WINFIELD SCOTT TOWER URBAN RENEWAL LP v. LUCIANI

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

WINFIELD SCOTT TOWER URBAN

RENEWAL LP,

Plaintiff,

Civil Action No, 23-133 (MAS) (TJB)

. MEMORANDUM OPINION

LORISSA LUCIANI, et al.,

Defendants.

SHIPP, District Judge

This matter comes before the Court upon Defendants Lorissa Luciani (“Luciani”), Angela

Goode (“Goode”), and the New Jersey Department of Community Affairs’ Division of Housing

and Community Resources’ (the “NJDCA”) (collectively, “Defendants”) Motion to Dismiss (ECF

No. 32) Winfield Scott Tower Urban Renewal LP’s (“Winfield” or “Plaintiff’?) Second Amended

Complaint (“SAC”) (ECF No. 31). Plaintiff opposed (ECF No. 33), and Defendants replied (ECF

No. 34). After careful consideration of the parties’ submissions, the Court decides Defendants’

motion without oral argument pursuant to Local Civil Rule 78.1(b). For the reasons outlined below,

Defendants’ motion to dismiss is granted, and the SAC is dismissed without prejudice.

I. BACKGROUND

A. Factual Background!

Winfield, a Florida-based Limited Partnership that does business in New Jersey, owned a

property located in Elizabeth, New Jersey (the “Property”) on which the NIDCA held a mortgage

valued at $1,680,000 plus accrued interest. (SAC §9 6, 10-11, 34, ECF No. 31.) In or about May

2021, Winfield contracted to sell the Property to Magill Tower Urban Renewal “Magill” or

“Purchaser”) for $6,200,000. (/d. J 12.)

To complete the sale, Magill was to assume the mortgage held by the NJDCA, which had

an outstanding balance of $2,864,607.12. (Id. 13-15.) The NJDCA approved Magill’s

assumption of the mortgage several months prior to the closing of the sale. (Jd. § 16.) Rather than

assuming the entire balance of the mortgage, however, Magill only assumed $2,172,214.12. Ud.

Before the closing, the NJDCA, acting through Goode and Luciani (collectively “the

Individual Defendants’), required Winfield to pay off the entire balance of the mortgage—

$1,184,607.12 in outstanding interest and $1,680,000.00 in principal—plus an additional

$692,393.00. (Ud. $17.) Upon Winfield’s inquiry, the NJDCA informed Winfield that it was

required to pay the additional $692,393.00 because Defendants did not want it to profit from the

sale. (id. 18-20.) Defendants wanted to give the purchaser, who is allegedly African American,

the benefit of this $692,393.00 payment so that they could “stick it” to Daniel Cohen (“Cohen”),

Winfield’s Caucasian Jewish principal. (Jd. §§ 23-25.) Winfield, either through mistake or receipt

of an improper payoff figure, then paid $3,557,000. to the NIDCA, rather than the $2,864,607.12

that it owed. Ud. § 35.)

' For the purpose of considering the instant motion, the Court accepts all factual allegations in the

Complaint as true. See Phillips v. County of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008).

B. Procedural Background

Winfield commenced this action on January 11, 2023, against only the Individual

Defendants, alleging that they violated its property and contract rights in an arbitrary and

capricious manner, entitling it to relief under 42 U.S.C. § 1983. (Compl. 2-4, 17, ECF No. 1.)

On May 22, 2023, the Individual Defendants moved to dismiss Winfield’s Complaint, (ECF

No. 10), and on August 22, 2023, Winfield filed a cross-motion to amend its Complaint (ECF

No. 19). After Winfield’s cross-motion to amend went unopposed, this Court granted the motion

to amend? and subsequently dismissed the Amended Complaint without prejudice pursuant to

Federal Rule of Civil Procedure 12(b)(6).? (See generally Mem. Op., ECF No. 28.)

