Opinion
2015-1625
09-01-2016
In the Matter of the Proceeding of Plattsburgh City Retirees' Association, MICHAEL ALEY, JOSEPH AMBROSIO, HARALAMBOS ANASTASIADIS, ROBERT ANDERSON, ROBERT ASHLINE, MARYANN AYOTTE, JAMES BAKER, JOSEPH BAKER, SUSAN BAKER, JOHN BARRY, MICHAEL BERRY, BRYON BISSONETTE, CHRISTOPHER BLEAUX, MATTHEW BOOTH, BRUCE BORDEAU, GARY BOUCHARD, JEFFREY BOUYEA, DAVID BOVA, BRYNN BOYER, GARY BRANDSETTER, ALAN BREWSTER, SCOT BRODERICK, JOHN BROWN, JANE BULGER, ROYCE BUTCHINO, ROBERT CARPENTER, RODNEY CARTIER, LEIGH CERONE, SCOTT CHASE, LEO CONNICK, ALINE COTE, SUSAN DANDROW, MARK DROLLETTE, WARD DUCATTE, WAYNE DUCATTE, JAMES DUFFANY, WAYNE DURKEE, MICHAEL EDWARDS, VIOLET FEAZELLE, ROGER FORGETTE, MICHAEL FOUNTAIN, JOYCE FRECHETTE, HENRY FROEHLICH, MARK GADWAY, ANITA GATLIN, TERRY GOLDFARB, GARY GONYEA, PRISCILLA GONYEA, GARY GREGORY, FRANK HAY, HAROLD HICKS, ARNOLD JENSEN, ROBERT JENSEN, DANIEL JOHNSON, RHONDA JOHNSON, FRED KELLEY, MICHAEL KEMP, DAVID KILFOYLE, ROBERT KING, ANSEL LA FOREST, GARY LA FOREST, GARY LA FOUNTAIN, NORMAN LANGLOIS, ROBERT LA PIER, BRENDA LA POINT, DAN LA POINT, CHARLES LARAVIA, CYNTHIA LASHER-GRAHAM, WILLIAM LAUNDRIE, BERNARD LAUNDRY, BRUCE C. LAVALLEY, BRUCE M. LAVALLEY, GARY LEAVINE, KENNETH LEAVINE, DENNIS LE FEBVRE, DEBBIE LINNEY, JOHN LINNEY, ROBERT LOUGHAN, SHERMAN LUCK, JACQUELINE LUPPA, JOSEPH MAKARA, JERRY MARKING, THOMAS MCCAULEY, ALLEN MESICK, DONNA MILLER, GEORGE H. MILLER, GEORGE M. MILLER, KEVIN MURPHY, PATRICK PAYNE, WILLIAM PEARSALL, THOMAS PENFIELD, RICHARD PERRY, DONALD PESCIA, WILLIAM PLYMPTON, TERRY POLHEMUS, CLAYTON PROVOST, BRENDA RABIDEAU, GEORGE RABIDEAU, DENNIS REID, MICHAEL ROBINSON, JULIE ROSS, MICHAEL ROSS, CAROLYN ST. CLAIR, BETTY SANTIAGO, ALLAN SEYMOUR, RICHARD SEYMOUR, DAVID SMITH, TIMOTHY SONDRINI, WILLIAM SPELLMAN, WAYNE SPINKS, JAMES SQUIRES, MARVIN STACY, GARY STARK, JOHN STOCKMAN, RALPH STONE, ALBERT SWOBODA, DONALD TERRY, RICHARD THOMPSON, KURT TOBROCKE, PATRICK TROMBLEY, RICHARD TUCKER, ORLAN WADE, JAMES WELLS, WILLIAM WILSON, ROBERT WOOD, PETER ZIELINSKI on behalf of themselves and all similarly situated persons, Plaintiffs-Petitioners, v. City of Plattsburgh, Defendant-Respondent.
Hinman Straub, P.C., Albany (Joseph M. Dougherty and Matthew W. O'Neil of counsel), for plaintiffs-petitioners. Goldberger and Kremer, Albany (Brian S. Kremer of counsel), for defendant-respondent.
