This story, in slightly different form, originally appeared in the New York Law Journal.
The case that once involved Trump, Riverside South Planning Corporation v. CRP/Extell Riverside, hinged on a deal the developer made in March 1993 with a coalition of six community groups called the Riverside South Planning Corp. In exchange for the groups' support for his plans for a mixed development on a 76-acre Penn Central railway yard, Trump agreed to give the coalition an ongoing role in the planning and development of the site as well as input in design criteria and plans for parks, open spaces and public arts programs. The agreement stated that it "shall continue for 10 years," or for a shorter period, should Trump no longer own any of the Riverside South property.
After beginning development on the project known as Trump Place, Trump sold a 70% stake in the project to a group of Hong Kong and Chinese businessmen in 1994. Eleven years later, the Asian investors sold all shares in the project to Extell Development Corp. and the Carlyle Group for $1.8 billion. The RSPC sought to assert the agreement it made with Mr. Trump when members objected to the use of glass on a building, and Extell refused.
The community groups contended that although Trump was no longer involved in the project by 2005, an "assignment clause" in their agreement with him made subsequent owners subject to the deal. In that clause, Trump agreed to "require any person who purchases any Parcel of the Subject Property from me so long as the Special Permits remain in effect, to agree to abide by the agreements in this letter."
The Albany-based court ruled that the "assignment clause" was intended to obligate an unrelated company to adhere to the agreement with Trump only if a Trump-related company retained an interest in the project. The 10-year sunset clause extinguished any expectation that the RSPC had of staying involved in design and planning of the project, the court ruled.
"Under the clear wording of the sunset provision, the obligations in the Letter Agreement immediately ceased if Trump no longer owned, directly or indirectly, any portion of Riverside South--if he and his companies sold the entire property--and this would be true even if such a sale occurred within 10 years," Judge Victoria A. Graffeo wrote for the 7-0 court. "In that circumstance, there would be no obligations to pass on to a successor because the contract immediately expired upon Trump's divestiture of ownership."
The ruling affirmed a 3-2 decision by an Appellate Division, First Department, panel earlier this year. The two dissenters said they agreed with Manhattan Supreme Court Justice Richard B. Lowe, who refused to dismiss the case after finding ambiguity with the reach of the 10-year sunset provision.
Nine residential towers have been built at Riverside South. Extell has filed plans for five more at the site along the West Side Highway. Signers of the '93 agreement with Trump on behalf of the RSPC coalition were the Municipal Arts Society, the Riverside Park Fund, the Parks Council Inc., the Regional Plan Association, the Natural Resources Defense Council and People for Westpride.
Robert H. Dolan of Schlam, Stone & Dolan argued for Extell that the sunset clause's provision that the agreement "shall continue for 10 years" is anything but ambiguous. "If that was ambiguous, God help anyone who writes contracts in New York," Dolan said in an interview Tuesday.
Dolan said a contrary ruling would have been "extremely serious" because it would have injected doubts about the interpretation of basic language in contracts. Max R. Schulman of Cravath, Swaine & Moore represented the community groups before the Court of Appeals.Joel Stashenko can be reached at [email protected].
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