Naples et al v. Stefanelli et al
ORDER granting 55 Motion to Amend/Correct/Supplement. For the reasons set forth in the attached opinion, the ESI Defendants' motion amend their answer and assert counterclaims and a cross-claim, appearing on the docket as Docket Entry No. [55 ], is granted. The amended answer is to be served on or before January 6, 2017. The Court hereby cancels the previously entered requirement that the parties submit a status report on January 20, 2017. Instead, the Court directs all counsel to appear for an in-person status conference on January 23, 2017 at 10:30 A.M. At the January 23, 2017 conference, counsel must be prepared to discuss the status of settlement talks in this matter, as well as dates certain for the taking of all depositions. All other discovery deadlines remain in effect. So Ordered by Magistrate Judge Anne Y. Shields on 12/29/2016. (Casalini, Rosalinde)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
JAMES V. NAPLES and JAMES C. NAPLES,
MEMORANDUM AND ORER
PHILIP STEFANELLI, JOSEPH PARISI,
DAVID PARISI, ENVIRONMENTAL
SERVICES, INC., AND JOHN DOES 1-100,
SHIELDS, United States Magistrate Judge:
This case was commenced in 2012 by Plaintiffs James V. Naples and James C. Naples
(collectively “Plaintiffs’) against several defendants, some of whom have since been dismissed
from the action. There have been two rounds of pleadings, and two decisions on motions to
dismiss, as described below.
Presently before this Court is the motion of certain Defendants to amend their answer to
assert additional affirmative defenses as well as counterclaims and a cross-claim. The motion
was made on November 22, 2016 – the deadline imposed by this court as the last day to, inter
alia, amend pleadings. The motion is unopposed. Upon review of the motion and for the reasons
set forth below, the motion is granted.
The Presently Operative Complaint: The Second Amended Complaint
The facts set forth below are drawn from Plaintiff’s latest pleading, i.e., the Second
Amended Complaint. These facts have been set forth, in great detail, in the District Court’s prior
opinions and, for ease of reference are, again, set forth below. The references are to the presently
operative complaint, i.e., Plaintiffs’ Second Amended Complaint (the “SAC”) and the documents
submitted in connection with the latest motion to dismiss. (See SAC, Docket Entry (“DE”) 29.)
Plaintiffs are father and son who owned two biofuel companies that were companies
engaged in, inter alia, the business of collecting and reselling waste kitchen oil. (SAC ¶¶ 3-7.)
Plaintiffs’ business model involved entering into contracts with restaurants that allowed
Plaintiffs to collect and resell used kitchen oil. (See SAC ¶¶ 18-31.) If they secured a contract,
Plaintiffs would provide the restaurant with which they contracted with locked containers to
store used oil pending pick-up by Plaintiffs. (SAC ¶ 29.) Defendants Joseph Parisi and David
Parisi own and operate Defendant ESI, a company that was in competition with the Plaintiff’s
company. (SAC ¶¶ 6-8, 17.) As referred to by the District Court, this Court refers to these
Defendants collectively as the “ESI Defendants.”
Plaintiffs claim that beginning in 2010, ESI began targeting Plaintiffs’ customers and
inducing them to breach their contracts with the Naples Corporations and hire ESI instead. (SAC
¶¶ 17-19) If ESI was successful in convincing one of Plaintiffs’ customers to sign a contract with
ESI, ESI would remove Plaintiffs’ containers and locks from the premises and replace them with
ESI’s containers and locks. (SAC ¶ 19.) Plaintiffs estimate that between 2010 and May 2012, the
ESI Defendants stole in excess of twenty thousand gallons of oil worth approximately $50,000,
containers valued at $15,000, and $100,000 in lost profits from Plaintiffs’ customers. (SAC ¶¶
Plaintiffs also claim that the ESI Defendants employed Officer Stefanelli, a Suffolk
County police officer, and paid him in cash to use his influence in the County Police Department
to threaten, harass, and intimidate Plaintiffs because they were competitors of ESI. (SAC ¶¶ 80,
98-100, 102, Ex. C.) They allege that in September 2011, Officer Stefanelli and other County
police officers pulled over and falsely arrested Jimmy Naples while he was driving a truck to
collect waste cooking oil from Plaintiffs’ customers. (SAC ¶¶ 32-34.) The County officers and
officers from the Suffolk County Motor Carrier Division allegedly conducted warrantless
searches of the truck and wrongfully charged Island Biofuel with violating Section 140.00 of
New York Vehicle and Traffic Law for operating a commercial vehicle in violation of the state’s
safety requirements--specifically, for having a broken windshield wiper blade and an expired
“insurance health card.” (SAC ¶ 55.) Officer Stefanelli also “arranged for the [DEC] to inspect
and close” the Naples Corporations’ garage in Center Moriches. (SAC ¶¶ 55-56, 74). The DEC
ordered that the garage be closed, ticketed Jimmy Naples and Island Biofuel for operating a
waste facility without a permit in violation of N.Y. Comp. Codes R & Regs. tit., § 3601.7(a)(1)(i), and ticketed Island Biofuel for violating the New York Department of
Transportation’s regulations governing the safe operation of commercial motor vehicles, N.Y.
