Opinion
00 CV 2233 (ILG)
May 10, 2000.
MEMORANDUM and ORDER
Alleging violations of its rights to due process and equal protection under the United States Constitution, and of 42 U.S.C. § 1983, plaintiff, Coney Island Resorts, Inc. ("Plaintiff," or "CIR") seeks declaratory and injunctive relief, and specifically, seeks to enjoin the City of New York ("the City") from constructing or authorizing the construction of a minor league baseball stadium in the Coney Island area of the borough of Brooklyn.
On May 1, 2000, oral argument was heard on Plaintiff's applications. The record of that proceeding shows that the Court made the following findings, which are elaborated upon in the discussion that follows: (1) Plaintiff has failed to show that it has a property interest in the land at issue; (2) Plaintiff has failed to show an infringement of any constitutional right premised in such a property interest; and, consequently, (3) plaintiff has failed to show either irreparable harm in the absence of an injunction, or a likelihood of success on the merits should an injunction issue. Accordingly, the Plaintiff's applications for a temporary restraining order and a preliminary injunction were denied, which determination is now ratified by this memorandum and order.
BACKGROUND
Plaintiff is a Delaware corporation authorized to do business in the state of New York. (Complaint at ¶ 5.) According to the allegations of its complaint, Plaintiff was formed for the purpose of constructing an amusement park on certain City-owned property at Steeplechase Park in Coney Island, and subsequently, in 1985, entered into a license agreement with the City to develop and operate such a park. (Id. at ¶¶ 6-8.)
In 1984, in response to a Request for Proposals circulated by the City Parks Department, CIR submitted a proposal to develop and operate an amusement park on the Steeplechase Park site, and it was on the basis of that proposal that the City entered the license agreement with CIR. (Bullard Aff. at ¶¶ 3.)
That agreement contains language providing that CIR "is contemplating acquiring an interest in a parcel . . . adjacent to the Licensed Parcel." (Pl. Exh. B, License Agreement at ¶ 15.) The agreement further provides that CIR is contemplating renovation of a roller coaster located on the adjacent property, and incorporating the roller coaster into its amusement park. (Id.) In the agreement, the City "hereby approves the operation of such an amusement park." The agreement continues:
In the event Licensee [namely, CIR] has acquired an interest in the Adjacent Parcel the parties hereto recognize that Licensee may thereafter wish to apply to the state of New York or any other appropriate authority for legislation or approval authorizing a lease by City to Licensee of the Licensed Premises.
The Agreement generally confers on CIR as licensee exclusive use and occupancy of "certain real property commonly known as Steeplechase Park . . . for purposes of the construction, operation and management of the Licensed Premises as an amusement park." (Pl. Exh. B, License Agreement at § 1.) The Agreement describes certain "Improvements" to the licensed property that CIR undertakes to make, and provides that CIR "shall expend or cause to be expended approximately $2,000,000 for the construction of the Improvements and rehabilitation of the Licensed Premises." (Id. at § 1(c).) The Agreement "shall terminate upon May 1, 1996," and is otherwise subject to termination on notice upon the determination of the NYC Parks Commissioner or Mayor "in their sole and absolute discretion which shall not be exercised in an arbitrary or capricious manner" that "the Licensed Premises are needed for a paramount park use or paramount park purpose." (Id. at 2(a) and (b).) Under the Agreement, CIR has an option to renew its license until May 1, 2006, upon notice of intent to renew within 15 months of its termination. (Id. at § 3.) The Agreement sets forth a schedule of license fees, and provisions concerning a Security Deposit to be deposited by CIR. (Id. at §§ 3-4.) The Agreement further provides that CIR shall secure financing of not less than $3 million. (Id. at § 6.) Finally, the Agreement provides that the Commissioner may terminate the lease under a variety of conditions, mostly relating to material breach of the Agreement, and notably including "[f]ailure to construct all or any part of the Improvements according to the time Schedule set forth in Exhibit D hereof." (Id. at § 9(12).) Schedule D, in turn, lists deadlines and estimated costs for the Improvements earlier referred to, including lighting, permanent and portable toilets, fencing, "Butler-type" fixtures, signs, rides, and other unspecified "amusement rides, arcades and concessions." (Id. at Exh. B C.)
