Court Opinion

ID: 5176355
Source: CourtListenerOpinion
Date Created: 2022-01-05 22:02:21.339845+00
Date Added: 2024-06-11T08:26:20.385349
License: Public Domain

USCA11 Case: 20-13753     Date Filed: 01/05/2022    Page: 1 of 16

                                                     [PUBLISH]

                            In the

         United States Court of Appeals
                 For the Eleventh Circuit

                   ____________________

                         No. 20-13753
                   ____________________

5200 ENTERPRISES LIMITED,
                                              Plaintiff-Appellant,
versus
CITY OF NEW YORK,

                                            Defendant-Appellee.

                   ____________________

          Appeal from the United States District Court
               for the Middle District of Florida
             D.C. Docket No. 3:18-bk-01646-JAF
                   ____________________
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2                      Opinion of the Court                 20-13753

Before JORDAN, NEWSOM, and ED CARNES, Circuit Judges.
NEWSOM, Circuit Judge:
       In the mid-1980s, a single-asset real estate entity called 5200
Enterprises Limited bought a piece of property in Brooklyn. To its
consternation, it later learned that the property had been contami-
nated sometime between 1940 and 1950 by its then-owner, the City
of New York.
       As part of an ongoing bankruptcy proceeding, 5200 Enter-
prises filed an adversary proceeding contending (1) that the City’s
earlier contamination constitutes a “continuing trespass” on the
property, and (2) that the City improperly assessed property taxes.
We must first address 5200 Enterprises’ trespass claim. We must
then decide whether 5200 Enterprises may use its bankruptcy pro-
ceeding to challenge property taxes levied against it long ago. Find-
ing 5200 Enterprises’ trespass claim barred by the statute of limita-
tions and its property-tax challenge foreclosed by federal law, we
affirm the bankruptcy court’s order dismissing its adversary pro-
ceeding.
                                  I
       In the early 1900s, the City of New York used a powerhouse
in Brooklyn to provide electricity for its trolley system. The City
gave up on trollies in the 1930s, which eliminated its need for the
powerhouse. Soon thereafter, in 1940, the City took ownership of
the property where the power plant sat and—sometime during the
ensuing decade—dismantled the plant.              As part of that
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20-13753                 Opinion of the Court                           3

deconstruction, the City removed a smokestack, placed it in the
basement of the building—directly on top of a mechanical system
that, as it turns out, was insulated with friable asbestos-containing
material—and buried it under a concrete slab. In 1951, the City
sold the property to a third party, which, in turn, sold it to 5200
Enterprises in 1986.
       Less than a year after 5200 Enterprises bought the property,
the City began negotiations to lease it. In connection with those
negotiations, the City conducted an asbestos inspection, which re-
vealed that the property was contaminated with PCBs. Based on
that discovery, the State of New York placed the property on its
Registry of Inactive Hazardous Waste Disposal Sites, indicating
that the property posed a significant threat to public health or the
environment. That designation rendered the property effectively
worthless.
       The State began remediation of the property in 2015. It was
only then—during a pre-demolition sampling—that the buried
smokestack was uncovered, along with the friable asbestos-con-
taining material underneath it. 1 That discovery required a variance
in the remediation proposal, postponing the project indefinitely.
       Throughout the entirety of 5200 Enterprises’ ownership, the
City taxed the property according to its “best intended use” as a

1 Although  the 1987 inspection found PCBs, none were discovered under the
concrete slab until the later sampling was taken.
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4                      Opinion of the Court                20-13753

commercial and industrial warehouse, rather than assessing the
property according to its present, contaminated condition. But
during the 30-plus years in which taxes were assessed on the prop-
erty, 5200 Enterprises purported to challenge only one of those tax
bills—and even then, it failed to prosecute the action by filing a
Note of Issue. Rather than paying the taxes or properly challenging
their validity, 5200 Enterprises elected to ignore them. As a result,
the taxes became liens on the property.
       In 2018, 5200 Enterprises filed for Chapter 11 bankruptcy. It
thereafter initiated an adversary proceeding against the City in
bankruptcy court. In its complaint, 5200 Enterprises (1) asserted a
cause of action against the City for “continuous trespass,” and
(2) sought a declaratory judgment that the City (a) is responsible
for the hazardous waste on the property and the damage that it has
caused and (b) improperly taxed the property according to its “best
intended use” rather than as if it were worthless.
        The City moved to dismiss the complaint for failure to state
a claim under Federal Rule of Bankruptcy Procedure 7012(b) and
Federal Rule of Civil Procedure 12(b)(6). The City argued that the
trespass claim failed both (1) because it was not cognizable under
New York law and (2) because it was time barred. Separately, the
City contended that the Bankruptcy Code precluded 5200 Enter-
prises’ challenge to the decades-old tax assessments because the pe-
riod to contest them had expired under the applicable nonbank-
ruptcy law.
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20-13753                   Opinion of the Court                               5

