JGB Properties, LLC v. Ironwood, LLC et al

Filing 40

DECISION & ORDER granting # 31 Defendants' motion in limine to exclude the hearing testimony of Plaintiff's expert witness; denying # 2 Plaintiff's Motion for Preliminary Injunction; granting # 11 Defendants' motion to dismiss; granting # 38 Defendants' letter-motion to consider Defendants' reply memorandum of law in deciding their motion for sanctions; and denying # 34 Defendants' motion for sanctions. Plaintiff's complaint is dismissed. Signed by Judge Glenn T. Suddaby on 3/26/15. (lmw)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
__________________________________________
JGB PROPS., LLC,
Plaintiff,
v.

5:14-CV-1542
(GTS/ATB)

IRONWOOD, LLC; and STEELWAY
REALTY CORP.,
Defendants.
__________________________________________
APPEARANCES:

OF COUNSEL:

SLOVER & LOFTUS
Counsel for Plaintiff
1224 Seventeenth Street NW
Washington, DC 20036

FRANK J. PERGOLIZZI, ESQ.
PETER A. PFOHL, ESQ.

CAMARDO LAW FIRM, P.C.
Co-Counsel for Plaintiff
127 Genesee Street
Auburn, NY 13021

JOSEPH A. CAMARDO, JR.

HANCOCK ESTABROOK, LLP
Counsel for Defendants
1500 AXA Tower I
100 Madison Street
Syracuse, NY 13202

DAVID G. LINGER, ESQ.
JAMES P. YOUNGS, ESQ.

GLENN T. SUDDABY, United States District Judge
DECISION and ORDER
Currently pending before the Court, in this action for declaratory and injunctive relief
filed by JGB Properties, LLC (“Plaintiff”) against Ironwood, LLC, and Steelway Realty
Corporation (“Defendants”), are the following four motions: (1) Defendants’ motion in limine to
exclude the hearing testimony of Plaintiff’s expert witness, John F. Betak (Dkt. No. 31); (2)

Plaintiff’s motion for a preliminary injunction pursuant to Fed. R. Civ. P. 65 (Dkt. No. 2); (3)
Defendants’ motion to dismiss for lack of subject-matter jurisdiction pursuant to Fed. R. Civ. P.
12(b)(1) and/or for failure to state a claim upon which relief can be granted pursuant to Fed. R.
Civ. P. 12(b)(6) (Dkt. No. 11); and (4) Defendants’ motion for sanctions pursuant to Fed. R. Civ.
P. 11(b) and their letter-motion for the Court to consider their Fed. R. Civ. P. 12 reply
memorandum of law in deciding their motion for sanctions (Dkt. Nos. 34, 38). For the reasons
set forth below, Defendants’ motion in limine is granted; Plaintiff’s motion for a preliminary
injunction is denied; Defendants’ motion to dismiss is granted; and, while Defendants’ lettermotion for the Court to consider their Fed. R. Civ. P. 12 reply memorandum of law (in deciding
their motion for sanctions) is granted, their motion for sanctions is denied.
I.

RELEVANT BACKGROUND
A.

Summary of Plaintiff’s Complaint

Liberally construed, Plaintiff’s Complaint alleges that Defendants are wrongfully
pursuing an action against Plaintiff for declaratory relief and damages (arising from Plaintiff’s
alleged unlawful interference with Defendants’ railroad easement by inappropriately removing
railroad tracks from that easement) in New York State Supreme Court, Onondaga County,1
which has wrongfully issued judgments awarding Defendants compensatory damages of
$195,763.22 and punitive damages of $300,381.50,2 despite the fact that it does not have subject-

1

This New York State court action, commenced on August 18, 2009, is Ironwood,
LLC v. JGB Props., LLC, Index No. 2009-5776 / RJ No. 33-09-3858 (N.Y. Sup. Ct., Onondaga
Cnty.). (Dkt. No. 1, at ¶ 20.)
2

These Judgments were issued on July 25, 2013, and March 27, 2014. (Dkt. No. 1,

at ¶ 27.)
2

matter jurisdiction over the action because the Interstate Commerce Commission Termination
Act of 1995, 49 U.S.C. § 10101 et seq. (“ICCTA”), vests exclusive jurisdiction over “the
construction, acquisition, operation, abandonment or discontinuance of . . . [certain types of
tracks] or facilities” in the Surface Transportation Board (“STB”), in which a parallel proceeding
is currently pending.3 (Dkt. No. 1.)
Generally, based on these allegations, the Complaint asserts three claims against
Defendants: (1) a claim for a judgment declaring that the New York State Supreme Court,
Onondaga County, lacks subject-matter jurisdiction over Defendants’ pending action; (2) a claim
for a preliminary injunction enjoining Defendants from pursuing further state court relief and/or
enforcing state court judgments that relate to the issues currently pending before the STB, and
staying any such actions pending the STB’s rulings on Plaintiff’s petition; and (3) a claim for a
permanent injunction enjoining Defendants from enforcing, or attempting to enforce, any state
court judgment that is inconsistent with the STB’s rulings in Plaintiff’s currently pending action
there. (Id.)
B.

