NRP Holdings LLC et al v. City of Buffalo et al
Filing
68
DECISION AND ORDER GRANTING in part and DENYING in part Defendant BURA's 58 Motion to Dismiss. Signed by William M. Skretny, Chief Judge on 9/14/2013. (MEAL)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
NRP HOLDINGS LLC and
NRP PROPERTIES LLC,
Plaintiffs,
v.
DECISION AND ORDER
11-CV-472S
BUFFALO URBAN RENEWAL AGENCY, et al.,
Defendants.
I. INTRODUCTION
As this Court noted in a July 2012 Decision, this lawsuit arose as a result of a stalled
housing project on the City of Buffalo’s East Side. From 2007 to 2009, Plaintiffs NRP
Holdings LLC and NRP Properties LLC (collectively “NRP”),1 two intertwined housing
development corporations, were working with the City of Buffalo on a project to build and
manage 50 subsidized homes in the Masten and Cold Springs neighborhoods in the City
of Buffalo. After each side had taken significant steps towards the project’s completion, the
City of Buffalo, a defendant in this case, backed out of the deal because, as NRP alleges,
NRP rebuffed Mayor Byron Brown’s attempts to involve his political ally Richard
Stenhouse, and Stenhouse’s company, Jeremiah Partnership for Community
Development, Inc. (“Jeremiah Partnership”), in the project.
In July of 2012, this Court dismissed several of NRP’s claims but found that its
1
NRP is the alleged assignee of Belm ont Shelter Corporation (“Belm ont”) , a separate entity that
was also involved in the project. NRP “stands in the shoes” of Belm ont for the purposes of this m otion.
Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 101 (2d Cir. 2007).
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claims under the doctrine of promissory estoppel and under the Racketeer Influenced and
Corrupt Organizations Act (commonly known as “RICO”) survived the City’s motion to
dismiss. This Court also granted NRP leave to file an amended complaint, adding the City
of Buffalo Urban Renewal Agency (“BURA”) as a defendant. According to NRP, BURA is
a public benefit corporation that acts as an agent of Buffalo in carrying out its urban
renewal services.
NRP then filed the second amended complaint, and BURA now moves to dismiss
NRP’s promissory-estoppel claim against it. In addition, BURA seeks dismissal of Counts
I, III, and V, which are the same claims that this Court previously dismissed as against the
City of Buffalo defendants in July 2012.
For the following reasons, BURA’s motion is granted in part and denied in part.
II. BACKGROUND
A.
Facts2
This Court has already comprehensively detailed the facts that form the basis of
NRP’s complaint. See NRP Holdings LLC v. City of Buffalo, No. 11-CV-472S, 2012 WL
2873899, at *2–*3 (W.D.N.Y. July 12, 2012). And this Court will incorporate that recitation
here. At this time, it suffices to note that the events leading to this litigation began in
November of 2007 when the City expressed its desire to work with NRP in constructing
affordable single-family homes within the City limits. (Second Am. Compl., ¶ 21; Docket
No. 44.) NRP contends that promises to this end were made in a February 25, 2008 letter
2
Facts alleged in NRP’s second am ended com plaint – but not labels or legal conclusions – m ust
be accepted as true for the purposes of resolving this m otion. See Ashcroft v. Iqbal, 556 U.S. 662, 668,
129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); ATSI Com m c'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d
Cir. 2007).
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composed by Timothy Wanamaker, the Executive Director of Buffalo’s Office of Strategic
Planning. (Id., ¶ 23.) In that letter, Wanamaker wrote to NRP:
This letter is to confirm that the Buffalo Urban Renewal Agency
has earmarked $1,600,000 of the City’s HOME funds for the []
project that consists of construction of fifty (50) units of singlefamily homes in the Masten Park and Cold Springs
neighborhoods of the City of Buffalo.
(Wanamaker Letter, attached as “Ex. A” to Am. Compl.; Docket No. 22-1.) After describing
the details of the plan – including the “lease-to-own” component, the City’s promise to offer
its “usual Low-Income Housing Pilot Agreement,” and the City’s commitment to provide 51
vacant lots at a price of $2,000 per lot – Wanamaker noted, “This commitment letter is only
valid if the developer is successful in securing a 2008 Low-Income Housing Tax Credit
allocation to complete the project.” (Id.) He concluded, “Of course, BURA is required to
meet all applicable Federal, State, and local rules and regulations before issuance of HOME
funds to eligible recipients.” (Id.)
