Opinion
# 2015-038-505 Claim No. 120695 Motion No. M-85328
03-20-2015
MAUREEN ABRAMOSKI and JOANNE PETRELLI v. STATE OF NEW YORK
CHARNY & ASSOCIATES By: Russell G. Wheeler, Esq. ERIC T. SCHNEIDERMAN, Attorney General of the State of New York By: Douglas R. Kemp, Assistant Attorney General
Synopsis
Defendant's motion for summary judgment granted against claim for cost of retirees' lifetime healthcare benefits obtained via their contract with now-dissolved special act school district. Defendant did not enter into any contract with claimants or their former employer, and so their causes of action for breach of contract and third party beneficiary of a contract lacked merit. Defendant not be subject to successor liability on this claim. State constitutional tort cause of action not viable where claimants had other available remedies, including a proceeding pursuant to article 78, and had obtained a default judgment against their former employer. Cause of action sounding in promissory estoppel was not supported by any proof of a promise from defendant to claimants nor proof that they relied upon any such promise to their detriment.
Case information
| UID: | 2015-038-505 |
| Claimant(s): | MAUREEN ABRAMOSKI and JOANNE PETRELLI |
| Claimant short name: | ABRAMOSKI |
| Footnote (claimant name) : | |
| Defendant(s): | STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 120695 |
| Motion number(s): | M-85328 |
| Cross-motion number(s): | |
| Judge: | W. BROOKS DeBOW |
| Claimant's attorney: | CHARNY & ASSOCIATES By: Russell G. Wheeler, Esq. |
| Defendant's attorney: | ERIC T. SCHNEIDERMAN, Attorney General of the State of New York By: Douglas R. Kemp, Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | March 20, 2015 |
| City: | Saratoga Springs |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
Claimants are former employees of the West Park Union Free School District (West Park), a special act school district that was associated with the St. Cabrini Home, a residential treatment facility. West Park provided educational services for St. Cabrini's students, and the closure of St. Cabrini in February 2011 resulted in a decision to close West Park. By that time, both claimants had already retired from service to West Park. Claimants were the beneficiaries of employment contracts with West Park that provided them with certain post-retirement health insurance and dental benefits for their lifetimes (hereinafter referred to as "lifetime benefits"). In their initial verified claim, claimants alleged that they continued to receive their lifetime benefits after the closure of West Park, but that later in 2011, West Park's Superintendent notified them that defendant, which had previously funded the retirement benefits through the State Education Department (NYSED), would not be including continued funding for those benefits in the "close-down" costs of West Park. The claim alleges that claimants' lifetime benefits as previously provided by West Park ceased after September 30, 2011. The second amended claim seeks to recover from defendant the anticipated cost of the lifetime retirement benefits that were due claimants under their contracts with West Park.
Claimants' initial claim asserted a single cause of action sounding in breach of contract against defendant State of New York. The initial claim has been amended twice - once by stipulation of the parties, and once thereafter upon motion (see Abramoski v State of New York, UID No. 2014-038-514 [Ct Cl, DeBow, J., Apr. 4, 2014]), and both amended claims have been answered by defendant. The second amended claim includes the cause of action for breach of contract and causes of action sounding in promissory estoppel, breach of contract - third party beneficiary, violation of State constitutional due process, and tortious interference with contract. Defendant now moves for summary judgment dismissing the claim in its entirety, and claimants oppose the motion.
In general, a movant for summary judgment must establish, by proof in admissible form, the right to judgment as a matter of law (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067 [1979]). If the movant establishes prima facie entitlement to summary judgment, the burden then shifts to the opponent of the motion to establish, by admissible proof, the existence of genuine issues of material fact (Alvarez v Prospect Hosp.; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Here, the facts of the matter are not in dispute, and so this motion for summary judgment requires determination of whether the undisputed facts support any of the causes of action asserted in the second amended claim (hereinafter "the claim").
