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Decision No. 16,828

Application of ANTONIO LUCIANO for the removal of Daniel Schwartz, as president, and Yehuda Weissmandl, Moses Friedman, Moshe Hopstein, Eliyahu Solomon, Jacob Lefkowitz, Yonah Rothman, Suzanne Young-Mercer and Stephen Price, as members, of the Board of Education of the East Ramapo Central School District.

Decision No. 16,828

(September 17, 2015)

Advocates for Justice, attorneys for petitioners, Arthur Z. Schwartz, Esq., of counsel

Bingham McCutchen LLP, attorneys for respondents, David J. Butler, Esq., of counsel

     ELIA, Commissioner.--Petitioner seeks the removal of Daniel Schwartz, Yehuda Weissmandl, Moses Friedman, Moshe Hopstein, Eliyahu Solomon, Jacob Lefkowitz, Yonah Rothman, Suzanne Young-Mercer and Stephen Price (collectively, “respondents”) as members of the Board of Education (the “board”) of the East Ramapo Central School District (the “district”).  Petitioner also requests, inter alia, that I appoint an oversight committee and an interim monitor to oversee the district.  The application must be denied.

Petitioner’s removal application is yet another in a series of legal proceedings in which the district has become embroiled.  Petitioner’s assertion that removal is warranted in this proceeding distills to a claim that respondents breached their fiduciary duties by having explicit knowledge of, and participating in, fraudulent and illegal acts relating to district finances. Petitioner’s request for interim relief was denied on December 21, 2012.

Respondents deny petitioner’s allegations and raise several affirmative defenses.  Respondents contend that petitioner lacks standing to maintain the application and that the application fails to state a claim upon which relief may be granted and to allege facts upon which the extraordinary remedy of removal may be granted.[1]

As a threshold matter, I must address the issue of standing.  An individual may not maintain an appeal unless aggrieved in the sense that he or she has suffered personal damage or injury to his or her civil, personal or property rights (Appeal of Waechter, 48 Ed Dept Rep 261, Decision No. 15,853; Appeal of Erickson, 47 id. 261, Decision No. 15,689).  Only persons who are directly affected by the action being appealed have standing to bring an appeal (Appeal of Waechter, 48 Ed Dept Rep 261, Decision No. 15,853; Appeal of Erickson, 47 id. 261, Decision No. 15,689).  District residents have standing to challenge an allegedly illegal expenditure of district funds (Appeal of Strade, et al., 48 Ed Dept Rep 73, Decision No. 15,797; Appeal of Russo, 47 id. 429, Decision No. 15,744; Appeal of Houdek, 47 id. 415, Decision No. 15,740).

Moreover, a non-resident does not have standing to bring a proceeding pursuant to Education Law §306 to remove a school official in a district in which he or she does not reside (Appeal of D.B., 47 Ed Dept Rep 336, Decision No. 15,716; Application of Landgrebe, 32 id. 49, Decision No. 12,754).

The application fails to allege that petitioner is a resident of the district.  Rather, it broadly alleges that he is “a taxpayer and resident of Rockland County, and a citizen of the State of New York” and that his child “formerly attended schools” within the district.  Respondents raise this deficiency as an affirmative defense and argue that the application must be dismissed for lack of standing.  Petitioner never filed a reply refuting respondents’ affirmative defenses.

 Respondents contend that because petitioner failed to file a reply, all of the affirmative defenses are deemed admitted, requiring dismissal of the application.  Respondents are incorrect.  Although section 275.14 of the Commissioner’s regulations states that a petitioner shall reply to each affirmative defense, the result of petitioner’s failure to do so is that the facts alleged are deemed to be true (Appeal of Carmand and White, 54 Ed Dept Rep, Decision No. 16,689).  I am not bound, however, to accept respondents’ legal conclusions regarding the affirmative defenses, and a legal analysis of the admitted facts with respect to the affirmative defenses must be performed (Appeal of Carmand and White, 54 Ed Dept Rep, Decision No. 16,689).

Turning to the analysis of the issue, when petitioner filed his memorandum of law, he also requested permission to file an affirmation by counsel which included new documentary evidence in further support of his application.  One of the documents is an affidavit by petitioner in which he claims residency within the district.

Respondents object to the submission of this additional material arguing, inter alia, that petitioner should not be permitted to bolster his defective application this late in the process.

I agree.  The Commissioner’s procedural rules set forth an orderly process for framing the relevant issues (Matter of the Appeal of a Handicapped Child, 24 Ed Dept Rep 41, Decision No. 11,308).  The purpose of a reply is to respond to new material or affirmative defenses set forth in an answer (8 NYCRR §§275.3 and 275.14).  A reply shall be served within 10 days after service of the answer to which it responds (8 NYCRR §275.14[a]). 

