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Trends In New York Construction Law

07
SEP
2018

Watch out what you advertise on your building…it could cost you

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Lawyer’s companies found to have engaged in unauthorized outdoor advertising by placing signs advertising his law practice on buildings he owns through corporations.

The First Department recently upheld the determinations of the New York City Environmental Control Board (“ECB”) regarding outdoor signage. The ECB previously held that buildings owners were in violation of Administrative Code §§28-105.1, 28-415.1, 28-502.6, and Zoning Resolution §32-63, by placing outdoor signs on certain buildings without a permit, with fines totaling $380,000. Franklin Street Realty Corp. v. NYC ECB, 2018 WL 3470618 (1st Dept. July 19, 2018).

In 2014, the Department of Buildings (“DOB”) issued violations against five (5) buildings as to City Code §§28-105.1, 28-415.1, 28-502.6, and Zoning Resolution §32-63. Section 28-105.1 provides that it is a Code violation to change the use of a building or operate any sign equipment without a written permit.  Section 28-415.1 states that it is unlawful to hang a sign on the outside of a building, unless done by a person licensed to perform this action.  Section 28-502.6.1 provides that an outdoor advertising company (“OAC”) is liable for affixing a sign to a building without proper permits.  RCNY §3-103 imposes a minimum $10,000 fine, per violation, on an OAC that violates signage statutes.  In contrast, non-OACs are fined a minimum of $800 per first violation.

The ECB ruled that the actions of the building owners were violations of signage statutes, finding that the building owners were operating as OACs, because they affixed outdoor signs to the buildings, the buildings were owned by corporate entities, not Ciafone or his law practice, and the corporate entities did not practice law. The signs at issue all advertised the law practice, Ciafone P.C.; the law practice is owned by Ciafone, who also owns, or is a member of all the corporations that own the buildings at issue.  According to Ciafone, his law practice uses spaces at each building as satellite offices to meet clients.  The five (5) separate buildings are located in Long Island City, Brooklyn, or Queens.

On appeal, Ciafone and the corporate entities argued, in part, that contrary to the determinations of the ECB, they fell within the exemption for OAC liability, because the signs should be deemed “accessory use” signs; the “accessory use” sign exception allows for signs that direct attention to a business at the sign’s location and are not considered advertising. Ciafone and the corporations asserted that he had an ownership interest in the companies that owned the buildings, the signs informed the public about his law practice, and he met clients at available spaces in each building.

The First Department rejected these arguments. According to the First Department, the building owner corporations were not, and should not be deemed the equivalent of Ciafone nor his law firm, and the signs advertised for his law firm, not services offered by the building’s actual owners.  The First Department interpreted the intent of the statute to be a strong deterrent to advertising signs being erected without proper permits, and to prevent cluttering of spaces with advertising that did not have a permit.

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John T.A. Rosenthal

John T. A. Rosenthal is an associate in the commercial litigation practice group at Harrington, Ocko & Monk, LLP. He assists clients in protecting their intellectual property rights, including trademarks, copyrights and trade secrets. Mr. Rosenthal helps clients maximize branding efforts through development of copyrights and trademarks, and the negotiation of licensing agreements for use with their intellectual property. If you have any questions regarding construction law issues, please contact John at (914) 686-4800 or via e-mail jrosenthal@homlegal.com.