Hinman Straub, P.C., Albany (Joseph M. Dougherty and Matthew W. O'Neil of counsel), for plaintiffs-petitioners. Goldberger and Kremer, Albany (Brian S. Kremer of counsel), for defendant-respondent. Robert J. Muller, J.
The underlying facts are fully set forth in the previous decisions of this Court. As relevant here, the individual plaintiffs are all Medicare eligible retirees of defendant City of Plattsburgh (hereinafter the City) and members of plaintiff Plattsburgh City Retirees Association, a not-for-profit organization which advocates for the rights of City retirees. Each individual plaintiff was a member of a collective bargaining unit while employed by the City and worked pursuant to a collective bargaining agreement, thus receiving a vested contractual right to health insurance coverage under the terms of the collective bargaining agreement in place at the time of his or her retirement. On October 8, 2015, the City's Common Council passed a resolution to transfer all Medicare eligible retirees from the City's self-insured health plan with claims processing through BlueShield of Northeastern New York (hereinafter the Blue Plan) to a premium-based Humana Medicare Plan (hereinafter the Humana Plan), provided that the prior authorization for services required under the Humana Plan did not exceed that required under the Blue Plan and, further, that the Humana Plan's network was nationwide and comprehensive. This transfer was to take place on January 1, 2016.
Plaintiffs commenced this combined CPLR article 78 proceeding and declaratory judgment action on December 24, 2015, alleging three causes of action. The first and third causes of action alleged, in sum, that the October 8, 2015 resolution must be declared null and void because the Humana Plan is more restrictive than the Blue Plan with respect to prior authorizations and, further, does not offer a nationwide and comprehensive network. The second cause of action then alleged that the City's actions were in breach of the individual plaintiffs' respective collective bargaining agreements, many of which require the City to maintain health insurance coverage for retirees that is equivalent to or better than the Blue Plan.
Simultaneous with the filing of the verified petition and complaint, petitioners filed a motion by Order to Show Cause for a preliminary injunction restraining the City from transferring the individual plaintiffs — and all others similarly situated — to the Humana Plan pending the outcome of the proceeding. Plaintiffs also requested a temporary restraining order (TRO) pending the return date of the motion, which TRO was granted to the extent that the City was restrained from transferring the individual plaintiffs from the Blue Plan to the Humana Plan pending the outcome of the motion. The Court then granted the motion in its entirety by Decision and Order dated February 1, 2016 (hereinafter the February 2016 Decision and Order), directing plaintiffs to post an undertaking in the amount of $207,019.20 (see 51 Misc 39 1209[A], 2016 NY Slip Op 50512[U], *6-7 [Sup Ct, Clinton County 2016]).
On February 18, 2016, the City passed a resolution which expressly "supercede[d]" the October 8, 2015 resolution. This resolution removed the conditions previously set forth relative to the transfer of coverage, simply declaring "that the City shall no longer provide health insurance benefits through the [Blue Plan] to [M]edicare eligible retirees and such [M]edicare eligible retirees shall be provided with health insurance benefits [through the Humana Plan]." In view of this resolution, plaintiffs' first and third causes of action were dismissed as moot by Decision and Order dated April 20, 2016, and their second cause of action — which is essentially a breach of contract cause of action — was converted to a plenary action. A discovery scheduled was subsequently established and, on August 22, 2016, the Court granted plaintiffs' motion for leave to amend their verified petition and complaint.
Presently before the Court are (1) plaintiffs' motion to hold defendant in civil and criminal contempt as a result of its alleged failure to comply with the preliminary injunction; and (2) the City's motion to modify the preliminary injunction by increasing the amount of the undertaking. The motions will be addressed in seriatim.
