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Arbitrator Exceeded His Authority by Modifying Punishment Imposed by Town Upon Employee for Misconduct

The Second Department determined an arbitrator exceeded his authority (by modifying punishment) as that authority was described in a stipulation prior to the hearing, and further determined objection to the arbitrator’s exceeding his authority was not waived by the town. Petitioner was a town employee who had been suspended for thirty days for misconduct.  The arbitrator determined there was just cause for the town’s action, but imposed a lesser penalty.  The town brought the Article 75 proceeding to address whether the arbitrator had exceeded his authority by modifying the punishment:

“Judicial review of an arbitrator’s award is extremely limited” … . A court may vacate an arbitration award pursuant to CPLR 7511(b)(1)(iii) “only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator’s power” (…see CPLR 7511[b][1][iii]…).

A party can only waive its contention that an arbitrator acted in excess of his or her power “by participating in the arbitration with full knowledge” of the alleged error that is being committed and “by failing to object until after the award” is issued … . * * *

At the beginning of the arbitration, the issue to be determined was defined as whether there was just cause to punish [the employee] and, “if not,” what the remedy should be. As framed in this manner, the issue to be determined by the arbitrator was in accordance with his powers, as set forth in Article X(E)(6) of the [Collective Bargaining Agreement], which only empowered the arbitrator to provide [the employee] with a remedy upon a finding that the imposition of discipline was not founded on just cause. Since the arbitrator found that there was just cause for the discipline imposed, the arbitrator exceeded his authority in reducing the penalty imposed. Matter of Town of Babylon v Carson, 2013 NY Slip Op 07980, 2nd Dept 11-27-13

 

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NYC Fire Department Cannot Be Compelled to Bargain Over the “Zero Tolerance” Drug-Test Policy for EMS Personnel

In a full-fledged opinion by Justice Richter, the First Department determined the “zero tolerance” policy requiring the termination of emergency medical services personnel who fail or refuse a drug test was not subject to mandatory collective bargaining:

This appeal raises the question of whether the New York City Fire Department’s “zero tolerance” policy, requiring automatic termination of certain emergency medical services [EMS] employees who fail or refuse to provide a specimen for a drug test, should have been subject to mandatory collective bargaining. The New York City Board of Collective Bargaining found that this issue was not required to be bargained, and unions representing the employees brought this article 78 proceeding. We now uphold the Board’s decision because the City Charter provides that the discipline of these EMS employees is the sole province of the New York City Fire Commissioner, and because the Fire Department’s determination of an appropriate penalty for illegal drug use relates to its primary mission of providing public safety. * * *

The Court of Appeals recently reiterated that a public employer cannot be compelled to bargain over “inherent[] and fundamental[] policy decisions relating to the primary mission of the public employer” … . FDNY’s interest in ensuring that its EMS workers are drug-free directly relates to the primary mission of treating and providing transport for sick and injured citizens and ensuring that EMS workers do so safely. This Court of Appeals precedent provides further support for our conclusion that FDNY cannot be compelled to bargain over this fundamental public safety policy decision. Matter of Roberts v NYC Off of Collective Bargaining, 2013 NY Slip Op 07870, 1st Dept 11-26-13

 

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Department of Homeless Services’ New Eligibility Procedure Triggered the Notice and Hearing Requirements of the City Administrative Procedure Act

The Court of Appeals, in a full-fledged opinion by Judge Graffeo, determined that the NYC Department of Homeless Services’ (DHS’s) adoption of a new Eligibility Procedure for temporary housing assistance triggered the notice and hearing requirements of the City Administrative Procedure Act (CAPA).  The failure to comply with the act prohibited implementation of the new rules.  In explaining that the Eligibility Procedure met the definition of a rule or regulation, the Court wrote:

