If an employee engaged in repeated acts constituting disloyalty to the employer, forfeiture of compensation and benefits is warranted under the Faithless Servant Doctrine

If an employee engaged in repeated acts constituting disloyalty to the employer, forfeiture of compensation and benefits is warranted under the Faithless Servant Doctrine

City of Binghamton v Whalen, 2016 NY Slip Op 04289, Appellate Division, Third Department

John C. Whalen had been employed by the City of Binghamton[City] as its Director of Parks and Recreation and, in that capacity, was entrusted with the collection of various fees and funds on behalf of the City. In April 2014, Whalen pleaded guilty to grand larceny in the third degree, admitting that he stole more than $50,000 from the City between January 2007 and November 2012.

The City subsequently sued Whalen seeking [1] to recover all compensation it had paid to him during the period of the theft and [2] a judicial declaration that it is under no obligation to furnish him with health insurance earned through his employment. The City moved for summary judgment in its favor.

Supreme Court granted the City’s summary judgment on the issue of liability. However Supreme Court concluded that in view of Whalen’s “otherwise ‘unblemished’ 35 years of service to [the City]" and notwithstanding his over a half a "decade of thievery," there were issues of fact raised as to whether forfeiture of compensation was warranted under the faithless servant doctrine. The City appealed.

The Appellate Division said the Supreme Court’s ruling that there were issues of fact to be considered with respect to the faithless servant doctrine was error and ruled that the City was entitled to summary judgment on the issue of damages and a declaration that it is relieved of its obligation to provide Whalen with health insurance benefits.

The court explained that New York law with respect to the disloyal or faithless performance of employment duties has developed for well over a century and, citing Western Elec. Co. v Brenner, 41 NY2d 291, said that "an employee is to be loyal to his [or her] employer and is 'prohibited from acting in any manner inconsistent with his [or her] agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his [or her] duties.'" 

In the words of the Appellate Division, “[u]nder what is commonly referred to as the faithless servant doctrine, ‘[o]ne who owes a duty of fidelity to a principal and who is faithless in the performance of his [or her] services is generally disentitled to recover his [or her] compensation, whether commissions or salary.’ Thus, where an employee ‘engage[s] in repeated acts of disloyalty, complete and permanent forfeiture of compensation, deferred or otherwise, is warranted.’"*

Clearly there was no dispute that Whalen’s admission to stealing more than $50,000 from the City over the course of a nearly six-year period constitutes conclusive proof of such facts and established the City's entitlement to judgment as a matter of law on the issue of Whalen's liability. Further, said the Appellate Division, “[t]he Court of Appeals has made clear that forfeiture of compensation is required even when some or all of ‘the services were beneficial to the principal or [when] the principal suffered no provable damage as a result of the breach of fidelity by the agent.’"

Thus, said the Appellate Division, what Supreme Court characterized as Whalen's “exemplary performance of his duties when he was not stealing from [the City] does not insulate him from the application of the faithless servant doctrine” with respect to his  persistent pattern of disloyalty over the six-year period during which he stole from the City.

As to the damages claimed by the City, it submitted documentary evidence establishing that it paid Whalen $316,535.54 in compensation between January 2007 and November 2012, and Whalen failed to submit any competent proof to dispute that figure. Accordingly, the Appellate Division awarded the City damages in the amount of $316,535.54 and declared that the City was relieved of its obligation to provide Whalen health insurance benefits earned through his employment.

* See William Floyd Union Free School Dist. v Wright, 61 AD3d 856.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04289.htm

An eligible list found to be invalid prior to its "expiration" had no legal existence and thus it could not have "expired," permitting the establishment of a "corrected' list"

An eligible list found to be invalid prior to its "expiration" had no legal existence and thus it could not have "expired," permitting the establishment of a "corrected' list"

Crociata v Cassano, 2016 NY Slip Op 04212, Appellate Division, Second Department

New York City Fire Commissioner Salvatore J. Cassano declining to promote Anthony L. Crociata to the rank of Fire Marshal. Crociata sued the Commissioner and Supreme Court ordered that Crociata’s name be placed “on a special eligible list for promotion to the rank of Fire Marshal” and that that he be reconsider for such promotion.

In response to Cassano’s appeal of the Supreme Court's ruling the Appellate Division vacated the lower court's order and dismissed the proceeding in its entirety.

Although noting that “[t]he only available remedy to a Civil Service examinee who is determined to have been improperly passed over for an appointment or promotion is a judicial direction for reconsideration,” the court said that in this instance the relief awarded by the Supreme Court -- directing Cassano to reconsider Crociata’s application for promotion -- was improper, as the eligible list on which his name had appeared had expired by operation of law.