        The bankruptcy court granted the City’s motion and dis-
missed the adversary proceeding with prejudice. It held that 5200
Enterprises’ continuous-trespass theory wasn’t cognizable under
New York law and that the Bankruptcy Code barred 5200 Enter-
prises’ challenge to the allegedly improper property taxes.
        5200 Enterprises sought certification to appeal directly to
this Court on the ground that its complaint presented an issue of
first impression under New York law. See 28 U.S.C. § 158(d)(2);
Fed. R. Bankr. P. 8006(f). The City didn’t object, the district court
certified the request, and a motions panel of this Court granted it.
       Once before this Court, 5200 Enterprises moved to stay the
briefing schedule and to certify the continuing-trespass question to
the New York Court of Appeals. We denied the motion to stay the
briefing schedule and carried the motion to certify with the case.
We now deny the motion to certify and affirm the bankruptcy
court’s order dismissing 5200 Enterprises’ complaint.2
                                       II
      We divide our discussion into two parts. First, we address
5200 Enterprises’ continuing-trespass claim. Second, we consider

2 5200 Enterprises asks us to certify to the New York Court of Appeals the
question whether it has stated a claim for continuing trespass. But because we
find that we needn’t reach the state-law question in resolving the case, we
needn’t certify it either. See Royal Cap. Dev., LLC v. Md. Cas. Co., 659 F.3d
1050, 1054 (11th Cir. 2011) (“[C]ertification of state law questions is a matter
of discretion.”).
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6                            Opinion of the Court                         20-13753

whether the Bankruptcy Code precludes 5200 Enterprises from
challenging allegedly improper property taxes in the course of its
bankruptcy proceeding. 3
                                         A
        According to 5200 Enterprises’ complaint, the allegations of
which we take as true for present purposes, the City contaminated
the property that 5200 Enterprises now owns when the City law-
fully possessed it. Because that contamination remains today, 5200
Enterprises contends that the City is “continuous[ly] trespass[ing]”
on its property. But because any claim that 5200 Enterprises might
have had is barred by the statute of limitations, we elect not to
reach the merits of its continuing-trespass theory. 4
       Whether New York law recognizes 5200 Enterprises’ con-
tinuing-trespass theory of liability is an open question. See 55

3 “We review de novo a district court’s order granting a motion to dismiss for
failure to state a claim.” Boyle v. City of Pell City, 866 F.3d 1280, 1286 (11th
Cir. 2017). To survive a motion to dismiss, a plaintiff’s complaint must allege
facts sufficient “to state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). Thus, the plaintiff must plead
“factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). And the court “must accept as true all of the allegations con-
tained in a complaint.” Id.
4   See, e.g., Thomas v. Cooper Lighting, Inc., 506 F.3d 1361, 1364 (11th Cir.
2007) (per curiam) (“We may affirm the district court’s judgment on any
ground that appears in the record, whether or not that ground was relied upon
or even considered by the court below.”).
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20-13753                 Opinion of the Court                           7

Motor Ave. Co. v. Liberty Indus. Finishing Corp., 885 F. Supp. 410,
424 (E.D.N.Y. 1994) (“New York Courts have not addressed a tres-
pass claim on facts similar to the instant case . . . .”). But even as-
suming that such a theory is viable in New York, 5200 Enterprises’
claim is barred by the applicable statute of limitations.5
       5200 Enterprises contends that a continuing trespass is a “re-
curring wrong[] that [is] not subject to any Statute of Limitations
because [it] constantly accrue[s], thus giving rise to successive
causes of action.” Reply Br. of Appellant at 7 (alterations adopted)
(quoting Jensen v. Gen. Elec. Co., 581 N.Y.S.2d 917, 918 (N.Y. App.
Div. 1993)). That used to be the law in New York—traditionally, a
continuing trespass operated as an “exception to the Statute of Lim-
itations.” Jensen v. Gen. Elec. Co., 623 N.E.2d 547, 552 (N.Y. 1993).
But the case on which 5200 Enterprises relies—the intermediate
appellate court’s Jensen decision—was subsequently reversed by
the New York Court of Appeals, which expressly rejected 5200 En-
terprises’ premise. Jensen, 623 N.E.2d at 548 (“We conclude that
the order of the Appellate Division should be modified by reversing
so much as reinstated the plaintiffs’ causes of action for damages
based on continuing trespass and nuisance.”). Instead, the Court
of Appeals held that the state legislature had statutorily abrogated