Shortly thereafter, on February 28, 2024, Winfield filed the SAC, which again named the

Individual Defendants in their official and personal capacities as defendants and added the NIDCA

as a defendant. (SAC §]3, 7-9.) The SAC contains one count against Defendants alleging

deprivation of Winfield’s “contract and property” rights in violation of the Fourteenth

Amendment’s Due Process Clause (“Count One”) (SAC 4 10-31) and one count for breach of

contract against the NJIDCA (“Count Two”) (/d. §§ 32-36). Defendants moved to dismiss the SAC

in its entirety pursuant to Rules 12(b)(1) and 12(b)(6) on March 20, 2024. (Notice of Mot. to

Dismiss, ECF No. 32.) Winfield opposed the motion on April 1, 2024 (PL.’s Opp’n Br., ECF

No. 33), and Defendants replied on April 8, 2024 (Defs.’ Reply Br., ECF No. 34).

* Since Plaintiff's Amended Complaint did not alter any factual allegations, the Court construed

the Individual Defendants’ motion to dismiss the Complaint as a motion to dismiss the Amended

Complaint. (See Mem. Op. 1-2.)

> Unless otherwise noted, all references to a “Rule” or “Rules” hereinafter refer to the Federal

Rules of Civil Procedure.

Il. LEGAL STANDARD

A. Rule 12(b)(1) Standard

At any time, a defendant may move to dismiss for lack of subject matter jurisdiction under

Rule 12(b)(1). Fed. R. Civ. P. 12(b)(1), (h)(3). “A motion to dismiss . . . for lack of subject matter

jurisdiction made prior to the filing of the defendant’s answer is a facial challenge to the

complaint.” Bennett v. Ail. City, 288 F. Supp. 2d 675, 678 (D.N.J. 2003) (citations omitted). “A

facial 12(b)(1) challenge, which attacks the complaint on its face without contesting its alleged

facts, is like a 12(b)(6) motion in requiring the court to consider the allegations of the complaint

as true.” Hartig Drug Co, v. Senju Pharm. Co., 836 F.3d 261, 268 (3d Cir. 2016) (internal quotation

marks and citation omitted). The Third Circuit has “repeatedly cautioned against allowing a Rule

12(b)(1) motion . . . to be turned into an attack on the merits.” Jd. at 272 n.14.

B. Rule 12(b)(6) Standard

Rule 8(a)(2) “requires only a ‘short and plain statement of the claim showing that the

pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the . . . claim is and

the grounds upon which it rests.’” Bell Ail. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting

Conley v. Gibson, 355 U.S. 41, 47 (1957).

A district court conducts a three-part analysis when considering a motion to dismiss under

Rule 12(b)(6). See Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). First, the court must

identify “the elements a plaintiff must plead to state a claim.” Ashcroft v. Iqbal, 556 U.S. 662, 675

(2009). Second, the court must identify all of the plaintiff’s well-pleaded factual allegations, accept

* A motion to dismiss on the grounds of state sovereign immunity is properly brought pursuant to

Rule 12(b)(1) because the Eleventh Amendment ‘is a jurisdictional bar which deprives federal

courts of subject matter jurisdiction.”” Van Orden v. Borough of Woodstown, 181 F. Supp. 3d 237,

243 (D.N.J. 2015) (quoting Blanciak v. Allegheny Ludlum Corp., 77 F.3d 690, 693 n.2 (3d Cir.

1996)).

them as true, and “construe the complaint in the light most favorable to the plaintiff.” Fowler v

UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (citation omitted). The court can discard bare

legal conclusions or factually unsupported accusations that merely state the defendant unlawfully

harmed the plaintiff. See Igbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 55 5). Third, the court

must determine whether “the [well-pleaded] facts alleged in the complaint are sufficient to show

that the plaintiff has a ‘plausible claim for relief.’” Fowler, 578 F.3d at 211 (quoting /gbal, 556

U.S. at 679). A facially plausible claim “allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Jd. at 210 (quoting Iqbal, 556 U.S. at 678). Ona

Rule 12(b)(6) motion, the “defendant bears the burden of showing that no claim has been

presented.” Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc.

v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)),

DISCUSSION

For the reasons set forth below, Defendants’ motion to dismiss is granted. The Court first

addresses the question of whether Defendants are immune to suit before turning to the sufficiency

of Winfield’s pleadings.

