Dreyer v City of Saratoga Springs

[*1] Dreyer v City of Saratoga Springs 2006 NY Slip Op 52618(U) [21 Misc 3d 1108(A)] Decided on August 21, 2006 Supreme Court, Saratoga County Nolan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on August 21, 2006
Supreme Court, Saratoga County

Erin Dreyer, Petitioner,

against

City of Saratoga Springs, New York, City Council of the City of Saratoga Springs, Respondents.



45-1-2006-0032



GLEASON, DUNN, WALSH & O'SHEA

Attorneys for Petitioner

40 Beaver Street

Albany, New York 12207-1511

MILLER, MANNIX, SCHACHNER & HAFNER, LLC

Attorneys for Respondents

451 Glen Street

P.O. Box 765

Glens Falls, New York 12801

Thomas D. Nolan, Jr., J.

The principal issue in this CPLR Article 78 proceeding is whether respondents, City of Saratoga Springs and its City Council (collectively City), must provide a legal defense to petitioner Erin Dreyer (Dreyer) in two Federal court actions in which she is a defendant.[FN1]

In May 2003, Dreyer was appointed to the public office [FN2] of Deputy Commissioner of Public Safety by Thomas Curley (Curley), the City's then elected Commissioner of Public Safety. Under the City Charter, Curley, a part-time official, is responsible for the "governance, administration, disposition, operation and discipline of the [City's] Police Department and its [*2]officers" and as permitted,[FN3] delegated to Dreyer, a full-time City employee, authority over the police department. The relationship between Dreyer and Police Chief Edward Moore (Moore) and Assistant Chief James Cornick (Cornick) became strained and contentious. Senior police administrators felt that Dreyer, in an effort to undermine their authority and limit their discretion, was overstepping her authority and was wrongly interfering with their operation of the police department. Moore and Cornick privately complained to Curley about Dreyer's conduct but Curley rebuffed them publicly and expressed support for Dreyer and the way she was supervising the department. Moore and Cornick then went public with their grievances about Dreyer and alleged that certain of Dreyer's actions constituted criminal violations and misconduct by a public official. Those accusations prompted the New York State Police to commence an investigation into Dreyer's conduct, and later a Special Prosecutor was appointed, and a Grand Jury was convened to review Dreyer's conduct. The principals in this proceeding, Curley, Dreyer, Moore and Cornick, and many others testified before the Grand Jury which in January 2005 returned a "no-bill", not indicting Dreyer. However, the Grand Jury, in a report critical of Dreyer's performance as Deputy Commissioner, found that she had committed several acts of misconduct, performed negligently, and deliberately acted to create and foster dissension in the police department and recommended that she be disciplined or removed from office. Just as he had earlier rebuffed Moore's and Cornick's complaints about Dreyer, Curley rejected the Grand Jury's recommendations and did not discipline or terminate Dreyer. In May 2005, the City Council, over Curley's objection, adopted a resolution eliminating the position of Deputy Commissioner of Public Safety, and thus Dreyer's tenure as a City employee ended.

In August 2005, Moore commenced a Federal courtaction to recover damages against Dreyer and Curley in which he alleges that the two conspired under color of law and state action to violate his constitutional rights through adverse employment actions designed to create a hostile work environment and to force him to resign, and further, that Dreyer, with Curley's approval, intentionally and maliciously implemented a course of hostile and disparaging conduct, disseminated, publicly and privately, defamatory information about him, and illegally retaliated when he spoke out against their conduct. Additionally, Moore alleged Dreyer's and Curley's public statements made before and after the Grand Jury's report were defamatory and their conduct constituted an intentional infliction of emotional distress. Dreyer, as well as Curley, notified the City of the commencement of the action, and both requested the City to provide to them a legal defense. On November 18, 2005, the City Council, finding that Curley's conduct, as alleged in Moore's complaint, fell within the scope of his official duties as Commissioner of Public Safety, by resolution agreed to defend and indemnify Curley but determined that Dreyer's acts, as alleged in Moore's complaint, were not within the scope of her official duties as Deputy Commissioner of Public Safety and refused to provide to her a defense and indemnification.

