Opinion
# 2014-015-477 Claim No. 120029 Motion No. M-84165 Cross-Motion No. CM-84241
02-21-2014
PBA v. STATE OF NEW YORK
Law Offices of Stephen G. DeNigris, P.C. By: Stephen G. DeNigris, Esquire Richard E. Mulvaney, Esquire Honorable Eric T. Schneiderman, Attorney General By: Thomas R. Monjeau, Esquire Assistant Attorney General
Synopsis
Motion and cross motion for summary judgment was denied in action for breach of an agreement regarding certain terms of a collective bargaining agreement for state troopers. Arbitration provision was waived by defendant's litigation of the instant claim for nearly 2 years.
Case information
| UID: | 2014-015-477 |
| Claimant(s): | POLICE BENEVOLENT ASSOCIATION OF THE NEW YORK STATE TROOPERS, INC. |
| Claimant short name: | PBA |
| Footnote (claimant name) : | |
| Defendant(s): | STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 120029 |
| Motion number(s): | M-84165 |
| Cross-motion number(s): | CM-84241 |
| Judge: | FRANCIS T. COLLINS |
| Claimant's attorney: | Law Offices of Stephen G. DeNigris, P.C. By: Stephen G. DeNigris, Esquire Richard E. Mulvaney, Esquire |
| Defendant's attorney: | Honorable Eric T. Schneiderman, Attorney General By: Thomas R. Monjeau, Esquire Assistant Attorney General |
| Third-party defendant's attorney: | |
| Signature date: | February 21, 2014 |
| City: | Saratoga Springs |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
Claimant, Police Benevolent Association of The New York State Troopers, Inc. (PBA), moves for summary judgment alleging the defendant breached the terms of a Memorandum of Agreement which provided for the payment of $1,244,529.68 into an Employee Benefit Fund (EBF) established in a Collective Bargaining Agreement (CBA) between the parties. Defendant opposes the motion and cross-moves for dismissal of the claim pursuant to CPLR 3211 and 3212 on the grounds the claim fails to state a cause of action; that it is barred by the alternative dispute resolution procedures set forth in the CBA, and that the monies sought in the claim, which were once appropriated for use in connection with a physical fitness program, "lapsed" as a matter of law.
In its claim, the PBA seeks nearly $2.5 million in damages for the defendant's alleged failure to safeguard funds which were required to be available to fund a Physical Fitness Program (PFP) pursuant to CBAs covering both the Troopers' Bargaining Unit and Commissioned and Non-Commissioned Officers' Bargaining Unit (the Supervisors' Unit) (claimant's Exhibit A, Verified Notice of Claim). The claim sets forth the following in this regard:
"Fourth: In accordance with the terms of the collective bargaining agreements for both bargaining units, the physical fitness program funds are dedicated, negotiated funds that belong to and are set aside to be used for the benefit of members of the Claimant.The Troopers' CBA, effective April 2, 2009 and covering a stated period from April 1, 2007 through March 31, 2011, required that "[t]he annual amount available to fund the Physical Fitness Program shall be one million two hundred and eighty-five thousand four hundred and forty ($1,285,440.00) dollars". It provided that those members "who satisfy certain agreed upon standards" shall be paid a fitness stipend in an amount to be determined by a Labor-Management Committee on or about December 1st of each fiscal year (id. at p. 21, 22). It also required "that monies from the physical fitness fund shall be transferred to the PBA's Employee Benefit Fund" in the annual amount of $100 per member effective April 1, 2007, April 1, 2008 and April, 1, 2009; and in the amount of $110 per member effective April 1, 2010 (id. at p. 22, ¶ 10. 3 [C]). The Troopers' CBA further states that:
Fifth: Those funds did not belong to and were not available to the State Police for their discretionary and unilateral use.
Sixth: Defendants were responsible for the segregation and safekeeping of those funds.
Seventh: Defendants neglected to maintain and safeguard those funds in the manner required, resulting in those funds being removed and utilized elsewhere.
Eighth: Defendants purposefully and maliciously removed Claimant's monies without Claimant's knowledge or consent.
Ninth: Defendants fraudulently hid their actions from Claimant by failing to acknowledge correspondences, answer queries or otherwise notify Claimant that the funds had been utilized without Claimant's knowledge or consent.
Tenth: As a result of Defendants' actions, Claimant is damaged in the amount of $2,485,053.30."
