United States District Court, N.D. New York
FRANK J. PERGOLIZZI, ESQ.. PETER A. PFOHL, ESQ., SLOVER & LOFTUS, Washington, DC. Counsel for Plaintiff,
JOSEPH A. CAMARDO, JR., CAMARDO LAW FIRM, P.C., Auburn, NY. Co-Counsel for Plaintiff.
DAVID G. LINGER, ESQ., JAMES P. YOUNGS, ESQ., HANCOCK ESTABROOK, LLP, Syracuse, NY. Counsel for Defendants,
DECISION and ORDER
GLENN T. SUDDABY, District Judge.
Currently pending before the Court, in this action for declaratory and injunctive relief filed by JGB Properties, LLC ("Plaintiff") against Ironwood, LLC, and Steelway Realty Corporation ("Defendants"), are the following four motions: (1) Defendants' motion in limine to exclude the hearing testimony of Plaintiff's expert witness, John F. Betak (Dkt. No. 31); (2) Plaintiff's motion for a preliminary injunction pursuant to Fed.R.Civ.P. 65 (Dkt. No. 2); (3) Defendants' motion to dismiss for lack of subject-matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) and/or for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6) (Dkt. No. 11); and (4) Defendants' motion for sanctions pursuant to Fed.R.Civ.P. 11(b) and their letter-motion for the Court to consider their Fed.R.Civ.P. 12 reply memorandum of law in deciding their motion for sanctions (Dkt. Nos. 34, 38). For the reasons set forth below, Defendants' motion in limine is granted; Plaintiff's motion for a preliminary injunction is denied; Defendants' motion to dismiss is granted; and, while Defendants' lettermotion for the Court to consider their Fed.R.Civ.P. 12 reply memorandum of law (in deciding their motion for sanctions) is granted, their motion for sanctions is denied.
I. RELEVANT BACKGROUND
A. Summary of Plaintiff's Complaint
Liberally construed, Plaintiff's Complaint alleges that Defendants are wrongfully pursuing an action against Plaintiff for declaratory relief and damages (arising from Plaintiff's alleged unlawful interference with Defendants' railroad easement by inappropriately removing railroad tracks from that easement) in New York State Supreme Court, Onondaga County,  which has wrongfully issued judgments awarding Defendants compensatory damages of $195, 763.22 and punitive damages of $300, 381.50,  despite the fact that it does not have subjectmatter jurisdiction over the action because the Interstate Commerce Commission Termination Act of 1995, 49 U.S.C. § 10101 et seq. ("ICCTA"), vests exclusive jurisdiction over "the construction, acquisition, operation, abandonment or discontinuance of... [certain types of tracks] or facilities" in the Surface Transportation Board ("STB"), in which a parallel proceeding is currently pending. (Dkt. No. 1.)
Generally, based on these allegations, the Complaint asserts three claims against Defendants: (1) a claim for a judgment declaring that the New York State Supreme Court, Onondaga County, lacks subject-matter jurisdiction over Defendants' pending action; (2) a claim for a preliminary injunction enjoining Defendants from pursuing further state court relief and/or enforcing state court judgments that relate to the issues currently pending before the STB, and staying any such actions pending the STB's rulings on Plaintiff's petition; and (3) a claim for a permanent injunction enjoining Defendants from enforcing, or attempting to enforce, any state court judgment that is inconsistent with the STB's rulings in Plaintiff's currently pending action there. ( Id. )
B. Summary of Parties' Arguments on Pending Motions
1. Defendants' Motion in Limine to Exclude Expert Testimony
Generally, in their memorandum of law in chief, Defendants argue as follows: (1) to the extent that Dr. John F. Betak's testimony includes a description of the railroad lines, operations, and facilities in the subject area (as stated in Part I.1. of Plaintiff's witness list), that testimony is not admissible pursuant to Fed.R.Evid. 402 because it is irrelevant to the issues now before the Court (in that it was repeatedly rejected by the state court and, in any event, is barred from consideration by the doctrines of claim preclusion and/or issue preclusion); and (2) to the extent that Dr. Betak intends to offer testimony on the nature of the pending proceeding before the STB (as stated in Part I.1. of Plaintiff's witness list), that subject is a question of law on which the Court needs no expert opinion (especially given the record evidence of the parties' claims before the STB) and on which Dr. Betak is not qualified to opine. (Dkt. No. 31.)
Generally, in its opposition memorandum of law, Plaintiff argues as follows: (1) Defendants are incorrect in stating that the issues upon which Dr. Betak testified were conclusively decided in prior New York State Court between Plaintiff and Defendants (and, indeed, address the critical separate inquiry that should have been answered before any railroad track was constructed on the easement, namely, whether Defendants had a legal right to construct a common carrier railroad on that easement); (2) Dr. Betak's testimony concerning his STB submissions is relevant to this Court's understanding of the issues presented (specifically, how the issues before the STB differ from the issues before, and decided by, the state court); (3) Dr. Betak's testimony that the subject rail track was a common carrier track, and that the rail property was in such a state of disrepair that it was his opinion it had been constructively abandoned, should not be barred as legal opinions; and (4) Defendants' late-filed motion should be denied because Defendants were afforded a full opportunity to cross-examine Dr. Betak at the hearing and thus the denial of the motion will not prejudice Defendants' interests. (Dkt. No. 29.)