The causes of action and defendant's alleged liability to claimants rest primarily upon defendant's role in the close-down of West Park, the facts of which are set forth by defendant in the affidavit of James P. DeLorenzo, the Assistant Commissioner for Special Education for the Office of Special Education with NYSED, who was involved in the close-down process of West Park. West Park was created by the Legislature in 1973 as a "Special Act District" for the purpose of providing educational services to students whose educational needs could not be met by their local public school district, Board of Cooperative Educational Services (BOCES) or social services districts (see DeLorenzo Affidavit, ¶¶ 4-5). West Park, like public school districts and other special act districts, was controlled and governed by a board of education that had the powers and duties of a public school board of education, and which, in the case of West Park, was appointed by officials of St. Cabrini (id. ¶¶ 10-14). Tuition for students attending West Park was paid by "placing districts" - either the student's public school district or social services district, depending upon the entity that placed the student at West Park (id. ¶¶ 16-19). The annual tuition rate to be paid by such entities is established by the Commissioner of NYSED, subject to the approval of the State Division of Budget (id. ¶ 20). Special act districts are also eligible to receive certain State aid payments and federal funding (id. ¶ 22).
With respect to the process for the close-down of special act districts, DeLorenzo states the following:
"During discussions with State Education Department staff and the Director of Finance of the Rate Setting Unit regarding the closure of West Park, it was explained to me that there are no set standards and procedures for finalizing the close-down of a school operated by a special act school district, beyond the tuition rate setting methodology established to finalize and cover the costs of educating students during the final year of operation of such school. See, Education Law § 4405 and Section 200.9 of the Regulations of the Commissioner of Education. Conceivably, however, there are activities that must be engaged in to finalize the costs of educating students in the final year of operation, such as reconciling the tuition rates for reimbursement of the costs incurred in providing education to students in the final school year.
"It was also explained to me that the close-down rate process serves the limited purpose of finalizing and reconciling the costs associated with educating students during the final school years of instruction and administrative costs associated with carrying out the close-down process of the school. Such process is not intended to address long-term fiscal liability. The costs of closing down the school are imposed on the school districts of residency or social services that placed students at the school.
"The responsibility to close down a school no longer in operation remains the duty of the board of education of the special act school district. The State Education Department is not responsible for closing down the school, beyond that which is discussed below, in regards to setting the close-down rate.
"The State Education Department's involvement in the close-down of a special act school district is limited to facilitating, if and as needed, the transfer of students to other appropriate programs before the program closes and advising, if and as needed, the district on the development and implementation of the close-down plan to prepare for the dissolution of the district. The special act school district is solely responsible for developing the close-down plan.
"Section 200.7 of the Regulations of the Commissioner of Education provides, in pertinent part, that 'the owner or operator of an approved private residential or non-residential school for students with disabilities that receives public funds pursuant to article 81 and/or 89 of the Education Law, who intends to cease the operation of such school . . . shall submit to the commissioner written notice of such intention not less than 90 days prior to the intended effective date of such action.' 8 NYCRR §200.7(e). Section 200.9 of the Commissioner's Regulations further provides for the reimbursement of tuition to the special act school district in closing down the school, and requires financial reporting."
(DeLorenzo Affidavit, ¶¶ 34-38).
Defendant was notified by letter dated January 28, 2011 that, due to the closure of St. Cabrini, the West Park Board of Education had issued a resolution to begin the process of dissolving West Park that directed the Superintendent of West Park to:
begin procedures for transitioning students, to be completed within 30 days; to arrange for the orderly transition of staff, consistent with state law and contractual obligations; to close out contracts with agencies and vendors that have executor obligations; to address issues related to the outstanding Dormitory Authority bond repayment and satisfaction of the current Revenue Anticipation Note and other outstanding obligations of the District; and to arrange for appropriate records retention and disposition.
