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THE SEVENTH REGIMENT FUND v. PATAKI

January 18, 2002

THE SEVENTH REGIMENT FUND, ASSOCIATES OF THE ENGINEER CORPS AND COMPANY K, SEVENTH REGIMENT, INC. AND THE VETERANS OF THE SEVENTH REGIMENT, PLAINTIFFS
V.
GEORGE PATAKI, AS GOVERNOR OF THE STATE OF NEW YORK, MAJ. GEN. JOHN H. FENIMORE V, INDIVIDUALLY AND AS THE ADJUTANT GENERAL FOR THE DIVISION OF MILITARY AND NAVAL AFFAIRS, THE DIVISION OF MILITARY AND NAVAL AFFAIRS, CHARLES A. GARGANO, AS CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE N.Y.S. URBAN CORPORATION, N.Y.S. URBAN DEVELOPMENT CORPORATION D/B/A EMPIRE STATE DEVELOPMENT CORPORATION, ERNST & YOUNG LLP AND SEVENTH REGIMENT ARMORY CONSERVANCY, INC., DEFENDANTS.



The opinion of the court was delivered by: Laura Taylor Swain, United States District Judge

MEMORANDUM OPINION AND ORDER

This matter involves the proposed reuse or development of the historic Seventh Regiment Armory (the "Armory") located at 643 Park Avenue in Manhattan. Plaintiffs are three private non-profit organizations that assert property rights in the Armory and/or its contents. In this action, they challenge the issuance by certain defendants of a request for proposals ("RFP") inviting developers to submit bids for a long term lease of the Armory, to which defendant Seventh Regiment Armory Conservancy, Inc. ("Conservancy"), responded with a proposal to redevelop the Armory as a "theater and high-end restaurant" (the "Proposal").*fn1 Plaintiffs assert that the contemplated development would impair or destroy their property rights in the Armory and/or its contents, in violation of certain provisions of the Constitution of the United States. They seek to have the RFP declared unlawful and proceedings pursuant to it enjoined.

The Conservancy moved to dismiss Plaintiffs' complaint (the "Complaint"), pursuant to Federal Rules of Civil Procedure 12(b)(1) and (6). Shortly thereafter, all of the New York State-affiliated defendants*fn2 interposed a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, seeking to dismiss all of the claims asserted against them in the Complaint. Defendant Ernst & Young LLP moved to dismiss the Complaint as against it; Plaintiffs voluntarily dismissed, without prejudice, the action as against that defendant, mooting the dismissal motion. Oral argument was heard on the motions of the State Defendants and the Conservancy insofar as they addressed Plaintiffs' claims asserted pursuant to the Takings Clause of the Fifth Amendment to the United States Constitution under section 1983 of Title 42 of the United States Code.*fn3 The Court has considered thoroughly the parties' submissions and arguments. For the reasons that follow, Plaintiffs' application for dismissal with prejudice of certain of their claims is granted,*fn4 and the motions of the State Defendants and the Conservancy are granted with respect to the remaining claims.

BACKGROUND

The following factual allegations are taken from the Complaint.

Plaintiffs are the Seventh Regiment Fund (the "Fund"), organized in 1909 and composed of present and past members of lineal descendants of the Seventh Regiment of the New York National Guard, including the current 107th Corps Support Group (the "Seventh Regiment" or "Regiment"); the Associates of the Engineer Corps and Company K, Seventh Regiment, Inc. (the "Associates"), organized in 1942 and composed of veterans of the Engineer Corps or Company K of the Seventh Regiment, or the lineal descendants of the unit; and the Veterans of the Seventh Regiment ("Veterans"), organized in 1861 and comprising approximately 1,000 former and present active duty members of the successor units of the Seventh Regiment. (Compl. ¶¶ 1-4.)

The Seventh Regiment traces its provenance to a militia battalion formed in 1824 as the "National Guards;" it has been known as the Seventh Regiment since 1847. (Compl. ¶¶ 14-15.) From its establishment, the Seventh Regiment provided for its own expenses, including the refurbishment, in 1859, of drill and office space in Tompkins Market provided free by the City of New York (the "City"). (Compl. ¶¶ 15-16.) By the early 1870's, the Seventh Regiment was outgrowing its Tompkins Market space. In an 1873 statute, the New York State legislature directed the City to lease to field officers of the Seventh Regiment, and their successors in office, a plot of ground belonging to the City, "to be . . . exclusively used for an armory and drill rooms by the Regiment;" field officers of the Seventh Regiment were authorized to accept the lease on behalf of the Regiment. (Compl. ¶ 20.) On September 23, 1874, pursuant to further State legislation enacted that year, the City and the field officers entered into such a lease, and in 1877, construction of the Armory was initiated on a plot of land, bounded by 66th and 67th streets on the north and south and by Park and Lexington Avenues on the east and west (the "Land"). (Compl. ¶ 24.) Pursuant to an 1879 lease between the City and the field officers, the Land and building "are to be `held and used exclusively for an armory and drill rooms by' the Regiment." (Compl. ¶ 26.) No State funds were used in erecting the Armory. The Armory is unique in New York and in the United States in that it was constructed and furnished solely with private funds raised by the active and veteran members of the Regiment. (Compl. ¶¶ 27, 29.) Under a law passed in 1879, the City was required to appropriate funds to furnish heat, light and maintenance of the Armory. The City still pays the Regiment $8,000 per year in respect of such expenses. (Compl. ¶ 25.)

