SCOTUS Denies Cert. on N.Y. Rent Stab. Laws Case

Supreme Court declines to hear rent stabilization case.
By Katherine Clarke, The Real Deal [R.E. industry blog],Mon., 23rd April, 2012, 12:00 P.M.[Updated at 3:30 p.m. with comment from Assembly Member Linda Rosenthal, q.v., infra, & updated at 12:30 p.m. with comment from Harmon]

Despite an unexpectedly thorough review from the U.S. Supreme Court in recent months, the court has declined to hear the case of James Harmon, the Upper West Side landlord challenging rent stabilization laws, according to court papers filed today. Harmon challenged the constitutionality of having him subsidize tenants to live in his own home at 32 West 76th Street. He previously said it’s unfair for him to subsidize his long-time tenants when they can afford to pay market rates. His three rent-stabilized tenants pay $1,000 monthly for their apartments, he said. Though courts on all levels routinely upheld rent stabilization laws, and despite the fact that his own case has been dismissed by two state courts, Harmon, who is a former New York federal prosecutor and represented himself in the case, caught the attention of the U.S. Supreme Court in December, in his bid to fight the regulations, it was previously reported. But, despite the Supreme Court requesting the city file a response explaining the courts’ aforementioned dismissals, the case is now closed. “The Harmon family is disappointed in the Supreme Court’s decision,” Harmon, whose brownstone is between Central Park West and Columbus Avenue, told The Real Deal in a statement. “We still believe that the constitution does not allow the government to force us to take strangers into our home at our expense for life. Even our grandchildren have been barred from living with us. That is not our America.” He continued: “Because of rent stabilization, it will now continue to be difficult for us to keep our home of five generations.” A supporter of Harmon’s fight, Sherwin Belkin, a founding partner of the law firm of Belkin Burden Wenig & Goldman, issued the following statement to The Real Deal: “Belkin Burden Wenig & Goldman, on behalf of the Community Housing Improvement Program, had filed an amicus brief in support of the owners,” Belkin said. “Certainly we are disappointed that the Supreme Court has elected not to hear this case. We fully expect that members of the real estate industry will continue examining cases that present compelling constitutional claims.” Another attorney, Terrence Oved, chairman of law firm Oved & Oved’s real estate department, who was not involved in the case, said he was somewhat surprised that the court had denied hearing the case despite expressing interest in it over the last few months. “We thought the court was going to take this on,” he said. “These laws have been in New York City for 40 or 50 years and were drafted in response to an emergency housing situation.”If the court had chosen to hear the case, it might have affected the rental market in the city, he said. “In anticipation of a decision, a lot of landlords thinking of putting properties subject to rent stabilization on the market might have held them back,” he noted. Assembly member Linda Rosenthal, who oversees Harmon’s district, released the following statement on the Supreme Court’s decision: “I am gratified that the United States Supreme Court has denied review of the Harmon case, which could have spelled the end of rent regulation in New York City. This is a victory for millions of rent-regulated tenants throughout New York City who would not be able to afford to live in this City were it not for rent regulation.” The Supreme Court declined to comment on the decision.
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No. 11-496 Title: James D. Harmon, Jr., et ux., Petitionersv.Jonathan L. Kimmel, et al.Docketed: October 20, 2011Linked with 10A1205Lower Ct: United States Court of Appeals for the Second Circuit Case Nos.: (10-1126) Decision Date: March 8, 2011 Rehearing Denied: May 20, 2011~~~Date~~~ ~~~~~~~Proceedings and Orders~~~~~~~~~~~~~~~~~~~~~Jun 7 2011 Application (10A1205) to extend the time to file a petition for a writ of certiorari from August 18, 2011 to October 17, 2011, submitted to Justice Ginsburg.Jun 15 2011 Application (10A1205) granted by Justice Ginsburg extending the time to file until October 17, 2011.Oct 17 2011 Petition for a writ of certiorari filed. (Response due November 21, 2011)Oct 25 2011 Waiver of right of respondent Darryl C. Towns to respond filed.Oct 31 2011 Waiver of right of respondent Jonathan L. Kimmel to respond filed.Nov 21 2011 Brief amici curiae of Rent Stabilization Association of New York, Inc., et al. filed. (Distributed)Nov 21 2011 Brief amici curiae of Pacific Legal Foundation, et al. filed. (Distributed)Nov 21 2011 Brief amici curiae of Atlantic Legal Foundation and Center for Constitutional Jurisprudence filed. (Distributed)Nov 22 2011 DISTRIBUTED for Conference of December 9, 2011.Dec 5 2011 Response Requested . (Due January 4, 2012)Dec 21 2011 Order extending time to file response to petition to and including February 3, 2012, for all respondents.Jan 4 2012 Brief amicus curiae of Community Housing Improvement Program, Inc. filed.Jan 26 2012 Order further extending time to file response to petition to and including March 5, 2012, for all respondents.Mar 2 2012 Brief of respondent Jonathan L. Kimmel in opposition filed.Mar 5 2012 Brief of respondent Darryl C. Towns in opposition filed.Mar 13 2012 Application (11A871) to file reply brief in excess of word limits, submitted to Justice Ginsburg.Mar 14 2012 Response (11A871) to application from respondent Darryl C. Towns filed.Mar 14 2012 Reply (11A871) of applicants James D. Harmon, Jr., et ux. filed.Mar 14 2012 Application (11A871) denied by Justice Ginsburg.Mar 20 2012 Reply of petitioners James D. Harmon, Jr., et ux. filed. (Distributed)Mar 21 2012 DISTRIBUTED for Conference of April 13, 2012.Apr 16 2012 DISTRIBUTED for Conference of April 20, 2012.Apr 23 2012 Petition DENIED.~~Name~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~Address~~~~~~~~~~~~~~~~~~ ~~Phone~~~Attorneys for Petitioners: James D. Harmon Jr. 32 West 76th Street (212) 595-1322 Counsel of Record New York, NY 10023 harmonj@harfirm.comParty name: James D. Harmon, Jr., et ux.Attorneys for Respondents: Leonard J. Koerner Chief Assistant Corporation Counsel (212) 788-1034 Counsel of Record NYC Law Department 100 Church Street New York, NY 10007 lkoerner@law.nyc.govParty name: Jonathan L. Kimmel Barbara D. Underwood Solicitor General (518) 416-8016 Counsel of Record Office of the Attorney General The Capitol Albany, NY 10271 barbara.underwood@ag.ny.govParty name: Darryl C. TownsOther: Sherwin Belkin Belkin Burden Wenig &Goldman LLP (212) 867-4466 270 Madison Avenue New York, NY 10016 sbelkin@bbwg.comParty name: Community Housing Improvement Program, Inc. Martin S. Kaufman Atlantic Legal Foundation (914) 834-3322 2039 Palmer Avenue Larchmont, NY 10538 mskaufman@atlanticlegal.orgParty name: Atlantic Legal Foundation and Center for Constitutional Jurisprudence R. S. Radford Pacific Legal Foundation (916) 419-7111 930 G Street Sacramento, CA 95814 rsr@pacificlegal.orgParty name: Pacific Legal Foundation, et al. Brian R. Smith 280 Trumbull Street (860) 275-8200 Hartford, CT 06103 bsmith@rc.comParty name: Rent Stabilization Association of New York, Inc., et al.
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Now is the winter of our fiscal discontent Made glorious summer by this sun of Mario; And all the clouds that lour'd upon our Senate In the deep bosom of the Catskills buried.From ALAN FLACKS at: alphlax@yahoo.com

