X-Men Sec., Inc. v. Pataki

• Decision Date: 10 July 1997
• Docket Number: No. 96 Cv. 5041.,96 Cv. 5041.
• Citation: 983 F.Supp. 101
• Parties: X-MEN SECURITY, INC., et al., Plaintiffs, v. Governor George PATAKI, et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

983 F.Supp. 101

X-MEN SECURITY, INC., et al., Plaintiffs, v. Governor George PATAKI, et al., Defendants.

No. 96 Cv. 5041.

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

July 10, 1997.

Order Denying Reconsideration October 29, 1997.

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Michael A. Hardy, Scheurer, Wiggin & Hardy, New York City, for plaintiffs.

Gregory J. McDonald, Office of the Attorney General of the State of New York, New York, NY, Julian Friedman, Stillman & Friedman, P.C., New York, NY, Stephen Riegel, U.S. Attorney's Office, EDNY, for defendants in Memorandum and Order.

Stephen Riegel, U.S. Attorney's Office, EDNY, Michael L. Stern, Senior Asst. Counsel, Office of the General Counsel, U.S. House of Reprentatives, Washington, D.C., for defendants in Memorandum and Order on Reconsideration.

MEMORANDUM AND ORDER

GLASSER, District Judge:

SUMMARY

This civil rights case arises from the termination of a contract held by X-Men Security, Inc. ("X-Men") to provide security guard services to a housing development in Brooklyn, New York known as Ocean Towers. The plaintiffs are X-Men, its owner Anthony Richards and Sheila Boyd, a tenant of Ocean Towers. The defendants fall into three groups: those in the private sector ("the Private Defendants"); those who, at the time of the events alleged, held official positions in the government of the State of New York, ("the State Defendants"); and a United States Congressman, Peter King ("King"). The complaint charges the defendants with violating federal civil rights laws and New York state law by terminating X-Men's contract.

All defendants now move to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6); the State Defendants also move under Fed. R.Civ.P. 12(b)(1). For the reasons set forth below, the Private Defendants' motion should be granted, and the motions of the State Defendants and King should be granted in part and denied in part.¹

BACKGROUND

The Plaintiffs

X-Men is a private corporation that provides security and protective services. The majority of its employees, and its owner Richards, are black and Muslim and attend mosques that follow the teachings of the Nation of Islam, one of whose ministers is Louis Farrakhan. According to the complaint, X-Men is not affiliated with the religious corporation of the Nation of Islam.

Plaintiff Boyd is the president of the Ocean Towers Tenants Association, an advocacy group for the tenants of Ocean Towers.

The Defendants

The Private Defendants are DU Third Realty, Co. L.P. ("DU"), the owner of Ocean Towers; Bernard Jereski, a partner of DU; BSR Management Corp. ("BSR"), the managing agent of Ocean Towers; and Aaron Silberman, an officer of BSR. They are alleged to have acted in concert with the State Defendants who are George Pataki, Governor of the State of New York; Jules Polonetsky, a New York State Assemblyman; and Joseph H. Holland, the former New York State Commissioner of the Division of Housing and Community Renewal ("DHCR"), and with King, United States Representative for the Third Congressional District of New York. The State Defendants and King are sued in their individual capacities.

Regulation of Ocean Towers

Although Ocean Towers is privately owned and operated, it receives public financing from both the federal and state governments. The development is regulated by the federal government through the Housing and Urban Development Agency ("HUD") and by the State of New York through the DHCR. As part of its oversight, DHCR regulations require that contracts over $500 at Ocean Towers be awarded through a competitive bidding process. See 9 N.Y.C.R.R. § 1728-4.1(b). Prior DHCR approval is needed to enter into contracts in excess of $5,000, and on such contracts, the presumption is that the building owner will recommend to DHCR that the contract be awarded to the lowest responsible bidder. See 9 N.Y.C.R.R. § 1728-4.1(d)(1) and (g).

FACTS

The following facts are accepted as true for purposes of this motion.

Until June 28, 1993, Ocean Towers was plagued by violent crime, gangs and drugs. Compl. ¶¶ 20-23. On that date, N.O.I. Security, Inc. ("N.O.I.") contracted with DU, the development's owner, and BSR, the manager, to provide security services to Ocean Towers. Id. at ¶ 24. The contract was executed by Dion Muhammad, an officer of N.O.I., and Bernard Schreiber, the late president of BSR, and was to extend for one year. Id.; Pl.'s Br. in Opp. to State Defs. Motion to Dismiss, p. 14. Pursuant to an amendment to the contract, N.O.I.'s parent company, X-Men, became the "named holders" of the contract. Compl. ¶ 24.

Following execution of the contract, X-Men began performing 24 hour-a-day, 7 daya-week security functions at Ocean Towers. Their efforts resulted in a cleaner, safer, and more secure environment at the complex almost immediately. Id. at ¶¶ 28-29. Drug trafficking ceased, vandalism was reduced, and overall security was vastly improved. Id. at ¶ 29.

