MARGO K. BRODIE, District Judge.
Plaintiff The Center for Discovery, Inc. ("CFD"), commenced the above-captioned action against Defendants D.P., his parents V.P. and C.P. (collectively the "Family"), and former Defendant New York City Department of Education (the "DOE") on July 15, 2016,
By report and recommendation dated July 17, 2017 (the "R&R"), Judge Reyes recommended that Plaintiff's motion to dismiss the action and the counterclaims be granted. (R&R, Docket Entry No. 35.) On July 31, 2017, Defendants filed timely objections to the R&R. (Defs. Obj. to R&R ("Defs. Obj."), Docket Entry No. 36.) Defendants filed supplemental objections on August 11, 2017.
CFD operates a residential school that serves children with developmental disabilities.
The DOE, following the recommendation of the Committee on Special Education ("CSE"), sent CFD an admissions package on behalf of D.P in October of 2015. (A&C ¶¶ 4, 63-70.) The admissions package included a detailed Individualized Educational Program ("IEP") describing D.P.'s disability, needs, and specific goals. (Id.) D.P.'s placement at CFD was "consistent with the placement procedures described in [IDEA]." (Id.) D.P.'s IEP disclosed that he had "engaged in aggressive, tantruming [sic] and self-injurious behaviors" which were a "manifestation of [a]utism." (Id. ¶¶ 21-22.) These self-injurious behaviors included "[p]ullingout [his] teeth." (Id. ¶ 68.) The IEP also "specified that `[D.P.] requires a BIP [Behavior Intervention Plan] to address his aggressive behaviors.'" (Id. ¶ 67.) Following review of the application, CFD "notified the DOE it could provide D.P. the services set forth in the IEP . . ., and that it was offering admission." (Id. ¶ 70.) The DOE, V.P. and C.P. all agreed to accept the offer of admission, and D.P. began attending CFD on or about December 7, 2015. (Id. ¶ 71.)
D.P.'s placement at CFD was made "pursuant to a contractual relationship between CFD and the DOE" and another contractual relationship "between CFD and the State of New York through the [New York State Education Department (`NYSED')] and the Office for People with Developmental Disabilities (`OPWDD')." (Id. ¶¶ 73-74.) As part of these contractual relationships, "CFD has charged the DOE and the State [of New York] for services rendered . . . and has received payments." (Id. ¶ 74.)
During his time at CFD, D.P. exhibited self-injurious behaviors between December of 2015 and April of 2016, including self-extracting four teeth. (Id. ¶ 84.) D.P.'s behaviors, however, "were improving as of April [of] 2016 and he has not extracted another tooth to date." (Id. ¶¶ 85, 140.) Nevertheless, CFD's administration indicated that they "wanted to discharge D.P." (Id. ¶¶ 85-86.) In or about April of 2016, CFD requested V.P. and C.P. "to cooperate in applying for D.P. to be admitted as a psychiatric inpatient to Spring Harbor Hospital in Westbrook, Maine." (Id. ¶ 94.) V.P. and C.P. agreed but the hospital denied D.P. admission. (Id. ¶ 95.) On May 25, 2016, CFD attempted to have D.P. admitted to Westchester County Medical Center over the protests of his parents. (Id. ¶ 97.) V.P. and C.P. went to the medical center where a psychiatrist told them that D.P. was "not medically appropriate" to be admitted. (Id. ¶ 107.) Accordingly, V.P. and C.P. attempted to return D.P. to CFD, to no avail. (Id. ¶¶ 108-17.)
On August 11, 2016, CFD gave the DOE and the Family two written proposals to add services to D.P.'s IEP: (1) "24-hour 1:1 paraprofessional aide"; and (2) "three hours daily of 1:1 applied behavior analysis (`ABA') provided by a clinician certified as a Board Certified Behavior Analyst (`BCBA')." (Id. ¶ 125.) CFD explained that "if these services were added to D.P.'s [IEP], then there would no longer be an issue of danger to self or others." (Id. ¶ 127.) The Family did not oppose the addition of these services, but did object to the ABA service being added to the IEP. (Id. ¶¶ 129-31.) V.P. and C.P. objected because they believed (1) the "service was not necessary for D.P.'s continued placement at CFD," (2) were concerned that CFD's "assertion that the additional funding for the service . . . was already assured [was inaccurate]," and (3) that CFD would use any "problems with obtaining funding" to seek judicial relief "to remove D.P. from the school." (Id. ¶ 132.) The Family alleges on "information and belief" that CFD wanted to add the ABA service to the IEP so that it could "receive an enhanced rate for maintaining D.P.'s placement" or "seek[] a change of placement through the CSE process." (Id. ¶ 136.) On August 12, 2016, the DOE held a special meeting with the Family and CFD present, and the two proposals were added to D.P.'s IEP despite the protests of V.P. and C.P. (Id. ¶¶ 123, 137.)
On July 15, 2016, CFD commenced this action against the DOE, V.P., C.P., and D.P, seeking a preliminary injunction to remove D.P. from school.
