Sunset Homeowners Ass'n, Inc. v. Difrancesco

• Decision Date: 15 April 2019
• Docket Number: 1:19-CV-00016 EAW
• Parties: SUNSET HOMEOWNERS ASSOCIATION, INC. and GLENN ARTHURS, Plaintiffs, v. NATASCHA DIFRANCESCO and BRYAN DIFRANCESCO, Defendants.
• Court: U.S. District Court — Western District of New York

SUNSET HOMEOWNERS ASSOCIATION, INC. and GLENN ARTHURS, Plaintiffs, v. NATASCHA DIFRANCESCO and BRYAN DIFRANCESCO, Defendants.

1:19-CV-00016 EAW

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK

April 15, 2019

DECISION AND ORDER

INTRODUCTION

Plaintiffs Sunset Homeowners Association, Inc. (the "Sunset HOA" or the "Association") and Glenn Arthurs ("Arthurs") (collectively, "Plaintiffs") commenced this action in New York State Supreme Court, Cattaraugus County, on December 4, 2018, alleging that Natascha DiFrancesco and Bryan DiFrancesco (collectively, "Defendants") breached their contractual obligations by advertising and utilizing their properties as rental units through Airbnb, Inc., and HomeAway, Inc. (Dkt. 1-2 at 4-18).¹ Plaintiffs also obtained a temporary restraining order in state court that, among other things, prohibited the use of Defendants' properties for rental purposes. (Dkt. 1-3 at 1-4). On January 3, 2019, Defendants removed this action to federal court. (Dkt. 1).

Presently before the Court is Plaintiffs' motion for a preliminary injunction (Dkt. 1-3 at 5-184) and Defendants' motion to dismiss (Dkt. 3). For the following reasons, theCourt denies Defendants' motion to dismiss, in part, to the extent it is based on a lack of standing. The Court holds Defendants' remaining arguments in abeyance along with Plaintiffs' motion for a preliminary injunction until both sides have had the opportunity to submit further briefing as instructed below.

BACKGROUND²

Defendants are citizens of Ontario, Canada (Dkt. 1 at ¶¶ 3-4 (Notice of Removal)) and homeowners of two properties on Sunset Road, Ellicottville, New York (Dkt. 1-2 at 5). While Natascha purchased both properties at issue (Dkt. 3-8 at ¶ 4 (Bryan's Affidavit); Dkt. 3-12 at ¶¶ 4-5 (Natascha's Affidavit)), Plaintiffs allege that she "shares common law ownership" of these properties with her husband, Bryan (Dkt. 1-2 at 5). These lots fall under the purview of the Sunset HOA, which "oversees the administration and governance of the Sunset Area Subdivision of Holimont within the Town of Ellicottville, New York." (Id.). One of the primary purposes of the Association is to "ensure the creation and promotion of an attractive well-built and well-maintained community of private homes" within the subdivision. (Id. at 7). As a result, subdivision homeowners become members of the Sunset HOA and are subject to certain restrictive covenants. (Id.).

Plaintiffs allege that, beginning on or about May 2018, Defendants "began advertising their Ellicottville properties, including the subject properties on Sunset Road, for short-term lease through a local real estate broker and property manager, and on websites such as VRBO.com and Airbub.com, among others." (Id. at 9). Accordingly,Plaintiffs claim that Defendants' alleged "rental activity" violated their obligations under the restrictive covenants, which "prohibit any type of business or commercial enterprise, and which permit only private and non-commercial use of their Sunset Road properties." (Id. at 10). Because Defendants have leased their property to "transient tenants" without the consent of the Sunset HOA Board of Directors, Plaintiffs have allegedly violated these restrictive covenants. (Id. at 10-11).

Plaintiffs further allege that the Sunset HOA, acting through its President, Jeffrey Zaffino ("Zaffino"), informed Defendants of their purported noncompliance throughout the Summer of 2018 and sought to enforce these obligations. (See id. at 11-12). Despite his attempts, Defendants allegedly ignored the Sunset HOA's requests to cease further advertising of their properties for rental and/or commercial activities. (Id. at 12).

PROCEDURAL HISTORY

On or about December 4, 2018, Plaintiffs filed a Summons and Verified Complaint with the New York State Supreme Court, County of Cattaraugus, alleging, among other things, causes of action for breach of contract and seeking a preliminary injunction enjoining Defendants from continuing to use their properties in contravention of the restrictive covenants. (See Dkt. 1-2 at 2-18). On December 13, 2018, the state court issued an order to show cause containing a temporary restraining order that restricted Defendants' use of their property. (See Dkt. 1-3 at 1-4). The state court subsequently issued a supplemental order to show cause on December 24, 2018, that carved out several exceptions to the prohibited rental activity in order to accommodate for the holiday season until the preliminary injunction hearing scheduled for January 17, 2019. (Id. at 186-90).