2. Plaintiff's Motion for a Preliminary Injunction
Generally, in its memorandum of law in chief, Plaintiff argues as follows: (1) this Court has the authority to issue the requested injunctive relief because the Court's jurisdiction is concurrent with that of the STB under 49 U.S.C. § 10502; (2) Plaintiff satisfies the preliminary injunction requirements because (a) it is likely to succeed on the merits (in that it has a substantial likelihood of prevailing on its claim that the STB has exclusive jurisdiction to determine the underlying issue of whether the rail line was unauthorized or de facto abandoned), (b) it will suffer irreparable harm absent the issuance of injunctive relief (in that it will continue to be "subjected to a protracted state court process before a body lacking in jurisdiction" and it will be deprived of the "right to obtain expert agency relief"), and (c) the public interest weighs in favor of granting injunctive relief (in that the public has a strong interest in having a comprehensive federal regime for considering rail line construction, and in having uniformity of standards governing rail issues and operations); (3) the requested relief is permitted by the Anti-Injunction Act and All Writs Act because (a) an injunction is authorized by the ICCTA, and (b) an injunction is necessary in aid of the Court's jurisdiction; and (4) the Court should dispense with the bond requirement, because (a) the underlying judgments are already secured by more than $500, 000 in cash undertakings, and (b) the injunction is necessary to preserve the court's jurisdiction. (Dkt. No. 2, Attach. 5 [Plf.'s Memo. of Law].)
Generally, in their opposition memorandum of law, Defendants argue as follows: (1) Plaintiff's Complaint is subject to dismissal pursuant to Fed.R.Civ.P. 12(b)(1), and there is no likelihood that it will succeed on the merits, because (a) the Complaint is barred by the Rooker-Feldman doctrine, (b) the Complaint is precluded in its entirety by the doctrines of res judicata and collateral estoppel in light of New York State court's prior judgments and decisions governing the subject of this suit, (c) the Court should abstain from considering Plaintiff's Complaint under the Younger doctrine (given that the New York State courts have provided an adequate venue for all of Plaintiff's constitutional arguments), (d) the Complaint, by seeking permanent injunctive relief, is barred by the Anti-Injunction Act, and (e) Plaintiff's Petition before the STB is irrelevant to a determination of its motion for a preliminary injunction and will in any event be denied; (2) Plaintiff will not suffer irreparable harm without a preliminary injunction because, even if it loses in state court, it will merely suffer a monetary loss easily compensable by money damages; and (3) equity and public policy dictate that the Court deny Plaintiff's motion for a preliminary injunction because (a) Plaintiff egregiously destroyed the railroad line and interfered with Defendants' easement rights, and (b) Plaintiff's aim in all of this is to use the ICCTA perversely to deny rail service and to limit railroad transportation. (Dkt. No. 16 [Defs.' Opp'n Memo. of Law].)
Generally, in its reply memorandum of law, Plaintiff argues as follows: (1) Defendants do not dispute that the Court has authority to issue the requested relief, and their usurpation-ofstate-court-jurisdiction-argument is diversionary and baseless; (2) Defendants provide no credible arguments against the granting of injunctive relief, because (a) Plaintiff is likely to succeed on the merits (in that Defendants' lack-of-subject-matter-jurisdiction arguments and res judicata and collateral estoppel arguments are wholly without merit), (b) Plaintiff will suffer irreparable harm absent the issuance of injunctive relief (in that in it will be denied its right to pursue its claim under the ICCTA before the appropriate entity, the STB, in the first instance), and (c) the public interest weighs in favor of granting injunctive relief (for the reasons Plaintiff stated in its memorandum of law in chief); and (3) Defendants' other opposing arguments are unavailing because (a) they completely ignore the All Writs Act, (b) their arguments regarding the Anti-Injunction Act are weak and irrelevant, and (c) their Rooker-Feldman and Younger arguments are unavailing (in that the Anti-Injunction Act and ICCTA provide a statutory restraint on the use of both doctrines, Plaintiff is not seeking appellate review for purposes of the Rooker-Feldman doctrine, and there is no state interest at stake for purposes of the Younger doctrine). (Dkt. No. 21 [Plf.'s Reply Memo. of Law].)
On February 11, 2015, the Court held a hearing on Plaintiff's motion, during which Plaintiff adduced the testimony of its expert witness (Dr. John F. Betak, Ph.D.), the parties submitted hearing exhibits, and counsel for the parties offered oral argument on the motion (in which they elaborated on various of their above-described arguments). (Dkt. No. 28 [Hrg. Tr.]; Hrg. Exs.)
