Robert Bertuglia, Jr., Individually & Corp. v. Schaffler, 15-3455-cv

• Decision Date: 06 December 2016
• Docket Number: 15-3455-cv
• Parties: ROBERT BERTUGLIA, JR., Individually and as President of Laro Maintenance Corporation, Plaintiff-Appellant, LARO MAINTENANCE CORPORATION, Plaintiff-Counter-Defendant-Appellant, LARO SERVICE SYSTEMS, INC., Plaintiff-Counter-Defendant v. JEFFREY SCHAFFLER, Port Authority Supervising Investigator, Defendant-Counter-Claimant-Appellee, CITY OF NEW YORK, ADA ELYSE RUZOW, ADA MICHAEL SCOTTO, BERNARD D'ALEO, Port Authority Contract Administrator, PORT AUTHORITY INVESTIGATORS JOHN DOES, #1-5 names and shield numbers whom are unknown at present, and other unidentified members of the Port Authority, PORT AUTHORITY INVESTIGATORS JANE DOES, # 1-5 names and shield numbers whom are unknown at present, and other unidentified members of the Port Authority, Defendants, ROBERT E. VAN ETTEN, Port Authority Inspector General, MICHAEL NESTOR, Port Authority Director of Investigations, EDWARD KENNEDY, Port Authority Investigative Manager, PORT AUTHORITY OF NEW YORK AND NEW JERSEY, FRED FERRONE, Port Authority Forensic Auditor, Defendants-Counter-Claimants.
• Court: U.S. Court of Appeals — Second Circuit

ROBERT BERTUGLIA, JR., Individually and as President ofLaro Maintenance Corporation, Plaintiff-Appellant,LARO MAINTENANCE CORPORATION, Plaintiff-Counter-Defendant-Appellant,LARO SERVICE SYSTEMS, INC., Plaintiff-Counter-Defendant v. JEFFREY SCHAFFLER,Port Authority Supervising Investigator, Defendant-Counter-Claimant-Appellee,CITY OF NEW YORK, ADA ELYSE RUZOW,ADA MICHAEL SCOTTO, BERNARD D'ALEO,Port Authority Contract Administrator,PORT AUTHORITY INVESTIGATORS JOHN DOES,#1-5 names and shield numbers whom are unknown at present,and other unidentified members of the Port Authority,PORT AUTHORITY INVESTIGATORS JANE DOES,# 1-5 names and shield numbers whom are unknown at present,and other unidentified members of the Port Authority, Defendants,ROBERT E. VAN ETTEN, Port Authority Inspector General, MICHAEL NESTOR,Port Authority Director of Investigations,EDWARD KENNEDY, Port Authority Investigative Manager,PORT AUTHORITY OF NEW YORK AND NEW JERSEY, FRED FERRONE,Port Authority Forensic Auditor, Defendants-Counter-Claimants.^**

15-3455-cv

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

December 6, 2016

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION &QUOTSUMMARY ORDER&QUOT). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 6^th day of December, two thousand sixteen.

PRESENT: DENNY CHIN, SUSAN L. CARNEY, Circuit Judges, BRIAN M. COGAN, District Judge.^*

FOR PLAINTIFFS-APPELLANTS:

JON L. NORINSBERG, Law Offices of Jon L. Norinsberg PLLC, New York, New York, and Scott A. Korenbaum, New York, New York, on the brief.

FOR DEFENDANT-APPELLEE:

KATHLEEN GILL MILLER (Sajaa Ahmed, on the brief), The Port Authority of New York and New Jersey, New York, New York.

Appeal from the United States District Court for the Southern District of New York (Koeltl, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.

Plaintiffs-appellants Laro Maintenance Corporation ("Laro") and its president, Robert Bertuglia, Jr.,¹ appeal from a judgment of the district court entered September 30, 2015, to the extent it granted summary judgment in favor of defendant-counter-claimant-appellee Jeffrey Schaffler² on their malicious prosecution, fair trial, and conspiracy claims. The district court explained its reasoning in an opinion and order filed September 29, 2015. We assume the parties' familiarity with the underlying facts, procedural history, and issues on appeal.

In December 2004, Laro entered into a $24 million contract to provide cleaning services at the Port Authority Bus Terminal from January 1, 2005 to December 31, 2007. The contract required that certain cleaning equipment be in "new and unused condition" at the start of the contract term. J. App. at 166. The cost of the new equipment was to be offset by a charge built into Laro's hourly rate over the course of the contract. Laro failed to purchase two pieces of cleaning equipment that were required at the start of the contract term; nevertheless, Laro billed the full hourly rateeach month. By the time the contract ended, the Port Authority had paid Laro at least $153,000 for use of the two pieces of cleaning equipment that had not been purchased.

In March 2007, Schaffler, an investigator with the Port Authority, informed Assistant District Attorney ("ADA") Michael Scotto that the Port Authority was investigating Bertuglia and Laro for overbilling. In May 2007, the New York County District Attorney's Office (the "DA's Office") opened a criminal investigation into Bertuglia and Laro, led by ADA Elyse Ruzow.

