STEPHANATOS v. WAYNE TOWNSHIP et al

Filing 61

OPINION fld. Signed by Judge Faith S. Hochberg on 4/15/13. (sr, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
__________________________________________
:
BASILIS N. STEPHANATOS,
: Civil Action No. 12-1793 (FSH)
:
Plaintiff,
:
:
v.
: OPINION
:
WAYNE TOWNSHIP, et al.,
:
: Date: April 15, 2013
Defendants.
:
__________________________________________ :

HOCHBERG, District Judge:
This matter comes before the Court upon a motion to dismiss Plaintiff’s Complaint by all
Defendants pursuant to Fed. R. Civ. P. 12(b)(6), on the grounds that Plaintiff’s claims are barred
by res judicata and failure to state a claim for which relief can be granted. The Court has
considered the motion and reviewed the submissions of the parties pursuant to Fed. R. Civ. P. 78.
I. BACKGROUND
A. Statement of Facts
Plaintiff, Basilis Stephanatos, was a Wayne township property owner. Plaintiff has
challenged local taxation at least three prior times, filing lawsuits in federal courts and New
Jersey state courts alleging constitutional and tort causes of action. 1 Here, Plaintiff opposes the

1

Plaintiff challenged the federal government’s ability to tax in Stephanatos v. United States, 81
Fed. Cl. 440 (2008), (granting the government’s motion to dismiss Plaintiff’s Complaint), aff’d,
306 F. App’x 560 (Fed. Cir. 2009). Plaintiff again challenged the government’s ability to tax in
Stephanatos v. Cohen, 06-1310, 2006 WL 2872519 (D.N.J. Aug. 7, 2006) (dismissing Plaintiff’s
Complaint and denying Plaintiff’s motions), aff’d, 236 F. App’x 785 (3d Cir. 2007). Plaintiff

payment of the local portion of his taxes going toward education since he does not have children.
Additionally, Plaintiff claims that Defendants took part in a conspiracy to rig bids and allocate
markets for the sale of Tax Sale Certificates in New Jersey in order to suppress competition to
obtain municipal tax liens offered at public auctions at non-competitive interest rates.
On September 27, 2005, the Tax Collector for Wayne Township conducted the statutorily
required public tax sale for unpaid taxes for the year 2004. 2 The Tax Collector determined that
Plaintiff owed $866.06 at the time of the tax sale. Defendant, American Tax Funding, LLC
(“ATF”), purchased the lien on Plaintiff’s property at the September 27 tax sale. ATF paid the
delinquent taxes on Plaintiff’s property for two years, at which time ATF could foreclose on the
property pursuant to N.J.S.A. 54:5-86.
ATF retained Defendant Robert Del Vecchio, Esq. (“Del Vecchio”), to carry through
with the foreclosure on the lien of Plaintiff’s property. Del Vecchio and ATF served Plaintiff by
certified mail with a Notice of Intent to Foreclose on December 23, 2008, notifying Plaintiff that
a foreclosure action would commence and that he had the opportunity to redeem the lien within
30 days.
ATF filed a Tax Sale Foreclosure Complaint in the Superior Court of New Jersey on
February 18, 2009, to foreclose on Plaintiff’s property. In response, Stephanatos filed an Answer
and Counterclaim, alleging that he had paid all municipal taxes because school taxes are not
municipal taxes and he should not have to pay them. ATF then filed a Motion to Strike the
also filed a tax appeal in the Tax Court of New Jersey, again challenging the constitutionality of
New Jersey’s system of funding for schools and specifically challenging his real estate taxes for
the year 2004. Stephanatos v. Township of Wayne, 007234-2005 (N.J. Tax June 23, 2006)
(dismissing Plaintiff’s Complaint and denying Plaintiff’s motion for summary judgment), aff’d,
0941-06T5, 2008 WL 723782 (N.J. Super. Ct. App. Div. Mar. 19, 2008).
2

The Tax Collector properly published notices of the tax sale on September 1, September 8,
September 15, and September 22 of 2005. A tax sale is when a municipality sells a lien on
property with unpaid taxes.
2

