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TONWAL REALTIES, INC. v. BEAME

January 8, 1976

TONWAL REALTIES, INC., et al., Plaintiffs,
v.
Abraham BEAME, as Mayor of the City of New York, et al., Defendants


Ward, District Judge.


The opinion of the court was delivered by: WARD

WARD, District Judge.

Defendants Abraham Beame, Mayor of the City of New York, Roger Starr, Administrator of the Housing and Development Administration of New York City, Daniel W. Joy, Commissioner of the Department of Rent and Housing Maintenance of New York City, and City Rent Agency ("the municipal defendants"), Hugh Carey, Governor of the State of New York, Lee Goodwin, Commissioner of the New York State Division of Housing and Community Renewal ("the state defendants") and defendant-intervenors Metropolitan Council on Housing and Esther Rand ("Metropolitan Council") move, by three separate motions, for dismissal of the complaint in this action pursuant to Rule 12, Fed.R.Civ.P., for failure to state a claim and for lack of subject matter jurisdiction.

 Plaintiffs Tonwal Realties, Inc., Waltwood Realty, Inc., Huxbert Realty Company, Wendy Building Corp., Bernard Axelrod, Carlin Axelrod, Barmat Realty Co., 205 East 69th Street Corp., and Bryant Westchester Realty Corp. ("Realties") move for an order pursuant to Rule 23, Fed.R.Civ.P., declaring that this action is properly maintainable as a class action. The municipal defendants cross-move for dismissal of the action as a class action with respect to money damages relying upon Rule 23(c)(1), Fed.R.Civ.P., and subdivision (d) of Rule 11A of the Civil Rules of the United States District Courts for the Southern and Eastern Districts of New York. Metropolitan Council cross-moves under Rule 19(b), Fed.R.Civ.P., for dismissal of the complaint for failure to join the tenants of the plaintiffs who are landlords as indispensable parties-defendants. For the reasons hereinafter stated, the motions and cross-motions are denied without prejudice.

 This action seeks to challenge "Rent Control" in the City of New York. Plaintiffs request injunctive relief and a judgment pursuant to 28 U.S.C. §§ 2201 and 2202 and Rule 57, Fed.R.Civ.P., declaring that state and city statutes and regulations controlling New York City residential housing are unconstitutional both ipso facto and as administered by the municipal and state defendants. The jurisdiction of this Court is invoked based upon 28 U.S.C. § 1343(3) and (4) since plaintiffs claim abridgement of rights protected by the Fourteenth Amendment to the United States Constitution and by 42 U.S.C. § 1983.

 At the outset, it should be noted that the presence of a wrong does not necessarily mean that a federal judicial remedy exists. The federal courts are hesitant to enter the thicket of local politics or to encroach upon matters legitimately within the purview of local administrative agencies. Rent control, in both theory and practice, presents complex and troublesome questions. For example, plaintiffs' papers are replete with commentary from the media exploring the relationship between rent control and New York City's fiscal crisis.

 Where issues of overriding state and local concern predominate, federal courts, relying upon Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943) and Alabama Public Service Comm. v. Southern R. Co., 341 U.S. 341, 71 S. Ct. 762, 95 L. Ed. 1002 (1951), have often seen fit to abstain. See Ungar v. Mandell, 471 F.2d 1163, 1166 (2d Cir. 1972); Brown v. First National City Bank, 503 F.2d 114, 117-18 (2d Cir. 1974). This is just such a case.

 The instant action is not the first challenge to New York City's rent control system filed in this Court. Earlier efforts, however, have failed to raise a sufficiently substantial federal question. See Somerset-Wilshire Apts., Inc. v. Lindsay, 304 F. Supp. 273 (S.D.N.Y.1969) and Stoneridge Apts. Company v. Lindsay, 303 F. Supp. 677 (S.D.N.Y.1969). In Israel v. City Rent & Rehabilitation Administration of City of New York, 285 F. Supp. 908, 910 (S.D.N.Y.1968) Judge Pollack observed:

 
Plaintiff contends that the State rent control enabling Act and Local Law 20 which continues rent control in New York City violate the following of her constitutional rights:
 
Due process of Law (XIV Amendment, U.S. Constitution, Article I, § 6, N.Y. Constitution); equal protection of the laws (XIV Amendment, U.S. Constitution, Article I, § 11, N.Y. Constitution); taking property without compensation (Article I, § 7, N.Y. Constitution); impairment of obligations of contract (Article I, § 10, U.S. Constitution). In addition, plaintiff invokes the Civil Rights statutes (18 U.S.C. § 242; 28 U.S.C. § 1343; 42 U.S.C. § 1983). No other grounds for federal jurisdiction are alleged.
 
The constitutionality of the Rent Control Statute is well settled. The statute does not violate due process (Bowles v. Willingham, 321 U.S. 503, 517, 64 S. Ct. 641, 88 L. Ed. 892 (1944)); equal protection (Woods v. Cloyd W. Miller Co., 333 U.S. 138, 145, 68 S. Ct. 421, 92 L. Ed. 596 (1948)); taking of property without compensation (Teeval Co. v. Stern, 301 N.Y. 346, 362, 93 N.E.2d 884, cert. den. 340 U.S. 876, 71 S. Ct. 122, 95 L. Ed. 637 (1950)); impairment of contract rights (Marcus Brown Holding Co. v. Feldman, 256 U.S. 170, 198, 41 S. Ct. 465, 65 L. Ed. 877 (1920)); see generally, Lincoln Building Associates v. Barr, 1 N.Y.2d 413, 153 N.Y.S.2d 633, 135 N.E.2d 801 (1956), appeal dismissed for want of substantial federal question, 355 U.S. 12, 78 S. Ct. 12, 2 L. Ed. 2d 20 (1957).

 Judge Pollack went on to note that the emergency in New York City housing which originally compelled the institution of rent control continued to exist. 285 F. Supp. at 910-11.

 The enabling legislation which permits the City to enact and enforce rent control regulations will expire on July 1, 1976. Chap. 576, § 17 (1974) Laws of New York 1533. At that time, the State Legislature will again be obliged to deal with the problem. In abstaining in Burford v. Sun Oil Co., the Court indicated that it was loath to interfere in, "as thorny a problem as has challenged the ingenuity and wisdom of legislatures," Railroad Commission v. Rowan & Nichols Oil Co., 310 U.S. 573, 579, 60 S. Ct. 1021, 1023, 84 L. Ed. 1368 (1940) quoted in 319 U.S. at 318, 63 S. Ct. at 1099. Surely, rent control qualifies as such a problem.

 The New York courts have not been reluctant to render decisions in rent control cases. And, their opinions cannot be said to have ignored the landlords' problem. As plaintiffs' attorneys indicate in their memorandum in support of their motion for class action determination, they have been successful in representing landlords' interests in numerous cases before local courts. It is in the local forum that these matters are best litigated. The words of Judge Hand, speaking in Teeval Co., Inc. v. Dewey, 91 F. Supp. 891, 893-94 (S.D.N.Y.1950) remain convincing

 
There plainly is no justification for exercising our jurisdiction in the present case. The New York courts have shown no hesitation in dealing with matters of rent control, and a resort to those courts in order to interpret the Act before us may avoid consideration of questions arising under the Constitution of the United States and possible conflicts in the views of the two courts. If their decisions should prove to be wrong on Federal grounds a review may be had in the Supreme Court of the United States. . . . The State courts are the proper ...

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