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Nicola v. Adelphi Academy

September 29, 2006

PAUL DE NICOLA, ENZA DE NICOLA AND MARY RENDEIRO, PLAINTIFFS,
v.
ADELPHI ACADEMY, DEFENDANT.



The opinion of the court was delivered by: Trager, J.

MEMORANDUM AND ORDER

This action involves claims pertaining to the termination of three employees by their employer. Plaintiffs, Paul De Nicola ("Paul"), Enza De Nicola ("Enza") and Mary Rendeiro, (collectively "plaintiffs"), filed a complaint against their former employer, Adelphi Academy ("Adelphi," the "Academy" or "defendant"), under, inter alia, the Consolidated Omnibus Budget Reconciliation Act ("COBRA") and 29 U.S.C. § 1161 et seq., a federal statute which requires employers to provide employees with notice of their right to continued health care coverage after certain "qualifying events." Compl. ¶ 2. See, 29 U.S.C. § 1161. Plaintiffs have moved for summary judgment on this claim. Mem. of Law in Supp. of Pls.' Mot. for Partial Summ. J. and Opp. to Def.'s Mot. Dismiss ("Pls.' Mot. for Partial Summ. J.") at 1. While defendant does not oppose the summary judgment motion insofar as it "seeks judgment on liability . . ." it does oppose the plaintiffs' accompanying request for statutory damages and an award of attorneys' fees and costs. Mem. of Law in Partial Opp. to Pls.' Cross-Mot. for Partial Summ. J. Reply ("Opp. to Pls.' Cross-Mot. for Partial Summ. J.") at 4.

Additionally, plaintiffs assert three state law claims, specifically, (1) breach of contract, (2) conversion of property belonging to the plaintiffs, and (3) defamation. Compl. ¶ 2. Defendant moves to dismiss these claims for lack of jurisdiction, arguing that the federal COBRA claim is moot and that the court should not exercise jurisdiction over the remaining state law claims. Mem. of Law in Supp. of Def.'s Mot. to Dismiss ("Mot. to Dismiss") at 1-2.

For the reasons set forth below, summary judgment is granted on the COBRA claim. Plaintiffs are not awarded attorneys' fees or statutory damages and are given 30 days to submit itemized medical bills to determine the amount, if any, of medical reimbursements that are appropriate. Additionally, because the only federal claim has been disposed of, supplemental jurisdiction over the three remaining state law claims will not be retained.

Background

The facts pertinent to the current motions are drawn from plaintiffs' complaint and the parties' respective statements pursuant to Local Civil Rule 56.1. Unless otherwise indicated, the facts are not in dispute.

(1) The Parties Adelphi is a nonprofit, private school located in Brooklyn, New York, and chartered by the New York State Board of Regents. Pls.' Joint Statement of Material Facts Pursuant Local Civ. R. 56.1 ("Pls.' 56.1 Stmt.") ¶ 7. Plaintiffs describe Adelphi as managed by a Board of Trustees ("Board"). Compl. ¶ 9. Plaintiffs' discord with defendant centers on their sour relationship with Albert Corhan ("Corhan"). Corhan and his family have a long history of serving the Adelphi Board. Both his mother, Dolores Corhan, and sister, Suzanne Corhan, served on the Board and from approximately 1998 through June 2004, Suzanne Corhan served as the Board's President. Id. Corhan has been employed by Adelphi since approximately 1999.*fn1 Pls.' 56.1 Stmt. ¶ 8. First, Corhan served as the Board's Alumni representative. Id. From 2000 through June 2003, Corhan was employed as the Director of Academy Advancement at Adelphi. Id. Finally, from September 2003 to the present Corhan has been employed as the Director of the Academy. Id.

From 1998-99, Paul De Nicola was employed by Adelphi as a teacher of both History and English. Pls.' 56.1 Stmt. ¶ 1. He was again employed by Adelphi in 2003-04 as the Dean of Academics and the Head of the Upper School. Id. Plaintiffs allege that on November 11, 2004, De Nicola entered into an employment contract for the period of July 1, 2004 through June 30, 2006, as the Dean of the Academy and as Adelphi's Chief Executive Officer. Id. In August 2002, Mary Rendeiro was hired by Adelphi as Main Office Manager. Id. ¶ 5. Enza De Nicola, Paul's wife, began working as Finance Manager at Adelphi on July 21, 2004. Id. ¶ 3. Her contract ran through July 31, 2005. Id. ¶ 4.

