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December 12, 2005.

BOROUGH OF CRESSKILL, Et al., Defendants.

The opinion of the court was delivered by: DICKINSON DEBEVOISE, Senior District Judge


The Plaintiffs in this action are the Cresskill Volunteer First Aid Squad, Inc. ("the Squad"), the New Jersey State First Aid Council, Inc. ("NJSFAC"), Carl Wallin, a member and former officer of the Squad, and Peter Olivieri, a member of the Board of Trustees of the Squad. The Defendants are the Borough of Cresskill and various of its officials as well as John Does 1-25. Presently before the court are Defendants' motions to dismiss Plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6). These motions will be considered as summary judgement motions pursuant to Fed.R.Civ.P. 12(b) and Fed.R.Civ.P. 56 due to the extensive supporting documentation provided by all parties. For the reasons set forth below Defendants' motions are granted. Counts One, Six, Seven (to the extent it is based on claims arising under federal law), Eight, and Nine (to the extent it is based on claims arising under federal law) will be dismissed with prejudice. All other Counts (including Counts Seven and Nine to the extent they are based on State law) will be dismissed without prejudice pursuant to 28 U.S.C. § 1367(c)(3).


  Plaintiff Cresskill First Aid Squad ("the Squad") is a non-profit corporation formed in 1982 to provide 24-hour volunteer first aid and ambulatory services to the residents of the Borough of Cresskill ("the Borough"). (Compl. Ex. A.) As of May 2005 there were approximately twenty six active members listed on the Squad's roster. (Wallin Aff. ¶ 17.) In the early 1980's, the Borough Council adopted a series of local ordinances which designated the squad as the official first aid provider for the Borough. (Compl. Ex. C.) The Squad operated out of a building and utilized ambulances which were owned by the Borough. (Wallin Aff. ¶ 14.) The Squad received financial support in the form of voluntary municipal contributions it received from the Borough (in accordance with N.J.S.A. 40:5-2), as well as private donations. (Wallin Aff. ¶ 13.) The great majority of the Squad's funding was provided by the Borough. (Wallin Aff. ¶ 13.) The Borough additionally provided funds for the Length of Service Award Program ("LOSAP"), which is an incentive pension program (established pursuant to N.J.S.A. 40A:14-183) geared toward attracting and maintaining volunteers for emergency services. (Wallin Aff. ¶ 14.) The Borough provided funds for every qualifying year a member of the Squad had, and the member vested in the LOSAP after five qualifying years. (Wallin Aff. ¶ 23.) As a non-profit corporation, the Squad was required to file an annual "Charitable Organization Financial Statement" with the Internal Revenue Service and the Attorney General pursuant to N.J.S.A. 45:17A-23.

  In 2001, the Borough, facing litigation due to its lack of affordable housing, enacted a "Planned Unit Residential Development" (PURD). (Nasuto Aff. ¶ 2.) A considerably large senior community ("Sunrise") was being developed as part of the PURD, which would house several hundred senior citizens in the Borough. (Olivieri Aff. ¶ 10.) During Sunrise's planning phase, the Squad informed the Borough Council and mayor that it did not have the manpower to provide ambulatory services to the residents of Sunrise due to the large number of senior citizens (and their presumed heightened need for emergency services) who would reside in the development. (Olivieri Aff. ¶¶ 10-13.) The Squad and the Borough officials agreed that Sunrise would be required to provide its own services. (Compl. ¶¶ 42-47.) As a result, the Developer's Agreement of June 2001 required private onsite ambulatory service. (Nasuto Aff. ¶ 3; Olivieri Aff. ¶ 11.)

