Bertuglia v. City of N.Y.

• Decision Date: 19 March 2012
• Docket Number: No. 11 Civ. 2141 (JGK).,11 Civ. 2141 (JGK).
• Citation: 839 F.Supp.2d 703
• Parties: Robert BERTUGLIA, et al., Plaintiffs, v. The CITY OF NEW YORK, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

839 F.Supp.2d 703

Robert BERTUGLIA, et al., Plaintiffs,

v.The CITY OF NEW YORK, et al., Defendants.

No. 11 Civ. 2141 (JGK).

United States District Court,

S.D. New York.

March 19, 2012.

Jon Louis Norinsberg, Law Offices of Jon L. Norinsberg, New York, NY, for Plaintiffs.

Elizabeth Norris Krasnow, New York City Law Dept., Kathleen Gill Miller, The Port Authority of New York and New Jersey, Susan C. Roque, New York, NY, for Defendants.

OPINION AND ORDER

JOHN G. KOELTL, District Judge:

This case arises out of the initiation, investigation and prosecution of criminal charges brought against plaintiff Robert Bertuglia (“Bertuglia”), and his companies, plaintiffs Laro Maintenance Corporation and Laro Service Systems (collectively “Laro”), and the subsequent demise of Laro. The plaintiffs assert claims against six named employees of the Port Authority of New York and New Jersey (collectively, the “PA defendants”) and two New York County assistant district attorneys (collectively, the “ADA defendants”), for numerous alleged violations of the plaintiffs' federal civil rights under 42 U.S.C. § 1983. The plaintiffs also assert state law claims for tortious interference with contract and tortious interference with economic advantage against the ADA defendants and one of the PA defendants. The plaintiffs also assert a municipal liability claim against the City of New York (the “City”) under 42 U.S.C. § 1983 for failure to train and discipline prosecutors, and a state law claim for malicious prosecution. The PA defendants, the ADA defendants, and the City each have moved separately to dismiss the claims against them pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Jurisdiction is proper pursuant to 28 U.S.C. §§ 1331 and § 1367.

I.

In deciding a motion to dismiss pursuant to Rule 12(b)(6), the allegations in the complaint are accepted as true, and all reasonable inferences must be drawn in the plaintiff's favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.2007); Arista Records LLC v. Lime Grp. LLC, 532 F.Supp.2d 556, 566 (S.D.N.Y.2007). The Court's function on a motion to dismiss is “not to weigh the evidence that might be presented at trial but merely to determine whether the complaint itself is legally sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985). The Court should not dismiss a claim if the plaintiff has stated “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). While the Court should construe the factual allegations in the light most favorable to the plaintiff, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Id.; see also SEC v. Rorech, 673 F.Supp.2d 217, 221 (S.D.N.Y.2009).

When presented with a motion to dismiss pursuant to Rule 12(b)(6), the Court may consider documents that are referenced in the complaint, documents that the plaintiffs relied on in bringing suit and that are either in the plaintiff's possession or that the plaintiff knew of when bringing suit, or matters of which judicial notice may be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002); Rorech, 673 F.Supp.2d at 221.

II.

The following factual allegations are accepted as true unless otherwise noted:

Bertuglia founded Laro, a provider of janitorial and maintenance services, over 30 years ago. At its height Laro employed over 3,000 people and had a gross annual revenue in excess of $72,000,000. Laro was based in Bayshore, New York, and its clients have included numerous public entities; it has provided services at well-known landmarks, including the Statute of Liberty, the Fulton Fish Market, and the Port Authority Bus Terminal in Manhattan. (Am. Compl. ¶¶ 32–37.) In 1996, Laro began working for the Port Authority at the Port Authority Bus Terminal. Since that time, the Port Authority renewed its contract with Laro several times, and as late as 2008 praised Laro's work. (Am. Compl. ¶¶ 38–39 & Ex. A.)

In 2004, Laro entered into a new contract with the Port Authority to provide cleaning services at the Port Authority Bus Terminal. A new provision in this 250 page contract provided that Laro was required to purchase new cleaning equipment for its work for the Port Authority. This provision was included as part of a vendor-wide policy by the Port Authority and was not specifically directed at Laro. The contract provided that Laro would be paid an additional $0.76 an hour to offset the cost of purchasing new equipment. (Am. Compl. ¶¶ 40–43.) While Laro purchased most of the new equipment, it inadvertently failed to purchase all of the new equipment required under the new contract due to the departure of staff members tasked with that responsibility. The Port Authority continued to use and praise Laro's services despite Laro's failure to purchase all of the new equipment. (Am. Compl. ¶¶ 44–49 & Ex. A.) The plaintiffs allege that they failed to purchase two cleaning machines. (Am. Compl. ¶ 55.)

