MANHATTAN (CN) - The Second Circuit on Monday reinstated a verdict that found zoning changes improperly killed a housing project meant to help minorities and families with children in upstate New York.
Saratoga Springs, located about 40 miles north of Albany, historically is a summer mecca for the affluent who flock to the city's thoroughbred horse track's seven-week meet, as well as its seasonal ballet, orchestra and other entertainment draws.
Year-round residents, though, face a chronic shortage of affordable housing, and the need is especially keen for large families and minorities, studies have shown.
Forty-four acres that Gail Anderson bought on the city's outskirts, near an interstate exit, were ideal to address this problem.
The Anderson Group, a commercial-development firm she owned with her three adult children, planned to develop 250 to 300 units of housing called Spring Run Village on the land, which was zoned for high-density residential and commercial development.
It would include condominiums, townhouse-style apartments and small building with multiple apartments.
Up to 60 of the rental units would be targeted for moderate- to low-income households - meeting a long-recognized need for such housing in the city.
As the family tried to get their development off the ground in 2002, however, they learned that the city had rezoned areas near its suburban borders to low-density rural-residential development.
The plan put parts of the city's outskirts in a "conservation development district" that limited the residential density to no more than one structure for every two acres.
In February 2005, a day before the Andersons were due before the city Planning Board for action on special-use permits to allow Spring Run Village, the city brought its zoning plan into compliance with New York's Environmental Quality Review Act.
With the rezoning now compliant, the Planning Board ruled the Andersons' proposal withdrawn because it failed to meet the new development limits.
Anderson and her group filed a federal complaint, alleging that the "city in the country" plan violated the Fair Housing Act.
Saratoga Springs countered that its efforts had a legitimate purpose in bringing the zoning code into compliance with the comprehensive plan it adopted in 2001.
After a nine-day trial in 2010, a federal jury in Albany credited the Anderson Group's claims of disparate-impact discrimination and perpetuation of segregation.
The jury said Saratoga Springs was liable only as to disparate impact, however, a claim that meant its actions had an unintended adverse effect on protected groups.
Finding that the rezoning furthered a legitimate governmental interest, the jury said the city was not liable on the segregation claim.
Though the jury awarded $1 million in compensatory damages, U.S. District Judge Gary Sharpe ordered a new trial a year later, and the next jury sided with the city in 2012.
Saratoga Springs said the new trial was necessary since the first jury had split on liability, but the Andersons contended that the city should have pointed out the inconsistencies before the first jury was dismissed.
Agreeing that Saratoga Springs should have objected to the perceived inconsistencies in the verdict before the jury was discharged, a three-judge panel with the Second Circuit agreed Monday that it was erroneous for the District Court to grant Saratoga Springs a new trial a year after the verdict.
"It is well established that a party waives its objections to any inconsistency in a jury verdict if it fails to object to the verdict prior to the excusing of the jury," Judge Peter Hall wrote for the Manhattan-based court, citing circuit precedent.
At no point was the jury told that its findings needed to be consistent, the panel found. Because that inconsistency did not rise to the level of fundamental error, "the district court committed a reversible error when it granted the city's motion for a new trial on that ground," Hall wrote.
Though Monday's ruling reinstates the 2010 verdict for the Anderson Group on the disparate-impact claim, Hall and his colleagues declined to also reinstate the award of $1 million in damages.
The judges found $900,000 of the award speculative, based on what the Andersons expected they could receive in tax credits if they went ahead with Spring Run Village's affordable-housing units.
Instead, the panel found more appropriate the remaining $100,000 in damages authorized by the jury, $81,000 of which covered actual development costs and the rest representing claimed damage to the Andersons' reputation.
Unless the Andersons accept the reduced award of $100,000, the issue of damages must be remanded for a new trial, the ruling states.
Second Circuit Judge Barrington Parker and U.S. District Judge Kiyo Matsumoto, sitting by designation from Brooklyn, concurred.
The Andersons have not yet decided whether to accept the reduced damages award or seek a new trial on that issue, their attorney said.
"The Anderson Group will have to consider how the evidence related to damages will fit into the rubric set forth by the Second Circuit," Reed Colfax, of Relman, Dane & Colfax in Washington, D.C., said in an email.