The near unanimous 6-1 ruling by the NY Court of Appeals upholding the Atlantic Yards Brooklyn condemnation in Goldstein vs. New York State Urban Development Corporation comes on the same day that the prospective major tenant at the complex, the New Jersey Nets, extended its losing streak to 14 to begin the 2009 to 2010 season. The petition alleged two essential claims: that the proposed taking was not for a “public use” but for the benefit of a private party in violation of NY law and that the condemnation proceeding was illegal as the project it sought to advance was not limited in occupancy to persons of low income, despite begin financed with state loans or subsidies. The respondent sought dismissal of the petition on the grounds it was time barred. In May of 2009, the Second Department of the Appellate Division issued a ruling, reported at 64 AD3d at 168, in favor of respondent on the merits.
Chief Judge Jonathan Lippman’s majority opinion upheld the condemnation on the grounds that the area containing the private parcels was “blighted” and subject to condemnation under the state Constitution, acknowledging that the need to redefine the definition of urban blight. Judges Susan P. Read and Eugene F. Pigott Jr. issued a concurring opinion upholding the dismissal of the petition on the grounds that it was filed too late.
Last year, this site had a post about the 2nd Circuit Court of Appeals affirming the dismissal of a complaint challenging eminent domain action on the grounds that it violated the Public Use Clause of the Fifth Amendment. This latest case may end legal challenges to the proposed development by opponents from the surrounding Brooklyn neighborhood although activists like Develop Don’t Destroy Brooklyn say otherwise. A Volokh Conspiracy post suggests that the Goldstein case may lead to more backlash against unfettered public takings with restrictive definitions of “public use” economic development takings of the kind upheld in Kelo v. City of New London, 545 U.S. 469 (2005).
A recent WSJ article reports that, four years after the Kelo case, Pfizer Inc., the private developer, announced that it has abandoned its plans for a hotel and offices and will close its research and development headquarters in New London, Connecticut. For further reading on the Kelo case, the Brooklyn Law School Library has Little Pink House: a True Story of Defiance and Courage by Jeff Benedict (Call #KF229.K45 B46 2009) telling the story of how Susette Kelo and fourteen neighbors fought the corporate giant and the city government to save their homes as the city decided to exercise its power of eminent domain to condemn them.
The US Attorney for the Southern District of New York issued a press release about “the first civil fraud suit brought by the Department of Justice concerning mortgage loans sold to Fannie Mae or Freddie Mac” which are government-sponsored enterprises (GSEs) and financial services corporations created by the United States Congress. The 46 page Complaint in U.S. ex rel. O’Donnell v. Bank of America Corp. and Countrywide Financial Corp. seeks to recover treble damages and penalties under the False Claim Act, 31 U.S.C. §3729 (“FCA”)and civil penalties under the Financial Institutions Reform, Recovery, Enforcement Act, 12 U.S.C. §1833a (“FIRREA”). The Complaint’s allegations center on a “streamlined” loan origination program at Countrywide known as the “Hustle” that removed controls on loan quality. The charges state that “there was widespread falsification” of data entered into an automated system for underwriting loans and that the lender “knowingly originated loans with escalating levels of fraud and other serious defects and sold them to the GSEs” despite these problems. This latest legal challenge for Bank of America could cost it $1billion.
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