"[t]he parties may convene the [Labor-Management Committee] to discuss and agree to expending physical fitness monies, including the amounts referenced in Article 10.3C for a mutually agreeable purpose. If the parties fail to agree, the monies shall be used to run the physical fitness program in existence as of March 31, 2007" (id. at p. 22, ¶ 10.3 [D]).The Troopers' CBA was preceded by a Memorandum of Agreement (MOA) dated August 16, 2008, and effective April 1, 2007 to March 31, 2011, which likewise required the transfer of monies from the physical fitness fund to the EBF in the same amounts recited by the CBA (claimant's Exhibit D). A provision authorizing the convening of a Labor-Management Committee to discuss and agree upon expending PFP monies for a mutually agreed purpose, similar to that (above) contained in the April 2009 CBA, was also included in the August 16, 2008 MOA. Also like the CBA, the MOA further provided that "[i]f the parties fail to agree, the monies shall be used to run the physical fitness program in existence as of March 31, 2007" (id.).
Neither party submitted a copy of the CBA for the Supervisors' Unit in support of their motions save for a one-page excerpt entitled Physical Fitness Program that was attached to the claim (claimant's Exhibit A, Verified Notice of Claim, last page of Exhibit A annexed thereto). This provision required that "[t]he annual amount available to fund the Physical Fitness Program shall be three hundred and forty-two thousand seven hundred and eighty-four ($342,784.00) dollars" (id.). Unlike the Troopers' Unit CBA, however, this excerpt includes no provision for an agreed-upon use of the funds for purposes other than the payment of a stipend to qualifying members. Rather, this CBA excerpt required only that "Members of this Unit who satisfy certain agreed upon standards shall continue to be entitled to a fitness stipend, the individual amount of which shall continue to be determined by the aforementioned [Labor-Management Committee]. The fitness stipend shall be paid in a lump sum to each qualifying Member on or about December 1 of each fiscal year" (id.).
An excerpt of the MOA between the PBA and the State for the Supervisors' Unit was also annexed as an exhibit to the claim (claimant's Exhibit A, Verified Notice of Claim, with excerpts of MOAs for Troopers' Bargaining Unit and Supervisors' Bargaining Unit). The terms of the PFP set forth in the Supervisors' Unit MOA were identical to those set forth in the Troopers' Unit MOA, including the provision for a Labor-Management Committee "to discuss and agree to expending the physical fitness monies for a mutually agreeable purpose. If the parties fail to agree, the monies shall be used to run the physical fitness program in existence as of March 31, 2007" (id.).
The PBA's motion for summary judgment is based, not upon a breach of the CBAs or the August 16, 2008 MOAs referenced in the claim, but upon the alleged breach of a March 2011 MOA pursuant to which the parties allegedly agreed to expend PFP monies for a mutually beneficial purpose. The March 2011 MOA on which the PBA contends it is entitled to summary judgment (claimant's Exhibit L; defendant's Exhibit L) was the subject of negotiations between the PBA and the State of New York, Division of State Police, regarding the use of $2,489, 059.36 of unspent PFP monies. It provided that each party would receive half the available monies, $1,244,529.68 to be allocated to the State Police for the purchase of "up to 500 semi-automatic assault rifles (inclusive of rifles already purchased) for patrol use" (claimant's Exhibit L, ¶ 1 [a]) and the remaining $1,244,529.68 to be transferred to the EBF established "by the collective bargaining agreement(s) and State Finance Law § 207-B (2)" (id.).
The claim alleges that, according to an accounting provided by the State, the annual transfers to the EBF required by the CBAs were deducted from the physical fitness fund for 2009 and 2010, leaving a balance of $981,897.56 in the Troopers' Unit Physical Fitness Fund and $261,147.80 in the Supervisors' Unit Physical Fitness Fund (claimant's Exhibit A, Verified Notice of Claim, pp.1-2). In fact, according to the accounting attached to the claim, the balance in the Troopers' Unit fund after deducting the required contributions to the EBF was $985,897.56.