In April, 1994, Joanne Imohiosen of the City's Parks Recreation Department wrote to Horace Bullard, President of CIR, informing him that the license conveyed under the license agreement would be terminated effective April 15, 1994, on account of CIR's failure to comply with its obligation under the agreement to "put, keep, repair and maintain in good repair" the licensed premises. In particular, Ms. Imohiosen's letter made reference to CIR's failure "to proceed with repair and rehabilitation of the Pier" since having been asked to do so in December, 1992. (See Def. Reply Aff., Exh. A.)
Before its license had been terminated, and for the purpose of developing the amusement park contemplated under the licensing agreement, CIR, acting through various subsidiary entities, "obtained control of the fee" of various non-contiguous parcels of real property located in the vicinity of Steeplechase Park. (Complaint at ¶ 10.) But in order to create a single continuous lot upon which to operate its park, CIR had to seek approval from the New York State legislature to lease parkland from the City. (Id. at ¶ 11.) In September, 1988, the legislature gave that approval, in the form of a statute authorizing the City to lease certain City-owned public parkland to CIR, so that it could obtain control of a single lot. (Id. at ¶ 12; Pl. Exh. C, Act of Sept. 1, 1988, ch. 632, 1988 N.Y. Laws 1231.)
The Act provides, in pertinent part, that the City "is hereby authorized and empowered to enter into a long-term lease with Coney Island Resorts, Inc., . . . upon such terms and conditions . . . as may be agreed upon by the city and CIR, whereby CIR is granted the right. to use, occupy or carry on activities in the whole or any part of that certain tract of land . . . commonly known as Steeplechase Park. . . ."Id. at § 1. The Act states that this authorization "shall lapse and be of no effect if the board of estimate does not approve such lease within three years of the date on which this act takes effect, and in any event no later than June thirtieth, nineteen hundred eighty-nine." Id. The Act further provides that the relevant property "shall revert completely and without any encumbrances to, and remain within, the jurisdiction of the city's department of parks and recreation in the event that, after execution of such approved lease, there is a material breach or default with respect to the lessee's obligations thereunder, including material defaults respecting the date set forth in such lease for the completion of the "Improvements" as described therein, and any such default or breach is not cured in accordance with the terms of the lease." Id.
In May, 1989, the City Board of Estimate approved a plan to lease certain Steeplechase Park properties to CIR. (Id. at 14; Pl. Exh. D, Board of Estimate Resolution, May 23, 1989.) Under that plan, the City was authorized to exchange certain Coney Island properties with CIR, and then to lease the property so obtained back to CIR on a 99-year lease for nominal rent. (Board of Estimate Resolution at 5-7.) The Board also authorized the City to lease certain parkland to CIR, pursuant to the terms of the Act of September 1, 1988. (Id. at 7.) The Board set forth detailed terms under which a leasing agreement should be reached with CIR, including terms concerning base rent for the properties, garage rent, real property taxes, a "sales tax fund, " and development of the properties by CIR. Specifically, the Resolution envisioned that CIR would "substantially complete construction [of] a first class amusement park in accordance with plans and specifications approved by the Department of Parks and Recreation" within three years of execution and delivery of the lease. (Id. at 20.) Finally, the Resolution provided that the Corporation Counsel should approve the authorized lease "within 16 months" of its enactment. (Id. at 24.)