(2) Plaintiffs' Termination Prior to their termination, plaintiffs accused Corhan of being involved in a number of financial improprieties. Compl. ¶ 12. Among the accusations was Corhan's alleged use of Adelphi credit cards to charge personal expenses, failing to make deductions from his own salary for contributions Adelphi made to his TIAA-CREF Retirement account, creating a little- or no-show job for his then-fiancee, Della Ann Sarno, and failing to submit reports to the IRS for two years. Id. Plaintiffs also alleged that Corhan created both checking and savings accounts in the name of the "Academy Alumni Association" and used at least one of those accounts to receive more than $50,000 in grant and mandated services money from the State of New York. Id. Plaintiffs state that Corhan also used these accounts to make campaign contributions to the Conservative Party of New York State and to various Brooklyn politicians. Id. According to plaintiffs, Corhan concealed his improprieties by stipulating that he was the sole Adelphi employee permitted to handle the Academy's mail or authorize bank deposits. Id. ¶ 13. Plaintiffs allege that the latter policy resulted in large amounts of cash being left unsecured at Adelphi: ultimately $10,000 was discovered missing in April 2005. Id.

Plaintiffs maintain that on June 1, 2005, Paul confronted Corhan about the alleged improprieties. Compl. ¶ 14. On the same day, after Corhan allegedly admitted that he needed to rectify the situation, plaintiffs claim that Corhan transferred approximately $50,766.00 from an Alumni Association account to an Adelphi school operations account. Id. Paul also alleges that he discussed the improprieties with Arthur Maresca, Chairman of the Board, and other Board members, who charged Paul with discovering more specifics about Corhan's activities. Id. ¶ 15. According to plaintiffs, Paul was to report his findings to Maresca at noon on June 22, 2005. Id.

Plaintiffs claim that Corhan did not remedy the situation beyond the bank transfers. Compl. ¶ 16. Rather, on June 14, 2004, he attempted to further conceal his actions by demanding that Mary Rendeiro pledge allegiance to him. Id. ¶ 17. She refused. Id.

On the morning of June 22, 2005, plaintiffs were given termination letters from Marasca. Pls.' 56.1 Stmt. ¶ 17; Compl. Ex. B. According to plaintiffs, Paul De Nicola was terminated for "conduct and actions . . . found to be at odds with the needs of the Academy." Compl. ¶ 19. Enza was terminated for "fail[ing] to safeguard monies entrusted" to her. Compl. ¶ 20. The money referred to in the termination letter allegedly went missing in April 2005. Compl. ¶ 20. Plaintiffs point out that Enza was not terminated until two months later, in late June.

Id. Mary was terminated for unsatisfactory conduct and work habits. Id. ¶ 21. Plaintiffs note that the previous February Mary Rendeiro was named employee of the year. Pls.' 56.1 Stmt. ¶ 6. All of the termination letters reminded plaintiffs of the confidentiality agreement found in their respective employment contracts. Compl. ¶ 22. Plaintiffs allege that they were escorted out of the school by armed guards and were prohibited from taking any of their personal belongings with them. Pls.' 56.1 Stmt. ¶ 17; Comp. Ex. H. Plaintiffs also maintain that they have no prior disciplinary records with Adelphi. Id. ¶ 18.

Adelphi, however, denies this statement. Def.'s 56.1 Stmt. ¶ 18. On June 28, 2005, plaintiffs wrote the Board of Trustees again reminding them of Corhan's alleged improprieties and requesting to be reinstated. Compl. ¶ 23. On July 6, 2005, the Board responded in a letter from their attorney, who accused plaintiffs of making baseless accusations. Compl. ¶ 24. Plaintiffs allege that Adelphi never investigated Corhan's activities at the Academy. Id. ¶ 25.

(3) COBRA Adelphi offers health benefits to all employees. Pls.' 56.1 Stmt. ¶ 19. Plaintiffs' health care benefits were cut off sometime after their termination. Id. ¶ 20. In a letter dated July 20, 2005, plaintiffs requested that they receive COBRA notification forms. Pls.' 56.1 Stmt. ¶ 21; Compl. Ex. E. In letters dated August 1, 2005, from Maresca, plaintiffs were informed that they were ineligible for COBRA benefits because their termination was due to their own "gross misconduct." Pls.' 56.1 Stmt. ¶ 22; Compl. Ex. F. Adelphi also took the position that plaintiffs were not eligible for unemployment benefits from the New York State Department of Labor because for the same reason. Compl. ¶ 29. Plaintiffs, however, maintain that the New York State Department of Labor, Bureau of Insurance, determined that they were not terminated for "gross misconduct" and, therefore, were entitled to benefits. Id. It is important to note that COBRA simply requires that employers notify outgoing employees of their right to elect COBRA coverage; it does not obligate employers to pay premiums for any coverage that an employee elects. See Local 217, Hotel & Restaurant Emp. Union v. MHM, Inc., 976 F.2d 805, 809 (2d Cir. 1992); Lafauci v. St. John's Riverside Hosp., 381 F. Supp. 2d 329, 332 (S.D.N.Y. 2005). Rather, departing employees must pay their own premiums. See Local 217, Hotel & Restaurant Emp. Union v. MHM, Inc., 976 F.2d 805, 809 (2d Cir. 1992); Lafauci v. St. John's Riverside Hosp., 381 F. Supp. 2d 329, 332 (S.D.N.Y. 2005).

