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Buonanotte v. Noonan

October 13, 2009

FRANK BUONANOTTE, ET AL., PLAINTIFFS,
v.
SHARI NOONAN, ACTING COMMISSIONER OF NEW YORK STATE OFFICE OF ALCOHOLISM AND SUBSTANCE ABUSE SERVICES, IN HER INDIVIDUAL CAPACITY AND HENRY F. ZWACK, EXECUTIVE DEPUTY COMMISSIONER OF NEW YORK STATE OFFICE OF ALCOHOLISM AND SUBSTANCE ABUSE SERVICES, IN HIS INDIVIDUAL CAPACITY DEFENDANTS.



The opinion of the court was delivered by: Wexler, District Judge

MEMORANDUM AND ORDER

Plaintiffs commenced this lawsuit alleging that actions taken by Defendants in connection with Plaintiffs' rights to offer alcohol and substance abuse services and housing violated their civil rights. The individual Plaintiff is Frank Buonanotte, a resident of Suffolk County who is the Chief Executive Officer of the Plaintiff corporate entities. These corporations are seven entities operating under names that include the name "Crossings," as well as six entities operating under names including the name "Woodfield." Named as Defendants are two individuals. Defendant Shari Noonan was, at all relevant times, the Acting Commissioner of New York State Office of Alcoholism and Substance Abuse Services ("OASAS") and Defendant Henry Zwack was, at all relevant times, that agency's Executive Deputy Commissioner.

This court's rulings on motions to dismiss and for summary judgment left two civil rights claims for trial. Those claims were based upon the theories that Plaintiffs were denied their rights to Due Process of Law and Equal Protection. A trial has been held, and Defendants have moved, pursuant to Rule 50(a) of the Federal Rules of Civil Procedure ("Rule 50(a)"), for judgment as a matter of law. The court has granted that motion and has found, as required by Rule 50(a), that "a reasonable jury would not have a legally sufficient evidentiary basis" to find in favor of the Plaintiffs on any claim. This memorandum and order sets forth the reasons for the dismissal.

DISCUSSION

I. There Was No Proximate Cause as a Matter of Law

Each of Plaintiffs' claims hinged on the theory that the acts of Defendants resulted in the shutting down of Plaintiffs' businesses. As noted, the Defendants named herein were the Acting Commissioner, and the Deputy Executive Commissioner of OASAS. The testimony at trial established, however, that it could not have been the act of any named Defendant that led to the demise of Plaintiffs' businesses. Specifically, it became clear that the single reason that Plaintiffs were unable to operate their businesses was because of the actions of a state agency that was not named as a Defendant, and had nothing to do with the OASAS proceedings. That agency was the Medicaid Fraud Control Unit of the New York State Attorney General's Office ("Medicaid").

The evidence at trial established that on October 6, 2005 (two months prior to the commencement of any OASAS action with respect to Plaintiffs' businesses) Medicaid requested that the New York State Department of Health withhold 50% of the future Medicaid payments submitted by Plaintiffs. The testimony made clear that Crossings was crippled by the withholding of these payments. On December 22, 2005, (also prior to any OASAS action) Medicaid made the decision to withhold 100% of Crossings' payments. It was that action, and not any OASAS proceeding, that effectively put the Plaintiffs out of business.

Thus, the testimony at trial made clear that the only rational decision that could have been reached by a jury is that Plaintiffs went out of business, not because of the revocation of their OASAS granted operating certificates, or any action of OASAS, but solely because of the decision made by Medicaid to reduce and, eventually entirely cut off Plaintiffs' Medicaid funding.

Significantly, no Medicaid representative was named as a Defendant. Additionally, counsel made clear that there was no claim of any conspiracy among the named Defendants and Medicaid. Since it was the act of a non-Defendant state agency that led to the demise of Plaintiffs' businesses, and those acts took place: (1) before OASAS issued any order revoking Plaintiffs' operating certificates; (2) before commencement of OASAS receivership proceedings, and, (3) before OASAS issued any notice of suspension, no denial of Plaintiffs' civil rights by OASAS could have been the proximate cause of Plaintiffs' damage. Accordingly, the court could not submit the Plaintiffs' civil rights claims to the jury.

Even if a rational jury could have found proximate cause based upon the action of either named Defendant, the court would nonetheless have dismissed the civil rights claims for the reasons set forth below.

1. Due Process Claims

A. The Pleadings

Plaintiffs' due process claims were inartfully pled and tried. As to the pleadings, there was an initial and amended complaint. The initial complaint set forth, inter alia, two separately stated due process claims. The first was denominated as a claim for a "Violation of Due Process," and set forth facts relating to the denial of a hearing. The second due process claim, entitled "Violation of Substantive Due Process," also set forth facts regarding the failure to provide Plaintiffs with a hearing, and further alleged that the conduct of Defendants was morally wrong. Thus, the initial complaint clearly set forth two separate due process claims: (1) for denial of procedural due process and (2) for denial of substantive due process.

Plaintiffs' amended complaint did not separately allege denial of Plaintiffs' procedural and substantive due process rights. Instead, it set forth a single claim of a due process violation. That claim states only that Defendants' conduct was "arbitrary, irrational" and "unconscionable." This court noted in its decision on the motion to dismiss that such a claim appeared to set forth a claim only of a substantive due process violation. The ...


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