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WALENTAS v. LIPPER

June 3, 1986

DAVID C. WALENTAS, Plaintiff, against KENNETH LIPPER, JOHN DOE #1, JOHN DOE #2, JOHN DOE #3, JOHN DOE #4, and JOHN DOE #5, Defendants


The opinion of the court was delivered by: STANTON

LOUIS L. STANTON, D.J.

Plaintiff David Walentas, a real estate developer in New York, brings this action pursuant to 28 U.S.C. 1983 and its jurisdictional counterpart, 28 U.S.C. § 1343, against defendant Kenneth Lipper, *fn1" at relevant times Deputy Mayor for Finance and Development for New York City, alleging that Lipper, acting under color of state law, deprived plaintiff of property and liberty interests without due process of law. Defendant moves pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the complaint for failure to state a claim upon which relief can be granted.

Facts

 In April and November 1981, plaintiff purchased, with intent to convert to rentable office space, several buildings located near the Brooklyn Bridge, known cumulatively as the "Brooklake property". Adjacent to that parcel is a piece of property, known for purposes of this law suit as the "RFP site", owned in part by the City of New York and in part by New York State.

 In June 1981 the city, through its Public Development Corporation ("PDC"), and the state, through its Urban Development Corporation ("UDC") and its Office of Parks, Recreation and Historic Preservation ("OPRHP"), solicited development proposals for the RFP site. As defendant's position included oversight of the operations of PDC, it is claimed he had considerable control over who would be selected as developer of the project.

 The selection process had two phases. Initially, a successful candidate received a conditional designation; he then had to complete various detailed obligations satisfactorily and at his own expense, under a contract between himself and PDC, UDC and OPRHP, before being designated the developer of the project.

 On May 27, 1982 plaintiff was conditionally designated by PDC, UDC and OPRHP ("the Parties") as the developer of the RFP site. He and the Parties signed a Conditional Designation agreement ("the Agreement"), looking to the negotiation of various terms and plans by the Parties with plaintiff and their cooperation with him by providing their approval and directions where required. The Agreement allowed the Parties to terminate it if they were not satisfied with the progress of the negotiations.

 Plaintiff proceeded, according to the Agreement, with plans for developing his land and the RFP site. He obtained approval from the City Board of Estimate for an application (Urban Development Action Grant Application) for federal monetary assistance. He submitted applications to the state for tax reductions and low interest loans. In September and October 1983, plaintiff reached agreement with PDC and UDC regarding physical alterations for the site and final budget.

 In December 1983 plaintiff entered into negotiations with Lehman Brothers Kuhn Loeb ("Lehman Brothers") regarding leasing by Lehman Brothers of a portion of the Brooklake property. All of the conditions and terms of the lease were agreed upon that month, but a final agreement was contingent upon the plaintiff obtaining the tax reductions sought.

 Plaintiff's version, taken as true for purposes of this motion, Cruz v. Beto, 405 U.S. 319, 322, 31 L. Ed. 2d 263, 92 S. Ct. 1079 (1972), is that all was going smoothly until defendant Lipper, who personally disliked plaintiff and was dissatisfied with the way plaintiff had managed some other business ventures between them, used his powers as Deputy Mayor of Finance and Development and as overseer of the PDC to stop plaintiff from carrying out his development plans and from being chosen as the developer of the RFP site.

 Specifically, plaintiff claims that: (1) defendant directed the president of PDC to impose additional burdensome restrictions on plaintiff, such as finding partners who could guarantee financing of the entire project, to be satisfied in less than two months, or the city would no longer consider him for developer; (2) at the same time, defendant "made it known" to potential partners of plaintiff that the city would "view [them] with extreme disfavor" if they agreed to join plaintiff in the development of the RFP site; (3) defendant, as chairman of the New York Industrial Commerce Incentive Board, to which plaintiff had applied for tax reductions, delayed plaintiff's application, 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) defendant 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 he would forward Councilwoman Messinger's allegations to the New York Department of Investigations and actually doing so, defendant told the Commissioner of Investigations to issue a report confirming the allegations without checking their veracity; (6) when the Department did issue that report in March 1984, defendant, knowing the report to be false, distributed copies to the press; (7) in February 1984, defendant told a Daily News reporter, without first consulting either UDC or OPRHD, that plaintiff would not be the developer of the site; (8) in March 1984, defendant held a press conference, without consulting either UDC or OPRHP, during which he made false and disparaging remarks about plaintiff and formally de-designated plaintiff as developer of the site; and (9) on the same day, the president of PDC wrote plaintiff a letter, at the direction of defendant, informing him that he had been de-designated as developer.

 Section 1983

 To assert a claim under § 1983 plaintiff must show that, as a result of state action, he was deprived of a right protected by the Constitution and federal laws. Gomez v. Toledo, 446 U.S. 635, 640, 64 L. Ed. 2d 572, 100 S. Ct. 1920 (1980); Weiss v. Willow Tree Civic Association, 467 F. Supp. 803, 809 (S.D.N.Y. 1979). Since plaintiff claims he was deprived of rights protected by the Fourteenth Amendment, he must show that the state deprived him of a life, liberty or property interest without due process of law.

 The range of interests protected by the procedural due process clause is not infinite. Board of Regents v. Roth, 408 U.S. 564, 572, 33 L. Ed. 2d 548, 92 S. Ct. 2701 (1972). Thus, plaintiff must show that the interests of whose deprivation he complains are substantial ...


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