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Catching up: appeal failed in lawsuit challenging DOB's approval of modular construction

This is way late, but worth noting for the record. Remember that appeal last year by two trade organizations challenging the New York City Department of Buildings' approval of modular construction for Forest City Ratner's modular building, B2, or 461 Dean Street?

As I wrote 5/1/15, the Appellate Division, First Department seemed only moderately engaged with the challenge to the DOB's conclusion that modular construction could proceed in a factory using cross-trained workers without the presence of licensed plumbers and fire suppression contractors. Indeed, the lower court's somewhat questionable unwritten ruling was quickly upheld, and no appeal was filed.

That building, with half market-rate rentals and half subsidized rentals, should open later this year, with a lottery for the affordable units expected very soon.

Questions linger regarding the integrity of the building, according to legal papers from Forest City's former partner Skanska, as well as a state monitor's reports of leaks and mold. But those questions focus on issues of construction methods/implementation, not plumbing or fire suppression issues.

The official statements

According to a 2/23/16 Forest City Realty Trust 10-K filing:
In 2013, two trade organizations representing New York City-licensed plumbers and mechanical contractors sued the City of New York, challenging a determination by its Department of Buildings (“DOB”) that certain piping work performed in a modular factory need not be performed by licensed plumbers or mechanical contractors if such work was monitored by a licensed professional engineer and otherwise complied with the technical requirements of the New York City Building and Construction Codes. Piping work at our modular factory is being performed by non-licensees monitored by a licensed professional engineer in accordance with DOB’s determination. We intervened in the proceeding, and in December 2013 the Court dismissed the suit. However, these trade organizations appealed the Court’s determination. By decision and order entered May 21, 2015, the Supreme Court, Appellate Division, First Department, affirmed the court below. Petitioners did not appeal this decision, and the time has passed for them to do so. It also remains possible that other construction industry organizations could bring similar suits challenging the DOB-authorized fabrication methodology used in our factory.
Here's the 5/21/15 decision in Matter of Mechanical Contrs. Assn. of N.Y. v New York City Dept. of Bldgs:
Order, Supreme Court, New York County (Eileen A. Rakower, J.), entered December 20, 2013, which denied the petition seeking to annul respondent agency's April 9, 2013 determination that the Administrative Code of the City of New York's requirements that certain plumbing and fire suppression work be performed only by, or under the direct and continuing supervision of, a licensed master plumber and licensed master fire suppression piping contractor, respectively, do not apply to off-site, factory-based assembly of modular construction units, unanimously affirmed, without costs.

The Department of Building's determination that "modular . . . assembly performed at a location other than the jobsite is not plumbing or fire suppression work as . . . defined in the Administrative Code and that those terms do not apply to work done offsite prior to its incorporation into a building or jobsite," is rationally based, is not arbitrary and capricious, and is entitled to deference (see Matter of Feigenbaum v Silva, 274 AD2d 132, 136-137 [1st Dept 2000];see also Matter of Excellus Health Plan v Serio, 2 NY3d 166, 171 [2004]; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459 [1980]). A modular construction unit is not of the same kind or class as the non-inclusive list of examples of a "structure" provided for in New York City Construction Code (Administrative Code of City of NY) § 28-101.5 (see e.g. 242-44 E. 77th St., LLC v Greater N.Y. Mut. Ins. Co., 31 AD3d 100, 103-104 [1st Dept 2006]). Concur—Tom, J.P., Friedman, DeGrasse, Richter and Kapnick, JJ.


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