Opinion
000414/18
03-05-2019
In the Matter of the Application of Laura A. GILLEN, as Supervisor of the Town of Hempstead, Leigh Latimer, Susan Brockmann, Barbara Conner, Tom Smyth, Chirsty H. Mansfield, Giulia Hamacher, Stephen Hamacher, and Karin Johnson (the "Taxpayers"), Petitioners, v. TOWN OF HEMPSTEAD TOWN BOARD, Anthony J. Santino, Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, Local 880, Respondents.
Matthew Didora, Esq., Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone LLP, Attorneys for Petitioner Laura A. Gillen, 3 Dakota Drive, Suite 300, Lake Success, NY 11042, (516) 328-2300 MDidora@abramslaw.com, Roni F. Epstein, Esq., Attorney for Taxpayer-Petitioners, 15 Rooney Court, Glen Cove, NY 11542, (516) 652-1564, repstein@publicenergyadvisers.com Ronald J. Rosenberg, Esq., Attorneys for Respondent Town of Hempstead Town Board, 100 Garden City Plaza, Garden City, New York 11530 Andrew Preston, Esq., Bee, Ready, Fishbein, Hatter & Donovan, LLP, Attorneys for Respondent Anthony J. Santino, 170 Old Country Road, Suite 200, Mineola, NY 11501, (516) 746-5599, apreston@beereadylaw.com Steven M. Klein, Esq., Attorneys for Respondent Civil Service Employees Association, Inc., 143 Washington Avenue, Albany, NY 12210, (518) 257-1443, Steven.klein@cseainc.org
Matthew Didora, Esq., Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone LLP, Attorneys for Petitioner Laura A. Gillen, 3 Dakota Drive, Suite 300, Lake Success, NY 11042, (516) 328-2300
MDidora@abramslaw.com, Roni F. Epstein, Esq., Attorney for Taxpayer-Petitioners, 15 Rooney Court, Glen Cove, NY 11542, (516) 652-1564, repstein@publicenergyadvisers.com
Ronald J. Rosenberg, Esq., Attorneys for Respondent Town of Hempstead Town Board, 100 Garden City Plaza, Garden City, New York 11530
Andrew Preston, Esq., Bee, Ready, Fishbein, Hatter & Donovan, LLP, Attorneys for Respondent Anthony J. Santino, 170 Old Country Road, Suite 200, Mineola, NY 11501, (516) 746-5599, apreston@beereadylaw.com
Steven M. Klein, Esq., Attorneys for Respondent Civil Service Employees Association, Inc., 143 Washington Avenue, Albany, NY 12210, (518) 257-1443, Steven.klein@cseainc.org
Randy Sue Marber, J.
Petitioners, Laura A. Gillen, as Supervisor of the Town of Hempstead, and certain resident-taxpayers, bring this hybrid Article 78 and declaratory judgment proceeding challenging two resolutions passed by the former composition of the Town Board of the Town of Hempstead (the "Town"), along with its former Supervisor, Anthony J. Santino ("Santino"). Also named as a Respondent is the CIVIL SERVICE EMPLOYEES ASSOCIATION, INC., LOCAL 1000, AFSCME, AFL-CIO, LOCAL 880 ("CSEA").
On Election Day, November 7, 2017, then Supervisor Santino ran for reelection and was defeated by Petitioner, Laura Gillen . The following month, at former Supervisor Santino's last board meeting in office, a resolution was passed amending certain provisions of the Collective Bargaining Agreement ("CBA") that were heavily negotiated and ratified a mere five months earlier. The amendments effectively prohibited the Town from terminating virtually all CSEA employees for any reason except misconduct and incompetence, as well as broadened the class of employees entitled to the protections afforded by the CBA's Disciplinary Procedure. At the same meeting, another resolution was passed authorizing the transfer/appointment of 197 employees from the Office of the Supervisor and the Office of the Town Clerk to various departments. At issue here are 14 of those employees who were transferred from the Office of the Supervisor and the Town Clerk's Office and placed in newly protected civil service positions created by the CBA amendments without an appropriate reduction in their salaries.
This election marked the first time in over a century that a Democrat defeated a Republican for the position of Town Supervisor (See Affirmation of Matthew F. Didora, Esq., dated 08/20/18, at p. 8).
The Petitioners contend that the resolutions were promulgated in violation of various provisions of the Town Law and General Municipal Law and were done solely to restrict Supervisor Gillen's authority and protect patronage employees at the expense of Town residents. By this proceeding, the Petitioners seek to have the resolutions declared null and void on the grounds that the Town's conduct was unreasonable, arbitrary and capricious, and violated lawful procedure.
The following material facts are drawn from the parties' submissions. FACTS
In 2017, Santino was the duly elected Supervisor of the Town. On November 7, 2017, Town residents elected a new Supervisor, Petitioner Gillen, with her term of office commencing in January 2018.
Well before the November 2017 election, former Supervisor Santino spent "several weeks" negotiating the terms of the new union contract with CSEA intended to govern a 5-year period with effective dates of January 1, 2017 through December 31, 2021. In July 2017, the new 5-year union contract was ratified by vote of the Town Board.
The original bargained-for terms of the CBA permitted the Town to terminate employees for reasons due to budgetary, economy, consolidation, abolition of functions or curtailment of activities pursuant to Section 45 entitled "layoff and rehiring procedure". Section 15 of the original CBA governed employee severance rights "[w]hen, because of economy, consolidation, abolition of functions or curtailment of activities, an employee's position is abolished and the Employer after the exercise of reasonable efforts is unable to offer the employee another position comparable as to compensation" (See 2017-2021 CBA at § 45, p. 36; § 15, p. 24, annexed to Petitioner Gillen's Opposition as Exhibit "1").
Moreover, the original CBA contained a Disciplinary Procedure which, inter alia , afforded certain protections to various classes of employees (Id . at § 1.4 of Disciplinary Procedure, p. 55). As relevant here, employees that held positions in categories designated as "exempt", "unclassified service", "confidential" or "influencing policy", were not entitled to the protections of the Disciplinary Procedure.
Resolution No. 1823-2017 — The "Memorandum of Agreement"
Following the loss of former Supervisor Santino's reelection bid, the Town Board voted to approve Resolution No. 1823-2017, authorizing Santino to execute a Memorandum of Agreement (the "MOA"), which amended Section 45 (layoff and rehiring procedure) and Section 1.4 of the Disciplinary Procedure of the CBA. (See Amended Petition at Exhibit "A"). Specifically, Section 45 was amended to add a "no layoff clause", providing, in pertinent part:
no employee shall be terminated for reasons due to budgetary, economy, consolidation, abolition of functions, abolition of position or curtailment of activities but may be
terminated only for misconduct or incompetence. (See Amended Petition at Exhibit "M" [emphasis supplied] ).
The MOA further amended Section 45 by adding a proviso whereby the original layoff and rehiring procedure and related employee severance rights would automatically be restored in the event that the no layoff clause ceased to be in effect:
While [the no layoff clause] remains in effect, the provisions in [the layoff and rehiring procedure] of this Section shall cease to be in force and effect and [employee severance rights provision] of the CBA shall cease to be in force and effect. However, if the [no layoff clause] ceases to be in effect, then [the layoff and rehiring procedure] of this Section shall control and [employee severance rights provision] shall be restored.
The MOA also amended Section 1.4 of the Disciplinary Procedure by expanding the list of employees entitled to the protections afforded thereunder. This provision, as amended by the MOA, provides as follows:
1.4 An employee who is other than full-time, temporary, provisional, or in the unclassified service shall not have the protections of this procedure in this Agreement. An employee in the Office of the Supervisor, Town Board, Town Clerk or Receiver of Taxes who is exempt (unless otherwise protected under the Civil Service Law), or in the unclassified service, or in a position designated by the Civil Service Commission as "confidential" or "influencing policy" in those offices shall not have the protections of this procedure in this Agreement. (See MOA at p. 1, annexed to Amended Petition as Exhibit "M" [emphasis supplied] ).
