W. Funding, Inc. v. S. Shore Towing, Inc., Civ. Action 19-12853 (FLW)

CourtUnited States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
Writing for the CourtHON. FREDA L. WOLFSON, U.S. CHIEF DISTRICT JUDGE
PartiesWESTERN FUNDING, INC., Plaintiff, v. SOUTH SHORE TOWING, INC., SS TOW ENTERPRISES, LLC, PETER IADAROLA, JENNIFER IADAROLA, and NEW JERSEY TURPIKE AUTHORITY, Defendants.
Decision Date11 April 2022
Docket NumberCiv. Action 19-12853 (FLW)

WESTERN FUNDING, INC., Plaintiff,
v.

SOUTH SHORE TOWING, INC., SS TOW ENTERPRISES, LLC, PETER IADAROLA, JENNIFER IADAROLA, and NEW JERSEY TURPIKE AUTHORITY, Defendants.

Civ. Action No. 19-12853 (FLW)

United States District Court, D. New Jersey

April 11, 2022


NOT FOR PUBLICATION

OPINION

HON. FREDA L. WOLFSON, U.S. CHIEF DISTRICT JUDGE

Plaintiff Western Funding, Inc. (“Plaintiff” or “Western”) brings this action against defendants South Shore Towing, Inc., SS Tow Enterprises, LLC (collectively, “South Shore”), Peter Iadarola, Jennifer Iadarola, and the New Jersey Turnpike Authority (“NJTA” or the “Authority”), under 42 U.S.C. § 1983 for alleged constitutional violations stemming from a towing incident on the Garden State Parkway. In an Opinion dated April 14, 2021, this Court dismissed claims in Plaintiff's Second Amended Complaint against South Shore and Peter Iadarola, but claims against Jennifer Iadarola remain. ECF No. 48. Additionally, the Court denied NJTA's motion to dismiss and requested supplemental briefing from the parties addressing whether NJTA is entitled to sovereign immunity as an arm of the State of New Jersey. Having reviewed the parties' supplemental briefing, I now conclude that NJTA is an arm of the State. Accordingly, NJTA is immune from suit under the Eleventh Amendment and, for that reason, NJTA also does not qualify as a “person” that is subject to suit under section 1983. NJTA's renewed motion to dismiss the Second Amended Complaint is

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therefore GRANTED.

I. BACKGROUND AND PROCEDURAL HISTORY

This Court's Opinion dated April 14, 2021, recounts the facts and procedural history relevant to this case. See ECF No. 48 at 2-4. Below I summarize only the background relevant to the issue before the Court, accepting as true Plaintiff's allegations in the Second Amended Complaint.

South Shore tows cars from the New Jersey Turnpike and Garden State Parkway pursuant to an “Agreement for Towing Services” (the “Agreement”) with NJTA. ECF No. 35, Second Amended Complaint (“SAC”) ¶¶ 2, 23, 27. Under the Agreement, South Shore pays NJTA an annual fee, and NJTA grants South Shore the right to tow vehicles from certain zones on the highways NJTA regulates. Id. ¶ 28. On May 28, 2018, South Shore towed a vehicle at NJTA's direction. Id. ¶¶ 29-30. At that time, Western allegedly “held a first priority lien” on the vehicle South Shore towed. Id. ¶ 31. South Shore notified the owner of the vehicle that he was liable for any accrued towing and storage fees, but the owner never responded. See ECF No. 20-3. When Western contacted South Shore to recover the vehicle pursuant to its first-priority lien, South Shore refused to release the vehicle unless Western paid the outstanding towing and storage fees. SAC ¶ 35. Western refused to pay the fees, Id. ¶ 38, and brought the instant suit.

In its Second Amended Complaint, Western asserts claims against NJTA, South Shore, its President, Peter Iadarola (“P. Iadarola”), and its manager, Jennifer Iadarola (“J. Iadarola”). In Count One, Western asserts claims against each defendant pursuant to 42 U.S.C. § 1983 for violations of the Fourth and Fourteenth Amendments. Id. ¶¶ 69-75. According to Western, the towing arrangement between NJTA and South Shore violates the Due Process Clause of the Fourteenth Amendment because neither entity provided Western any means to challenge the tow or the fees. Id. Western also alleges that NJTA violated the Fourth Amendment because it did not obtain a warrant before requesting the tow. Id. Count Two seeks relief pursuant to the Declaratory Judgment

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Act, 28 U.S.C. § 2201, declaring that South Shore's and J. Iadarola's actions are unconstitutional. Id. ¶¶ 92-97. Both South Shore and NJTA, along with the individual defendants, moved to dismiss.

