Opinion
No. 153608/2022
06-09-2023
New York City Campaign Finance Board, Plaintiff, v. Pia Raymond, Pia Raymond 2017, and Woody Raymond, Defendants.
New York City Campaign Finance Board, New York, NY (Bethany M. Perskie, Joseph T. Gallagher, and Caitlin Toto of counsel), for plaintiff.
Unpublished Opinion
New York City Campaign Finance Board, New York, NY (Bethany M. Perskie, Joseph T. Gallagher, and Caitlin Toto of counsel), for plaintiff.
Defendants are Pro Se.
HON. GERALD LEBOVITS, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 003) 11, 12, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 50, 51, 52, 53, 54 were read on this motion for SUMMARY JUDGMENT.
Plaintiff, New York City Campaign Finance Board, is a New York City agency. The Campaign Finance Board administers the City's voluntary Campaign Finance Program, which provides public matching funds to local public-office candidates. Ms. Raymond ran for City Council in 2017. Pia Raymond 2017 was her principal committee. Mr. Raymond was her treasurer. Ms. Raymond's campaign (in which all defendants were involved) received $94,392 from the Board.
On May 6, 2021, the Board sent defendants its final determination requesting that all defendants pay $12,078 in penalties and that Ms. Raymond and her committee return $78,141 of received public funds. Defendants did not bring a timely article 78 action to challenge this decision. Defendants also did not pay, prompting the Board to commence this action.
In this motion, the Board moves for summary judgment under CPLR 3212 against all defendants. The Board also asks the court to dismiss defendants' affirmative defenses.
In opposition, defendants Pia Raymond and her political committee, Pia Raymond 2017, argue that the Board did not adhere to its own notice and rules. She contends that the Board should have sent her a final audit report. When it does, she argues, she will have the chance to show good cause for her failure to respond to the Board's request for information and documentation needed to contribute to the report. Ms. Raymond and her committee seek an order directing the Board to produce the final audit report and denying the Board's motion.
Defendant Woody Raymond has not opposed the motion.
Ms. Raymond also brings two cross-claims against Mr. Raymond, both of which Mr. Raymond denies. (See NYSCEF No. 34 ¶¶ 1-2.) This decision does not address these cross-claims.
Because defendants did not bring a timely article 78 proceeding to challenge the Board's decision, their opposition is time-barred. Plaintiff's motion is granted. The Board is entitled to $12,009 as penalties from all defendants; $75,744 as repaid public matching funds from Ms. Raymond and Pia Raymond 2017; and $2,397 as repaid matching funds from Pia Raymond 2017. All sums are to be calculated with interest from June 8, 2021, the day following the due date in the final Board determination. (See NYSCEF No. 41 at 3.)
BACKGROUND
To be eligible for the Campaign Finance Board's program, candidates must abide by a number of requirements. (Administrative Code of City of NY § 3-701.) The Board has the right to demand repayment of any qualified expenditure deficit, which is the difference between the public matching funds and the total qualified expenditures, determined by credible documentation of actual expenditures. (New York City Campaign Finance Board Rules [52 RCNY] § 9-02.) The Board may also hold candidates and their committees jointly and severally liable for any violation of the Board Rules or the New York City Campaign Finance Act. (Id.)
The Board conducted post-election audits by reviewing documents provided by defendants and found that they had violated the New York City Campaign Finance Board Rules and the New York City Campaign Finance Act. On August 4, 2020, the Board sent all defendants an enforcement notice with a recommendation that the Board assess civil penalties of $12,078, against all defendants jointly and severally; and a repayment of $78,141, against Ms. Raymond and her committee jointly and severally. (See NYSCEF No. 39 [email from the Finance Board reminding defendants to respond to the enforcement notice]; NYSCEF No. 44 at ¶ 18.) The enforcement notice included a notice giving defendants an opportunity to appear for a hearing. (See NYSCEF No. 44 at ¶ 20.) It also informed defendants that failure to respond would constitute a waiver of participation rights in any post-enforcement process. (Id. at ¶ 21.) No defendant responded.
On April 29, 2021, the Board held a public hearing. No defendant appeared. The hearing concluded with the Board's determination of the above sums.
On May 6, 2021, the Board sent to all defendants the final Board determination, stating that the payment deadline was June 7, 2021, and notifying defendants of their right to challenge the decision within four months. (NYSCEF No. 41.)
On June 7 and then August 31, 2021, the Board sent more notices to defendants, without receiving a response. (NYSCEF No. 42.) On February 23 and March 29, 2022, the Board sent two demand letters to notify defendants that litigation would be pursued unless payments are made. (NYSCEF No. 43.)
