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The Third Dept Upheld the Statutory Amendment Cutting Off Reimbursement of Medicaid Overburden Expenses Incurred Prior to 2006—However the Court Imposed a Six-Month Grace Period Before the Amendment Kicks In [The Fourth Dept Dealt with the Same Question in a Decision Dated 11-14-14—Although the Fourth Dept Also Upheld the Amendment, It Did Not Impose a Grace Period and Did Not Use the Same Reasoning]

The Third Department, in a full-fledged opinion by Justice McCarthy, determined that a 2012 amendment to the Social Services Law (section 61) eliminated the requirement that counties be reimbursed by the state for certain medicaid expenses (so-called “Overburden expenses”) incurred prior to 2006, when the medicaid “Cap Statute” was enacted.  The 4th Department dealt with the same issues in Matter of County of Niagara v Shah, 2014 NY Slip Op 07781, 4th Dept 11-14-14.  Although the two courts came to similar, but not identical, conclusions, it is interesting to see the substantial differences in reasoning and result.  Unlike the 4th Department, the Third Department imposed a six-month grace period, starting from the date of the decision, before the prohibition against reimbursement for pre-2006 expenses kicks in. The Third Department dealt with several issues, including:  (1) whether a political subdivision of a state can make a due process claim against the state (the court deemed the issue waived); (2) the amendment of the statute essentially imposed a statute of limitations and therefore did not extinguish a vested right to reimbursement; (3) the amendment is not unconstitutional because the new statute of limitations does not retroactively affect any substantive rights; (4) the special facts exception did not apply; (5) petitioner was entitled to a writ of mandamus requiring payment of the pre-2006 expenses (because of the grace period):

Social Services Law § 368-a and the 2012 amendment can be read together and “interpreted to achieve legislative objectives that are not inherently inconsistent with each other” … . This Court has already held that, under Social Services Law § 368-a (1) (h), petitioner’s right to reimbursement of overburden expenditures accrued when petitioner made payment to the state for those expenses for which no local share was owed, i.e., prior to January 1, 2006 … . The 2012 amendment did not specifically repeal any part of Social Services Law § 368-a or affect the counties’ inherent right to reimbursement. Rather, the amendment simply imposed a statute of limitations for the payment of claims for such reimbursement. A statute of limitations does not impair an underlying substantive right, but may deprive a litigant of any remedy … . In April 2012, the Legislature could have reasonably decided that, to promote finality of claims and effectuate accurate budgeting, reimbursements from more than six years earlier could be barred. Although petitioner contends that DOH was required by statute to reimburse all counties for overburden expenditures incurred prior to 2006, and that DOH did not comply with its statutory obligations, “[a] statute of limitations may apply even when conduct inconsistent with a statute or the state constitution is alleged” … . Matter of County of St. Lawrence v Shah, 2014 NY Slip Op 08278, 3rd Dept 11-26-14

 

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If the Action Challenging Governmental Action Could Have Been Brought in an Article 78 Proceeding, No Matter How the Action Is Labelled, the Four-Month Statute of Limitations Applies

The collection of assessments by the defendant from hydroelectric power plants was deemed illegal in a federal lawsuit brought by a hydroelectric power plant.  Plaintiff, a different hydroelectric power plant, thereafter sought return of the assessments it had paid for six years (between 2002 and 2008) in an action for unjust enrichment.  The Third Department determined that action could have been brought as an Article 78 proceeding challenging the assessments as they were imposed.  Therefore the four-month Article 78 statute of limitations applied, rendering the action untimely:

…Supreme Court erred in applying a six-year statute of limitations because, even though plaintiffs have now labeled their cause of action as one for unjust enrichment, they could have raised their claim for refunds in a CPLR article 78 proceeding challenging each annual assessment, for which the applicable statute of limitations is four months (see CPLR 217 [1]).

“Where, as here, governmental activity is being challenged, the immediate inquiry is whether the challenge could have been advanced in a CPLR article 78 proceeding” … . Thus, whether plaintiffs’ “claims are subject to the four-month statute of limitations period under CPLR article 78 . . . turns on whether the parties’ rights could have been resolved in an article 78 proceeding” … . Indeed, the analysis does not depend upon how plaintiffs label their claims but, rather, we “must look to the underlying claim and the nature of the relief sought and determine whether such claim could have been properly made in another form” … . The purpose of this rule, which results in the imposition of a short statute of limitations to governmental action, is to ensure “that the operation of government [will] not be trammeled by stale litigation and stale determinations” … . Northern Elec Power Co LP v Hudson River-Black Riv Regulating District, 2014 NY Slip Op 08280, 3rd Dept 11-26-14

