Economic Opportunity Com'n v. County of Nassau
| Decision Date | 03 May 1999 |
| Docket Number | No. CV97-6104 (ADS).,CV97-6104 (ADS). |
| Citation | 47 F.Supp.2d 353 |
| Parties | ECONOMIC OPPORTUNITY COMMISSION OF NASSAU COUNTY, INC., CEDC, Incorporated, and John L. Kearse, Plaintiff, v. The COUNTY OF NASSAU, INCORPORATED, Village of Hempstead, Incorporated, Village of Hempstead Community Development Agency, Clinton C. Boone, Tina Hodge-Bowles, John Courtney, James A. Garner, Alvina Gray, Gien Spiritis, Charles Theofan, Thomas S. Gulotta, Owen B. Walsh, Kenneth Cynar, Joseph W. Ryan, Jr., Harrison J. Edwards and Donald J. Campbell, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Law Offices of Frederick K. Brewington, Hempstead, NY, by Frederick K. Brewington, of counsel, for the plaintiffs.
Snitow & Cunningham, LLP, New York City, by Stewart J. Epstein, Robert P. Devlin, Charles D. Cunningham, Edward J. Phillips, of counsel, for the Nassau County, defendants.
Horowitz & Feinberg, West Hempstead, NY, by Saul Horowitz, Matthew Feinberg, of counsel, for the defendant Incorporated Village of Hempstead.
Certilman Balin Adler & Hyman, LLP, East Meadow, NY, by Brian J. Davis, of counsel, for the Incorporated Village of Hempstead Community Development Agency, defendants.
This lawsuit arises from the claims of the plaintiffs, including the Economic Opportunity Commission of Nassau County, Inc. ("EOC"), a self-described "official antipoverty community action agency for Nassau County," that the defendants, consisting of local municipalities, agencies and officials, conspired, among other things, to unlawfully deprive it of a multi-million dollar loan guarantee by the United States Department of Housing and Urban Development ("HUD"), so as to obtain control of the plaintiffs' coveted properties. The Complaint raises claims of due process and equal protection under 42 U.S.C. § 1983; conspiracy and substantive violations under the Racketeer and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) and (d); and several common law causes of action. At issue are three, separately-filed motions to dismiss the Amended Complaint (the "Complaint"), pursuant to Federal Rule of Civil Procedure 12(b)(6), by the Village of Hempstead defendants (the "Village"), the Nassau County defendants (the "County"), and the defendant Incorporated Village of Hempstead Community Development Agency (the "CDA"). The County also moves to dismiss pursuant to Rule 9(b).
The following facts are derived from the Complaint.
The plaintiff Economic Opportunity Commission of Nassau County, Inc. ("EOC") is a private, nonprofit corporation which serves as the "official anti-poverty community action agency for Nassau County," New York. The plaintiff CEDC, Incorporated ("CEDC"), also a private, nonprofit corporation, serves as the "economic development arm" of the EOC and administers certain community development programs in the County. The plaintiff John L. Kearse ("Kearse") serves as the Chief Executive Officer of both the EOC and the CEDC.
Kearse is a long-time community activist who states that he "was a motivating force behind the recent successful federal court constitutional challenge to the composition of [the] County's governing body." His political activities have contributed to the "creation of [the] current County Legislature, which has served to enhance the political influence of the minority community," albeit, allegedly at the expense of the "controlling political establishment" in the County, which opposed Kearse's efforts "with vigor."
The EOC owns and occupies two properties. The first property is a building, which the plaintiffs renovated, located at 134 Jackson Street, in Hempstead, Nassau County (the "Jackson Street building"). The Jackson Street building "serves as a primary example of the recent revitalization effort" the plaintiffs have conducted in a "previously dilapidated area" of the Village.
In 1977, CEDC purchased the second property, the Hempstead Bus Terminal Building, located at 100 Main Street in Hempstead, Nassau County (the "Bus Terminal" and, collectively with the Jackson Avenue building as "the Properties") for the purpose of providing "a consistent income base" for the plaintiff agencies an "as a symbol of the ability of the minority, low-income committee to become economically self-sufficient."