On September 27, 2016, Defendants filed six counterclaims against CFD: (1) breach of contract as between CFD and New York State and the DOE; (2) breach of the duty of good faith and fair dealing as between CFD and New York State and the DOE; (3) violation of the New York Education Law and the Regulations of the Commissioner of Education; (4) breach of contract between CFD and Defendants to provide "three hours per day, seven days of the week, of 1:1 BCBA services to D.P."; (5) negligence; and (6) intentional and negligent infliction of emotional distress. (A&C ¶¶ 56-194.) As to the first two claims, Defendants based their arguments on the theory that they were third-party beneficiaries of contracts between the CFD and New York State and the DOE.
On April 7, 2017, CFD filed its Motion to Dismiss the Action pursuant to Rule 41(a)(2) as it is "seeking no Federal relief against the remaining Defendants D.P., V.P., and C.P." (Pl. Mem. 1, 4.) CFD also moved to dismiss the Family's six counterclaims pursuant to Rules 12(b)(1) and 12(b)(6). (Id. at 6-8.) The Family objects to the dismissal of the action unless it is "with prejudice, affirms that the counterclaims remain pending, and subjects the CFD to [six] terms and conditions."
Judge Reyes recommended that Plaintiff's motion to dismiss the action be granted with prejudice, and that the motion to dismiss the counterclaims be granted without prejudice for failure to state a claim pursuant to Rule 12(b)(6), but denied for lack of subject matter jurisdiction pursuant to Rule 12(b)(1).
In recommending dismissal of the action with prejudice, Judge Reyes first determined that Defendants' counterclaims were all "compulsory[,] as they arise `out of the transaction or occurrence that is the subject matter of the opposing party's claim,'" (R&R 7 (quoting Fed. R. Civ. P. 13(a)), — namely "[Plaintiff's attempt to remove D.P. and its pursuit of a preliminary injunction," (id. at 8). Accordingly, Judge Reyes found that Defendants would not be prejudiced by the dismissal of the action because the Court could retain jurisdiction over the compulsory counterclaims through supplemental jurisdiction. (R&R 6 n.7, 8.)
Judge Reyes also noted that both parties agreed the action could be dismissed with prejudice. (Id. at 8.) However, Judge Reyes declined to impose any additional conditions on the dismissal. As to the Rule 11 sanctions, Judge Reyes determined that Plaintiff's reliance on Honig to commence this action rather than seeking to exhaust its administrative remedies was not frivolous. (Id. at 17.) In addition, Judge Reyes found attorneys' fees to be unwarranted because Plaintiff's arguments were not frivolous, there was no proof of bad faith, and Defendants were not "a prevailing party" under IDEA. (Id. at 18-21.) Judge Reyes declined to impose the other conditions due to mootness and ripeness concerns. (Id. at 23.)
Judge Reyes recommended dismissal of all of Defendants' counterclaims pursuant to Rule 12(b)(6) without prejudice. In dismissing the counterclaims, Judge Reyes first determined that all the claims were ultimately brought pursuant to IDEA. (See id. at 10-14.) Accordingly, Judge Reyes determined that Defendants could not seek compensatory or punitive damages for claims based on IDEA. (Id.) Judge Reyes also found that Defendants had failed to adequately plead the elements of the Fourth, Fifth, and Sixth counterclaims for breach of contract, negligence, and infliction of emotional distress, respectively. (Id. at 13.) Defendants did not adequately allege, inter alia, a duty of care as to the Fifth Claim, and outrageous or extreme conduct as to the Sixth Claim. (Id. at 12-13.) Judge Reyes also dismissed the Fourth counterclaim because Defendants failed to explain the basis of the contract claim. (Id. at 13.) The Fourth counterclaim was also mooted because Plaintiff has "been providing D.P. with the services stated in his IEP." (Id. at 14.)
A district court reviewing a magistrate judge's recommended ruling "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(C). When a party submits a timely objection to a report and recommendation, the district court reviews de novo the parts of the report and recommendation to which the party objected. Id.; see also United States v. Romano, 794 F.3d 317, 340 (2d Cir. 2015). The district court may adopt those portions of the recommended ruling to which no timely objections have been made, provided no clear error is apparent from the face of the record. John Hancock Life Ins. Co. v. Neuman, No. 15-CV-1358, 2015 WL 7459920, at *1 (E.D.N.Y. Nov. 24, 2015). The clear error standard also applies when a party makes only conclusory or general objections. Benitez v. Parmer, 654 F. App'x 502, 503-04 (2d Cir. 2016) (holding "general objection[s] [to be] insufficient to obtain de novo review by [a] district court" (citations omitted)); see Fed. R. Civ. P. 72(b)(2) ("[A] party may serve and file specific written objections to the [magistrate judge's] proposed findings and recommendations." (emphasis add)); see also Mario v. P & C Food Mkts., Inc., 313 F.3d 758, 766 (2d Cir. 2002) ("Merely referring the court to previously filed papers or arguments does not constitute an adequate objection under . . . Fed. R. Civ. P. 72(b)").
