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Panzella v. City of Newburgh

United States District Court, S.D. New York

February 8, 2017

JOHN PANZELLA and JOEMARK ENTERPRSES, LLC, Plaintiffs,
v.
CITY OF NEWBURGH, Defendant.

          Michael H. Sussman, Esq. Sussman & Watkins Goshen, NY Counsel for Plaintiffs.

          David L. Posner, Esq. McCabe & Mack LLP Poughkeepsie, NY Counsel for Defendant.

          OPINION & ORDER

          KENNETH M. KARAS UNIJED STATES DISTRICT JUDGE.

         Plaintiffs John Panzella (“Panzella”) and Joemark Enterprises, LLC (“Joemark”) (collectively, “Plaintiffs”) filed this Action pursuant to 42 U.S.C. § 1983 against the City of Newburgh (the “City”), alleging that the City denied them equal protection of the law out of a malicious, bad-faith intent to destroy their businesses. (Am. Compl. ¶ 3 (Dkt. No. 13).)[1] Before the Court is the City's Motion To Dismiss the Amended Complaint (the “Motion”) pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 19.) For the reasons explained herein, the City's Motion is granted.

         I. Background

         A. Factual Background

         The following facts are taken from the Amended Complaint, and are taken as true for purposes of the Motion.[2]

         Panzella is the owner and president of Joemark. (Am. Compl. ¶ 1.) In 2000, he purchased the River Rose, a 64-foot New Orleans paddle-wheel cruise boat, for the purposes of hosting passengers on trips along the Hudson River from a dock in the City of Newburgh. (Id. ¶ 4.) Joseph Bonura (“Bonura”), “a prominent Newburgh restauranteur, ” initially served as Panzella's business partner in the operation of the River Rose, but Panzella bought him out in 2001. (Id. ¶¶ 5-6.) Following that transaction, Bonura “became extremely hostile to [P]laintiffs' business plans.” (Id. ¶ 6.)

         In 2002, Plaintiffs began seeking approval to install a dock to park the River Rose on municipal property at the Newburgh waterfront. (Id. ¶ 7.) That process continued until mid-2003, when the City of Newburgh Planning Board (“Planning Board”) unanimously “granted approval of [P]laintiffs' site plan subject only to their securing all necessary approvals and permits from Federal and State regulatory agencies with jurisdiction over the project.” (Id. ¶ 13 (internal quotation marks omitted).) Then, on March 29, 2004, the Newburgh City Council (“City Council”) authorized the City Manager to enter into an agreement and lease with Joemark “to allow for the construction and use of a dock with a buy back to the City of the completed dock for $1.00.” (Id. ¶ 15.) Plaintiffs and the City entered into an agreement (the “Agreement”) on April 5, 2004, whereby the City agreed to allow Panzella to build a dock at 70 Front Street, Newburgh, for the River Rose, to sell back the dock to the City for $1.00 once it was completed, and to then lease the dock for up to 20 years. (Id. ¶ 16.) The Agreement further provided that the River Rose “shall have the right . . . to connect to and make use of necessary utilities at the waterfront, specifically: electricity, water supply[, ] and sewage disposal.” (Id. ¶ 19 (internal quotation marks omitted).)

         After the Agreement was signed, businesses operating along the waterfront in Newburgh, including one owned by Bonura, expressed strong opposition to Plaintiffs' operation. (Id. ¶¶ 20- 21.) The City, responding to the pressure exerted by these businesses, refused to comply with the terms of the Agreement. (Id. ¶ 22.) It falsely claimed that Plaintiffs' building plans for the dock were invalid and denied that it was required to provide utilities for Plaintiffs' use. (Id.)

         Plaintiffs commenced building the dock contemplated by the Agreement in April 2004 after filing an application for and paying for a building permit. (Id. ¶ 23.) After three months of construction, the City, “under pressure [from] the [aforementioned] business interests, ” issued a stop work order. (Id. ¶ 24.) Panzella went and spoke to the City's building inspector, who issued a new building permit. (Id. ¶ 26.) One week later, however, the building inspector issued a second stop work order. (Id. ¶ 27.)

         Other waterfront businesses continued to oppose the construction of the dock during this period. The restaurant owners threatened to shut down all parking at the waterfront and to file a lawsuit against the City. (Id. ¶ 28.) Furthermore, in mid-April 2004, Rizzo, one of Plaintiffs' competitors, told Klein that “anyone who attempted to help John Panzella in obtaining his dock, will be looked upon with disfavor by the officials of the City of Newburgh and other members of the waterfront area.” (Id. ¶¶ 29-30 (internal quotation marks omitted).)[3] Rizzo directed Klein to send a letter to the City's Building Department stating that the original building plans submitted for the dock were not actually building plans, but were only design plans. (Id. ¶ 30.) Klein complied with this request. (Id. ¶ 31.)

         In mid-June 2004, counsel for the businesses that opposed Plaintiffs' operations demanded that the City deny Plaintiffs' utility site plan. (Id. ¶ 32.) Shortly thereafter, counsel for these entities also demanded that the City shut down construction of the dock, citing Klein's revocation of his signature from the submitted building plans. (Id. ¶ 34.) In August 2004, Plaintiffs' competitors filed an Article 78 proceeding seeking the revocation of the Planning Board's approval of Plaintiffs' project and Plaintiffs' opponents on the City Council introduced a resolution to rescind the Agreement. (Id. ¶¶ 35, 38.) The resolution, however, was tabled. (Id. ¶ 38.) In light of these actions, the City Manager declared that the City was in a holding pattern with regard to allowing Plaintiffs to finish the dock. (Id. ¶ 36.)

         As a result of the stop work orders and the opposition to the project, Plaintiffs hired a new architect to draw a building plan for the dock. (Id. ¶ 39.) The City, however, continued to frustrate Plaintiffs' attempt to finish the dock. (Id. ¶ 41.) Specifically, the City's building inspector claimed that the newly drafted plans were inadequate because they did not contain an original signature and seal even though the plans were allegedly in compliance with those requirements. (Id. ¶ 42.) In March 2005, the building inspector allegedly rejected the plans because they were not signed and stamped and did not include certifications for the work that had already been completed. (Id. ΒΆ ...


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