With sparse court attention to the subject of community benefits agreements (CBA), a recent opinion by a New York appellate court is a positive signal regarding the enforceability of the private agreements regarding land development. The contract at issue, however, is not a CBA (for more information on CBAs click here).
In exchange for support to develop one project (the old Penn Central railway yard), Donald Trump allied himself with several environmental and neighborhood groups, and in exchange for the groups’ support, Trump agreed to develop Riverside South with a development plan that called for parks, open spaces and public arts programs. The Riverside South Planning Corp. was also created to oversee the design, planning and construction of the site. In 1993, the parties entered into an agreement and pursuant to its terms the groups were to have an active role in planning Riverside South and ensuring that it was developed pursuant to the development plan’s specifications. Among other things, the agreement obligated Trump to ensure that any entity that purchased real estate from him concerning the Penn Central yard would abide by the agreement. In June 2005, a real estate company purchased Trump’s company’s interest in Riverside South. Subsequently, the acquiring real estate company began constructing a building on the property with more glass than was permitted under the sustainability guidelines and failing to conduct the required environmental sustainability assessments and calculations. In November 2007, the groups filed a complaint alleging breach of contract and breach of the implied covenant of good faith and fair dealing. The defendant company moved to dismiss on the grounds that a sunset provision in the 1993 agreement made its provisions unenforceable. The trial court denied the motion, holding that the sunset provision was unclear whether it applied to the entire agreement. On appeal, the Appellate Division reversed, holding that the agreement was clear on its face that it only continued for 10 years at maximum.
Riverside South Planning Corp. v. CRP/Extell Riverside LP, 60 A.D. 3d 61, 869 N.Y.S.2d 511 (1 Dept. 12/30/2008).
The opinion can be accessed at: http://www.nycourts.gov/reporter/3dseries/2008/2008_10229.htm
