Rye CounSEL Guides Rye CounCIL to Insurance Dry Hole?

Tuesday’s revelations that the real amount stolen by a senior Rye City employee from the Rye Golf Club’s members were not anywhere near prior official estimates of “many hundreds of thousands of dollars” - but were actually millions of dollars stolen - set club members, the blogosphere and a wide cross-section of Rye residents aflame. Mayor Joe Sack conceded as much last night as he and Rye Golf Commissioner Leon Sculti discussed the dramatic new revelation and issued mutual promises to redouble efforts to deliver justice for the theft victims and the public in general. Where the approximately $2 Million+ filched from club members might come back from if the city’s insurance carrier balks might seem anybody’s guess. But a plausible alternative recovery source may have been purposely avoided.

FIRST SOME HISTORY.

What we now know is that in late 2012, current Rye City Corporation Council Kristen Wilson notified city’s liability insurance carrier, Travelers Insurance Co, that a material theft by a city employee had occurred. Ms. Wilson then followed up this original notice with an actual claim for coverage on August 13, 2013. We are currently told that Travelers has not responded to this claim, either pro or con. (I had previously commented on this situation without knowing what we now know – “Rye Insurance Claim: Just Buying Time?” )

Many in Rye believe this negligent creation of a phony golf club staffing company (through which these city managed funds flowed) could only have been done with the knowledge and approval of former senior city fiduciaries including Steve Otis (Mayor), Kevin Plunkett (City Attorney) and O. Paul Shew (City Manager). And it is now clear that this ‘RM Staffing’ forced its employees to work horrendous amounts of uncompensated overtime, stole their tips and gratuities, provided rooming for some in a sweat-house of a garage attic in Mamaroneck, and generally excelled in underpaying and exploiting a group primarily made up of undocumented foreign laborers.  

(For those unaware of any of this, a quick search of www.lausdeo10580.com will bring the testimony and documents about it to your fingertips. Or see my own April 1, 2013 MyRye column - SCOTT YANDRASAVICH - SOLO CRIMINAL GENIUS? )

Now I hope that today’s Council is also aware of a publically documented pattern of violations of constitutional law, exploitation of undocumented foreign workers and exploitation of religious organizations that follow the former municipal clients of Mr. Kevin Plunkett, Esq. And that Ms Wilson, and her Harris Beach Partner Darius Chafizadeh, both served under Mr. Plunkett for many years at his prior law firm, Thacher Proffitt & Wood - which was hired in 2002 by former Mayor, now NYS Assemblyman, Steve Otis. Before that change our city attorneys were typically employees of the city, not outside contractors, and certainly not large law firms like Thatcher Proffitt, and now Harris Beach, which is a firm capable of making significant political campaign contributions.

NOW ABOUT THAT ALTERNATIVE SOLUTION FOR RYE.

Let’s say that Travelers Insurance declines to pay for these fraud and theft losses incurred at the hands of a city employee over many years despite previous official warnings. That might happen. And that would, as some might say, suck. But who among us hasn’t heard that negligent law firms don’t get sued for malpractice? Malpractice insurance is required to operate any law firm whether it has 1 employee or 10,000 employees. Malpractice law is a huge international field where case law is deep and wide and canny practitioners not too difficult to find. Thatcher Profitt had malpractice insurance. Thatcher Profitt’s malpractice insurance policy(s) almost certainly have what are known as “tails” in industry parlance – agreements which extend liability coverage past the operational wind-down of the firm. So there’s that deep pocket to explore.

Harris Beach is a like-kind major law firm. It similarly has industrial strength malpractice insurance coverage in place. While I believe Mr. Plunkett never worked for Harris Beach before leaving law for one of the very top paying jobs in The Astorino Administration, Ms. Wilson does. And Ms Wilson has been billing Rye for her Harris Beach services for many years now. Year’s including when RM Staffing was in full swing stealing Rye Golf member money. So there’s another deep pocket to explore.

The statute of limitations for filing such a claim is, I understand, – 3 years.

It’s little wonder that Ms. Wilson was so opaque for so long about the Travelers Insurance status. No one from Rye officialdom said a word about it during the Rye City Council election campaign last fall to my knowledge. Yet there it was - all along. And filed in August for 10 times the amount the public had been told.

It’s also little wonder that Ms. Wilson hasn’t suggested these alternative deep pockets of coverage to recover the stolen funds before. Her interests and the City of Rye’s interests, diverge here. And lastly - about that history of “controversy’s” that follow Ms. Wilson and Mr. Plunkett, well, I’ve made a list of some. Easily findable, these examples appear to be what some might see as - a pattern of legal malpractice:

Mamaroneck to pay $500,000, taking more hospitable approach to day laborers

http://www.nytimes.com/2007/06/13/nyregion/13labor.html?fta=y                                                                         

Mamaroneck to pay $4.75 million to Westchester Day School

http://harringtononline.blogspot.com/2008/01/mamaroneck-village-settles-day-school.html 

Mamaroneck to pay $2 Million in Police Case

http://query.nytimes.com/gst/fullpage.html?res=9E0CE2DA113EF936A15751C0A9619C8B63 

Mamaroneck to pay $825,000 to local yacht club in settlement

http://www.lohud.com/article/20100913/OPINION/9130302/

Mamaroneck Mayor: “For $8 (million) to $10 million, you should be building pools and community centers and parks, not giving it to lawyers,"

$6.5 million Greenburg settlement believed nation’s largest for a land-use case involving intentional discrimination against a religious institution. $5.5 million of amount to be borne by taxpayers.

http://westfaironline.com/59778/greenburgh-agrees-to-6-5m-settlement-with-church/

GREENBURG DECISION – http://www.jdsupra.com/legalnews/decision-fortress-bible-church-v-feiner-42288/

 SANCTIONS - “The record is replete with evidence regarding Defendants' intentional destruction of evidence and disregard for discovery obligations.”…”In addition to destroying evidence and not placing the appropriate litigation hold on documents in the Town's possession, Defendants failed to produce certain evidence to Plaintiffs. Such was made clear at trial…”Defendants' blatant disregard for its discovery obligations under the Civil Rules of Procedure compels this Court to hereby sanction Defendants in the amount of $10,000 for their spoliation of evidence and failure to comply with their discovery obligations under the Civil Rules of Procedure.”