Opinion
No. 1750/10.
09-10-2015
Nancy PACELLA, Carol Rydell, as Executrix of the Estate of John Rydell, Carol Rydell, Michelle Abreu, as Executrix of the Estate of Christine Ricalde, Theresa Sutton, Anna Marie Calli, Kathy Hamilton, Harrison Slocum, as Executor of the Estate of Marion Slocum, and Eileen Hayes, Plaintiffs, v. TOWN OF NEWBURGH VOLUNTEER AMBULANCE CORPS INC., n/k/a Town of Newburgh Emergency Medical Services, Inc., Town Of Newburgh Volunteer Ambulance Corps. Inc. Length of Service Award Program, John Stepinski, Karen Bakun, Tara Gondolfo, Michael Starace, Margaret Maher, Suzanne Ostrander, Anne Haugland, Nina Haugland, as Administratrix of the Estate of Bjorn Haugland, Hometown Firefighter Services Insurance Agency, Richard Schmidt & Associates, and S & S Pension Services, Defendants.
Drake, Loeb, Heller, Kennedy, Gogerty, Gaba & Rodd, PLLC, New Windsor, Attorneys for Plaintiffs. Catania, Mahon, Milligram & Rider, PLLC, Town of Newburgh Volunteer Ambulance Corps, Inc., Length of Service Award Program, John Stepinski, Karen Bakun, Tara Gondolfo, Michael Starace, Margaret Maher, Suzanne Ostrander, Anne Haugland and Nina Haugland, as Administratrix of the Estate of Bjorn Haugland, Newburgh, Attorneys for Defendants. Keidel, Weldon & Cunningham, LLP, White Plains, Attorneys for Defendant Hometown.
Drake, Loeb, Heller, Kennedy, Gogerty, Gaba & Rodd, PLLC, New Windsor, Attorneys for Plaintiffs.
Catania, Mahon, Milligram & Rider, PLLC, Town of Newburgh Volunteer Ambulance Corps, Inc., Length of Service Award Program, John Stepinski, Karen Bakun, Tara Gondolfo, Michael Starace, Margaret Maher, Suzanne Ostrander, Anne Haugland and Nina Haugland, as Administratrix of the Estate of Bjorn Haugland, Newburgh, Attorneys for Defendants.
Keidel, Weldon & Cunningham, LLP, White Plains, Attorneys for Defendant Hometown.
JOHN P. COLANGELO, J.
The following papers were considered by the Court on these Motions:
| Motion for Summary Judgment by the TONEMS Defendants: | |
|---|---|
| Notice of Motion on behalf of TONEMS Defendants: | 1–2 |
| Affirmation of David Rosenberg In Support of Motion: | 3–23 |
| Affidavit of Suzanne Ostrander In Support of Motion: | 24–30 |
| Affidavit of Thomas D. Weddell, CPA In Support of Motion: | 31–37 |
| Memorandum of Law in Support of Motion: | 38–59 |
| Reply Affirmation of David Rosenberg (with Exhibits and Affidavits of Weddell, Stepinski and Bakun) in Further Support of Motion: | 60–121 |
| Memorandum of Law In Support of Motion: | 122–144 |
| Exhibits A–I In Support of Motion: | 145–339 |
| Plaintiff's Opposition to TONEMS Defendants Motion For Summary Judgment (Part I): | 340–627 |
| Plaintiff's Opposition to TONEMS Defendants Motion For Summary Judgment (Part II): | 628–941 |
| Motion for Summary Judgment by Plaintiffs | |
| Notice of Motion: | 1–3 |
| Affirmation of Ralph J. Puglielle, Jr.: | 4–27 |
| Affidavit of Nancy Pacella: | 28–36 |
| Exhibits A–P In Support of Plaintiffs' Motion: | 37–226 |
| Reply Affirmation of Ralph Puglielle, Jr. and Points I–VIII Annexed Thereto: | 227–269 |
| Reply Affidavit of Nancy Pacella: | 270–276 |
| Exhibits Q–EE: | 277–433 |
| Affirmation of David A. Rosenberg In Opposition to Plaintiffs' Motion for Summary Judgment: | 434–445 |
| Affidavit of Suzanne Ostrander: | 446–452 |
| Affidavit of Thomas D. Weddell, CPA: | 453–459 |
| Exhibits A–B to Rosenberg Affirmation: | 460–556 |
In this action for damages and a declaratory judgment, plaintiffs including Nancy Pacella ("Pacella"), Carol Rydell, Michelle Abreu, Theresa Sutton, Anna Marie Calli, Kathy Hamilton, Harrison Slocum and Eileen Hayes ("Plaintiffs") are all present or former members, or the representatives of former members, of defendant Town of Newburgh Volunteer Ambulance Corps Inc. ("TONVAC"), now known as the Town of Newburgh Emergency Medical Services, Inc. ("TONEMS"). TONEMS and formerly TONVAC (hereinafter collectively referred to as "TONEMS") are and were at all relevant times Not–For–Profit Corporations established under the New York State Not–For–Profit Corporation Law (see Exh. F to TONEMS' Motion). Defendants include TONEMS and individual defendants who are also present or former members and allegedly board members of TONEMS: John Stepinski, Karen Bakun, Tara Gondolfo, Michael Starace, Margaret Maher, Suzanne Ostrander, Anne Haugland, and Nina Haugland (the "Individual Defendants").
