Opposition Brief — Kottaram v. Bank Leumi, USA

> Supreme Court, U.S.

FILED

A

ao

L APR 272005 |

No. 04-1135 OFFICE OF THE CLERK |

IN THE

Supreme Court of the United States

VILASINI NAIR KOTTARAM,

Petitioner,

v.

BANK LEUMI, USA, et al.,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF IN OPPOSITION

CHRISTOPHER J. SULLIVAN

Counsel of Record

Carot M. GOODMAN

HERRICK, FEINSTEIN LLP

Two Park Avenue

New York, New York 10016

(212) 592-1400

Attorneys for Respondents

Bank Leumi U SA, Joseph A. Sciarillo,

Robert M. Cassuto, Jislie Sheifeitz

On the Brief: and George R. Penny

Mari-CLaAupDIA JIMENEZ

194114 ce

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

i

CORPORATE DISCLOSURE STATEMENT

PURSUANT TO SUPREME COURT RULE 29.6

Respondent Bank Leumi, USA certifies that it is a

subsidiary of Bank Leumi le-Israel Corporation. Bank Leumi

le-Israel B.M. is the parent company and the owner of all of

the shares of Bank Leumi le-Israel Corporation. No other

company has an ownership interest of 10% or more in Bank

Leumi, USA.

il

TABLE OF CONTENTS

Page

Corporate Disclosure Statement Pursuant to Supreme

CagweRule 296 oii sievecaaee ates e iene 1

Table of ComtegitRD ....0.65404 40k eee ee a keneree es ii

Table of Cited Authorities .....cccciccsccescecs ill

Statement of @he CASE: ack cance eee ae eeu ne l

Reasons for Denying the Petition............... 5

I. Petitioner’s Claims of a Violation of the

Condominium and Cooperative Conversion

Protection and Abuse Relief Act Were Not

Overlooked or Ignored by the District Court

and the Second Circuit .............00.. 6

II. Even if the Courts Below Did Not Address

The Condominium Act, It Does Not Apply in

this Case and Has Not Been Violated ..... 7

III. The Petition for Certiorari Should be Denied

Because There is No Underlying Decision

Invalidating the Condominium Act ....... 11

Conclusions .. ...s:.55b4e eee eee 13

ili

TABLE OF CITED AUTHORITIES

Page

CASES

2 Tudor City Place Assocs. v. Tudor City

Tenants Corp.,

924 F.2d 1247 (2d. Cir. 1991) ............... 9

Bleeker Charles Co. v. 350 Bleeker

Street Apt. Corp,

og & Egy | & Ay: | ee 9, 10

Board of Managers of Charles House Condo v.

Infinity Corp.,

Ee fo fy ie | | rr 8, 9, 10

Coliseum Park Apartments Co. v. Coliseum

Tenant Corp.,

742 F. Supp. 128 (S.D.N.Y. 1991) ............ 10

Freeman v. Complex Computing Co.,

Bae we We OG. OE. TSFT) on ccc ccc cenee 10

Neitzke v. Williams,

i i cc cdi ce ananeewaneee na 11, 12

Park South Tenants Corp. v. 200 Cent. Park South,

be Bieiy Seo) | | ee 8

iv

Cited Authorities

Page

STATUTES

The Condominium and Cooperative Conversion

Protection and Abuse Relief Act,

P.L. 96-399, 15 U.S.C. § 3601, et seq. ........ passim

de UA. © TSESUGMAMD oa s ckesceassnnaces 11

]

Respondents Bank Leumi USA (“Bank Leum1”), Joseph

A. Sciarillo, Robert M. Cassuto, Julie Sheifetz and George

R. Penny (together, “Respondents”) request that this Court

deny the petition of Vilasilini Nair Kottaram (“Kottaram’’)

(“Petitioner”) for a writ of certiorari seeking review of the

judgment of the United States Court of Appeals for the

Second Circuit (“Second Circuit”) entered on August 3, 2004.

STATEMENT OF THE CASE

This action involves a condominium building known as

the Crown Plaza Condominium, a six-story, 29-unit

condominium building located at 54-09 108th Street, Corona,

Queens. Petitioner is the owner of one condominium unit,

having purchased the unit from the original sponsor, B-F

Corona Holdings, Inc., on May 31, 1995.

