The opinion of the court was delivered by: MICHAEL TELESCA, Senior District Judge
Plaintiffs Sherry Palmer ("Palmer" or "plaintiff") and Mark
Palmer bring this action against numerous defendants claiming
that Palmer's Constitutional and common law rights were violated
in connection with her arrest and prosecution on charges of
Second Degree Grand Larceny. Plaintiff claims that she was
falsely accused and maliciously prosecuted on charges that she
embezzled $52,205.90 from defendant Burns Glass Service, d/b/a
Ray Sands Glass, her former employer. She brings this action
under 42 U.S.C. § 1983 claiming that her Constitutional rights
were violated, and under New York State law claiming that she was
subjected to malicious prosecution, abuse of process, intentional and/or
reckless infliction of emotional distress, and negligence.
On May 23, 2001, defendants David Burns, Frank Burns, and Burns
Glass Service (the "Burns defendants"), moved for summary
judgment on grounds that plaintiff has failed to state a viable
cause of action against them. By Order dated August 21, 2001,
this Court granted the Burns defendants' motion for summary
judgment, and granted in-part and denied in-part plaintiffs'
motion to amend. The Court additionally allowed plaintiffs to
amend their complaint to add as defendants Sergeant Ralph Sarkis
and Lieutenant Michael Nyhan. Thereafter, plaintiff moved for
reconsideration, and by Decision and Order dated January 3, 2002,
I vacated that portion of my previous Decision and Order
dismissing plaintiffs' malicious prosecution claims. While I
allowed plaintiffs to pursue their cause of action for malicious
prosecution against the Burns defendants, I dismissed plaintiffs'
civil rights claims against the Burns defendants on grounds that
plaintiffs had failed to sufficiently allege that the Burns
defendants were state actors or acted in concert with state
Currently before the court are three motions seeking various
forms of relief. Defendants Charles Callear ("Callear"), Joseph
Hennekey ("Hennekey"), Ralph Sarkis ("Sarkis"), Michael Nyhan
("Nyhan"); the County of Monroe; and the Monroe County Sheriff
(hereinafter collectively referred to as the "County Defendants") move for summary judgment against the plaintiffs on all claims.
Additionally, the County defendants (1) seek permission to amend
their answers nunc pro tunc; (2) move to dismiss the Complaint
for plaintiffs' disobedience of previous court orders; (3) move
to preclude plaintiffs from offering certain evidence at trial;
(4) move for an order of contempt; and (5) seek various other
forms of relief. See County Defendants' Notice of Motion (docket
item no. 132).
The Burns defendants move for summary judgment against the
plaintiffs, and seek sanctions pursuant to Rule 37(b)(2) of the
Federal Rules of Civil Procedure including the striking of
plaintiffs' complaint, and preclusion of the use by plaintiffs of
certain evidence at trial.
Plaintiffs move for summary judgment against the defendants and
for an order permitting plaintiffs to amend the Complaint to
include causes of action for false arrest under New York State
Law, and misuse of grand jury subpoena power.
Plaintiff Sherry Palmer was employed by defendant Burns Glass
Service as an office manager from July 1994 until February 1998.
In November of 1995, plaintiff was assigned certain accounting
responsibilities. In January 1998, bookkeeper Ed Able, ("Able"),
an employee whom Palmer placed on probation because of poor work
performance, wrote a letter to David and Frank Burns (President
and Vice President respectively of Burns Glass Service), and
complained of a number of improprieties with respect to
plaintiff's management of the office. According to Able, Palmer,
among other things leaked confidential information to employees
and failed to return overpayments to customers. Palmer denies
these allegations, and claims that Able was a poorly-performing
employee who wrote the letter only to save his job. David and
Frank Burns investigated Able's claims and on February 6, 1998,
they terminated plaintiff's employment on grounds that she
allegedly leaked confidential information. At the time, plaintiff
was then seven months pregnant.
Upon plaintiff's termination, she hired an attorney in an
attempt to obtain a monetary bonus from the previous year and
severance pay. The parties were unable to negotiate a settlement
of those claims.
Following Palmer's termination, Frank and David Burns hired
Patricia Hedeen, ("Hedeen"), as the replacement office manager.
Hedeen was asked to review the financial records to determine if
Palmer had engaged in any financial misconduct. In the course of
her investigation, Hedeen learned that for every month from
November 1995 (when plaintiff took over the accounting functions)
through December 1997, (two months before plaintiff was fired),
cash receipts for Burns Glass Service exceeded cash deposits.
