New York Legal Update

Jehovah Witness Building Must Pay NYC Water And Sewer Charges

Some organizations within the City of New York have a unusual benefit - they are exempted from having to pay for water and sewer charges.  Religious organizations are entitled to the benefit if the water and sewerage they use is in real estate used in a public place of worship.  The limits of this special exemption was tested yesterday in a case before the Court of Appeals - Matter of Brooklyn Assembly Halls of Jehovah's Witnesses, Inc. v Department of Envtl. Protection of the City of New York.

The exemption is set forth in Chapter 696 of the Laws of 1887, as subsequently amended (the water exemption statute), which provides that:

"the real estate owned by any religious corporation located in the city of New York as now constituted, actually dedicated and used by such corporation exclusively as a place of public worship . . . [is] hereby exempted from the payment of any sum of money whatever to said city, for the use of water taken by same from said city."

In addition, New York City Administrative Code § 24-514(e) exempts:

 "[a]ny real property . . . entitled to an exemption from the payment of water rents or charges . . . from payment of the sewer rents or charges imposed hereunder."

The Brooklyn Assembly Halls of Jehovah's Witnesses applied for the exemption in 1991 for a building they owned in Brooklyn.  The building was 100,000 square feet, four stories high, with an attached three-story structure, and contained multiple meeting and assembly halls used for religious instruction and worship. In its application, the Church indicated that there were "[t]wo apartments on premises — One is for the manager and his wife. The second apartment is for the technical maintenance caretaker and his wife. All are ministers."

The City Department of Environmental Protection (DEP) denied the application on the grounds that under its implementation of the exemption only one dwelling in a building was allowed for a caretaker.

The Church dropped the matter until 2002 when it reapplied for the exemption.  In this application, the Church indicated that there were regularly scheduled events 30 weekends per year with approximately 1500-2000 in attendance per day at each event.  In addition, it claimed that two caretakers were needed to live on the premises given the size of the facility, maintenance and security needs, and insurance requirements. 

The DEP again denied the application on the grounds that the use of the building had not changed. A subsequent investigation by DEP revealed the building contained additional guest rooms that were not disclosed in the Church's application. The Church was advised that it could seek a partial exemption by installing a separate water meter for the non-qualifying portion of the premises.

Instead, the Church commenced an Article 78 proceedings directing and compelling the City to grant its application for the exemption, and to reimburse the Church for charges paid under protest. The Church argued that the determinations denying its request for an exemption were arbitrary and capricious and contrary to law.

The Court of Appeals upheld the denial of the Church's application.  The Court set forth the general rule that the construction given statutes by the agency responsible for their administration, if not irrational or unreasonable, should be upheld.  It then stated:

"While the agencies [DEP] might legitimately have chosen to read the statute more generously, we cannot say that they acted irrationally by limiting the exemption to premises devoted exclusively to public worship plus the residence of a caretaker for these premises, if there is one. This interpretation, uniformly applicable to religious corporations throughout the City, is easily understood and administered, and is reasonable in light of the water exemption statute's language and legislative history."

The Court rejected the Church's argument that the DEP's interpretation ignored a religious organization's actual need for water consumption.  The Court found that there was nothing in the water exemption's legislative history which suggested such a broad interpretation.  The Court also rejected the Church's claim that the water exemption laws should be interpreted in the same way as Real Property Tax Law § 420-a(1), which exempts from taxation any real property owned by religious organizations organized or conducted exclusively for religious purposes, if used exclusively for such purposes.  The Court stated that the DEP was not called upon to interpret the statutory exemption from water charges afforded religious corporations "in th[e] context" of Real Property Tax Law § 420-a(1).  And there was nothing to suggest that the two sets of legislation shared a common source. 

Commentary

With the average citizen paying increasing taxes, fees, tolls etc. for government services, what sense does it make to retain this special exemption for religious organizations at all?  Religious organizations' use of this special exemption only makes everyone else's water bill higher.  The water exemption laws are an anachronism and should be repealed entirely.

 

Bianca Jagger Can't Get No Rent Control Satisfaction

Beware you jet setting, international, super celebrities.  Your days in your New York rent controlled or stabilized apartments may be numbered.  This is the implication of the Court of Appeals' decision yesterday in Katz Park Ave. Corp. v Jagger, 2008 NY Slip Op 07987.

The case involved not Mic, but Bianca Jagger.  Ms. Jagger is in the U.S. legally on a B2 tourist visa.  She also has a rent stabilized apartment in Manhattan.  The problem? 