On April 27, 2022, the Board filed an action in this court to recover penalties and repayment. (NYSCEF No. 44.) On July 26, 2022, Mr. Raymond filed a late Answer with 12 affirmative defenses. (NYSCEF No. 11.) On November 18, 2022, Ms. Raymond and her committee filed a late Answer with nine affirmative defenses and two cross-claims against Mr. Raymond. (NYSCEF No. 47.) On December 8, 2022, Mr. Raymond filed an affidavit in opposition to Ms. Raymond's answer, denying both claims. (NYSCEF No. 34.)
On January 30, 2023, Ms. Raymond and her committee filed opposition to the Board's motion. Defendants contend that a reasonable reading of the New York City Campaign Finance Board Rule [52 RCNY] § 8-05 is that defendants must be sent a final audit report and that they then have 30 days following receipt to challenge the Board's decision. (NYSCEF No. 50 at ¶ 2.) Defendants argue that because the Board did not provide them with that report, the Board deprived defendants of their 30 days, and that as a result the Board's motion should be denied. Ms. Raymond also raises two good-cause arguments for not providing the demanded information: (i) that she had to flee the address she previously registered with the Finance Board due to domestic violence and that she therefore did not receive any mail from the Board (id. at ¶¶ 10-11); (ii) Mr. Raymond did not inform Ms. Raymond of plaintiff's communications and demands (id. at ¶ 12).
On February 1, 2023, the Board filed a memorandum in response to Ms. Raymond and the committee's opposition, arguing that 52 RCNY § 8-05 applies to payment and nonpayment determinations. (NYSCEF No. 54 at 3-4.) The Board argues that the applicable provision is instead 52 RCNY § 10-03 (c), which deals specifically with public-funds-repayment obligations (see id. at 4). Therefore, a copy of the Board's final determination, once sent to the relevant party, triggers the four-month CPLR article 78 statute of limitations. The Board also contends that the defendants' supplemented facts are not material to the issue at hand. (See id. at 5.)
DISCUSSION
Ms. Raymond and her committee argue that § 8-05 of New York City Campaign Board Rules should apply to this case. If they are right, the Board did not follow the correct procedure and deprived defendants of the opportunity to bring an article 78 proceeding. However, an assessment of the Board Rules and the relevant precedents supports the Board's contention that § 10-03 is the appropriate provision. The Board therefore pursued the correct procedure. Since defendants have not brought a timely article 78 proceeding, they are time-barred from challenging the Board's final decision.
1. Whether the final Board determination is the legal and proper channel for the Finance Board to seek repayment and penalties from defendants
Ms. Raymond contends that the Board erred in failing to issue a final audit report, effectively depriving Defendants of their 30 days to petition. In support, she cited a paragraph within the final Board determination that reads:
"The Campaign will receive a Final Audit Report containing additional information regarding matters listed herein, as well as any audit-only findings, which are not associated with any violation or public funds repayment and are thus not included in this determination. As set forth in the Board Rule 8-05, the campaign may challenge public funds determination in a petition for Board reconsideration within thirty days of the date of the Final Audit Report. However, the board will not reconsider the petition unless the Campaign submits new information and/or documentation and shows good cause for its previous failure to provide this information or documentation." (NYSCEF No. 50 at ¶ 3.)
Under New York City Campaign Finance Board Rules, when it comes to Board determinations regarding violations, infractions, penalties, and repayment, 52 RCNY § 10-03 applies, not § 8- 05. The plain language of § 8-05 makes clear that it applies only to post-election payments and nonpayments, which § 8-02 clarifies to be unpaid matching claims, qualified expenditure surplus, and documented outstanding liabilities.
Section 10-03 provides that when the party must make repayments and penalties to the Board, the Board provide notice to the party. After the party has had a chance to respond, the Board will assess the case and issue a final Board determination. (See generally Brodsky v NY City Campaign Fin. Bd., 2007 NY Slip Op 31850 [U], at *1-2 [Sup Ct, NY County June 21, 2007] [although the Finance Board had issued a final Board determination and a final audit report with similar content, defendants contested the final Board determination with respect to repayment and penalties], affd 107 A.D.3d 544 [1st Dept 2008]; NY City Campaign Fin. Bd. v Mahadeo, 2010 NY Slip Op 33155 [U], at *2-3 [Sup Ct, NY County Nov. 4, 2010] [describing the process in which the Finance Board conducted a post-election audit, found that parties exceeded expenditure limit, and issued a final Board determination requesting penalties], affd 88 A.D.3d 536 [1st Dept 2011].)