The lease agreement authorized by the Board of Estimate was never fully executed, and in the reasons why lie the origins of this action. First, in November, 1990, the City submitted a draft agreement as approved by the Corporation Counsel. (Id. at ¶ 16.) Then, the parties entered into a stipulation extending time to execute the lease until September 25, 1992. (Pl. Exh. E, Letter from Office of the Mayor, July 27, 1992.) As a condition of that extension, Plaintiff agreed to pay the Economic Development Corporation (the "EDC") a sum of $20,000 on behalf of the City. That stipulation further provided that the Plaintiff should execute and deliver a lease agreement to the City no later than September 25, 1992. (Complaint at ¶ 17.)
On September 25, 1992, the Plaintiff delivered an executed lease agreement to the City, and a check for $20,000 to the EDC. (Id. at ¶ 18; Pl. Exhs. F G.) On March 8, 1994 then-Deputy Mayor John S. Dyson wrote to CIR President, Horace Bullard, stating that CIR had "provided no evidence to EDC of any progress in procuring financing." (Pl. Exh. H.) Mr. Dyson indicated that the City had provided extensions of the Board of Estimate's original deadlines for executing the authorized lease agreement "in order to afford CIR additional time to procure firm commitments for construction and permanent financing for the development of the Steeplechase Project," as described in both the Board of Estimate Resolution and the draft lease. (Id.) Mr. Dyson concluded that CIR's failure to obtain financing, or even to "supply evidence that it has submitted a financing application," meant that CIR had "not met the requisite condition of procuring financing, thereby failing to meet the preconditions for executing and delivering the Ground Lease." (Id.) Accordingly, Mr. Dyson served notice on CIR that "as of March 18, 1994, the City hereby terminates negotiations with CIR for the Ground Lease and terminates all right, authority, designation or interest of any kind by CIR in the City-owned Project Parcels." (Id.)
Mr. Dyson also indicated that CIR had "failed to make all the necessary payments required under each of the Extension Letters, resulting in a shortfall of $24,000 that has not been received by EDC as of September 25, 1992." (Pl. Exh. H.) Mr. Dyson refers to a letter dated July 25, 1992 that is not among Plaintiff's exhibits, but is included as an exhibit to the Brown Affidavit in support of defendant's opposition and cross-motion to dismiss, alongside four other letters from the City in which extensions were granted to CIR. (Brown Aff. at ¶ 9, Def. Opp., Exh. C, D, E, F, G.)
In response to the Dyson letter, CIR apparently took the position that its lease with the City was already in force, and that the City had no right "to unilaterally terminate CIR's contract rights under the lease." (Complaint at ¶ 22.) Attempting to enforce that view, CIR brought an action against the City under Article 78 of New York's Civil Practice Law and Rules, seeking an order requiring the City to withdraw the Dyson letter, and to deliver an executed copy of the lease, and a preliminary injunction requiring the City to extend the March 18, 1994 deadline set forth in the Dyson letter. (Id. at ¶ 23.) In the alternative, CIR sought "incidental damages" of $150 million. The request for a preliminary injunction was denied, in an opinion by Justice Carol H. Arber, dated May 1, 1994. Matter of Coney Island Resorts, Inc. v. Dyson, No. 108068/94, slip op. at 2 (Sup.Ct. N.Y. County May 1, 1994).
Justice Arber's opinion begins with a recitation of the events just chronicled above, up to the Dyson letter advising CIR that it was terminating negotiations over Steeplechase Park effective March 18, 1994. She then reviews the legal prerequisites to a grant of injunctive relief, and assesses CIR's arguments that it is entitled to such relief. of particular relevance to this action is the following passage:
[P]etitioner contends that it has executed and delivered the ground lease to the City. However, the so-called executed lease is clearly marked `draft' and it has not been executed by the City. In addition the lease has not been, as required by the Board of Estimate resolution . . . approved as to form by the City Council. Even if the draft had been executed by both sides, effectiveness of the lease was conditioned upon CIR's procuring financing in a form and amount satisfactory to the City. Petitioner acknowledges that financing for the project is still not resolved. Accordingly the execution by petitioner of the draft ground lease without satisfying the balance of the conditions as to financing fails to confer rights upon the petitioner.Matter of Coney Island Resorts, Inc. v. Dyson, No. 108068/94, slip op. at 4. In passing on CIR's failure to show irreparable harm, Justice Arber added that "petitioner has not established that it has a right or interest that is threatened or is about to be violated. . . ." Id. at 5.
