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School district?s lawsuit to recover some of the monies stolen from it dismissed as untimely with respect to certain named defendants

School district?s lawsuit to recover some of the monies stolen from it dismissed as untimely with respect to certain named defendants
Roslyn Union Free School Dist. v Barkan, 2010 NY Slip Op 01781, Decided on March 2, 2010, Appellate Division, Second Department

Carol Margaritis, a former members of the Roslyn Union Free School District Board of Education,* was among a number of individuals sued by the school district in an effort to recover some of the $11,000,000 in District funds alleged to have been stolen by District employees. The District?s complaint alleged that the board members' failure to detect the theft District funds constituted, among other things, a breach of their fiduciary duty, negligence, and unjust enrichment.**

In response to a motion Margaritis submitted to Supreme Court, the court dismissed that portion of the District?s complaint that named her as a defendant.

The Appellate Division affirmed the lower court?s ruling noting that the District's allegations concerning a ?breach of fiduciary duty? and its negligence cause of action were time-barred by the three-year statute of limitations set forth in CPLR 214(4).

Further, said the court, the District?s complaints alleging unjust enrichment and ?constructive trust? had to be dismissed insofar as Margaritis was concerned because of a ?failure to state a cause of action.? Each of these causes of action, said the Appellate Division, required the District to allege that Margaritis ?possessed property or assets? belonging to the District. There were no such allegations set out in the District?s complaint.

In the words of the Appellate Division, ?Accepting the allegations in the complaint as true, and according the District the benefit of every favorable inference, the District failed to state a cause of action for an accounting, unjust enrichment, or a constructive trust, as the complaint is bereft of any allegation that Margaritis possessed any property or asset of the District.?

* Margaritis served on the Board from July 2000 to June 2001.

** Then State Comptroller Alan Hevesi published a report concerning the so-called Roslyn School District's embezzlement scandal entitled "Roslyn Union Free School District: Anatomy of a Scandal." The report covers the time period from Jan. 1, 1996 to June 14, 2004 in an effort to uncover the depth of the scandal and how it happened.

The Comptroller?s report is posted on the Internet at: http://www.osc.state.ny.us/localgov/audits/2005/schools/roslyn2.pdf

A ?follow-up report? issued by the Comptroller is posted on the Internet at: http://www.osc.state.ny.us/localgov/audits/2006/schools/roslynfoll.htm

Full post as published by New York Public Personnel Law on March 09, 2010 (boomark / email).