Rottier v. Paz
OPINION & ORDER re: 7 MOTION to Dismiss filed by David Paz. Because, for the reasons stated above, this Court lacks subject matter jurisdiction to hear this case, defendant's motion to dismiss is GRANTED. The Clerk of Court is instructed to terminate the motion pending at docket entry number 7, and to close this case. (Signed by Judge Paul A. Engelmayer on 1/3/2013) (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
DAVID PAZ, et al.,
12 Civ. 1324 (PAE)
OPINION & ORDER
PAUL A. ENGELMAYER, District Judge:
Plaintiff Rebecca Rottier, proceeding pro se, brings this diversity action for tortious
interference with contract; intentional and negligent infliction of economic harm; fraud; and a
permanent injunction, all in connection with the proposed sale of shares in a cooperative housing
corporation. Defendant David Paz moves to dismiss this complaint for, inter alia, lack of subject
matter jurisdiction. As explained below, Paz’s motion to dismiss on that ground is granted, on
the basis of the Rooker-Feldman doctrine.1
The original Complaint in this case names Paz as the only defendant. Dkt. 1. The Amended
Complaint purports to name four additional defendants: Moran Shuster, Tal Fuhrer, 130 W
Coop LLC, and CIDH-VCMB LLC. Dkt. 19. However, there is no indication that these
defendants were ever served. Accordingly, the claims against them are also dismissed.
Rottier, an Israeli citizen, owns shares in a cooperative housing corporation, 205 West
103 Owners Corp. (the “Coop”). Rottier is on the board of the Coop.
In November 2010, R&L Realty Associates (“R&L”), which is not a party to this action,
entered into a contract with Paz to sell him 25 unsold shares in the Coop. R&L is a partnership
with two partners, Ruth Shomron and Mali Fuks. At the time the contract was signed, litigation
was already underway regarding the sale of shares in the Coop.
In 2002, Shomron filed a suit in the Supreme Court of the State of New York, New York
County. See Shomron v. Griffin, et al., Index No. 102882/02. In that action, Shomron, on behalf
of R&L, successfully sought to rescind the sale of certain Coop apartments to defendants who
are not parties here. See Shomron v. Griffin, 70 A.D.3d 406 (1st Dep’t 2010). As is most
pertinent to this case, on August 16, 2010, Justice Marcy Friedman issued an Order giving
Shomron the power to sell 25 apartments at the Coop owned by R&L, and specifically providing
that Shomron was authorized to do so in a bulk sale (“the August 2010 Order”). In that action,
Fuks had opposed the bulk sale of the apartments, to no avail.
In April 2010, the Coop brought a separate action in the same court against Shomron and
R&L. See 205 W. 103 Owners Corp. v. Ruth Shomron and R & L Realty Assocs., Index No.
105360/10. In that action, the Coop sought a permanent injunction enjoining the sale of these
shares to Paz. The Coop also brought claims for breach of contract, breach of fiduciary duty,
The Court’s account of the underlying facts in this case is drawn from the Amended Complaint
(Dkt. 19). On a motion to dismiss, the Court takes all facts pleaded in the complaint as accurate.
However, a court “may also look to public records . . . in deciding a motion to dismiss.” Blue
Trees Hotel Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212,
217 (2d Cir. 2004). To the extent Paz’s filings in this case cite information from public records,
the Court has considered such information in deciding this motion.
breach of the covenant of good faith and fair dealing, and fraud. Notably, Rottier verified the
complaint in that action as an officer of the Coop. On November 19, 2010, Justice Friedman
granted R&L’s motion to dismiss and denied the Coop’s motion for a preliminary injunction (the
“November 2010 Order”). In that Order, Justice Friedman stated that the current action was
“nothing more than an attempt to make an end run around” the August 2010 Order.
Despite Justice Friedman’s orders in these two cases, the Coop continued to refuse to
cooperate in R&L’s sale of 25 shares to Paz. Accordingly, R&L brought an Article 78
proceeding in the same court against the Coop. See R&L Realty Assocs. v. 205 W. 103 Owners
Corp., Index No. 104662/11. That action sought an order directing the Coop to issue stock
certificates for the 25 shares so that the sale to Paz could proceed. On June 13, 2011, Justice
Friedman granted R&L’s petition, noting that the Coop’s objections to the petition were “yet
another attempt to frustrate this court’s order” regarding the sale. Justice Friedman ordered the
Coop to “prepare, execute and deliver” all closing documents “in connection with R&L’s
impending sale to Paz” of the 25 shares (the “June 2011 Order”).
The Coop still refused to comply. On December 16, 2011, Justice Friedman issued an
order (the “December 2011 Contempt Order”), holding the defendants, including the Coop and
Rottier, in contempt for failing to comply with the court’s June 2011 Order. Justice Friedman
found that the defendants (including Rottier) had “shown no excuse for their delay in complying
with the [June 2011 Order] with respect to the execution of the documents necessary to
effectuate the bulk sale” to Paz, and that there was “no colorable basis upon which [the Coop]
objects to the sale to Paz.”
