Harvey M. Stone and Richard H. Dolan
Harvey M. Stone and Richard H. Dolan ()

This column reports on several significant, representative decisions handed down recently in the U.S. District Court for the Eastern District of New York. Judge I. Leo Glasser granted a writ of error coram nobis in the interests of justice, to prevent continuing legal consequences from petitioner’s conviction. Judge Sterling Johnson Jr., holding that the federal courts cannot grant a New York State Certificate of Relief from Civil Disabilities, suggested steps for petitioner to gain the requested relief in state Supreme Court. Judge Jack B. Weinstein held that a homeowner who bought a house adjacent to his for his daughter was protected by the Real Estate Settlement Procedures Act. And Judge Sandra J. Feuerstein denied defendant’s motion to dismiss a Title VII claim based on pregnancy discrimination.

Coram Nobis Granted

In United States v. Santiago, 05 CR 590 (EDNY, June 27, 2014), Judge Glasser granted a writ of error coram nobis vacating the conviction of a defendant who, years earlier, had pleaded guilty before him to conspiracy to obstruct justice.

Defendant Irene Santiago was a “client assistant” for Timothy O’Connell and Kenneth Mahaffy, two brokers employed by Merrill Lynch. During a federal securities fraud investigation commenced in 2004, O’Connell persuaded Santiago to lie to investigators. He told her, for example, that if she told the truth, he would lose his home and children, with a clear implication that this would drive him to suicide. The government relied on these facts, among others, in securing O’Connell’s eventual conviction for witness tampering with respect to Santiago.

Once caught, Santiago entered her guilty plea and began nearly five years as a cooperating government witness, through two trials, contributing not only to O’Connell’s conviction for witness tampering, but also to the convictions of O’Connell, Mahaffy and others for conspiracy to commit securities fraud. All those convictions were reversed, however, upon discovery that the government had failed to turn over Brady material that cast substantial doubt on its position that certain of the information at issue was “confidential” within the meaning of the federal securities laws. Declining to retry the matter, the government granted O’Connell a deferred prosecution agreement, and scheduled Mahaffy for the same disposition.

Coram nobis relief is available under the All Writs Act, 28 U.S.C. §1651, to vacate a criminal conviction where: (1) there are circumstances compelling such action to achieve justice; (2) sound reasons exist for failure to seek appropriate relief earlier; and (3) a petitioner continues to suffer legal consequences from her conviction that may be remedied by granting the writ. Slip op. 8, quoting Foont v. United States, 93 F.3d 76, 79 (2d Cir. 1996) Glasser vigorously dismissed the government’s argument that Santiago had failed to meet this test. The government’s assertion that there was “no fundamental error” in connection with Santiago’s plea relied on a common law coram nobis element that was not carried over by the All Writs Act (which allows relief even in the absence of such error), and sat poorly alongside the government’s Brady violation. Slip op. 10.

Santiago did not unduly delay in seeking relief, as she filed her writ approximately two months after dismissal of the underlying indictment against O’Connell and Mahaffy. Slip op. 14-16. Finally, Santiago showed that she continued to suffer legal consequences from her conviction by citing the loss of her Series 7 license, disbarment from the securities industry, ineligibility for jury duty, and “other diminished civil rights and reputational harms.” Slip op. 17.

Absent relief, Santiago would remain “a convicted felon while O’Connell, Mahaffy and their co-conspirator defendants who were the principal targets of the government’s investigation…are now conviction free—free to vote, free to serve on a jury, to honestly say they are not felons in making application for employment.” Glasser was therefore “driven to the conclusion that to remedy the perpetuation of this injustice, the issuance of this writ is both necessary and appropriate.” Slip op. 9-10.

Certificate of Relief

In Libereros v. United States, 14 MC 266 (EDNY, June 12, 2014), Judge Johnson denied for lack of jurisdiction petitioner’s request for a New York State Certificate of Relief from Civil Disabilities, noted the absence of equivalent relief in the federal system, and outlined approaches to be taken by petitioner in state court.

Petitioner sought expungement of his 1994 federal conviction or, alternatively, a Certificate of Relief from Civil Disabilities, provided under Corr. Law §701. The certificate relieves someone from restrictions on their legal privileges such as voting or licenses or on their employment, or any other forfeitures or disabilities that are automatically imposed by certain criminal convictions.

While denying the application after a hearing, the court described petitioner’s sympathetic background. Petitioner “has been clean, sober, and working in the hotel industry for the past thirteen years, since his release from prison.” His “long period of sobriety and productive citizenship comes after decades of drug dependence and unemployment.” Petitioner fears that, if his old conviction comes to light, he could lose his job; and he believes that the conviction could have prevented other employment opportunities.

The court “commend[ed]” petitioner on “ turning his life around,” but found his claims of potential harm to “fall short” of the “extreme circumstances” required to expunge a conviction.