Under the Rent Stabilization Code (RSC), a landlord may recover possession of a rent stabilized apartment from a tenant whose lease has expired if the apartment "is not occupied by the tenant . . . as his or her primary residence" (RSC [9 NYCRR] § 2524.4 [c]). But the holder of a B2 tourist visa is required to have a "principal, actual dwelling place" outside the United States. Federal regulations make B2 visas available to aliens who are "visitors for pleasure" of the kind described in section 1101 (a) (15) (B) of the Immigration and Nationality Act (see8 CFR § 214.1 [a] [1] [i], [2]). That subsection of the statute applies only to "an alien . . . having a residence in a foreign country which he has no intention of abandoning" (8 USC § 1101 [a] [15] [B]), and "residence" is defined as "principal, actual dwelling place in fact, without regard to intent" (8 USC § 1101 [a] [33]).

Based on this, Ms. Jagger's landlord claimed that her rent stabilized apartment was not her "primary residence" and sought to remove her from the stabilized apartment. 

In affirming the landlord's motion for summary judgment, the Court of Appeals concluded that, at least absent some unusual circumstance, a primary residence in New York and a B2 visa are logically incompatible. It noted that Ms. Jagger made no attempt to show how she could simultaneously have a principal, actual dwelling place outside the United States and her primary residence in a New York stabilized apartment. 

So, Ms. Jagger's apartment will now be available.  Which international celebrity will be next?

Sex, Cohabitation, Divorce, And Spousal Support

It is somewhat common in divorces for the parties to reach an agreement regarding spousal support.  Tuesday's decision by the Court of Appeal in Graev v Graev, 2008 NY Slip Op 0794 should give a warning to parties entering into such agreements, and the attorneys drafting them, to make it explicitly clear what the terms of the agreement are.

The issue in the case involved exactly what does the term "cohabitation" mean? Is its meaning clear under New York law?  Does it require sexual relations or not?  Does it imply some sort of economic union?

In the case before the Court, during the parties' divorce, the husband and wife entered into a settlement agreement.  The agreement required the husband to pay spousal support to the wife until the occurrence of any of four "termination events."  These were: (1) the wife's remarriage; (2) the wife's death; (3) the husband's death; or (4) "[t]he cohabitation of the Wife with an unrelated adult for a period of sixty (60) substantially consecutive days." The agreement did not define "cohabitation."

After the agreement was entered into, the husband began conducting surveillance on his wife, and based on this surveillance, he believed that she had been cohabiting with a male (let's call him "MP" as the Court did).  The husband thus stopped making the spousal support payments. 

The wife then sought judicial relief to enforce the settlement agreement's spousal support provision.  The husband moved for summary judgment claiming that the wife and MP were cohabiting within the meaning of the settlement agreement because MP had stayed overnight in the wife's vacation home in Connecticut for at least 60 substantially consecutive days during the summer of 2004, as borne out by surveillance. Further, he contended, there was an "obvious serious relationship" between the wife and MP and that MP was the wife's "lover and life partner," as demonstrated by the number of family occasions — weddings, birthdays and the like — they attended as a couple.

In response, the wife argued that she did not "cohabit" with MP during the summer of 2004 because their relationship had long been purely platonic.  And she attempted to prove this with evidence of MP's sexual incapacity and her diminished sexual desire caused by prescribed medication. In her view, "cohabitation" meant having sexual relations.

The husband insisted that "cohabitation" was not synonymous with and did not require a showing of "sexual relations" under the law. 

Before a hearing on the matter, the husband sought to introduce extrinsic evidence of the "circumstances surrounding the separation agreement" so as to explain what behavior the parties intended to cover by the term "cohabitation." The wife opposed this motion claiming the motion court was able to define the term cohabitation in accordance with the plain meaning of the term as construed by the case law.  The motion court denied the husband's motion finding that the word "cohabitation" as used in the separation agreement was not ambiguous.

During the actual hearing, the wife admitted that at least for a period of three months her relationship with MP was sexual.  Other evidence admitted demonstrated that their relationship remained romantic and exclusive for over three years; they participated in social activities with friends and family as a couple and split costs when dating; and they performed chores and errands together.  The wife  nevertheless argued she and MP were not "cohabiting" within the meaning of the separation agreement because "cohabitation" required the central element of maintaining one residence, sharing household expenses and functioning as an economic unit.  And in this case, it was undisputed that MP owned his own home in Connecticut, where he spent considerable time, and did not contribute to the costs of maintaining the wife's summer home.