On August 23, 2011, R&L commenced yet another action in the same court, this time
against both the Coop and its officers, including Rottier. R&L Realty Assocs. v. 205 W. 103rd
Owners Corp., Rebecca Rottier, et al., Index No. 108106/11. On February 2, 2012, Justice
Friedman granted a temporary restraining order enjoining the Coop and its officers, including
Rottier, from “taking any steps or proceedings or otherwise taking any acts” to interfere with the
sale of the 25 shares, pending final judgment in that matter (the “February 2012 TRO”).
Less than three weeks later, Rottier commenced this action.
On February 22, 2012, Rottier filed her original complaint in this action. Dkt. 1.
On April 25, 2012, Paz moved to dismiss Rottier’s complaint. Dkt. 7. On May 11, 2012, Rottier
filed an amended complaint, and on May 14, she opposed Paz’s motion to dismiss. Dkts. 17, 19.
In a letter dated June 1, 2012, counsel for Paz informed the Court that he would file a reply
addressing both Rottier’s original and amended complaints.3 Dkt. 20. Paz filed that reply on
June 18, 2012. Dkt. 21. Rottier filed a sur-reply on June 22, 2012. Dkt. 26.
In her Amended Complaint, Rottier argues that her due process and equal protection
rights have been violated by the New York Supreme Court, which she claims is “heavily biased
in favor of local” interests, including those of R&L and Paz. Am. Compl. ¶ 7. Rottier claims
she “cannot get [an] independent and unbiased trial” at state court. Id. ¶ 9. She says that, were
she and the other Coop board members to follow the state court’s orders and allow the sale of 25
shares to Paz to go forward, they would be committing “financial suicide” by being forced to
“facilitate what appears to be a loophole for money-laundering of funds” by R&L and Paz. Id.
¶¶ 8, 11. She avers that R&L and Paz have forged documents, diverted Coop money, concealed
Pursuant to this Court’s Individual Rules, Rule 3B, Paz’s failure to file either an answer or an
amended motion to dismiss in response to Rottier’s amended complaint means that he relies on
the previously filed motion to dismiss.
material information from the Coop regarding the sale to Paz, and otherwise acted in bad faith
and in dereliction of their responsibilities.
The Amended Complaint alleges five causes of actions against Paz and his codefendants: two counts of tortious interference with contract; intentional and negligent infliction
of economic harm; fraud; and a request for a permanent injunction. These claims are
substantially identical to those alleged in the original Complaint, the only difference being the
addition of references to the newly added co-defendants.
Applicable Legal Standard
To state a claim, a complaint must plead sufficient facts to “state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In construing a
complaint, the Court is required to assume the truth of “all well-pleaded, nonconclusory factual
allegations in the complaint.” Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 124 (2d Cir.
2010) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Additionally, the Court is required to
read a pro se plaintiff’s complaint liberally, see Erickson v. Pardus, 551 U.S. 89, 94 (2007), and
interpret it as raising the strongest arguments it suggests, Triestman v. Fed. Bureau of Prisons,
470 F.3d 471, 474 (2d Cir. 2006).
However, even a pro se plaintiff must establish that the court has subject matter
jurisdiction over the action, as the “burden of demonstrating subject matter jurisdiction lies with
the party asserting it.” MLC Fishing, Inc. v. Velez, 667 F.3d 140, 141 (2d Cir. 2011).
In seeking relief from this Court, Rottier claims that her rights under the due process and
equal protection clauses have been violated by the various orders, chronicled above, by the New
York State courts, which consistently run in favor of R&L and Paz, and against Rottier and the
Coop. She seeks damages and a permanent injunction against the sale of the 25 shares to Paz.
She argues that the sale to Paz would put the rest of the shareholders in the Coop at financial
risk. As chronicled above, these same claims have been litigated repeatedly in state court in New
York. The Supreme Court of the State of New York, New York County, has issued no fewer
than three orders compelling the sale to go forward and for the Coop to enable that sale.
This Court lacks subject matter jurisdiction over this controversy because, under the
Rooker-Feldman doctrine of abstention, the Court is squarely precluded from exercising
jurisdiction over it. The Rooker-Feldman doctrine is a “judicially-created doctrine of abstention
based on principles of comity.” Lipin v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 202 F.
Supp. 2d 126, 133 (S.D.N.Y. 2002); see generally Rooker v. Fidelity Trust Co., 263 U.S. 413
(1923); Dist. of Columbia Ct. of Appeals v. Feldman, 460 U.S. 462 (1983). It bars a federal
district court from exercising jurisdiction over a suit that is “in fact a collateral attack on a final
state court judgment.” Id. In explaining the doctrine, the Supreme Court has stated that, where
“constitutional claims presented to a United States District Court are inextricably intertwined”
with a state court’s decision, then the district court “is in essence being called upon to review the
state court decision,” which it “may not do.” Feldman, 460 U.S. at 428 n.16.
