, the City’s Corporation Counsel — as the cause of action failed to satisfy the specificity and particularity requirements of CPLR 3013 and 3016″ Matter of Haberman v. Zoning Bd. of Appeals of City of Long Beach 53 A.D.3d 490, 861 N.Y.S.2d 745, (2nd Dept., 2008 [internal citations omitted]). In Matter of Haberman v. Zoning Bd. of Appeals of City of Long Beach, 94 A.D.3d 997, 942 N.Y.S.2d 571 (2nd Dept. 2012) the Second Department similarly disposed of a motion to dismiss an amended complaint. The court held, “Contrary to the contention of the City defendants, in the decision and order on remittitur on the prior appeal (see Matter of Haberman v. Zoning Bd. of Appeals of City of Long Beach, 53 AD3d 490 [2008]), this Court did consider, and reject, their arguments challenging the viability of the plaintiffs’ due process and breach of contract causes of action. Since this Court’s decision and order on the prior appeal (Id.) constituted the law of the case, and there has been no ‘showing of subsequent evidence or change of law,’ reexamination of the viability of those same causes of action, which are asserted in the first, fifth, and sixth causes of action, is foreclosed.” The Second Department also declined to dismiss the second cause of action, which was the only newly plead cause. In Matter of Haberman v. Zoning Bd. of Appeals of City of Long Beach 152 A.D.3d 683, 58 N.Y.S.3d 585, (2nd Dept., 2017) the Second Department affirmed the order of the Justice McCormack entered March 27, 2015 (Supreme Court, Nassau County), which held the City in default of answering. In its opinion affirming the decision of the trial court, the Second Department reviewed the history of the case from 2010 to 2017 leading up to the default: The appellants moved pursuant to CPLR 3211 (a) (7) and 7804 (f), inter alia, to dismiss the first, second, fifth, and sixth causes of action of the third amended petition/complaint insofar as asserted against them. By order dated September 13,2010, the Supreme Court, inter alia, granted that branch of the motion, By decision and order dated April 17, 2012, this Court reversed that portion of the order (see Matter of Haberman v. Zoning Bd. of Appeals of City of Long Beach, 94 AD3d 997 [2012]), and denied the motion. On October 4, 2012, the petitioners/plaintiffs served a written demand that an answer be served within 10 days. By establishing that the appellants failed to comply with that demand, the petitioners/plaintiffs established the appellants’ default (see CPLR 3211 [f]). Contrary to the appellants’ contention, the petitioners/plaintiffs were not required to provide proof of entry of the appellate order with the clerk of the original court (see Rockland County Patrolmen’s Benevolent Assn. v. Town of Clarkstown, 288 AD2d 456, 457 [2001]). Moreover, the Supreme Court providently exercised its discretion in finding that the appellants’ proffered excuse was not reasonable (see Gershman v. Ahmad, 131 AD3d at 1105; Fried v. Jacob Holding, Inc., 110 AD3dat 60; Harcztark v. Drive Variety, Inc., 21 AD3d 876, 876-877 [2005]). In 2018 the case was assigned to the undersigned. UNCONTESTED FACTS Belair Building, LLC. is a New York limited liability company that owns several parcels of real property known collectively as 350 Shore Road, Long Beach, N.Y. Sinclair Haberman is the sole member of Belair¹. He is in the business of real estate management, development and investment. Haberman owns between 20 and 30 buildings and manages between 650 and 700 apartments. During the period of 1982-1985, the late Jacob Haberman (the father of Sinclair and a predecessor at interest to the property at issue) applied to the City of Long Beach² for variances of its zoning laws concerning maximum building area, minimum lot area and off street parking requirements in order to permit construction of a high-rise cooperative or condominium housing development comprised of four buildings containing a total of 432 units. These variances were granted in 1982, but subsequently deemed abandoned because the construction did not proceed within one year, a condition of the variance grant. In 1985 a new application for variances was filed. That application was granted and like the previous variance allowed the construction of four buildings (designated in the chronological order of construction as Towers “A”, “B”, “C” and “D”). Construction on Tower A commenced in 1986 and was completed in 1987. The 1985 variances provided as a condition precedent to obtaining permits for Towers B, C and D, that Haberman had to demolish his existing garden apartment complex known as “Belair Gardens.” As Tower A neared completion, Haberman tore down Belair Gardens and applied for permits for Towers B, C, and D. The permits were denied on the grounds that while Tower A was still under construction, the City amended its zoning laws to reduce the maximum height of buildings to seven stories and to increase the number of off-street parking spaces required for