Gurevitch v. Emerald Green Property Owners Association Inc.

Background

Alexander Gurevitch and Irina Gurevitch alleged that they practice Hasidic Judaism and bought a house within the Emerald Green Property Owners Association, Inc. (EGPOA). They alleged that EGPOA imposed fees and fines related to an eruv, mikvah, deck, and shed; issued a stop-work order; and held meetings at times that interfered with their religious observance. They also alleged that EGPOA and its attorney, Marvin Newberg, pursued a lien and foreclosure action based on unpaid fees. The state court entered a default judgment and later a judgment of foreclosure and sale, and EGPOA bought the property at the foreclosure sale.

The amended complaint asserted Fair Housing Act discrimination and retaliation claims against the defendants and a Fair Debt Collection Practices Act claim against Newberg. The defendants moved to dismiss.

Rooker-Feldman

The court rejected the defendants’ argument that the Rooker-Feldman doctrine barred the case. That doctrine generally prevents a federal district court from acting as an appeals court over a state-court judgment. The court held that the doctrine did not apply because the plaintiffs’ state-court appeals were still pending when they filed this federal action. It also held that the plaintiffs’ federal claims sought damages for injuries allegedly caused by the defendants’ conduct, rather than asking the federal court to undo the foreclosure judgment.

Claim preclusion

The court applied New York’s claim-preclusion rule, also called res judicata. This rule can prevent a party from bringing a later claim arising from the same transaction when the claim could have been raised in an earlier case. The court held that the foreclosure action was a decision on the merits even though it resulted from a default.

The court held that claim preclusion applied to the plaintiffs’ claims against EGPOA to the extent those claims challenged whether EGPOA’s rules and regulations applied to the property. Those rules formed the basis for the fees underlying the foreclosure action. The court held that claim preclusion did not apply to the claims against Newberg because the attorney-client relationship alone did not establish the required legal relationship between Newberg and EGPOA. The court also held that FHA claims based on other alleged discriminatory acts were not barred by claim preclusion.

Fair Housing Act discrimination claim

The court assumed for purposes of the motions that the Fair Housing Act could cover the plaintiffs’ alleged conduct after they acquired the property. It held that the plaintiffs adequately alleged that they belonged to a protected class and suffered adverse actions, but not that the defendants acted with discriminatory intent.

The court found that the complaint did not allege that non-Jewish residents were treated more favorably when they built similar structures or made similar property changes. It also found that the allegations about meetings held during religious observance did not explain when the meetings occurred, how they were scheduled, or why their scheduling was connected to the plaintiffs’ faith. The complaint’s allegations about unidentified individuals opposing Jewish residents and an alleged effort to prevent Jewish people from moving into the area were considered too conclusory and insufficiently connected to the challenged actions. The discrimination claim was dismissed.

Fair Housing Act retaliation claim

To state a retaliation claim, the plaintiffs had to plausibly allege that they opposed conduct prohibited by the Fair Housing Act, that the defendants knew about that activity, that the defendants then took adverse action, and that the activity caused the adverse action.

The plaintiffs alleged that they distributed flyers and encouraged residents to exercise their federal rights. The court held that the complaint did not describe the flyers well enough to show that they opposed discrimination. Even assuming the activity was protected, the complaint did not say when the flyers were distributed or provide other facts connecting that activity to the defendants’ conduct. The retaliation claim was dismissed.

Fair Debt Collection Practices Act claim

The court held that the claim against Newberg was barred by the Fair Debt Collection Practices Act’s one-year filing deadline. The alleged collection conduct included filing a lien notice and starting the foreclosure action, which occurred more than one year before the plaintiffs filed this federal case.

The court rejected the plaintiffs’ argument that later statements or filings in the foreclosure action created new violations and restarted the deadline. It held that repeating allegedly false or misleading statements during the same foreclosure action did not create new violations. The court dismissed the debt-collection claim and did not address Newberg’s other arguments for dismissal.

Disposition

The court declined to grant leave to amend because the plaintiffs had already amended once after receiving notice of the alleged deficiencies, did not request another amendment, and did not identify additional facts that might cure those deficiencies. Judge Seibel granted EGPOA’s and Newberg’s motions to dismiss, directed the Clerk to terminate the motions, and ordered the case closed. The conclusion did not specify that the dismissals were with or without prejudice.