Beauford v. Helmsley
| Citation | 740 F. Supp. 201 |
| Decision Date | 06 June 1990 |
| Docket Number | No. 86 Civ. 7115 (RWS).,86 Civ. 7115 (RWS). |
| Parties | Roslyn O. BEAUFORD, Leonard Grossman, Maria Valle, Joseph Decesare, Jr., and Elsie Decesare, individually and on behalf of others similarly situated, Plaintiffs, v. Harry B. HELMSLEY, Leona M. Helmsley, Joseph V. Licari, Supervisory Management Corp., Helmsley Enterprises, Inc., Avenue of America Realty Corp., Benenson Capital Co., Sanfurd G. Bluestein, Felice Earley, Estate Associates, Joan Konner, Peter L. Malkin, John J. Reynolds, Inc., Saul S. Silverman, William C. Warren, William C. Breed, III, Ralph W. Felsten, Lillian M. Gelfman, Robert W. Gelfman, Donald L. Jonas, Jeffrey D. Klein, Norman R. Klein, Alvin S. Lane, Fred Linden, Gertrude G. Malkin, Peter L. Malkin, Claire W. Morse, Lester S. Morse, Jr., Richard P. Morse, Ivan Shapiro, Alvin Silverman, Harold L. Strudler, Parkchester Management Corp., Brown Harris Stevens, Inc., and Deco Purchasing and Distributing Co., Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Edward S. Kanbar, New York City, for plaintiffs.
Shea & Gould, New York City (Michael S. Feldberg, of counsel), for defendants Harry B. Helmsley, Leona M. Helmsley, Supervisory Management Corp., Helmsley Enterprises, Inc., John J. Reynolds, Inc., Brown Harris Stevens, Inc. and Deco Purchasing and Distributing Co., Inc.
Wien, Malkin & Bettex, New York City, for defendants Peter L. Malkin, Ralph W. Felsten and Alvin Silverman.
This action is before the court on the motion of plaintiff Leonard Grossman ("Grossman") for a preliminary injunction and on cross-motions to dismiss brought by defendants Harry B. and Leona M. Helmsley ("Helmsley"), Supervisory Management Corp. ("SMC"), Helmsley Enterprises, Inc., John J. Reynolds, Inc., Brown, Harris, Stevens, Inc., Deco Purchasing and Distributing Co., Inc. (the "Helmsley defendants"), and by Peter L. Malkin, Ralph W. Felsten, and Alvin Silverman. For the reasons discussed below, the motion for a preliminary injunction is denied, the cross-motion of the Helmsley defendants is granted, and the complaint is dismissed.
Plaintiffs own or reside as tenants in units of a massive residential complex in the Bronx known as the Parkchester. They seek damages and injunctive relief in connection with alleged fraudulent misrepresentations made in connection with the conversion and management of the southern half of the residential complex. This 135-building structure, containing 8,286 apartments, is in its present condominium form formally termed The Parkchester South Condominium, Inc. (hereinafter "Parkchester South" or the "Condominium"). Claims under RICO, the federal antitrust laws, the federal securities laws, the Interstate Land Sales Full Disclosure Act, and several state laws are asserted against the thirty-five defendants.
The original complaint was filed in September 1986 and amended in October 1986. The parties to the first amended complaint and the essential allegations set forth therein were outlined in the court's opinion of December 12, 1986 dismissing the action after finding that the federal RICO and securities causes pleaded therein (and as sought to be further amended by plaintiffs) failed to state a claim upon which relief could be granted. Further elucidation of the complaint is contained in the en banc opinion of the Court of Appeals reversing the district court dismissal on the ground that the complaint adequately pleaded RICO elements of pattern and continuity. See Beauford v. Helmsley, 650 F.Supp. 548 (S.D.N.Y.1986), aff'd, 843 F.2d 103 (2d Cir. 1988), reversed upon rehearing en banc, 865 F.2d 1386 (2d Cir.1989), vacated, ___ U.S. ___, 109 S.Ct. 3236, 106 L.Ed.2d 584, adhered to upon further consideration, 893 F.2d 1433, cert. denied, ___ U.S. ___, 110 S.Ct. 539, 107 L.Ed.2d 537 (1989).
In its en banc ruling, the Court of Appeals "suggested that the district court allow plaintiffs an additional opportunity to file a new pleading," id., 865 F.2d at 1392, in view of the appellate court's expressed doubt that the amended complaint met the requirements of Rule 9(b) and Rule 8(a) of the Federal Rules of Civil Procedure. The mandate from the Court of Appeals followed the Supreme Court's consideration of the RICO issue (resulting in an order of vacatur), and the Second Circuit's determination, nevertheless, to adhere to its prior en banc decision.