This procedure, laid out in § 10-03, complies with the Administrative Code § 3-710 (4), which provides that "any such repayment claim shall be based on a final determination issued by the Board." Reasons for repayment are "overpayment of public funds" or "qualified expenditure deficit," the latter of which is determined based on incomplete or absent credible documentation provided by the party. (See 52 RCNY § 9-02.) Once the final Board determination is issued, the party must abide by the deadline; failure to comply will result in penalties. (Id.) This administrative rule tracks Administrative Code § 3-710 (2) (b).
Since the present dispute concerns repayments and penalties for qualified expenditure deficits, § 10-03 applies.
Ms. Raymond's insistence on a final audit report under RCNY § 8-05 is misplaced, not only because it is irrelevant to the order of repayment, but also because it is not needed once the Board has sent to the parties an enforcement notice. Title 52 RCNY § 10-02 (a) and (b) provide that the Board will issue an enforcement notice or a final audit report within the provided deadlines. Because she did not dispute the enforcement notice mentioned in NYSCEF No. 39, Ms. Raymond's argument that the Board violated its own rules does not hold water. For the same reason, Ms. Raymond's good-cause argument is likewise irrelevant to the dispute at hand.
2. Whether the final Board determination is a final and binding decision, challengeable only through an article 78 proceeding
Under 52 RCNY § 10-03 (c), the Board's final determination must note that the party has four months to bring a CPLR article 78 challenge. CPLR 217 (1) requires that an article 78 proceeding against a body or officer be commenced within four months after the agency decision becomes final. (Mahadeo, 2010 NY Slip Op 33155 [U] at *4.)
To determine whether an agency decision is final, the court must consider whether the administrative action is complete and whether the decision aggrieves the relevant party. (See Edmead v McGuire, 67 N.Y.2d 714, 716 [1986].)
The final Board determination puts forward the amount of money defendants must pay back to the Finance Board, along with civil penalties. (NYSCEF No. 41 at 3; NYSCEF No. 51 at 3.) The Finance Board's final Board determination in this case concludes the administrative process. Under 52 RCNY § 10-03 (c) and (d), there is no step in between the final Board determination and the party's obligation to pay, lest the party commences an article 78 proceeding. Since the decision economically aggrieves defendants, the final Board determination satisfies both factors that constitute a completed administrative action under Edmead. (See 67 N.Y.2d at 716.) It is a final and binding decision that starts the four-month limitations period. (52 RCNY § 10-03 [c]; Administrative Code § 3-710.5 [ii] [b].)
3. Whether the Finance Board has provided adequate notice to defendants
Administrative Code § 3-710 (4) requires that the petitioning party receive notice of the agency's decision before the statute of limitations begins to run. Notice is also considered adequate in cases where the party "knows, or should have known, that it was aggrieved by the determination." (90-92 Wadsworth Ave. Tenants Assn. v City of NY Dept. of Hous. Preserv. & Dev., 227 A.D.2d 331, 331-332, [1st Dept 1996].) Policy of fairness compels this determination. (Biondo v NY State Bd. of Parole, 60 N.Y.2d 832, 837 [2021] [?].)
Mr. Raymond raises a defense that the Board's complaint lacked proper service. (NYSCEF No. 12 at 7.) However, he did not move to dismiss the complaint for improper service within 60 days since he asserted the defense. He has waived an objection based on service. (See CPLR 3211 [e]; Mariette v Amber Ct. of Pelham Gardens LHCSA, LLC, 213 A.D.3d 413, 414 [1st Dept 2023]; Tannenbaum Helpern Syracuse & Hirschtritt LLP v Deheng Law Off., 127 A.D.3d 564, 565 [1st Dept 2015].)
The Board sent all defendants the final Board determination on May 6, 2021, via email and C-Access. (NYSCEF No. 41.) The Board also sent two notices on June 7 and August 31, 2021, via email and C-Access, and two demand letters on February 23 and March 29, 2022, via C-Access and first-class mail. (NYSCEF No. 42; NYSCEF No. 43.) Ms. Raymond does not deny that she had access to the Committee's email address and the login to C-Access. In fact, Mr. Raymond asserts that Ms. Raymond had access to all pertinent documentations by electronic means. (NYSCEF No. 34 at ¶¶ 2-3.)
C-Access is a virtual communication channel between the Board and its participating candidates and committees. (New York City Campaign Finance Board, https://www.nyccfb.info/candidate-services/cfb-systems-notices/ [last accessed June 6, 2022].)
