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L.I. Head Start Child Development Services, Inc. v. Econnomic Opportunity Commission of Nassau County, Inc.

United States District Court, E.D. New York

July 25, 2013

L.I. HEAD START CHILD DEVELOPMENT SERVICES, INC., PAUL ADAMS, derivatively on behalf of COMMUNITY ACTION AGENCIES INSURANCE GROUP and as class representative of all other persons similarly situated, Plaintiffs,
v.
ECONOMIC OPPORTUNITY COMMISSION OF NASSAU COUNTY, INC., ECONOMIC OPPORTUNITY COUNCIL OF SUFFOLK, INC., YONKERS COMMUNITY ACTION PROGRAM, INC., and STELLA B. KEARSE as Representative of the ESTATE OF JOHN L. KEARSE, Deceased. Defendants

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For Plaintiff: Alexander A. Miuccio, Esq., of Counsel, Welby, Brandy & Greenblatt, LLP, White Plains, NY.

For Defendants: Mark E. Goidell, Esq., Garden City, NY.

For Stella B. Kearse Representative of the Estate of John L. Kearse, Deceased: Frederick K. Brewington, Esq., of Counsel, Law Offices of Frederick K. Brewington, Hempstead, NY.

For Economic Opportunity Council of Suffolk, Defendant: Barry V. Pittman, Esq., Bayshore, NY.

OPINION

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MEMORANDUM OF DECISION AND ORDER

ARTHUR D. SPATT, United States District Judge.

This litigation has a long and complicated history. On March 3, 2000, in a prior related lawsuit, the Court entered judgment in the amount of $497,736, plus interest, attorneys' fees, and costs, against Community Action Agencies Insurance Group (" CAAIG" or the " Plan" ), a welfare benefits plan for employees of not-for-profit antipoverty agencies, and its trustees. The judgment was entered in favor of one of the participating agencies, the Plaintiff L.I. Head Start Child Development Services, Inc. (" LIHS" ), on account of CAAIG's failure to refund reserves that had been set aside for LIHS after LIHS withdrew from the Plan.

In the present case, LIHS and Paul Adams, derivatively on behalf of CAAIG and as representative of a class of LIHS employees who were Plan participants, sued the administrators of CAAIG, contending that they breached their fiduciary duties to CAAIG under the Employee Retirement Income Security Act (" ERISA" ), 29 U.S.C. § 1001 et seq., bye failing to ensure that CAAIG had sufficient assets with which to satisfy the judgment. Following a bench trial, the Court agreed and entered judgment against the Plan administrators. The administrators appealed. The United States Court of Appeals for the Second Circuit affirmed. Presently pending before the Court is the Plaintiffs' renewed motion styled as one pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." or " Rule" ) 60(a) to correct the judgment. For the following reasons, the motion is granted in part and denied in part.

I. BACKGROUND

On July 8, 2009, the Court ruled that the Plaintiffs established that the Defendants violated their fiduciary duties under the provisions of ERISA by failing to make the necessary contributions to adequately fund CAAIG (" the Underfunding Claim" ). (Docket Entry No. 192.) In addition, in the July 8, 2009 decision, the Court also ruled that the Plaintiff established that the Defendants EOC Nassau, EOC Suffolk, Yonkers CAP, and the Estate of John L. Kearse violated their fiduciary duties under the provisions of ERISA in failing to collect the delinquent contributions from EOC Suffolk (" EOC Suffolk Delinquency Claim" or " Delinquency Claim" ). In this regard, judgment was rendered against EOC Nassau, Yonkers CAP, and the Estate of John L. Kearse, but, for some unexplained reason, not EOC Suffolk, in the sum of $9,000, with interest from June 30, 1998 to the date of the judgment.

In this July 8, 2009 decision, the Court also dealt with the enforcement of the prior judgment with regard to the debt owed to CAAIG by the other agencies. Specifically, there was the judgment entered

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on May 25, 2000 in the sum of $802,831.57, which includes the principal sum of $497,736 plus pre-judgment interest in the sum of $131,271.79, attorneys fees in the sum of $151,375 and costs in the sum of $22,448.78, against John L. Kearse and Alphonso Anderson as Trustees of CAAIG. The judgment creditors of CAAIG are the Plaintiffs in the present case, as a result of this May 25, 2000 judgment entered against CAAIG and the trustees. Accordingly, the court ruled that in its final order of judgment, it would include a directive that the Defendants in this action turn over to the Plaintiffs in the prior action, as judgment creditors, sums still owed pursuant to the May 25, 2000 judgment.