As discussed below, this action revolves around a length of service awards program ("LOSAP") established by TONEMS in 2000. The LOSAP is also named as a defendant herein. Plaintiffs have named as defendants three entities that were also allegedly connected to the LOSAP: Hometown Firefighters Service Insurance Agency ("Hometown"), Richard Schmidt & Associates ("Schmidt"), and S & S Pension Services ("S & S").
This decision addresses only the motion for summary judgment interposed by TONEMS, LOSAP and the Individual Defendants (collectively the "TONEMS Defendants") to dismiss the Complaint with respect to them, as well as Plaintiffs' competing motion for summary judgment as it pertains to the TONEMS Defendants. Plaintiffs also moved to dismiss the counterclaim interposed by TONEMS. Defendant Hometown brought its own cross-motion for summary judgment with respect to the instant Complaint. That motion will be addressed in a separate decision. One defendant, Richard Schmidt & Associates, has defaulted, and the Court understands that defendant S & S is now defunct.
For the reasons discussed below, the motion for summary judgment of the TONEMS Defendants is granted in all respects and the Complaint as to them is dismissed, the motion by Plaintiffs for summary judgment on the Complaint in their favor is denied, and the motion by Plaintiffs to dismiss TONEMS' counterclaim is granted.
Factual and Procedural Background.
Background Facts.
The facts underlying the instant case and motions are, in the main, straightforward and largely undisputed. The fulcrum of this action is a reward for length of service plan instituted by TONEMS in February, 2000 and retroactive to January 1, 1998. The Length of Service Award Program ("LOSAP") provided, in essence, for certain awards in the form of cash or term life insurance benefits to members of the ambulance corps who had served as volunteers for a certain number of years. The LOSAP had a look back period of fifteen years so that time served by the members of the corps beginning in the 1980's could be counted toward qualifying for an award. As such, at the time the LOSAP was instituted, many if not most of the members of the Corps qualified for an award (See Affid. of Suzanne Ostrander, Pres. of TONEMS, annexed to TONEMS Motion Papers, 5–6; Opposition Affid. of Nancy Pacella, sworn to on August 14, 2014, 2–4). The two-page document implementing the LOSAP (the "Specification Document") described, in broad strokes, the awards available under LOSAP, and was signed by Pacella in her capacity as Treasurer of TONEMS; it was signed by no other person or entity. Attached to the Specification Document is a multi-page, untitled document signed by no one. The initial paragraph of the annexed document states as follows:
"By executing the Plan Specification Document, the Sponsor has established a Length of Service Award Program pursuant to Article 11–A of the General Municipal Law of the State of New York. This Program is to provide a benefit for the volunteer firefighters in recognition of their service to the Sponsor. The Plan is to be maintained according to the aforementioned documents." (Compl.Exh.A); (emphasis supplied).
Significantly, TONEMS is an organization of volunteer ambulance corp members, not volunteer firefighters, and Article 11–A of the General Municipal Law relates to volunteer firefighters and had in 2000, and has now, nothing to do with ambulance corps volunteers. (The two page Specification Document and the annexed multi-page document will be referred to collectively as the "Plan").
Be that as it may, the LOSAP was initiated and implemented by TONEMS as program sponsor and began to parcel out incentives as contemplated. The document annexed to the Specification Document listed three entities who would, by the language of the Plan, be responsible for various aspects of it: the Sponsor—TONEMS; the Administrator; and the Trustee. The specific identity of the original Administrator remains unclear. Plaintiffs allege that defendants herein Hometown, Schmidt and S & S are and were the Administrator (Complaint 34), a claim which such defendants deny. In a related action, Pacella, et al. v. RSA Consultants, Inc., et al. (Index No. 7537/14), the same Plaintiffs allege that RSA Consultants, Inc. ("RSA") and another entity distinct from Hometown herein, the Hometown Insurance Agency of Long Island, Inc., "[a]t all relevant times ... acted as the administrator of the LOSAP." (Compl., Index No. 7537/14, 39–40). As far as the Court or, for that matter, counsel for the parties can discern, no person or entity was ever named as LOSAP Trustee. (See Transcript of Oral Argument, March 31, 2015, p. 36).
The LOSAP proceeded apace until late 2007. By that time, a new generation of ambulance corps volunteers had joined the TONEMS ambulance corps and its leadership ranks. They proceeded to take a fresh look at the LOSAP. TONEMS retained a law firm then named Tarshis, Catania, Liberth, Mahon & Milligram, PLLC (the "Catania Firm") to advise it, as well as a consulting firm, Peneflex Inc. ("Peneflex") and an accounting firm, Vanacore, DeBenedictus, DiGioviani & Weddell, LLP to evaluate the LOSAP and its fiscal viability (Opposition Affid. of Thomas D. Weddell, CPA 4–5).Peneflex and the accounting firm concluded that the LOSAP was, for TONEMS, a program that would be financially difficult to sustain in view of the present and projected payments that were to be made pursuant to it, on top of the ongoing expenses of operating an ambulance corps. (See Ostrander Affid. 9–14; Affid. of Karen Bakun, Treas. of TONEMS, 5–10; Weddell Affid., 10–14). After a presentation by Ed Holohan of Peneflex and Julia Goings–Perrot, Esq. ("Perrot") of the Catania Firm to TONEMS at a "Special Meeting" on May 1, 2008, TONEMS "voted 17–2 to immediately freeze any contributions of [TONEMS] to the plan, and immediately freeze benefit pay-outs to current beneficiaries." (Meeting minutes of May 1, 2008, Exh. E to TONEMS' Motion for Summary Judgment; Ostrander Affid. 14–16). It should be noted that the question of whether the "Special Meeting" was properly called or noticed remains unclear.
