The opinion of the court was delivered by: Amon, United States District Judge
Defendant Selma Weiss has to dismiss this action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiffs Victor and Cathy Negron have sued Weiss, claiming ownership of the property at issue, 99-72 66th Road, Apartment 9-Z, Rego Park, New York (the "Apartment"). Among other forms of relief, the Negrons request a judicial declaration that they are the lawful owners of the Apartment and damages in the amount of $400,000. Weiss argues that the Negrons are judicially estopped from asserting any legal or equitable claim to the Apartment as they failed to disclose such claims in a prior bankruptcy proceeding. For the reasons set forth below, this Court agrees.
The Negrons filed suit in the Supreme Court of the State of New York, County of Queens, on February 8, 2006. On March 21, 2006, Weiss removed the action to this Court, asserting diversity jurisdiction under 28 U.S.C. § 1332.
It is unclear from the Negrons' complaint and brief in opposition to the motion to dismiss whether they are asserting that they have a legal right to the Apartment or whether they are asserting that they are entitled to the Apartment under principles of equity. The undisputed facts reveal that the Apartment, a unit in a cooperative building, was purchased on April 14, 2000, using a $35,000 down payment furnished by Weiss and a mortgage obtained in her name. (Compl. at ¶ 12, 14, 15.) The cooperative stock and proprietary lease appurtenant thereto were issued in Weiss' name. However, Victor and Cathy Negron, the son-in-law and daughter of Weiss, lived in the Apartment and paid the mortgage and maintenance fees. (Id. at ¶ 10, 16, 23.)
On October 30, 2003, the Apartment was refinanced in the Negrons' name. (Id. at ¶ 18.) The Negrons filed for a Chapter 7 petition for bankruptcy in June 2004, but did not list the Apartment as an asset or otherwise state that they had any legal or equitable claim to the Apartment. (Chapter 7 Voluntary Petition of Victor R. Negron and Cathy R. Negron, Attached as Ex. B to the Decl. of Jeremy N. Kudon ("Kudon Decl. Ex. B").) On October 4, 2004, the Negrons were discharged in bankruptcy.
In their complaint, the Negrons assert that they purchased the Apartment on April 14, 2000, and that Weiss "has no real interest in and to the premises." (Id. at ¶ 12, 23.) The Negrons assert that the down payment of $35,000 was "advanced" by Weiss to her daughter, Cathy Negron, and that the Apartment "was at all of the times herein mentioned to be owned and occupied by the Plaintiff(s) and their children." (Id. at ¶ 14, 17.) The Negrons further assert that they paid Weiss a sum of $45,486.13 on October 30, 2003, when they refinanced the Apartment. (Id. at ¶ 18.) The Negrons claim that this constituted a repayment of the $35,000 down payment, plus interest, such that they are "the rightful and lawful owners" of the Apartment. (Id. at ¶ 29.) However, despite these factual assertions, which seem to state a claim to actual legal ownership of the Apartment, the Negrons request that this Court declare "their right, title and interest in" the Apartment via a "constructive trust and/or equitable lien." (Id. at ¶ 24.) Furthermore, in their response to Weiss' motion to dismiss, the Negrons argue that they have an "equitable interest in" the apartment.
Under Rule 12(b)(6), a complaint should be dismissed "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." Patel v. Searles, 305 F.3d 130, 135 (2d Cir. 2002) (internal quotations omitted). When determining the sufficiency of a complaint under Rule 12(b)(6) purposes, "consideration is limited to the factual allegations in plaintiffs'  complaint, which are accepted as true, to documents attached to the complaint as an exhibit or incorporated in it by reference, to matters of which judicial notice may be taken, or to documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit." Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993) (citations omitted). If "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 [of the Federal Rules of Civil Procedure], and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion . . . ." Fed. R. Civ. P. 12(b). The conversion of a Rule 12(b)(6) motion into one for summary judgment "is governed by principles of substance rather than form. The essential inquiry is whether the [opposing party] 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, 295 (2d Cir. 1985).
As discussed below, the Negrons have presented an affidavit in connection with their opposition to Weiss' motion to dismiss in which they attempt to explain the failure to disclose the Apartment during the bankruptcy proceedings. Weiss bases her motion to dismiss on an equitable doctrine, the doctrine of judicial estoppel. The Court must in equity consider the Negrons' explanation of why this doctrine should not apply. Thus, the Court will consider the Negrons' affidavit and will convert the motion to dismiss into a motion for summary judgment. Because the Negrons included an affidavit outside the pleadings in their response to the motion to dismiss, they should have recognized the possibility that the motion to dismiss might be converted into a motion for summary judgment. Furthermore, Weiss was afforded the opportunity to address the affidavit in her reply brief and both parties were afforded the opportunity to address the affidavit at oral argument. Finally, Weiss is not prejudiced by our conversion of the motion, as that motion for summary judgment is granted, for reasons explained below.
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Belfi v. Prendergast, 191 F.3d 129, 135 (2d Cir. 1999). When considering a motion for summary judgment, "[t]he court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in his favor." L.B. Foster Co. v. America Piles, Inc., 138 F.3d 81, 87 (2d Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). Nevertheless, the non-moving party cannot rest on "mere allegations or denials" but must instead "set forth specific facts showing there is a genuine issue for trial." Fed. R. Civ. P. 56(e). No genuine issue exists "unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (citations omitted).
The doctrine of judicial estoppel prevents a party from "asserting a factual position in a legal proceeding that is contrary to a position previously taken by him in a prior legal proceeding." Bates v. Long Island R.R. Co., 997 F.2d 1028, 1037 (2d Cir. 1993); see also New Hampshire v. Maine, 532 U.S. 742, 749 (2001) ("Where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position . . . .") (quoting Davis v. Wakelee, 156 U.S. 680, 689 (1895)). Judicial estoppel aims to "preserve the sanctity of the oath by demanding absolute ...