In this proceeding under City Code § 9-1 and Public Officers Law § 18, Dreyer alleges that the City's determination to not provide a defense to her was made in violation of law, and was irrational and arbitrary and capricious.

Subsequently and by agreement, the City's time to answer the petition concerning the Moore defense denial was extended, in part, because on February 1, 2006, Cornick filed his [*3]Federal court action against Dreyer, Curley and the City and that new action was expected to raise the same or similar defense/indemnification issues raised by the Moore action. Cornick's complaint alleges that, after her appointment as Deputy Commissioner and in an effort to force Cornick to resign as Assistant Chief, Dreyer implemented a plan to constantly and consistently harass and torment and defame him in front of subordinate police officers and other command staff and that Curley refused to order Dreyer to halt her activities, condoned Dreyer's conduct, and in fact conspired with her, and subsequently participated in the public harassment of Cornick and thus established an unconstitutional official policy of adverse employment actions and retaliatory conduct which allegedly violated Cornick's constitutional rights. Cornick additionally alleged Dreyer and Curley made public statements which defamed him in his profession and which were intended to and in fact did inflict emotional distress. Dreyer forwarded to the City a copy of the complaint and requested that the City provide a legal defense for her. The City retained counsel to defend itself and Curley, but the City Attorney, by letter dated March 13, 2006, informed Dreyer's attorney that "the City Council has...not agreed to provide [a] defense [to Dreyer]". Dreyer then filed an amended petition in this Article 78 proceeding seeking judgment annulling the City's decision and directing that it provide a defense to her in the Cornick action on the same grounds offered in her original petition. In her amended petition, Dreyer alleged, incorrectly, that the City Council adopted on March 2, 2006 a resolution denying to her a defense in Cornick. In its answer, the City asserts an objection in point of law that the City has not made a final determination relative to Dreyer's request for a defense in Cornick and thus that issue is not yet ripe for judicial review.

An initial housekeeping matter. Dreyer's motion for leave to amend her petition is superfluous and it is accordingly denied, without costs. CPLR 3025 (a) (2) permitted Dreyer to amend her petition as of right any time before the time to answer expired. Here, the parties' stipulation extending the City's time to answer in Moore's action automatically extended Dreyer's time to amend her petition. (Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3025:2). The City has answered the amended petition and filed a return. Thus, the pleadings are complete, and the Article 78 proceeding can be decided on the merits. CPLR 7804 (g).

Now, the City's objection in point of law. The City denies that its Council adopted on March 2, 2006 or any other time a resolution declining to defend Dreyer in the Cornick action and asserts that no final determination reviewable by the court has yet been made. In reply and recognizing the inaccurate allegation made in her amended petition, Dreyer contends that the City Attorney's letter reflects an official and definitive determination denying her request under City Code § 9-1 that the City defend her in the Cornick action. On that point, Dreyer is correct.

CPLR 7801 (1) precludes judicial review of determinations which are "not final". The rationale is that a court ought not issue advisory opinions. New York Public Interest Research Group, Inc. v Carey, 42 NY2d 527, 529 (1977). Judicial review is permitted only when there exists an actual controversy, a genuine legal dispute, not contingent upon events which may or may not occur. see Matter of New York State Inspection, Sec. & Law Enforcement Employees v Cuomo, 64 NY2d 233, 240 (1984); Matter of Rubin v New York State Educ. Dept., 210 AD2d 550 (3rd Dept 1994). An action taken by a municipality is not ripe for judicial review until such action inflicts an actual, concrete injury to the party which challenges that action. Church of St. [*4]Paul & St. Andrew v Barwick, 67 NY2d 510, 519 (1986); Matter of Town of Coeymans v City of Albany, 237 AD2d 856 (3rd Dept 1997), lv denied 90 NY2d 803 (1997). Stated another way, a challenged determination is final and binding when it " has its impact' upon the petitioner who is thereby aggrieved". Matter of Edmead v McGuire, 67 NY2d 714, 716 (1986); Matter of Maurer v State Emergency Management Office, 13 AD3d 751, 753 (3rd Dept 2004).

