Lee v. Town of Southampton
| Decision Date | 21 February 2020 |
| Docket Number | 18-cv-3167 (JMA)(SIL) |
| Parties | STEVEN LEE and STEVEN LEE GOLF INC., Plaintiffs, v. THE TOWN OF SOUTHAMPTON, THE SOUTHAMPTON TOWN POLICE DEPARTMENT, SERGEANT WILLIAM KIERNAN in his official capacity as a Police Officer of the Town of Southampton Police Department, RUSSELL A. KRATOVILLE in his official capacity as the Town of Southampton Management Services Administrator, TIFFANY S. SCARLATO in her official capacity as the Town Attorney for the Town of Southampton, JOHN DOE a person or firm whose name is currently unknown, ERIC SCHULTZEL, and ROB CORCORAN, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
REPORT AND RECOMMENDATION
Presently before the Court in this civil rights action are Defendants' motions to dismiss and for sanctions, and Plaintiffs' cross-motion for leave to amend their complaint. Plaintiffs Steven Lee ("Lee") and Steven Lee Golf Inc. ("SLG," and together with Lee, "Plaintiffs") commenced this action on May 30, 2018 against Defendants The Town of Southampton (the "Town"), The Southampton Town Police Department (the "STPD"), Sergeant William Kiernan in his official capacity as a Police Officer of the Town of Southampton Police Department ("Kiernan"), Russell A. Kratoville in his official capacity as the Town of Southampton Management Services Administrator ("Kratoville"), Tiffany S. Scarlato in her official capacity as the Town Attorney for the Town of Southampton ("Scarlato"), John Doe a person or firm whose name is currently unknown ("Doe," and collectively with the Town, the STPD, Kiernan, Kratoville, and Scarlato, the "Southampton Defendants"), Eric Schultzel ("Schultzel," and together with the Southampton Defendants, "Defendants"), and Rob Corcoran ("Corcoran"),1 alleging, inter alia: (i) violations of their civil rights pursuant to 42 U.S.C. § 1983 ("Section 1983") and related New York State laws; and (ii) breach of contract and tortious interference (and conspiracy to tortuously interfere) with contract under New York State law. See generally Complaint ("Compl."), Docket Entry ("DE") [1]. Presently pending, on referral from the Honorable Joan M. Azrack for Report and Recommendation, are: (a) The Southampton Defendants' and Schultzel's motions to dismiss the Complaint against them pursuant to Fed. R. Civ. P. 12(b)(6), DEs [46], [50]; (b) Schultzel's motion for sanctions against Plaintiffs and their counsel under Fed. R. Civ. P. 11, DE [56]; and (c) Plaintiffs' cross-motion (in response to the motion for sanctions) for leave to file an amended complaint pursuant to Fed. R. Civ. P. 15(a)(2), DE [60]. For the reasons set forth below, the Court respectfully recommends granting Defendants' motions to dismiss and denying Schultzel's motion for sanctions and Plaintiffs' cross-motion for leave to file an amended complaint, as detailed herein.
The following facts are taken from the Complaint and various documents filed in connection with Defendants' motions to dismiss.2 The Complaint's factual allegations are accepted as true unless conclusively contradicted by additional materials considered by the Court, as more fully discussed below.
Since approximately August 2013, the Town has owned the Poxabogue Golf Center (the "Golf Center"), a public golf facility containing a nine-hole golf course, pro shop, and driving range, located at 3556 Montauk Highway, Sagaponack, New York. See Compl. ¶ 22. On or about June 5, 2013, the Town entered into a license agreement with SLG, which is owned by Lee, whereby SLG would operate, maintain, and manage the Golf Center in exchange for payment of an annual license fee to the Town (the "License Agreement"). See id. ¶¶ 23-28.3 The License Agreement entitled SLG to retain all revenues derived from operating the Golf Center, less expenses to maintain the premises. See id. ¶ 26. Once SLG started running the Golf Center, it began surveilling the property using cameras that were previously installed. See id. ¶ 44. Lee posted at least two signs informing customers that the premises were under 24-hour surveillance. See id.
In managing the Golf Center, SLG hired instructors, including Schultzel and Corcoran, as independent contractors, to give private and group lessons to patrons.See id. ¶¶ 31-32. SLG arranged a monetary split with its instructors whereby the instructors would keep 60% of "profits" and SLG would receive the other 40%. See id. ¶¶ 32-33. In May 2015, Schultzel and Corcoran complained about their share of the fees, and SLG subsequently adjusted the split to 65%/35% in favor of the instructors, but only for private lessons. See id. ¶ 33. Corcoran was unhappy that the revised breakdown did not apply to group lessons, and thereafter would only give private lessons. See id. ¶ 34. During the spring and summer of 2015, Schultzel began leaving the Golf Center early and, as a result, missing scheduled lessons. See id. ¶ 35. Thus, Lee reprimanded Schultzel and told him that if he was not going to show up for his lessons, SLG would need to hire more instructors to fill the void. See id. ¶ 36. Thereafter, Schultzel's and Corcoran's relationship with Lee was strained. See id ¶¶ 34, 37. SLG ultimately terminated its arrangement with Corcoran on September 6, 2015 because of his continued failure to fulfil his teaching obligations. See id. ¶ 56.
