Stonybrook Tenants Association, Inc. v. Alpert
| Decision Date | 31 May 1961 |
| Docket Number | Civ. 8604. |
| Court | U.S. District Court — District of Connecticut |
| Parties | STONYBROOK TENANTS ASSOCIATION, INCORPORATED, George F. Wright, Earl M. Gleason, John A. Matarazzo, and Earl McMaugh Barnes, Plaintiffs, v. Hyman ALPERT and Joseph Alpert, Individually and d/b/a Stonybrook Gardens Company, and Stonybrook Gardens, Incorporated, and Stonybrook, Incorporated, Defendants. |
Theodore I. Koskoff, Bridgeport, Conn., and Frank J. Hennessy, Stratford, Conn., for plaintiffs.
Hugh A. Hoyt, Bridgeport, Conn., Francis M. Shea and Alfred L. Scanlan, Washington, D. C., for defendants.
Plaintiffs1 move, pursuant to 28 U.S. C. § 1447, to remand this case to the Superior Court for Fairfield County, from which it was removed to this Court, pursuant to 28 U.S.C. § 1441, by defendants Hyman Alpert and Joseph Alpert.
The question presented by the motion to remand is whether two inactive Connecticut corporations named as defendants—both of which have been liquidated, have neither assets nor liabilities and are in the process of dissolution—are necessary or indispensable parties defendant so as to destroy requisite diversity of citizenship.
The Court holds that this question must be answered in the negative and accordingly denies the motion to remand.
Facts dispositive of this motion are set forth in the complaint originally filed in the Superior Court, the agreement of August 17, 1959 (Exhibit A referred to in the complaint) and the verified removal petition.
The action is brought to enforce a written agreement entered into August 17, 1959 between defendants in this action (referred to as "Parties of the First Part") and plaintiffs in this action (referred to as "Parties of the Second Part"). The agreement provided, among other things, for the settlement of certain litigation arising out of the operation of Stonybrook Gardens, a 400 unit housing development in Stratford, Connecticut; for the sale of individual housing units in Stonybrook Gardens upon specified terms and conditions; for cooperation between the parties in attempting to work out a sale to plaintiffs of Stonybrook Gardens as a cooperative; and for certain maintenance, repairs, renovations and painting of the property.
Relief sought in this action, in addition to a claim of $400,000 damages, includes equitable relief in the form of an injunction ordering defendants to complete certain repairs, renovations and painting; to maintain the premises properly; to refrain from proceeding with summary process actions and from instituting new ones; to cooperate in working out a sale of the property to a cooperative, including securing the necessary financing; and to sell the property to a cooperative at a price to be determined by the Court.
Stonybrook Gardens was built during 1941 and 1942 as a permanent defense housing project, pursuant to the Lanham Act, 54 Stat. 1125 (1940), 42 U.S.C. §§ 1521-1524. Upon completion, it was placed under control of the Bridgeport Housing Authority. On June 30, 1943 it was placed under control of the Stratford Housing Authority. Both housing authorities were agents of the Public Housing Administration, an instrumentality of the United States.
On January 17, 1956 Stonybrook Gardens, having been put up for public sale by the Public Housing Administration pursuant to the Lanham Act, was sold to Stonybrook Gardens, Inc., a Connecticut corporation, for $1,327,492. The Public Housing Administration was paid $200,000 in cash and accepted a purchase-money mortgage note, secured by a mortgage on the premises, for the remainder of the purchase price.
On December 31, 1956 the interest of Stonybrook Gardens, Inc. in the property was conveyed outright to Hyman Alpert and Joseph Alpert (hereinafter "the Alperts") who were doing business under the name of Stonybrook Gardens Company, a New York partnership.
On January 10, 1957 the property was conveyed by the Alperts to Stonybrook, Inc., a Connecticut corporation, under an arrangement whereby this corporation was to act as nominee for the Alperts for the sole purpose of holding title to the property; the Alperts were to receive all income from the property, were to be responsible for all expenses of operating the property and were to assume all liabilities of the corporation arising from its holding title to the property.
On May 21, 1959 all interest of Stonybrook, Inc. in the property was conveyed outright to the Alperts.
