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TUFANO v. ONE TOMS POINT LANE CORP.

September 13, 1999

ALFRED TUFANO, PLAINTIFF,
v.
ONE TOMS POINT LANE CORPORATION, ET AL., DEFENDANTS.



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

  ORDER ADOPTING REPORT AND RECOMMENDATION

Presently pending before the Court are Plaintiff's objections to Magistrate Judge E. Thomas Boyle's Report and Recommendation (hereinafter "R & R"), dated July 17, 1999, recommending dismissal of Plaintiff's complaint in its entirety for failing to state a claim upon which relief can be granted, with leave to replead within 45 days, and recommending that the lis pendens file against the Kalinsky cooperative shares be vacated.

BACKGROUND

Familiarity with the factual and procedural history of this litigation is presumed. An abridged version of the events leading up to the filing of the lawsuit involves a contract entered into between Plaintiff Alfred Tufano and Defendants George Kalinsky and Lee Kalinksy (hereinafter "the Kalinskys"), on or about October 7, 1998, for the sale of 440 shares of stock in a cooperative housing corporation, One Toms Lane Corporation (hereinafter the "Corporation"), and the proprietary lease for unit 9H, subject to the approval of the Corporation. On or about October 29, 1998, Plaintiff was interviewed by a "screening committee" comprised of Defendants Barbara Healy and Mrs. MacMann, at which time Plaintiff also presented previously requested documents. On or about November 6, 1998, the day after the Board of Directors of the Corporation (hereinafter the "Board"), held a meeting to consider Plaintiff's application, Tufano's attorney was informed that the application was disapproved, without reason, and a letter to that effect, dated November 7, 1998, (hereinafter the "Letter"), was sent by the Board to Alfred Tufano.

On November 10, 1998, Plaintiff filed the instant action, initially alleging a conspiracy and fraud by Defendants to violate Plaintiff's civil rights in violation of 42 U.S.C. § 1983 & 1988, and a claim for unfair competition under New York state law. Plaintiff filed an Amended Complaint on November 24, 1998, adding jurisdictional predicates pursuant to 42 U.S.C. § 1981 & 1982, the United States Constitution and the Fair Housing Act. After issue was joined, Defendants moved to dismiss and/or for summary judgment and Plaintiff cross-moved for summary judgment. The Kalinskys also moved to vacate the lis pendens, filed with the Clerk of the County of Nassau on November 10, 1998, against their apartment.

DISCUSSION

I. STANDARD OF REVIEW

A motion to dismiss or for summary judgment is a dispositive motion and as such it may be referred to a Magistrate Judge for proposed findings of fact and recommendations for its disposition pursuant to 28 U.S.C. § 636(b)(1)(B), and specific objections thereto shall be reviewed de novo by this Court to accept, reject, or modify, in whole or in part, the Magistrate's findings or recommendations. See 28 U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b).

Magistrate Judge Boyle, in a thorough and well-reasoned opinion, counseled dismissal of the complaint because, inter alia, there are no allegations articulating a civil rights violation, nor has the complaint been pled with sufficient particularity to allege fraud or to state a claim sounding in conspiracy. Moreover, as this Court finds, a review of the complaint and other documents reveals that there is no claim alleged against the Kalinskys, save Tufano's oral assertion at a hearing that they are "intertwixed and intertwined with the Corporation."

II. STANDARD GOVERNING MOTIONS TO DISMISS

A district court should grant a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure only if "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50, 109 S.Ct. 2893, 2906, 106 L.Ed.2d 195 (1989) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984)). In applying this standard, a district court must "read the facts alleged in the complaint in the light most favorable" to the plaintiff, and accept these allegations as true. Id. at 249, 109 S.Ct. at 2906; see Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); see also Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 167, 113 S.Ct. 1160, 1163, 122 L.Ed.2d 517 (1993) (citing Fed.R.Civ.P. 8(a)(2) to demonstrate liberal system of `notice pleading' employed by the Federal Rules of Civil Procedure). This is especially so when analyzing a complaint filed by a pro se plaintiff. Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994). When the complaint alleges a violation of a civil rights statute, allegations must specify the violations rather than offering "a litany of general conclusions that shock but have no meaning." Barr v. Abrams, 810 F.2d 358, 363 (2d Cir. 1987); see also Leon v. Murphy, 988 F.2d 303, 310 (2d Cir. 1993) ("`A complaint containing only conclusory, vague, or general allegations of conspiracy to deprive a person of constitutional rights cannot withstand a motion to dismiss.'") (quoting Sommer v. Dixon, 709 F.2d 173, 175 (2d Cir. 1983)); Neustein v. Orbach, 732 F. Supp. 333, 346 (E.D.N.Y. 1990) (holding to survive a motion to dismiss, a civil rights complaint must contain "more than naked improbable unsubstantiated assertions without any specifics"). The issue before the Court on a Rule 12(b)(6) motion "is not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claim."

