Americas Choice Veterans Construction Inc. v. City of New York

Background

Americas Choice Veterans Construction Inc. (ACVCI), Elizabeth Younes, and Andreas Plaza alleged that Edward F. Guida, Jr., Albert Perna, and Gregg Wasserman used improper service—described as “sewer service”—to obtain default judgments against them in New York City Small Claims Court. The plaintiffs alleged that Guida, a New York City Marshal, helped enforce the judgments by serving notices on Teachers Federal Credit Union, where Younes and ACVCI had accounts. They alleged that the resulting account freeze caused business and personal harms.

The Small Claims Court later vacated the default judgments against Younes and Plaza and ordered the return of funds collected under those judgments. The opinion states that Wasserman returned Younes’s seized funds with interest. The Small Claims Court entered separate judgments against ACVCI, which ACVCI appealed.

The amended federal complaint asserted a claim under 42 U.S.C. § 1983 alleging a Fourteenth Amendment due process violation against all defendants. It also asserted a Sherman Act antitrust claim against the Individual Defendants and several state-law claims against different defendants. The City moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). The Individual Defendants moved under Rules 12(b)(1) and 12(b)(6) and also sought to strike allegations.

Federal jurisdiction

The Individual Defendants argued that the court lacked subject-matter jurisdiction. The court rejected that argument, holding that the federal claims were not so insubstantial or frivolous that they failed to create federal-question jurisdiction. The court explained that the arguments concerning compliance with state law, qualified immunity, and whether some defendants acted under color of state law concerned the claims’ merits or pleading sufficiency, not subject-matter jurisdiction.

Due process claim

The court held that the plaintiffs failed to state a procedural due process claim. The plaintiffs appeared to base the claim on the freezing of their bank accounts through Guida’s actions. The court treated the alleged conduct as a random, unauthorized act by a state actor. In that situation, due process is satisfied if the state provides a meaningful procedure after the deprivation.

The court found that New York provided such procedures, including proceedings that could vacate an execution, void a levy, control enforcement of a judgment, or award damages. The plaintiffs used those procedures to challenge the default judgments, obtain the lifting of the freeze, and recover Younes’s seized funds. The court therefore held that the availability of those remedies defeated the due process claim. Because the plaintiffs had not pleaded a constitutional violation by a state actor, the court also held that there could be no municipal liability against the City on this theory.

Sherman Act claim

The plaintiffs alleged that the Individual Defendants conspired to impair ACVCI’s ability to compete for contracts involving service-disabled veteran-owned businesses. The court dismissed this claim for two independent reasons.

First, the complaint did not plausibly allege an agreement between at least two legally distinct economic entities. Perna and Wasserman allegedly established USA Veterans Builders, Inc. and acted as officers of that same firm. The court held that their conduct did not supply the separate actors required for a Section 1 conspiracy. The allegations concerning Guida also did not cure the problem because the complaint did not allege that he participated in the relevant market or acted other than as Perna and Wasserman’s agent.

Second, the court held that the complaint did not plausibly allege an unreasonable restraint on trade. It alleged harm to ACVCI, but did not allege an actual adverse effect on competition as a whole in the relevant market. Antitrust law protects competition, rather than individual competitors alone.

State-law claims and disposition

After dismissing all federal claims, the court declined to exercise supplemental jurisdiction over the remaining state-law claims. Because the case was at an early stage and discovery had not begun, the court found that judicial economy and respect for state courts favored dismissal of those claims.

The court granted the Individual Defendants’ motion to dismiss in part and granted the City’s motion to dismiss. It dismissed the action without prejudice to filing the state-law claims in state court and directed the Clerk of Court to close the case.