DHS argues that the Eligibility Procedure is not a rule because DHS workers exercise some measure of discretion in resolving certain issues relevant to eligibility, such as whether an applicant has provided adequate cooperation during the need assessment process.  But the procedure itself is mandatory — all intake workers must follow it, regardless of the circumstances presented by an individual applicant — and many of the standards articulated in it are mandatory in the sense that their application will dictate whether an individual will or will not receive benefits.  For example, applicants are required to produce documentation pertaining to prior housing, financial resources and mental or physical impairment (which may necessitate the signing of a medical release) and if they fail to do so without a valid reason (mental or physical impairment), this “constitutes a failure to cooperate” mandating denial of benefits.  Similarly, the procedure specifies that a single adult who has $2,000 of on-hand assets “must utilize his/her resources to reduce or eliminate his/her need for emergency shelter” prior to being eligible for benefits.  Another section directs that “if an applicant has tenancy rights at any housing option, that residence will be deemed the viable housing option and the applicant will be found ineligible, provided there is no imminent threat to health or safety.”  These concrete provisions substantially curtail, if not eliminate, an intake worker’s discretion to grant THA (temporary housing assistance) benefits.  In fact, there are several specific directives in the Eligibility Procedure that appear to compel intake workers to deny benefits based on the presence or absence of a single factor, regardless of other circumstances that might support a determination of eligibility.  The procedure, which is itself mandatory, requires the application of standards that are dispositive of the outcome.  Matter of the Council of the City of New York v The Department of Homeless Services of the City of New York, 193, CtApp 11-26-13

 

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Hotel Room Occupancy Tax On Online Hotel Reservations Okay

The Court of Appeals, in a full-fledged opinion by Judge Rivera, held that a New York City hotel room occupancy tax (Local Law 43), applicable to online travel companies through which customers make hotel reservations, was constitutional (reversing the Appellate Division):

Online travel companies like the plaintiffs have successfully reshaped the way people book travel.  Now, a customer can conveniently and efficiently search the plaintiffs’ websites for a hotel room and reserve it with the click of a button.  While it may no longer seem novel to reserve a hotel room online, this innovation revamped the industry, and the industry players have reaped considerable profits.  However, this innovation has not changed the main purpose of a hotel reservation process: selecting and paying for a room for future occupancy.  Local Law 43 adheres to its enabling purpose, the taxation of hotel occupancy rent and charges, by taxing everything a hotel occupant actually pays for occupancy when booking online. * * *

Local Law 43 is not unconstitutional because the State Legislature granted the City broad authority to impose a tax on hotel occupants, and Local Law 43 taxes only payments for the occupancy of a hotel room.  Expedia Inc … v City of New York Department of Finance…, 180, CtApp 11-21-13

 

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Complaint Did Not State a Cause of Action Against City for Negligent Failure to Provide Emergency Medical Services—No “Special Relationship” Alleged

The Second Department determined a complaint against the City alleging a negligent failure to provide emergency services (resulting in the death of plaintiff’s decedent) should have been dismissed.  The court explained that the criteria for a “special relationship” with the city with respect to responding to a call for medical help had not been met:

As a general rule, “a municipality may not be held liable to a person injured by the breach of a duty owed to the general public, such as a duty to provide police protection, fire protection or ambulance services” … . There is, however, a “narrow class of cases in which [the courts] have recognized an exception to this general rule and have upheld tort claims based upon a special relationship’ between the municipality and the claimant” … . Such special relationship imposes a specific duty upon the municipality to act on behalf of the claimant … . As articulated by the Court of Appeals in Cuffy v City of New York, “[t]he elements of this special relationship’ are: (1) an assumption by the municipality, through promises or actions, of an affirmative duty to act on behalf of the party who was injured; (2) knowledge on the part of the municipality’s agents that inaction could lead to harm; (3) some form of direct contact between the municipality’s agents and the injured party; and (4) that party’s justifiable reliance on the municipality’s affirmative undertaking”… .