Dreyer, of course, was impacted and thus aggrieved when the City Attorney notified her attorney that no defense would be provided her in the Cornick litigation. To avoid a default judgment, she had to interpose at her personal expense a legal defense in the Cornick action. City Code § 9-1, the predicate for Dreyer's demand for a defense, sets forth no standardized procedure for addressing an employee's request for a legal defense. Section 9-1 does not require that the City Council adopt a formal resolution one way or the other. That a resolution was adopted in regard to Dreyer's earlier, identical request in the Moore case does not mean that City Attorney's letter, which conveyed unequivocally the message that the City would not provide a defense to her in Cornick , was not a final determination. To accept the City's argument would impermissibly permit the City to place Dreyer's request for a defense in a legal limbo simply by not acting by formal resolution. The City Attorney's letter constitutes municipal action which impacted and aggrieved Dreyer. Thus, Dreyer's second claim for defense presents a controversy just as justiciable as her first, and both are ripe for determination. The City's objection in point of law lacks merit and is dismissed, without costs.

Now, the merits. City Code § 9-1 reads in pertinent part as follows:

The City Council of the City of Saratoga Springs agrees to provide a defense and indemnify its officers and employees in any state or federal legal action arising out of any alleged act or omission which occurred or allegedly occurred in the scope of official duty or public employment ***

Dreyer contends, and the City does not argue to the contrary, that by enacting City Code § 9-1, the City intended to give City officers and employees the same protections afforded in Public Officers Law § 18.[FN4]

Dreyer's position is that the allegations and only the allegations made in the Moore and Cornick complaints determine whether the City must defend her in those actions.[FN5] Dreyer [*5]contends that the allegations in the complaints, on their face, determine and establish the City's duty to defend her, and that when the City looked beyond and behind the allegations and then concluded that her conduct was not within the scope of her duties as Deputy Commissioner, it acted beyond what Public Officers Law § 18 permits. Even if this argument were rejected, Dreyer contends that the City's determination to provide a defense to Curley but not to her, is irrational and arbitrary and capricious. She argues that as Deputy Commissioner she was for all practical purposes the alter ego of the Commissioner and had been properly invested by the Commissioner to carry out his broad authority to manage and supervise the police department.

The City contends that it correctly concluded that claims alleged against Dreyer arose from actions taken outside of her official duties and did not give rise to an obligation of the City to defend her in both actions and that its determination was rational and proper. The City further contends that its determinations, that Curley's conduct giving rise to these two actions fell within his official responsibilities and that hers did not, do not constitute disparate treatment of the Commissioner and Deputy Commissioner.

Once again, analysis here, as Dreyer concedes, is limited to the sole issue whether the City should provide to her a legal defense under City Code § 9-1 and Public Officers Law § 18 (3). The issue whether the City may have to indemnify her against plaintiffs' claims, if ultimately proven, is not yet justiciable.

Public Officers Law § 18 (3) (a) requires a public entity, such as the City, to provide a legal defense of employees in civil actions "arising out of any alleged act *** which occurred or allegedly occurred while the employee was acting within the scope of ...public employment or duties". The statute is intended to "insulate[] public employees from litigation expenses arising out of their employment". Matter of Graziano v County of Albany, 25 AD3d 1059, 1061 (3rd Dept 2006); quoting Matter of Hogue v Zoning Bd. of Appeals of Vil. of Canajahorie, 239 AD2d 807, 808 (3rd Dept 1997). Under Public Officers Law § 18 (3) (a), an employee must be defended "if the alleged act occurred' or allegedly occurred' within the scope of employment", Merrill v County of Broome, 244 AD2d 590, 593 (3rd Dept 1997), or as City Code § 9-1 states "in the scope of official duty or public employment".