On August 17, 1959 the agreement referred to above was executed.
All named individual plaintiffs are citizens and residents of Connecticut.2 Plaintiff, Stonybrook Tenants Association, Inc., is an incorporated Connecticut association, all of whose members reside in Stonybrook Gardens and are Connecticut citizens.
The two named individual defendants, Hyman Alpert and Joseph Alpert, are citizens and residents of New York. They do business under the name of Stonybrook Gardens Company, a New York partnership with its principal place of business in Brooklyn, New York. The partnership owns and operates Stonybrook Gardens, the housing project referred to above.
The two named corporate defendants, Stonybrook Gardens, Inc. and Stonybrook, Inc., are Connecticut corporations whose present status and interest in this action will be summarized below.
The individual defendants—the Alperts—are the sole owners and operators of Stonybrook Gardens and have been continuously since execution of the agreement of August 17, 1959. Since December 31, 1956 they have owned the equitable title to the property and during this period have collected all rents from the property; have paid all taxes on the property; have brought eviction proceedings and other actions against tenants of the property; and have been responsible for all expenses of operating the property, including maintenance, repairs and renovations.
Defendant Stonybrook Gardens, Inc. had an active corporate existence from January 17, 1956 (the date it purchased Stonybrook Gardens from the Public Housing Administration) to December 31, 1956 (the date it conveyed its interest in the property to the Alperts). This corporation has been inactive since December 31, 1956; has no assets or liabilities; and is now in process of dissolution.
Defendant Stonybrook, Inc. held legal title to Stonybrook Gardens from January 10, 1957 (the date the Alperts conveyed the property to it under the arrangement referred to above) to May 21, 1959 (the date it conveyed its interest in the property to the Alperts). This corporation has been inactive since May 21, 1959; has no assets or liabilities; and is now in process of dissolution.
Defendants removed this case from the Superior Court for Fairfield County to this Court pursuant to 28 U.S. C. § 1441(a),3 invoking the jurisdiction of this Court pursuant to 28 U.S.C. § 1332(a) (1)4 on the ground that requisite diversity of citizenship exists and the requisite jurisdictional amount is involved.5
In view of the $400,000 claim for damages, there is no issue as to jurisdictional amount. The sole issue is whether diversity of citizenship exists by reason of the two inactive Connecticut corporations named as defendants, all plaintiffs being Connecticut citizens and the two individual defendants being New York citizens.
Requisite diversity jurisdiction exists if all parties on one side are of citizenship diverse to that of all parties on the other side. Strawbridge v. Curtiss, 1806, 3 Cranch 267, 7 U.S. 267, 2 L.Ed. 435; In re Removal Cases, 1879, 100 U.S. 457, 468-470, 25 L.Ed. 593; Salem Trust Company v. Manufacturers' Finance Company, 1924, 264 U.S. 182, 189, 44 S.Ct. 266, 68 L.Ed. 628; City of Indianapolis v. Chase National Bank, 1941, 314 U.S. 63, 69, 62 S.Ct. 15, 86 L.Ed. 47. In a removal case, such diversity must exist at the time suit is commenced and at the time the removal petition is filed. Yulee v. Vose, 1878, 99 U.S. 539, 25 L.Ed. 355.
The right of removal cannot be defeated by joining unnecessary or dispensable parties. Salem Trust Company v. Manufacturers' Finance Company, supra, 264 U.S. at pages 189-190, 44 S.Ct. 266; Olsen v. Jacklowitz, 2 Cir., 1935, 74 F.2d 718, 719. In the Salem Trust Company case, the Supreme Court stated (264 U.S. 182, 189-190, 44 S.Ct. 266, 267):
Moreover, nominal or formal parties, being neither necessary nor indispensable, are not required to join in the petition for removal. Shattuck v. North British & Mercantile Insurance Company, 8 Cir., 1893, 58 F. 609, 610.
For purposes of determining whether requisite diversity of citizenship exists, the courts look to the citizenship of the real parties in interest and disregard the citizenship of nominal or formal parties having no real interest in the controversy. In Hann v. City of Clinton, 10 Cir., 1942, 131 F.2d 978, 981, the court stated:
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