The Second Circuit stated that in deciding a Rule 12(b)(6) motion, a court may consider "only the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings and matters of which judicial notice may be taken." Samuels v. Air Transport Local 504, 992 F.2d 12, 15 (2d Cir. 1993); see also International Audiotext Network, Inc. v. American Tel. & Tel., 62 F.3d 69, 72 (2d Cir. 1995); Paulemon v. Tobin, 30 F.3d 307, 308-09 (2d Cir. 1994); Rent Stabilization Ass'n of the City of New York v. Dinkins, 5 F.3d 591, 593-94 (2d Cir. 1993) (citing Samuels, 992 F.2d at 15).

According to Rule 12(b), however, "[i]f, on a motion . . . to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." A district court may not convert a motion under Fed.R.Civ.P. 12(b)(6) into a Rule 56 motion for summary judgment without sufficient notice to the opposing party to respond. Groden v. Random House, Inc., 61 F.3d 1045, 1052 (2d Cir. 1995). The essential inquiry is whether the plaintiff should reasonably have recognized the possibility that the motion might be converted into one for summary judgment or was taken by surprise and deprived of a reasonable opportunity to meet facts outside the pleadings. In re G. & A. Books, Inc., 770 F.2d 288, 294-95 (2d Cir. 1985).

In deciding whether to convert a motion to dismiss into one for summary judgment, the Court recognizes that the complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference. Cortec Indust. Inc. v. Sum Holding, L.P., 949 F.2d 42, 47 (2d Cir. 1991). When a plaintiff chooses not to attach to the complaint or incorporate by reference a document upon which it solely relies and which is integral to the complaint, the court may under certain circumstances take the document into consideration in deciding the defendant's motion to dismiss without converting the proceeding to one for summary judgment. Id. at 47-48; International Audiotext Network, 62 F.3d at 72. In addition, the Court may consider documents annexed to the movant's papers which, although not annexed to the complaint, plaintiff either had in his possession or had knowledge of and upon which he relied in bringing suit. Roucchio v. Coughlin, 923 F. Supp. 360, 366 (E.D.N.Y. 1996) (citing Cortec, 949 F.2d at 48). The Second Circuit has warned, however, that it is error to consider factual allegations contained in legal briefs or memoranda without converting the motion to one for summary judgment. Fonte v. Board of Managers of Continental Towers Condominium, 848 F.2d 24, 25 (2d Cir. 1988).

Here, the parties have submitted affidavits and correspondence beyond the pleadings. Further, the parties are aware that the Court might convert this motion into summary judgment, in fact, Defendant has moved to dismiss or in the alternative for summary judgment and Plaintiff has cross-moved for summary judgment. Because Judge Boyle recommended dismissal of the instant action without prejudice to replead, it is unnecessary for the Court to consider whether the motion to dismiss should be converted to a motion for summary judgment, however, the Court will utilize the affidavits and other documents presented, as all parties are sufficiently on notice that summary adjudication is a feasible option. It is within this framework that the Court addresses Tufano's specific objections to Magistrate Judge Boyle's Report and Recommendation.

III. TUFANO'S OBJECTIONS

A. Conspiracy Claims

First, Tufano declares that he is not alleging a conspiracy pursuant to 42 U.S.C. § 1985(3), yet Plaintiff's Amended Complaint, although never citing § 1985, does allege that Defendants "acting as an entity within a corporation, as a board of directors, having held meetings and communications did conspire to violate plaintiff's . . . civil rights." (Pl.'s Compl. ¶ 7.) Although the Court does not believe Plaintiff wishes to abandon his conspiracy claim, the first objection to the utilization of § 1985 is without merit. A claim alleging conspiracy to violate civil rights is properly brought pursuant to § 1985. 42 U.S.C. § 1985(3) provides, in relevant part:

  If two or more persons in any state . . . conspire .
  . . for the purpose of depriving, either directly or
  indirectly, any person or class of persons of the
  equal protection of the laws, or of equal privileges
  and immunities under the laws . . . the party so
  injured or deprived may have an action for the
  recovery of damages occasioned by such injury or
  deprivation, against any one or more of the
  conspirators.

With respect to the alleged conspiracy, Magistrate Boyle properly reported that the pleadings require allegations that Defendants not only engaged in a conspiracy to deprive Plaintiff of the equal protection of the laws or the equal privileges and immunities under the laws, and acted in furtherance thereof, but that such actions deprived Plaintiff of a right or privilege of a citizen of the United States. See New York State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1358 (2d Cir. 1989). Further, the statute requires a racial or class-based discriminatory animus behind the conspirators' action. See Mian v. Donaldson, Lufkin & Jenrette Sec. Corp., 7 F.3d 1085, 1088 (2d Cir. 1993). For numerous reasons, Plaintiff's conspiracy claim must fail. As discussed infra, Plaintiff did not allege a racial or class-based discriminatory motivation or intent in his Amended Complaint, in addition, the Court concludes that Plaintiff's constitutional rights were not violated, and finally, the intracorporate conspiracy doctrine also bars Plaintiff's conspiracy claim.