Although NRP later acquired the tax credit (Second Am. Compl. ¶¶ 28–29), the
project was never completed. In short, NRP alleges that Defendants impermissibly stalled
the project because NRP refused to include – and pay – the Mayor’s political ally, Richard
Stenhouse, and his company, the Jeremiah Partnership.
B.
Procedural History
NRP filed a complaint in this Court on June 6, 2011. (Docket No. 1.) After the
parties’ unsuccessful attempt to resolve the dispute through mediation (Docket No. 19),
NRP filed an amended complaint on December 23, 2011. (Docket No. 22.) Thereafter, on
January 13, 2012, NRP voluntarily dismissed Jeremiah Partnership and Richard Stenhouse
as defendants. The same day, the remaining defendants moved to dismiss the amended
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complaint. (Docket Nos. 26, 27.) On July 12, 2012, this Court granted in part and denied in
part the City’s motion to dismiss; it also granted NRP leave to file a second amended
complaint. (Docket No. 43.) NRP filed that complaint on July 18, 2012. The City thereafter
answered, and BURA, newly added, filed the present motion to dismiss on October 15,
2012. Briefing thereon concluded on November 13, 2012, at which time this Court took the
motion under consideration.
III. DISCUSSION
A. Motion to Dismiss Standard – Rule 12(b)(6)
Rule 12(b)(6) allows dismissal of a complaint for “failure to state a claim upon which
relief can be granted.” Fed. R. Civ. P. 12(b)(6). Federal pleading standards are generally
not stringent: Rule 8 requires only a short and plain statement of a claim. Fed. R. Civ. P.
8(a)(2). But the plain statement must “possess enough heft to show that the pleader is
entitled to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1966, 167 L.
Ed. 2d 929 (2007).
When determining whether a complaint states a claim, the court must construe it
liberally, accept all factual allegations as true, and draw all reasonable inferences in the
plaintiff’s favor. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007)
Legal conclusions, however, are not afforded the same presumption of truthfulness. See
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (“The tenet
that a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions.”).
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
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accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 678 (quoting
Twombly, 550 U.S. at 570). Labels, conclusions, or a “formulaic recitation of the elements
of a cause of action will not do.” Twombly, 550 U.S. at 555. Facial plausibility exists when
the facts alleged allow for a reasonable inference that the defendant is liable for the
misconduct charged. Iqbal, 556 U.S. at 678. The plausibility standard is not, however, a
probability requirement: the pleading must show, not merely allege, that the pleader is
entitled to relief. Id. at 678; Fed. R. Civ. P. 8(a)(2). Well-pleaded allegations must nudge the
claim “across the line from conceivable to plausible.” Twombly, 550 U.S. at 570.
Courts therefore use a two-pronged approach to examine the sufficiency of a
complaint, which includes “any documents that are either incorporated into the complaint
by reference or attached to the complaint as exhibits.” Blue Tree Hotels Inv. (Can.), Ltd.
v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004). This
examination is context specific and requires that the court draw on its judicial experience
and common sense. Iqbal, 556 U.S. at 679. First, statements that are not entitled to the
presumption of truth – such as conclusory allegations, labels, and legal conclusions – are
identified and stripped away. See Id. Second, well-pleaded, non-conclusory factual
allegations are presumed true and examined to determine whether they “plausibly give rise
to an entitlement to relief.” Id.
B.
BURA’s Motion
1.
Promissory Estoppel
Under New York law, a claim for promissory estoppel requires a clear and
unambiguous promise, reasonable and foreseeable reliance on that promise, and an injury
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sustained in reliance on that promise.3 Kaye v. Grossman, 202 F.3d 611, 615 (2d Cir. 2000);
Ripple's of Clearview, Inc. v. Le Havre Assocs., 452 N.Y.S.2d 447, 449, 88 A.D.2d 120
(1982).
NRP contends that BURA is liable under this doctrine because it refused to follow
through on the promises found in the Wanamaker letter. In a sparse motion, BURA raises
two arguments, which it contends compel dismissal. It argues that (1) this Court previously
found, in its July 2012 Decision and Order, that the “promises” in the letter are “not promises
at all” and that (2) New York law requires NRP to allege that BURA violated “duties
independent of the [Wanamaker] agreement.” (BURA Br., at 3, 4; Docket No. 58-2.”) BURA
does not, at least at this point, raise any argument with respect to the final two elements of
a promissory-estoppel claim as outlined above.
