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TZ Manor, LLC v. Daines

July 28, 2009

TZ MANOR, LLC, PONDVIEW CORP., AND PARKFIELD PROPERTIES, PLAINTIFFS,
v.
RICHARD F. DAINES, M.D., COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF HEALTH, ROBERT P. DOUGHERTY, DIRECTOR OF THE NEW YORK STATE DEPARTMENT OF HEALTH, DIVISION OF HOME AND COMMUNITY BASED CARE, JUDITH R. MOONEY, CO-DIRECTOR OF THE NEW YORK STATE DEPARTMENT OF HEALTH, DIVISION OF HOME AND COMMUNITY BASED CARE, MARYBETH FADER, DIRECTOR, ACF CON CERTIFICATION UNIT OF THE NEW YORK STATE DEPARTMENT OF HEALTH, DIVISION OF HOME AND COMMUNITY BASED CARE, KEVIN MAHON, COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF SOCIAL SERVICES, ALAN J. LAWITZ, ESQ., ASSOCIATE ATTORNEY, BUREAU OF HOUSE COUNSEL, NEW YORK STATE DEPARTMENT OF HEALTH, AND THE LONG HILL ALLIANCE COMPANY, INC., DEFENDANTS.



The opinion of the court was delivered by: Kenneth M. Karas, District Judge

OPINION AND ORDER

Plaintiffs TZ Manor, LLC ("TZ Manor"), Pondview Corp. ("Pondview"), and Parkfield Properties ("Parkfield") (collectively, "Plaintiffs") bring this action pursuant to 42 U.S.C. § 1983 ("Section 1983") and state law. Plaintiffs allege, inter alia, that various New York state officials (the "State Defendants") effected a taking of Plaintiffs' property without just compensation and deprived Plaintiffs of due process of law, in violation of the Fifth and Fourteenth Amendments, by taking a variety of actions in connection with the operation of an Adult Home in Nyack, New York, by Defendant Long Hill Alliance Company, Inc. ("Long Hill"). The State Defendants move to dismiss all claims against them, asserting, inter alia, that Plaintiffs' Fifth Amendment takings claim must be dismissed for lack of subject matter jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(1), or in the alternative, for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6); and that Plaintiff's Fourteenth Amendment due process claim must be dismissed for failure to state a claim. For the reasons stated herein, the State Defendants' motion is granted, the Section 1983 claims are dismissed, supplemental jurisdiction over remaining state law claims is declined, and the Complaint is dismissed in its entirety without prejudice.

I. Background

For purposes of this Motion, the Court accepts as true all facts alleged by Plaintiffs in their Complaint.

At issue in this case is real property located at 51 Mountainview Avenue, Nyack, New York (the "Premises"), which contains a 100-bed adult home (the "Adult Home"), a licensed "adult care facility" as defined by N.Y. Soc. Serv. Law § 461 et seq. (Compl. ¶¶ 25-26.) Eleanor Blatt signed a ten-year lease of the Premises in 1996, and in June 1998 she received from the New York State Department of Health ("DOH") an Operating Certificate to operate the Adult Home; she subsequently replaced that lease with a new ten-year lease signed in June 1998. (Id. ¶¶ 34, 40-41, 43.) After Eleanor Blatt's death in 2001, her interest in the Premises passed to her estate's administrator, Andrew Blatt, who continued to operate the Adult Home.*fn1 (Id. ¶¶ 44-45, 47-48.) On or about June 25, 2002, DOH designated Andrew Blatt as the "temporary operator" of the Adult Home, and DOH renewed his "temporary license" until August 14, 2004. (Id. ¶ 49.)

On September 9, 2002, TZ Manor applied to DOH for a "temporary operating license" to operate the Adult Home. (Id. ¶ 32.) On October 4, 2002, Pondview and the Exchange Authority LLP took title as owners of the Premises. (Id. ¶ 25.) Parkfield was subsequently assigned Exchange Authority LLP's interest in the Premises, making Pondview and Parkfield tenants in common. (Id. ¶¶ 29-30.) On February 10, 2003, DOH denied TZ Manor's application for a temporary operating license "on the basis that site control of the Adult Home was in dispute because of an alternate claimant asserting leasehold rights in the Adult Home." (Id. ¶ 32.)