According to Plaintiff, talks between CIR and the City were ongoing for an interval following Justice Arber's rejection of CIR's attempt to obtain relief under Article 78. Thus, Plaintiff alleges that in 1998, "CIR was informed that defendant city would not execute the lease executed by CIR in 1992, unless a minor league baseball stadium was provided for in the plans for the family theme park to be constructed by CIR on the subject property." (Complaint at ¶ 24.) Plaintiff further alleges that, despite its attempts to meet this demand, the City and the Mayor were "still not satisfied and demanded other changes." (Id. at ¶ 25.) At the present juncture, however, it may safely be said that the parties are no longer negotiating.
The Bullard Affidavit contains a detailed narrative of the exchanges between Plaintiff, various representatives of the EDC, various City agencies, and the Mayor's Office. According to that narrative, there were vigorous negotiations between the parties aimed at reaching an agreement under which CIR would obtain authorization to develop both an amusement park and a baseball stadium on the site described in the lease that was never executed by the City. The narrative makes just as clear that those negotiations eventually came to nought, resulting in this action, and the state court action referred to below. (Bullard Aff. ¶ 23.)
CIR President Horace Bullard states that when CIR was informed that the Mayor "wants to construct a minor league baseball stadium for the New York Mets on the site . . . CIR reluctantly complied with the demand to amend its plans to include a minor league baseball stadium." (Bullard Aff. at ¶ 15.)
Mr. Bullard specifically alleges that the Mayor required CIR to obtain financing for the new project, but that when it did so, "the City determined that the person brought "on board' to help obtain financing was not acceptable to City Hall." (Bullard Aff. at ¶ 17.) When CIR then "obtained another strategic partner who was financially credible and business-wise ideal for the project . . . the City still made no effort to execute the lease." (Id. at ¶ 18.)
In 1998 the City began in earnest to develop projects that would bring minor league baseball to New York City. (Levy Aff. at ¶ 6, Def. Cross-Mot. to Dismiss, Exh. E.) In short order, a plan for the construction of a Mets minor league stadium focused on the Steeplechase Park properties at issue in this action. (Id. at ¶ 7.) On April 12, 2000, the City Council voted to approve certain zoning, and a concession for the baseball stadium. (Id.) Although the City acknowledges meeting with Mr. Bullard concerning these developments, the sole objective of those meetings, according to the City, was "to give him as an adjacent property owner to the stadium project . . . an audience to present proposals for economic development in the Coney Island area." (Id. at ¶ 8.)
On February 28, 2000, CIR commenced an action against the City in state Supreme Court, seeking a declaration, inter alia, that the draft lease delivered by CIR to the City in September, 1992 constitutes a binding contract; that the City has breached that contract; and that, in light of that breach, CIR's rights and obligations under the contract should be adjusted in various ways. CIR also seeks an order of specific performance of the draft lease, including an order that the City execute the draft lease and return it to CIR. Finally, CIR seeks damages, and consolidation of its action with the still-pending Article 78 proceeding. (State Court Complaint at pp. 23-28, Def. Cross-Mot. to Dismiss, Exh. A.)
The papers submitted in support of CIR's application in this Court do not include any documentary evidence either of the Article 78 proceeding mentioned earlier, or of the pending state court action (an omission rectified by the City's submission in opposition). More importantly, the existence of these actions belies Mr. Bullard's claim in an affidavit submitted in support of the action here, and sworn to under penalty of perjury, that "[n]o prior application for the relief requested herein has been made to this court or to any other court." (Bullard Aff. at ¶ 6 31.)