Summary of Parties’ Arguments on Pending Motions
1.

Defendants’ Motion in Limine to Exclude Expert Testimony

Generally, in their memorandum of law in chief, Defendants argue as follows: (1) to the
extent that Dr. John F. Betak’s testimony includes a description of the railroad lines, operations,
and facilities in the subject area (as stated in Part I.1. of Plaintiff’s witness list), that testimony is
not admissible pursuant to Fed. R. Evid. 402 because it is irrelevant to the issues now before the

3

This STB proceeding, commenced by Plaintiff on April 8, 2014, is JGB Props.,
LLC–Petition for Declaratory Order–Woodward Indus. R.R. Operations., STB Finance Docket
No. FD 35817. (Dkt. No. 1, at ¶¶ 6, 41.)
3

Court (in that it was repeatedly rejected by the state court and, in any event, is barred from
consideration by the doctrines of claim preclusion and/or issue preclusion); and (2) to the extent
that Dr. Betak intends to offer testimony on the nature of the pending proceeding before the STB
(as stated in Part I.1. of Plaintiff’s witness list), that subject is a question of law on which the
Court needs no expert opinion (especially given the record evidence of the parties’ claims before
the STB) and on which Dr. Betak is not qualified to opine. (Dkt. No. 31.)
Generally, in its opposition memorandum of law, Plaintiff argues as follows: (1)
Defendants are incorrect in stating that the issues upon which Dr. Betak testified were
conclusively decided in prior New York State Court between Plaintiff and Defendants (and,
indeed, address the critical separate inquiry that should have been answered before any railroad
track was constructed on the easement, namely, whether Defendants had a legal right to
construct a common carrier railroad on that easement); (2) Dr. Betak’s testimony concerning his
STB submissions is relevant to this Court’s understanding of the issues presented (specifically,
how the issues before the STB differ from the issues before, and decided by, the state court); (3)
Dr. Betak’s testimony that the subject rail track was a common carrier track, and that the rail
property was in such a state of disrepair that it was his opinion it had been constructively
abandoned, should not be barred as legal opinions; and (4) Defendants’ late-filed motion should
be denied because Defendants were afforded a full opportunity to cross-examine Dr. Betak at the
hearing and thus the denial of the motion will not prejudice Defendants’ interests. (Dkt. No. 29.)
2.

Plaintiff’s Motion for a Preliminary Injunction

Generally, in its memorandum of law in chief, Plaintiff argues as follows: (1) this Court
has the authority to issue the requested injunctive relief because the Court’s jurisdiction is

4

concurrent with that of the STB under 49 U.S.C. § 10502; (2) Plaintiff satisfies the preliminary
injunction requirements because (a) it is likely to succeed on the merits (in that it has a
substantial likelihood of prevailing on its claim that the STB has exclusive jurisdiction to
determine the underlying issue of whether the rail line was unauthorized or de facto abandoned),
(b) it will suffer irreparable harm absent the issuance of injunctive relief (in that it will continue
to be “subjected to a protracted state court process before a body lacking in jurisdiction” and it
will be deprived of the “right to obtain expert agency relief”), and (c) the public interest weighs
in favor of granting injunctive relief (in that the public has a strong interest in having a
comprehensive federal regime for considering rail line construction, and in having uniformity of
standards governing rail issues and operations); (3) the requested relief is permitted by the AntiInjunction Act and All Writs Act because (a) an injunction is authorized by the ICCTA, and (b)
an injunction is necessary in aid of the Court’s jurisdiction; and (4) the Court should dispense
with the bond requirement, because (a) the underlying judgments are already secured by more
than $500,000 in cash undertakings, and (b) the injunction is necessary to preserve the court’s
jurisdiction. (Dkt. No. 2, Attach. 5 [Plf.’s Memo. of Law].)
Generally, in their opposition memorandum of law, Defendants argue as follows: (1)
Plaintiff’s Complaint is subject to dismissal pursuant to Fed. R. Civ. P. 12(b)(1), and there is no
likelihood that it will succeed on the merits, because (a) the Complaint is barred by the
Rooker-Feldman doctrine, (b) the Complaint is precluded in its entirety by the doctrines of res
judicata and collateral estoppel in light of New York State court’s prior judgments and decisions
governing the subject of this suit, (c) the Court should abstain from considering Plaintiff’s
Complaint under the Younger doctrine (given that the New York State courts have provided

