CAM-L-004612-18 12/13/2018 4:23:46 PM Pg 1 of 9 Trans ID: LCV20182167909

Philip G. Kircher, Esq. (pro hac to be filed) Attorneys for Defendants Victor Urban
Aaron Krauss, Esq. (16211991) Renewal, LLC, Victor Associates, LP, Victor
Thomas A. Leonard, Esq. (080142013) GP Corp., Dranoff Properties, Inc., and Carl
COZEN O’CONNOR E. Dranoff
457 Haddonfield Road, Suite 300
Cherry Hill, NJ 08002-2220
(856) 910-5000
(856) 910-5075 (fax)
PKircher@cozen.com
AKrauss@cozen.com
TLeonard@cozen.com

: SUPERIOR COURT OF NEW JERSEY

CITY OF CAMDEN and CITY OF CAMDEN : LAW DIVISION: CAMDEN COUNTY
REDEVELOPMENT AGENCY, :
: DOCKET NO. L-004612-18
Plaintiffs, :
: CIVIL ACTION
v. :
: DEFENDANTS VICTOR URBAN
VICTOR URBAN RENEWAL, LLC, VICTOR : RENEWAL, LLC, VICTOR
ASSOCIATES, LP, VICTOR GP CORP., : ASSOCIATES, LP, VICTOR GP
DRANOFF PROPERTIES, INC., CARL E. : CORP., DRANOFF PROPERTIES,
DRANOFF, and JOHN DOES 1-10, : INC., and CARL E. DRANOFF’S
: MEMORANDUM OF LAW IN
Defendants. : SUPPORT OF MOTION TO DISMISS
:

DEFENDANTS VICTOR URBAN RENEWAL, LLC, VICTOR ASSOCIATES, LP,

VICTOR GP CORP., DRANOFF PROPERTIES, INC., AND CARL E. DRANOFF’S
MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO DISMISS
On July 23, 2001, the Philadelphia Inquirer published an editorial describing the

“boldness” of Carl Dranoff in seeking to revitalize The Victor Building. Aside from the famous

“Nipper” logo, the article read, “[l]ittle else about the building speaks of its former glory. It is a

lifeless skeleton, with peeling pillars, busted windows and stifling, dusty air hovering above its

debris-strewn floors.” The editorial continued:

It is a perfect emblem of the decay of Camden, New Jersey’s poorest city

and one of the most destitute in the nation. Now, a man named Carl Dranoff
wants to make it a perfect emblem for Camden’s rebirth, turning this lonely
industrial relic into luxury high rise apartments . . . . Mr. Dranoff is not just
a dreamer, but a doer, having pulled off similar transformations of

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abandoned hulks dozens of times before, including two in Philadelphia last

year. The developer from Narberth is playing for high stakes for himself
and Camden.

The article concluded by imploring then-Camden Mayor Gwendolyn Faison to “show the

courage to leave behind the defensive, parochial habits of past, failed administrations and

embrace state help to build a new Camden that looks like more like Mr. Dranoff’s vision than

[The Victor Building’s] sorry present.”

At the time, no other major developer would touch Camden. The City was filled with

blight and featured an infamously corrupt government. Yet Dranoff took the risk that Camden

was on the cusp of rebirth and that its government officials would stand by their promises when

he invested considerable resources to revive The Victor Building into the thriving middle- and

working-class residence it is today.

Now, in what can only be described as a vindictive and malicious attack on Dranoff’s

character, Camden has fabricated a baseless lawsuit against him and several affiliates of his

organization, falsely accusing them of failing to support the very City that Dranoff went out on a

limb to help almost 18 years ago. Dranoff believes this vendetta has its origins in the opening of

the waterfront to other developers under state tax incentives, which made The Victor Building

and its skyline easements a target. Camden’s rush to file this lawsuit in this Court – when there

is another lawsuit pending in federal court involving the same contracts and transaction – is

proof positive that its motives are purely nefarious. If Camden was sincere in its purported belief

that its long-time champion had somehow failed to pay his fair share of taxes (which is an absurd

conclusion given all that Dranoff risked when he invested in Camden years ago, and given that

Dranoff is paying between six and fifteen times as much in taxes as those Johnny-Come-Latelies

who are building literally across the street) and was not actually pursuing a vendetta against

Dranoff, it would not have filed this lawsuit with the attendant manufactured publicity.