The plaintiffs allege that no one at Laro ever intended to defraud or steal from the Port Authority, and further that Bertuglia did not even know he was submitting invoices that contained a $0.76 overcharge to the Port Authority. (Am. Compl. ¶¶ 50–51, 57) The plaintiffs further allege that they had no motive to defraud or steal from the Port Authority, because doing so would have risked their excellent reputation as well as the business generated from a major client, and would further have risked triggering the liquidated damages clause in the Port Authority contract. (Am. Compl. ¶¶ 52–55.)

In April 2007, an attorney for Laro sent a letter to the Port Authority challenging the integrity of the bidding process for the maintenance contract for Laguardia Airport, based on the allegation that a competitor, Guardian Maintenance, had intimated that it had already secured the contract, potentially outside of the formal bidding process. (Am. Compl. Ex. B.) The plaintiffs allege that this same attorney had also written a letter to defendant Robert Van Etten (“Van Etten”), the Port Authority's Inspector General, regarding a similar complaint about the integrity of the bidding process for a new World Trade Center project. The plaintiffs also allege that Bertuglia had personally made similar complaints about the World Trade Center bidding to Charles Gargano, a Port Authority board member, noting that Guardian had “openly boasted that an upcoming project at the World Trace [sic] Center was already ‘in the bag’ ” and Bertuglia asked “to ‘get a fair shake’ on an upcoming bid.” (Am. Compl. ¶¶ 15, 102–105.)

The plaintiffs allege that the Port Authority's Office of the Inspector General (“OIG”) commenced an investigation into Laro's failure to purchase new equipment as a result of these complaints about the “rigged” Port Authority bidding process. (Am. Compl. ¶¶ 58–59, 66, 106.) Defendant Jeffrey Schaffler (“Schaffler”), a Port Authority Supervising Investigator, led the investigation. (Am. Compl. ¶¶ 23, 60.) Also involved in the investigation were the defendants Fred Ferrone (“Ferrone”), a Forensic Auditor for OIG, and Bernard D'Aleo (“D'Aleo”), a Contract Administrator for the Port Authority Bus Terminal, as well as five other unnamed OIG officers. (Am. Compl. ¶¶ 21, 25, 59–60.) The plaintiffs allege that this team was supervised by Inspector General Van Etten, as well as Port Authority Director of Investigations Michael Nestor and Investigative Manager Edward Kennedy. (Am. Compl. ¶¶ 17, 19, 59–65, 106.)

The plaintiffs allege that this investigation uncovered no evidence of any criminality or intentional misconduct by any of the plaintiffs, and the defendants failed to ask the plaintiffs or any Laro employees directly about the additional $0.76 an hour charge. (Am. Compl. ¶¶ 57, 61–63.) The plaintiffs allege that, despite the lack of any evidence, the PA defendants falsely told the New York County District Attorney's Office that Bertuglia “had committed intentional criminal misconduct by knowingly submitting invoices containing the $.76 charge without having bought the new equipment.” (Am. Compl. ¶ 64.) The plaintiffs allege that the defendants “grossly distorted the actual facts and circumstances,” and that they told the District Attorney's Office that Bertuglia “had ‘stolen a lot of money’ from the Port Authority, was a ‘thief’ and a ‘crook’, and should be arrested and prosecuted.” (Am. Compl. ¶ ¶ 65, 67.) The plaintiffs allege that these statements were made with the express intent that the plaintiffs be arrested and prosecuted, that the PA defendants continued to advocate for the plaintiffs' arrest and prosecution even after the case was referred to the District Attorney's Office, and that the PA defendants withheld exculpatory evidence from the District Attorney's Office, including that the Port Authority had continued to pay Laro on the contract despite the alleged fraud, and had even renewed the Laro contract for another three years. (Am. Compl. ¶¶ 68–70, 206.)

The plaintiffs allege that ADA Elyse Ruzow (“ADA Ruzow”) of the New York County District Attorney's Office opened a criminal investigation in response to the allegations by the Port Authority defendants. (Am. Compl. ¶¶ 10, 71.) The plaintiffs allege that ADA Ruzow, in connection with her role in the District Attorney's Labor and Racketeering Unit, had been separately investigating a person named Vincent Grimaldi who had been on the phone call with Bertuglia and Charles Gargano in which Bertuglia had told Gargano that he was concerned about the Port Authority's bidding process...