Plaintiff submits that it has "a constitutionally protectable property interest in the City owned parkland and in the lease to that parkland." (Complaint at ¶ 35.) Plaintiff charges that actions taken by the City and the Mayor have deprived it of property in violation of its rights to due process and to equal protection under the Fourteenth Amendment of the United States Constitution, and in violation of 42 U.S.C. § 1983. Plaintiff further charges that "[s]hould construction commence on the baseball stadium, CIR will be irreparably harmed," inasmuch as there is no way to calculate monetary damages arising from loss of a 99 year lease. (Bullard Aff. at ¶ 26.) On the basis of these allegations, Plaintiff seeks the declaratory and injunctive relief described earlier, as well as punitive damages, costs, and attorneys' fees.
In further support of this allegation, Plaintiff states that through purchases of real property required under the lease, as well as expenses associated with development design, and environmental and traffic studies, it has expended more than $12,000,000 in reliance on the City's representations in the Lease. (Complaint at ¶ 33.)
Plaintiff states that if the City proceeds with construction of the baseball stadium on the parkland sites, CIR will be left with two non-contiguous parcels separated by a baseball stadium, which will be unsuitable for development as an amusement park. (Mem. of Pts. Authorities at 2.)
DISCUSSION
The prerequisites for a grant of a interim injunctive relief are familiar from longstanding precedents. Plaintiff must show that (1) it will suffer irreparable harm in the absence of an injunction; (2) either a likelihood of success on the merits, or sufficiently serious questions going to the merits making them a fair ground for litigation; and (3) a balance of hardships tipping in its favor. Jackson Dairy, Inc. v. H.P. Hood Sons, 596 F.2d 70, 72 (2d Cir. 1979).
Plaintiff's case for injunctive relief stands or falls on whether it has shown that it likely will succeed ultimately in establishing that it has a constitutionally protected property interest in the Steeplechase Park properties at issue. In fact, Plaintiff has failed even to make a facially plausible case that it has such an interest.
To establish a constitutional infringement, Plaintiff must establish a property interest, and property interests are creatures of state law. The Supreme Court explained the point in Board of Regents of State Colleges v. Roth, 408 U.S. 564 (1972):
Property interests, of course, are not created by the Constitution. Rather they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law — rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.Id. at 577. Plaintiff's claim to a protected property interest in the Steeplechase Park properties stands on four legs, none of which withstand scrutiny. Specifically, Plaintiff appeals to: (1) a lease, clearly marked "draft" on its cover page, and executed by Plaintiff but not by the City; (2) a license agreement between it and the Department of Parks and Recreation, that was terminated by the City in April, 1994; (3) its purchase, allegedly with the City's encouragement, of certain properties adjacent to or in the vicinity of the property at issue; and (4) the enactments of the Legislature and the Board of Estimate referred to above. (Pl. Mem. of Law at 7; Def. Reply Aff, Exh. A.) Under the "rules and understandings" of New York property law, none of these premises makes out an entitlement rising to the level of a protected property interest.