According to plaintiffs, for six months after their termination, they had no available health insurance and as a result were forced to forgo medical treatment for a wide variety of new and pre-existing conditions. Id. ¶¶ 27-30. Paul states that during the six months following his termination he was unable to obtain medical treatment for his chronic sleep apnea, for a chronic eye problem which required a retinal specialist, for a serious dental problem nor for various regular checkups with his physician, dentist and opthamologist. Id. ¶ 28. Similarly, Enza alleges that she was unable to see a specialist for regular semiannual visits to monitor a pre-existing gynecological condition and for her migraine headaches, for which she was also unable to obtain medication. Id. ¶ 30. Enza also alleges that she could not receive treatment for the flu and was unable to maintain her regular visits with her physician, dentist and opthamologist. Id. Additionally, plaintiffs maintain that Mary Rendeiro was unable to receive treatment for hip and back problems which left her immobilized for approximately four weeks in September and October 2005. Id. ¶ 29. She also claims that she was unable to obtain treatment for a severe chest cold and suffered extreme stress and anxiety due to worry over her lack of medical insurance. Id. Defendants, however, note that both Paul and Enza De Nicola filed medical claims once their insurance was reinstated and thus must have received some medical treatment during the time in question. Def.'s 56.1 Stmt. ¶¶ 28, 30.

(4) The Present Action On September 7, 2005, plaintiffs filed this action alleging four charges against Adelphi: (1) Under COBRA, plaintiffs maintain that termination for reasons other than "gross misconduct" is a "qualifying event," under 29 U.S.C. §§ 1161, 1162(2)(A)(I), which requires an employer to notify an employee of his or her right to elect to continue health coverage for eighteen months after termination. Compl. ¶¶ 40-41.

(2) Plaintiffs also maintain a breach of contract action against Adelphi, stating that they were terminated without "cause," which is required by the policies of the Trustees. Id. ¶¶ 46-50.

(3) Additionally, plaintiffs bring a conversion action stating that they repeatedly requested that their personal belongings be returned to them, but that these requests were ignored by defendant. Id. ¶¶ 51-55. (4) Finally, plaintiffs allege that after their termination, Adelphi representatives made defamatory statements against them. Id. ¶¶ 56-57. As redress for their COBRA claim, plaintiffs seek statutory damages and penalties pursuant to 29 U.S.C. § 1132(c), attorneys' fees and costs, and injunctive relief directing Adelphi to provide plaintiffs with their COBRA notices and benefits. Id. ¶ 58.

Shortly after plaintiffs filed their complaint the parties entered mediation. Mot. to Dismiss at 3. After the complaint was filed, Adelphi provided COBRA notices to Paul De Nicola and Mary Rendeiro on November 25, 2005 and to Enza De Nicola on December 3, 2005. Compl. ¶¶ 24-25. Enza's health insurance was reinstated on December 12 and Mary and Paul's insurance was reinstated on December 29. Compl. ¶ 26. Paul De Nicola made a claim for $38 in retroactive payment and Enza De Nicola made a claim for less than $300 in retroactive payment. Pls.' 56.1 Stmt. ¶ 31. Mary Rendeiro made no such claims. Id.

According to defendant, on December 28, 2005, it paid five months' worth of health insurance premiums for each plaintiff, amounting to $2,183.60, despite not being required to do so under COBRA. Def.'s 56.1 Stat. ¶ 18; Gutstein Aff. Ex. C. Jan. 20, 2006. Adelphi maintains that these actions did not reflect a change in its view of plaintiffs' termination, but rather its desire to expedite the process of resolution. Def.'s 56.1 Stmt. ¶ 24. At a court conference the following day, defendant "informed the Court that in an effort to resolve this matter, it would not seek to prove gross misconduct." Mot. to Dismiss at 7 n.4.

(5) Acts of Intimidation Mediation, however, was cut short by actions outside of, but related to, this litigation, as this bitter dispute devolved into further allegations of misconduct. Mot. to Dismiss at 4 n.2. As a backdrop to the current litigation, defendant has alleged that plaintiffs have waged a campaign of intimidation and harassment against the Academy and, specifically, Corhan. Def.'s 56.1 Stmt. ¶¶ 34-6. According to defendant, a group identifying itself as "The Wobblies" is responsible for various attacks against Corhan and the Academy.*fn2 Def.'s Mem. of ...


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