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Dranoff categorically denies the allegations in Camden’s Complaint. Indeed, Camden’s

false accusations validate the City’s critics. This lawsuit has inevitably sent a message to

potential future developers in the City that any promise made by the City’s government is

worthless and its officials are not above stabbing investors in the back. Unfortunately, Camden’s

residents must bear the consequences of their government’s actions.

Besides smearing a well-respected and dedicated developer’s good name and punishing

him despite all that he has done, Camden’s lawsuit has also served to waste the parties’ and the

Court’s time and resources. Camden’s claims should have been brought as counterclaims in the

federal lawsuit to avoid the pitfalls that a bedrock of New Jersey law, the entire controversy

doctrine, was designed to combat. The Court should therefore dismiss Camden’s Complaint so

that it can be refiled as a counterclaim in the previously-filed federal lawsuit, where Dranoff can

(and will) refute the reprehensible accusations made by Camden.

I. FACTUAL BACKGROUND

On August 21, 2002, Victor Urban Renewal and Camden entered into a Financial

Agreement. This Financial Agreement, which was attached to Camden’s Complaint as Exhibit

B, granted Victor Urban Renewal a tax exemption under the Long Term Tax Exemption Law,

N.J.S.A. § 40A:20-1 through 20, for the property known as The Victor Building. It also provides

that the tax exemption can be transferred to another qualified urban renewal association or

corporation and that “[i]f such transferee shall assume [Victor Urban Renewal]’s obligations

hereunder and shall otherwise qualify under all other applicable requirements of law, the City

shall consent to such transfer.” Complaint Ex. B ¶ 6(a).

Victor Urban Renewal contracted to transfer The Victor Building to Aimco One Market

Street Urban Renewal, LLC, which is a qualified urban renewal association or corporation.

Aimco’s purchase, however, was conditioned on the transfer of the Financial Agreement and the

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associated tax exemption to Aimco. Victor Urban Renewal and Aimco asked Camden to consent

to such a transfer.

However, Camden refused to do so. Instead, Camden needlessly required Victor Urban

Renewal to resubmit the request to transfer in a different way and form, refused to return phone

calls or emails, refused to set up meetings or engage in discussions with either Victor Urban

Renewal or Aimco, refused to place the transfer (which requires approval by the Camden City

Council) on the City Council’s agenda for any of its meetings, and demanded that Aimco present

its case for the transfer, despite the fact that Victor Urban Renewal has met every prerequisite in

the Financial Agreement for obtaining the transfer of the tax exemptions. Even though they have

no basis in the Financial Agreement, Victor Urban Renewal and Aimco have attempted to

accommodate Camden’s demands, but to no avail.

Victor Urban Renewal therefore filed a complaint against the City of Camden and two of

its officials in federal court on June 20, 2018. See Victor Urban Renewal Group LLC et al. v.

City of Camden et al., United States District Court for the District of New Jersey, No. 1:18-cv-

10841-NLH-AMD. A copy of the complaint that Victor Urban Renewal filed in federal court is

attached as Exhibit A. The complaint alleged that the City had breached the Financial

Agreement and that the City and the two individual defendants violated Victor Urban Renewal’s

property rights. Camden – represented by the same law firm as in the present case – filed a

motion to dismiss the complaint on July 2, 2018. Victor Urban Renewal then filed an amended

complaint on July 20, 2018, which (among other things) added a claim by Dranoff Properties

against the Camden Redevelopment Agency for breaching a contract that gave Dranoff

Properties the option to purchase the Radio Lofts property referred to in Camden’s Complaint in

this Court. A copy of the amended complaint that Victor Urban Renewal and Dranoff Properties

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filed in federal court is attached as Exhibit B. Camden then filed another motion to dismiss,

which Victor Urban Renewal and Dranoff Properties opposed. This motion remains pending.

While the parties awaited the federal court’s decision on the motion, Victor attempted to

appease Camden yet again in a last-ditch effort to save the deal with Aimco. Victor sent Camden

financial documents that went above and beyond what the Financial Agreement required.

Camden has since taken those documents, distorted their numbers, and reached an unfathomable

conclusion that Victor owes Camden millions in taxes. Camden then brought the present action

alleging breaches of the same contracts and misconduct surrounding the same transaction that are

central to the federal lawsuit that Victor filed in June.