Thus, petitioner was afforded an opportunity to timely file a reply containing any exhibits or evidence required to refute respondents’ affirmative defenses.  Petitioner elected not to do so.  Instead, petitioner waited until he filed his memorandum of law to respond to the affirmative defenses by requesting permission to file additional papers, including his affidavit.    

Additional affidavits, exhibits and other supporting papers may only be submitted with the prior permission of the Commissioner (8 NYCRR §276.5).  While this provision permits the submission of additional evidence, it cannot be used to buttress allegations in the petition (Appeal of L.S., 50 Ed Dept Rep, Decision No. 16,180). The Commissioner will only grant such a filing “upon good cause shown” (8 NYCRR §276.5[a]; Appeal of Zaccaro, 51 Ed Dept Rep, Decision No. 16,336).

Petitioner has offered no explanation or excuse for his delay in filing the additional papers. In fact, his affidavit was executed and dated December 13, 2012 – an entire month before it was even submitted for consideration.  On the record before me, petitioner has not demonstrated good cause for his delay in submitting the additional documentation and it is not accepted for consideration (Appeal of Zaccaro, 51 Ed Dept Rep, Decision No. 16,336).

Even if I were to accept the additional papers, petitioner’s affidavit fails to prove that he is a district resident with standing to maintain this proceeding. Although his residency is a disputed issue, the affidavit is devoid of any specificity or particulars whatsoever. In the affidavit, petitioner offers blanket statements that he has been a resident of the district for 21 years and pays taxes in the district.  Petitioner fails to provide his address or any documentary evidence establishing his residency within the district, other than his own conclusory statement, and without any evidence of his residence, I find that the application must be dismissed for lack of standing (Appeal of D.B., 47 Ed Dept Rep 336, Decision No. 15,716; Application of Landgrebe, 32 id. 49, Decision No. 12,754).

Even if the application were not dismissed for lack of standing, petitioner’s claim for removal would be partially dismissed as moot.  The Commissioner will only decide matters in actual controversy and will not render a decision on a state of facts which no longer exist or which subsequent events have laid to rest (Appeal of a Student with a Disability, 48 Ed Dept Rep 532, Decision No. 15,940; Appeal of M.M., 48 id. 527, Decision No. 15,937; Appeal of Embro, 48 id. 204, Decision No. 15,836). 

I take judicial notice of the fact that respondents Daniel Schwartz, Moses Friedman, Eliyahu Solomon, Suzanne Young-Mercer and Stephen Price are no longer members of the board. Accordingly, to the extent petitioner’s application seeks to remove these individuals from the board, such claims must be dismissed as moot (Appeal of Affronti, 54 Ed Dept Rep, Decision No. 16,756; Appeal of Anderson, 52 id., Decision No. 16,438).

Even if I were to address the claims for removal against remaining respondents Yehuda Weissmandl, Moshe Hopstein, Jacob Lefkowitz and Yonah Rothman, they would be dismissed on the merits.  A member of a board of education may be removed from office pursuant to Education Law §306 when it is proved to the satisfaction of the Commissioner that the board member has engaged in a wilful violation or neglect of duty under the Education Law or has wilfully disobeyed a decision, order, rule or regulation of the Board of Regents or the Commissioner of Education (Application of Powell, 50 Ed Dept Rep, Decision No. 16,216; Application of Kolbmann, 48 id. 370, Decision No. 15,888).  Applications for removal must set forth the facts establishing the violations “with such certainty as to time, place and all other pertinent details, as to furnish the officer with precise information as to what he is expected to meet ...” (8 NYCRR §277.1[a]).  Significantly, removal from office is a drastic remedy that will be taken only in extreme circumstances (Application of Powell, 50 Ed Dept Rep, Decision No. 16,216; Application of Tang, 48 id. 507, Decision No. 15,932).

As an initial matter, to buttress the allegations in the application, petitioner purports to incorporate all of the pleadings, exhibits and documents relating to two decisions of the Commissioner that involve the district (see Application of Jones, et al., 55 Ed Dept Rep, Decision No. 16,823; Appeal of Carmand and White, 54 id., Decision No. 16,689;) and relating to a federal civil rights class-action suit pending in the Southern District of New York (see Montesa, et al. v Schwartz, et al., 12-cv-6057) (collectively, the “Related Litigation”). 