In any event, payments and contributions were frozen and soon thereafter, on May 12, 2008, the entity apparently functioning as LOSAP Administrator, RSA, was directed by letter dated May 12, 2008 from TONEMS' counsel, Ms. Perrot of the Catania Firm to RSA's Frederick Stahl to cease paying benefits; she further directed him "not to speak to anyone regarding TONVAC business." (May 12, 2000 letter, annexed as Exh. 4 to Pls. Opposition Papers). When Stahl subsequently inquired of Perrot about the status of LOSAP in light of these directions, she advised him by letter dated August 27, 2008 that the "LOSAP is not terminated. " (Exh. J to Hometown's Cross–Motion for Summary Judgment; emphasis in original). The record reflects that Perrot's statement was technically accurate; at that time, LOSAP was paying no benefits and receiving no contributions, but had yet to be terminated.
That state of affairs changed on October 14, 2008. On that date, at a regular monthly meeting of TONEMS, the LOSAP was terminated. As the minutes of the October 14 meeting state, "LOSAP was voted out in favor of starting a new program by 8 to 3." (Exh. P to Pls. Motion). Shortly thereafter, by letter dated October 24, 2008, Perrot informed Stahl of the vote to terminate LOSAP and directed him to "transfer all funds" to TONEMS' checking account. (Exh. 5 to Pls. Opposition Papers). The transfer was, in the main, promptly made with some residual amounts paid in 2009 as well, and the monies from LOSAP used by TONEMS for its general expenses and improvements; no facts have been adduced to indicate otherwise. (See Complaint, 53–54; Pls. Opposition to TONEMS Motion, Exhs. 5–9; Ostrander Affid. 16; Affid. of Thomas D. Weddell, CPA, 12–15; Defts. Ans. to Pls. Interog. No. 3, Exh. 1 to Pls. Opposition Papers). Over 14 months later, this action followed.
Procedural Background.
By Summons and Complaint filed in February 2010, Plaintiffs, all present or former ambulance corps volunteers and members of TONEMS led by Pacella, brought the instant suit. Stripped to its essence, the Complaint charges that the LOSAP was wrongfully terminated, and assigns various degrees of blame to the plethora of defendants named, with TONEMS as the principal culprit. As the caption reflects, several other defendants were added for good measure, including the alleged LOSAP administrators, and several alleged individual members of the TONEMS board of directors (the "Individual Defendants"). In this action (hereinafter the "First Pacella Action"), Plaintiffs set forth five causes of action: for breach of contract; violation of ERISA; a declaratory judgment; breach of fiduciary duty; and promissory estoppel. Several years later, in October 2014, the Pacella Plaintiffs brought a second suit (Index No. 7537/14) against other purported LOSAP administrators, RSA Consultants, Inc. ("RSA") and Hometown Insurance Agency of Long Island, Inc. asserting causes of action sounding, inter alia, in breach of contract and breach of fiduciary duty. (The "Second Pacella Action"). Not to be outdone, Hometown brought suit in August 2014 (Index No. 6369/14) against several individuals and entities, including, but not limited to, the Catania Firm and attorney Perrot, alleging several causes of action. (The "Hometown Action").
Due to the death of several of the original plaintiffs in the Pacella actions, all three actions have proceeded in fits and starts, with periodic interruptions for the substitution of administrators/executors. However, the parties—through their attorneys—managed to keep busy by engaging in motion practice. At last count, no fewer than twelve motions and cross-motions have been interposed, ranging from substantive motions to dismiss or for summary judgment to discovery motions and motions to amend pleadings. Oral argument with respect to several substantive motions, including the instant motions, was held on March 31, 2015 (the "March 31 Transcript").
This decision will address only the motion by the TONEMS Defendants for summary judgment to dismiss the First Pacella Action and will perforce decide Plaintiffs' Motion for summary judgment with respect to the First Pacella Action, as well as Plaintiffs' motion to dismiss the counterclaim interposed in TONEMS' Answer to the instant Complaint. As demonstrated below and in accompanying related decisions, the Court's decision on the TONEMS Defendants motion herein will also effectively dispose of several other pending motions in this and other actions.
The Standard for Deciding Motions for Summary Judgment
CPLR § 3212(b) states in pertinent part that a motion for summary judgment "shall be granted if, upon all of papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party."
In Andre v. Pomeroy, 35 N.Y.2d 361, 364 (1974), the Court of Appeals held that:
"[S]ummary judgment is designed to expedite all civil cases by eliminating from the Trial Calendar claims which can properly be resolved as a matter of law .... when there is no genuine issue to be resolved at trial, the case should be summarily decided, and an unfounded reluctance to employ the remedy will only serve to swell the Trial Calendar and thus deny to other litigants the right to have their claims promptly adjudicated."
CPLR § 3212(b) further states that a motion for summary judgment "shall be granted if, upon all of papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party."
The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence to demonstrate the absence of material issues of fact. Weingrad v. New York Medical Center, 64 N.Y.2d 851, 853 (1986). Once such showing has been made, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact that require a trial of the action. Alvarez v. Prospect Hosp., 68 N.Y.2d 320 (1986).