Richard Mulvaney, General Counsel to the PBA, provided an initial draft of a proposed MOA governing the reallocation of the PFP monies to the State Police on March 14, 2011 (claimant's Exhibit E, p. 9). The State Police together with Michael N. Volforte of the Governor's Office of Employee Relations (GOER) revised the draft MOA (see claimant's Exhibit E, pp.13-56). Upon completion of the revisions, Mr. Volforte sent the proposed MOA to Mr. Mulvaney on March 28, 2011, with a copy to Colonel Francis P. Christensen, Deputy Superintendent in Employee Relations for the Division of State Police. The e-mail from Mr. Volforte stated, "Attached is our proposed MOA. If you agree with its terms, please have Tom [Mungeer] sign the document and return to me" (claimant's Exhibit E, p. 57 ). Tom Mungeer, President of the PBA, signed the proposed MOA and returned it to Mr. Volforte at GOER on March 29, 2011 (Affidavit of Richard E. Mulvaney sworn to on October 15, 2013, ¶ 22). According to Mr. Mulvaney, he was advised by Mr. Volforte on March 29, 2011 that the money to fund the MOA had not been re-appropriated and that, in any event, there was no agreement because the MOA had not been signed by all parties (id. at ¶ 24). Mr. Mulvaney states further that "Mr. Volforte, for the first time, asserted that he had told the PBA that there would be no agreement without all of the signatures" (id. at ¶ 24). Mr. Volforte testified at an examination before trial that he sent a text message to Mr. Mulvaney on either March 28, 2011 or March 29, 2011 informing him "there was no agreement until all had signed" (defendant's Exhibit K, pp. 49, 88). Mr. Volforte testified that immediately after the text message had been sent, he spoke with Mr. Mulvaney and informed him that there may be an issue regarding funding (id.). Up until that time, however, Mr. Volforte admittedly had not informed the PBA of potential problems in funding the agreement (id. at p. 49). According to Mr. Volforte, he was negotiating the terms of the MOA authorizing reallocation of the PFP monies while at the same time attempting to get the MOA funded (id. at pp. 42-44).
There is no disagreement that appropriations had been made for the monies required to be available to fund the PFP for both the Troopers' and Supervisors' Units for fiscal years 2009 - 2010 and 2010-2011 (see State Finance Law § 41). There is also no dispute that the transfers to the EBF required pursuant to the terms of the respective CBAs were made (claimant's Exhibit A, Verified Notice of Claim, p. 1, ¶ 3).
According to Margaret A. Naughton, Director of Financial Administration, the 2009-2010 appropriation funding the PFP programs lapsed on June 30, 2010, and the 2010-2011 appropriation was interchanged from personal service to non-personal service (see State Finance Law § 51) and lapsed on June 30, 2011 (defendant's Exhibit I, p. 50). Thus, at the time the March 2011 MOA was being negotiated, the appropriation for the 2009-2010 PFP contribution was no longer in force or effect (see generally State Finance Law § 40).
Ms. Naughton testified that physical fitness stipends are personal service expenditures whereas the purchase of guns, for example, is a non-personal service expenditure.
As explained by Susan Knapp, Unit Head for the Public Protection Unit of the New York State Division of Budget (DOB), proposed budgets for State agencies are submitted to the Legislature for approval pursuant to Article 7 of the New York State Constitution (defendant's Exhibit F, examination before trial transcript of Susan Knapp, p. 13). These budgets, once approved by the Legislature, contain spending appropriations authorizing the expenditure of State monies (id. at p. 14). "[T]here is nothing that impedes [a State agency] from using funds appropriated by the Legislature for the purposes [for which] . . . they are given . . . other than you have to look first to make sure that you have a Certificate in place. And, generally, you do multiple certificates through the year" (id. at pp. 14-15; 33). She describes a Certificate of Allocation as a formal action taken by the DOB to authorize the use of monies appropriated for a particular purpose (id. at 33; see also State Finance Law § 49). With respect to unused appropriations, Ms. Knapp testified that "[i]f appropriation authority has no encumbrances against it, when the statutory lapse date occurs, then that appropriation . . . lapses. It ceases to exist" (id. at p. 20). According to Ms. Knapp, where there is no possibility that the money appropriated for a particular purpose will be spent before the end of the fiscal year (March 31st), the agency may seek to have it re-appropriated or made part of the new budget (id. at 20-21, 25). Failing that, a lapsed appropriation disappears and is no longer available for spending (id. at pp. 22; 26-27; 51). For both personal and nonpersonal service appropriations, the statutory lapse date is June 30th (id. at 25; see also State Finance Law 40 [3] [a]).
The Parties' Contentions
The PBA contends that Mr. Volforte's transmission of the proposed MOA to Mr. Mulvaney on March 28, 2011 with the request that "If you agree with its terms, please have Tom [Mungeer] sign the document and return to me" (claimant's Exhibit E, p. 57) was an offer which was accepted upon Mr. Mungeer's signing and returning the MOA to Mr. Volforte. It further contends that the MOA was supported by consideration and that defendant breached the terms of this MOA by failing to transfer the money as agreed.