Under the intracorporate conspiracy doctrine, officers, agents and employees of a single corporate entity are legally incapable of conspiring together. See Solla v. Aetna Health Plans of New York Inc., 14 F. Supp.2d 252, 257 (E.D.N.Y. 1998). Although the Supreme Court has yet to address the issue, the Second Circuit has imported the intracorporate conspiracy doctrine into Section 1985 jurisprudence, dismissing a claim of conspiracy against officers and employees of a non-profit institution. See Herrmann v. Moore, 576 F.2d 453 (2d Cir. 1978). "Intracorporate immunity has also been extended to the context of conspiracies between a public entity and its employees." Rini v. Zwirn, 886 F. Supp. 270, 292 (E.D.N.Y. 1995) (applying intracorporate conspiracy doctrine in the context of municipal defendants).

The Second Circuit has addressed this exact issue in a similar setting. See Girard v. 94th St. & Fifth Ave. Corp., 530 F.2d 66 (2d Cir. 1976). In Girard, as part of a separation agreement, Mr. Girard attempted to assign his interest in his co-op to his wife, without receiving consent from the board as required. Id. at 68. Mrs. Girard unsuccessfully brought suit in New York Supreme Court, which held the consent provision enforceable under state law. Id.

Plaintiff then initiated suit in federal court alleging that the board refused to consent to the assignment of the proprietary lease because she is female, in violation of 42 U.S.C. § 1983, and that the defendants conspired to deprive her of her civil rights because of her sex, in violation of 42 U.S.C. § 1985(3). Id. Affirming the court's dismissal of the conspiracy claim, the Second Circuit stated:

  In the instant case, the individual defendants
  comprise the board of directors through which the
  corporation acted. The lease agreement specifically
  required the consent of the board before any transfer
  of ownership interest could be effective. . . .
  plaintiff does not allege that any of the individual
  defendants acted in any other capacity than his
  official role as director. As found by the court
  below, "[a]lthough the decision plaintiff challenges
  reflected the collective judgment of `two or more
  persons,' the decision cannot be considered the
  product of a conspiracy when the board was merely
  carrying out the corporation's managerial policy."

Id. (quoting Girard v. 94th St. & Fifth Ave. Corp., 396 F. Supp. 450, 455-56 (S.D.N.Y. 1975)).

Tufano's objections in support of a conspiracy claim state, "[c]ontrary to Magistrate Boyle's assessment corporations, corporate officers, shareholders, management, employers, and agents can be held responsible for any discriminatory unlawful act(s) committed by anyone of the above mentioned." Tufano's further contention that the Letter standing alone satisfies the conspiracy standard is patently wrong. A conspiracy claim in this setting must allege more than a meeting of the Board and an adverse decision resulting therefrom. Moreover, as explained, a decision rendered by a board of directors as a singular corporate body cannot be the basis of a conspiracy claim, absent the personal interest exception, inapplicable herein. See Bond v. Board of Education of the City of New York, No. 97 CV 1337, 1999 WL 151702, at *1 (E.D.N.Y. March 17, 1999). Accordingly, the Court adopts Magistrate Judge Boyle's recommendation to dismiss Plaintiff's conspiracy claim.

Tufano's second objection centers around Magistrate Boyle's descriptive reference that "the gravamen of Tufano's complaint is that he was denied approval by the Co-op board . . ." to which Plaintiff objects because it was the Letter, annexed to the complaint as Exhibit B, which is the instrument by which he was disapproved. Once again, Tufano raises insignificant matters. The Letter, serving as documentary evidence that Tufano was disapproved, merely proves a given, and standing alone, provides no evidence of discrimination. As will be discussed, the Board was under no obligation to provide a reason for denying Plaintiff the right to purchase the cooperative shares, and no inference can be drawn from this equivocal action. It clearly does not, as Plaintiff suggests, establish a "minimum violation of the Fair Housing Act."

B. Restrictions on Alienability of Cooperative Shares

Cooperative corporations are a special form of ownership of real property which enjoy broad discretion in their decisions to accept or reject potential purchasers. See Levandusky v. One Fifth Ave. Apartment Corp., 75 N.Y.2d 530, 538, 554 N.Y.S.2d 807, 812, 553 N.E.2d 1317 (1990) (finding that "[s]o long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith, courts will not substitute their judgment for the board's)"; see also 2 Patrick J. Rohan & Melvin A. Reskin, Real Estate Transactions: Cooperative Housing Law and Practice § 7.02[2] (1998) (stating that a cooperative board may "grant or withhold consent, for any reason or for no reason"). Only where the board's decision exceeds the scope of its authority or when it is made in bad faith or in a discriminatory fashion is judicial review appropriate.

C. Fair Housing Act Claim

Plaintiff misunderstands discrimination as it applies to the Fair Housing Act, and the proof required therein. This also explains his misplaced repeated reference to "discriminatory effect and impact." Although it is a correct statement of law to assert that evidence of discriminatory effect alone can be sufficient to establish a prima facie case of a Fair Housing Act violation, it is a non sequitur to declare that the denial of Tufano's application automatically constitutes discrimination. Discrimination in the context of a Fair Housing Act violation does not arise whenever someone believes they have been wronged in a housing matter, even if the adverse decision stems, for example, from a misguided personal dislike and not from an objective suitable assessment. The civil rights laws are clear, as is the language of the Fair Housing Act which defines discrimination in housing as "refus[ing] ...


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