For the reasons discussed below, the TONEMS Defendants have clearly met their burden here and Plaintiffs prove unable to overcome theirs, principally because Plaintiffs have failed to adduce a viable basis for recovery as a matter of law. Unquestionably, Plaintiffs suffered a loss when the LOSAP was terminated; they are now deprived of benefits which they previously received and to which they allegedly believed they would be indefinitely entitled. However, not every loss compels remediation through the legal process. That is the case here.
THE TONEMS DEFENDANTS' MOTION FOR SUMMARY JUDGMENT:
Analysis and Conclusions
Put simply, Plaintiffs' Complaint, as well as Plaintiffs' opposition to the TONEMS Defendants motion for summary judgment, amount to nothing more than an army of assertions, roving across the legal landscape, in search of a viable theory of liability. Unfortunately, for Plaintiffs, their search, albeit diligent, is in vain for a series of related reasons: (1) Plaintiffs' assertion of a breach of contract claim is stymied by the related facts that no contract as such has been adduced; the document that Plaintiffs' claim constitutes a written contract was signed only by Plaintiff Pacella as a representative of TONEMS and, by the operative terms of it, appears to be between an association of volunteer firemen and an unnamed political entity, neither of which are parties herein. Moreover, the aspect of Plaintiffs' breach of contract claim to the effect that the TONEMS Defendants are liable because they violated certain provisions of the General Municipal Law is baseless since the provisions of the General Municipal Law ("GML") purportedly incorporated in the Plan are clearly inapplicable here, where no pertinent GML provision is referred to in the Plan, and no political or governmental entity was involved in the LOSAP; (2) Plaintiffs' contention that the LOSAP was an ERISA Plan is belied by the fact that the Plaintiffs, as they must concede, were not employees but volunteers in a volunteer ambulance corps; (3) Plaintiffs' assertion that the TONEMS Defendants are liable for a breach of fiduciary duty is undermined by the fact that there is no basis—contractual or otherwise—on which a fiduciary duty may be founded; (4) Plaintiffs' cause of action based upon promissory estoppel fails because Plaintiffs cannot establish the fundamental elements of that claim; and (5) finally, Plaintiffs declaratory judgment cause of action is duplicative of their baseless substantive claims and thus falls of its own weight.
Accordingly, as more fully explained below, the TONEMS Defendants' motion for summary judgment is granted, Plaintiffs' motion for summary judgment is denied, and the Complaint herein as to the TONEMS Defendants is dismissed.
Plaintiffs' Causes of Action.
Plaintiffs' First Cause of Action for Breach of Contract
Plaintiffs' claim for breach of contract fails for several reasons. First and foremost, Plaintiffs have adduced no document that reflects a contractual relationship between the TONEMS Defendants and Plaintiffs. Indeed, the only document signed by TONEMS was signed by Pacella not individually, but for TONEMS in her capacity as TONEMS's Treasurer at the time, and does nothing more than set forth the bare bones elements of the LOSAP. Significantly, such two page Specification Document is silent regarding essential administrative details, such as the duration of the LOSAP, how it is to operate, the circumstances under which it may be terminated, and the consequences of any such termination.
Perhaps recognizing the deficiency of that document, Plaintiffs seek to rely upon the unsigned portion of the Plan annexed to the Specification Document, and the provisions of the GML referred to in it. (The unsigned portion of the Plan will be referred to herein as the "Plan Document"). However, Plaintiffs' reliance is misplaced for a simple and fundamental reason: that Plan Document is, by its own terms, not directly applicable to the instant situation for several reasons. First, such document and the operational scheme contained in it incorporates by reference and depends upon the application of GML provisions that relate to volunteer firemen, not ambulance corps members. As the Plan Document states:
"By executing the Plan Specification Document, the Sponsor has established a Length of Service Award Program pursuant to Article 11–A of the General Municipal Law of the State of New York. This Program is to provide a benefit for volunteer firefighters in recognition of their service to the Sponsor. The Plan is to be maintained according to the aforementioned documents." (Emphasis supplied).
Not surprisingly, the body of the Plan Document contains frequent references to GML Art. 11–A.
(See, e.g., Plan Doc. §§ 2.2, 2.4, 3.1, 3.4, 5.4, 6.1, 7.1, 8 .1 and 9.1).
The purpose section of GML Article 11–A further reflects that the Article applies to volunteer firefighter programs, and refers to a "political subdivision" sponsor—neither of which is present under the LOSAP. As GML § 214(1) states:
" § 214. Purpose. 1. It is hereby declared that this article is intended to effectuate the objects and purposes of section eighteen of article one of the constitution and that the relationship between the political subdivision liable for payments of service awards under this article and a volunteer firefighter entitled to such payments is that of employer and employee within the meaning of such provision of the constitution. In no event shall the receipt of a service award under the provisions of this article be deemed to constitute membership in any pension or retirement system of the state or of a civil division thereon within the purview of section of article five of the constitution." (Emphasis added).
The fact that the Plan Document refers to and incorporates by reference inapposite provisions of the GML is not of mere semantic significance. When those GML provisions—or, for that matter, the other, unmentioned GML Articles that do refer to volunteer ambulance corps—are examined, the statutory scheme as set forth therein does not and cannot be applied to the LOSAP as established by TONEMS. Such GML provisions presuppose, and their proper functioning is dependant upon, the sponsor being a "political subdivision"—something TONEMS clearly is not.An examination of the GML statute and its various permutations—whether applicable to volunteer firefighters or ambulance corp volunteers—reveals that the provision that the sponsor be a "political subdivision" is crucial to the statutory scheme since the entire plan as contemplated is dependant on a revenue stream, supervision, and participation by the governing body of a political subdivision which does not exist in the context of a plan where a private company or corporation is operating as sponsor. The presence of a "political subdivision" as a sponsor proves particularly important in the contexts at issue here—the establishment and termination of a length of service plan. In both instances under the GML, voting and participation by a "political subdivision"—such as a city, town or fire district—is called for, which can only be the case if the sponsor is such a political subdivision. As GML § 216 and 216–a—sections of GML Article X1–A pursuant to which the LOSAP was purportedly established (Plan Doc., p. 1)—state in pertinent part as follows:
" Section 216.
