Dunlop-McCullen v. Pascarella

Full title: JAMES DUNLOP-McCULLEN AND LOCAL 1-S RETAIL, WHOLESALE AND DEPARTMENT STORE…

Court: United States District Court, S.D. New York

Date published: Nov 13, 2002

97 Civ. 0195 (PKL) (DFE) (S.D.N.Y. Nov. 13, 2002)

Opinion

97 Civ. 0195 (PKL) (DFE)

November 13, 2002

Louie Nikolaidis, Esq., Lewis, Greenwald, Clifton Lewis, P.C., New York, New York, Attorney for Plaintiffs¹ and Third-Party Defendant W. Theodore Been.

1 On March 6, 2002, the Court signed an Order substituting Thomas N. Ciantra, Esq. of Cohen Weiss and Simon as the attorney of record for Local 1-S, Retail, Wholesale and Department Store Union, RWDSU, RFCW, AFL-CIO, CLC, in place of Mr. Nikolaidis. Mr. Nikolaidis remains the attorney of record for Dunlop-McCullen.

Eric J. LaRuffa, Esq., Richard M. Greenspan, P.C., Elmsford, NY, Attorney for Defendants Joseph Pascarella, Margaret Samuels and Gail Rogers.

Margaret M. Shalley, Fasulo, Shalley DiMaggio, LLP, New York, NY, Attorney for Third-Party Defendant Gwendolyn Parham.

OPINION AND ORDER

PETER K. LEISURE, United States District Judge.

This case is the culmination of several years of mismanagement and political infighting in the labor union that represents the employees of Macy's Department Store. Plaintiffs James Dunlop-McCullen ("McCullen"²) and Local 1-S, Retail, Wholesale and Department Store Workers Union, AFL-CIO ("Local 1-S") bring this action under § 501 of the Labor-Management Reporting and Disclosure Act ("LMRDA"), 29 U.S.C. § 501, and § 722 and § 723 of the New York Labor Law against Joseph Pascarella, Margaret Samuels and Gail Rogers. Pascarella and Samuels filed a counterclaim based on a breach of contract theory. Pascarella, Samuels and Rogers bring a third-party action against Gwendolyn Parham and W. Theodore Been for indemnity and contribution.

2 It appears that Dunlop-McCullen's full name is "James Dunlop-McCullen." However, when not stating his name in full, each of the parties refers to him as "McCullen." In light of the fact that his own submissions shorten his name, the Court also will refer to him in this opinion as "McCullen" and not "Dunlop-McCullen" for the sake of brevity.

Defendants now move this Court for summary judgment pursuant to Rule 56(b) of the Federal Rules of Civil Procedure on all of plaintiffs' claims and on the counterclaim. Third-party defendant Parham moves for summary judgment on the third-party claim³ and also seeks leave to reopen discovery. For the following reasons, defendants' motion is granted in part and denied in part and third-party defendant's motion is denied in full.

3 Third-party defendant Been has not moved for summary judgment at this time.

BACKGROUND

I. Factual Background

A. The Parties

Local 1-S is an unincorporated association and is the certified bargaining representative of certain Macy's Department Store employees. Defendants Pascarella and Samuels' Rule 56.1 Statement ("Pascarella's 56.1 S.") ¶ 1. The internal affairs of the union are governed by the Local 1-S Constitution and By-laws ("Constitution"). Third-party Defendant Parham's Rule 56.1 Statement ("Parham's 56.1 S.") ¶ 9; Plaintiffs' Brief in Opposition to Defendants' Motions for Summary Judgment ("Pl. Opp.") at 3.

McCullen is the current president of Local 1-S. Pascarella's 56.1 S. ¶ 2; Declaration of James Dunlop-McCullen, Aug. 31, 2001 ("McCullen Dec.") ¶ 1. In February 1998, he was installed as executive vice president by the union's executive board. At the same time, Vincent Giananti became the union president. Pascarella's 56.1 S. ¶ 2; Plaintiffs' Rule 56.1 Statement ("Pl. 56.1 S.") ¶ 97. On June 11, 1998, Giananti resigned as president and McCullen was appointed to take his place. In 1999, McCullen was elected president by the membership of Local 1-S. Pascarella's 56.1 S. ¶ 2; McCullen Dec. ¶ 7.

Pascarella was the president of Local 1-S from 1980 until 1998 and is currently retired. Before serving as president, he was the vice-president from 1978 until 1980. Pascarella's 56.1 S. ¶ 3; Pl. 56.1 S. ¶ 97. He was removed as president by a unanimous vote of the executive board in February 1998. Pl. 56.1 S. ¶ 97.

Samuels was a full-time employee of the union from 1969 until 1976, serving as an administrator. Id. ¶ 11. In 1978, after a brief tenure in the New York State Department of Labor, she returned to the union and was elected second vice president. Pascarella's 56.1 S. ¶ 4; Pl. 56.1 S. ¶ 13. In 1980 or 1981, she was elected first vice president. Pascarella's 56.1 S. ¶ 4; Pl. 56.1 S. ¶ 16. In 1992, after a Constitutional change in the officer positions, Samuels became executive vice president and held the position until 1998. Pascarella's 56.1 S. ¶ 4; McCullen Dec. ¶ 6. In February 1998, she was removed from her position by the executive board, Pl. 56.1 S. ¶ 97, and is presently retired. Pascarella's 56.1 S. ¶ 4.

Rogers is presently an employee of Macy's Department Store in White Plains, New York. She was employed as an administrator at Local 1-S from 1986 until 1996. Defendant Rogers' Rule 56.1 Statement ¶ 1. In 1996, Pascarella promoted Rogers to the position of director of administrators, a position in which she supervised the administrators. Pl. 56.1 S. ¶ 74; Affidavit of Gail Rogers, June 11, 2001 ("First Rogers Aff.") ¶ 6. She was fired from the position in April 1998 by then union president Giananti. Pl. 56.1 S. ¶ 80; First Rogers Aff. ¶ 10.

Parham was the financial secretary and office manager of Local 1-S from August 1990 through 1998. Affidavit of Joseph Pascarella, June 13, 2001 ("First Pascarella Aff.") ¶ 14; Deposition of Gwendolyn Parham at 10, attached as Ex. 8 to Margaret M. Shalley's Affirmation in Support of Motion for Summary Judgment, June 15, 2001 ("Shalley Aff."). It appears that she currently is an elected union officer but it is unclear, based on the parties' submissions, exactly what position she holds. According to Parham, she is second executive vice president. Affidavit of Gwendolyn Parham, June 13, 2001 ("Parham Aff.") ¶ 1. However, no such position exists in the Local 1-S Constitution's list of officers. Prior to 1992, there were two vice presidents, the first vice president and the second vice president. Local 1-S Constitution and By-Laws, as amended to April 1, 1985 ("1985 Constitution") art. VIII, attached as Ex. 1 to Shalley Aff. The Constitution was amended in 1992, however, to eliminate the two vice president positions and create a single executive vice president. Local 1-S Constitution and By-Laws, as amended to February 15, 1992 ("1992 Constitution") art. VIII, attached as Ex. 2 to Shalley Aff. As such, it is unclear to the Court exactly what position Parham holds.

Been was a member of the Local 1-S's executive board and also served on the trial committee and the transition committee. Parham's 56.1 S. ¶ 5. Been may also currently hold an elected position, but, similar to Parham, the parties' papers are not consistent, sometimes even internally, as to his title⁴ Fortunately, Parham's and Been's titles are not necessary to decide this motion.

4 Parham's Rule 56.1 Statement describes Been as the current vice president. Parham's 56.1 S. ¶ 5. Her Memorandum of Law states that he was elected first vice president on January 30, 1999. Parham's Memorandum of Law in Support of Third Party Defendant's Motion for Summary Judgment at 11. However, Parham's Affidavit states that he was elected second vice president in June of 1998. Parham Aff. ¶ 60. According to Pascarella, Been is the current executive vice president, appointed in March of 1998. Pascarella's 56.1 S. ¶ 6. Been describes himself as the current vice president. Deposition of Theodore Been, March 23, 2000 at 24.

B. The Union Constitution, Officers and Social Services Fund

The Local 1-S Constitution has been in effect for over sixty years. They were amended in 1985 and then again in 1992. McCullen Dec. ¶ 9. According to Article VII, § 3 of both the 1985 and 1992 versions of the Constitution, the executive board of the union "shall have general supervision over all the affairs and properties of the union." 1992 Constitution art. VII, § 3; 1985 Constitution art. VII, § 3. All expenditures of Local 1-S money over $500 must be reported to the executive board. 1992 Constitution art. VII, § 3; 1985 Constitution art. VII, § 3.

The duties of the union president include, among other things not germane to this action, enforcing the Constitution, managing the union office, attending to all legal matters, authorizing and accounting for all necessary expenditures, countersigning all checks issued by the financial secretary, and supervising along with the financial secretary all monies paid into the union. 1992 Constitution art. VIII, § 4; 1985 Constitution art. VIII, § 4.

The executive vice president, according to the Constitution, has responsibilities to render reports to the union membership and the executive board, assist the president in enforcing the Constitution and collective bargaining agreement, and countersign all checks issued by the financial secretary in the absence of the president. 1992 Constitution art. VIII, § 5. These duties are essentially the same as the duties of the first vice president before the restructuring of the officer positions. See 1985 Constitution art. VIII, § 5.

The financial secretary is responsible for supervising the receipt of all monies paid into the union and for ensuring that the bookkeeper issues official receipts for all monies received. She also is required to supervise the bookkeeper, including ensuring that he keep regular records of the finances and that those records are submitted for inspection and audit at the end of each quarter. Each of these duties of the financial secretary is to be done "jointly with the [p]resident." 1992 Constitution art. VIII, § 7; 1985 Constitution art. VIII, § 7. Additionally, the financial secretary is to co-sign all union checks. 1992 Constitution art. VIII, § 7; 1985 Constitution art. VIII, § 7.

The Constitution also calls for the creation of a social services fund ("SSF"), funded by fines levied upon union members. 1992 Constitution art. XI, §§ 1, 3; 1985 Constitution art. XI, §§ 1, 3. The fund's purpose is "to provide such services as will advance the good and welfare of the union and its members." 1992 Constitution art. XI, § 2; 1985 Constitution art. XI, § 2. The Constitution requires that the SSF be maintained as a separate union account. 1992 Constitution art. XI, § 3; 1985 Constitution art. XI, § 3. All checks drawn on the SSF must be signed by two out of three of the following:⁵ the president, the financial secretary or the executive vice president.⁶ 1992 Constitution art. XI, § 4.

5 This provision is in conflict with Article VIII, § 7, which requires that the financial secretary co-sign all checks. See 1992 Constitution art. VIII, § 7; 1985 Constitution art. VIII, § 7.

6 In the Constitution as amended in 1985, instead of executive vice president, the first vice president could sign the social services fund checks. 1985 Constitution art. XI, § 4.

The sole authority to administer the SSF lies with the social services committee. 1992 Constitution art. XI, § 5; 1985 Constitution art. XI, § 5. The financial secretary is the chairperson of the committee and the president, along with other elected union members, serves on the committee. 1992 Constitution art. XII, § 2; 1985 Constitution art. XII, § 2. The committee is required to meet at least once a month and must make a semi-annual detailed financial report to the executive board and to the membership. 1992 Constitution art. XII, §§ 5, 7; 1985 Constitution art. XII, §§ 5, 7.

C. The Union Accountants

Lewis Goltz⁷ served as Local 1-S's accountant from 1939 until his retirement in October 1991. Pascarella's 56.1 S. ¶ 41. Upon retiring, Goltz moved to North Carolina and died sometime in 1993. Id. ¶ 43. The union hired James Gurrieri to replace Goltz based on the former accountant's recommendation. Id. ¶ 42.

7 The correct spelling of Goltz's surname is unclear. The parties use both "Goltz" and "Goeltz." For consistency, the Court will use "Goltz" throughout this Opinion.

D. The Conduct at Issue

In regards to the conduct at issue, there is very little about which the parties agree. Therefore, this section of the factual background is brief. The parties' versions of the facts are included in the discussion section when relevant.

In 1991, Goltz asked Pascarella and Samuels to sign authorizations to close several SSF accounts. Pascarella and Samuels signed the authorizations without seeking an explanation as to what Goltz was going to do with the money. Accounts totaling over $250,000 were closed and Local 1-S has been unable to locate the funds or ascertain what became of them. Pl. 56.1 S. ¶¶ 32-36. Furthermore, they never asked Goltz what he did with the money they authorized to be withdrawn. Deposition of Joseph Pascarella ("Pascarella Dep.") at 130, attached as Ex. B to Declaration of Louie Nikolaidis in Opposition to Defendants' Motions for Summary Judgment ("Nikolaidis Dec."). This withdrawal of funds occurred shortly before Goltz's retirement and his move to North Carolina. Pl. 56.1 S. ¶ 32.