(DeLorenzo Affidavit, Exhibit A [emphasis added]). The Superintendent was subsequently advised by NYSED to "submit a Plan of Disposition of all assets and liabilities" that addresses "the priority order of fulfilling all remaining fiscal obligations" (id. Exhibit C). She was further advised that NYSED's "Rate Setting Unit will review the Plan of Disposition of all assets and liabilities and advise the District of any necessary changes" (id.). Pursuant to the Commissioner's regulations, the procedures to be followed during the close-down process generally require a district to make a full financial report to NYSED, and for NYSED to adjust the reported data and determine a reimbursement methodology (see 8 NYCRR § 200.9 [g]; [f] [1]; [f] [2]), which NYSED must then recommend for approval to the Director of the Budget (see 8 NYCRR § 200.9 [f] [2]; DeLorenzo Affidavit, ¶ 40). The approved reimbursement methodology is utilized to calculate the final tuition rate which will be paid by the "placing districts." This process includes "administration and direct care costs" (8 NYCRR § 200.9 [f] [1] [i]), and claimants do not dispute that the costs of their lifetime benefits are a liability to be included in this process.
West Park was entitled to reimbursement from "placing districts" ending with the 2010-2011 school year (see DeLorenzo Affidavit, ¶ 41). In August 2011, the issue of continued payment of lifetime benefits came to the attention of NYSED, which informed the Superintendent of West Park that the cost of claimants' future lifetime benefits was not included in the close-down rate, and the Superintendent then informed claimants that their lifetime benefits would cease as of September 30, 2011 (see id. ¶ 45). By the end of September 2011, the Superintendent and the entire Board of Education of West Park had resigned and no successors were named (see id. ¶ 42), leaving West Park in existence but without any person or body to complete the close-down of West Park.
When special act districts have been dissolved in the past, special legislation has been enacted to authorize the dissolution and direct the disposition of the special act districts' debts, amounts receivable, property, and other matters (see id. ¶¶ 27-31). Special legislation for the dissolution of West Park that included continued payment of claimants' lifetime benefits was vetoed by the Governor in 2012 because it was viewed as inequitable to transfer the costs of lifetime benefits to the taxpayers of the placing districts that had placed students at West Park in its final year (id. ¶ 32; see also Wheeler Affirmation, Exhibit 7 [Governor's Veto Message No. 166]). Similar legislation was before the legislature in 2013 and 2014, but in neither year did it pass both houses of the legislature (DeLorenzo Affidavit, ¶ 33).
Claimants assert (and defendant does not dispute) that claimant Abramoski met all the requirements for her lifetime benefits when she retired from West Park in 2007, as did claimant Petrelli when she retired from West Park in 2010 (see Wheeler Affirmation, ¶¶ 27, 29, 31), and that both received the lifetime benefits pursuant to their contracts with West Park until on or about September 30, 2011 (see Kemp Affirmation, Exhibit F [Second Amended Claim], ¶ 18). Claimants do not dispute the facts as recited above, but they present a number of arguments about NYSED's involvement in the close-down of West Park that generally describe NYSED's activities in a manner that overstates claimants' exhibits, disparages NYSED's admitted involvement in the close-down process, or is not pertinent to the legal issues to be considered on this motion.
For example, claimants assert that "[c]hief among the reasons for the Board's resignation was Defendant's failure to include retiree health benefits in the close-down rate or to otherwise address the issue" (Wheeler Affirmation, ¶ 73) and that "BOCES notified Defendant that the Board intended to resign in the face of the untenable situation arising from the District's obligation to provide retiree health insurance benefits" (Claimants' Memorandum of Law, at 12). However, review of the documents submitted by claimants that are relevant to the resignation of the members of the Board demonstrate that the lifetime benefits issue was but one of many significant issues of concerns to the individual Board members, and there is no indication that "the Board" qua "the Board" resigned mainly for this reason. Moreover, even if the Board, as a whole or its members individually, resigned for this reason, their disagreement with and opposition to NYSED's determination that the cost of future lifetime benefits should not be included in the final tuition rate does not provide a basis for defendant's liability to claimants.
