Hirschfeld v. City of New York

• Decision Date: 11 February 1999
• Citation: 253 A.D.2d 53,686 N.Y.S.2d 367
• Parties: 1999 N.Y. Slip Op. 1377, 1999 N.Y. Slip Op. 1378 Abraham HIRSCHFELD, Plaintiff-Respondent, v. The CITY OF NEW YORK, et al., Defendants, Robert M. Morgenthau, et al., Defendants-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 367

686 N.Y.S.2d 367

1999 N.Y. Slip Op. 1377, 1999 N.Y. Slip Op. 1378

Abraham HIRSCHFELD, Plaintiff-Respondent, v. The CITY OF NEW YORK, et al., Defendants Robert M. Morgenthau, et al., Defendants-Appellants.

Supreme Court, Appellate Division First Department.

Feb. 11, 1999.

Amyjane Rettew, of counsel (Office of the District Attorney of New York County) for defendants-appellants.

Bud G. Holman, of counsel (Benjamin H. Green, Paul F. Doyle, Thomas M. Licata and Scott H. Mandel, on the brief, Kelley Drye & Warren LLP, attorneys) for plaintiff-respondent.

ERNST H. ROSENBERGER, J.P., MILTON L. WILLIAMS, ISRAEL RUBIN and DAVID B. SAXE, JJ.

WILLIAMS, J.

In August 1994, the New York State Department of Taxation and Finance made a criminal referral to the New York County District Attorney's Office ("the DA's Office") recommending that Abraham Hirschfeld, the plaintiff in this case and a well-known real estate developer and political activist, be the subject of an investigation relating to alleged criminality in individual and corporate transactions conducted from 1988 to 1993. On the basis of that recommendation, the DA's Office commenced such an investigation of plaintiff for possible violations of State tax laws.

In furtherance of the investigation, the DA's Office issued four Grand Jury subpoenas duces tecum to Citibank, N.A. ("Citibank"), directing it to produce records pertaining to certain financial transactions of plaintiff and/or his companies. The subpoenas were dated December 1, 1994, December 22, 1994, October 24, 1995 and April 26, 1996 and were returnable on December 16, 1994, January 20, 1995, November 14, 1995 and May 10, 1996, respectively. Grand Juries were in session on each of the return dates. The subpoenas were issued under a "John Doe" caption to protect plaintiff's identity, sought evidence relevant to the matters under investigation, and required that Citibank produce the relevant records before the Grand Jury. The subpoenas included a proviso whereby Citibank, at its option, could have the documents delivered to the Assistant District Attorney's attention at the DA's Office; later, the ADA agreed to accommodate Citibank by sending someone to review the documents at its office in an effort to narrow the scope of the subpoenas.

The Grand Jury to which the first subpoena was returnable was impanelled several days after the subpoena's issuance. The term of that Grand Jury ended before the investigation was completed, which required that the investigation be re-opened before succeeding Grand Juries until August 1996, when, at the request of the DA's office, the Supreme Court impanelled a Special Grand Jury to hear evidence in this matter.

Shortly thereafter, plaintiff commenced this action asserting one cause of action for abuse of process and deprivation of rights and privileges guaranteed and secured by the Constitution and laws in violation of 42 U.S.C. § 1983. He alleged that at the time the subpoenas were issued, served and returnable, upon information and belief, no Grand Jury proceeding or criminal action was pending; that defendants acted maliciously and without justification in issuing the subpoenas "without any Grand Jury involvement" in an effort to "ruin[ ]" his reputation and business or as "an act of retribution and harassment" or to "win a collateral advantage" by developing evidence for subsequent criminal prosecutions; and that such actions resulted in damages due to loss of business and severe emotional distress. Defendants answered, denying liability.

Defendants then moved for summary judgment, in January 1997, on grounds that the issuance of the subpoenas was justified; that a duly-assigned Grand Jury was in existence on the return date of each subpoena; that plaintiff failed to allege a specific Constitutional or civil right that had been violated; that the investigation [and the subpoenas] were designated "John Doe" matters to prevent any unfair inference as to plaintiff's involvement or the nature of the investigation; and that the subpoenas were issued to third parties and plaintiff had no basis to assume their rights. Defendants also asserted the defense of absolute prosecutorial immunity. The moving papers were supported by an affidavit of a New York County Grand Jury Warden that stated that, as such, he was the custodian of records for Grand Juries convened in that county and that his records showed that on the return date of each of the subpoenas, a Grand Jury was impaneled and convened and had on its calendar an investigation that corresponded to the case numbers set forth on the respective subpoenas.