5

an adequate venue for all of Plaintiff’s constitutional arguments), (d) the Complaint, by seeking
permanent injunctive relief, is barred by the Anti-Injunction Act, and (e) Plaintiff’s Petition
before the STB is irrelevant to a determination of its motion for a preliminary injunction and will
in any event be denied; (2) Plaintiff will not suffer irreparable harm without a preliminary
injunction because, even if it loses in state court, it will merely suffer a monetary loss easily
compensable by money damages; and (3) equity and public policy dictate that the Court deny
Plaintiff’s motion for a preliminary injunction because (a) Plaintiff egregiously destroyed the
railroad line and interfered with Defendants’ easement rights, and (b) Plaintiff’s aim in all of this
is to use the ICCTA perversely to deny rail service and to limit railroad transportation. (Dkt. No.
16 [Defs.’ Opp’n Memo. of Law].)
Generally, in its reply memorandum of law, Plaintiff argues as follows: (1) Defendants
do not dispute that the Court has authority to issue the requested relief, and their usurpation-ofstate-court-jurisdiction-argument is diversionary and baseless; (2) Defendants provide no
credible arguments against the granting of injunctive relief, because (a) Plaintiff is likely to
succeed on the merits (in that Defendants’ lack-of-subject-matter-jurisdiction arguments and res
judicata and collateral estoppel arguments are wholly without merit), (b) Plaintiff will suffer
irreparable harm absent the issuance of injunctive relief (in that in it will be denied its right to
pursue its claim under the ICCTA before the appropriate entity, the STB, in the first instance),
and (c) the public interest weighs in favor of granting injunctive relief (for the reasons Plaintiff
stated in its memorandum of law in chief); and (3) Defendants’ other opposing arguments are
unavailing because (a) they completely ignore the All Writs Act, (b) their arguments regarding
the Anti-Injunction Act are weak and irrelevant, and (c) their Rooker-Feldman and Younger

6

arguments are unavailing (in that the Anti-Injunction Act and ICCTA provide a statutory
restraint on the use of both doctrines, Plaintiff is not seeking appellate review for purposes of the
Rooker-Feldman doctrine, and there is no state interest at stake for purposes of the Younger
doctrine). (Dkt. No. 21 [Plf.’s Reply Memo. of Law].)
On February 11, 2015, the Court held a hearing on Plaintiff’s motion, during which
Plaintiff adduced the testimony of its expert witness (Dr. John F. Betak, Ph.D.), the parties
submitted hearing exhibits, and counsel for the parties offered oral argument on the motion (in
which they elaborated on various of their above-described arguments). (Dkt. No. 28 [Hrg. Tr.];
Hrg. Exs.)
3.

Defendants’ Motion to Dismiss for Lack of Subject-Matter
Jurisdiction and/or for Failure to State a Claim

Generally, in their memorandum of law in chief, Defendants argue as follows: (1) the
Court lacks subject-matter jurisdiction over the Complaint under 28 U.S.C. § 1257 and the
Rooker-Feldman doctrine, because the Complaint constitutes an appeal from unfavorable state
court judgments and orders; (2) in the alternative, the Complaint is precluded by the disposition
of the state court litigation, pursuant to 28 U.S.C. § 1738 (also known as the Full Faith and
Credit Act) and the doctrines of res judicata and/or collateral estoppel; (3) again in the
alternative, the Court must abstain from considering the Complaint under the Younger doctrine,
because the state courts provided an adequate forum for consideration of Plaintiff’s preemption
argument; (4) again in the alternative, the Complaint is barred by the Anti-Injunction Act,
because (a) a federal injunction of state court proceedings is not expressly authorized by the
ICCTA (given both the language and legislative history of the ICCTA), and (b) an injunction is
not “necessary in aid of” the Court’s jurisdiction (given that the Court has not acquired
7

jurisdiction over disposition of real property); and (5) the All Writs Act (which is relied on by
Plaintiff in its motion for a preliminary injunction) does not raise an issue separate from that
raised by the Anti-Injunction Act, because the Anti-Injunction Act is a limitation on the authority
granted federal courts by the All Writs Act to issue injunctions generally. (Dkt. No. 11, Attach.
1 [Defs.’ Memo. of Law].)
Generally, in its opposition memorandum of law, Plaintiff argues as follows: (1) the
Court has subject-matter jurisdiction over Plaintiff’s Complaint because the injunctive relief
requested therein is authorized by the ICCTA (which confers on this Court concurrent
jurisdiction to determine the matters raised in Plaintiff’s STB Petition), the Anti-Injunction Act
(whose predecessor, the Interstate Commerce Act, authorizes this action and renders the
injunction necessary to aid the Court’s jurisdiction) and the All Writs Act (which was
“completely ignored” by Defendants); (2) Plaintiff has stated claims upon which relief can be
granted under the ICCTA; (3) Defendants’ res judicata and collateral-estoppel arguments are
unavailing, because (a) this federal court action does not involve the same cause of action as the
state court action, (b) any issues decided in the state courts pertaining to preemption were
“secondary or incidental” to Defendants’ claims there, and (c) in any event, Congress did not
intend to give state court determinations res judicata or collateral estoppel effect over railroad
matters; (4) Defendants’ Rooker-Feldman arguments are unavailing, because (a) Plaintiff is not
seeking appellate review of any issue that was properly addressed and decided by the state court,
(b) a key rationale underlying the doctrine (i.e., that state courts are as competent as federal
courts to decide federal constitutional issues) does not apply in this case, and (c) the doctrine has
been significantly diluted over recent years; and (5) Defendants’ Younger arguments are