Comp. Codes R & Regs. tit., § 820.0 et seq. (SAC ¶¶ 61, 76; Parisi Decl. Ex. 7, DE 34-7.) Also,
in October 2011, the County Police Department’s Seventh Precinct (Defendant Stefanelli’s
precinct) rearrested Jimmy Naples and charged him with Criminal Mischief in the Fourth Degree
in violation of N.Y. Penal Law § 145.00 for allegedly cutting a ten dollar lock on one of ESI’s oil
containers with bolt cutters (SAC ¶ 66; Parisi Decl. Ex. 7), apparently based on a false witness
statements signed by David Parisi (SAC ¶ 67).
Plaintiffs claim that they discovered the alleged conspiracy between the ESI Defendants
and Officer Stefanelli after Jimmy Naples’ arrest, when Plaintiffs went to ESI’s headquarters to
retrieve some of their containers. (SAC ¶ 79.) Plaintiffs claim that upon arriving, they “were
stunned to see Defendant Stefanelli working at the facility dressed fully in clothing indicating
that he was employed by and working for Defendant ESI.” (SAC ¶ 80.) They were “furious with
the discovery of Defendant Stefanelli’s presence,” refused to sign the release forms for their
containers, and insisted that the County Police Department be called. (SAC ¶ 83.) Officer
Stefanelli made a call, and an officer arrived shortly thereafter. (SAC ¶ 84.) He spoke to Officer
Stefanelli first and then told Plaintiffs that he would not get involved; if Plaintiffs wanted their
container, they would have to sign the release as requested. (SAC ¶ 84.)
Plaintiffs allege that they complained to the County Police Department prior to and after
Jimmy Naples’ arrest, but the County never investigated the complaints or took any action to
stop the ESI Defendants’ alleged unlawful conduct. (SAC ¶¶ 85- 86, 91-93.) Additionally, on
April 4, 2012, Plaintiffs, through counsel, submitted a formal complaint to the County Police
Department’s Internal Affairs Division (“IAD”) describing ESI’s actions and Officer Stefanelli’s
alleged involvement and demanding that the charges against Jimmy Naples and Island Biofuel be
dropped. (SAC ¶ 94, Ex. C.) IAD initially contacted Plaintiffs’ counsel to schedule an interview
of Plaintiffs; however, no interview was ever conducted. (SAC ¶¶ 92–93.)
Apparently, Officer Stefanelli found out about Plaintiffs’ IAD complaint. (SAC ¶ 94.) In
response, he circulated a letter to County police officers, which stated that the County Police
Department was to protect ESI and that, if anyone saw the Naples Corporations collecting oil,
they were to call Officer Stefanelli immediately. (SAC ¶ 95.) The letter stated that he had
firsthand knowledge that they were cutting locks and stealing oil and would provide a sworn
affidavit for petit larceny. (SAC ¶ 96; Ex. B to Pls.’ Opp. to First Mot. to Dismiss, Docket Entry
24-5.) Plaintiffs deny stealing any oil from the ESI Defendants, and they interpreted Officer
Stefanelli’s letter as a threat and retaliation for their IAD complaint. (SAC ¶¶ 103–04.)
Plaintiffs ultimately sold their assets and exited the industry in or around May 2012.
(SAC ¶ 106.) However, before this was known publicly, Officer Stefanelli approached Plaintiffs
while they were having breakfast one morning at a local diner. (SAC ¶ 108.) He stated, in sum
and substance, that he was and had been employed by ESI to conduct surveillance of ESI’s
competitors, that there were other police officers involved, and that “a lot of things went on”
(which Plaintiffs interpret to mean illegal activity). (SAC ¶ 110.) He was in full uniform and on
duty at the time. (SAC ¶ 109.) DI.
The District Court’s Decision and the Remaining Claims
Upon review of the facts and the legal standards applicable to all claims alleged, the
District Court granted in part and denied in part Defendants’ motions to dismiss. In particular,
that Court dismissed Plaintiffs’ malicious prosecution and Donnelly Act claims against the ESI
Defendants. The Court denied, however, the motion to dismiss the claims of false arrest, illegal
search, and the RICO claims against the ESI Defendants.
As a result of the motion practice, the claims that remain for trial are:
Section 1983 Claims in the nature of false arrest and illegal search
RICO claim against the ESI Individual Defendants and Stefanelli
RICO claim against the Individual ESI Defendants and Stefanelli
Interference with business/contractual relations against ESI Defendants and Stefanelli
Conversion against EDI Defendants and Stefanelli
Claim for counsel fees.
See Status Report dated November 7, 2016, DE 54.
Course of Discovery and Pretrial Proceedings
This Court held an initial conference in this matter on June 7, 2016. A discovery
scheduled was entered. That schedule established November 22, 2016 as the last day to amend
the pleadings. Additionally, at the status conference, this Court directed Plaintiff to serve a
settlement demand by July 12, 2016, and for the parties to submit a joint status letter on July 18,
2016. DE 50. On September 13, 2016 this Court noted the parties’ failure to comply with its July
7, 2016 order, and directed that a joint status letter be submitted by September 23, 2016.