I granted South Shore's motion to dismiss as to South Shore and P. Iadarola, but I denied South Shore's motion as to J. Iadarola, and I denied NJTA's motion. ECF No. 48 at 2. With respect to NJTA, I requested additional briefing addressing whether NJTA qualifies as an “arm of the state, ” in which case NJTA would be immune from suit under the Eleventh Amendment and, by extension, would not be subject to suit under section 1983. See ECF No. 48 at 7. Section 1983 imposes liability on a “person, ” and although “the Eleventh Amendment and § 1983 determinations are ‘analytically distinct,' . . . an arm of the state . . . is not a ‘person' for § 1983 purposes.” Karns v. Shanahan, 879 F.3d 504, 519 n.6 (3d Cir. 2018) (citing Will v. Michigan Dep't of State Police, 491 U.S. 58, 71 (1989)); Patterson v. Pa. Liquor Control Bd., 915 F.3d 945, 950, 956 n.2 (3d Cir. 2019) (“[A] state, including an entity that is an arm of the state, is not a ‘person' under 42 U.S.C. § 1983, and therefore cannot be sued for damages under that statute.”). Both parties have now filed briefs addressing whether NJTA qualifies as an arm of the State. NJTA argues that it does so qualify, see ECF No. 55, and Western disagrees. ECF No. 56.

II. LEGAL STANDARD

Whether NJTA is an arm of the state concerns both the Court's subject-matter jurisdiction, as relates to sovereign immunity, and whether Western has stated a claim upon which relief may be granted, as relates to whether NJTA is a “person” under section 1983. Accordingly, the standards under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure are both relevant. See Maliandi v. Monclair State Univ., 845 F.3d 77, 82 (3d Cir. 2016) (reviewing contention that a university is an arm of the state and therefore immune from suit under the Eleventh Amendment as a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1)); Indep. Enters., Inc. v. Pittsburgh Water and Sewer Auth., 103 F.3d 1165, 1168, 1172 (3d Cir. 1997) (reviewing

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contention that the Pittsburgh Water and Sewer Authority is not a “person” under section 1983 as a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6)). NJTA does not specify whether it seeks dismissal as an arm of the state pursuant to Rule 12(b)(1) or 12(b)(6). Accordingly, I will analyze the issue under both standards.

A. Rule 12(b)(1)

Under Rule 12(b)(1), parties may move to dismiss a case for “lack of subject-matter jurisdiction.” Fed.R.Civ.P. 12(b)(1). Challenges to a district court's subject-matter jurisdiction include those asserting state sovereign immunity under the Eleventh Amendment. See Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 98-100 (1984). When challenging the court's subject-matter jurisdiction, the plaintiff bears the burden of persuasion. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991). Where, as here, a party asserts a facial challenge to subject matter jurisdiction “without disputing the facts alleged in the complaint, ” the Court must “consider the allegations of the complaint as true.” Davis v. Wells Fargo, 824 F.3d 333, 346 (3d Cir. 2016).

B. Rule 12(b)(6)

Under Rule 12(b)(6), a court may dismiss an action if a plaintiff fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). When evaluating a Rule 12(b)(6) motion, the court must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). A complaint survives a motion to dismiss if it contains sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).

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To determine whether a complaint is plausible, courts conduct a three-part analysis. Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the court “takes note of the elements a plaintiff must plead to state a claim.” Id. (quoting Iqbal, 556 U.S. at 675). Second, the court identifies allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 131 (quoting Iqbal, 556 U.S. at 679). Third, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.” Santiago, 629 F.3d at 131 (quoting Iqbal, 556 U.S. at 680). This is a “context-specific task that requires the [ ] court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.

III. DISCUSSION

NJTA contends that it is an arm of the state and is therefore immune from suit under the Eleventh Amendment. Plaintiff disagrees, and in the alternative, it argues that the doctrine of judicial estoppel precludes NJTA from invoking sovereign immunity given that NJTA took the opposite position in briefing it filed during a separate and unrelated litigation in 2008. For the reasons set forth herein, I conclude that NJTA is an arm of the state and that NJTA is not estopped from invoking sovereign immunity. And because NJTA is an arm of the state, it does not qualify as a “person” subject to suit under section 1983. Accordingly, Plaintiff's claims against NJTA are dismissed.

A. Sovereign Immunity

The Eleventh Amendment provides: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. In Hans v. Louisiana, 134 U.S. 1 (1890), the Supreme Court “extended the Eleventh Amendment's reach to suits by in-state plaintiffs, thereby barring all private suits against non-consenting States in federal court.” Lombardo v. Pa., Dep't of Pub. Welfare, 540 F.3d 190, 194 (3d

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