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BRONTEL, LTD. v. CITY OF NEW YORK

September 23, 1983

BRONTEL, LTD., Plaintiff,
v.
THE CITY OF NEW YORK, PHILIP R. MICHAEL, as COMMISSIONER OF FINANCE OF THE CITY OF NEW YORK, and TAX COMMISSION OF THE CITY OF NEW YORK, Defendants; RENT CONTROL MEMORIAL CORP. and BRONTEL, LTD., Plaintiffs, v. THE CITY OF NEW YORK, PHILIP R. MICHAEL, as COMMISSIONER OF FINANCE OF THE CITY OF NEW YORK, and TAX COMMISSION OF THE CITY OF NEW YORK, Defendants



The opinion of the court was delivered by: WEINFELD

EDWARD WEINFELD, D.J.

 This is still another action by plaintiffs, who over the years have engaged in extensive litigation with the City of New York, its Tax Commission and others (collectively "the City"), challenging the City's tax assessments on three of plaintiffs' properties. Plaintiffs acquired the properties in 1975 and 1976 and to date have not paid a single penny of assessed taxes, not even the amount due based upon their own estimate of fair valuation for tax purposes. In 1981 the City acquired title to the three properties pursuant to in rem judgments of foreclosure entered in the Supreme Court of the State of New York because of nonpayment of real estate taxes. *fn1" Plaintiffs have challenged the foreclosure proceedings since their commencement in 1977. This action is a further attempt to overcome the judgments of foreclosure and regain the properties. Plaintiffs' twice amended complaint contains fourteen prolix and widely discursive claims that, stripped to essentials, allege:

 
(1) The City violated plaintiffs' right to due process of law and deprived them of their property in violation of the Fourteenth Amendment by denying them a prompt determination of certiorari proceedings they had instituted to challenge the assessments on the properties;
 
(2) The City restrains trade by imposing rent control upon privately owned property, and monopolizes trade by exempting city-owned property from rent control and other local laws regarding residential buildings, in violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2, 3;
 
(3) The City's rent control, property tax, and housing laws and regulations have destroyed the value of plaintiffs' properties and therefore constitute an inverse condemnation or "taking" for which just compensation is required by the United States and New York Constitutions;
 
(4) The City's rent control regulations impair the obligation of contracts in violation of article I, section 10 of the United States Constitution;
 
(5) The City unlawfully refused to allow plaintiffs to redeem the properties;
 
(6) The City destroyed a building on one of the premises, without notice to plaintiffs, and without reason;
 
(7) The City breached an alleged agreement to settle this litigation.

 The City moved to dismiss the action pursuant to Fed. R. Civ. P. 12(b)(6) and 56 for failure to state a claim upon which relief can be granted and on the grounds of res judicata and collateral estoppel. The plaintiffs cross-moved pursuant to Fed. R. Civ. P. 65 for a preliminary injunction enjoining the City from continuing its alleged violations of law pending a trial of the issues. Each side submitted extensive affidavits and briefs in support of their respective positions. The motion for a preliminary injunction was denied upon the conclusion of oral argument as utterly lacking in substance.

 THE DEFENSE OF RES JUDICATA AND COLLATERAL ESTOPPEL

 The rule of res judicata provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter barred from relitigating the same cause of action in a subsequent suit, absent fraud or some other factor invalidating the judgment. *fn2" The doctrine extends not only to issues actually determined, but also to the claims that could have been raised in the prior action. *fn3" Under the doctrine of collateral estoppel, once an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in a subsequent suit on a different cause of action involving a party to the prior litigation. *fn4" These related defenses of collateral estoppel and res judicata, advanced by the City in support of its motion, require an examination of the long and convoluted prior litigation that preceded the instant action.

 The prior state court litigation

 In 1977, the City commenced In Rem Action No. 29 in the Supreme Court of the State of New York to foreclose all properties in New York City that were delinquent in taxes, including the three properties owned by plaintiffs: 28 West 116th Street, 415 East 12th Street, and 12 East 116th Street. Plaintiffs opposed the foreclosure action, denying that they were in arrears in the payment of "lawfully assessed" taxes and charges, and asserting two counterclaims. The first alleged that the City had confiscated the properties through the application of rent control laws, without just compensation, in violation of the New York and United States Constitutions, and sought damages. The second asserted that the properties were not properly ...


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