Defendants' Reply Memorandum of Law in Support of Motion to Consolidate and for Summary Judgment

    SUPREME COURT OF THE STATE OF NEW YORK 
COUNTY OF QUEENS 
  

THE COUNCIL OF THE CITY OF NEW YORK, 

et al., : 

Plaintiffs, Index No. 004897-96 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 
CITY OF NEW YORK, et al., 

Defendants. 

  

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS 
- QUEENS, COALITION, an unincorporated 
association, et al., Index No. 10763/96 

Plaintiffs, 

--against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 

  

DEFENDANTS’ REPLY MEMORANDUM OF LAW 

IN SUPPORT OF MOTION TO CONSOLIDATE AND 

FOR SUMMARY JUDGMENT AND IN OPPOSITION TO 
PLAINTIFFS’ CROSS-MOTION FOR SUMMARY JUDGMENT 

  

  

  

  

PAUL A. CROTTY 
Corporation Counsel 

of the City of New York 
Attorney for Defendants 
100 Church Street 

New York, New York 10007 
| (212) 788-0412 

DANIEL TURBOW, 
DAVID KARNOVSKY, 
ROBERT CARVER, 

of Counsel. 

 



SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF QUEENS 
  

  

THE COUNCIL OF THE CITY OF NEW YORK, 

et al., 

Plaintiffs, Index No. 004897-96 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 

Defendants. 

  

CAMPAIGN TO SAVE OUR PUBLIC HOSPITALS 

- QUEENS, COALITION, an unincorporated 

association, et al., Index No. 10763/96 

Plaintiffs, 

- against - 

RUDOLPH W. GIULIANI, THE MAYOR OF THE 

CITY OF NEW YORK, et al., 
Defendants. 

  

DEFENDANTS’ REPLY MEMORANDUM OF LAW 

IN SUPPORT OF MOTION TO CONSOLIDATE AND 

FOR SUMMARY JUDGMENT AND IN OPPOSITION TO 

PLAINTIFES’ CROSS-MOTION FOR SUMMARY JUDGMENT 

  

  

  

  

PRELIMINARY STATEMENT 
  

Plaintiffs in both these actions have submitted voluminous sets of papers in 

opposition to our motion for summary judgment, filled with extensive factual recitations and 

numerous citations of legal authority. But notwithstanding their bulk, they are beside the point, 

ignoring the critical factual and legal truths: 

a. The Council Plaintiffs assert that HHC lacks the statutory authority to lease a 

hospital to a third party unless the facility is no longer necessary for hospital purposes. But the  



  

HHC Act expressly permits HHC to effect its mission through a lease agreement with a private 

entity for an HHC facility, by empowering HHC "To provide health and medical services for 

the public directly or by agreement or lease with any person, firm or private or public 
  

corporation or association, through and in the health facilities of the corporation . . . ." U.L. 
  

§ 7385(8) (emphasis added). This could not be stated more clearly. 

b. Plaintiffs allege that the Mayor pod been the moving force behind the hospital 

privatization initiative, and that the transaction should thus be viewed as being undertaken by 

the City, rather than HHC, and therefore subject to ULURP. However, plaintiffs ignore that 

while the Mayor does indeed support the privatization of certain HHC facilities and, we submit, 

has the authority previously vested in the Board of Estimate to consent to such an action, the 
  

actual decision whether to sublease any facility can and will only be made by HHC, acting 

through its Board of Directors, following a public hearing before that Board. U.L. § 7385(6): 

and 

c. Plaintiffs have confused two separate processes in their effort to subject the 

proposed transaction to Council approval through application of ULURP. First, they claim that 

the proposed transaction is subject to ULURP as a "disposition of City real property." Second, 

they claim that the proposed transaction is subject to ULURP as part of the approval process 

envisioned by U.L. § 7385(6). 