Contesting Answer and allow the foreclosure to proceed uncontested. On June 12, 2009, the
Honorable Margaret Mary McVeigh, P.J.Ch., denied ATF’s Motion to Strike without prejudice,
and stayed the tax sale foreclosure for four months on the condition that by June 19, 2009,
Stephanatos would file a Complaint in Lieu of Prerogative Writs in the Law Division requesting
adjudication of the issues relating to the constitutionality of the assessments on his property.
On June 16, 2009, Plaintiff filed a Complaint in Lieu of Prerogative Writs in the Superior
Court of New Jersey, Law Division, against Township of Wayne, Wayne Township Tax
Collector, Wayne School District Board of Education, and the State of New Jersey. On February
19, 2010, the Honorable Joseph J. Riva dismissed the Plaintiff’s Action in Lieu of Prerogative
Writs.3 Judge Riva added that Plaintiff was barred from ever re-litigating the issues and claims
raised in the Complaint in Lieu of Prerogative Writs against any or all of Defendants in that
action.
After Judge Riva’s dismissal of the Action in Lieu of Prerogative Writs, ATF re-filed a
motion in the tax sale foreclosure matter requesting that Judge McVeigh, based on the ruling of
Judge Riva, strike the contesting Answer and allow the tax sale foreclosure to proceed. On April
27, 2010, Judge McVeigh entered an Order permitting the tax sale foreclosure to proceed.
On January 14, 2011, the Foreclosure Unit of the Superior Court of New Jersey entered
an Order setting the amount, time, and place of repurchase for Plaintiff, noting that March 2,
2011, would be the last day Plaintiff could buy back the property before foreclosure. Plaintiff
neither bought the lien nor paid his delinquent taxes, which resulted in the Tax Collector
executing a Certification of Non-Redemption on April 18, 2011. On May 13, 2011, Final
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Specifically, Plaintiff argued in the Writ that Defendants: (1) violated the Equal Protection
Clause; (2) refused or failed to provide the fair share of funding to the Wayne Public Schools; (3)
violated the Due Process Clause; (4) violated the Just Compensation Clause; and (5) violated the
Commerce Clause.
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Judgment was entered in favor of ATFH Real Property, LLC, an ATF subsidiary to which ATF
assigned its lien. 4 That same day, the Foreclosure Unit of the Superior Court of New Jersey
issued a Writ of Possession, which was sent to the Passaic County Sheriff requesting that a date
be arranged for a lockout of Plaintiff. The Sheriff scheduled a lockout for June 28, 2011, and
provided written notice to Plaintiff.
On June 28, 2011, the Passaic County Sheriff’s Office attempted to execute the Writ of
Possession. Defendants Corporal Ron Lucas (“Lucas”), Officer Victor D’Agostino
(“D’Agostino”), Lieutenant Nick Mango (“Mango”), and Captain Fred Ernst (“Ernst”) arrived at
Plaintiff’s property early that morning. Upon Lucas and D’Agostino approaching the front door,
Lucas saw that the front door was open and noticed a “metal type ammunition box” on the
second step of the porch, which he thought could have been “some type of explosive device.”
After D’Agostino warned Lucas that someone was moving inside the house, Lucas observed a
man walking toward the front door with a “black barreled rifle” raised toward Lucas. Lucas and
D’Agostino took cover, and Mango requested that a SWAT team be activated. Plaintiff was
taken into custody by SWAT team members and transported to the Wayne Township Police
Headquarters, where he was charged with unlawful possession of a weapon, aggravated assault,
creating a risk of widespread injury or damage, and hindering apprehension.