multiple family housing developments. Haberman brought an action against the City to compel the issuance of the permits. In 1989 that lawsuit was settled by stipulation. Under the terms of settlement Haberman agreed to apply for new variances seeking permission to construct Towers B and C at a height of ten stories and reduce the height of Tower D to seven stories. Haberman filed that variance application and the Board of Zoning Appeals approved it. Haberman also agreed to pay the sum of $200,000 to the City in consideration of which the City agreed to install underground utility lines within two years of payment. In December of 1989 Haberman paid the $200,000 to the City. After receiving the $200,000 the City requested an extension of time to install the utility lines. The parties entered into a second stipulation which provided that the deadline for Haberman to obtain building permits for the remaining three buildings was tolled until the City installed the utility lines. In the fall of 2002 Haberman applied for a building permit for Tower B, although the City had not installed the utility lines (and has not done so to date). Haberman submitted a full set of construction plans and specifications with the permit application. These plans and specs were under continuing review by the City in 2003, when Haberman’s contractor filed for a permit to drive piles and install footings for Tower B. Commissioner Scott Kemins (who was and still is the commissioner of the City’s building department) issued a permit, granting permission for “Driving Piles and Install Footings for Ten Story Apartment Building.” The piles were driven and the footings installed. Xander Corp. is the cooperative corporation which owns Tower A. On September 4, 2003 Xander petitioned the City Board of Zoning Appeals (“BZA”) to revoke the permit for installation of piles and footings for Tower B. The petition was granted by resolution of the board dated December 29, 2003 and the permit revoked. On September 14, 2003 in a further effort to prevent construction of Tower B, Xander commenced an action against Haberman asserting that Xander held a portion of the proposed construction site by adverse possession. By order dated December 6, 2004 Haberman was judicially enjoined from constructing Towers B, C, and D. The injunction was vacated on December 23, 2009 when Xander’s case was dismissed. Haberman then brought the instant case as a combined plenary action and special proceeding under Article 78 of the CPLR. The action sought declaratory relief and compensatory damages for breach of the second stipulation and for violation of due process under 42 USC §1983. The relief sought under Article 78 was reversal of the BZA decision that revoked the permit and an order directing reinstatement of the permit. By decision dated June 20, 2018 this court granted that relief, following that decision Commissioner Kemins issued the building permit in substantially the same form as the permit that he initially revoked in 2003. Haberman also brought an action (Supreme Court, Nassau County Index No. 21508/2010) against Xander and others alleging malicious prosecution and abuse of process. The parties agreed to bifurcate the Xander trial, with the issue of Xander’s liability to be heard before a jury and the damages portion of the Xander case to be tried before the bench jointly with the damage inquest in the case at bar. The liability phase of the Xander case resulted in a verdict in favor of plaintiffs and against Xander and the other defendants. On the morning of commencement of the scheduled joint hearing the parties to the Xander case settled the damage issue. COMBINED FINDINGS OF FACT and CONCLUSIONS OF LAW VALIDITY OF THE 2003 PERMIT Plaintiffs’ expert witness Mark Stumer, A.I. A performed an architectural evaluation of Towers B and C. He opined that in 2003 Towers B and C could have been built at a height often stories in substantial accordance with the plans submitted by Haberman in 2002. (184:15-19,199:6-24). Stumer opined that in 2010 and thereafter Towers B and C would have to be reduced to nine stories due to changes in sea level measurements, FEMA codes, flood plain maps and changes to construction codes (185:5-20). During cross examination Stumer acknowledged the existence of various building code sections and reference standards concerning flood elevations that might have required the base elevation depicted on the 2002 building plans to be three feet higher. He testified that if these sections were applicable the height of Tower B would have to be reduced to nine stories. Stumer also testified that without reviewing these code sections and reference standards and considering their interface with other regulations he could not determine whether these additional regulations were applicable at the time the permit was issued. Defendants’ expert, architect Joseph A. Lavalle, A.I.A. testified that in 2003 the building code sections and reference standards