The officers of Local 1-S, including Pascarella and Samuels, were given union-leased cars during their tenures. Samuels does not have a license to drive. She allowed her daughter, Cheryl Coleman, to use the vehicle that the union leased for her. The car was stored at Coleman's house and Samuels never asked if her daughter used the car for non-union purposes.Id. ¶¶ 48-53. In 1998, Local 1-S was paying $1324 a month to lease a 1992 Oldsmobile Coronado and a 1993 Ford Taurus. Id. ¶ 58. The leases were not reported to the executive board. Id. ¶ 62.

In 1995 and 1996, Local 1-S purchased $32,000 in computer equipment.Id. ¶ 69.

In 1997, Local 1-S entered into a lease with Pitney Bowes Credit Corporation for a mailer and a copy machine. Under the terms of the leases, the union paid $755 a month for the copier and $456 a month for the mailer. The leases were not reported to the executive board. Id. ¶¶ 64, 66, 67.

While employed by the union, Rogers was reimbursed for travel expenses. Id. ¶ 82; Affidavit of Gail Rogers, Oct. 12, 2001 ("Second Rogers Aff.") ¶ 7. When she was terminated, Rogers received vacation leave from Local 1-S. She also received vacation time from Macy's when she recommenced employment at the White Plains store. Pl. 56.1 S. ¶ 81.

E. The Trial Committee and Forensic Accountants

In 1996, McCullen filed internal charges with the union against Pascarella, Samuels and Rogers. In August 1997, the executive board formed a trial committee to investigate these charges, and the trial committee hired a forensic accountant, Pogogeff and Lafharis, PA, to review Local 1-S's financial records. Pascarella's 56.1 S. ¶ 24; Pl. 56.1 S. ¶ 95. On January 12, 1998, Pogogeff and Lafharis delivered their investigative report in which they found numerous problems with the union's finances and how Local 1-S was being run. See Final Report of Pogogeff Lafharis, Jan. 12, 1998 ("Pogogeff Lafharis Report"), attached as Ex. 10 to Shalley Aff.

F. The March 25, 1998 Agreement

On March 25, 1998, Pascarella and Samuels entered into an agreement ("March Agreement") with Local 1-S to end their employment and withdraw their appeal of the executive board's decision to remove them. Pl. 56.1 S. ¶ 99. Jon Quint, Esq., a general counsel to the Retail, Wholesale and Department Store Union, facilitated the agreement. Id. ¶ 98; Defendants' Reply to Plaintiffs' Statement of Disputed Facts ("Defs. Reply to Pl. Facts") ¶¶ 49, 50.

The March Agreement states that "there is no evidence that either [Pascarella or Samuels] converted or otherwise benefited from[,] directly or indirectly[,] the closed social service fund and other bank accounts and certain cemetery plots . . . which the accounting consultant, to date, has not been able to account for." Mar. 25, 1998 Letter Agreement ("Mar. Ag.") at 1, attached as Ex. D to Affidavit of Margaret Samuels, June 11, 2001. Pascarella and Samuels agreed to assist in the ongoing investigation into the missing funds and withdraw their appeal. Id. at 2, 4. Local 1-S agreed to refrain from suing or authorizing lawsuits against Pascarella or Samuels "[u]nless the investigation concerning the unaccounted for assets discloses tangible and credible evidence that [either Pascarella or Samuels] converted or otherwise benefited, directly or indirectly, from the unaccounted for assets." Id. at 3. The union further agreed to defend Pascarella and Samuels in any lawsuit currently pending against them relating to their respective service as union officers. Id. Pascarella, Samuels, Giananti and McCullen signed the March Agreement. See id. at 4.

On October 14, 1998, Louie D. Nikolaidis, Esq., on behalf of Local 1-S, propounded interrogatories and document requests to both Pascarella and Samuels, allegedly pursuant to the March Agreement. See Oct. 14, 1998 Letter from Louie Nikolaidis to Joseph Pascarella ("Interrogatories Document Requests"), attached as Ex. 16 to McCullen Dec. On October 23, 1998, Mr. Quint sent a letter to Mr. Nikolaidis in response to the discovery requests, stating that Pascarella would not respond to the requests because they lack "any legitimate basis." See Oct. 23, 1998 Letter from Jon Quint, Esq., to Louis Nikolaidis, Esq., attached as Ex. K to First Pascarella Aff.

Mr. Nikolaidis's response to Mr. Quint's letter was to notice a deposition for both Pascarella and Samuels. See Oct. 28, 1998 Letter from Louie Nikolaidis to Joe Pascarella, attached as Ex. 17 to McCullen Dec. By way of a November 3, 1998 letter, Pascarella indicated that he would not appear. See Nov. 3, 1998 Letter from Joseph Pascarella to Louie Nikolaidis, Esq., attached as Ex. 18 to McCullen Dec. And indeed neither Pascarella nor Samuels appeared for the depositions. See Statement on the Record, Nov. 20, 1998, attached as Ex. 20 to McCullen Dec.

II. Procedural Background

McCullen commenced this action on January 13, 1997, when he filed a verified application for leave to file suit against Local 1-S and its officers and agents pursuant to § 501(b) of the LMRDA, 29 U.S.C. § 501 (b). On May 21, 1997, this Court denied plaintiff leave to sue pursuant to Magistrate Judge Eaton's March 7, 1997 recommendation. See Dunlop-McCullen v. Local 1-S, AFL-CIO-CLC, No. 97 Civ. 0195, 1997 U.S. Dist. LEXIS 7107 (S.D.N.Y. May 21, 1997).

On May 7, 1998, the Second Circuit reversed the May 21, 1997 decision and remanded the matter to this Court. Dunlop-McCullen v. Local 1-S, AFL-CIO-CLC, 149 F.3d 85 (1998). McCullen filed the First Amended Complaint on March 22, 1999, in which Local 1-S was realigned as a plaintiff. On April 20, 1999, defendants filed an Answer to the First Amended Complaint and a counterclaim, along with the Third-party Complaint against Parham and Been.

DISCUSSION

I. Summary Judgment Standard

A moving party is entitled to summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Holt v. KMI-Continental Inc., 95 F.3d 123, 128 (2d Cir. 1996). The substantive law underlying a claim determines if a fact is material and "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When considering the motion, the Court's responsibility is not "to resolve disputed issues of fact but to assess whether there are any factual issues to be tried." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986).

In determining whether genuine issues of material fact exist, the Court must resolve all ambiguities and draw all justifiable inferences in favor of the nonmoving party. See Anderson, 477 U.S. at 255; Holt, 95 F.3d at 129. The moving party bears the burden of demonstrating that no genuine issue of material fact exists. See Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970); Gallo v. Prudential Residential Serv. L.P., 22 F.3d 1219, 1223-24 (2d Cir. 1994). "[T]he movant's burden will be satisfied if he can point to an absence of evidence to support an essential element of the nonmoving party's claim." Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995). Once the moving party discharges his burden of demonstrating that no genuine issue of material fact exists, the burden shifts to the nonmoving party to offer specific evidence showing that a genuine issue for trial exists.See Celotex, 477 U.S. at 324. The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "A 'genuine' dispute over a material fact only arises if the evidence would allow a reasonable jury to return a verdict for the nonmoving party." Dister v. Cont'l Group, 859 F.2d 1108, 1114 (2d Cir. 1988) (citing Anderson, 477 U.S. at 248).

II. Defendants' Summary Judgment Motions

Defendants Pascarella and Samuels present the following arguments for summary judgment: (1) this Court lacks subject matter jurisdiction over Local 1-S's claims; (2) plaintiffs' state law claims are time barred; (3) plaintiffs' claims are barred by the March Agreement between Local 1-S and Pascarella and Samuels and it entitles Pascarella and Samuels to attorneys' fees and legal costs; (4) Pascarella and Samuels did not violate their fiduciary duties; and (5) punitive damages are not available under the LMRDA or New York law.

Rogers joins Pascarella and Samuels in their arguments with respect to subject matter jurisdiction and punitive damages. Additionally, she argues that (1) she is not a fiduciary under the LMRDA and (2) plaintiffs have failed to state a claim under the LMRDA and New York state law.

The Court will address each of these arguments in turn.

A. Subject Matter Jurisdiction

1. Jurisdiction over Local 1-S's LMRDA Claims

Defendants argue that the Court lacks subject matter jurisdiction over Local 1-S's LMRDA claims because the union is not a proper plaintiff under § 501 of that statute. Local 1-S has alleged jurisdiction under 28 U.S.C. § 1331, 1337 and 1343(a)(3) and 29 U.S.C. § 185.

Both § 1331 and § 1337 deal with "arising under" jurisdiction. Section 1331 gives federal courts jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Section 1337 grants jurisdiction over "any civil action or proceeding arising under any Act of Congress regulating commerce." 28 U.S.C. § 1337 (a). The Supreme Court and Second Circuit have "not distinguished between the 'arising under' standards of § 1337 and § 1331." Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 8 n. 7 (1983); Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 98 (1978); Russo v. Kirby, 453 F.2d 548, 551 n. 2 (2d Cir. 1971). These jurisdictional statutes do not themselves create a cause of action, but are "dependent upon an action arising under a separate federal law before a district court's jurisdiction is proper."Int'l Bhd. of Boilermakers v. Freeman, 683 F. Supp. 1190, 1193 (N.D. Ill. 1988); see also West 14th St. Commercial Corp. v. 5 West 14th Owners Corp., 815 F.2d 188, 192 (2d. Cir. 1987) (stating that a case arises under federal law if federal law creates a cause of action); Russo, 453 F.2d at 551. Therefore, § 1331 and § 1337 do not provide jurisdiction in this matter unless a claim arises under § 501. See United Transp. Union v. Bottalico, 120 F. Supp.2d 407, 410-11 (S.D.N.Y. 2000). If there is no right of action, § 1331 and § 1337 are simply of no avail to Local 1-S.

Section 501(a) of the LMRDA establishes that union officers, agents, shop stewards and other representatives owe fiduciary duties to the union and its members. 29 U.S.C. § 501 (a). Section 501(b) of the same statute states in relevant part:

When any officer . . . is alleged to have violated the duties declared in subsection (a) and the labor organization or its governing board or officers refuse or fail to sue or recover damages or secure an accounting or other appropriate relief within a reasonable time after being requested to do so by any member of the labor organization, such member may sue such officer . . . to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization.

Id. § 501(b). Defendants correctly state that the plain language of the statute does not create a claim for unions in federal court. See Bottalico, 120 F. Supp.2d at 408. Plaintiffs, however, argue that the Court should find that the statute implies a federal cause of action for unions. While two United States Courts of Appeals have ruled on this issue,⁸ compare Bldg. Material Dump Truck Drivers, Local 420 v. Traweek, 867 F.2d 500, 506-07 (9th Cir. 1989) (holding that unions cannot sue under § 501), with Int'l Union of Elec., Elec., Salaried, Mach. Furniture Workers v. Statham, 97 F.3d 1416 (11th Cir. 1996) (holding that unions can sue under § 501), the Second Circuit has not yet addressed whether a union can sue in federal court under § 501. Therefore, this Court is not bound by precedent in its determination.

8 The Supreme Court has noted the split of authorities on this issue but has not resolved it. See Guidry v. Sheet Metal Workers Nat'l Pension Fund, 493 U.S. 365, 374 n. 16 (1990).

