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Judge, ruling from bench, dismisses lawsuit aiming to block DOB's approval of modular construction

For a little while, it looked like state Supreme Court Justice Eileen Rakower was sympathetic to the argument that construction of modules for Atlantic Yards was less like a building component such as a dishwasher and more like a building itself--and thus would require the presence of licensed plumbing contractors and fire suppression contractors, who had sued the New York City Department of Buildings (DOB).

However, after a 70-minute hearing today at a small courtroom at 80 Centre Street in Lower Manhattan, Rakower swiftly dismissed the suit, ruling from the bench, "I also find that DOB did not exceed its mandate in permitting the manufacture of these systems."

That wasn't precisely on point, since she was using "permitting the manufacture of these systems" as a shorthand for several issues aired in the legal papers and oral argument, and perhaps will be discussed in her forthcoming written opinion.

One of those issues: why, as the judge's ruling indicated, is a several-ton factory manufactured module--one of the 930 components of a 363-unit, 32-story tower--more like a dishwasher than a building?

Brett Jaffe, representing the Plumbing Foundation and the Mechanical Contractors Associations, pointed out at the start that the suit was not just about B2, Forest City Ratner's under-construction Atlantic Yards modular tower, but any future modular construction, including commercial buildings and hospitals.

He added that the petitioners support modular construction, but only as long as it's in compliance with the construction Code. To a developer like Forest City, cross-trained workers in the factory cost much less than licensed specialists.

Petitioners' case

Jaffe first had to argue that the petitioners deserved standing, that they had an interest at stake, and that no one else could sue DOB to ensure a safe process. (The DOB argued no, suggesting that neighbors and future tower residents might have standing, but the judge granted standing to the petitioners moments before she dismissed the suit.)

Jaffe suggested that, because of strict liability, his clients, after they do the hook-ups at the job site, "they'll have no control of anything that went into it," and thus could suffer a severe injury.

"We're going to hear the word 'deference' a lot," Jaffe said regarding the defense strategy, which argued that the court should defer to agency discretion as long as the DOB acted "rationally," a low bar.

"Not here, Your Honor," he continued. "Not when we are talking about a pure question of statutory interpretation." If the DOB prefers a different regulatory scheme, he said, "they could go to City Council."

Rakower asked about a Council hearing this past January in which some of the issues were raised, and whether the hearing produced any result.

"Not a result," Jaffe said, "and nothing can be taken from that." He said some hearing testimony was appended to show it's "not some sort of proprietary issue" and to show how Forest City Ratner and the DOB typically use the term "plumbing" in colloquial discourse. "The only time they stopped calling it plumbing was when we sued."

Rakower asked why the third cohort of licensed trades--electricians--hadn't sued. Jaffe said his understanding is that there were some differences in the Code, but agreed the policy considerations were the same.

He noted that, if the plumbing and fire suppression work were done on site, it would have to be done by licensed contractors. "They say, when you move from the job site to the factory, magically, the requirement falls away."

Language at issue

He took aim at the DOB's interpretation of statutory language regarding plumbing, reading "in connection with" as "to connect to." With a traditional building, he noted, the system isn't connected to the water supply until the end.

The second DOB argument, he noted, is that the module isn't a building.

The judge noted that there's an exception for modular buildings like mobile homes. That, said Jaffe, is a completed structure, while "this is a 32-story building."

He noted that Forest City must comply with technical requirements of the code regarding materials and process, but not who's doing the work.

Rakower asked if there's a way--presumably for Jaffe's clients--to test the modules for quality before they're brought onto the site. "I don't think there is," Jaffe said.

"You make a good point," the judge said. "If they're going to be strictly liable, they want to know it's  good product."

Jaffe added that, as a matter of common sense, a module is not akin to a Jacuzzi, since the latter is among "listed items" that are produced according to national standards.

"What we're talking about here is an entire bespoke plumbing system for a building," he declared.

DOB defense

Mark Muschenheim, representing the DOB, said the petitioners' analysis was faulty, because a licensed plumber "is obviously not responsible for a defective Jacuzzi."

That argument left unresolved the question about whether it was possible to distinguish between defective plumbing work done at the factory and that done at the site, and whether the plumbers at the site would be liable.

"Location matters," he said, noting that the contracting work must be done in a building. And uninstalled items, he said, are not structures.

The applicable provisions are clear, he said, and if not should be entitled to deference.

Rakower asked a practical question: would the systems in the finished building be tested each year?

Muschenheim, after consulting an associate, said fire suppression systems were tested, but was unsure of the frequency.

Forest City's case

Bradley Ruskin, representing Forest City affiliates--the modular factory and the owners of B2--pointed to "unproved and unprovable allegations" of Forest City's intervention into the process after meeting with DOB.

Rakower said that played no role.

(No one made a big deal about how DOB issued a draft Bulletin requiring licensed plumbing and fire suppression work at the modular factory, then withdrew it.)

The issue, the judge said, is whether modules should be considered the same way as if constructed on site.

DOB's role, Ruskin said, is not to regulate construction of components in places like "Kansas" but rather "where it gets put together" and "connected to the water system," at the building site.

Rebuttal, response, and ruling

In rebuttal, Jaffe said the latter interpretation doesn't make sense: "It means plumbing work isn't plumbing work until its connected to the water supply. That's never been the approach before."

He said terms used by the DOB regarding a building--"stand on its own" and "viable for use and occupancy"--were not found in the Code.

Given a chance to respond, Ruskin said the Code didn't cover a range of systems constructed offsite, including water reclamation systems and firepumps.

But those, said Rakower, were built to a particular standard.

"As is the case here," replied Ruskin.

"The interesting thing about a modular building," mused Rakower, "is you're manufacturing a system."

At that point, she ruled that the petitioners had standing and, in once more sentence, dismissed the case: "I also find that DOB did not exceed its mandate in permitting the manufacture of these systems."

It's unclear whether the petitioners will appeal.

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