Delano Village Companies v. Orridge

• Decision Date: 12 January 1990
• Parties: , 1990-2 Trade Cases P 69,260 The DELANO VILLAGE COMPANIES, Bernard Axelrod and Carlin Axelrod, Plaintiffs, v. Valerie ORRIDGE, Myles Matthews, Dolores Shephard, Dorothy Gibbs, Claudia La Touche, Mae Lee, Monison Groves, Rueben Brown, Joseph Wardally, Grace Davis, Lillian Parkam, Parker Young, Murphy Wells, Jane Walker and Edgar Williams, Defendants.
• Court: New York Supreme Court

Page 938

553 N.Y.S.2d 938

147 Misc.2d 302, 1990-2 Trade Cases P 69,260

The DELANO VILLAGE COMPANIES, Bernard Axelrod and Carlin Axelrod, Plaintiffs, v. Valerie ORRIDGE, Myles Matthews, Dolores Shephard, Dorothy Gibbs, Claudia La Touche, Mae Lee, Monison Groves, Rueben Brown, Joseph Wardally, Grace Davis, Lillian Parkam, Parker Young, Murphy Wells, Jane Walker and Edgar Williams, Defendants.

Supreme Court, New York County IAS, Part 15.

Jan. 12, 1990.

Summit Rovins & Feldesman, New York City, for plaintiffs.

Smollens & Guralnick, New York City, for tenant defendants.

Lord Day and Lord, Barrett, Smith, New York City, for defendant Williams.

CARMEN BEAUCHAMP CIPARICK, Justice:

Defendants Orridge, Matthews, Shephard, Gibbs, La Touche, Lee, Groves, Brown, Wardally, Davis, Parkam, Young, Wells and Walker (tenant-defendants) and codefendant E. Thomas Williams ("Williams") move for an order, pursuant to CPLR 3211(a)(7), dismissing the complaint for failure to state a cause of action. Plaintiffs Delano Village Companies, and its principals Barnard Axelrod and Carlin Axelrod (Delano) move by separate motion for an order pursuant to CPLR 3042 vacating tenant-defendants' demand for a bill of particulars, dated July 26, 1989, and further for an order pursuant to CPLR 6301 granting them injunctive relief against the defendants.

Plaintiffs, owners of the Delano Village ("the Complex") located between 139th and 143rd Streets, New York, New York, have brought this action against tenant-defendants, members of the board of directors of the Complex's Tenants' Association and Williams, a businessman and real estate developer alleging, inter alia, that they have conspired and participated in a discriminatory plan to force the sale of the Complex from the plaintiffs to Williams by use of coercion and harassment toward them and potential white purchasers.

This action evolves from plaintiffs' attempt to sell the Complex to the highest bidder on terms calling for an all-cash purchase and providing for the retirement of the existing mortgage on the premises.

In 1988, plaintiffs solicited bids for the sale of the Complex. Defendant Williams submitted his bid of $37.5 million, but prior to executing a purchase agreement reduced his offer to $36.5 million and sought to modify certain terms of the sale. Plaintiffs refused and began negotiations for the sale of the Complex with another potential purchaser the Harley Development Corporation, owned by two individuals, Steven Finkelstein and Stuart Morgan ("Finkelstein") and received a bid for $38.5 million. Plaintiffs accepted and entered into an agreement of purchase. Tenant-defendants allege that prior to these events they allegedly submitted a bid to purchase the Complex for $38 million.

Apparently, tenant-defendants felt Finkelstein would purchase the Complex and sell it at a profit or privately convert it to a cooperative. They feared that such a conversion plan would be at their detriment because of the high cost in purchasing shares in a private conversion plan. Tenant-defendants allegedly fearing the loss of their residences organized to work toward a tenant sponsored conversion with the financial assistance of defendant Williams.

Plaintiffs allege that Williams, unhappy that his bid was not accepted, conceived with the tenant defendants, all of whom are Black, to initiate a campaign of harassment and intimidation in order to prevent the sale of the Complex to Finkelstein and to coerce plaintiffs to sell the Complex to Williams.

To attain this goal plaintiffs allege that the defendants conspired to, urged and caused numerous tenants and others to send threatening letters to Finkelstein, as well as, phoning anonymous bomb threats to both the purchaser and plaintiffs. It is maintained that because of these tactics Finkelstein exercised its right under the purchase agreement to cancel its option of buying the Complex.