The complaint alleges that shortly after X-Men began its work at Ocean Towers, defendants Polonetsky and King, motivated by racial and religious prejudice, formed a conspiracy with three objectives: (1) terminating X-Men's contract with DU and BSR; (2) preventing X-Men and Richards from procuring future contracts; and (3) preventing Boyd and the other tenants of Ocean Towers from enjoying the benefits of X-Men's security services. Id. at ¶¶ 36, 39, 41. Using their official positions to create a public frenzy, the conspirators made false allegations that: X-Men was controlled by Farrakhan; the Nation of Islam profited from the Ocean Towers contract; X-Men was a racist hate group; and X-Men and Richards were guilty of fraud, mismanagement and unpaid debts. Id. at ¶¶ 40-44.

Notwithstanding the alleged conspiracy, X-Men worked under their one-year contract for the remainder of 1993 and into 1994. When the contract expired, they continued to provide security on a month-to-month basis. Id. at ¶¶ 25, 57. Despite BSR's pleasure with X-Men's performance during this time, the complaint alleges that it came under pressure from DHCR to solicit open bids for the security contract as required by DHCR regulations. In August 1994, BSR reluctantly went ahead and sought bids on the Ocean Towers security guard contract.

While BSR was considering the bids it received, Polonetsky and King forwarded a letter under Polonetsky's signature dated September 24, 1994 to then-DHCR Commissioner Donald Halperin. The letter stated, in relevant part:

Since the Nation of Islam promotes hatred against whites, Jews, women, Catholics and others, it is difficult to understand how the X-Men are eligible for a state-supported contract — which requires compliance with equal employment and nondiscrimination guidelines. It seems clear that state support for this contract subsidizes the activities of a hate group and helps fund the racist and anti-Semitic goals of Louis Farrakhan and the Nation of Islam.

Id. at ¶ 45. Later in the letter, Polonetsky urged the Commissioner to terminate the contract with X-Men. Id. at ¶ 46. According to the complaint, the efforts of Polonetsky and King were at least partially successful because on or about November 14, 1994, Jereski and Silberman (on behalf of DU and BSR) notified X-Men that their contract would not be renewed for a definite term. Id. at ¶ 47.

At the conclusion of the 1994 bidding process, BSR recommended that DHCR reject all the submitted bids and retain X-Men on account of the "dramatic improvements" in security that were made on their watch. Id. at ¶ 49, Ex. A. DHCR followed this advice and rejected the bids, enabling X-Men to continue providing security at Ocean Towers during 1994 and 1995 on a monthly basis.

Over that time, the complaint alleges that Polonetsky succeeded in bringing Pataki, Holland, DU, BSR, Jereski and Silberman into the conspiracy. Compl. ¶ 55. The conspirators' goal was allegedly achieved on September 9, 1996 when BSR notified X-Men that the contract would be terminated once and for all effective October 10, 1996. Id. at ¶ 62. On that date, Task Force Security Ltd., the low bidder in the 1995 bidding process, was scheduled to take over security at Ocean Towers. However, that date came and went without Task Force taking over because, allegedly, they were not competent to perform the required services. A security company that had not participated in the 1995 bidding process was eventually brought in on a monthly basis. Id. at ¶ 64.

X-Men, Richards and Boyd filed the complaint in this action in October 1996 charging all defendants with violating 42 U.S.C. §§ 1981, 1983 and 1985(3). The State Defendants and King are also charged with tortious interference with contract in violation of New York state law. Plaintiffs seek $200 million in compensatory and punitive damages as relief.

DISCUSSION

I. Standing of Plaintiff Boyd

As a threshold matter, it is argued by the State Defendants that plaintiff Boyd lacks standing to prosecute this action because she has not suffered any cognizable injury as a result of the unlawful acts charged.

In order for a federal court to assert jurisdiction over an action, the court must find that a justiciable "case or controversy" exists. See U.S. Const., Art. III, § 2. Standing is the principle doctrine to determine whether a case or controversy exists and the doctrine which delineates a plaintiff's entitlement to invoke the power of a federal court. Comer v. Cisneros, 37 F.3d 775, 787 (2d Cir.1994). The Supreme Court has determined that a plaintiff must satisfy three criteria to have standing: (1) personal injury or threat of injury; (2) that the injury fairly can be traced to the action; and (3) that the injury is likely to be redressed by the requested relief. Garelick v. Sullivan, 987 F.2d 913, 918-19 (2d Cir.), cert. denied, 510 U.S. 821, 114 S.Ct. 78, 126 L.Ed.2d 47 (1993). The alleged injury cannot be "abstract" in character. City of Los Angeles v. Lyons, 461 U.S....