All the above-mentioned correspondence properly addresses defendants, Ms. Raymond, her Committee, and Mr. Raymond, rendering the Board's communications proper notices. (Cf. NY City Campaign Fin. Bd. v Ortiz, 38 A.D.3d 75, 78-79 [1st Dept 2006].) Therefore, defendant Pia Raymond should have known that she was aggrieved by plaintiff's May 6, 2021, final Board determination.
4. Whether all the penalties the Finance Board claims are correctly calculated under the Board's 2017 Guidelines
In Count 1, the Board claims a $525 civil penalty against all defendants for receiving a $150 in-kind contribution from Ultimate Tax Prepares Inc. and untimely refunding a $25 contribution from Marilyn Lil Services, Inc. (NYSCEF No. 2 at ¶¶ 28-32.) The calculation, given the undisputed allegations, under the Guideline is $250 + $150 + $125 = $525. (2017 Guidelines for Staff Recommendations for Penalty Assessments for Certain Violations at 4.)
In Count 2, the Board claims a $50 civil penalty against all defendants for failing to report a $22,215.05 expenditure to a subcontractor, Chifort LLC. (NYSCEF No. 2 at ¶¶ 33-37.) The calculation, given the undisputed allegations, under the Guideline is $50/per contractor x 1 subcontractor = $50. (2017 Guidelines for Staff Recommendations for Penalty Assessments for Certain Violations at 13.)
The Board Rules mandate all reporting of expenditures exceeding $5,000 to a single subcontractor. (See 52 RCNY § 4-05 [c] [iv] [D].)
In Count 3, the Board claims a $790 civil penalty against all defendants for failing to document a $11,801.26 discrepancy between the amount contracted and the amount paid to Chifort LLC, the fair market value of a $1,610 in-kind contribution from three individuals, and a $500 in-kind contribution from Culture Zone Worldwide Product. (NYSCEF No. 2 at ¶¶ 38-42.) The calculation, given the undisputed allegations, under the Guideline is ($11,801.26 x 5%) + ($1,610 x 5%) + $50 = $721. (2017 Guidelines for Staff Recommendations for Penalty Assessments for Certain Violations at 11-12.)
In Count 4, the Board claims a $200 civil penalty against all defendants for failing to report two intermediaries from whom Defendants received contributions. (NYSCEF No. 2 at ¶¶ 43-47.) The calculation, given the undisputed allegations, under the Guideline is $100/per intermediary x 2 = $200. (2017 Guidelines for Staff Recommendations for Penalty Assessments for Certain Violations at 12-13.)
In Count 5, the Board claims a $544 civil penalty against all defendants for failing to demonstrate that a sum of $2,176.57 was made in furtherance of the campaign. (NYSCEF No. 2 at ¶¶ 48-52.) The calculation, given the undisputed allegations, under the Guideline is: $2,176.57 x 25% = $544. (2017 Guidelines for Staff Recommendations for Penalty Assessments for Certain Violations at 16.)
In Count 6, the Board claims a $130 civil penalty against all defendants for making an impermissible post-election expenditure totaling $520. (NYSCEF No. 2 at ¶¶ 53-57.) The calculation, given the undisputed allegations, under the Guideline is: $520 x 25% = $130. (2017 Guidelines for Staff Recommendations for Penalty Assessments for Certain Violations at 17.)
In Count 7, the Board claims a $9,839 civil penalty against all defendants for failing to respond to the Draft Audit Report and the Initial Documentation Request. Defendants never submitted the former, and it submitted the latter eight days late. (NYSCEF No. 2 at ¶¶ 58-63.)The calculation, given the undisputed allegations, under the Guideline is: ($94,392 x 10%) + ($50 x 8) = $9,839. (2017 Guidelines for Staff Recommendations for Penalty Assessments for Certain Violations at 22-24.)
In total, all defendants are jointly and severally liable for $525 + $50 + $721 + $200 + $544 + $130 + $9839 = $12,009 in civil penalties.
Accordingly, it is
ORDERED that the Finance Board's motion for summary judgment is granted, and the Finance Board is awarded a judgment against (i) all defendants, jointly and severally, for $12,009, with interest running from June 8, 2021; against (ii) Ms. Raymond and her committee, Pia Raymond 2017, jointly and severally, for $75,744, with interest running from June 8, 2021; and against (iii) Pia Raymond 2017 for $2,397, with interest running from June 8, 2021; plus (iv) costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that Ms. Raymond's cross-claims against Mr. Raymond are severed and shall continue; and it is further
ORDERED that plaintiff shall serve a copy of this order with notice of its entry on all parties and on the County Clerk, who shall enter judgment accordingly.