S&R Dev. Estates, LLC v. Town of Greenburgh

• Decision Date: 29 August 2018
• Docket Number: No. 16-CV-8043 (CS),16-CV-8043 (CS)
• Citation: 336 F.Supp.3d 300
• Parties: S & R DEVELOPMENT ESTATES, LLC, et al., Plaintiff, v. TOWN OF GREENBURGH, NEW YORK, et al., Defendants. Sisters of the Blessed Sacrament, Inc., Counterclaim Plaintiff, v. S & R Development Estates, LLC, Counterclaim Defendant.
• Court: U.S. District Court — Southern District of New York

336 F.Supp.3d 300

S & R DEVELOPMENT ESTATES, LLC, et al., Plaintiff,

v.TOWN OF GREENBURGH, NEW YORK, et al., Defendants.

Sisters of the Blessed Sacrament, Inc., Counterclaim Plaintiff,

v.S & R Development Estates, LLC, Counterclaim Defendant.

No. 16-CV-8043 (CS)

United States District Court, S.D. New York.

Signed August 29, 2018

Robert B. Bernstein, Bernstein & Associates, PLLC, Scarsdale, New York, Counsel for Counterclaim Plaintiff.

Michael H. Park, Consovoy McCarthy Park PLLC, New York, New York, Counsel for Counterclaim Defendant.

William S. Consovoy, Bryan K. Weir, Consovoy McCarthy Park PLLC, Arlington, Virginia, Counsel for Counterclaim Defendant.

William P. Harrington, James W. Glatthaar, Bleakley Platt & Schmidt, LLP, White Plains, New York, Counsel for Counterclaim Defendant.

OPINION AND ORDER

Seibel, District Judge

Before the Court is the motion of Plaintiff S & R Development Estates, LLC ("S & R") to dismiss the counterclaim of Defendant Sisters of the Blessed Sacrament, Inc. (the "Sisters"). (Doc. 140.) For the following reasons, the motion is GRANTED.

I. BACKGROUND

For purposes of this motion, I accept as true the facts, but not the conclusions, set forth in the Sisters' Amended Counterclaim. (Doc. 139 at 47-84 ("ACC").)¹

A. Facts

Defendant and Counterclaim Plaintiff Sisters is a religious not-for-profit corporation that owns and operates a convent located at 86 Dromore Road in the Town of Greenburgh, New York. (Id. ¶ 19.) Plaintiff and Counterclaim Defendant S & R is a New York limited-liability company managed by brothers Stephen and Richard Troy. (Id. ) In approximately 2006, S & R purchased, and since then has attempted to develop, a parcel of land directly adjacent to the Sisters' convent. (Id. ¶¶ 65, 95.)

The Sisters purchased the 6.7-acre lot which is used for their convent in 1996. (Id. ¶¶ 2, 26.) They use their land to "conduct daily prayer and meditation" and "spiritual reading and study." (Id. ¶ 25.) The Sisters allege that the parcel's relative distance from developed land is vital to their "need for quiet and privacy" and their religious practice. (Id. ¶ 29.)

The Sisters allege that certain restrictive covenants on the use of adjacent land were also important to their decision to purchase their land.² (Id. ¶ 43) The Sisters' land and all of the adjacent parcels are part of a ten-lot subdivision that was created by a March 1912 deed. (Id. ¶¶ 5, 37.) The deed included restrictive covenants that banned, among other things, the building of "tenements and flat houses so-called." (Id. ¶¶ 26, 37.) The Sisters argue that this ban continues in force and restricts the building of any modern apartment building. (Id. ¶ 110.)

Following its acquisition of the neighboring property, S & R received a permit to demolish the then-existing home and swimming pool, and submitted plans to build thirty-seven "market rate" apartments. (Id. ¶ 67.) On August 17, 2009, S & R publicly announced a new plan to build forty-one "affordable housing" units instead. (Id. ¶ 95.)

S & R and the Town were involved in multiple lawsuits as early as 2008 regarding whether the zoning of its land allowed for the development of a housing project. (Id. ¶ 94.) In March 2008, the Sisters notified the Town that they opposed any zoning change to S & R's property that would interfere with the zoning classification that guaranteed their peaceful setting. (Id. ¶¶ 92-93.) During a Town Planning Board hearing held in February 2013 regarding S & R's request for a zoning variance, the Edgemont Community Council, a local civic group, raised the issue of the restrictive covenant, which brought it to the attention of the Sisters' counsel, who was at the meeting. (Id. ¶¶ 102, 103.)