Lawyer, Hired by Bronx Surrogate, Wore Wire in Cleanup Effort

From:
http://wiselawny.wordpress.com/ 13 April 2012
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John J. Reddy Jr., who was hired by Bronx Surrogate Lee L. Holzman to clean up a scandal in his court, wore a wire as a part of a 2009 investigation conducted by the New York City Department of Investigation, according to sources.

In an interview, Mr. Reddy confirmed that he had worn the wire to help the New York City Department of Investigation (DOI) determine who knew what within the Bronx courthouse and its satellite, the Bronx Public Administrator’s Office.

As part of the effort, Mr. Reddy, a widely respected lawyer who sought the Democratic nomination for Surrogate in 2008, said he asked a pointed question as to whether Surrogate Holzman had been informed of potential wrongdoing.

While wearing the wire shortly after Surrogate Holzman hired him in April 2009, Mr. Reddy said he asked an accountant, whose contract with the Public Administrator’s office he was about to end, what information he had provided to the judge.

“I was terrified of the answer,” Mr. Reddy said. But, he added, the accountant, Paul Rubin, told him that he did not raise any red flags for the Surrogate. A source close to Mr. Rubin said that prior to the scandal breaking into the open in early 2006, the accountant was not aware of any problem in the office and only might have been with the benefit of hindsight.

“My job was to clean up the office, not to protect anyone,” Mr. Reddy added, “I wasn’t there to protect the Surrogate.”

In April, 2009, when the conversation was recorded, three government agencies—the FBI, the Bronx District Attorney’s Office and DOI—were examining suspicions that the office’s counsel, Michael Lippman, had been overcharging for work he had performed and taking fees in advance of earning them.

Fifteen months later in July 2010, Mr. Lippman was indicted for receiving $300,000 in unwarranted fees from estates he had handled at the Public Administrator’s Office. The case is currently scheduled to begin trial on May 22. The Public Administrator’s Office handles estates of persons who die without a will.

Mr. Lippman’s lawyer, Murray Richman, said his client “has done nothing wrong and everything he did had been cleared by the court prior to his doing it.”

Conduct Commission Hearing

In January 2011, the New York State Commission on Judicial Conduct filed disciplinary charges against Surrogate Holzman accusing him of breaching the ethical code for judges by not properly supervising Mr. Lippman and by failing to report his alleged improper billings to law enforcement authorities.