A plaintiff may seek dismissal of an action pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure. Whether to grant dismissal is within the discretion of the Court. Corrado v. New York State Unified Court Sys., 698 F. App'x 36, 37 (2d Cir. 2017). Rule 41(a)(2) provides in relevant part:
Fed. R. Civ. P. 41(a)(2). Any such dismissal is without prejudice unless the dismissal order otherwise provides. Id. Although "[v]oluntary dismissal without prejudice is . . . not a matter of right," Corrado, 698 F. App'x at 37 (quoting Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990)), "[g]enerally . . . `a voluntary dismissal without prejudice . . . will be allowed `if the defendant will not be prejudiced thereby.'" Riley v. United States, 78 F. App'x 774, 776 (2d Cir. 2003) (quoting Cantanzano v. Wing, 277 F.3d 99, 109 (2d Cir. 2001)); see also Ascentive, LLC v. Opinion Corp., No. 10-CV-4433, 2012 WL 1569573, at *2 (E.D.N.Y. May 3, 2012) ("Although voluntary dismissal without prejudice is not a matter of right, there is a presumption in this circuit that generally motions to dismiss claims without prejudice should be granted.").
The Second Circuit has recognized that "[t]wo lines of authority have developed with respect to the circumstances under which a dismissal without prejudice might be improper." Kwan v. Schlein, 634 F.3d 224, 230 (2d Cir. 2011) (quoting Camilli v. Grimes, 436 F.3d 120, 123 (2d Cir. 2006)). The first "indicates that such a dismissal would be improper `if the defendant would suffer some plain legal prejudice other than the mere prospect of a second lawsuit.'" Kwan, 634 F.3d at 230 (quoting Camilli, 436 F.3d at 123). The second line of authority "indicates that the test for dismissal without prejudice involves consideration of various factors, known as the Zagano factors." Id. (quoting Camilli, 436 F.3d at 123); see generally Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990). The Zagano factors include: "(1) the plaintiff's diligence in bringing the motion, (2) any undue vexatiousness on the plaintiff's part, (3) the extent to which the suit has progressed, including the defendant's efforts and expense in preparation for trial, (4) the duplicative expense of relitigation, and (5) the adequacy of the plaintiff's explanation for the need to dismiss." Kwan, 634 F.3d at 230; see also Zagano, 900 F.2d at 14. "These factors are not necessarily exhaustive and no one of them, singly or in combination with another, is dispositive." Kwan, 634 F.3d at 230.
In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must construe the complaint liberally, "accepting all factual allegations in the complaint as true and drawing all reasonable inferences in the plaintiff's favor." Kim v. Kimm, 884 F.3d 98, 103 (2d Cir. 2018) (quoting Chambers v. Time Warner Inc., 282 F.3d 147, 152 (2d Cir. 2002)); see also Tsirelman v. Daines, 794 F.3d 310, 313 (2d Cir. 2015) (quoting Jaghory v. N.Y. State Dep't of Educ., 131 F.3d 326, 329 (2d Cir. 1997)). A complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); see also Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717-18 (2d Cir. —). Although all allegations contained in the complaint are assumed true, this principle is "inapplicable to legal conclusions" or "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Iqbal, 556 U.S. at 678.
Neither party objects to the following recommendations: (1) dismissal of the Amended Complaint with prejudice; (2) dismissal of Plaintiff's 12(b)(1) motion on the grounds that the Court retains jurisdiction over Defendants' compulsory counterclaims; and (3) dismissal of Defendants' Fourth counterclaim on mootness grounds. Finding no clear error, the Court adopts these recommendations.
Defendants object to the dismissal of the action without the imposition of the special conditions on Plaintiff. (Defs. Obj. 2.) As to the Rule 11 sanctions and attorneys' fees, Defendants argue that Judge Reyes erred by not finding that they were "successful in causing Plaintiff to abandon its attempt to secure a preliminary or permanent injunction removing D.P. from the school." (Id. at 3.) In addition, Defendants argue that Judge Reyes should have considered their "proof" in the form of their allegations that the action was "commenced for the ulterior, now explicit, purpose of obtaining increased tuition payments from the DOE." (Id.) Defendants also claim that Judge Reyes erred by not finding Plaintiff's reliance on Honig to be frivolous. (Id. at 9.) Defendants argue, inter alia, that Honig "cannot reasonably be read as allowing a nonpublic school . . . to bring an injunction . . . under the IDEA to expel and physically remove a student," and that Judge Reyes' reference to Maryhaven Center of Hope, Inc. v. Hacker, No. 12-CV-5793 (E.D.N.Y. 2012), as "precedent" was in error. (Defs. Obj. 11.) Defendants assert that the lack of case law applying Honig to private schools should create the inference that Plaintiff's argument was "so obvious[ly] [incorrect] to attorneys." (Id. at 10-12.) Defendants also object to the dismissal of the conditions designed to prevent the removal of D.P. from Plaintiff's school because their concerns are not moot. (Id. at 2.) Defendants assert that Judge Reyes "erred in crediting Plaintiff's counsel's . . . representation that [Plaintiff's] contractual and regulatory compliance obligations with regard to D.P.'s continuing enrollment . . . expired at the end of the 2016-2017 school year." (Id. at 2.) Defendants argue that Plaintiff has a general contract with the DOE for the period of July 1, 2015 to June 30, 2020 to provide services to students. (Id. at 7-8.) In their supplemental objections, Defendants also argue that the recent dismissal of Plaintiff's Article 78 proceeding has increased the likelihood of retaliation against D.P. (Defs. Suppl. Obj.)