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Plaintiff filed an appeal of this Final Judgment; however, it was dismissed on October 12, 2011,
when Plaintiff did not pay the $200.00 filing fee. Plaintiff, additionally, attempted to appeal this
matter to the Supreme Court of New Jersey. On July 14, 2011, a staff attorney from the Supreme
Court of New Jersey wrote a letter to Plaintiff notifying him that he must follow the Rules of
Court and proper appeal procedure in order to file an appeal to the Supreme Court of New
Jersey. Furthermore, Plaintiff requested an Order to Stay the eviction from Judge McVeigh,
which was denied on June 28, 2011. On June 30, 2011, Plaintiff requested Judge McVeigh to
stay Plaintiff’s removal from the property pending appeal. Judge McVeigh denied the second
request on June 30, 2011.
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B. Procedural History
Plaintiff filed this suit on March 23, 2012, against the Township of Wayne, the Wayne
Township Tax Collector, the Mayor of Wayne Township, ATF, Del Vecchio, the County of
Passaic, and County Sheriff’s Officers Lucas and D’Agostino. Plaintiff asserts thirteen counts in
his Complaint: violations of the Fifth Amendment (Counts 1 and 4), violations of the Equal
Protection Clause (Count 2), violations of the right to Due Process (Count 3), violations of the
Commerce Clause (Count 5), violations of the Fourth Amendment (Counts 6, 7, and 8),
conversion of property (Count 9), civil conspiracy pursuant to 42 U.S.C § 1985 (Count 10),
neglect to prevent civil conspiracy pursuant to 42 U.S.C. § 1986 (Count 11), negligent and
intentional infliction of emotional distress and failure to train (Count 12), and violations of the
right to Due Process pursuant to the state-created danger doctrine (Count 13). 5
Defendants now move to dismiss Plaintiff’s Complaint pursuant to the doctrine of res
judicata and failure to state a claim for which relief can be granted.
II. DISCUSSION
Defendants advance two primary arguments that allow for the dismissal of Plaintiff’s
Complaint pursuant to Fed. R. Civ. P. 12(b)(6): (1) the doctrine of res judicata bars Plaintiff from
bringing these claims; and (2) Plaintiff fails to state a claim for which relief can be granted.
To survive a 12(b)(6) motion to dismiss “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
A court should accept as true all of the factual allegations, as well as all reasonable inferences,
5

Plaintiff also submitted a Motion to Supplement the Record on October 17, 2012. However,
this Motion is in direct violation of this Court’s June 13, 2012 Order prohibiting the parties from
amending pleadings and adding parties. Accordingly, the Motion to Supplement the Record is
denied.

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reasonably drawn from the complaint, and view them in the light most favorable to the plaintiff.
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). Under the Iqbal standard,
the Court must conduct a two-part analysis:
First, the factual and legal elements of a claim should be separated. The District
Court must accept all of the complaint's well-pleaded facts as true, but may
disregard any legal conclusions. Second, a District Court must then determine
whether the facts alleged in the complaint are sufficient to show that the plaintiff
has a “plausible claim for relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 21011 (3d Cir. 2009) (quoting Iqbal, 556 U.S. at 679).
A pleading that “offers labels and conclusions or a formulaic recitation of the elements of a cause
of action” will not meet the Iqbal standard. Iqbal, 556 U.S. at 678 (internal quotation marks
omitted). In evaluating a Fed. R. Civ. P. 12(b)(6) motion to dismiss, “a court must consider only
the complaint, exhibits attached to the complaint, matters of public record, and undisputedly
authentic documents if the complaint’s claims are based on those documents.” Mayer v.
Belichick, 605 F.3d 223, 230 (3d Cir. 2010). Additionally, the affirmative defense of res
judicata may be raised in a Fed. R. Civ. P. 12(b)(6) motion to dismiss. Rycoline Prod. v. C & W
Unlimited, 109 F.3d 883, 886 (3d Cir. 1997).
A. Claims Barred by Res Judicata
Res judicata prohibits reexamination of matters decided in a prior case, as well as those
matters that the parties could have, but did not assert in that earlier action. Edmundson v.
Borough of Kennett Square, 4 F.3d 186, 189 (3d Cir. 1993). The Third Circuit prefers a broad
definition of res judicata that “encompasses both claim and issue preclusion.” United States v. 5
Unlabeled Boxes, 572 F.3d 169, 174 (3d Cir. 2009). Issue preclusion forecloses future litigation
of an already litigated and decided matter, while claim preclusion prevents litigation of a matter
that has not been actually litigated but could have been presented to the court in an earlier suit.
Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1 (1984)

