Spinelli v. City of N.Y.

ANGELA SPINELLI and OLINVILLE ARMS, INC. , Plaintiffs, v. THE CITY OF NEW YORK, Defendant.

02 Civ. 8967

UNITED STATE DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

July 11, 2011

OPINION

APPEARANCES

Attorney for Plaintiffs

LAW OFFICE OF DAVID A. ZELMAN

By: David A. Zelman, Esq.

Attorney for Defendant

MICHAEL A. CARDOZO

By: Robin Binder, Esq.

Mark W. Muschenheim, Esq.

Sweet, D.J.

Plaintiffs Angela Spinelli ("Spinelli" or the "Plaintiff") and Olinville Arms, Inc. ("Olinville") (collectively, the "Plaintiffs") have moved pursuant to Federal Rule of Civil Procedure 59 for a new trial. Upon the conclusions set forth below, the motion is denied.

Prior Proceedings

This action against Defendant the City of New York ("City" or the "Defendant") stems from the October 9, 2001 suspension, by the New York City Police Department ("NYPD") License Division ("License Division"), of the licenses of Olinville to sell guns based on an NYPD inspection that occurred the prior day that revealed significantly compromised security at the store. After Olinville addressed the compromised security, on December 5, 2001, its licenses to sell guns were reinstated

In 2002, Olinville and its owner, Spinelli, commenced this action. In 2007, the City's motion for summary judgmentwas granted, and Plaintiffs' cross motion was denied. Plaintiffs appealed, and in 2009 the Second Circuit held that Plaintiffs' Fourth Amendment rights were not violated when the NYPD inspected Olinville, and that their due process rights were not violated when the License Division suspended Olinville's licenses due to exigent circumstances that required prompt action (namely, the inadequate security). Spinelli v. City of New York, 579 F.3d 160, 167-68, 170-71 (2d Cir. 2009) . The Second Circuit also held that Olinville's due process rights were violated because the License Division's post-suspension procedures (the suspension notice and the lack of a post -suspension hearing) were inadequate and remanded to determine damages. Id. at 172, 175. Prior to trial, in an October 26, 2010 Decision, this Court held that the License Division was required to provide Olinville a hearing to contest the suspension within thirty days of the suspension, by November 8, 2001.

This action was tried before a jury from November 8 to November 11, 2010. At the beginning of the trial, the City conceded that Olinville was entitled to lost profits between November 16 and December 5, 2001 that stemmed from the suspension. In addition to various exhibits introduced by bothsides, five witnesses were called by Plaintiffs: Olinville's employees Juan Cabrera ("Cabrera") and Dominick Soricelli ("Soricelli"), Spinelli, Spinelli's doctor Sundararag Mohandoss ("Dr. Mohandoss"), and, by deposition, Olinville's accountant, Marvin Cohen ("Cohen"). Two witnesses were called by the City: the License Division Director, Thomas Prasso ("Director Prasso") and, by deposition, Olinville's attorney during the 2 001 suspension, John Chambers ("Chambers"). On November 11, 2 010, the jury returned a verdict of ten thousand dollars for Olinville and zero dollars for Spinelli.

The Rule 59 Standard

The Second Circuit has held that a Rule 59 motion for a new trial should be denied "unless the trial court is convinced that the jury has reached a seriously erroneous result or that the verdict is a miscarriage of justice." AIG Global Sec. Lending Corp. v. Banc of Am. Sec. , LLC, 38 6 Fed. Appx. 5, 7 (2d Cir. 2010) (quoting Medforms, Inc. v. Healthcare Mgmt. Solutions, Inc., 290 F.3d 98, 106 (2d Cir. 2002)); see Malmsteen v. Berdon, LLP, 369 Fed. Appx. 248, 249 (2d Cir. 2010) (quoting Medforms, 290 F.3d at 106); Tesser v. Bd. of Educ., 370 F.3d 314, 320 (2d Cir. 2004) (quoting Hugo Boss Fashions, Inc. v.Fed, Ins. Co., 252 F.3d 608, 623-24 (2d Cir. 2001)). When considering whether the jury's result was seriously erroneous or a miscarriage of justice, "a court should rarely disturb a jury's evaluation of a witness' credibility." PLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 134 (2d Cir. 1998) (citing Dunlap-McCuller v. Riese Organization, 980 F.2d 153, 157 (2d Cir. 1992); Metromedia Co. v. Fugazy, 983 F.2d 350, 363 (2d Cir. 1992)). Although some courts have stated that "a motion for a new trial may be granted even if there is substantial evidence to support the jury's verdict... in practice courts do not grant new trials as freely as the language suggests." In re MTBE Products Liability Litigation, 739 F. Supp. 2d 576, (S.D.N.Y. 2010) (quoting Caruolo v. John Crane, Inc., 226 F.3d 46, 54 (2d Cir. 2000)) (internal quotation marks omitted). To sufficiently demonstrate that a new trial is appropriate, "the movant bears a heavy burden." Goetz v. Hershman, No. 06 Civ. 8180, 2010 U.S. Dist. LEXIS 70983, at *32 (S.D.N.Y. Jul. 14, 2010) aff'd and vacated on other grounds in 2011 U.S. App. LEXIS 10311 (2d Cir. May 20, 2011).

