The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
AMERICAS CHOICE VETERANS CONSTRUCTION :
INC., et al., :
: 24cv6522 (DLC)
Plaintiffs, :
-v- : OPINION AND
: ORDER
CITY OF NEW YORK, et al., :
:
Defendants. :
:
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APPEARANCES:
For plaintiffs Americas Choice Veterans Construction Inc.,
Andreas Plaza, and Elizabeth Younes:
Michael Jahnke
GunnerCooke
475 Park Ave S, 23rd Floor
New York, NY 10016
For defendant City of New York:
Jeffrey Scott Dantowitz
New York City Law Department
100 Church Street
New York, NY 10007
For defendant Teachers Federal Credit Union:
Brian S. Gitnik
Litchfield Cavo LLP
420 Lexington Avenue, Suite 2104
New York, NY 10170
For defendants Edward F. Guida, Jr., Albert Perna, and Gregg
Wasserman:
Todd Brian Sherman
Eleni Melekou
Pardalis & Nohavicka LLP
950 Third Avenue, 11th Floor
New York, NY 10022
DENISE COTE, District Judge:
The plaintiffs allege that default judgments were
wrongfully obtained against them in the Civil Court of the City
of New York, Small Claims Part (“Small Claims Court”), through
use of “sewer service.” They have sued two individuals that
they allege carried out this sewer-service scheme, as well as a
New York City Marshal who allegedly helped execute the default
judgments (“Individual Defendants”). In addition, they have
sued the bank at which two of the plaintiffs have an account,
and the City of New York (“City”). The City moved to dismiss
the First Amended Complaint (“FAC”) under Rule 12(b)(6), Fed. R.
Civ. P. The Individual Defendants moved to dismiss the FAC
pursuant to both Rule 12(b)(1) and Rule 12(b)(6), Fed. R. Civ.
P, as well as to strike certain allegations in the FAC pursuant
to Rule 12(f), Fed. R. Civ. P. For the following reasons, the
Individual Defendants’ motion to dismiss is granted in part, and
the City’s motion to dismiss is granted. All federal claims
having been dismissed, the Court declines to exercise
supplemental jurisdiction over the remaining state law claims.
Background
The following facts are drawn from the FAC, documents
incorporated into the FAC by reference, and documents of which
the court may take judicial notice. Bellin v. Zucker, 6 F.4th
463, 473 (2d Cir. 2021). The FAC’s factual allegations are
accepted as true for purposes of this motion, and all reasonable
inferences are drawn in the plaintiffs’ favor.
I. Factual Background
The plaintiffs are Elizbeth Younes, Andreas Plaza, and
Americas Choice Veterans Construction, Inc. (“ACVCI”). Younes,
a resident of New York, and Plaza, a veteran and resident of
Virginia, are the co-founders and co-owners of ACVCI, a
“Service-Disabled Veterans Owned Small Business” registered in
New York State.
The three Individual Defendants, Greg Wasserman, Albert
Perna, and Edward F. Guida, Jr., are all residents of New York.
The two remaining defendants are Teachers Federal Credit Union
(“TFCU”) and the City. TFCU is a financial institution with its
headquarters in New York state and its main branch in Hauppauge,
New York. Both Younes and ACVCI have accounts at a TFCU branch
in Suffolk County, New York. Guida is a New York City Marshal,
and the FAC alleges that the City trains and supervises New York
City marshals, such as Guida.
A. Events Prior to Small Claims Court Filings
Defendants Perna and Wasserman worked as consultants to
ACVCI before the events leading to this litigation. Their
consulting relationship ended formally on October 6, 2021, when
plaintiffs released them from any further consulting services.
Apparently after this release -- the FAC does not make clear
when -- Perna and Wasserman established another Service-Disabled
Veterans Owned Business, USA Veterans Builders, Inc. (“USAVBI”).
Plaintiffs allege that USAVBI operates in the same market as
ACVCI -- the market for Service-Disabled Veterans Owned Small
Business “contracts in the City and State of New York.”
B. November 2021 Small Claims Court Filings
In November 2021, a month after the release from their
consulting roles, Perna and Wasserman each filed claims for
breach of contract in Small Claims Court against Younes, Plaza,
and ACVCI (“Perna Action” and “Wasserman Action,” respectively).
Both sought $10,000 in damages, plus interest.
The FAC alleges, however, that in completing the Statement
of Claim forms, Perna and Wasserman used an address for Younes
that would not provide the plaintiffs with notice of the two
Actions. The address is associated with a nonprofit community
volunteer ambulance organization, Corona Community Ambulance
Corps. Inc. (“CCAC”). Perna is CCAC’s President and Guida is
its Chairman.
