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Robert J. Del Col, Esq. and Leftheris "Ted" Doukas v. Kathleen Rice

December 18, 2012

ROBERT J. DEL COL, ESQ. AND LEFTHERIS "TED" DOUKAS, PLAINTIFFS,
v.
KATHLEEN RICE, ACTING INDIVIDUALLY AND AS THE DULY ELECTED DISTRICT ATTORNEY FOR THE COUNTY OF NASSAU; COUNTY OF NASSAU; GUIDO GABRIELE, III, ESQ., ACTING INDIVIDUALLY AND ON BEHALF OF THE NASSAU COUNTY DISTRICT ATTORNEY'S OFFICE; LINDA PERESS, ACTING INDIVIDUALLY AND AS A PURPORTED DULY APPOINTED ASSISTANT DISTRICT ATTORNEY FOR THE COUNTY OF NASSAU; DATATREASURY CORPORATION; RICHARD B. FRIEDMAN; CLAUDIO BALLARD; SHEPHARD LANE; KEITH DELUCIA; ASSISTANT DISTRICT ATTORNEY JOHN AND JANE DOES #1 -- 20 OF THE COUNTY OF NASSAU; NASSAU COUNTY DISTRICT ATTORNEY DETECTIVE INVESTIGATORS JOHN AND JANE DOES #1 -- 20, OR THOSE ACTING IN A SIMILAR CAPACITY AND UNDER THE LAW ENFORCEMENT AUTHORITY OF THE NASSAU COUNTY DISTRICT ATTORNEY; NASSAU COUNTY POLICE OFFICER JOHN AND JANE DOES #1 -- 20; AND UNKOWN CORPORATIONS AND INDIVIDUALS #1 -- 20, DEFENDANTS.



The opinion of the court was delivered by: Margo K. Brodie, United States District Judge:

MEMORANDUM & ORDER

Plaintiffs Robert J. Del Col, Esq. and Leftheris "Ted" Doukas filed the above-captioned action against Defendants on October 21, 2011. Plaintiffs allege that they were arrested and indicted as part of a "pay to prosecute" conspiracy. They filed the Complaint against five categories of defendants; (1) Kathleen Rice, the District Attorney ("D.A.") of Nassau County; the County of Nassau; Guido Gabriele, III, a former Assistant District Attorney ("A.D.A.") in the Nassau County D.A.'s Office, who was appointed to prosecute Doukas and Del Col after leaving the Nassau County D.A.'s Office; Linda Peress, the Bureau Chief of the Nassau County D.A.'s Office; John and Jane Doe A.D.A.s working for the Nassau County D.A.'s Office; John and Jane Doe D.A. Detective Investigators; John and Jane Doe Nassau County Police Officers; the Sheriff of Nassau County; and the Nassau County Correctional Center (collectively the "Nassau County Defendants"); (2) the DataTreasury Corporation ("DTC"), a Delaware corporation doing business in Plano, Texas; Claudio Ballard, an owner of shares in DTC and an officer in the company; Shepard Lane, the General Counsel for DTC; Keith DeLucia, the Chief Executive Officer and majority shareholder of DTC (collectively the "DTC Defendants"); (3) Richard Friedman, an attorney who represented the DTC Defendants in a patent litigation; (4) Matthew Didora, an attorney who was in possession of the Del Col's and Doukas's indictment; and (5) Mary Hauptman, Doukas's ex-wife.*fn1

Plaintiffs brought claims for unlawful search and seizure, abuse of process, conspiracy to violate federally protected rights, conspiracy to obstruct justice, manufacture of false evidence, malicious prosecution, intentional infliction of emotional distress, negligent infliction of emotional distress, New York constitutional tort, negligence, false arrest and false imprisonment, pursuant to 42 U.S.C. § 1983 ("§ 1983"), 42 U.S.C. § 1985 ("§ 1985"), and New York state common law. The claims were asserted against all Defendants, except for the search and seizure claim, which was only asserted against the Nassau County Defendants, and the manufacture of false evidence claim, which was asserted against the Nassau County Defendants, the DTC Defendants and Friedman.*fn2

All Defendants move to dismiss on various grounds. The DTC Defendants and Friedman also seek attorneys' fees. Plaintiffs cross moved to disqualify the Nassau County Defendants' counsel. The Court heard argument on July 26, 2012, and the Court decided several of the claims at oral argument.*fn3 For the reasons set forth below, Defendants' motions to dismiss the remaining claims are granted in part and denied in part. The Court grants the motions to dismiss the malicious prosecution claim as to the Nassau County Defendants and the false imprisonment and false arrest claims as to all Defendants. The Court denies the motions to dismiss the conspiracy and abuse of process claims as to all Defendants and the malicious prosecution claim as to the DTC Defendants and Friedman. The Court also denies the motions for attorneys' fees.

