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D'Agostino v. Dinapoli

July 20, 2010

ALBERT A. D'AGOSTINO, PLAINTIFF,
v.
THOMAS P. DINAPOLI, COMPTROLLER OF THE STATE OF NEW YORK; KEVIN F. MURRAY, DEPUTY COMPTROLLER OF THE STATE OF NEW YORK; ROBERT COUGHLIN, COUNSEL TO THE NEW YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM; LISA BIERMAN, GENERAL COUNSEL FOR THE COMPTROLLER OF THE STATE OF NEW YORK, DEFENDANTS.



MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Presently before the Court is Defendants' Motion (Dkt. No. 10) to dismiss Plaintiff's Complaint (Dkt. No. 1) in its entirety or stay the action pending resolution of certain administrative proceedings. Plaintiff Albert A. D'Agostino, formerly an attorney for New York State public school districts and municipal employers, has named in this action Thomas P. DiNapoli, Comptroller of the State of New York; Kevin F. Murray, Deputy Comptroller of the State of New York; Robert Coughlin, Counsel to the New York State and Local Employees' Retirement System; and Luke Bierman, General Counsel for the Comptroller of the State of New York. Compl. at 3-4. The sole claim at issue, brought under 42 U.S.C. § 1983 and seeking compensatory damages, alleges that Defendants deprived Plaintiff of his Fourteenth Amendment right to due process of law and caused him various injuries arising from the substantive deprivation of retirement benefits which followed the due process deprivation.

II. BACKGROUND

Beginning in 1977, Plaintiff was appointed and paid an annual salary to act as school attorney for Valley Stream Free School District No. 30 in Hempstead, New York. Compl. at 2. The District provided Plaintiff the opportunity to enroll in the New York State Employees' Retirement System ("ERS" or "System"). Id. at 3. Thereafter, Plaintiff worked for assorted other New York municipal employers for which he was credited in the System. On October 14, 2000, Plaintiff entered retirement and began to draw benefits from ERS in an annual amount of approximately $106,000. Id.

Plaintiff's suit arises from a series of administrative actions taken by Defendants to determine the eligibility of Plaintiff for membership in ERS; these actions culminated in an April 23, 2008 letter to Plaintiff, suspending payment of his retirement benefits. Compl. at 5. No pre-deprivation hearing was held in relation to this determination. Id. Plaintiff alleges that "[i]n suspending the Plaintiff's pension benefits, the Defendants individually, and/or in concert failed to provide the Plaintiff with adequate notice of the nature of and factual basis for the actions being taken against him, and failed to provide a pre-deprivation hearing or any other Constitutionally sufficient Due Process of Law." Id. at 6. The letter came from Defendant Murray and is alleged to have been authored or sent with the knowledge and consent of the other named Defendants. Id. at 5. Subsequently, by a letter dated August 19, 2008, Plaintiff's suspension of benefits was confirmed, his membership in ERS was revoked, and a demand for repayment of $605,874.79 within 30 days was made, the amount of benefits Plaintiff has received during his years of inclusion within the System. Id. at 6.

In response to this determination, Plaintiff commenced a CPLR Article 78 proceeding in New York Supreme Court, Albany County, which resulted in a ruling substantially in Plaintiff's favor. See In the Matter of the Application of D'Agostino v. DiNapoli, Index No. 8134-08 (Sup. Ct. Albany Co. Aug. 20, 2009). In the Article 78 proceeding, most of Plaintiff's challenges were dismissed on Defendants' motion; Plaintiff's due process claim, however, was allowed to go forward, and the court ultimately held on August 20, 2009, that Defendants violated Plaintiff's "right to procedural due process by depriving him of continuing retirement benefits prior to granting him a hearing and by failing to provide adequate notice of the nature of and factual basis for the claims against him." Id., Compl. Ex. C at 6. Accordingly, the court vacated and annulled the determination, and ordered the Comptroller to: "pay accrued arrears in [Plaintiff's] pension within 30 days . . . ." Id. at 7. Thereafter, Plaintiff received the sum of his suspended benefits, and in a letter dated September 10, 2009, notice that monthly payments had resumed and indication that further review of his status within ERS would happen with "appropriate due process." Mot. to Dismiss, Murray Dec.,¶ 4, and Exh. A. Plaintiff, despite prevailing in this manner, appealed the dismissal of a number of his arguments to New York Supreme Court, Appellate Division. Finding that Plaintiff was no longer aggrieved, this appeal was dismissed on February 25, 2010. In the Matter of the Application of D'Agostino, 70 A.D. 3d 1285, 894 N.Y.S. 2d 778 (3d Dep't Feb. 25, 2010)