Notably, claimants prosecuted a special proceeding pursuant to CPLR article 78 against NYSED, West Park, and other entities that may have had a role in the termination of their lifetime benefits, seeking judicial review of the determination to do so. As relevant to defendant, the Court stated that "[a]s presented, the only action taken by [NY]SED which affected those benefits was the refusal to permit the costs to be included in the close-down tuition rate . . . [N]o showing has been made that any statute, regulation or other legal authority made provision for funding retiree health insurance benefits through the close-down tuition rate. Nor have petitioners shown other instance of funding such benefits through the close-down tuition rate. Thus, [NYSED's] decision has not been shown to be arbitrary and capricious or affected by an error of law" (Matter of Abramoski and Petrelli v New York State Education Department, et al., Supreme Court, Albany County, Index No. 7764-11 [McNamara, J., Oct. 8, 2013], at 3).
In this claim, the Court does not assign preclusive effect to Supreme Court's decision, but notes that in opposition to defendant's motion for summary judgment, claimants have again not shown the existence of statutory or regulatory mandates that have been breached by NYSED's rejection of the cost of claimants' lifetime benefits, nor have they shown other instance of defendant having funded a retiree's lifetime benefits through the close-down tuition rate.
Breach of Contract
Defendant first contends that claimants cannot succeed on their cause of action for breach of contract because defendant was not a signatory or party to any contract for lifetime benefits, a factual matter that was acknowledged by claimants (see Kemp Affirmation, Exhibits J, at 8-9; K, at 7-9; N, at Bates 49-50; W, at 2-17, 19; X, at 12-13, 20). The existence of a contract between claimants and defendant is an essential element of such a cause of action, which claimants do not dispute, nor do they raise any issue of fact as to the existence of such a contract. Thus, claimants have not defeated defendant's entitlement to summary judgment on the cause of action for breach of contract.
To the extent that claimants argue that defendant should be liable to them as a successor to their contracts with West Park (see Wheeler Affirmation, ¶¶ 83-91; Claimants' Memorandum of Law, at 15-18), their contentions are unavailing. First, claimants' characterization of factual matters lacks support in the documents that are submitted in opposition to the motion. For example, their assertion that defendant "assumed and exercised supervision of the District . . . [as] evidenced by its January 14, 2011 directive to the District to provide a 'fiscal viability plan' with respect to, inter alia, its financial planning, projected revenue and expenditures" (Claimants' Memorandum of Law, at 15) is merely a negative characterization of NYSED's explanation to West Park of the district's responsibilities pursuant to 8 NYCRR § 200.7 (e). Similarly unavailing to raise a triable issue of fact are claimants' assertions that NYSED was a successor to West Park because NYSED controlled West Park's property - real and personal - when the documents submitted by claimants clearly demonstrate that NYSED did not step into the shoes of West Park, but sought to dispose of its abandoned tangible assets - along with equipment and supplies of other school districts - in a non-wasteful manner and to facilitate the former Superintendent's access to information that remained in the former West Park premises (see Wheeler Affirmation, Exhibit 2, at Bates 132; 156; 761-764; see also 772-774).
Further, even if claimants' factual assertions create an issue of fact that could give rise to liability as against a successor to West Park's contractual obligation to claimants, defendant relies upon section 5 of Article X of the State constitution and Roberts v Paterson (19 NY3d 524 [2012]) for the proposition that the State cannot be liable for the contractual obligations of West Park because there is no legislation that authorizes that successor liability. Grasping onto a statement by DeLorenzo that the Commissioner of NYSED has the authority to set tuition rates for special act districts such as West Park because "unlike traditional school districts, special act school districts have no voter oversight in the budgeting process" (see Claimants' Memorandum of Law, at 16; Wheeler Affirmation, Exhibit 8, ¶ 22), claimants argue that, by the legislation creating West Park, the legislature removed defendant from the constitutional protection.