Subsequently, Orridge sent out a newsletter to the tenants of the Complex reporting Finkelstein's withdrawal from the purchase of the Complex. The newsletter stated in pertinent part:

It was announced that ... Finkelstein ... had dropped out as a buyer. That was indeed a victory for us ... We do not know [plaintiffs'] intentions. We do know that Houlihan and Parness, ... that have ravaged buildings on Grand Concourse ... have expressed interest with intention to buy and sell at a profit. They have been informed that they are not welcomed ... [A] Hasidic Jewish realty company is a very real possibility. Reflections on Crown Heights and Williamsburg in Brooklyn suggests that relations between blacks and the Hasidic population is far from good.... [hereinafter the New Letter]

Thereafter, Houlihan and Parnes, expressed an interest in the Complex but withdrew after receiving alleged threatening letters from the tenant-defendants. The alleged threatening letter reads in pertinent parts the following:

It has been invited to attention your interest in, and intention to purchase Delano Village Complex. Please be advised that the buildings are spoken for and that we do not appreciate or welcome prospective buyers. We the tenants of Delano Village have an agenda, which is this....

We are 1800 black families involved in the struggle for the establishment of our own economic base. Our economic liberation can be a reality only through black ownership of enterprize [sic], assets and property in the black community. We are of the persuasion that not only we can and should decide and determine our destiny. We cannot participate in self help or realize economic freedom if we continue to be enslaved by white entrepreneur, black consumer, white landlord, black tenant type relationships. Non black owners of property, enterprise and assets in the black community are not in our best interest.

In that regard we are enlisting your cooperation and request that you honor and respect our view and refrain from further transactions to purchase Delano Village. We will take very unkindly to entrepreneurs that choose to violate our position and favor their personal interests and proceeds over our principle of ownership where we live [hereinafter the Letters]

Plaintiffs next contend that the defendants conspired and urged several tenants of the Complex to go on a rent strike for the purpose of scaring away all potential white purchasers and to coerce plaintiffs to sell the Complex to Williams. This action then ensued. Plaintiffs have also commenced approximately 440 separate non-payment proceedings in the New York City Housing Court with regard to the rent strike (the "Rent Strike").

The complaint, sets out four causes of action: (1) unlawful discrimination in violation of 42 U.S.C. Sections 1981, 1982, 1985, 1988 (Civil Rights Act), 3604 and 3617 (Federal Fair Housing Act), and New York Executive Law, Section 296 (Human Rights Law); (2) personal injury as a result of the above alleged acts; (3) tortious interference with business relations; and (4) unlawful interference with plaintiffs' business in violation of the New York Donnelly Act, General Business Law, Section 340. Plaintiffs seek permanent injunctive relief and monetary and punitive damages. Defendants now move to dismiss the complaint.

In accordance with the following decision that branch of defendant Williams' motion for an order dismissing the complaint for failure to acquire personal jurisdiction over him pursuant to CPLR 3211(a)(8) and plaintiffs' motion for an order pursuant to CPLR 3042 vacating the demand for a bill of particulars are denied as moot. The first cause of action alleges that defendants have violated plaintiffs' civil rights under 42 U.S.C., Sections 1981, 1982, 1985 and 1988 (attorneys' fees), 3601 and 3617 (Fair Housing Act), as well as, New York's Executive Law, Section 296 (Human Rights Act).

42 U.S.C. Section 1981 forbids racially discriminatory interference with the right to contract; 42 U.S.C. Section 1982 forbids racially discriminatory interference with the right to sell property; and 42 U.S.C. Section 1985 forbids conspiracies to do either. It has been held by the United States Supreme Court that 42 U.S.C. Section 1981 is applicable to actions regardless of whether the racial discrimination is against whites or nonwhites (see, McDonald v. Sante Fe Trail Transportation Co., 427 U.S. 273, 96 S.Ct. 2574, 49 L.Ed.2d 493). The same applies with equal force to claims under Sections 1982 and 1985, to protect the property rights and create a cause of action for injuries due to a conspiracy motivated by racial or other invidious discrimination.

The Fair Housing Act makes it unlawful "[t]o refuse to sell or rent ... or otherwise make available or deny, a dwelling to any person because of race, color, religion, sex or national origin" (42 U.S.C. Section 3604). In this instance, the Complex is subject to the provisions of the Fair Housing Act pursuant to Section 3603(a)(2). As provided therein, it is "unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of ... any rights granted or protected by Section 3604" (see, 42 U.S.C. 3617).

The application of the Fair Housing Act to the instant action may be had where it is shown that the defendants herein, including Williams, have interfered, coerced or intimidated, or attempt to do the same, the plaintiffs as owners and sellers into racially discriminating in the sale of their property (42 U.S.C., Section 3617). Moreover, 42 U.S.C., Section 3617 can be violated absent violation of Sections 3603 and 3604 (see, Stackhouse v. DeSitter, 620 F.Supp. 208 [N.D.Ill.1985].

The same holds true under the Human Rights Act, Section 296(6) (see also, Section 296[5], regardless whether the violator is a seller, landlord, or broker (cf., National Organization for Women v. State Division of Human Rights, 34 N.Y.2d 416, 421, 358 N.Y.S.2d 124, 314 N.E.2d 867). Section 296(6) provides in pertinent part:

It shall be unlawful...