Lost Lake Holdings LLC v. Town of Forestburgh

Background

Lost Lake Holdings LLC, Mishconos Mazah LLC, Rabbi Mordechai Halberstam, and Rose Halberstam sued the Town of Forestburgh, the Town Board, the Zoning Board of Appeals, and several officials and employees. They alleged that defendants, motivated by religious discrimination, prevented construction of the Lost Lake Resort. Their claims included alleged violations of the United States Constitution, the New York Constitution, the Fair Housing Act, 42 U.S.C. § 1982, and New York’s Civil Rights Law, as well as trespass and tortious interference with prospective business advantage. They also sought to annul and vacate the Zoning Board of Appeals’ decision under New York Article 78.

The property had previously received planned-development approval, including conditions concerning density, environmental mitigation, and the project’s design. After plaintiffs purchased the project, they submitted building-permit applications. The Building Inspector approved two applications, later revoked one permit, and denied later applications. The Zoning Board of Appeals affirmed the denials, finding that plaintiffs’ proposed development differed materially from the development previously approved. The Town Board then reopened environmental review and invited plaintiffs to submit proposed changes and seek modifications to the project approvals. The opinion states that plaintiffs did not submit supplemental materials or seek those modifications.

Motion and legal standard

Defendants filed a partial motion under Federal Rules of Civil Procedure 12(b)(1) and 12(c), arguing that the plaintiffs’ land-use claims were not ripe. Ripeness is a requirement that a dispute be sufficiently developed for a court to decide it, rather than depend on future events. In land-use cases, the court explained, a claim generally is not ripe until the responsible government entity has issued a final decision about how the regulations apply to the property. Under Second Circuit precedent, a developer must appeal an adverse zoning decision and submit at least one meaningful application for a variance or modification.

The court reconsidered its earlier conclusion that the claims were ripe. It relied on a later binding Second Circuit decision, BMG Monroe, which held that a developer’s appeal to a zoning board did not satisfy the final-decision requirement when the developer had not sought a variance from existing project approvals.

Court’s analysis

The court concluded that plaintiffs’ land-use claims were as-applied challenges. An as-applied challenge contests how a rule was applied to a particular person or property. The court rejected plaintiffs’ argument that their claims were facial challenges, which contest a rule itself and may be ripe without a final decision. The court determined that plaintiffs challenged the application of the Parks and Playgrounds Fee, a stop-work order, and other land-use actions to their project.

The court held that plaintiffs had not obtained a final decision because they never applied to the Town Board for a variance or modification of the existing project approvals. The Town Board retained authority to amend the approval’s terms, restrictions, and conditions, and it had expressly invited plaintiffs to submit proposed changes for additional environmental review and possible approval. Because that administrative avenue remained open, the court held that plaintiffs had not yet established how the Town would ultimately allow them to develop the property.

The court also rejected the futility exception. That exception can excuse a final application when the relevant agency lacks discretion to grant relief or has made clear that all applications will be denied. The court held that the Town Board had authority to grant a variance or modify the project approvals, and that defendants’ alleged hostility, public comments, alleged regulatory misinterpretations, or alleged bad faith did not establish that an application would certainly be denied. The court also rejected plaintiffs’ contention that a 2020 repeal of the planned-development law eliminated the Town Board’s authority, describing that contention as unsupported and inconsistent with the Zoning Board’s decision.

The court separately rejected the exception for discrimination claims. A land-use discrimination claim may proceed without a final decision when the plaintiff shows an injury independent of the challenged land-use decision, such as discrimination on the face of a zoning policy or manipulation of the process to avoid a final decision. The court held that plaintiffs alleged injuries arising from the permit denials and other actions preventing development, not injuries independent of those decisions. It also found no logistical barrier preventing plaintiffs from seeking a variance or modification.

Disposition

The court granted defendants’ motion to dismiss. It dismissed plaintiffs’ land-use claims and stated that the remaining claims, Counts XI, XVII, and XVIII, may proceed. The opinion does not add a with-prejudice or without-prejudice designation to the dismissal. The scheduled case-management conference was left in place, with the parties directed to discuss discovery and settlement efforts.