In so arguing, plaintiffs ignore the fact that the transaction at issue involves the 

disposition by HHC of HHC'’s leasehold interest, not a disposition by a City agency of any real 

property interest of the City. Moreover, they confuse the authority the Board of Estimate 

exercised in connection with the disposition of City-owned property -- including its participation 

in the ULURP process -- and the much more limited authority granted the Board of Estimate 

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in § 7385(6) to approve dispositions by HHC. Indeed, plaintiffs ignore the fact that, when the 

Board of Estimate previously approved a sub-lease by HHC pursuant to U.L. § 7385(6) in 1985, 

it reviewed only the business terms of the transaction -- an authority now expressly given the 

Mayor -- and did not review any land use issues. 

Finally in this regard, but significantly, the Council Plaintiffs have repeatedly 
  

sought legislation that would have given the Counc greater authority over HHC, including the 

authority to consent to HHC dispositions pursuant to U.L. § 7385(6). That legislation was not 

approved. 

In sum, as will be discussed in detail below, because plaintiffs’ papers cannot 

obscure the straightforward facts and legal principles at issue in this case, defendants’ motion 

for summary judgment should be granted. 

POINT I 

HHC HAS THE AUTHORITY TO SUB-LEASE 

ITS HOSPITAL FACILITIES 
  

Although they have not raised the claim in their pleading, in their memorandum 

of the law the Council Plaintiffs contend for the first time that HHC cannot sublease a hospital 

  

to a private entity unless it no longer wishes to have the facility operated as a hospital. Since 

the proposed sublease of Coney Island Hospital ("CIH") contemplates its continued use as a 

hospital, they continue, the transaction is unauthorized. This claim may be summarily addressed 

-- it is belied by the plain language of the HHC Act. 

  

! Neither set of plaintiffs oppose our consolidation motion, so we do not address it here. In 

addition, because the Campaign Plaintiffs have failed to explain how they have been 

substantively or procedurally affected by defendants’ alleged violation of Charter § 197-b, no 
further discussion of that claim is warranted. 

-3- 

 



  

It is true, as plaintiffs contend, that section 7387(4) of the HHC Act authorizes 

the disposition through lease to third parties of HHC’s real property which is no longer required 

for HHC’s corporate purposes and powers. However, contrary to plaintiffs’ contention, that 

section in no way operates to prohibit leases to third parties in other circumstances. 

As we have repeatedly noted, section 7385(6) of the HHC Act expressly grants 

HHC the power to "dispose of by . . . lease or sublease, real . . . property, including but not 

limited to a health facility, or any interest therein for its corporate purposes." (emphasis added). 
  

Plaintiffs are thus mixing apples and oranges when they contend that a section dealing with the 

disposition of property no longer needed for corporate purposes (§ 7387(4)) somehow limits the 

authority granted by a section dealing with the disposition of property for corporate purposes 

(§ 7385(6)). 

In any event, the terms of another section of the HHC Act - which plaintiffs have 

entirely ignored -- dispositively contradicts their strained hypothesis. Section 7385(8) specifically 

authorizes transactions such as that challenged here -- the effectuation of HHC’s health care 

mission through a lease with a private entity for the delivery of medical services in an HHC 

facility. It grants HHC the power 

[tlo provide health and medical services for the 

public directly or by agreement or lease with any 

person, firm or private or public corporation or 

association, through and in the health facilities of the 

corporation . . 

Plaintiffs’ novel suggestion that the plain language of this provision should be 

disregarded in favor of a tortured interpretation of section 7387(4) should be treated as the 

 



  

afterthought that it is. There is no question that HHC has the authority to sublease the Subject 

Hospitals to private entities, subject only to the limitations set forth in section 7385(6).° 

POINT II 

HHC IS SUBJECT NEITHER TO ULURP NOR 

GENERAL CITY LAW § 23(b) 
  

1. LURP 
  

a. Plaintiffs acknowledge that ULURP does not apply to dispositions of real 

property by HHC. Accordingly, in their effort to subject the proposed transaction to those 

provisions, they attempt to demonstrate that the City -- through the Mayor -- is controlling the 

privatization initiative and that, in truth, it is the City’s real property interests which are the 

subject of the proposed dispositions. At the very least, they argue, there are questions of fact 

concerning the nature of the relationship between the City and HHC requiring the denial of 

summary judgment. Plaintiffs’ efforts are legally and factually unavailing. 

