Daytree at Cortland Square, Inc. v. Walsh

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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DAYTREE AT CORTLAND SQUARE,

I NC., et al., MEMORANDUM AND ORDER

Plaintiffs, Case No. 2:15-cv-02298-FB-AYS

-against-

MICHAEL P. WALSH, et al.,

Defendants.

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Appearances: For the Defendants:

For the Plaintiffs: TIMOTHY F. HILL

ANDREW J. CAMPANELLI 267 Carleton Avenue, Suite 301

Campanelli & Associates, P.C. Central Islip, NY 11722

1757 Merrick Avenue, Suite 204

Merrick, NY 11566 JOHN R. DICIOCCIO

Islip Town Attorney’s Office

655 Main Street

I slip, NY 11751

BLOCK, Senior District Judge:

Plaintiffs Thomas A. Datre Sr. (“Datre Sr.”), Clara Datre, and Daytree at

Cortland Square, Inc. bring this action against defendants Michael P. Walsh,

Michael Torres, Robert L. Cicale, Anthony S. Senft Jr., Steven J. Flotteron, John

C. Cochrane, Trish Bergin Weichbrodt, and the Town of Islip (the “Town”).

Before the Court are claims for defamation (libel), stigma-plus, breach of contract,

and section 1983 conspiracy.

Fundamentally, the plaintiffs contend the defendants engaged in a

conspiracy to cause the local community and members of law enforcement to

wrongfully believe that the plaintiffs were responsible for dumping toxic waste in

the Roberto Clemente Park (the “Park”). Notwithstanding these allegations,

Thomas Datre Jr., an employee of plaintiff Daytree at Cortland Square, Inc., has

pleaded guilty to four felonies in connection with the dumping of hazardous

materials in the Park.

For the following reasons, the Court grants the motion to dismiss.

I.

Daytree at Cortland Square is a New York State corporation formed in 2010

for the purpose of building a housing project in Bay Shore, NY known as Cortland

Square. Datre Sr. and Clara Datre were principals of the firm, and Daytree at Court

Square was run as a “family business.” See ECF No. 89-8 at 16, 73 (deposition of

Clara Datre). The organization employed Datre Sr. and Clara Datre’s daughter, Gia

Gatien, and son, Thomas Datre Jr. (“Datre Jr.”). See, e.g., ECF No. 89-10 at 71

(listing Datre Jr. as the “general manager” and “contact person” for “Daytree at

Cortland Square Inc.”). The family ran Daytree at Cortland Square and other

associated businesses out of a shared office located at 2150 Fifth Avenue in

Ronkonkoma, NY pursuant to a single lease. Datre Jr. was on the payroll of

Daytree at Cortland Square as an employee. See ECF No. 89-12. Daytree at

Cortland Square shared equipment and employees with Datre Jr.’s businesses and

financed vehicles for use by Datre Jr. Clara Datre also issued interest free

payments to Datre Jr.’s businesses and sought repayment through a barter system.

See ECF No. 89-8 at 27, 97-99, 110. Corporate filings reveal overlap between the

various businesses of Datre Sr., Clara Datre, and Datre Jr. See, e.g., ECF No. 89-8

at 81 (Clara Datre identifying herself as a process server for Datre Jr.’s company

DFF Farm Corp).

In the summer of 2013, after a vast quantity of toxic waste was dumped in

the Park, an effort was undertaken by the Town to determine who was responsible.

According to a letter submitted by Deputy Town Attorney Michael P. Walsh to the

Town’s insurance carriers, the Town found that “Daytree at Cortland Square [was

the] responsible party.” See ECF No. 90-20 at 2-6. A wholly separate criminal

investigation by the Suffolk County District Attorney’s Office led to the indictment

of both Datre Sr. and Datre Jr. As acknowledged by the plaintiffs, Datre Jr.

ultimately pleaded guilty to four felonies in connection with the dumping of toxic

waste at the Park. He received concurrent one-year sentences on each count.

In the wake of the toxic dumping allegations, Datre Sr. was removed from a

paid position on the Town’s Plumbers’ Examining Board, and a tree removal

contract between the Town and Daytree at Cortland Square was cancelled.