The plaintiffs allege that they did not receive timely
notice of the Perna or Wasserman Actions and did not appear. On
June 21, 2023, a judge in Small Claims Court entered a default
judgment in both the Perna Action and the Wasserman Action
against each of Younes, Plaza, and ACVCI.
C. Guida’s Enforcement of Small Claims Court Judgments
On August 7, 2023, Guida secured an “Execution Against
Income/Property” in both the Perna and Wasserman Actions. Then,
on September 19, Guida served the Executions and accompanying
Exemption Notices1 on TFCU at an address in the New York City
borough of Queens. The FAC asserts that Guida had a “clear
conflict of interest” -- his role as Chairman in CCAC -- and
that “he knew” that the default judgments had been obtained
without providing the plaintiffs required notice. It also
asserts that Guida acted “outside his jurisdiction” by “seeking
enforcement against assets” that were held by TFCU in a branch
in Suffolk County, i.e., outside New York City.
D. Seizure and Return of Younes’s Funds
Following Guida’s service of the Exemption Notices on TFCU,
state law required TFCU to serve the notices on the account
holder at their last known address. Younes alleges she did not
receive TFCU’s September 22, 2023 letter, but nonetheless
learned that her account had been frozen in “late September
2023” when, attempting to use her debit card, she did not have
“access” to her funds. Younes contacted TFCU, which informed
1 The Exemption Notices, which TFCU was required to then deliver
to the plaintiffs, alerted Younes and ACVCI to the judgments
obtained against them and explained that certain assets may be
exempt from judgment. See NY CPLR 5222-a(b).
her that it had been “obligated to perform [a] seizure by the
Marshal.”
On or around September 26, 2023, apparently based on the
information Younes received from TFCU, the plaintiffs contacted
Guida. It was then that the plaintiffs learned about the Perna
and Wasserman Actions, and the June 2023 default judgments.
“Shortly after” this conversation with Guida, Younes sought
relief in Small Claims Court, filing an “Order to Show Cause” to
vacate the default judgments.2 The Small Claims Court held a
hearing on November 9 and directed that the bank accounts be
unfrozen. It was too late, however: Wasserman’s default
judgment had already been satisfied through the seizure of funds
from Younes’s account.
A trial occurred in Small Claims Court on two dates in
March and April 2024. This resulted in an adjudication of
liability against ACVCI only. Accordingly, on April 14, the
Small Claims Court vacated the default judgments against Younes
and Plaza and ordered that any funds collected pursuant to those
judgments be returned. On May 10, the Small Claims Court
entered judgment against ACVCI in both the Perna Action
(awarding $4,770) and the Wasserman Action (awarding $5,070).
2 Due to “bureaucratic error,” Younes and ACVCI sought this
relief in only the Perna Action, not in the Wasserman Action.
On October 26, Plaza sought and received similar relief in both
the Perna and Wasserman Actions.
ACVCI has appealed. On October 11, the Small Claims Court
entered judgment for Younes against Wasserman, and on November
5, counsel for plaintiffs affirmed in a state court filing that
Wasserman had satisfied the judgment.
Plaintiffs concede that Wasserman returned to Younes the
seized funds with interest, and they do not allege that ACVCI or
Plaza had any funds unlawfully seized. Rather, they assert that
Younes suffered harms incidental to the seizure of funds (e.g.,
being unable to pay her rent). They further contend that ACVCI
and Plaza were harmed because they had to defend themselves in
the Small Claims Court Actions and because Perna and Wasserman
improperly diverted business away from ACVCI to USAVBI.
The FAC makes three general allegations as to harm suffered
by Plaza and ACVCI. First, the FAC asserts that ACVCI was
unable to bid on a $1.56 million contract from the New York
State Office of Parks, Recreation and Historic Preservation that
USAVBI secured because plaintiffs had to “travel to and attend
proceedings in the Small Claims Actions.” Second, plaintiffs
allege that the freezing of ACVCI’s funds “precluded purchases
of necessary supplies, setup of payroll, and other steps needed
for ACVCI to maintain viable bids and perform contractual
obligations.” Finally, the FAC asserts that Perna and Wasserman
“caused” ACVCI to lose its “ability to do business” with one
client with which ACVCI had a “longstanding” relationship and
“likely” did the same with “other potential customers.”
II. Procedural History
The plaintiffs initiated this action on August 30, 2024.
After the City and the Individual Defendants filed motions to
dismiss, an Order of December 3, 2024 gave plaintiffs an
opportunity to amend their complaint and warned plaintiffs that
they would likely not have a further opportunity to amend.
