Dwight Halstead, & Block 28-29 Realty Corp. v. City of N.Y.

• Decision Date: 31 March 2015
• Docket Number: 13-CV-4874 (MKB)
• Parties: DWIGHT HALSTEAD, and BLOCK 28-29 REALTY CORP., Plaintiffs, v. CITY OF NEW YORK, RAFAEL J. LUCAS, JOSEPH PUCITO and LINDSAY EASON, Defendants.
• Court: U.S. District Court — Eastern District of New York

DWIGHT HALSTEAD, and BLOCK 28-29 REALTY CORP., Plaintiffs, v. CITY OF NEW YORK, RAFAEL J. LUCAS, JOSEPH PUCITOand LINDSAY EASON, Defendants.

13-CV-4874 (MKB)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

March 31, 2015

NOT FOR PUBLICATION

MEMORANDUM & ORDER

MARGO K. BRODIE, United States District Judge:

Plaintiffs Dwight Halstead and Block 28-29 Realty Corp., commenced the above-captioned action pursuant to 42 U.S.C. § 1983 against Defendants City of New York, Rafael¹ J. Lucas, Joseph Pucito and Lindsay Eason, seeking injunctive relief, compensatory and punitive damages, and attorneys' fees. Plaintiffs allege that Defendants violated their substantive and procedural due process rights by failing to give them proper notice of the foreclosure sale of certain real property. Defendants move to dismiss the Amended Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.² For the reasons discussed below, the Court grants Defendants' motion to dismiss the Amended Complaint.

I. Background

a. Facts alleged in the Amended Complaint

The facts alleged in the Amended Complaint are assumed to be true for the purposes of deciding Defendants' motion. Plaintiffs owned "land and property located at 781, 783, and 787 East 94th Street in Brooklyn, New York" (the "Property").³ (Am. Compl. ¶ 6.) Defendants, the City of New York, and Sheriffs Lucas, Pucito and Eason, auctioned the Property without proper notice to Plaintiffs. (Id. ¶¶ 5, 8.) Lucas "falsely represented in an affidavit to the Kings County State Supreme Court" that he complied with the notice requirement by posting the required information in the United States Post Office located at 271 Cadman Plaza East in Brooklyn, New York. (Id. ¶ 9.) Pucito "falsely claimed in an affidavit in response [to] an order to show cause application" that Defendants complied with all the notice and procedure requirements for the auction of the Property. (Id. ¶ 12.) Eason "falsely executed a deed in favor [of] another person. (Id. ¶ 13.) Defendants "purported to record a new deed from the auction/sale on January 11, 2011." (Id. ¶ 14.) Plaintiffs learned of these "misdeeds" on or about July 12, 2013. (Id.)

b. Documents relied on by Plaintiffs

Plaintiffs rely on several documents in bringing this action, including (1) affidavits filed in a state court proceeding, including affidavits of Lucas and Deputy Sheriff Jacob Itty, (2) the notice provided prior to the auction of the Property, and (3) the deed pursuant to which Defendants transferred ownership of the Property. (Id. ¶¶ 9, 12a, 12b,⁴ 13.) Although Plaintiffs did not attach these documents to the Amended Complaint, the Court recognizes them asdocuments incorporated by reference into, and integral to, the Amended Complaint.⁵ In addition, because the state court proceeding referenced by Plaintiffs is a public record, and the determinations by the state court judge are integral to the Amended Complaint, the Court also takes judicial notice of the state court action and the decisions of the state court in deciding the motion to dismiss.⁶

According to these documents, on or about March 11, 2009, Plaintiffs commenced an action before Judge David Schmidt in New York State Supreme Court, Kings County, against Madeline Felice, (the "State Court Action") seeking a stay of the sale of the Property, "asserting various due process errors." (Block 2829 Realty & Dwight Halstead v. Madeline Felice, Index No. 5795-09 (N.Y. Sup. Ct.), annexed to Decl. of Margaret Devoe ("Devoe Decl.") as Exs. 5 and6, Ex. 6 at 3.)⁷ Among the papers filed in the State Court Action was an affidavit by Deputy Sherriff Jacob Itty as to the notice procedures regarding the auction of the Property. (Aff. of Jacob Itty, annexed to Devoe Decl. as Ex. 7, ("Itty Aff.") 1).⁸ Plaintiffs obtained a stay of the auction from the state court, but Plaintiffs did not timely serve the stay on Defendants. (October 15, 2010 State Court Decision 3-4.) On March 11, 2009, Defendants auctioned the Property. (Id. at 3.) Plaintiff Halstead appeared at the auction and bid $110,000 for the Property. (Id. at 4.) The Property was sold to Felice, the highest bidder. (Id. at 3.)