For purposes of this motion, we do not dispute any of the facts plaintiffs have 

asserted concerning the Mayor's involvement in the privatization initiative. Nor do we shrink 

from the fact that the City has a substantial relationship with HHC. That is what the legislature 

intended. Under plaintiffs’ reading of the law, however, HHC’s legal independence would only 

be honored if the Mayor and the City ignored their obligations and exercised no influence 

concerning matters respecting HHC and the delivery of health services in the City. Neither 

common sense nor the law support such a bizarre conclusion. 

  

2 The express authority contained in § 7385(8) also undermines plaintiffs’ contention that the 

transaction is inconsistent with an opinion of the Attorney General which concluded that the 

creation of HHC of a for-profit subsidiary was not permitted under the HHC Act. Similarly, 

it flatly contradicts plaintiffs’ assertion that under its lease with the City, HHC must operate the 

Subject Hospitals itself. Indeed, nothing in that lease, including the sections cited by plaintiffs 

(§8 2.1-2.3), support that conclusion. 

<5. 

 



Without belaboring the obvious, the Mayor has a legitimate interest in the delivery 

of health services to the City’s populace and the operations of the municipal hospital system. 

This is recognized in numerous places in the HHC Act, including § 7384(1), which provides that 

HHC’s Board shall include (i) four Commissioners of City agencies, who are appointed by the 

Mayor, and a Deputy Mayor, all of whom serve ex officio; and (ii) five other Board members 

selected by the Mayor. In addition, as Chief Executive Officer of the City, the Mayor has 

primary responsibility for assuring that the numerous obligations imposed upon the City 

government by the HHC Act are satisfied.’ 

Moreover, plaintiffs are wrong when they assert that "the Mayor's actions have 

stripped HHC of any control over the terms of the disposition of its facilities." Campaign Memo. 

p17. This claim ignores two critical factors. As plaintiffs themselves acknowledge, the 

Chairperson of the HHC Board has participated extensively in this process and repeatedly 

reported to the Board as the process has continued. More importantly, while steps leading to 

privatization have been taken by the Mayor, none of those steps has had any legal effect on the 

operation of any of the Subject Hospitals. Rather, any sublease arrangement entered into by 

HHC can only be authorized by HHC, acting through its Board of Directors, following a public 

hearing. U.L. § 7385(6). In other words, as a legal matter, regardless of what the City or 

Mayor might do, it is the HHC Board that must separately authorize the terms of any sublease 

for privatization to proceed. 

The case law also makes clear that HHC’s legal authority is not compromised 

simply because the Mayor, in accordance with the power expressly granted by the Act, can 

exercise significant authority over the Board through his appointment powers. For example, in 

  

3 See, e.g., U.L. § 7386(7), discussed in note 7, infra.  



  

Glen v. Rockefeller, 61 Misc.2d 942 (Sup. Ct. N.Y. Co.), aff'd on opinion below 34 A.D.2d 
  

  

930 (1st Dept. 1970), the Court found that while both the New York City Transit Authority and 

the Metropolitan Transportation Authority had the identical board members, the acts of one 

entity could not be imputed to the other: 

On the contrary, its is not at all unique in 

government service for key officials and employees, 

on occasions, to wear "two hats" but, nonetheless, 

as here, to function independently in each separate 

capacity. 

Id., at 948. In sum, the fact that certain individuals members wear "two hats" -- one as 

employees of the City and one as Board members -- is consistent with the HHC Act and does 

not cause the acts of HHC to be transformed into acts of the City. 

b. Plaintiffs also contend that ULURP must be followed because the proposed 

transactions involve a "disposition of the real property of the City," within the meaning of 

Charter § 197-c. Plaintiffs are wrong. 