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The doctrine of res judicata requires three factors: “(1) a final judgment on the merits in a
prior suit involving, (2) the same parties or their privies; and (3) a subsequent suit based on the
same cause of action.” Board of Trustees of Trucking Employees v. Centra, 983 F.2d 495, 504
(3d Cir. 1992). When res judicata is invoked against a plaintiff who has at least twice asserted
essentially the same claims against different defendants, courts have enlarged the scope of res
judicata. Bruszewski v. United States, 181 F.2d 419, 422 (3d Cir. 1950).
Here, Plaintiff’s Counts 1 through 5 and 10 through 13, which all stem from Plaintiff’s
challenge to the constitutionality of his taxes, have been decided on the merits and each Judge to
consider the issue found no support for Plaintiff’s factual allegations. In the New Jersey Tax
Court’s 2006 ruling in Stephanatos v. Township of Wayne, the Court dismissed Plaintiff’s claims
of constitutional violations as to his gross income tax because they were “without merit” and
untimely. Again in the 2010 decision in New Jersey Superior Court, the Court dismissed
Plaintiff’s Complaint in its entirety after reviewing the case on the merits, and additionally
barred Plaintiff from ever re-litigating the issues raised in the Complaint. 6 Additionally, Plaintiff
has raised similar tax-related claims in his two federal court cases, in which all claims were
dismissed with prejudice. Stephanatos v. United States, 81 Fed. Cl. 440 (2008); Stephanatos v.
Cohen, 06-1310, 2006 WL 2872519 (D.N.J. Aug. 7, 2006).
In addition, Defendants have privity with one another because Plaintiff has asserted, at
least twice, essentially the same claims against different defendants and thus the requirement of
privity is lessened. Bruszewski, 181 F.2d at 422. Therefore, the parties involved are the same or

6

The specific issues raised in Plaintiff’s Complaint were: (1) violation of the Equal Protection
Clause; (2) refusal or failure to provide the fair share of funding to the Wayne Public Schools;
(3) violation of the Due Process Clause; (4) violation of the Just Compensation Clause; and (5)
violation of the Commerce Clause.

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have enough relation to meet the standard required under Bruszewski because the parties are
those that were involved, or could have been involved, in earlier suits under the same claims. Id.
Therefore, the privity standard amongst Defendants is met here.
This new suit is based on the same principle as the earlier causes of action, though it may
raise several different individual claims. Thus, the third prong of res judicata is met since it is
the same general cause of action as those raised earlier. Because Plaintiff’s earlier Complaints
span a breadth of adjudicated claims, and because res judicata also precludes matters that could
have been litigated at an earlier time, all of Plaintiff’s claims are dismissed under the doctrine of
res judicata, except for Plaintiff’s claims regarding the conversion of his property (Counts 6-9),
which had not occurred until after this Complaint was filed.
B. Remaining Claims
Plaintiff’s remaining claims are dismissed because he has failed to state a claim with
respect to his Fourth Amendment and conversion of property claims (Counts 6-9). Dismissal for
failure to state a claim is not warranted unless the theory of the claim is such that it can be shown
to be a factual impossibility from the face of the pleadings. Bell Atl. Corp. v. Twombly, 550
U.S. 544, 561 (2007).
Concerning Plaintiff’s Fourth Amendment claims (Counts 6-8), Plaintiff must prove that
there was an unreasonable search and seizure of his private property. U.S. Const. amend. IV.
Even construing all facts and inferences in Plaintiff’s favor, he does not plausibly state a claim
for relief because the sale and foreclosure of Plaintiff’s property was conducted properly in
accordance with New Jersey’s Tax Sale Law. N.J.S.A. 54:5-1, et seq. Defendants adhered to all
laws and procedures regarding the sale of Plaintiff’s property and the Complaint states no facts
on the face of the pleadings nor any plausible legal theory to suggest that Defendants conducted

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an illegal search and seizure in violation of the Fourth Amendment. Thus, Counts 6-8 will be
dismissed for failure to state a claim.
Regarding Plaintiff’s conversion of property claim (Count 9), Plaintiff must prove that
Defendants wrongfully and willfully interfered with the dominion of Plaintiff’s property in a
manner inconsistent with the other person’s rights in that property. McAdam v. Dean Witter
Reynolds, Inc., 896 F.2d 750, 771 (3d Cir. 1990). Conversion is “the exercise of any act of
dominion in denial of another's title to the chattels, or inconsistent with such title.” Schenkel v.
Flaster, 54 F. App'x 362, 365 (3d Cir. 2002) (citing Mueller v. Technical Devices Corp., 8 N.J.
201, 207 (1951)). Again, Plaintiff fails to sufficiently plead a conversion of property claim,
because there is no factual averral to rebut the lawful justification to take control of Plaintiff’s
property: the Court Order granting the tax foreclosure to proceed and allowing the Township to
take control over Plaintiff’s property. Thus, Plaintiff’s Count 9 will be dismissed for failure to
state a claim for which relief can be granted.
III. CONCLUSION
After careful review of the record in its entirety, and for the reasons set forth above,
Plaintiff’s Complaint is dismissed with prejudice. An appropriate Order follows.

s/ Faith S. Hochberg
Hon. Faith S. Hochberg, U.S.D.J.

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