8

unavailing, because (a) the doctrine applies only if important state interests are involved (which
is not the case here), (b) the doctrine applies to only a limited number of state court civil
proceedings (none of which is present here), and (c) the state court proceedings did not offer the
parties an adequate opportunity to raise the claims currently before the STB. (Dkt. No. 30 [Plf.’s
Opp’n Memo. of Law].)
Generally, in their reply memorandum of law, Defendants argue as follows: (1) Plaintiff
fails to provide any authority for either precluding application of the Rooker-Feldman doctrine
or demonstrating subject-matter jurisdiction in this case, because (a) Plaintiff’s argument that it
is not asking for a rejection of any state court judgment is undermined by its request in its
Complaint that the Court “[e]nter judgment declaring that the State Court judgments . . . are
invalid and unenforceable” (see Dkt. No. 1, at 16, ¶ C), and (b) under the circumstances, the
ICCTA does not provide a distinct federal claim that is unrelated to the state court proceeding;
(2) Plaintiff acknowledges that the state court decisions and judgments must be given preclusive
effect, and fails to address the consequences of preclusion in this case; (3) Plaintiff fails to
provide any authority supporting its assertion that this Court may enjoin state court proceedings
(under the ICCTA) despite the prohibition of the Anti-Injunction Act (but cites only a Fifth
Circuit case from 1969 that applies dead-letter law); and (4) Plaintiff fails to explain how the
state court exceeded its authority or otherwise failed to offer Plaintiff a full opportunity to raise
all federal issues as contemplated in the Younger doctrine. (Dkt. No. 32 [Defs.’ Reply Memo. of
Law].)

9

4.

Defendants’ Motion for Sanctions

Generally, in their memorandum of law in chief, Defendants argue as follows: (1)
Plaintiff’s Complaint and motion for a preliminary judgment violate Fed. R. Civ. P. 11(b)(2)
because Plaintiff’s claims and legal contentions are not warranted by existing law in that (a) its
claims are facially violative of the Rooker-Feldman doctrine, (b) this lawsuit is barred by the
prior state court judgments, which are accorded preclusive and res judicata effect in this Court,
and (c) there is no basis for Plaintiff’s assertion that the ICCTA provides a statutory or
jurisdictional exception to the Anti-Injunction Act; and (2) Plaintiff and its counsel have violated
Fed. R. Civ. P. 11(b)(1) because this lawsuit was brought for the improper purpose of harassing
Ironwood and subjecting it to persistent vexatious litigation and legal costs. (Dkt. No. 34,
Attach. 4 [Defs.’ Memo. of Law].) As relief, Defendants request “no less than the cost of legal
fees incurred in bringing its motion to dismiss the frivolous suit, opposing JGB’s baseless
application for a preliminary injunction, and in bringing the instant motion, together with such
other relief and monetary sanctions as the Court deems appropriate.” (Id. at 21 [attaching page
“17” of Defs.’ Memo. of Law].)
Generally, in its opposition memorandum of law, Plaintiff argues as follows: (1)
Plaintiff’s Complaint and motion for preliminary injunction are warranted by existing law and
are non-frivolous under Fed. R. Civ. P. 11(b)(2) in that (a) Plaintiff has well-founded arguments
that its claims are not barred by the Rooker-Feldman doctrine, (b) the prior state court judgments
did not address the issues before the STB and cannot be considered res judicata, and (c)
Defendants’ anti-injunction argument is also unavailing; (2) Plaintiff’s Complaint and motion for
preliminary injunction are brought for a proper purpose under Fed. R. Civ. P. 11(b)(1), as

10

previously recognized by state courts, and in contradiction to Defendants’ clear
mischaracterization of the record; and (3) it was Defendants’ motion that was brought for an
improper purpose, because it is duplicative of past filings and brought to advance Defendants’
legal position, in violation of Fed. R. Civ. P. 11. (Dkt. No. 37 [Plf.’s Opp’n Memo. of Law].)
Finally, in a letter-motion, Defendants request that, in considering their motion for
sanctions, the Court consider their reply memorandum of law on their motion to dismiss. (Dkt.
No. 38 [Defs.’ Letter-Motion].)
II.

GOVERNING LAW
A.

Defendants’ Motion in Limine to Exclude Expert Testimony

Rule 702 of the Federal Rules of Evidence governs the admissibility of expert testimony.
Specifically, the rule provides as follows:
A witness who is qualified as an expert by knowledge, skill, experience,
training, or education may testify in the form of an opinion or otherwise if:
(a) the expert's scientific, technical, or other specialized knowledge will
help the trier of fact to understand the evidence or to determine a fact in
issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts
of the case.
Fed. R. Evid. 702.
B.

