Baker v. Latham Sparrowbush Associates

• Decision Date: 26 October 1992
• Docket Number: No. 91 Civ. 6673 (CBM).,91 Civ. 6673 (CBM).
• Parties: Gloria BAKER, Plaintiff, v. LATHAM SPARROWBUSH ASSOCIATES and Aaron Kozak, Defendants.
• Court: U.S. District Court — Southern District of New York

808 F. Supp. 992

Gloria BAKER, Plaintiff, v. LATHAM SPARROWBUSH ASSOCIATES and Aaron Kozak, Defendants.

No. 91 Civ. 6673 (CBM).

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

September 11, 1992.

On Motion For Interlocutory Appeal October 26, 1992.

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OPINION

MOTLEY, District Judge.

Several pending motions now await the court's decision. Defendants move to dismiss the amended complaint under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, and, in the alternative, for summary judgment under Rule 56. Plaintiff opposes these motions and cross-moves for partial summary judgment on her second cause of action to recover the leasehold under New York law.

This case was last before the court on defendants' motion to dismiss for failure to state a claim on which relief may be granted. In the court's opinion of March 23, 1992, 808 F.Supp. 981, familiarity with which is presumed, the court dismissed plaintiff's claims under 42 U.S.C. § 1983 and § 853 of the New York Real Property Actions and Proceedings Law (RPAPL) as barred by the statute of limitations. Also in this opinion, and by the court's order of the same date, the court granted plaintiff leave to amend the complaint to more specifically plead any state law claims, plaintiff having alleged diversity jurisdiction in the original complaint. Plaintiff subsequently filed an amended complaint separately pleading her state law claims and repleading the § 1983 and RPAPL § 853 claims that were dismissed by the court's prior opinion. Plaintiff also submitted a letter to the court dated March 27, 1992, explaining her position that her repleading of the § 1983 and RPAPL § 853 claims was proper because the amended complaint includes a new allegation that, if true, would toll the statute of limitations and render these claims timely.

I. FACTS

Although the court will not now set forth the extensive factual background leading up to the present litigation, a brief review of the facts is necessary to clarify the issues raised in the motions presently before the court.

Defendant Latham Sparrowbush Associates ("LSA") is a limited partnership which owns a garden apartment complex known as Sparrowbush Apartments ("Sparrowbush"). Defendant Aaron Kozak is a general partner of LSA. On August 28, 1968, LSA leased Sparrowbush to Shaker Estates, Inc. ("Shaker"), not a party to this litigation, under a long term blanket lease for twenty-one years and three days with an option to extend the lease for two successive twenty-one year terms. On December 31, 1973, Cohoes Industrial Terminal ("CIT), a New York corporation, purchased Shaker's interest in the leasehold. Plaintiff's husband, Leon Baker, co-counsel to plaintiff in this litigation, is the president and sole shareholder of CIT. Plaintiff claims that CIT entered into the leasehold agreement as her nominee, and that she was the equitable owner of the leasehold, although defendants dispute this contention. Section 32.01 of the Sparrowbush lease granted LSA the option to terminate the lease at any time on sixty days notice and pay the tenant $ 350,000. On December 26, 1984, LSA notified CIT that it was exercising its option to terminate the lease. The next day, Leon Baker informed LSA of his opinion that the option in Section 32.01 of the lease was invalid under New York's Rule against Perpetuities.

The present litigation is the fourth in a series of court actions to determine the lessee's rights to the Sparrowbush leasehold. Plaintiff first brought suit in January of 1985 in Westchester Supreme Court to obtain a judgment declaring that Section 32.01 of the lease violates New York's Rule against Perpetuities (the "Westchester action"). The court dismissed plaintiff's complaint for lack of standing by order dated April 16, 1985, and this decision was affirmed on appeal. Baker v. Latham Sparrowbush Assocs., 129 A.D.2d 667, 514 N.Y.S.2d 426 (2d Dep't 1987), appeal denied, 70 N.Y.2d 606, 519 N.Y.S.2d 1030, 514 N.E.2d 388 (1987).

On February 11, 1985, LSA commenced an action against CIT in the Supreme Court of the State of New York, Albany County, for specific performance of the termination clause in Section 32.01 of the lease (the "Albany action"). LSA served process on CIT by providing service on the Secretary of State pursuant to § 306 of the Business Corporation Law (BCL). CIT did not receive process from the Secretary of State because CIT's current address was not on file with the Secretary of State at the time. CIT did receive actual notice of the action in time to defend by a copy of the summons and complaint which LSA attached to papers served on plaintiff in the Westchester action. CIT defaulted in the Albany action and Supreme Court Justice Kahn entered an order dated April 19, 1985 granting LSA's motion for a default judgment and directing CIT to deliver possession of Sparrowbush to LSA. Justice Kahn denied CIT's motion to vacate the default on May 21, 1985, and that order was affirmed in Latham Sparrowbush Assocs. v. Cohoes Indus. Term., Inc., 114 A.D.2d 584, 494 N.Y.S.2d 195 (3d Dep't 1985), appeal dism'd, 67 N.Y.2d 736, 500 N.Y.S.2d 100, 490 N.E.2d 1226 (1986).