In Statham the Eleventh Circuit held that § 501(b) implies that a union can sue its officials. "[O]therwise, it would be futile for individuals to request the union to sue and senseless to make the individuals engage in a futile act." Statham, 97 F.3d at 1419. But see Int'l Longshoremen's Ass'n v. Spear, Wilderman, Borish, Endy, Spear Runckel, 995 F. Supp. 564, 574 (E.D. Pa. 1998) ("I am not convinced that it makes no sense, as the provision of a remedy for unions was simply not the focus of the legislation . . . ."). The court stated that the demand requirement shows that Congress preferred that the union, rather than members, sue on the union's behalf. Id. In response to arguments that the unions could pursue claims in state court, the Eleventh Circuit found that the legislative history of the LMRDA showed that "Congress enacted the fiduciary provisions of § 501 because existing state law remedies for union officials' misconduct were inadequate." Id. at 1420 (citing a minority statement from the Senate report as saying "[o]nly one state has enacted a statute imposing fiduciary obligations on union officials and giving union members a right to sue in the event of any breach thereof." S.Rep. No. 187, 86th Cong., 1st Sess., Reprinted in 1959 U.S.C.C.A.N. 2318, 2376). The Statham court explained that Congress expressly authorized union members to sue but was silent on union claims because "[a]llowing the individuals to assert the unions' claims was more extraordinary and therefore had to be spelled out." Id. at 1421. But see Local 1150 Int'l Bhd. of Teamsters v. SantaMaria, 162 F. Supp.2d 68, 79 (D. Conn. 2001) (noting, contrary toStatham's assumption that if § 501(b) had not been included, no one would argue that unions could not enforce § 501(a), "the legislative history suggests that § 501(b) was added precisely because, in the absence of such a remedy provision, Congress feared that the fiduciary duty established by § 501(a) would be an empty declaration").

In Bottalico, Hon. Michael B. Mukasey, Chief Judge of this Court, rejected the Statham court's analysis of § 501 and held that the statute does not confer subject matter jurisdiction to federal courts over claims brought by a union. Bottalico, 120 F. Supp.2d at 408-10. Judge Mukasey started with the principle that "'[w]here a statute expressly provides a remedy, courts must be especially reluctant to provide additional remedies. In such cases, "in the absence of strong indicia of contrary congressional intent, we are compelled to conclude that Congress provided precisely the remedy it considered appropriate."'"Id. at 409 (quoting Chan v. City of New York, 1 F.3d 96, 102 (2d Cir. 1993) (Kearse, J.) (quoting Karahalios v. Nat'l Fed'n of Fed. Employees, Local 1263, 489 U.S. 527, 533 (1989))); see also Salahuddin v. Alaji, 232 F.3d 305, 309 (2d Cir. 2000) (Kearse, J.) (noting that when a statute expressly provides a remedy, absent strong evidence of congressional intent, courts should refrain from finding an implied remedy). Judge Mukasey found nothing in the statute's language or history to rebut that presumption.

Addressing Statham, Judge Mukasey argued convincingly that the legislative history relied on by the Eleventh Circuit suggests that Congress was more concerned "with enabling suits by union members than by unions." Id. at 409. Additionally, he was unmoved by the Eleventh Circuit's argument that without a federal remedy, the § 501(b) demand requirement would be futile, stating that recourse exists under state law. See id. at 409; see also SantaMaria, 162 F. Supp.2d at 77 (noting that the futility argument would have some logical appeal except that the legislative history of the LMRDA indicates "Congress believed that state common law remedies were available for breach of fiduciary duty, even if not ideal"). Therefore, he found that the court did not have jurisdiction over the suit in question.⁹

9 The Bottalico Court also undertook an implied private right of action analysis. Following the dictates of Cort v. Ash, 422 U.S. 66 (1975), Judge Mukasey found that the test for determining if Congress intended to create a private right was not met. Bottalico, 120 F. Supp.2d at 408-10; see also SantaMaria, 162 F. Supp.2d at 75-81 (applying theCort v. Ash test and finding no implied right of action); Spear, 995 F. Supp. at 572-73 (same). But see Teamsters, Chauffeurs, Warehousemen Helpers, Local 764 v. Greenawalt, 880 F. Supp. 1076, 1080-81 (M.D. Pa. 1995) (finding that a union's claim under § 501 meets the test for an implied private right of action). This Court finds Judge Mukasey's reasoning persuasive and adopts his analysis without further discussion.

The Court notes for completeness that several district courts across the country have addressed this issue and no consensus has been reached.¹⁰ After reviewing the case law and the parties' submissions, this Court finds that the cases holding that there is no right of action for unions under § 501 achieved the more cogent reasoning. Mindful of the rule that "federal jurisdiction is not to be extended beyond the scope permitted by a strict construction of the statute upon which it rests," Kresberg v. Int'l Paper Co., 149 F.2d 911, 913 (2d Cir. 1945); see also Victory Carriers, Inc. v. Law, 404 U.S. 202, 212 (1971), the Court finds that there is no claim created for unions by § 501 and therefore there is no subject matter jurisdiction under § 1331 or § 1337 over claims brought by Local 1-S under § 501.¹¹ Therefore, the Court grants summary judgment to Pascarella, Samuels and Rogers on all of Local 1-S's LMRDA § 501 claims.¹²

10 The following district court cases found that unions are not proper plaintiffs under the LMRDA: Local 1150 Int'l Bhd. of Teamsters v. SantaMaria, 162 F. Supp.2d 68 (D. Conn. 2001); Int'l Longshoremen's Ass'n v. Spear, Wilderman, Borish, Endy, Spear Runckel, 995 F. Supp. 564 (E.D. Pa. 1998); Local 443, Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen Helpers of America v. Pisano, 753 F. Supp. 434 (D. Conn. 1991); Local 191, Int'l Bhd. of Teamsters v. Rossetti, No. B-90-74, 1990 U.S. Dist. LEXIS 11600 (D. Conn. Aug. 23, 1990); Int'l Bhd. of Boilermakers v. Freeman, 683 F. Supp. 1190 (N.D. Ill. 1988);Crosley v. Katz, No. 88-2437, 1988 U.S. Dist. LEXIS 9980 (E.D. Pa. Sept. 9, 1988); Local 624, Int'l Union of Operating Eng'rs v. Byrd, 659 F. Supp. 274 (S.D. Miss. 1986); Truck Drivers, Warehousemen Helpers, Local Union No. 512 v. Baker, 473 F. Supp. 1120 (M.D. Fl. 1979); Stanton v. Shields, No. C-79-1211, 1979 U.S. Dist. LEXIS 10869 (N.D. Cal. July 20, 1979); Teamsters, Chauffeurs, Warehousemen and Helpers, Local 20 v. Leu, No. C 76-221, 1976 U.S. Dist. Lexis 12632 (N.D. Ohio Oct. 22, 1976); Safe Workers' Org., Chapter No. 2 v. Ballinger, 389 F. Supp. 903 (S.D. Ohio 1974).
These district court cases have concluded unions can bring a claim pursuant to § 501: Int'l Longshoremen's Ass'n, Steamship Clerks Local 1624, AFL-CIO v. Virginia Int'l Terminals, Inc., 914 F. Supp. 1335 (E.D. Va. 1996); Teamster, Chauffeurs, Warehousemen Helpers, Local 764 v. Greenawalt, 880 F. Supp. 1076 (M.D. Pa. 1995); Morris v. Scardelletti, No. 94-3557, 1995 U.S. Dist. LEXIS 3328 (E.D. Pa. Mar. 14, 1995); Operative Plasterers Cement Masons Int'l Ass'n, AFL-CIO v. Benjamin, 776 F. Supp. 1360 (N.D. Ind. 1991); Glenn v. Mason, No. 79 Civ. 3918, 1980 U.S. Dist. LEXIS 13233 (S.D.N.Y. Aug. 18, 1980); Bhd. of Ry., Airline Steamship Clerks, Freight Handlers, Express Station Employees v. Orr, No. CIV-1-76-86, 1977 U.S. Dist. LEXIS 15840 (E.D. Tenn. May 18, 1977).

11 While not cited by the parties, the case of Weaver v. United Mine Workers of America, 492 F.2d 580 (D.C. Cir. 1973), is factually similar to the instant matter. In Weaver, a proper § 501 action was brought by union members. While on appeal, the plaintiffs' faction gained control of the union through an election. Id. at 582-83. The union then moved the circuit court to be realigned as a plaintiff. Id. at 583. The court granted the motion. Id. at 586-87. In Traweek, the Ninth Circuit distinguished Weaver by stating:

The result of the court's holding is that once a proper § 501 suit is brought and federal court jurisdiction is created as a threshold matter, other plaintiffs can join the original plaintiff properly before the court, even if the additional parties might not have been able to initiate the suit.

Traweek, 867 F.2d at 506. Under Traweek's interpretation of Weaver, Local 1-S's claims could survive because it was realigned after a proper plaintiff, McCullen, initiated suit. This Court, however, respectfully disagrees with that interpretation. The Weaver court did not address subject matter jurisdiction when allowing the realignment. Furthermore, § 501 does not create a federal cause of action for unions so the existence of a proper claim under that statute has no bearing on an improper claim.

12 28 U.S.C. § 1343 grants jurisdiction over claims by any person:

To redress the deprivation, under color of any State law, statute, ordinance, regulation, custom or usage, of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the United States.

28 U.S.C. § 1343 (a)(3). The statute plainly on its face does not grant jurisdiction over Local 1-S's § 501 claims. No further discussion on this alleged basis for jurisdiction is warranted. Similarly, 29 U.S.C. § 185 does not aid Local 1-S. That statute authorizes suits in federal court for violations of union contracts. 29 U.S.C. § 185 (a). Section 501 claims are for breaches of fiduciary duties, not breaches of union contracts and therefore § 185 does not grant this Court jurisdiction over § 501 claims. See Bottalico, 120 F. Supp.2d at 411.

2. Supplemental Jurisdiction over Local 1-S's State Law Claims

Defendants argue that because Local 1-S's § 501 claims are improper,¹³ this Court should not exercise supplemental jurisdiction over the union's state law claims. Local 1-S responds that, even if summary judgment is granted on the § 501 claim, this Court should retain jurisdiction over the state law claims because discovery is concluded and the state claims mirror the federal claims.

13 Defendants also state that plaintiffs have "neither asserted a cause of action under [ 29 U.S.C. § 185] nor pleaded any facts giving rise to a cause of action under" that statute. Memorandum of Law in Support of Defendants Pascarella's and Samuel's Motion for Summary Judgment ("Pascarella's Memo") at 8. Plaintiffs only mention § 185 in the jurisdictional statement of the complaint. First Am. Compl. ¶ 2. The Court agrees with defendants and does not read this as an attempt to assert a cause of action under that statute.

Supplemental jurisdiction is governed by 28 U.S.C. § 1367, which states that district courts have supplemental jurisdiction over claims that "are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy." 28 U.S.C. § 1367 (a). A claim is part of the same case or controversy if it "derives from a common nucleus of operative fact," Federman v. Empire Fire Marine Ins. Co., 597 F.2d 798, 808 (2d Cir. 1979), "such that 'the relationship between [the federal] claim and the state claim permits the conclusion that the entire action before the court comprises but one'" case. City of Chicago v. Int'l College of Surgeons, 522 U.S. 156, 164-65 (1997) (quoting Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966)) (alteration in original). The exercise of supplemental jurisdiction is left to the discretion of the district court. Purgess v. Sharrock, 33 F.3d 134, 138 (2d Cir. 1994).

Local 1-S is, to use the pre-§ 1367 language,¹⁴ a pendent party. While the pendent parties are usually defendants (or third-party defendants), see Xuncax v. Gramajo, 886 F. Supp. 162, 194 (D. Mass. 1995), there is generally no reason to distinguish between plaintiffs and defendants when analyzing supplemental jurisdiction in federal question cases. See Arnold v. Quality Care Nursing Serv., 762 F. Supp. 1182, 1185 (M.D. Pa. 1991). Section 1367 is broad enough to encompass pendent plaintiffs as well as pendent defendants. See Ansoumana v. Gristede's Operating Corp., 201 F.R.D. 81, 92-94 (S.D.N.Y. 2001); Denis F. McLaughlin, The Federal Supplemental Jurisdiction Statute — A Constitutional and Statutory Analysis, 24 Ariz. St. L.J. 849, 926 (1992) ("In all cases not founded solely on [the diversity statute], [§ 1367] now authorizes full supplemental jurisdiction for all claims involving additional parties, without restriction as to whether the additional party is joined as a 'pendent party plaintiff' or 'pendent party defendant.'"). The last sentence of § 1367(a) states, "Such supplemental jurisdiction shall include claims that include joinder or intervention of additional parties." 28 U.S.C. § 1367 (a). "This language is broad enough to include a pendent plaintiff . . . ." Arnold, 762 F. Supp. at 1185. Therefore, if Local 1-S's state law claims arise from the same set of facts as other claims in the case, it does not matter that this Court does not have independent subject matter jurisdiction over the union's New York claims.

14 Prior to § 1367, courts had discretion in some circumstances to exercise jurisdiction over state law claims when diversity was lacking based on the common law doctrines of ancillary and supplemental jurisdiction. In 1990, Congress combined the two doctrines in § 1367 under the heading of supplemental jurisdiction. City of Chicago, 522 U.S. at 164-65.