In August 2008, a grand jury indicted Bertuglia and Laro on charges of grand larceny in the second degree, offering false instruments for filing, and falsifying business records. The Supreme Court, New York County (Zweibel, J.), dismissed the indictment as to Bertuglia after finding that the evidence against him was legally insufficient, and the DA's Office thereafter dropped the charges against Laro. In April 2009, the grand jury again indicted Bertuglia and Laro for grand larceny in the second degree, but the second indictment was also dismissed as to both Bertuglia and Laro for, inter alia, legally insufficient evidence.

On March 29, 2011, Bertuglia and Laro filed a complaint in the district court against numerous defendants, including Schaffler, alleging claims of, inter alia, false arrest, malicious prosecution, denial of the constitutional right to a fair trial, and conspiracy to violate civil rights under 42 U.S.C. § 1983. Plaintiffs filed an amended complaint on July 1, 2011. On March 19, 2012, the district court granted in part motionsto dismiss by the defendants; certain of plaintiffs' claims against Schaffler, including malicious prosecution, deprivation of the right to a fair trial, and conspiracy, survived.

On October 17, 2014, plaintiffs moved for partial summary judgment on their malicious prosecution claim against Schaffler, and on November 21, 2014, Schaffler cross-moved for summary judgment dismissing plaintiffs' remaining claims.³ In a detailed memorandum and order entered September 29, 2015, the district court denied plaintiffs' motion for partial summary judgment and granted summary judgment to Schaffler and all other defendants on plaintiffs' remaining claims. Plaintiffs filed this timely appeal.⁴

We review a district court's grant of summary judgment de novo, "resolv[ing] all ambiguities and draw[ing] all inferences against the moving party." Garcia v. Hartford Police Dep't, 706 F.3d 120, 126-27 (2d Cir. 2013) (per curiam). "Summary judgment is proper only when, construing the evidence in the light most favorable to the non-movant, 'there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" Doninger v. Niehoff, 642 F.3d 334, 344 (2d Cir. 2011) (quoting Fed. R. Civ. P. 56(a)).

1. Malicious Prosecution

Under New York law, to succeed on their malicious prosecution claim, Bertuglia and Laro had to establish: "(1) the initiation or continuation of a criminal proceeding against plaintiff[s]; (2) termination of the proceeding in plaintiff[s'] favor; (3) lack of probable cause for commencing the proceeding; and (4) actual malice as a motivation for defendant's actions." Manganiello v. City of New York, 612 F.3d 149, 161 (2d Cir. 2010) (internal quotation marks omitted).

The grand jury indictments returned against Bertuglia and Laro create a presumption of probable cause that is fatal to their malicious prosecution claims. "[T]he existence of probable cause is a complete defense to a claim of malicious prosecution in New York . . . ." Id. at 161-62. Under New York law, a grand jury indictment "creates a presumption of probable cause that can only be overcome by evidence that the indictment was the product of fraud, perjury, the suppression of evidence by the police or other police conduct undertaken in bad faith." Bermudez v. City of New York, 790 F.3d 368, 377 (2d Cir. 2015) (internal quotation marks omitted).

Plaintiffs have proffered no facts from which a reasonable jury could infer that the indictment was the product of fraud, perjury, the suppression of evidence, or other bad faith conduct on the part of Schaffler. In the voluminous record in this case, plaintiffs point to three statements made by Schaffler to ADA Ruzow that they contend are false and evidence bad faith that rebuts the presumption of probable cause: Schaffler purportedly told Ruzow that (1) plaintiffs knowingly overbilled the PortAuthority, (2) Bertuglia was a "thief" and a "crook" who "stole a lot of money," J. App. at 646-47, 1631-33, and (3) Robert Kolakowski, Laro's onsite manager at the Port Authority, complained to Bertuglia about the lack of new cleaning equipment.

As an initial matter, Laro in fact billed the Port Authority for equipment it never purchased, and so Schaffler's statements were undisputedly true as to that fact. While Schaffler allegedly went further in his statements to the DA's Office, accusing plaintiffs of stealing and knowingly overbilling, plaintiffs point to no record evidence that those statements reached the grand jury. See Rothstein v. Carriere, 373 F.3d 275, 283-85, 290 (2d Cir. 2004) (rejecting view that "a person who falsely tells the police that someone has committed a felony may be liable for malicious prosecution no 'matter what goes on before the grand jury'" and adopting view that "unless the plaintiff can demonstrate that the proceedings before the grand jury were tainted, an indictment extinguishes the claim"). Moreover, the statements that Bertuglia was a thief and a crook who stole money clearly were statements of opinion that lacked evidentiary value. Without more, the district court correctly concluded that a jury could not find that "the grand jury was defrauded or that its integrity was undermined" by Schaffler'sconduct such that the presumption of probable cause was overcome.⁵ Special App. at 32.

Furthermore, the dismissals of the indictments due to legally insufficient evidence did not vitiate the presumption of probable cause created by the indictments. The New York Court of Appeals has observed that

[t]he rule in New York differs . . . from that in some jurisdictions which permit the presumption to be overcome by any evidence tending to show the absence of probable cause. In this State, the trial court may not weigh the evidence upon which the police acted or

...