Of course the Subject Hospitals are real property of the City. However, they are 

not to be the subject of any "disposition" by the City. Rather, the only interest which is the 

subject of a "disposition" is the leasehold interest of HHC. And that interest is one which is 

completely separate from any interest the City might have as owner of the underlying fee. As 

a matter of fundamental real property law: 

A tenant for one year, ten years, or one thousand 

years is the owner of the land during his term, 

entitled to its exclusive possession and control just 

as truly as a tenant for life or a tenant in fee . . . . 

A tenant has something more than a mere privilege 

or license; he has ownership, exclusive and as 
  

  

  

against all the world including his landlord . . . . 

 



  

Walsh on Law of Property [2d ed.], § 148, quoted in Kaypar v. Fosterport Realty Corporation, 
    

1 Misc. 2d 469, 470-71 (Sup. Ct. Bronx. Co.), aff'd 272 App. Div. 878 (1st Dept. 1947); see 

also Strunk v. Zoltanski, 96 A.D.2d 1074 (2d Dept.) (“ [Property law . . . regards a lease as 
  

equivalent to a sale of the land for the term of the lease . . . . In the absence of an agreement 

to the contrary, the lessor surrenders both possession and control of the land to the lessee, 

retaining only a reversionary interest.") (citations omitted), aff'd 62 N.Y.2d 572 (1983). 

  

In asserting that the proposed transaction involves the disposition of the "City’s 

real property," plaintiffs treat as legally insignificant the estate given HHC by its lease with the 

City pursuant to express legislative authorization. That estate, however, is legally and factually 

real, and as specifically contemplated by the HHC Act, may be conveyed by a sublease. And 

that is the disposition at issue here, not the disposition of City-owned property. 

c. In our initial papers, we noted that application of a local law such as ULURP 

to a state-created public benefit corporation, such as HHC, would violate Municipal Home Rule 

Law § 10(5). Plaintiffs’ citation to Levy v. Citv Commission on Human Rights, 85 N.Y.2d 740 
  

(1995), to avoid that conclusion, is completely unavailing. There, the Court found that, 

consistently with § 10(5), the City’s Commission on Human Rights could exercise jurisdiction 

over a sex discrimination claim over the New York City Transit Authority, which is a state- 

created public benefit corporation. Ironically, however, the reasoning of the Court provides an 

eloquent explanation of why, in the case at bar, ULURP does not apply to HHC: 

The purpose of the New York City Transit 

Authority is to acquire and operate transit facilities 

Tt cannot be seriously contended . . . that 

compliance with the prohibitions against employment 

discrimination would interfere with its function and 

purpose... . 

 



  

Id. at 745-46. Here, by contrast, application of ULURP to HHC would directly impair HHC's 

ability to deliver health care services to the public through exercise of the specific authority 

granted by § 7385(8) to enter into leases with private entities. Indeed, it would be directly 

contrary to the Legislature’s declared purpose of freeing HHC from the "myriad of complex and 

often deleterious constraints and restrictions” on the delivery of health care services to which the 

City was subject. U.L. § 7382.7 

2. General City Law § 23(b) 
  

By their amended complaint,’ the Council Plaintiffs have raised a claim under 

General City Law § 23(b). They assert that, under that section, "real property of the City may 

not be leased except for the highest marketable rental at public auction or by sealed bids, in the 

absence of a local law otherwise so providing." Amended Complaint 1 53. This claim may be 

summarily addressed. 

First, as a matter of common sense, one wonders how plaintiffs can suggest that 

the best interests of the City would be served by leasing a hospital to the highest bidder, without 

regard to the quality of health services provided. 

  

4 The other cases cited by plaintiffs in this regard also fail to support their position. Indeed 

Waybro v. Board of Estimate, 67 N.Y.2d 349 (1986), underscores that ULURP should not apply 

where it would defeat legislative intent. And here, as we have noted, the Legislature expressly 

intended by the HHC Act to free HHC from "the myriad constraints and restrictions" to which 

the City was subject. Indeed, the Waybro Court characterized ULURP as an "impenetrable 

layer of red tape." Id. at 350. And Connor v. Cuomo, 161 Misc. 2d 889 (Sup. Ct. Kings Co. 