Following the Court of Appeals' decision, counsel for plaintiffs did not seek leave to amend the Beauford complaint, but in February 1990 filed, as a related matter, an additional, separate complaint alleging several of the same causes against several of the same defendants but in the name of a new plaintiff, Grossman, a condominium owner in Parkchester who resided in the apartment complex prior to its conversion. By the accompanying order to show cause, Grossman also sought a preliminary injunction, inter alia, directing Parkchester Apartments Co., the sponsor of the conversion ("Sponsor"), to pay a sum in excess of a million dollars to the Condominium and use its votes on the Board of the Condominium (the "Board") to revoke a recent increase in maintenance charges imposed on Condominium owners of approximately 35%. It was alleged that the present increases would not have been necessary if two years prior, defendants had not caused the Board to vote to abate the monthly maintenance charges for a period of one and a half months in February and March of 1988.
At the hearing on the order to show cause on February 15, 1990, counsel for plaintiff agreed to serve an amended complaint consolidating the Grossman action with the Beauford action. Counsel for defendants opposed the motion for preliminary relief and sought by cross-motion dismissal of the actions in their entirety. Counsel for plaintiff disclaimed the need for an evidentiary hearing on the request for preliminary injunctive relief.
The consolidated complaint was filed thereafter on February 23, 1990, briefs on the motions were received prior to the oral argument on March 16, and the matter was taken on submission following receipt from plaintiff's counsel of a further submission dated March 23, 1990.
The consolidated complaint substitutes Grossman, a Parkchester South unit-purchaser, for former plaintiff Mr. Palmento, now deceased, who was the only condominium purchaser (as opposed to non-purchasing tenant) named in the Beauford action as a plaintiff. The other four named plaintiffs, all of whom are tenants at the complex who did not elect to purchase their apartments at the time of the conversion, remain unchanged from the original action. As for defendants, these remain essentially the same as in the original Beauford action.1
As in Beauford, the new complaint alleges violations of RICO and federal securities laws, as well as the related state law common law claims of fraud, breach of fiduciary duty and contract. New federal causes of actions arising under the antitrust laws and the Interstate Land Sales Full Disclosure Act are added to the consolidated complaint, notwithstanding that these claims which were not pleaded in either the Beauford or Grossman actions and that the filing of the consolidated complaint was authorized for no purpose other than to harmonize and particularize the pleading in those two actions.
The request for preliminary relief, supported by the affidavit of counsel for plaintiff, who perforce is without personal knowledge of the facts averred, is predicated on the First Claim of the Consolidated Complaint, which alleges that an abatement of maintenance charges for a month and a half in 1988 (an action sought by the Sponsor and agreed to by the Board, upon which the Sponsor has a majority of representatives by virtue of its continuing to own more than fifty percent of the units) violated Section 515 of New York's Not-for-Profit Corporation Law, as well as Local Law No. 70 of the City of New York for 1982.
According to the complaint and counsel for Grossman, this Board-authorized six week moratorium on maintenance charges, which was made possible by a drop in the price of oil at the time, reduced maintenance funds by $2.4 million in 1988. In 1990, necessary roof repairs and other maintenance needs of the Parkchester have required the Board to raise maintenance fees by 35% for five months and perhaps further into the future, and the operating budget projects a loss for the year.
On that factual basis, plaintiffs seek an order preliminarily (a) directing the Sponsor (but not the other unit owners) to pay to the Condominium a sum representing its share of maintenance charges that were not assessed upon it and all other unit holders in February and March 1988; (b) directing the Sponsor to use its votes on the Condominium Board to revoke recent increases in maintenance charges to condominium owners of approximately 35% to finance needed maintenance work, and (c) enjoining the Sponsor from any further use of its majority control of Parkchester South Condominium.
In this circuit, a party seeking a preliminary injunction must establish irreparable injury if the requested relief is not granted, and also demonstrate either that (a) it is likely to succeed on the merits or (b) the balance of hardships tip decidedly in its favor and there is a sufficiently serious question going to merits so as to make its claim a fair ground for litigation. E.g., Plaza Health Laboratories, Inc. v. Perales, 878 F.2d 577, 580 (2d Cir.1989). Grossman has not satisfied this standard.
"It is well established that `irreparable injury means injury for which a monetary award cannot be adequate compensation.'" Loveridge v. Pendleton Woolen Mills, Inc., 788 F.2d 914, 917-18 (2d Cir. 1986), quoting Jackson Dairy, Inc. v. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979). The demand that...
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