The complaint also alleges that Surrogate Holzman approved fee applications from Mr. Lippman that were based upon “boilerplate” affidavits that did not detail the actual work he had done.

Those charges did not become public until nine months later when Surrogate Holzman waived his right to keep the proceeding confidential.

The commission acknowledges that Surrogate Holzman never approved either advance or excess fees for Mr. Lippman. No criminal charges have been brought against the judge.

Mr. Reddy also said in an interview that he testified about his recording of the conversation with Mr. Rubin during the disciplinary hearing. The commission appointed former Manhattan Supreme Court Justice Felice K. Shea to preside as referee over the hearing which spanned 15 days through last fall and early winter.

According to published reports, Surrogate Holzman testified at the hearing that he fired Mr. Lippman as the office’s counsel after learning of his allegedly improper fee practices in early 2006, but allowed him the remain on staff to work on cases.

In allowing Mr. Lippman to stay on, the conduct commission charges, Surrogate Holzman improperly set up a system that permitted the lawyer to use his future earning to reimburse estates from which Mr. Lippman had allegedly improperly taken fees.

According to an article in the New York Law Journal (Jan. 18, 2012), Surrogate Holzman testified that he fired Mr. Lippman after he confessed in 2006 to taking excess fees from some estates, but added that he did not believe Mr. Lippman had broken any laws and trusted that he would pay back any overpayments. It was not until 2009, he testified, that he first suspected Mr. Lippman might have engaged in serious misconduct upon learning state and federal authorities were investigating his fee practices.

Surrogate Holzman’s lawyer, David Godosky, of Godosky & Gentile, said in an email that Mr. Reddy had testified that the reimbursement system devised by Surrogate Holzman “greatly reduced the harm” caused by Mr. Lippmann’s receipt of advanced fees.

In connection with its description of the repayment system, the commission complaint alleges that Surrogate Holzman allowed “a social, political or other relationship” to influence his judgment. Separately, the complaint states that Surrogate Holzman should have recused himself from hearing Mr. Lippman’s cases because he raised $125,000 for Surrogate Holzman’s 2001 campaign.

Following his termination of Mr. Lippman in early 2006, Surrogate Holzman named his court attorney, Mark Levy, as counsel to the public administrator. Mr. Levy served in that capacity until Mr. Reddy was appointed in April 2009.

Shortly after becoming the PA counsel, Mr. Reddy terminated Mr. Lippman’s relationship with the office, according to the commission complaint.

Eight months before Mr. Reddy was hired as counsel to the public administrator, the New York Daily News ran an article reporting that Mr. Lippman had taken fees before filing affidavits required to support the fee applications (July 20, 2008). The article also reported that then-New York City Comptroller William Thompson had criticized a number of practices within the Bronx Public Administrator’s Office and had referred the matter to the Department of Investigations.

The evidentiary phase of the hearing was completed on Jan. 17, and it is anticipated that the 2,700-page transcript of the hearing will be available to the public on the commission’s Web site next week. Referee Shea will render a report to the commission after the two sides submit briefs.

Surrogate Holzman, who turns 70 in May, will be required by law to step down at the end of the year.

Reddy Again Sought Surrogate Nomination This Year

As in 2008, Mr. Reddy again this year sought the Democratic nomination to fill a vacancy on the Manhattan court which will open up at the end of the year when the current surrogate, Kristin Booth Glen, must also step down because of the mandatory retirement law. The Surrogate’s Court presides over the distribution of the assets of persons who die either with, or without, a will.

Unlike four years ago, when the Democratic party’s screening panel found Mr. Reddy to be one of the best three qualified candidates to compete in the primary, this year the panel did not include him on the list of candidates qualified to run. Also unlike in 2008, the screening panel this year only found two candidates qualified to compete for the nomination, Barbara Jaffe and Rita Mella, both Civil Court judges.

Under the Manhattan party’s rules, the county [executive] committee may only endorse one of the three candidates named by its screening panel. While the county party’s backing is largely symbolic, most of the local political clubs in the borough, which do much of the legwork in campaigns, will only endorse candidates reported out by the panel, though they are not bound to.

Mr. Reddy, a trusts and estates expert at Reddy Levy & Zifner in Manhattan, said he has abandoned his quest for the Democratic nomination because it is not possible to compete without the support of the borough’s Democratic clubs.

The party screening panel’s deliberations are confidential, and the reason Mr. Reddy was not listed among the three best candidates is not known.

Four years ago, after being one of the three candidates approved by the screening panel, Mr. Reddy went on to compete in a three-way race for the Democratic nomination. Manhattan Surrogate Nora S. Anderson won that contest and two months later was elected to the then-open seat on the Manhattan court.

Decision of Interest: TRO in Park West Village case.