Here, the complaint fails to allege any facts tending to show that there was any “direct contact” between the decedent and the defendants or that there was any “justifiable reliance” on any promise made to the decedent by the defendants. Accordingly, the complaint does not state facts from which it could be found that there was a special relationship between the decedent and the defendants necessary to assert a negligence cause of action against the defendants … . In the absence of any allegation of such a relationship, the complaint cannot state a viable cause of action against the City based on its alleged negligence in failing to send an ambulance to the decedent’s home.  Freeman v City of New York, 2013 NY Slip Op 07707, 2nd Dept 11-20-13

 

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Notices of Claim Were Sufficient to Notify County of a “Navigation Law 181” Cause of Action Re: a Fuel Spill

The Second Department determined the notices of claim against the county were sufficient even though they did not explicitly mention a violation of Navigation Law section 181.  The notices alleged the county was negligent with respect to underground fuel storage tanks resulting in leakage and contamination of water wells. The notices did not specifically recite that the County was subject to strict liability for a violation of Navigation Law section 181. The Second Department explained the relevant legal and factual notice requirements:

…[T]he plaintiffs, as a condition precedent to the assertion of Navigation Law § 181 cause of action, were required to serve a notice of claim that included information and allegations specific to their Navigation Law § 181 cause of action. County Law § 52 requires a notice of claim to be served upon the County, and applies to any claim for “for invasion of personal or property rights, of every name and nature” and to “any other claim for damages arising at law or in equity, alleged to have been caused or sustained in whole or in part by or because of any misfeasance, omission of duty, negligence or wrongful act on the part of the county” (County Law § 52). The assertion of a Navigation Law § 181 cause of action against the County, which could result in the County being held strictly liable for all cleanup costs and damages resulting from a discharge of petroleum, is subject to the broad notice-of-claim requirements of County Law § 52… .

…[T]he plaintiffs’ notices of claim were sufficient to apprise the County that they intended to pursue a cause of action premised upon a violation of Navigation Law § 181. The plaintiffs were not required to “state a precise cause of action in haec verba” in their notices of claim … . “The test of the sufficiency of a [n]otice of [c]laim is merely whether it includes information sufficient to enable the [municipality] to investigate'” the claim … . Here, the plaintiffs’ notices of claim set forth conduct on the part of the County which allegedly caused the discharge of petroleum onto the plaintiffs’ properties, thereby resulting in damage to the properties. The notices of claim provided information sufficient to enable the County to investigate the alleged fuel spills, leakage, and seepage while information concerning the alleged fuel spills, leakage, and seepage was still readily available. As such, the notices of claim were sufficient to alert the County to the potential Navigation Law § 181 cause of action, and afforded the County ample opportunity to promptly investigate the alleged spills, leakage, and seepage underlying that cause of action. Bartley v County of Orange, 2013 NY Slip Op 07701, 2nd Dept 11-20-13

 

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Lease Which Purported to Deregulate Rent-Controlled Apartment Is Void As Against Public Policy

In a full-fledged opinion by Judge Mazzarelli, the First Department determined that a lease (called the “New Agreement”) which purported to deregulate a rent-controlled apartment was void as against public policy:

In Drucker v Mauro (30 AD3d 37, 39 [1st Dept 2006], appeal dismissed 7 NY3d 844 [2006]) this Court stated:

“It is well settled that the parties to a lease governing a rent-stabilized apartment cannot, by agreement, incorporate terms that compromise the integrity and enforcement of the Rent Stabilization Law. Any lease provision that subverts a protection afforded by the rent stabilization scheme is not merely voidable, but void (Rent Stabilization Code [9 NYCRR] § 2520.13), and this Court has uniformly thwarted attempts, whether by mutual consent or by contract of adhesion, to circumvent regulated rent maximums.”