1994), merely involved a situation where no such legislative intent could be inferred. 

  

  

5 The Council Plaintiffs served their amended complaint after we moved for summary judgment. 

Accordingly, this claim was not addressed in our moving papers. However, by stipulation (a 

copy of which is annexed as Exhibit B to the accompanying September 12, 1996 Turbow 

Affirmation (“Turbow Aff.”)), defendants’ summary judgment motion was deemed amended so 
as to address that claim. 

  

1 

 



Second, § 23(b) simply does not apply to the City. Rather, as the very opinion 

  

of the Attorney General to which they cite makes clear, § 23(b) is not a general law. Thus, 

Charter § 384 governs the disposition of "real property of the City." And, interestingly, contrary 

to plaintiffs’ position, that section specifically permits negotiated acquisitions in certain 

circumstances -- without the adoption of a local law. 

Finally, once again, plaintiffs’ claim falls for the identical reason its ULURP claim 

must fall -- the subject transaction does not involve the disposition of any interest the Clty ns 

in real property. Rather, all that is at issue is HHC’s disposition of its leasehold interest. And 

even plaintiffs do not suggest that HHC is somehow subject to General City Law § 23(b). 

In the end, therefore, plaintiffs seek to impose an additional process upon the 

disposition of HHC property which is inconsistent with the process the State legislature saw fit 

to impose in the HHC Act. This effort should be rejected. 

  

6 For example, § 384(b)(4) provides: 

Notwithstanding the provisions of this charter, or 

any general, special, or local law to the contrary, 

the mayor may, with the approval of a majority of 

the members of the borough board of the borough in 

which such real property is located, lease or sell any 

real property of the city, except inalienable property 

or any interest therein, to a local development 

corporation without competitive bidding . . . . 

In addition, there are other instances where the City disposes of real property without 

competitive bidding. Such authority, for example, is contained in the Urban Renewal Law. See 

Jo & Wo Realty Corp. v. City of N.Y., 157 A.D.2d 205 (Ist Dept.) aff'd 76 NY 2d 962 (1990). 
  

10- 

 



POINT III 

THE PROPOSED TRANSACTION IS NOT 

SUBJECT TO THE APPROVAL OF THE CITY 

COUNCIL 
  

The Council Plaintiffs initially claimed that the entire authority previously vested 

in the Board of Estimate to approve the disposition of HHC real property pursuant to § 7385(6) 

has devolved upon the Council. Now they suggest that the power is divided between the Mayor, 

who has the authority over the business terms of the transaction, and the Council, which has 

authority over the land use implications, through its involvement in the ULURP process. There 

are several flaws in this analysis. 

Most critically, the disposition by HHC simply is not subject to ULURP. That is, 
  

plaintiffs’ hypothesis would be correct if the transaction involved the disposition by a City 

agency of City-owned property pursuant to Charter § 384. Under those circumstances, the 

Mayor would have authority over the business terms of the transaction (§ 384(a)), and the 

Council would be authorized to participate in the ULURP process (§ 384(b)(5)). However, as 

we have explained, the instant transaction does not involve a disposition by the City of its 

property. Nor is it being effected pursuant to § 384. Any basis for the application of ULURP 

is thus completely absent. See, e.g., Mauldin v. Transit Authority, 64 A.D.2d 114 (2d Dept. 
  

1978) (“The application of [§ 197-c] is necessarily limited to the 11 paragraphs of subdivision 

a thereof.”). And plaintiffs do not -- and could not -- point to any other source of authority 

which would permit them to undertake a land use review. 

Instead of the exercise of land use review authority in connection with the 

disposition of City property under § 384, all that is at issue here is the power, previously held 

by the Board of Estimate, to consent to HHC's disposition pursuant to U.L. § 7385(6). Indeed, 

:11-  



  

contrary to the Council's conjecture, while the Board of Estimate had the power, where 

applicable, to engage in land use review, it did not do so when it exercised its consent authority 

under section § 7385(6). Rather, as evidenced by the resolution adopted by the Board of 

Estimate when it consented to a sub-lease transaction by HHC in 1985, it only concerned itself 

with the business terms of the transaction. See Turbow Aff., Exhibit C. Plaintiffs totally ignore 

this history. 