I. Background

Plaintiffs' causes of action arise out of an alleged conspiracy between the Nassau County Defendants, the DTC Defendants, Richard Friedman, Matthew Didora, and Mary Hauptman.

According to Plaintiffs, Doukas was part of a joint venture with Ballard in 1994/1995. *fn4

(Compl. ¶ 87.) Doukas provided capital, while Ballard worked on developing technology. (Id. at ¶¶ 87--97.) The joint venture created a valuable patent, which was later assigned to DTC; however, Doukas was unaware that Ballard had been successful in creating a valuable patent. (Id.) Doukas became aware of the patent after a conversation with Del Col, in which Del Col mentioned he was litigating the patent on behalf of another client in Trimarco v. DataTreasury Corp. ("the Trimarco litigation"). (Id.) Doukas told Del Col that he also had an interest in the patent. (Id.) On June 12, 2009, Del Col referenced Doukas's potential claim in a motion to dismiss the Trimarco litigation.*fn5 (Id. at ¶ 98.) Days after filing the motion, the first contributions to Rice's campaign began. (Id. at ¶ 99.) The DTC Defendants and individuals allegedly associated with them gave $150,000 to Rice in her campaign for office. *fn6 (Id. at ¶ 100.)

On November 20, 2009, Del Col sent a letter on behalf of Doukas, to Friedman, who was the attorney for DTC in the Trimarco litigation. (Ferrillo Decl. Ex. A.) In the letter, Del Col claimed that Doukas wanted to "discuss a pre-commencement settlement" of his claim before getting involved in the Trimarco litigation. (Id.) The letter ends with a post-script which states: "While my client wishes to keep his address confidential, it appears that several entities have been unsuccessfully attempting to serve subpoenas upon him, do you know what this is about . . .are they yours? Get back to me on this before he is compelled to testify in a way that could potentially harm your client in its action against the various banks." (Id.)

Subsequently, "[u]pon information and belief, the 'pay to prosecute scheme/conspiracy' was formed sometime in late December 2009/early January 2010." (Compl. ¶ 115) (emphasis in original). On December 31, 2009, Gabriele left his employment at the Nassau County D.A.'s Office, as an A.D.A., and a few days later Rice appointed him to prosecute Del Col and Doukas. (Id. at ¶¶ 118--19.) Between January 1, 2009 and February 9, 2010, the DTC Defendants and the Nassau County Defendants "conducted secret and clandestine meetings . . . in order to discuss how . . . Rice could assist [DTC] in ridding itself of . . . Doukas and Del Col who had become a problem and posed a threat to" the DTC Defendants' earnings because of Doukas's patent claim. (Id. at ¶ 116.)

"[O]n or about February 9, 2010, . . . Gabriele, . . . appeared before the Grand Jury, presided over that body and knowingly permitted witnesses, including members of the conspiracy, to testify falsely against . . . Del Col and Doukas in furtherance of the conspiracy." (Id. at ¶ 122) (emphasis in original). The alleged witnesses included Ballard, Lane, Friedman, Mary Doukas, and detective investigators. (Id. at ¶ 123.) Ballard allegedly falsely testified that Doukas had no interest in the patent and "was nothing more than a 'nosey landlord.'" (Id. at ¶¶ 125--26) (emphasis in original). Lane and Friedman also allegedly falsely testified that Doukas had no legitimate claim to the patent. (Id. at ¶¶ 127--30.) On February 9, 2010, the impaneled grand jury issued an indictment against Plaintiffs for grand larceny in the second degree ("extortion") for the alleged extortion of the DTC Defendants. (Bartoldus Aff. Ex. A.) At 6:00 p.m. on February 9, 2010, Plaintiffs met with the DTC Defendants and Defendant Friedman.*fn7 (Compl. ¶¶ 140--41; Didora Aff. Ex. 3.)

At the meeting Plaintiffs, Friedman, Ballard, and Lane discussed "settling" Doukas's claim and possible deposition testimony in the patent litigation. (Compl. ¶¶ 140--41; Didora Aff. Ex. 3.) The meetingwas recorded with audio equipment provided by the D.A.'s office. (Compl. ¶ 121.) During the meeting, the DTC Defendants gave Plaintiffs $75,000 as an "initial settlement payment" by check from DTC payable to Del Col, as attorney for Doukas. (DTC Mot. Dismiss Mem. 7.) Plaintiffs agreed to execute a "settlement agreement" providing for future payments of $325,000 to Doukas. (Id.)Doukas agreed to sign an affidavit stating that he knew nothing about the ownership of DTC's patents. (Id.)As they left the meeting, Plaintiffs were arrested. (Compl. ¶¶ 140--41; Didora Aff. Ex. 3.) Defendants executed the arrest after Doukas signed the settlement agreement, where he released all claims to the patent, which was the primary goal of the DTC Defendants. (Compl. ¶ 144.) While Plaintiffs were being arrested, "Lane was heard to exhort 'that was worth the price' and . . . Friedman exclaimed, 'I wish the Manhattan D.A. could be so cheap.'" (Id. at ¶ 145) (emphasis in the original).