Defendants also object to dismissal of their counterclaims without prejudice. Defendants argue that Judge Reyes erred in finding compensatory damages unavailable under IDEA, specifically with regards to the contract claims. (Def. Obj. 2-4.) In particular, Defendants object to Judge Reyes' reliance on case law involving public schools which they argue is "irrelevant to [their] claim[s]
Plaintiff argues that the Court should dismiss Defendants' First, Second, and Third counterclaims because compensatory damages are unavailable under IDEA, and equitable relief is unavailable because the rest of the case is moot. (Pl. Mem. 6-7; Pl. Reply 7.) In addition, Plaintiff argues that Defendants have failed to specify which "portion of the alleged contracts oblige . . . compl[iance] with . . . IDEA or even w[hich] section[s] of . . . IDEA" has been breached. (Pl. Mem. 6.) Defendants failed to address these arguments directly in their opposition filings.
Defendants fail to adequately allege the existence a contract to which they are the intended third-party beneficiaries. Thus, the First and Second counterclaims for breaches of contract and the duty of good faith and fair dealing fail to state a claim.
"[A]bsent a contractual relationship there can be no contractual remedy." Hillside Metro Assocs., LLC v. JPMorgan Chase Bank, Nat. Ass'n, 747 F.3d 44, 49 (2d Cir. —) (quoting Suffolk Cty. v. Long Island Lighting Co., 728 F.2d 52, 63 (2d Cir. 1984)). "Such a relationship exists if the plaintiff is in privity of contract with the defendant or is a third-party beneficiary of the contract." Id. "[T]o succeed on a third party beneficiary theory, a non-party must be the intended beneficiary of the contract, not an incidental beneficiary to whom no duty is owed." Id. In the case of government contracts, individual members of the public are presumed to be incidental beneficiaries unless a different intention is manifested. See Grunewald v. Metro. Museum of Art, 3 N.Y.S.3d 23, 25 (App. Div. 2015) ("Government contracts often confer benefits to the public at large. . . . That is not . . . a sufficient basis in itself to infer the government's intention to make any particular member of the public a third party beneficiary, entitled to sue on such contract." (citations omitted)). "In order for the benefit to be direct, it must be primary and immediate in such a sense and to such a degree as to demonstrate the assumption of a duty to provide a direct remedy to the individual members of the public if the benefit is lost." Id. (citation omitted).
Courts in other jurisdictions have applied the above principles to find special needs students to be third-party beneficiaries of contracts between private schools and the public entities in charge of implementing IDEA. See, e.g., Smith v. James C. Hormel Sch. of Virginia Inst. of Autism, No. 08-CV-00030, 2010 WL 1257656, at *17 (W.D. Va. Mar. 26, 2010) ("[I]n the IDEA context, courts have found that individual students can be third party beneficiaries to contracts with private schools providing for educational services."); Bishop v. Oakstone Acad., 477 F.Supp.2d 876, 887 (S.D. Ohio 2007) (finding plaintiff is third-party beneficiary to contract for provision of plaintiff's education because he was the person the contract anticipated receiving the benefit of [private school's] services); P.N. v. Greco, 282 F.Supp.2d 221, 240 (D.N.J. 2003) (finding private school liable on third-party beneficiary claim for breach of contract with school district providing for educational services to plaintiff); see also St. Johnsbury Acad. v. D.H., 240 F.3d 163, 172-73 (2d Cir. 2001) ("We do not mean to imply that arrangements between a public agency and a private school are not enforceable against the private school."). These cases indicate, however, that not all contracts between private schools and public entities may be enforced by third parties. See Smith, 2010 WL 1257656, at *17 (finding special needs student not to be third-party beneficiary of contract between private school and public entity where the agreement "did not mention [the student] by name or provide for his education at [the school]" and was not an enrollment agreement); see also New York City Health & Hosps. Corp. v. WellCare of New York, Inc., 801 F.Supp.2d 126, 137 (S.D.N.Y. 2011) ("Courts are hesitant to allow suits by third-party beneficiaries to enforce statutory requirements incorporated into contracts with the government where there is no private right of action under the statute, because the third-party suit `is in essence a suit to enforce the statute itself.'" (quoting Astra USA, Inc. v. Santa Clara Cty., Cal., 563 U.S. 110, 118 (2011))).
