Gowanus Industrial Park, Inc. v. Amerada Hess Corp.
Filing
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ORDER : See attached memorandum and order denying in part Hess Corporation's Febraury 18, 2011 motion to dismiss, 6 . Ordered by Judge John Gleeson on 5/13/2011. (Horowitz, Hayley)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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GOWANUS INDUSTRIAL PARK, INC., :
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Plaintiff,
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-against:
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HESS CORP.,
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Defendant. :
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A P P E A R A N C E S:
FOR ONLINE PUBLICATION ONLY
MEMORANDUM
AND ORDER
10-CV-05522 (JG) (JO)
HINMAN, HOWARD & KATTELL, LLP
185 Madison Avenue, 7th Floor
New York, New York 10016
By:
Joseph Noah Paykin
Attorney for Plaintiff
PROSKAUER ROSE, LLP
11 Times Square
New York , New York 10036
By:
Charles S. Sims
Attorney for Defendant
JOHN GLEESON, United States District Judge:
Gowanus Industrial Park, Inc. (“GIP”) initiated this action against Hess Corp.
(“Hess”) on November 30, 2011. Familiarity with the facts is assumed. See Gowanus Indus.
Park, Inc. v. Hess Corp., No. 10-cv-5522 (JG) (SMG), 2011 WL 1431621 (E.D.N.Y. April 8,
2011) (Mem. Inviting Amicus Curiae Brief); Order Addressing Scope of Hearing, Apr. 19, 2011,
ECF. No. 22 (“Order Addressing Hearing”). In brief, GIP alleges that it holds title to certain
underwater property at the Henry Street Basin, and that Hess, an adjacent uplands owner,
wrongfully built a bulkhead that encroaches on that property. GIP asserts that a fence and piping
constructed by Hess on top of the bulkhead constitute a trespass and a nuisance for which it
seeks damages and injunctive relief. GIP further seeks several declarations regarding the status
of the disputed property and the bulkhead. On February 18, 2011, Hess filed a motion under
Fed. R. Civ. P. 12(b)(6) seeking to dismiss GIP’s complaint in its entirety because GIP does not
hold title to the property at issue or, in the alternative, to dismiss GIP’s trespass and nuisance
claims because they are barred by res judicata in light of an earlier action between the same
parties (“GIP I”). See Gowanus Industrial Park, Inc. v. Amerada Hess Corp., No. 01-CV-0902
(ILG), 2003 WL 22076651 (E.D.N.Y. Sept. 5, 2003) (“GIP I”). Oral argument on the motion to
dismiss was held on March 29, 2011. At that time, I granted GIP leave to amend its complaint,
which it did on April 5, 2011. By order dated April 7, 2011, I deemed Hess’s challenges to the
initial complaint to have been made against the amended complaint and reserved decision on the
motion. I now deny Hess’s motion to dismiss in part. Specifically, I hold that if GIP acquired
title to the property subsequent to the disposition of GIP I – an issue I have yet to decide – its
trespass and nuisance claims are not barred by res judicata or collateral estoppel.1
DISCUSSION
A.
The Rule 12(b)(6) Legal Standard
To survive a motion under Rule 12(b)(6) for failure to state a claim, “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, 129 S.Ct. 1937, 1949 (2009). A claim is facially plausible only if
the pleaded facts permit a court to reasonably infer that the plaintiff is entitled to relief. Id. Res
judicata and collateral estoppel are proper bases for dismissal under Rule 12(b)(6) when they are
1
As I mentioned, I do not now address Hess’s argument that GIP’s claims should be dismissed
because it does not hold title to the property. I reserve judgment on that portion of Hess’s motion and assume for the
purposes of this memorandum and order that GIP has obtained title since the 2003 disposition of GIP I. I recognize
that if GIP does not have title, it may still attempt to assert claims for trespass and nuisance on the basis that it
exercises a possessory interest in the property. Nothing in this memorandum and order should be read to address the
res judicata or collateral estoppel effects of GIP I in the event that GIP does not now hold title to the property. I
hold only that if GIP has acquired title since 2003, res judicata and collateral estoppel do not bar the present action.
I reserve judgment on all other aspects of Hess’s February 18, 2011 motion to dismiss.
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raised as affirmative defenses, and “it is clear from the face of the complaint, and matters of
which the court may take judicial notice, that the plaintiff’s claims are barred as a matter of law.”