Plaintiffs’ misreading of the import of Charter § 1152(e) thus becomes plain. That 

section counsels that upon dissolution of the Board of Estimate, the powers it exercised "set forth 

in any state or local law" were to "devolve upon the body, agency or officer of the City charged 

with comparable and related powers and responsibilities under” the Charter. Such powers as the 

Board of Estimate exercised with respect to ULURP in connection with the disposition of City- 

owned property were assigned by the Charter to the Council in § 197-d. However, it did not 

exercise any such powers with respect to its consent authority under § 7385(6). Rather, that 

consent authority drew solely upon the power to approve business terms of transactions under 

§ 384(a). And that power was clearly assigned to the Mayor, as the word "Mayor" replaced 

the words "Board of Estimate" in § 384(a): 

No real property of the city may be sold, leased, 

exchanged or otherwise dispose of except with the 

approval of the mayor and as may be provided by 

law unless such power is expressly vested by law in 

another agency. 

Finally, it must be noted that plaintiffs’ repeated plaint that the legislature intended 

to preserve democratic processes by granting the Board of Estimate oversight authority over 

HHC’s disposition process, while eloquent, has no basis in law. First, the HHC Act itself 

expressly recognizes the primacy of the Mayor in the oversight of HHC, by, among other things, 

12: 

 



  

requiring HHC to "deliver health and medical service to the public in accordance with policies 

and plans" of Mayoral appointees’ -- not those of the Board of Estimate or City Council (which, 

8 Second, contrary to their protestations, after all, did exist at the time of the Act’s adoption). 

the Board of Estimate’s authority over real property dispositions was indeed never characterized 

as "legislative" in the Morris v. Board of Estimate litigation, and there is thus no basis to claim 
  

that the drafters of the HHC Act contemplated a "legislative" check on HHC's dispositions of 

its property. Third, over the years the Council itself has proposed several bills which would give 

it greater authority over HHC -- including the express authority to consent to HHC real property 

dispositions under § 7385(6) -- and the State legislature has not seen fit to act upon those 

proposals. Turbow Aff.. 94, Exh. D, FE. 

In sum, the Council Plaintiffs are seeking to use this proceeding to achieve the 

goal they could not accomplish through legislation. While they no doubt, as a political body, 

  

7 U.L. § 7386(7) provides that HHC 

shall exercise its powers to provide and deliver 

health and medical services to the public in 

accordance with policies and plans of the 

administration with respect to the provision and 

delivery of such services . 

The term "administration" as defined, in § 7383(2), is "the health services administration of the 

city of New York." The agency was abolished by Local Law No. 25 of 1977, which established 

the Department of Health and the Department of Mental Health, Mental Retardation and 

Alcoholism Services to exercise its functions. Each of those agencies is headed by a 

commissioner appointed by the Mayor. 

8 Indeed, the State legislature did grant the Council a role -- albeit a limited one. It provided 

that five of the ten Mayoral appointees to the HHC Board shall be designated by the Council. 

U.L. § 7384(1). 

213: 

 



  

seek to exercise approval over the sub-lease by HHC, this is not a power that has been accorded 

them by the governing legislation. 

CONCLUSION 
  

For the foregoing reasons, it is respectfully requested that (i) defendants’ motion 

for an order consolidating these suits and upon consolidation, granting summary judgment in 

defendants’ favor, be granted in its entirely; (ii) plaintiffs’ cross-motions for summary judgment 

be denied in their entirety; and (iii) the Court grant defendants such other and further relief as 

may be deemed just and proper. 

Dated: New York, New York 

September 12, 1996 

PAUL A. CROTTY 

Corporation Counsel 
of the City of New York 

Attorney for Defendants 

100 Church Street 
New York, New York 10007 

(212) 788-0412 

DANIEL TURBOW, 

DAVID KARNOVSKY, 

ROBERT CARVER, 

of Counsel. 

1d: