Stensrud v. Rochester Genesee Reg'l Transp. Auth., 6:19-CV-06753 EAW

Decision Date16 December 2020
Docket Number6:19-CV-06753 EAW
Parties John R. STENSRUD and Maria B. Stensrud, Plaintiffs, v. ROCHESTER GENESEE REGIONAL TRANSPORTATION AUTHORITY, Defendant.
CourtU.S. District Court — Western District of New York

John T. Refermat, Lacy Katzen LLP, Rochester, NY, for Plaintiffs.

Kathleen M. Bennett, Stephanie M. Campbell, Suzanne O. Galbato, Bond, Schoeneck & King PLLC, Syracuse, NY, for Defendant.


ELIZABETH A. WOLFORD, United States District Judge


Plaintiffs John R. Stensrud and Maria B. Stensrud (collectively "Plaintiffs") filed a complaint pursuant to 42 U.S.C. § 1983 related to an alleged taking of property by defendant Rochester Genesee Regional Transportation Authority ("RGRTA" or "Defendant"). (Dkt. 1). RGRTA filed a motion to dismiss on statute of limitations grounds, and alternatively arguing that the Court should abstain from hearing Plaintiffs’ claims pursuant to Younger v. Harris , 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). (Dkt. 13). For the reasons set forth below, RGRTA's motion is denied.


The following facts are taken from the complaint. (Dkt. 1). As is required at this stage of the proceedings, the Court treats Plaintiffs’ well-pleaded factual allegations as true. Additionally, Defendant has requested that the Court take judicial notice of the filings from ongoing state court proceedings between Plaintiffs and Defendant, and Plaintiffs join in that request. Pursuant to Federal Rule of Evidence 201, the Court takes judicial notice of the state court proceedings only to the extent of establishing the fact of the litigation and the related filings, including the procedural posture of the litigation and the various state court rulings. See Ndremizara v. Swiss Re Am. Holding Corp. , 93 F. Supp. 3d 301, 313 n.7 (S.D.N.Y. 2015) ("The Court may take judicial notice of pleadings filed in other cases in deciding a motion to dismiss without converting that motion into a motion for summary judgment."); see also Glob. Network Commc'ns, Inc. v. City of New York , 458 F.3d 150, 157 (2d Cir. 2006) ("A court may take judicial notice of a document filed in another court not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings." (citation omitted)).

In 2011, Plaintiffs applied for a commercial loan of $300,000 to purchase a four-family commercial apartment complex at 36-38 Chamberlain Street, Rochester, New York. (Dkt. 1 at ¶ 14). In mid-2012, Canandaigua National Bank commissioned a conventional financing appraisal, which valued the property at $400,000. (Id. at ¶ 16). Plaintiffs made many different improvements to the building and increased the rents from approximately $550 per unit per month to rents ranging from $1,150 to $3,295. (Id. at ¶¶ 17-20).

In 2013, RGRTA began taking initial steps to acquire the property through eminent domain. (Id. at ¶ 24). It commissioned an appraisal issued in 2014 (the "2014 RGRTA Appraisal"), which did not include an income capitalization calculation, and valued the property at $255,000. (Id. at ¶¶ 25, 34). Later in 2014, RGRTA advised Plaintiffs that it would no longer acquire the property, and Plaintiffs continued to make improvements and otherwise invest in the property. (Id. at ¶ 28). In 2015, RGRTA reversed course and decided to condemn the property, sending notices to the tenants, who vacated. (Id. at ¶ 31).

On June 23, 2015, RGRTA filed a verified petition in New York State Supreme Court, Monroe County, seeking an order pursuant to New York Eminent Domain Procedure Law § 402 authorizing the filing of an acquisition map and vesting title to the property in RGRTA. (Dkt. 13-2). Title to the property formally transferred to RGRTA on August 13, 2015, with the entry of a vesting order. (Id. at ¶ 34). RGRTA paid $292,000 to Plaintiffs on or about November 16, 2015. (Id. ).

On December 30, 2015, Plaintiffs filed a claim in New York State Supreme Court, Monroe County, seeking direct and consequential damages as compensation for the alleged value of the property. (Dkt. 13-5). Plaintiffs retained an expert to calculate the income capitalization of the property, as well as a real estate appraiser who included an income-based analysis in his appraisal, referred to as the investment value. (Dkt. 1 at ¶¶ 35-38). RGRTA filed a motion in limine to strike the investment value portion of the appraisal report and preclude the testimony of the income capitalization expert, arguing that Plaintiffs should be limited to fair market value measures of valuation. (Id. at ¶ 39). Plaintiffs cross-moved to strike the 2014 RGRTA Appraisal for failure to include an income approach. (Id. at ¶ 40). On December 12, 2016, the state trial court granted RGRTA's motion and denied Plaintiffscross-motion. (Dkt. 13-6 at 3).