Plaintiff’s Motion for a Preliminary Injunction

Generally, the issuance of a preliminary injunction pursuant to Fed. R. Civ. P. 65
depends on the movant's demonstration of (1) irreparable harm and (2) either (a) a likelihood of

11

success on the merits or (b) a sufficiently serious question as to the merits of the case to make it
a fair ground for litigation and a balance of hardships tipping decidedly in its favor. Tom
Doherty Assoc., Inc. v. Saban Entm't, Inc., 60 F.3d 27, 33 (2d Cir. 1995).
Irreparable harm is “the single most important prerequisite for the issuance of a
preliminary injunction,” and “[i]n the absence of a showing of irreparable harm, a motion for a
preliminary injunction should be denied.” Rodriguez ex rel. Rodriguez v. DeBuono, 175 F.3d
227, 233-34 (2d Cir.1999) (internal quotation marks and citation omitted). “Irreparable harm is
an injury that is not remote or speculative but actual and imminent, and ‘for which a monetary
award cannot be adequate compensation.’” Tom Doherty Assocs., 60 F.3d at 37 (quoting
Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 [2d Cir.1979]).
Because the parties have demonstrated in the memoranda of law an adequate
understanding of this legal standard, the Court need not, and does not, further elaborate on this
legal standard in this Decision and Order, which is intended primarily for the review of the
parties.
C.

Defendants’ Motion to Dismiss for Lack of Subject-Matter Jurisdiction
and/or for Failure to State a Claim

“It is a fundamental precept that federal courts are courts of limited jurisdiction.” Owen
Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). Generally, a claim may be
properly dismissed for lack of subject-matter jurisdiction where a district court lacks
constitutional or statutory power to adjudicate it. Makarova v. U.S., 201 F.3d 110, 113 (2d Cir.
2000). On a motion requesting dismissal on such grounds, the court must accept all factual
allegations in the complaint as true. Jaghory v. New York State Dept. of Educ., 131 F.3d 326,
329 (2d Cir. 1997). However, the court may look to evidence outside of the pleadings.
12

Makarova, 201 F.3d at 113. While the plaintiff bears the burden of proof by a preponderance of
the evidence, all ambiguities must be resolved and inferences drawn in favor of the plaintiff.
Makarova, 201 F.3d at 113; Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d
Cir. 2005).
Turning to the standard governing motions to dismiss for failure to state a claim, the
Court will not repeat that well-known legal standard. Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009). Rather, the Court will merely highlight two
related points of law.
First, generally, a dismissal based on defenses such as collateral estoppel and Younger
abstention is appropriate under Fed. R. Civ. P. 12(b)(6) rather than Fed. R. Civ. P. 12(b)(1) when
it is clear from the face of the complaint that the defense bars the plaintiff’s claims as a matter of
law. See, e.g., Conopco, Inc. v. Roll Intern'l, 231 F.3d 82, 86-87 (2d Cir.2000).
Second, when contemplating a dismissal pursuant to Fed. R. Civ. P. 12(b)(6), the
following matters outside the four corners of the complaint may be considered: (1) documents
attached as an exhibit to the complaint or answer, (2) documents incorporated by reference in the
complaint (and provided by the parties), (3) documents that, although not incorporated by
reference, are “integral” to the complaint, or (4) any matter of which the court can take judicial
notice for the factual background of the case.4

4

See Fed. R. Civ. P. 10(c) (“A copy of any written instrument which is an exhibit
to a pleading is a part thereof for all purposes.”); Seale v. Madison Cnty., 929 F. Supp.2d 51, 64
& n.2 (N.D.N.Y. 2013) (Suddaby, J.) (collecting cases).
13

III.

ANALYSIS
A.

Defendants’ Motion in Limine to Exclude Expert Testimony

After carefully considering the matter, the Court grants Defendants’ motion in limine for
the reasons stated by Defendants in their motion papers and during oral argument. See, supra,
Part I.B.1. of this Decision and Order. (See also Dkt. No. 28 [Hrg. Tr].) The Court would add
only that, even if the Court were to deny Defendants’ motion and admit into evidence the expert
testimony of Dr. Betak, the Court would reach the same conclusion as stated below in Part III.B.
of this Decision and Order (regarding Plaintiff’s motion). This is because whether Defendants
had a legal right to construct a common carrier railroad on the easement during the time in
question is an issue separate from whether the easement, which was permanent and had been
created by grant, remained valid at the time of Plaintiff’s interference. At most, Plaintiff’s
argument goes to a measure of damages, which was addressed (and rejected) by the Appellate
Division, Fourth Department.
B.

Plaintiff’s Motion for a Preliminary Injunction
1.