By a State statute passed in 1893, the field officers of the Seventh Regiment were designated as Trustees of the Armory ("Trustees"). (Compl. 28.) The Trustees are responsible for holding the Armory solely and exclusively for the public purposes of the Regiment and are also charged with the duty of maintaining and improving the Armory. (Compl. ¶ 29.) For construction of the Armory alone, members of the Seventh Regiment and the Trustees spent over $600,000. Several private groups affiliated with Regiment members decorated and furnished rooms in the Armory. Regiment members or Trustees also supplied funds to furnish individual rooms of the Armory. Plaintiffs have also decorated and restored portions of the Armory. Ownership of all decorative properties of the Armory so furnished became vested in Veterans or Fund. (Compl. ¶¶ 31-32.) Under a law passed in 1942, the State assumed certain City obligations for upkeep of the Armory. The law did not, however, create an ownership interest by the State in the Armory. (Compl. ¶ 30.)

In or about July of 2000, without the consent or approval of the Trustees, Defendants issued the RFP, purporting to seek a developer for the reuse of the Armory. The RFP purported to offer the Armory on a long term lease to such a developer, "who was invited to use the Armory without regard to the terms of the [1879] Lease, and the rights of the Regiment, the Veterans, the Associates or the Fund in and to the Armory." (Compl. ¶ 33.) In connection with the RFP, the State has asserted that it is the owner of the Armory and that it "`will decide at its sole discretion the make-up of the selection/evaluation team.'" (Compl. ¶ 35.) In response to the RFP, the Conservancy submitted a proposal for the development of the Armory into a "theater and high-end restaurant." (Compl. ¶ 36.)

The Complaint asserts causes of action pursuant to 42 U.S.C. § 1983 for violation of the Due Process and Takings Clauses of the Fifth Amendment to the United States Constitution as well as of the Contracts Clause (Article I, section 10, clause 1) of the Constitution, demands a declaratory judgment with respect to the asserted Fifth Amendment violations, and asserts that Plaintiffs will suffer irreparable injury in the form of property deprivation unless the RFP is "restrained and declared unlawful."

DISCUSSION

As noted above, Plaintiffs' Fifth Amendment Takings Clause claim is the only substantive one they have chosen to pursue.*fn5 Plaintiffs argue that, in issuing the RFP and receiving the Conservancy's proposal, the State Defendants and the Conservancy have impaired or threaten impairment of Plaintiffs' property rights in the Armory and/or its contents. The State Defendants argue that summary judgment in their favor is appropriate because Plaintiffs' Fifth Amendment takings claim is not ripe for adjudication, as Plaintiffs have not yet exhausted state procedures for seeking just compensation; the State Defendants also argue that Plaintiffs lack standing because they have no defensible property or contractual interest in the Armory. The Conservancy seeks dismissal for lack of subject matter jurisdiction on the same grounds, and dismissal on the merits pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for lack of a sufficient allegation of state action with respect to the Conservancy.

To prevail on a motion for summary judgment, the moving party must show that "there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Once the moving party has met its burden, the opposing party, to defeat the motion, must set forth specific facts showing a genuine issue for trial and may not rest on the mere allegations of its pleadings. Franco v. Kelly, 854 F.2d 584, 587 (2d Cir. 1988). In ruling on a motion for summary judgment, the court's function is not to weigh the evidence and ascertain the truth of the matter but, rather, to determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Nonetheless, the existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id. at 247-48.

"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). Where the defendant challenges the factual basis of jurisdiction, a district court may refer to evidence outside the pleadings. See id.; Goodman v. Children's Television Workshop, No. 98 Civ. 8348, 1999 WL 228396, at *2 (S.D.N.Y. Apr. 19, 1999); Exchange Nat'l Bank of Chicago v. Touche Ross & Co., 544 F.2d ...


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