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Free: Panel Upholds Defamation Award Against Police
Chief

By Joel Stashenko

August 6, 2007

ALBANY - A police chief defamed two Lebanese
immigrants by telling other residents of his rural upstate village that the men
were terrorists with ties to Osama Bin Laden, the Appellate Division, Third
Department, has ruled.

In two other rulings, the appeals court refused
to let banks invoke attorney-client privilege for their counsels' involvement in
a financial transaction that led to the liquidation of an insurance company, and
it set aside a $1.2 million medical malpractice verdict and ordered a new trial
because a judge gave faulty jury instructions.

In addition to upholding
the finding of defamation against Police Chief James DeVita of Owego, Tioga
County, the Third Department affirmed the jury's award of $200,000 to both
Michael Yammine and Hassid Kazan in compensatory damages.

Justice Karen
K. Peters, writing for a unanimous court in Yammine v. DeVita, 501649, ruled that Mr. DeVita's position
of authority in Owego made the impact of his fictitious claims even worse than
if they had come from a private citizen. Justice Peters evoked the image of the
chief "parading around the village, cloaked in his police uniform" and falsely
telling citizens that Messrs. Yammine and Kazan were terrorists in the wake of
the Sept. 11, 2001, attacks.

The decision will be published
Wednesday.

"With this community knowing that Chief DeVita was
previously a personal friend of plaintiffs who frequently patronized their
restaurant, his statements became more credible," Justice Peters wrote.

According to the ruling, Messrs. Yammine and Kazan approached the
village's attorney and other officials when they found out about Mr. DeVita's
statements and asked that he be ordered to stop. When he did not, they filed a
notice of claim to sue for defamation in hopes of getting the attention of the
village. When Mr. DeVita "could not be quelled," as Justice Peters put it, the
two men filed their defamation action.

At trial in Tioga County Supreme
Court, Mr. DeVita initially denied making the statements. But village trustee
Herbert McDowell and Frank Orlando, a close friend of Mr. DeVita, both testified
to hearing him frequently talk about Messrs. Yammine and Kazan as Bin Laden
associates. Often, Messrs. McDowell and Orlando testified, Mr. DeVita would do
so in crowded restaurants with a loud voice.

As Justice Peters wrote,
"While initially denying the conduct, Chief DeVita later admitted to the jury
that he made the statements that plaintiffs were terrorists, drug runners and
gun runners associated with Osama Bin Laden, and knew they were false."

That admission from the witness stand by Mr. DeVita was "one of those
Perry Mason moments," said Matthew C. Butler, trial and appeals attorney for the
two Lebanese immigrants.

"It was the perfect storm of scenarios for how
not to treat naturalized citizens in this country," said Mr. Butler, of Butler
& Butler in Vestal.

The two men were also able to show at trial they
were damaged by Mr. DeVita's statements. Business fell off at their Original
Italian and Pizza Restaurant in Owego, the court noted, and customers who did
come in frequently repeated the accusations the police chief was making about
the men.

"Plaintiffs felt publicly scorned, both professionally and
personally, as did their children," Justice Peters wrote. "Plaintiff Michael
Yammine testified that his children were picked on at school; one was refusing
to leave the house while another two left to live with family in Lebanon.
Plaintiff Hassid Kazan testified that his young daughter came off of the bus
crying due to the statements made by the other children."

Justices D.
Bruce Crew III, Carl J. Mugglin, Anthony T. Kane and Anthony J. Carpinello
concurred with Justice Peters' ruling.

Mr. DeVita reached a settlement
with the village after the jury returned the defamation verdict and gave up his
post, Owego Mayor John Loftus said Friday.

"We came to a mutual
agreement that it was best that he retire," Mr. Loftus said. "It was in his and
the village's best interests."

Mr. Loftus said in an interview that the
source of Mr. DeVita's animus toward the immigrants has never been clear.

Owego, a village of about 3,900 residents, has an eight-member police
department.

Gregory Cascino of Congdon, Flaherty, O'Callaghan, Reid,
Donlon, Travis & Fishlinger in Uniondale represented the defendants. He
declined to comment on the ruling.

Privilege Matter

Also
last week, the Third Department:

• Granted the state insurance
superintendent's request to compel disclosure of all communications by counsel
for Chase Manhattan and other banks involved in a transaction that hastened the
liquidation of the United Community Insurance Company.

The court, in
Superintendent of Insurance of the State of New York v. Chase
Manhattan Bank, 501433, also unanimously denied the banks' motion for
summary judgment, ruling that triable issues of fact remain about the
transaction.

The case concerned the Lawrence Group Inc., a tangled group
of insurance companies controlled by Albert Lawrence of Schenectady. When the
Lawrence Group amassed $27 million in debts to the banks that it was clear
Albert Lawrence could not repay, the banks sought a restructuring of the debt
that included a $13 million loan by the United Community Insurance Company to
the Lawrence Group as well as a $14 million loan from another subsidiary.

The money went into a newly created trust and eventually found its way
to Mr. Lawrence's creditors.

The $13 million loan was not disclosed to
the state Insurance Department for prior approval.

For his role in the
restructuring and repayment plan, Mr. Lawrence was indicted by federal
prosecutors for mail and wire fraud. He was sentenced to 3 years in federal
prison in 2001 after his conviction.

The state argued, and the court
yesterday agreed, that attorney-client privilege cannot be invoked in the case.
Citing CPLR 4503(a) and Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman &
Dicker, 1 AD3d 223, 224 (2003), the court ruled that attorney-client
privilege is not available "where it involves client communications that may
have been in furtherance of a fraudulent scheme, an alleged breach of fiduciary
duty or an accusation of some other wrongful conduct."

In this case, the
state has demonstrated that the banks "may well have known" that United
Community Insurance Company was insolvent, or that its involvement in the loan
transaction would make it so, a unanimous Third Department panel held in a
ruling by Justice Crew.

Justices Edward O. Spain, Carpinello, Mugglin
and Kane joined in the opinion.

The decision affirmed a decision by
Supreme Court Justice Frank B. Williams (See
Profile).

Improper Jury Charge

• Ordered a new trial
for the widow of a man who won $1.25 million from a jury because of the failure
of doctors to diagnose and repair a fatal defect in the man's heart.

The
court unanimously ruled that Albany County Supreme Court Justice Thomas J.
Spargo improperly charged the jury about the plaintiff's reduced burden of proof
under Noseworthy v. City of New York, 298 NY 76 (1948), which applies in
cases where the victim is not alive to testify about the care they received.

Justice Spargo told the jury, "You are permitted greater latitude in
inferring negligence on the part of the defendants from all of the evidence in
the case."

In Imbierowicz v. A.O. Fox Memorial Hospital, 501142, the Third
Department found that the charge "likely led the jury to conclude that plaintiff
had a lesser burden of proof as to negligence, including whether there was a
deviation from the standard of care and other issues about which decedent could
have offered no relevant testimony."

That error must lead to a new trial
for two doctors and Capital Cardiology Associates of Albany, the court
determined. The panel also ruled that A.O. Fox Memorial Hospital in Oneonta,
Delaware County, was improperly held to be 20 percent liable for Sigmund
Imbierowicz's death. It ruled the hospital can only be held vicariously liable
for the failure of one of its doctors to discover the heart problem that killed
Mr. Imbierowicz, not separately liable as an institution.

Mr.
Imbierowicz died after six days at A.O. Fox and the Albany Medical Center, where
doctors were unable to discover that his ascending aorta had dissected and was
leaking blood into his pericardium. He died when the blood compressed his heart
and caused it to stop beating.

Justice Robert S. Rose wrote the ruling;
Justices Crew, Mugglin and Kane concurred.

- Joel Stashenko can be
reached at [email-masked].

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