PEYTON v. PWV ACQUISITION LLC
2012 NY Slip Op 50598(U)

MAGGI PEYTON ET AL., Plaintiffs,
versus
PWV ACQUISITION LLC, PWV OWNER LLC, AND JEWISH HOME LIFECARE, MANHATTAN, Defendants.
Index No.: 111379/11.
Supreme Court, New York County.
Decided April 5, 2012.

Catherine A. Grad, Esq., GRAD & WEINRAUB, LLP, for plaintiffs.
Deborah E. Riegel, Esq., ROSENBERG & ESTIS, P.C., for defendants.

ANIL C. SINGH, J.

Plaintiffs are tenants at Park West Village in Manhattan. The riders to their leases give them assigned parking spaces in outdoor parking lots at 97th and 100th Streets.

On July 21, 2011, many of the plaintiffs received notices from their landlord, defendant PWV Acquisition LLC ("PWV"), that their cars were being relocated to an underground parking garage located at 808 Columbus Avenue. On September 26, 2011, PWV advised the tenants that the landlord had the right to change assigned parking spaces under a rider to the leases. The tenants were urged to contact management to make final arrangements for the transfer without the need for legal action.

PWV seeks possession of the 97th Street parking lot as part of a real estate transaction with defendant Jewish Home Lifecare ("Jewish Home"). Under the deal, the 97th Street parking lot will be conveyed to Jewish Home. A new nursing home and elder care center will be constructed on the 97th Street parking lot. In exchange, Jewish Home will transfer its property located on 106th Street, which has valuable development rights, to defendant PWV Owner LLC ("PWV Owner"). PWV Owner intends to construct a high-rise residential building on the property it will receive from Jewish Home.

Plaintiffs move to enjoin defendants from terminating their parking lease riders and right to park in their current parking spaces or to eliminate or relocate plaintiffs' parking spaces to the underground parking garage at 808 Columbus Avenue. Defendants oppose the granting of injunctive relief. In the event injunctive relief is granted, defendants seek a bond of at least five million dollars for the first year or, alternatively, a hearing on the amount of the bond.

To be granted injunctive relief, plaintiffs must establish a likelihood of success on the merits and irreparable injury in the event the injunction is not granted (U.S. Re Companies, Inc. v. Scheerer, 41 A.D.3d 152, 154 [1st Dept., 2007]). The equities must balance in favor of the plaintiffs (Nobu Next Door, LLC v. Fine Arts Housing, Inc., 4 N.Y.3d 839, 840 [2005]). The purpose of an injunction is to maintain the status quo to prevent the dissipation of property so as not to render any judgment ineffectual (Gluck v. Hoary, 55 A.D.3d 668, 668 [2d Dept., 2008]). Injunctive relief is not appropriate where money damages will make plaintiffs whole (Somers Associates, Inc. v. Corvino, 156 A.D.2d 218, 219 [1st Dept., 1989]). A bond is necessary where injunctive relief is granted as to secure defendants' damages if it is ultimately determined that an injunction should not have been granted (Ithilien Realty Corp. v. 180 Ludlow Development LLC, 80 A.D.3d 455, 455 [1st Dept., 2011]).

I. Likelihood of Success on the Merits
The three buildings at issue in this lawsuit — 784 Columbus Avenue, 788 Columbus Avenue, and 792 Columbus Avenue — have had parking since their construction as reflected in the respective certificates of occupancy issued in the late 1950s. Promotional material for Park West Village from the early 1960s touts the availability of optional on-site parking.

Today, only two lots remain — the 97th Street lot abutting 784 Columbus Avenue, and the 100th Street lot in front of 792 Columbus Avenue. The third parking lot bordering 788 Columbus Avenue was utilized in 2006 to construct 808 Columbus Avenue. It is the site of the underground lot where PWV seeks to relocate plaintiffs.
Plaintiffs allege that they are rent-stabilized tenants with written and oral leases for assigned parking spaces at the 97th and 100th Street parking lots. They contend that the parking spaces are a required ancillary service and cannot be modified or substituted without first obtaining the approval of the Division of Housing and Community Renewal ("DHCR").

The Rent Stabilization Code ("RSC") defines an ancillary service as "those required services not contained within the individual housing accommodations which the owner was providing on the applicable base dates.... These may include, but are not limited to, garage facilities" (RSC Section 2520.6 [r][3]). Garage service provided to tenants in conjunction with the leasing of their apartments that is building-wide and not a service provided to an individual tenant is an ancillary service (Matter of Netherland Operating Corp. v. Eimicke, 135 A.D.2d 352, 352-353 [1st Dept., 1987]).
Plaintiffs have established that the parking spaces provided to them at the 97th and 100th Street lots are a required ancillary service. Parking spots were available to tenants in the late 1950s and the early 1960s. The service was provided prior to the base date of May 31, 1968. RSC Section 2522.5(e) provides that a landlord may not modify or substitute a required service without first receiving approval by DHCR.