Notwithstanding these facts,1 the plaintiffs allege a wide-ranging, politically

motivated2 conspiracy by defendants who they claim “acted in concert to destroy

Plaintiffs’ lives by falsely branding them as heinous criminals who illegally

dumped tons of toxic materials in a children’s public park.” ECF No. 90 at 8. They

argue the defendants failed to properly supervise the Park and “orchestrated a

conspiracy to deflect blame for their own wrongdoings.” Id. These claims, and

plaintiffs’ theory, hinge on the notion that plaintiffs – Datre Sr., Clara Datre, and

Daytree at Cortland Square, Inc – are “entirely different entit[ies]” from Datre Jr.

ECF No. 90 at 18.

II.

“A district court may grant summary judgment only where ‘the movant

shows that there is no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.’” Reynolds v. Quiros, 990 F.3d 286, 293–

94 (2d Cir. 2021) (quoting Fed. R. Civ. P. 56(a)). “Material facts are those which

might affect the outcome of the suit under the governing law, and a dispute is

1 The plaintiffs contend that “all the spurious assertions in Defendants’ joint

motion for summary judgment are nothing more than lies, fabricated for the sole

purpose of deflecting blame for Defendants’ own wrongdoing and placing it

squarely upon the Plaintiffs, thus making them the town’s scapegoats.” ECF No.

90 at 12.

2 The plaintiffs repeatedly claim that defendants’ conspiracy was motivated by a

desire to “deflect blame away from their Conservative Party operatives within the

town” and to “eviscerate” the “substantial political fundraising abilities” of the

Datres. ECF No. 90 at 20.

genuine if the evidence is such that a reasonable jury could return a verdict for the

nonmoving party.” Electra v. 59 Murray Enterprises, Inc., 987 F.3d 233, 248 (2d

Cir. 2021) (internal citation omitted). At this stage, courts must resolve all

ambiguities and draw all reasonable inferences against the moving party. See

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);

Tolbert v. Smith, 790 F.3d 427, 434 (2d Cir. 2015). “In evaluating a motion for

summary judgment, a district court may not make credibility determinations, or

weigh evidence.” Reynolds, 990 F.3d at 294.

III. Defamation (Libel) Claim

“Under New York law, a plaintiff must establish five elements to recover in

libel: 1) a written defamatory statement of fact concerning the plaintiff; 2)

publication to a third party; 3) fault (either negligence or actual malice depending

on the status of the libeled party); 4) falsity of the defamatory statement; and 5)

special damages or per se actionability (defamatory on its face).” Electra v. 59

Murray Enterprises, Inc., 987 F.3d 233, 259 (2d Cir. 2021) (quoting Celle v.

Filipino Rep. Enters. Inc., 209 F.3d 163, 176 (2d Cir. 2000)).

The allegedly defamatory statement was sent on official stationery of the

“Office of the Town Attorney” of Islip, New York and signed by “Deputy Town

Attorney” Michael P. Walsh. See ECF No. 90-20 at 2-6.3 The letter was sent to the

Town’s insurance carriers. Id. It informs them that “dumping of construction

material on town property located at 400 Broadway, Brentwood, New York

11717” occurred. Id. The letter states that “we have completed our investigation

and found that Daytree at Cortland Square is a responsible party.” Id.

The defendants contend this statement is covered by governmental/executive

privilege.

Under New York law, immunity from liability for defamation is afforded to

“an official [who] is … entrusted by law with administrative or executive policy-

making responsibilities of considerable dimension’ … with respect to statements

made during the discharge of those responsibilities about matters which come

within the ambit of those duties.” Clark v. McGee, 49 N.Y.2d 613, 617 (1980)

(internal citations omitted); see also Ove Gustavsson Contracting Co. v. Floete,

299 F.2d 655, 658 (2d Cir. 1962) (analogous privilege applied to federal officials

for “acts, done within the scope of their duties, which necessarily involved the

exercise of a judgment or discretion which public policy requires be made without

3 The plaintiffs contend the defendants’ statements “included, but were not

necessarily limited to, multiple statements to four insurance companies, one

broker, the DA’s Office, and the press.” ECF No. 90 at 28. However, in their

briefing, the plaintiffs do not identify the precise statements to which they are

referring other than the letter from Deputy Town Attorney Walsh identified as

plaintiffs’ “Exhibit S” and docketed at ECF No. 90-20.

fear of personal liability”). Absolute privilege is afforded based on the position

held by the speaker and is limited to the speaker’s “official participation in the

process of government.” Park Knoll Associates v. Schmidt, 59 N.Y.2d 205, 209

(1983).