Electronic Order dated September 13, 2016.
On September 21, 2016, Plaintiffs’ counsel, citing health problems, sought an extension
of discovery deadlines. DE 52. On October 3, 2016, this Court granted the requested extension,
and a new discovery schedule was entered. That schedule set November 22, 2016 as the last day
to seek to amend the pleadings and March 15, 2017 as the date for completion of fact discovery.
All discovery is now scheduled to be complete by June 1, 2017. This Court set January 20, 2017
for submission of the next joint status letter.
The Present Motion to Amend
The ESI Defendants seek to amend their answer to assert three additional affirmative
defenses, four counterclaims, and a cross-claim. Specifically, the ESI Defendants seek to assert
the following affirmative defenses:
Amounts, if any, determined to be owed by Defendants to Plaintiff shall be set off or
reduced by any judgment awarded in favor of Defendants.
To the extent that Plaintiffs suffered any damages as a result of the allegations set forth in
the Complaint, such damages were caused, in whole or in part, by Plaintiffs' own
culpable conduct and ESI Defendants are entitled to a reduction in any judgment and/or
verdict entered against it in an amount equal to the amount of damages caused by
Plaintiffs' own culpable conduct.
Pursuant to CPLR Article 16, the liability of Defendants for non-economic loss shall not
exceed the equitable share of Defendants determined in accordance with the relative
culpability of each person/party causing or contributing to the total liability for noneconomic loss.
As to counterclaims and cross-claims, the ESI Defendants seeks to assert four counterclaims
against Plaintiffs as follows:
Conversion and misappropriation
Tortious interference with contract/business relationships and
Finally, the ESI Defendants seek to assert a cross-claim against Defendant Stefanelli for
As noted, the motion was filed on November 22, 2016. There is no indication on the
docket of any opposition to the motion, or request to extend the time in which to oppose. The
Court holds the motion to therefore be ripe for decision.
Legal Standard on Motion to Amend
Rule 15 of the Federal Rules of Civil Procedure governs the amendment of pleadings
prior to trial. Fed. R. Civ. P. 15. Where, as here, leave of court is required to amend, the court
has broad discretion to grant such leave “freely,” “when justice so requires.” Fed. R. Civ. P.
15(a)(2). Because amendments “tend to facilitate a determination on the merits,” they are
“generally favored.” Zucker v. Porteck Global Servs., Inc., 2015 WL 6442414, at *4 (E.D.N.Y.
2015) (citations omitted). As stated by the Supreme Court, “[i]f the underlying facts or
circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded
an opportunity to test his claim on the merits.” Foman v. Davis, 371 U.S. 178, 182 (1962). Thus,
Rule 15 is construed liberally and courts have broad discretion to allow parties to add additional
causes of action. See Shpak v. Curtis, 2012 WL 511478, at *4 (E.D.N.Y. 2012); see also
Hartman v. County of Nassau, 2008 WL 1923127, at *18 (E.D.N.Y. 2008).
Despite the liberal construction generally afforded Rule 15, motions to amend are
properly denied where they are founded in “undue delay, bad faith, futility, or prejudice to the
non-moving party....” Mendez v. U.S. Nonwovens Corp., 2 F. Supp. 3d 442, 451 (E.D.N.Y.
2014) (citation omitted). The non-movant bears the burden of demonstrating that the proposed
amendment is improper. Blaskiewicz v. Cnty. of Suffolk, 29 F. Supp. 2d 134, 137 (E.D.N.Y.
The Motion to Amend is Granted
Upon review of the motion and the supporting memorandum of law and, in particular, the
liberal construction to be afforded motions to amend, this Court concludes that the motion to
amend should be granted. The motion has been timely made. As evidenced by factual matters
raised in prior motion practice, the additional affirmative defenses, counterclaims and crossclaim
relate to matters that are clearly well-known to the parties. Despite the age of this case, the bulk
of the time that has passed has been devoted to pre-answer motion practice. Therefore, while the
matter has been pending since 2012, pretrial discovery remains in its infancy. Thus, allowing the
ESI Defendants to assert additional claims at this time will not unduly delay the proceedings.
Finally, as noted, there is no opposition to the motion. Even if there were, this Court would not
hold the motion to be precluded by either undue delay, bad faith, futility, or prejudice.
For the foregoing reasons, the ESI Defendants’ motion amend their answer and assert
counterclaims and a cross-claim, appearing on the docket as Docket Entry No. 55, is granted.
The amended answer is to be served on or before January 6, 2017. The Court hereby cancels the
previously entered requirement that the parties submit a status report on January 20, 2017.
Instead, the Court directs all counsel to appear for an in-person status conference on January 23,
2017 at 10:30 A.M. At the January 23, 2017 conference, counsel must be prepared to discuss the
status of settlement talks in this matter, as well as dates certain for the taking of all depositions.
All other discovery deadlines remain in effect.
Dated: Central Islip, New York
December 29, 2016
/s/ Anne Y. Shields
ANNE Y. SHIELDS
United States Magistrate Judge
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