Plaintiffs contend that the change PWV seeks to impose is a radical shift in the manner by which the landlord delivers parking services to the tenants. They lose their convenient aboveground lots, which are available to them on a twenty-four hour basis. Instead, they will be required to move to a less convenient underground location accessible by elevator or stairwell. Plaintiffs maintain that the room where the elevator and stairwell is located is not secure. In the event the elevator is not functioning, the garage is accessible only by stairs. The lot is operated by Quik Park, an independent contractor which provides valet parking. Plaintiffs contend that they will have to wait for an hour to retrieve their cars and that valet service will increase their costs.

Additionally, plaintiffs urge that under their current rent-stabilized lease riders, PWV is required to provide parking. However, the underground parking lot is owned by 808 Columbus, a condominium. Under its condominium declaration, residents of 808 Columbus Avenue have a preference. The parking spaces of non-residents can be terminated upon thirty days notice. Therefore, plaintiffs could lose their spaces and be without legal recourse against 808 Columbus, which is not their landlord.
Defendants urge that the parking space riders give PWV the express right to relocate the parking spaces. Therefore, the tenants' current spaces may be lawfully moved to the underground garage, and such a move does not constitute a reduction in service. In fact, plaintiffs will be provided an upgraded secure parking facility upon the same terms and conditions as their existing lease riders. Defendants urge that complaints by the plaintiffs are de minimus. The minor inconvenience plaintiffs may experience does not give rise to a reduction of service. Accordingly, DHCR intervention is not warranted.

I disagree. Plaintiffs are likely to succeed on their claim that their current parking on outside lots cannot be modified without prior DHCR approval. RSC Section 2522.5[e][3] explicitly requires that an owner may not modify or substitute a required service without first obtaining approval from DHCR.

In Charles H. Greenthal & Co. v. 301 E. 21st St. Tenants' Assn., 91 A.D.2d 934, 935 (1st Dept. 1983), the landlord and managing agent sought a preliminary injunction to compel tenants to grant access to their apartments to allow the landlord to convert electricity from master to individual metering. The court held that the "initial determination of what constitutes an essential service, relevant to the issue here of whether the conversion from master to individual metering should be approved, is a matter appropriately reserved to the administrative agencies, which have the necessary expertise and are best equipped to dispose of the issue (citation omitted)."

Both parties cite to DHCR administrative determinations on the issue of whether an owner's attempt to change from a self-park system to valet parking, or to alter the location of parking spots, constitutes a modification of an essential service. Similarly, here, a full administrative record must be developed before DHCR, the agency with expertise and regulatory authority, to determine whether PWV's attempt to move the tenants from their current aboveground parking lots to an underground facility at a different location constitutes an impermissible modification of services, or whether it is a minor inconvenience authorized by the lease riders.
Plaintiffs will suffer irreparable injury if a preliminary injunction is not granted. Defendants intend to move plaintiffs to the underground parking facility to consummate the real estate swap with the Jewish Home. Jewish Home intends to build its new facility on the 97th Street lot.

If DHCR ultimately determines that PWV may not modify the parking service it provides to plaintiffs by moving the tenants to the underground lot at a different location, plaintiffs may not be able to repossess their outdoor parking spots. When bulldozers start plowing through pavement and construction begins, the parking spaces will be gone forever. The legal right to a parking space as part of a rent-stabilized lease in Manhattan is a valuable service. Money damages will not suffice, as the tenants' current outdoor parking convenient to their homes cannot be replaced.

The sworn affidavits exhibited by plaintiffs clearly describe an irreparable injury.
Plaintiff Hillel Hoffman states in a sworn affidavit that the elevator from the vestibule to the 808 Garage is often out of service. His wife is 69 years old, and he is 71 years old. His wife has had two hip replacements. Although they can both currently walk the stairs to the garage from the ground level, Hoffman is concerned that they may not be able to do so in the future, as walking up and down stairs becomes more difficult.

Hoffman is worried about crime. He asserts that the door to the elevator and stairwell is not locked. There are no security personnel or any other personnel posted there. According to Hoffman, the arcade is desolate at night. Anyone entering the elevator/stair room is "trapped" there and vulnerable to muggers.
Plaintiff Mary Lee Baranger states that she is 81 years old and lives alone. She does not want to surrender her designated parking space in the nearby outdoor lot because she uses her car frequently to bring her son and daughter-in-law and her two grandchildren to her home. This involves transporting several people and many things that go along with children aged four and nine. Accordingly, she needs to have her parking space just outside her building. When the elevator in the garage is out of order, it will be hard for her to walk on the ramp used by cars, especially in bad weather.

Plaintiff Maggi Peyton states in a sworn affidavit that she investigated access to the garage. She contends that the elevator was out of service; that the stairwell was deserted; and that she did not feel safe walking to the garage in the stairwell. When she sought access by the ramp used by cars for ingress and egress, she found that the ramp has a very steep incline that would be impossible for a person to navigate using a walker.