A. Eleventh Amendment Immunity

Defendants argue that Plaintiff's SAC should be dismissed under Rule 12(b)(1) because

the NJDCA and the Individual Defendants in their official capacities are immune from suit under

the Eleventh Amendment. (Defs.’ Moving Br. 10-13.) Plaintiff does not provide an argument in

opposition. (See generally Pl.’s Opp’n Br.) For the reasons below, Defendants’ motion pursuant to

Rule 12(b)(1) is granted as to the NJDCA and the Individual Defendants in their official capacities,

The Eleventh Amendment provides that “[t]he Judicial power of the United States shall not

be construed to extend to any suit in law or equity, commenced or prosecuted against one of the

United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S.

CONST. amend. XI. State agencies, therefore, are generally immunized by the Eleventh

Amendment from suits seeking damages in federal court. See Pennhurst State Sch. & Flosp. v.

Halderman, 465 U.S. 89, 100 (1984). A state agency qualifies for sovereign immunity if it is

considered an “arm of the state.” See Lawton v. N.J. Dept of Cmmty. Affs., No. 15-8526, 2016 WL

5012321, at *2 (D.N.J. Sept. 16, 2016) (citing Regents of the Univ. of Cal. v. Doe, 519 U.S. 425,

429-30 (1997)). The Third Circuit has previously found that the NJDCA, as “a principal

department ‘established in the Executive Branch of the State Government[,]’” is entitled to

sovereign immunity under the Eleventh Amendment. See Rhett v. Evans, 576 F. App’x 85, 88 (3d

Cir. 2014) (quoting N.J. Stat. Ann. § 52:27D-1); see also Lawton, 2016 WL 5012321, at *2 (finding

that the NJDCA is immune from suit under the Eleventh Amendment). State officials sued in their

official capacities are also generally immunized by the Eleventh Amendment from suits seeking

damages in federal court, and this immunity extends to employees of the NJDCA sued in their

official capacity. See Kentucky v. Graham, 473 U.S. 159, 169 (1985) (citing Cory v. White, 457

U.S. 85, 90 (1982)) (citation omitted).

There are, however, three exceptions to a state’s sovereign immunity under the Eleventh

Amendment: “1) congressional abrogation[;] 2) state waiver[;] and 3) suits against individual state

officers for prospective relief to end an ongoing violation of federal law.” MCI Telecomm. Corp.

v. Bell Atl. Pa., 271 F.3d 491, 503 (3d Cir. 2001). As discussed below, none of these exceptions

apply.

L. Congressional Abrogation

Winfield does not cite nor implicate a statute abrogating soverei gn immunity. (See

generally SAC.) Winfield sues under 42 U.S.C. § 1983, alleging a violation of its Fourteenth

Amendment rights. (SAC §§ 2-4.) While 42 U.S.C. § 1983 “provides a federal forum to remedy

many deprivations of civil liberties,” it does not override the Eleventh Amendment and “provide a

federal forum for litigants who seek a remedy against a State for alleged deprivations of civil

liberties.” Will v. Mich. Dept of State Police, 491 U.S. 58, 66 (1989); see also Quern v. Jordan,

440 U.S. 332, 340-41 (1979) (finding § 1983 does not abrogate states’ sovereign immunity under

the Eleventh Amendment); Edelman v. Jordan, 415 U.S. 651, 675-77 (1974) (same).

2. State Waiver

Defendants have not waived their sovereign immunity. A state defendant’s waiver of its

sovereign immunity must be voluntary and done through a “clear declaration that it intends to

submit itself to [federal] jurisdiction.” Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ.

