Judges to Consider City Plan for Union Square Park Restaurants

, New York Law Journal

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The pavilion at the north end of Union Square Park
The pavilion at the north end of Union Square Park

ALBANY - During a term with a decided commercial tilt, the state Court of Appeals will consider whether a controversial restaurant proposal for Union Square Park violates the public trust doctrine, a principle the court introduced in 2001 to help determine when municipal parkland may be used for private purposes.

As it hears arguments in 30 cases beginning today, the court also will be asked to clarify language commonly included in insurance contracts on replacement costs for damaged buildings and to settle a dispute that arose in lower courts in Manhattan over the admissibility of scientific evidence in residential mold exposure cases.

Union Square Park Communities Coalition v. New York City Department of Parks and Recreation, 17, the public trust doctrine case, will be heard on Jan. 14.

The Union Square Park Communities Coalition is seeking to overturn an Appellate Division, First Department, ruling that upheld a plan for Chef Driven Market to establish a new seasonal restaurant in Union Square Park Pavilion and a year-round food kiosk nearby (NYLJ, June 19, 2013).

Manhattan Supreme Court Justice Arthur Engoron earlier had ruled that appropriating a portion of the park's pavilion for the restaurant project would be an impermissible use of parkland for nonpark purposes.

Chef Driven Market would run the restaurant and kiosk through a 15-year licensing agreement with the city. In return, the city would gain the right to approve the restaurants' menus and prices, to restrict the kinds of events held at the eateries and to terminate the agreement at any time. The city also would initially collect $300,000 a year through the license, to increase to $453,777 annually by the 15th year of the agreement.

Assistant Corporation Counsel Deborah Brenner will argue that restaurants have long been recognized as appropriate uses of city parkland, with the city licensing popular eateries in Central Park, Battery Park, Madison Square Park and other city parks.

She also will maintain that the city parks agency is empowered to enter into the restaurant license agreements.

Opponents argue that conveying the property to Chef Driven Market violates the public trust doctrine as it was enunciated by the Court of Appeals in Friends of Van Cortlandt Park v. City of New York, 95 NY2d 623 (2001).

In that determination, the court held that "legislative approval is needed when there is a substantial intrusion on parkland for nonpark purposes, regardless of whether there has been an outright conveyance of title and regardless of whether the parkland is ultimately to be restored."

Sanford Weisburst, an attorney for Quinn Emanuel Urquhart & Sullivan, will argue on behalf of the coalition that the public trust doctrine was designed by the court to provide a check by the state—in the form of the Legislature's approval—on officials who may be facing undue pressures about the use of parkland.

Among the plaintiffs is Democratic Assemblyman Richard Gottfried, a 43-year veteran of the state Legislature whose district includes the 175-year-old Union Square Park.

In an amicus curiae brief filed in support of the communities coalition, new Manhattan Borough President Gale Brewer and three other state legislators argue that the Union Square case "implicates the interest of millions of New Yorkers" and would "fundamentally transform one of New York City's most iconic parks."

State senators Liz Krueger and Brad Hoylman and Assemblywoman Deborah Glick, all Democrats from Manhattan, joined Brewer.

But New Yorkers for Parks, a parks and open space promotional group, said in its amicus curiae brief that the restaurant project will "serve park users, enliven parkland and have limited footprints that are appropriate uses of parkland and do not violate the public trust doctrine."

Chef Driven Market is run by the same company that owns Five Napkin Burgers.

Replacement Costs

The insurance case, Executive Plaza v. Peerless Insurance, 2, will be heard today.

Put before the court as a certified question by the U.S. Court of Appeals for the Second Circuit (NYLJ, May 28, 2013), it involves an insurer's obligation in light of two potentially conflicting clauses common to insurance contracts.

One provision says any lawsuit for replacement costs of a building lost to an accident must be brought within two years while the other says the property owner, when seeking replacement costs, has to replace the damaged property before bringing suit and complete replacement work "as soon as reasonably possible."

Second Circuit Judge Denny Chin asked when a property cannot be "reasonably replaced" within the two-year limitations period specified in contracts.

"No controlling precedent interprets the suit limitations clause in light of the replacement cost provision," Chin wrote. He added that the "cases available provide little predictive value as to how the Court of Appeals would resolve this issue."

The case concerns Peerless Insurance Company's refusal to pay the replacement costs of an Executive Plaza-owned building destroyed by fire in Island Park, Nassau County, in July 2007.

Due in part to zoning problems, Executive Plaza did not "substantially replace" the building and sued the insurer for what it said was outstanding replacement costs provided for in the insurance contract until well after the two-year period had passed.

Mold Exposure

The mold exposure case, Cornell v. 360 West 51st Street Realty, 16, may hinge on the interpretation of another resident exposure case that also came from the First Department, 2008's Fraser v. 301-52 Townhouse Corp., 57 AD3d 416.

An appeals panel decided in 2012 that Supreme Court Justice Marcy Friedman interpreted Fraser too broadly when she dismissed tenant Brenda Cornell's suit against her landlord. The panel restored Cornell's claim that she was exposed to toxic mold and other substances because of a steam pipe break, a water leak and other deficiencies in her Manhattan apartment.

The First Department said Friedman misinterpreted Fraser as barring all toxic mold claims. In fact, the First Department maintained in a decision by Justice Sallie Manzanet-Daniels, the appeals court "never disavowed the underlying theory that exposure to mold may, under certain circumstances, give rise to respiratory and other ailments" (NYLJ, March 7, 2012).

The property owner contends that by not following Fraser as interpreted by Friedman, Cornell will be allowed to bring claims of illness due to mold exposure that she cannot prove through testimony that is accepted in the scientific and health communities.

In an amicus curiae brief, the Council of New York Cooperatives and Condominiums urged the Court of Appeals to abandon the First Department's ruling in Cornell. The group, which represents the owners of more than 2,000 cooperatives and condominiums in the New York City area, said the case could open the "floodgates" to tenants' litigation based on unsubstantiated health claims from exposure to mold.

Cornell claimed she experienced a body rash, fatigue, disorientation, shortness of breath, fatigue and headaches from being in her apartment.

The court will hear Cornell on Jan. 14.

Oral arguments before the Court of Appeals are webcast live through the court's website at www.nycourts.gov/ctapps/.

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