Conopco, Inc. v. Roll Intern., 231 F.3d 82, 86 (2d Cir. 2000); see also Kowalczyk v. Gilroy, 166
F.3d 1200 (2d Cir. 1998) (claim dismissed on basis of collateral estoppel); Day v. Moscow, 955
F.2d 807 (2d Cir. 1992) (claim dismissed as res judicata). When deciding a Rule 12(b)(6)
motion, I must accept all factual allegations in the complaint as true and draw all reasonable
inferences in the non-movant’s favor. Shomo v. City of New York, 570 F.3d 176, 183 (2d Cir.
2009).
B.
Res Judicata
“Under both New York law and federal law, the doctrine of res judicata, or claim
preclusion, provides that a final judgment on the merits of an action precludes the parties from
relitigating issues that were or could have been raised in that action.” Duane Reade, Inc. v. St.
Paul Fire and Marine Ins. Co., 600 F.3d 190, 195 (2d Cir. 2010) (internal quotation marks and
alterations omitted). Once a claim is brought to judgment on the merits, “all other claims arising
out of the same ‘transaction’ are barred[.]” Burch v. Trustees of Freeholders and Commonalty of
Town of Southampton, 849 N.Y.S.2d 622, 625 (2d Dep’t 2008) (citing O’Brien v. Syracuse, 54
N.Y.2d 353, 357 (1981)); see also Waldman v. Village of Kiryas Joel, 207 F.3d 105, 108 (2d Cir.
2000) (claims are barred when they “spring from the same ‘transaction’ or ‘claim’” as gave rise
to an earlier suit resolved on the merits (internal quotation marks omitted)). However, “the
circumstances that several operative facts may be common to successive actions between the
same parties does not mean that the claim asserted in the second is the same claim that was
litigated in the first, and that litigation of the second is therefore precluded by the judgment in the
first.” NLRB v. United Technologies Corp., 706 F.2d at 1254, 1259-60 (2d Cir. 1983). Whether
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an action is precluded by a prior action will depend in part on “whether the facts essential to the
second were present in the first.” Id. at 1260; see also Restatement (Second) of Judgments § 24
cmt. f (“Material operative facts occurring after the decision of an action with respect to the same
subject matter may in themselves, or taken in conjunction with the antecedent facts, comprise a
transaction which may be made the basis of a second action not precluded by the first.”).
Hess contends that GIP’s trespass and nuisance claims are barred in light of
GIP I. According to Hess, GIP I arose out of the same transaction as the present case and was
decided on the merits in a decision by Judge Glasser. See GIP I, 2003 WL 22076651. GIP
alleged then, as it does now, that it held title to the property underlying the Henry Street Basin
and that Hess had constructed a bulkhead that lay partially on GIP’s side of the property line.
GIP sought declaratory relief as well as compensatory and punitive damages for trespass. On
cross-motions for summary judgment, Judge Glasser held that the bulkhead lay partially within
the property to which GIP claimed title, but that GIP did not own the property. GIP claimed to
have obtained title from the New York Port Authority, but Judge Glasser held that the Port
Authority had authority to convey the property only to New York State. Judge Glasser further
found that GIP had not shown a possessory interest sufficient to support a claim for trespass
absent proof of ownership. Accordingly, he granted GIP the declaration it sought that the
bulkhead lay within the property at issue and otherwise dismissed GIP’s claims.
GIP alleges that it has acquired title to the property since the disposition of GIP I.
According to the amended complaint, the State conveyed the property to GIP by letters patent on
April 1, 2005, subsequent to Judge Glasser’s 2003 opinion. Hess maintains that the 2005
transaction did not successfully vest title in GIP. But even if GIP did obtain title, Hess argues,
its trespass and nuisance claims are barred by res judicata because GIP has not alleged any
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“materially changed facts” that could not have been raised at the time GIP I was resolved. Def.’s
Mem. Support Mot. Dismiss 13, Feb. 18, 2011, ECF No. 6. I disagree. Judge Glasser’s decision
in GIP I rested entirely on Gowanus’s failure to show that it had either obtained title or exercised
possession over the property. If GIP has obtained title since 2003, that constitutes a material
operative fact not present at the time of GIP I and prevents application of res judicata. See
Barrows v. Kindred, 71 U.S. 399, 404 (1866) (plaintiff in an ejection action had had judgment
rendered against him in prior ejection action, which was “conclusive as to his want of title at that
time . . . [b]ut did not deprive [plaintiff] of the right to acquire a new and distinct title[,] and,
having done so . . . assert it, without prejudice from the former suit”).2
Accordingly, if GIP acquired title to the property at issue in 2005, the principle of
res judicata does not bar its trespass and nuisance claims.
B.