Along with his § 501 claims, McCullen has asserted the same New York labor law claims as Local 1-S. Defendants have not argued that there is no supplemental jurisdiction over his state law claims and the Court is confident that such jurisdiction exists.¹⁵ The facts that give rise to McCullen's state law causes of action are, of course, the same facts that underlie Local 1-S's remaining causes of actions because they are identical claims. The Court finds, therefore, that the union's state law claims and McCullen's claims derive "from a common nucleus of operative fact," Federman, 597 F.2d at 808, and jurisdiction exists over them under § 1367. Defendants' motions for summary judgment on Local 1-S's state law claims based on subject matter jurisdiction is therefore denied.

15 If subject matter jurisdiction is lacking, the Court may, indeed must, raise the issue sua sponte. Lyndonville Sav. Bank Trust Co. v. Lussier, 211 F.3d 697, 700-01 (2d Cir. 2000). However, the Court certainly has supplemental jurisdiction over McCullen's state law claims. Section 501 and the two state statutes address the fiduciary duties of union officials. Any acts committed by defendants that violated federal law quite likely also violated state law. See Fitzgerald v. Catherwood, 388 F.2d 400, 403-04 (2d. Cir. 1968) (noting the similarity between § 501 and New York Labor Law §§ 722 and 723 when finding that § 501 did not preempt the state statutes). Where "the same acts violate parallel federal and state laws, the common nucleus of operative facts is obvious and federal courts routinely exercise supplemental jurisdiction over the state law claims." Lyon v. Whisman, 45 F.3d 758, 761 (3d Cir. 1995).

B. Statute of Limitations for New York Labor Law Claims

Defendants Pascarella and Samuels next request summary judgment on the New York labor law claims, contending that they are time-barred. Plaintiffs argue that the state law claims are saved by the discovery rule for fraud actions or, in the alternative, that there is a factual issue as to when the causes of action accrued.

The first task for the Court is to determine the applicable statute of limitations. New York statutory law does not specifically delineate a statute of limitations for claims based on § 722 or § 723 of the New York Labor Law. Additionally, there are no New York cases that address the applicable time limitation. In their memorandum of law, defendants assume that CPLR § 213(1) applies. See Pascarella's Memo at 10. CPLR § 213(1) states that any "action for which no limitation is specifically prescribed by law" must be brought within six years of accrual. N.Y. CPLR § 213(1). Plaintiffs appear to agree that six years is the correct time limit, only disagreeing on whether the discovery rule is applicable and when the causes of action actually accrued. See Pl. Opp. at 36.

The type of relief sought governs the applicable statute of limitations for breach of fiduciary duty. See Loengard v. Santa Fe Industries, Inc., 514 N.E.2d 113, 115 (N.Y. 1987). When plaintiffs seek equitable relief, the statute of limitations is six years under § 213(1), but when only legal damages are sought, the claims are time-barred after three years under CPLR § 214(4). Cooper v. Parsky, 140 F.3d 433, 440-41 (2d Cir. 1998) (Kearse, J.); Sierra Rutile Ltd. v. Katz, No. 90 Civ. 4913, 1995 U.S. Dist. LEXIS 15675 (S.D.N.Y. Oct. 24, 1995) (Keenan, J.); Merine v. Prudential-Bache Util. Fund, Inc., 859 F. Supp. 715, 724-25 (S.D.N.Y. 1994) (Leisure, J.). In the instant matter, plaintiffs seek an accounting and other equitable remedies and therefore the relevant statute of limitations is six years. This case commenced on January 13, 1997, so claims based on conduct occurring before January 13, 1991 are time-barred.

Plaintiffs argue that they should receive the benefit of the discovery rule for causes of action that sound in fraud. In New York, the statute of limitations for an action based on fraud is the longer of six years from the time the fraud took place or two years from the time the fraud was, or reasonably should have been, discovered. N.Y. CPLR §§ 203(g), 213(8). The purpose of this rule is "to protect plaintiffs for a limited period when underlying facts are concealed from them." Marathon Enters., Inc. v. Feinberg, 595 F. Supp. 368, 373 n. 19 (S.D.N.Y. 1984).

The discovery rule only applies to claims of actual fraud, not constructive fraud. Whitney Holdings, Ltd. v. Givotovksy, 988 F. Supp. 732, 744 (S.D.N.Y. 1997); Shepherd Agency, Inc. v. Comstar Telecomms., Inc., No. 88 Civ. 6894, 1990 U.S. Dist. LEXIS 577, *9 (S.D.N.Y. Jan. 22, 1990) (Keenan, J.); Quadrozzi Concrete Corp. v. Mastroianni, 392 N.Y.S.2d 687, 688 (App.Div. 1977). In determining if a claim is properly considered one for actual fraud, a court must look at the "'essence of the action and not its mere name.'" Druckerman v. Harbord, 31 N.Y.S.2d 867, 870 (Sup.Ct. 1940) (quoting Brick v. Cohn-Hall-Marx Co., 11 N.E.2d 902, 904 (N.Y. 1937)). Actual fraud "involves the element of deceit practiced upon the party defrauded," Nasaba Corp. v. Harfred Realty Corp., 39 N.E.2d 243, 245 (N.Y. 1942), whereas constructive fraud¹⁶ requires no proof of intent to defraud. Whitney Holdings, 988 F. Supp. at 749; see also Black's Law Dictionary 671 (7th ed. 1999).

16 Constructive fraud can be an elusive and complicated concept for some. See Lon L. Fuller, Anatomy of the Law 12 (1968) ("The layman would probably rather be found guilty of fraud, for he can then say the court was wrong, than be found guilty of 'constructive fraud,' for he does not know what that means and he may doubt whether the court does either.").

Plaintiffs allege in the First Amended Complaint that Pascarella and Samuels converted the missing union funds. First Am. Compl. ¶ 23. This allegation along with Pascarella and Samuels alleged failure to disclose financial information to the executive board might rise to an allegation of intent to defraud. Nasaba Corp., 39 N.E.2d at 245 ("Concealment with intent to defraud of facts which one is duty-bound in honesty to disclose is of the same legal effect and significance as affirmative misrepresentations of fact."). Plaintiffs, however, have failed to put forth any evidence that even suggests Pascarella or Samuels converted, or even intended to convert, the missing money. Indeed, none of the affidavits or statements of facts submitted in response to defendants' motion even allege that Pascarella or Samuels intended to misappropriate union funds. Without some evidence of the requisite scienter, after discovery, plaintiffs' claims now boil down to a breach of fiduciary duties through failure to report that which defendants were obligated to report and general mismanagement of union funds. The Court finds that the discovery rule does not apply in this matter because this claim is, at its base, a claim for constructive fraud. See Whitney Holdings, 988 F. Supp. at 745 (stating that a claimant "cannot convert a constructive fraud claim into a one for actual fraud merely by conclusory allegations of fraud").

Plaintiffs also contend that there is an issue of fact with respect to when the cause of action for claims regarding the missing $250,000 arose. Their contention is based on the following: SSF reports are required on a quarterly basis. The missing funds were withdrawn approximately January 8, 1991. Defendants should have been aware the money was missing by March 31, 1991, the end of the relevant quarter. Therefore, there is an issue of fact as to whether they knew before or after January 13, 1991.

Factual questions can arise that preclude summary judgment in a case.See, e.g., Indep. Order of Foresters v. Donald, Lufkin Jenrette, Inc., 157 F.3d 933, 942-43 (2d Cir. 1998). Pascarella and Samuels had a fiduciary obligation to safeguard union funds. The point at which they breached that duty, if indeed they did, is a factual question in this matter. They signed an authorization on January 8, 1991, permitting Goltz to close the SSF accounts that held the now-missing funds. See January 8, 1991 Letter to Raymond Lompart, Independence Savings Bank, from Joseph Pascarella and Margaret Samuels, attached as Ex. 11 to Shalley Aff. The relevant question is when the defendants' actions became unreasonable. If signing the authorization at Goltz's request without inquiry was the unreasonable act, then the breach occurred on the January 8, 1991 and plaintiffs' claims are not timely. However, if their actions on January 8, 1991 were reasonable, but they acted unreasonably by not later following up as to the disposition of the funds, then the claims may be within the statute of limitations. It is for the trier of fact to determine when and if defendants acted unreasonably. If that date is set after January 13, 1991, plaintiffs' claims are not barred.

Pascarella and Samuels' motion for summary judgment on the state law causes of action is granted to the extent that the claims are based on conduct that occurred before January 13, 1991. With respect to the missing $250,000, there is a factual issue as to when the cause of action accrued.

C. The March Agreement

Defendants Pascarella and Samuels next request for summary judgment is based on the March Agreement between the defendants and the union. They claim that the March Agreement is a valid contract that precludes Local 1-S, and equitably estops McCullen, from pursuing this lawsuit. Plaintiffs do not argue that the March Agreement is an invalid contract. Instead, they respond that the agreement is vitiated because of evidence that Pascarella and Samuels benefited from the missing funds, that defendants have breached the agreement by not cooperating with Local 1-S's investigation into the missing funds, and that McCullen is not bound by the agreement.¹⁷

17 In a footnote in the opposition brief, plaintiffs also state that Local 1-S was a defendant in this matter until Magistrate Judge Eaton "directed that it be realigned as a party plaintiff to accurately reflect its current position in the litigation." Pl. Opp. at 31 n. 31. Therefore, plaintiffs argue, if defendants objected to the realignment, they should have appealed the Magistrate Judge's order and a challenge to that order is now untimely. It is clear why plaintiffs relegated this argument to a footnote. The Magistrate Judge's order simply recognized the true interests of the parties involved. See American Motorists Ins. Co. v. Trane Co., 657 F.2d 146, 149 (7th Cir. 1981) ("Realignment is proper when the court finds that no actual, substantial controversy exists between parties on one side of the dispute and their named opponents . . . ."). In that regard, it was a procedural order and did not address the substance of Local 1-S's claim. The instant motion is not an appeal of the Magistrate Judge's order. It is a summary judgment motion properly before this Court.

1. New Evidence of Defendants Benefiting from the Missing Funds

The March Agreement conditioned Local 1-S's promise not to sue on the investigation into the missing funds not disclosing "tangible and credible evidence that either [Pascarella or Samuels] benefited, directly or indirectly, from the unaccounted for assets." Mar. Ag. at 3. Plaintiffs claim that after the contract was signed, "the new administration of Local 1-S uncovered another SSF account that was used as a slush fund by Pascarella and Samuels." Pl. Opp. at 32. They allege that the fund was used to make political contributions and attend dinners in an attempt by defendants "to increase their own standing in the labor and political community."¹⁸ Id. This, they state, is at least an indirect benefit.

18 Plaintiffs also state that since the March Agreement was signed, the union has discovered that another $34,000 is missing from two bank accounts. Pl. Opp. at 32. They seem to imply that this is more evidence that defendants benefited from the unaccounted for funds. Plaintiffs, however, have put forth no evidence that Pascarella or Samuels converted this money or otherwise benefited from it, so the Court rejects this argument.

When a court looks at a contract, its "primary objective is to give effect to the intent of the parties as revealed by the language they chose to use." Seiden Assoc., Inc. v. ANC Holdings, Inc., 959 F.2d 425, 428 (2d Cir. 1992). "Under New York law whether the language of a contract is unambiguous and, if so, what construction is proper, are legal questions . . . ." Id. at 429. However, if contract language is ambiguous, summary judgment is inappropriate. Mellon Bank, N.A. v. United Bank Corp. of New York, 31 F.3d 113, 115 (2d Cir. 1994).

The Court has reviewed the copies of the cancelled checks that plaintiffs point to as evidence of indirect benefit. See Bank Records and Cancelled Checks from Manufacturers Hanover Trust Account 150034003 ("Account 150034003 Records"), attached as Ex. 15 to Shalley Aff. There are twenty-three checks dated between November 29, 1983 and July 27, 1988. From the payees and the notations, the payments appear to fall into several categories. There are six checks that seem to be for attendance at dinners, hosted by such organizations as the Hispanic Labor Committee and the New York Consumer Assembly. There are seven checks that appear to be charitable donations to organizations such as the American Cancer Society and Kid Watch. There are five checks that purport to be for advertisements in journals or programs. These checks are made payable to the Jewish Labor Committee, the St. Paul United Methodist Church and similar organizations. There are two checks made payable to Lewis Goltz, the former union accountant, both in the amount of $300.¹⁹ There are two checks made payable to other Local 1-S accounts and, finally, one check made payable to R.M.R.S. System.²⁰ Two people signed each of these checks and all but one appears to include the signature of either Pascarella or Samuels.²¹

19 The notations on these two checks simply read "1/1-3/31" and "4/1-6/30."

20 There is no indication as to what the check to R.M.R.S. System is in regard to.

21 The signatures on the R.M.R.S. System check are illegible.

These expenditures of funds might have procured a benefit for defendants in terms of their standing in the labor community. On the other hand, they might have been legitimate union disbursements. Indeed, they very well might have been a legitimate expense which, at the same time, bestowed an incidental benefit on defendants.²² It is not the proper place of the Court to decide this question. Mindful of the posture the Court must assume in deciding this motion, the Court finds that these checks are sufficient evidence that defendants benefited from the unaccounted for funds to forestall summary judgment. It is for the trier of fact to decide whether this somewhat suspect evidence of indirect benefit excuses Local 1-S from its contractual promise not to sue. Summary judgment on this ground is denied.