 

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Procedure for Determining a Motion to Dismiss Pursuant to CPLR 3211 (a)(7) Where the Defendant Submits Evidence Explained/Elements of Gross Negligence Explained

The Second Department, in finding the complaint adequately pled gross negligence (re: packing and transporting an art collection), explained the analytical criteria for dealing with a motion to dismiss pursuant to CPLR 3211 (a)(7) where evidence is submitted by the defendant:

“On a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the complaint must be construed liberally, the factual allegations deemed to be true, and the nonmoving party must be given the benefit of all favorable inferences” … . The court is limited to “an examination of the pleadings to determine whether they state a cause of action,” and the “plaintiff may not be penalized for failure to make an evidentiary showing in support of a complaint that states a claim on its face” … . “The test of the sufficiency of a pleading is whether it gives sufficient notice of the transactions, occurrences, or series of transactions or occurrences intended to be proved and whether the requisite elements of any cause of action known to our law can be discerned from its averments'” … .

“A court is, of course, permitted to consider evidentiary material submitted by a defendant in support of a motion to dismiss pursuant to CPLR 3211(a)(7)” …, and, if it does so, “the criterion then becomes whether the proponent of the pleading has a cause of action, not whether he has stated one'” … . “Yet, affidavits submitted by a defendant will almost never warrant dismissal under CPLR 3211 unless they establish conclusively that [the plaintiff] has no cause of action” … .

Gross negligence “differs in kind, not only degree, from claims of ordinary negligence” … . “To constitute gross negligence, a party’s conduct must smack of intentional wrongdoing or evince a reckless indifference to the rights of others” … . “Stated differently, a party is grossly negligent when it fails to exercise even slight care or slight diligence” … . Ordinarily, the question of gross negligence is a matter to be determined by the trier of fact … . Dolphin Holdings Ltd v Gander & White Shipping Inc, 2014 NY Slip Op 08316, 2nd Dept 11-26-14

 

Motion to Intervene Should Have Been Granted—Criteria Explained

The Third Department determined that the church elders’ motion to intervene should have been granted.  The church at issue had been funded by the man after whom the church was named more than one hundred years ago. The petitioner sought to have the restrictions on the fund removed so that it could be used to support any local Presbyterian church, rather than just the church founded with the fund. The elders of the church founded with the fund sought to intervene:

“Intervention is liberally allowed by courts, permitting persons to intervene in actions where they have a bona fide interest in an issue involved in that action” … . “Whether intervention is sought as a matter of right under CPLR 1012 (a), or as a matter of discretion under CPLR 1013, is of little practical significance since a timely motion for leave to intervene should be granted, in either event, where the intervenor has a real and substantial interest in the outcome of the proceedings” … .

Here, decedent was a wealthy philanthropist who funded the construction of a church building, and he provided trust funds that have benefitted that church for over 100 years. The congregation provided some proof reflecting that decedent may have intended assistance to the church bearing his name to have precedence over any particular denominational affiliation. Although it is premature to determine whether the congregation will prevail, nonetheless the congregation will be impacted by this proceeding and should be afforded the opportunity to present its position. Matter of Jermain, 2014 NY Slip Op 08274, 3rd Dept 11-26-14

 

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Mistrial Declaration Over Defendant’s Objection Was “Manifestly Necessary”—Double Jeopardy Prohibition Not Triggered

The Second Department determined the trial judge had no choice but to declare a mistrial when defense counsel could not proceed because of a conflict and new counsel needed a two-month adjournment.  Because the mistrial, granted over defendant’s objection, was “manifestly necessary” the double jeopardy prohibition of a second trial was not triggered:

The double jeopardy clauses of the New York State and United States Constitutions protect an accused from multiple prosecutions for the same offense . “In a jury trial, once the jury is empaneled and sworn, jeopardy attaches, and the defendant has a valued right to have his trial completed by a particular tribunal'” … .

