Walentas v. Lipper

• Decision Date: 25 November 1988
• Docket Number: No. 384,D,384
• Citation: 862 F.2d 414
• Parties: David C. WALENTAS, Plaintiff-Appellant, v. Kenneth LIPPER, John Doe # 1, John Doe # 2, John Doe # 3, John Doe # 4, and John Doe # 5, Defendants-Appellees. ocket 87-7570.
• Court: U.S. Court of Appeals — Second Circuit

Page 414

862 F.2d 414

David C. WALENTAS, Plaintiff-Appellant, v. Kenneth LIPPER, John Doe # 1, John Doe # 2, John Doe # 3 John Doe # 4, and John Doe # 5, Defendants-Appellees.

No. 384, Docket 87-7570.

United States Court of Appeals Second Circuit.

Argued Nov. 24, 1987.

Decided Nov. 25, 1988.

Richard S. Fischbein, New York City (Kenneth G. Schwarz, Deborah J. Locitzer, Fischbein Badillo Schwarz Wiener Gruskin

& Lederman, New York City, of counsel), for plaintiff-appellant.

Elizabeth Dvorkin, Asst. Corp. Counsel for the City of New York, New York City (Peter Zimroth, Corp. Counsel for the City of New York, Jeffrey Schonback, Edward F.X. Hart, Asst. Corp. Counsels, New York City, of counsel), for defendants-appellees.

Before VAN GRAAFEILAND, WINTER and MAHONEY, Circuit Judges.

MAHONEY, Circuit Judge:

Plaintiff-appellant David C. Walentas appeals from a judgment of the United States District Court for the Southern District of New York, Louis L. Stanton, Judge, granting defendant-appellee Kenneth Lipper's motion for summary judgment, see Fed.R.Civ.P. 56, on the ground that Lipper is entitled to qualified immunity from suit in this action brought pursuant to 42 U.S.C. Sec. 1983 (1982). Walentas also appeals from an earlier order of the district court which dismissed his complaint, see Fed.R.Civ.P. 12(b)(6), to the extent that it alleged a deprivation of a property interest without due process of law.

We affirm.

I. BACKGROUND

Given the procedural posture in which this appeal comes to us, we assume the truth of plaintiff's allegations, see United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Hawkins v. Steingut, 829 F.2d 317, 319 (2d Cir.1987); Luce v. Edelstein, 802 F.2d 49, 52 (2d Cir.1986), upon which this statement of the case's background is substantially based.

Plaintiff-appellant David C. Walentas is a prominent New York real estate developer. During the late 1970s, Walentas realized the development potential of certain property on the Brooklyn waterfront located between the Brooklyn and Manhattan bridges. At that time the area, commonly known as the Fulton Ferry landing, was a bleak stretch of land consisting of industrial buildings, abandoned warehouses and rotting piers.

Despite the general disrepair of the neighborhood, Walentas was convinced that the area could be revitalized and imitate the success enjoyed by the South Street Seaport, a once similarly blighted area less than a mile away across the East River in Manhattan. He accordingly began to purchase properties in the vicinity in 1981, ultimately acquiring over two million square feet in the area (described by appellant as the "Brooklake properties" because acquired by Brooklake Associates, a New York limited partnership which served as the acquiring entity).

Immediately adjacent to the Brooklake properties were several parcels of land, comprising approximately fifteen acres, which were owned in part by the City of New York and in part by the State of New York and contained a number of historically significant properties, albeit in a state of disrepair. On June 3, 1981, the New York City Public Development Corporation ("PDC"), the New York State Urban Development Corporation ("UDC") and the New York State Office of Parks, Recreation and Historic Preservation ("OPRHP"), the agencies charged with overseeing the property (collectively the "Agencies"), jointly issued a Solicitation For Development Proposal (the "SDP") in an effort to secure a developer who would undertake the project of revitalizing these parcels (the "SDP Site").

The SDP, which set forth the conditions under which a developer for the SDP site would be chosen, stated that the designation of a developer was to take place in two phases. Initially, one or more developers were to be conditionally designated, based upon initial proposals which would include preliminary development and financial plans together with statements of the applicants' development experience and financial background. Thereafter, the developer or developers selected for further consideration would submit more detailed information concerning its or their proposals, particularly with respect to financial, management and development plans. The final selection of a developer would then be made upon the basis of this information.