The constitutional prohibition on the State's successor liability excepts that "the state or a political subdivision thereof may, if authorized by the legislature, acquire the properties of any such corporation and pay the indebtedness thereof" (NY Const, Art X, § 5). It is patently apparent that the 1973 legislation creating West Park, upon which claimants rely, is not the express legislative authorization contemplated in this constitutional provision. Claimants argue only that the "imposition of successor liability is in this instance, appropriate" (Claimants' Memorandum of Law, at 18), but they cite no authority for the proposition that such legislative authority may be inferred, nor, as discussed above, do they cite any compelling facts that find support in the motion papers and which demonstrate that NYSED, in fact, undertook West Park's obligation to claimants. Roberts v Paterson (supra) is a case very similar to the instant claim - plaintiff/retirees of New York City Off-Track Betting Corporation (OTB) sought to have the State pay the costs of continued health insurance of retirees after OTB had shut down. The Appellate Division, First Department stated that the constitutional provision "precluded" the State from assuming the obligation to pay retirees' health insurance benefits (see Roberts v Paterson, 84 AD3d 655 [1st Dept 2011]). When the case was before the Court of Appeals, that Court declined to opine whether the constitutional provision applied because "plaintiffs have stated no viable theory under which the State assumed responsibility for this assistance in the first place" (Roberts v Paterson, 19 NY3d, at 531). Here, in the absence of legislation specifically authorizing the State to fund West Park's financial obligation to claimants, and absent a showing that the State assumed that obligation, claimants' argument in support of successor liability is unavailing.
Breach of Contract - Third Party Beneficiary
Defendant further contends that claimants cannot recover under the theory that they were third party beneficiaries of a contract between West Park and defendant because there was no contract between those parties. Claimants do not directly dispute this argument, and they have not raised an issue of fact as to any of the elements of such a cause of action, which include:
"(1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for [claimants'] benefit and (3) that the benefit to [claimants] is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate him if the benefit is lost"
(Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 315, 336 [1983]). Claimants present no factual demonstration of the existence of a contract between West Park and defendant, and thus, defendant is entitled to summary judgment on the third cause of action. Claimants' argument that defendant "procured" West Park's failure to continue to pay the contributions for claimants' lifetime benefits so that their eligibility would not expire (see Claimants' Memorandum of Law, at 18; see also 4 NYCRR § 73.2 [d]) does not defeat defendant's entitlement to summary judgment on claimants' third cause of action, for which the "[e]xistence of a valid and binding contract is . . . a sine qua non" (id.).
Promissory Estoppel
Defendant next asserts that it is entitled to summary judgment on claimants' second cause of action, sounding in promissory estoppel, because such a cause of action is not maintainable against the state, citing Matter of E.F.S. Ventures Corp. v Foster (71 NY2d 359 [1998]) and Holdman v Office of Court Administration and State of New York Department of Civil Service (UID No. 2012-016-061 [Ct Cl, Marin, J., Dec. 13, 2012]). Defendant further argues that even if the doctrine of promissory estoppel could be invoked against NYSED, defendant made no promises or representations to claimants regarding the continuation of their lifetime benefits that should estop defendant from making the determination it made. The doctrine of promissory estoppel generally prevents a party from taking a position that is inconsistent with a prior promise or representation to another who has detrimentally relied upon the initial promise or representation (see Matter of E.F.S. Ventures, at 368-369). However, "estoppel may not be invoked against a governmental agency to prevent it from discharging its statutory duties" (id. at 369), although, as claimants contend, "exceptions to the general rule may be warranted in 'unusual factual situations' to prevent injustice" (id.).