requiring a three foot higher base elevation applied to Tower B. Lavalle opined that if the flood elevations presented to him by Defendants were correct, the height of the building should have been limited to nine stories. He initially testified that the three foot parapet on the building should not be included in measuring the height of the building, but changed that testimony on redirect to state that the parapet should be included (1186: 3-5). Defendant Kemins also testified on behalf of the City (pp. 1008-1076). Kemins is the City’s current Commissioner of Buildings and held that title at the time the 2003 permit was issued. Kemins opined that the building code sections and reference standards requiring the increased base elevation should have been applied when the permit was issued by him in 2003 (pp. 1025, 1026). On cross examination Kemins acknowledged that from the date that he issued the permit in 2003 until the commencement of this hearing (a period of approximately 17 years) he never considered whether these standards were applicable. Kemins testified that he did not consider whether the plans submitted complied with these standards when he signed and issued the permits in 2003 or when he reissued the revoked permit in 2018 (pp.1040-1042). He only considered whether these regulations applied when the possibility was brought to his attention by counsel for Defendants just before the start of this hearing (p. 1043). Kemins also testified that the permit for “Driving Piles and Install Footings for Ten Story Apartment Building” was not a permit to construct the actual building. He testified that although a full set of construction plans was submitted it was still under review at the time that the initial permit was issued as reflected in correspondence concerning the plans between Haberman’s architect and the building department (Defts. Ex. 16). The correspondence contained nothing to suggest that the ongoing review had anything to do with flood elevations, height of the building for which the installation of footings and pilings was already permitted or any other matter that would prevent the ultimate construction of a ten story building for which he issued piling and foundation permits. “[A] defendant whose answer is stricken as a result of a default admits all traversable allegations in the complaint, including the basic allegation of liability, but does not admit the Plaintiffs conclusion as to damages (McClelland v. Climax Hosiery Mills, 252 NY, at p 351)…Accordingly at a trial to determine the amount of a plaintiff’s real damages, the defendant will not be allowed to introduce evidence tending to defeat the plaintiff’s cause of action” Rokina Opt. Co. v. Camera King 63 N.Y.2d 728,480 N.Y.S.2d 197 [1984]. The validity of the underlying permit and its wrongful revocation were alleged in the complaint and were traversable issues of fact deemed admitted by virtue of the City’s default. It is also law of the case having been determined by the decision of this court dated June 20, 2018. Finally the validity of acts of public officials in the course of their ordinary duties may only be rebutted by substantial evidence. “Under this ‘presumption of regularity’ the law further presumes that no official or person acting under an oath of office will do anything contrary to his official duty, or omit anything which his official duty requires to be done. Substantial evidence is necessary to overcome that presumption” People v. Dominique, 90 N.Y.2d 880, 661 N.Y.S.2d 597 [1997]. The evidence offered in rebuttal of the presumption of regularity was not substantial. It weighed evenly, at best. HOLDING: The permit issued in 2003 was valid prior to its wrongful revocation. BREACH OF CONTRACT With respect to Plaintiffs’ cause of action sounding in breach of contract, the Defendants assert that the stipulation was unenforceable as it was in violation of public policy. Defendants cite Collard v. Incorporated Vil. of Flower Hill, 52 N.Y.2d 594, 421 N.E.2d 818, 439 N.Y.S.2d 326 [1981] and its progeny all of which stand for the proposition that a municipality may not contract away its statutory zoning duties. Collard is a landmark zoning case and its general proposition is inviolate. That general proposition is also inapplicable to the case at bar. In its 2007 decision in connection with this matter (Matter of Haberman v. Zoning Bd. of Appeals of City of Long Beach, 9 N.Y.3d 269, 849 N.Y.S.2d 189) the highest court of this state addressed this specific issue, holding: [W]here a zoning board of appeals has voted to grant a variance, the board’s lawyer, acting with actual or apparent authority, may agree to extend the time to build the improvements permitted by the variance. A second board meeting and vote are not required. * * * We have held, however, that once a variance has been issued, the same formality is not required to extend the variance’s duration: “It is not required that…an application [for an extension] be treated