O'Mara v. Town of Wappinger

• Decision Date: 16 April 2007
• Docket Number: Docket No. 06-0078-cv(L).,Docket No. 06-1323-cv(CON).
• Citation: 485 F.3d 693
• Parties: Donald J. O'MARA III, Patrick L. O'Mara Sr., and Absolute Property Management, Inc., Plaintiffs-Counter-Defendants-Appellees, v. TOWN OF WAPPINGER, Defendant-Counter-Claimant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

485 F.3d 693

Donald J. O'MARA III, Patrick L. O'Mara Sr., and Absolute Property Management, Inc., Plaintiffs-Counter-Defendants-Appellees, v. TOWN OF WAPPINGER, Defendant-Counter-Claimant-Appellant.

Docket No. 06-0078-cv(L).

Docket No. 06-1323-cv(CON).

United States Court of Appeals, Second Circuit.

Argued: January 22, 2007.

Decided: April 16, 2007.

Gary Stein (Frank Lasalle, Dacia Cocariu, Schulte Roth & Zabel LLP and Emanuel F. Saris, Vergilis, Stenger, Roberts,

Pergament & Viglotti, LLP on the brief), Schulte, Roth & Zabel LLP, New York, NY, for Defendant-Counter-Claimant-Appellant.

Kenneth C. Brown (James W. Gatthaar, Susan E. Galvao, Bleakley Platt & Schmidt, LLP and Maurice J. Salem on the brief), Bleakley Platt & Schmidt, LLP, White Plains, NY, for Plaintiffs-Counter-Defendants-Appellees.

Michael E. Kenneally, Jr., Albany, N.Y. for The Association of Towns of the State of New York as amicus curiae in support of defendant-counter-claimant-appellant Town of Wappinger.

Before: SOTOMAYOR, KATZMANN, Circuit Judges and CEDARBAUM, District Judge.^*

KATZMANN, Circuit Judge.

The Town of Wappinger ("Town") appeals from a judgment resolving the enforceability of an open space restriction imposed by the Town of Wappinger Planning Board ("Planning Board"). This case calls on us in principal part to resolve a question of New York property law: Is an open space restriction imposed by a subdivision plat under New York Town Law § 276 enforceable against a subsequent purchaser, and under what circumstances? For the reasons that follow we believe this question should be answered by the New York courts and, thus, we certify it to the New York Court of Appeals. The district court also held that the Town was liable under 42 U.S.C. § 1983 ("Section 1983") for actions taken to enforce the open space restriction. Because we respectfully differ with the district court's application of federal law, we now reverse.

I.

The pertinent facts, as found by the district court at trial except where otherwise noted, are as follows: In 1962 two developers, David Alexander and Fred Lafko, purchased property in the Town: they planned to develop a condominium project to be known as Wildwood Manor on this property. O'Mara v. Town of Wappinger, 400 F.Supp.2d 634, 636 (S.D.N.Y.2005). On or about December 17, 1962, the Planning Board tentatively approved a preliminary layout for the project. Id. The Planning Board conditioned its approval, in part, on the creation of a "permanent open space on the plat."¹ Id. On or about January 23, 1963, the Planning Board approved a plat of the Wildwood Manor development which divided the property into seven parcels ("1963 Plat") including two parcels, Parcels B and E, which were designated the "buffer" area where the open space would be. Id. at 637. On the plat the words "Open Space" are written on Parcels B and E. Id. The minutes for the January 23 meeting at which the plat was approved ("Planning Board Minutes") indicate that it was accepted subject to eight conditions, the last of which was that "no building permits will be issued for Parcels B and E, as indicated on the [1963] Plat." Id. The 1963 Plat and the Planning Board Minutes were filed with the Town. Id. The 1963 Plat was also filed with the Dutchess County Clerk's Office.² The Wildwood Manor condominiums were constructed and continue to be occupied. Id. at 638. Parcels B and E remained undeveloped until the events that gave rise to this litigation. Id.

Plaintiff-appellee Absolute Property Management, a company owned by plaintiffs-appellees Donald O'Mara and Patrick O'Mara (collectively "the O'Maras"), acquired Parcels B and E for $29,500 in an in rem tax sale on October 18, 2000, with the intention of constructing ten single-family houses. Id. at 636, 638. In 2002, the O'Maras began to take steps toward constructing a first house, which was intended to serve as a residence for Donald O'Mara and his family, on Parcel B. Id. at 638. Initially, development progressed smoothly: The Town issued a building permit and a temporary certificate of occupancy, and approved both an interim survey for the lot on which the house was to be built and a site plan. Id.

