Cloverleaf Realty of N.Y., Inc. v. Town of Wawayanda, No. 07-3405 (2d Cir. 2009)
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07-3405-cv Cloverleaf Realty of N.Y., Inc. v. Town of W awayanda 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ------------August Term 2008 Argued: December 8, 2008 Decided: July 15, 2009 Docket No. 07-3405-cv --------------------------------------------------X CLOVERLEAF REALTY OF NEW YORK, INC. and SUNRISE PARK REALTY, Plaintiffs-Appellants, - against TOWN OF WAWAYANDA and COUNTY OF ORANGE, Defendants-Appellees. --------------------------------------------------X Before: FEINBERG, LEVAL, and CABRANES Circuit Judges. Appeal from an order of the United States District Court for 31 the Southern District of New York (Charles L. Brieant, Judge) 32 dismissing a procedural due process claim as precluded by an 33 earlier dismissal of a similar claim by a New York state court 34 for lack of timeliness. The Court holds that a dismissal on 35 statute of limitations grounds by a New York court does not 36 preclude the bringing of the same claim in another jurisdiction 37 with a longer statute of limitations, including a federal court 38 exercising its federal question jurisdiction. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 The order of the district court is vacated, and the matter remanded for further proceedings. JAMES G. SWEENEY, Goshen, N.Y., for Appellants. RICHARD J. GUERTIN, Middletown, N.Y., Defendant-Appellee Town of Wawayanda. for MARIA CONDOLUCI, Goshen, N.Y., for DefendantAppellee County of Orange (David L. Darwin, Orange County Attorney, on the brief). FEINBERG, Circuit Judge: 15 Plaintiffs Cloverleaf Realty of New York, Inc. and Sunrise 16 Park Realty (collectively Cloverleaf ) appeal from an order of 17 the United States District Court for the Southern District of 18 New York (Charles L. Brieant, Judge) dismissing their complaint 19 against defendants the Town of Wawayanda (the Town ) and the 20 County of Orange (the County ). We conclude that the District 21 Court erred in dismissing the complaint as precluded by an 22 earlier state court dismissal, and we vacate the order and 23 remand the case to the district court for further proceedings. 24 25 I. Background 26 Cloverleaf owns two parcels of land in Wawayanda, New 27 York. In 2005, the Town prepared a tentative special assessment 28 roll to fund improvements to the water and sewer district that 29 included the parcels. Following a public hearing, the Town 30 approved the tentative assessment roll. The Town then -2- 1 transmitted the assessment roll to the County, which levied the 2 taxes against the property owners within the district. As a 3 result, Cloverleaf received tax bills from the County totaling 4 $38,642.01.1 On January 31, 2006, the last day the taxes could 5 be paid without penalty, Cloverleaf paid the full amount under 6 protest. 7 In 2006, Cloverleaf brought a declaratory judgment action 8 against the Town and the County in a New York state court. The 9 complaint sought to invalidate the assessments on two grounds. 10 First, Cloverleaf argued that New York law required the 11 assessments to be made on a benefit basis, where taxes would 12 be based on the proportional share of the benefit each property 13 in the district would receive from the improvements. Instead, 14 the assessment roll was enacted on an ad valorem basis, so that 15 taxes were based purely on the assessed value of the 16 properties. Second, Cloverleaf argued that procedural due 17 process required providing actual notice of the objectors 18 hearing by mail, and that the City s posting of a newspaper 19 advertisement was insufficient. The state trial court found 20 that the four-month statute of limitations contained in N.Y. 21 C.P.L.R. 217 applied to Cloverleaf s claims, and it dismissed 22 the complaint as untimely. 1 Cloverleaf Realty of New York, Inc. was billed $28,574.39, and Sunrise Park Realty was billed $10,067.62. -3- 1 Cloverleaf subsequently brought this action in the 2 Southern District pursuant to 42 U.S.C. § 1983, again alleging 3 that the failure to provide notice of the objectors hearing by 4 mail violated its Fourteenth Amendment right to due process. 5 Although this claim was essentially identical to the state 6 court procedural due process claim, Cloverleaf sought to take 7 advantage of the longer statute of limitations applied by 8 federal courts to § 1983 actions against New York state 9 officials. See Owens v. Okure, 488 U.S. 235, 251 (1989) 10 (holding that New York s three-year statute of limitations for 11 general personal injury actions is applicable to § 1983 actions 12 filed in federal courts in New York). See also Jaghory v. New 13 York State Dep t of Educ., 131 F.3d 326, 331 (2d Cir. 1997) 14 (observing that the statute of limitations for a claim under § 15 1983 that accrued in New York is three years ); Meyer v. Frank, 16 550 F.2d 726, 728 (2d Cir. 1977) ( [T]he three year New York 17 statute of limitations governs [plaintiff s] instant § 1983 18 claim. ); Romer v. Leary, 425 F.2d 186, 187 (2d Cir. 1970) ( It 19 is now settled...that in a suit seeking declaratory and 20 injunctive relief which is based on [§ 1983], the applicable 21 limitation in a case arising in New York is the three year 22 limitation... ). 23 24 The District Court dismissed the action on the pleadings, concluding that the federal court claim was precluded by the -4- 1 earlier state court dismissal. The district court then granted 2 a motion by Cloverleaf to reconsider the dismissal, but 3 ultimately adhered to its initial order. This appeal followed. 