The court explained that although Crociata had commenced his lawsuit before the date on which the list had expired, “he failed to adequately allege that the list itself was constitutionally invalid,” citing Pena v NYC Civil Service Commission, 27 AD3d 293. 

In the Pena case the Appellate Division found that Pena had not challenge the validity of the original eligible list, but sought to have her name placed on a "special list," pursuant to Civil Service Law §56(3).* However, said that court, “in order to be placed on a special eligible list, [Pena] was required first to successfully challenge the validity of the list itself prior to its expiration."

The Pena court, citing City of New York v New York State Div. of Human Rights, 93 NY2d 768, said that only if Pena’s challenge to the list itself was successful would she have a remedy that comports with Article V, §6 of the New York State Constitution, in that the original list would have had no legal existence and thus could not have expired, allowing for extension of a 'corrected' list.”

In Crociata’s situation the court held that Supreme Court “erred in directing [Cassano] to place [Crociata’s] name on a special eligible list for promotion to the rank of fire marshal and reconsider him for such promotion. 

* Civil Service Law §56.3 addresses situations where the individual was disqualified and such disqualification has been reversed, or the individual's rank order on an eligible list has been adjusted, as the result of an administrative or judicial action or proceeding. In contrast, Civil Service Law §56.4 is triggered where a court of competent jurisdiction has determined that an eligible list is invalid and provides that the court may order the creation of a special eligible list having a duration of not less than one nor more than four years commencing at the time the corrected list is published.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04212.htm

Responding to a Freedom of Information Law request by neither confirming nor denying the existence of such information or data

Responding to a Freedom of Information Law request by neither confirming nor denying the existence of such information or data

Abdur-Rashid v New York City Police Dept., 2016 NY Slip Op 04318, Appellate Division, First Department 
Samir Hashmi v New York City Police Department, et al., 2016 NY Slip Op 04318, Appellate Division, First Department

A governmental agency’s response to a Freedom of Information Law [FOIL] request stating it would “neither confirm nor deny” it had information concerning focus of the FOIL request in its possession is characterized as a “Glomar response” -- the Central Intelligence Agency’s response to a FOIL request for information concerning the activities of the Glomar Explorer, a salvage vessel allegedly built at the request of the CIA in an effort to salvage a sunken submarine.

Supreme Court denied the petition brought by Talib W. Abdur-Rashid pursuant to CPLR Article 78 seeking to compel the New York City Police Department [Department] to disclose documents requested pursuant to FOIL. The Department's response to Abdur-Rashid's FOIL request was that it "would neither confirm nor deny" such records or documents existed. The Appellate Division unanimously affirmed the lower court's ruling.*

The Appellate Division explained that FOIL does not prohibit the Department from giving a Glomar response to a FOIL request where, as here, the Department "has shown that such confirmation or denial would cause harm cognizable under a FOIL exception."

Citing Hanig v State of N.Y. Dept. of Motor Vehicles., 79 NY2d 106, the court said that although Abdur-Rashid contends that a “Glomar response is impermissible in the absence of express statutory authorization," the Glomar Doctrine is "consistent with the legislative intent and with the general purpose and manifest policy underlying FOIL,” as it allows an agency to safeguard information that falls under a FOIL exemption.

Addressing the Supreme Court's ruling in Samir Hashmi v New York City Police Department,** the Appellate Division, after considering the differences between the two statutes identified by the Hashmi court,  concluded that they do not justify rejecting the Glomar doctrine in the context of FOIL.

The Appellate Division noted that while federal case law regarding FOIA is not binding on it, it is "instructive" when interpreting FOIL provisions and the application of the Glomar doctrine to FOIA requests has been widely approved by federal circuit courts. 

Further, said the court, the Department met it burden to "articulate particularized and specific justification" for declining to confirm or deny the existence of the requested records. In this instance the records sought information related to Department investigations and surveillance activities, including showing that answering the inquiries “would cause harm cognizable under the law enforcement and public safety exemptions of Public Officers Law §87(2).”

The Appellate Division, referring to Wilner et al,v NSA,*** then cautioned that by its ruling in these two actions it was not suggesting that any FOIL request for Department records would justify a Glomar response, opining that "An agency resisting disclosure of the requested records has the burden of proving the applicability of [a FOIL] exemption" and must submit "a detailed affidavit showing that the information logically falls within the claimed exemptions" and "the basis for [the agency's] claim that it can be required neither to confirm nor to deny the existence of the requested records."

