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February 10, 1997

LYNNE CLOW, Plaintiff,
WILLIAM DEILY, Individually and as former Police Commissioner of the City of Hudson; and THE CITY OF HUDSON, NEW YORK, Defendants, THE CITY OF HUDSON, Defendant/Third-Party Plaintiff, v. BRIAN H. BREEDLOVE, Third-Party Defendant.

The opinion of the court was delivered by: SCULLIN


 This is an action pursuant to 42 U.S.C. § 1983 in which Plaintiff alleges that the Defendants violated her rights under the Fourteenth Amendment to the United States Constitution. *fn2" Specifically, Plaintiff alleges that she was terminated from her employment as a police officer for the Defendant City of Hudson ("City") without due process of law. She seeks reinstatement, compensatory damages, and punitive damages. *fn3"

 The City filed a counterclaim against Plaintiff alleging that she had breached an agreement with the Columbia County District Attorney, in which Plaintiff allegedly agreed to resign from her position as a police officer, and to which the City claims it was a third-party beneficiary. The City also filed a third-party complaint against Brian H. Breedlove, Plaintiff's former attorney, for allegedly violating his duties as the City's escrow agent under that same agreement. Presently before the Court are cross-motions for summary judgment by Plaintiff and the City (including Defendant Deily in his official capacity) on the issue of liability only. *fn4"

 The facts of this case are largely undisputed. In August of 1989, Plaintiff began her employment as a police officer for the City of Hudson. On October 31, 1990, and again on January 22, 1991, the Columbia County Grand Jury indicted Plaintiff on charges of perjury and official misconduct. Plaintiff retained Third-Party Defendant Breedlove as her defense attorney. *fn5" Despite the indictments, Plaintiff remained in the employ of the City Police Department, and as of January 1992, she had become a full time officer permanently appointed to that position under N.Y. Civil Service Law § 75.

 On January 23, 1992, the Mayor of Hudson appointed Defendant William Deily, an attorney, to the position of Police Commissioner of the City of Hudson for a term expiring December 31, 1993. Meanwhile, a pre-trial hearing on the Clow indictments was scheduled for January 27, 1992, to be immediately followed by trial. On that date, Plaintiff, Breedlove, and Columbia County District Attorney Paul Czajka entered into plea negotiations, and ultimately reached an agreement executed by all three individuals. The agreement was embodied in a "Stipulation" signed and executed by Czajka, Breedlove, and Clow, and provided as follows:

1. The defendant agrees to resign from the Hudson Police Department and has signed an irrevocable letter of resignation to the Commissioner of Hudson Police Department, a copy of which is attached.
2. The People shall move the Court for a dismissal in the interest of justice, without prejudice.
3. Brian Breedlove, Esquire, agrees to hold the original letter of resignation in escrow for both parties until February 15, 1992, at which time he shall file same with the Commissioner of the Hudson Police Department.
4. The defendant shall cease active duty as a police officer effective immediately and continuing through February 15, 1992, either by using vacation time, leave of absence or any other lawful means.
5. Upon the Hudson Police Department's receipt of defendant's resignation letter and upon defendant's actual resignation, the People shall unequivocally and irrevocably indicate their intention not to re-present or in any way re-prosecute or re-institute the instant charges.

 Clow Aff. Ex. 2. The Stipulation was executed in triplicate original. Prior to signing the Stipulation, Plaintiff signed a letter of resignation, dated January 27, 1992 and addressed to defendant Deily, in which she stated: "For personal reasons, I hereby tender my resignation from the Hudson Police Department effective February 15, 1992." Clow Aff. Ex. 1. The letter of resignation was also executed in triplicate original. Defendant Breedlove retained two copies of the letter and Mr. Czajka retained one copy of each document. That same day, January 27, 1992, Czajka moved to dismiss the indictments against Plaintiff in the interests of justice and without prejudice. The County Court granted the motion on the record and thereafter signed an Order executing its decision.

 On February 14, 1992, Czajka delivered his copies of the Stipulation and Plaintiff's letter of resignation to Defendant Deily. In addition, Czajka provided Deily copies of Clow's February 4, 1992 letter to Breedlove, and Breedlove's February 12, 1992 letter to Czajka. Deily reviewed these materials and concluded that the agreement embodied in the Stipulation was valid and in full force and effect as of January 28, 1992. That day, Deily accepted Clow's resignation and terminated Plaintiff's employment effective the following day, February 15, 1992, on the basis of the Stipulation and Plaintiff's letter of resignation. Deily delivered his letter purporting to accept Clow's resignation to ...

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