Palm Beach Strategic Income, LP v. Salzman , 457 F. App'x 40 ( 2012 )

11-2668-cv
Palm Beach Strategic Income v. Salzman
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY
ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL
APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY
CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Daniel Patrick Moynihan
United States Courthouse, 500 Pearl Street, in the City of New
York, on the 26th day of January, two thousand twelve.
PRESENT:
PETER W. HALL,
DENNY CHIN,
Circuit Judges,
ALVIN K. HELLERSTEIN,*
District Judge.
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PALM BEACH STRATEGIC INCOME, LP,
Plaintiff-Appellant,
-v.- 11-2668-cv
STANLEY P. SALZMAN, MARILYN SALZMAN,
STANLEY P. SALZMAN, PC,
Defendants-Appellees.
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FOR PLAINTIFF-APPELLANT: RICHARD M. ASCHE, Litman, Asche &
Gioiella, LLP, New York, New York.
FOR DEFENDANTS-APPELLEES: PETER J. BIGING, Lewis Brisbois
Bisgaard & Smith LLP, New York, New
York, and William Todd Boyd and
Joseph G. Riopelle, Boyd Richards
Parker Colonnelli, PL, Tampa,
Florida, for Stanley P. Salzman and
Stanley P. Salzman, PC.
* The Honorable Alvin K. Hellerstein, United States District
Judge for the Southern District of New York, sitting by
designation.
ELLIOT R. POLLAND, Hoffman, Polland
& Furman, PLLC, New York, New York,
for Marilyn Salzman.
Appeal from a judgment and order of the United States
District Court for the Eastern District of New York (Seybert,
J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment and order are AFFIRMED.
Plaintiff-appellant Palm Beach Strategic Income, LP
("PBSI") appeals from the district court's May 3, 2011, judgment
granting the motion of defendants-appellees Stanley P. Salzman,
PC (the "PC"), Stanley P. Salzman ("Salzman"), and Marilyn
Salzman to dismiss PBSI's amended complaint pursuant to Federal
Rule of Civil Procedure 12(b)(6). PBSI also appeals the district
court's June 23, 2011, decision and order denying PBSI's motions
for reconsideration pursuant to Rule 59(e) and relief from
judgment pursuant to Rule 60(b).
PBSI first filed suit against the PC in the Southern
District of Florida in 2008. See Palm Beach Strategic Income, LP
v. Stanley P. Salzman, PC, No. 2:08-CV-04188 (M.D. Fla. Mar. 12,
2008). PBSI's complaint, which alleged breach of an escrow
agreement with the PC, attached a May 2006 escrow agreement
naming PBSI as the escrow provider ("PBSI Agreement 1"). In
October 2008, the case was transferred to the Eastern District of
New York. PBSI filed an amended complaint against the PC and
Salzman, this time attaching as the operative contract a May 2006
agreement that listed a different entity, Palm Beach Capital
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Management, LLC ("PBCM"), as the escrow provider (the "PBCM
Agreement"). The PBCM Agreement purported to cover the same
transaction as PBSI Agreement 1, but PBSI made no effort to
explain why it was now relying on a different agreement.1
Defendants moved to dismiss the amended complaint and
PBSI filed a second amended complaint, again attaching the PBCM
Agreement. Defendants again moved to dismiss. The district
court granted the motion, and dismissed the second amended
complaint because it failed to properly plead diversity
jurisdiction. The district court dismissed the action with leave
to amend "for the limited purpose" of enabling PBSI to properly
plead diversity jurisdiction.
PBSI, however, did not replead. Instead, on January
21, 2010, PBSI filed a new action in the Eastern District of New
York against the PC, Salzman, and Marilyn Salzman. See Palm
Beach Strategic Income, LP v. Salzman, No. 2:10-CV-00261-JS-AKT
(E.D.N.Y. Jan. 21, 2010) (the "261 action"). The new complaint
-- which was PBSI's fourth complaint -- asserted federal subject
matter jurisdiction on the basis of newly-added RICO claims and
again attached the PBCM Agreement as the operative contract.
Defendants moved to dismiss the 261 action for lack of
standing, arguing that PBSI could not sue for breach of a
contract to which PBSI was not a party. PBSI argued that it
indeed had standing because it provided the funds for the escrow
1
PBSI specifically argued that a July 2006 agreement,
identified by Salzman as the operative contract, could not
control because PBSI is "not identified as a party" or
"referenced at all" in the July agreement.
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account and because it was an undisclosed principal of PBCM. In
its opposition, PBSI continued to rely on the PBCM Agreement.
The district court granted defendants' motion to dismiss, but
allowed PBSI to amend its complaint to cure the standing problem.
PBSI filed an amended complaint -- its fifth complaint
-- that attached a May 2006 escrow agreement that named PBSI as
the escrow provider ("PBSI Agreement 2") but was slightly
different from PBSI Agreement 1, again without explanation for
why yet another agreement was being submitted. On May 2, 2011,
the district court granted defendants' motion to dismiss. The
court found that because PBSI's amended complaint directly
contradicted three of its prior complaints, which alleged that
the PBCM Agreement controlled, the court had no obligation to
accept the amended complaint's allegations as true. The court
instead dismissed the case based on the insufficiency of PBSI's
claims alleging breach of the PBCM Agreement, which the court
considered controlling in light of PBSI's repeated
representations that it was the operative contract. On May 17,
2011, PBSI filed a motion for reconsideration under Rule 59(e) or
for relief from judgment under Rule 60, which the district court
denied on June 23, 2011.
