Roytlender v. D. Malek Realty

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MAYA ROYTLENDER, Plaintiff, v. D. MALEK REALTY, LLC et. al., Defendants.

No. 21-CV-00052 (JMW)

United States District Court, E.D. New York

July 29, 2024

APPEARANCES:

Paul L. Dashefsky, Esq.

317 Middle Country Road

Attorney for Plaintiff and Counter Defendant Maya Roytlender

Jonathan D. Farrell, Esq.

Daniel Frank Carrascal, Esq.

Mark A. Radi, Esq.

Meltzer Lippe Goldstein & Breitstone LLP

Attorneys for Defendants and Counterclaims D. Malek Realty, LLC, Malek Management Corporation, StaffPro, Inc., David Malek, and Michael Malek

OPINION AND ORDER

JAMES M. WICKS, UNITED STATES MAGISTRATE JUDGE.

What started out as a relatively straightforward claim for overtime wages due under the Federal Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”) quickly morphed into something far different and far more complex. Defendant interposed counterclaims grounded in fraud, breach of fiduciary duty and the faithless servant doctrine. Through years of discovery - and once the camel's nose entered the tent - this wage and hour claim became a case about whether Plaintiff embezzled and misappropriated funds from Defendants over a period of years.

Plaintiff, Maya Roytlender, commenced this action against Defendants D. Malek Realty, LLC (“D. Malek Realty”); Malek Management Corporation (“Malek Management”); StaffPro, Inc. (“StaffPro”); David Malek; and Michael Malek (collectively, “Defendants”) pursuant to the FLSA, 29 U.S.C. 201, et seq. and the NYLL. Discovery is complete and a trial date is set for September. Defendants now move for summary judgment to dismiss Plaintiff's claims and for judgment on their counterclaims. (ECF No. 123.) Plaintiff strenuously opposes Defendants' motion.^[1] (ECF No. 124.) For the reasons set forth below, Defendants' motion for summary judgment is GRANTED in its entirety.

BACKGROUND

The following facts are taken from the Complaint (ECF No. 1) Defendants' Counterclaims (ECF No. 14) and the parties' 56.1 statements (ECF Nos. 114-1, 115, and 117).^[2]

The Parties

Plaintiff is a Brooklyn, New York resident. (ECF No. 1 ¶ 4.) The Corporate Defendants are property management companies. (ECF No. 114-1 ¶ 1.) D. Malek Realty is a New York limited liability company. (ECF No. 1 ¶ 5.) D. Malek Realty's principal office is located in Valley Stream, New York. (Id.) Malek Management is a New York corporation, also located in Valley Stream. (Id. ¶ 6.) David Malek resides in Lawrence, New York, and is the principal and owner of D. Malek Realty and Malek Management. (ECF No. 114-1 ¶ 2.) Michael Malek is a property manager for D. Malek Realty and Malek Management. (Id. ¶ 3.) Defendant StaffPro is a New York corporation located in Inwood, New York and is “Defendants' Professional Employer Organization” which processes and issues payroll based on information entered into its system. (Id. ¶¶ 4-5; ECF No. 1 ¶ 7.) StaffPro uses a “web-based portal in to which Malek Management enters its employees' hours. StaffPro [] processes and issues payroll to Malek Management's employees from StaffPro's bank accounts based on the information entered into the portal.” (ECF No. 123-78) (“Affidavit of Elly Geldwerth”).

Plaintiff's Work as an Employee

Plaintiff was employed as an Office Clerical employee for Defendants Malek Realty, Malek Management, StaffPro, and the individual Defendants. (ECF No. 1 ¶¶ 10, 13.) She began her employment around October 2012 but was terminated in October 2020. (Id. ¶¶ 13-14.) Plaintiff alleges that from 2018 to 2020, she was paid approximately $27.86 per hour and worked seven days a week-Monday to Thursday from 9:00 AM to 5:00 PM and Fridays from 9:00 AM to 1:00 PM. (Id. ¶ 16.) She claims she worked overtime on the weekdays and weekends-that is, she worked over 40 hours for some weeks-and should have been paid an overtime hourly rate of $41.79. (Id. ¶ 17.)

Plaintiff claims she is owed $4,875 in regular wages. (ECF No. 1 ¶ 15.) She also asserts that she received only $21.86 an hour-instead of the overtime hourly rate for overtime hours worked-and worked 4,963.5 in overtime hours. (Id. ¶ 22.) She states the total sum owed for the overtime hours is $207,424.66. (Id.) In addition to the regular and overtime wages due, Plaintiff also alleges she has not been paid for 96 holiday hours from 2018 to 2020 which totals $2,098.56. (ECF No. 114-1 ¶ 36.)

Plaintiff, however, has only been able to produce handwritten time records to support her position. (ECF No. 114-1 ¶ 38.) These self-created notes demonstrate that she worked 1,242.66 overtime hours at most. (Id. ¶ 39.) Defendants state that from January 2017 to October 2020 Plaintiff was paid $188,895, which is commensurate with the hours she worked. (Id. ¶ 17.)^[3]

Defendants' Counterclaims

Defendants claim that Plaintiff engaged in various schemes to defraud Defendants and stole millions from them. They assert causes of action for fraud and breach of fiduciary duty, and a claim under the faithless servant doctrine. (ECF No. 14 at 17-19.) Plaintiff in turn, denies stealing from Defendants. (ECF No 115 ¶ 268.)