Almost seven years later, through counsel, Petitioner

commenced this action against Bank Leumi, whose only

involvement with the Crown Plaza Condominium was as the

holder of a 1989 mortgage loan to B-F Corona, the original

sponsor.' In 1496, B-F Corona defaulted on the mortgage

1. Petitioner was initially represented by counsel, Satish K.

Bhatia. However, during the course of the District Court proceedings

Petitioner made a motion to discharge her counsel because counsel

had become “uncooperative and obstinate.” She then opted to proceed

pro se. In addition, Petitioner’s husband John Felix (“Felix’) was

never a party to the district court action as Petitioner filed a motion

to join Felix as a plaintiff, but the district court denied this request.

However, Petitioner included Felix’s name on her Notice of Appeal

to the Second Circuit. The Second Circuit included a footnote in its

August 3, 2004 decision in which it explained that although Felix’s

name appeared in the Court’s official caption, he was not a proper

party to the appeal. (Pet. at 9).

2

and Bank Leumi foreclosed on its collateral — the unsold

condominium units — and subsequently sold its position to

an affiliate, EOR Fifty-Five of New York, Inc (““EOR”). EOR

became the subsequent sponsor.

Petitioner’s complaint alleged a cause of action under

RICO, claiming essentially that Respondents: (i) engaged in

the criminal acts of “wire fraud” and “mail fraud” because

the condominium’s offering plan “misrepresented” that

condominium units would be sold to individuals exclusively

for use as their primary residence; and (ii) that substandard

materials were used in the construction of Petitioner’s unit

resulting in repairs to the roof and the plumbing and heating

systems. (Petition for Writ of Certiorari (“Pet.”), at 24-41).

In dismissing Petitioner’s Complaint, the District Court

correctly held that Petitioner had failed to comply with the

RICO statute’s rigorous pleading requirements and, that in

any event, those claims were time-barred as they were

brought outside of RICO’s four year limitations period.

Having dismissed the only federal claim that was

properly before it, the District Court declined to exercise

supplemental jurisdiction over any pendant state law claims.

(Pet. at 13-14).

In an attempt to circumvent RICO’s four-year statute of

limitations, Petitidner’s brief to the Second Circuit focused

on a new cause of action; that the Respondents somehow

violated the Condominium and Cooperative Conversion

Protection and Abuse Relief Act, P.L. 96-399, 15 U.S.C.

§ 3601, et seq. (the “Condominium Act”), a statute addressing

long-term self-dealing contractual arrangements entered into

by a condominium sponsor (“sweetheart deals”), because the

Sponsor, not Bank Leumi, exercised its rights under the

3

offering plan to appoint its representatives to the

condominium’s Board of Managers (the “Board”) until the

last condominium unit was sold. Thus, Petitioner contends,

the Board w-s not illegally constituted and its decisions (such

as the raising of common charges) are void.

The Second Circuit properly ordered the appeal

DISMISSED because it lacked “an arguable basis in law or

fact.” It also denied Petitioner’s other pending motions, such

as denying its motion to stop the Defendant Ramesh C. Vig

from claiming legal fees; (ii) denying Petitioner’s motion

for a certificate of appealability as “unnecessary”; and (iii)

denying petitioner’s motion for an “emergency restoration

order.” (Pet. at 8-9).

Petitioner now claims, in its application before this

Court, that the failure of the courts to enforce the

Condominium Act is jeopardizing the “Housing of this

Country” and resulting in exploitation by the “MIGHTY

PEOPLE.” (Pet. at 7). Petitioner’s latest argument is

consistent with her voluminous submissions to the courts

which in which she has unleashed a torrent of rambling,

incoherent and libelous attacks on Bank Leumi and its current

and former employees. In fact, in an affirmation for the

District Court, Petitioner went so far as to claim, without a

shred of substantiation, that Bank Leumi, a mere mortgage

holder of a construction loan for the original sponsor back

in 1989, is actually a criminal enterprise and set up exactly

like an “organized crime family.” (Petitioner’s Affirmation

Opposing Declaration of Defense Counsel & Demanding

Answers to Charges or Summary Judgment at 11).

Petitioner’s outrageous and untrue allegations are simply

an attempt to mask the truth that she has utterly failed to

4

state a viable claim against Respondents. Instead, the only

thing Petitioner has accomplished in this case is to

unnecessarily multiply these proceedings by filing numerous,

frivolous motions — including two in the Second Circuit

seeking an order related to a water leak in her apartment —

containing hundreds of pages of irrelevant argument and

annexing thousands of pages of exhibits that have nothing

to do with the claims at issue.