Defendants fail to plead sufficient, non-conclusory allegations to state contract claims in the First and Second counterclaims, based on the theory that they are third-party beneficiaries of any contracts between Plaintiff and the DOE and/or the State of New York. In lieu of identifying any specific contracts, Defendants repeatedly assert that "D.P's placement was pursuant to a contractual relationship. . . ." (A&C ¶¶ 72, 73, 147, 148.) Defendants also allege in a conclusory manner and without explanation, that they are the "intended beneficiaries" of the unidentified contracts. (Id. ¶¶ 75, 149, 156.) These conclusory allegations are insufficient to state a claim.
Defendants' Third counterclaim for violation of New York Education Law and the Regulations of the Commissioner of Education appears to be an IDEA claim in disguise. Courts, however, have almost unanimously held IDEA does not apply to private schools. See St. Johnsburg Academy, 240 F.3d at 171-72 (holding that the text of IDEA and its implementing regulations all compel the conclusion that IDEA does not apply to private schools); see also McElroy v. Pac. Autism Ctr. for Educ., No. 14-CV-04118, 2016 WL 3029782, at *11 (N.D. Cal. May 27, 2016) ("With the exception of the District of New Jersey, every court to have considered the issue has concluded that the IDEA does not apply to private schools because private schools are not a `State educational agency, State agency, or local educational agency.'").
In their Answer and Counterclaims, Defendants failed to identify the authority pursuant to which they have a private cause of action under New York Education Law and the Regulations of the Commissioner of Education. (See A&C ¶¶ 158-62.) Defendants conclusorily asserted that they "have a statutory right of action against [Plaintiff] to enforce compliance by a nonpublic school with that statutory framework when non-compliance is causing them an injury in fact." (Id. ¶ 160.) Although Defendants cited to 8 N.Y.C.R.R. §§ 200.7 and 200.9 in their Answer and Counterclaims, these regulations do not appear to give rise to a private cause of action. In light of these issues, in their opposition filing, Defendants requested that the "Answer be deemed amended to more explicitly state that the private right of action is embedded in the IDEA implementation structure." (Defs. Opp'n 22 n.13.)
To the extent Defendants brought the Third counterclaim directly under IDEA, the claim is dismissed with prejudice because there is no private right of action under IDEA or New York Education Law against private schools. See St. Johnsburg Acad., 240 F.3d at 171-72; In re Pelose ex rel. Pelose, 885 N.Y.S.2d 816, 818 (App. Div. 2009) (holding certain New York Education Law and IDEA provisions did not apply because "such provisions apply to public school districts, and not to respondent, a nonpublic school" (citations omitted)); id. ("[T]he central purpose of the IDEA ( see 20 USC § 1400[d][1][A]) and article 89 of the Education Law (see generally § 4401[1]) is to afford a `public' education for children with disabilities."); see also Polera v. Bd. of Educ., 288 F.3d 478, 486 (2d Cir. 2002) (holding that compensatory damages are unavailable under IDEA). To the extent the Third counterclaim is based on the alleged contracts, the claim is dismissed without prejudice for failure to state a claim.
Plaintiff argues that the Court should dismiss Defendants' Fifth and Sixth counterclaims for negligence and infliction of emotional distress because compensatory damages are also unavailable under IDEA for state tort claims. (Pl. Mem. 7-8.) Plaintiff also contends that Defendants failed to adequately allege the elements of both claims. (Id. at 8.) Defendants failed to respond to Plaintiff's arguments, addressing only jurisdictional implications raised by the claims. (Defs. Opp'n 24.)
"The elements of a negligence claim under New York law are: `(i) a duty owed to the plaintiff by the defendant; (ii) breach of that duty; and (iii) injury substantially caused by that breach.'" Pasternack v. Lab. Corp. of Am. Holdings, 807 F.3d 14, 19 (2d Cir. 2015), as amended (Nov. 23, 2015) (citations omitted). "If the defendant owes no duty to the plaintiff, the action must fail." Id.
Defendants fail to provide any non-conclusory allegations as to what duty of care Plaintiff violated. As Judge Reyes aptly explained, "[b]eyond the conclusory statements that [Plaintiff] owed [Defendants] a `heightened' duty of care, the Fifth Counterclaim fails to state precisely what the duty was, how this duty was violated, and how it caused the harms alleged." (R&R 12.) The Answer and Counterclaims merely allege that "[Plaintiff] owed a duty of care to D.P. based on common law and based on statutory rules of conduct in the Education Law and the IDEA." (A&C ¶ 179.) Even in their objections to the R&R, Defendants conclusorily argue that "[b]ecause the conduct of [Plaintiff] was blatantly in violation of its contract with the DOE, breached applicable laws and regulations, and was contrary to basic decency . . . the Fifth and Sixth Counterclaims should not be dismissed." (Defs. Obj. 10.) These bare assertions are insufficient to withstand a motion to dismiss. Further, to the extent Defendants now argue that the duty of care is provided by the alleged contracts, the Court notes that "a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated." Clemens Realty, LLC v. New York City Dep't of Educ., 850 N.Y.S.2d 172, 173 (App. Div. 2008) (citations omitted). Accordingly, the Court dismisses Defendants' Fifth counterclaim for negligence without prejudice.
