Court Opinion

ID: 621573
Source: CourtListenerOpinion
Date Created: 2012-01-26 15:59:17+00
Date Added: 2024-06-11T17:50:57.265145
License: Public Domain

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.
                               -3-
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

                               -4-
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.

                                  -6-
          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.

                                -7-
                           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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