By specifically amending it to read that only those employees from the four elected offices holding those positions do not have protection, the result is that the employees in those categories in all other departments/offices are now protected. This emanates from the Latin maxim, expressio unius est exclusio alterius , meaning, when one or more things of a class are expressly mentioned others of the same class are excluded.
Claimed Violation of Town Ethics Code — Vote on the MOA
The seven members of the Town Board at the December 12, 2017 meeting were: former Supervisor Santino and Council members, Dorothy L. Goosby, Bruce A. Blakeman, Anthony P. D'Esposito, Edward Ambrosino, Erin King Sweeney and Dennis Dunne, Sr. The MOA passed by a 4-3 vote. The decisive votes in favor of the MOA were cast by Santino and D'Esposito, both of whom had relatives that stood to benefit from the MOA.
At the meeting, Town residents emphatically voiced their concerns regarding the ethical implications raised by Board members voting on matters in which their relatives have an interest (See Minutes of Board Meeting at pp. 199-200, annexed to Amended Petition as Exhibit "O"). At first, the Town Attorney told the residents that no ethical issues exist. The Town Attorney then advised that any ethical issues would be addressed during the vote (Id. ). Despite the foregoing, however, the votes were cast, not a single Board member abstained, and the MOA was approved by a 4-3 vote (Id. at pp. 224-229).
The Petitioner challenges the promulgation of the MOA insofar as the votes cast by former Supervisor Santino and Councilman D'Esposito violated the Town's Ethical Standards (the "Town Ethics Code") which prohibits an elected official from casting a vote for any matter in which a relative has a financial interest (See Town of Hempstead Code, Chapter 38, Ethical Standards, § 38-1[I] ). Pursuant to subdivision I of Section 38-1, a relative is defined as a spouse, mother, father, sister, brother, or child. Here, the Petitioner highlights that Santino's sister and Councilman D'Esposito's mother, brother and sister-in-law were all employees of the Town. Additionally, D'Esposito's father was a signatory to the MOA. Thus, the Petitioner contends that Santino and D'Esposito were under an ethical obligation to abstain from voting on the MOA. It is further submitted that, had Santino and D'Esposito not voted, a quorum of the Town Board would still have existed, yet the Resolution to approve the MOA would have failed without their votes.
Resolution 1871-2017 — The "Personnel Transactions"
At the same meeting, the Town Board also voted to approve Resolution No. 1871-2017, authorizing, inter alia , the transfer of several employees to various departments together with their salaries (the "Personnel Transactions") (See Resolution No. 1871-2017, annexed to Amended Petition as Exhibit "B"). In support, the Petitioner proffers the sworn affidavit of Averil Smith, a certified public accountant employed as the Town's Director of Finance since January 2018. The Court notes that while the Amended Petition and supporting memorandum of law refer to either "192" or "190" personnel actions, Smith's affidavit only challenges 14 personnel actions. Smith attests that the Comptroller's Office provided her with a "breakdown of the cost associated with retaining these 14 employees." (See Smith Affidavit ¶¶ 13-14, sworn to on April 11, 2018, annexed to Amended Petition as Exhibit "I"). Smith opines that the unbudgeted salaries and related expenses for the 14 employees adds $ 2,249,097 in expenses to the 2018 Budget without a corresponding budget reduction or appropriation to the 2018 Budget. Smith then contends that "[t]he supporting spreadsheet is annexed [thereto] as Exhibit O". However, no such spreadsheet is found anywhere in the record.
Review of the record reveals that there were a total of 197 personnel resolutions, out of which 32 employees from the Tosner Eligibility List were severed from the vote (See Conroy Affidavit at ¶25). As to the identity of the 14 challenged transfers, review of Resolution No. 1871-2017 annexed to the Amended Petition as Exhibit "B" reveals that the first 14 pages relate to employees from the former Supervisor's Office and/or the Town Clerk's office , and are identified by a specific sub-Resolution Number. The following chart provides a comprehensive summary of the challenged personnel transactions that correspond to those 14 sub-Resolutions: 14 Challenged Personnel Transactions of Resolution No. 1871:
The Town is legally required to appoint at least 30 part-time employees to full-time positions every year pursuant to the terms of a Stipulation of Settlement entered into by the Town in Tosner v. Town of Hempstead , Index No. 19334-01 [Sup. Ct. Nassau County, 2008]. Pursuant to the Tosner Settlement, the Town is required to create an "Eligibility List" of Town employees eligible to be appointed to full-time positions, and, each year, the Town offers the first 30 employees on the list such positions (See Conroy Affidavit at ¶¶ 21-22; see also Exhibit "C" annexed thereto).
The Court also notes that annexed to the original petition as Exhibit "C" are only 14 resolutions contained within Resolution 1871. The 14 employees identified in the original petition are identical to the first 14 resolutions annexed to the Amended Petition as Exhibit "B". Moreover, only the Resolutions relating to these 14 employees are complete in that they reflect the Resolution No., Case No., date adopted, and votes cast. The remaining Resolutions annexed as Exhibit "B" do not appear to be complete documents as they do not specify such information (See Exhibit "B" annexed to Amended Petition).
Employee Position Position Salary CBA Amend. Resolution Resigned/ Appointed/ Change (affected by No. Transferred Transferred To (Amount) MOA) From (Office) (Department/ Office) Diana Muller Dep. Town Clerk Counsel (Dept. of No Change Exempt 1871/128-2017 (Town Clerk) Engineering) ($111,310) (protected) Cheryl Petri Exec. Assistant Deputy Receiver No Change Exempt 1871/141-2017 (Supervisor) of Taxes (Receiver ($136,508) (protected) of Taxes) Linda Reed Exec. Assistant to Deputy Commissioner No Change Exempt 1871/152-2017 Supervisor (Senior ($146,117) (protected) (Supervisor) Enrichment) Felice Guarnieri Deputy Town Deputy Commissioner No Change Exempt 1871/77-2017 Clerk (Town (General ($154,046) (protected) Clerk) Services) Michael Deery Director of Confidential No Change Exempt 1871/47-2017 Comm. Assistant to ($203,405) (protected) (Supervisor) Receiver of Taxes (Receiver of Taxes) Celeste Esopa Secretary to Messenger (Town No Change Non-Competitive 1871/55-2017 Supervisor Attorney's Office) ($90,639) Ungraded (Supervisor) (protected) Deborah Faas Clerk Laborer Transferred to No Change Clerk Laborer 1871/57-2017 (Supervisor) Dept. of Parks & ($70,674) (protected) Recreation Nasrin Ahmad Town Clerk Deputy Commissioner No Change Exempt 1871/3-2017 (DOOR) ($129,500) (protected) Roseann Secretary to Secretary to Town No Change Exempt Scandiffio Supervisor Attorney (Town ($130,185) (protected) 1871/164-2017 (Supervisor) Attorney) Michele Admin. Officer II Transferred to No Change Admin. Officer Sparaccio (Supervisor) Dept. of Senior ($128,996) II (protected) 1871/172-2017 Enrichment Jamie Tiso Secretary to Town Community No Change Non-Competitive 1871/182-2017 Clerk (Town Research ($70,000) Ungraded Clerk) Assistant (Dept. (protected) of Buildings) Jostyn Assistant Dir. of Community No Change Non-Competitive Hernandez Communications Research ($100,000) Ungraded 1871/87-2017 (Supervisor) Assistant (protected) (Comptroller's Office) Kim Kelly Messenger Transferred to No Change Messenger 1871/97-2017 (Supervisor) Dept. of Parks & ($50,000) (protected) Recreation Marcia Miner Secretary Reinstated as Increase to Competitive 1871/126-2017 (Supervisor) Office Services ($83,013) Permanent Assistant (protected) (General Services)
The Petitioner's challenge is targeted at the foregoing appointments of the outgoing Supervisor's "political allies" from the two elected offices, together with their salaries, to departments not financially positioned to handle the additional salary expense. Moreover, the Petitioner challenges the placement of these employees in protected civil service positions.