The defendant opposes the motion on the ground its purported breach of the March 2011 MOA was not the alleged basis for the claim and that, in any event, it was not signed by the State as the party to be charged. In support of its cross motion, defendant contends that the claim fails to state a cause of action and, in any event, the parties are bound by the alternative dispute resolution procedure set forth in article 15 of the CBAs. Defendant points out in this regard that the PBA previously filed a grievance which was held in abeyance on consent of the parties (defendant's Exhibits D and E).
The PBA, on the other hand, argues that the monies appropriated for the PFP were improperly utilized in an attempt to fund raises for upper echelon management. To the extent the March 2011 MOA was not alleged in the claim, the PBA asserts that leave to amend should be freely given pursuant to CPLR 3025 (c).
The PBA also contends that the March 2011 MOA is a contract separate and distinct from the CBAs, thereby rendering the alternative dispute resolution procedures set forth therein inapplicable. The PBA argues that even if the Court determines the alternate dispute resolution procedures set forth in the CBAs do apply, however, the defendant waived its right to compel arbitration by its unreserved participation in the instant litigation over an extended period of time.
Discussion
The claim is premised upon defendant's obligations under the CBAs and the August 2008 MOAs which preceded them. Nowhere in the claim is the March 2011 MOA on which the PBA now moves for summary judgment even mentioned. Court of Claims Act § 11 (b) requires that a claim state "the time when and place where such claim arose, the nature of same, the items of damage or injuries claimed to have been sustained and . . . the total sum claimed . . ." These requirements are "substantive conditions upon the State's waiver of sovereign immunity" (Lepkowski v State of New York, 1 NY3d 201, 207 [2003]), the failure to satisfy any one of which is a jurisdictional defect requiring dismissal (Kolnacki v State of New York, 8 NY3d 277, 280-281 [2007]; Politi v State of New York, 112 AD3d 1257 [3d Dept 2013]; Davis v State of New York, 64 AD3d 1197 [4th Dept 2009], lv denied 13 NY3d 717 [2010]; Wilson v State of New York, 61 AD3d 1367 [4th Dept 2009]; Hogan v State of New York, 59 AD3d 754 [3d Dept 2009]; Nasir v State of New York, 41 AD3d 677 [2d Dept 2007]). "Although 'absolute exactness' is not required (Heisler v State of New York, 78 AD2d 767, 767 [4th Dept 1980]), the claim must ' "provide a sufficiently detailed description of the particulars of the claim to enable [defendant] to investigate and promptly ascertain the existence and extent of its liability" ' " (Morra v State of New York, 107 AD3d 1115, 1115-1116 [3d Dept 2013], quoting Robin BB. v State of New York, 56 AD3d 932, 932-933 [3d Dept 2008]; quoting Sinski v State of New York, 265 AD2d 319, 319 [2d Dept 1999]). "[T]he State is not responsible for uncovering information that the claimant is required to allege under section 11 (b)" (Kolnacki v State of New York, 8 NY3d at 280; see also Dinerman v NYS Lottery, 69 AD3d 1145 [3d Dept 2010]).
Here, claimant's failure to allege a breach of the March 2011 MOA as a basis for its claim requires denial of the PBA's motion. Defendant was clearly unable to investigate or ascertain the merit of this belated allegation and had no opportunity to raise whatever affirmative defenses may have applied thereto. To the extent claimant seeks to amend its claim, albeit in only an affirmation submitted in opposition to the defendant's dismissal motion, the request is denied as a jurisdictional defect cannot be cured through amendment (Hogan v State of New York, 59 AD3d 754, 755 [3d Dept 2009]; Manshul Constr. Corp. v State Ins. Fund, 118 AD2d 983, 985 [3d Dept 1986]). As a result, claimant's motion for summary judgment, which is based solely upon the March 2011 MOA, must be denied.
Notably, unless the State imposed the requirement of a writing signed by all parties as a pre-condition to the March 2011 agreement as Mr. Volforte seems to contend, there is no requirement of a writing in the absence of an affirmative defense asserting the statute of frauds (see CPLR 3211 [a] [5]). In addition, to the extent the PBA takes the position that the March 2011 MOA is unrelated to the CBAs, a question arises whether the comptroller's approval was required under State Finance Law § 112 (see State Finance Law 112 [4]).