1. Fictitious Employees

Plaintiff was allegedly the only individual responsible for monitoring and reporting employees' hours and reporting that information back to StaffPro, which would then process and issue payroll checks.^[4] (ECF No. 14 ¶¶ 9-10.) Plaintiff however claims that another employee was responsible for ensuring that all payables were accurate. (ECF No. 115 ¶ 6.) She also previously testified that she assisted in submitting new hire information which was ultimately forwarded to StaffPro. (ECF No. 114-1 ¶¶ 19-20.)

Defendants allege that Plaintiff engaged in payroll fraud. Specifically, when she would submit the hours and payroll information to StaffPro, she would add fictitious individuals to Defendants' payroll. (ECF No. 14 ¶ 20.) She even went as far to falsify new-hire documents for these employees and submit time records on their behalf. (Id. ¶ 21.) These employees would receive paychecks for hours they never worked. (Id. ¶ 27.) Plaintiff allegedly created several fake identities for the following “employees”: Aleksandr Leontyev, Michael James II, and Valerie B. Leon. (Id. ¶ 30.) From Leontyev, James, and Leon alone, Plaintiff received $161,590.63. (ECF No. 114-1 ¶ 142.)

Leontyev allegedly agreed for Plaintiff to put him on Defendants' payroll so he could repay Plaintiff for a previous loan. (ECF No. 114-1 ¶¶ 41-42.) He would give her 70% of the monies that came from his checks.^[5] (Id. ¶ 43.) He never worked for Defendants but in fact lived in Florida from October 2016 to April 2019-that is, during the months he was purportedly employed for them. (Id. ¶ 46.) Leontyev was unlawfully paid $282,894.50 before taxes for regular and overtime hours that he never worked, repair and maintenance work he did not perform, and bonus/vacation/sick and holiday pay he never had to begin with. (Id. ¶¶ 58-62.) Leontyev transferred $126,571.41 to Plaintiff to repay his debt to her. (Id. ¶ 69.)

James was Leontyev's roommate who also lived in Florida during the time he was allegedly employed for Defendants as a doorman/porter and on their payroll.^[6] (ECF No. 114-1 ¶¶ 72, 78-81.) James completed an employment application and submitted his bank account information. (Id. ¶ 76.) However, James did not know what the job he applied for entailed nor did he know any of the Defendants. (Id. ¶¶ 82-83.) Yet, he received direct deposits from StaffPro for work he never performed. (Id. ¶¶ 88-89.) He received a total of $96,984.85 for these hours not worked. (Id. ¶ 97.) James would transfer 80% of the monies to Leontyev and Leontyev would keep 10% for himself and send the remaining 70% to Plaintiff. (Id. ¶¶ 101-02.)

Around March 2020, Leontyev asked to be removed from the payroll but Plaintiff would only remove him if he found someone to replace him.^[7] (ECF No. 114-1 ¶¶ 108-09.) Leontyev enrolled his sister, Valerie Leon, to replace him and she agreed to send all proceeds to Leontyev. (Id. ¶¶ 110-11, 113.) She submitted all required documentation and was staffed as a doorman for Defendants, but never performed any work for them. (Id. ¶¶ 115, 118, 125.) She was paid a total of $37,783.67 until October 2020 for work never performed. (Id. ¶¶ 132, 135.) Leontyev would transfer 70% of the proceeds to Plaintiff, reserving 30% for himself. (Id. ¶ 137.)

2. Fictious Hours for Existing Employees

In a second scheme, Plaintiff would “report fraudulent hours for existing or former employees.” (ECF No. 14 ¶ 31.) For example, she reported that an existing porter named Ihor Dubno worked hours of overtime and for repair and maintenance work at a location he had never entered. (Id. ¶¶ 32-35.) This resulted in Defendants issuing a total of $309,255.03 to Dubno for hours he had never worked or personal or sick time he had never used in 2019. (ECF No. 114-1 ¶¶ 36, 217-22.)

Guido Salvo was also a porter for Defendants. (ECF No. 114-1 ¶ 148.) Salvo was paid for over 2,000 overtime and regular hours and $19,715 for repair and maintenance work performed. (Id. ¶¶ 231-32.) However, his time sheets did not support these fictitious hours worked. (Id. ¶¶ 234-35.)

This scheme, in conjunction with the fictitious employees scheme, led to Plaintiff's theft of over $1 million from Defendants.

3. Theft of Tenant Deposits

In addition to her duties associated with inputting time worked and payroll, Plaintiff was also responsible for interacting with tenants regarding security deposit checks and accepting rent payments from tenants. (ECF No. 14 ¶¶ 11-14.) Typically, a tenant may forfeit their security deposit due to a violation of the lease agreement or damaging the premises. (Id. ¶ 40.) If it is not forfeited, however the deposit must be returned to the...