By way of example, the Petitioners submit proof that prior to the election, in or about October 2017, the Department of Occupational Resources ("DOOR") was experiencing significant budgetary issues due to government funding cuts. At that time, a meeting was held with the Commissioner of DOOR, Human Resources Department, Town Attorney's Office and Civil Service Commission whereupon it was agreed that several employees would be transferred out of DOOR and removed from its payroll no later than December 31, 2017. Such agreement was then "placed on hold on November 8, 2017" after Santino lost his reelection bid, and on December 12, 2017, Resolution No. 1871 was passed which appointed and assigned additional personnel to DOOR.
By Inter-Departmental Memo dated December 13, 2017, the Commissioner of DOOR advised the Town's Human Resources Director that the new transfers into this already financially crippled department would dramatically increase its budget deficit. The memo provided that "due to the nature of the job titles and functions of the new staff, we would be forced to exceed the funding limitation of expenditures on administrative costs which was to be no more than 10% of the department's funding allocation." Most significantly, "any funds spent in excess of the administrative cap will be disallowed by the New York State Department of Labor and must be repaid with tax levied funds." (See Exhibit "H" to Amended Petition).
Despite the significant budget deficit faced by DOOR due to severe reductions in federal funding, rather than carrying out the original plan of removing personnel to avoid exceeding the maximum allowable expenditures, on December 11, 2017, DOOR's Commissioner was informed of the Town Board's plan to appoint former Town Clerk Nasrin Ahmad to the vacant Deputy Commissioner position at DOOR, as well as a secretarial staff member. In response, DOOR's Commissioner stated that this was going in the "opposition direction to balancing DOOR's budget" as previously planned.
Notwithstanding the foregoing, one of the challenged appointments is Resolution No. 1871/3-2017 whereby former Town Clerk Ahmad was appointed as Deputy Commissioner of DOOR, an exempt, ungraded position, together with her salary of $ 129,500.00. As with the other challenged transfers, the no layoff clause prevents termination due to budgetary reasons. Moreover, Ahmad was placed in a civil service "exempt" position that is now protected by the MOA's expansion of the "exempt" class of employees entitled to the protections of the Disciplinary Procedure.
2018 Approved Budget
In preparing the budget for fiscal year 2018, former Supervisor Santino issued a Budget Message dated September 30, 2017 — a mere 5 ½ weeks before Election Day — setting forth his goals and priorities. Some of these priorities included "dramatically cutting costs, reducing staffing levels, holding managers accountable and slashing [the] township's budget" (See 2018 Budget Message at p. 1, annexed to Conroy Reply Affidavit as Exhibit "B"). Santino informed the taxpayers that the 2018 Budget was "structurally balanced", with sufficient revenues to meet expenses without reliance on "one shot revenues or any other fiscal gimmicks." He promised budget cuts by trimming the Supervisor's Office payroll; "rightsizing" the Town's municipal workforce; cutting the number of full-time positions; exercising "extreme reserve" in filling vacancies; and employing an overall "Doing More with Less" approach and "Reducing the Workforce" (See Budget Message). With regard to the new 5-year union contract with CSEA, former Supervisor Santino makes no mention of the prospect of offering the union a no layoff clause.
On October 17, 2018, following a comprehensive review, discussion and financial analysis, the Town Board adopted the budget for fiscal year 2018 (the "Budget").
Petitioner Gillen contends that former Supervisor Santino had a fiduciary responsibility to properly manage and administer the Budget from the time it was adopted until he left office pursuant to Town Law Section 52. The Petitioner further submits that the arbitrary and capricious nature of Santino's conduct is demonstrated by his "late term conduct that permeated the Board" which directly contradicted his administration's budgetary goals that remained consistent throughout his term. It is alleged that, rather than achieving his claimed budgetary goals by "aggressively managing workforce costs", the loss of his re-election bid in November 2017 resulted in the former Supervisor actively campaigning to increase workforce costs.
The Petitioner further challenges the propriety of the Personnel Transactions as violative of Town Law §§ 112 and 117. In this regard, the Petitioner contends that the additional salaries were unbudgeted in the departments to which the personnel were appointed and/or transferred causing significant fiscal stress in the 2018 Budget. This, the Petitioner posits, added over $ 2 million in Budget expenses without a corresponding Budget appropriation or adoption of a budget note to pay those expenses. Nor could they have adopted a budget note pursuant to Local Finance Law as Town Law requires "urgent municipal purposes" to exist, or contemplates the expenditures to be an "unforeseeable public emergency" such as an "epidemic, conflagration, riot, storm, flood, earthquake, or other unusual peril to the lives and property of the citizens of such unit of government." (Local Finance Law § 29).
Opposition to Resolutions at December 12, 2017 Board Meeting
The public outcry at the December meeting of the Town Board was readily apparent. Town residents expressed that it was "sabotage" in an attempt "to bankrupt the Town so that Laura Gillen fails" by "appointing people to really stifle the new administration." (See Transcript at pp. 146, 167, annexed to Amended Petition as Exhibit "O").
When the MOA was first raised for discussion, a number of Town residents vehemently objected to the last-minute amendments to the CBA. It was labeled a "power grab". Santino was accused by residents of intending to "appoint people in perpetuity" despite having lost the election. (See Transcript of Meeting at pp. 134-135, annexed to Amended Petition as Ex. "O").
Several Town residents also raised strenuous objections to the transfer of certain employees to different departments without an appropriate salary reduction (Id . at pp. 154-188, 199-210). A resident commented that the transfers should be rescinded because the "movement of individuals to civil service positions flips the Civil Service Law on its head, using the law to protect political appointees, just the opposite." (Id . at p. 140-141).
Santino was criticized by the residents for previously taking "great pride in reducing the Town's workforce" and questioned what his response would be to the MOA if he continued in office. Concerns were voiced about the financial impact on the Town in the event of economic downturn such as a recession or decreased ability to raise necessary revenue. The Board was called upon to "put the needs of the residents and taxpayers before parochial abominations and pass the baton to the new Administration without hampering flexibility to act." (Id . at pp. 141-142).
Councilman Blakeman raised significant opposition regarding the lack of consideration for the MOA. He demanded to know what the Town was receiving in return for the no layoff clause. At one point, Santino responded that "[t]he Civil Service Employee Association that is part of the negotiations with the Union and what it does it provides further protection for our employees going forth, so, that is my answer" (Id . at pp. 137-138). Councilman Blakeman publicly remarked:
[The MOA] is handcuffing the Town Board going forward, all the Members of the Town Board, not just the new Supervisor.
It is going to jeopardize the fiscal integrity of this Town.
It is against every principle of good government.
There is no reason for this other than a blatant power grab that benefits no one but the ruling class.
* * *
I want to know who initiated this and what the taxpayers are getting in return.
Nobody has answered that question yet.
And, I think that question needs to be answered. (Id . at pp. 138-139).
Despite the foregoing, and continued objections by Town residents, the question was never answered.
Certain Council members and Town residents called upon the Town's Comptroller, Kevin Conroy, to address the financial impact of the Resolutions. Comptroller Conroy candidly acknowledged that no financial impact analysis was conducted, stating, in pertinent part:
The cost effect or the cost regarding these transfers is going to take a few days
It needs to be done on a case by case basis.
