Liquifin Aktiengesellschaft v. Brennan, 74 Civ. 767 (JMC).

• Decision Date: 29 October 1974
• Docket Number: No. 74 Civ. 767 (JMC).,74 Civ. 767 (JMC).
• Parties: LIQUIFIN AKTIENGESELLSCHAFT, Plaintiff, v. Joseph P. BRENNAN, Individually, and as City Sheriff of the City of New York, and the City of New York, Defendants.
• Court: U.S. District Court — Southern District of New York

383 F. Supp. 978

LIQUIFIN AKTIENGESELLSCHAFT, Plaintiff, v. Joseph P. BRENNAN, Individually, and as City Sheriff of the City of New York, and the City of New York, Defendants.

No. 74 Civ. 767 (JMC).

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

October 29, 1974.

Donald J. Zoeller, New York City (Mudge, Rose, Guthrie & Alexander, John J. Witmeyer III, John B. Sherman and William P. Laino, New York City, of counsel), for plaintiff.

Edward J. Mallon, Philip Agree, Elliot Tunis, New York City (Adrian P. Burke, Corp. counsel, New York City), for defendant The City of New York.

Frederick Weinberger, New York City, for defendant Joseph P. Brennan.

MEMORANDUM DECISION

CANNELLA, District Judge:

The defendants herein, Joseph P. Brennan (City Sheriff of the City of New York) and The City of New York, move this Court pursuant to Rule 12(b) of the Fed.R.Civ.P. to dismiss plaintiff's complaint, or in the alternative, to decline or postpone the exercise of jurisdiction over the instant matter. Three grounds for such relief are urged upon the Court: (1) that the doctrine of abstention so requires; (2) that a prior state court judgment collaterally estops plaintiff from bringing this action; and (3) that the plaintiff has failed to join an indispensable party. For the reasons set forth below, the Court finds defendants' challenges to be without merit and denies the motion.

This matter arises out of an action begun by the Ronson Corporation against Liquifin Aktiengesellschaft ("Liquifin"), in the Supreme Court of New York, New York County, on July 6, 1973 with the obtaining by Ronson of an ex parte order of attachment. The order of attachment was immediately delivered to the Sheriff of the City of New York, who thereupon levied on $1,500,000 of Liquifin's funds then on deposit with the Franklin National Bank by serving a copy of said order of attachment upon an officer of the Bank. As a result of the attachment order the Bank put a "freeze" on Liquifin's account.

On July 19, 1973, Liquifin, acting pursuant to New York Civil Practice Law and Rules § 6222, obtained an order discharging the attachment. This order provided that upon service of the order and payment to the Sheriff of "his statutory fees and expenses," the attached property would be released. On the same day, the Sheriff demanded that Liquifin pay to him statutory fees and expenses in the sum of $75,625, and conditionally released the attachment provided that:

of the sum of $75,625, the Sheriff will hold $25,625 in escrow for three months either for substitution of that sum by a bond or the commencement of a proceeding to determine poundage as to the levy in excess of $1,000,000.

On September 19, 1973, Liquifin obtained an order removing the Ronson action to this Court, where it is presently pending before Judge Brieant (Ronson Corp. v. Liquifin Aktiengesellschaft and Liquigas SpA., Vincenzo Cazzaniga, 73 Civ. 4025 C.L.B.). On November 16, 1973 Liquifin paid to the Sheriff "with full reservation of all rights" the previously demanded sum of $75,625.

Having paid the Sheriff the amount demanded, Liquifin instituted the present action against the Sheriff and The City of New York. Jurisdiction is based upon diversity of citizenship and 28 U.S.C. § 1343, the jurisdictional predicate of 42 U.S.C. § 1983. Plaintiff's amended complaint contains three counts. In Count 1, plaintiff alleges that the required payment of $75,625 was a taking of property without due process of law and an "unreasonable interference with and undue burden upon access" to the New York State Courts and therefore is violative of the Fourteenth Amendment to the United States Constitution and Article I, Section 6 of the New York State Constitution. Count 2 alleges that a proper reading of Section 8012(b)(3) of N.Y.C.P.L.R. limits the maximum fee which the Sheriff could demand to $50,000 and not $75,625. The final count of the complaint alleges that C.P.L.R. Section 8012(b)(1), which permits a higher sheriff's fee to be charged in the counties of the City of New York than elsewhere in the State, denies due process and equal protection in violation of the Fourteenth Amendment to the United State Constitution and Article I, Section 6 to the New York State Constitution.

THE LAW

ABSTENTION

Defendants ask this Court to exercise its "discretion to postpone the exercise of . . . jurisdiction pending the resolution of the matters at issue by the Courts of the State of New York. . . ." (Weinberger Affidavit at 1). This invitation to abstain is declined.