On October 20, 2011, in a further decision, the Court rendered a judgment in favor the Plaintiffs against all of the Defendants in the total sum of $832,945. The Court allocated the sum as against the three participating agencies as follows: judgment was rendered in favor of the Plaintiffs against the Defendant EOC Nassau in the sum of $652,198; judgment was rendered in favor of the Plaintiffs against the Defendant EOC Suffolk in the sum of $110,782; and judgment was rendered in favor of the Plaintiffs against the Defendant Yonkers CAP in the sum of $69,967; plus costs. (Docket Entry No. 244.) In addition, the Court awarded prejudgment interest under CPLR 5001 on the unpaid contributions at the federal interest rate on these amounts from the end of each fiscal year, commencing with the fiscal year that ended on August 31, 1995 and the subsequent years that ended on August 31, 1996, August 31, 1997, and June 30, 1998, when the Plan was terminated.

On April 24, 2012, the Court issued a decision and order that awarded the Plaintiffs' counsel attorney's fees in the sum $490,807.53. (Docket Entry No. 232.) The Clerk of the Court was directed to enter judgment for the full amount of the causes of action for the Plaintiffs, together with attorney's fees, in the sum of $490,807.53, in accordance with this decision and order, and prejudgment interest. After the entering of judgment, the Clerk of the Court was further directed to close this case.

On April 25, 2012, a judgment was entered in favor of the Plaintiffs and against all of the Defendants in the total sum of $832,945. In accordance with the Court's earlier decision, the award was allocated between the three participating agencies as follows: judgment was entered in favor of the Plaintiffs against the Defendant EOC Nassau in the sum of $652,198; judgment was entered in favor of the Plaintiffs against the Defendant EOC Suffolk in the sum of $110,782; and judgment was entered in favor of the Plaintiffs against the Defendant Yonkers CAP in the sum of $69,967. In addition, the Plaintiffs were awarded prejudgment interest as detailed in the October 20, 2011 Memorandum of Decision and Order, and the Plaintiffs were awarded attorney's fees in the amount of $490,807.53. Finally, the case was marked as closed.

On May 21, 2012, a notice of appeal was filed by the Defendants to the Second Circuit from the final judgment entered in this action on April 25, 2012. (Docket Entry No. 245.)

On June 1, 2012, pursuant to Rule 60(a), the attorney for the Plaintiffs moved to correct the judgment to include the following remedies: (1) to enter judgment in favor of the Plaintiffs against all of the Defendants, jointly and severally, for the sum of $9,000, with prejudgment interest from June 30, 1998 to April 25, 2012 in the sum of $3,583.65; (2) to direct that all of the Defendants in this action turnover to the Plaintiffs in the prior action, as judgment

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creditors of CAAIG, pursuant to the May 25, 2000 judgment entered against the Defendants in the prior action, the unpaid balance due on the prior judgment in the sum of $717,271.00, with post-judgment interest at the federal rate from May 25, 2000; (3) to permit the Plaintiffs to recover the allowable costs of this action taxed against all of the Defendants; and (4) to conclude that all of the Defendants are jointly and severally liable to the Plaintiffs in the total sum of $832,945, with prejudgment interest in the amount of $42,564.48 from September 1, 1995 to June 30, 1998. (Docket Entry No. 247.)

On June 11, 2012, the Court signed an order to show cause submitted by Mark E. Goidell, Esq., attorney for the Defendants, requesting an order (1) staying enforcement of the judgment at issue and dispensing with a supersedeas bond; and (2) vacating restraining notices placed on the bank accounts of the Defendant EOC Nassau. (Docket Entry No. 251.) Then, on June 25, 2012, the Court stayed enforcement of the judgment pending the determination of the appeal, upon the additional terms and conditions set by the Court. The Court ordered that the restraints that were placed on the bank accounts of the Defendants were vacated and that any and all acts of the Plaintiffs, their attorneys, agents, or assigns and the Sheriff of the County of Nassau to issue or execute a restraint or to take any other action against the Defendants to enforce the judgment in connection with the underlying proceeding was stayed pending the determination of the appeal. Finally, the Court ordered that the Defendants and the non-party Community Economic Development Corporation were restrained and enjoined from conveying, transferring, encumbering, pledging, or otherwise disposing of any assets or interests in property, including but not limited to any right, title or interest in real property, other than in the regular course of business, pending the determination of the appeal. (Docket Entry No. 267.)

On March 12, 2013, the Court denied the Plaintiffs' Rule 60(a) motion as procedurally improper and without the permission of the Second Circuit. At that time, the Court specifically declined to consider the merits of the motion.

On March 13, 2013, the Second Circuit affirmed the April 25, 2012 judgment. The Defendants filed a petition for a panel rehearing or, in the alternative, for rehearing en banc . On April 16, 2013, the panel that determined the appeal and the active members of the Second Circuit denied the petition. The Second Circuit mandate was issued and filed with the Clerk of the Court on June 10, 2013.

On June 14, 2013, more than one year after the April 25, 2012 judgment was entered, the Plaintiffs renewed their motion styled as a Rule ...


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