Defendants removed the action to federal court on January 3, 2019 (Dkt. 1)—before the disposition of the preliminary injunction motion—and filed a motion to dismiss and a motion to vacate the temporary restraining order on the same day (Dkt. 3). Because the temporary restraining order expired 14 days after the action was removed (see Dkt. 7), on January 18, 2019, Plaintiffs filed a cross motion for a temporary restraining order (Dkt. 8) and requested an expedited hearing on that motion (Dkt. 9).

At a telephone conference held on January 22, 2019, the Court denied Plaintiffs' cross motion for a temporary restraining order and scheduled a motion hearing on Defendants' motion to dismiss and Plaintiffs' still pending motion for a preliminary injunction. (Dkt. 13). On January 31, 2019, the Court held oral argument and reserved decision. (Dkt. 22).

DISCUSSION

I. Plaintiffs Have Standing to Bring this Suit

"A plaintiff's constitutional standing is a jurisdictional matter and, as such, requires examination when called into question." Holve v. McCormick & Co., Inc., 334 F. Supp. 3d 535, 551 n.7 (W.D.N.Y. 2018). Accordingly, the Court will address Defendants' standing arguments before turning to whether service was properly effectuated. See Elkind v. Revlon Consumer Prod. Corp., No. 14-CV-2484 JS AKT, 2015 WL 2344134, at *3 (E.D.N.Y. May 14, 2015) ("Because standing is a jurisdictional matter, the Court considers those arguments before considering the merits of Defendant's motion to dismiss." (citation omitted)).

A. Legal Standard

To establish standing under Article III of the United States Constitution, "a plaintiff must, generally speaking, demonstrate that he has suffered 'injury in fact,' that the injury is 'fairly traceable' to the actions of the defendant, and that the injury will likely be redressed by a favorable decision." Bennett v. Spear, 520 U.S. 154, 162 (1997) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). The injury must be "(a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical." Friends of the Earth Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180 (2000). A plaintiff must have standing as to every claim for relief alleged, including requests for injunctive relief. City of Los Angeles v. Lyons, 461 U.S. 95, 105 (1983). As the Second Circuit has explained:

In order to meet the constitutional minimum of standing to seek injunctive relief, [a plaintiff] must carry the burden of establishing that he has sustained or is immediately in danger of sustaining some direct injury as the result of the challenged official conduct. In doing this, he cannot rely on past injury to satisfy the injury requirement but must show a likelihood that he . . . will be injured in the future.

Shain v. Ellison, 356 F.3d 211, 215 (2d Cir. 2004) (quotations and citations omitted); see Laidlaw, 528 U.S. at 191 ("[I]f a plaintiff lacks standing at the time the action commences, the fact that the dispute is capable of repetition yet evading review will not entitle the complainant to a federal judicial forum."); Nicosia v. Amazon.com, Inc., 834 F.3d 220, 239 (2d Cir. 2016) ("Although past injuries may provide a basis for standing to seek money damages, they do not confer standing to seek injunctive relief unless the plaintiff can demonstrate that she is likely to be harmed again in the future in a similar way.").

B. Plaintiff Arthurs has Standing to Bring this Suit

Pursuant to New York law, "when an owner of a large tract of land divides it into lots to be sold to different purchasers by deeds containing uniform covenants restricting the use which the grantees may make of their premises, the covenants are enforceable by any grantee as against any other." Beacon Syracuse Assocs. v. City of Syracuse, 560 F. Supp. 188, 196 (N.D.N.Y. 1983). The restrictive covenants apply to the subject lots in the Sunset HOA subdivision (Dkt. 1-2 at 20), and were intended to assist the Sunset HOA in promoting "the creation of an attractive well-built and well-maintained community of private homes. . . ." (id.; see id. at 28 (stating that the "covenants, conditions and restrictions . . . are for the purpose of protecting and enhancing the value, desirability and attractiveness" of the properties)). To this end, the covenants restricted the landowners from putting their properties to certain delineated uses in order to ensure that the character of the neighborhood was developed and maintained as a residential community. Moreover, the restrictive covenants included enforcement provisions that provided that such covenants:

shall bind and inure to the benefit of and be enforceable by the Corporation or by the owner or owners of any of said property and it shall be lawful not only for the Corporation, but also for the owner of any said plots or lots to institute and prosecute any proceedings at law or in equity against any person, firm or corporation violating or threatening to violate any of the conditions, restrictions or covenants herein contained. . . .

(Id. at 24 (emphases added); see also id. at 32 (providing that the "Association, or any owner, shall have the right to enforce, by any proceeding at law or in equity, all of therestrictions, covenants, conditions, reservations, liens and charges now or hereafter imposed by the provisions of this Declaration" (emphasis added))).

A review of the restrictive...