22 The Court notes that it is not uncommon, nor is it improper, for the members of an organization to benefit from the good deeds of that organization. For example, when a law firm buys a table at a charity dinner, the lawyers who attend the dinner benefit in food, exposure and possibly stature in the legal community. While it is not for the Court to decide in this motion, it seems highly unlikely that this is the type of benefit to which the contract refers. See, e.g., Ray v. Young, 753 F.2d 386, 390 (5th Cir. 1985) (stating, in a different context, that "[w]hen a union officer enjoys a legitimate business dinner at union expense, for example, he has been relieved of the personal cost, which he otherwise would have incurred, of daily sustenance and has certainly received, in some sense, a benefit. Obviously, however, courts cannot and should not probe into the reasonableness of every union business dinner.")

2. Defendants Failure to Comply with Discovery Requests

It is also inappropriate for the Court to decide on a summary judgment motion whether defendants breached the March Agreement by not assisting in the investigation. The agreement states that Pascarella and Samuels "will cooperate and take all reasonable steps needed along with the Local's accounting consultant to complete an exhaustive investigation in regard to the unaccounted for assets." Mar. Ag. at 2 (emphasis added). According to plaintiffs, defendants "completely failed to uphold their end of the bargain." Pl. Opp. at 31.

Plaintiffs argue that the defendants' failure to answer the discovery requests and appear for the depositions was a breach of their contractual obligations to assist in the investigation. Defendants counter that the requests were made in bad faith and "had no legitimate purpose involving any investigation related to Local 1-S assets." Defendants' Reply Memorandum in Support of Defendants' Motions for Summary Judgment ("Defs. Reply") at 6. They allege that plaintiffs attempted to "orchestrate a breach" to avoid their obligations under the contract.Id. (internal quotations omitted).

While some of the discovery requests do seem overbroad,²³ the Court cannot say that no reasonable trier of fact would find that the defendants did not need to comply under the March Agreement. The reasonableness of the interrogatories, document requests and deposition notices in this matter is not an issue that the Court can decide on a summary judgment motion. Therefore, summary judgment in this regard is inappropriate.

23 The discovery requests included, for example, such potentially irrelevant and overbroad requests as "Your income tax records, bank records, mutual fund records, stock records, bond records, and real estate holding for the period January 1, 1975 to the present," "All documents that concern and/or refer to your membership in fraternal, civic, political and/or social organizations, associations or parties," "Your personal phone records from January 1, 1975 to the present," "All documents that concern and/or refer to your travel to and from the New York area from January 1, 1975 to the present," and "All documents that concern and/or refer to all psychological or psychiatric counselling [sic] undergone by you from January 1, 1975 to the present." See Interrogatories Document Requests at 6, 7, 8 9.

3. McCullen's Obligations Under the March Agreement

Defendants also ask the Court to grant summary judgment on the issue of whether McCullen was personally bound by the March Agreement. They argue that because the signature of Giananti, the union president at the time, was sufficient to bind the union, McCullen's signature is superfluous if it does not also bind him. Therefore, they claim he is equitably estopped from pursuing this lawsuit. Plaintiffs, besides claiming that defendants breached the contract, argue that the elements of equitable estoppel are not present in this matter.

Equitable estoppel "prevents one from denying his own expressed or implied admission which has in good faith been accepted and acted upon by another." Airco Alloys Div., Airco Inc. v. Niagara Mohawk Power Corp., 430 N.Y.S.2d 179, 187 (App.Div. 1980). The elements of equitable estoppel in New York are: "(1) [a]n act constituting a concealment of facts or a false misrepresentation; (2) [a]n intention or expectation that such acts will be relied upon; (3) [a]ctual or constructive knowledge of the true facts by the wrongdoers; [and] (4) [r]eliance upon the misrepresentations which causes the innocent party to change its position to its substantial detriment." Gen. Elec. Capital Corp. v. Armadora, S.A., 37 F.3d 41, 45 (2d Cir. 1994); see also Special Event Entm't v. Rockefeller Ctr., Inc., 458 F. Supp. 72, 76 (S.D.N.Y. 1978);Airco Alloys, 430 N.Y.S.2d at 187.

Defendants claim to satisfy the elements of equitable estoppel thusly: McCullen "misrepresented himself when he entered into an agreement to which he did not intend to be bound," he intended defendants to rely on this misrepresentation, he knew he did not intend to honor the March Agreement, and Pascarella and Samuels relied on his assertions by withdrawing their challenge to their suspensions by the executive board.See Pascarella's Memo at 10.

Estoppel is usually a question of fact inappropriate for summary judgment. See Amrep Corp. v. American Home Assurance Co., 440 N.Y.S.2d 244, 247 (App.Div. 1981); see also Bennett v. U.S. Lines, Inc., 64 F.3d 62, 65 (2d Cir. 1995) ("Whether equitable estoppel applies presents an issue of fact."). There is no reason to depart from this general rule in the instant matter. Each of the four elements involves questions of fact inappropriate for disposition on a summary judgment motion.²⁴

24 For example, the second element requires determining whether McCullen intended to induce reliance by the defendants. "Questions of intent . . . are usually inappropriate for disposition on summary judgment." Nat'l Union Fire Ins. Co. v. Turtur, 892 F.2d 199, 205 (2d Cir. 1989); Nat'l Union Fire Ins. Co. v. Robert Christopher Assocs., 691 N.Y.S.2d 35, 39 (App.Div. 1999).

Because the issues raised with respect to the March Agreement raise questions of material fact that cannot be resolved in a motion of this type, defendants' request for summary judgment based on the contract is denied.²⁵

25 Defendants have also requested summary judgment on their counterclaim for costs and attorneys' fees in defending this action based on the March Agreement. The same questions of fact discussed supra are relevant to the counterclaim and therefore summary judgment on the counterclaim is also denied.

D. Defendants Pascarella and Samuels Fiduciary Duties Under the LMRDA

Defendants next ground for their summary judgment request is that they did not breach the fiduciary duty established in 29 U.S.C. § 501 (a). McCullen, unsurprisingly, disagrees.²⁶

26 This section only applies to McCullen's § 501 claim because the Court has already granted defendants summary judgment on Local 1-S's § 501 claims on a jurisdictional basis. See supra Part II.A.1.

It is well settled in the Second Circuit that the § 501 fiduciary duty applies only "to the money and property of the union and that it is not a catch-all provision under which union officials can be sued on any ground of misconduct with which the plaintiffs choose to charge them."Gurton v. Arons, 339 F.2d 371, 375 (2d Cir. 1964); see also Dunlop-McCullen v. Local 1-S, AFL-CIO-CLC, 149 F.3d 85, 93 (2d Cir. 1998); Coleman v. Bhd. of Ry. S. S. Clerks, Freight Handlers, Exp. and Station Employees, 340 F.2d 206, 209 (2d Cir. 1965). The statute "is intended to ensure that union officials do not violate their duties to the union or its membership." Moran v. Flaherty, No. 92 Civ. 3200, 1993 Dist. LEXIS 2245, *11 (S.D.N.Y. Feb. 26, 1993) (Leisure, J.). The Court must not lose sight of the fact, however, that "'the statute is not meant as a vehicle for judicial oversight of union activity, but only as a means of redressing unreasonable and arbitrary actions by union officials. The federal courts do not sit as a "super review board" of internal union grievances . . . .'" Id. (quoting Corea v. Web, 937 F.2d 1132, 1143 (6th Cir. 1991)); see also Gurton, 339 F.2d at 375 ("The provisions of the L.M.R.D.A. were not intended by Congress to constitute an invitation to the courts to intervene at will in the internal affairs of unions.").

In determining what standard to apply in § 501 case, the key is whether the defendants personally benefited from the conduct in question. "[W]hen a union officer personally benefits from union funds, a court in a § 501(b) suit may determine whether the payment, notwithstanding its authorization, is so manifestly unreasonable as to evidence a breach of the fiduciary obligation imposed by § 501(a)."Morrissey v. Curran, 650 F.2d 1267, 1274 (2d Cir. 1981); see also Guzman v. Bevona, 90 F.3d 641, 646 (2d Cir. 1996) ("[T]his Court has held that even authorized conduct may violate section 501 if (a) the officer personally benefited from the expenditure and (b) the expenditure was manifestly unreasonable." (internal quotations omitted)). If the defendants did not benefit personally, the relevant question is whether the conduct was authorized. See Guzman, 90 F.3d at 647 ("Expenditures by union officers that violate the union's constitutions represent the classic case of breach of fiduciary duty under section 501.").

McCullen raises several instances of conduct that he alleges violated defendants' fiduciary obligations. The Court will address each issue and apply the relevant standard to determine if summary judgment is appropriate.

First, McCullen alleges that Pascarella's failure to supervise the union bookkeeper is a § 501 violation. This allegation does not involve personal benefit so the only issue is authorization.²⁷ According to the Constitution, it is the joint responsibility of both the president and the financial secretary to supervise the bookkeeper. 1992 Constitution art. VIII, § 7; 1985 Constitution art. VIII, § 7. There is a question of material fact as to whether Pascarella failed in his responsibility to supervise Goltz and Gurrieri. He allowed Goltz to close accounts without making any inquiry regarding what the accountant was doing with the money. Pascarella Dep. at 130. Additionally, in his deposition, Pascarella made admissions that a trier of fact could reasonably find indicate a failure to uphold his duty to oversee the bookkeeper.²⁸ See id. at 100-02, 106, 110-12, 117-18, 129-31. Therefore, summary judgment is inappropriate on this issue. See Moran, 1993 Dist. LEXIS 2245, at 26 (stating that a § 501 claim could go forward if plaintiffs demonstrate a factual basis for an allegation that an officer failed to supervise the secretary-treasurer in accordance with the union bylaws).

27 While this allegation does not involve a particular monetary transaction, § 501 clearly applies because the conduct involves the management, or lack thereof, of union funds.

28 For example, Pascarella stated in his deposition, "The only comment I would make how the hell do I supervise somebody that knows more than me? And I don't know nothing about balancing books and LMs and all this stuff. How in the world would anybody expect me to supervise them." Pascarella Dep. at 117-18.

Next, McCullen claims that defendants violated their fiduciary duties by spending SSF money for non-SSF purposes. Plaintiff is referring to the SSF account found after the signing of the March Agreement and the checks that were drawn on it. See Account 150034003 Records. According to the union Constitution, the SSF money is to be used to "advance the good and welfare of the Union and its members." 1992 Constitution art. XI, § 2; 1985 Constitution art. XI, § 2. The Court has already held that it is a question of fact whether defendants benefited from the expenditure of this money for purposes of the March Agreement. See supra Part II.C.1. Likewise, it is a question of fact as to whether there is a benefit that triggers the stricter of the two § 501 standards.²⁹ As such, summary judgment cannot be granted.

29 The Court notes that, even if at trial, it is determined that these expenditures constitute a benefit for purposes of the March Agreement, that does not necessarily mean that the heightened § 501 standard would apply. The contract specifically includes "indirect benefit." Mar. Ag. at 3. Indirect benefit, however, might not be sufficient to invoke the stricter standard of § 501. The Fifth Circuit, for example, has held that "[i]f a union officer receives an indirect benefit from a transaction in which the union also benefits, valid authorization will normally be a complete defense." See Ray, 753 F.2d at 390-91. It is not necessary, however, to decide that issue at this juncture.