The Verdict of Nominal Damages for Spinelli's Emotional Distress Claim Was Not Seriously Erroneous or Against the Weight of Evidence

Spinelli contends that the jury's verdict awarding Spinelli only nominal damages for emotional distress resulting from inadequate notice or lack of a post-suspension hearing was seriously erroneous. The City asserts that, as a matter of law, Spinelli could not seek emotional distress damages based on her due process claim under 42 U.S.C. § 1983 because a plaintiff must demonstrate, among other things, a deprivation of a right protected by the Constitution. See Paul v. Davis, 424 U.S. 693, 696-97 (1976). To determine whether due process rights were violated, the threshold question is whether the plaintiff has been deprived of a liberty or property interest that is subject to due process protection. See Board of Regents of State Colleges v. Roth, 408 U.S. 564, 569-70 (1972), Any property interests are "created and their dimensions are defined by existing rules or understandings that stem from an independent source...." Id. at 577.

The City contends that Spinelli cannot assert a due process claim since her purported interest in her reputation, without more, is not a property right protected by due process, see Paul, 424 U.S. at 711-12, and Spinelli has not pointed to any New York law that provides her "any legal guarantee of present enjoyment of reputation which has been altered as aresult of [defendants'] actions." See Id. Plaintiffs contend that Spinelli was upset by the fact that she did not know the reasons for the suspension of Olinville's licenses.

After the October 9, 2001 suspension, Olinville's agent, Chambers, who was retained on October 22, sent a fax to the NYPD License Division. Chambers also testified that within 24 hours of being retained he had spoken with the NYPD License Division and had been told about the specific security problems. Under New York law, "knowledge acquired by an agent acting within the scope of its agency is imputed to the principal, even if the information was never actually communicated." N.Y. Marine & Gen Ins. Co. v. Tradeline LLC, 266 F.3d 112, 122 (2d Cir. 2001) (citing Christopher S. v. Douglaston Club, 713 N.Y.S.2d 542, 543 (2d Dep't 2000)). See also Meisel v. Grunberg, 651 F. Supp. 2d 98, 110 (S.D.N.Y. 2009) (quoting Cromer Fin. Ltd. v. Berger, 245 F. Supp. 2d 552, 559 (S.D.N.Y. 2003)).

In accordance with this Court's October 26, 2010 Decision, as a matter of law Spinelli was not entitled to any damages pre-dating November 8 for the License Division's failure to give Olinville a post-suspension opportunity to contest thesuspension. Also as a matter of law, Spinelli is not entitled to any emotional distress damages for the NYPD's October 8, 2001 inspection of Olinville, or to the immediate suspension (without providing Olinville an opportunity to be heard) of Olinville's licenses on October 9, 2001. Spinelli, 579 F.3d at 167-68, 17071. Spinelli does not take issue with the City's position at trial that Olinville's licenses would not have been reinstated on November 8, 2001, or that the earliest date to recover any damages was November 16, the day after the NYPD conducted an inspection, and the day that the License Division determined that Olinville's licenses should be reinstated. This leaves only the period between November 16 and December 5, 2001.

The jury did not award damages for emotional distress for the period between November 16 and December 5, 2001. Dr. Mohandoss, Spinelli's doctor, testified that in October 2001 he made a house call to Spinelli because she was depressed. While Dr. Mohandoss gave her a sample of Paxil (enough medication to last only a few days), he did not record this visit in his chart notes. There is also no evidence that Dr. Mohandoss ever wrote Spinelli a prescription for Paxil (or any other anti-depressant) or that he referred her to a psychiatrist. Dr. Mohandoss's contemporaneous chart note from his examination of Spinelli onOctober 13, 2001 did not document any evidence of depression and that chart note documents conditions that Spinelli had both before the October 8 suspension and after the December 5 lifting of the suspension. Plaintiffs contend that these conditions, such as hypertension, were aggravated by the emotional distress purportedly suffered by Spinelli. Evidence of such aggravation, however, at best only exists for the October 13 visit, which pre-dates the compensable period (November 16 to December 5, 2001). Spinelli saw Dr. Mohandoss only once during the potentially compensable period, and that was for a boil on the underarm. Dr. Mohandoss testified that neither depression nor high blood pressure would cause a boil.

The Plaintiffs have relied on Atkins v. New York City, 143 F.3d 100 (2d Cir. 1998). In Atkins, the court explained that if a § 1983 plaintiff cannot prove actual injury from a violation of his constitutional rights, that plaintiff is only entitled to nominal damages. Id. at 103 (citing Carey v. Piphus, 435 U.S. 247, 248 (1978)). The court further stated that "[t]o recover...