1985-86 the years for which he now claims unreimbursed
expenses Mr. Kelly, in fact, received check reimbursements for
expenses of $34,551.18 by checks from MDO.
Moreover, there was no evidence that the additional
expenses, which Mr. Kelly claims as set-off, were ever
submitted for reimbursement while Mr. Kelly was employed,
despite the fact that the cancelled checks for 1985 and 1986
in payment for those expenses totalling $228,690.44 were in
Mr. Kelly's possession and would support his payments of those
amounts (Exh. LL). Mr. Kelly also claims as set-off cash
expenditures for fish in the round amount of $300,000 without
back up. Assuming there were cash expenditures for fish, this
evidence, absent evidence of timely request for reimbursement,
is not sufficiently probative for a court to award a
The Court does not feel it is necessary to rule on each
specific expense submitted by Mr. Kelly as a possible set-off,
but finds the testimonial evidence offered by Mr. Kelly as a
whole did not meet the standard required in a federal court.
For example, during testimony, Mr. Kelly claimed $11,255.00
for his housewarming party as a reimbursable expenditure on
behalf of the plaintiff, as well as $1,500 for a fur coat for
one of his female assistants.
Furthermore, as a disloyal employee Mr. Kelly breached his
contract of employment and thus MDO has no legal obligation to
repay him for disbursements allegedly expended pursuant to the
terms of that contract during the period of disloyalty.
Graves v. Kaltenbach & Stephens, Inc., 205 A.D. 110, 199 N.Y.S.
248, (1st Dep't 1923), aff'd, 237 N.Y. 546, 143 N.E. 737
(1923); cf. Heyman v. Kline, 344 F. Supp. 1088 (D.Conn. 1970),
aff'd in part and rev'd in part, 456 F.2d 123 (2d Cir.), cert.
denied, 409 U.S. 847, 93 S.Ct. 53, 34 L.Ed.2d 88 (1972);
Sundland v. Korfund Co., 260 A.D. 80, 20 N.Y.S.2d 819 (1st
Dep't 1940); Turner v. Konwenhoven, 100 N.Y. 115,
2 N.E. 637 (1885).
Lastly, defendants claim that the Court improperly imposed
punitive damages including treble damages under RICO,
18 U.S.C. § 1964. In essence, defendants claim that the Court's
conclusion that under New York law a disloyal employee is not
entitled to reimbursement for any expenses incurred on behalf
of an employer is penal in nature and that the penalty, when
imposed in conjunction with the trebling of damages under RICO,
is in error.
As already stated above, there is substantial doubt that the
defendant suffered any "penalty" by the Court's decision not
to allow a set-off at all, since the evidence consisted of
highly questionable items of set-off and because none of these
items were submitted for approval by Mr. O'Keefe or the
bookkeeper, in accordance with the procedure required by the
Water Club. Furthermore, defendants have not convinced the
Court that the loss of reimbursement is punitive rather than
Secondly, with respect to the imposition of treble damages
under RICO, the defendants failed to submit any authority for
the proposition that the statute, which states that an injured
person "shall recover threefold the damages he sustains," did
not require literal application. In fact, imposition of treble
damages is required by RICO. Cullen v. Margiotta, 811 F.2d 698,
713 (2nd Cir.), cert. denied, 483 U.S. 1021, 107 S.Ct. 3266, 97
L.Ed.2d 764 (1987); Abell v. Potomac Ins. Co., 858 F.2d 1104,
1129, n. 27 (5th Cir. 1988).
Rules 59(b) and 59(c) are intended to correct only manifest
errors, Federal Deposit Ins. Corp. v. Meyer, 781 F.2d 1260,
1268 (7th Cir. 1986); Filner v. Shapiro, 83 F.R.D. 630, 631
(S.D.N.Y. 1979). Defendants have failed to show such errors.
Accordingly, their motion is denied.
Plaintiff's motion for sanctions against defendants'
attorneys pursuant to Rule 11 is denied.
IT IS SO ORDERED.