To state a claim for intentional infliction of emotional distress in New York, a plaintiff must allege that the defendant engaged in "extreme and outrageous conduct, which so transcends the bounds of decency so as to be regarded as atrocious and intolerable in a civilized society." Friedman v. Self Help Cmty. Servs., Inc., 647 F. App'x 44, 47 (2d Cir. 2016) (quoting Turley v. ISG Lackawanna, Inc., 774 F.3d 140, 157 (2d Cir. —)). "To prevail on such a claim, a plaintiff must establish that there was `extreme and outrageous conduct,' that the conduct was undertaken with `intent to cause, or disregard of a substantial probability of causing, severe emotional distress,' and that the conduct did in fact cause severe emotional distress." Turley, 774 F.3d at 157-58 (quoting Howell v. N.Y. Post Co., 81 N.Y.2d 115, 121 (1993)); see also Stuto v. Fleishman, 164 F.3d 820, 827 (2d Cir. 1999) ("Under New York law, a claim for intentional infliction of emotional distress requires a showing of (1) extreme and outrageous conduct; (2) intent to cause, or reckless disregard of a substantial probability of causing, severe emotional distress; (3) a causal connection between the conduct and the injury; and (4) severe emotional distress."). "Whether the conduct alleged may reasonably be regarded as so extreme and outrageous as to permit recovery is a matter for the court to determine in the first instance." Stuto, 164 F.3d at 827.
Moreover, intentional infliction of emotional distress is a "highly disfavored [tort] under New York law," Turley, 774 F.3d at 158 (quoting Nevin v. Citibank, N.A., 107 F.Supp.2d 333, 345-46 (S.D.N.Y. 2000)), and it is "to be invoked only as a last resort," id. (quoting McIntyre v. Manhattan Ford, Lincoln-Mercury, Inc., 682 N.Y.S.2d 167, 169 (App. Div. 1998)). "[A]lthough the New York Court of Appeals has not set forth detailed guidelines for when the tort [of intentional infliction of emotional distress] may be available, it has cautioned that a claim for [intentional infliction of emotional distress] may not be sustainable `where the conduct complained of falls well within the ambit of other traditional tort liability.'" Id. at 159 (quoting Fischer v. Maloney, 43 N.Y.2d 553, 557-58 (1978)); see also Salmon v. Blesser, 802 F.3d 249, 256 (2d Cir. 2015) ("[U]nder New York law, an intentional infliction tort `may be invoked only as a last resort . . . to provide relief in those circumstances where traditional theories of recovery do not.'" (citations omitted)); Lloyd v. City of New York, 246 F.Supp.3d 704, 730, (S.D.N.Y. 2017) (quoting Salmon, 802 F.3d at 256). For example, "[o]ther New York courts have applied this dictum to exclude claims for intentional infliction where a cause of action for defamation may be asserted on the facts of the case." Turley, 774 F.3d at 159 (collecting cases).
Defendants fail to state a claim for intentional infliction of emotional distress. As Judge Reyes explained, "[t]he Sixth Counterclaim fails to explain why CFD's conduct should be deemed extreme or outrageous, how such conduct caused the Family's `distress,' or why such distress was `severe.'" (R&R 13.) As discussed above, the objections, even if considered, also fail to add any more specificity to the bare assertions in the Answer and Counterclaims.
"Under New York law, a plaintiff may establish [a claim for negligent infliction of emotional distress] in one of two ways: (1) the `bystander' theory; or (2) the `direct duty theory.'" Lloyd, 246 F. Supp. 3d at 730 (quoting Baker v. Dorfman, 239 F.3d 415, 421 (2d Cir. 2000)). The "bystander theory" provides that:
Baker, 239 F.3d at 421 (emphasis added) (quoting Bovsun v. Sanperi, 61 N.Y.2d 219, 224 (1984)). Under the "direct duty" theory, "a plaintiff suffers emotional distress caused by [a] defendant's breach of a duty which unreasonably endangered [the plaintiff's] own physical safety." Id. (citation and internal quotation marks omitted).
Defendants fail to plead a claim for negligent infliction of emotional distress under either theory. The Answer and Counterclaims fail to allege what risk of bodily harm was created by Plaintiff. Moreover, as to the second theory, as discussed above, Defendants have failed to sufficiently allege any duty owed by Plaintiff. Accordingly, the Court dismisses Defendants' Sixth counterclaim for intentional and negligent infliction of emotional distress without prejudice.
Despite agreeing to dismissal of Plaintiff's action with prejudice, Defendants also seek to impose the following six conditions:
(Defs. Opp'n 8-9.)
