Opinion
Index No. 158766/2020 Motion Seq. Nos. 020 021 NYSCEF Doc. No. 438
01-11-2024
GREGG SINGER, SING FINA CORP., 9TH AND 10TH STREET LLC, Plaintiff, v. BILL DE BLASIO, NEW YORK CITY DEPARTMENT OF BUILDINGS, AARON SOSNICK, PAUL WOLF, EAST VILLAGE COMMUNITY COALITION, INC., GEORGE ARTZ COMMUNICATIONS, INC., HR&A ADVISORS, INC., Defendant.
Unpublished Opinion
DECISION + ORDER ON MOTION
ANDREW BORROK, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 020) 354, 355, 356, 357, 358, 359, 360, 361,362, 363, 364, 365, 366, 367, 368, 369, 370, 371, 372, 373, 374, 375, 376, 415 were read on this motion to/for AMEND CAPTION/PLEADINGS
The following e-filed documents, listed by NYSCEF document number (Motion 021) 416, 417, 418, 419, 420, 421,422, 423, 424, 425, 426, 427, 428 were read on this motion to/for AMEND CAPTION/PLEADINGS
Upon the foregoing documents, the Plaintiffs' motion (Mtn. Seq. No. 020) is denied. Reference is made to (i) a Decision and Order dated April 20, 2022 (the Prior Decision;
NYSCEF Doc. No. 105), pursuant to which this Court granted the Defendants' motions to dismiss to the extent of dismissing the causes of action for tortious interference with contractual relations and prima facie tort and (ii) a Decision and Order of the Appellate Division dated April 6, 2023 (the Appellate Division Decision; NYSCEF Doc. No. 348) pursuant to which the Appellate Division modified the Prior Decision to the extent of dismissing the cause of action for prospective business relations and otherwise affirmed the Prior Decision. Familiarity with the underlying facts is presumed. Terms used herein but otherwise not defined shall have the meaning ascribed thereto in the Prior Decision.
In the Appellate Division Decision, the Appellate Division held:
This appeal is the latest in extensive litigation involving the development and use of a five-story building located at 605 East 9th Street in Manhattan. Plaintiffs purchased the property at auction from the City of New York in 1999 and they allege that, for more than twenty years, their efforts to develop the property have been wrongfully thwarted by defendant Aaron Sosnick. In their complaint, plaintiffs allege that Sosnick funded the non-profit East Village Community Coalition, Inc to oppose their development efforts and hired HR&A Advisors, GAC and Wolf to further interfere with development of the property. Plaintiffs contend that, as a result of this interference, non-party Adelphi University exercised its right to terminate a lease for the property, and plaintiffs subsequently defaulted on a loan with non-party Madison Realty Capital.
The motion court properly dismissed plaintiffs' claim for tortious interference with contractual relations in the absence of allegations that Adelphi University and Madison Realty Capital breached their agreements with plaintiffs as a result of defendants' interference (see NBT Bancorp v Fleet/Norstar Fin. Group, 87 N.Y.2d 614, 620-621 [1996]). As alleged, plaintiffs executed the lease with Adelphi, and procured a loan from Madison, with the expectation that defendant Department of Buildings (DOB) would approve the lease and issue a permit for the construction of a school dormitory by a date certain. However, after DOB delayed in approving the lease and in issuing a permit, Adelphi terminated the lease, and Madison subsequently foreclosed on the loan upon plaintiffs' default. Plaintiffs' lease with Adelphi and the Madison loan were dependent upon DOB's approval of the Adelphi lease and issuance of a permit. When plaintiffs were unable timely to secure DOB's approval of the Adelphi lease and a permit Adelphi properly exercised its right under the lease to terminate. Similarly, when plaintiffs defaulted on the loan, Madison properly exercised its right under the loan agreement to foreclose. These actions did not constitute breaches of the respective agreements with plaintiffs and therefore cannot be the basis of a tortious interference with contract claim (see NBT Bancorp, 87 N.Y.2d at 622-623).
The cause of action for tortious interference with prospective business relations should have been dismissed because defendants' conduct, as alleged, did not rise to the level of culpable conduct sufficient to support the claim (see Carvel Corp., v Noonan, 3 N.Y.3d 182, 189-192 [2004]). Plaintiffs' allegations that DOB's delay in approving the lease and denial of the permit was the result of political corruption and improper influence are speculative and lack specificity (see Matter cf Soames v 2LS Consulting Eng'g, D.P.C., 187 A.D.3d 490, 491 [1st Dept 2020]).