II. LEGAL ARGUMENT

A. Standard of Review

Under Rule 4:6-2(e), a party may move the Court to dismiss a complaint for failure to

state a claim upon which relief can be granted. The Court “examine[s] the challenged pleadings

to determine ‘whether a cause of action is ‘suggested’ by the facts.’” Cona v. Twp. of

Washington, 456 N.J. Super. 197, 214, 192 A.3d 1052, 1061 (App. Div. 2018); see also

Teamsters Local 97 v. State, 434 N.J. Super. 393, 412, 84 A.3d 989 (App. Div. 2014). “A

pleading should be dismissed if it states no basis for relief and discovery would not provide one.”

Cona, 456 N.J. Super. at 214, 192 A.3d at 1061; see also Rezem Family Assocs., LP v. Borough

of Millstone, 423 N.J. Super. 103, 113, 30 A.3d 1061 (App. Div. 2011).

B. Camden’s Complaint Should Be Dismissed Under the Entire Controversy

Doctrine

1. The Federal Lawsuit Precludes Camden’s Complaint

Camden is attempting to make an end-run around the federal lawsuit in violation of long-

standing New Jersey law. “The entire controversy doctrine embodies the principle that the

adjudication of a legal controversy should occur in one litigation in only one court; accordingly,

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all parties involved in a litigation should at the very least present in that proceeding all of their

claims and defenses that are related to the underlying controversy.” Adelman v. BSI Fin. Servs.,

Inc., 453 N.J. Super. 31, 39, 179 A.3d 431, 436 (App. Div. 2018) (citation omitted). “This tenet

encompasses virtually all causes, claims, and defenses relating to a controversy, including

counterclaims and cross-claims. It is not necessary that the claims share any commonality of

legal issues, as long as the distinct claims are aspects of a single larger controversy because they

arise from interrelated facts.” Manhattan Woods Golf Club, Inc. v. Arai, 312 N.J. Super. 573,

577, 711 A.2d 1367, 1369 (App. Div. 1998) (citations omitted). “The purposes of the doctrine

are to prevent piecemeal or fragmented litigation and to promote comprehensive and final

litigation and judicial efficiency.” Delacruz v. Alfieri, 447 N.J. Super. 1, 11, 145 A.3d 695, 700

(App. Div. 2015). This rule has been applied in New Jersey courts when there is a previously-

filed (and still pending) claim in federal court. See J-M Mfg. Co. v. Phillips & Cohen, LLP, 443

N.J. Super. 447, 129 A.3d 342 (App. Div. 2015).

This case demonstrates why New Jersey courts have implemented and followed the entire

controversy doctrine for decades. Victor1 previously filed a lawsuit against Camden related to

the development of the Victor Building, the Financial Agreement executed between the parties,

and the option contract related to the Radio Lofts. Camden’s pursuit of claims against Victor in

this Court relate to that same development and those same contracts undermines the principles

behind the entire controversy doctrine: avoiding piecemeal litigation, promoting comprehensive

outcomes, and conserving judicial resources. See Delacruz, 447 N.J. Super. at 11, 145 A.3d at

700. If Camden’s Complaint is allowed to stand, it would lead to duplicative efforts by the

parties and courts and risk inconsistent and fragmented verdicts.

1
As discussed in subsection 2 below, Victor Associates, LP, Victor GP Corp., and Carl E. Dranoff should be treated
as one and the same as Victor Urban Renewal and Dranoff Properties for the purposes of this motion, even though
they are not parties to the federal litigation.

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The Appellate Division’s holding in J-M Manufacturing is instructive. There, an ex-

employee had filed a qui-tam action against his former employer in federal court in

California. Instead of filing counterclaims in the federal case, the employer filed a separate

lawsuit in New Jersey state court against the ex-employee and his law firm. The trial court

dismissed the state action and the Appellate Division affirmed, holding that the two cases

involved the same underlying facts and the employer should have filed counterclaims in the

federal action against the ex-employee and added the law firm as a third-party defendant. “[T]o

allow the New Jersey action to proceed would result in ‘fragmented, multiple and duplicative

litigation’ that would not achieve fairness to the parties.” J-M Mfg., 443 N.J. Super. at 455, 129

A.3d at 347. Like the employer in J-M Manufacturing, Camden has every opportunity to assert

its claims against Victor in the federal litigation, even if that means potentially adding new

defendants. The Court should apply the Appellate Division’s holding in that case and dismiss

Camden’s Complaint.