The strife between the O'Maras and the Town can be traced to July 2003 when Ronald Lafko, the son of Fred Lafko, approached a Town Councilman to express his concern that the development violated the 1963 Plat. Id. at 639. Nothing happened immediately, but in November 2003, George Kolb ("Kolb"), the newly-appointed Town Building Inspector, issued a stop work order based on the open space restriction.³ Id. Donald O'Mara immediately protested the issuance of the stop work order and met with Town officials in an attempt to resolve the matter. Id. The Town allowed him to continue to complete some exterior work on the site but did not remove the stop work order. Id.

On December 2, 2003, an attorney for the Town made a written settlement proposal to the O'Maras' counsel in which the Town offered to grant a certificate of occupancy provided the rest of Parcels B and E were dedicated to the Town. Id. at 640, 645. The O'Maras responded by filing this action in the Southern District of New York.

The O'Maras' original complaint alleged a claim under the Takings Clause, which was dismissed on the eve of trial, and a claim under Section 1983. The complaint was amended to add claims for a declaratory judgment that the O'Maras owned Parcels B and E free and clear of the open space restriction, as well as claims for fraud and negligent misrepresentation. The case went to trial in October 2005. Midway through the trial, on the suggestion of the district court, both sides waived their right to a jury trial, and the evidence was presented to the court as the finder of fact. Id. at 636 n. 1.

Following the completion of the trial, the district court held that the O'Maras were entitled to a declaratory judgment and damages under Section 1983. The open space restriction was deemed unenforceable because it had not been recorded with Dutchess County and the O'Maras were purchasers for value who had neither actual nor constructive notice of the restriction. Id. at 642-43. Turning to the Section 1983 claim, the district court concluded that because the O'Maras had a "legitimate claim of entitlement" to a certificate of occupancy and because the Town's basis for withholding the certificate "was illegal," the Town had violated the O'Maras' constitutional right to substantive due process, and they were entitled to damages. Id. at 644-45. Finally, the district court held that the O'Maras were not entitled to relief on their fraud and negligence claims.⁴ Id. at 646.

The district court's final order and judgment, which included an award of attorneys' fees under Section 1983, was entered on February 22, 2006. Id. at 646. The Town filed a timely notice of appeal.

II.

In reviewing the decision of a district court following a bench trial, we review findings of fact for clear error and conclusions of law de novo. See Rose v. AmSouth Bank of Fla., 391 F.3d 63, 65 (2d Cir.2004). The Town has not challenged the district court's findings of fact on appeal. Our review of the district court's legal conclusions will proceed in two parts. First, we review the conclusion that, under New York law, the open space restriction was not enforceable against the O'Maras. Second, we review the district court's conclusion that the Town violated the O'Maras' constitutional rights for purposes of Section 1983.

Enforceability of the Open Space Restriction

The district court assumed that the enforceability of the open space restriction against the O'Maras was governed by New York Real Property Law § 291, the statute that addresses the recording of a "conveyance of real property." N.Y. Real Prop. Law § 291.⁵ The New York legislature has defined a conveyance as a "written instrument" that "create[s], transfer[s], mortgage[s], or assign[s]" an interest in real property, N.Y. Real Prop. Law § 290(3), and the opinion below does not discuss why a duly promulgated zoning regulation should fall within this definition.⁶ The district court also did not explain why New York statutes that describe the powers of town planning boards in approving subdivisions and filing subdivision maps did not govern. See N.Y. Town Law § 276; N.Y. Real Prop. Law § 334.

No New York court decision appears to have identified explicitly the law governing the enforceability of a zoning regulation imposed during a subdivision process against a subsequent purchaser. For this reason and because we are cognizant that this is an area of law that has long been recognized as one in which the state courts have far greater competence than the federal courts, see, e.g., Harlen Assocs. v. Inc. Vill. of Mineola, 273 F.3d 494, 505 (2d Cir.2001) (rejecting § 1983 claim challenging zoning decision and noting that "[s]tate courts are better equipped in this arena and we should . . . avoid unnecessary state-federal conflict with respect to governing principles in an area principally of state concern" (quotation marks and alterations omitted)), we believe that it is appropriate to certify the important state law question this case raises to the New York Court of Appeals to answer in the first instance.⁷

Under Second Circuit Rule § 0.27 and New York law we may certify a question to the Court of Appeals when a question of New York law is "determinative" of a claim before us and "no controlling precedent of the Court of Appeals" resolves the question. 22 N.Y.C.R.R. § 500.27; see Morris v. Schroder Capital Mgmt. Int'l, 445 F.3d 525, 530 (2d Cir. 2006). We do not certify every case that meets these criteria. Where possible, it is our responsibility to predict how the forum state's highest court would rule. See DiBella v. Hopkins, 403 F.3d 102, 111 (2d Cir.2005) ("Because it is our job to predict how the forum state's highest court would decide the issues before us, we will not certify questions...