4 5 6 II. Discussion The difficulty in this case arises from the circumstance 7 that Cloverleaf s procedural due process claim was untimely 8 under the law applied by the New York courts, but timely under 9 the law applied by the federal courts. Federal courts must 10 give to a state-court judgment the same preclusive effect as 11 would be given that judgment under the law of the State in 12 which the judgment was rendered. Migra v. Warren City School 13 Dist. Bd. of Educ., 465 U.S. 75, 81 (1983). The district court 14 concluded that under New York preclusion law, a dismissal for 15 lack of timeliness is treated as a judgment on the merits, 16 and that the claim therefore could not be litigated in another 17 forum. Cloverleaf argues that the district court erred in 18 failing to apply an exception to claim preclusion where the 19 first claim was dismissed solely for lack of timeliness and the 20 second claim is brought in another state or jurisdiction. We 21 agree. 22 As the Supreme Court has recognized, the traditional rule 23 is that expiration of the applicable statute of limitations 24 merely bars the remedy and does not extinguish the substantive -5- 1 right, so that dismissal on that ground does not have claim- 2 preclusive effect in other jurisdictions with longer, unexpired 3 limitations periods. Semtek Int l Inc. v. Lockheed Martin 4 Corp., 531 U.S. 497, 504. (2001); see also 18A Charles Alan 5 Wright & Arthur R. Miller, Federal Practice and Procedure § 6 4441, at 224 (2d. ed. 2002) (noting the general conclusion 7 that dismissal on limitations grounds merely bars the remedy in 8 the first system of courts, and leaves a second system of 9 courts free to grant a remedy that is not barred by its own 10 limitations rules ). Stated differently, unless a state s 11 claim-preclusion law departs from the traditional rule and 12 treats a dismissal for timeliness as a ruling on the merits of 13 the claim, courts in another jurisdiction need not give claim- 14 preclusive effect to a dismissal on timeliness grounds. A 15 federal court, exercising its federal question jurisdiction, is 16 plainly a jurisdiction separate from that of the State of New 17 York. The remaining question, then, is whether New York s 18 claim-preclusion law departs from the traditional rule, and 19 instead treats a dismissal for lack of timeliness as 20 extinguishing both the right and the remedy. 21 We conclude that New York law does not depart from the 22 traditional rule. As the New York Court of Appeals explained in 23 Tanges v. Heidelberg N. Am., Inc., 93 N.Y.2d 48 (1999), The 24 expiration of the time period prescribed in a Statute of -6- 1 Limitations does not extinguish the underlying right, but 2 merely bars the remedy. Id. at 55. The dismissal of 3 Cloverleaf s procedural due process claim for lack of 4 timeliness thus merely barred its ability to obtain relief in 5 the courts of New York. The underlying right remains intact, 6 and a remedy remains available in the federal courts. 7 Some confusion has arisen from an earlier decision of the 8 New York Court of Appeals in Smith v. Russell Sage College, 54 9 N.Y.2d 185 (1981). That case affirmed the dismissal of an 10 employment discrimination claim on claim-preclusion grounds, 11 observing that a prior dismissal of the same claim on both 12 statute of limitations and statute of frauds grounds was 13 sufficiently close to the merits for claim preclusion purposes 14 to bar a second action. Id. at 194. We have in the past read 15 Russell Sage as establishing that under New York law, a 16 dismissal for lack of timeliness is a judgment on the merits 17 that destroys both the right and the remedy. See EFCO Corp. v. 18 U.W. Marx, Inc., 124 F.3d 394, 397 (2d Cir. 1997); Bray v. N.Y. 19 Life Ins., 851 F.2d 60, 64 (2d Cir. 1988).2 20 In light of the more recent statement of its own law by 21 the New York Court of Appeals in Tanges, such a reading of 22 Russell Sage is no longer appropriate given the earlier case s 2 Neither Bray nor EFCO binds our decision in this case, as both were decided before the New York Court of Appeals clarified the effect of a dismissal for lack of timeliness in Tanges. -7- 1 ambiguity. First, the initial dismissal in Russell Sage was not 2 merely on statute of limitations grounds, but also on statute 3 of frauds grounds. Russell Sage, 54 N.Y.2d at 194. The Court of 4 Appeals appears to have concluded that the two grounds taken 5 together lead to a conclusion that the prior dismissal was 6 sufficiently close to the merits to give it claim-preclusive 7 effect. Id. We do not read this as a statement that a dismissal 8 for lack of timeliness is, standing alone, a judgment on the 9 merits. 10 Second, in Russell Sage, the motion to dismiss the first 11 action was treated as one for summary judgment on which the 12 court considered submissions of the parties outside the 13 pleadings, making claim preclusion especially appropriate in 14 the eyes of the New York Court of Appeals. Id. That is not true 15 of the matter before us. 16 Third, the court in Russell Sage was not confronted by the 17 situation we face: a dismissal for lack of timeliness by a 18 court in another jurisdiction with a shorter statute of 19 limitations. Since that decision did not confront the question 20 of whether a claim originally dismissed as time-barred should 21 be precluded when later reasserted in another jurisdiction with 22 a longer statute of limitations, it should not be understood as 23 having settled that question. 24 -8- 1 III. Conclusion 2 We hold that dismissal of a claim solely for lack of 3 timeliness in a New York state court does not preclude the same 4 claim from being brought in another jurisdiction with a longer 5 statute of limitations, including a federal court exercising 6 its federal question jurisdiction. Accordingly, the order of 7 the district court dismissing Cloverleaf s suit is VACATED, and 8 the matter REMANDED for further proceedings consistent with 9 this opinion. We express no opinion as to the County s argument 10 that Cloverleaf s complaint failed to state a claim upon which 11 relief may be granted, as the district court did not address 12 this argument in its order. -9-
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