Astoria General Contracting Corp. v. Office of the Comptroller

159 F. Supp. 3d 385, 2016 U.S. Dist. LEXIS 12346, 2016 WL 369237
CourtDistrict Court, S.D. New York
DecidedJanuary 27, 2016
Docket15 Civ. 1782 (NRB)
StatusPublished
Cited by6 cases

This text of 159 F. Supp. 3d 385 (Astoria General Contracting Corp. v. Office of the Comptroller) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Astoria General Contracting Corp. v. Office of the Comptroller, 159 F. Supp. 3d 385, 2016 U.S. Dist. LEXIS 12346, 2016 WL 369237 (S.D.N.Y. 2016).

Opinion

MEMORANDUM AND ORDER

NAOMI REICE BUCHWALD, UNITED STATES DISTRICT JUDGE

Defendants the Office of the Comptroller of the City of New York (the “Comptroller”), Scott M. Stringer as Comptroller of the City of New York, John C. Liu as former Comptroller, Samuel Pepper as Wage Investigator for the New York City Department of Education (“DOE”), David N. Ross as Executive Director of the DOE (“Ross”), Jay Miller (“Miller”), John Shea (“Shea”), Jose Quiroz (“Quiroz”), Johnny Cisneros (“Cisneros”), Thomas Fennell, and Volkert Braren (“Braren,” and collectively, “defendants”) move to dismiss the complaint of plaintiffs Astoria General Contracting Corp. (“AGC”) and Dimitrios Koutsoukos (“Koutsoukos,” and together with AGC, “plaintiffs”). Plaintiffs allege that defendants conspired to unlawfully terminate AGC’s contracts with the DOE and withhold payments owed to AGC on those contracts in violation of plaintiffs’ due process rights. We dismiss plaintiffs’ claims to the extent that they seek injunc-tive and declaratory relief that would interfere with plaintiffs’ ongoing state proceeding pursuant to Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and stay the remainder of the action.

[389]*389BACKGROUND1

AGC is a general contractor organized as a corporation under the laws of the State of New York with its principal office in Queens. Koutsoukos is AGC’s sole officer and shareholder. In 2007, AGC entered into three contracts with the DOE to repair rolling doors in New York City public schools. In 2012, DOE conducted an investigation into AGC, during which three of AGC’s. employees — John Sanango, Oscar Sanango, and Jaime Zum-bay (“Zumbay”) — signed complaints alleging underpayment of wages. Pursuant to that investigation, the Comptroller ordered the DOE to withhold payments to AGC on its contracts pending the Comptroller’s determination of whether AGC had violated New York State’s prevailing wage law.

In December 2012, the DOE terminated AGC’s contracts after determining that AGC violated various contractual provisions, including those requiring it to pay prevailing wages. The following year, the Comptroller brought administrative proceedings at the New York City Office of Administrative Trials and Hearings (“OATH”) against plaintiffs for violations of the prevailing wage law. Currently pending in state court are (1) plaintiffs’ appeal of a New York State Supreme Court decision dismissing plaintiffs’ claims brought against the DOE and Ross for, inter alia, violation of their due process rights and breach of contract, and (2) plaintiffs’ Article 78 proceeding challenging the Comptroller’s determination and order, issued after the’ instant motion to dismiss was fully briefed, finding that plaintiffs willfully violated New York’s prevailing wage law. Below, we provide an overview of the prevailing wage law before setting forth plaintiffs’ allegations and addressing the pending state court proceedings.

Before doing so, we note that while plaintiffs’ due process claims generally do not distinguish between the conduct of the DOE and the Comptroller, the two entities are each alleged to have initiated proceedings against plaintiffs that, even if linked by an overarching conspiracy, resulted in [390]*390distinct harms: the DOE investigated AGC and terminated its contracts and the Comptroller ordered the DOE to withhold AGC’s payments for completed work and brought prevailing wage charges against plaintiffs. Accordingly, where relevant, we distinguish between plaintiffs’ allegations related to the termination of contracts and those related to the withheld funds and prevailing wage proceedings.

I. New York State’s Prevailing Wage Law

The New York State Constitution and New York Labor Law provide that laborers employed by public works contractors must be paid the “prevailing rate of wages” for their trade or occupation in the New York locality where the work is done. N.Y. Lab. Law § 220(3)(a); see also N.Y. Const., Art. I, § 17. In New York City, § 220 empowers the Comptroller to set the prevailing wage rates for employees of contractors performing public works projects and building service work for City agencies; investigate, either sua sponte or upon a worker’s complaint, a failure to pay prevailing wages; and, after a hearing, make determinations regarding possible violations. See N.Y. Lab. Law §§ 220(3)(e), 220(5)(e), 220(7), 220(8), 220-b(2)(e). If upon investigation the Comptroller determines that workers have been paid less than the prevailing wage, the Comptroller may, prior to any hearing or administrative process, withhold payment on the contract in an amount sufficient to satisfy the payments that “appear to be due” to the workers, interest running from the date of the alleged underpayments, and a civil penalty that may be assessed on the alleged amount of underpayment. Id. §§ 220-b(2)(a), (c) & (d).

The Comptroller’s § 220 hearings are conducted by OATH. See 44 R.C.N.Y. § 2-02. An administrative law judge (“ALJ”) oversees the hearing and issues a written report and recommendation to the Comptroller or his or her designee, who subsequently issues a decision adopting, rejecting or modifying the ALJ’s findings and recommendation. See id. § 2-03(a), (c). The Comptroller’s decision is subject to challenge in an Article 78 proceeding before the Appellate Division of the New York State Supreme Court. See N.Y. Lab. Law §§ 220(8), 220-b(2)(e).

II. DOE’s Investigations into AGC

In 2008, AGC received notice from the Comptroller of allegations that it had failed to pay prevailing wages to workers it employed on a contract with the DOE, but those charges were ultimately dismissed in 2010 after plaintiffs proved that they complied with the prevailing wage law. Compl. ¶¶ 19(e), 37; Compl., Ex. A. Plaintiffs contend that the 2012 investigation into AGC was the result of a conspiracy among the defendants to target AGC after the dismissal of the prior charges.

Most of plaintiffs’ allegations of misconduct relate to defendant Cisneros. Cisne-ros was employed as an investigator for the DOE beginning in or about 2005 to 2007 and from 2010 to August 2013, and worked from 2007 to 2010 at the New York City Department of Transportation (“DOT”). Compl. ¶ 11. Although he testified at the OATH hearing that he began the investigation at issue here “after July 19, 2012,” Cisneros had, despite working at the DOT at the time, interviewed John Sanango, Oscar Sanango, and Zumbay in 2008, and Oscar Sanango again in 2009. Id. ¶ 28 (internal quotation marks omitted). The Complaint includes the transcript of a phone call concerning Cisneros that was recorded in April 2014 between Koutsoukos and DOE project supervisor Donald Dross (“Dross”) with Dross’s permission. During that call, Dross described [391]*391a conversation he had with Cisneros and another DOE supervisor about a meeting of DOE borough managers that occurred prior to Cisneros being rehired by the DOE in 2010. According to Dross, at that meeting, Cisneros

said that he planned to target certain uh contractors that got away the first time he was employed by the ... Department of Education.

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Bluebook (online)
159 F. Supp. 3d 385, 2016 U.S. Dist. LEXIS 12346, 2016 WL 369237, Counsel Stack Legal Research, https://law.counselstack.com/opinion/astoria-general-contracting-corp-v-office-of-the-comptroller-nysd-2016.