1. a. A service award program may be adopted only by resolution of the governing board of a political subdivision, receiving the affirmative vote of at least sixty percent of the governing board of the political subdivision having control of the fire departments and fire companies, and the approval of a mandatory referendum authorizing the adopting of the program by the eligible voters within such political subdivision."
* * * *
"2. Upon the affirmative vote of at least sixty percent of the governing board of the political subdivision, which political subdivision has contracted with volunteer fire departments or fire companies located in a fire protection district of such political subdivision, there shall be held a mandatory referendum of the eligible voter residing within such fire protection districts to determine whether such governing board shall establish a service award program for the volunteer firefighters of such volunteer fire departments or the companies."
* * * *
"Section 216–a.
"9. Except as otherwise provided in this subdivision, any provision of anagreement to jointly sponsor a service award program for the volunteer firefighters of aspecial fire company or department may amended upon the affirmative vote of at least sixty percent of the governing board of each political subdivision which is a party to the agreement without referendum. Amendments to the provisions of the agreement required by paragraphs
(h), (I) and (j) of subdivision three of this section shall only be made upon the affirmative vote of at least sixty percent of the governing board of each such political subdivision, subject to a mandatory referendum of the eligible voters within each such political subdivision."
* * * *
"11. A service award program for the volunteer firefighters of a special firecompany or department shall remain in effect until terminated by the political subdivisions which are parties to the agreement to jointly sponsor the program. The service award program shall be terminated only if:
(a) the governing board of each and every such political subdivision approves a resolution to terminate the program by an affirmative vote of at least sixty percent of the governing board; and
(b) the eligible voters of each and every such political subdivision separately approve a proposition to terminate the program. " (Emphasis added).
Significantly, GML Section 215(7–a) –a defines a "[p]olitical subdivision" as a "county, city, town, town on behalf of a fire protection district, village, village on behalf of a fire service area or fire district." (See also GML § 219–c (6–a), pertaining to volunteer ambulance corps). It goes without saying that TONEMS does not fall into any of those categories. Thus, aside from the fact that Plaintiffs have adduced no document reflecting a contractual relationship between them and the TONEMS Defendants, since the Plan Document is dependant upon inapposite provisions of the GML, it may not serve as the basis for Plaintiffs' breach of contract cause of action. That claim therefore fails for want of a contract.
Since in light of its very provisions, the GML may not serve as the talisman for Plaintiffs' breach of contract case, it can be no more than a guide. The Court notes that when viewed as such, the undisputed facts show that TONEMS, as Sponsor, essentially followed the terms of the GML as well as the Plan Document itself as far as the central issue of termination of the LOSAP and distribution of the remaining program proceeds is concerned. Several sections of the GML and of the Plan Document provide that the Sponsor may "amend" or "terminate" the length of service program, and may do so by a vote of the members of the political subdivision (GML §§ 216–a (9), (11) ; Plan, §§ 7(a), 8(a) and 9.7). Upon termination, the remaining assets of the Plan will be returned to the "political subdivision's" sponsor. (Id. ).
Here, the members of TONEMS voted at a regular meeting to terminate the Plan, and the residual proceeds from it were returned to TONEMS (the "political subdivision" counterpart under the GML §§ 216–a (9) and (11) as well as under the GML Article pertaining to ambulance corps volunteers— § 219–g, 219–d(8); Plan § 8.1(a)) for use by its members for TONEMS' purposes—the purchase of equipment for and general operation of the ambulance corps. (See Complaint 53–54; Exhs. 5–9 to Pls. Opposition to TONEMS Motion; Ostrander Affid. 16; Affid. of Thomas D. Weddell, CPA, 12–15 B; Defts. Ans. to Pls. Interrog. No. 3, Exh. 1 to Pls. Opposition Papers).Thus, even under the provisions of the Plan "contract" and the GML provisions purportedly incorporated in it, Plaintiffs' breach of contract cause of action does not lie. Accordingly, for the foregoing reasons, Plaintiffs' first cause of action for breach of contract is dismissed.
Plaintiffs' Second Cause of Action for Violation of ERISA.
In an effort to salvage its breach of contract claim, Plaintiffs assert that the LOSAP is covered by ERISA and, as such, creates contractual rights between Plaintiffs and TONEMS which cannot be terminated by the unilateral action of TONEMS. Plaintiffs' effort proves unavailing since ERISA only applies when an employer-employee relationship is at play.
The law is clear that ERISA's protections extend only to employees, not to volunteers (29 USC § 1002(b) ). The longstanding test of whether an employer-employee relationship is present was set forth in the Supreme Court case of Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318, 323 (1992), quoting Community for Creative Non–Violence v. Reid, 490 U.S. 730 at 751–752, which articulates the factors that should be considered:
"[T]he hiring party's right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hiring party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party."
