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CARLIN v. GOLD HAWK JOINT VENTURE

November 14, 1991

MARTIN CARLIN, PLAINTIFF,
v.
GOLD HAWK JOINT VENTURE, TOM E. PURVIS, ESTATE OF JACK H. YORK, AND WILLIAM CLINTON WEEDEN, DEFENDANTS.



The opinion of the court was delivered by: Sand, District Judge.

This case arises out of a dispute concerning the default of Gold Hawk Investments Company [hereinafter "GHIC"] on mortgage payments owed on commercial real estate which had been purchased by GHIC from defendant Gold Hawk Joint Venture [hereinafter "GHJV"]. GHIC was a Texas joint venture composed of the plaintiff in this action, Martin Carlin, Vlad Stevens, and Steve Stevens, Jr. Defendant GHJV was also a Texas joint venture composed of defendants Tom E. Purvis and William Clinton Weeden, and Jack H. York.*fn1 In 1987, a judgment of almost eight million dollars was entered against GHIC and its individual joint venturers, including plaintiff, in the federal district court for the Northern District of Texas.

In April of 1991, plaintiff brought this latest action in a series of litigations challenging this judgment in the New York Supreme Court, Bronx County, and filed a Notice of Pendency with the County Clerk of Westchester County. On April 30, defendants GHJV, Purvis, and Estate of Jack York removed the action to this Court. Defendants now move to dismiss the complaint with prejudice primarily on the ground of res judicata and to cancel the Notice of Pendency. They also seek a permanent injunction, costs and sanctions against plaintiff. For the reasons discussed below, the motion to dismiss the complaint and cancel the Notice of Pendency is granted. Defendants' request for an injunction, costs and sanctions is denied.

I. BACKGROUND

A. Underlying Facts

In August of 1986, GHIC purchased five Houston shopping centers from GHJV, and assumed the mortgages and notes on these properties which were payable to other lenders, including a $5,507,966.51 promissory note due to the Sunrise Savings & Loan Association [hereinafter "Sunrise"]. However, defendants remained responsible for the mortgages if GHIC failed to meet its obligations. Complaint ¶ 15; Memorandum Opinion, CA4-87-205-K, Gold Hawk Joint Venture v. Gold Hawk Investments Co., (N.D.Tex. March 7, 1988), at 2 [hereinafter "Memorandum Opinion"]. At some point thereafter, GHIC defaulted on the note due to Sunrise. Complaint ¶ 17. The lenders then accelerated the mortgages and instituted foreclosure proceedings on the shopping centers, as well as other property owned by the defendants which had served as additional collateral on the Sunrise note. Complaint ¶¶ 9-13; Memorandum Opinion at 2.

B. Procedural History

On March 26, 1987, GHJV sued GHIC, Carlin, Vlad Stevens and Steve Stevens, Jr. in the United States District Court for the Northern District of Texas for damages suffered from GHIC's default. On May 19, 1987, after an inquest hearing, judgment was entered against all the defendants in that action jointly and severally in the amount of $7,903,519.42 with interest at 11.5% per annum from the date of judgment, and $25,000 in attorneys' fees. [hereinafter "the Judgment"]. The Judgment was docketed in the United States District Court for the Southern District of New York on July 14, 1987, and in the Supreme Court of the State of New York, Westchester County, on July 23, 1987. See Etkin Affidavit in Support of Motion to Dismiss Complaint, Cancel Notice of Pendency and for a Permanent Injunction, May 7, 1991, at 2-3 [hereinafter "Etkin Affidavit"].

In September 1987, GHJV commenced enforcement proceedings on the Judgment in the Supreme Court of the State of New York, Westchester County in an action directed at real property owned there by Carlin. In his answer to the Complaint filed in that enforcement action, Carlin challenged the validity of the Judgment and on October 29, 1987, he obtained a stay of execution while he moved in Federal Court in the Northern District of Texas to vacate the Judgment. See Proceedings before the Honorable Vincent A. Gurahian, Supreme Court of the State of New York, County of Westchester, Application of Gold Hawk Joint Venture for a Judgment Pursuant to CPLR 5206 for a Sale of Homestead Exceeding Ten Thousand Dollars v. Martin Carlin, Index No. 18232/87, (Oct. 29, 1987), at 2, annexed to Etkin Affidavit as Exhibit B [hereinafter "Application of Gold Hawk Joint Venture"].