Simply put, Petitioner’s claims, at best, amount to a time-

barred negligence or breach of contract action against the

original Sponsor, as this action seeks nothing more than

recovery for alleged damages to Petitioner’s condominium

unit incurred in June 1995 — more than six (6) years before

the action was commenced. In sum, this is not a RICO case

(the cause of action asserted in the Complaint); it is not a

case about a violation of the Condominium Act (a statute

relied upon as a basis for jurisdiction in the Complaint); and

it is certainly not a case requiring the review of this Court.

Thus, as the District Court and the Second Circuit both

properly found, the allegations against Respondents are .

untimely, unsupported, completely unfounded, do not give

rise to a cause of action of any kind and “lack an arguable

basis in law or fact”. (Pet. at 8-9, 13-14).

5

REASONS FOR DENYING THE PETITION

The petition for certiorari should be denied because it

satisfies none of the criteria specified by this Court’s rules

or decisions for issuance of the writ. The decision below does

not conflict with a decision of this Court or any Court of

Appeals. This claim was first styled as a RICO action and,

before the Second Circuit, was reinvented by Petitioner as a

violation of the Condominium Act. The District Court and

the Second Circuit have both heard and considered the

arguments raised by Petitioner, and both courts have

summarily dismissed these claims. Petitioner has no

cognizable claim against Respondents, yet she persists in

filing a flurry of frivolous motions and appeals which are

both burdensome and costly for Respondents and the judicial

system.

While Respondents submit that the Condominium Act

claim is not properly before this Court — because this was

not a cause of action asserted in the underlying Complaint

— should the Court decide to consider these allegations, the

well established law of the Second Circuit mandates a finding

that no such claim may lie against Respondents here. In

addition, the question presented by Petitioner for review is

whether the Condominium Act is “a valid law to be enforced

by the Courts.” (Pet. at i). There is no underling decision,

however, questioning the validity of the Condominium Act.

Rather, the District Court and the Second Circuit have

determined that the Condominium Act has no application to

the facts of this case. Because this is the only question

presented by Petitioner before this Court, her petition should

be denied.

6

I.

PETITIONER’S CLAIMS OF A VIOLATION OF THE

CONDOMINIUM AND COOPERATIVE CON-

VERSION PROTECTION AND ABUSE RELIEF ACT

WERE NOT OVERLOOKED OR IGNORED BY THE

DISTRICT COURT AND THE SECOND CIRCUIT

As part of the questions presented for review by this

Court, Petitioner alleges that the District Court and the

Second Circuit did not address her claims of violations of

the Condominium and Cooperative Conversion Protection

and Abuse Relief Act, P.L. 96-399, 15 U.S.C. § 3601, et seq.

(the “Condominium Act’). Petitioner incorrectly interprets

the courts’ silence on this issue as meaning that the allegations

were not addressed. The fact that the couris below did not

discuss every argument alleged by Petitioner does not

mean that these arguments were overlooked or “ignored”.

(Pet. at 2).

Although the Petitioner’s claim regarding the

Condominium Act was not properly before the courts because

it was not asserted as a cause of action in the Complaint and

because Petitioner never sought to amend the Complaint to

include such a claim, it was nonetheless addressed by

Respondents in their papers because a pro se plaintiff's

complaint is entitled to the most generous reading possible.

Both the District Court and the Second Circuit were therefore

fully briefed on the relevant issues (or lack thereof) and both

Courts, after evaiuating these contentions as well as the others

alleged, chose to deny Petitioner’s claims as a whole.

7

Il.

EVEN IF THE COURTS BELOW DID NOT ADDRESS

THE CONDOMINIUM ACT, IT DOES NOT APPLY IN

THIS CASE AND HAS NOT BEEN VIOLATED

Petitioner claims that Respondents violated the

Condominium Act because: (i) EOR (the entity that purchased

the unsold condominiums after a foreclosure sale) elected to

appoint its representatives Sheifetz, Cassuto and Penny to

the Condominium’s Managing Board (Pet. at 34-35); and (ii)

because the Condominium Act defines condominium

association as “the organization, whose membership consists

exclusively of all of the unit owners in the condominium

project, which is, or will be, responsible for the operation,

administration, and management of the condominium

project,” 15 U.S.C. § 3603(4), the presence of the Sponsor’s

representatives on the Board in accordance with the offering

plan somehow forms a basis for a claim.