Expense Bd., 527 U.S. 666, 676 (1999) (internal citations omitted); see also Pennhurst State Sch.

& Hosp., 465 U.S. at 99 (noting that a state must “unequivocally express[ ]” a waiver of immunity)

(citing Edelman, 415 U.S. at 673). Here, the SAC does not specify if, or how, Defendants waived

their immunity, nor any actions that would allow the Court to infer that they did so impliedly. (See

generally SAC.)

3. Prospective Relief

Finally, the third exception is inapplicable. Suits for prospective relief for ongoing

violations of state law have been allowed in federal court since the Supreme Court recognized the

“legal fiction” that state officials are stripped of their official or representative character and

thereby deprived of the State’s immunity when they commit an ongoing violation of federal law.

Del. River Joint Toll Bridge Comm'n y. Sec’y Pa. Dept of Lab. & Indus., 985 F.3d 189, 193-94

(3d Cir. 2021) (citing Ex Parte Young, 209 U.S. 123, 145 (1908)). Winfield is seeking monetary

damages for a past harm, rather than prospective relief. (SAC 4] 36); see also Wright v. N.J. Dept

of Educ., 115 F, Supp. 3d 490, 499 (D.N.J. 2015) (“Compensatory . .. damages are designed to

remedy a past wrong against the plaintiff, exactly the type of relief barred by the Eleventh

Amendment.”) (citing MCI Telecomm. Corp., 217 F.3d at 506). This Court, therefore, dismisses

the complaint without prejudice as to the NJDCA and the Individual Defendants sued in their

official capacities pursuant to Rule 12(b)(1).°

B. Qualified Immunity

Winfield also brings Count One against the Individual Defendants “individually.” (SAC

{ 3.) State officials sued in their personal capacity are not entitled to Eleventh Amendment

immunity. See Hafer v. Melo, 502 U.S, 21, 27 (1991); Est. of Lagano v. Bergen Cnty. Prosecutor’

Off, 769 F.3d 850, 856 (3d Cir. 2014). The Individual Defendants, therefore, are not entitled to

sovereign immunity, and are “persons” amenable to suit under § 1983. See Est. of Lagano, 769

F.3d at 856 (citing Hafer, 502 U.S. at 27). The Individual Defendants argue alternatively, however,

that they are immune to suit through the doctrine of qualified immunity. (Defs.’ Moving Br. 15-18.)

Qualified immunity shields public officials from civil damages liability as long “as their

conduct does not violate clearly established statutory or constitutional rights of which a reasonable

person would have known.” Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982) (internal citation

omitted). “A clearly established right is one that is ‘sufficiently clear that every reasonable official

would have understood that what he is doing violates that right.’” Mullenix v. Luna, 577 US. 7,

> As Winfield’s breach of contract claim is pled only against the NJDCA, Count Two is dismissed

without prejudice for lack of subject matter jurisdiction. This holding does not prohibit Winfield

from bringing its breach of contract claim in state court, where New Jersey has waived its

sovereign immunity. See NJSR Surgical Ctr, L.L.C. v. Horizon Blue Cross Blue Shield of N.J., Inc.,

979 F. Supp. 2d 513, 519-20 (D.N.J. 2013) (holding that the State of New Jersey waived its

sovereign immunity in the New Jersey Contractual Liability Act for breach of contract actions

brought in state court only).

11-12 (2015) (quoting Reichle v. Howards, 566 U.S. 658, 664 (2012)). A public official’s liability

thus, “generally turns on the ‘objective legal reasonableness’ of the action.” Anderson y. Creighton,

483 U.S. 635, 639 (1987) (quoting Harlow, 457 U.S. at 819). Importantly, “qualified immunity

will be upheld on a 12(b)(6) motion only when the immunity is established on the face of the

complaint.” Thomas v. Indep. Twp., 463 F.3d 285, 291 (3d Cir. 2006) (quoting Leveto v. Lapina,

258 F.3d 156, 161 (3d Cir. 2001)); see also Newland v. Rechorst, 328 F. App’x 788, 791 n.3 3d

Cir. 2009) (cautioning that “it is generally unwise to venture into a qualified immunity analysis at

the pleading stage as it is necessary to develop the factual record in the vast majority of cases’).