The Commissioner’s regulations require that a petition provide a clear and concise statement of the claims upon which the petitioner seeks relief (8 NYCRR §275.10).  Under certain limited circumstances it may be appropriate for a petitioner to incorporate the record from another matter (see Appeal of Goltz, 40 Ed Dept Rep 623, Decision No. 14,571).  However, where the record would be voluminous – as is the case here because petitioner seeks to incorporate all the pleadings and documents relating to three separate and distinct legal proceedings – I will not permit the practice (Appeal of Goltz, 40 Ed Dept Rep 623, Decision No. 14,571).  Petitioner’s application must be evaluated on its own merits, and to sustain his burden of proof, his application must provide a clear and concise statement of his claims. 

In evaluating the application before me, petitioner has the burden of demonstrating a clear legal right to the relief requested and the burden of establishing the facts upon which petitioner seeks relief (8 NYCRR §275.10; Appeal of Aversa, 48 Ed Dept Rep 523, Decision No. 15,936; Appeal of Hansen, 48 id. 354, Decision No. 15,884; Appeal of P.M., 48 id. 348, Decision No. 15,882).  Petitioner has failed to sustain his burden.

The application states that the district’s external auditors presented a report for the fiscal year ending June 30, 2012 (the “Report”) during a November 2012 board meeting.  In a section of the Report addressing the auditors’ responsibilities pursuant to generally accepted auditing standards, there is a short schedule listing what appear to be pro forma statements such as “No change in scope of the audit” and “No material errors.”  Included on this list are the following two statements:  “No fraud or illegal acts identified that the School District has not already been made aware of” and “No instances/suspicion or allegations of fraud were noted during conduct of the audit that School District has not already been made aware of.”

Petitioner asserts that respondents should be removed from office because these two statements prove that they had explicit knowledge of, and participated in, fraudulent and illegal acts.  These blanket statements, however, are devoid of any context, specificity, or particularity, and do not allege, let alone establish, any wilful violation or neglect of duty on the part of any respondent board member (Appeal of Anderson, 52 Ed Dept Rep, Decision No. 16,438; Appeals of Braca, 33 id. 536, Decision No. 13,140).

The Report also noted that the district was operating at a deficit of approximately $1.7 million. Petitioner contends that removal is warranted because this deficit was unlawful.  Although the application fails to allege or specify exactly what makes the operating deficit unlawful, petitioner’s memorandum of law claims that the district violated Education Law §1718, which states that boards of education are not permitted to engage in deficit spending and are required to adopt a balanced budget annually (Appeal of Polmanteer, et al., 44 Ed Dept Rep 221, Decision No. 15,155).  Education Law §1718(1) also states that boards may engage in deficit spending where “such board is specially authorized by law to incur such liability.”

I note that in this economic and fiscal climate many districts struggle with budgetary constraints and do accumulate deficits.  Thus, while districts are required to eliminate such deficits as soon as possible (see Appeal of Polmanteer, et al., 44 Ed Dept Rep 221, Decision No. 15,155), I do not find that operating at a deficit, in and of itself, is “unlawful” such that it requires the removal of the members of a board of education.  To establish that removal is warranted, petitioner must allege more than incompetence or financial mismanagement; rather, petitioner must establish that respondents’ misconduct was wilful, that is, their actions must have been intentional and with a wrongful purpose (Appeal of Hamblin, et al., 48 Ed Dept Rep 421, Decision No. 15,902).  While petitioner alleges that the board has, for example, engaged in “gross financial errors,” improper fiscal oversight, and has improperly relied on incorrect information from district employees, he has failed to establish that the individual respondents intentionally acted with a wrongful purpose to disregard a lawful duty or violate a legal requirement.  Petitioner bears the burden of establishing the facts demonstrating wilfulness in this removal proceeding (Application of Schmucker, 32 Ed Dept Rep 643, Decision No. 12,942).  On the record before me, petitioner has not specified any actions on the part of any of the remaining respondents that constitute a willful violation or neglect of duty, or established that any acts were done with a wrongful purpose (Appeal of Hamblin, et al., 48 Ed Dept Rep 421, Decision No. 15,902; Application of Griffin, 31 id. 221, Decision No. 12,625).

Petitioner appears to argue that removal of the remaining board members is required because respondent Daniel Schwartz acknowledged that the board’s actions with respect to the deficit were unlawful during the November 20, 2012 board meeting.  According to petitioner, Schwartz stated “We are projecting a seven to eight million dollar shortfall never minding that it’s unlawful – that we are not in compliance with the law.”   