On July 25, 2015, Lee looked out his office window located in the Golf Center's pro shop (the "Window") and saw a "young woman" sitting on a bench outside, looking at her cellphone and wearing shorts and a t-shirt. See id. ¶ 38. According to Plaintiffs, the Window was transparent and overlooking a public area that was regularly traversed by customers, and the bench was near one of the signs informing patrons that the premises were under surveillance. See id. ¶¶ 43-44. Lee then took a picture of the girl with his cellphone (the "Photograph") while remaining inside in his office in a what he characterizes as a "conspicuous manner." See id. ¶ 39.According to Plaintiffs, the Photograph depicts a "chin-down image of a seated person of indeterminate age and sex, with one leg bent at the knee, holding a cell phone in both hands in front of his/her chest ... [with] no portion of the person's face above the chin and no hair ... visible." See id. ¶¶ 40. The Court's review of a copy of the Photograph provided by Plaintiffs indicates that the girl's crotch, and a portion of her right buttock, is at the center of the picture and that, although she is clothed, her shorts are moved to the side such that a portion of her pubic area is covered only by an undergarment. See Declaration of Patricia M. Meisenheimer in Opposition to Schultzel's Motion to Dismiss ("Meisenheimer Decl."), DE [48-2], Ex. B (a copy of the Photograph). Also on July 25, 2015, Lee showed the Photograph to Schultzel and described the manner in which he had taken it. See Compl. ¶ 45. That same day, Schultzel discussed the image with Corcoran. See id. ¶ 46.
On or about July 30, 2015, Schultzel wrote to Kratoville, the Town Management Services Administrator, seeking to schedule an appointment to "discuss 'the future of [the Golf Center].'" See id. ¶¶ 13, 47. Schultzel followed-up by email on or about August 5, 2015, stating that he needed to "report an urgent matter regarding the future of [the Golf Center]." See id. ¶ 48. Kratoville met with Schultzel and Corcoran on August 11, 2015, and purportedly discussed whether Lee taking the Photograph was grounds to terminate the License Agreement and whether Schultzel and/or Corcoran might be able to take over managing of the Golf Center in the event the Town terminated its arrangement with SLG. See id. ¶¶ 49-50. There is no allegation that Defendants discussed terminating the License Agreement prior to thisincident. At the time of this meeting, Kratoville was one of three members - along with his then fiancé and now wife, Scarlato, the Town Attorney - of the Poxabogue Request for Proposal ("RFP") Review Committee (the "Committee"), which was charged with evaluating proposals to operate the Golf Center and making recommendations concerning its licensing to the Town's Board.4 See id. ¶¶ 17, 51-52, 112. Kratoville told Schultzel and Corcoran that he would "look favorably on the possibility of their managing [the Golf Center]." See id. ¶ 53.
On September 9, 2015, Kratoville informed Schultzel and Corcoran that he had spoken to Chief Pearce ("Pearce") of the STPD about the incident they had described to him and encouraged them to prepare a written statement detailing their account. See id. ¶ 57. Rather than drafting a document himself, Schultzel contacted Harry Hurt ("Hurt"), a freelance writer, to prepare a statement on his behalf (the "Statement"). See id. ¶ 58.5 Hurt, who was not present when the Photograph was captured and had never seen the image or spoken to Lee, drafted of the Statement and emailed it to Schultzel for review. See id. ¶¶ 59, 61. Schultzel reviewed the Statement before sharing the final version with Kratoville, who then forwarded it to Pearce on September 14, 2015. See id. ¶¶ 60, 63. The Statement purportedly contains inaccurate, misleading, and inflammatory information, explaining that Lee "stated he had shot the Photograph through a two-way mirrored window" and that the image "'showed the private lower area' of a teenage girl." See id. ¶¶ 59, 62, 64; see alsoDeclaration of Theodore D. Sklar in Support of the Southampton Defendants' Motion to Dismiss ("Sklar Decl."), DE [50-2], Ex. F-1, DE [51-3] (the "Criminal File," which contains a copy of the Statement).
On October 9, 2015, Schultzel supplemented the Statement with a supporting deposition to the STPD, attesting that the Photograph was of an "underage girl with her legs spread apart[,]" taken through a two-way mirror in Lee's office (i.e., the Window). See Compl. ¶ 65. Two additional witnesses employed at the Golf Center, Howard Matheson ("Matheson") and John...
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