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Watson v. Grady

September 30, 2010


The opinion of the court was delivered by: Kenneth M. Karas, District Judge


Plaintiff Robert C. Watson, Sr. ("Plaintiff") brings this action pursuant to 42 U.S.C. § 1983 ("§ 1983") against District Attorney William Grady ("Grady"), Deputy District Attorney Edward Whitesell ("Whitesell"), Comptroller Thomas DiNapoli ("DiNapoli"), Beth Sims, Esq. ("Sims"), Jeffery Baker ("Baker"), and the Board of Education of the City of Poughkeepsie School District ("the Board") (collectively, "Defendants"), asserting violations of his Fourth and Fourteenth Amendment rights. Defendants filed Motions to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6) seeking to dismiss all of Plaintiff's claims. For the reasons stated herein, the motions are granted in part and denied in part.

I. Background

For the purposes of deciding the instant Motions to Dismiss, the Court accepts the allegations in the Amended Complaint ("Am. Compl.") as true.

A. Factual Background

Starting on July 14, 2000, Plaintiff worked as the Superintendent of Schools for the City of Poughkeepsie School District ("the District"). (Am. Compl. ¶ 10.) In August 2001, the Defendant Board appointed the law firm of Shaw & Perelson as counsel for the District, and, at Plaintiff's request, Defendant Sims began working as day-to-day counsel for the District. (Id. ¶¶ 11-12.)

Defendant Baker, the business manager of the District, "harbored an intense animosity toward [P]laintiff," especially after Plaintiff suspended Defendant Baker for insubordination in the spring of 2005. (Id. ¶¶ 15-16.) In retaliation, Defendant Baker allegedly fabricated numerous records "chronicling . . . improprieties" by Plaintiff. (Id. ¶¶ 17-18.) In the summer of 2005, Defendant Baker tried to speak to the Defendant Board about Plaintiff, but the Defendant Board refused his request because it was aware of his animosity toward Plaintiff. (Id. ¶¶ 19-20.) Instead, the Defendant Board hired a consulting firm and launched an investigation into Plaintiff's allegations of improprieties by the business office. (Id. ¶ 21.) However, in an attempt to distract the Defendant Board from his own wrongdoings, Defendant Baker re-focused the investigation on Plaintiff. (Id. ¶ 22.)

In the fall of 2005, after completion of a major construction project, the manager of the construction company, the Palumbo Group ("Palumbo"), informed Plaintiff and the Defendant Board that, because of extras in the project, the District owed Palumbo an additional $264,000. (Id. ¶¶ 36-38.) Plaintiff allegedly insisted that Palumbo provide "written justification" for the expenditures, advised Defendant Sims of the situation, and sought Defendant Sims' legal advice. (Id. ¶¶ 39-40.) After Palumbo provided the written justification, Plaintiff submitted the documents to Defendant Sims. (Id. ¶ 41.) The Defendant Board delayed deciding on the payment so that Defendant Sims could properly review the matter. (Id. ¶ 42.) Plaintiff conducted his own review of the expense documentation and eliminated $40,000 at his own discretion. (Id. ¶ 43.) When the Defendant Board voted on Palumbo's payment request, it approved the amount suggested by Plaintiff. (Id. ¶ 44.) Defendant Sims had still not reviewed the submission, despite having adequate time to do so, and did not provide any legal justification for denying the payment to Palumbo. (Id. ¶¶ 45-46.)

After the Defendant Board approved the payment, Defendant Baker's office wrote a check to Palumbo that exceeded the amount approved by the Defendant Board. (Id. ¶ 50.) Even though Defendant Baker supposedly noticed the discrepancy, he immediately sent the check to Palumbo, bypassing the standard review by the Internal Claims Auditor. (Id. ¶¶ 51-52.) Defendant Baker's action was allegedly part of a scheme to frame Plaintiff because he knew that Plaintiff's secretary had inadvertently caused the error. (Id. ¶¶ 52-53.) According to Plaintiff, Defendant Baker mistakenly believed that the son of Plaintiff's secretary worked for Palumbo and that, as a result, Defendant Baker could claim that Plaintiff's secretary overstated the check, with Plaintiff's knowledge, in order to benefit her son. (Id. ¶ 54.) Plaintiff claims that he did not know about the incorrect check. (Id. ¶ 55.)