Several years later, in or about May 1993, CEDC undertook major renovations at the Bus Terminal. The work was financed through a program adopted as part of the Housing and Urban Development Act of 1974, codified at 42 U.S.C. § 5308, and commonly referred to as a "Section 108 loan guarantee." The Section 108 loan guarantee was issued to Nassau County, as recipient, and the Village of Hempstead, as sub-recipient, for the purpose of eventually channeling the funds to the EOC and the CEDC. Under this arrangement, the Village, through its Community Development Agency (the "CDA"), loaned 6.25 million to the CEDC, of which approximately $2 million was used to satisfy an existing mortgage on the property. The balance of the funds were allocated for renovations. The loan was secured by a $6 million first mortgage, with the CDA as the mortgagee.
The CDA is empowered to design and implement urban renewal projects in the Village. Many of the defendants in this case are CDA officials who are sued in their individual and official capacities: Clinton C. Boone ("Boone") is the Vice-Chairman of the CDA and a member of the Board of Directors; Tina Hodge-Bowles ("Hodge-Bowles") is the Secretary of the CDA and a member of the Board of Directors; John Courtney ("Courtney") is the Treasurer of the CDA and a member of the Board of Directors; James Dunne ("Dunne") is a member of the CDA's Board of Directors; Alvina Gray ("Gray") is the Deputy Commissioner of the CDA and a member of the Board of Directors; Glen Spiritis ("Spiritis") is the Commissioner of the CDA; Charles Theofan ("Theofan") is the Assistant Commissioner for Legal Affairs of the CDA; Anne Martin ("Martin") is a member of the CDA's Board of Directors; and James A. Garner ("Garner"), is the Village Mayor and the Chairman of CDA's Board of Directors (collectively, the "CDA defendants").
The Nassau County defendants, who also are sued in their individual and official capacities, include the following: Thomas S. Gulotta ("Gulotta") is the Nassau County Executive; Owen B. Walsh ("Walsh") is the Nassau County Attorney; Kenneth Cynar ("Cynar") is the Special Assistant to the County Executive; Joseph W. Ryan Jr. ("Ryan") serves as Special Counsel to the County Attorney; Harrison J. Edwards ("Edwards") is the Special Counsel to the Nassau County Department of Housing and Intergovernmental Affairs; and Donald J. Campbell ("Campbell") is the Commissioner of the Nassau County Office of Housing and Intergovernmental Affairs (collectively, the "County defendants").
As noted previously, in 1993, CEDC undertook major renovations needed at the Bus Terminal. However, by the plaintiffs' account, the CDA threw up roadblocks at every turn. For example, the CDA insisted that the contract for a general contractor to perform the work be put out for a public bid, rather than permit the CEDC to perform the work itself. Then, when the CEDC submitted the lowest bid to serve as the general contractor, the CDA nevertheless demanded that the contract be awarded to the next lowest bidder, Viron Company, Inc. ("Viron").
At the encouragement of Mayor Garner and CDA Commissioner Spiritis, Viron subcontracted with another company, QDR Consultants and Development Co. ("QDR"), for a $1.3 million part of the work. "The result was a disaster," the plaintiffs maintain. QDR did not complete the work it designated for itself, and did not pay its own subcontractors. When Kearse tried to terminate QDR, the CDA and Village officials "threatened" him, saying that "any action taken to terminate the [QDR] contract would result in CDA not releasing any further funds to the project."
As a result of Viron's failure to complete the project in a timely or competent manner, CEDC was unable to generate sufficient rental income from the Bus Terminal to satisfy its real estate tax and mortgage obligations for the property. As of 1995, CEDC was unable to lease more than 30% of the projected available office space in the Property due to the "massive construction problems" that resulted in "burdensome construction delays and thwarted completion." According to the plaintiffs, officials from the Village and the CDA conspired to cause these delays and cost overruns in an effort to "divest CEDC of its real property, to discredit and defame Plaintiffs for controversial political activities, and to improperly subvert and discontinue funding for EOC."
The Complaint further alleges that the CEDC's efforts to increase the rent roll at the Property were "inhibited by Defendants' actions to discourage public agencies from leasing available space in the building," despite the pressing need for office space in the Village, and the Bus Terminal's convenient location at the "heart of the District Court area." In this regard, the plaintiffs state that the County canceled a bidding process to house the Bureau of Traffic Violations "after it became apparent that CEDC was ready to submit the lowest bid and win the contract to house the agency." Also, the CDA and the Village "selectively and discriminatorily chose to preclude CEDC from leasing property" to a methadone clinic, despite the fact that existing zoning regulations would have permitted the lease. The actions of the County, the CDA and the Village resulted in the plaintiffs allegedly losing "at least $100,000" each year in rental income.
In 1994, CEDC...
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