The privilege is designed “to secure the unembarrassed and efficient

administration of justice and public affairs” so that “public officials will be free to

speak their minds openly and bluntly as is required for the proper performance of

their duties, without subjecting themselves to the possibility of vexatious and

burdensome lawsuits.” Clark, 49 N.Y.2d at 617 (internal citations omitted). A

government official does not need to be a high-level executive to properly invoke

the privilege,4 and the privilege “must be carefully confined to that type of

situation in which the protection provided by the privilege will serve a necessary

societal function.” Id. at 618.

Here, the statement in question was made in the discharge of Michael

4 See Augustyniak v. Koch, 588 F. Supp. 793, 797 (S.D.N.Y.), aff’d, 794 F.2d 676

(2d Cir. 1984) (application of privilege to city lawyers “acting within the scope of

their duties as executive officials enforcing the municipalities’ [housing code and]

laws”); Walls v. Town of Islip, No. 0011376/2004, 2008 WL 3333887 (N.Y. Sup.

Ct. July 07, 2008) (privilege attaching to “Deputy Commissioner of the

Department of Code Enforcement”); Clark, 49 N.Y.2d at 619 (application to town

supervisor); Ward Telecommunications & Computer Servs., Inc. v. State, 42

N.Y.2d 289, 290 (1977) (applying the privilege to “audit reports issued on behalf

of the State Comptroller by the Division of Audit and Accounts”); Gautsche v.

State, 67 A.D.2d 167, 170 (N.Y. App. Div. 3d Dep’t 1979) (granting “absolute[]

privilege” to Assistant Attorney General who was investigating fraud and abuse).

Walsh’s official responsibilities as Deputy Town Attorney and came within the

ambit of his duties. It was part of a letter to the Town’s insurers – informing them

of a potential liability issue – and sent on stationery bearing the town seal. Sound

public policy and established law require that this Court find Walsh’s statement is

covered by governmental/executive privilege and cannot form the basis for a

defamation claim.5

IV. Stigma-Plus Claim

To prevail on a “stigma-plus” claim, a plaintiff must establish “(1) the

utterance of a statement sufficiently derogatory to injure his or her reputation, that

is capable of being proved false, and that he or she claims is false, and (2) a

material state-imposed burden or state-imposed alteration of the plaintiff’s status or

rights.” Mudge v. Zugalla, 939 F.3d 72, 80 (2d Cir. 2019).

The analysis above defeats any claim that Deputy Town Attorney Walsh’s

statements support a stigma-plus claim. Privileged statements cannot form the

5 The Court also finds that Deputy Town Attorney Walsh’s straightforward

statement in letters to the Town’s insurers was not motivated by “actual malice,” or

“knowledge that [the statement] was false or with reckless disregard of whether it

was false or not.” Kipper v. NYP Holdings Co., 12 N.Y.3d 348, 353 (2009). As

such, even if an absolute privilege did not apply, Deputy Town Attorney Walsh’s

statement would also be subject to qualified governmental privilege, which

requires a showing of actual malice. See, e.g., Brennan v. Granite Equip. Leasing

Corp., 60 A.D.2d 877, 878 (N.Y. App. Div. 2d Dep’t 1978) (“It is well settled that

summary judgment is properly granted where a qualified privilege obtains and the

plaintiffs offer an insufficient showing of actual malice”) (quoting Trails W., Inc.

v. Wolff, 32 N.Y.2d 207, 221 (1973)).

basis for a stigma-plus claim as a matter of law. See Paterno v. City of New York,