Defendants argue that sanctions are warranted for three reasons: (1) Plaintiff initiated a frivolous action; (2) Plaintiff's conduct was "unduly vexatious"; and (3) Plaintiff's action caused significant expenditure of "efforts and expense."
Defendants argue that Rule 11 sanctions are appropriate based primarily on Plaintiff's reliance on Honig. (Defs. Opp'n 9-13.) They assert Honig cannot plausibly have been interpreted to allow a private school to bypass administrative remedies to seek the removal of a special needs student, particularly by suing the local school district with whom they have contracted to provide services and the parents of the student. (Id. at 10-11.) Defendants also contend that Honig is inapposite because the students in Honig were "emotionally disturbed adolescents," "the [s]chools in Honig had sought the support of public school officials in identifying appropriate alternative placements," and the removal was pursuant to a "tuition dispute" rather than exigent circumstances. (Id. at 11-13.) Plaintiff argues that its reliance on Honig was in good-faith, and that counsel has previously obtained a temporary restraining order on behalf of a "non-public school" in another action using the same case interpretation.
Rule 11 of the Federal Rules of Civil Procedure provides that a court may impose sanctions either by motion or by its own initiative, when (1) a pleading, written motion or other paper is "presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;" (2) the claims, defenses and other legal contentions raised are not "warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;" (3) the factual contentions do not have any evidentiary support or are unlikely to have any evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are not warranted on the evidence or are not "reasonably based on belief or a lack of information." Fed. R. Civ. P. 11(b)-(c); see also Ipcon Collections LLC v. Costco Wholesale Corp., 698 F.3d 58, 63 (2d Cir. 2012) ("Sanctions may be—but need not be—imposed when court filings are used for an `improper purpose,' or when claims are not supported by existing law, lack evidentiary support, or are otherwise frivolous."). "[E]ven when a district court finds a violation of Rule 11, `the decision whether to impose a sanction for a Rule 11(b) violation is . . . committed to the district court's discretion.'" Ipcon Collections, 698 F.3d at 63 (quoting Perez v. Posse Comitatus, 373 F.3d 321, 325 (2d Cir. 2004)). Enforcing Rule 11 requires "notice and a reasonable opportunity to respond," and "[a] motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b)." Fed. R. Civ. P. 11(c).
Under the circumstances, the Court finds that Rule 11 sanctions are unwarranted. Without concluding in favor of either party's construction of Honig, the Court finds Defendants' distinctions of the holding in that case to this present action to be unpersuasive. At its core, Honig stands for the proposition that under exigent circumstances, schools may bypass administrative remedies and seek judicial relief to address problematic students under the IDEA. The Supreme Court did not condition a school's exercise of this, albeit limited, discretion on a seal of approval by the local department of education. See generally id. The inclusion of private schools into the education of special needs students introduces an additional party not present in Honig. (See R&R 17 ("Honig was ultimately silent as to the standing of non-public schools, like CFD.").) This change in dynamics may create unforeseen consequences, including conflicts with parents and local authorities as evinced by this litigation, that require novel applications or extensions of existing case law.
The other factual distinctions on which Defendants rely are equally unpersuasive. Defendants argue that the students in Honig were "dangerous emotionally disturbed adolescents" while "D.P. is a little boy with autism." (Defs. Opp'n 12.) At issue in Honig was the manifestation of the students' disabilities rather than their specific diagnosis. See Honig, 484 U.S. at 327. In addition, the Court cannot ignore Defendants' own admissions that D.P. is prone to "inappropriate behaviors `such as tooth picking, aggression and tantrum.'" (A&C ¶ 68.) While D.P. may be a child, his classmates presumably are as well. More importantly, Honig could plausibly be read to apply to situations where schools considered themselves ill-equipped to prevent self-harm. Furthermore, Defendants mistakenly apply their allegations as truth. They argue that this action was instituted to serve as "leverage" in a tuition dispute. Plaintiff contends that the extra tuition was necessary in order to provide additional care so that they could provide services to prevent the troublesome behavior exhibited by D.P.
Defendants seek attorneys' fees under Rule 41(a)(2) standing alone, and in conjunction with the fee provisions in IDEA.
"[U]nder the American Rule, absent statutory authorization or an established contrary exception, each party bears its own attorney's fees." Colombrito, 764 F.2d at 133 (citations omitted). "The only pertinent exception for present purposes is the court's inherent authority to award fees when a party litigates frivolously or in bad faith." Id. (citations omitted). "The bad faith exception permits an award upon a showing that the claim is `entirely without color and has been asserted wantonly, for purposes of harassment or delay, or for other improper reasons.'" Id. (citations omitted). "Neither meritlessness alone, nor improper motives alone, will suffice." Id. (internal citations omitted).