While defendant contends the claim fails to state a cause of action, it asserts no specific argument with respect to the viability of a breach of contract cause of action. Accepting the facts as alleged in the claim as true and giving the claimant the benefit of every possible favorable inference (Leon v Martinez, 84 NY2d 83, 87-88 [1994]; see also Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]), the facts alleged in the claim state a cause of action for breach of the CBAs and the August 16, 2008 MOAs for both the Troopers and Supervisors' bargaining units. In fact, defense counsel appears to concede that the claim "is in essence alleging a breach of the CBA" (affirmation of Thomas R. Monjeau dated November 6, 2013, ¶ 4). Thus, the claim is not subject to dismissal to the extent it alleges breach of contract causes of action premised upon the alleged violation of the CBAs and the August 16, 2008 MOAs.
Defendant next contends that the dispute resolution procedures set forth in the CBAs require dismissal of the claim. The Troopers' Unit CBA provides a dispute resolution procedure for all contract and non-contract grievances (defendant's Exhibit C, article 15). A contract grievance, which includes disputes over the interpretation or application of a term of the CBA, consists of a four-step procedure which culminates in final and binding arbitration if the dispute remains unresolved (id. at pp. 83-84). "As a general proposition, when an employer and a union enter into a collective bargaining agreement that creates a grievance procedure, an employee subject to the agreement may not sue the employer directly for breach of that agreement but must proceed, through the union, in accordance with the contract" (Matter of Board of Educ., Commack Union Free School Dist. v Ambach, 70 NY2d 501, 508 [1987], cert. denied sub nom. Margolin v Board of Educ. Commack Union Free School Dist., 485 US 1034 [1988]; Matter of Sinacore v State of New York, 277 AD2d 675 [3d Dept 2000]). Exceptions arise where the CBA permits an employee the right to sue the employer directly or where the union fails in its duty of fair representation (id. at 508; Altman v Rossi, 107 AD3d 1223, 1224 [3d Dept 2013]; Matter of Cummings v Board of Educ. of Sharon Springs Cent. School Dist., 60 AD3d 1138, 1140 [3d Dept 2009]; Yoonessi v State of New York, 289 AD2d 998 [4th Dept 2001] ). Otherwise, the arbitrability of a dispute is determined by reference to whether there is any statutory, constitutional or public policy prohibiting arbitration and, if not, whether the parties have agreed to arbitrate the dispute at issue (Matter of City of Johnstown [Johnstown Police Benevolent Assn.], 99 NY2d 273, 278 [2002]). The Court's task in considering the second issue is merely to determine " 'whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the CBA' " (id. at 279; Matter of City of Buffalo [Buffalo Professional Firefighters Assn., Local 282, IAFF, AFL-CIO-CLC], 27 AD3d 1093 [4th Dept 2006]). The agreement to arbitrate must, however, be " 'express, direct and unequivocal'" (Matter of South Colonie Cent. School Dist. [South Colonie Teachers Assn.], 46 NY2d 521 [1979], quoting Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. [United Liverpool Faculty Assn.], 42 NY2d 509, 511, 515 [1977]; see also Matter of Sherwood [Kirkpatrick], 108 AD3d 979 [3d Dept 2013]; Matter of Meegan v Brown, 66 AD3d 1437 [4th Dept 2009]).
The PBA argues that the March 29, 2011 MOA on which its motion for summary judgment is based does not include a grievance procedure and, because it is separate and distinct from the CBA, article 15 of the CBA governing grievances and arbitration does not apply (see Matter of Sherwood [Kirkpatrick], 108 AD3d 979 [3d Dept 2013] [no arbitration permitted where memorandum of understanding included select provisions of the CBA but did not include the arbitration provisions]; Matter of Meegan v Brown, 66 AD3d 1437 [4th Dept 2009] [grievance procedure in CBA applied to dispute arising under a MOA that modified the terms of a CBA]). As set forth previously, however, a breach of the March 29, 2011 MOA (defendant's Exhibit L) was not alleged in the claim rendering consideration of whether the provision for arbitration applies thereto unnecessary.
The PBA next contends the defendant waived its contractual right to arbitration by actively litigating the case on the merits and failing to seek an Order to compel arbitration pursuant to CPLR § 7503 (a). "Like contract rights generally, a right to arbitration may be modified, waived or abandoned" (Sherrill v Grayco Bldrs., 64 NY2d 261, 272 [1985]). As stated by the Court of Appeals in De Sapio v Kohlmeyer (35 NY2d 402, 405 [1974]):
"The crucial question . . . is what degree of participation by the defendant in the action will create a waiver of a right to stay the action. In the absence of unreasonable delay, so long as the defendant's actions are consistent with an assertion of the right to arbitrate, there is no waiver. However, where the defendant's participation in the lawsuit manifests an affirmative acceptance of the judicial forum, with whatever advantages it may offer in the particular case, his actions are then inconsistent with a later claim that only the arbitral forum is satisfactory. Thus, entering a stipulation to extend the time to answer is a purely defensive action and is not inconsistent with a later attempt to force arbitration. . . In contrast, contesting the merits through the judicial process is an affirmative acceptance of the judicial forum and waives any right to a later stay of the action."