On this limited basis, this Court must deny the motion.
First, this court never found that there were no promises in the Wanamaker letter.
Instead, it found that the letter did not create a binding contract between NRP and the
defendants. Although this Court did find that the letter demonstrated only the defendants’
commitment to the project, and not to NRP, this Court is not prepared to rule – especially
without argument – that this, ipso facto, means that NRP cannot state a promissoryestoppel claim. There are, in fact, several promises made in the Wanamaker letter. As this
Court wrote in its July 2012 Decision, “The letter commits the City to ‘extend to the
development its usual Low-Income Housing PILOT agreement,’ to ‘provide $1,600,000 of
its HOME funds to assist in the construction’ and to ‘provide 51 buildable vacant lots.’”
3
There is no dispute that New York law applies .
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Whether those promises are sufficiently clear and unambiguous, whether they were subject
to further negotiation or execution, whether NRP actually relied on the them, whether NRP
was justified in relying on them, and whether NRP sustained an injury by virtue of that
reliance, are all relevant questions. But BURA does raise them, and this Court will therefore
not rule on them.
Second, a party asserting promissory-estoppel claim must allege “duties independent
of the agreement” only when an enforceable agreement exists. Cases cited by BURA
demonstrate this. In each, as NRP correctly notes, the court found that the dispute was
governed by contract; thus, to state a promissory-estoppel claim, the plaintiff was required
to allege a duty that arose independent of that agreement. See Randall's Island Aquatic
Leisure, LLC v. City of New York, 92 A.D.3d 463, 464, 938 N.Y.S.2d 62 (1st Dep’t 2012);
Iskalo Elec. Tower LLC v. Stantec Consulting Servs., Inc., 79 A.D.3d 1605, 1608, 916
N.Y.S.2d 373 (2010). This is sensible; “[w]hen an enforceable contract does exist, the
parties cannot assert a claim for promissory estoppel based on alleged promises that
contradict the written contract.” Bader v. Wells Fargo Home Mortgage Inc., 773 F. Supp. 2d
397, 415 (S.D.N.Y. 2011) (quoting NCC Sunday Inserts, Inc. v. World Color Press, Inc., 759
F. Supp. 1004, 1011 (S.D.N.Y. 1991). But that is not the case here. This Court has found
that there was not an enforceable agreement between NRP and the defendants. As such,
there is no “duties-independent-of-the-agreement” requirement. Indeed, there is no
agreement.
Rather, this is precisely the situation in which a promissory-estoppel claim could
apply. “Because it is a quasi-contractual claim . . . promissory estoppel generally applies
only in the absence of a valid and enforceable contract.” Kwon v. Yun, 606 F. Supp. 2d 344,
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368 (S.D.N.Y. 2009); see also Paxi, LLC v. Shiseido Americas Corp., 636 F. Supp. 2d 275,
287 (S.D.N.Y. 2009) (“[Promissory estoppel] is a narrow doctrine which generally only
applies where there is no written contract, or where the parties' written contract is
unenforceable for some reason.”).
BURA’s motion to dismiss this cause of action, on these grounds, is therefore
denied.
2.
Claims I, III, & V
NRP concedes that the Court’s July 2012 Decision, which dismissed these claims
as against the City of Buffalo, applies with equal force to BURA. Accordingly, BURA’s
motion to dismiss these claims is granted.
IV. CONCLUSION
BURA has not demonstrated that the Wanamaker letter was devoid of promises, and
NRP was not required to allege duties “independent of the agreement.” Its motion to dismiss
NRP’s promissory-estoppel claim is therefore denied. Its motion to dismiss Counts I, III, and
V of the second amended complaint, however, is granted. Those claims were more
thoroughly addressed – and then dismissed as against the City of Buffalo defendants – in
this Court’s July 2012 Decision. That decision applies equally to BURA.
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V. ORDERS
IT HEREBY IS ORDERED, that BURA’s Motion to Dismiss (Docket No. 58) is
GRANTED in part and DENIED in part.
SO ORDERED.
Dated:
September 14, 2013
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Court
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