Irreparable Harm

After carefully considering the matter, the Court finds that Plaintiff did not demonstrate
that irreparable harm would result if the present motion is not granted, for the reasons stated by
Defendants in their motion papers and during oral argument. See, supra, Part I.B.2. of this
Decision and Order. (See also Dkt. No. 28 [Hrg. Tr].) The Court would add only that, during
oral argument, Plaintiff’s counsel essentially admitted that the ultimate purpose of enabling
Plaintiff to pursue its federal administrative proceeding to conclusion unhampered by the
enforcement of the state court judgments is to relieve Plaintiff of the necessity of having to pay

14

to Defendants the damages awarded by the New York State court for unlawfully interfering with
Defendants’ easement. (Dkt. No. 28, at 38-43 [Hrg. Tr.].) Setting aside the questionable nature
of Plaintiff’s assumption that an STB ruling in Plaintiff’s favor would justify a diminution in the
damages awarded to Defendants in New York State court (give the ruling’s lack of relevance to
the rationales for those damages awards),5 a judicial remedy appears available for Plaintiff to
recover any such improperly paid damages, rendering a monetary award adequate.6
2.

Likelihood of Success on the Merits

Having concluded that Plaintiff has failed to demonstrate irreparable harm, the Court
need not, and does not, decide whether Plaintiff has demonstrated either (a) a likelihood of
success on the merits or (b) a sufficiently serious question as to the merits of the case to make it
a fair ground for litigation and a balance of hardships tipping decidedly in its favor. However,
for the purpose of thoroughness on appellate review, the Court finds it is appropriate to render
the following alternative findings.

5

In awarding the damages, the New York State court considered (1) “the cost to
reinstall the railroad spur less the cost which would have been incurred to return the easement
(railroad spur) to a serviceable condition,” as well as (2) the “malicious” nature of the currentPlaintiff’s interference (given its prior notice of the current-Defendants’ objection to the removal
of the railroad tracks) and the amount of the current-Plaintiff’s “net worth.” (See, e.g., Dkt. No.
12, Attach. 5; Dkt. No. 12, Attach. 6; Dkt. No. 12, Attach. 7; Dkt. No. 12, Attach. 8; Dkt. No. 12,
Attach. 9.)
6

See, e.g., N.Y. C.P.L.R. Rule 2221(e)(2) (“A motion for leave to renew . . . shall
demonstrate that there has been a change in the law that would change the prior determination . .
. .”); N.Y. C.P.L.R. Rule 5015(a) (“The court which rendered a judgment or order may relieve a
party from it upon such terms as may be just, on motion of any interested person with such
notice as the court may direct, upon the ground of: . . . newly-discovered evidence which, if
introduced at the trial, would probably have produced a different result and which could not have
been discovered in time to move for a new trial under section 4404; or . . . lack of jurisdiction to
render the judgment or order . . . .”); N.Y. C.P.L.R. Rule 5015(d) (“Where a judgment or order is
set aside or vacated, the court may direct and enforce restitution in like manner and subject to the
same conditions as where a judgment is reversed or modified on appeal.”).
15

After carefully considering the matter, the Court finds that Plaintiff did not demonstrate
either of these things for the following reasons: (a) the action is barred by the Rooker-Feldman
doctrine; (b) Plaintiff is precluded from relitigating the issue of preemption under the doctrine of
collateral estoppel; (c) the Court should abstain from deciding Plaintiff’s claims pursuant to the
Younger abstention doctrine; and (d) the STB does not have exclusive jurisdiction over
Defendants’ state-court claims.
a.

STB Jurisdiction

Taking the last ground first, Plaintiff argues that this Court should enjoin the enforcement
of the New York State court judgments because the ICCTA expressly grants the STB exclusive
jurisdiction over Defendants’ state-court claims. As argued by Plaintiff, the relevant provision
of the ICCTA states as follows:
(b) The jurisdiction of the Board over-(1) transportation by rail carriers, and the remedies provided in this
part with respect to rates, classifications, rules (including car service,
interchange, and other operating rules), practices, routes, services,
and facilities of such carriers; and
(2) the construction, acquisition, operation, abandonment, or
discontinuance of spur, industrial, team, switching, or side tracks, or
facilities, even if the tracks are located, or intended to be located,
entirely in one State,
is exclusive. Except as otherwise provided in this part, the remedies provided under this part
with respect to regulation of rail transportation are exclusive and preempt the remedies
provided under Federal or State law.
49 U.S.C. § 10501(b)(1)(2) (emphasis added).
However, the New York State court exercised jurisdiction over Defendants’ claims of
Plaintiff’s unlawful interference with their easement, not a claim regarding “the construction,

16

acquisition, operation, abandonment or discontinuance” of any type of “tracks[] or facilities”
under the ICCTA. Viewed from another perspective, Defendants’ easement, which was created
by grant and was permanent, remained valid despite the fact that its purpose was for a railroad
line whose usage was, at the time, prohibited (whether by fact or by law).7 The Court notes that
Plaintiff has adduced no evidence that the railroad line could not be brought back into
compliance at some future date through either an improvement in the railroad line or a change in
existing law (e.g., the implementation of magnetic levitation transit technology in the United
States). The Court notes also that Plaintiff has adduced no evidence that requiring it to remedy
the injury claimed by Defendants would have the effect of preventing or unreasonably interfering
with railroad transportation.
For these reasons alone, Plaintiff is unable to show a likelihood of success on the merits.
b.