The bad faith exception has almost never been applied "when a lawsuit is voluntarily dismissed with prejudice under Fed. R. Civ. P. 41(a)(2)." Id. at 133-34. The rarity of the exception's application "upon dismissal of claims with prejudice is simply that the defendant . . . has been freed of the risk of relitigation of the issues just as if the case had been adjudicated in his favor after a trial, in which event (absent statutory authorization) the American Rule would preclude such an award." Id. at 134. Accordingly, courts have been hesitant to award attorneys' fees when an action has been dismissed with prejudice. See id.; Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978); Alyeska Pipeline Service Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975)).
The Court declines to exercise its discretion to award attorneys' fees pursuant to Rule 41(a)(2). As discussed supra, the Court has determined Plaintiff's reliance on Honig was not frivolous. In addition, Defendants' arguments as to "improper" motives largely only serve to state the conclusion. Accordingly, fees pursuant to Rule 41(a)(2) are improper.
Under IDEA, courts may in their discretion award "reasonable attorneys' fees" "to a prevailing party who is the parent of a child with a disability."
The Court declines to exercise its discretion to award attorneys' fees in this action. Defendants argue their "strong response" prompted Plaintiff to agree to dismiss the action with prejudice. (Defs. Obj. 15; see also Pl. Reply 1. ( "agree[ing] to the dismissal of this action with prejudice" with the condition that it not be subject to any attorneys' fees).) As highlighted above, courts also routinely hold parties obtaining voluntary dismissals with prejudice to be prevailing parties. Nevertheless, the Court retains discretion to award attorneys' fees even as to prevailing parties. See A.R. ex rel. R.V. v. New York City Dep't of Educ., 407 F.3d 65, 67 (2d Cir. 2005) ("The IDEA grants courts the discretionary power to `award reasonable attorneys' fees . . . [to] the prevailing party' `[i]n any action or proceeding brought under' the IDEA." (citations omitted)); Ector Cty. Indep. Sch. Dist. v. VB, 420 F. App'x 338, 345 (5th Cir. 2011) ("A finding that a party is a prevailing party only makes him eligible to receive attorneys' fees under the IDEA; it does not automatically entitle him to recover the full amount that he spent on legal representation." (citations omitted)).
Although not required to do so by statute, the Court considered, inter alia, the nonfrivolous nature of the legal arguments,
The four other conditions proposed by Defendants all essentially serve to prevent Plaintiff from removing D.P. from CFD. (See Pl. Opp'n 8-9.) Plaintiff argues that these conditions are unnecessary because the DOE is providing "protective or custodial intervention to prevent D.P. from engaging in further aggressive behavior," the current IEP for the then-current school year was set to expire on June 30, 2017 and "the DOE could recommend another school for D.P. at that time." (Pl. Reply 2.) Defendants contend that a recent dismissal of Plaintiff's Article 78 action against the DOE "increases the risk that [Plaintiff] will regress to unlawful attempts to remove D.P. from its school." (Defs. Suppl. Obj. 2.) Defendants also argue that their concerns are not hypothetical because Plaintiff has contracted with DOE to provide students services until 2020.
"[R]ipeness is a jurisdictional inquiry," and courts are obliged to consider ripeness issues first. Kowalczyk v. Barbarite, 594 F. App'x 690, 691 (2d Cir. —) (citing Island Park, LLC v. CSX Transp., 559 F.3d 96, 110 (2d Cir. 2009)); Murphy v. New Milford Zoning Comm'n, 402 F.3d 342, 347 (2d Cir. 2005). The court "must presume that [it] cannot entertain [a plaintiff's] claims `unless the contrary appears affirmatively from the record.'" Kowalczyk, 594 F. App'x at 691 (quoting Murphy, 402 F.3d at 347). For a claim to be ripe, "it must present a real, substantial controversy, not a mere hypothetical question.'" Neroni v. Zayas, 663 F. App'x 51, 53 (2d Cir. 2016) (quoting Nat'l Org. for Marriage, Inc. v. Walsh, 714 F.3d 682, 687 (2d Cir. —)). In determining whether a case is ripe, the court is to "evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Murphy, 402 F.3d at 347 (internal quotation marks omitted) (quoting Abbot Labs. v. Gardner, 387 U.S. 136, 149 (1967)).
The Court declines to impose these four conditions at this time. As to the then school 2016-2017 year, the conditions are now moot. As to future school years, the conditions present "hypothetical future occurrences for which such conditions would be premature." (R&R 23.) Defendants admit they participate in "their local CSE following the procedures of the IDEA and the Education Law in devising yearly programs of education and services." (A&C 60 (emphasis added).) Therefore, the existence of a general contract between Plaintiff and DOE does not make Defendants' concerns any less hypothetical. The DOE (or even Defendants) may choose to place D.P. at another school, regardless of whether Plaintiff is one of the schools that is available to the state by contract.
For the foregoing reasons, the Court adopts the R&R as to the judgment in its entirety but only in part as to its reasoning. In particular, the Court has provided additional or different reasons for dismissal as to the first three counterclaims, and also the denial of attorneys' fees.
SO ORDERED.
(R&R (citing Defs. Opp'n 8-9, 13-21).)