2. Camden’s Naming of Victor Associates, LP, Victor GP Corp., and Carl E.

Dranoff as Parties Does Not Affect the Application of the Entire
Controversy Doctrine

Camden’s decision to name defendants in this action that are not parties to the federal

litigation (i.e. Victor Associates, Victor GP, and Dranoff) does not preclude the application of

the entire controversy doctrine. As Camden admits in its Complaint, Victor Associates is the

sole member of Victor Urban Renewal, and Victor GP is the general partner of Victor

Associates. See Complaint ¶¶ 7-8. Camden also admits that “Dranoff has an ownership interest

and management interest in Dranoff Properties and in Victor Urban Renewal, Victor Associates,

and Victor GP.” Complaint ¶ 10. Any recovery or liability by these defendants is derivative of

Victor Urban Renewal and Dranoff Properties. The entire controversy doctrine therefore applies

equally to the claims against these defendants. Accord J-M Mfg., 443 N.J. Super. at 457-58, 129

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A.3d at 348-49 (dismissing claim against the law firm, which was not a party to the previously-

filed federal litigation, because “[a]ny liability on [the law firm] is derivative of [the ex-

employee’s] liability” and “the complaint against [the law firm] arises out of the same

transaction” as the previously-filed federal litigation).

3. Camden Cannot Avoid Entire Controversy Doctrine by Arguing That the

Federal Court May Lack Jurisdiction over the Claims

Finally, the entire controversy doctrine applies in this case even though Camden has

challenged Victor’s complaint in federal court on subject matter jurisdiction grounds. The

federal court has not ruled on Camden’s motion to dismiss, and this Court should not decide

whether the federal court has jurisdiction. See F.F. v. G.A.D.R., 331 N.J. Super. 23, 30, 750

A.2d 786, 790 (App. Div. 2000) (“Considerations of comity forbid interference with the

prosecution of a proceeding in a foreign jurisdiction capable of affording adequate relief and

doing complete justice, unless there be a special equity.”); see also O’Loughlin v. O’Loughlin, 6

N.J. 170, 179, 78 A.2d 64 (1951).

In fact, the entire controversy doctrine could become a nullity if a court refused to apply

it whenever there was a jurisdictional challenge in the previously-filed case. Subject matter

jurisdiction is a defense that is not waivable and can be raised at any time in litigation, whether

in federal court or New Jersey state court. See Kontrick v. Ryan, 540 U.S. 443, 455 (2004) (“A

litigant generally may raise a court’s lack of subject-matter jurisdiction at any time in the same

civil action, even initially at the highest appellate instance.”); N.J. Ct. R. 4:6-7 (“Whenever it

appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject

matter, the court shall dismiss the matter . . . .”). A party could avoid the entire controversy

doctrine whenever it wanted if raising a jurisdictional challenge in the previously-filed action

was all it took to avoid its application. This Court should therefore apply the entire controversy

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doctrine in this case even though Camden has raised a jurisdictional challenge in the federal

litigation.

III. CONCLUSION

Camden has apparently decided that it could no longer wait for the federal litigation to

move forward and chose to rush to this Court in violation of well-established New Jersey

practice. But the entire controversy doctrine prohibits this Court from considering Camden’s

Complaint because Victor filed a lawsuit involving the same contracts and transaction in federal

court almost six months ago. Camden should have waited to assert its claims in that action at the

appropriate time. Instead, it has wasted the parties and the Court’s time and resources through its

impatience. The Court should therefore dismiss Camden’s Complaint.

Dated: December 13, 2018 COZEN O’CONNOR

By: /s/ Thomas A. Leonard

Philip G. Kircher, Esq. (pro hac to be filed)
Aaron Krauss, Esq. (16211991)
Thomas A. Leonard, Esq. (080142013)
COZEN O’CONNOR
457 Haddonfield Road, Suite 300
Cherry Hill, NJ 08002-2220
(856) 910-5000
(856) 910-5075 (fax)
PKircher@cozen.com
AKrauss@cozen.com
TLeonard@cozen.com
Attorneys for Defendants Victor Urban
Renewal, LLC, Victor Associates, LP, Victor
GP Corp., Dranoff Properties, Inc., and
Carl E. Dranoff