Ramsey v. City of Newburgh

1

ARJORIE RAMSEY, Plaintiff, v. CITY OF NEWBURGH, ORANGE COUNTY, Defendants.

No. 23-CV-8599 (CS)

United States District Court, S.D. New York

October 8, 2024

Tanya Dwyer

Legal Services of the Hudson Valley

Counsel for Plaintiff

Paul Svensson

Hodges Walsh & Burke, LLP

Counsel for Defendant City of Newburgh

Matthew Nothnagle

Chief Assistant County Attorney

Orange County District Attorney's Office

Counsel for Defendant Orange County

OPINION & ORDER

CATHY SEIBEL, U.S.D.J.

Before the Court are the motions to dismiss of Defendants the City of Newburgh and the County of Orange. (ECF Nos. 30, 37.) For the following reasons, the motions are GRANTED.

I. BACKGROUND

For purposes of this motion, the Court accepts as true the facts, but not conclusions, set forth in Plaintiff's Amended Complaint, (ECF No. 27 (“AC”)).

A. Facts

Plaintiff Marjorie Ramsey was the sole owner of a property in the City of Newburgh, New York, where she has resided for 32 years. (See AC ¶¶ 1, 12.) She fell behind on her taxes, (id. ¶ 12), and on September 30, 2022, the City seized the property in a tax foreclosure for an unpaid tax lien of $23,000, and the deed was transferred to the City, (id. ¶¶ 1-2, 12). Plaintiff has not left the premises and the City is in the process of trying to evict her. (See Id. ¶¶ 11-14.) She alleges that the property was worth $264,000 on the day the City seized it and that she cannot afford to relocate without access to the equity in the property. (Id. ¶ 14.) She alleges that the City's retention of the excess value beyond what she owed in taxes violates the Takings and Excessive Fines clauses of the federal and New York Constitutions. (See generally AC.)

B. Procedural History

On September 29, 2023, Plaintiff commenced this lawsuit against Janice Gaston, Comptroller of the City of Newburgh, Todd Venning, City Manager for the City of Newburgh, and Steven Neuhaus, County Executive of Orange County. (ECF No. 1.)^[1] On November 27, 2023, Gaston and Venning filed a letter requesting a pre-motion conference in anticipation of a motion to dismiss, (ECF No. 12), and on December 1, 2023, Neuhaus did the same, (ECF No. 16). On December 27, 2023, the Court held a pre-motion conference and granted Plaintiff leave to amend the complaint. (See Minute Entry dated Dec. 27, 2023.) On February 16, 2024, Plaintiff filed the AC. (ECF No. 27.) The instant motions followed. (ECF Nos. 30, 37.)

II. LEGAL STANDARD

“A federal court has subject matter jurisdiction over a cause of action only when it has authority to adjudicate the cause pressed in the complaint.” Arar v. Ashcroft, 532 F.3d 157, 168 (2d Cir. 2008), vacated and superseded on other grounds on reh'g en banc, 585 F.3d 559 (2d Cir. 2009).^[2] “Determining the existence of subject matter jurisdiction is a threshold inquiry, and a claim is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Id. “When jurisdiction is challenged, the plaintiff bears the burden of showing by a preponderance of the evidence that subject matter jurisdiction exists, and the district court may examine evidence outside of the pleadings to make this determination.” Id. “The court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff, but jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it.” Morrison v. Nat'l Austl. Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008), aff'd on other grounds, 561 U.S. 247 (2010).

When a defendant moves to dismiss both for lack of subject matter jurisdiction and on other grounds such as failure to state a claim upon which relief can be granted, the Court must address the issue of subject matter jurisdiction first. See Rhulen Agency, Inc. v. Ala. Ins. Guar. Ass'n, 896 F.2d 674, 678 (2d Cir. 1990).

Ripeness is a jurisdictional inquiry, see, e.g., Island Park, LLC v. CSX Transp., 559 F.3d 96, 110 (2d Cir. 2009), and accordingly the Court “must presume that [it] cannot entertain [Plaintiff's] claims unless the contrary appears affirmatively from the record,” Murphy v. New Milford Zoning Comm'n, 402 F.3d 342, 347 (2d Cir. 2005); see Quick Cash of Westchester Ave. LLC v. Vill. of Port Chester, No. 11-CV-5608, 2013 WL 135216, at *6 (S.D.N.Y. Jan. 10, 2013) (“[R]ipeness is a jurisdictional inquiry antecedent to a Court's ability to hear claims.”). The concept of ripeness is “rooted in Article III's case or controversy requirement and the prudential limitations on the exercise of judicial authority.” S & R Dev. Ests., LLC v. Bass, 588 F.Supp.2d 452, 460 (S.D.N.Y. 2008). The ripeness doctrine “ensure[s] that a dispute has generated injury significant enough to satisfy the case or controversy requirement of Article III of the U.S. Constitution.” Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 90 (2d Cir. 2002). It also prevents courts from “entangling [themselves] in abstract disagreements over matters that are premature for review because the injury is merely speculative and may never occur, depending on the final administrative resolution.” Id. The ripeness requirement defers federal review of claims until they have “arisen in a more concrete and final form.” Murphy, 402 F.3d at 347.