Both the Supreme Court and the Appellate Division found in favor of the wife essentially holding that previous case law had demonstrated that "cohabitation" had a plain meaning, it was not ambiguous, and it had been consistently interpreted to mean more than a romantic relationship or series of nights spent together, or more than an adult dating relationship.  It required some type of "changed economic circumstances," a sharing of finances, a sharing of a residence, or an economic relationship akin to a shared possessory interest in one home.  In other words, the couple must function as an economic unit.  And based on the evidence, both these courts found that there was no such relationship between the wife and MP because MP owned his own home and there was "absolutely no evidence that the couple shared household expenses or functioned as a single economic unit."  Thus, since the relationship did not amount to "cohabitation," the wife was entitled to continued spousal support payments.

However, the Court of Appeals disagreed and reversed.  The Court of Appeals found that the term "cohabitation" did not have a plain meaning which contemplated some type of changed economic circumstances.  They stated that the meaning of "cohabitation" was not necessarily determined by whether the couple shared household expenses or functioned as a single economic unit. Rather, the word "cohabitation" was ambiguous as used in the separation agreement, and neither the dictionary nor New York caselaw supplied an authoritative or "plain" meaning.  The Court stated:

"cohabitation" . . . bring[s] to mind a variety of physical, emotional and material factors, and therefore might mean any number of things in a separation agreement, where otherwise unexplained in the text, depending on the parties' intent. For example, the parties here might reasonably have meant "cohabitation" to encompass whether Mrs. Graev engaged in sexual relations with an unrelated adult; whether she and the unrelated adult commingled their finances or — just the opposite — whether she supported the unrelated adult financially; whether she and the unrelated adult shared the same bed; or some combination of these or other factors associated with living together as if husband and wife.

Accordingly, the Court of Appeals sent the case back to the lower court for further proceedings, presumably to allow the husband the opportunity to introduce evidence as to the parties' intent as to the meaning of the word "cohabitation."

It is obvious that matrimonial attorneys will now have to be quite specific in drafting divorce settlement agreements when using the term "cohabitation."  Such agreements should now spell out in detail whether "cohabitation" means having sexual relations, sharing expenses, sharing a residence, or any other number of factors.

 

Challenge to Dormancy Fees Of Gifts Cards Survives

We all love receiving Gift Cards.  Let's face it, we'd much rather get the stuff we want rather than those ugly sweaters and hideous candlestick holders.  But there is one problem.  After getting those gift cards, we stick them in our wallets or purses and forget about them.  And unfortunately, many cards have dormancy fees which decreased the value of the cards if they are not used within a certain time.

Are such fees fair?  Are they legal?

A class action suit currently underway just survived a motion to dismiss a challenge to such fees in a ruling from the Appellate Division, Second Department last week in Lonner v Simon Prop. Group, Inc., 2008 NY Slip Op 07877.

The Gift Card at issue in this litigation imposed a dormancy fee of $2.50 per month which would be deducted from the balance of the card beginning with the seventh month after the date of purchase. There were three notices advising purchasers of the card of this dormancy fee.  The first was on the card itself on the back of the card below the magnetic strip which stated as follows:

"An administrative fee of $2.50 per month will be deducted from your balance beginning with the seventh month from the month of card purchase."

In addition, the card was distributed within a cardboard sleeve, which also contained five additional folding double-sided "pages" which were attached to the sleeve.  A section on the back of the card sleeve, entitled "Do I ever expire?" gave the same notice as above.  Finally, the actual terms regarding the dormancy fees was placed on the very last page on the back of the 10 folding pages' of information included with the card sleeve. That section, entitled "Service Charges," provided as follows:

"If a balance remains on the Gift Card after the sixth month, the Gift Card will be charged a $2.50 monthly service fee. The fee will be deducted automatically, starting on the seventh month after the month of purchase, from any remaining value on the card on the first day of the month until the value reaches zero."

The class action plaintiffs set forth causes of action to recover damages for breach of contract based upon a breach of the implied covenant of good faith and fair dealing, violation of General Business Law § 349 (which prohibits deceptive and misleading business practices), and unjust enrichment.

The defendants moved to dismiss the complaint for failure to state a cause of action, and a defense based on documentary evidence (CPLR 3211[a][1] and [7]).

In denying the defendant's motion and upholding the complaint, the Second Department found that the complaint pled sufficient facts that the notices about the dormancy fees were in too small a print, in fonts materially less than that required by CPLR 4544.  CPLR 4544 provides, in relevant part, as follows:

The portion of any printed contract or agreement involving a consumer transaction . . . where the print is not clear and legible or is less than eight points in depth or five and one-half points in depth for upper case type may not be received in evidence in any trial, hearing or proceeding on behalf of the party who printed or prepared such contract or agreement, or who caused said agreement or contract to be printed or prepared.

The Court also found that sufficient facts were pled that the notices were concealed, and in violation of General Business Law § 349 (prohibiting deceptive and misleading business practices) and General Business Law 396-i(3), which provides that:

 [t]he terms of a gift certificate or store credit shall be clearly and conspicuously stated thereon.