Looking at the transfers, um, what I see, now, subject to check, subject to comprehensive review is no real, no monetary adjustment from transfer from Department A to Department B.
* * *
[The impact of the no layoff provision] remains to be seen, prospectively, I can't quantify that at this point.
(See Amended Petition, Exhibit "O" at pp. 147-149).
As to why the Comptroller's Office would approve the MOA without first having conducted a financial impact analysis, Comptroller Conroy responded:
In this budget, the '18 budget, we elevated all vacancies and in the budget, itself, is a line item,
"salary adjustments," to accommodate something that would be in the course of this item.
Salary adjustment numbers were 2.4 million dollars.
So, therefore, getting back to answer your questions, specifically and comprehensively, a total review would have to be done by a case by case basis. (Id. at pp. 150-151).
Notably, Comptroller Conroy also candidly conceded that "if the economy did, in fact, go South, [the no layoff clause] probably would have an adverse effect." (Id. at p. 153).
RESPONDENTS' APPLICATIONS
Santino's Motion to Dismiss (Mot. Seq. 02)
In lieu of answering, Respondent Santino moves to dismiss on the sole grounds that, as a "former" officeholder, he is powerless to provide any relief for injuries resulting from any official act taken while in office. Insofar as the Amended Petition fails to delineate whether Santino is being sued in his official capacity or individual capacity and given that allegations therein challenge acts taken by Santino as "Town Supervisor", it is argued that the matter should be dismissed against him individually. Counsel for Santino contends that, where the challenged decision-making entity has been named, individual defendants are entitled to absolute legislative immunity and are improper parties.
CSEA's Motion to Dismiss (Mot. Seq. 04)
The sole grounds upon which CSEA seeks dismissal is the Petitioners' failure to name approximately 192 necessary parties. CSEA contends that the Court should not proceed in the absence of the affected employees as their rights are potentially affected by a determination on whether the Resolution approving the Personnel Transactions should be declared null and void.
Notably, CSEA's motion papers do not make any reference to the MOA.
Town's Motion to Dismiss (Mot. Seq. 05)
The Town initially raises a number of procedural arguments in its motion, to wit , that the Petitioners' proceeding must be dismissed as untimely, for lack of personal jurisdiction, lack of subject matter jurisdiction, lack of standing, the claims do not present a justiciable controversy, and lastly, failure to join necessary parties. As to standing, the Town alleges that Supervisor Gillen fails to properly allege that either Resolution actually interferes with any power, authority or discretion afforded to her as the Town Supervisor. The Town further alleges that the Taxpayer-Petitioners similarly lack standing because they do not claim any particular interest in the Resolutions other than the fact that they are taxpayers. In the same vein, the Town posits that Petitioner Gillen's claims are non-justiciable controversies because she does not possess any individual authority to lay off union employees or challenge personnel actions. Even if she did, the Town avers that she has not attempted to take any such action and thus there has not been a "final determination" as would render the claim ripe for judicial review.
The Town also argues that the Petitioners failure to name as respondents to this proceeding the approximately 190 employees that would be affected by any determination by this Court warrants dismissal.
Substantively, the Town seeks dismissal of the Petition on the merits urging that the Town Board was vested with the authority to amend the CBA to include "job security" provisions. In opposition to the Petitioners' claim that the Town Board was without power to contract beyond its own such that the challenged Resolutions were "ultra vires", the Town argues that the "term limits rule" does not apply to labor determinations. In this regard, the term limits rule generally "prohibits one municipal body from contractually binding its successors in areas relating to governance unless specifically authorized by statute or charter provisions to do so" ( Karedes v. Colella , 100 N.Y.2d 45, 50, 760 N.Y.S.2d 84, 790 N.E.2d 257 [2003] ). Insofar as the MOA concerned the terms and conditions of union employees by amending a labor agreement — the CBA — the Town posits that the term limits rule is inapplicable. Relying upon Town Code Chapter 32, the Town contends that it is specifically empowered to enter into and amend collective bargaining agreements with CSEA. Further, pursuant to Civil Service Law Article 14 (the "Taylor Law") and Section 208(2), the Town submits that collective bargaining agreements are to have a term of years which is not restricted by the term in office of the elected officials approving the agreement. Moreover, the Town argues that it was duly authorized and empowered to amend the CBA to include a no layoff clause as part and parcel of fixing the "terms and conditions" of employment. In support, the Town claims that the Court of Appeals has long held such "job security" provisions valid, permissible and not contrary to public policy as they serve the purpose of attracting and retaining employees (See Board of Ed. of Yonkers City School Dist. v. Yonkers Federation of Teachers , 40 N.Y.2d 268, 386 N.Y.S.2d 657, 353 N.E.2d 569 [1976] ; Burke v. Bowen , 40 N.Y.2d 264, 386 N.Y.S.2d 654, 353 N.E.2d 567 [1976] ; Matter of Antonopoulou v. Beame , 32 N.Y.2d 126, 343 N.Y.S.2d 346, 296 N.E.2d 247 [1973] ).
With respect to the Petitioners' claim that the Town Board violated Town Law § 112, the Town contends that even if it did make additional appropriations or increase existing appropriations without providing for financing thereof, it was specifically empowered to do so pursuant to Local Finance Law Section 29.
With respect to the alleged ethical violations by Santino and D'Esposito's votes in favor of the MOA, the Town's argument is twofold: first, that neither had a "conflict of interest" as defined by the Code, and even if they did, matters concerning contracts with labor unions are expressly excluded from the prohibition. Second, the Town argues that the "sole remedy" for voting on the MOA in violation of the Town's Ethics Code would be a penalty against the individual, not annulment of the Resolution. On the latter point, the Town contends that the alleged ethical violations cannot provide the basis for an Article 78 challenge, as a matter of law.
The Town primarily relies upon Section 38-3 of the Town's Ethics Code, entitled "Interpretation; conflicts of interest". This section provides that "interest" is "defined as a direct or indirect pecuniary or material benefit accruing to an elected official, employee, or other person acting on behalf of, or in the name of, the Town as a result of a contract with the Town which such [person] serves." (See Town of Hempstead Town Code, Chapter 38: Ethical Standards, Section 38-3). Moreover, an elected official, employee, or other person acting on behalf of the Town "shall be deemed to have an interest in the contract of (a) his or her spouse, minor children and dependents, except a contract of employment with the Town which such officer or employee serves." To this end, the Town avers that the "relatives" were not a spouse or dependent of the affected Board members. The Town further argues that, in any event, the exception is applicable because the CBA is "a contract of employment with the Town" which Santino and D'Esposito served.
Lastly, the Town relies upon the last sentence of Section 38-3 which provides, "[n]othing shall constitute a conflict of interest under this chapter or Code of Ethics if it falls within one of the enumerated exceptions set forth in § 802 of the General Municipal Law" (Id .) While no affidavit was proffered in support of its motion, the Town submits an affidavit by Comptroller Conroy for the first time on reply, erroneously labeled as "Affidavit in Support of Motion to Dismiss" (See Conroy Affidavit, sworn to on 09/21/18). Indeed, Comptroller Conroy candidly admits that the affidavit is submitted "in response to" the Petitioners' respective opposition papers, the Amended Petition, and the moving affidavit of Averil Smith (See Conroy Affidavit at ¶5). In his affidavit, Comptroller Conroy explains how the Personnel Transactions did not add unbudgeted expenses to the 2018 Budget. Rather, the Town Board filled budgeted vacancies in the various department to which the employees were transferred and/or appointed. Comptroller Conroy attests that, having analyzed the financial impact of the Personnel Transactions, the 2018 Budget provided two structural "cushions" for anticipated salary expenses, either of which may independently cover the total adjusted salary cost of the "197 affected Town employees." (Id . at ¶9). He concludes that the Personnel Transactions did not create a salary budget or other shortfall to the 2018 Budget.