DISCUSSION
We affirm the district court's dismissal of PBSI's
amended complaint and denial of PBSI's post-judgment motions.
Although the district court couched its ruling as a Rule 12(b)(6)
dismissal of the amended complaint, in essence it was holding
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that PBSI had gone beyond the limited leave it had been given to
amend its original complaint, and the court instead considered
the sufficiency of the prior complaint, that is, the original
complaint in the 261 action. We hold that the district court did
not abuse its discretion in doing so. We further hold that the
district court correctly concluded that the original complaint
failed to state a claim upon which relief could be granted.
Dismissals pursuant to Rule 12(b)(6) are reviewed de
novo, Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir.
2002), but decisions denying leave to amend are reviewed for
abuse of discretion, Iqbal v. Ashcroft, 574 F.3d 820, 822 (2d
Cir. 2009) (per curiam); but see L-7 Designs, Inc. v. Old Navy,
LLC, 647 F.3d 419, 345 (2d Cir. 2011) ("However, a denial of
leave to amend that is based on a legal interpretation, such as
for futility, is reviewed de novo."). We review denials of
motions for reconsideration and motions for relief from judgment
for abuse of discretion. Devlin v. Transp. Commc'n Int'l Union,
175 F.3d 121, 131-32 (2d Cir. 1999); Transaero, Inc. v. La Fuerza
Aerea Boliviana, 162 F.3d 724, 729 (2d Cir. 1998).
District courts in this Circuit have routinely
dismissed claims in amended complaints where the court granted
leave to amend for a limited purpose and the plaintiff filed an
amended complaint exceeding the scope of the permission granted.
See, e.g., Pagan v. N.Y. State Div. of Parole, No. 98 Civ. 5840
(FM), 2002 WL 398682 (S.D.N.Y. Mar. 13, 2002) (granting
defendants' motion to dismiss with prejudice as to new state law
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claims alleged in amended complaint when court's order granted
plaintiff leave to replead only his § 1981 and NYSHRL claims);
Willett v. City Univ. of N.Y., No. 94 CV 3873, 1997 WL 104769(E.D.N.Y. Feb. 18, 1997) (declining to consider five of eight new
claims in amended complaint, on basis they exceeded scope of
court's order granting plaintiff leave to amend); Kuntz v. N.Y.
State Bd. of Elections, 924 F. Supp. 364 (N.D.N.Y. 1996)
(dismissing three new claims in amended complaint where they
"appear to proceed on entirely new factual allegations and legal
bases and clearly exceed the mandated scope of the Court's leave
to amend"). Such dismissals are also reviewed for abuse of
discretion. See United States ex rel. Atkinson v. Pa.
Shipbuilding Co., 473 F.3d 506 (3d Cir. 2007) ("The rejection of
an unapproved amended complaint is not an abuse of discretion.");
FDIC v. Kooyomjian, 220 F.3d 10 (1st Cir. 2000) (no abuse of
discretion where district court struck new counts alleging new
theories of recovery where court granted leave to amend for the
"limited purpose" of showing that existing claims were not
barred).
Here, although the district court dismissed PBSI's
amended complaint in its May 3, 2011, judgment, in essence what
it did was reject the amended complaint as exceeding the
parameters of the leave that was given to file an amended
complaint. Instead, the court considered the original complaint
in the 261 action, which was the fourth complaint filed by PBSI
based on the transaction in question.
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We find no abuse of discretion in this decision. For
over two years, PBSI relied on the PBCM Agreement, in three
pleadings as well as in its opposition to defendants' first
motion to dismiss the 261 action. After the district court
dismissed the original complaint on the basis that PBSI had no
standing to sue under the PBCM Agreement, it granted limited
leave to amend so that PBSI could allege that it had standing.
Instead of addressing the standing issue, PBSI abandoned the PBCM
Agreement and attached PBSI Agreement 2, which purported to cover
the same transaction and named PBSI as the escrow provider. The
district court was understandably concerned with PBSI's sudden
abandonment of the agreement it had relied on for over two years
and was justified in doubting that there could be multiple
agreements covering the same transaction. As plaintiff, PBSI was
in the best position to understand which agreement controlled,
and it was represented by the same law firm, Greenberg Traurig,
throughout this time. The district court did not abuse its
discretion in holding PBSI accountable for its previous
representations to the court and considering PBSI's prior
complaint in deciding defendants' motion to dismiss. The prior
complaint, as the district court properly concluded, was
deficient because PBSI failed to allege facts to show that it had
standing to sue for breach of an agreement to which it was not a
party.
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CONCLUSION
We have considered all of PBSI's remaining arguments
and conclude that they are without merit. Accordingly, the
judgment and order of the district court are hereby AFFIRMED.
FOR THE COURT:
CATHERINE O'HAGAN WOLFE, CLERK
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