Plattsburgh Hous. Auth. v. Cantwell, No. 2013–0858.

CourtUnited States State Supreme Court (New York)
Writing for the CourtROBERT J. MULLER, J.
Citation54 N.Y.S.3d 612 (Table)
Decision Date10 February 2017
Docket NumberNo. 2013–0858.
Parties PLATTSBURGH HOUSING AUTHORITY, Plaintiff, v. Lori CANTWELL, Defendant.

54 N.Y.S.3d 612 (Table)

PLATTSBURGH HOUSING AUTHORITY, Plaintiff,
v.
Lori CANTWELL, Defendant.

No. 2013–0858.

Supreme Court, Clinton County, New York.

Feb. 10, 2017.


Barclay Damon, Albany (Colm P. Ryan of counsel), for plaintiff.

Hinman Straub, Albany (James T. Potter of counsel), for defendant.

ROBERT J. MULLER, J.

The issues of this action having duly come on for a hearing before me as one of the Justices of this Court, on June 20, 2016, June 21, 2016, June 22, 2016, June 30, 2016, and August 29, 2016 and having heard the allegations and proofs of the respective parties, and having carefully reviewed plaintiff's exhibits 1–3, 7, 9–11, 13–15, 17, 19, 20, 22–29, 35, 36, 39, 40, 43, 46, 49, 50, 66, 85–87, 96, 100, 101, and 104 and defendant's exhibits 38, 41, 44, 45, 47, 51, 52, 55, 59, 60, 63, 65, 67, 69, 70, 72, 73, 75, 77, 78, 84, 102, and 103, all of which were received into evidence, and the Court also having had an opportunity to observe the demeanor of the witnesses called to testify and having made determinations on issues of credibility with respect to these witnesses and due deliberation having been had thereon,

NOW, after reviewing the submissions, and the plaintiff having appeared by and through its attorney, Barclay Damon, Albany (Colm P. Ryan of counsel), and the defendant having appeared in person and by and through her attorney, Hinman Straub, Albany (James T. Potter of counsel) I do hereby make the following findings of essential facts which I deem established by the evidence and reach the following conclusions of law.

PLATTSBURGH HOUSING AUTHORITY

BACKGROUND

1. Plaintiff Plattsburgh Housing Authority (hereinafter the PHA) provides housing to approximately eleven hundred people in Plattsburgh, N.Y. and provides vouchers for housing to another several hundred people (Trial Tr. 54:15–25).

2. There are approximately thirty employees who work for the PHA and it has an annual budget of $4.5 million to $5 million (Trial Tr. 54:5–8).

3. The PHA is run by a Board that is comprised of seven members, five of whom are appointed by the mayor of the City of Plattsburgh and two of whom are elected by residents living in PHA housing (Trial Tr. 53:11–16).

4. Clayton Morris was appointed to the PHA Board in approximately 2006 and served as the chairperson of the PHA Board from 2007 or 2008 through July 1, 2012 (Trial Tr. 52:3–7, 56:3–9).

5. Shirley O'Connell was appointed to the PHA Board in 2004 and on July 1, 2012, she became the chairperson of the PHA Board and Mr. Morris became the vice-chairperson (Trial Tr. 56:10–12, 758:19–22).

6. Mr. Morris or Ms. O'Connell served as the chairperson of the PHA Board at all times relevant to this action.

7. The Executive Director of the PHA is responsible for day to day operations of the PHA including managing the budget and PHA personnel and communicating with PHA residents (Trial Tr. 58:11–17).

MS. CANTWELL'S RELATIONSHIP WITH PHA AS ATTORNEY

8. The Defendant Lori Cantwell has been an attorney since 1991 (Trial Tr. 418:13–14).

9. In 1997, Ms. Cantwell began performing services as an attorney for the PHA as an independent contractor (Trial Tr. 418:22–23). At that time, the Executive Director of the PHA was Patricia Lucia (Trial Tr. 264:12–13, 799:1–3).

10. As an independent contractor, Ms. Cantwell performed services pursuant to a legal services retainer and handled essentially all of the PHA's legal work (Trial Tr. 412:15–19, 420:14–16).

11. In March of 2003, Ms. Cantwell and the PHA executed a self-renewing 5 year General Counsel Employment Agreement (hereinafter the GC Agreement) providing for Ms. Cantwell to become an employee of the PHA (Trial Tr. 413:8–1 1, Plaintiff's Exhibit 2).

12. As the full time PHA attorney, Ms. Cantwell worked approximately 30–35 hours per week (Trial Tr. 99:7–11, 426:4–5).

13. As the PHA attorney, Ms. Cantwell attended almost all of the PHA Board meetings and provided the Board with information about Housing Urban Development ("HUD"), the PHA's regulatory agency, and advice on how to respond to directives from HUD (Trial Tr. 64:10–14, 65:18–22, 237:3–6).