Plaintiffs were incarcerated for two nights. (Id. at ¶ 157.) After they were released from jail, Plaintiffs conducted an investigation and uncovered the "pay to prosecute" conspiracy. (Id. at ¶ 164.) Their investigation unearthed the contributions to Rice by the DTC Defendants and those associated with them. (Id. at ¶ 166.) The individuals that contributed allegedly had no connection to Nassau County. (Id.)

Plaintiffs moved to dismiss the indictment on several grounds. See People v. Del Col et. al., Ind. No. 313N-10, slip op. (N.Y. Cnty. Ct. filed Oct. 26, 2010). The County Court of the State of New York, County of Nassau ("Nassau County Court") held that Rice had no authority to appoint Gabriele as a Special Assistant District Attorney and dismissed the indictment. Id. at 3 ("It is clear that the District Attorney's appointment of Mr. Gabrielle [sic] as a 'Special Assistant District Attorney' exceeded her authority under Law and improperly empowered him with a position that does not exist, thus necessitating a dismissal of the indictment."). The Nassau County Court gave the D.A.'s Office of Nassau County leave to "to represent [the] matter to a new Grand Jury within 45 days of the date of [the order]." Id. at 4. Defendants conceded at oral argument that no new indictment has been brought against Plaintiffs.

The Appellate Division, Second Department affirmed the lower court's decision dismissing the indictment. People v. Del Col, 930 N.Y.S.2d 488, 488--89 (App. Div. 2011) ("Under the circumstances of this case, the County Court properly determined that the District Attorney lacked the authority to appoint the prosecutor who presented the subject charges to the grand jury . . . [and] did not err in determining that dismissal of the indictment was warranted on the ground that the District Attorney lacked the authority to appoint the prosecutor who presented the charges to the grand jury."). The New York Court of Appeals denied the People's application for leave to appeal. People v. Del Col, 18 N.Y.3d 956 (2012).

II. Discussion

a.Standard of Review

In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must "accept as true all allegations in the complaint and draw all reasonable inferences in favor of the non-moving party." Matson v. Bd. of Educ. of City Sch. Dist. of N.Y., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Connecticut v. Am. Elec. Power Co., 582 F.3d 309, 320 (2d Cir. 2009)). A complaint must, however, "contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Matson, 631 F.3d at 63 (quoting Iqbal, 556 U.S. at 678). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged -- but it has not 'show[n]' -- 'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quotingFed. R. Civ. P. 8(a)(2)).

b.Preliminary Issues

i.Absolute and Qualified Immunity

The Nassau County Defendants argue that they are entitled to absolute immunity and therefore the Complaint should be dismissed against them. (Nassau Cnty. Mot. Dismiss Mem. 4--6.) As the Supreme Court and the Second Circuit have repeatedly recognized, prosecutors performing duties related to their prosecutorial function are protected by absolute immunity. See e.g., Burns v. Reed, 500 U.S. 478, 486 (1991) ("[P]rosecutors are absolutely immune from liability under § 1983 for their conduct in initiating a prosecution and in presenting the State's case." (internal quotation marks and citations omitted)); Warney v. Monroe County, 587 F.3d 113, 120--21 (2d Cir. 2009). The immunity extends not only to the District Attorney but to all employees engaged with the judicial process. Hill v. City of New York, 45 F.3d 653, 660--61 (2d Cir. 1995) ("This includes not only officials performing discretionary acts of a judicial nature, but also individual employees who assist such an official and who act under that official's direction in performing functions closely tied to the judicial process."). However, "[p]olice and other law enforcement officers generally [only] enjoy absolute immunity from suit based on the substance of their testimony in judicial and quasi-judicial proceedings." Sclafani v. Spitzer, 734 F. Supp. 2d 288, 296--97 (E.D.N.Y. 2010). Because absolute immunity bars suit against covered claims, it is a threshold issue and courts "are encouraged to determine" whether it is available to defendants at the start of a litigation. Anilao v. Spota, 774 F. Supp. 2d 457, 476 (E.D.N.Y. 2011).

To determine whether or not immunity applies to a government actor's actions, a court must determine which functions the official was performing. Van de Kamp v. Goldstein, 555 U.S. 335, 342 (2009). The functional approach has been interpreted to mean that when a prosecutor is acting as an advocate pursuing a case, the prosecutor is absolutely immune, but when a prosecutor or other government official acts as an investigator or administrator or engages in any other conduct not related to the judicial phase, only qualified immunity attaches. Van de Kamp, 555 U.S. at 343--44; see also Rehberg v. Paulk, 566 U.S. -, -,132 S.Ct. 1497, 1503 (2012) (finding that under the "'functional approach' . . . actions taken by prosecutors in their role as advocates" are absolutely immune, while action by police ...


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