In the first place, the purpose of the draft lease was to enable CIR to obtain financing for the development projects contemplated within it, and within negotiations that had been ongoing with the City since 1985. (Brown Aff. at ¶ 9, Def. Opp., Exh. B.) The City evinced no intention to be bound by the lease in its draft form — a conclusion supported not just by the fact that it is clearly marked "draft," and is not signed by any agent of the City, but also by the fact that five times between 1990 and 1992, the City granted to CIR extensions of the deadline contained in the 1989 Board of Estimate resolution. (Id. at ¶¶ 26-29, Exhs. C, D, E, F G.) The letters in which the terms of these extensions are set forth make clear that a condition precedent to the lease is the procurement of financing by CIR "in form and amount satisfactory to the City." (Id. at Exh. C.) Plaintiff does not dispute that it never procured such financing, and thus, cannot dispute that it did not satisfy a condition precedent to the lease. In any event, a lease that by its terms is not to be performed within one year falls within the scope of New York's Statute of Frauds, which requires a writing "subscribed by the party to be charged therewith, or by his lawful agent. . . ." N.Y. Gen. Oblig. Law § 5-701(a)(1). Thus, the draft lease Plaintiff would construe as a protected property interest is not binding on the City even if it did comply with the Statute of Frauds, which it does not. See R.G. Group, Inc. v. Horn Hardart Co., 751 F.2d 69, 77-78 (2d Cir. 1984) (applying New York law, and finding that plaintiff had failed to satisfy the statute of frauds where the writings proffered contradicted alleged oral agreement, and were incomplete); Chatterjee Fund Management L.P. v. Dimensional Media Assocs., 260 A.D.2d 159, 687 N.Y.S.2d 364, 365 (1st Dep't 1999) ("When parties do not intend to be bound until their agreement is reduced to writing and signed, there is no contract in the interim . . . even if the parties have orally agreed upon all the terms of the proposed contract. . . .) (citations omitted and emphasis supplied). See also Mr. Greenjeans Corp. v. Olympia York Properties Co., 525 F. Supp. 1126, 1132 (S.D. N.Y. 1981) (concluding that draft leases and a memorandum adduced as proof of a binding contract in fact "were part of the negotiation process with respect to the lease that was required under [a prior] letter agreement"); Coletti v. Knox Hat Co., 252 N.Y. 468, 472 (1930) ("When the performance of a contract consists in doing (faciendo) on one side, and in giving (dando) on the other side, the doing must take place before the giving."); Brooklyn Central RR Co. v. Brooklyn City RR Co., 32 Barb. 358 (1860 WL 7531 at *7) (N.Y.Sup. Gen. Term) (Brown, J.) (finding no contract between the parties, and concluding that "[s]o long as any one material subject or stipulation of the agreement remained unconsidered and undetermined, it was not obligatory upon either party").
Second, Plaintiff looks to its license agreement with the City. This argument fails for reasons independent of the fact that Plaintiff raises no issue about the City's contention, supported by documentary evidence, that the license was terminated by the City in 1994. The license Plaintiff held is most plausibly interpreted as a license coupled with an interest, because by its terms the license agreement calls for the expenditure of money by the licensee, which expenditure Plaintiff did indeed undertake. See Saratoga State Waters Corp. v. Pratt, 227 N.Y. 429, 442 (1920) ("A license is revocable and carries no interest in the land in or over which it is to be enjoyed. It may become irrevocable through the expenditure of money by the licensee . . . ."); Prosser v. Gouveia, 98 A.D.2d 992, 993, 470 N.Y.S.2d 231, 232 (4th Dep't 1983) ("An irrevocable license coupled with an interest may be found where there is an agreement founded on consideration and the licensee altered his or her position in reliance on the license. . . ."). But this simply means that the license may not be revoked at will. It may be revoked in accordance with its terms for material breach by the licensee, which is apparently what occurred when, after due notice and warnings, the City revoked the license because of Plaintiff's failure adequately to maintain the licensed premises. There is nothing in Plaintiff's submissions to sustain a finding to the contrary.
Third, Plaintiff raises a species of estoppel argument based on its purchase of parcels near the Steeplechase Park parcel for the specific purchase of becoming developer of that site. Again, however, no property interest is discernible in these actions. The City never did anything to assure Plaintiff that he would have a leasehold on and a right to develop the site in issue. Instead, the City engaged in protracted negotiations with Plaintiff, in the hope of eventually crafting a development plan that it could agree to. These hopes never materialized, despite Plaintiff's earnest efforts, including the land purchases. But, as Judge Stanton observed in dismissing another case involving a disappointed developer and City officials accused of constitutional and civil rights violations, the City's "approval was necessary at various stages in the process (for plans and designs, as well as Plaintiff's selection of consultants), and there was no guarantee it would be forthcoming, even in the exercise of good faith." Walentas v. Lipper, 636 F. Supp. 331, 336 (S.D. N.Y. 1986).