as a new application for which public notice and a hearing are mandatory” (Matter of New York Life Ins. Co. v. Galvin, 35 NY2d 52,59 [1974]). The ZBA concedes that, under Galvin, a new notice and hearing were not necessary, but says that an extension should still require a ZBA vote. It cites no authority for this rule, and we see no good reason to adopt it. This decision of the Court of Appeals upholding the legality of the stipulation is binding law of the case. The holding that the stipulation was valid was also incorporated into the decision of this court dated June 20, 2018 which is law of the case as well. Even if the validity of the permit was not law of the case, the City’s factual admissions by virtue of its default bars the City from raising that issue. In Rokina Opt. Co. v. Camera King, 63 N.Y.2d 728, 480 N.Y.S.2d 197 (1984) the court held: [A] defendant whose answer is stricken as a result of a default admits all traversable allegations in the complaint, including the basic allegation of liability, but does not admit the plaintiffs conclusion as to damages (McClelland v. Climax Hosiery Mills, 252 NY, at p 351)…Accordingly at a trial to determine the amount of a plaintiff’s real damages, the defendant will not be allowed to introduce evidence tending to defeat the plaintiff’s cause of action. All of the issues concerning the validity of the permit are based on the traversable issues of fact alleged in the complaint. Those facts are deemed admitted by virtue of the City’s default. This principle also applies to Defendants’ assertion that breach of the stipulation did not cause damage to Plaintiffs, but rather all or a substantial part of the damages were caused by Plaintiffs themselves or the wrongful actions of Xander. The complaint alleges with specificity all of the elements of the breach of contract including how that breach caused Plaintiffs’ damages. These allegations (like the validity of the permit) are traversable issues of fact, which are deemed resolved in favor of the Plaintiffs in this case (Id). HOLDING: Wrongful revocation of the 2003 building permit by Defendants was a breach of their contract with Plaintiffs (the 1989 Stipulation). Defendants are liable for damages arising out of that breach. DAMAGES It is black letter law that the purpose of awarding compensatory damages is “to put the plaintiff in as good a position as he would have been in had the defendant kept his contract” (Hawkins v. McGee 84 N.H. 114 [N.H. 1929]³). “Compensatory damages are intended to have the wrongdoer make the victim whole…” (Ross v. Louise Wise Servs., Inc. 8 N.Y.3d 478, 836 N.Y.S.2d 509 [2007]). The devil in this detail is determining what sum of money will accomplish that purpose without gross speculation. The City argues that the best measure of damages is determining the difference between the value of the property in 2003 with the variances and the value of the property in 2003 if no variances were granted. In support of this position the City argues without authority that Plaintiffs did not need variances to build something. Defendants asserted that Plaintiffs without any variances could (and should) have built a smaller condominium project (such as a building reduced in size and number of units) or a different “as of right project” (such as garden apartments or single family homes). That argument ignores the fact that once plaintiffs built an as of right project they would be permanently deprived of the right to build what the variances authorized, the very right which the City granted through its BZA. Under the facts of this case, this suggested approach to measuring damages is inconsistent with reason. LOST PROFITS The alternate measure proposed by the Defendants is to determine lost profits by comparing potential sales proceeds at the time the permit was issued with the potential proceeds after the permit was restored. In order to determine potential lost profits in this manner, the value of the property and construction costs must be considered. The following sections review those issues. Property Value Daniel F. Sciannameo, MAI testified on behalf of Plaintiffs as an expert on land appraisal. Sciannameo submitted a report (Pltffs. Ex. 14) which appraised the value of the property as of December 2003 and as of September of 2018. The values were calculated by use of both the sales comparison and land residual approaches (506:19, 510:3-11). In using the sales comparison approach Sciannameo applied the construction costs provided in the report of William McQuilkin (Pltffs. Ex. 14,70-85). Using the combined approach Sciannameo opined that the value of the property in December, 2003 was $29,000,000 and its value was $17,600,000 as of September of 2018. Matthew J. Guzowski, MAI a member of the firm of Goodman-Marks Associates testified on behalf of Defendants as its expert land appraisal witness. Guzowski submitted a report prepared by Goodman-Marks (Defts. Ex. 22) in which the sales comparison