3. Defendants' Motion to Dismiss for Lack of Subject-Matter Jurisdiction and/or for Failure to State a Claim
Generally, in their memorandum of law in chief, Defendants argue as follows: (1) the Court lacks subject-matter jurisdiction over the Complaint under 28 U.S.C. § 1257 and the Rooker-Feldman doctrine, because the Complaint constitutes an appeal from unfavorable state court judgments and orders; (2) in the alternative, the Complaint is precluded by the disposition of the state court litigation, pursuant to 28 U.S.C. § 1738 (also known as the Full Faith and Credit Act) and the doctrines of res judicata and/or collateral estoppel; (3) again in the alternative, the Court must abstain from considering the Complaint under the Younger doctrine, because the state courts provided an adequate forum for consideration of Plaintiff's preemption argument; (4) again in the alternative, the Complaint is barred by the Anti-Injunction Act, because (a) a federal injunction of state court proceedings is not expressly authorized by the ICCTA (given both the language and legislative history of the ICCTA), and (b) an injunction is not "necessary in aid of" the Court's jurisdiction (given that the Court has not acquired jurisdiction over disposition of real property); and (5) the All Writs Act (which is relied on by Plaintiff in its motion for a preliminary injunction) does not raise an issue separate from that raised by the Anti-Injunction Act, because the Anti-Injunction Act is a limitation on the authority granted federal courts by the All Writs Act to issue injunctions generally. (Dkt. No. 11, Attach. 1 [Defs.' Memo. of Law].)
Generally, in its opposition memorandum of law, Plaintiff argues as follows: (1) the Court has subject-matter jurisdiction over Plaintiff's Complaint because the injunctive relief requested therein is authorized by the ICCTA (which confers on this Court concurrent jurisdiction to determine the matters raised in Plaintiff's STB Petition), the Anti-Injunction Act (whose predecessor, the Interstate Commerce Act, authorizes this action and renders the injunction necessary to aid the Court's jurisdiction) and the All Writs Act (which was "completely ignored" by Defendants); (2) Plaintiff has stated claims upon which relief can be granted under the ICCTA; (3) Defendants' res judicata and collateral-estoppel arguments are unavailing, because (a) this federal court action does not involve the same cause of action as the state court action, (b) any issues decided in the state courts pertaining to preemption were "secondary or incidental" to Defendants' claims there, and (c) in any event, Congress did not intend to give state court determinations res judicata or collateral estoppel effect over railroad matters; (4) Defendants' Rooker-Feldman arguments are unavailing, because (a) Plaintiff is not seeking appellate review of any issue that was properly addressed and decided by the state court, (b) a key rationale underlying the doctrine (i.e., that state courts are as competent as federal courts to decide federal constitutional issues) does not apply in this case, and (c) the doctrine has been significantly diluted over recent years; and (5) Defendants' Younger arguments are unavailing, because (a) the doctrine applies only if important state interests are involved (which is not the case here), (b) the doctrine applies to only a limited number of state court civil proceedings (none of which is present here), and (c) the state court proceedings did not offer the parties an adequate opportunity to raise the claims currently before the STB. (Dkt. No. 30 [Plf.'s Opp'n Memo. of Law].)
Generally, in their reply memorandum of law, Defendants argue as follows: (1) Plaintiff fails to provide any authority for either precluding application of the Rooker-Feldman doctrine or demonstrating subject-matter jurisdiction in this case, because (a) Plaintiff's argument that it is not asking for a rejection of any state court judgment is undermined by its request in its Complaint that the Court "[e]nter judgment declaring that the State Court judgments... are invalid and unenforceable" ( see Dkt. No. 1, at 16, ¶ C), and (b) under the circumstances, the ICCTA does not provide a distinct federal claim that is unrelated to the state court proceeding;
(2) Plaintiff acknowledges that the state court decisions and judgments must be given preclusive effect, and fails to address the consequences of preclusion in this case; (3) Plaintiff fails to provide any authority supporting its assertion that this Court may enjoin state court proceedings (under the ICCTA) despite the prohibition of the Anti-Injunction Act (but cites only a Fifth Circuit case from 1969 that applies dead-letter law); and (4) Plaintiff fails to explain how the state court exceeded its authority or otherwise failed to offer Plaintiff a full opportunity to raise all federal issues as contemplated in the Younger doctrine. (Dkt. No. 32 [Defs.' Reply Memo. of Law].)
4. Defendants' Motion for Sanctions
Generally, in their memorandum of law in chief, Defendants argue as follows: (1) Plaintiff's Complaint and motion for a preliminary judgment violate Fed.R.Civ.P. 11(b)(2) because Plaintiff's claims and legal contentions are not warranted by existing law in that (a) its claims are facially violative of the Rooker-Feldman doctrine, (b) this lawsuit is barred by the prior state court judgments, which are accorded preclusive and res judicata effect in this Court, and (c) there is no basis for Plaintiff's assertion that the ICCTA provides a statutory or jurisdictional exception to the Anti-Injunction Act; and (2) Plaintiff and its counsel have violated Fed.R.Civ.P. 11(b)(1) because this lawsuit was brought for the improper purpose of harassing Ironwood and subjecting it to persistent vexatious litigation and legal costs. (Dkt. No. 34, Attach. 4 [Defs.' Memo. of Law].) As relief, Defendants request "no less than the cost of legal fees incurred in bringing its motion to dismiss the frivolous ...