At the outset, as defendant's alternative argument implies, promissory estoppel may be invoked "where one party, justifiably relying upon the word or conduct of another, changes its position to its detriment" (England v Nettesheim, 222 AD2d 825, 827 [3d Dept 1995]). Claimants have demonstrated no facts nor made any argument that support a cause of action sounding in promissory estoppel. They were retired from West Park and receiving lifetime benefits as provided by their contracts with West Park prior to any of the events relevant to this claim. They neither demonstrate nor refer to any promise ever made to them by NYSED nor conduct of NYSED upon which they relied, nor do they assert that they relied upon any such promise or conduct. The contention that defendant's misfeasance or nonfeasance by failing to include funding for claimants' lifetime benefits in the close-down rate despite having instructed West Park to resolve its financial obligations is simply not an argument that supports a cause of action by claimants that sounds in promissory estoppel. Accordingly, defendant is entitled to summary judgment dismissing claimants' second cause of action.
Further, defendant properly relies upon Matter of E.F.S. Ventures for the proposition that such a cause of action cannot be asserted against this governmental defendant in this matter. As claimants argue, a governmental entity "may be estopped by its misleading nonfeasance if there would otherwise be a manifest injustice" (Matter of 1555 Boston Rd. Corp. v Finance Adm'r of City of N.Y., 61 AD2d 187, 192 [2d Dept 1978]), but here, although claimants may view themselves as being in a manifestly unjust position by having lost their lifetime benefits, the cases cited by claimants in opposition are distinguishable because the plaintiffs therein made a factual showing relevant to the existence of a promise or conduct by the defendants and their detrimental reliance thereon (see Allen v Board of Educ. of Union Free School District No. 20, 168 AD2d 403, 404 [2d Dept 1990] [summary judgment precluded by issues of fact whether defendant promised lifetime benefits, and whether plaintiffs were induced to retire by such promise]; Landmark Colony at Oyster Bay v Board of Supervisors of County of Nassau, 113 AD2d 741 [2d Dept 1985] [County was estopped from imposing a penalty upon plaintiff when the County's bureaucratic confusion and deficiencies were substantial factors in plaintiff's violations of a newly enacted ordinance]; Matter of 1555 Boston Rd. Corp. [petitioner refrained from filing tax certiorari petition in reliance upon respondent's promise of more substantial reductions for prior years]). Moreover, and even if claimants have raised an issue of fact as to nonfeasance by defendant and their detrimental reliance thereon, all of the cases upon which claimants rely pre-date Matter of E.F.S. Ventures, which set an extremely high bar to overcome where, as here, the complained-of conduct of a governmental agency has occurred in the performance of its statutorily mandated duties (see Matter of E.F.S. Ventures, at 370 [developer of a commercial property suffered damages in the millions of dollars due to municipality's revisiting and revising its SEQRA determination]). Here, claimants do not argue that defendant's conduct in determining the final tuition rate fell outside of its statutory responsibilities, and as noted in footnote 1 above, Article 78 review of NYSED's setting of West Park's final tuition rate resulted in a decision that its determination was not unlawful nor arbitrary and capricious.
State Constitutional Tort
The fourth cause of action in the claim seeks monetary damages for "increased health and dental insurance costs predating this action and continuing for the lifetime of the Claimants" (Verified Second Amended Claim, ¶ 46), and the cause of action sounds in State constitutional tort based upon defendant's alleged violation of claimants' due process rights. Specifically, claimants allege that they "had a property interest in their retirement health and insurance benefits as provided for by their contracts of employment. . ." (id. ¶ 43). Defendant seeks summary judgment dismissing this cause of action on the ground that a constitutional cause of action may be stated only where the claimant has no other available remedy (see Brown v State of New York, 89 NY2d 172, 192 [1996]; Martinez v City of Schenectady, 97 NY2d 79, 83 [2001]). The inquiry relevant to another available remedy is whether the State constitutional tort cause of action can be stated because it is either "necessary to effectuate the purposes of the State constitutional protections [claimants] invoke[], [or] appropriate to ensure full realization of [their] rights" (Martinez v City of Schenectady, 97 NY2d at 83; see Brown v State of New York, at 189), and they assert - without dispute - that claimants pursued remedies to the termination of their lifetime benefits in a plenary proceeding seeking CPLR article 78 relief and a breach of contract action against West Park. It is further undisputed that claimants obtained orders and judgments against West Park (see Kemp Affirmation, Exhibits U, V). Defendant further asserts that a due process claim may reside in the federal courts pursuant to 42 USC § 1983.