Additionally, the City defendants are entitled to immunity from plaintiffs' claims seeking damages because the denial of a permit is a discretionary act (see Haddock v City cf New York, 75 N.Y.2d 478, 484 [1990]; see also Singer v City cf New York, 417 F.Supp.3d 297, 322-323 [SD NY 2019]). The proper judicial vehicle to challenge their delay and denial of the permit is through a CPLR article 78 proceeding, given that the underlying claim involved allegations that DOB exceeded its jurisdiction and violated lawful procedure (see California Suites, Inc. v Russo Demolition, Inc., 98 A.D.3d 144, 153-154 [1st Dept 2012]). The Sosnick defendants, Wolf, and GAC are also entitled to immunity from liability for their lobbying activities under the Noerr-Pennington doctrine (see Villanova Estates, Inc. v Fields ton Prep. Owners Assn., Inc., 23 A.D.3d 160, 161 [1st Dept 2005]) and the anti-Sl, APP (Strategic Lawsuit Against Public Participation) statute (see Hariri v Amper, 51 A.D.3d 146, 150-151 [1st Dept 2008])(NYSCEF Doc. No. 348, at 2-4).
Prior to the issuance of the Appellate Division Decision, the Plaintiffs filed an amended complaint dated May 31, 2022 (the AC; NYSCEF Doc. No. 142) alleging causes of action for (i) tortious interference with existing business relations (first and fourth causes of action), (ii) tortious interference with prospective business relations (second cause of action), (iii) breach of the implied covenant of good faith and fair dealing (third cause of action), and (iv) prima facie tort (fifth cause of action). After the Appellate Division Decision was issued, the Court signed four orders to show cause (NYSCEF Doc. Nos. 325-328) staying discovery in this case and ordering briefing of the Defendants' motions to dismiss the AC. The Plaintiffs then removed this case to the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) (NYSCEF Doc. No. 333) and the pending motions were denied as moot (NYSCEF Doc. No. 335). This case was then remanded by the Bankruptcy Court by decision and order dated August 17, 2023 (NYSCEF Doc. No. 351).
The Plaintiffs move seeking to file a second amended complaint alleging causes of action for (i) nuisance (first cause of action), (ii) civil racketeering (second cause of action), (iii) breach of contract or breach of the implied covenant of good faith and fair dealing (third cause of action), (iv) tortious interference with actual and prospective business advantage (fourth cause of action), and (v) prima facie tort, in the alternative (fifth cause of action).
On a motion to amend, the moving party must show that the proffered amendment is not palpably insufficient or clearly devoid of merit (MBI Ins. Corp., v Greystone & Co., Inc., 74 A.D.3d 499, 500 [1st Dept 2010]). In considering a motion to amend, the court should examine the proposed cause of action and should deny the motion where the proposed pleading fails to state a cause of action or is palpably insufficient as a matter of law (Davis & Davis v Morson, 286 A.D.2d 584, 585 [1st Dept 2001]).
The Plaintiffs' motion to file a second amended complaint is denied because the claims in the SAC are palpably insufficient as a matter of law.
As an initial matter, the SAC fails because the Appellate Division already held that (i) the City Defendants are entitled to immunity because the denial of a permit is a discretionary act and the proper vehicle for the Plaintiffs to challenge the delay and denial of the permit is through a CPLR Article 78 proceeding and (ii) the Sosnick Defendants, Mr. Wolf, and GAC are entitled to immunity under the Noerr-Pennington doctrine.
The cause of action for tortious interference with actual and prospective business advantage can not be properly reasserted because it was previously dismissed by the Appellate Division and the SAC does not remedy the deficiencies identified by the Appellate Division. In the Appellate Division Decision, the Appellate Division held that there was no claim for interference with contractual relations because there was no allegation that Adelphi or Madison breached their agreements with the Plaintiffs as a result of the Defendants interference. Importantly, the Appellate Division held that this claim failed because the actions taken by Adelphi and Madison did not constitute breaches of their agreements with the Plaintiffs such that they could not form the basis for a tortious interference claim. Although the SAC purports to add additional facts to support its claims that the Defendants acted improperly, they fail to identify any breach that supports its claim for tortious interference with contractual relations. The Appellate Division also held that the claim for tortious interference with prospective business relations failed because the Defendants' conduct did not rise to the required level of culpable conduct, citing Carvel Corp, v Noonan, 3 N.Y.3d 182, 189-192 (2004). The Appellate Division also held that the allegations that the DOB's delay in approving the lease and denial of the permit was the result of political corruption and improper influence were too speculative and lacked specificity. In Carvel Corp., the Court of Appeals held that the level of culpable conduct to give rise to a claim for tortious interference with prospective business relations must be criminal or independently tortious, or otherwise must be for the sole purpose of inflicting intentional harm on the plaintiffs (id., at 190). As before, the conduct alleged in the SAC does not rise to the requisite level of culpability and is otherwise too speculative to support this claim. The RICO claim in this case also fails. To sustain a RICO claim, a plaintiff must show (i) that the defendant (ii) through the commission of two or more acts (iii) constituting a pattern (iv) of racketeering activity (v) directly or indirectly invests in, or maintains an interest in, or participates in (vi) an enterprise (vii) the activities of which affect interstate or foreign commerce (Williams v Affinion Group, LLC, 889 F.3d 116, 123-124 [2d Cir 2018]). A plaintiff also must show that the defendant's violation of the Rico statute caused an injury to their business or property (Cruz v FX Direct Dealer, LLC, 720 F.3d 115, 120 [2d Cir 2013]).
