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Lewis v. Smith

United States District Court, Second Circuit

June 4, 2013

WILLIAM D. LEWIS, Plaintiff,
STEVEN SMITH, et al., Defendants.


LORNA G. SCHOFIELD, District Judge.

Plaintiff William D. Lewis sued Steven Smith and Oak Point Properties, LLC ("Oak Point") for breach of contract, unjust enrichment, breach of fiduciary duty, an accounting, and declaratory judgment. Defendants previously moved to dismiss for improper service and failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). District Judge Barbara S. Jones denied Defendants' Rule 12(b)(6) motion but required Plaintiff to effectuate proper service on Defendants. The case was then transferred to this Court. The Court invited Defendants to file the instant motion to dismiss for lack of subject matter jurisdiction after a status conference where the subject was raised. 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). For the reasons stated below, Defendants' motion to dismiss is DENIED.

I. Background

This case centers on the development of 27 acres of land located at One Oak Point Avenue in the Bronx, New York (the "Property"). (Compl. ¶ 8.) The Property was owned by Britestarr Homes Inc. ("Britestarr"), which filed for Chapter 11 bankruptcy protection in 2001. (Compl. ¶ 9.) As part of Britestarr's Chapter 11 reorganization plan (the "Britestarr Plan"), the Bankruptcy Court approved the transfer of the land to ABB Equity Ventures ("ABB"). Id. In 2002, Defendants Smith and Oak Point negotiated their purchase of the Property from ABB. (Compl. ¶ 10.) Although the Complaint is unclear, it appears that ABB never took title to the Property, but rather transferred to Defendants Smith and Oak Point ABB's right to purchase the Property from the Britestarr estate.

Plaintiff alleges that in 2002 or early 2003, he and the Defendants entered into an oral agreement to form a joint venture or partnership whereby the Plaintiff would help Defendants develop the Property. (Compl. ¶ 11.) Plaintiff alleges that, pursuant to the agreement, he was to receive a share of the proceeds from the eventual sale of the Property. (Compl. ¶ 12.) Between 2003 and 2005, the parties attempted to develop the Property into a power plant. (Compl. ¶¶ 14, 16.) In 2004, the parties attracted Keyspan Energy Corporation as a major investor in the power plant, but eventually the deal with Keyspan fell through. (Compl. ¶¶ 19, 22.) In 2007, the City of New York announced a plan to condemn the Property. (Compl. ¶ 23.)

On July 7, 2009, the Property was transferred from Britestarr to Smith and Oak Point pursuant to the Britestarr Plan. (Compl. ¶ 24.) In August 2010, Plaintiff advised the Defendants to consider developing the Property as a data center complex. (Compl. ¶ 25.) Plaintiff alleges that at that point, Defendants disclaimed his interest in the Property in violation of their agreement. (Compl. ¶¶ 26-27.) On November 30, 2010, the Defendants sold the Property to a real estate developer for $22.3 million. (Compl. ¶ 27.) Plaintiff then brought this suit, seeking to recover what he believes to be his rightful share of the profits from the sale of the Property.

Defendants now argue that this Court lacks subject matter jurisdiction for three reasons: first, Plaintiff lacks standing, a jurisdictional requirement, because he failed to file a proof of claim in the bankruptcy court preserving his interest in the Property; second, the Property was sold pursuant to the Bankruptcy Court's Consummation Order "free and clear of any and all encumbrances, obligations, liabilities, interests, contractual commitments [and] claims;" and third, the Bankruptcy Court retained exclusive jurisdiction to interpret and enforce the provisions of the Consummation Order.

II. Discussion

A. Legal Standard

On a motion to dismiss for lack of subject matter jurisdiction, the complaint "will be construed broadly and liberally." 5B Fed. Prac. & Proc. Civ. § 1350 (3d ed.) (2013). The plaintiff has the ultimate burden of establishing subject matter jurisdiction. A motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) is an appropriate mechanism for challenging a plaintiff's constitutional standing to bring a particular claim. See W.R. Huff Asset Mgmt. Co., LLC v. Deloitte & Touche LLP, 549 F.3d 100, 104 (2d Cir.2008); MacIssac v. Town of Poughkeepsie, 770 F.Supp.2d 587, 593 (S.D.N.Y. 2011).

B. Analysis

The Defendants' arguments rely on the flawed premise that the Britestarr Plan bears on this case. Plaintiff brings suit against Defendants Smith and Oak Point for breach of fiduciary duty, breach of contract, unjust enrichment and an accounting. It is legally irrelevant that Plaintiff's alleged rights as to Smith and Oak Point grew from the development of the Property previously owned by Britestarr. Plaintiff brings no claims against the Property or Britestarr. None of Plaintiff's claims arise out of an obligation from Britestarr to the Plaintiff. The Defendants' arguments are addressed in turn.

i. Standing

Defendants argue that Plaintiff lacks standing to bring this case. To meet the "case-orcontroversy" requirement of Article III, a plaintiff must establish that he has standing to bring suit. Raines v. Byrd, 521 U.S. 811, 818 (1997) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). Standing requires a plaintiff to demonstrate a "personal stake in the outcome of the litigation." Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 543-44 (1986). Formulated as a three-part test, a plaintiff must show that (1) he has suffered an "injury in fact;" (2) the injury is traceable to the defendant; and (3) the injury can be redressed by a favorable decision. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000). Plaintiff has alleged clear ...

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