The equities balance in favor of plaintiffs. On the one hand, granting an injunction might delay construction of buildings that are, at best, in the planning stage at this point. The delay and uncertainty is caused in part by PWV. Prior to entering the land swap with Jewish Home, PWV could have brought administrative proceedings before DHCR seeking a modification of the ancillary parking service provided to plaintiffs. On the other hand, denying an injunction would result in the immediate loss of the tenants' assigned parking spaces to which they have a present lawful possessory right. Plaintiffs only seek to maintain the status quo pending DHCR's determination as to whether PWV can modify the current parking service.

Finally, we turn to the bond issue. "The fixing of the amount of an undertaking is a matter within the sound discretion of the court, and will not be disturbed absent an improvident exercise of discretion" (Lelekakis v. Kamamis, 303 A.D.2d 380 [2d Dept., 2003]). The amount of the undertaking must be rationally related to the defendants' potential damages if the preliminary injunction later proves to have been unwarranted (Madison/Fifth Associates LLC v. 1841-1843 Ocean Parkway, LLC, 50 A.D.3d 533, 534 [1st Dept., 2008]). "Its sufficiency depends upon the circumstances of the particular case" (67A N.Y.Jur.2d Injunctions 172). The amount of the undertaking must not be excessive, and the court must not consider defendants' speculative or conclusory claims of potential financial losses (Ujueta v. Euro-Quest Corp., 29 A.D.3d 895, 896 [2d Dept., 2006]; Shaffer v. Shaffer, 44 A.D.2d 725 [2d Dept., 1974]); 7th Sense v. Liu, 220 A.D.2d 215, 217 [1st Dept., 1995]).

"It is improper to require, as a condition of a preliminary injunction, an undertaking in an amount which would result in a denial of the relief to which the plaintiffs show themselves to be entitled" (67 N.Y.Jur.2d Injunctions 172, citing Zonghetti v. Jeromack, 150 A.D.2d 561 (holding that plaintiffs were required to post only $100,000 undertaking as prerequisite to granting injunctive relief, not $740,000 undertaking originally required by trial court); see also Modugno v. Merritt-Chapman Scott Corp., 17 Misc.2d 679 [Supreme Ct., Special Term, Queens Cty., 1959], and Barouh Eaton Allen Corp. v. International Business Machines Corp., 1980 WL 4693 [Supreme Ct., Special Term, Kings Cty., 1980]).

By the same token, the amount of the bond must not be insufficient. For example, in Weitzen v. 130 E. 65th St. Sponsor Corp., 86 A.D.2d 511 [1st Dept., 1982], the trial court entered an order granting plaintiff's motion for a preliminary injunction prohibiting demolition of premises known as 130 East 65th Street in Manhattan and construction of a 17-story building on the site, and directed that plaintiff file an undertaking in the sum of $20,000. The First Department modified the order, finding that the amount of the undertaking fixed by the trial court was inadequate and should be increased to $150,000.

In the instant matter, defendants exhibit the sworn affidavit of Jeffrey Davis, who states that he is the property manager for Columbus Square Management. He contends that an injunction would block defendants' development and construction of a residential high-rise building, thereby causing defendants more than $297 million in lost profits, resulting in "concrete losses of approximately $625,000 in expenses already incurred" (Davis. Aff., p. 2, para. 4).

It is important to note that a significant amount of regulatory work must take place before construction can begin. Several entities, including the Department of Buildings, the City Planning Commission, and the New York State Department of Health, must approve the project and issue permits. Jewish Home must also obtain a bank loan or other financing before the project can move forward.

In short, we find that it would be completely speculative to require a bond in the sum of $5 million per year in light of the fact that regulatory approval and financing have not yet been finalized.

We must bear in mind that plaintiffs do not have unlimited financial resources. The astronomical amount sought by defendants would, in effect, deny plaintiffs injunctive relief. The Court must be careful to fix the bond in an amount that will not result in the denial of the equitable relief to which the tenants have shown themselves to be entitled.

Under the totality of the circumstances, plaintiffs shall post a bond in the amount of $75,000. No issue of fact is raised requiring a hearing on the amount of the bond at this time.

Accordingly, it is
ORDERED that pending the final resolution of this action, defendants, their agents, servants, employees and all other persons acting under the jurisdiction, supervision and/or direction of defendants, are enjoined and restrained from terminating plaintiffs' parking lease riders and right to park in their current parking spaces or to eliminate or relocate plaintiffs' parking spaces to the underground parking garage at 808 Columbus Avenue; and it is further

ORDERED that plaintiffs within 30 days shall post with the Clerk of the Court a bond in the sum of $75,000 with sufficient surety to secure the damages incurred by defendants for the vacating of the preliminary injunction, if they succeed in vacating the preliminary injunction.

Patronage and Nepotism in the Courts--Really?

Gonzalez turned his high court into a patronage den. The presiding justice escapes without even a warning.