In opposition, claimants argue that "there exists no viable alternative remedy available to Claimants that would preclude the pursuit of the constitutional claim" (Claimants' Memorandum of Law, at 21) because money damages against the State are unavailable under both a federal section 1983 action and an article 78 proceeding; they do not comment upon the breach of contract action against West Park. Here, however, claimants had a remedy pursuant to CPLR article 78, and had they shown NYSED's conduct to have been arbitrary and capricious or unlawful, they may have been entitled to incidental damages pursuant to CPLR 7806, but they did not demonstrate or persuade Supreme Court that NYSED's conduct was unlawful (see Matter of Abramoski and Petrelli v New York State Education Department, Supreme Court, Albany County, Index No. 7764-11[McNamara, J., Oct. 8, 2013]; compare Brown v State of New York [police conduct shown to violate the constitutional provisions against illegal search and seizure, but in the absence of a criminal proceeding in which wrongfully obtained evidence could be suppressed, claimants had no other remedy to address the constitutional violations]). Furthermore, it is patently clear that claimants seek to assert this cause of action against the State as an alternative remedy to their breach of contract action against West Park, which, although successful, has proved to be unenforceable. Although the Court need not decide whether a contract action against a private party is an alternative remedy within the meaning of Brown, it seems beyond peradventure that the narrow and extraordinary remedy of a State constitutional tort would not be allowed simply to make claimants whole because their judgment debtor is judgment proof.
Tortious Interference with Contract
The elements of a cause of action for tortious interference with an existing contract are: "(1) the existence of a valid contract between [claimant] and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional procuring of the breach, and (4) damages" (Foster v Churchill, 87 NY2d 744, 749-750 [1996]; see Lama Holding Co. v Smith Barney, 88 NY2d 413, 424 [1996]). Here, the critical element to be considered is the nature of defendant's conduct that led to West Park's breach of its contracts with claimants for lifetime benefits, and defendant argues that it cannot be found liable for the alleged interference with the contract between claimants and West Park because defendant's conduct was "incidental to some other, lawful, purpose" (see Alvord & Swift v Muller Constr. Co., 46 NY2d 276, 281 [1978]; Franbilt v New York State Thruway Auth., UID No. 2000-015-089 [Ct Cl, Collins, J., Oct. 2, 2000]). Defendant has established through the DeLorenzo affidavit that NYSED's conduct was incidental to a lawful purpose, i.e., its responsibility to consider all of West Parks assets and liabilities and make a recommendation of an appropriate close-down tuition rate, and thus, defendant has demonstrated its prima facie entitlement to summary judgment on claimants' cause of action for tortious interference with contract.
Claimants oppose the motion on the ground that "where there is an existing, enforceable contract and a defendant's deliberate interference results in a breach of that contract, a [claimant] may recover damages for tortious interference with contractual relations even if the defendant was engaged in lawful behavior" (NBT Bancorp v Fleet/Norstar Fin. Group, Inc., 87 NY2d 614, 621 [1996]; see Vriesendorp v State of New York, UID No. 2005-018-473 [Ct Cl, Fitzpatrick, J., June 29, 2005], citing Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183 [1980]).