Petitioner’s arguments were properly rejected.

As discussed below, the Condominium Act does not prohibit

a sponsor trom appointing its representatives to the

condominium’s managing board in accordance with the

condominium’s offering plan, until the last condominium is

sold. Moreover, with respect to Petitioner’s second point,

and as explained in Respondents’ submissions below, EOR

was the owner of all of the unsold condominium units, was a

“unit owner” within the meaning of 15 U.S.C. § 3603(4) and

was entitled, under both the Condominium Act and the

offering plan, to sit on the Board until the last unit was sold.

Significantly, EOR was not even named as a defendant in

this action. Having now had three bites at this apple, in the

New York City Civil Court, the District Court, and the Second

8

Circuit, Petitioner has now, for the fourth time, failed to show

how the Board was illegal.

The stated purposes of the Condominium Act are to:

(i) minimize the adverse impacts of condominium or

cooperative conversions on housing opportunities of low

income individuals, the elderly and the handicapped; (11)

assure that fair and equitable principles are followed in the

establishment of condominium and_ cooperative

opportunities; and (iii) to provide appropriate relief where

long term leases of condominium or cooperative related

facilities are determined to be unconscionable. 15 U.S.C.

§ 3601(b). Moreover, all four elements listed in § 3607(a)

must be present for a condominium association to terminate

self-dealing contracts. Board of Managers of Charles House

Condo. v. Infinity Corp., 21 F.3d 528, 532 (2d Cir. 1994)

(For the contract to be terminable under the Condominium

Act it must (1) provide for operation, maintenance or

management of a condominium .. . (2) be between the unit

Owners or a condominium association and the developer or

an affiliate of the developer; (3) have been entered into while

such association was controlled by the developer through

special developer control; and (4) must be for a period of

more than three years).

The Condominium Act gives condominium unit owners,

or a condominium association, the opportunity to challenge

sweetheart deals that the developer entered into with the

condominium association. See e.g., Park South Tenants Corp.

v. 200 Cent. Park South Assoc., 941 F.2d 112, 114 (2d Cir.

1991) (holding that the plain language of the Condominium

Act awards a cooperative association the right to terminate

so-called sweetheart leases within § 3607’s two year window.)

As such, the Condominium Act simply has no application to

9

Petitioner’s claims against Respondents who a ‘he former

holder of the mortgage on the unsold condom. um units.

Bleecker Charles Co. v. 350 Bleecker Street Apt. Corp., 327

F.3d 197 (2d Cir. 2003) (holding that to be terminable under

the Condominium Act, the relevant contract must first

provide for the operation, maintenance or management of

the condominium, must be between the unit owners and the

developer or an affiliate, must have been entered into when

the developer controlled the condominium and must extend

for more than three years); 2 Tudor City Place Assocs. v.

Tudor City Tenants Corp., 924 F.2d 1247, 1251 (2d Cir. 1991)

(holding that the Condominium Act allowed the tenants to

terminate a garage lease with an affiliate of the developer);

Board of Managers of Charles House, 21 F.3d at 533 (holding

that the “termination provision of the Act was designed to

prevent sponsors from binding tenants to long-term, self-

dealing Leases.”) (emphasis in original).

Thus, it is clear that the Condominium Act was meant to

address developer self-dealing, and, accordingly, has no

application to Petitioner’s claims against Respondents.

See e.g., 15 U.S.C. § 3601(a)(3) (“Congress finds and

declares that ... certain long-term leasing arrangements for

recreation and other condominium-or cooperative-related

facilities which have been used in the formation of

cooperative and condominium projects may be

unconscionable”); Board of Managers of Charles House

Condo., 21 F.3d at 531 (“By enacting § 3607, Congress

established a non-judicial remedy for condominium

associations and unit owners to terminate long-term self

dealing contractual arrangements.’’)

In any event, claims under the Condominium Act may

only be brought where “the owners of two-thirds of the units

10

other than those owned by the deve'>per or its affiliates ...

vote for termination,” Bleecker Charles Co., 327 F.3d at 199,

and not by a single unit owner as in this case.