After an unsuccessful motion to reargue and renew before the trial court (Dkt. 13-11), Plaintiffs pursued an appeal before the New York State Supreme Court, Appellate Division, Fourth Department, which ultimately issued a decision on June 7, 2019, modifying in part and affirming in part the trial court's order. (Dkt. 13-16). The Fourth Department modified the order to allow the presentation of evidence addressing the investment value methodology, but affirmed the preclusion of the expert witness testimony regarding income capitalization as well as the denial of Plaintiffscross-motion. (Id. ). The decision cited N.Y. Comp. Codes R. & Regs. tit. 22, § 202.61(e) (hereinafter " 22 NYCRR § 202.61(e)") as the basis for precluding expert testimony regarding the income capitalization method that was not discussed in the appraisal. (Id. at 2). Plaintiffs sought leave from the Fourth Department to reargue or appeal to the New York State Court of Appeals, which was denied on September 27, 2019. (Dkt. 13-17). Plaintiffs then sought permission from the Court of Appeals to appeal the Fourth Department's decision, which was denied on the basis of non-finality. (Dkt. 22).

Plaintiffs filed the instant lawsuit on October 9, 2019. (Dkt. 1). Plaintiffs assert two causes of action: (1) a § 1983 claim that RGRTA took Plaintiffs’ property without just compensation in violation of the Fifth and Fourteenth Amendments to the United States Constitution, and the New York Constitution; and (2) a claim for "Indirect/Consequential Damages" based on the unconstitutional taking. (Id. at ¶¶ 51-57). Among other things, Plaintiffs argue that the interpretation of 22 NYCRR § 202.61(e) by New York state courts—wherein the testimony of Plaintiffs’ non-appraiser expert is limited to the content of the appraisal prepared by Plaintiffs’ appraiser—is unconstitutional as applied to them. (Id. at ¶¶ 5-6, 43-48).

RGRTA filed its motion to dismiss on December 9, 2019. (Dkt. 13). Plaintiffs filed papers in opposition on January 27, 2020 (Dkt. 17), and RGRTA replied on February 17, 2020 (Dkt. 19). On March 19, 2020, this case was transferred from the assigned district judge to the undersigned. (Dkt. 21). Plaintiffs filed a letter on April 16, 2020, informing the Court of the order from the Court of Appeals denying their motion for leave to appeal. (Dkt. 22). On June 24, 2020, the Court ordered supplemental briefing from the parties concerning the applicability of Younger abstention to a claim seeking only monetary relief (Dkt. 23), to which the parties responded on July 2, 2020 (Dkt. 24), July 6, 2020 (Dkt. 26), and July 13, 2020 (Dkt. 30; Dkt. 31).

I. Statute of Limitations

Defendant seeks dismissal, arguing that the statute of limitations has run on Plaintiffs’ claims. "Although the statute of limitations is ordinarily an affirmative defense that must be raised in the answer, a statute of limitations defense may be decided on a Rule 12(b)(6) motion if the defense appears on the face of the complaint."

Ellul v. Congregation of Christian Bros. , 774 F.3d 791, 798 n.12 (2d Cir. 2014) ; see In re S. Afr. Apartheid Litig. , 617 F. Supp. 2d 228, 287 (S.D.N.Y. 2009) (an exception to the rule that an affirmative defense cannot normally be decided on a motion to dismiss "is made where the complaint facially shows noncompliance with the limitations period and the affirmative defense clearly appears on the face of the pleading." (citation omitted)). As discussed below, the Court agrees that Plaintiffs commenced this litigation outside the limitations period; however, equitable estoppel prevents dismissal.

A. Accrual of § 1983 Claim

The length of the statute of limitations for a § 1983 action is governed by state law, Wallace v. Kato , 549 U.S. 384, 387, 127 S.Ct. 1091, 166 L.Ed.2d 973 (2007), and in New York, it is three years. Eagleston v. Guido , 41 F.3d 865, 871 (2d Cir. 1994). On the other hand, when a § 1983 claim accrues is a question of federal law. Wallace , 549 U.S. at 388, 127 S.Ct. 1091. "[A]ccrual occurs when the plaintiff knows or has reason to know of the injury which is the basis of his action." Pearl v. City of Long Beach , 296 F.3d 76, 80 (2d Cir. 2002) (citations and quotations omitted); see also Levy v. BASF Metals Ltd. , 917 F.3d 106, 108 (2d Cir. 2019) (explaining that, in determining when a claim accrues, the "relevant inquiry" is not whether a party has "discovered the identity of the defendants," but rather whether the party is aware of the injury), cert. denied , ––– U.S. ––––, 140 S. Ct. 536, 205 L.Ed.2d 337 (2019).

In the instant matter, Plaintiffs allege that RGRTA took their property without paying just compensation in violation of their Fifth and Fourteenth Amendment rights. (Dkt. 1 at ¶¶ 52-54). The Fifth Amendment's Takings Clause provides that no private property "shall ... be taken for public use, without just compensation." U.S. Const. Amend. V. "The Fifth Amendment does not proscribe the taking of property; it proscribes taking without just compensation." Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City , 473 U.S. 172, 194, 105 S.Ct. 3108, 87...

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