Plaintiffs filed the FAC on December 23, 2024. It asserts
ten causes of action against different sets of defendants.
First, against all defendants, the FAC asserts a claim under 42
U.S.C. § 1983 alleging a violation of Due Process Clause of the
Fourteenth Amendment, U.S. Const. Amend. XIV. Second, against
the Individual Defendants only, it asserts common law claims for
abuse of process and tortious interference with business and
economic relationships, as well as statutory claims for
violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and New York
General Business Law §§ 340-47 (“Donnelly Act”). Third, against
Guida alone, the FAC asserts common law claims for negligence
and trespass ab initio. Finally, the FAC asserts claims of
conversion, fraud, and intentional infliction of emotional
distress against TFCU and the Individual Defendants.
TFCU filed an Answer to the FAC on December 27, 2024. Both
the City and the Individual Defendants renewed their motions to
dismiss on January 24, 2025. The motions became fully submitted
on March 14, 2025.3 For the reasons that follow, the Individual
Defendants’ motion to dismiss is granted in part and the City’s
motion to dismiss is granted.
Discussion
I. Federal Question Jurisdiction
The Individual Defendants contend that the Court lacks
subject matter jurisdiction. The plaintiffs argue that there is
federal question jurisdiction because of the Sherman Act and Due
Process Clause claims.
“Federal courts are courts of limited jurisdiction.”
Bacher for Bacher v. Boehringer Ingelheim Pharms., Inc., 110
F.4th 95, 97 (2d Cir. 2024) (citation omitted). Thus, where a
party raises a jurisdictional challenge under Rule 12(b)(1), a
court must address that challenge before turning to any merits
issue. See Moreira v. Societe Generale, S.A., 125 F.4th 371,
384 (2d Cir. 2025).
3 On March 17, the plaintiffs requested that the Court disregard
certain arguments in the Defendants’ reply briefs and a
declaration attached to the Individual Defendants’ reply. The
Court has not considered Perna’s reply declaration. As to the
arguments made in the Defendants’ reply briefs themselves,
however, these arguments were properly made either in response
to arguments made by plaintiffs in their opposition brief, or as
extensions of arguments raised in the opening motions to
dismiss. See Bayway Ref. Co. v. Oxygenated Mktg. & Trading
A.G., 215 F.3d 219, 226-27 (2d Cir. 2000).
Federal district courts have “original jurisdiction” over
civil actions “arising under” the laws “of the United States.”
28 U.S.C. § 1331. Federal claims that are “not colorable, i.e.,
immaterial and made solely for the purpose of obtaining
jurisdiction or wholly insubstantial and frivolous, do not give
rise to federal-question jurisdiction.” Gallego v. Northland
Grp. Inc., 814 F.3d 123, 126 (2d Cir. 2016) (citation omitted).
A federal claim’s failure to “clear even that low bar” should
not be confused with the failure “to state a claim for relief on
the merits.” Id. (citation omitted).
Federal jurisdiction exists here. The plaintiffs’ federal
claims are not so wholly insubstantial and frivolous that they
do not give rise to federal question jurisdiction.
The Individual Defendants contend that subject matter
jurisdiction is lacking because Guida acted in compliance with
state law or alternatively that he is “entitled to the dismissal
of all claims based upon qualified immunity.” Both arguments go
to the merits of the plaintiffs’ claims; neither argument
implicates a court’s subject matter jurisdiction. See Maye v.
City of New Haven, 89 F.4th 403, 407 (2d Cir. 2023) (qualified
immunity).
The Individual Defendants next argue that Perna and
Wasserman are not state actors. “[T]he sufficiency of a color-
of-law allegation” for purposes of § 1983, however, is also not
jurisdictional and “is to be tested under Rule 12(b)(6).”
Monsky v. Moraghan, 127 F.3d 243, 245 (2d Cir. 1997).
II. Due Process Claim
The Individual Defendants argue that the FAC fails to state
a claim that they violated the plaintiffs’ due process rights.
The City likewise contends that the plaintiffs’ due process
claim against it fails because there was no underlying
constitutional violation by Guida or any other state actor.
Both the Individual Defendants and the City are correct.
The Fourteenth Amendment provides that no state shall
“deprive any person” of “life, liberty, or property, without due
process of law.” U.S. Const. Amend. XIV. To plead a procedural
due process claim, a plaintiff must allege: (1) that the
defendant deprived him of a cognizable interest in life,
liberty, or property, (2) without affording him constitutionally
sufficient process. Baltas v. Maiga, 119 F.4th 255, 263 (2d
Cir. 2024). “[I]n evaluating what process satisfies the Due
Process Clause, the Supreme Court has distinguished between (a)
claims based on established state procedures and (b) claims
based on random, unauthorized acts by state employees.” Rivera-
Powell v. N.Y.C. Bd. of Elections, 470 F.3d 458, 465 (2d Cir.