Additionally, the mere fact that certain current or former

employees of the Bank are principals of EOR, does not allow

Petitioner to impose liability on either the Bank or these

individuals for EOR’s conduct. Freeman v. Complex

Computing Co., 119 F.3d 1044, 1053 (2d Cir. 1997) (holding

that the corporate veil cannot be pierced “in the absence of a

showing that this control was used to commit [a] wrong,

fraud, or the breach of a legal duty, or a dishonest and unjust

act in contravention of plaintiff's legal rights, and that the

control and breach of duty proximately caused the injury

complained of.”) Accordingly, because Petitioner has not

stated a cognizable claim for relief under the Condominium

Act against the Bank or the individual employees, this Court

should deny its petition.

Should Petitioner wish to attempt to challenge the

validity of any lease or other contract or agreement between

the Sponsor and the condominium association as

“unconscionable” she is, of course, free to do so. However,

it is clear that the allegations contained in the Complaint fall

well short of the conduct regulated by this statute, therefore

the Condominium Act has not been violated as it is not

applicable to this case. See e.g., Coliseum Park Apartments

Co. v. Coliseum Tenant Corp., 742 F. Supp. 128 (S.D.N.Y.

1990); Bleecker Charles Co., 327 F.3d 197; Board of

Managers of Charles House Condo., 21 F.3d 528.

Lastly, to the extent that Petitioner is seeking to use

§ 3607 of the Condominium Act to terminate any lease or

other contract entered into between the condominium and

11

the Sponsor, this claim is time-barred by the two-year

limitations period contained in that section. 15 U.S.C.

§ 3607(b). To the extent that Petitioner is seeking any other

relief under the Condominium Act, those claims are likewise

time-barred by that statute’s catchall six-year limitations

period. 15 U.S.C. § 3613. Because EOR became the Sponsor

on or about August 7, 1996 and Petitioner did not commence

this action until more than six years after that date, their

Condominium Act claim would, in any event, be time-barred.

Il.

THE PETITION FOR CERTIORARI SHOULD BE

DENIED BECAUSE THERE IS NO UNDERLYING

DECISION INVALIDATING THE CONDOMINIUM ACT

The question presented by Petitioner for review by this

Court is whether the Condominium Act is a “valid law[] to

be enforced by the courts” (Pet. at i). Petitioner seems to

misapprehend that there is no question about whether or not

the Condominium Act is a valid law. There is no underlying

decision anywhere which holds that the Condominium Act

is invalid. The issue here is not whether the Condominium

Act is valid, but rather if the Condominium Act was violated.

In its August 3, 2004 decision, the Secend Circuit denied

all of Petitioner’s motions and dismissed their appeal stating

that it lacked “an arguable basis in law or fact.” Citing

28 U.S.C. § 1915(e)(2)(B)(i) as well as Neitzke v. Williams,

490 U.S. 319 (1989), the Court properly concluded that

Petitioner’s case was frivolous or malicious and should be

dismissed. As this Court explained in Neitzke, 28 U.S.C.

§ 1915 “accords judges not only the authority to dismiss a

claim based on an indisputably meritless legal theory, but

12

also the unusual power to pierce the veil of the complaint’s

factual allegations and dismiss those claims whose factual

contentions are clearly baseless.” /d. at 327. In denying

Petitioner’s claims, the Court implicitly stated that the

Condominium Act did not apply to this case and was not

violated.

The Condominium Act addresses long-term self-dealing

contractual arrangements entered into by a condominium

sponsor. Thus the act was designed to allow a condominium

association or a group of unit owners to terminate certain

self-dealing contracts entered into by the sponsor during the

period of its control of the condominium. This statute thus

has no application to Petitioner’s claims that Respondents

somehow acted improperly when EOR, as an owner of unsold

condominium units, appointed certain of its employees to

the Board in accordance with the terms of the offering plan.

Because the Second Circuit did not in anyway hold that the

Condominium Act is “invalid,” Petitioner’s application for

a determination as to the validity of the Act has no merit.

13

CONCLUSION

For the reasons stated above, the Petition for a Writ of

Certiorari should be denied.

Respectfully submitted,

CHRISTOPHER J. SULLIVAN

Counsel of Record

Caro, M. GoopMAN

HERRICK, FEINSTEIN LLP

Two Park Avenue

New York, New York 10016

(212) 592-1400

Attorneys for Respondents

Bank Leumi USA,

Joseph A. Sciarillo,

Robert M. Cassuto,

Julie Sheifeitz

and George R. Penny

On the Brief:

Mari-CLAuDIA JIMENEZ