In September 2005, the Defendant Board sought to end Plaintiff's employment because he had expressed to the DefendantBoard that it was micro-managing him and engaging in racial discrimination by refusing his personnel recommendations. (Id. ¶¶ 24-26.) In October 2005, Defendant Sims met with Defendant Baker, knowing of his dislike for Plaintiff, in order to determine what information he had that might allow the Defendant Board to dismiss Plaintiff. (Id. ¶ 27.) However, Defendant Baker did not cooperate with Defendant Sims at this time. (Id. ¶ 28.)

Upon completion of the consulting firm's investigation, the Defendant Board was unable to use information against Plaintiff to begin a termination proceeding. (Id. ¶ 29.) Knowing that the allegations against Plaintiff were inaccurate, the Defendant Board presented Plaintiff with a severance agreement in November 2005, which set Plaintiff's final day as Superintendent as February 9, 2006. (Id. ¶¶ 13, 23.) A few days after the severance agreement was signed, a member of the Defendant Board spoke with Defendant Grady about the District Attorney's Office launching an investigation into Plaintiff's actions in order to provide the Defendant Board with a reason for "abrogat[ing]" the severance agreement. (Id. ¶ 35.) The severance agreement later became controversial, and the Defendant Board was publicly criticized. (Id. ¶¶ 14, 32, 57.) Because of the controversy, which highlighted the financial problems of the District, Defendant Sims proposed an audit of past dealings between Plaintiff and the Defendant Board. (Id. ¶¶ 30, 33.)

Defendant Baker, allegedly seeing an opportunity to falsely attack Plaintiff, met with Defendants Grady and Whitesell in December 2005 and presented purportedly false allegations of fraud and deceit by Plaintiff. (Id. ¶¶ 34, 58-59.) Defendant Baker told Defendants Grady and Whitesell that Plaintiff had defrauded the Defendant Board on behalf of Palumbo, and that Palumbo had given Plaintiff money, which he used to buy a BMW. (Id. ¶ 60.) As proof, Defendant Baker cited the erroneous check paid to Palumbo, even though he knew that Palumbo had already returned the excess money. (Id. ¶¶ 61-62.) Defendant Baker, with the support of Defendant Sims and members of the Defendant Board, also falsely claimed that Plaintiff had coerced the Defendant Board into approving Palumbo's payment request by misrepresenting that Gary McGrath ("McGrath"), the District's Director of Buildings and Grounds, had reviewed and approved the payment. (Id. ¶¶ 47, 63.) But, Defendant Baker was not present at the relevant board meeting, and Plaintiff claims that he never made such a representation to the Defendant Board. (Id. ¶¶ 49, 64.)

Defendants Grady and Whitesell began an investigation of these false accusations in order to deflect public attention away from the Defendant Board. (Id. ¶ 66.) While interviewing witnesses and "review[ing] [] potential evidence during the early stages of their investigation," Defendants Grady and Whitesell "understood that [Plaintiff] had not committed any criminal offense," but decided to institute the prosecution based on "false, malicious[,] and misleading statements made by" the other Defendants. (Id. ¶ 74.) Defendants Grady and Whitesell allegedly "discount[ed] and hid[] evidence" that exonerated Plaintiff and showed that the Defendant Board was also responsible for the various decisions. (Id. ¶ 67.) Specifically, "in their effort to maliciously prosecute" Plaintiff, Defendants Grady and Whitesell ignored "facts made known to them during their investigation," including evidence that: (i) allegedly "corrupt sidebar agreements" were presented to the Defendant Board's lawyers and approved by the Defendant Board; (ii) Plaintiff had the authority to hire his secretary's fiancé and offer him credit for years worked outside the District; (iii) District employees, and not Plaintiff, had granted Plaintiff a pay raise at a rate consistent with past policies and the Defendant Board had accepted Plaintiff's salary raise; (iv) the Defendant Board approved Plaintiff's decision to pay an administrator's retirement incentive; (v) Plaintiff did not sign interview documents regarding four administrators, even though Defendants Whitesell and Grady claimed that Plaintiff falsified these records; (vi) the Defendant Board approved the hiring of those four administrators; and (vii) Plaintiff did not gain personal benefit from any of the alleged acts. (Id. ¶ 72.)

Nearly all of the information on which the prosecution was based came from Defendant Baker's false allegations. (Id. ¶ 73.) However, Defendant Sims also allegedly provided false information to Defendants Grady and Whitesell, falsely stating that Plaintiff had not timely reported the Palumbo incident to her and that she did not have sufficient time to review Palumbo's expense documentation. (Id. ¶ 75.) Defendants Grady and Whitesell relied on this information from Defendant Sims, disregarding her billing records. (Id. ¶ 78.) Defendant Sims also falsely claimed that Plaintiff had represented to the Defendant Board that Mr. McGrath had reviewed and approved Palumbo's expenses. (Id. ¶ 75.) Although Defendant Sims truthfully stated that she and the Defendant Board were aware of the sidebar agreements and that Plaintiff was acting within his authority as District Superintendent, Defendants Grady and Whitesell "chose to ignore such information and, instead, to indict [P]laintiff." (Id. ¶¶ 79-80.)