The RICO claim is premised on the argument that (i) Mr. Sosnick filed tax returns materially misrepresenting EVCC's level of public support as close to 100% when most of its funding came from Messrs. Rosen and Sosnick, (ii) Mr. Sosnick used EVCC's 501(c)(3) status to conceal his personal agenda, and (iii) Mr. Sosnick abused EVCC's tax-exempt status by having EVCC claim to be a local charity opposing the Plaintiffs' plans when in fact Mr. Sosnick was pursuing his personal agenda. The SAC alleges that the requisite enterprise centers around EVCC and includes Messrs. Rosen and Sosnick and was aided by people claiming to represent EVCC. The SAC also alleges that Mr. de Blasio engaged in "additional predicate acts" by making public statements that constitute economic extortion and larceny by extortion. Because the alleged RICO violation is the filing of false tax returns, the SAC fails to allege an enterprise extending beyond the Sosnick Defendants. The SAC also fails to allege (i) any impact on interstate or foreign commerce, (ii) the alleged RICO violation, i.e., the filing of false tax returns, with sufficient specificity, (iii) any connection between the alleged enterprise and its alleged violations and Mr. de Blasio's alleged "additional predicate acts" and (iv) any nexus between the alleged violation and the alleged fraudulent scheme or any damages to the Plaintiffs. The RICO claim is therefore palpably insufficient as a matter of law.
The nuisance claim is also palpably insufficient as a matter of law. To state a claim for nuisance a plaintiff must allege an interference (i) substantial in nature, (ii) intentional in origin, (iii) unreasonable in character, (iv) with a person's property right to use and enjoy land, (v) caused by another's conduct in acting or failure to act (Wlody v Birch Family Services, Inc., 210 A.D.3d 1036, 1037 [2d Dept 2022]). The allegations in the SAC are that the DOB's denial of permits constitutes a nuisance because the permit would have allowed the Plaintiffs to make the best use of the property. The Appellate Division has already held that the denial of the permit was a discretionary act and that the proper venue to challenge that denial is a CPLR Article 78 proceeding. As such, it can not form the predicate for a nuisance claim.
The breach of contract claim against the City also fails for the same reason. An Article 78 is the proper vehicle for challenge. Even if this were not case, the claim would be palpably insufficient because nothing in the Indenture required the City to approve the permit such that their discretionary denial can not constitute a breach of contract.
To state a claim for prima facie tort, a plaintiff must allege that the intent was motivated solely by malice or disinterested malevolence (Diorio v Ossining Union Free School Dist., 96 A.D.3d 710, 712 [2d Dept 2012]). Where any other motive other than a desire to injure the plaintiff exists, a prima facie tort can not lie (Smith v Meridian Tech., Inc., 86 A.D.2d 557, 559 [2d Dept 2011]; see AREP Fifty-Seventh, LLC v PMGP Assoc., LP, 115 A.D.3d 402, 408 [1st Dept 2014]). As the SAC concedes, the Defendants allegedly had other motivations besides injuring the Plaintiffs, including their own self-interest. Thus, the claim is palpably insufficient and the motion to amend the complaint to file the SAC is denied.
The Plaintiffs' motion (Mtn. Seq. No. 021) to amend to add supplemental pleadings purporting to set out a history of the City's nonenforcement of the "Dorm Rule" since 2005 and its purported history of bias in favor of an independent student housing service called EHS is also denied. As discussed in the Appellate Division Decision and set forth above, the proper venue for the Plaintiffs to challenge the denial of permits is a CPLR Article 78 proceeding. Thus, the motion is denied.
It is hereby ORDERED that the motions to amend are denied.