During the pendency of the summary judgment motion, defendants filed a 123-count indictment against plaintiff charging him and seven of his companies with a scheme to defraud in the first degree, grand larceny in the second degree, offering a false instrument for filing, and various tax offenses. Allegedly, defendants insisted that plaintiff be available for arraignment on the morning of May 1, 1997, which happened to be the exact date and time he had scheduled his press conference announcing his candidacy for Manhattan Borough President. It was further alleged that news of the arraignment was leaked to the press and that they were in attendance.

In June 1997, plaintiff cross-moved to amend the complaint. The cross-motion was resolved by stipulation which, among other things, granted leave to serve the amended complaint on the condition that the pending motion for summary judgment on the ground of prosecutorial immunity be deemed to address all causes of action therein. The amended complaint updated events and alleged three claims: abuse of process and violation of 42 U.S.C. § 1983; interference with business relationships; and prima facie tort.

Plaintiff alleged in opposition to summary judgment that defendants violated his First Amendment right to participate in the political process and tried to discredit his professional and personal reputation. It was his contention that prosecutorial immunity did not shield defendants' conduct here, where the investigation was politically motivated and not a legitimate inquiry into purported criminal conduct. He claimed actual damages to his business due to the loss of millions of dollars of financing commitments, which in some instances resulted in forced sale of properties at a "crushing loss". He also claimed damage to his personal, professional and political reputation and relationships. Although plaintiff did concede at this point that the Grand Juries were in existence on the subpoenas' return dates, he still maintained that his action was viable because the first subpoena was dated before the Grand Jury was impanelled and defendants "acted improperly" in leaking information to the press.

The motion court denied defendants summary judgment as to the abuse of process and federal civil rights claims, but granted summary judgment and dismissed plaintiff's wrongful interference with business relations and prima facie tort claims. The court, in upholding the abuse of process claim, looked askance at the circumstances surrounding the first subpoena--it was issued by the prosecutor prior to commencement of any proceeding--since it arguably could have been seen as being used improperly, i.e., to summon witnesses to a place where the Grand Jury was not convened or to conduct an investigation at the prosecutor's behest unrelated to a Grand Jury proceeding (see, Rodrigues v. City of New York, 193 A.D.2d 79, 602 N.Y.S.2d 337). The court rejected defendants' assertion of absolute prosecutorial immunity, since there was no pending Grand Jury proceeding, and further noted that their entitlement to qualified immunity was subject to challenge upon a showing of malice, and that plaintiff's allegation that defendants' investigation was "politically motivated" raised an issue of fact as to whether such entitlement exists here. Finally, the court found that a Federal civil rights claim had been sufficiently established by plaintiff's allegations that the first subpoena was improperly issued and that his business suffered injury as a result of defendants' efforts to discredit his public and professional reputations by issuance of the subpoenas and press releases.

The primary issue on this appeal is whether issuing a Grand Jury subpoena when the Grand Jury is not impanelled on the date of issuance constitutes an abuse of process. This appeal also poses the additional issues of whether plaintiff's abuse of process claim is defeated by absolute or qualified prosecutorial immunity and whether plaintiff adequately stated a Federal civil rights claim.

Plaintiff's contention that for a Grand Jury subpoena to be lawful, the Grand Jury must be impanelled prior to the issuance of the subpoena, is contrary to the existing authorities on the subject. Indeed, in People ex rel Van Der Beek v. McCloskey, 18 A.D.2d 205, 238 N.Y.S.2d 676, this Court held that "[w]hen the District Attorney, on his own initiative, issues and serves such a subpoena in good faith, a proceeding is instituted in the Grand Jury just as, in an analogous situation, a civil action is commenced by the service of a summons" (McCloskey at 208, 238 N.Y.S.2d 676). There is no requirement that the People open a Grand Jury proceeding prior to the return date of a Grand Jury subpoena (see, People v. Coastal Oil New York, Inc., NYLJ 6/4/98, p. 31, col. 4 [S.Ct., N.Y. Co.] ), or that the subpoena's validity depends on "the existence of a particular Grand Jury at any specific time" (Matter of Brunswick Hosp. v. Hynes, 52 N.Y.2d 333, 339, 438 N.Y.S.2d 253, 420 N.E.2d 51 n. 2 [dictum] ). What is required is that the Grand Jury be convened, or...