Editorial, NEW YORK DAILY NEWS, Tuesday, April 3, 2012.

He was appointed in 2009 to serve as presiding justice of a top New York appeals court, and preside Luis Gonzalez did — over payroll cronyism.

The state Commission on Judicial Conduct reveals that getting hired to work at the Appellate Division court serving Manhattan and the Bronx has long required knowing somebody who knows somebody — and that Gonzalez elevated the insiderism to a whole new level.

When an early-retirement program produced 25 administrative openings, almost every one went to buddies and kinfolk. Gonzalez okayed a half-dozen well-paying jobs for people who had family ties to his chamber, never mind that some lacked the published qualifications for the posts.

Exhibit 1: Gonzalez gave his ex-wife a job as a paralegal at a salary of $64,834 a year, more than her supervisor was paid. He asked his executive assistant to keep the relationship secret.

Exhibit 2: He gave an executive assistant’s nephew a $58,298 job as a senior court clerk even though the nephew was not a college graduate and had no court experience, both of which were required for the post.

Exhibit 3: Another Gonzalez executive assistant also slipped a nephew onto the payroll as a $58,298 clerk, even though he, too, had never graduated from college or worked for the courts.

Exhibit 4: Gonzalez’s secretary helped her brother get a paycheck.

Exhibit 5: Gonzalez’s driver got his son hired.

Exhibit 6: The driver got a cousin a job.

Gonzalez managed or enabled all this by dismantling a reformed hiring process put in place by his predecessor. Under that system, job openings were publicly posted for the first time. A panel of senior career employees passed on the qualifications of applicants. Gonzalez dropped the listings and the panel.

Caught red-handed, Gonzalez admitted all. Still, the commission wrongheadedly chose to let him off without so much as a reprimand for conduct that demeaned the standards of a high court that demands the best personnel. Call it an ill-advised plea bargain.

The administrative board of the courts is composed of state Chief Judge Jonathan Lippman and the four presiding justices, including Gonzalez. The panel is expected Tuesday to discuss proper hiring procedures, including a requirement that all openings should be publicly advertised.

Since nepotism has long been barred in the courts, the promulgation should really be unnecessary. But, as Gonzalez proved, the judges need a reminder that they, too, must live by the standard rules of government.

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Commission Clears Gonzalez of Misconduct But Calls for Reform of Hiring Practices

By John Caher, New York Law Journal, 3 April 2012

The Commission on Judicial Conduct has cleared the presiding justice of the Appellate Division, First Department, of any misconduct in connection with allegations that he misrepresented his residency to claim a tax credit and that he put a no-show employee on the state payroll.

But the commission was deeply critical of hiring practices in the First Department and called for state-wide reforms in the appellate courts. "The Commission believes that such a system-wide reform of the hiring process would ultimately enhance public confidence in the courts and advance such laudable goals as a qualified, diverse and transparently selected workforce," the commission said.

Presiding Justice Luis Gonzalez became the focus of a probe after the New York Post reported in March 2011 that the judge had simultaneously claimed two primary residences, including a rent-stabilized apartment in the Bronx, benefiting from both the tax advantages of home ownership and the advantages of rent stabilization.

Additionally, it was alleged that Gonzalez allowed his executive assistant to maintain a private law practice, provided positions for his ex-wife and relatives of First Department employees and set up a former New York City Council member in a no-show job.

In a report dated March 30 and posted publicly on April 2, the commission said the allegations were not established.

On the mortgage matter, the commission found no evidence that Gonzalez made misrepresentations on documents or that he was ever in violation of residency requirements. Records show that in 2008, he accurately reported his house in Brooklyn as his primary residence. At that time, he obtained a tax break under the New York State School Tax (STAR) program, to which he was entitled. The mortgage and taxes were managed by Union Federal Mortgage Corp., which continued to claim the STAR deduction even after Gonzalez changed his primary residence to the Bronx.

The commission said that Gonzalez "credibly testified" that he was not aware of the tax credit until alerted to it by the New York Post, and promptly refunded $560.

Another allegation centered on Gonzalez's executive assistant, Susan Hernandez.

The Post reported that Ms. Hernandez was apparently working with Roura & Melamed in Manhattan while employed by the court. With few restrictions, full-time court lawyers cannot practice.

But the investigation showed that while Ms. Hernandez had a solo practice before taking the state job in 2010 and shared space with Roura & Melamed, "there is no credible information" to conclude that she engaged in private practice while working as a court attorney.

Similarly, the investigation concluded that there was no truth to allegations that the judge had provided a no-show job to former New York City Councilwoman Maria Baez. That allegation, which came from a judge who was not identified in the report, apparently resulted from an "erroneous" assumption, the commission said. According to the report, Baez was hired as a $64,834-a-year court analyst by Gonzalez's assistant in 2010, several months after she lost her election to the council post she had held for seven years. For family and health reasons, Baez was transferred by the Office of Court Administration to a public safety position in White Plains, records show. An associate justice of the Appellate Division told the commission in September that Baez was a no-show, but the judge apparently did not realize she was working in Westchester County. "Maria Baez did not have a 'no -show' job at the Appellate Division or anywhere else in the court system," the commission said.