Finally, Plaintiff vaguely alludes to the actions of the State Legislature and the Board of Estimate as a basis for its claimed property interest. Inspection of these enactments proves to the contrary. The Legislature's 1988 bill authorizes a long-term lease to CIR, but expressly conditions such a lease on action by the Board of Estimate. The Board of Estimate's resolution in turn authorizes the Mayor or his designee to "execute and deliver the instruments herein described and other instruments which may include such provisions, consistent with such terms and conditions, as the applicable above-named official shall determine to be necessary, appropriate or desirable to effect the transactions herein authorized and the Project herein described. . . ." (Brown Aff. at ¶ 23, quoting Exh. B thereto at ¶ 8.) Plainly, the Board of Estimate resolution does no more than clothe the Mayor and his agents with authority to exercise their discretion to bring a complex transaction to completion, if possible. Even if the resolution created an obligation in the City and the Mayor to negotiate with CIR in good faith, that obligation does not give rise to a property interest protected by the due process clause. Walentas v. Lipper, 636 F. Supp. at 335.
It follows that having failed to establish a property interest in any aspect of its dealings with the City, Plaintiff cannot show either irreparable harm in the absence of an injunction, or a likelihood of success on the merits on his due process or civil rights claims.
Equally unavailing are Plaintiff's theories of constitutional deprivation based on (1) its liberty interests in its development business, and its reputation as a developer, and (2) its right to equal protection. As the analysis already set forth makes clear, Plaintiff can scarcely make out a facially sufficient claim of contractual breach. But even assuming arguendo that Plaintiff can prove a claim of breach, his remedy lies in an action for damages. "The fact that consequential damages of the alleged breach may be severe cannot convert a contract claim into a deprivation of liberty." SD Maintenance Co. v. Goldin, 844 F.2d 962, 970 (2d Cir. 1988).
Plaintiff's equal protection claim is somewhat inscrutable, and merits only summary treatment. To establish an equal protection violation based on selective enforcement, a Plaintiff must show that
(1) the person, compared with others similarly situated, was selectively treated; and (2) that such selective treatment was based upon impermissible considerations such as race, religion, intent to inhibit or punish the exercise of constitutional rights, or malicious or bad faith intent to injure a person.Lisa's Party City, Inc. v. Town of Henrietta, 185 F.3d 12, 16 (2d Cir. 1999) (citation omitted).
The fatal flaw of Plaintiff's equal protection claim here is his failure to identify any group of others, similarly situated, in comparison with whom it was selectively treated. Developers are "de-designated" by the City from time to time, for a variety of reasons, including the ones indicated here — namely, failure to obtain sufficient City-approved financing for the proposed project. Plaintiff has offered no proof that his being de-designated was in any way unusual as compared with the cases of other developers, and no proof either that the City harbored improper or discriminatory motives in dealing with CIR. Indeed, the record would seem to show to the contrary: the City appears to have given CIR every opportunity over the course of more than a decade to make good on its representations and declarations of intent. Yet CIR was not able to do so. It is understandably frustrated by this failure, but such feelings hardly suffice to sustain an equal protection claim. Accordingly, Plaintiff fails on any theory to make a case that it will likely succeed in showing a violation of its constitutional rights, or that it will suffer irreparable harm in the absence of an injunction. Therefore, Plaintiff's application for interim injunctive relief must be denied.
Plaintiff has also filed a complaint, alleging the same constitutional violations already discussed, as well as violations of 42 U.S.C. § 1983, and seeking punitive damages and costs. In response, the City moves to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief may be granted.