Hedeen found that for the approximately two-year period, receipts exceeded deposits in the amount of $52,205.90. Plaintiff claims
that the investigation was flawed, and that there were no
discrepancies. Specifically, plaintiff contends that the records
used by the defendants did not accurately reflect which accounts
were paid in cash, and which accounts were paid in some other
manner. She contends that because the records utilized did not
accurately reflect which accounts were paid in cash, those
records would not correspond to cash deposits, and therefore any
comparison of amounts from those sources is fundamentally flawed.
She contends that had the defendants utilized accurate records in
determining wether or not there was a discrepancy between cash
receivables and cash deposits, the Burns defendants would have
realized that there was no discrepancy, or at worst, and
Following Hedeen's investigation, Burns Glass Service hired the
accounting firm of Mengel, Metzger, Barr & Company, ("Mengel
Metzger") to conduct an independent investigation. The firm
utilized the same method to investigate records for two separate
months, and reached the same conclusion as Hedeen: that there
were discrepancies between cash receipts and cash deposits.
One week after receiving the confirming report from Mengel
Metzger, David and Frank Burns directed Hedeen to report her
findings to the Monroe County Sheriff's Department. Monroe County
Sheriff's Deputy Joseph Hennekey, ("Hennekey") investigated the allegations, and filed a felony Complaint against Palmer on
September 3, 1998, charging her with second degree grand larceny.
As part of his investigation, Hennekey obtained the plaintiffs'
financial records and compared the plaintiffs' known expenditures
to their known sources of income. In doing so, he concluded that
plaintiffs, over the course of three years from 1996 through
1998, had spent over $19,000.00 in excess of their known sources
of income. Plaintiffs dispute Hennekey's findings on grounds that
Hennekey ignored over $19,000.00 in known income, and improperly
calculated plaintiffs' expenditures by double-counting several
expenditures. According to the plaintiffs, the actual discrepancy
between plaintiffs income and expenditures over the course of
approximately 2 and one half years was less than $300.00
On March 12, 1999, a Grand Jury returned an Indictment against
the plaintiff on Grand Larceny charges. The case was later tried
at a bench trial before the Honorable William Bristol, who, on
August 5, 1999, found the defendant not guilty. Plaintiffs filed
the instant case on August 4, 2000.
The sole remaining independent count against the Burns
defendants is a claim for malicious prosecution. As I held in my
January, 2002 Decision and Order, a complaining witness can be
held liable for malicious prosecution if the witness "fail[s] to
make a full and complete statement of facts to the District Attorney or
the court," or "hold[s] back information that might have affected
the results" of an investigation or trial. Alberto Ramos v. The
City of New York, 2001 N.Y. Slip Op. 06735 (1st Dep't August
16, 2001). I therefore determined that the Burns defendants could
be held liable for malicious prosecution "if it is found that
they gave information which they knew to be false and which
unduly influenced the authorities." January 3, 2002 Decision and
Order at p. 3.
The Burns defendants now move for summary judgment on grounds
that as a matter of law, there is no evidence that they provided
authorities with information they knew to be false or which
unduly influenced authorities. In support of their argument,
defendants contend, inter alia, that: (1) there is no
evidence that the invoices they used to determine if there was a
discrepancy between cash payments and cash deposits were
unreliable; and (2) law enforcement authorities conducted their
own independent investigation thus demonstrating that the
information they reported to the authorities did not unduly
influence law enforcement officials.
I find, however, that there is a question of fact as to whether
or not the Burns defendants provided information they knew to be
false to law enforcement authorities, and whether or not law
enforcement authorities were unduly influenced by that
information. Specifically, with respect to the investigation conducted by the
Burns, there is significant evidence in the record raising a
question as to whether the investigation performed by the Burns
defendants was made in good faith, and whether they knew the
information presented to authorities was accurate or reliable.
There is evidence that the invoices used by the Burns defendants
to calculate cash receipts actually reflected receipts of cash,
checks, or credit cards. Accordingly, because the invoices used
to determine the amount of cash received on a given day may have
actually reflected payments made in cash, credit cards, or
checks, the comparison of these invoices only to deposits of cash
would not necessarily reflect accurately any discrepancy between
cash received and cash deposited. Moreover, there is evidence
that the person who conducted the investigation knew that the
invoices she used to calculate cash receipts included forms of
payment other than cash to wit: check and credit card payments.
Because there is ...