5 Accordingly, we elect not to address the unresolved question of New York
law. See United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966) (“Needless
decisions of state law should be avoided both as a matter of comity and to
promote justice between the parties, by procuring for them a surer-footed
reading of applicable law.”).
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8                      Opinion of the Court                 20-13753

“the judicially engrafted exception to the Statute of Limitations for
continuing wrongs.” Id. at 552.
       By virtue of that abrogation, New York General Law § 50-i
provides the applicable statute of limitations. That provision states
that any action maintained against a municipality “shall be com-
menced within one year and ninety days after the happening of the
event upon which the claim is based.” N.Y. Gen. Mun. L. § 50-i(1).
For “injury to property caused by the latent effects of exposure to
any substance,” § 50-i’s statute of limitations begins to run only
when the injury is discovered or should have been discovered
“through the exercise of reasonable diligence.” N.Y. C.P.L.R.
§ 214-c(3). Taken together, those provisions mean that 5200 Enter-
prises had to file suit within one year and 90 days from the date that
it knew or had reason to know about its injury.
        5200 Enterprises’ president and sole shareholder conceded
during discovery that he became aware of “the contamination of
the property that would be the basis” for the suit against the City
“when the contractor dug test pits in the basement of the building,”
which he “guess[ed]” occurred “sometime” in 2015 or 2016. The
record shows that those pits were dug before the State of New York
requested a variance in the remediation plan on July 27, 2015. 5200
Enterprises doesn’t contest that—taking that testimony in conjunc-
tion with the variance request—the latest possible date on which it
could have discovered its injury was July 27, 2015. 5200 Enterprises
filed its bankruptcy petition on May 16, 2018—nearly three years
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20-13753                 Opinion of the Court                             9

later. Thus, even assuming the latest possible date of discovery—
July 27, 2015—5200 Enterprises’ trespass claim is time-barred.
                                     B
       5200 Enterprises separately sought “to have the bankruptcy
court review assessed ad valorem taxes.” Br. of Appellant at 33.
5200 Enterprises contended that the City incorrectly assessed taxes
according to the property’s “best intended use” rather than its
“then present and contaminated condition,” which rendered it “es-
sentially worthless.” Compl. at ¶¶ 32–35. The bankruptcy court
dismissed that claim, holding that the Bankruptcy Abuse Preven-
tion and Consumer Protection Act, 11 U.S.C. § 505(a)(2)(C), pro-
hibited it from redetermining any of the assessments.
        By its express terms, the BAPCPA precludes a bankruptcy
court from redetermining “the amount or legality of any amount
arising in connection with an ad valorem tax on real or personal
property of the estate, if the applicable period for contesting or re-
determining that amount under applicable nonbankruptcy law has
expired.” 11 U.S.C. § 505(a)(2)(C). 5200 Enterprises concedes that
§ 505(a)(2)(C), if applicable, vitiates its tax-assessment claim. 6 But
it insists that applying § 505(a)(2)(C)—which was added to the

6 The bankruptcy court thoroughly explained that the time for contesting the
tax assessments under “applicable nonbankruptcy law”—which, here, is com-
prised of state and municipal laws governing the process by which an ag-
grieved New York City taxpayer may seek redress—long ago expired. Because
5200 Enterprises does not contest that conclusion, we do not address it.
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10                     Opinion of the Court                 20-13753

Bankruptcy Code in 2005, see Pub. L. No. 109-8, 119 Stat. 23, 124
(Apr. 20, 2005)— to pre-2005 taxes would give the statute improper
retroactive effect. We disagree.
        If an interpretation of a statute would cause it to “operate
retroactively, our traditional presumption teaches that it does not
govern absent clear congressional intent favoring such a result.”
Landgraf v. USI Film Prods., 511 U.S. 244, 280 (1994). But “[a] stat-
ute does not operate ‘retrospectively’ merely because it is applied
in a case arising from conduct antedating the statute’s enactment
or upsets expectations based in prior law.” Id. at 269 (citation omit-
ted). Instead, a statute has “retroactive effect” only when “it would
impair rights a party possessed when he acted, increase a party’s
liability for past conduct, or impose new duties with respect to
transactions already completed.” Id. at 280.
       Put simply, “retroactivity is to be judged with regard to the
act or event that the statute is meant to regulate.” Antonin Scalia
& Bryan A. Garner, Reading Law: The Interpretation of Legal
Texts 264 (2012). It’s obvious to us that § 505(a)(2)(C) is “meant to
regulate” federal bankruptcy proceedings—not an individual’s
state or local tax liability. Accordingly, because 5200 Enterprises
engaged in “the relevant conduct regulated by [§ 505(a)(2)(C)]”—
its federal bankruptcy proceeding—“after the [statute’s] effective
date,” the statute’s application is prospective only. Republic of
Austria v. Altmann, 541 U.S. 677, 697 & n.17 (2004) (quotation
omitted).
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20-13753                Opinion of the Court                         11