Ben R. Rubinowitz of Gair, Gair, Conason, Steigman, Mackauf, Bloom & Rubinowitz, who represented Gonzalez along with Paul Shechtman of Zuckerman Spaeder, said the probe resulted from "baseless rumor" and insinuation. "It was really unfortunate that this investigation was based on sources of information that jumped to erroneous conclusions without knowing the true facts," Rubinowitz said. Rubinowitz said neither he nor Gonzalez know which of the judge's colleagues made the accusation about the alleged no-show job.

"We don't know who it is, but it is troubling that a rumor such as that would come from an associate judge," Rubinowitz said.

'Closed' Hiring Process

While the commission found no evidence of misconduct with relation to any of the allegations it investigated, it strongly criticized the hiring practices used by Gonzalez for filling positions in the First Department. The commission said that under Gonzalez, and apparently several of his predecessors, hiring was a "closed process" in which vacancies were posted only within the court and in non-public areas.

But the committee said Gonzalez went further by dismantling hiring committees that had been in place under predecessors and moving the process from the court clerk's office to his own chambers. "A system in which the vast majority of administrative jobs are 'posted' only in internal, non-public rooms of the courthouse, is inherently exclusive, in that it requires an acquaintance, friend, relative or some other connection to the court" even to be aware of a possible opening, the commission said in its report.

It said the "in-house" hiring method results in a system of favoritism and nepotism, undermining "the judicial obligation to make appointments based on merit" and excluding "a vast pool of qualified individuals" who do not have a connection to the court.

The report states that in 2010, 25 administrative positions were filled, six of them with direct family links to people working in Gonzalez's chambers. They include the judge's former wife, a nephew of his executive assistant, a nephew of his prior executive assistant, his secretary's brother and a son and cousin of his driver.

According to the report, Vivian Gonzalez, the judge's ex-wife, worked as a paralegal but in the title of "associate appellate court clerk," a higher grade than her supervisor and at a higher salary, $64,834, than most other paralegals. Ms. Gonzalez, as well as the driver's son and cousin, were among those later laid off following the 2011 budget cuts.

Gonzalez claimed that his hiring practices mirrored those of many prior First Department presiding judges, and in the three other departments of the Appellate Division. He provided a list of about 50 former employees who were hired under different administrations over the last 30 years and "whose relationships with judges and other employees of the court suggest nepotism or favoritism," the commission said.

The commission concluded that hiring practices in the other three departments are not as uniform and transparent as they should be. But it also noted that while there may be similarities between the way hiring is done in the First Department and the other departments, there are also significant differences. It noted that at least two of the departments have "employment opportunities" posted on their websites and at least one has a detailed hiring protocol.

Although the commission did not identify those departments, a review of websites shows that the Third Department in Albany and the Fourth Department in Rochester prominently post job openings on their public websites and the Second Department announces vacancies on the Office of Court Administration's site.

Additionally, Gonzalez's predecessor in the First Department, now Chief Judge Jonathan Lippman (See Profile), routinely advertised openings outside the court system, in the Law Journal and other sources.

Further, the Second Department has an exhaustive 99-page hiring manual stating policies adopted when A. Gail Prudenti became presiding justice in 2002.

The commission is calling for a high-level examination of hiring in the four Appellate Division departments and the development of guidelines that would include public advertising of job openings, the vetting of applicants by senior staff, and the recusal of employees from the hiring process when the applicant is within four degrees of relationship to the employee or his or her spouse. That would bar employees and officials from involvement in employment decisions involving such relatives as first cousins, grand nieces and nephews and great-great grandchildren.

Prudenti, who is now chief administrative judge, said she has spoken to the four presiding justices about the commission report and scheduled a meeting for April 3 to discuss hiring procedures. "Each one of the presiding justices agrees that hiring practices and protocols have to be reviewed," she said. "We will have a discussion on what protocols will be put in place." Rubinowitz said Gonzalez will attend the meeting in Manhattan and is fully supportive of efforts to reform and standardize hiring procedures in the departments.

"The judge waived confidentiality in this report and one of the reasons he did this was to ensure, if he could, a way to make the courts better," Rubinowitz said. "This will allow for uniformity in the court system as far as hiring practices go and the judge fully respects and accepts the recommendations of the commission."

Robert H. Tembeckjian, the commission's administrator and counsel, said the panel last issued a stand-alone report and recommendations on "a substantive matter involving the courts" in 1977, when it criticized ticket-fixing practices in town and village courts. Tembeckjian said the panel routinely includes recommendations in its annual report. But he said the Gonzalez report is the first separate report the agency has released in 35 years.

@|John Caher can be contacted at jcaher@alm.com.

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In the deep bosom of the Catskills buried.
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