I note that the above quote does not arise from any official transcript but, rather, from an exhibit attached to the application purporting to be a “Non-verbatim transcript of board meeting,” which petitioner describes in the application as a “rough draft of [the] transcript.”  More importantly, however, Schwartz’s characterization of an activity as “unlawful” is not controlling or dispositive on the issue of removal in this proceeding.  As discussed above, whether or not an action is “unlawful” such that it requires the removal of members of a board of education is a conclusion of law exclusively within my purview.  Moreover, when reading the entirety of Schwartz’s statements as reported by petitioner, it is clear that he is acknowledging that the district is in a fiscal crisis and arguing for immediate action to remedy the deficit situation in light of the board’s fiduciary duties (see Appeal of Polmanteer, et al., 44 Ed Dept Rep 221, Decision No. 15,155).  For example, petitioner’s exhibit also attributes the following statement to Schwartz:

And I begin to become very concerned as to whether or not we are operating in this vacuum of a budget, am I fulfilling my fiduciary obligations as a board member when I vote in favor of expenditures.  I don’t know if I fulfill my duties as a board member if I abstain from them either.  Every single person here is in an impossible situation, and this has been going on for months.  We need answers.  We need the solution done.

Such statement illustrates Schwartz’s awareness of and concern with meeting his fiduciary obligation as a board member in a fiscal crisis.  Petitioner’s conclusory allegation that such statement constitutes an “[a]cknowledgement by the Board that It Is Operating Illegally” is without merit.

Finally, I note that I lack the authority to grant petitioner’s request for the appointment of a monitor “with final right of approval on all [district] financial and special education matters.”  The Commissioner of Education has the responsibility of supervising all schools and institutions which are subject to the provisions of the Education Law, or any statute relating to education, and is required to, inter alia, “advise and guide the school officers of all districts and cities of the state in relation to their duties and the general management of the schools under their control” (Education Law §305[2]).  Under Education Law §308, the Commissioner also has the power and duty to institute proceedings or processes necessary to properly enforce and give effect to any provision in the Education Law or any statute relating to the school system of the State or to any school district and to enforce any rule or direction of the Board of Regents (“Regents”).  Pursuant to Education Law §215, the Regents, the Commissioner, or their representatives, may “visit, examine into and inspect” any institution in the University of the State of New York (“USNY”) and any school or institution under the educational supervision of the State, and may require, as often as desired, duly verified reports providing such information and in such form as the Regents or the Commissioner shall prescribe.

However, the Appellate Division has ruled that the Commissioner lacks the authority to appoint an overseer invested with “veto power” – the power to substitute his or her opinion and determination for that of the board – as petitioner requests in this matter (see Verbanic v. Nyquist, 41 AD2d 466). 

Similarly, I lack the authority to appoint an “oversight committee” to “remedy rampant abuses of office” within the district or to recommend that the “State ... take over the School Board ... and appoint an oversight committee” to the district.  I note, however, that on August 13, 2015, I exercised my existing authority under the statutory provisions discussed above to appoint Dennis M. Walcott as a monitor to serve the district in an advisory capacity in order to ensure that it is able to provide an appropriate educational program and properly manage and account for State and federal funds received.  Mr. Walcott, former Chancellor of the New York City public school system, has extensive experience in school management and governance and is supported by a team of experts in teaching and learning, school turnaround and state aid and fiscal policy.

In my recent decision in Application of Jones, et al. (55 Ed Dept Rep, Decision No. 16,823), I noted that, based on the record in that case and the history of turmoil in the district, I shared petitioners’ concerns regarding the actions and decisions of the board, which is ultimately responsible for the operation of the school district.  Based on the record in that proceeding, I also directed the Monitor and his team, as part of their monitoring duties in the district, to review the district’s policies and practices regarding textbook purchases and loans, safety and security and to provide the district with guidance, recommendations and proposed actions related thereto (Application of Jones, et al., 55 Ed Dept Rep, Decision No. 16,823).

With regard to the allegations raised in the instant application, I note that the Monitor and his team have been charged with reviewing the district’s fiscal and budgetary practices and policies to ensure that the district properly manages and accounts for State and federal funds received.

THE APPLICATION IS DENIED.

END OF FILE

 

[1] While respondents claim to appear specially without waiving objections to service or jurisdiction, they do not offer any details regarding any alleged defects. They similarly fail to allege any defects in personal service or jurisdiction as affirmative defenses in their answer.  In their memorandum of law, however, they generally claim a defect in personal service. A memorandum of law should consist of arguments of law (8 NYCRR §276.4). It may not be used to add belated assertions or exhibits that are not part of the pleadings (Appeal of Bruning and Coburn-Bruning, 48 Ed Dept Rep 84, Decision No. 15,799; Appeal of Wright, 47 id. 202, Decision No. 15,668).  Failing to include such claims as affirmative defenses in the answer constitutes a waiver of those defenses and they will not be considered (Appeal of Leger-Vargas, 54 Ed Dept Rep, Decision No. 16,771).