In this case, Dreyer undeniably was vested by Curley with broad supervisory power over the police department. The complaints filed in Moore and Cornick plainly reveal that plaintiffs' claims are based on Dreyer's conduct as she exercised or attempted to exercise that power. A defense under Public Officers Law § 18 (a) must be provided even though an employee's actions "may be characterized as intentional wrongdoing", Matter of Schulz v Doetsch, 217 AD2d 861, 862 (3rd Dept 1995), unless it can be determined that the conduct was "entirely unrelated to the employer's business". Polak v City of Schenectady, 181 AD2d 233, 237 (3rd Dept 1992).

A municipal employer's statutory duty under Public Officers Law § 18 to provide a defense to one of its officers has been likened to an insurance company's contractual duty to provide a defense to one of its insured policyholders. Along that line, the Court of Appeals recently reiterated that "when [an insurance] policy represents it will provide the insured with a defense, we have said that it actually constitutes litigation insurance' in addition to liability coverage (citations omitted)". Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [*6](2006). Moreover, "the duty to defend is exceedingly broad and an insurer will be called upon to provide a defense whenever the allegations of the complaint' suggest....a reasonable possibility of coverage" (citations omitted) and that the insurer must defend " even though the facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered' (citations omitted)". supra, at 137. And, the Third Department, last month, in Merchants Ins. of New Hampshire, Inc. v Weaver,AD3d, 2006 WL 1912809 (3rd Dept 2006), citing Automobile Ins. Co. of Hartford, supra compelled an insurer to defend its insured against a claim of negligence even though the insured knowingly aimed a loaded and operable flare gun and fired it at a friend causing serious injury and pleaded guilty to attempted assault in the first degree.

The City's inquiry here ought to have been confined to merely a review of the two complaints "to ascertain whether [they] charge[d] that [Dreyer] was acting within the scope of...her employment at the time of the alleged wrongdoing". Merrill v County of Broome, supra, at 592; accord Hassan v Fraccola, 851 F2d 602 (2nd Cir 1988). If the complaints made such allegations - and they do - the City's analysis ends there, and a defense must be provided unless, by local law, the City had adopted - which it had not - additional review requirements. compare Salino v Cimino, 1 NY3d 166, 172 (2003); revg 298 AD2d 589 (2nd Dept 2002) [Suffolk County's code provided in "clear and unambiguous language that the County Attorney is to determine in the first instance' whether an employee was acting within the scope of employment"]. Moreover, and contrary to the City's argument, an independent assessment by the City whether the employee's acts in fact "occurred" within the scope of employment would be appropriate, if and only if, the complaints in the underlying actions did not make those defense triggering allegations and, then and only then, may the municipality further conduct its own investigation to determine if a defense must be provided. For example, in Rihle v County of Cattaraugus, 17 AD2d 1029 (4th Dept 2005), a deputy sheriff, injured while watching a training exercise when a co-employee approached him from behind and placed him in a neck hold, did not allege in his complaint that the co-employee was acting within the scope of his employment or duties, and thus the County had to decide, based upon its independent investigation, whether the co-employee's act was within the scope of his employment or duties in deciding whether to provide a defense. Likewise in Matter of Polak v City of Schenectady, supra, upon which the City places great reliance, the complaint filed by one police officer against another officer alleged only that the defendant officer twice placed a loaded gun to the plaintiff's forehead and did not allege that such wrongful acts were committed in the course of employment. Thus, based solely on the allegations in the complaint, there was no basis for the City to defend the officer. Yet, the City could not properly deny the defendant officer a defense until it had made an independent assessment whether his acts "actually occurred within the scope of [the officer's] duties" and if it did so conclude, the City would have been required to provide a defense.