14. Both Ms. Lucia, as Executive Director of the PHA, and the PHA Board often sought legal advice from Ms. Cantwell (Trial Tr. 65:8–17, 237:7–24).

MS. CANTWELL'S SALARY AS GENERAL COUNSEL

15. Ms. Cantwell's GC Agreement with the PHA stated that her annual salary was $27,960 (Trial Tr. 266:24–25, 267:1–3, Plaintiff's Exhibit 40).

16. This agreement provided that Ms. Cantwell's salary could be increased at the discretion of the Executive Director, but only with the approval of the PHA Board (Plaintiff's Exhibit 2 114(d)).

17. Although the PHA Board never passed a resolution to increase Ms. Cantwell's salary, she received 2.5% to 3% annual raises which were tied to the raises that employees on the PHA salary schedule1 received (Trial Tr. 341:15–22, 425:1–3).

18. In 2009, a new line was placed on the salary schedule for the PHA attorney as "legal" and Ms. Cantwell's salary was placed at the "step one" salary for the attorney position with an initial salary, on the schedule, of $37,062 which corresponded to Ms. Cantwell's salary at that time (Trial Tr. 342:13–25, Plaintiff's Exhibit 40).

19. From 2003 to the time she was placed on the PHA salary schedule in 2009, Ms. Cantwell's annual salary increased approximately $10,000 (Trial Tr. 586:20–23, Plaintiff's Exhibit 40).

CANTWELL LAW FIRM LEASE AGREEMENT

20. The PHA office was initially located on Oak Street in Plattsburgh, but in 2009 or 2010 plans began for a new office building on South Catherine Street for the PHA (Trial Tr. 218:20–25, 219:1–4, 799:19–21).

21. During the design phase of the construction of the new building Ms. Lucia suggested that a portion of the new building be rented as an office and Ms. Cantwell advised that she would be interested in renting that office for the Cantwell Law Firm (Trial Tr. 219:1–5, 800:18–25, 801:1–7).

22. In 2011, the PHA Board approved a lease agreement for the Cantwell Law Firm to occupy two offices within the new PHA Administration Building (Trial Tr. 141: 4–12).

23. When the lease agreement with the Cantwell Law Firm was executed Ms. Cantwell was a member of the Cantwell Law Firm (Trial Tr. 427:16–17).

24. Ms. Cantwell was the only attorney who reviewed the lease agreement between the PHA and the Cantwell Law Firm on the PHA's behalf (Trial Tr. 141:7–9, 219:14–18).

25. Despite representing the PHA and being a member of the entity that was contracting with the PHA, Ms. Cantwell never advised the PHA, either orally or in writing, to have an attorney, other than herself, review the lease agreement (Trial Tr. 141:10–12, 219:22–25, 220:1–2, 428:1–5).

26. Ms. Cantwell never advised the PHA as to who she was representing with respect to the lease agreement, but presented the lease to the PHA "because she was [its] attorney" (Trial Tr. 141:13–17, 768:16–21).

27. Ms. Cantwell never obtained informed consent from the PHA disclosing her role in the negotiation and execution of the lease agreement (Trial Tr. 428:10–16).

28. Significantly, this failure to disclose her conflict of interest would occur again.

MS. CANTWELL BECOMES EXECUTIVE DIRECTOR OF PHA

29. When Clayton Morris, Shirley O'Connell and Paul Grasso were appointed to the PHA Board, Ms. Lucia served as Executive Director (Trial Tr. 57:25, 58:1–3, 207:17–18, 758: 19–23).

30. In the summer of 2011, Ms. Lucia advised the PHA that she would be retiring from her position as Executive Director effective approximately January 2012 (Trial Tr. 58:22–24, 59:3–5, 208:22–25).

31. To find a new Executive Director, the PHA published notices in local newspapers and housing authority trade magazines advising potential candidates of the opportunity to serve as Executive Director of the PHA (Trial Tr. 59:8–14, 209:9–10, 430:20–22).

32. The salary for the new Executive Director was set forth in this as $75,000 to $85,000, commensurate with experience (Trial Tr. 59:15–20, 209:1 1–21, 761:19–23).

33. Ms. Cantwell was one of over a dozen applicants for the position and one of three or four candidates interviewed for the position by members of the PHA Board. (Trial Tr. 59:21–23, 61:6–10).

34. Ms. Cantwell was ultimately hired because she had considerable experience with the PHA and the PHA Board believed that her experience as an attorney would help her navigate the complexities of HUD policies (Trial Tr. 64:22–25, 65:1–5).

35. Another reason the PHA Board supported Ms. Cantwell was that her qualifications as a licensed attorney would reduce the need for the PHA Board to need assistance from another attorney (Trial Tr. 223:7–12, 241:5–8, 242:9–12).

36. During her interview, Ms. Cantwell advocated that hiring her would present a cost savings to the PHA because the PHA would not need to...

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