On June 9, 2009, Judge Schmidt issued the June 9, 2009 State Court Decision dismissing the state action brought by Plaintiffs and finding that Plaintiffs' "order to show cause was served in an untimely manner" after the auction had been completed. (June 9, 2009 State Court Decision 1.) Judge Schmidt also found that Block 2829 Realty participated in the auction by "placing a bid and thereby waiving any objection to said auction." (Id.) After finding that Felice was the successful bidder of the auction, Judge Schmidt ordered the Sheriff's office to "deliver a deed to Madeleine Felice, the successful bidder, forthwith." (Id.)

Plaintiffs subsequently moved to, among other things, vacate the June 9, 2009 State Court Decision, restore the action to the court's calendar, renew their opposition to the auction of theProperty, and prevent Felice from taking possession of the Property. (October 15, 2010 State Court Decision 2.) Plaintiffs' motions were denied. (Id. at 7.)

II. Discussion

a. Standard of Review

In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court "must take all of the factual allegations in the complaint as true." Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717 (2d Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); see also Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 113 (2d Cir. 2013) (quoting Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009)). A complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Matson v. Bd. of Educ. of City Sch. Dist. of N. Y., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Iqbal, 556 U.S. at 678); see also Pension Ben. Guar. Corp., 712 F.3d at 717-18. "[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 'show[n]' — 'that the pleader is entitled to relief.'" Pension Ben. Guar. Corp., 712 F.3d at 718 (alteration in original) (quoting Iqbal, 556 U.S. at 679). Although all allegations contained in the complaint are assumed true, this principle is "inapplicable to legal conclusions." Iqbal, 556 U.S. at 678.

b. Plaintiffs' due process claims are time-barred

Defendants contend that Plaintiffs' claims are time-barred by the applicable statute of limitations because, on the date the Property was auctioned, Plaintiffs had notice of the allegedinjury. (Def. Mot. ¶¶ 3-4.) Plaintiffs assert that Defendants took the Property from Plaintiffs in violation of their substantive and procedural due process rights. (Am. Compl. ¶¶ 21-23.) Plaintiffs acknowledge that the deed was recorded on or about January 6, 2011, January 11, 2011, (Am. Compl. ¶ 10), or January 11, 2013, ⁹ (Pl. Opp'n Ltr. 1), but contend that it was only after Halstead inspected "the recording instruments" that he learned in July 2013, that Defendants "had committed fraud by executing false affidavits attesting to their compliance with required posting rules." (Id.) Plaintiffs argue that because of the fraudulent concealment, the "limitations period should be tolled" until Plaintiffs' discovery of the fraudulent affidavits in July 2013. (Am. Compl. ¶ 14; Pl. Opp'n Ltr. 1.)

The statute of limitations for claims brought pursuant to Section 1983 is determined by state law and, in New York, the statute of limitations for Section 1983 claims arising in New York is three years. Pinaud v. Cnty. of Suffolk, 52 F.3d 1139, 1156 (2d Cir. 1995) (citing Owens v. Okure, 488 U.S. 235, 250-51 (1989)). "While state law supplies the statute of limitations for claims under Section 1983, federal law determines when a federal claim accrues. The claim accrues when the plaintiff knows or has reason to know of the harm." Connolly v. McCall, 254 F.3d 36, 41 (2d Cir. 2001) (quoting Eagleston v. Guido, 41 F.3d 865, 871 (2d Cir. 1994)); see also Pendleton v. Goord, 849 F. Supp. 2d 324, 329 (E.D.N.Y. 2012) ("The limitations period begins to run, or accrue, when the plaintiff knows or has reason to know of the injury which is the basis of his action.") Plaintiffs do not dispute that that the three year statute of limitations applies, however, they argue that it should be tolled because of Defendants' fraudulent actions.(Pl. Opp'n Ltr. 1-2.) Because the Property was sold at auction on or about March 11, 2009, and because Plaintiffs commenced this action on August 29, 2013, more than four years after the auction of the Property, unless Plaintiffs can demonstrate that they are entitled to equitable tolling of the statute of limitation, the action is time-barred.

i. Equitable tolling doctrine

Section 1983 claims are subject to equitable tolling under certain circumstances. Pearl v. City of Long Beach, 296 F.3d 76, 80 (2d Cir. 2002) (noting that equitable tolling can apply to Section 1983 claims). Whether or not the limitations period should be tolled is determined by state law. See Abbas v. Dixon, 480 F.3d 636, 641 (2d Cir. 2007) ("Although federal law determines when a Section 1983 claim accrues, state tolling rules determine whether the limitations period has been tolled unless state laws would defeat the goals of Section 1983." (citation and internal quotation marks omitted)).

"[A] litigant seeking equitable tolling must establish two elements: '(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way and prevented timely filing.'" Bolarinwa v. Williams, 593 F.3d 226, 231 (2d...