Collateral Estoppel
Hess also argues that GIP’s claims are barred by collateral estoppel, or issue
preclusion, even if GIP has acquired title to the property. At the March 29, 2011 oral argument, I
determined that, if GIP possesses title, resolution of its trespass and nuisance claims will require
a balancing of GIP’s ownership rights against Hess’s riparian rights. See Order Addressing
Hearing 4; see also GIP I, 2003 WL 22076651, at *16 (“The issue here therefore is whether the
bulkhead’s existence is necessary in order to assure Hess’s reasonable access to navigable waters
and, if so, whether its continued existence would seriously impair or destroy GIP’s rights as the
2
Hess has directed my attention to Lighthouse 925 Hempstead, LLC v. Citibank, N.A., 889 N.Y.S.
188 (2d Dep’t 2009), which it describes as “particularly instructive.” Def.’s Mem. 18. That case is readily
distinguishable from the one now before me. In Lighthouse 925, the defendant had leased certain premises from the
plaintiff and, when the lease expired, failed to remove an ATM before surrendering the premises. The plaintiff first
brought an action alleging breach of contract for failure to remove the ATM. The action was dismissed on the
merits. The plaintiff then brought a second action alleging that the ATM constituted a continuing trespass. The
Appellate Division, Second Department, held that the second suit was barred by res judicata because it concerned
the same transaction as formed the basis of the first suit, and the trespass claim could have been raised in the original
action. In Lighthouse 925, all material facts asserted in the second action were present at the time of the first action.
That is not the case here, as GIP alleges that it has obtained title since the disposition of GIP I.
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purported possessor of the submerged lands.”). Hess responded that I am precluded from
conducting such an inquiry. According to Hess, Judge Glasser held in GIP I that there was “no
occasion for that balancing” in light of GIP’s “bare bones complaint.” Trans. March 29, 2011
Proceedings 7. Hess argues that GIP’s pleadings in this action are substantially the same as
those in GIP I, in that they contain no “particular allegations of possession and use [by GIP] to
weigh in the balance” against what Hess describes as “the obvious and judicially found interests
of the residents of New York City, who don’t, after all, want the oil to be spilling into the water.”
Id. 10. Therefore, Hess continues, I am bound by Judge Glasser’s opinion to find that GIP has
alleged no facts that can weigh in its favor and to dismiss GIP’s trespass and nuisance claims
without conducting the balancing prescribed by New York law.3 This argument mischaracterizes
the nature of Judge Glasser’s holdings in GIP I.
Judge Glasser did not decide that Hess’ interests as a riparian rights holder
necessarily outweigh GIP’s interests as a property owner.4 He held that even if GIP had
established ownership or possession so that a balancing of rights was called for, “neither party
presented facts regarding the reasonableness of maintaining the bulkhead,” and that summary
judgment regarding Hess’s riparian rights “would not be available to either party based on the
reasonableness of maintaining the bulkhead.” GIP I, 2003 WL 22076651, at *16. Judge Glasser
further left open the question of whether the bulkhead constitutes an exercise of riparian rights
that deserves any weight, given that it “does not provide access [to the waterway] per se.” Id. at
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It is unclear whether Hess would maintain its position in light of GIP’s amended complaint, which
alleges facts pertaining to the specific uses GIP would make of its property if not prevented by the presence of
Hess’s bulkhead.
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Even if he had made such a finding, it would have been dicta, not necessary to his holding, which
was premised on GIP’s failure to establish ownership or possession. See GIP I, 2003 WL 22076651, at *13 (“Hess
additionally argues that [its] riparian rights permit it to maintain the bulkhead in its current location . . . . Although
the Court is well aware of Sir Francis Bacon’s observation that ‘an over-speaking judge is no well-tuned cymbal,’ it
ventures to address these additional arguments.”). Collateral estoppel therefore would not apply.
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*15. Accordingly, Judge Glasser explicitly refrained from deciding whether maintenance of the
bulkhead constitutes a reasonable exercise of Hess’s riparian rights.
In New York, collateral estoppel has two essential elements. ‘First, the identical
issue necessarily must have been decided in the prior action and be decisive of the present action,
and second, the party to be precluded from relitigating the issue must have had a full and fair
opportunity to contest the prior determination.’” Jenkins v. City of New York, 478 F.3d 76, 85
(2d Cir. 2007) (quoting Juan C. v. Cortines, 89 N.Y.2d 659, 667 (1997)). The first element has
not been satisfied. Accordingly, if GIP holds title to the property at issue, its trespass and
nuisance claims are not collaterally estopped.
CONCLUSION
For the reasons stated above, Hess’s February 18, 2011 motion to dismiss is
denied in part. Assuming that GIP holds title to the property at issue, its trespass and nuisance
claims are not barred by res judicata or collateral estoppel.
So ordered.
John Gleeson, U.S.D.J.
Date: May 13, 2011
Brooklyn, New York
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