2006) (citation omitted). In the former, the state “is in the
position to provide a pre-deprivation hearing.” Id. In the
latter, however, “the state satisfies procedural due process
requirements so long as it provides meaningful post-deprivation
remedy.” Id.
The plaintiffs appear to contend that they were deprived of
property without due process of law when their bank accounts
were frozen. They emphasize actions taken by Guida, a New York
City Marshal and state actor, who served the Exemption Notices
on TFCU even though he knew that default judgments had been
“obtained based on blatantly invalid service.” This claim based
on random, unauthorized acts by a state actor fails to state a
due process violation since the state provides meaningful post-
deprivation process.4 Indeed, the plaintiffs used that process
to vacate the default judgments obtained against them.
4 Specifically, NY CPLR 5239 provides that “[p]rior to the
application of property or debt by a sheriff or receiver to the
satisfaction of a judgment, any interested person may commence a
special proceeding against the judgment creditor or other person
with whom a dispute exists to determine rights in the property
or debt.” In such a proceeding, “[t]he court may vacate the
execution or order, void the levy, direct the disposition of the
property or debt, or direct that damages be awarded.” Plymouth
Venture Partners, II, L.P. v. GTR Source, LLC, 37 N.Y.3d 591,
600 (2021) (citation omitted). Section 5240 in turn lays out a
court’s power to, “at any time, on its own initiative or the
motion of any interested person, and upon such notice as it may
require, make an order denying, limiting, conditioning,
regulating, extending or modifying the use of any enforcement
procedure.” NY CPLR 5240. This provision affords “courts broad
discretionary power to control and regulate the enforcement of a
money judgment under article 52 to prevent unreasonable
annoyance, expense, embarrassment, disadvantage, or other
prejudice to any person or the courts.” Plymouth Venture
Partners, 37 N.Y.3d at 600.
Plaintiffs contend that even if these state court remedies
resulted in the lifting of the freeze and the return of Younes’s
seized funds, they were inadequate because the plaintiffs
suffered additional damages. The availability of the state
court remedies, however, resolves the claim for a violation the
plaintiffs’ due process rights. They may not seek damages
through a due process claim when there has been no violation of
their right to due process. See Hudson v. Palmer, 468 U.S. 517,
535 (1984); Hellenic Am. Neighborhood Action Comm. v. City of
New York, 101 F.3d 877, 881 (2d Cir. 1996). Moreover, because
no state actor inflicted “constitutional harm,” there can be no
municipal liability against the City. City of Los Angeles v.
Heller, 475 U.S. 796, 799 (1986); Curley v. Vill. Of Suffern,
268 F.3d 65, 71 (2d Cir. 2001).5
III. Sherman Act
Next, the Individual Defendants move to dismiss the
plaintiffs’ claim for violation of § 1 of the Sherman Act, 15
U.S.C. § 1. The FAC alleges that the Individual Defendants
“entered into a contract, combination or conspiracy . . . to
effectively shut down ACVCI’s ability to compete” in the market
5 Since the plaintiffs have failed to plead a violation of their
due process rights, it is unnecessary to reach the City’s
secondary argument that the FAC fails to plead that action
pursuant to an “official municipal policy” caused the alleged
constitutional injury. Uviles v. City of New York, 130 F.4th
27, 32 (2d Cir. 2025).
for Service-Disabled Veterans Owned Small Business “contracts in
the City and State of New York.” More specifically, the FAC
alleges that the Individual Defendants’ sewer-service scheme
resulted in a freeze on Younes’s and ACVCI’s bank accounts,
which prevented ACVCI from bidding on contracts and maintaining
existing contractual relationships.
Section 1 of the Sherman Act prohibits every contract,
combination, or conspiracy “in restraint of trade or commerce
among the several States.” 15 U.S.C. § 1. To state a claim for
a violation of § 1, a plaintiff must plausibly allege “(1) a
contract, combination, or conspiracy exists that (2)
unreasonably restrains trade.” 1-800 Contacts, Inc. v. Fed.
Trade Comm'n, 1 F.4th 102, 114 (2d Cir. 2021). Plaintiffs’
claim fails both prongs.