After the trial court's August 20, 2009 ruling on the Article 78 action, Plaintiff was sent a letter dated November 10, 2009, informing him that his membership in ERS had been subject to review which had resulted in a finding of ineligibility. Mot. to Dismiss, Murray Dec., ¶ 5 and Exh. B. The letter advised Plaintiff that he had been incorrectly designated as an employee for purposes of ERS, rather than as an independent contractor, such that Plaintiff's enrollment in the System was invalid. The letter did not communicate that a final determination had been made, but offered, instead: "If you have documentation or information that would support a finding that you were an employee, please submit it to us for further consideration. In order to be considered before we issue a determination, such documentation must be submitted in writing within 15 days . . . ." Id. The letter also included an analysis of Plaintiff's work history with various school employers purporting to support the conclusion that Plaintiff's relationship to those employers was that of an independent contractor. Id.

Another letter was sent on November 17, 2009, stating that Plaintiff's request for an RSSL § 74(d) hearing in relation to the earlier determination was deemed withdrawn on the basis of ERS' withdraw of its earlier preliminary determination regarding Plaintiff's enrollment, pursuant to the state court decision. Mot. to Dismiss, Murray Dec., ¶ 6 and Exh. C. It also reminded Plaintiff of the new preliminary determination and noted the time for appeal after an actual determination of his ERS status. Id. Thus, given this background, according to Defendants, Plaintiff has and will continue to receive retirement benefits until "(1) a decision to suspend or revoke his benefits is made and sustained in an RSSL § 74(d) hearing, or (2) a decision to suspend or revoke his benefits is made and Plaintiff fails to timely request an RSSL § 74(d) hearing." Mot. to Dismiss, Memo. at 8-9. On March 17, 2010, ERS confirmed its preliminary determination, concluding that Plaintiff had been an independent contractor and was ineligible for membership in the System. Reply at 6. The Court is not aware of the current status of any RSSL § 74(d) hearing on this matter and whether a final determination has been made; nor is there a record of whether state court review has been or will be sought following such a hearing pursuant to CPLR §§ 7803(4) and 7804(g).

The instant suit is predicated on, and seeks damages arising solely from, the initial due process violation occasioned in April 2008, which Plaintiff contested and prevailed on in state court pursuant to Article 78, and on the deprivation of benefits that followed the asserted the violation. As stated above, the Hon. Gerald Connolly of the New York Supreme Court, Albany County found that Defendants' actions of suspending Plaintiff's retirement benefits prior to a hearing and failing to provide adequate notice of the basis for that suspension violated the constitutional guarantee of procedural due process. In his suit, Plaintiff alleges that he has suffered, inter alia, economic harm, extreme emotional distress, pain and suffering derived from the reputational injury caused by Defendants. Compl. at 8-9. This asserted harm to personal and professional reputation comes from what Plaintiff alleges were actions taken by Defendants to publicize the suspension of Plaintiff's benefits through multiple media outlets and cast his receiving of those benefits as an "egregious fraud." Id. at 8. More broadly, Plaintiff contends that the deprivation of his Fourteenth Amendment rights caused assorted compensable harms, and that Plaintiff had to incur significant legal expenses to vindicate his constitutional rights. Id. at 9. On this basis, Plaintiff seeks damages for unspecified monetary and non-monetary losses, as well as punitive damages and attorneys' fees. Defendants moved the Court to dismiss or stay Plaintiff's action on February 9, 2010, arguing, in the main, that his claim is unripe and without merit. See generally Mot. to Dismiss. The Court now address that Motion.