Under this test, Plaintiffs and their fellow TONEMS members clearly do not qualify as employees. Members of the Town of Newburgh Volunteer Ambulance Corps are and were just that—volunteers, as Plaintiffs effectively acknowledge (See Compl. 1–9). They did not and do not receive a salary; they are free to leave at any time without consequence; they do not hire or pay any assistants; and the corps for which they volunteer is not and has no regular "business."
Accordingly, as a non-ERISA Plan, the Sponsor—here, TONEMS—was, as far as ERISA was concerned, free to terminate it at any time, the situation that obtained before ERISA for employees and non-employees alike. See, e.g., Kravitz v. Twentieth Century–Fox Film Corp., 5 Misc.2d 368, 371 (Sup.Ct., N.Y. Co.1957) ("It seems clear that the scheme of the Retirement Plan is simply a promise on the part of defendants to give to specifically described and qualified employees a certain sum in the future with a reservation in that it may at any time determine not to complete the gift. If, as here, the employer so determines, no employees has any right to recover any sum."); Friedman v. Romiane, 77 Misc.2d 134 (Sup.Ct., N.Y. Co.1974) ; McNevin v. Solvay Process Co., 32 A.D. 610 (4th Dept.1898).
In short, Plaintiffs have no enforceable contractual right to benefits under the LOSAP. Plaintiffs are not parties to any written agreement—at least no such agreement has been adduced by counsel; the GML statute and the Plan that refers to it on which Plaintiffs purport to rely are not applicable to the issues raised by Plaintiffs under the LOSAP herein and, even if such GML and Plan provisions are deemed to be applicable, the Sponsor TONEMS essentially complied with their terms. In addition, since no employer-employee relationship existed between Plaintiffs and TONEMS, Plaintiffs are foreclosed from seeking refuge in ERISA by claiming that the ERISA statute furnishes a basis for a breach of contract claim. Thus, both the purported breach of contract and ERISA causes of action fail to pass muster.
Plaintiffs' Fourth Cause of Action: For Breach of Fiduciary Duty .
Plaintiffs' cause of action for breach of fiduciary duty proves equally infirm for several reasons, not the least of which is the utter lack of a foundation for such a claim, particularly with respect to the LOSAP and TONEMS. First, with respect to TONEMS and LOSAP, there is simply no basis for a breach of fiduciary duty claim against either of them. As far as the LOSAP is concerned, it is not an independent person or corporate entity; it was a program provided by a sponsor, TONEMS. As such, it owes no duty, fiduciary or otherwise, to anyone.
Similarly, TONEMS as a corporation does not owe a fiduciary duty to its "owners" such as Plaintiffs; rather, TONEMS' officers and directors owe such a duty to TONEMS and its members as a group. (See Not to Profit Corporation Law §§ 718–721). When a shareholder in the case of a business corporation, or a member as in the case of a not-for-profit corporation, brings a suit charging a breach of fiduciary duty, he or she does so by suing the corporation's directors or officers, and by so doing seeks to vindicate a right of the corporation and its members collectively; such a suit may not serve as a means of seeking redress peculiar to that particular shareholder or member. See, e.g., Yaverbaum v. Solonch, 48 N.Y.S.2d 860 (Sup.Ct., N.Y. Co.1944) ; ("[S]uch a [derivative] action is one to redress a wrong done to be corporation and not to the stockholder individually and any benefit or recovery therefore inures to the corporation alone and not to the individual plaintiff; the action in reality is brought by the corporation for its benefit"); Kavanaugh v. Commonwealth Trust Co. of New York, 181 N.Y. 121 (1905) ; cf. Shanik v. Empire Power Corp., 58 N.Y.2d 176 (Sup.Ct., N.Y. Co.1945), aff'd, 270 A.D. 925, (1st Dept .), aff'd., 296 N.Y. 664 (1946).
To bring such a suit—in essence, a derivative action—the individual shareholders or members must comply with the relevant statute: in the case of a not for profit corporation, Section 623 of the Not–for–Profit Corporation Law ("NFPCL") (the counterpart for business corporations is Business Corporation Law ("BCL") § 719 ).
Section 623 of the NFPCL sets forth the prerequisites for bringing such a derivative action:
" § 623. Members' derivative action brought in the right of the corporation to procure a judgment in its favor
(a) An action may be brought in the right of a domestic or foreign corporation to procure, a judgment in its favor by five percent or more of any class of members or by such percentage of the holders of capital certificates or of the owners of a beneficial interest in the capital certificates of such corporation.
(b) In any such action, it shall be made to appear that each plaintiff is such a member, holder or owner at the time of bringing the action.
(c) In any such action, the complaint shall set forth with particularly the efforts of the plaintiff or plaintiffs to secure the initiation of such action by the board or the reason for not making such effort." (Emphasis supplied).
Plaintiffs plainly failed to satisfy Section 623's prerequisites. As the Complaint and its case caption shows, the instant suit is not brought "in the right" of TONEMS; rather, it amounts to separate claims by individual Plaintiffs. In addition, the record is devoid of any allegation that Plaintiffs made an effort, outside of this lawsuit, to comply with sections (a), (c) or otherwise purport to compel corporate action different from the actions ultimately undertaken by TONEMS. (See Tr. of March 31, 2015 Oral Argument, pp. 44–45). Nor do NFPCL Sections 719 and 720 assist Plaintiffs' cause; these provisions principally concern self-dealing or misdirection of corporate funds away from the not-for-profit corporation, conduct which is absent here in view the undisputed fact that once terminated, the residual LOSAP funds were not spirited away for the Individual Defendants' personal benefit, but were used for ambulance corps purposes. (See discussion supra pp. 6–7).