When a mistrial is granted over the defendant’s objection or without the defendant’s consent, a retrial is precluded unless ” there was manifest necessity for the mistrial or the ends of public justice would be defeated'” … . “Manifest necessity” means a ” high degree of necessity'” based on reasons that are ” actual and substantial'” … . Moreover, before declaring a mistrial, a court must explore all appropriate alternatives and must provide a sufficient basis in the record for resorting to this “drastic measure” …  . Matter of Roey v Lopresto, 2014 NY Slip Op 08340, 2nd Dept 11-26-14

 

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Issuance of a Positive Declaration that the Requested Rezoning May Have a Significant Impact on the Environment and the Requirement that a Draft Environmental Impact Statement Be Drawn Up, Under the Facts, Did Not Constitute an “Injury” Sufficient to Make the Matter Ripe for Court Review—All the Relevant Factors Discussed in Depth

The Second Department, in a full-fledged opinion by Justice Dickerson, determined that the town board’s issuance of a positive declaration pursuant to the State Environmental Quality Review Act (SEQRA) (finding the proposed rezoning to heavy industrial may have a significant effect on the environment) and the requirement that the petitioner (landowner) prepare and circulate a draft environmental impact statement (DEIS), under all the facts, did not constitute an “injury” sufficient to make the matter ripe for judicial review.  Much of the opinion was devoted to distinguishing Matter of Gordon v Rush, 100 NY2d 236, where the Court of Appeals determined, under the facts, the positive SEQRA declaration and the DEIS requirement constituted an “injury” sufficient to make the case ripe for court review without further proceedings.  The Second Department determined that facts here did not warrant the relief granted in the Rush case:

“Ripeness is a justiciability doctrine designed to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties'” … . “To determine whether a matter is ripe for judicial review, it is necessary first to determine whether the issues tendered are appropriate for judicial resolution, and second to assess the hardship to the parties if judicial relief is denied” … .

A court considering review of an agency determination “must determine whether an agency has arrived at a definitive position on the issue that inflicts an actual concrete injury and whether the resolution of the dispute requires any fact-finding, for [e]ven if an administrative action is final, however, it will still be “inappropriate” for judicial review and, hence, unripe, if the determination of the legal controversy involves the resolution of factual issues'” … . “The position taken by an agency is not definitive and the injury is not actual or concrete if the injury purportedly inflicted by the agency could be prevented, significantly ameliorated, or rendered moot by further administrative action or by steps available to the complaining party” … . * * *

“An action taken by an agency pursuant to SEQRA may be challenged only when such action is final” … . Traditionally, a “SEQRA determination [has] usually [been] considered to be a preliminary step in the decision-making process and, therefore, . . . not ripe for judicial review until the decision-making process has been completed” … . Matter of Ranco Sand & Stone Corp v Vecchio, 2014 NY Slip Op 08338, 2nd Dept 11-26-14

 

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Type II Actions (Here Replacement of a Wooden Boardwalk With Synthetic Materials) Presumptively Do Not Have a Significant Impact on the Environment and Do Not Require an Environmental Impact Statement

Petitioners brought an Article 78 proceeding against the NYC Department of Parks and Recreation (DPR) alleging that the plan to replace wooden planks in a boardwalk with a concrete/plastic surface violated the State Environmental Quality Review Act (SEQRA) and the City Environmental Quality Review Rules (CEQR).  The Second Department noted the action was timely and the DPR’s determination the replacement of the boardwalk was a Type II action under SEQR and CEQR that presumptively did not have a significant environmental impact and did not require an environmental impact statement:

The DPR failed to meet its burden of demonstrating that it made a final and binding determination to implement the plan, and that the petitioners were provided notice of such a determination more than four months before the proceeding was commenced (see CPLR 217[1]…).

… The DPR determined that the proposed boardwalk project was for a “replacement, rehabilitation or reconstruction of a structure or facility, in kind” (6 NYCRR 617.5[c][2]) and, thus, was a Type II action under SEQRA and CEQR that presumptively did not have a significant impact upon the environment, and did not require the preparation and circulation of an environmental impact statement. The fact that different materials were used in the replacement construction did not alter the propriety of classifying the project as a Type II action, and that determination was, thus, not arbitrary and capricious, made in violation of lawful procedure, affected by an error of law, an abuse of discretion, or irrational … . Once an action is properly classified as a Type II action under the enumerated provisions of 6 NYCRR 617.5(c), which the New York State Department of Environmental Conservation has already determined to have no significant impact on the environment… . Matter of Coney-Brighton Boardwalk Alliance v New York City Dept of Parks & Recreation, 2014 NY Slip Op 08334, 2nd Dept 11-26-14

 

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Because Defendant Was Negligent As a Matter of Law (Violation of Vehicle and Traffic Law), the Verdict In Favor of the Defendant Was Properly Set Aside

The Second Department determined Supreme Court properly set aside the defendant’s verdict in a vehicle collision case:

A jury verdict should not be set aside as contrary to the weight of the evidence unless the jury could not have reached its verdict on any fair interpretation of the evidence … . “It is within the province of the jury to determine issues of credibility, and great deference is accorded to the jury given its opportunity to see and hear the witnesses” … .