McCullen also points to the use of a union-leased vehicle by Samuels' daughter as a breach of fiduciary duty. Samuels admits that she does not have a license to drive, that the union leased an automobile for her during her entire tenure as an officer, and that during that time, she permitted her daughter, Cheryl Coleman, to drive the car. See Defs. Reply to Pl. Facts ¶¶ 49, 50; Deposition of Margaret Samuels at 55-56, attached as Ex. C to Nikolaidis Dec. Samuels also acknowledges that from 1985 to 1998, Coleman drove union-leased vehicles over 90,000 miles. See Defs. Reply to Pl. Facts ¶ 51. Samuels claims that Coleman kept the car so she could drive Samuels to union events. However, she also admits that she never asked whether her daughter used the car for her own personal benefit. Id. ¶ 52. Furthermore, for close to five years, Coleman had no other automobile. Id. ¶ 53.

The benefit required to trigger the stricter of the two § 501 standards can be triggered by the expenditure of union funds to benefit the friends and family of the union official. Ray, 753 F.2d at 390 ("[W]e think that a union officer benefits, in a way that justifies heightened judicial scrutiny . . . from the expenditure of union funds to purchase things for his personal use or for his family and friends . . . ."). McCullen has certainly put forth enough evidence to raise a question of fact as to whether union-leased vehicles were used improperly for the benefit of Samuels' daughter.

Plaintiff also contends that the vehicle leases themselves represent fiduciary duty violations because they were well over the market rate and because they were not reported to the executive board. A March 1998 lease shows that Local 1-S was paying $1324 a month for a 1992 Oldsmobile Coronado and a 1993 Ford Taurus. See Rental Invoice dated March 26, 1998, attached as Ex. 8 to McCullen Dec. McCullen has put forth some evidence that this rate was indeed well over market value. See McCullen Dec. ¶ 29 (stating that, after becoming president, McCullen was able to cancel the leases and lease two new Toyota Corollas for a total of $478 a month); see also Transcript of the Trial Committee, Feb. 20, 1998 at 43-44, 67-68. Defendants contend that the lease price was not unreasonable because it included maintenance contracts that covered all the costs of repairing and maintaining the vehicles. See Defs. Reply to Pl. Facts ¶ 59. The Court has already determined that it is a question of fact whether Samuels benefited from the lease. See supra. Equally so, it is also a question of fact whether Pascarella benefited sufficiently (in that he was given a vehicle to drive) to trigger the relevant § 501 standard for cases involving expenditures that benefited union officers. Furthermore, if it is determined that the defendants did benefit from the leases, it is an issue of fact whether the expenditure was manifestly unreasonable. As such, this is not a resolvable issue on a summary judgment motion.³⁰

30 Additionally, the union Constitution requires the officers to report all expenditures over $500 a month to the executive board. 1992 Constitution art. VII, § 3; 1985 Constitution art. VII, § 3. Defendants admit that the vehicle leases were never reported. See Defs. Reply to Pl. Facts ¶ 61.

McCullen's next line of attack is in regards to the leases for the copier and the mailer. Like the car leases, he alleges these expenditures were well above the market rate and were not reported to the executive board. Local 1-S paid $755 per month for the copier and $456 a month for the mailer. There is no allegation, nor is there any evidence, that the defendants somehow personally benefited from leasing the copier and the mailer. As such, the relevant question is authorization. McCullen has not even argued that they were unauthorized expenditures. Therefore, he has not sufficiently alleged a violation of § 501 with regard to the leasing of the copier and mailer. However, defendants admit that they did not report these expenditures to the executive board.³¹ See Defs. Reply to Pl. Facts ¶ 66. The copier lease should have been reported because it was over $500 a month. Therefore, while the actual leasing of the machines did not violate § 501, plaintiff can go forward with his arguments regarding the failure to report the copier lease.³²

31 Parham disputes this in her affidavit, stating that the executive board "was also aware of the cost of the machine because the monthly payments appeared on many reports" to the executive board. Parham Aff. ¶ 58.

32 In their reply papers, defendants claim that it was Parham's responsibility to report the expenditures to the executive board. The Local 1-S's Constitution states, however, that it is the union president's job "to enforce strict observance of the Constitution and By-Laws." 1992 Constitution art. VIII, § 4; 1985 Constitution art. VIII, § 4. The executive vice president is "to assist the President in all matters pertaining to the enforcement and strict observance of the Constitution and By-Laws." 1992 Constitution, art. VIII, § 5(a); 1985 Constitution art. VIII, § 5(a). Therefore, even if it was the primary responsibility of Parham to report the leases, Pascarella and Samuels were responsible for ensuring that she actually did so.

Plaintiff also argues that defendants' failure to fully utilize purchased computer equipment represents a waste of union resources. He does not object to the actual purchase, nor does he claim that defendants failed to properly report the expenditure. See Pl. Opp. at 29-30. McCullen's claim is simply that defendants should have found more uses for the equipment. If the Court were to entertain this claim, it would be precisely the type of micromanaging of union affairs that § 501 does not authorize and courts should avoid. This Court is not qualified to determine the most efficient use of computers by union officials.³³ As such, McCullen cannot establish a § 501 violation in regard to computer usage.

33 The Second Circuit observed in Gurton that:

The provisions of the L.M.R.D.A. were not intended by Congress to constitute an invitation to the courts to intervene at will in the internal affairs of unions. Courts have no special expertise in the operation of unions which would justify a broad power to interfere. The internal operations of unions are to be left to the officials chosen by the members to manage those operations except in the very limited instances expressly provided by the Act. The conviction of some judges that they are better able to administer a union's affairs than the elected officials is wholly without foundation.

Gurton, 339 F.2d at 375.

McCullen's last alleged example of a fiduciary duty breach involves the burial plots Local 1-S owns and offers for sale to members. He claims that failure to include the plots as assets on the union's financial reports or to report to the executive board about their sale is a violation of § 501. Defendants do not deny this lack of reporting.See Defs. Reply to Pl. Facts ¶ 24. Instead, they say any failure in this regard is the responsibility of Parham and the union accountant. This excuse fails to relieve defendants of any potential liability in regards to the reporting of the burial plots because of the reasoning expressed in footnote 32, supra.

Based on the foregoing, McCullen's § 501 claim can go forward with respect to the allegations involving failure to supervise the bookkeeper, the use of SSF funds for non-SSF purposes, Samuels' daughter's use of the union-leased vehicle, the price of the car leases, the failure to report the automobile and copier leases, and the failure to adequately report burial plot information. His claims regarding the actual price paid for the copier and mailer leases, the failure to report the mailer lease, and not fully utilizing the computer equipment may not go forward.

E. Punitive Damages

Pascarella, Samuels and Rogers also seek summary judgment on the issue of punitive damages. They argue that punitive damages are not authorized under § 501 and that plaintiffs cannot demonstrate a basis for such an award under New York labor law.

1. Punitive Damages Under § 501

The First Amended Complaint does not state under which statute punitive damages are sought. Plaintiffs' Memorandum of Law clarifies this situation. Plaintiffs seek punitive damages only under New York state law. See Pl. Opp. at 35 n. 8. They seek a surcharge remedy under § 501.³⁴ Because plaintiffs are seeking punitive damages under only New York law, it is unnecessary for the Court to consider the appropriateness of such an award under § 50.³⁵

34 In defendants' reply papers, they interpret plaintiffs' clarification as requesting punitive damages as a surcharge. See Defs. Reply at 10. The Court, however, does not read plaintiffs' submissions as making such a request.

35 Because plaintiffs have not asserted a state law claim against Rogers, see infra Part II.H., they cannot assert a claim for punitive damages against her.

2. Punitive Damages Under New York Labor Law

Section 725 of the New York Labor Law states that:

Where an officer or agent of a labor organization has violated or is violating any of his obligations provided in section seven hundred twenty-two and seven hundred twenty-three, such labor organization and the parent organization of such labor organization shall each have the right to bring an action or proceeding in any court of competent jurisdiction for legal or equitable relief to redress such violation of obligation.

N.Y. Labor Law § 725. The statute does not address the issue of whether punitive damages are available under the statute and the Court has found no case law dealing with the issue. However, New York case law has addressed punitive damages in the context of fiduciary duty breaches. Because § 722 and § 723 impose fiduciary obligations on union officers, it appropriate to decide this question based on that case law.

Exemplary damages are "an extraordinary remedy and are available 'only in a limited number of instances.'" Aramony v. United Way of America, 28 F. Supp.2d 147, 182 (2d Cir. 1998) (quoting Garrity v. Lyle Stuart, Inc., 353 N.E.2d 793 (N.Y. 1976)), aff'd in part and rev'd in part sub nom., Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140 (2d Cir. 1999). They are permissible in claims "where the wrong complained of is morally culpable, or is actuated by evil and reprehensible motives, not only to punish the defendant but to deter him, as well as others who might otherwise be so prompted, from indulging in similar conduct in the future." Walker v. Sheldon, 179 N.E.2d 497, 498 (N.Y. 1961). New York allows punitive damages for breaches of fiduciary duties "even if there is no harm aimed at the general public 'so long as the very high threshold of moral culpability is satisfied.'" Blank v. Baronowski, 959 F. Supp. 172, 179 (S.D.N.Y. 1997) (quoting Giblin v. Murphy, 532 N.E.2d 1282 (N.Y. 1988)); see also Schweizer v. Mulvehill, 93 F. Supp.2d 376, 409 (S.D.N.Y. 2000) ("Punitive damages are available in cases of breach of fiduciary duty, so long as a very high degree of moral culpability is exhibited.").

So, for purposes of this summary judgment motion, the Court must determine if there is enough evidence of moral culpability in the conduct alleged that there is a factual question as to whether the threshold for punitive damages has been met. There are only two instances of conduct alleged that could even arguably be construed as "morally reprehensible." The first of which is the allegation that defendants used a SSF account as a "slush fund" for their own personal benefit. However, the evidence presented in this regard consists of checks written between 1983 and 1988. There is no evidence that this conduct persisted after 1988. Because the plaintiffs are seeking punitive damages only under New York law, this alleged conduct cannot be considered in the punitive damages analysis because the Court has ruled that New York claims based on actions before January 13, 1991 are untimely. See supra Part II.B.

The other alleged conduct that potentially gives rise to a claim for punitive damages is the use of a union-leased vehicle by Samuels' daughter. While this might be a breach of defendants' fiduciary duties, the Court holds that no reasonable trier of fact could award punitive damages based on this conduct. It simply is not egregious enough under any standard to be called "morally reprehensible." Cf. Aramony, 28 F. Supp.2d at 183 (granting punitive damages where a charity was looted by its president in breach of his fiduciary obligations). Therefore, defendants' request for summary judgment on the issue of punitive damages is granted in full.

F. Whether Rogers Is a Fiduciary Under the LMRDA

Defendant Rogers separately moves for summary judgment contending that she is not a fiduciary under the LMRDA and therefore is not a proper defendant.

Section 501 of the LMRDA imposes fiduciary obligations on "officers, agents, shop stewards, and other representatives of a labor organization," 29 U.S.C. § 501 (a), which, according to the definition section of the statute, "includes elected officials and key administrative personnel, whether elected or appointed (such as business agents, heads of departments or major units, and organizers who exercise substantial independent authority), but does not include salaried nonsupervisory professional staff, stenographic, and service personnel." 29 U.S.C. § 402 (q).

Rogers argues that the key to determining whether § 501 imposes fiduciary duties on her "is whether she engaged in financial dealings affecting [u]nion money or property or acted with sufficient independence in connection with transactions regarding [u]nion property or monies." Memorandum of Law in Support of Defendant Gail Rogers' Motion for Summary Judgment at 8. As support for this proposition, she cites Gurton v. Arons, 339 F.2d 371 (2d Cir. 1964). In Gurton, however, the Second Circuit simply stated that there can only be a violation of the fiduciary duties imposed by § 501(a) if the underlying transaction involved union money or property. Id. at 375. It does not limit who is a fiduciary under the statute. Rogers appears to conflate the issue of whether she is a fiduciary with the issue of whether she violated her fiduciary duties.

The definition section expressly includes business agent among those who have fiduciary duties under § 501. See 29 U.S.C. § 402 (q). Rogers herself stated that her position as administrator was "the equivalent to that of a union business agent." First Rogers Aff. ¶ 3. Rogers was a fiduciary under § 501 and as such her motion for summary judgment on this ground is denied.³⁶ G. Rogers' Fiduciary Duties Under the LMRDA ³⁷

36 The Court notes that this case is not the first time that LMRDA fiduciary duties have been imposed on business agents in the Second Circuit. See United States v. Haller, 837 F.2d 84, 85 (2d Cir. 1988).

37 Again, the Court notes that this section only applies to McCullen's § 501 claims because Local 1-S's claims under the statute have already been disposed of on jurisdictional grounds. See supra Part II.A.1.

