Babul et al v. Demty Associates Limited Partnership et al

Filing 37

MEMORANDUM DECISION AND ORDER dated 5/8/18 that The Hillcrest defendants' 26 Motion to Dismiss is denied, and the Demty defendants' 32 Motion for Summary Judgment is granted in part and denied in part. ( Ordered by Judge Brian M. Cogan on 5/8/2018 ) (Guzzi, Roseann)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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:
AHMED BABUL and NAFIEW AHMED,
:
:
: MEMORANDUM DECISION &
Plaintiffs
: ORDER
:
- against : 17-cv-5993 (BMC)
:
DEMTY ASSOCIATES LIMITED
:
PARTNERSHIP, FAHIM ROUFAIL,
ANDREW ROUFAIL, DANIEL ROUFAIL, :
:
HILLCREST OWNERS ASSOC. INC.,
BOARD OF HILLCREST OWNERS
:
ASSOC., REZAUL JAMEE, FAYEZULLA :
BABUL, MR. ALAM, SUBARMA
:
SENGUPTA and CHANDAN SENGUPTA, :
:
Defendants.
:
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COGAN, District Judge.
Plaintiffs Ahmed Babul and Nafiew Babul (father and son, respectively) brought this suit
alleging that defendants discriminated against Ahmed on the basis of his disability and age by
refusing to sell to them either of two apartment units. Plaintiffs’ claims are directed at three sets
of defendants: (1) the “Demty Defendants” (Demty Associates Limited Partnership, Fahim
Roufail, Andrew Roufail, and Daniel Roufail), who initially owned the disputed units; (2) the
“Hillcrest Defendants” (Hillcrest Owners Association, Inc., Board of Hillcrest Owners
Association, Rezaul Jamee, Fayezulla Babul, and Shake Ahmed (a/k/a “Mr. Alam”)), who, along
with Fahim and Andrew Roufail, comprised the cooperative corporation for the building
containing the units; and (3) the “Senguptas” (Subarma Sengupta and Chandan Sengupta), who
eventually purchased one of the units.

The Hillcrest Defendants and the Demty Defendants have moved, respectively, to dismiss
the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and for summary judgment
pursuant to Federal Rule of Civil Procedure 56. The Hillcrest Defendants’ motion is denied, and
the Demty Defendants’ motion is granted in part and denied in part.
I.

Hillcrest Defendants’ Rule 12(b)(6) Motion
A. Summary of Complaint
The complaint alleges that in December 2015, Nafiew attempted to purchase either of

two units – “D-23” or “E-7” – from the Demty Defendants for Ahmed (his father). Plaintiffs
claim that Andrew Roufail, on behalf of Demty Associates, refused to sell either of the
apartments to Nafiew, and explained his refusal by claiming that if Ahmed lived in either, “[it]
would make the building look like a nursing home.” He allegedly said that because “his family
company (Demty) owned multiple apartments in the building, [] a sale to the old, disabled, and
handicapped plaintiff would bring the market value of Demty Associates’ other apartments in the
building [] down.” Roufail indicated to Nafiew that he conferred with the members of the
Hillcrest board, “and that all agreed it would hurt the market value of their remaining apartments
if they sold to an older and disabled buyer.”
Later, in January, plaintiffs approached the Senguptas, who had bought four units in the
building (including D-23) from the Demty Defendants, about purchasing one of them. Plaintiffs
claim that the Senguptas spoke with the members of the Hillcrest Board, who
agreed that it would be a bad decision to sell plaintiff[s] the property, because
[Ahmed] appeared to [be] old, sickly and disabled; and that it would decrease
the value of the remaining apartments that the Sengupta family and Roufail
family had in the building, if they were to sell to [the] visibly disabled and
older plaintiff.