As to the statements made at the December 12, 2017 Board meeting, Comptroller Conroy contends that there was "no requirement that [his] office perform a case-by-case analysis before the Town Board could vote on the Personnel Resolutions." (Id . at ¶ 14). In sum, Conroy attests that there was sufficient funding for the Personnel Transactions at issue due to the line item "SALARY ADJUSTMENTS" in the 2018 Budget.
Notably absent from Comptroller Conroy's affidavit, however, is any mention of the MOA, its purpose, financial impact on the Budget, or explanation of his comments at the meeting.
In light of the Town's improper submission of an affidavit for the first time on reply, the Court granted Petitioner Gillen's request to submit a sur-reply. In the sur-reply affidavit by Averil Smith, it is again clarified that "this suit specifically concerns the impact of adding 14 ‘appointed’ employees from the Office of the Town Clerk and the Office of the Town Supervisor whose respective principals were ousted by the residents of the Town of Hempstead; appointees of each who, in the ordinary course of business, should have vacated their roles to honor the wishes of the voters of the Town to necessarily make room for the duly elected officials who assumed office in 2018" (See Smith Sur-Reply Affidavit at ¶3, sworn to on 10/11/18). With respect to filling budgeted vacancies with the 14 employees who should have been terminated, Smith attests that Conroy's explanation "would be correct if the affected appointees qualified for, were offered, and had accepted the pay of the existing vacancy." This, Smith claims, was not the case as many of the employees transferred at the same or higher pay.
Smith also contends that the line items providing for "Salary Adjustments" were never explained by Conroy as a "significant cushion", but rather, that such monies were specifically budgeted for (i) contractually obligated 1.5% "bonus" pay to union employees (totaling approximately $ 2.2 million); (ii) reimbursement for healthcare premium avoidance (totaling approximately $ 1.2 million annually); and (iii) "other" approved raises for employees during the budgeted year (See Smith Sur-Reply Affidavit at ¶5). As the foregoing expenses exceed the allotted $ 3,264,783.00 for "Salary Adjustments", the same monies cannot be used twice. (Id . at ¶6).
In further opposition to the Town's motion, Petitioner Gillen proffers an email that was sent less than a week after the former Supervisor's defeat, by Albina Kataeva, Esq., Deputy Town Attorney, to Ken Gray, Esq., outside counsel to the Town. According to the Petitioner, the statements in the email serve as proof that the sole motive behind the Resolutions of Respondent Santino and his Board was to strip her of the authority to terminate employees they sought to protect. In the email, drafted less than a week after the election, Kataeva writes, in pertinent part:
By specifically amending it to read that only those employees from the four elected offices holding those titles do not have protection, the intention of the parties and the result will be that those holding those positions in other departments
are now protected. Expressio Unius Est Exclusio Alterius.
Further, if we add a no lay off clause, the question is whether she will be able to get rid of the Commissioners? She cannot unilaterally do so, she needs the Town Board to do so. The question becomes if this provision will estop her from doing so because we are providing additional protections to the Commissioner's [sic ] beyond that which is required by law? My fear is if she has enough votes on the Board, ends up eliminating them, then they end up suing. This may not provide the protection
they need from being eliminated.
Further, all the commissioners, all the confidential titled people are part of the collective bargaining unit already. The question becomes whether she could go to PERB and state that these people (Commissioners, confidential, policy making, or exempts) cannot be protected because they cannot be part of the collective bargaining unit? Thus, can PERB rule this provision to be illegal and kick them out of the bargaining unit?
As I think about this, I would really need to flush this out further but we have very little time to do so. Need as much help researching these issues and obtaining guidance on these issues as possible. (See Email from Kataeva to Gray, dated 11/13/17 at 5:00 p.m., annexed to Petitioner's Opposition as Exhibit "4" [emphasis supplied] ).
It is alleged that the references to "she" and "her" throughout the email refer to Supervisor Gillen. Petitioner Gillen contends that the email is proof that the MOA was specifically directed at limiting incoming Supervisor Gillen's power within the Town.
In its reply papers the Town initially argued that Petitioner Gillen was legally prohibited from relying on the email because it was filed "under seal" and was a privileged communication between the Town Attorney and the Town's outside counsel not subject to public disclosure. Subsequently, however, the Town waived any privilege with respect to the email on the record at a Court conference held on September 27, 2018. The Court shall now address the parties' respective applications.
LEGAL ANALYSIS
Town's Procedural Objections
The Court finds that the original Petition was filed within four months of the Town Board's determinations and was thus timely interposed against the Respondents. The Court further determines that the Amended Petition relates back to the original Petition.
On the threshold question of standing, the Court concludes that the Petitioners have alleged sufficient allegations of injury or waste to public funds so as to imperil the public interests or to work a public injury or produce some public mischief, conferring standing to challenge the subject Resolutions (See Korn v. Gulotta , 72 N.Y.2d 363, 534 N.Y.S.2d 108, 530 N.E.2d 816 [1988] ). Moreover, contrary to the Town's assertions, the Amended Petition specifically alleges, in nonconclusory fashion, the harmful effects caused by the MOA to which Supervisor Gillen is now a party. As Petitioner Gillen correctly notes, it would be illogical to leave a Town's Supervisor and its Taxpayers without a means of challenging an agreement that is alleged to have been ratified by improper or illegal measures. The fact that the Town Board possesses the authority to lay off, hire and terminate Town employees does not preclude review of the determinations by the former composition of the Board by which the current Supervisor and Taxpayers are aggrieved. ( Matter of City of New York v. City Civ. Serv. Commn. , 60 N.Y.2d 436, 470 N.Y.S.2d 113, 458 N.E.2d 354 [1983] ).
The Town's reliance on Matter of Colton v. Town Bd. of Town of Amherst , 72 A.D.3d 1638, 899 N.Y.S.2d 498 [4th Dept. 2010], is misplaced. There, a minority board member lacked standing to bring an Article 78 proceeding to challenge the town board's actions with respect to the proposed development of vacant property because as "merely a member of the Town Board who voted in the minority has not suffered any injury sufficient to provide him with standing" ( Id. at 1639, 899 N.Y.S.2d 498 ). The court in Colton found that the record did not support petitioner's contention that the challenged actions of the town board nullified his vote and usurped his power as a town board member, thereby providing him with standing ( Id . at 1639, 899 N.Y.S.2d 498 ). Precisely the opposite occurred here.
In the instant matter, Supervisor Gillen was not even a member of the Board who voted with respect to the Resolutions. Rather, the Petitioner's claims are predicated upon the conduct of former Supervisor Santino and his Board in passing the Resolutions for the explicit purpose of curtailing the incoming Supervisor's ability to terminate the very employees the Resolutions sought to protect.
Pursuant to Town Law § 52, a supervisor is the chief executive officer of a suburban town and head of the administrative branch of town government. The supervisor is responsible for the administration of the annual budget after adoption by the town board and for recommending modifications and transfers between appropriations in such budget during the fiscal year. The supervisor is also charged with, among other things, providing for the direct internal organization and reorganization within individual Town departments or agencies. Accordingly, the Amended Petition sufficiently asserts the manner in which the MOA hinders her ability to perform the functions, powers and duties authorized by Town Law § 52 and Article 45 of the CBA.