* The Appellate Division unanimously reversed, on the law, the same Supreme Court’s denial of the Department’s motion to dismiss the Article 78 petition filed by Samir Hashmi seeking to compel it to disclose documents requested by Hashmi pursuant to FOIL and to submit an answer to the petition.

**See Samir Hashmi, et al v New York City Police Department, 46 Misc 3d 712, 722-724

*** USCA, Second Circuit, Docket No. 08-4726-cv, [Petition for writ of certiorari denied, US Supreme Court]

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04318.htm

A General Municipal Law §207-a(2) salary supplement becomes payable by the employer upon a firefighters retirement with accidental or line of duty disability benefits

A General Municipal Law §207-a(2) salary supplement becomes payable by the employer upon a firefighters retirement with accidental or line of duty disability benefits

Masullo v City of Mount Vernon, 2016 NY Slip Op 04225, Appellate Division, Second Department

The Fire Commissioner of the City of Mount Vernon adopted the recommendation of a hearing officer, made after a hearing, and denied disabled firefighter Michael Masullo’s application for supplemental salary benefits pursuant to General Municipal Law §207-a(2).

Masullo appealed the City’s action and Supreme Court held that Masullo was obligated to submit an application in the manner prescribed by the City of Mount Vernon and City of Mount Vernon Fire Department for §207-a(2) salary supplement payments and that the eligibility review process imposed by the City of Mount Vernon and City of Mount Vernon Fire Department was not improper. Masullo appealed the Supreme Court’s determination.

The Appellate Division overturned the Supreme Court’s decision, essentially holding that the language in §207-a(2) providing for supplemental salary payments to a firefighter retired on accidental or line of duty disability retirement mandates such payments upon the retirement of the firefighter because of such disability and is initiated by operation of law. Thus no “procedure” or “request” to grant or obtain such payments involving the employer appears to be required.

In the words of the Appellate Division, “General Municipal Law §207-a(2) guarantees the payment of benefits to a firefighter who is permanently disabled in the line of duty, including the continued payment of the firefighter's regular salary until the mandatory retirement age, less certain amounts received from other sources.”

The court noted that Masullo’s appeal “presents an issue of first impression for this Court: whether the provisions of General Municipal Law §207-a(2) authorize a municipality to terminate permanent disability retirement benefits previously awarded to a firefighter pursuant to that subsection, and require the firefighter to submit a formal application for those benefits pursuant to an application procedure that was adopted by the municipality subsequent to the firefighter's retirement.”

The court ruled that “a municipality is not authorized to terminate such previously awarded §207-a(2) benefits or require the submission of a formal application for such benefits after the firefighter has retired, as this essentially amounts to an improper reconsideration of an award of benefits based on improved medical condition, a procedure which is not authorized by General Municipal Law §207-a(2).”

The decision reports that the New York State Comptroller had approved both an accidental disability retirement allowance pursuant to the Retirement and Social Security Law §363, and a performance-of-duty disability retirement allowance pursuant to Retirement and Social Security Law §363-c for Masullo. In addition, the decision notes that Masullo "had simultaneously retired from the fire department."

In accordance with General Municipal Law §207-a(2), the City commenced paying Masullo §207-a(2) benefits, consisting of the  difference between his regular salary and those retirement allowances. In April 2004, the City adopted an application procedure for firefighters to request and receive §207-a(2) benefits.

The genesis of this litigation was a letter Deputy Fire Commissioner Deborah Norman sent to Masullo advising him that the City had recently reviewed his eligibility to receive §207-a(2) benefits and determined that there was no record that he had ever requested or applied for those benefits. Norman also advised Masullo that, "in the absence of a request or application for [Section] 207-a(2) benefits," she had determined that Masullo had been erroneously paid these benefits. Norman then directed the City to immediately cease paying Masullo §207-a(2) benefits, and included an application form with the letter should Masullo wish to apply for those benefits.

Masullo’s attorney wrote to the City the expressing his view that the Masullo was entitled to continue receiving §207-a(2) benefits. The City agreed to resume paying §207-a(2) benefits to Masullo on the condition that he submit an application in full compliance with the Fire Department’s recently implemented application process. Masullo did so and the City’s physician who examined Masullo opined that he “did not find any pathology that would represent a causally related disability, and determined that there was nothing which would prevent [Masullo] from returning to full-duty status.” Ultimately the City discontinued Masullo’s §207-a(2) supplemental payments.