The case will now proceed to a jury, or fact finder, to determine whether or not the dormancy fee notices were adequate.  Given consumer sentiment on such matters, it is likely that a jury will find in favor of the plaintiffs.

 

90-Day Statute Of Limitations To Challenge Arbitration Decision Begins To Run When Decision Is Received

Arbitration decisions can be vacated or modified under Article 75 of the CPLR.  However, there is a 90-day statute of limitations to commence such a proceeding to challenge an arbitrator's decision.  CPLR 7511(a) specifically provides:

An application to vacate or modify an award may be made by a party within ninety days after its delivery to him

The statute does not define "delivery."  So, when does the statute of limitations start to run - when the arbitrator's decision is mailed to the petitioner, or when it is received? 

In a case of  first impression, the Appellate Division, Fourth Department held on October 10th that the statute begins to run when it is received - Matter of Lowe v Erie Ins. Co., 2008 NY Slip Op 07735.

 

 

Rochester Curfew Law Ruled Unconstitutional

In 2006, the City of Rochester adopted a nighttime curfew for juveniles.  The curfew ordinance made it unlawful for minors under the age of 17 to be in a public place between the hours of 11:00 p.m. and 5:00 a.m. Sunday through Thursday and between midnight and 5:00 a.m. on Friday and Saturday.  The ordinance was adopted in response to the violent deaths of three boys between June 2001 and October 2005.  In adopting the ordinance, the City Council stated its reasons for the curfew as follows:

A. A significant number of minors are victims of crime and are suspects in crimes committed during the nighttime hours, hours during which minors should generally be off the streets and getting the sleep necessary for their overall health and quality of life. Many of these victimizations and criminal acts have occurred on the streets at night and have involved violent crimes, including the murders of teens and preteens.

B. While parents have the primary responsibility to provide for the safety and welfare of minors, the City also has a substantial interest in the safety and welfare of minors. Moreover, the City has an interest in preventing crime by minors, promoting parental supervision through the establishment of reasonable standards, and in providing for the well-being of the general public.

C. A curfew will help reduce youth victimization and crime and will advance the public safety, health and general welfare of the citizens of the City.

The curfew prohibited minors to be in public places unless the minor could demonstrate one of six exceptions:

1. The minor was accompanied by a parent, guardian, or other responsible adult
2. If the minor was engaged in lawful employment, or en route to from such employment
3. If the minor was in an emergency situation
4. If the minor was en route from a school, religious, or other civic sponsored recreational activity
5. If the minor was exercising fundamental rights such as freedom of speech or religion or the right of assembly protected by the First Amendment
6. If the minor was engaged in interstate travel.

On Friday, October 10th, the Appellate Division ruled the ordinance unconstitutional in Anonymous v City of Rochester, 2008 NY Slip Op 07724. 

The Court found the ordinance violated the equal protection clauses of both the U.S. Constitution (US Const, 14th Amend,  § 1) and the State Constitution (NY Const, art I, § 11).  Applying a strict scrutiny standard, the Court found that the curfew infringed on a minor's fundamental right of free movement because it affected the right of a minor:

"with parental consent to walk the streets, move about at will, meet in public with friends, and leave his house when [he] pleases. This right to movement is a vital component of life in an open society, both for juveniles and adults" (citations omitted).

Even though the Court stated that a strict level of scrutiny was the appropriate standard to apply, it stated that the ordinance did not even withstand intermediate scrutiny, or heightened scrutiny since the City did not show a substantial relationship between the curfew and its goals.

In examining the submissions submitted by the City in support of the curfew, the Court found that a common theme was that City officials perceived a pressing need to respond to the problem of juvenile victimization and crime as a result of the tragic deaths of the three minors between June 2001 and October 2005. However, the Court found that the record established that two of the deaths took place during hours outside the curfew, and that the other killed minor was already subject to an individualized curfew as the result of an adjudication that he was a person in need of supervision. Thus, the Court found there was no connection between the ordinance and the tragic events that spurred its enactment. In addition, in examining generalized crime statistics, the Court noted that minors were more substantially more likely to be the victim of a crime outside the curfew hours.

The Court also held that the curfew imposed unconstitutional burden on the First Amendment rights of minors. Even though the curfew ordinance specifically contained an exception for First Amendment activity, the Court nevertheless found the exception left it solely to the judgment of the arresting officer whether the minor was engaged in First Amendment activity, thus creating a chill on First Amendment activity.

Finally, the Court concluded that the curfew interfered with parental supervision and supplanted a parent's reasonable standards to direct and control the upbringing of their children.