Noting the availability of disclosure devices as the "significant differentiating factor between judicial and arbitral proceedings," the Court concluded that defendant's procurement of a pretrial deposition of the plaintiff constituted an election between forums and a waiver of his right to stay the action (id. at 406). The Court made clear that "[t]he courtroom may not be used as a convenient vestibule to the arbitration hall so as to allow a party to create his own unique structure combining litigation and arbitration" (id.; see also Gold Plastering Co. Inc. v 200 E. End Ave. Corp., 282 App Div 1073 [2d Dept 1953], affd 307 NY 668 [1954]). Thus, while " '[n]ot every foray into the courthouse effects a waiver of the right to arbitrate' . . ., a contractual right to arbitrate may be waived or abandoned if the party invoking arbitration 'manifest[s] a preference "clearly inconsistent with [his] later claim that the parties were obligated to settle their differences by arbitration" ' " (Johanson Resources v LaVallee, 271 AD2d 832, 835 [3d Dept 2000], quoting Sherrill v Grayco Bldrs., 64 NY2d at 273).
In the Court's view, defendant's conduct in initially consenting to hold the grievance procedure in abeyance, together with its active litigation of this matter over the course of the next two years, evinces an acceptance of the judicial forum which is inconsistent with its contention that the parties were obligated to settle their differences by arbitration (Sherrill v Grayco Bldrs., 64 NY2d at 272; see also Masson v Wiggins & Masson, LLP, 110 AD3d 1402, [3d Dept 2013] [defendant waived its right to compel arbitration although it asserted a contractual arbitration provision as an affirmative defense where it participated in extensive discovery and failed to move to stay the action or compel arbitration]; St. Paul Travelers Cos., Inc. v Joseph Mauro & Son, Inc., 36 AD3d 891 [2d Dept 2007] [active participation in litigation constituted waiver of right to arbitrate]; Friedman v CYL Cemetery, Inc., 99 AD3d 857 [2d Dept 2012] [respondents waived their purported right to arbitration as they failed to raise it as a defense in their answers and thereafter moved for a change of venue, participated in discovery and waited more than eight months after service of their answers to move to compel arbitration]; LZG Realty, LLC v H.D.W. 2005 Forest, LLC, 71 AD3d 642 [2d Dept 2010] [right to arbitration was not asserted in the defendant's answer or otherwise raised until 1½ years after action was commenced and then only after a stipulation between the parties for a joint trial]; St. Paul Travelers Cos., Inc. v Joseph Mauro & Son, Inc., 36 AD3d 891 [2d Dept 2007] [defendant's actions in submitting and responding to discovery, seeking to consolidate actions, and appearing for a preliminary conference constituted a waiver of its right to arbitration]; Johanson Resources v LaVallee, 271 AD2d 832 [3d Dept 2000] [participation in discovery and initiation of related actions constituted a waiver of any right to arbitration of the dispute]; Matter of Gabriele v Metropolitan Suburban Bus Auth., 239 AD2d 575 [2d Dept 1997] [having argued the merits of an article 78 action, public employer evinced clear and unequivocal acceptance of the judicial forum and could not enforce the arbitration provision of a collective bargaining agreement]; Sullivan v Kisly, 93 AD2d 783 [1st Dept 1983] [defendant waived its right to arbitration by participating in litigation to the extent of demanding an examination before trial and submitting to an examination before trial]).