  Between June 2001 and March 2005, a dispute evolved between the Borough and the Sunrise Developer regarding the onsite ambulatory service requirement. The developer threatened legal action against the Borough alleging that the onsite ambulatory service requirement was a violation of the equal protection clause because it applied to the residents of Sunrise but to no other residents of the Borough. (Nasuto Aff. Ex. 5.) In April 2005, on the advice of counsel, the Mayor and Borough Council reversed their position. (Nasuto Aff. ¶¶ 5-6.) The Borough and developer reached a settlement releasing Sunrise's onsite ambulatory service requirement. (Nasuto Aff. ¶ 6.) Members of the Squad strenuously objected to this change. (Wallin Aff. ¶ 29.)

  As the debate for the Sunrise matter was still ongoing, but before the Borough rescinded the ambulatory service requirement, in August 2004 the Borough requested an audit of the Squad's finances for 2002-2003 for the first time in the Squad's history. (Lerch Aff.) This audit was performed by an independent auditing firm, Lerch, Vinci, & Huggins, LLP ("Lerch") which was retained by the Borough. (Lerch Aff. ¶ 4.) Since they did not receive a written representation letter from the Squad, Lerch was "unable to express . . . an opinion on the financial statements submitted by the Squad." (Lerch Aff. ¶ 6.) However, the Squad allowed Lerch to inspect its financial documents while preparing the audit and Lerch made the following findings with respect to errors, omissions, irregularities, and violations of the law during its audit of the Squad:
(1) The audit of cash revealed that the Squad did not prepare monthly bank reconciliations;
(2) The audit of the purchasing cycle revealed that the Organization did not utilize a formal voucher/purchase order system;
(3) The audit of the cash disbursements cycle revealed that the Squad disbursements were being made without approval of the Board of Trustees;
(4) The audit of the minutes could not be completed since there were no minutes available for meetings prior to December 2002.
(Lerch Aff. ¶ 7.)
  Due to the apparent deficiencies, in April 2005, Lerch recommended that the Borough widen the scope of the original audit to encompass the Squad's expenditures from 1999-2004. (Lerch Aff. ¶ 8.) The Borough attorney requested that the Squad provide all of its financial records from 1999-2004 for the expanded audit. (Wallin Aff. ¶ 41.) The Squad did not immediately comply. (Wallin Aff. ¶ 41.) At some time in April or May 2005, members of the Borough Council had the police department enter the building used by the Squad in order to retrieve the Squad's financial records and provide them to the auditors. (Compl. Ex. E; Wallin Aff. ¶¶ 42-43; Romeo Aff. ¶ 17; Nasuto Aff. ¶ 8.) After realizing that the keys no longer worked, they called the locksmith, entered the building, and seized the records. At some point thereafter, the Borough had the locks changed unbeknownst to the Squad. (Nasuto Aff. ¶ 8.) The Borough additionally ordered that the Squad provide it with the Patient Care Reports ("PCPs") from the years encompassing the audit. (Wallin Aff. ¶ 47.) The Squad complied with this request. (Wallin ¶ 47.) Lerch completed the expanded audit upon receiving the additional documentation, citing the following additional irregularities:
(1) Lack of supporting documentation;
(2) Squad funds being disbursed for unrelated purposes (including $1,450 for wedding gifts, $3,926 for the Captains Dinner, and $2,530 for Costco Memberships for all members and their spouses);
(3) Failure to sign the representation letter;
(4) Individuals receiving clothing allowance who did not meet the criteria;
(5) Failure to provide the necessary documentation to receive LOSAP benefits.
(Lerch Aff. ¶¶ 13, 20)

  At a Borough Council meeting on June 1, 2005, the Council and Mayor agreed to lock the Squad out of the Borough owned building it was using. (Wallin Aff. ¶¶ 51-52.) The Borough also passed a resolution and enacted Ordinance 05-09-1296 which rescinded the ordinance establishing the Squad as the official provider of first aid and ambulatory services for the Borough. (Wallin Aff. ¶¶ 51-52; Compl. Ex. E.) The resolution stated that the Squad had: engaged in financially irresponsible action with regards to public donations, taken actions to turn away volunteers, obstructed a department audit, created difficulty in responding to emergency calls, caused a reduction in membership, and otherwise operated in a manner which adversely impacts the public safety of Cresskill residents. (Compl. Ex. E.) The resolution and Ordinance effectively terminated the Squad as the first aid/ambulatory service provider for the Borough.