In the Second Circuit, a district court is to consult four factors to determine whether the
Rooker-Feldman doctrine applies:
First, the federal-court plaintiff must have lost in state court. Second, the
plaintiff must complain of injuries caused by a state-court judgment.
Third, the plaintiff must invite district court review and rejection of that]\
judgment. Fourth, the state-court judgment must have been rendered
before the district court proceedings commenced—i.e., Rooker–Feldman
has no application to federal-court suits proceeding in parallel with
ongoing state-court litigation.
Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77, 85 (2d Cir. 2005) (internal citation and
brackets omitted). Here, the second and third factors, often referred to as the substantive factors,
are easily met. The Second Circuit has described the second factor as the “core requirement
from which the others derive,” and “the key” to Rooker-Feldman analysis. Id. at 87. Rottier
clearly is complaining of injuries caused by a state court judgment: She argues that her financial
interests are being jeopardized by the state court’s orders compelling the sale to go forward. See
Am. Compl. ¶¶ 8, 10, 26, 35, 47, 48, 51. As to the third factor, Rottier also explicitly seeks this
Court’s review of those state court judgments against her: She states that she believes she
“cannot get [an] independent and unbiased trial” in state court. Id. ¶ 9.
The substantive factors thus met, the Court turns to the procedural Rooker-Feldman
factors. As to the first, Rottier argues that she did not lose in state court, because the Coop,
rather than she herself, was the losing party in the state court proceedings. Rottier is correct that
she was not formally a party to the proceedings that resulted in the the August 2010, November
2010, and June 2011 Orders.4 However, the Second Circuit has explained that, in the context of
the Rooker-Feldman doctrine, the decisive question when the party bringing the federal district
court action is not identical to the party that lost in state court is whether there is sufficient
privity, as a matter of federal law, between the parties such that the federal plaintiff should be
bound by the state lawsuit. Hoblock, 422 F.3d at 90. Under federal law, “a nonparty can be
bound by the results of someone else’s litigation ‘when, in certain limited circumstances, a
person, although not a party, has his interests adequately represented by someone with the same
interests who is a party.’” Id. (quoting Martin v. Wilks, 490 U.S. 755, 762 n.2 (1989)). Here, the
Rottier was a named defendant in R&L Realty Assocs. v. 205 W. 103 Owners Corp., Rebecca
Rottier, et al., Index No. 108106/11. The December 2011 Contempt Order and the February
2012 TRO in that case both run against her.
interests involved in the earlier state court litigation are identical to those here: In state court, the
Coop argued that the proposed sale of shares to Paz by R&L would put the Coop at great risk of
financial injury, because proper procedures were not being followed and information was being
withheld.5 Justice Friedman rejected that argument in the November 2010 Order. Here, Rottier
similarly argues that the proposed sale of shares to Paz by R&L places her, a Coop board
member and shareholder, at great risk of financial injury, for the same reasons. Rottier’s stated
interests in bringing this lawsuit are two: first, to protect herself financially as a member of the
Coop; second, to have this Court “correct” the allegedly incorrect state court judgments. The
second is impermissible under Rooker-Feldman, and the first is indistinguishable from the
interests the Coop sought, and failed, to protect when it lost in state court. Thus, for the purposes
of the Rooker-Feldman inquiry, Rottier lost in state court.
As to the final factor, Rottier argues that the state court orders against her have all been
interlocutory in nature, and thus the Rooker-Feldman doctrine does not preclude this Court from
exercising jurisdiction, as there has been no final state judgment rendered. That is factually
incorrect. In the August 2010 Order, Justice Friedman authorized Shomron, on behalf of R&L,
to sell the 25 shares; that is the same sale Rottier now seeks to enjoin. In the June 2011 Order,
Justice Friedman, after reviewing the merits of the Coop’s arguments, granted R&L’s Article 78
petition, and ordered the Coop to “prepare execute and deliver at the closing the [necessary]
documents in connection with R&L’s impending sale to Paz or his designees.” The June 2011
Order is explicitly designated as a “final disposition” on its cover sheet, which is signed by the
presiding Supreme Court judge. The subsequent action brought by R&L against the Coop,
which is currently pending before the Supreme Court, is an attempt by the Coop to enforce the
Rottier also verified the complaint in that action as an officer of the Coop.
state court's earlier final judgment in its favor, and does not represent a new adjudication on the
merits. Accordingly, the state court judgment was final and concluded before this action was
commenced in February 2012.
Because, for the reasons stated above, this Court lacks subject matter jurisdiction to hear
this case, defendant's motion to dismiss is GRANTED. The Clerk of Court is instructed to
terminate the motion pending at docket entry number 7, and to close this case.
Paul A. Engelmayer
United States District Judge
Dated: January 3, 2013
New York, New York
Because the Court concludes that it lacks subject matter jurisdiction to hear this case, it is
unnecessary to consider Paz's alternative grounds for dismissal of the complaint.
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