A third related action was commenced on April 28, 1986, in United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy action"). CIT filed a Chapter 11 petition to collaterally attack the default judgment in the Albany action. LSA moved pursuant to 11 U.S.C. § 362(d)(1) to lift the automatic stay to enable it to obtain possession of Sparrowbush. CIT cross-moved to have LSA and the receiver held in contempt of court for attempting to enforce the state court judgment in violation of the automatic stay, and for an order directing CIT to transfer legal title of the leasehold to Gloria Baker. Judge Schwartzberg granted LSA's motion and denied both of CIT's cross-motions. In re Cohoes Indus. Term., Inc., 62 B.R. 369 (Bankr.S.D.N.Y.1986). The bankruptcy court's decision was affirmed by the district court in the Southern District of New York in In re Cohoes Indus. Term., Inc., 70 B.R. 214 (S.D.N.Y.1987), which was affirmed by the Second Circuit in a unpublished summary order. In re Cohoes Indus. Term. Inc., 831 F.2d 283 (2d Cir.1987).

At the heart of the present litigation is plaintiff's contention that the Albany default by which LSA obtained possession of Sparrowbush was unconstitutionally obtained.¹ The amended complaint alleges that defendants availed themselves of the method of service permitted by § 306 with the knowledge that CIT would not receive service of process because defendants knew that the Secretary of State did not have the correct address on file for CIT. Plaintiff alleges that LSA knew CIT's correct address and could have readily effected personal service on CIT. Plaintiff also alleges that CIT knew that plaintiff claimed to own the leasehold and that CIT was acting as her nominee, yet failed to serve plaintiff or join her as a party.

II. DEFENDANT'S MOTION TO DISMISS THE COMPLAINT

Defendants move to dismiss the complaint for failure to state a claim upon which relief may be granted and for lack of subject matter jurisdiction.

A. Plaintiff's § 1983 and RPAPL § 853 claims

Defendants first challenge plaintiff's attempt to replead her § 1983 and RPAPL § 853 claims as a transparent effort to avoid the court's prior decision dismissing these claims under the statute of limitations. Plaintiff responds that Rule 15(a) permits a party to amend the complaint without leave of court before the opposing party has filed a responsive pleading. Because a motion to dismiss the complaint is not a responsive pleading under F.R.C.P. 7(a), plaintiff contends that she could amend her § 1983 and RPAPL § 853 claims as of right notwithstanding the court's decision dismissing these claims.

The court finds plaintiff's position untenable. Rule 15(a) does not permit a party to file an amended complaint as of right after the court dismisses the complaint with prejudice on a Rule 12(b)(6) motion. See Swan v. Board of Higher Educ., 319 F.2d 56, 60-61 (2d Cir.1963); Salwen Paper Co., Profit Sharing Retirement Trust v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 79 F.R.D. 130, 133 (S.D.N.Y.1978); Christophides v. Porco, 289 F.Supp. 403, 408 (S.D.N.Y.1968); 3 Moore's Federal Practice, ¶ 15.07 at 15-36 (2d ed.1987) ("While Rule 15(a) literally gives the plaintiff an unlimited right to amend once as of course before a responsive pleading has been served, if the court has dismissed the complaint (on a Rule 12(b) motion, for example) before an answer has been served, the plaintiff may file an amended complaint only upon leave of court."). This court's order of March 23, 1992 specifically granted plaintiff leave to replead only her state law claims that were not specifically pled in the original complaint. Plaintiff did not obtain or request leave to amend the complaint with respect to the dismissed claims.² Plaintiff's repleading of these claims in the amended complaint was therefore improper.

Plaintiff's insertion of new contentions in the amended complaint to support her § 1983 and RPAPL § 853 claims constitutes an improper attempt to reargue the merits of this court's dismissal of these claims in its prior ruling. Plaintiff's purported factual allegations amending her § 1983 and RPAPL § 853 claims are actually arguments that were not previously made to the court in support of her position that these claims are not time-barred. A court is justified in refusing to reconsider matters once resolved in a continuing proceeding under the doctrine of "the law of the case". Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4478 at 788 (1981). The court's local rules set forth the procedures that a party must follow to seek reargument of a motion. See Civil Rule 3(j), Local Rules of the United States District Courts for the Southern and Eastern Districts of New York (...