If the Petitioners' allegations are correct, which we must assume in this posture they are, the 14 challenged Personnel Transactions and the "eleventh hour" amendments to the CBA should not have been presented to the Board for a vote and ratified. The Resolutions, when taken together, undeniably represents a "concrete and particularized" harm to Supervisor Gillen and the Taxpayers.
Moreover, the Court agrees that Supervisor Gillen also has standing as a party to the MOA. The Town Board approved a "resolution authorizing the Supervisor to execute a memorandum of agreement amending the Collective Bargaining Agreement" (Amended Petition, Exhibit "A"). In turn, former Supervisor Santino executed the MOA in his official capacity (Amended Petition, Exhibit "N"). Tasked with the fiscal responsibility of the Town, the Court agrees with the Petitioners that it would be illogical to leave a Town Supervisor and the Taxpayers without a means of challenging what could very well be found to have been promulgated in violation of lawful procedure.
Equally unavailing is the Town Board's contention that this matter presents a nonjusticiable controversy. An Article 78 proceeding to review a determination by a body or officer can only be brought after the determination to be reviewed becomes final and binding upon the petitioner ( Matter of Eadie v. Town Bd. of Town of N. Greenbush , 7 N.Y.3d 306, 821 N.Y.S.2d 142, 854 N.E.2d 464 [2006] ). Here, the Court concludes that the Petitioners suffered "concrete injury" when the Town Board approved the MOA amending the CBA.
The Court also disagrees with the Town that this matter involves a nonjusticiable political question. Despite the obvious political overtones, it is entirely appropriate for this Court to determine questions of law. As the Court of Appeals has aptly articulated:
The mere existence of [political] overtones has not and will not serve to prevent this court from passing on questions of law which are presented to us. Whenever faced with questions of law, we always have, and shall continue to, decide those questions, regardless of the political context in which such questions arise. To do otherwise would only undermine
the function of the judiciary as a coequal branch of government. ( Matter of Anderson v. Krupsak , 40 N.Y.2d 397, 404, 386 N.Y.S.2d 859, 353 N.E.2d 822 [1976] )
Thus, as in Anderson , the fact that this case would not have arisen but for the change in political leadership does not prevent this Court from determining whether the discretion exercised by the Town's then-elected officials in approving the Resolutions and whether they were promulgated in violation of applicable Town Laws and ethical standards.
Concerning the merits of Petitioners' various challenges to the Resolutions, on the basis of the parties' submissions and the entirety of the record presented herein, the Court's determinations are as hereinafter provided.
Article 78 — Standard of Review
In Article 78 proceedings for judicial review of administrative action, a court's scope of review is limited to questions of law. Where an issue concerns the exercise of discretion by an administrative agency, the proceeding is in the nature of mandamus to review pursuant to CPLR § 7803(3). The standard of review in such a proceeding is whether the agency determination was arbitrary and capricious or affected by an error of law ( Matter of Scherbyn v. Wayne-Finger Lakes Bd. of Coop. Educ. Servs. , 77 N.Y.2d 753, 570 N.Y.S.2d 474, 573 N.E.2d 562 [1991] ; Matter of Pell v. Board of Educ. Of Union Free School District, 34 N.Y.2d 222, 230-231, 356 N.Y.S.2d 833, 313 N.E.2d 321 [1974] ("[t]he courts cannot interfere unless there is no rational basis for the exercise of discretion or the action complained of is ‘arbitrary and capricious’ ") ).
The court cannot substitute its judgment for the determinations of a legislative body unless it is shown that such determination was arbitrary, capricious or unreasonable, or was the result of improper conduct or was based upon an erroneous conception of a rule of law ( Pell , 34 N.Y.2d at 232, 356 N.Y.S.2d 833, 313 N.E.2d 321 ; 5 NY Jur 2d, Article 78, § 12; Matter of Diocese of Rochester v. Planning Bd. of Town of Brighton , 1 N.Y.2d 508, 520, 154 N.Y.S.2d 849, 136 N.E.2d 827 [1956] ). The Court's focus is one of rationality.
Here, the Petitioner asserts fourteen causes of action, several of which have been abandoned. The remaining claims seek to annul and to declare void the Resolutions pursuant to CPLR § 7803(3) in the nature of mandamus to review. The Petitioner also seeks a declaration that the MOA was approved in violation of Town Code 38-1(I). Claimed Violation of Town Ethics Code
Initially, the Court must determine whether the proceedings before the Town Board relating to the MOA were fatally tainted by the participation of two Board members in violation of the Town Ethics Code. While the Court agrees with the Town that former Supervisor Santino and Councilman D'Esposito did not violate the prohibitions of the General Municipal Law, it is not necessary that a specific provision of the General Municipal Law be violated before there can be a finding of ethical impropriety. It is statutory law that a town may promulgate a code of ethics more stringent than the provisions of the General Municipal Law ( General Municipal Law § 806 ; Matter of Zagoreos v. Conklin , 109 A.D.2d 281, 287, 491 N.Y.S.2d 358 [2d Dept. 1985] ).
The parties' dispute turns on the interpretation of Sections 38-1(I) and 38-3 of the Town Ethics Code. The applicability of 38-1(I) is found in its plain meaning:
Elected officials may not cast a vote for any matter in which a relative has a financial interest. For purposes of this section, a relative as defined thereunder includes a spouse, mother, father, sister, brother, or child.
Section 38-3, however, provides that "[i]n determining whether a conflict of interest exists under this chapter and the Code of Ethics adopted hereunder, the term "interest" shall be defined as a direct or indirect pecuniary or material benefit accruing to an elected official as the result of a contract with the Town which such [person] serves." This section also contains a narrower definition of relative applying only to the elected official's spouse, minor children and dependents.
Upon considering the ethical issues arising under Section 38-1(I), the more stringent of the two provisions, the participation of Santino and D'Esposito was prohibited by an explicit prohibition against casting a vote in a matter in which their relatives have a financial interest under Section 38-1(I). In so finding, the Court applies a broader interpretation of Section 38-1(I) than that suggested by the Town. Indeed, 38-1(I) contains a more expansive definition of "relative" than other provisions of the Town Ethics Code and the General Municipal Law.
In contrast, Section 38-3 of the Town Ethics Code pertains to conflicts of interest where the pecuniary interest or material benefit inures to the elected official personally . There is no claim here that former Supervisor Santino or Councilman D'Esposito had a personal individual financial interest in the MOA which would trigger Section 38-3. Likewise, the Court finds inapplicable the exception set forth in General Municipal Law Section 802(f), which provides that the prohibited conflicts of interest shall not apply to a contract with a membership corporation or other voluntary non-profit corporation or association. Again, Section 38-1(I) of the Town Ethics Code has a broader scope and is more stringent than the General Municipal Law.
Moreover, in keeping with the spirit and intent of the statute, to serve to avoid even an appearance of impropriety, affected board members should recuse themselves from discussions, and abstain from voting, on matters in which their relatives have a financial interest. Courts of this State have held public officials to a high standard of conduct. Certain determinations have been negated which, although not prohibited by the literal provisions of Article 18 of the General Municipal Law or a code of ethics, violate the spirit and intent of the statute, are inconsistent with public policy, or suggest self-interest, partiality or economic impropriety.
The legislative intent behind a public official's duty to act free from conflicts, codified in Article 18 of the General Municipal Law, is found in the commentary which provides, as relevant here, that:
As government becomes increasingly complex, as our democratic processes draw citizens from every walk of life, there is an increasing need for known
standards of ethical conduct as a guide for public officers. These standards must rest primarily on personal integrity and on community vigilance: law cannot in itself create moral fiber, nor can law quicken the civic conscience. In support of these basic standards, it is the purpose of this chapter to define areas of conflicts of interest in municipal transactions, leaving to each community the expression of its own code of ethics. (General Municipal Law Art. 18, at 211).