On March 2, 2013, the Sisters sent a letter to S & R reserving its rights under the restrictive covenant. (Id. ¶ 106.) Following receipt of this letter, S & R commenced a suit against the Sisters in Westchester County Supreme Court seeking to extinguish the enforcement of the covenant. (Id. ¶ 107.) After this suit was dismissed on procedural grounds, a second suit was filed on March 4, 2016, and is currently pending. (Id. ¶¶ 107-108.)

B. Procedural History

On October 14, 2016, S & R commenced this action claiming, among other things, that the Sisters selectively enforced the covenant against it in violation of the Fair Housing Act of 1968 ("FHA"), 42 U.S.C. §§ 3601 et seq. (See Doc. 1.) On February 17, 2017, S & R filed an Amended Complaint including the same claim against the Sisters. (Doc. 78.) The Sisters moved to dismiss, (Doc. 103), and in an oral ruling on September 20, 2017, the Court denied the motion, (Minute Entry dated Sept. 20, 2017).

On October 20, 2017, the Sisters filed an Answer to the Amended Complaint and Counterclaim. (Doc. 129.) On October 31, 2017, S & R filed a letter seeking a pre-motion conference to discuss its anticipated motion to dismiss the counterclaim. (Doc. 133.) The Sisters responded on November 8, 2017, (Doc. 136), and at a pre-motion conference on November 15, 2017, the Sisters were granted leave to amend their counterclaim. (Minute Entry dated Nov. 15, 2017.) On December 7, 2017, the Sisters filed an Amended Answer and Counterclaim. (Doc. 139.) On December 22, 2017, S & R filed the instant motion to dismiss the counterclaim. (Doc. 140.)

In their counterclaim, the Sisters allege that in the event that S & R's FHA claims succeed, they should be entitled to compensation for any damages suffered as a result of the "extinguishment" of their restrictive covenant. (ACC ¶¶ 122, 125.) The Sisters' position is that New York Real Property Actions and Proceedings Law ("RPAPL") § 1951(2) allows for recovery of the monetary value of a covenant that has been deemed unenforceable, regardless of the reason. See New York Real Prop. Acts. Law § 1951(2) (McKinney 2018); ACC ¶ 122.³

S & R responds that any state law claim for damages plainly conflicts with Congress's intent in passing the FHA and is therefore preempted. (Doc. 141 ("P's Mem.") at 4) ("It would be perverse to allow a state-law claim to require the victims of housing discrimination to compensate the perpetrators for the privilege of being their neighbors."). S & R also argues that the Sisters fail to state a claim under RPAPL § 1951(2). (Id. at 6 n.1.)

The Sisters respond that allowing the FHA to preempt § 1951(2) claims would amount to a "taking" without just compensation in violation of the Fifth Amendment. (Doc. 143 ("D's Opp.") at 13.) They allege further that in areas where state police powers have traditionally governed, there is a strong presumption against federal preemption and that the standard for showing preemption is rigorous.

II. LEGAL STANDARD

"A motion to dismiss a counterclaim is evaluated under the same standard as a motion to dismiss a complaint." Holborn Corp. v. Sawgrass Mut. Ins. Co. , 304 F.Supp.3d 392, 397 (S.D.N.Y. 2018)(internal quotation marks omitted). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (alteration, citations, and internal quotation marks omitted). While Federal Rule of Civil Procedure 8"marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, ... it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Iqbal , 556 U.S. at 678-79, 129 S.Ct. 1937.

In considering whether a complaint states a claim upon which relief can be granted, the court "begin[s] by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth," and then determines whether the remaining well-pleaded factual allegations, accepted as true, "plausibly give rise to an entitlement to relief." Id. at 679, 129 S.Ct. 1937. Deciding whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has not ‘shown’ – ‘that the pleader is entitled to relief.’ " Id. (alteration omitted) (quoting Fed. R. Civ. P. 8(a)(2) ).⁴

A defense of preemption is properly considered on a motion to dismiss because all preemption claims are "conclusion[s] of law," and are therefore properly decided absent a full factual record. Utts v. Bristol-Myers Squibb Co. , 251 F.Supp.3d 644, 672 (S.D.N. Y 2017). When taking all of the facts alleged in the complaint as true, "[a] district court may find a claim preempted only if the facts ... do not plausibly give rise to a claim that is not preempted." Galper v. JP Morgan Chase Bank, N.A. , 802 F.3d 437, 444 (2d Cir. 2015).⁵

III. DISCUSSION

A. Legal Framework

The Supremacy Clause of the United States Constitution provides that federal law "shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. "From this constitutional principle, it follows that ‘Congress has the power to preempt state law.’ " In re Methyl Tertiary Butyl Ether ...