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IN RE BRADLEY INDUS. PARK

February 17, 1996

In the Matter of the Application of BRADLEY INDUSTRIAL PARK, DAYHO MOTEL CORP., FADB REALTY CORP., PIERMONT LANDING PROPERTY OWNERS ASSOC., INC., TAPPAN PROPERTY, INC., VINCENT HOSANG, PETER GRAZIANO, MICHALINA CARBONE, NICE-PAK PRODUCTS, INC., and Others, Plaintiff-Petitioners, -against- THE COMMISSIONER OF EDUCATION, DR. A. GLEN EVERHART, DR. MORTON SHERMAN, SOUTH ORANGETOWN CENTRAL SCHOOL DISTRICT, DR. WILLIAM HEEBINK, CLARKSTOWN CENTRAL SCHOOL DISTRICT, Defendant-Respondents.


The opinion of the court was delivered by: MCAVOY

 I. BACKGROUND

 Plaintiffs, a coalition of "non-homestead real property owners," allege that defendants either instituted or approved a school district boundary change whereby plaintiffs' properties would be transferred from the South Orangetown Central School District to the Clarkstown Central School District. Plaintiffs claim that this action is illegal because it is not authorized by the Department of Education or New York law. Plaintiffs also claim pursuant to 42 U.S.C. § 1983 that the boundary change, by increasing non-homestead parcel taxes 45 percent, constitutes an unconstitutional deprivation of property interests under the Fifth and Fourteenth Amendments.

 Plaintiffs submitted three separate appeals to the Commissioner of Education in March, 1995, all of which are still pending. On May 11, 1995, plaintiffs commenced an Article 78 proceeding in New York State Supreme Court, and the Hon. James Canfield issued a stay of the boundary change and tax increase from May 19, 1995, until August 1, 1995. Defendants subsequently appeared before the Appellate Division, Third Department, seeking to have the stay vacated. The Appellate Division denied the motion without opinion on June 6, 1995, whereupon defendants removed the action to this Court on the basis of plaintiffs' asserted cause of action under Section 1983.

 In a previous Memorandum-Decision and Order, Bradley Indus. Park v. Commissioner of Educ., 1995 U.S. Dist. LEXIS 19024, 1995 WL 760824 (N.D.N.Y. Nov. 14, 1995), the Court granted a motion by plaintiffs to remand the case to New York State Supreme Court, Albany County, pursuant to the abstention doctrine promulgated in Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496, 498-500, 85 L. Ed. 971, 61 S. Ct. 643 (1941). Plaintiffs now move pursuant to 28 U.S.C. § 1447 for an award of attorneys' fees related to the remand motion. Section 1447(c) reads in pertinent part:

 
A motion to remand the case on the basis of any defect in removal procedure must be made within 30 days after the filing of the notice of removal under [28 U.S.C. § ] 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require the payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. . . ..

 28 U.S.C. § 1447(c). Defendants argue in opposition that Section 1447(c) is not applicable in this case because the Court has not found that it lacks subject matter jurisdiction, but has only abstained from exercising it.

 II. DISCUSSION

 A. RELEVANCE OF SECTION 1447(c)

 Plaintiffs are correct that the holding of Mermelstein v. Maki, 830 F. Supp. 184, 185-186 (S.D.N.Y. 1993), lends some support to their position and contradicts that of defendants. In Mermelstein, Judge Sotomayor concluded that "there is nothing in the language of the [costs and attorneys' fees] sentence [of Section 1447(c)] to suggest that it only applies to remands based on lack of subject matter jurisdiction." Mermelstein, 830 F. Supp. at 185. Rather, that part of the statute "references orders of remand, without limitation -- and therefore those provisions apply to all such orders." Id.

 In arguing that the costs and fees provision was limited to remands predicated on the grounds set forth in Section 1447(c), the defendants in Mermelstein relied on a case in which the Second Circuit, while discussing the 1988 revisions to Section 1447(c), stated that

 
the statute as amended makes no reference at all to the state of mind or intent of the party removing the action, instead focusing strictly on the mere absence of subject matter jurisdiction. The amendment also added to the statute an explicit reference to attorneys' fees as part of the costs that may be awarded.

 Morgan Guar. Trust Co. of New York v. Republic of Palau, 971 F.2d 917, 923 (2d Cir. 1992). The defendants isolated the reference "focusing strictly on the mere absence of subject matter jurisdiction" to argue that costs and fees only may be awarded where subject matter jurisdiction is lacking. Judge Sotomayor disagreed, however, finding that "it is clear that the Second Circuit found no such limitation on awards of fees and costs." Mermelstein, 830 F. Supp. at 186.

 Upon consideration of the relevant caselaw, the Court believes that it is not clear that the Second Circuit found no such limitation on awards pursuant to Section 1447(c). In fact, the Court reaches essentially the opposite conclusion: the Second Circuit has limited the recovery of costs and fees to cases where subject matter jurisdiction is lacking -- or where defects in the removal process have occurred. In other words, no part of Section 1447(c), including the costs and fees provision, applies unless the case was remanded for one of the two reasons enumerated in the first part of the section. *fn1" ...


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