Any agreement to conspire must be “between at least two
legally distinct economic entities in the form of a conscious
commitment to a common scheme designed to achieve an unlawful
objective.” Anderson News, L.L.C. v. Am. Media, Inc., 899 F.3d
87, 97 (2d Cir. 2018) (citation omitted). A plaintiff can
allege that an “agreement to conspire” exists in one of two
ways: by direct evidence or by indirect or circumstantial
evidence. City of Pontiac Police & Fire Ret. Sys. v. BNP
Paribas Sec. Corp., 92 F.4th 381, 391 (2d Cir. 2024).
“[O]fficers or employees of the same firm do not provide the
plurality of actors imperative for a § 1 conspiracy” because “an
internal agreement to implement a single, unitary firm’s
policies does not raise the antitrust dangers that § 1 was
designed to police.” Copperweld Corp. v. Indep. Tube Corp., 467
U.S. 752, 769 (1984). Agents that act with limited functions at
the behest and in the interests of their principals are also not
sufficiently distinct economic entities capable of agreeing to
conspire within the meaning of §1. See Belfiore v. New York
Times Co., 826 F.2d 177, 182 (2d Cir. 1987).
The FAC fails to allege that a contract, combination, or
conspiracy exists between at least two legally distinct economic
entities. The plaintiffs allege that Perna and Wasserman
jointly “established” USAVBI, which competes with ACVCI in a
market of small businesses owned by disabled veterans who
compete for government contracts in New York State. As officers
of the same firm, Perna and Wasserman cannot provide the
plurality of actors necessary for a § 1 conspiracy. See
Copperweld Corp., 467 U.S. at 769. Adding Guida to this alleged
conspiracy does not cure this defect. The allegations
connecting Guida to the alleged conspiracy are his association
with Perna through CCAC and his serving court documents on the
plaintiffs’ bank when he knew that the default judgments against
the plaintiffs had been obtained through improper means. There
is no allegation that Guida has any role in the alleged “market”
or that he did anything other than act as Perna and Wasserman’s
agent. Accordingly, he lacked capacity to conspire within the
meaning of § 1 with his principals. See Belfiore, 826 F.2d at
182.
The plaintiffs’ claim also fails for an independent reason.
The antitrust laws are designed to protect competition, not
competitors. Brown Shoe Co. v. United States, 370 U.S. 294, 320
(1962). The FAC does not allege that the Individual Defendants’
actions unreasonably restrained trade. See Anderson News,
L.L.C., 899 F.3d at 97. Assuming that the FAC has pleaded a
relevant market, the FAC fails to plausibly plead that the
Individual Defendants’ actions “had an actual adverse effect on
competition as a whole in the relevant market.” 1-800 Contacts,
Inc., 1 F.4th at 114 (citation omitted).
IV. Supplemental Jurisdiction
The Individual Defendants next press that, with all federal
claims dismissed, and complete diversity lacking, this Court
should decline to exercise supplemental jurisdiction over the
remaining state law claims. A district court may decline to
exercise supplemental jurisdiction over a state-law claim if it
“has dismissed all claims over which it has original
jurisdiction.” 8 U.S.C. § 1367(c)(3). Once a court has
dismissed all federal claims, it must decide whether the
traditional values of “economy, convenience, fairness, and
comity” counsel against the exercise of supplemental
jurisdiction. Catzin v. Thank You & Good Luck Corp., 899 F.3d
77, 85 (2d Cir. 2018) (citation omitted). “[I]n the usual case
in which all federal-law claims are eliminated before trial, the
balance of factors . . . will point toward declining to exercise
jurisdiction over the remaining state-law claims.” Kolari v.
New York-Presbyterian Hosp., 455 F.3d 118, 122 (2d Cir. 2006)
(citation omitted). Thus, “[i]t is well settled that where
. . . the federal claims are eliminated in the early stages of
litigation, courts should generally decline to exercise pendent
jurisdiction over remaining state law claims.” Whiteside v.
Hover-Davis, Inc., 995 F.3d 315, 325 (2d Cir. 2021) (citation
omitted).
There is no reason to depart from the ordinary practice of
dismissing the remaining state law claims. The federal claims
have been dismissed and discovery has not begun. The plaintiffs
do not advance any argument why this Court should exercise
supplemental jurisdiction. Both judicial economy and comity
favor dismissal.
Conclusion
The Individual Defendants’ January 24, 2025 motion to
dismiss is granted in part. The City’s January 24, 2025 motion
to dismiss is granted. All federal claims having been
dismissed, the Court declines to exercise supplemental
jurisdiction over the remaining state law claims. This action
is dismissed without prejudice to filing the state law claims in
state court. The Clerk of Court shall close the case.
Dated: New York, New York
May 1, 2025
bot COTE
United States District Judge
FR