Motion for Contempt
"In order [t]o sustain a finding of either civil or criminal contempt based on an alleged violation of a court order[,] it is necessary to establish that a lawful order of the court clearly expressing an unequivocal mandate was in effect[,] . . . that the order has been disobeyed' and that the charged party had knowledge of the court's order'" (Town of Copake v 13 Lackawanna Props., LLC, 73 AD3d 1308, 1309 [2010], quoting Matter of Department of Envtl. Protection of City of NY v Department of Envtl. Conservation of State of NY, 70 NY2d 233, 240 [1987]; see Matter of McCormick v Axelrod, 59 NY2d 574, 583 [1983], amended 60 NY2d 652 [1983]). "The same act may constitute both criminal and civil contempt; the element which escalates a contempt to criminal status is the level of willfulness associated with the conduct'" (Town of Copake v 13 Lackawanna Props., LLC, 73 AD3d at 1309, quoting McCain v Dinkins, 84 NY2d 216, 226 [1994]; see Judiciary Law § 750 [A] [3]; Matter of McCormick v Axelrod, 59 NY2d at 583). "Moreover, criminal contempt must be proven beyond a reasonable doubt" (Town of Copake v 13 Lackawanna Props., LLC, 73 AD3d at 1309; see Matter of People v Hooks, 64 AD3d 1075, 1077 [2009], lv dismissed 13 NY3d 815 [2009]). "Civil contempt, in contrast, must be proven by clear and convincing evidence, and requires a showing that the rights of a party have been prejudiced" (Town of Copake v 13 Lackawanna Props., LLC, 73 AD3d at 1309; see McCain v Dinkins, 84 NY2d at 226; Judiciary Law § 753 [A] [3]; Automated Waste Disposal, Inc. v Mid-Hudson Waste, Inc., 50 AD3d 1073, 1074 [2008]).
Here, while the City has maintained all of the individual plaintiffs on the Blue Plan since issuance of the TRO, it transferred 65 similarly situated Medicare eligible retirees who were not named as individual plaintiffs to the Humana Plan on January 1, 2016. According to plaintiffs, these similarly situated retirees should have been transferred back to the Blue Plan upon issuance of the preliminary injunction, which expressly "restrained [the City] from transferring the individual [plaintiffs] — and all others similarly situated — to the Humana Plan pending the outcome of [the] proceeding." Plaintiffs contend that the City must be held in civil and criminal contempt as a result of its willful and ongoing refusal to effectuate such transfer.
In opposition, the City contends that enforcement of the preliminary injunction has been stayed because, on February 29, 2016, it filed and served a notice of appeal of the Decision and Order granting plaintiffs' motion for a preliminary injunction. The City also filed a motion for leave to appeal, which motion was denied by the Appellate Division, Third Department on April 19, 2016.
Under CPLR 5519 (a) (1), "[s]ervice upon the adverse party of a notice of appeal or an affidavit of intention to move for permission to appeal stays all proceedings to enforce the judgment or order appealed from pending the appeal or determination on the motion for permission to appeal where the appellant or moving party is the state or any political subdivision of the state." The scope of the automatic stay of CPLR 5519 (a) "is restricted to the executory directions of the judgment or order appealed from which command a person to do an act" (Matter of Pokoik v Department of Health Servs. of County of Suffolk, 220 AD2d 13, 15 [1996]; see Matter of Kar-McVeigh, LLC v Zoning Bd. of Appeals of Town of Riverhead, 93 AD3d 797, 799 [2012]). "[T]he stay does not extend to matters which are not commanded but which are the sequelae of granting or denying relief" (Matter of Pokoik v Department of Health Servs. of County of Suffolk, 220 AD2d at 15; see Matter of Kar-McVeigh, LLC v Zoning Bd. of Appeals of Town of Riverhead, 93 AD3d at 799).
While the provisions of CPLR 5519 (a) (1) stayed enforcement of the preliminary injunction — an undisputedly executory direction contained within the February 2016 Decision and Order — the Court finds that this stay expired upon denial of the City's motion for leave to appeal. While the City contends that the stay is still in effect because the appeal itself remains pending, the Court is not persuaded. Under CPLR 5701 (b) (1), "[a]n order is not appealable to the appellate division as of right where it is made in a proceeding against a body or officer pursuant to article 78." Therefore, to the extent that the City's motion for leave to appeal was denied, it's notice of appeal has been rendered a nullity.