As to the Certificate of Relief, Johnson noted that New York law prohibits denying employment absent a “direct relationship” to the offense of conviction. “Even then,” the court added, the “employer must consider: time elapsed since the offense, proof of rehabilitation or good conduct, and age, and other factors.” The employee is also “entitled to a written statement of why employment was denied.” Slip op. 2. See N.Y. Exec. Law §296 (15); N.Y. Correct. Law §§750 to 754.

“Going forward,” petitioner “might demand a timely explanation for denial of employment” in order to show, among other things, that “his strong employment history is more important than a twenty-year old conviction[.]” The appropriate forum for such an application, however, is state Supreme Court.

Real Estate Transactions

In Friedman v. Maspeth Federal Loan and Savings Association, 13 CV 6295 (EDNY, July 14, 2014), Judge Weinstein, denying defendant’s motion to dismiss, held that the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §2601, et seq., protected an owner who purchased a home for his daughter from improperly assessed late fees on mortgage payments.

Defendant purchased a home in Brooklyn, adjacent to his own home, for his daughter and her family in 2008. On the mortgage application he checked the box “investment” as the best fit, because the other boxes stated “primary residence” and “secondary residence.” Both plaintiff and his daughter and her husband made mortgage payments, and plaintiff paid off the mortgage and fees in full in January 2014. Plaintiff alleged that defendant had improperly assessed seven late fees in the total amount of $457.83. Based on plaintiff’s mail receipts, each mortgage payment should have been received by defendant prior to the time they were due as prescribed in defendant’s coupon payment booklet. Plaintiff alleged that defendant’s internal investigation showing when the late payments had been received was not accurate. The parties disputed the meaning of late fees as defined in the coupon book.

RESPA was enacted to ensure that residential real estate owners were provided with adequate information about the costs of a loan and to protect them from abusive business practices related to loan agreements. RESPA is broad enough to cover the post-settlement late charges at issue here. As a remedial and protective statute, it has been liberally construed.

Credit transactions made primarily for business purposes are exempt from RESPA. The issue of first impression in this case was whether defendant’s purchase of the house for his daughter was a business or consumer credit transaction. Under RESPA a rental property that the borrower does not occupy, or one with more than two housing units, is generally treated as a property for business purposes, but the statute does not address non-owner occupied property purchased for family purposes.

The court pointed to multi-generational living arrangements as a “reality of the current socio-economic landscape.” Slip op. 10. Another current development is gifting assets to children while parents are still alive: By “offering a financial support system for their children, parents help provide the stability necessary for progeny to pursue higher education, advance their nascent careers, and eventually establish their own family.” Slip op. 11.

The evidence here showed that credit was extended for a residential, consumer purpose, as opposed to a business purpose: Plaintiff purchased the home for his family; his main occupation was restaurant operator, not property manager; he did not receive income from the property; the amount of the loan was appropriate to the value of the house; he checked off “investment” on the loan application because it was the most accurate listed description of his interest; and the arrangement with his daughter living in a separate house adjoining plaintiff’s was conducive to maintaining a close-knit family relationship. Though plaintiff made some of the mortgage payments, there was no evidence that he and his daughter intended to have a landlord-tenant relationship.

Because plaintiff was able to show that defendant gave incorrect information about the receipt of the loan payments, the complaint stated a valid RESPA claim.

Weinstein also decided to exercise supplemental jurisdiction over plaintiff’s state law claims in the interest of judicial efficiency, holding that plaintiff had stated valid claims for violations of the New York General Business Law §349, breach of the implied duty of good faith and fair dealing, breach of contract, and unjust enrichment. Slip op. 17-19.

Pregnancy Discrimination

In Codrington v. Carco Group, 13 CV 2780 (EDNY, June 27, 2014), Judge Feuerstein denied defendant’s motion to dismiss plaintiff’s pro se complaint alleging sex and pregnancy discrimination by her former employer in violation of Title VII.

Plaintiff began working for defendant in March 2011. After she became pregnant in the fall of 2011, she informed her supervisor and said she wanted to return to her job after her pregnancy. Because plaintiff had not been with the company long enough to be protected by the Family and Medical Leave Act, she was concerned about job security. Her supervisor stated that he could not guarantee her job.

Plaintiff left to deliver her son in December 2011 and, when she called to say she was ready to return, she was told there was no job available. A college student replaced her. Plaintiff filed complaints with the New York State Division of Human Rights, which dismissed her complaint, and the Equal Employment Opportunity Commission, which issued a dismissal and notice of rights.

Title VII prohibits sex discrimination on the basis of pregnancy. In her complaint, plaintiff established three of four prongs for a prima facie case of discrimination: (1) she was a member of a protected class; (2) she satisfactorily performed the duties required by the position; and (3) she was discharged. Defendant challenged only the fourth prong—whether her position remained open and was ultimately filled by a non-pregnant employee. As the court found, plaintiff had satisfied the pleading requirements of the fourth prong by alleging that “her position remained open for five (5) weeks and was ultimately filled by a ‘college student’ ‘with no children.’” Slip op. 7.