III. DISCUSSION

Upon reviewing Defendants' Motion and Plaintiff's Response in opposition, the Court observes that there has been some uncertainty as to the nature of Plaintiff's claim and the relief sought in his Complaint. The initial arguments presented by Defendants in their Motion to dismiss speak to issues of Eleventh Amendment immunity for Defendants in their official capacities and of standing to assert a claim for declaratory judgment in relation to the due process challenge already adjudicated in state court. Mot. to Dismiss, Memo. at 11-13. Plaintiff's Response makes clear, however, that despite ambiguities in the Complaint which indicated that a claim raising these issues was in fact made, Plaintiff does not seek to sue Defendants in their official capacities or seek a declaratory judgment in any matter. Response at 15-18. Accordingly, to the extent that such claims were alleged, they are deemed abandoned.

The primary basis on which Defendants move for dismissal is their contention that Plaintiff's § 1983 claim lacks the requisite ripeness or maturity of facts for judicial resolution at this time. Defendants' argument rests on the doctrine of prudential ripeness. Mot. to Dismiss, Memo. at 15-20. That is, while Plaintiff's claim satisfies the requirement of a "concrete dispute affecting cognizable current concerns of the parties sufficient to satisfy standing and constitutional ripeness," Ehrenfeld v. Mahfouz, 489 F.3d 542, 546 (2d. Cir. 2007), the Court is urged to dismiss or stay Plaintiff's action because its present adjudication would, nevertheless, be premature.*fn1 "Prudential ripeness is, then, a tool that courts may use to enhance the accuracy of their decisions and to avoid becoming embroiled in adjudications that may later turn out to be unnecessary . . . ." Simmonds v. INS, 326 F.3d 351, 357 (2d Cir. 2003). Both constitutional and prudential ripeness are addressed to this concern of maturity but are not coextensive; the former "has as its source the Case or Controversy Clause of Article III of the Constitution, and hence goes, in a fundamental way, to the existence of jurisdiction[, while . . . prudential ripeness] is a more flexible doctrine of judicial prudence, and constitutes an important exception to the usual rule that where jurisdiction exists a federal court must exercise it." Id. By "evaluat[ing] both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration," Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967), overruled on other grounds by Califano v. Sanders, 430 U.S. 99, 105 (1977), a court may determine on prudential ripeness grounds that a "case will be better decided later and that the parties will not have constitutional rights undermined by the delay." Simmonds, 326 F.3d at 357 (emphasis in original).

A court's consideration of this manner of ripeness is governed by a two-step inquiry. See N.Y. Civil Liberties Union v. Grandeau, 528 F.3d 122, 131 (2d Cir. 2008). "The fitness analysis is concerned with whether the issues sought to be adjudicated are contingent on future events or may never occur." Simmonds, 326 F.3d at 359 (quotations and citation omitted). In assessing the possible hardship to the parties resulting from withholding judicial resolution," the court considers "whether the challenged action creates a direct and immediate dilemma for the parties . . ." outside the "mere possibility of future injury" without the prospect of causing "present detriment." Id. at 360 (quotation and citation omitted).

Defendants argue that essential facts are undeveloped at this stage in the parties' litigation, namely that it has not yet been determined whether the Plaintiff properly belongs within ERS or should be excluded. Thus, they contend: "the fact that the newly commenced administrative review may be 'separate and distinct' from the earlier administrative process does not alter the reality that, until the conclusion of (1) the new review, (2) the subsequent administrative hearing that Plaintiff has a right to demand pursuant to Retirement and Social Security Law ("RSSL") § 74(d), and (3) any subsequent CPLR Article 78 review of the final determination ultimately rendered after an RSSL § 74(d) hearing, this Court will be unable to assess whether Plaintiff has suffered any compensable injury as a result of the purported violation of his due process rights." Reply at 5. Regardless of whether the Plaintiff's claim may be meritorious in whole or in part, Defendants argue that the § 1983 claim is not fit for review because the Court cannot effectively address the breadth of that claim, particularly in relation to identifying injuries and ascertaining damages, without a final determination of Plaintiff's ERS status. As to the hardship inquiry for considering ripeness, Defendants state that ...


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