2

Plaintiffs also allege that defendants breached the warranty of habitability with regard to
D-23, pointing to broken windows, broken locks, peeling paint, broken kitchen cabinets, and
mold. Plaintiffs claim that they gave the Demty Defendants notice of these conditions, but that
the defendants did not attempt to rectify them.
Based on these allegations, plaintiffs allege claims for violation of the Fair Housing Act
(the “FHA”), 42 U.S.C. § 3601, et seq.; the New York State Human Rights Law (“NYSHRL”),
N.Y. Exec. Law § 296, et seq.; and the New York City Human Rights Law (“NYCHRL”), N.Y.
City Admin. Code § 8-107 et seq. 1
B. Discussion
To defeat a motion to dismiss for failure to state a claim under Rule 12(b)(6), a plaintiff’s
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) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 547 (2007)). “A claim has facial plausibility when the pleaded factual
content allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citation omitted). Therefore, the “plausibility standard . . . asks for
more than a sheer possibility that a defendant has acted unlawfully.” Id. (citation omitted).
Neither legal conclusions nor “[t]hreadbare recitals of the elements of a cause of action” state a
claim because “Rule 8 . . . does not unlock the doors of discovery for a plaintiff armed with
nothing more than conclusions.” Id. at 678-79 (citation omitted). Further, “[w]hile facts must be
accepted as alleged, this does not automatically extend to bald assertions, subjective
characterizations, or legal conclusions.” ECOR Sols., Inc. v. Malcolm Pirnie, Inc., No.
1:02CV01103, 2005 WL 1843253, at *3 (N.D.N.Y. July 29, 2005).

1

In their opposition to the motion to dismiss, plaintiffs have withdrawn their breach of the warranty of habitability
claim against the Hillcrest Defendants.

3

Plaintiffs allege that on two occasions – when they sought to purchase an apartment first
from the Demty Defendants, and then from the Senguptas – the Hillcrest Defendants expressly
stated that a sale to Ahmed would hurt the market value of apartments in the building, because of
his age and disability. Plaintiffs do not allege that the Hillcrest Defendants officially terminated
or blocked either proposed sale.
The FHA, however, “applies broadly to ‘any notice, statement, or advertisement, with
respect to the sale or rental of a dwelling that indicates’ a discriminatory preference on
prohibited grounds.” United States v. Space Hunters, Inc., 429 F.3d 416, 424 (2d Cir. 2005)
(citing 42 U.S.C. § 3604(c)). Furthermore, the statute’s reach is not limited “to statements that
directly effect a housing transaction.” Id.
Plaintiffs have plausibly alleged that the Hillcrest Defendants, succumbing to the Demty
Defendants (two of whom are on the Hillcrest board), de facto rejected the first proposed sale.
The Hillcrest board was obviously positioned to scuttle any decision to sell by merely signaling
disapproval – which is what it allegedly did. In doing so, it positioned itself to later claim that it
had not actually rejected plaintiffs. But as noted above, the FHA does not require affirmative
conduct; allegations of discriminatory statements by those in a position to influence sale or rental
decisions are actionable, and there is no credible argument that the board’s negative response to
the proposed sale could not be at least influential, if not dispositive.
The degree of influence that the Demty Defendants had on the board’s decision cannot be
adequately addressed on a motion to dismiss. It is as plausible that the Hillcrest Defendants
agreed with Andrew’s statements as it is that their reported disapproval was really just that of the
Demty Defendants who also sat as board members.

4

Similarly, the complaint plausibly alleged that the Hillcrest Defendants telegraphed a de
facto veto when plaintiffs later approached the Senguptas. As with the proposed sale from the
Demty Defendants, the Hillcrest Board was in a position here to effectively kill the transaction
“off the record.”
Accordingly, the Hillcrest Defendants’ motion to dismiss is denied.
II.

Demty Defendants’ Motion for Summary Judgment
A. Undisputed Facts
The Demty Defendants and plaintiffs have each submitted Local Rule 56.1 statements.

However, neither plaintiffs’ response to the Demty Defendants’ statement nor their own Local
Rule 56.1 statement complies with subdivision (d) of that rule, as many of the purportedly
undisputed facts in both are not supported by citations to admissible evidence. Accordingly, the
Court accepts those statements in defendants’ rule 56.1 submission that are supported by
evidence in the record and as to which plaintiffs have cited no contrary evidence. See Giannullo
v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003). 2
On August 2, 2015, Demty Associates sold the shares allocated to D-23 to Subarna
Sengupta by a contract dated the same day. Closing of title occurred on October 6, 2015. Before
then, in around 2014, Ahmed had commenced a small claims action against Demty Associates in
Queens County, arising out of flooding damage in D-23.
On December 18, 2015, Demty Associates, through its attorney, sent plaintiffs’ counsel a
letter regarding a proposed settlement of the litigation between them. The terms of the
settlement generally required plaintiffs to vacate a default judgment they had obtained against

2

Contrary to plaintiffs’ view, the allegations in a complaint are not deemed true on a motion for summary judgment,
nor can the non-moving party offer those allegations to raise disputed issues of fact. See St. Pierre v. Dyer, 208 F.3d
394, 404 (2d Cir. 2000).