By order dated April 20, 2004, the Supreme Court of New York, Westchester County, "appointed Long Hill as Temporary Receiver and Interim Operator of the Adult Home." (Id. ¶ 52.)*fn2 On July 6, 2004, Defendant Marybeth Fader, a DOH official, notified Long Hill that, effective July 8, 2004, DOH "'authorize[d] the temporary operation'" of the Adult Home by Long Hill, "'pursuant to its appointment'" by the Supreme Court, "'pending review of any applications for an operating certificate that has been or will be submitted.'" (Id. ¶ 53 (quoting Fader).)

By order dated March 3, 2006, the Supreme Court terminated Long Hill's receivership of the Adult Home, effective July 2, 2006, resolving the underlying issue of site control. (Id. ¶¶ 55-56, 59.) Plaintiffs, represented by Robert Almeida, subsequently "sought to take over the operation" of the Adult Home. (Id. ¶ 57.) By letter of October 2, 2006, Almeida stated Plaintiffs' view that "'as of July 2, 2006 there is now no issue of site control,'" and requested that DOH "'promptly approve a temporary operating license for TZ Manor.'" (Id. ¶ 59 (quoting letter).) By letter of October 11, 2006, DOH rejected Plaintiffs' request and "declared its position that Long Hill . . . w[ould] continue to be the lawful temporary operator" of the Adult Home. (Id. ¶ 60.)

By letter of June 6, 2007, Plaintiffs' general counsel Vincent Cuono stated that Long Hill was "'no longer acting on behalf of the Court'" and had "'no current appointment or contract with the owners of the facility'" and "'therefore ha[d] no right to any current fees or payments from us.'" (Id. ¶ 61 (quoting letter).) Cuono's letter stated that "contrary to [Long Hill's] authority" under "'the DOH temporary license,'" "Long Hill has been improperly paying itself and others fees from the funds from the residents of the [Adult Home]." (Id. ¶¶ 63-64 (quoting letter).) The letter stated:

"We have questioned their authority to divert these funds and they have asserted their right to do so based on the authority purportedly delegated to them by the DOH. We have repeatedly requested an expeditious appointment of a temporary license pursuant to Section 485-5 of the Social Services Law, which has been denied to us. If the DOH had any legitimate reason to deny [u]s the temporary license, they could have sought the appointment of a Receiver under Sections 461-f4(a) [sic] of the Social Services Law, which of course, they have not done.

By denying us a temporary license, the DOH has effectively enabled the actions of Long Hill to the detriment of both the residents as well as the owners . . . ." (Id. ¶ 64 (quoting letter).) By letter of June 27, 2007, Defendant Alan J. Lawitz, a DOH attorney, responded that "'Long Hill has been authorized to act as temporary operator pending approval of an application for change of operator,'" and that "'[i]n the absence of other arrangements between the parties for payment of [Long Hill's] services, . . . [DOH] has no objection to use of [a] portion of operational revenue to pay for its services.'" (Id. ¶¶ 66-67 (quoting letter).)

By email of July 17, 2007, Cuono asked Lawitz to "explain the legal or statutory basis for the appointment of [Long Hill] as the temporary operator of [the Adult Home]," stating that "'[t]he owners have neither authorized nor approved any payments to Long Hill post-receivership'" and that "'[i]t is our understanding that all funds seized by Long Hill[] were pursuant to DOH authorization.'" (Id. ¶ 69 (quoting email).) By email of July 24, 2007, Lawitz responded:

Following the termination of the court-appointed receivership of Long Hill . . . , there was a clear need for [DOH] to authorize Long Hill to continue to act as interim operator of [the Adult Home], as there was no other individual or entity that had received [DOH] approval to operate the facility, and [DOH] did not wish to take action to require the closure of the [Adult Home] and transfer of its residents. . . .

[DOH] has authority to issue operating certificates under Social Services Law (SSL) section 460-d . . . . No individual or entity other than the approved operator is legally authorized to participate in the operating revenue of an adult home. . . . In most cases, when the operator does not own the real property, the operator is making rental payments under a lease to the landlord. Because of the . . . circumstances in this case, there is no current lease between the real property owner and the interim operator. . . . As you know, [DOH] is currently reviewing an application for change of operator of [the Adult Home]. . . . We will try to continue to expedite this review.

(Id. ¶ 71.)

On October 3, 2007, DOH approved Part I of TZ Manor's application to become the operator of the Adult Home. (Id. ¶ 72.) Part II of the application remained pending when Plaintiffs filed suit in this Court on April 4, 2008. (Id. ¶ 73.) Plaintiffs named as defendants Long Hill, Fader, Lawitz, the Commissioner of DOH, the ...


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