Citing McGowan v Fairview Fire District, 51 AD3d 796,  the court said that it had addressed the question of whether a fire district was authorized to review a firefighter's medical condition for the purpose of determining whether it had improved to such an extent that the firefighter was no longer entitled to supplemental benefits pursuant to General Municipal Law §207-a(2).

The court said in McGowan it had held that General Municipal Law §207-a does not contain any language authorizing a municipality to terminate General Municipal Law §207-a(2) benefits on the basis of improved medical condition.

In contrast, GML §207-a(3) expressly grants municipalities the authority to terminate benefits being paid pursuant to GML §207-a(1) upon a finding that the employee has experienced an improvement is his or her medical or physical condition under certain circumstances.

Subdivision 3 of General Municipal Law §207-a provides as follows: “If such a [firefighter] [i.e., a firefighter receiving §207-a(1) benefits] is not eligible for or is not granted such accidental disability retirement allowance or retirement for disability incurred in performance of duty allowance or similar accidental disability pension and is nevertheless, in the opinion of such health authorities or physician, unable to perform his [or her] regular duties as a result of such injury or sickness but is able, in their opinion, to perform specified types of light duty, payment of the full amount of regular salary or wages, as provided by subdivision one of this section, shall be discontinued with respect to such [firefighter] if he [or she] shall refuse to perform such light duty if the same is available and offered to him [or her], provided, however, that such light duty shall be consistent with his [or her] status as a [firefighter] and shall enable him [or her] to continue to be entitled to his [or her] regular salary or wages, including increases thereof and fringe benefits, to which he [or she] would have been entitled if he [or she] were able to perform his [or her] regular duties.”*

The Appellate Division concluded that the absence of a similar provision in General Municipal Law §207-a with respect to retirees receiving §207-a(2) salary supplements to their retirement benefits indicates that the Legislature did not intend to grant municipalities the authority to terminate benefits paid §207-a(2) on the basis of the retiree’s improved medical condition.

The Appellate Division determined that the Masullo [1] was not obligated to submit an application for benefits pursuant to General Municipal Law §207-a(2) in the manner prescribed by the City of Mount Vernon and City of Mount Vernon Fire Department; [2]  the eligibility review process imposed by the City of Mount Vernon and City of Mount Vernon Fire Department was improper; [3] directed the City of Mount Vernon to reinstate Manullo’s§207-a(2)  benefits retroactive to February 13, 2009, plus statutory interest; and [4] awarded Masullo “one bill of costs.”

* GML §207-a(5) provides “The appropriate municipal or fire district officials may transfer such a [firefighter] to a position in the same or another agency or department where they are able to do so pursuant to applicable civil service requirements and provided the [firefighter] shall consent thereto.” See, also, GML §207-a(6) which provides for the forfeiture of a firefighter’s GML §207-a(1) entitlement to such benefits under certain circumstances.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04225.htm

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An appointing authority is not required to assign an individual to the position he or she desires or prefers

An appointing authority is not required to assign an individual to the position he or she desires or prefers
Webb v City of New York, 2016 NY Slip Op 04307, Appellate Division, First Department

Dawn Webb, a tenured teacher with a 15 year career, did not challenge the findings made in the course of a disciplinary arbitration hearing that she committed forty acts of misconduct, including insubordination, dereliction of duty, and incompetence, over a two-year time period at numerous different schools. Neither did she deny that she ignored the efforts of numerous supervisors and administrators to remedy her pedagogical deficiencies.

Notwithstanding Webb’s contention that she “became demoralized when she was assigned to the absent teacher reserve pool and did not have permanent assignment at one school,” the penalty imposed by the arbitrator was dismissal from her employment.

Webb filed a petition pursuant to CPLR Article 75 seeking a court order vacating the penalty of termination imposed by the arbitrator. Supreme Court dismissed her petition, which ruling was unanimously affirmed by the Appellate Division.

Citing Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, the Appellate Division said that “a court must uphold a sanction imposed [following a disciplinary hearing] unless it is so disproportionate to the offense that it shocks the conscience and therefore, constitutes an abuse of discretion.”

In this instance the court concluded that the penalty of termination of Webb’s employment was not unduly harsh or excessive given her failure to conform her behavior to the requirements of the job and her unwillingness to accept assistance or improve her performance.

As to Webb’s claim that her malfeasance or misfeasance in performing her duties were the result of her not having permanent assignment at one school, the Appellate Division observed that the appointing authority was not required to assign her to the position she desired.

Further, said the court, the record reflects that Webb was warned many times that her conduct would result in disciplinary action. Despite these warnings Webb failed to take steps to correct the deficiencies noted by numerous supervisors and administrators.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04307.htm

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