Initially, the PBA filed a grievance relating to this matter which, on consent of both the State Police and the PBA, was held in abeyance for 60 days pending a resolution of the issues (see defendant's Exhibits D and E). The claim was thereafter filed on June 29, 2011 and defendant served an answer which failed to assert the dispute resolution procedures of the CBAs as a defense. Over the course of the next two years defendant actively litigated this matter without asserting its right to administrative resolution of the issues through the grievance / arbitration procedure set forth in the CBAs. Defendant participated in a preliminary conference on November 2, 2011 and requested, together with counsel for the PBA, two extensions of the cutoff date for completing discovery and filing the note of issue. Specifically, by letter dated January 8, 2013, defense counsel notified the Court that "[t]he Claimant and I have been working diligently to schedule the 9 depositions that the Claimant is seeking" and requested an extension of time to complete discovery and file the note of issue (see letter from Thomas R. Monjeau dated January 8, 2013 e-filed on the NYSEF system). A second letter was sent by defense counsel on January 8, 2013 setting forth the dates and times of the scheduled depositions, which included that of PBA President Thomas Mungeer, and Richard Mulvaney, General Counsel to the PBA (see second letter from Thomas R. Monjeau dated January 8, 2013 e-filed on the NYSEF system). Defense counsel informed the Court by letter dated April 26, 2013 that "[a]ll of the depositions except for the last one has been completed" and again requested another extension of the cutoff date to complete discovery and file the note of issue (see letter from Thomas Monjeau dated April 26, 2013 e-filed on the NYSCEF system). Finally, claimant's counsel filed the note of issue on June 14, 2013. A pre-trial telephone conference was held on July 25, 2013 at which time the parties sought additional time to move for summary judgment. The instant motion and cross motion were thereafter filed. In addition to opposing the PBA's motion for summary judgment on the merits, defendant's cross motion seeks summary judgment on the merits and a determination that the claim fails to state a cause of action. Significantly, defendant did not raise its purported right to arbitration in its answer or otherwise seek to compel arbitration pursuant to CPLR 7503 (a). While the Court agrees with defendant's assertion that this Court lacks jurisdiction to entertain an application to compel arbitration because such relief is not incidental to the primary claim for money damages (see Psaty v Duryea, 306 NY 413, 417 [1954]; Henderson v State of New York, 40 Misc 3d 638 [Ct Cl 2012]), such an application could and should have been timely made in the Supreme Court (see CPLR 7502 [a]; 7503 [a]). Moreover, while defendant is also correct in its assertion that its purported right to the resolution of the instant dispute through the grievance/arbitration procedures set forth in the CBAs is not a defense supporting dismissal (see Allied Bldg. Inspectors Intl. Union of Operating Engrs., Local Union No. 211, AFL-CIO v Office of Labor Relations of City of N.Y., 45 NY2d 735, 738 [1978]), it is well recognized that "when pleaded it is no less an assertion that the defendant does not intend to abandon his rights, and so rebuts any inference that would otherwise be drawn from the mere service of the answer" (Nagy v Arcas Brass & Iron Co., 242 NY 97 [1926]). Even where the purported right to arbitration is raised in the answer of a defendant, however, an excessive delay in seeking appropriate relief may be construed as a waiver (id.; Sherrill v Grayco Bldrs., 64 NY2d at 274 [assertion of right to arbitrate as an affirmative defense or counterclaim might preserve the right before it is forfeited and while arbitration is promptly sought]). Here, defendant answered the claim without reservation of its purported right to arbitration and litigated the matter for two years before raising the issue (cf. Byrnes v Castaldi, 72 AD3d 718 [2d Dept 2010] [defendant's four-month delay in moving to compel arbitration did not constitute waiver where its right to arbitration was asserted as a defense in its answer and its conduct was not otherwise inconsistent with its asserted right to arbitration). Notably, defense counsel acknowledges in his affirmation that "the parties engaged in extensive discovery procedures and deposed numerous witnesses" (affirmation of Thomas Monjeau ¶4). Thus, in the Court's view, defendant's agreement to hold the grievance/ arbitration procedures in abeyance and its two-year participation in the discovery process evinced its acceptance of the judicial forum for resolution of this dispute. The Court concludes the defendant waived its purported right to resolution of the claim in accordance with the grievance/ arbitration provisions of the CBAs.
Defendant's application was not supported by the purported grievance /arbitration provisions of the Supervisors' Unit CBA.
Defendant's contention that the monies appropriated for use in the PFP lapsed as a matter of law is supported by the affidavit of Susan Knapp of the DOB who states, in pertinent part, the following:
"4. Pursuant to § 40 of the New York State Finance Law, a state agency may only spend money under an appropriation contained in the State budget if a liability was incurred thereunder on or before the end of the State's fiscal year on March 31.
5. Under the facts of this case as I understand them, if none of the members of the Division of the State Police chose to undergo the physical fitness testing during a particular fiscal year, and such testing was a required precondition to receive a cash stipend under the terms of the physical fitness program referenced in the Claimant's Collective Bargaining Agreement, no stipends would be paid out during the year. Consequently, the appropriation for the physical fitness program would no longer be available to be used because no liabilities were incurred thereunder on or before the end of the fiscal year on March 31. Further, the Division of State Police has no power or ability on its own to make appropriations available for use after the close of the particular fiscal year for which they were authorized by the Legislature, where there has been no liability incurred thereunder on or before the March 31 close of that particular fiscal year. In order to 'use' an unspent appropriation in a given fiscal year during the next fiscal year where no liability has been incurred thereunder during that given fiscal year, the Legislature must approve for the next fiscal year a reappropriation of the prior fiscal year's unspent appropriation" (affidavit of Susan Knapp, ¶¶ 4 -5).
