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Campaniello v. New York State Department of Taxation and Finance

United States District Court, S.D. New York

July 27, 2017

THOMAS CAMPANIELLO, et al., Plaintiffs,



         Plaintiffs Thomas Campaniello (“Thomas”) and Sandra Campaniello (“Sandra”) (collectively, “Plaintiffs”) bring this action against Defendants New York State Department of Taxation and Finance (“Department of Taxation”); New York State Division of Tax Appeals, Tax Appeals Tribunal (“TAT”); Commissioner of Taxation and Finance (“Commissioner”); James H. Tully, Jr. and Roberta Moseley Nero (collectively, “Defendants”), alleging that Defendants violated their constitutional and civil rights under 42 U.S.C. § 1983 and the Fourteenth Amendment. Defendants move to dismiss Plaintiffs' Amended Complaint (“Complaint”) for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). For the following reasons, Defendants' motion is granted.

         I. BACKGROUND

         The following facts are taken from Plaintiffs' Complaint and accompanying exhibits. All uncontroverted facts in the Complaint are construed, and all reasonable inferences are drawn, in favor of Plaintiffs as the party asserting jurisdiction. See Fed R. Civ. P. 10(c); Fountain v. Karim, 838 F.3d 129, 134 (2d Cir. 2016).

         Plaintiffs Thomas and Sandra are happily married and spend at least half their time in separate residences. Thomas lives in Florida in an apartment that he purchased in 1981. With the exception of his family, Thomas's business, social and community ties have been in Florida since at least 2006. Thomas has a Florida driver's license, which he obtained in 1998 and renewed in 2008. He also owns several investment properties in Florida in which Sandra “holds no interest.” Sandra lives in New York in an apartment that she formerly shared with Thomas full time (the “New York Apartment”). Between 2001 and 2006, Thomas and Sandra were separated for more than half of each year, but Thomas frequently traveled -- and continues to travel -- to New York to be with his wife, daughter and grandson.

         On November 19, 2007, Thomas sold one of his Florida properties and realized a capital gain of $5, 392, 445 from the sale, which he reported on his federal tax return. Believing he was a Florida resident, Thomas filed nonresident tax returns in New York for both 2006 and 2007. Sandra filed resident tax returns in New York for both years.

         In 2011, a Department of Taxation auditor determined that Thomas was a New York resident and should have filed a New York resident tax return for 2006 and 2007. The Commissioner served Thomas with a Notice of Deficiency for the 2007 tax year, claiming that Thomas owed the state of New York a $729, 501.39 tax deficiency and penalty for capital gains taxes on the sale of the Florida property.

         Thomas filed a petition challenging the determination of deficiency. On June 25, 2015, an Administrative Law Judge (“ALJ”) issued a determination that Thomas was a domiciliary of New York City in 2007 and thus properly subject to tax as a New York resident for that year. The ALJ found that as of the date of the hearing, Thomas continued to own, maintain and use the New York Apartment. Among numerous other findings, the ALJ also found that Thomas had a pattern of spending a portion of each week in both Florida and New York, worked at a New York office while in New York, continued to see New York doctors, had personal belongings and clothing in the New York Apartment and listed the Bronx as his county of residence on his 2006 nonresident tax form. The ALJ considered Thomas's arguments that he did not live at the New York Apartment and that no negative inference should be drawn from the fact that he and his wife lived in different states, but concluded that Thomas was domiciled in New York City for the relevant tax year.

         Thomas appealed the ALJ's determination to the TAT, arguing (1) that the ALJ's determination was unconstitutional because it denied Thomas his “constitutionally protected right” to live in a different state than his wife, and (2) that he was domiciled in Florida for the 2007 tax year. The TAT considered Thomas's arguments and rejected them in a July 21, 2016, decision written by Defendants Tully and Nero. The TAT found that the New York Tax Law (“Tax Law”) “does not require a husband and his spouse to have the same domicile, ” and that Thomas and Sandra had the right to “live apart together” if desired. However, because the TAT also found that Thomas did not establish that he was a Florida domiciliary within the meaning of the Tax Law, the TAT affirmed the ALJ's determination.

         On November 18, 2016, Plaintiffs filed the above-captioned case asserting one cause of action, a violation of 42 U.S.C. § 1983 and the Fourteenth Amendment of the United States Constitution, and seeking (1) a declaration that “living apart together” is a constitutionally-protected type of marriage, (2) a declaration that Defendants' conduct violated Plaintiffs' constitutional rights to “live apart together” and (3) a “mandatory injunction prohibiting Defendants from applying the [Tax Law] . . . such that it penalizes married parties choosing to ‘live together apart.'” The Complaint alleges that this Court has subject matter jurisdiction based on diversity of citizenship, and federal question jurisdiction over certain civil rights actions. See 28 U.S.C. §§ 1332, 1343(3)-(4).

         Concurrent with the filing of this action, Thomas appealed TAT's decision to the New York Supreme Court Appellate Division, Third Department, alleging that the TAT's decision was arbitrary and capricious under New York law. Thomas did not raise his federal constitutional argument before the Third Department, choosing instead to raise it only in federal court.

         II. STANDARD

         “A district court properly dismisses an action under [Rule] 12(b)(1) for lack of subject matter jurisdiction if the court lacks the statutory or constitutional power to adjudicate it . . . ” Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) (citation and internal quotation marks omitted). “In resolving a motion to dismiss under Rule 12(b)(1), the district court must take all uncontroverted facts in the complaint . . . as true, and draw all reasonable inferences in favor of the party asserting jurisdiction.” Fountain, 838 F.3d at 134 (quoting Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014)). Plaintiffs have the burden of proving by a preponderance of the evidence that the court has subject matter jurisdiction. Id.

         III. ...

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