In addition, even had Plaintiffs satisfied Section 623's procedural prescriptions or were otherwise permitted to bring suit against the directors of TONEMS named as individual defendants herein, such Individual Defendants would be insulated from liability under NFPCL § 720–a. Section 720–a of the NFPCL protects defendant directors of a not-for-profit corporation who serve without compensation unless the plaintiff corporation member can plead and prove that such directors acted with gross negligence or with a specific intent to harm plaintiff. As § 720–a provides:
" § 720–a. Liability of directors, officers and trustees
Except as provided in sections seven hundred nineteen and seven hundred twenty of this chapter, and except any action or proceeding brought by the attorney general or, in the case of a charitable trust, an action or proceeding against a trustee brought by a beneficiary of such trust, no person serving without compensation as a director, officer or trustee of a corporation, association, organization or trust described in section 501(c)(3) of the United States internal revenue code shall be liable to any person other than such corporation, association, organization or trust based solely on his or her conduct in the execution of such office unless the conduct of such director, officer or trustee with respect to the person asserting liability constituted gross negligence or was intended to cause the resulting harm to the person asserting such liability. For purposes of this section, such a director, officer or trustee shall not be considered compensated solely by reason of payment of his or her actual expenses incurred in attending meetings or otherwise in the execution of such office." (Emphasis added).
Courts have not hesitated to dismiss actions brought against such individual directors where, as here, no fraud or gross negligence was or could be plausibly pleaded and proved. See Scanlon v. Kessler, 11 F.Supp.2d 444, 448 (S.D.NY 1998) ; Goldsmith v. Fight For Sight, Inc., 251 A.D.2d 120, 121 (1st Dept.1998) ; Pontarelli v. Shapero, 231 A.D.2d 407, 410 (1st Dept.1996).
In the instant case, even a cursory reading of the Complaint and the affidavits submitted by Plaintiffs in connection with this motion reveal that Plaintiffs have failed to adduce sufficient facts to properly plead, much less potentially prove, that the Individual Defendants acted in such a cavalier and venal fashion with respect to TONEMS or individual TONEMS members. Indeed, the undisputed facts adduced in the pleadings and motion papers are to the contrary; the Individual Defendants' decision—made at a regular meeting of the TONEMS Board in October 2008—redounded to the benefit of TONEMS, albeit at the expense of those in Plaintiffs' position, by increasing the monies available to the ambulance corps for its central eleemosynary mission. (See Complaint, 53–54; Weddell Affid. 10–14; discussion supra. p. 4–7).
Put simply, a claim of fiduciary breach against board members serving without compensation should be made of sterner stuff. The case law applying § 720–a so indicates. See, e.g., Goldsmith v. Fight for Sight, Inc., 251 A.D.2d 120 (1st Dept.1998) ; Rabushka v. Marks, 229 A.D.2d 899, 900 (3d Dept.1996). ("In light of the legislative intent to curtail litigation against persons engaged in nonpaid charitable activities in its earliest stages ... it is our view that a plaintiff must come forward with evidentiary proof showing a fair likelihood that he or she will be able to prove that the defendant was grossly negligent or intended to cause the resulting harm"); Pontarelli v. Shapero, 231 A.D.2d 407, 410 (1st Dept.1996) ("[T]he IAS Court properly held that the unpaid directors are immune from suit under Not–For–Profit Corporation Law § 720–a and CPLR 3211(11), absent allegations of their gross negligence or intention to cause harm.").
Plaintiffs' Fifth Cause of Action: Promisory Estoppel
The last substantive straw at which Plaintiffs grasp is the claim of promisory estoppel. Plaintiffs allege that TONEMS established the LOSAP in order to "induce the plaintiffs to provide volunteer services" for it and that Plaintiffs provided such services "[a]cting with reasonable reliance on the representations made by TONVAC" that they would participate in and obtain benefits from the LOSAP (Com pl.100–101 ). Aside from the fact that Plaintiffs cannot establish a basis for an agreement or understanding directly between Plaintiffs and TONEMS to provide LOSAP benefits to Plaintiffs for the indefinite future—which impugns this claim on its face—the undisputed facts adduced on this summary judgment motion reveal that Plaintiffs cannot establish the fundamental elements of a cause of action based upon promisory estoppel.
The law is clear that an order to prevail on a claim of promisory estoppel, a plaintiff must establish the following elements: (1) a clear and unambiguous promise; (2) reasonable and foreseeable reliance by the party to whom the promise was made; and (3) a serious injury sustained in reliance on that promise, such that a failure to compensate plaintiff would be unconscionable. AHA Sales, Inc. v. Creative Bath Products, Inc., 58 AD3d 6, 20, 21 (2d Dept.2008) ; Rock v. Rock, 100 AD3d 614 (2d Dept.2012) ; Schwartz v. Miltz, 77 AD3d 723, 724 (2d Dept.2010) ; Fishoff v. Coty, Inc., 676 F.Supp.2d 209, 219 (S.D.NY 2009), aff'd., 634 F.3d 647 (2d Cir.2011). Based on the facts adduced on the instant motion, Plaintiffs cannot sustain any of these essential elements.First, as discussed above, since TONEMS had the right—even under the Plan provisions upon which Plaintiffs purport to rely—to terminate the LOSAP at any time (Plan § 8.1), Plaintiffs cannot establish a "clear and unambiguous promise" to them or undertaking by TONEMS to continue the LOSAP into the indefinite future. See Rock v. Rock, 100 AD3d 614, 616 (2d Dept.2012) ( "[T]he son [plaintiff] was not entitled to a permanent injunction based upon promissory estoppel because the evidence did not establish that the promise by the father to transfer the property to the son was clear and unequivocal.").