"Whether conduct which interferes with another's contractual relations is improper, and thus actionable, is determined by reference to a number of factors, including the nature of the conduct itself, the motives of the interfering party and the interests which it acts to protect, the interest with which it interferes and the relationship between the parties"
(MLI Indus., Inc. v New York State Urban Dev. Corp., 205 AD2d 998, 999 [3d Dept 1994] citing Guard-Life Corp., supra). Here, claimants and defendant are not commercial competitors, rather, defendant is a State agency charged with the oversight of West Park's closure, a relationship which weighs in favor of justifying any allegedly improper conduct of defendant (see id. at 1000; Franbilt v New York State Thruway Auth.; compare NBT Bancorp v Fleet/Norstar Fin. Group; Guard-Life Corp. v Parker Hardware Mfg. Corp.), and claimants do not argue that the interests being protected by defendant were the propriety of the close-down of West Park and the effect of the close-down on public monies. Even more compelling, and as evidenced by the decision on claimants' prior proceeding pursuant to article 78, is defendant's argument that its determination to exclude the cost of lifetime benefits from the close-down tuition rate "was discretionary and made in the course of [defendant's] official duties, and thus, defendant cannot be held liable for tortious interference with contract" (4430 N. Bailey, Inc. v Town of Amherst, 9 AD3d 853, 854 [4th Dept 2004]). Although claimants generally assert that there are issues of fact about certain aspects of the nature of defendant's conduct (see Wheeler Affirmation, ¶ 110), they do not discuss the materiality of those purported issues of fact, nor do they dispute that defendant's decision was discretionary or that it was made within the scope of defendant's official duties. And finally, claimants' contention that defendant allegedly tortiously interfered with valid and enforceable contracts between West Park and claimants as opposed to prospective contractual agreements does not defeat defendant's motion because the "substantial protection" accorded an existing contract may, as here, be outweighed by the competing public interests that are attendant to defendant's allegedly tortious behavior (see MLI Indus., Inc., at 1000). Specifically, because defendant's motives and interest spring from its status as a governmental agency that was carrying out its responsibility to supervise the close-down of West Park and safeguard public monies, and because defendant's determination was not arbitrary and capricious or unlawful, claimants' significant interest in their contractual right to lifetime benefits does not, in this matter, render defendant's otherwise lawful behavior tortious as against claimants.
In sum, defendant has established its prima facie right to judgment as a matter of law on each of the causes of action stated in the verified second amended claim, and claimants have not raised a triable issue of material fact or a controlling legal principle that would defeat defendant's right to judgment as a matter of law on any of those causes of action, and thus, defendant's motion for summary judgment will be granted in its entirety.
The Court is not unsympathetic to the unfortunate position in which claimants find themselves - lacking the paid healthcare benefits to which their contract with West Park entitled them for their lifetimes - but the liability for West Park's breach of its contractual obligations to claimants does not rest with NYSED.
Accordingly, it is
ORDERED, that defendant's motion number M-85328 is GRANTED, and claim number 120695 is DISMISSED.
March 20, 2015
Saratoga Springs, New York
W. BROOKS DeBOW
Judge of the Court of Claims
Papers considered:
(1) Verified Second Amended Claim, filed May 8, 2014;
(2) Verified Answer to Verified Second Amended Claim, filed June 26, 2014
(3) Notice of Motion, dated June 26, 2014;
(4) Attorney Affirmation of Douglas R. Kemp, AAG, affirmed June 26, 2014,with Exhibits A-X;
(5) Affidavit of James P. DeLorenzo, sworn to June 24, 2014, with Exhibits A-C;
(6) Defendant's Memorandum of Law in Support of its Motion for Summary Judgment,
dated June 26, 2014;
(7) Affirmation of Russell G. Wheeler, Esq., dated August 27, 2014, with Exhibits 1-8;
(8) Claimants' Memorandum of Law in Opposition to Defendant's Motion for Summary
Judgment, dated August 27, 2014;
(9) Attorney Reply Affirmation of Douglas R. Kemp, AAG, affirmed September 16, 2014.