  On June 9, 2005, the Cresskill Volunteer Ambulance & Emergency Services Company ("CVAESC") was incorporated and became the new first aid/ambulatory service provider for the Borough. (Compl. Ex. F.) The Mayor and several members of the Borough Council were named as Trustees in the CVAESC. (Compl. Ex. F.)

  The contested facts in this case concern the underlying reasons for the audit and subsequent disbandment of the Squad. Plaintiffs claim they were subject to retribution by the Mayor and Borough Council because members of the Squad publicly opposed them in regards to the Sunrise matter. (Compl. ¶¶ 48-52.) Plaintiffs allege that since that time (which according to Plaintiff Wallin's Affidavit at ¶ 31, occurred in 2002), defendants have embarked on a "smear campaign" against the Squad and its members by deliberately discrediting the Squad and pursuing a "vendetta" against them for publicly disagreeing with defendants about the Council's decision to release the developer from its onsite ambulatory service requirement. (Compl. ¶ 49.) Plaintiffs also allege that the "smear campaign" was motivated by the Mayor's desire to defame those members of the Squad whom he viewed as potential political opponents. (Olivieri Aff. ¶ 20.)

  Plaintiffs concede that they did commit the expenditures cited to as "fiscally irresponsible" in the June 1, 2005 council resolution. However, Plaintiffs contend that these types of expenditures are common practice throughout the New Jersey volunteer first aid community as a means of recruiting and retaining volunteers who devote a substantial amount of their free time to providing EMS services. (Compl. ¶ 84.)

  Plaintiffs have brought action against the group of defendants which include: the Borough, the Mayor, members of the Borough Council, the Deputy Police Chief and a Detective, individually and in their official capacity.*fn1 Plaintiffs claim that the disbandment of the Squad and removal of members of the Squad for the reasons cited above constitute a violation of their First Amendment right to free speech and association, and Fourteenth Amendment right to procedural and substantive due process (Count One). Additionally, Plaintiffs claim that the search of the building and seizure of the Squad's financial documents was a violation of the Fourth Amendment protection against unreasonable search and seizure (Count One). The complaint advances Plaintiffs' legal claims in nine Counts. Count One, as previously noted, asserts claims brought pursuant to 42 U.S.C. § 1983. Count Two, charges violations of the New Jersey Highway Safety Act, N.J.S.A. 27:5F-1, et seq. Count Three is for defamation. Count Four is for conversion. Count Five charges negligent supervision, training, and retention. Count Six alleges that the Borough is liable under § 1983 for the violation of federal rights. Count Seven asserts that all claims against the named defendants are also claimed against unidentified defendants John Does 1-25. Count Eight alleges that in adopting the June 1, 2005 Resolution and the June 15, 2005 Ordinance, the Defendants acted arbitrarily, capriciously, and unreasonably. In Count Nine, Plaintiff NJSFAC purports to appear on behalf of several hundred first aid squads in the State of New Jersey which are similarly situated to the Squad and alleges that if the Defendants' actions were permitted to stand all those squads would be adversely affected.

  Plaintiffs have sought relief in the form of: (1) a preliminary and final injunction reversing the mayor and borough council's legislation and reinstating the Squad as the official provider of first aid and ambulatory services to the Borough (The court denied Plaintiffs' motion for a preliminary injunction in its bench opinion issued October 24, 2005); (2) the return of all assets and contributions to the Squad; (3) the return of all financial files and PCPs to the Squad; (4) copies of the audit provided to Plaintiffs; (5) cessation of all defamatory speech and activity against Plaintiffs; (6) reversal of all adverse effects to the funds contained in Plaintiffs' LOSAP accounts so those accounts can be returned to where they would ...

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