On November 16, 1987, Carlin and the other defendants in the Texas action moved to set aside the Judgment by Order to Show Cause in the Northern District of Texas. See Order to Show Cause, Gold Hawk Joint Venture v. Gold Hawk Investments Co., CA4-87-205-K, (N.D.Tex. Nov. 6, 1987), annexed to Etkin Affidavit as Exhibit C. On March 7, 1988, the Court denied Carlin's motion and upheld the Judgment. See Memorandum Opinion. To execute on the Judgment, one of plaintiff's New York properties, 175 Crary Avenue, Mt. Vernon, NY, was sold at a Sheriff's sale, at which GHJV was the successful bidder. Carlin appealed the district court's decision to the United States Court of Appeals for the Fifth Circuit, which affirmed the lower court. See Gold Hawk Venture v. G. H. Investment, 869 F.2d 1486 (5th Cir. 1989). Judge Gurahian subsequently granted GHJV summary judgment in the enforcement action.

On April 5, 1990, Carlin filed a complaint in the Supreme Court of the State of New York, Westchester County, challenging the Judgment on the grounds that the cause of action was not ripe for adjudication. This complaint was dismissed on the grounds of res judicata and that the Judgment was not subject to collateral attack. See Decision and Order, Carlin v. Gold Hawk Joint Venture, Free Lunch, Inc., the State of New York, and the United States of America, No. 6113-1990, Supreme Court of the State of New York, County of Westchester, (Feb. 28, 1991), annexed to Etkin Affidavit as Exhibit E.

On April 1, 1991, Carlin filed the present complaint in the New York Supreme Court, Bronx County and a Notice of Pendency on the Crary Avenue property with the County Clerk of Westchester County. In the present action, plaintiff asks for indemnification from any judgment entered against him by the FDIC as receiver of Sunrise in a suit now pending against both plaintiff and defendants, and asks that GHJV be enjoined from selling the Crary Avenue property and other New York property obtained from him unless and until judgment is entered against GHJV in the FDIC action. Plaintiff further requests that if judgment is entered against GHJV in that action, GHJV be directed to partially satisfy that judgment by transferring its interest in the New York properties to the FDIC. Finally, plaintiff asks that if the FDIC suit is dismissed or satisfied for less than the fair market value of his New York properties, that those properties, or the difference in value, be returned to him. The action was removed to this Court on April 30, 1991. On May 7, 1991 defendants GHJV, Purvis, and Estate of Jack H. York moved to dismiss the complaint, cancel the Notice of Pendency, and award a permanent injunction against plaintiff under Fed.R.Civ.P. 65. Plaintiff has not responded to this motion.

II. DISCUSSION

In considering a motion to dismiss for failure to state a claim, the Court must take plaintiff's allegations as true. See Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976); Miree v. DeKalb County, 433 U.S. 25, 27 n. 2, 97 S.Ct. 2490, 2492 n. 2, 53 L.Ed.2d 557 (1977). The Court must construe the complaint in a manner favorable to the non-moving party. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). The Court should dismiss the complaint only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957) (footnote omitted); Goldman v. Belden, 754 F.2d 1059, 1065 (1985).

A. Res Judicata

Defendants argue that the doctrine of res judicata prevents the present litigation and that therefore plaintiff's complaint must be dismissed for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6); see Etkin Affidavit at 2. Defendants allege that the issues raised in the present complaint have been fully adjudicated in the federal courts in Texas and in the state courts of New York. See Memorandum of Law in Support of the Motion of the Gold Hawk Defendants to Dismiss the ...


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