No. 17 CIV. 8278 (LGS), 2018 WL 3632526, at *4 (S.D.N.Y. July 31, 2018),

aff’d, 781 F. App’x 15 (2d Cir. 2019) (“Here, the Consent Decree and the

statements in it are absolutely privileged and cannot be the basis for a [stigma-plus]

claim”); Sharpe v. City of New York, No. 11 CIV. 5494 BMC, 2013 WL 2356063,

at *7 (E.D.N.Y. May 29, 2013), aff’d, 560 F. App'x 78 (2d Cir. 2014) (rejecting

stigma-plus claim because statements were “made in the course of court

proceedings” and were therefore “absolutely privileged under New York common

law”). Because the statements in question are subject to governmental/executive

privilege, they cannot serve as the basis for a stigma-plus claim.

Moreover, stigma-plus is a constitutional tort grounded in the Due Process

Clause. The Second Circuit has found the availability of an Article 78 hearing is a

“perfectly adequate post[-]deprivation remedy” sufficient to satisfy Due Process

concerns. Hellenic Am. Neighborhood Action Comm. v. City of New York, 101 F.3d

877, 881 (2d Cir. 1996); see also Abdelhadi v. City of New York, No. 08-CV-380,

2011 WL 3422832, at *6 (E.D.N.Y. Aug. 4, 2011), aff’d sub nom. Abdelhadi v.

New York City Dep't of Correction, 472 F. App'x 44 (2d Cir. 2012) (applying

Hellenic to a stigma-plus claim and concluding “an Article 78 proceeding under

New York law provides an adequate post-deprivation opportunity for the plaintiff

to clear his or her name”). The plaintiffs could have availed themselves of the

process they were due by pursuing an Article 78 proceeding in state court, but they

chose not to. Having failed to do so, plaintiffs cannot now state a stigma-plus claim

in federal court. See Paterno, 2018 WL 3632526, at *6 (finding, in stigma-plus

context, “[p]laintiff’s decision not to avail himself of the process he was due—i.e.,

an Article 78 proceeding—does not constitute a denial of due process”).

V. Section 1983 Conspiracy Claim

A § 1983 conspiracy claim requires a plaintiff to establish “(1) an agreement

between a state actor and a private party; (2) to act in concert to inflict an

unconstitutional injury; and (3) an overt act done in furtherance of that goal

causing damages.” Ciambriello v. Cty. of Nassau, 292 F.3d 307, 325 (2d Cir.

2002).

With the benefit of discovery, it is evident that plaintiffs’ claim fails to

establish the first and second elements, which require an agreement between a state

actor and a private party to inflict an unconstitutional injury. Plaintiffs voluntarily

withdrew all their claims against Edward Walsh, leaving Michael Torres as the

only defendant who is not affiliated with the Town. Notwithstanding the bald

assertions of plaintiffs’ counsel,6 there is no clear evidence in the record

6 Plaintiffs’ counsel contends that “among all Defendants’ meritless claims, this

one is probably the most preposterous” and repeats the theory that defendants met

to choose “Thomas Datre Sr. as their ‘scapegoat’ despite having not a single shred

of evidence, as of April 24, 2014, that Plaintiffs committed any violations at the

Roberto Clemente Park.” ECF No. 90 at 52.

establishing that any of the Town defendants formed an agreement with Michael

Torres to inflict an unconstitutional injury. See generally ECF No. 89-24

(deposition of Michael Torres).7 Although there is evidence Michael Torres

reached out to Datre Jr. and Sr. in connection with the town’s investigation, this

simply does not rise to the level of infliction of an unconstitutional injury. See Fisk

v. Letterman, 401 F.Supp.2d 362, 377 (S.D.N.Y. 2005) (“[a]lleging merely that a

private party regularly interacts with a state actor,” as plaintiff did in this case,

“does not create an inference of agreement to violate a plaintiff's rights.”) (internal

citations omitted); see also Rzayeva v. United States, 492 F.Supp.2d 60, 82

(D.Conn. 2007) (“Although Plaintiffs generally assert that a network of

conspirators exists among [the named defendants] and others to deprive Plaintiffs

of their civil rights ... they allege no facts to establish that the private defendants

entered an agreement with the state actors to inflict a particular unconstitutional

injury upon them.”). Plaintiffs have failed to point the Court to other evidence –

aside from their factually unsubstantiated theory, which is directly contradicted by

the guilty plea of Datre Jr. – that the defendants inflicted an unconstitutional injury.