approach was the only one used. Based upon that approach Goodman-Marks valued the property at $17,300,000 in 2003, at $20,300,000 in 2010, and at $25,100,000 in 2018. The Goodman-Marks report did not include any information about a relevant appraisal report that it prepared on the property at issue (for a different client) in 2012. That key omission made the testimony adduced from Guzowski less than persuasive. During cross examination Guzowski stated that when preparing the appraisal submitted in connection with this matter he forgot about report prepared by his firm in 2012. That report valued the property at $7,500,000 and included a parcel on the north side of Shore Road, which was not included in the other Goodman-Marks valuations (896-904, 949, 954, Pltffs Ex.. 15-A and 15-B). Guzowski gave no explanation about the wide deviation in valuation ($20,300,000 in 2010, $7,500,000 in the “forgotten” 2012 report and $25,100,000 in 2018) or the reason for omitting the parcel on the north side of Shore Road from the 2010 and 2018 appraisals. The court did not find credible that in 2012 the property plus an additional parcel were worth approximately one-third of the value of the property alone in 2010 and even less than one-third of the value in 2018. In evaluating Guzowski’s testimony the court also found that many of the properties selected as “comparables” were not comparable and not properly adjusted to be considered comparable (pp. 915-917, 928-931). Plaintiffs proved by a preponderance of the evidence that the property value was $29,000,000 in 2003 and $17,600,000 in 2018. Construction Costs Plaintiffs’ expert William McQuilkin was a construction estimator for 40 years on more than 4,000 projects including major projects such as the AOL-Time Warner Center and the World Trade Center. McQuilkin’s method of cost estimating includes research from public sources such as the internet, R.S. Means publications, and suppliers catalogs. He also uses a personal proprietary data base, which has been accepted as an valid reference source by contractors, architects and builders (pp.259-263). McQuilkin testified as to his cost analyses of Towers B and C as ten story buildings to be constructed in 2003 and as nine story building in 2010. The cost estimates were based upon the original 1987 design plans for the project. He also estimated the cost of required demolition of existing structures in each of those years and for structured parking on the north side of Shore Road. McQuilkin submitted a detailed report showing his calculations of the cost estimates (Plaintiff’s Ex.12). These estimates were as follows: 2003 (Ten Story)      2010 (Nine Story) Tower B $28,056,337                  46,037,399 Tower C 35,616,267                    57,852,692 Demolition 374,479 619,542 Parking Structure     655,355     1,084,227 Defendants submitted a report prepared by CSF (Def. Ex. A-19) and signed by Joseph A. LaValle, an architect and a member of that firm. The CSF report estimated that in 2003 the combined construction cost of towers B, C, and D was $55,574,936. That estimate did not include the cost of demolition or structured parking on the north side of Shore Road, site improvements or sales tax (pp 1165, 1166). In his testimony, LaValle summarized the information in the CSF report. In addition to summarizing the CSF report, LaValle testified that in 2004 a nine story building would cost $16,211,430 to construct(1102:18-21). This nine story cost estimate was not included in the CSF report and LaValle offered no explanation of how he arrived at this figure. Weighing the reports of McQuilkin and CSF and the testimony adduced, Plaintiffs established by a preponderance of the evidence that the McQuilkin cost estimates (as set forth above) were correct. Estimating Profit Defendants offered the report of forensic accountant Troy A. Dahlberg, C.P.A. (Defts’ Exhibit 20). Dahlberg testified that his estimate of lost profit was based upon assumptions drawn from the cost estimates of CSF and the valuations of land and unit sales provided by Goodman-Marks. Using these assumptions Dahlberg was asked to determine the difference between a ten story residential building and a similar building at seven stories. Dahlberg testified that if the information provided by CSF and Goodman-Marks was inaccurate assumptions his profit projection would likewise be inaccurate (1230:20-23, 1237:14-17). This court found the CSF and Goodman-Marks reports flawed (supra.). But even if the information in those reports (upon which Dahlberg based his assumptions) was accurate, Dahlberg testified that a determination of the amount of profit can only be made after the project is built and sold. (1236:13, 1237:14-17). There is no way of predicting when and if the project will be built, what configuration it will have to take given the local state and federal regulations that changed since the issuance of the 2003 permit, what construction costs will be and what the market