Second, Plaintiffs—all veteran members of the ambulance corps at the time the LOSAP was initiated—cannot seriously maintain that they initiated their service or continued their tenure in reliance upon the LOSAP; their admitted history with the corps speaks forcefully to the contrary (See Affid. of Nancy Pacella In Opposition, sworn to on Aug. 14, 2014, 2–4; Plaintiffs' Response No. 5 to Defendants' First Set of Interrogatories, Exh. H to Defts. Motion). See Schwartz v. Miltz, 77 AD3d 723, 725 (2d dept.2010) ("The evidence presented at trial did not warrant a finding that plaintiff detrimentally relied on defendant's alleged promise to convey to him a one-half interest in the subject real property. The expenditures which the plaintiff testified he made to maintain and improve the subject property may be satisfactorily explained by his desire to improve the surroundings in which he and his family lived.").
Third, and most significantly, Plaintiffs' alleged injury can scarcely be characterized as an unconscionable consequence of the TONEMS Defendants' conduct; Plaintiffs merely seek breach of contract type damages in the form of LOSAP benefit payments they claim are contractually owed. This hardly amounts to "something beyond the expectation damages' which follow naturally from the non-performance of the alleged agreement" which a claim of promisory estoppel mandates. Fishoff v. Coty, Inc., 676 F.Supp.2d 209, 220 (S.D.NY 2009), aff'd, 634 F.3d 647 (2d Cir.2011). The reason behind such a rule is clear: absent the requirement of an unconscionable consequence, any failed breach of contract claim might automatically qualify for promisory estoppel relief. See also Halliwell v. Gordon, 61 AD3d 932, 934 (2d Dept.2009) ("Recovery under the doctrine of promisory estoppel is limited to cases where the promissee suffered unconscionable injury."); AHA Sales, Inc. v. Creative Bath Products, Inc., 58 AD3d 6, 21 (2d Dept.2008) ; ("[T]he doctrine of promisory estoppel is limited to cases where the promise suffered an unconscionable injury' "); WE Transport, Inc. v. Suffolk Transportation Service, Inc., 192 A.D.2d 601 (2d Dept.1993) ("[T]he doctrine of promisory estoppel is not applicable since [plaintiff] has not suffered an unconscionable injury'); Ferreyr v. Soros, 116 AD3d 407 (1st Dept.2014) ("The promisory estoppel claim also fails since the facts alleged do not show that defendant caused unconscionable injury' to plaintiff as a result of any reasonable reliance she placed on his alleged promises .").
Moreover, the fact that Plaintiffs received benefits from the LOSAP over a period of years further undermines any claim that the alleged injuries ultimately suffered by termination of the LOSAP were so severe as to be considered "unconscionable." See AHA Sales Inc. v. Creative Bath Products, Inc., 58 AD3d 6, 21 (2d Dept .2008) ("[T]he plaintiff did not suffer unconscionable injury since it derived substantial revenues over the course of many years in reliance on the alleged representations of [defendants]."); D & N Boening Inc. v. Kirsch Beverages, Inc., 99 A.D.2d 522, 524 (2d Dept.), aff'd, 63 N.Y.2d 449 (1984).
Accordingly, Plaintiffs' promisory estoppel cause of action is untenable and is dismissed.
Plaintiffs' Third Cause of Action For a Declaratory Judgment
In light of the Court's decision with respect to Plaintiffs' four substantive causes of action, Plaintiffs' application for a declaratory judgment falls of its own weight. Plaintiffs' application for a declaratory judgment is predicated upon the same claims asserted in the other allegations of the Complaint—particularly their claim for breach of the Plan provisions. Since such claims lack merit, as discussed above, the application for a declaratory judgment lacks any foundation and cannot be maintained. See JMF Consulting Group II Inc. v. Beverage Marketing USA, Inc., 97 AD3d 540, 542 (2d Dept.2012) ; Alizio v. Feldman, 82 AD3d 804, 805 (2d Dept.2011).
Conclusion.
For all the foregoing reasons, the summary judgment motion interposed on behalf of the TONEMS Defendants is granted and the Complaint with respect to them is dismissed.
Plaintiffs' Motion for Summary Judgment with Respect to the TONEMS Defendants.
In light of this Court's decision granting summary judgment and dismissing the Complaint against the TONEMS Defendants, Plaintiffs' motion for summary judgment against them with respect to the instant Complaint must be denied. However, for essentially the same reason, Plaintiffs' motion with respect to TONEMS counterclaim has merit. The counterclaim revolves around the calculation, or alleged miscalculation, of certain benefits under the LOSAP which Plaintiffs claim would be owing to certain of them under the Plan. In view of the Court's decision granting TONEMS motion for summary judgment which, in effect, holds that TONEMS is not liable for termination of the LOSAP, the counterclaim falls of their own weight. The same holds true for TONEMS cross-claim for indemnification and contribution against certain of its co-defendants which the Court dismisses on its own motion.
Accordingly, both TONEMS' counterclaim and cross-claim are dismissed.
The foregoing constitutes the Decision and Order of this Court.