Although the language in Polak could be construed - as the City does - to authorize the second review in all cases, later cases make it clear that the independent factual analysis by the municipality is appropriate only when the complaint fails to allege that an employee at the time of the wrongdoing was acting within the scope of employment. see Merrill v County of Broome, supra, at 592 ["And, regardless of the allegation of the complaint, a public entity must also defend if an objective investigation reveals that the alleged wrongful act was committed in the course of employment."]; 1997 NY Opn Atty Gen (Inf) 1096 ["If the complaint fails to allege [*7]that the defendant acted within the scope of his or her duties, the second test authorized by section 18...is applied in which the local government investigates the facts and determines whether the alleged act or omission occurred within the scope of the employee's duties."].

In short, in determining whether Dreyer was entitled to be defended in the Moore and Cornick actions, the City was limited by Public Officers Law § 18 (3) and City Code § 9-1 to a review of the allegations in the complaint, which did allege Dreyer was acting within the scope of her employment. By going behind and beyond these allegations and engaging on its own in an independent assessment of the underlying facts, it exceeded the limits on its discretion imposed by Public Officers Law § 18 (3) (a) and City Code 9-1.

In view of this finding, the court need not address petitioner's claim that the City's decision to deny a defense was irrational in the face of its earlier decisions to provide Curley a defense.

A final point. Dreyer seeks to be reimbursed by the City for counsel fees in bringing this proceeding. The general rule in New York is that attorney's fees are "incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule". Hooper v AGS Computers, 74 NY2d 487, 491 (1989). Public Officers Law § 18 permits a successful petitioner to recover attorney's fees incurred in defending a third-party action, but it does not allow an award of fees incurred in the proceeding to compel compliance with the statute. Matter of Gimbrone v Stevenson, 8 AD3d 959, 961 (4th Dept 2004); Umfrey v NeMoyer, 184 AD2d 1047 (4th Dept 1992); Matter of Garcia v Abrams, 98 AD2d 871, 873 (3rd Dept 1983).

The amended petition is granted to the extent that respondents City of Saratoga Springs and the City Council of Saratoga Springs are directed to provide petitioner Erin Dreyer with a defense in the Moore action and the Cornick action now pending in the U.S. District Court for the Northern District of New York and to reimburse petitioner for the reasonable costs of her defense to date in both actions, with the court retaining, under Public Officers Law § 18 (3) (c), jurisdiction to fix said amount if the parties are unable to agree thereon, and the amended petition is otherwise dismissed, all without costs.

This memorandum shall constitute the decision, order and judgment of the court. All papers, including this decision, order and judgment, are being returned to petitioner's counsel. The signing of this decision, order and judgment shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of that section relating to filing, entry and notice of entry.

So Ordered and Adjudged.

DATED: August 21, 2006

Ballston Spa, New York

Hon. Thomas D. Nolan, Jr.

Supreme Court Justice Footnotes

Footnote 1:The two actions, pending in U.S. District Court for the Northern District of New York, are Moore v Dreyer and Curley, 05-CV-1060 and Cornick v City of Saratoga Springs, Curley and Dreyer, 06-CV-0138.

Footnote 2:City of Saratoga Springs Charter § 2.6.1.

Footnote 3:Charter, City of Saratoga Springs, Title 6 A.

Footnote 4:Public Officers Law § 18 (2) provides that "the provisions of this section shall apply to any public entity (a) whose governing body has agreed by the adoption of local law, bylaw, resolution, rule or regulation (i) to confer the benefits of this section upon its employees, and (ii) to be held liable for the costs incurred under these provisions ***". City Code § 9-1 does not make specific reference to § 18. Yet, since parties are free to chart their own course in a litigation, the court will accept the premise advanced by Dreyer and the City that § 18 applies and is controlling.

Footnote 5:Dreyer concedes that the issue of whether the City may be required to indemnify her for judgments which Moore or Cornick may recover against her cannot be decided until it is factually determined whether she was or was not acting within the scope of her duties as Deputy Commissioner and that the issue of indemnification thus remains open until the jury or the judge in the Federal actions decides that issue.