Rogers next argues that, if the Court determines that she is a fiduciary under the statute, she acted with the requisite standard of care. The Court's finding that Rogers had fiduciary obligations under § 501, of course does not mean that she breached those obligations. The test for determining whether a union fiduciary violated § 501 has already been discussed in this Opinion. See supra Part II.D. The Court need now only apply that standard.

While stating that Rogers' "culpability does not rise to the level of Pascarella and Samuels," McCullen puts forth several instances of conduct that he claims evince a breach of § 501 by Rogers. See Pl. Opp. at 30. First, he alleges that as director of administrators, Rogers allowed hundreds of member grievances to go unprocessed. This allegation, however, is outside the scope of the LMRDA fiduciary duty, which only applies to the union money and property. This claim falls squarely within the Gurton Court's admonition that § 501 "is not a catch-all provision under which union officials can be sued on any ground of misconduct with which the plaintiffs choose to charge them."³⁸ Gurton, 339 F.2d at 375. McCullen's claims cannot hinge on this conduct.³⁹

38 McCullen alleges that because Rogers allowed these grievances to go unprocessed, Local 1-S had to hire additional employees to handle them and, as such, cost Local 1-S over $20,000. That may well be the case, but just because it incurred expenses for the union does not make the underlying conduct about union money or property.

39 Furthermore, even if this allegation was somehow about union money or property, it is doubtful that it would survive this summary judgment motion. McCullen has simply put forth no evidence that there actually were hundreds of unprocessed grievances. He relies solely on his own statement and pictures that he claims show the grievances. See McCullen Dec. ¶ 39. The pictures, however, simply show a desk with paper piled on it. They are undated and it is impossible to ascertain what the papers are. See Pictures, attached as Ex. 14 to McCullen Dec. These pictures indicate, at best, a messy desk at some undisclosed time. Additionally, Anne Boyd, who became a vice president at some point after Rogers was fired, testified at her deposition that there were only twenty-five to thirty pending grievances when Rogers was terminated. See Deposition of Anne Boyd at 32-33, attached as Ex. A to Second Rogers Aff.

McCullen next claims that when Rogers was fired from her union position and returned to a full-time salesperson position, she received vacation leave from both Macy's and Local 1-S for the same period. This allegation, however, is bereft of any evidence. It is not even clear that it would be improper, if it was true, because Rogers states that the vacation pay she received from Local 1-S was a proper payout of accrued time. Defs. Reply to Pl. Facts ¶ 81. Plaintiff cannot rely simply on his own unsupported allegation to survive summary judgment.

McCullen also alleges that Rogers violated her fiduciary duties by her "failure to make sure that Macy's paid the proper amount in dues check-off after she assumed that responsibility from Parham." Pl. Opp. at 30. Because of this failure, plaintiff claims the union lost thousands of dollars. Rogers contends that it was not her responsibility to supervise the collection of dues and that there is no evidence to support this claim.

According to Local 1-S's Constitution, it is the responsibility of the financial secretary (along with the president) to supervise the receipt and deposit of union funds. See 1992 Constitution art. VIII, § 7; 1985 Constitution art. VIII, § 7. Based on this provision, Rogers argues that she cannot be held responsible for any failure to properly collect dues. McCullen, however, counters that in 1996 Pascarella transferred this responsibility to Rogers and other staff members. Rogers, Pascarella and Samuels deny that such a transfer took place. Unlike his other allegations against Rogers, McCullen has more evidence to support this claim than just his own assertion. He also points to a contemporaneous internal complaint against Pascarella, Rogers and others filed by Parham with the executive board alleging the same transfer of responsibility. See Apr. 29, 1997 Internal Complaint, attached as Ex. 5 to Shalley Aff. As such, whether Rogers took over Parham's responsibilities is a material fact in dispute. If Pascarella did indeed put Rogers in charge of supervising the receipt and deposit of funds, she certainly had responsibilities under § 501 to handle the money as a fiduciary regardless of whether the power transfer was proper under the Constitution. She cannot handle funds improperly and then be heard to argue that she never had the power to handle the funds in the first place.

This, of course, does not answer the question fully. It just leads into Rogers second defense, i.e. that there is no evidence that she failed to properly supervise the dues collection leading to losses of thousands of dollars. McCullen's evidence in this regard is his own affidavit, a page from the deposition of Kenneth Bordieri⁴⁰ and checks reflecting the dues Macy's remitted to Local 1-S on May 7, 1998 and on July 4, 2001. In his deposition, Bordieri indicates that Macy's was "a little remiss" in adding names of new union members to their list and, correspondingly, in transmitting their dues to Local 1-S. See Deposition of Kenneth Bordieri at 195, attached as Ex. E to Nikolaidis Dec. He stated that if a new member started paying dues in January, for example, they did not appear on Macy's list until March and therefore at times there were "dues-paying members that were not on the list that [Local 1-S was] collecting dues for." Id. Bordieri did not indicate, at least in the part of the deposition submitted to the Court by McCullen, the time frame he was discussing. The checks submitted by McCullen show that on May 7, 1998, Macy's submitted $85,422.25 in dues to Local 1-S. On July 4, 2001, they submitted $112,190.96 in dues, an approximately 30% increase. See May 7, 1998 and July 4, 2001 Checks from FACS Group to Local 1S Dept. Store Union, attached as Ex. 15 to McCullen Dec. McCullen claims this increase came with no increase in union members. The Bordieri deposition and the checks, while not particularly compelling evidence,⁴¹ are sufficient for this claim to survive summary judgment.

40 Bordieri is a member of Local 1-S and was the chairman of the trial committee that internally investigated McCullen's claims against Pascarella and Samuels.

41 The length of time between the two checks — three years — is worth noting. If McCullen's allegations prove true, then certainly he could not be expected to instantly correct the dues deficiency. However, if the union, under his leadership, was not able to fix the problems with dues collection for three years, he might very well have committed the same violations of which he now alleges Rogers is guilty.

Finally, McCullen makes allegations regarding Rogers' travel expenses and claims they evince a violation of the LMRDA. He states that her regular commuting expenses were paid for and that her W-2 did not reflect this benefit. Rogers claims that the travel was for proper business expenses in that it was travel between Macy's stores in connection with her union position. McCullen's only evidence to support this claim is his own assertion and a single page from the Rogers deposition. However, in her deposition, Rogers simply stated that she was reimbursed for her travel "as one of the conditions of taking the job." Deposition of Gail Rogers, attached as Ex. D to Nikolaidis Dec. This statement is entirely consistent with her defense that the travel was legitimately reimbursed as a business expense. Therefore, because of the complete lack of evidence, McCullen cannot base a § 501 claim against Rogers on this conduct.

Based on the foregoing, McCullen's LMRDA claims against Rogers can go forward based on her conduct in overseeing dues collection. However, to the extent the claims are based on unprocessed grievances, vacation leave and travel expenses, they are dismissed.

H. Rogers' Fiduciary Duties Under New York Labor Law

Rogers also claims that plaintiffs have failed to state a claim against her for breach of fiduciary duty under New York labor law. The Court need not address this argument, except to say that plaintiffs have not alleged that Rogers violated these duties. The First Amended Complaint does not include a count against Rogers under New York law.⁴²

42 Interestingly, Pascarella and Samuels, the defendants against whom state law claims were brought, have not sought summary judgment on the merits of these claims. They only addressed the statute of limitations and punitive damages.

III. Third-Party Defendant's Summary Judgment Motion

Third-party defendant Parham moves for summary judgment on the following grounds: (1) various procedural issues regarding the LMRDA; (2) Parham did not breach her fiduciary duties and was entitled to rely on the advice of the union accountants; (3) third-party plaintiffs failed to comply with Rule 8 of the Federal Rules; (4) third-party plaintiffs failed to comply with Rule 14; (5) third-party plaintiffs failed to comply with the scheduling order; (6) the Court should decline to exercise supplemental jurisdiction; (7) there is no right of contribution for breach of contract; and (8) indemnification is unwarranted because Parham shares fiduciary duties with the union president.

The Court will now turn to these issues.

A. LMRDA Issues

All of Parham's grounds for summary judgment based on the LMRDA can be dealt with by simply stating that the Third-Party Complaint is not based on the LMRDA. While it does not explicitly use the words "contribution" and "indemnification," it is clear on its face that they are the basis for the claim. The Third-Party Complaint states that "[i]n the event the plaintiffs recover judgment in their action against the defendants-third party plaintiffs, Parham will become, jointly and severally liable for the amount of the damages and costs awarded to plaintiffs." Third-party Compl. ¶ 6. The prayer for relief asks for "damages and costs that may be adjudged against [defendants] in favor of plaintiffs."⁴³ As such, summary judgment based on failure of third-party plaintiffs to comply with the demand requirements of the LMRDA, timeliness of the action under the LMRDA, failure to exhaust administrative remedies, and Pascarella and Samuels' standing under the LMRDA is denied. While the availability of indemnification and contribution might hinge, at least in part, on whether Parham violated her fiduciary obligations to Local 1-S, this is not an action under § 501 and as such, third-party plaintiffs do not need to comply with the LMRDA's procedural requirements.

43 In her reply papers, Parham contends that third-party plaintiffs are suddenly shifting their cause of action to indemnity and contribution. However, while it may not be obvious to a layperson, any attorney reading the Third-Party Complaint should recognize quickly that it sounds in contribution and indemnification. Parham has been represented throughout this litigation. Third-party defendant also states that "immediately prior to the submission of [her] brief, counsel for [t]hird [p]arty [p]laintiffs reaffirmed that the only claim alleged was one of a violation of the LMRDA." Parham's Reply Memorandum in Support of Third Party Defendant's Motion for Summary Judgment ("Parham's Reply") at 1 n. 1. If this allegation is true, then Parham's attorney acted unreasonably in relying on the statement given the language used in the Third-Party Complaint.
If any party has "shifted" positions, it is third-party defendant. In her reply papers, she put forth several new grounds for summary judgment. To grant Parham summary judgment based on arguments that the third-party plaintiffs did not have a full opportunity to contest would be fundamentally unfair. However, because Parham's new grounds are without merit, the Court will dispose of them in this Opinion.

B. Parham's Duties and Reliance on Local 1-S's Accountants

Parham alleges that summary judgment is appropriate because there is no evidence she violated her fiduciary duties to the union. As part of that claim, she argues that she acted in reasonable reliance on the union's accountant.

The Constitution requires the financial secretary to supervise the union bookkeeper. 1992 Constitution art. VIII, § 7; 1985 Constitution art. VIII, § 7. The forensic accountants hired by the trial committee cast doubt on whether Parham executed this responsibility. In their January 12, 1998 final report, they stated that

based upon our inquiries and a questionnaire completed by Ms. Parham, we find that Ms. Parham does not possess even a basic understanding of accounting or finance. . . . Accordingly, she is ill equipped to interpret financial information provided by the bookkeeper or to engage him or others in a meaningful dialogue on matters relating to accounting and finance.

Pogogeff Lafharis Report at 179. Additionally, they noted several problems with the accounting system in place at Local 1-S, and because of these problems, "the local's financial reports and tax returns have been incomplete and misleading." See id. at 180-81. This conduct, if proven, is inconsistent with Parham's duty to supervise the accountant. Furthermore, Parham claims that she was denied access to the financial reports and records until 1997. See id. at 14; Parham's 56.1 S. ¶ 39. She took office as the financial secretary, however, in 1990. She waited until 1996 to make "her first formal complaint" about this denial of access. Parham Aff. ¶ 51. Certainly, a factual question exists whether this six-year delay was reasonable or whether it was a dereliction of her duties to union.

Short shrift can be made of Parham's argument that she reasonably relied on the union accountants. She is accused of failing to supervise the union bookkeeper. She can hardly be heard to argue that she adequately performed that duty by simply relying blindly on the very person that she was charged with supervising.⁴⁴ Therefore, summary judgment on this issue is denied.

44 In support of her reasonable reliance argument, Parham citesUnited States v. Int'l Bhd. of Teamsters ("Caldwell"), 831 F. Supp. 278 (S.D.N.Y. 1993), which states "[r]easonable reliance on the advice of counsel can negate intent and, therefore, can exculpate a charged individual." Id. at 284. She neglects, however, to provide the context of that quote. Caldwell involved a charge of fraudulent intent to deprive the union of its funds. As Judge Preska has stated, the case "merely noted the unremarkable principle that when intent is an element of an offense, the charges against an individual cannot be sustained absent the requisite intent to commit the charged offense." U.S. v. Int'l Bhd. of Teamsters, 164 F. Supp.2d 328, 334 (S.D.N.Y. 2001). As such, the case is not helpful to Parham in the instant proceeding. The issue is whether she complied with her union and fiduciary duties. Intent is not a relevant issue.