will be at the time of construction. Calculating lost profit requires too much speculation to be an accurate measure of damages. RETURN ON MARKET VALUE Plaintiffs’ submit that damages must be determined based upon the return on market value of the property at the time the property was sold. In 520 E. 81st St. Assoc. v. State of New York 99 N.Y.2d 43,780 N.E.2d 518, 750 N.Y.S.2d 833 (2002) the Court held: Just compensation requires that claimant be awarded interest on the 1985 sale proceeds from the date the deprivation occurred. This represents the amount claimant would have been expected to earn had the money been available for use. As the Washington Supreme Court stated in Sintra, Inc. v. City of Seattle, “[w]e assume a person who received the money value of his or her property as of the date of the taking has a beneficial use available for these funds. Interest in this context is not an award of prejudgment interest on a liquidated sum in the traditional sense, but is a measure of the rate of return on the property owner’s money had there been no delay in payment” (internal citation omitted). In Wheeler v. City of Pleasant Grove, 833 F.2d 267, 271 [11th Cir. 1987] the court established a method for determining the damages sustained by temporary governmental interference with a landowner’s beneficial use of property. In Town of Orangetown v. Magee 88 N.Y.2d 41, 643 N.Y.S. 2d 21 (1996) the court applied the same measure of damages to a case in which a municipality wrongfully revoked a building permit. The wrongful conduct of the municipal defendant in the Town of Orangetown case was virtually identical to the conduct of the Defendants in the case at bar⁴ In Town of Orangetown the court found, “[Wheeler] held that the loss takes the form of an injury to the property’s potential for producing income or an expected profit. The compensable interest is the return on the portion of fair market value that is lost as a result of the government’s action. Accordingly, the landowner should be awarded the market rate of return computed over the period of the taking on the difference between the property’s fair value without the restriction and its fair market value with the restriction” (Orangetown, supra). The lost profit approach proposed by Defendants is impossible to calculate without a great degree of speculation even according to Defendants’ own witness. In contrast calculating the “market rate of return” used in Wheeler and Town of Orangetown cases requires little speculation. The Wheeler/Orangetown approach is the most appropriate measure of determining damages in the instant case. HOLDING: Plaintiffs are entitled to a market rate of return on the 2003 value of the property as one element of damages RATE OF RETURN Plaintiffs offered the testimony of Sameer Chandan, Ph.D as an expert in the field of real estate finance. Chandan submitted a detailed report (Pltffs. Ex. 13) in which he was asked to determine a reasonable proxy for the return on the value of the property. Chandan testified that the most appropriate way to calculate a proxy rate of return for an experienced real estate investor such as Haberman was to apply the Bloomberg Apartment REIT Index. According to the Chandan report the Apartment REIT Index for the period 2003 to 2018 is the equivalent of a compound annual rate of 11.3384 percent. Defendants offered the testimony of Robert S. Powell, Ph.D., an economist. Powell also submitted a report setting forth in detail the basis of his testimony (Defts. Ex. 21). Powell testified that the rate attributable to 10 year U.S. Treasury Bills was the most appropriate proxy since it would protect the invested principal from inflation in an a virtually risk free vehicle. Citing Granite Auto Leasing Corp. v. Jeff-Mar Bus Leasing Corp. 44 A.D.2d 553,353 N.Y.S.2d 217 (2nd Dept. 1974), the Defendants argued that the Bloomberg Apartment REIT Index cannot be used because (like any index) it includes a compounding factor. The principal holding in Granite concerned whether the transaction at issue was a lease or a financing agreement. As a secondary issue the court noted, (citing Atlas Fin. Corp. v. Ezrine 42 A.D.2d 256, 345 N.Y.S.2d 36 [1st Dept. 1973]) that the trial court also erred by allowing impermissible “interest upon interest.” The transaction at issue in Atlas was a self-amortizing mortgage which included prepaid and unearned interest. Neither Granite Auto Leasing Corp. (supra) or Atlas Fin. Corp (supra) is applicable to the instant case. The contract breached in the case at bar was not a financing transaction. There is no prepaid unearned interest under consideration. The amount resulting from the application of the Bloomberg Apartment REIT Index to the 2003 value is not “interest on interest.” While both Chandan and Powell provided credible testimony and submitted well detailed and documented reports, Chandan’s testimony was more persuasive. While not offering as secure a return as treasury bills, a REIT is