On May 27, 1982, Walentas, under the trade name Two Trees Management Co., was conditionally designated as the developer of the SDP Site, and accordingly entered into a conditional designation agreement (the "Agreement") with the Agencies. The Agreement gave Walentas the exclusive right to negotiate and thereafter execute a memorandum of intent with the Agencies to be named the final developer of the project. The Agreement had a term of six months, but the Agencies had a unilateral right to extend that period "for continuing negotiations." In fact, the Agreement was once formally extended by the Agencies, and was thereafter informally extended until approximately March, 1984. In addition, the Agreement provided that "the [Agencies] may terminate the negotiations at any time if, in their sole discretion, they are not satisfied with the progress of negotiation or if you [Walentas] fail to satisfy any of the other conditions set forth in [the Agreement]." The Agreement obliged Walentas, inter alia, to provide preliminary plans and construction documents with respect to the project, as well as commitments for necessary financing.

As the project proceeded, Walentas obtained from the New York City Board of Estimate approval of an application for a federal Urban Development Action Grant which would have provided up to $20 million in financial assistance to develop the SDP Site. In September, 1983, Walentas submitted a draft Uniform Land Use Review Program application to the City. By the end of that month, the PDC and UDC had reached an agreement with Walentas regarding the physical alterations to be accomplished by Walentas on the waterfront portion of the SDP Site. In September, 1983, Walentas submitted to the New York Industrial and Commerce Incentive Board (the "ICIB") an application for tax reductions for his adjoining Brooklake properties that would have resulted in savings of approximately $12 million over a twenty year period. On October 7, 1983, Walentas reached agreement with the PDC and UDC on the budget for the development of the SDP Site. On November 21, 1983, he submitted an application to the New York Industrial Development Authority for a low interest loan to finance the construction of automobile parking garages at the SDP Site. In or about December, 1983, Lehman Brothers Kuhn Loeb ("Lehman Brothers"), a major investment banking concern, agreed to a lease of a portion of the building known as 1 Main Street which was a part of the Brooklake properties, the finalization of which was dependent upon favorable action by the ICIB upon Walentas' application for tax relief.

Defendant Kenneth Lipper was the Deputy Mayor for Finance and Economic Development of the City of New York from January, 1983 until March, 1985. In his capacity as Deputy Mayor, Lipper oversaw the Office of Economic Development, of which the PDC is a component. Prior to his appointment as Deputy Mayor, Lipper had been an investor in two real estate ventures organized and managed by Walentas. During the time the two were partners, Lipper became dissatisfied with the manner in which Walentas managed the ventures. Lipper also blamed Walentas for the suicide of Lipper's friend, J. Frederick Byers III, who was also a partner in Walentas' real estate ventures. Walentas alleges that Lipper had thus developed a personal animosity towards Walentas, as a result of which Lipper used his official powers as Deputy Mayor during early 1984 to interfere with Walentas' development of the SDP Site, culminating in the eventual de-designation of Walentas as the developer of the project.

In this connection, Walentas claims that Lipper engaged in the following acts of wrongdoing: (1) Lipper directed the president of PDC to impose additional burdensome restrictions on Walentas, such as finding a new partner who could guarantee financing of the entire project or obtaining an unconditional financing commitment from an institution, and identifying a construction firm of adequate size to handle the project, to be satisfied in less than two months, failing which the city would "automatically terminate all further consideration of [Walentas] as a developer for this site"; (2) at the same time, Lipper "made it known" to potential partners of Walentas that the city would "view [them] with extreme disfavor" if they agreed to join plaintiff in the development of the SDP Site; (3) Lipper, as chairman of the ICIB, repeatedly delayed consideration of Walentas' application to the ICIB for tax relief, which resulted in Lehman Brothers' declining to reach a formal lease agreement with plaintiff; plaintiff was eventually told that the application would be denied; (4) Lipper knowingly gave Councilwoman Ruth Messinger false and disparaging information about plaintiff which, in February, 1984, Councilwoman Messinger disseminated to the public in a press conference; (5) publicly stating that he would forward Councilwoman Messinger's allegations to the New York City Department of Investigations and actually doing so, Lipper directed the Commissioner of Investigations to issue a report confirming the allegations irrespective of their truth or falsity; (6) when the Department of Investigations did issue that report in March, 1984, Lipper, knowing the report to be false, distributed copies to the press; (7) in February, 1984, Lipper told a Daily News reporter, without first consulting either UDC or OPRHP, that plaintiff would not be the developer of the SDP Site; (8) on March 5, 1984, Lipper held a press conference, without consulting either UDC or OPRHP, during which he made false and disparaging remarks...