C. Failure to Comply with Rule 8

Third-party plaintiffs did not include a jurisdictional statement in their complaint. Rule 8 of the Federal Rules sets forth the requirements for pleadings. Specifically, the Rule states that any complaint must contain "a short and plain statement of the grounds upon which the court's jurisdiction depends, unless the court already has jurisdiction and the claim needs no new grounds of jurisdiction to support it." Fed.R.Civ.P. 8(a)(1). It has been noted, however, that third-party complaints generally do not need to include jurisdictional grounds because the Court already has jurisdiction over the case.⁴⁵ 6 Wright, Miller Kane, Federal Practice Procedure, Civil 2d § 1453 (2d ed. 1990); see also Fidelity Deposit Co. v. C A Currency Exch., Inc., 738 F. Supp. 302, 303 (N.D. Ill. 1990); Donley v. Whirlpool Corp., 234 F. Supp. 869, 876 (E.D. Mich. 1964). As such, the Third-Party Complaint is not defective.⁴⁶

45 It is instructive that Form 22-A attached to the Federal Rules of Civil Procedure, which is a model for third-party complaints, does not include a jurisdictional statement. Rule 84 states that the model forms "are sufficient under the rules." Fed.R.Civ.P. 84.

46 Even if the lack of a jurisdictional statement rendered the complaint defective, it would have had little practical effect except to delay this case. The Court certainly would have allowed third-party plaintiffs to amend the complaint based on the principles embodied in Rule 15, which states that leave to amend "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). Parham has been a party to this action since 1999 and discovery is now complete. To not allow third-party plaintiff to amend the Third-Party Complaint now, were it necessary, would be almost as nonsensical as dismissing the Third-Party Complaint based on a two-week deviation from the scheduling order. See Infra Part III.E.

D. Failure to Comply with Rule 14

Parham's next contention is that third-party plaintiffs failed to comply with Rule 14 by not obtaining leave to file the Third-Party Complaint. This argument is quizzical. Rule 14 requires that defendants seek leave of the court if they file the third-party action more than ten days after filing their answer. Fed.R.Civ.P. 14(a). In this case, third-party plaintiffs filed the Third-Party Complaint on April 20, 1999, the same day they filed their Answer to the Amended Complaint. Therefore, it was unnecessary to obtain the Court's permission.

E. Failure to Comply with the Original Scheduling Order

Parham's next ground is that the third-party plaintiffs failed to comply with Magistrate Judge Eaton's original scheduling order, which stated that any "motion for leave to amend the pleadings or to add parties must be served and filed by" April 19, 1999. The Third-Party Complaint was filed April 20, 1999 and served on May 3, 1999.

The Court's discussion of this ground must begin by noting that Parham filed this motion on June 15, 2001, over two years after the "late" filing of the third-party action and after discovery, which Parham participated in fully, was completed, and this is the first time she has moved the Court to dismiss based on the two-week delay in 1999.

Rule 16 authorizes district court and magistrate judges to issue scheduling orders. Fed.R.Civ.Pro. 16(b). The Rule also authorizes sanctions for failure to comply with such orders, including dismissal with prejudice. Fed.R.Civ.Pro. 16(f). Whether to issue sanctions for failure to comply with a scheduling order is in the sound discretion of the district court. See Neufeld v. Neufeld, 172 F.R.D. 115, 118 (S.D.N.Y. 1997) (Motley, J.). Dismissal with prejudice is a severe sanction and should not be imposed for minor deviations from the order.Cf. id.

While it is true that a "magistrate judge's scheduling order 'is not a frivolous piece of paper, idly entered, which can be cavalierly disregarded by counsel without peril,'" Luigino's, Inc. v. Pezrow Companies, 178 F.R.D. 523, 525 (D. Minn. 1992) (quoting Gestetner Corp. v. Case Equip. Co., 108 F.R.D. 138, 141 (D. Me. 1985)), dismissing the Third-Party Complaint in this matter because of a two-week delay three years ago would be disproportionate, to say the least, and the Court will not do so.

F. Supplemental Jurisdiction

State law governs indemnification and contribution. Because third-party plaintiffs and third-party defendants are not diverse, subject matter jurisdiction over these claims can only be found in supplemental jurisdiction. See 28 U.S.C. § 1367. In her reply papers, Parham seems to acknowledge that this Court has supplemental jurisdiction.⁴⁷ See Parham's Reply at 5. She argues, however, that the Court should choose not to exercise such jurisdiction.

47 This acknowledgment is not remarkable. Supplemental jurisdiction arises when the state law claims "are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy." 28 U.S.C. § 1367 (a). Third-party plaintiffs' claims are clearly intertwined with the federal claims asserted by plaintiffs.

Section 1367 delineates four reasons not to invoke supplemental jurisdiction. See 28 U.S.C. § 1367 (c). Parham, however, makes no attempt to fit her argument into any of these categories. Instead, she argues that by allowing the claims for indemnity and contribution to go forward, the Court would be allowing third-party plaintiffs to bring a claim based on the LMRDA while not meeting the procedural requirements — admitting "'at the back door that which has been legislatively turned away at the front door.'" Parham's Reply at 6 (quoting Divens v. Amalgamated Transit Union Int'l, 38 F.3d 598, 600 (D.C. Cir. 1994)). This argument is an extension of Parham's failure to comprehend that the third-party action is not based on the LMRDA and is simply wrong. According to the union Constitution, she had a duty to supervise the bookkeeper. Third-party plaintiffs' claim is that if they are held liable to the union, it is because Parham failed to exercise this duty. Neither jurisdiction nor the theory of the third-party action relies on the LMRDA. It is simply a state law claim that alleges that if defendants are liable to plaintiffs, then Parham should compensate defendants for the damages attributable to her conduct. See Mas v. Two Bridges Assocs., 554 N.E.2d 1257, 1263 (N.Y. 1990) ("The purpose of all contribution and indemnity rules is the equitable distribution of the loss occasioned by multiple defendants."). The Court has, and will exercise, supplemental jurisdiction over this third-party claim.

G. Contribution Claims for Breach of Contract

New York law does not permit contribution "between two parties whose potential liability to a third party is for economic loss resulting only from a breach of contract." Bd. of Educ. v. Sargent, Webster, 517 N.E.2d 1360, 1361 (N.Y. 1987); see also Morse/Diesel, Inc. v. Trinity Indus., Inc., 859 F.2d 242, 249 (2d Cir. 1988). Parham claims that the contribution claims should be dismissed because they are based on a breach of contract — the contract being the union Constitution. She selectively quotes third-party plaintiffs' opposition papers as saying the claim is "based upon 'a breach of [Parham's] contractual obligations.'" Parham's Reply at 8 (quoting Third-Party Plaintiffs' Memorandum of Law in Opposition to Third Party Defendant's Motion for Summary Judgment ("Third-Party Pl. Opp.") at 1). However, the third-party plaintiffs full statement is as follows: "In fact, this third party proceeding is an action for common-law indemnification and contribution arising from breach of her contractual obligations under the Local 1-S Constitution or negligent performance thereof." Third-Party Pl. Opp. at 1. Therefore, to the extent that the contribution claims are based on breach of contract, they are dismissed. However, to the extent they are based on negligence (including breach of fiduciary duties), they survive.⁴⁸

48 It appears to the Court that the main theory of the third-party action is really the breach of fiduciary duty and the unavailability of contribution for contract claims plainly does not affect fiduciary duty claims.

H. Indemnification and Shared Duties

Parham's last basis for her summary judgment request is that indemnification is improper in this case because the union Constitution charges both the financial secretary and the president with supervising the bookkeeper. Therefore, she argues, it would be improper for all of the liability to be shifted to her.

Indemnification, as opposed to contribution, "shifts the entire loss to another." Rosado v. Proctor Schwartz, Inc., 484 N.E.2d 1354, 1356 (N.Y. 1985). It arises out of contract, either express or implied. Id. However, "an indemnity cause of action can be sustained only if the third-party plaintiff and the third-party defendant have breached a duty to plaintiff and also if some duty to indemnify exists between them."Garrett v. Holiday Inns, Inc., 450 N.Y.S.2d 619, 621 (App.Div. 1982);see also Bellevue South Assoc. v. HRH Constr. Corp., 579 N.E.2d 195, 201 (N.Y. 1991) ("The right of one party to shift the entire loss to another — indemnification — may be based upon an express contract or an implied obligation . . . ."). "The classic situation giving rise to a claim for indemnity is where one, without fault on its own part, is held liable to a third party by operation of law (frequently statutory) due to the fault of another." City of New York v. Lead Indus. Ass'n, Inc., 644 N.Y.S.2d 919, 922-23 (App.Div. 1996).

In the instant matter, there is no contract that expressly requires Parham to indemnify third-party plaintiffs. Therefore, their indemnification claim must be based on an implied obligation. When there is not an express contractual agreement providing for indemnity, the Second Circuit, interpreting New York law, has found two situations in which indemnity is properly implied. First, indemnification can be implied "based on the special nature of a contractual relationship between parties." Peoples' Democratic Republic of Yemen v. Goodpasture, Inc., 782 F.2d 346, 351 (2d Cir. 1986). This situation is sometimes referred to as the implied contract theory. The second situation, referred to as the implied in fact theory, is one in which "there is a great disparity in the fault of two tortfeasors, and one of the tortfeasors has paid for a loss that was primarily the responsibility of the other." Id.

The implied contract theory is not applicable here. There is not a special relationship between third-party plaintiffs and Parham such that fairness dictates availability of indemnification. The implied in fact theory, however, cannot be disposed of in this motion. The degree of culpability is an issue of fact to be decided by the trier of fact. See City of New York v. Black Veatch, No. 95 Civ. 1299, 1997 U.S. Dist. LEXIS 15510, *36 (S.D.N.Y. Oct. 6, 1997). Therefore, summary judgment on the indemnification claim is denied.

IV. Joining Trustees and Executive Board Members

In her reply papers, Parham asks this Court for leave to reopen discovery so that she can institute a fourth party action for indemnity and contribution against members of the executive board and the trustees. This request is denied for the following reasons.

As discussed above, parties must obtain leave of the court to join additional parties beyond ten days after the filing of the answer. See Fed.R.Civ.Pro. 14(a). The decision to grant leave in such circumstances is left to the sound discretion of the district court. Rosario v. Amalgamated Ladies' Garment Cutters' Union, 605 F.2d 1228, 1247 (2d Cir. 1979). The factors relevant in determining whether leave should be granted include: "'(1) whether the movant deliberately delayed or was derelict in filing the motion, (2) whether impleading would delay or unduly complicate the trial; (3) whether impleading would prejudice the third-party defendant; and (4) whether the proposed third-party complaint states a claim upon which relief can be granted.'" Murphy v. Keller Indus., Inc., 201 F.R.D. 317, 320 (S.D.N.Y. 2001) (Motley, J.) (quotingMiddle Mkt. Fin. Corp. v. D'Orazio, No. 96 Civ. 8138, 1998 U.S. Dist. LEXIS 19527, at *4 (S.D.N.Y. December 15, 1998)).

In the matter presently before the Court, two of these factors militate strongly towards denying Parham's request. She first sought to implead additional parties in papers filed over one year after her answer in this matter. In East Hampton Dewitt Corp. v. State Farm Mut. Auto. Ins. Co., 490 F.3d 1234 (2d Cir. 1973) (Friendly, J.), the Second Circuit found that the district court's denial of leave to add a party under Rule 14 was not an abuse of discretion when the request was made one year after commencement of the case. Id. at 1246. Additionally, adding parties now would certainly delay the trial considering discovery is finished. See Middle Mkt. Fin. Corp., 1998 U.S. Dist. LEXIS 19527, at *5 (denying impleader because, inter alia, discovery was closed and reopening it would delay trial). This case has been pending since 1997. The Court will not needlessly extend it any further simply because Parham has now decided she would like to join additional parties. Her request is denied.⁴⁹

49 It is not unfair to deny this request considering that if Parham is found liable to third-party plaintiffs, there is no bar to her filing a separate action in state court for indemnity and contribution against the executive board and the trustees.

CONCLUSION

Based on the foregoing, defendants' motion for summary judgment is hereby GRANTED IN PART AND DENIED IN PART. Third-party defendant's motion for summary judgment is DENIED. Third-party defendant's request for leave to reopen discovery to add additional parties is DENIED. The parties are hereby ordered to appear for a pre-trial conference on November 20, 2002 at 11:00 A.M.

SO ORDERED.