The Court also finds that the affected Board members' failure to abstain from voting violates the spirit and intent of Section 38-1(A) of the Town Ethics Code and its preamble. The preamble of the Code provides a clear statement of its broad scope which is intended to "serve many salutary goals, chiefly, to maintain the highest of ethical standards for Town elected officials." Subdivision (A) of that Section 38-1 provides that no elected official "shall undertake any act adverse or potentially adverse to the Town." [Town Ethics Code § 38-1(A) [emphasis supplied] ).
Having found that the votes cast by former Supervisor Santino and Councilman D'Esposito in favor of the MOA fall squarely within the prohibition of Town Ethics Code Section 38-1(I) and violates the spirit and purpose of Section 38-1(A), the Court next determines whether annulment of the MOA Resolution is an appropriate remedy. We find that it is.
The Court finds unavailing the Town's contention that the Board of Ethics possesses the "exclusive power to enforce the Code". Courts routinely consider questions of the interest or perceived interest of voting members of a legislative body and have annulled a determination made in violation of ethical rules where appropriate ( Matter of Zagoreos v. Conklin , 109 A.D.2d 281, 287, 491 N.Y.S.2d 358 [2d Dept. 1985] ; Tuxedo Conservation & Taxpayers Ass'n v. Town Bd. of the Town of Tuxedo , 69 A.D.2d 320, 418 N.Y.S.2d 638 [2d Dept. 1979] ; Meinhard v. Salmon , 249 N.Y. 458, 164 N.E. 545 [1928] ; Town of North Hempstead v. Village of North Hills , 38 NY2d 334, 379 N.Y.S.2d 792, 342 N.E.2d 566 [1975] ). "It is the policy of the law to keep the officials so far from temptation as to ensure his unselfish devotion to the public interest." ( Zagoreos, supra, at 288, 491 N.Y.S.2d 358, citing Mills v. Town Planning & Zoning Comm. of Town of Windsor, 144 Conn. 493, 498, 134 A.2d 250 [1957].
The Court also disagrees with the Town's argument that the "sole" allowable remedy for a violation of the Code is a penalty against the individual, not annulment of the Resolution. While it is true that a violation of the Town Ethics Code is punishable as a misdemeanor, it does not serve as a bar to annulling the determination. Criminal conduct may coexist with ethical impropriety and the former does not prohibit annulment of the Resolution (See, People v. Lynch , 176 Misc. 2d 430, 437, 674 N.Y.S.2d 894 [County Court, Rockland County 1998] (the mere fact that the conduct proscribed by the statutory scheme is also prohibited by the rules of ethical conduct adopted by the school board stands as no barrier to criminal prosecution). To follow the Town's logic would render its own ethical rules meaningless.
Turning to the vote taken on the MOA at the December 2017 meeting of the Town Board, the Court finds that the failure of former Supervisor Santino and Councilman D'Esposito to recuse themselves was improper. While a relative's financial interest in a matter may not mandate disqualification in every instance, under the peculiar circumstances of these proceedings, their votes should not have been cast to approve the MOA. In light of the surreptitious nature of the eleventh-hour amendments to the CBA and the substantial controversy surrounding its promulgation, it was crucial that the Town residents be assured that elected officials were exercising their best judgment for the public interest in making the determination, without any suggestion of partiality, bias or self-interest. The need for Town elected officials to act with the "highest of ethical standards" was obvious, particularly given the repeated inquiries by Town residents concerning the potential ethical violations. Under these circumstances, the mere appearance of ethical impropriety warranted abstention by any affected Board members, and its disregard was error.
Accordingly, Resolution No. 1823-2017 approving the MOA must be annulled and vacated.
Arbitrary & Capricious Review — Resolution No. 1823-2017
The Court now turns to the merits of the Petitioners' claim that the Town Board's conduct in approving the MOA should be annulled as arbitrary and capricious and an abuse of discretion. With rationality as the benchmark for our determination, the Court finds that the Town Board's determination in approving the MOA lacked any semblance of rationality and constituted an abuse of power.
The essential facts necessary for our conclusion are not in dispute. Immediately following the former Supervisor's defeat, surreptitious acts were undertaken to amend fair and extensively bargained-for CBA that was ratified only a few months earlier. In his message to Town residents regarding the original CBA, former Supervisor Santino stated that: the "agreement is the result of many weeks spent negotiating between the Town and CSEA 880"; it "is a fair agreement for CSEA Members and taxpayers alike, respecting precious taxpayer dollars while negotiating benefits for five years"; the contract "was negotiated in good faith and both sides endured a fair measure of give and take"; and "careful budgeting, strict fiscal discipline and respect of both taxpayers and municipal employees have guided this process" (Amended Petition, Exhibit "D"). Despite these statements and guided principles, Santino's final weeks in office were spent rushing to undo the comprehensive layoff procedure and related employee severance rights provision that in fact contemplated terminations due to economy, budgetary, consolidation, or abolition of functions. The record is devoid of any proof as to what change in circumstance prompted the sudden need for such drastic amendments after a mere five months between July 2017 and December 2017 — except for the election results. The Town's contention that the MOA Resolution was "fully rational and well-reasoned aimed at encouraging Town personnel to remain in Town employment" is wholly unsupported by the record. There is no proof of any negotiation, let alone a "good faith" negotiation. Indeed, the Town's own Human Resources Director admitted at the December Board meeting that he was not involved in the negotiations to amend the CBA. There is not even the slightest measure of consideration — no "give and take". And despite the public's demand to know what the Town received in exchange, the query was not answered.
The Town's "after-the-fact" contention that the MOA serves "the legitimate purpose of inducing experienced personnel to remain in service" is of no moment here. It is a long-settled rule that judicial review of an administrative determination is limited to judging the propriety of such action "solely by the grounds invoked by the agency " ( Scherbyn , 77 N.Y.2d at 758, 570 N.Y.S.2d 474, 573 N.E.2d 562 [emphasis supplied] ). There is no evidence presented here that indicates experienced personnel needed to be induced or that pertinent individuals had the requisite job qualifications. Indeed, there were no threats to leave the Town's employ due to job security issues, or any other reason. There was simply no problem that needed fixing. The absence of such evidence further supports a finding that the determination was arbitrary and capricious.
The Court also finds significant to its determination the email from Deputy Town Attorney, Albina Kataeva, Esq., to the Town's outside counsel concerning the intended effect of the MOA and the motive behind its enactment. The statements made in the email, just days following the election, evidences the Town's clear objective. The query, "if we add a no lay off [sic ] clause, the question is whether she will be able to get rid of the Commissioners?" There was a fear that even the no layoff clause "may not provide the protection [the Commissioners] need from being eliminated." The Court finds this evidence supports the Petitioner's assertion that the sole motive behind the MOA was aimed at preventing the incoming Supervisor from eliminating certain employees and Commissioners the outgoing Supervisor sought to protect. The arbitrary and capricious nature of the MOA can also be found in the Deputy Town Attorney's candid admission that admission that she "would really need to flush this out further" but that there was "we have very little time to do so". This evidence also flatly contradicts the Town's claim that the MOA was to induce experienced personnel to remain in service, particularly since there is no mention of such purpose in the email. The power vested in legislative bodies is not plenary. Simply put, the absence of any indicia of rationality, coupled with the affirmative prove of improper motive, is precisely the type of conduct this Court deems arbitrary and capricious.