        5200 Enterprises nonetheless asserts that applying
§ 505(a)(2)(C) would impair (1) a preexisting “right to property,”
Br. of Appellant at 33, and (2) a “substantive right guaranteed” by
the Constitution—namely, bankruptcy itself, Reply Br. of Appel-
lant at 13. We reject both contentions.
       As to the former, 5200 Enterprises offers no support for its
assertion that “the right to contest ad valorem tax assessments” is
“an offspring” of the general “right to property.” Br. of Appellant
at 33. And even assuming such a right existed, § 505(a)(2)(C)
wouldn’t “impair” it. Landgraf, 511 U.S. at 280. Any right that 5200
Enterprises possessed to contest its tax liability expired when it
failed to do so through the proper means. At worst, then,
§ 505(a)(2)(C) merely fails to resuscitate that already-expired right.
        5200 Enterprises’ “substantive-right” argument fares no bet-
ter. “There is no constitutional right to obtain a discharge of one’s
debts in bankruptcy.” United States v. Kras, 409 U.S. 434, 446
(1973). To the contrary, “[t]he Constitution, art. I, § 8, cl. 4, merely
authorizes Congress to establish uniform laws on the subject of
Bankruptcies throughout the United States.” Id. (cleaned up). And
even if 5200 Enterprises has some “substantive” right at stake, it
fails to explain how § 505(a)(2)(C) impairs it.
       Applying § 505(a)(2)(C) in this case doesn’t give it retroactive
effect. Therefore, it applies and, as 5200 Enterprises has conceded,
eliminates its claim concerning the City’s allegedly improper taxes.
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12                    Opinion of the Court                20-13753

                              * * *
       The bankruptcy court’s dismissal of 5200 Enterprises’ adver-
sary complaint is AFFIRMED, and 5200 Enterprises’ motion to cer-
tify the question of New York law to the New York Court of Ap-
peals is DENIED.
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20-13753              NEWSOM, J., Concurring                        1

NEWSOM, Circuit Judge, concurring:
        Needless to say, I agree with the approach that the Court
takes today, resolving 5200 Enterprises’ appeal on statute-of-limita-
tions grounds. It’s clean, and it obviates any need to issue a prece-
dential opinion on an open question of New York law. Nonethe-
less, because the “continuing trespass” issue has been fully briefed
and argued—it was the focus of the parties’ presentations—and be-
cause that issue might recur in future cases, I’ll briefly explain why
5200 Enterprises’ theory fails under New York law.
                                  I
       Although the question whether New York law recognizes
5200 Enterprises’ continuing-trespass theory of liability is techni-
cally open, it isn’t hard. New York caselaw—which sets out the
elements of a trespass claim and explains how New York courts
understand and apply the continuing-trespass doctrine—readily
provides the answer: New York recognizes a concept of continuing
trespass, but not the one that 5200 Enterprises advances here.
       In New York, the “elements of a cause of action sounding in
trespass are [1] an intentional entry [2] onto the land of another
[3] without justification or permission.” Marone v. Kally, 971
N.Y.S.2d 324, 327 (N.Y. App. Div. 2013) (quotation omitted). The
traditional view in New York was that “trespasses upon real prop-
erty, effected by an unlawful structure or nuisance, are continuous
in their nature, and give successive causes of action from time to
time, as the injuries are perpetrated.” Galway v. Metro. Elevated
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2                       NEWSOM, J., Concurring                     20-13753