Here, a fair interpretation of the evidence does not support the jury’s finding that the defendant was not negligent. The defendant testified that, when she was stopped at the intersection, her view to her left, the direction from which the injured plaintiff was coming, was obstructed, yet she proceeded anyway. The fact that the defendant proceeded into the intersection without having a clear view of the traffic on Wilson Avenue and without yielding the right-of-way after a stop sign demonstrated that she violated Vehicle and Traffic Law §§ 1142(a) and 1172(a) … . Such violations constitute negligence as a matter of law, and could not properly be disregarded by the jury … . Consequently, on these facts, the jury could not have reached its verdict that the defendant was not negligent on any fair interpretation of the evidence … . Zhubrak v Petro, 2014 NY Slip Op 08332, 2nd Dept 11-26-14

 

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Declaratory Judgment Action Was Actually Seeking to Open a Default Judgment in a Tax Foreclosure Proceeding—30-Day Statute of Limitations in the Tax Law Applied

The Third Department determined that a proceeding seeking a declaratory judgment was actually seeking to open a default judgment in a tax foreclosure proceeding, subject to a 30-day statute of limitations.  The action was dismissed as untimely:

A tax debtor’s motion to reopen a default judgment of tax foreclosure ‘may not be brought more than one month after entry of the judgment'” … . Although the complaint seeks a judgment declaring that the foreclosure is a nullity and does not expressly seek an order vacating the default judgment, it is apparent that the relief that plaintiff now seeks is analogous to that which is demanded in an application to reopen a judgment entered on default and it is, therefore, subject to the timing requirements of RPTL 1131. As the action was commenced more than one month after the default judgment of foreclosure was entered and plaintiff has not demonstrated “either a reasonable excuse for his default or a meritorious defense,” dismissal of the complaint was warranted … . Goodfriend v Village of Jeffersonville, 2014 NY Slip Op 08279, 3rd Dept 11-26-14

 

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Corporation Created by Seneca Nation to Operate a Golf Course Was Not Entitled to Sovereign Immunity—Contractor Hired to Build the Course Can Sue to Foreclose a Mechanic’s Lien

The Court of Appeals, in a full-fledged opinion by Judge Pigott, over a dissent, determined that a corporation created by the Seneca Nation for the operation of a golf course (Lewiston Golf) was not entitled to sovereign immunity and, therefore, could be sued by the company with which the Seneca Nation contracted to build the golf course.  The contractor brought suit to foreclose on a mechanic’s lien:

Indian tribes possess the common law immunity from suit traditionally enjoyed by sovereign powers, unless waived. In Matter of Ransom, we set out several factors for courts to [*6]use to determine whether an entity, such as a corporation or agency, that is affiliated with an Indian tribe has the right to claim sovereign immunity against suit.

“Although no set formula is dispositive, in determining whether a particular tribal organization is an ‘arm’ of the tribe entitled to share the tribe’s immunity from suit, courts generally consider such factors as whether: [1] the entity is organized under the tribe’s laws or constitution rather than Federal law; [2] the organization’s purposes are similar to or serve those of the tribal government; [3] the organization’s governing body is comprised mainly of tribal officials; [4] the tribe has legal title or ownership of property used by the organization; [5] tribal officials exercise control over the administration or accounting activities of the organization; and [6] the tribe’s governing body has power to dismiss members of the organization’s governing body. More importantly, courts will consider whether [7] the corporate entity generates its own revenue, whether [8] a suit against the corporation will impact the tribe’s fiscal resources, and whether [9] the subentity has the power to bind or obligate the funds of the tribe. The vulnerability of the tribe’s coffers in defending a suit against the subentity indicates that the real party in interest is the tribe.” (Ransom, 86 NY2d at 559-560 [internal quotation marks, citations, and square brackets omitted; numbering added].) * * *

…[T]he primary purpose of creating the golf course in Lewiston was to act as a regional economic engine and thereby serve the profit-making interests of the Seneca Nation’s casino operations in the area. While this may result in more funds for government projects on the Seneca Nation’s reservations and elsewhere that benefit members of the tribe, … the purposes of Lewiston Golf were sufficiently different from tribal goals that they militate against Lewiston Golf’s claim of sovereign immunity. However, the purposes factor of Ransom is not determinative… . While some of the remaining Ransom factors favor the conclusion that Lewiston Golf is protected by sovereign immunity, the most important ones strongly support the opposite conclusion. Sue/Perior Concrete & Paving Inc v Corporation, 2014 NY Slip Op 08218, CtApp 11-25-14

 

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