As to Count 1 of plaintiff's complaint, attacking on due process grounds the constitutionality of New York's statutory procedure for compensation of sheriffs, abstention would be an abnegation of this Court's responsibilities and not a reflection of our "scrupulous regard for the rightful independence of the state governments"¹ and strong desire to foster comity. As the Supreme Court said in Lake Carriers' Association v. MacMullan, 406 U.S. 498, 509, 92 S.Ct. 1749, 1756, 32 L.Ed. 257 (1972),

Abstention is a "judge-made doctrine . . ., first fashioned in 1941 in Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 that sanctions . . . escape from immediate decision only in narrowly limited `special circumstances,' Propper v. Clark, 337 U.S. 472, 492, 69 S.Ct. 1333, 93 L.Ed. 1480," Zwickler v. Koota, 389 U.S. 241, 248, 88 S.Ct. 391, 395, 19 L.Ed. 2d 444 (1967), justifying "the delay and expense to which application of the abstention doctrine inevitably gives rise." England v. Medical Examiners, 375 U.S. 411, 418, 84 S.Ct. 461, 466, 11 L.Ed.2d 440 (1964).

There are, however, no "special circumstances" in this case and unlike the situation in Railroad Commission of Texas v. Pullman Co.,² a definitive ruling on the state law issue will not aid this Court in avoiding the constitutional issues raised in this complaint.

The "essential prerequisite"³ for this Pullman type abstention, that the "state statute is susceptible of a construction by the state judiciary that would avoid or modify the necessity of reaching a federal constitutional question,"⁴ is here missing. The decision, whether by this Court or by a state court, resolving the admitted ambiguity in C.P.L.R. § 8012(b)(3)⁵ will neither eliminate nor modify the constitutional questions before this Court.⁶ Plaintiff, relying on language in the statute which states that the Sheriff is entitled to the same poundage fee when an attachment is "vacated or set aside" as when the attachment is "discharged by order of the court", argues that the maximum amount upon which poundage should have been computed was $1,000,000. The Sheriff, on the other hand, points out that by its terms the $1,000,000 limitation applies only when the attachment is "vacated or set aside" and argues that the monetary limitation does not come into play when an attachment is discharged. The resolution of the instant motion does not require the Court to settle this dispute.⁷ It seems clear, however, that while the plaintiff's reading of the statute will save him $25,000, he will still be required to pay the Sheriff the substantial sum of $50,000 and his due process challenge will therefore remain intact.

As to Count 2, plaintiff raises no constitutional issues, but argues that a proper reading of N.Y.C.P.L.R. 8012(b) (3) requires that the poundage fee be calculated as if the amount attached was $1,000,000 rather than $1,500,000. As discussed above, the resolution of this controversy will require the Court to construe the meaning of an ambiguous state statute; such a procedure, however, has historically been the proper and unavoidable function of a federal court sitting in alienage and diversity cases. While a case such as this might present an appropriate opportunity to utilize a certification statute,⁸ New York does not have such a procedure, and as the Supreme Court has recently noted, in the absence of such a certification statute, "mere difficulty in ascertaining local law is no excuse for remitting the parties to a state tribunal for the start of another lawsuit,"⁹ something more must be present to trigger abstention.

Where Congress creates a head of federal jurisdiction which entails a responsibility to adjudicate the claim on the basis of state law, viz., diversity of citizenship, as was true in Meredith v. Winter Haven, 320 U.S. 228, 64 S. Ct. 7, 88 L.Ed. 9, we hold that difficulties and complexities of state law are no reason for referral of the problem to the state court. . . .¹⁰

Although there are certain ill-defined instances in which abstention is the proper course to be followed in a diversity case, it is clear that none of these "narrow and exceptional circumstances"¹¹ are present here. Defendants' reliance upon B-W Acceptance Corp. v. Torgerson, 234 F.Supp. 214 (D. Mont. 1964) is misplaced. In that case the court was faced with the alleged unconstitutionality of a Montana statute under a provision of the Montana Constitution having no counterpart in the United States Constitution. In such a case, where the interpretation and application of an unclear state constitutional provision may very well be "the nub of the whole controversy,"¹² abstention is appropriate.¹³ Here, however, the state constitutional provision allegedly infringed has a direct federal counterpart and the Court is not called upon to construe an ambiguous portion of New York's Constitution.

The state law issue presented in this case is not one of "vital concern"¹⁴ to the State of New York, and this Court's construction of 8012(b)(3), whatever it may in the end be, will neither trench upon state prerogatives,¹⁵ nor interfere with any complex state regulatory scheme.¹⁶ Abstention is thus an inappropriate course of action.

As to Count 3, wherein plaintiff mounts his equal protection challenge, the statutory language providing for higher sheriff's fees in the City of New York than elsewhere in the state is clear and...