Defendant DiNapoli, acting as the New York State Comptroller, "caused his staff to continue audits of school districts initiated by his predecessor." (Id. ¶¶ 4, 81.) Defendant DiNapoli allegedly "re-directed the audit of the . . . District to focus upon [P]laintiff" after "the outbreak of controversy . . . concerning [P]laintiff's severance agreement" and after he was pressured by Defendants Grady, Whitesell, and members of the Defendant Board. (Id. ¶¶ 82-83.) Plaintiff claims that the audit staff members "were predisposed to make [findings] adverse to [P]laintiff and [to] ignore[] evidence [that Plaintiff] directly presented to them showing that he had not engaged in improper practices and that others had engaged in substantial corrupt practices." (Id. ¶ 85.) According to Plaintiff, Defendant DiNapoli and his agents also "relied extensively" on Defendant Baker's fabricated allegations, despite having information from Plaintiff that refuted these allegations. (Id. ¶¶ 98-100.) On August 15, 2007, Defendant DiNapoli publicized the audit results, stating at a news conference that Plaintiff had "bent, twisted[,] and broke[n] the rules to make improper payments to himself and others," and that "[t]he improperties of one individual put more than $1 million of taxpayers['] money in jeopardy." (Id. ¶¶ 86-88.) After the audit findings were released, Defendant Grady publicly stated that audit staff members had testified before the Grand Jury and that Defendant DiNapoli "had been extremely cooperative in his ongoing investigation." (Id. ¶¶ 90-91 (internal quotation marks omitted).)

On February 7, 2008, Plaintiff was indicted by a Grand Jury on six felony counts and one misdemeanor count, charges which Plaintiff claims were based on the false Grand Jury testimony of Defendants Sims and Baker, members of the Defendant Board, and an agent of Defendant DiNapoli. (Id. ¶ 111.) The same day, Plaintiff alleges, Defendant Grady wrongly announced at a press conference that "on several occasions [] [Plaintiff]'s alleged illegal conduct took place without the knowledge or approval of the [Defendant] [B]oard," and that "there was only reason to charge [Plaintiff]." (Id. ¶ 69 (internal quotation marks omitted).) Plaintiff was ultimately exonerated of all charges after a trial on the merits. (Id. ¶ 113.) According to Plaintiff, each Defendant acted to further his or her own career, despite knowing the falsity of the allegations and that the Defendant Board had approved many of Plaintiff's decisions. (Id. ¶¶ 109-10.)

B. Procedural Background

Plaintiff filed his initial Complaint on March 30, 2009 (Dkt. No. 1), and an Amended Complaint on June 29, 2009, (Dkt. No. 22). Defendants filed their Motions to Dismiss on September 15, 2009, and the motion was fully submitted on October 20, 2009, (Dkt. Nos. 28, 34, 36, 37, 38, 43).

II. Discussion

A. Standard of Review

"On a Rule 12(b)(6) motion to dismiss a complaint, the court must accept a plaintiff's factual allegations as true and draw all reasonable inferences in [the plaintiff's] favor." Gonzalez v. Caballero, 572 F. Supp. 2d 463, 466 (S.D.N.Y. 2008); see also Ruotolo v. City of New York, 514 F.3d 184, 188 (2d Cir. 2008) ("We review de novo a district court's dismissal of a complaint pursuant to Rule 12(b)(6), accepting all factual allegations in the complaint and drawing all reasonable inferences in the plaintiff's favor." (internal quotation marks omitted)). Generally, "[i]n adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken." Leonard F. v. Isr. Disc. Bank of N.Y.,199 F.3d 99, 107 (2d Cir. 1999) (internal quotation marks omitted).

The Supreme Court has held that "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted) (second alteration in original). Instead, the Supreme Court has emphasized that "[f]actual allegations must be enough to raise a right to relief above the speculative level," id., and that "once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint," id. at 563. A plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570. If a plaintiff "ha[s] not nudged [his] claims across the line from conceivable to plausible, [his] complaint must be dismissed." Id.; see also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009) ("Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience ...

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