In a decision issued November 24, 2009,the New York court of appeals affirmed that Extell and all its successors are bound by the terms of the 1992 Restrictive declaration. This is an important decision because it limits the extent of what Extell can build on the property to limits agreed to with the community.
The suit was brought by the Riverside South Planning Corporation, RSPC, against Extell and the Carlyle Group, the current developers of Riverside South and RIverside Center. RSPC sued Extell and Carlyle to cooperate with RSPC per the terms of prior agreements. It lost, and appealed. On November 24, 2009, the appeals court issued its decision, affirming the lower court's rejection of RSPC's claims.
The decision was focused on a clause in a separate Letter Agreement. The court said:
In this breach of contract case, we are asked to
determine the scope of a sunset clause that appears in a 1993
Letter Agreement relating to the development of a parcel of real
property. ...we affirm the judgment dismissing plaintiff's claim.
This is not the decision RSPC wanted to get -- I don't yet know whether this will be the end of the matter. As readers of their website will know, they have some excellent ideas and proposals. And more than their ideas, someone needs to check what the developer is actually doing and make sure it conforms to the terms of the Restrictive Declaration.
However, the sunset clause in question is not in the Restrictive Declaration -- it's in a separate 4 page Letter Agreement specifically concerning the relationship between the developer and RSPC. However discouraging it may seem, this courtroom loss is limited to obligations Extell has to RSPC. It says nothing whatsoever about Extell's obligations to the community, as expressed in the 284 page Restrictive Declaration recorded with the New York City Register.
The court's opinion makes this very clear. Here is their description of the Restrictive Declaration:
...in 1992, formal approval was obtained from the City of New
York. Penn Yards recorded a 284-page Restrictive Declaration
with the New York City Register memorializing that approval.
Having been recorded in the chain of title, the declaration
imposed numerous restrictions on the owner that would run with
the land and bind any developer as well as any successors or assignees.
This court case is
not about the Restrictive Declaration, but about a later short agreement between Trump and the RSPC.
On March 31, 1993, Donald Trump entered into a four page
Letter Agreement with the RSPC to "confirm our arrangement
to continue working together."
The cornerstone of the case concerns a sunset clause:
Most relevant to this case, a sunset provision was
included on the third page of the four-page Letter Agreement
It was the sunset clause in the 4 page Agreement that was the subject of the suit lost on appeal by RSPC, not the Restrictive Declaration. So that there may be no doubt about that, the court went out of its way to explicitly affirm the fact that the Restrictive Declaration remains in force without sunset and without limit, "binding all successors for all time -- including Extell." Here is the language:
We further note
that RSPC succeeded in negotiating a Development Plan that
incorporated environmental sustainability and design criteria
and, unlike the Letter Agreement, such plan is part of the
Restrictive Declaration that is recorded in the chain of title
and runs with the land, binding all successors for all time --
including Extell. Nothing we decide today allows Extell to
unravel that significant accomplishment of the RSPC.
In summary:
- On November 24, 2009, the appeals court affirmed that Extell is not required to interact with RSPC under the terms of the 1993 letter agreement.
- The court affirmed that Extell and all its successors are bound by the terms of the Restrictive Declaration.
Footnote: What should Extell have done? Continued to cooperate with RSPC, and signed an agreement extending their relationship. It would have been a real demonstration of ethical behavior, and would have been most welcome.