relatively safe and the Apartment REIT is reflective of how Haberman would have invested given his business history. Evaluating the testimony and reports, Plaintiffs showed by a preponderance of the evidence that the Bloomberg Apartment REIT Index is an appropriate proxy for determining the return on the property value of $29,000,000. HOLDING: The Bloomberg Apartment REIT Index is a reasonable proxy rate for determining loss of return on market value LOSS OF VALUE Plaintiffs assert that in addition to the return on value they are entitled to the loss of value. In Michalowski v. Ey.7 N.Y.2d 71, 195 N.Y.S.2d 633 [1959]) the Court held: [T]he measure of damages will depend on whether or not the property had depreciated in value during the period of its wrongful detention. If the property depreciated in value, as the automobile in this case did, the plaintiff is entitled not only to such depreciation, but to the “interest on the [auto's] value, taken as it was before the depreciation” as well (51 N. Y., at p. 565; see Wells, Law of Replevin [2d ed., 1907], p. 493; Cobbey, Law of Replevin [2d ed., 1900], p. 469). This was the very rule applied by the trial court and approved by the Appellate Division. * * * As to property held for sale, the Allen case establishes, the measure of damages will depend on whether or not the property had depreciated in value during the period of its wrongful detention. If the property depreciated in value, as the automobile in this case did, the plaintiff is entitled not only to such depreciation, but to the “interest on the [auto's] value, taken as it was before the depreciation” as well (51 N. Y., at p. 565; see Wells, Law of Replevin [2d ed., 1907], p. 493; Cobbey, Law of Replevin [2d ed., 1900], p. 469). This was the very rule applied by the trial court and approved by the Appellate Division. In support of his contention that damages, if allowed, must be limited to the depreciation, the defendant argues that ‘It cannot be both loss of use and depreciation; it must be one or the other’. The short answer to this is that the plaintiff has been allowed not loss of use and depreciation but depreciation and interest on the value.” HOLDING: In addition to a return on the 2003 market value Plaintiffs are entitled to the loss of market value. REAL ESTATE TAXES During the period of December 29, 2003 through September 21, 2018 Haberman paid real estate taxes in the sum of $4,186, 434. Court’s Exhibit 4 which was submitted by stipulation of the parties, sets forth proof of the real estate taxes paid by Plaintiffs. It includes a schedule of payment dates and the calculation of accrued simple interest from those dated through November 2, 2020 at the current statutory rate. The total sum of interest reflected in Court’s Exhibit 4 is $3,473,659. HOLDING: Plaintiffs are entitled to recover real estate taxes and interest from the date of payment of those taxes. XANDER SETTLEMENT Defendants claim that they is entitled to set off all or a portion of the $23,000,000 proceeds of Haberman’s settlement with Xander against damages due in this case. In Rokina Opt. Co., (see p. 10, supra.) after setting forth those matters that a defaulting defendant could not dispute the court set forth the matters it could dispute. “Evidence will be allowed, however, involving circumstances intrinsic to the transactions at issue that, if proven, will be determinative of the plaintiff s real damages, which cannot be established by the mere fact of the defendant’s default.” (Id.) The law does not permit a double satisfaction for a single injury (Milks v. Mclver, 264 N.Y. 267). “Except in cases in which punitive damages may be allowed, an injured party may recover damages only for the actual loss he suffered and no more; he is to be made whole, but not entitled to be put in a better condition than he would be in had the wrong not been committed” Zarcone v. Perry 78 A.D.2d 70, 434 N.Y.S.2d 437 (2nd Dept. 1980, citing Missouri Pacific Railroad Company v. H. Rouw Company, 5 Cir., 258 F.2d 445, cert, denied 358 U.S. 929, 79 S.Ct. 315,3 L.Ed.2d 302; 15 Am. Jur., Damages, §13, pp. 402-404). Plaintiffs assert that there should be no set off since all of the damages arising out of the actions of Xander are separate and distinct from those arising out of the actions of the Defendants. That assertion is undermined by the fact that the parties agreed to a joint trial (and inquest) on damages. The main purpose of the joinder was to facilitate a determination of apportionment of damages between Xander and the Defendants. Because of the last minute settlement of the Xander matter, the Defendants had no opportunity to properly present evidence concerning its entitlement to a set off.