Even an agreement that modifies the rent laws in a manner favorable to the tenant is of no effect (id. at 41). The New Agreement does not merely modify the rent regulations; it declares them inapplicable to the apartment. Without question, then, the New Agreement is void. We note that, although Drucker addressed only agreements to deregulate rent-stabilized apartments, there is no logical reason why the same principle should not apply to the rent-controlled apartment at issue here.  Extell Belnord LLC v Uppman, 2013 NY Slip Op 07697, 1st Dept 11-19-13

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Village Properly Withdrew Its Defense and Indemnification of Officials When Officials Refused a Reasonable Settlement Offer

The Court of Appeals, in a full-fledged opinion by Judge Lippman (with a dissent), determined “that a municipality, consistent with its obligations under Public Officers Law, may withdraw its defense and indemnification of current and former municipal officials and officers in a civil action for their failure to accept a reasonable settlement offer, and that First Amendment concerns with respect to the settlement’s nondisclosure clause do not warrant a different conclusion:”

The Freeport Village Code § 130-6 adopts Public Officers Law § 18 (3)(a), which provides that “public entity shall provide for the defense of [an] employee in any civil action or proceeding, state or federal, arising out of any alleged act or omission which occurred or allegedly occurred while the employee was acting within the scope of his public employment or duties.”  The Village’s duty to defend and indemnify “shall be conditioned upon: . . . the full cooperation of the employee in the defense of such action or proceeding against the Village based upon the same act or omission” (Freeport Vil. Code § 130-6 [A][1] [emphasis added]; Public Officers Law § 18 [5][ii]). * * *

A municipal employer’s statutory duty to defend a public officer under Public Officers Law § 18 is similar to an insurance company’s contractual duty to defend an insured (Matter of Dreyer v City of Saratoga Springs, 43 AD3d 586, 588 [3d Dept 2007]).  As in the insurance context, petitioners were obligated to cooperate in the defense of the action as a condition of their defense and indemnification (Public Officers Law § 18 [5][ii]; Freeport Vil. Code § 130-6 [A][1]).

“In order to disclaim coverage on the ground of an insured’s lack of cooperation, the carrier must demonstrate that (1) it acted diligently in seeking to bring about the insured’s cooperation, (2) the efforts employed by the carrier were reasonably calculated to obtain the insured’s cooperation, and (3) the attitude of the insured, after cooperation was sought, was one of willful and avowed obstruction”… . Matter of Lancaster v Incorporated Village of Freeport…, 181, CtApp 11-19-13

 

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County Properly Passed Legislation Phasing Out Tax Exemption

The Fourth Department determined the county, by passing legislation, could remove a tax exemption for a municipal water and sewage treatment facility:

…[W]e agree with the court that the County Board’s adoption of the 2011 resolution phasing out all tax exemptions for municipal water and sewage treatment facilities constituted a “legislative change” within the meaning of the Exemption Agreement.  The County Board is a legislative body that exercises defendant’s power “through a local law or resolution duly adopted by the board” (County Law § 153 [1]; see § 150-a [1]), and the Exemption Agreement specifically provides that a legislative change shall modify the obligations of the parties to comply with such legislative change.  Village of Lowville v County of Lewis, 906, 4th Dept 11-15-13

 

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Lease; Services Agreement Did Not Allow Building Owner to Recover for Condition of Property

In a full-fledged opinion by Judge Smith, the Court of Appeals determined that plaintiffs, the building owners, could not recover damages related to the condition of the property upon the termination of the lease.  The property was used as a homeless shelter.  The City of New York entered into a Services Agreement with The Salvation Army to run the shelter.  The Salvation Army leased the property from the property owners. The City, in the Services Agreement, was required to pay The Salvation Army’s obligations to the property owners under the lease. The Court wrote:

The Lease is clear that, as a general proposition, The Salvation Army is not obliged to pay more to plaintiffs than it can recover from the City, and it is equally clear that The Salvation Army must do what it reasonably can to recover what the City owes it.  If The Salvation Army breached its duty to use commercially reasonable efforts to enforce a City obligation, it could not rely on the City’s non-payment of that obligation to defeat plaintiffs’ claim.  …[H]owever, … the complaint fails to allege any commercially reasonable step that The Salvation Army should have taken to recover money from the City. Plaintiffs do not identify any provision of the Services Agreement under which the City owes money to The Salvation Army that The Salvation Army failed to collect.  JFK Holding Company LLC v City of New York…, 196, CtApp 11-14-13

 

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