III. DISCUSSION

A. Takings Clause

“The Takings Clause of the Fifth Amendment to the United States Constitution, made applicable to the states through the Fourteenth Amendment, provides that ‘private property' shall not ‘be taken for public use, without just compensation.'” Dorce v. City of N. Y., 608 F.Supp.3d 118, 139 (S.D.N.Y. 2022) (quoting U.S. Const. amend. V), motion to certify appeal denied, No. 19-CV-2216, 2022 WL 3133063 (S.D.N.Y. July 18, 2022). “A property owner states a claim for a violation of the Takings Clause when the plaintiff adequately alleges that the government took the plaintiff's property for public use without paying for it.” Id.

For the first cause of action - taking of private property without a valid public use -Plaintiff alleges that by foreclosing on her property, the City and the County have confiscated more property than was due and have no public use to support keeping her equity in the property, which exceeds the amount she owes in taxes and associated charges. (AC ¶¶ 22, 25.) For the second cause of action - taking of private property without just compensation - Plaintiff alleges that to effectuate just compensation, she is entitled to the surplus equity in her property based on its fair market value at the time of the taking. (Id. ¶ 34.)

In Tyler v. Hennepin Cnty., Minnesota, the Supreme Court determined that the plaintiff had plausibly alleged a taking where the plaintiff had accumulated $15,000 in debt on her property, including $2,300 in unpaid taxes, and the county seized and sold the property for $40,000 and kept the remaining $25,000 for its own use. See 598 U.S. 631, 635, 637 (2023); see also Polizzi v. Cnty. of Schoharie, No. 23-CV-1311, 2024 WL 1061503, at *6 (N.D.N.Y. Mar. 12, 2024) (plaintiffs plausibly alleged that county violated takings clause by retaining surplus proceeds from tax foreclosure sale). The City argues that Plaintiff's takings claim is premature because a foreclosure sale has not been completed, and no taking of surplus can occur until after the property is sold and the surplus is retained by the City. (ECF No. 39 (“Newburgh Mem.”) at 7-8.) The City also argues, (id. at 8), that the foreclosing government is only required to return proceeds from the sale in excess of the debts associated with the property, and therefore Plaintiff is not entitled to receive the difference between the debt and the fair market value of the property at the time of foreclosure, because the property that is taken is the surplus proceeds, not the real property, see Rafaeli, LLC v. Oakland Cnty., 505 Mich. 429, 465-66 (2020).^[3] The City asserts, and Plaintiff does not dispute, that it has not been able to market the property for sale because Plaintiff has resisted eviction proceedings and has been living in the house rent-free and tax-free since September 2022. (Newburgh Mem. at 5-6; see AC ¶¶ 11-14.)

In Tyler, the Court held that a county cannot retain surplus money after it has sold a foreclosed property and satisfied the tax debt. See 598 U.S. at 639-40. Plaintiff concedes that she continues to occupy the property while fighting eviction, (AC ¶¶ 11-14), has alleged only that the property has been seized and the deed transferred to the City, and has not alleged that the City has sold or received any surplus money from the property. But a tax foreclosure alone does not constitute a taking. Matter of Seelbach, No. 2019/80001, 2024 WL 3734044 at *12 (N.Y. Sup. Ct. July 29, 2024) (“By its terms, Tyler accords each owner of real property subject to tax foreclosure a Takings Clause right to claim surplus funds, but Tyler does not question a taxing authority's power to obtain title to tax-delinquent property by deed in foreclosure.”). “[A] tax foreclosure proceeding can effectuate a taking only upon execution of a foreclosure judgment by which the taxing authority . . . becomes seized of the property's sale proceeds or value in excess of the unredeemed tax lien plus authorized costs.” Id. As the City has not sold the property, Plaintiff's takings claim is not ripe. Tupaz v. Clinton Cnty., New York, 499 F.Supp.2d 182, 19192 (N.D.N.Y. 2007) (plaintiffs' claim that county violated their constitutional rights by depriving them of right to surplus money not ripe because plaintiffs' property had not yet been sold), cff'd sub nom. Miner v. Clinton Cnty., N.Y., 541 F.3d...