⁵ The assertion that all of the Xander damages are separate and distinct is also inapposite to the settlement agreement between Xander and the Plaintiffs. The agreement states that the “Settlement Payment” was to compensate Plaintiffs “as and for a loss of value in, and injury to, the property and damages arising from the [Xander] Adverse Possession Action as sought in the Malicious Prosecution Action” (Settlement Agreement, 2 ). The damages sought in this case also include loss of property value due to inability to construct the remaining towers. Depriving Defendants of the ability to set off some of the Xander damages would impermissibly put Plaintiff in a better position than if he were made whole. (See, Zarcone, supra.) Because an undetermined portion of the Xander settlement arises solely out of the damages caused by the malicious prosecution action (including the cost of defending the adverse possession action), it is impossible without further inquiry to determine what portion of the settlement the Defendants is entitled to set off. An inquest is required with respect to how much of the settlement proceeds (if any) Defendants are entitled to as a set off. HOLDING: Defendants are entitled to set-off a portion of the $23,000,000 Xander settlement against the damages awarded in this matter. A further inquest is required to determine the amount of the set off. 42 USC §1983 Defendants admit that their “default with respect to the breach of contract claims and the 42 USC §1983 claims established liability under that statute” (Board of Appeals Post Trial Reply Memorandum, P. 28). Having been awarded full compensatory damages for breach of contract under its breach of contract claim, Plaintiffs cannot again recover those damages, but could be entitled to counsel fees if the Defendants are held liable for the §1983 claims. 42 USC §1988 (b) provides in pertinent part, “In any action or proceeding to enforce a provision of sections 1981, 1981a, 1982, 1983, 1985, and 1986 of this title…the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney’s fee as part of the costs…” Although admitting liability under §1983 in its brief (supra.) the Defendants also assert that the admitted acts do not constitute sufficiently egregious conduct to support a §1983 claim. In Bower Assoc. v. Town of Pleasant Val. 2 N.Y.3d 617, 781 N.Y.S.2d 240(2004) the court set forth several precedental standards for determining whether municipal conduct warranted a determination that constitutional right were violated. The court held: “[O]nly the most egregious official conduct can be said to be arbitrary in the constitutional sense”(City of Cuyahoga Falls, Ohio v. Buckeye Community Hope Found., 538 US 188, 198 [2003] [internal quotation marks omitted]; see also Harlen, 273 F3d at 501 [board action based on community opposition is not unconstitutionally arbitrary "if the opposition is based on legitimate state interests such as, inter alia, traffic, safety, crime, community pride, or noise" (internal quotation marks omitted)]; Natale, 170 F3d at 263 ["(s)ubstantive due process standards are violated only by conduct that is so outrageously arbitrary as to constitute a gross abuse of governmental authority"]; Lisa’s Party City, Inc. v. Town of Henrietta, 185 F3d 12, 17 [2d Cir 1999] [where town acted in accordance with a legitimate concern, it cannot be said to have acted "in an outrageously arbitrary manner so as to violate (plaintiff's) substantive due process rights"]). The issues in Bower Assoc. concerned a land use case in which the defendant municipality acted arbitrarily in denying a subdivision permit. Distinguishing the facts in that case from the facts in Town of Orangetown (supra.), the court held that “[w]hile the lower courts concluded that the municipalities’ actions in both cases were arbitrary, capricious and without rational basis in an Article 78 sense, what is lacking is the egregious conduct that implicates federal constitutional law.” The distinguishing facts arose out of the trial court’s finding in Orangetown that the permit revocation was arbitrary and capricious “because it was without legal justification and motivated entirely by political concerns.” The Defendants argue that its wrongful acts were akin to those of the municipal defendant in Bower Assoc. and are not “outrageously arbitrary” or “egregious.” Plaintiffs argue that the wrongful conduct of the Defendants was more like the conduct of the municipal defendant in Town of Orangetown, supra. That decision was predicated upon a finding of the trial court that the permit revocation was motivated entirely by “political concerns.” In the decision dated June 20, 2018 on the Article 78 claim in the instant case, there was no such finding. The §1983 claims alleged in the complaint were that the City unconstitutionally deprived Haberman of his property rights by acting in a manner that was “arbitrary and discriminatory…a gross abuse of governmental authority…intentional or with reckless or callous indifference to plaintiff’s rights” (Complaint,

,154, 155). The only specific acts alleged to have given rise to this “gross abuse of governmental authority” were : a) the insufficient notice of the scope of the BZA hearing (Complaint,