Rooker-Feldman Doctrine

In the alternative, Plaintiff cannot establish a likelihood of success on the merits because
its claims are barred by the Rooker-Feldman doctrine.
Generally, the Rooker-Feldman doctrine provides that a losing party in state court cannot
bring a claim in federal district court to review and reject a judgment by the state court. See
Exxon Mobile Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 283-84 (2005) (citing Rooker v.
Fidelity Trust Co., 263 U.S. 413 [1923], and District of Columbia Court of Appeals v. Feldman,
460 U.S. 462 [1983]). The Rooker-Feldman doctrine extends to claims that are “inextricably
intertwined” with issues already settled in state court. Bridgewater Operating Corp. v. Feldstein,

7

(Dkt. No. 12, Attach. 3 [containing Right of Way Agreement, which describes a
“permanent right of way for a railroad spur track”].)
17

346 F.3d 27, 29 (2d Cir. 2003) (holding that the Rooker-Feldman doctrine bars any claim that
directly implicates the propriety of a final judgment in state court). Claims brought in district
court in violation of the Rooker-Feldman doctrine are properly dismissed for lack of subjectmatter jurisdiction. Exxon Mobile Corp., 544 U.S. at 284.
Here, an Order of this Court enjoining the enforcement of the final judgments in state
court would directly implicate the propriety of those judgments. The Court notes that it is not
persuaded by Plaintiff’s argument that Congress (through the Anti-Injunction Act and/or
ICCTA) has specifically authorized the Court to sit in direct review of the state court decisions in
question. Cf. Riffin v. Snyder, 04-CV-2964, 2004 WL 3661337, at *1 (D. Md. Sept. 17, 2004)
(applying Rooker-Feldman doctrine despite argument that ICCTA preempted state
environmental law giving rise to state court action). Nor is the Court persuaded that the ICCTA
satisfies the “in aid of jurisdiction” exception of the Anti-Injunction Act because of the
preemptive effect of the ICCTA. Atl. Coast Line R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S.
281, 294 (1970) (“[F]ederal court does not have inherent power to ignore the limitations of [the
Anti-Injunction Act] and to enjoin state court proceedings merely because those proceedings . . .
invade an area preempted by federal law, even when the interference is unmistakably clear.”).
Nor is the Court persuaded that Plaintiff is not seeking what in substance would be appellate
review of the state court judgments. See Johnson v. DeGrandy, 512 U.S. 997, 1005-06 (1994)
(“[U]nder . . . [the Rooker-Feldman doctrine] a party losing in state court is barred from seeking
what in substance would be an appellate review of the state judgment in a United States District
Court . . . .”) (emphasis added).

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c.

Doctrine of Collateral Estoppel

Again in the alternative, Plaintiff cannot establish a likelihood of success on the merits
because its litigation of the preemption issue is barred by the doctrine of collateral estoppel.
Generally, under New York law, the doctrine of collateral estoppel (or issue preclusion)
has two essential elements: (1) “the identical issue necessarily must have been decided in the
prior action and be decisive of the present action”; and (2) “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).8
Here, after receiving both briefing and oral argument on the issue, the New York State
court expressly decided against Plaintiff, and in favor of Defendants, regarding Plaintiff’s
argument that the state court lacked subject-matter jurisdiction over Defendants’ action because
of the preemptive effect of the ICCTA; and the Appellate Division, Fourth Department affirmed
that decision. (Dkt. No. 13, Attach. 1, at 11-14 [attaching pages “8” through “11” of Supreme
Court’s Order of Jan. 21, 2014]; Dkt. No. 13, Attach. 2, at 2 [attaching Appellate Division’s
Order of Nov. 14, 2014, affirming Supreme Court’s Order].) The Court notes that it rejects
Plaintiff’s argument that state court decisions cannot have collateral estoppel effect over a
determination of the preemptive effect of the ICCTA. See, e.g., B. Willis, C.P.A., Inc. v. BNSF
Ry. Corp., 531 F.3d 1282, 1303 (10th Cir. 2008) (holding that doctrine of collateral estoppel

8

Generally, under New York law, the doctrine of res judicata (or claim preclusion)
has three elements: “(1) the previous action involved an adjudication on the merits; (2) the
previous action involved the parties or those in privity with them; and (3) the claims asserted in
the subsequent action were, or could have been, raised in the prior action.” Murtaugh v. New
York, 810 F. Supp. 2d 446, 485 (N.D.N.Y. 2011) (Suddaby, J.) (internal quotation marks
omitted).
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barred landowner's claim for declaratory judgment that ICCTA preempted state eminent domain
statutes as applied to plant operator's condemnation of easement across landowner's property).
d.

