United States v. Bedford Associates, 79 Civ. 1522

• Decision Date: 18 March 1980
• Docket Number: 79 Civ. 1482 (HFW).,No. 79 Civ. 1522,79 Civ. 1522
• Citation: 491 F. Supp. 848
• Parties: UNITED STATES of America, Plaintiff, v. BEDFORD ASSOCIATES, a partnership, Doris K. Carver and Samuel Ades, Individually and as partners of Bedford Associates, and Amcar Management Corp., Defendants. The BOWERY SAVINGS BANK, Plaintiff, v. BEDFORD ASSOCIATES, a partnership, Doris K. Carver and Samuel Ades, Individually and as partners of Bedford Associates, and United States of America, Defendants.
• Court: U.S. District Court — Southern District of New York

491 F. Supp. 848

UNITED STATES of America, Plaintiff, v. BEDFORD ASSOCIATES, a partnership, Doris K. Carver and Samuel Ades, Individually and as partners of Bedford Associates, and Amcar Management Corp., Defendants.

The BOWERY SAVINGS BANK, Plaintiff, v. BEDFORD ASSOCIATES, a partnership, Doris K. Carver and Samuel Ades, Individually and as partners of Bedford Associates, and United States of America, Defendants.

Nos. 79 Civ. 1522, 79 Civ. 1482 (HFW).

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

March 18, 1980.

Cadwalader, Wickersham & Taft, New York City, for the Bowery Sav. Bank, by Terence F. Gilheany, Stuart D. Root, Howard R. Hawkins, Jr., Vincent DiLorenzo, New York City, of counsel.

Robert B. Fiske, Jr., U. S. Atty., S. D. New York, New York City, for United

States of America, by William J. Brennan, Harvey J. Wolkoff, Asst. U. S. Attys., New York City, of counsel.

OPINION

HENRY F. WERKER, District Judge.

The United States has moved to dismiss the Bowery's complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). The only issue raised by the motion is whether the Bowery's complaint falls within the ambit of 28 U.S.C. § 2409a. For the reasons that follow, the motion is denied.

Section 2409a provides in pertinent part:

(a) The United States may be named as a party defendant in a civil action under this section to adjudicate a disputed title to real property in which the United States claims an interest, other than a security interest or water rights. . .

The Bowery's complaint alleges that the United States claims a leasehold interest in the premises in question, that no such leasehold interest in fact exists, and that even if it is found that such a leasehold interest does exist, the United States' interest is subject and subordinate to the Bowery's mortgage.¹ The first claim of Bowery's complaint seeks a declaratory judgment as to what interest, if any, the United States has in the premises and as to what effect foreclosure would have on that interest. The second claim seeks to foreclose Bowery's mortgage, and the third claim seeks an assignment of rents.

In moving to dismiss, the United States relies on the language in the statute which limits its coverage to actions "to adjudicate a disputed title," and argues that the Bowery's action cannot be one to adjudicate a "disputed title" since the title is not in dispute. The United States contends further that the Bowery's action "is on its face a garden variety, mortgagee-mortgagor action for foreclosure" which does not fall within the ambit of section 2409a.

Although the second claim of the complaint does indeed seek foreclosure, the Bowery's suit is certainly not a "garden variety" foreclosure action. The dispute concerning the existence and nature of the United States' alleged leasehold interest has created a very real cloud on the title of the property. For example, if it is found that the Bowery's mortgage is subordinate to the United States' alleged leasehold interest, the Bowery may not be entitled to possession of the property — or just compensation — even if it is successful in its efforts to foreclose. The Bowery's suit seeks a judgment quieting the cloud on the title to the property and an adjudication of the respective rights of the parties involved.

Under New York law, the Bowery's first claim would undoubtedly be considered to be in the nature of an action to quiet title or, as such actions are known in New York, an action to compel the determination of a claim to real property. N.Y.R.P.A.P.L. § 1501 et seq. (McKinney 1979). The legislative history of section 2409a indicates that state law should be looked to where a question is not covered by federal law. See Executive communication of the Attorney General, referred to in H.R.Rep. No. 92-1559, 92d Cong., 2d Sess., reprinted in 1972 U.S.Code Cong. & Admin.News, pp. 4547, 4555 ("The State law of real property would of course apply to decide all questions not covered by Federal law."). Accord, Kinscherff v. United States, 586 F.2d 159, 160 (10th Cir. 1978) ("It thus must be assumed that Congress intended to permit to be brought against the United States the typical quiet title suit, as it has developed in the various states in this country through statutory and case law."). Since the federal statute is silent as to the definition of an "action to quiet title," New York law is to be turned to for guidance.

The relevant New York statute is Article 15 of the Real Property Actions and Proceedings Law. Section 1501(1) thereof provides that where a person claims an estate or interest in real property . . . he may maintain an action against any other person . . . to compel the determination of any claim adverse to that of the plaintiff which the defendant makes . . . .." N.Y.R.P.A.P.L. § 1501(1) (McKinney 1979). The Bowery, as the first mortgagee, certainly has an "interest" in the property in question. See id. § 1501(5). Moreover, the United States' claimed leasehold interest is certainly "adverse to that of the plaintiff." See, e. g., Newport Associates, Inc. v. Solow, 30 N.Y.2d 263, 283 N.E.2d 600, 332 N.Y.S.2d 617 (1972), cert. denied, 410 U.S. 931, 93 S.Ct. 1372, 35 L.Ed.2d 593 (1973) (Article 15 proceeding brought against holder of a leasehold interest). Hence, had the Bowery commenced this action in state court, it would have been governed by Article 15 as an action to compel the determination of a claim adverse to the Bowery's interest. The New York cases have also permitted a person with an interest in real property to bring an action to quiet title against a purported tenant or someone else in possession who claims a leasehold interest in the property. See, e. g., Nickerson v. Canton, Marble Co., 35 App.Div. 111, 54 N.Y.S. 705 (3d Dep't 1898); S. H. Kress & Co. v. Fine, 25 Misc.2d 500, 202 N.Y.S.2d 368 (Sup.Ct.N.Y.Co.1960); Law Center Inc. v. Trust Co. of North America, 84 N.Y.S.2d 577 (Sup.Ct.N.Y...