See Black v. Petitinato, 761 F. App’x 18, 23 (2d Cir. 2019) (where “[plaintiffs]

produced no evidence that the defendants entered into an agreement to deprive

7 Torres was asked specifically whether he “participated in a conspiracy to frame

the plaintiffs” and answered with an unequivocal “no.” See ECF No. 89-24 at 78.

[them] of [their] constitutional rights,” summary judgment was appropriate).

VI. Breach of Contract Claim

In order to state a breach of contract claim, a plaintiff must allege “at a

minimum, the terms of the contract, each element of the alleged breach and the

resultant damages.” Kaplan v. Aspen Knolls Corp., 290 F. Supp. 2d 335, 337

(E.D.N.Y. 2003) (citation omitted). “The key elements of a breach of contract

claim are: (1) the formation of an agreement via offer, acceptance and

consideration; (2) performance by one party; (3) breach of the agreement by the

other party; and (4) damages.” Id.

Both parties acknowledge that Daytree pleaded guilty to violating prevailing

wage laws in connection with performance of the tree removal contract.8 See ECF

No. 90 at 48-50 (acknowledging the breach and arguing it was “de minimis”).

Adherence to the prevailing wage law is a material term of the contract. See ECF

No. 89-10 at 94-95 (“the wages to be paid for a legal day’s work … shall not be

less than the prevailing rate for a day’s work in the same trade or occupation”); see

also United States v. Coren, No. 07-CR-265 (ENV), 2009 WL 2579260, at *2

(E.D.N.Y. Aug. 20, 2009), aff’d, 432 F. App'x 38 (2d Cir. 2011) (“Having work on

8 The defendants further argue that Daytree breached the contract through

“performance and billing deficiencies,” “fail[ure] to comply with response-time

requirements set forth in the Tree Removal Contract,” and lack of insurance

coverage. ECF No. 89-1 at 59-60.

government owned projects actually done by prevailing wage workers is a

fundamental part of the contract”).

The breach of contract claim cannot stand in light of Daytree’s prior,

material breach – namely, violation of the prevailing wage law. See New Windsor

Volunteer Ambulance Corps, Inc. v. Meyers, 442 F.3d 101, 117 (2d Cir. 2006)

(“breach may excuse the nonbreaching party from further performance if the

breach is material.”); see also Shaub & Williams, L.L.P. v. Augme Techs., Inc., No.

13 CIV. 1101 GBD, 2014 WL 625390, at *1 (S.D.N.Y. Feb. 14, 2014)

(acknowledging the “affirmative defense[]” of “breach of contract”). Even if the

prior breach was not fully appreciated by the Town at the time of termination of

the contract, “a party may terminate a contract for cause, and gamble that its

estimate of the situation will be justified when all the facts are proven.” Kerns, Inc.

v. Wella Corp., 114 F.3d 566, 570 (6th Cir. 1997) (analyzing New York law); see

also Weber v. Tada, 589 F. App'x 563, 567 (2d Cir. 2014) (admitting “after-

acquired evidence” as a defense to a “breach of contract claim, specifically to show

that [the other party] materially breached the contract first”).

The plaintiffs’ breach of contract claim must be dismissed based on their

admitted, prior material breaches.

CONCLUSION

The Court is firmly persuaded that even after resolving all ambiguities and

drawing all reasonable inferences against the moving party, a reasonable jury could

not return a verdict for the plaintiffs on any of the claims presented. For the

foregoing reasons, the defendants’ motion for summary judgment is GRANTED.

SO ORDERED.

__/S/ Frederic Block______________

FREDERIC BLOCK

Senior United States District Judge

Brooklyn, New York

July 28, 2021