The City further contends that the Court's February 2016 Decision and Order did not express an unequivocal mandate directing that the 65 similarly situated Medicare eligible retirees transferred to the Humana Plan on January 1, 2016 be returned to the Blue Plan. Rather, it simply restrained the City from transferring the individual plaintiffs — and all others similarly situated — to the Humana Plan pending the outcome of the proceeding. According to the City, it has not transferred any one else to the Humana Plan since issuance of the Decision and Order and, as such, has complied fully with the directive.
In issuing the February 2016 Decision and Order, the Court did in fact intend for all of the individual plaintiffs and those similarly situated to be maintained on the Blue Plan pending the outcome of the proceeding, including those who had previously been transferred to the Humana Plan on January 1, 2016. This notwithstanding, to the extent that the Decision and Order did not expressly direct the City to transfer the 65 similarly situated Medicare eligible retirees from the Humana Plan back to the Blue Plan, the Court declines to find the City in either civil or criminal contempt. Plaintiffs' motion is therefore denied.
Inasmuch as plaintiffs request that — in the alternative — the Court direct the City to transfer the 65 similarly situated Medicare eligible retirees from the Humana Plan back to the Blue Plan, the Court declines to do so. With the first and third causes of action now dismissed and the second cause of action converted to a plenary action, the procedural posture of this case has changed substantially since issuance of the February 2016 Decision and Order. To the extent that the Court does not have any proof before it as to the collective bargaining agreements under which the 65 Medicare eligible retirees transferred to the Humana Plan are covered, it cannot direct that they be returned to the Blue Plan.
Motion to Modify Preliminary Injunction
"A motion to vacate or modify a preliminary injunction is addressed to the sound discretion of the court and may be granted upon compelling or changed circumstances that render continuation of the injunction inequitable'" (Thompson v 76 Corp., 54 AD3d 844, 846 [2008], quoting Wellbilt Equip. Corp. v Red Eye Grill, 308 AD2d 411, 411 [2003]; see CPLR 6314; Thompson v 76 Corp., 37 AD3d 450, 452-453 [2007]).
Here, the City contends that there has been a change in circumstances and the undertaking originally established by the Court is no longer equitable.
Indeed, the undertaking in the amount of $207,019.20 was calculated by the Court in its February 2016 Decision and Order based upon the City's estimate that it would save $584.80 per month for each individual plaintiff switched from the Blue Plan to the Humana Plan, together with the Court's estimate that the matter would be decided in three months:
$584.80/month for each individual plaintiff x 118 individual plaintiffs = $69,006.40/month
$69,006.40 x 3 months = $207,019.20 (see 51 Misc 39 1209[A], 2016 NY Slip Op 50512[U] at *7).
Dismissal of the first and third causes of action and conversion of the second cause of action to a plenary action then extended the time frame for disposition significantly, with the current discovery schedule suggesting a final resolution some time in the spring of 2017.
"[I]f it is ultimately determined that a party was not entitled to an injunction, recovery of resulting damages attributable to the injunction will be limited to the amount of the undertaking as fixed by the court" (Bonded Concrete, Inc. v Town of Saugerties, 42 AD3d 852, 855 [2007]; see CPLR 6312 [b]; City of Yonkers v Federal Sugar Ref. Co., 221 NY 206, 211 [1917]; Honeywell, Inc. v Technical Bldg. Servs., 103 AD2d 433, 434 [1984]). As such, the amount of the undertaking must "be rationally related to the potential damages recoverable if it is ultimately determined that the injunction was unwarranted" (Bonded Concrete, Inc. v Town of Saugerties, 42 AD3d at 854-855; see Lelekakis v Kamamis, 303 AD2d 380, 380 [2003]).
Here, the City requests that the amount of the undertaking be increased by $457,656.00. In support of this request, the City has submitted the affidavit of Judy M. Tyo, Vice President of First Niagara Benefits Consulting, its health benefits consultant. According to Tyo, a total of 149 retirees and their spouses have been maintained on the Blue Plan as a result of the preliminary injunction. Tyo opines that, from January 1, 2016 to May 31, 2016, the City has spent $438,548.00 to maintain these retirees and their spouses on the Blue Plan. Had these retirees and their spouses been transferred to the Humana Plan, the City would have spent a total of $247,898.00. As such, the City incurred additional costs of $190,650.00 — or $38,130.00 per month — from January 1, 2016 to May 31, 2016. Based upon these figures, the City calculates an estimated additional cost of $457,656.00 ($38,130.00 x 12 months) to maintain the retirees and their spouses on the Blue Plan from April 1, 2016 to April 1, 2017.