In argument in support of its motion, the City adds that "[t]he fact that plaintiff also instituted a separate prior pending action in New York Supreme Court, New York County, to litigate the same alleged contractual claims further bars this action." (Def. Mem. of Law at 16.) This observation evidently relates to the 1994 Article 78 proceeding. But, under New York law "[t]he granting or refusal of a temporary injunction does not constitute . . . an adjudication on the merits, and the issues must be tried to the same extent as though no temporary injunction had been applied for." Walker Memorial Baptist Church, Inc. v. Saunders, 285 N.Y. 462, 474 (1941); see also J.A. Preston Corp. v. Fabrication Enter., Inc., 68 N.Y.2d 397, 402 (1986) ("[T]he granting of a temporary injunction serves only to hold the matter in statu quo until opportunity is afforded to decide upon the merits. . . . In addition, since the injunction order lay in the discretion of the [court below], the decision thereon was not appealable to this court . . . and the proceeding is not material here.") (citations omitted). Thus, it appears that this Court is constrained from according preclusive effect to Justice Arber's denial of a preliminary injunction in CIR's 1994 action under Article 78, pursuant to the Full Faith and Credit Statute, 28 U.S.C. § 1738. See Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 80-85 (1984) (holding that § 1738 also mandates the application of claim and issue preclusion to constitutional claims raised in context of an action under 42 U.S.C. § 1983); Kremer v. Chemical Constr. Corp., 456 U.S. 461, 466 (1982) (federal courts are required "to give the same preclusive effect to state court judgments that those judgments would be given in the courts of the State from which the judgments emerged.").
In adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration to "facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken." Allen v. Westpoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991). Where matters outside the pleading are introduced by either or both parties on a motion to dismiss, Rule 12(b) contains this provision governing how the district court should proceed:
If, on a motion [to dismiss for failure to state a claim], matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provide in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.See also Leonard F. v. Israel Discount Bank of New York, 199 F.3d 99, 107 (2d Cir. 1999) (reversing grant of a 12(b)(6) motion where district court had considered factual matters outside the pleading and had failed to convert to a summary judgment motion). Here, both parties have submitted copious materials outside the pleading, including affidavits, documents, correspondence, and judicial filings. Accordingly, the City's motion to dismiss is hereby converted into a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, and both parties are put on notice that the Court will hear oral argument on the City's motion thus converted on May 26, at 10:00 a.m. Should the parties wish to supplement their submissions to date with additional material or argument pertinent to the disposition of the motion, they should arrange a briefing schedule between themselves and have courtesy copies of all submissions delivered to chambers no later than May 19, at 5:00 p.m.
Although neither party raises the issue, this case appears to present circumstances in which principles of abstention might have applied. One of the first principles of abstention doctrine is that a federal district court has a duty to stay its hand, particularly in the exercise of its equity jurisdiction, where the resolution of a federal constitutional question may be avoided if a definitive ruling on the state issues presented would terminate the controversy. Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496, 498-501 (1941). In an action filed just two months ago in Kings County Supreme Court, Plaintiff has sought wide-ranging relief, including declaratory, injunctive, and other equitable relief, as well as damages. CIR also seeks to consolidate its action with the Article 78 proceeding pending since 1994. As the above analysis makes clear there are many state law "rules or understandings" in play in this case, Board of Regents of State Colleges v. Roth, 408 U.S. at 577, deriving both from the actions of state and city government, and from state law principles of contract and property. The situation could conceivably be analogized to the one in Pullman, where "a federal court of equity is asked to decide an issue by making a tentative answer which may be displaced tomorrow by a state adjudication." 312 U.S. at 500.
CONCLUSION
For the foregoing reasons, the Plaintiff's application for a temporary restraining order and preliminary injunction is denied, and the defendant's motion to dismiss for failure to state a claim is converted to a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, to be fully briefed no later than 5:00 p.m. on May 19, 2000, and heard on oral argument on May 26, 2000 at 10:00 a.m.SO ORDERED.