While the Town Board urges that "motivations of the members of a legislative body are generally not the subject of inquiry in determining the effect of legislation adopted by them" ( Michaelis v. City of Long Beach , 46 A.D.2d 772, 773, 360 N.Y.S.2d 473 [2d Dept. 1974] ), the Court finds Michaelis readily distinguishable. In Michaelis , plaintiffs sought to declare invalid and unconstitutional an ordinance the effect of which was to curtail the incumbent's unexpired term. The court held that "absent any express constitutional limitation, a legislative body has full and unquestionable power to abolish an office of its creation or to modify the terms of the office, in the public interest, even though the effect may be to curtail an incumbent's unexpired term" ( Id . ). The plaintiffs there asserted that the ordinance was aimed at the members of the board of zoning appeals rather than the office itself. In finding that the amended complaint failed to state a cause of action, the Michaelis court found "a complete absence in the record of any evidence" to support plaintiffs' argument. It was found to be just as plausible that the ordinance was brought about a preferable change and was in the public interest.
Here, unlike Michaelis , the email from the Deputy Town Attorney demonstrates the intent and motive behind the amendments to the CBA were part of the legislative proceedings and are now part of the public record. While such reasons were not publicly articulated, the Town residents certainly were aware of them. In any event, the Court cannot think of a clearer example of evidentiary indicia of legislative motivation than the statements made in this email regarding the actions about to be taken by the Board, and we consider such statements properly admissible in weighing the validity and propriety of the Board's action.
In light of the particular facts presented in the record before it, the Court finds that the bounds of the discretion exercised by former Supervisor Santino and the Town Board in approving Resolution No. 1823-2017 were exceeded. It is appropriate here to raise the proviso to the CBA amendments which provided essentially that if the no layoff clause ceases to exist — for any reason at all — then the original terms of the CBA would automatically be restored. It is unclear whether reverting to the original CBA terms if the amendment is declared invalid demonstrates that a challenge was indeed contemplated and foreseeable. It is just as likely that the proviso was included as a measure to maintain control over the power to lay off employees in the event there was another later change in Town leadership. The Court need not address this query in order to conclude that, in light of Court's determination annulling the MOA Resolution, the original layoff and rehiring procedure, employee severance rights provision, and disciplinary procedure of the CBA shall control.
Petitioners' Claims Seeking to Declare Null & Void Resolution No. 1871-2017 is Denied
The Court does not come to the same conclusion regarding Resolution No. 1871-2017 authorizing 197 Personnel Transactions. This Resolution on its own does not expressly violate any applicable Town Law or provision of the General Municipal Law. Nor does the Court find based on the evidence presented that the determination was so lacking in rationality as to render it arbitrary and capricious.
Town boards are creatures of statute and possess no powers other than those conferred by statute ( Holroyd v. Town of Indian Lake, 180 N.Y. 318, 73 N.E. 36 [1905] ). The statutes have reposed the general powers of the town, not in its inhabitants, but in their duly elected representatives who constitute the Town Board. ( Town Law, § 64 ).
"A budget is a statement of the financial position of the government, for a definite period of time, based upon an estimate of proposed expenditures and anticipated revenues ( Matter of Collins v. City of Schenectady , 256 A.D.389, 391, 458 N.E.2d 354 [3d Dept. 1939]. The method by which public budgets are prepared is governed by applicable statutes. The legal requirements contained in those statutes are grounded in the general principles of regulation of all public conduct and they must be followed.
At the outset, the Petitioners have failed to demonstrate that the challenged conduct violated General Municipal Law § 51. A mere showing of an "illegal official act" or "to prevent waste" is not sufficient ( Korn v. Gulotta , supra at 371-372, 534 N.Y.S.2d 108, 530 N.E.2d 816 ). The Petitioners have also failed to sufficiently demonstrate that Town Law §§ 112 and 117 were violated in approving the Personnel Transactions. In this regard, the Petitioners' contention that the unbudgeted Personnel Transactions added approximately $ 2.4 million to the budget thereby creating a deficit has no support in the record. Smith's assertions in her supporting and sur-reply affidavits are conclusory and speculative insofar as it has not been adequately shown that the 14 challenged Personnel Transactions negatively impacted the 2018 Budget so as to warrant annulment.
The Court's determination in this regard does not mean that the far-reaching measures undertaken by the former Supervisor and the Board to protect personal appointees is condoned. As aptly noted by Councilman Blakeman at the meeting, the Resolution was dropped in their laps without notice or any information concerning, for instance, a particular employee's qualifications for a position. Notwithstanding such conduct, the Court concludes that the real harm is caused by the MOA, considered in conjunction with the Personnel Resolutions. This conduct includes, inter alia : transferring or appointing employees that held positions in the Supervisor's Office and Town Clerk's Office, placing them in newly protected civil service provisions, without an appropriate salary reduction, and the inability for the incoming Supervisor to lay off any such employees for any reason other than misconduct or incompetence. Despite the fact that the former Supervisor had no fewer than 5 secretaries/executive assistants who were appointed to various departments and placed in protected civil service positions along with their salaries, the Court is constrained to deny the Petitioners' application to annul and vacate Resolution No. 1871-2017.
Respondents' Remaining Applications
Having denied the Petitioners' application concerning Resolution No. 1871-2017, the motion (Seq. 04) interposed by CSEA is denied as moot as the only ground upon which it sought dismissal was the failure to join necessary parties.
With regard to Respondent Santino's motion (Seq. 02), the Court hereby deems the Amended Petition to assert claims in Respondent Santino's official capacity only. Insofar as the Amended Petition asserts any claims against Santino in his individual capacity, the motion is granted, and is otherwise denied. Lastly, the Court denies the Town's request to file an answer in the event its motion to dismiss is denied in whole or in part pursuant to CPLR § 7804(f). The mandate of CPLR 7804(f)"proscribes dismissal on the merits following a motion [to dismiss], unless the facts are so fully presented in the papers of the respective parties that it is clear that no dispute as to the facts exists and no prejudice will result from the failure to require an answer." ( Nassau BOCES Cent. Council of Teachers v. Bd. of Co-Op. Educ. Servs. of Nassau County , 63 N.Y.2d 100, 102, 480 N.Y.S.2d 190, 469 N.E.2d 511 [1984] ; Kusyk v. New York City Dept. of Buildings , 130 A.D.3d 509, 13 N.Y.S.3d 431 [1st Dept. 2015] ). Here, the Court herein denies the Town's motion to dismiss as to the Petitioners' application to annul and declare void the MOA Resolution and grants the Town's motion to dismiss the claims concerning the Personnel Transactions. The Town fails to demonstrate any factual disputes and further fails to show how any prejudice that would result from the failure to require an answer. The Court has done so following its determinations on the various questions of law presented. Accordingly, the Court finds no need to require an answer where the Town's submitted papers do not disclose any possibility of triable issues of fact.
The Court has considered the parties' remaining contentions and find them to be without merit.
Accordingly, it is hereby
ORDERED , that the branch of the Amended Petition (Seq. 01), pursuant to Article 78, seeking to annul the determination of the Respondents, former Supervisor Santino and the Town Board, is GRANTED , and Resolution No. 1823-2017 is ANNULLED , and the Amended Petition is otherwise DENIED ; and it is further
ORDERED , that the branch of the motion (Seq. 02), by the Respondent, former Supervisor Santino, is GRANTED in part insofar as any claims asserted against Respondent Santino solely in his individual capacity are dismissed and the Court hereby deems the claims in the Amended Petition to be asserted against this Respondent in his official capacity as the former Supervisor of the Town of Hempstead, only; and it is further
ORDERED , that the motion (Seq. 04), by the Respondent, CSEA, is DENIED as moot; and it is further
ORDERED , that the branch of the motion (Seq. 05) by the Respondent, Town, to dismiss the Petitioners' claims seeking to declare null and void Resolution No. 1871-2017 is GRANTED , and is otherwise DENIED .
All matters not specifically addressed herein are DENIED .
The foregoing constitutes the decision and order of the Court.