The opinion of the court was delivered by: THOMAS J. MCAVOY
THE Court heard oral argument on defendants' motions for summary judgment on May 26, 1995 at Binghamton, New York. In a decision issued from the bench on that date the Court, pursuant to Fed. R. Civ. P. 56, granted defendants' Motion for Summary Judgment as to all claims in plaintiff's Complaint and his Complaint was dismissed with prejudice. At that time all defendants also moved under Fed. R. Civ. P. 11 for sanctions against plaintiff and his attorney. The Court first reserved on that motion for sanctions and then ordered defendants to submit supplementary affidavits outlining and verifying for the Court all the expenses and reasonable attorney's fees incurred by the defendants from March 14, 1995,
up to and inclusive of the Motions heard on May 26, 1995.
Upon consideration of those supplementary affidavits along with plaintiff's and defendants' affidavits and memoranda of law on both the issue of sanctions and the Motion for Summary Judgment, the Court now sanctions plaintiff's attorney for initiating and maintaining claims with no basis in fact or law in the amount of $ 21665.18.
Defendant Calvin Nephew was the elected president of the local at all relevant times. In August, 1989, plaintiff Gray hired defendant Thomas Millea as a full-time local organizer. Gray, Millea and Marie Belli, were the local's only full time employees, sharing a one-room office in Plattsburgh. In early 1990 Belli showed Millea a blue cross bill which reflected that the Local was paying premiums for ineligible individuals. There also arose questions concerning plaintiff's practice of collecting dues in cash and failing to promptly or regularly deposit the cash. After Gray failed to rectify the situation over a period of months, Millea reported the matter to Nephew and the Local's trustees. On May 11, 1990 at a meeting of all concerned and the local trustees Plaintiff was removed as fund administrator and defendant Millea succeeded him. At that time the Local was $ 160,000 in arrears to Blue Cross and resolving this led to drastic cutbacks in member coverage.
Defendant David Sager is an International Representative for defendant International IBEW. One of his functions is to service IBEW Local 781 on the International's behalf. Sager travelled to Plattsburgh and met with the parties. As a result of these meetings, on May 22, 1990, plaintiff Gray resigned as business and financial secretary of the Local. Defendant Millea was appointed to serve out Gray's term. Sager continued to advise Millea on how to restore the Local to fiscal health and recommended an independent audit of the Local's general fund. An independent auditor was hired and in February, 1991, he reported to the Local's Executive Board a $ 14,000 discrepancy between dues payments and money deposited during Gray's tenure as well as $ 9,000 in charges on the Union's mastercard for which there were no vouchers or receipts.
Plaintiff claimed he was given no opportunity to explain the discrepancies. He also claimed his method (or lack of method) of recordkeeping and cash disbursements was common knowledge to all defendants, including the independent auditor, who was formerly the Local's accountant. The defendants ultimately established that plaintiff was repeatedly contacted and asked to clarify the situation and in late June of 1991, plaintiff finally produced receipts documenting $ 70.00 in cash expenditures. Plaintiff disingenuously represented to the Court that a fire at the Local destroyed many of the relevant records: in fact, however, the fire occurred on January 14, 1992, well after the events in question.
Federal law requires the Local to annually file a financial reporting form (an "LM-2") with the U.S. Department of Labor. Millea filed the LM-2 for July 1, 1990-June 30, 1991, in September of 1991 and therein reported the loss of funds. At that time Sager advised Millea that the Local could recoup the loss by filing a claim with their bonding company. He filed the claim and the bonding company reimbursed the Local $ 14,737.52. Also at this time Ruby Davis, a U.S. Labor Dept. investigator, contacted the defendants pursuant to an investigation triggered by the LM-2. All defendants met with Davis and told her what they knew. Plaintiff likewise met with Davis several times. Davis referred her completed investigation to the Department of Justice ("DOJ"), and on April 9, 1993, DOJ indicted plaintiff for embezzlement. DOJ withdrew the indictment on July 9, 1993, explaining that after further investigation the prosecution was not viable: DOJ squarely charged the delay in developing all the facts and evidence to the actions of plaintiff Gray.
Plaintiff brought this action (initially filed in New York State Supreme Court, Clinton County and removed by the defendants under the Labor Management Relations Act) under New York State tort law for 1) Defamation; 2) Malicious Prosecution; 3) Breach of Contract; 4) Abuse of Process; and 5) Conspiracy.
b. Defendant's Motion for Summary Judgment.
Summary judgment was granted in favor of the defendants as against all of ...