Ry. Co., 28 N.E. 479, 481 (N.Y. 1891) (emphasis added). To be
clear, though, in New York, “continuing trespass” has never served
as a distinct theory of liability; rather, it merely operated as an “ex-
ception to the Statute of Limitations.” Jensen v. Gen. Elec. Co.,
623 N.E.2d 547, 552 (N.Y. 1993). 1 Accordingly, a “continuing tres-
pass” must first be a trespass.
       To state a claim, therefore, 5200 Enterprises must at a mini-
mum allege an intentional entry “onto the land of another.”
Marone, 971 N.Y.S.2d at 327. It cannot do so. The injury from
which it seeks relief—the City’s contamination—occurred when
the City owned and possessed the property. Simply put, a land-
owner can’t trespass on its own property—it hasn’t, in that circum-
stance, entered “onto the land of another.” Id. Accordingly, 5200
Enterprises has failed to state a claim for trespass—continuing or
otherwise. Accord 55 Motor Ave. Co. v. Liberty Indus. Finishing
Corp., 885 F. Supp. 410, 424 (E.D.N.Y. 1994).
       5200 Enterprises resists that straightforward conclusion by
pointing to the Restatement (Second) of Torts § 161 and a Califor-
nia case interpreting that provision. I am not persuaded.
      Section 161 states that “[a] trespass may be committed by
the continued presence on the land of a structure, chattel, or other
thing which the actor has tortiously placed there, whether or not

1 As theCourt explains, this exception has since been abrogated by statute and
replaced with a discovery rule. See Majority Op. at 7–8; see also Jensen, 623
N.E.2d at 552.
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20-13753              NEWSOM, J., Concurring                         3

the actor has the ability to remove it.” Restatement (Second) of
Torts § 161(1) (1965). One California court has interpreted § 161 to
“sanction” a “continuing trespass theory in a situation” where
“contaminants have been left on the property by a prior owner.”
Newhall Land & Farming Co. v. Superior Ct., 19 Cal. App. 4th 334,
345 (Cal. Ct. App. 1993).
       5200 Enterprises contends that a reviewing court must ei-
ther endorse its theory of liability or reject what it calls “the ‘Re-
statement’ approach.” Br. of Appellant at 26. But that’s a false
choice. We might have needed to reject Newhall’s interpretation
of the Restatement to affirm the dismissal on the merits, but we
wouldn’t have needed to reject the Restatement itself.
        Nothing in § 161 endorses a theory of trespass pursuant to
which a landowner can incur continuing liability for contamination
of its own property. All § 161 requires is that the trespassing “struc-
ture” or “other thing”—here the smokestack and the contamina-
tion that it created—have been “tortiously placed” on a parcel of
land. Restatement (Second) of Torts § 161(1). The Restatement
elsewhere defines “tortious” as “conduct which is carried on at the
risk that the actor shall be subject to liability for harm caused
thereby.” Id. § 6. Obviously, “plac[ing]” some “thing” on another’s
land could subject the “place[r]” to tort liability. But 5200 Enter-
prises has failed to explain how the City, by contaminating its own
property in the 1940s, would have subjected itself to tort liability.
     It’s therefore unsurprising that courts around the country
have embraced § 161 while simultaneously rejecting 5200
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4                        NEWSOM, J., Concurring                      20-13753

Enterprises’ novel liability theory. 2 And, as I’ve explained, that ap-
proach comports with both § 161’s plain language and, more im-
portantly, New York’s common-law trespass principles.
        Accordingly, I agree with the “[c]ourts around the nation
[that] have rejected . . . efforts to sue someone for having tres-
passed on what was his or her own property at the time the action
was taken.” Lilly Indus., Inc. v. Health-Chem Corp., 974 F. Supp.
702, 708 (S.D. Ind. 1997) (collecting cases). “[B]ecause an essential
element of a claim for trespass”—the unlawful entry onto the land
of another—“has not been alleged” here, 5200 Enterprises has
failed to state a claim upon which relief can be granted under New
York law. 55 Motor, 885 F. Supp. at 424.

2 See, e.g., Rosenblatt v. Exxon Co., U.S.A., 642 A.2d 180, 189–90 (Md. 1994)
(holding that “[§] 161 does not support [the plaintiff’s] position” that the de-
fendant “committed a trespass when it allegedly caused the property to be
contaminated during its occupancy and the contamination continued into [the
plaintiff’s] occupancy of the land”); Moore v. Texaco, Inc., 244 F.3d 1229, 1233
(10th Cir. 2001) (applying Oklahoma law, which has embraced § 161, see An-
gier v. Mathews Expl. Corp., 905 P.2d 826, 830 (Okla. Civ. App. 1995), and
concluding that the defendant’s pollution was “not a trespass” because the pol-
lution occurred when the defendant “owned the property” and thus “did not
involve a physical invasion of real estate owned by anyone except [the defend-
ant] itself”); Triffler v. Hopf, No. 92 C 7193, 1994 WL 643237, at *7 (N.D. Ill.
Nov. 4, 1994) (applying Illinois law, embracing the Restatement’s continuing-
trespass definition, and concluding that a “prior land owner can simply not be
held liable under a theory of continuing trespass for items he left on his own
property”).