Winfield alleges that it has been deprived of its “[Fourteenth] [A]Jmendment and due

process” rights, as well as its “property and contract rights.” (SAC {J 3, 29.) Defendants’ principal

argument supporting that the Individual Defendants are entitled to qualified immunity is that their

actions, in declining to permit Winfield to keep the $692,393, were reasonable because “there is

no question” that Winfield owed that money pursuant to the mortgage agreement. (Defs.’ Moving

Br. 17.) To the contrary, whether Winfield owed this money is the core dispute underlying this

action. (See Pl.’s Opp’n Br. 14-15.) Construing the SAC in the light most favorable to Plaintiff,

this Court thus finds that the Individual Defendants have not carried their burden of demonstrating

that qualified immunity bars the suit against them in their personal capacities.

Cc. Section 1983 Claim (Count One)

Winfield fails to state a § 1983 claim because the Complaint includes only conclusory

allegations that are insufficient to state a claim upon which relief can be granted. “Section 1983

subjects to liability those who deprive persons of federal constitutional or statutory rights ‘under

color of any statute, ordinance, regulation, custom, or usage’ of a state.” Leshko v. Servis, 423 F.3d

337, 339 (3d Cir. 2005) (quoting 42 U.S.C. § 1983). To state a claim under § 1983, therefore,

Plaintiff must allege facts, which if proven, establish: (1) the violation of a right secured by the

Constitution and the laws of the United States; and (2) that the person depriving Plaintiff of the

right acted under color of state law. See West v. Atkins, 487 U.S. 42, 48 (1988). Here, Plaintiff

alleges a violation of the Fourteenth Amendment. (See SAC 4/3.) Specifically, the Court

understands the SAC to put forth a substantive due process claim.®

With respect to a substantive due process claim, “a plaintiff must demonstrate that an

arbitrary and capricious act deprived them of a protected property interest.” Zaylor Inv, Ltd. v,

Upper Darby Twp., 983 F.2d 1285, 1292 (1993) (citation omitted) (citing Moore v. Warwick Pub,

Sch, Dist., 794 F.2d 322, 329 (8th Cir. 1986)). Only “egregious official conduct” that “shocks the

conscience” meets this arbitrary and capricious standard. County of Sacramento v. Lewis, 523 U.S.

833, 846-47 (1998) (internal quotations omitted) (quoting United States v Salerno, 481 U.S. 739,

746 (1987)). “[Ml]erely alleging an improper motive is insufficient, even where the motive is

unrelated to the merits of the underlying action.” Bell v, Twp. of Maplewood, No. 19-12980, 2021

WL 3260848, at *11 (D.N.J. July 30, 2021) (quoting Chainey v. Street, 523 F.3d 200, 220 (3d Cir.

2008)). Whether a property interest is so fundamental that deprivation of that interest gives rise to

a substantive due process claim, “depends on whether that interest is ‘fundamental’ under the

United States Constitution.” Nicholas v, Pa. State Univ., 227 F.3d 133, 140 (3d Cir. 2000) (citations

omitted), “The Third Circuit has long recognized that ‘[oJnly certain state contracts create

° Plaintiff does not mention any “procedures” or provide facts in the SAC or briefing from which

the Court can infer that Plaintiff meant to plead a procedural due process claim. (See generally

SAC; Pl.’s Opp’n Br.); see also Hill v. Borough of Kutztown, 455 F.3d 225, 233-34 (3d Cir. 2006)

(quoting Alvin v. Suzuki, 227 F.3d 107, 116 (3d Cir. 2006)) (To state a procedural due process claim

under § 1983, a plaintiff must allege that: “(1) [it] was deprived of an individual interest that is

encompassed within the Fourteenth Amendment’s protection of ‘life, liberty, or property,’ and

(2) the procedures available to [it] did not provide ‘due process of law.’”).

protected property interests under the Fourteenth Amendment.’” Greenwald Assocs. LLC v. Hous.