Under the circumstances, the Court finds that the undertaking in the amount of $207,019.20 is no longer appropriate. The Court further finds that the additional undertaking requested by the City in the amount of $457,656.00 is rationally related to the potential damages recoverable if it is ultimately determined that the preliminary injunction was unwarranted.
Briefly, plaintiffs contend that the instant motion is frivolous, as the City previously moved to increase the amount of the undertaking and was denied such relief. The Court is not persuaded, however, given the change in circumstances since denial of the earlier motion. Plaintiffs further contend that increasing the undertaking will result in a denial of the injunction to which they are entitled (see Modugno v Merritt-Chapman Scott Corp., 17 Misc 2d 679, 680 [Sup Ct, Queens County 1959]), as they are all retirees living on fixed incomes and unable to post any additional undertaking. With that said, however, plaintiffs have failed to submit any proof in this regard.
Based upon the foregoing, the City's motion to modify the preliminary injunction is granted to the extent that the undertaking is increased by $457,656.00. Plaintiffs are hereby directed to post an additional undertaking in the amount of $457,656.00 within thirty (30) days of the date of this Decision and Order.
The Court expressly denies the City's request that the preliminary injunction be vacated without further Order if the undertaking is not timely posted.
Therefore, having considered the Affidavit of Joseph M. Dougherty, Esq. with exhibits attached thereto, sworn to May 9, 2016, submitted in support of motion for contempt; Memorandum of Law of Joseph M. Dougherty, Esq., dated May 9, 2016, submitted in support of motion for contempt; Affidavit of Brian S. Kremer, Esq. with exhibits attached thereto, sworn to May 25, 2016, submitted in opposition to motion for contempt; Memorandum of Law of Brian S. Kremer, Esq., dated May 25, 2016, submitted in opposition to motion for contempt; Affidavit of Joseph M. Dougherty, Esq. with exhibits attached thereto, sworn to June 3, 2016, submitted in further support of motion for contempt; Memorandum of Law of Joseph M. Dougherty, Esq., dated June 3, 2016, submitted in further support of motion for contempt; Affidavit of Brian S. Kremer, Esq. with exhibit attached thereto, sworn to June 2, 2016, submitted in support of motion to modify preliminary injunction; Affidavit of Judith M. Tyo with exhibits attached thereto, sworn to June 2, 2016, submitted in support of motion to modify preliminary injunction; Affidavit of Richard A. Marks with exhibit attached thereto, sworn to June 2, 2016, submitted in support of motion to modify preliminary injunction; Affidavit of Matthew W. O'Neil, Esq., sworn to June 24, 2016, submitted in opposition to motion to modify preliminary injunction; Memorandum of Law of Matthew W. O'Neil, Esq., dated June 24, 2016, submitted in opposition to motion to modify preliminary injunction; Memorandum of Law of Brian S. Kremer, Esq., dated June 30, 2016, submitted in further support of motion to modify preliminary injunction; and Affidavit of Judy M. Tyo with exhibits attached thereto, sworn to June 28, 2016, submitted in further support of motion to modify preliminary injunction, it is hereby
ORDERED that plaintiffs' motion seeking to hold defendant in civil and criminal contempt is denied in its entirety; and it is further
ORDERED that the City's motion to modify the preliminary injunction is granted to the extent that the undertaking is increased by $457,656.00; and it is further
ORDERED that plaintiffs shall post an additional undertaking in the amount of $457,656.00 within thirty (30) days of the date of this Decision and Order; and it is further
ORDERED that any relief not specifically addressed herein has nonetheless been considered and is expressly denied.
The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated May 9, 2016, the Notice of Motion dated June 3, 2016 and the submissions enumerated above. Counsel for the City is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry upon plaintiffs in accordance with CPLR 5513. Dated:September 1, 2016
Lake George, New York
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ROBERT J. MULLER, J.S.C. ENTER: