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Garber v. Deisch

United States District Court, W.D. Michigan, Southern Division

March 27, 2018

John Garber, Plaintiff,
v.
Mitchell Deisch, et al., Defendants,

          OPINION

          PHILLIP J. GREEN, United States Magistrate Judge

         Plaintiff John Garber filed this lawsuit claiming that the defendants conspired to have him wrongfully prosecuted for embezzlement, resulting in his early retirement as the City of Manistee's Director of Public Works and his election loss in the city council election. His complaint raises three federal claims: conspiracy to deprive him of his “free expression” right to run for public office, contrary to 42 U.S.C. § 1985 (Count I); violation of his First Amendment right to be a candidate for public office (Count II), contrary to 42 U.S.C. § 1983; and violation of his Fourth Amendment rights by conspiring to instigate an investigation and prosecution for embezzlement that lacked probable cause, contrary to 42 U.S.C. § 1983 (Count III). Plaintiff also brings four supplemental state claims: civil conspiracy to have him wrongfully arrested and to prevent his election to public office (Count IV); malicious prosecution (Count V); abuse of process (Count VI); and intentional infliction of emotional distress (Count VII).

         Defendants City of Manistee, City Manager Mitchell Deisch, Public Safety Director (Police Chief) David Bachman, Finance Director (City Treasurer) Edward Bradford, and Utilities Director Jeffrey Mikula (collectively “City Defendants”) have moved for summary judgment on all claims. (ECF No. 42). Plaintiff has responded (ECF No. 57), and City Defendants have replied. (ECF No. 60).

         Defendant Paul R. Spaniola, the elected Mason County Prosecutor, separately seeks summary judgment as to the counts against him. (ECF No. 46). Plaintiff has responded (ECF No. 58), and Defendant Spaniola has replied (ECF No. 59).

         Plaintiff has moved to amend his complaint “to clarify the issues associated with Defendant Spaniola's involvement in this litigation.” (ECF No. 35, PageID.261). For purposes of the pending motions for summary judgment, the Court is considering all the allegations in the proposed amended complaint. (See Proposed First Amended Complaint, ECF No. 35, PageID.263-86).

         The Court conducted oral argument on all the motions. (ECF No. 69). For the reasons stated herein, each of the motions for summary judgment (ECF No. 42, 46) will be granted. As the Court has determined that nothing in the proposed amended complaint would alter the outcome here, plaintiff's motion to amend the complaint (ECF No. 35) will be denied as futile.

         Factual Findings

         The following facts are beyond genuine issue. Plaintiff worked for the City of Manistee, Michigan, as a full-time employee from 1971 to his retirement on April 1, 2013. At the time of his retirement, plaintiff was the Director of the Department of Public Works. That department collected abandoned scrap metal from around the city and sold it to a scrap metal company.[1]Plaintiff's retirement was prompted by allegations that he had embezzled the city's scrap metal proceeds, and assertions that he risked losing his pension. (Garber Dep. at 15, 28-34, ECF No. 47-2, PageID.913, 916-18).

         1. The Criminal Investigation

         In February 2013, the City of Manistee hired Jeffrey Mikula as Utilities Director. Mr. Mikula was interested in using the sale of the City's scrap metal as a source of funding. While looking into that matter, he learned of the existence of a check from the Padnos Scrap Metal Company made payable to plaintiff, which was in the DPW safe. The check was dated February 26, 2013, in the amount of $901.60. Mr. Mikula told City Treasurer Edward Bradford, of the discovery of the check. (Miller Report at 4-5, 35; ECF No. 43-2; PageID.381-82, 412).[2]

         Immediately after receiving this information, Mr. Bradford asked plaintiff to bring the check to the treasurer's office so that it could be deposited into the city's bank account. Mr. Bradford then began a review of the city's financial records to determine whether there had been any misuse of the scrap metal funds. He obtained records from Padnos relating to the city's sales of scrap metal dating back to 2006. (Id. at 5, PageID.382).

         These records indicated that Padnos did not follow a uniform procedure for issuing payment for the city's scrap metal. In some instances, the company issued checks payable to the “City of Manistee”; in other instances, it issued checks payable to “John Robert Garber, ” “Jack Garber, ” and “Ed Cote.”[3] (Id.). Mr. Bradford compared the Padnos checks against the record of deposits. He discovered that two of the checks made payable to “John Robert Garber” in July 2012 had never been received by his office, nor had they been deposited into the city's bank account. (Id.). One of the checks was dated July 20, 2012, and the other July 23, 2012. Both checks included plaintiff's home address. The checks totaled $2, 129.46. (Id. at 7, PageID.384). They were both endorsed by plaintiff and deposited into his personal account at the Filer Credit Union. (Id. at 33, PageID.410). The City of Manistee did not have an account at that credit union. (Id. at 5, PageID.382).

         On March 27, 2013, Mr. Bradford informed City Manager Deisch of the two checks in question.[4] Mr. Bradford advised Mr. Deisch that there was no record that the funds from these checks had ever been deposited into the city bank account. (Miller Report at 7, PageID.384). Also on that day, Manistee City Police Department Detective John Riley contacted Michigan State Police Detective Mark Miller, and informed him of a potential complaint involving embezzlement of city funds. Detective Riley asked that, due to the police department's potential conflict of interest, the Michigan State Police assume responsibility for conducting the criminal investigation. (Id. at 4, PageID.381).

         In the morning of the next day, March 28, Police Chief David Bachman advised plaintiff of the concerns that plaintiff was converting the city's scrap metal proceeds to his personal use. Plaintiff denied having ever personally endorsed a Padnos check, and he stated that he would have turned over all such checks to the City Treasurer's Office. City Manager Deisch placed plaintiff on paid administrative leave pending an investigation into the matter. (Id. at 9, PageID.386).

         Later that same day, Detective Miller met with the following city officials: Police Chief Bachman, Detective Riley, City Treasurer Bradford, and Utilities Director Mikula. Detective Miller was given information and documents that had already been obtained from Padnos and the city's finance department. Detective Miller delayed the beginning of his investigation pending the city's receipt of copies of the cancelled checks in question. He began his investigation on April 1, 2013. (Miller Report at 4-5, PageID.381-82).

         In the meantime, on Easter Sunday, March 31, 2013, Police Chief Bachman went to plaintiff's residence, at plaintiff's request. Plaintiff provided Chief Bachman a sealed envelope addressed to the chief. Plaintiff advised the chief that the envelope contained a letter concerning the scrap metal issue. Plaintiff also mentioned something about the Department of Public Works and the Sewer and Water Departments always having “slush funds” on hand. Chief Bachman did not open the envelope, but rather, took it to City Manager Deisch's home, and left it with him. Mr. Deisch did not open the envelope until the next morning. (Id. at 9, PageID.386). The envelope contained a one-page letter, dated March 29, 2013, in which plaintiff explained the past practice for the use of the city's scrap metal proceeds.[5] In the letter, plaintiff denied ever converting city funds to his own use, asserting that the scrap metal proceeds were used for “retirements, cookouts, Christmas Parties and buying some tools.”[6] (Id. at 11, PageID.388). Mr. Deisch returned the letter to Chief Bachman the same day. (Id. at 9, PageID.386). The letter was later turned over to Detective Miller. (Id. at 11, PageID.388).

         On April 1, 2013, plaintiff contacted City Manager Deisch, and plaintiff submitted an official request to be placed on retirement status. Mr. Deisch granted that request. (Miller Report at 7, PageID.384). The next day, Mr. Deisch issued a press release announcing plaintiff's retirement in which he noted: “I can confirm after being asked by the media that an investigation has been initiated by the Michigan State Police concerning activities of Mr. Garber in his official duties as a City employee. No further comments will be made until the official investigation is completed by the Michigan State Police.” (ECF No. 57-10, PageID.1606).

         Detective Miller interviewed Mr. Deisch on April 2. Among other things, Mr. Deisch advised the detective that, when he began his tenure as City Manager in 2001, there had been a practice in place in which the city's scrap metal proceeds were used to pay for employee picnics and Christmas parties. This included the purchase of alcohol. Mr. Deisch put a stop to the purchase of alcohol with city funds, but the use of city funds to otherwise pay for these social events continued. To his knowledge, no employee was ever given permission to use city funds for personal use. (Miller Report at 6-8, ECF No. 43-2, PageID.383-85).

         City Treasurer Bradford also advised Detective Miller that no employee had been given authorization to use city funds for personal use. Mr. Bradford explained that the issue of the use of the city's scrap metal proceeds had been discussed during a meeting in the previous few years, and that he had informed plaintiff of the requirement that any such funds be deposited into the city's bank account. (Id. at 8, PageID.385).

         Detective Miller interviewed a number of city employees and former employees. Many of these individuals indicated either that the city did not have a formal policy regarding the handling of the city's scrap metal, or that they had no knowledge of such a policy. (Miller Report at 12-31, PageID.389-408). Edward Cote, a retired supervisor of the City Water Department, and then member of the Manistee City Council, advised the detective that the city's scrap metal proceeds had previously been used for Christmas and retirement parties, and that he had once obtained permission from City Manager Deisch and City Treasurer Bradford to purchase a refrigerator and other items for the Waste Water Treatment Plant. Detective Miller obtained records indicating that a couple of Padnos checks were made payable to Mr. Cote, which were deposited into the city's bank account. (Id. at 22-23, PageID.399-400). The detective obtained from Mr. Bradford a copy of a letter, dated June 18, 2007, documenting Mr. Cote's request to use scrap metal proceeds to purchase the refrigerator and other items for the Waste Water Treatment Plant. (Id. at 22, PageID.399).

         During his investigation, Detective Miller obtained records from Padnos concerning the City of Manistee's sale of scrap metal. These records showed fifteen scrap metal sales involving plaintiff between November 29, 2006, and July 23, 2012. In twelve of these transactions, checks were issued payable to plaintiff; in the three others, plaintiff was paid in cash. All twelve checks were endorsed by plaintiff and either deposited into his account or cashed at the Filer Credit Union. The records also reflected two Padnos checks made payable to another Department of Public Works employee, which were endorsed by plaintiff and deposited into his personal account at the Filer Credit Union. The funds involved in the seventeen transactions totaled $9, 357.83. City Treasurer Bradford advised Detective Miller that he had no information or documentation that any of these funds were ever deposited into the city's bank account or turned over to the City Treasurer's Office. (Miller Report at 32-34, PageID.409-11).

         The Padnos records also included eight transactions involving the sale of the City of Manistee scrap metal from August 16, 2006, and December 4, 2012, by employees other than plaintiff. The total proceeds of these transactions was $10, 883.49. Records reflect that the proceeds from each of these eight transactions were deposited into the city's bank account. (Id. at 34, PageID.411).

         On April 29, 2013, Manistee County Chief Assistant Prosecutor Jason Haag reviewed and approved an affidavit and search warrant for records relating to plaintiff's account at the Filer Credit Union. (Id. at 36, PageID.413). April 30, 2013, 85th District Judge Brunner authorized a search warrant based on the affidavit approved by Mr. Haag. (Id.). The credit union provided records dating back to May 2007 (prior records had already been purged), which reflected eight transactions in which plaintiff deposited Padnos checks into his personal account and then made an immediate cash withdrawal in the same amount. There were no credit union records found relating to cash payments Padnos made to plaintiff. (Id. at 38, PageID.415).

         Detective Miller contacted plaintiff's then-attorney, Mark Quinn, on August 19, 2013, requesting an interview with plaintiff. Mr. Quinn stated that he would discuss the request with plaintiff and advise the detective of plaintiff's response the following week. Detective Miller did not hear back from Mr. Quinn. (Miller Report at 38, PageID.415).

         On August 29, 2013, Detective Miller submitted a complaint against plaintiff to the Manistee County Prosecuting Attorney. The county prosecutor, citing a conflict of interest, asked the Michigan Attorney General's Office to assign the case to another prosecutor. Detective Miller was informed on October 8, 2013, that plaintiff's case had been assigned to Mason County Prosecutor Paul Spaniola. (Id. at 39, PageID.416).

         On October 11, 2013, Prosecutor Spaniola asked Detective Miller to conduct three additional interviews: former Manistee City Manager Ben Bifoss, former Manistee Director of Department of Public Works Dale Picardat, and former Manistee City Treasurer Ken Oleniczak.[7] (Id.). Plaintiff had identified these three individuals in his March 29, 2013, letter to Police Chief Bachman as individuals who could support his explanation for the handling of scrap metal sales and the use of the sales' proceeds. (See Id. at 11, 39; PageID.388, 416).

         Mr. Bifoss advised Detective Miller that he did not recall the specifics of how the City of Manistee handled scrap metal sales or the proceeds of those sales, but he stated: “[C]learly, any proceeds coming into the City from any source would need to go directly to the City.” Mr. Bifoss acknowledged that some of the scrap metal proceeds could have been used for employee parties or picnics. (Miller Report at 40, ECF No. 43-2, PageID.417).

         Mr. Picardat stated that he was unaware of any scrap metal proceeds being used to fund employee parties or picnics, or to purchase tools. He denied the existence of any “slush fund.” Mr. Picardat advised that, while he had not been specifically told to submit all sales proceeds to city hall, he knew to do that, describing it as an ethical issue. (Id.).

         Mr. Oleniczak told Detective Miller that, during his time with the city, scrap metal was sold to a local scrap dealer, and that the dealer made the payments directly to the city. He advised that, to the best of his knowledge, no city money was used to fund parties or picnics. (Id. at 41, PageID.418).

         2. The Prosecution

         On October 29, 2013, Prosecutor Spaniola obtained a misdemeanor warrant against plaintiff on the charge of embezzlement - agent or trustee, at least $200 but less than $1, 000, Mich. Comp. Laws § 750.174(3). (Miller Report at 42, ECF No. 43-2, PageID.419). Mr. Spaniola made the probable cause decision himself, without consulting anyone else. (Spaniola Dep. at 16-17, ECF No. 47-1, PageID.891). He testified that the Prosecuting Attorney for Manistee County had led him to believe “that [plaintiff] having no prior record would be amenable to a quick disposition on a misdemeanor basis.” (Id. at 13, PageID.890).

         On November 1, 2013, plaintiff was arraigned on the misdemeanor embezzlement charge. Later that day, Mr. Spaniola issued a press release, announcing the misdemeanor charge against plaintiff.[8] (ECF No. 43-17, PageID.848). The press release included the potential maximum penalties for conviction, the fact that plaintiff had been released on bond, that Mr. Spaniola had been appointed special prosecutor, the specific allegations underlying the misdemeanor charge, and the name of plaintiff's counsel (Mark Quinn). (Id.). The press release ended with the admonition that plaintiff “is presumed innocent of this charge unless proven guilty in a court beyond a reasonable doubt.” (Id.). The press release resulted in media reports in the local newspaper. (See ECF No. 57-11, PageID.1614).

         Mr. Spaniola offered plaintiff various plea resolutions, including a dismissal of the charge in exchange for plaintiff's agreement to pay the city restitution. (Spaniola Dep. at 26, ECF No. 47-1, PageID.894). Mr. Quinn sent Mr. Spaniola a letter, dated March 26, 2014, advising that plaintiff had rejected the plea offers, including that he was “unwilling to make a financial offer that may result in the dismissal of charges.” (ECF No. 58-13, PageID.1903). Consequently, Mr. Spaniola decided that he would no longer “cut [plaintiff] a break” and that he would file felony charges. (Spaniola Dep. at 25, ECF No. 47-1, PageID.893).

         On April 3, 2014, Prosecutor Spaniola obtained a three-count felony warrant against plaintiff, charging embezzlement - agent or trustee, at least $999 but less than $20, 000, Mich. Comp. Laws § 750.174(4); public money - safe keeping, Mich. Comp. Laws § 750.490; and embezzlement - public official, Mich. Comp. Laws § 750.175. (Miller Report at 43, ECF No. 43-2, PageID.420). On April 15, 2014, plaintiff was arraigned on these charges. (Id.). The felony charges were reported in the media. (See ECF No. 57-13).

         A preliminary hearing on the felony charges was held on May 7, 2014, before Manistee County District Judge Thomas Brunner. During the preliminary hearing, nine witnesses testified for the prosecution, including Utilities Director Jeffrey Mikula, City Treasurer Edward Bradford, and City Manager Mitchell Deisch. (Prelim. Tr., ECF No. 47-4). Messieurs Mikula, Bradford, and Deisch each testified either that he was not aware of, or did not recall, the city having a written policy concerning the disposal of scrap metal during plaintiff's employment. (Id. at 15, 39, 64, PageID.1019, 1043, 1069). Mr. Bradford testified, however, that he had twice advised plaintiff that any check reflecting the proceeds of the sale of the city's scrap metal needed to be brought to City Hall, and that all scrap metal proceeds had to be processed through the city. (Id. at 31, PageID.1035).[9]

         At the conclusion of the preliminary hearing, plaintiff's counsel, Mr. Quinn, argued, among other things, that the historical use of the city's scrap metal proceeds for employee functions, coupled with a lack of a written policy regarding the use of those proceeds, precluded a probable cause finding of a knowing and unlawful appropriation of city funds for plaintiff's own use. (Id. at 165-66, PageID.1170-71). Judge Brunner disagreed.

         He found that the prosecution had met its burden of establishing probable cause that plaintiff committed the three felony offenses Mr. Spaniola had charged. Among other things, the judge noted the following:

The primary focus of the prelim pertains to two checks issued by Padnos, exhibits one and two. Exhibit one is a check dated July 23, 2012, in the amount of $1787.53. The exhibit two is a check issued by Padnos on July 20, 2012, in the amount of $343.93. The payee on both of those checks is set forth as John Robert Garber, the Defendant in this case. Both checks were endorsed by John Robert Garber at Filer Credit Union in Manistee County. Mr. Garber had a personal account there. Mr. Garber, at the time of the cashing of these checks, was the Director of Public Works in the City of Manistee. The evidence indicates that these two checks were not endorsed over to the City of Manistee. There's no indications of any accountings from the Public Works Department in regard to the disposition of the proceeds.
. . .
These two particular checks, it's sufficient probable cause that they did come to Mr. Garber in his official capacity. The question becomes was there an unlawful knowing and unlawful appropriation of this money to his own use? In this case, the money was taken to - the checks were taken to the Filer Credit Union, they were cashed, and Mr. Garber received the cash from the bank. The two checks in question show that as having happened. The exhibit six shows the checks being cashed and the cash back, being provided to Mr. Garber. So that's what we have at this juncture of a probable cause hearing. We have City property, the scrap metal proceeds, having been check cashed, turned into cash, and the cash is in the pocket of Mr. Garber.

(Prelim. Tr. at 170-72, ECF No. 47-4, PageID.1175-77). Judge Brunner bound plaintiff over to circuit court on all three felony charges in the complaint. (Id. at 174, PageID.1179).

         In August 2014, Mr. Quinn filed a motion to quash Judge Brunner's bind-over order. (Spaniola Dep. at 29, ECF No. 47-1, PageID.894). On November 20, 2014, Circuit Court Judge James Batzer held a hearing on that motion. Mr. Quinn conceded that plaintiff had received the city's scrap metal proceeds at issue, but he argued that there was insufficient evidence to establish probable cause that plaintiff knowingly and unlawfully converted the money to his own use, which is required to support each of the three charges. (Mtn Tr. at 4-11, ECF No. 57-6, PageID.1581-83). Circuit Judge Batzer agreed:

Well, the problem that the prosecutor has in this case is that they can't show on a probable cause basis that this defendant dishonestly disposed of the money, or converted it to his own use, or took the money with the intent to convert it to his own use without consent of the city, or that he used it for an unauthorized purpose.

(Id. at 22-23, PageID.1585-86). The judge quashed the bind over. (Id. at 31, PageID.1588).

         Prosecutor Spaniola elected not to appeal the dismissal of the case. In a January 14, 2015, email, Detective Miller asked Prosecutor Spaniola whether he should close the case and destroy any property he obtained during the course of the investigation. In response, Prosecutor Spaniola stated: “Yes, go ahead and destroy the property and close the complaint as ‘case dismissed by Judge.' ” (Email from Paul Spaniola to Mark Miller, dated Jan. 14, 2015, ECF No. 43-2, PageID.427).

         3. The Election

         Plaintiff filed the necessary paperwork to seek election to a vacant city council position in May 2013, a month after his retirement from the Department of Public Works. (Garber Dep. at 52-53, ECF No. 43-7, PageID.537). Plaintiff did not have election signs published or prepared. The election took place November 5, 2013, with Mark Wittliff being elected to the position. Plaintiff came in second in the three-way race, approximately fifteen votes behind Mr. Wittliff and roughly thirty votes ahead of the third-place candidate. No one told plaintiff that he or she would have voted for him but for the criminal charges pending against him. (Id. at 58-60, PageID.539).

         Mr. Spaniola testified that he was unaware that plaintiff was running for elective office until sometime after he decided to file criminal charges against him. (Spaniola Dep. at 16, ECF No. 47-1, PageID.891).

         Plaintiff filed the instant lawsuit on May 2, 2016.

         Summary Judgment Standard

         Summary judgment is appropriate when the record reveals that there are no genuine issues as to any material fact in dispute and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); McKay v. Federspiel, 823 F.3d 862, 866 (6th Cir. 2016). The standard for determining whether summary judgment is appropriate is “whether ‘the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.' ” Rocheleau v. Elder Living Const., LLC, 814 F.3d 398, 400 (6th Cir. 2016) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). The Court must consider all pleadings, depositions, affidavits, and admissions on file, and draw all justifiable inferences in favor of the party opposing the motion. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); France v. Lucas, 836 F.3d 612, 624 (6th Cir. 2016).

         When the party without the burden of proof seeks summary judgment, that party bears the initial burden of pointing out to the district court an absence of evidence to support the nonmoving party's case, but need not support its motion with affidavits or other materials “negating” the opponent's claim. See Morris v. Oldham County Fiscal Court, 201 F.3d 784, 787 (6th Cir. 2000); see also Minadeo v. ICI Paints, 398 F.3d 751, 761 (6th Cir. 2005). Once the movant shows that “there is an absence of evidence to support the nonmoving party's case, ” the nonmoving party has the burden of coming forward with evidence raising a triable issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To sustain this burden, the nonmoving party may not rest on the mere allegations in his pleadings. See Ellington v. City of E. Cleveland, 689 F.3d 549, 552 (6th Cir. 2012); see also Scadden v. Werner, 677 F. App'x 996, 1001 (6th Cir. 2017). The motion for summary judgment forces the nonmoving party to present evidence sufficient to create a genuine issue of fact for trial. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir. 1990); see Newell Rubbermaid, Inc. v. Raymond Corp., 676 F.3d 521, 533 (6th Cir. 2012). “A mere ...


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