Auth, of City of Newark, No. 21-12136, 2022 WL 1505005, at *3 (D.N.J. May 12, 2022) (quoting

Baraka v. McGreevey, 481 F.3d 187, 207 (3d Cir. 2007)). Specifically, two types of contract rights

are considered property under the Fourteenth Amendment: (1) contracts that confer a protected

status; and (2) contracts that include “a provision that the state entity can terminate the contract

only for cause.” /d. (quoting Linan-Faye Const. Co. v. Hous. Auth. of City of Camden, 49 F.3d 915,

931-32 (3d Cir. 1995)).

Here, even if the Court assumes that Winfield properly articulates a protected property

interest, its claim must still be dismissed because it does not adequately plead that the Individual

Defendants engaged in arbitrary and capricious conduct depriving it of that interest. To be clear,

Winfield asserts that its Fourteenth Amendment contractual and property rights were violated by

the Individual Defendants when they allegedly required Winfield to pay $692,393, which it did

not owe. (SAC ff 21, 26.) According to Winfield, the Individual Defendants did this because they

“did not want [Winfield] to make any money on its investment[]” in order to aid either themselves

or the purchaser’s allegedly African-American principal because Cohen is “Caucasian Jewish.”

Ud. 22-25.)

Rather than providing facts to suggest the Individual Defendants acted out of racial or

antisemitic animus towards Cohen, however, Winfield merely states that “[t]here simply is no other

explanation.” (SAC 25.) Stripping away these conclusory allegations of racism and antisemitism,

and reading the SAC in the light most favorable to the Plaintiff by assuming Winfield was not

contractually obligated to pay the additional $692,393, there is nothing in the SAC from which the

Court can infer that the Individual Defendants engaged in “conscience-shocking” behavior

sufficient to satisfy the arbitrary and capricious pleading standard.’ The Court accordingly

dismisses Count One without prejudice. Out of an abundance of caution, the Court will grant

Plaintiff a final opportunity to amend its complaint and adequately outline for the Court how the

wrongful behavior Plaintiff alleges “violated [P]laintiff’s protected property and contract rights

under the Constitution and in violation of USC 42 § 1983 [sic].” (SAC § 29.)

IV. CONCLUSION

For the reasons set forth above, Defendants’ motion to dismiss is granted, Winfield’s SAC

is dismissed without prejudice. The Court will issue an Order consistent with this Memorandum

Opinion.

MICHAEL A. Sane

UNITED STATES DISTRICT JUDGE

’ See Haberle v. Troxell, 885 F.3d 170, 177 (3d Cir. 2018) (“For behavior by a government officer

to shock the conscience, it must be more egregious than ‘negligently inflicted harm,’ as mere

negligence ‘is categorically beneath the threshold of constitutional due process.’”’) (quoting Lewis,

523 U.S. at 849); see also Henderson v. Pa. State Univ., No. 21-872, 2022 WL 838119, at *10

(M.D. Pa., Mar. 21, 2022) (dismissing § 1983 claim where plaintiff failed to support his allegation

of racism with reference to specific incidents or concrete factual allegations of racism); Jackson v.

Madery, 158 F. App’x 656, 659 (6th Cir. 2005) (dismissing § 1983 claims containing only “vague,

conclusory allegations of racial discrimination”), abrogated on other grounds by Maben v. Thelen,

887 F.3d 252, 262 (6th Cir. 2018); see also Doe v. Trs. of the Univ. of Pa., 270 F. Supp. 3d 799,

821 (E.D. Pa. 2017) (finding that complaint asking the court to infer racial bias exclusively from

the fact that the plaintiff was African American alleged discrimination in a conclusory fashion).