Younger Abstention Doctrine

Finally, again in the alternative, Plaintiff cannot establish a likelihood of success on the
merits because its claims are barred by the Younger abstention doctrine.
Generally, pursuant to Younger v. Harris, 401 U.S. 37, 43-45 (1971), and its progeny, a
federal district court does not have jurisdiction over an action seeking injunctive or declaratory
relief where (1) “there is an ongoing state proceeding,” (2) “an important state interest is
implicated,” and (3) “the plaintiff has an avenue open for review of constitutional claims in state
court.” Parent v. N.Y., 485 F. App'x 500, 503 (2d Cir. 2012) (quoting Liberty Mut. Ins. Co. v.
Hurlbut, 585 F.3d 639, 647 [2d Cir. 2009]). “In the typical Younger case, the federal plaintiff is
a defendant in ongoing or threatened state court proceedings seeking to enjoin continuation of
those state proceedings. Moreover, the basis for the federal relief claimed is generally available
to the would-be federal plaintiff as a defense in the state proceedings.” Donohue v. Mangano,
886 F. Supp. 2d 126, 144 (E.D.N.Y. 2012) (quoting Crawley v. Hamilton Cnty. Comm’rs, 744
F.2d 28, 30 [6th Cir. 1984]).
Here, the state-court proceedings are ongoing in that Plaintiff has sought leave to appeal
to the New York State Court of Appeals. Moreover, an important state interest is implicated,
namely, the ability of New York State courts to adjudicate the rights of owners of real property
that is located within its jurisdiction. See, e.g., Morpurgo v. Inc. Vill. of Sag Harbor, 07-CV1149, 2007 WL 3375224, at *14 (E.D.N.Y. Oct. 11, 2007) (“I find here that ‘important’ state
interests are involved, namely, the ability of the state court to adjudicate the real property rights

20

of common tenants in, inter alia, partition actions.”), adopted in relevant part, 2007 WL
3355582 (E.D.N.Y. Nov. 8, 2007), aff'd in part and vacated on other grounds, 327 F. App'x 284
(2d Cir. 2009); Pritchard v. Alabama Power Co., 11-CV-0228, 2011 WL 3627381, at *2 (M.D.
Ala. July 28, 2011) (“Real property interests are important state interests.”) (collecting cases).9
Finally, Plaintiff has an avenue open for review of constitutional claims in state court.
C.

Defendants’ Motion to Dismiss for Lack of Subject-Matter Jurisdiction
and/or for Failure to State a Claim

After carefully considering the matter, the Court grants Defendants’ motion to dismiss for
the reasons stated in their memoranda of law. See, supra, Part I.B.3. of this Decision and Order.
In addition to those reasons, the Court relies on the same analysis set forth above in Part III.B.2.
of this Decision and Order.
D.

Defendants’ Motion for Sanctions

After carefully considering the matter, the Court denies Defendants’ motion for
sanctions. While Plaintiff’s Complaint and motion for preliminary injunction were lacking in
merit, they were not so clearly unwarranted by existing law as to be sanctionable pursuant to
Fed. R. Civ. P. 11(b)(2), especially when all doubts are resolved in Plaintiff’s favor. Moreover,
while the filing of Plaintiff’s Complaint was certainly aggressive (and its central legal theory

9

Another important state interest is in ensuring compliance with court orders. See
Grundstein v. Vermont, 11-CV-0134, 2011 WL 6291955, at *4 (D. Vt. Dec. 15, 2011) (“As to an
important state interest, not only is there such an interest in declaring real property rights in a
partition action . . . but also in ensuring compliance with court orders.”); Hindu Temple Soc'y of
N. Am. v. Supreme Court of the State of New York, 335 F. Supp.2d 369, 372 (E.D.N.Y.2004)
(“[A]t this stage of the state proceedings, after years of litigation in the state courts, the state's
interest has broadened to include a strong interest in enforcing its judicial orders and
judgments.”).
21

imaginative), it was not so clearly brought for the purpose of harassing Defendants and
needlessly increasing their litigation costs as to be sanctionable pursuant to Fed. R. Civ. P.
11(b)(1).
ACCORDINGLY, it is
ORDERED that Defendants’ motion in limine to exclude the hearing testimony of
Plaintiff’s expert witness (Dkt. No. 31) is GRANTED; and it is further
ORDERED that Plaintiff’s motion for a preliminary injunction pursuant to Fed. R. Civ.
P. 65 (Dkt. No. 2) is DENIED; and it is further
ORDERED that Defendants’ motion to dismiss (Dkt. No. 11) is GRANTED; and it is
further
ORDERED that, while Defendants’ letter-motion for the Court to consider Defendants’
Fed. R. Civ. P. 12 reply memorandum of law (in deciding their motion for sanctions) (Dkt. No.
38) is GRANTED, their motion for sanctions pursuant to Fed. R. Civ. P. 11(b) (Dkt. No. 34) is
DENIED; and it is further
ORDERED that Plaintiff’s Complaint is dismissed. The Clerk is directed to enter
judgment and close this case.
Dated: March 26, 2015
Syracuse, New York

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