5

Demty Associates in small claims court and discontinue that action with prejudice. In exchange,
Demty Associates would offer to Nafiew “an opportunity to purchase an apartment” in the
building. In the event that the sale of the apartment fell through for any reason, plaintiffs’ claims
against Demty Associates would not be reinstated. The Demty Defendants have submitted the
letter, a draft stipulation of dismissal, and the contract of sale for the apartment. The contract of
sale specifies that the offered unit is E-7. 3
Nafiew never signed the contract of sale, and Ahmed refused to withdraw the small
claims action, which eventually settled sometime after December 2015. Demty Associates later
sold the shares allocated to E-7 to an unrelated third party.
The Demty Defendants have submitted letters from 2013-14 by Ahmed complaining
about the condition of D-23.
B. Discussion
Claims of housing discrimination are evaluated under the burden-shifting framework of
McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). See Mancuso v. Douglas Elliman
LLC, 808 F. Supp. 2d 606 (S.D.N.Y. 2011). Under this framework, plaintiffs must first establish
a prima facie case of discrimination. To do so, a plaintiff must show “(1) that they are members
of a protected class; (2) that they sought and were qualified to rent or purchase the housing; (3)
that they were rejected; and (4) that the housing opportunity remained available to other renters
or purchasers.” Mitchell v. Shane, 350 F.3d 39, 47-48 (2d Cir. 2003). The burden then shifts to
the defendant to assert a legitimate, nondiscriminatory rationale for the challenged decision. Id.

3
In their Rule 56.1 statement, plaintiffs claim that “[t]his was hardly a real offer to sell,” because 1) one of the
apartments they believe was offered, D-23 (which, again, was not actually referenced in the proposed settlement),
had already been sold; 2) Demty Associates had a right to back out of any sale without consequence; and 3) the
Demty Defendants allegedly stated that they never intended to sell to plaintiffs because of Ahmed’s disability.
These points are argument, not fact, and the Court disregards them on this motion.

6

at 39. “If the defendant makes such a showing, the burden shifts back to the plaintiff to
demonstrate that discrimination was the real reason for the defendant’s action.” Id.
The Demty Defendants are entitled to summary judgment on plaintiffs’ federal, state, and
city discrimination claims as to the sale of D-23. 4 Uncontroverted evidence shows that the
Demty Defendants did not own the shares allocated to D-23 when plaintiffs claim to have
approached them regarding a potential sale. The Demty Defendants were in no position to reject
plaintiffs if they didn’t even own the sought-after apartment.
As to E-7, however, the Demty Defendants have not established that their offer to
plaintiffs was bona fide and not pretextual. First, under the settlement’s terms, the Demty
Defendants would have been free to back out of the agreement for any manufactured reason
without consequence after securing plaintiffs’ voluntary dismissal of the small claims action. It
would fully consistent with plaintiffs’ theory of the case if the Demty defendants intended to use
their board positions and relationship with other board members to block the sale.
Second, without knowing more about the merits and value of plaintiffs’ small claims
action, it is difficult, if not impossible, to assess the fairness of the Demty Defendants’
conditioning of plaintiffs’ opportunity to purchase an apartment on their voluntary dismissal of
that claim.
In short, although the undisputed evidence shows that the Demty Defendants offered
plaintiffs a settlement that appears to provide a chance to purchase an apartment, there is a
factual issue as to whether it constituted a genuine offer to sell E-7 at all.

4

It might appear anomalous that the Court is granting summary judgment to the Demty Defendants as to claims
about D-23, but not to the Hillcrest Defendants with regard to the same sale. However, the former moved for
summary judgment and submitted evidence supporting their motion, whereas the latter moved to dismiss. The
different standards for each motion compel different outcomes.

7

Turning to plaintiffs’ allegation of a breach of the warranty of habitability, the Demty
Defendants are correct that plaintiffs cannot bring this claim against individual limited liability
partners. See Ederer v. Gursky, 9 N.Y.3d 514, 523, 851 N.Y.S.2d 108 (2007) (New York
Partnership Law § 26(b) “eliminated the vicarious liability of a general partner in a registered
limited liability partnership . . .”). Accordingly, the claim is dismissed as to the individual
Demty Defendants. But there is no reason plaintiffs cannot proceed with that claim against
Demty Associates.
CONCLUSION
The Hillcrest Defendants’ motion to dismiss [26] is denied, and the Demty Defendants’
motion for summary judgment [32] is granted in part and denied in part.
SO ORDERED.

Digitally signed by Brian
M. Cogan
___________________________________
U.S.D.J.

Dated: Brooklyn, New York
May 8, 2018

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