Ms. Knapp's conclusion that no liabilities were incurred prior to the close of the 2009-2010 and 2010-2011 fiscal years is founded upon her understanding that the claim involved payment of physical fitness stipends which, according to the terms of the CBAs, were payable only upon a member satisfying certain agreed-upon standards. According to Ms. Knapp, because the program was not in operation in the fiscal years 2009-2010 and 2010-2011, none of the members qualified for the payment of physical fitness stipends. Since no stipends were paid and no liabilities were incurred the money lapsed, according to Ms. Knapp.
The PBA, however, does not seek payment of the physical fitness stipends for its qualifying members; indeed, there is no allegation in the claim that the physical fitness program was implemented or that any of its members qualified. Rather, the thrust of the claim is the allegation that funds remained in the PFP for both the Troopers' and Supervisors' Units which, absent an agreement for an alternative use of the funds, was required to be used for the physical fitness program (see Notice of Claim, p. 2).
State Finance Law § 40 (2) (a) provides that every appropriation for the fiscal year in which the budget is adopted "shall cease to have force and effect, except as to liabilities already incurred thereunder, at the close of such fiscal year" (emphasis added). State Finance Law § 40 (3) (a) provides that appropriations which at the close of the fiscal year cease to have "force and effect" shall lapse on June 30th immediately following the close of the fiscal year. Thus, like any other contract case, the issue for determination is whether the terms of the CBAs gave rise to an obligation for which the State may be held liable in breach of contract. Aside from Ms. Knapp's conclusion that the monies "lapsed" because the PFP was not in operation, the parties otherwise failed to address the issue.
On the one hand, the Troopers' CBA required only that monies be made "available" to fund the PFP in the annual amount of $1,285,440.00 (defendant's Exhibit C, p.22, ¶ 10.3 [A]) and that certain designated amounts from the PFP be transferred to the EBF annually (defendant's Exhibit C, p.22, ¶ 10.3 [C]). If the contract stopped there, the Court would agree that monies not used to fund a PFP in a given year lapsed as a matter of law. But the contract language continues as follows:
There is only a brief excerpt of the Supervisors' Unit CBA attached to the claim and the Court is unable to determine, therefore, whether the provisions for payment of the PFP monies are the same as those contained in the Troopers' Unit CBA. It is likely, however, that the PFP program provisions in both contracts are identical given the fact that these provisions are the same in the respective MOAs setting forth the terms of employment.
"D. The parties may convene the Joint Committee to discuss and agree to expending physical fitness monies, including the amounts referenced in Article 10.3C for a mutually agreeable purpose. If the parties fail to agree, the monies shall be used to run the physical fitness program in existence as of March 31, 2007" (defendant's Exhibit C, p. 22, ¶ 10.3 [D] [emphasis added]).
Notably, the CBA required that "[e]ffective in the fiscal year beginning April 1, 2011, the physical fitness fund shall return to its level as of March 31, 2007" (defendant's Exhibit C, p.22, ¶ 10.3 [C]). Having no information regarding the PFP in existence as of March 31, 2007 or the level of the PFP fund as of March 31, 2007, the Court cannot conclude, as a matter of law, that the State's failure to pay the nearly $1.25 million of unspent physical fitness monies that remained did not constitute a breach of the Troopers' Unit CBA. As a result, to the extent defendant moves for summary judgment dismissing the claim, the motion is denied.
Based on the foregoing, both claimant's motion and defendant's cross motion are denied.
February 21, 2014
Saratoga Springs, New York
FRANCIS T. COLLINS
Judge of the Court of Claims
The Court considered the following papers:
Notice of motion dated October 18, 2013;
Affidavit of Richard E. Mulvaney sworn to October 15, 2013 with exhibits;
Memorandum of Law of Stephen G. DeNigris dated October 18, 2013;
Affirmation of Stephen G. DeNigris affirmed October 15, 2013 with exhibits;
Notice of cross motion dated November 6, 2013;
Affirmation of Thomas R. Monjeau dated November 6, 2013 with exhibits;
Reply affirmation of Richard E. Mulvaney dated November 18, 2013 with exhibit;
Affirmation of Thomas R. Monjeau dated November 22, 2013 with exhibit