| Matter of Greece Town Mall, L.P. v New York State |
| 2013 NY Slip Op 02807 [105 AD3d 1298] |
| April 25, 2013 |
| Appellate Division, Third Department |
| In the Matter of Greece Town Mall, L.P., Appellant, v NewYork State et al., Respondents. |
—[*1] Eric T. Schneiderman, Attorney General, Albany (Owen W. Demuth of counsel), forrespondents.
McCarthy, J. Appeal from a judgment of the Supreme Court (McNamara, J.), enteredNovember 3, 2011 in Albany County, which dismissed petitioner's application, in acombined proceeding pursuant to CPLR article 78 and action for declaratory judgment,to review a determination of respondent Empire Zone Designation Board revokingpetitioner's certification as an empire zone business enterprise.
In 2002, petitioner, the owner of a shopping mall, was certified as an empire zonebusiness enterprise, allowing it to receive certain tax credits. The certification stated thatit was effective through 2015. In June 2009, after the Legislature amended the EmpireZones Act (General Municipal Law § 955 et seq.), the Commissioner ofEconomic Development revoked petitioner's certification retroactive to January 2008.Upon petitioner's administrative appeal, respondent Empire Zone Designation Board(hereinafter the Board) upheld that decision. Petitioner commenced this combinedproceeding pursuant to CPLR article 78 and action for declaratory judgment seeking,among other things, to annul the Board's determination that decertified petitioner as anempire zone business enterprise. Respondents moved to dismiss the petition. SupremeCourt partially granted the motion, dismissing all but two causes of action and issuingdeclarations in respondents' favor. Petitioner then moved for, among other things, leaveto amend its petition/complaint to add a cause of action seeking a declaration that its[*2]decertification could not be retroactively applied toJanuary 2008. Supreme Court denied the motion to amend and, after respondentsanswered, dismissed the petition/complaint. Petitioner appeals.[FN1]
Supreme Court properly determined that General Municipal Law § 959 (w)does not violate the NY Constitution (see NY Const, art III, § 22). Thepower to tax lies solely with the Legislature and may not be delegated to anadministrative agency (see NY Const, art III, § 1; art XVI, § 1;Greater Poughkeepsie Lib. Dist. v Town of Poughkeepsie, 81 NY2d 574,579-580 [1993]). Consistent with the NY Constitution, the taxes that petitioner wasrequired to pay were enacted by the Legislature. The Department of EconomicDevelopment (hereinafter DED) did not impose any tax; it merely determined whetherbusinesses were entitled to a credit against legislatively-imposed taxes (see James Sq. Assoc. LP vMullen, 91 AD3d 164, 172-173 [2011]). In doing so, DED was implementing alegislative mandate, which is constitutionally permissible (see Matter of MedicalSocy. of State of N.Y. v Serio, 100 NY2d 854, 864-865 [2003]; Matter ofCarpenter Tech. Corp. v Commissioner of Taxation & Fin., 295 AD2d 830, 834[2002], lv denied 99 NY2d 501 [2002]; Rex Paving Corp. v White, 139AD2d 176, 184 [1988]). Thus, the court properly declared that the Board's determinationdid not violate the NY Constitution.
Petitioner should have been granted leave to amend its petition/complaint to includea cause of action seeking a declaration that any revocation of petitioner's status as anempire zone business enterprise may not be applied retroactively to January 2008. "Leaveto amend a pleading should be freely granted as long as the amendment does not plainlylack merit and no prejudice will befall the opposing party" (Backus v Lyme AdirondackTimberlands II, LLC, 96 AD3d 1248, 1250 [2012] [citation omitted]). AlthoughSupreme Court found that the proposed cause of action had no merit, that determinationwas based upon a trial court decision that has since been modified by this Court (Matter of Hague Corp. v EmpireZone Designation Bd., 96 AD3d 1144, 1147 [2012], appeal dismissed19 NY3d 1016 [2012]). Based upon this Court's rulings—in circumstances similarto petitioner's—that revocation of a business's certification cannot be maderetroactive to January 2008 (see id. at 1147; Matter of WL, LLC v Department of Economic Dev., 97 AD3d24, 32-33 [2012], appeal dismissed 19 NY3d 1021 [2012], lvgranted 20 NY3d 853 [2012]; Matter of Morris Bldrs., LP v Empire Zone Designation Bd., 95AD3d 1381, 1382-1383 [2012], lv denied 19 NY3d 812 [2012]; see also Matter of J-P Group, LLCv New York State Dept. of Economic Dev., 91 AD3d 1363, 1364 [2012];James Sq. Assoc. LP v Mullen, 91 AD3d at 172-174), and based on a lack ofrecord proof that respondents would be prejudiced, we grant petitioner leave to amend itspetition/complaint as proposed.
Supreme Court properly declared that respondents may not be estopped fromrevoking petitioner's certification as an empire zone business enterprise. Because "taxlegislation is not a governmental promise, [taxpayers have] no vested or actionable right. . . to the benefit of a tax statute or regulation" (Matter of VarringtonCorp. v City of N.Y. Dept. of Fin., 85 NY2d 28, 33 [1995]). A claim of estoppelmay only be asserted against a government agency in the rarest of situations and may notbe invoked to prevent an agency from discharging its statutory duties (see Matter ofNew York State Med. Transporters Assn. v Perales, 77 NY2d 126, 130 [1990]; Matter of Village of Fleischmanns[Delaware Natl. Bank of Delhi], 77 AD3d 1146, 1148 [2010]). After theLegislature amended the Empire Zones Act, the Board discharged its statutory duty toreview [*3]appeals of the DED Commissioner's decisionsto decertify empire zone business enterprises (see General Municipal Law§ 959 [w]). Under these circumstances, where petitioner did not have a vestedright to continue receiving tax credits and the Board was fulfilling its duty under the law,the court properly held that estoppel may not be invoked.[FN2]
Finally, for the reasons stated in Matter of Office Bldg. Assoc., LLC v Empire Zone DesignationBd. (95 AD3d 1402, 1405-1406 [2012]), and as conceded by respondents, wemust remit to the Board because its determination lacks sufficient detail to permitintelligent court review, and the affidavit submitted by respondents did not cure thisdefect.
Mercure, J.P., Lahtinen and Garry, JJ., concur. Ordered that the judgment ismodified, on the law, without costs, by reversing so much thereof as (1) dismissedpetitioner's fourth and sixth causes of action seeking to annul the determination ofrespondent Empire Zone Designation Board revoking petitioner's certification as anempire zone business enterprise and (2) denied petitioner's motion to amend itspetition/complaint; motion granted and matter remitted to the Supreme Court for furtherproceedings not inconsistent with this Court's decision; and, as so modified, affirmed.
Footnote 1: Petitioner's appeal fromthe final judgment brings up for review any nonfinal orders that necessarily affect thatjudgment (see CPLR 5501 [a] [1]).
Footnote 2: To the extent thatpetitioner seeks to estop respondents from applying its decertification retroactively toJanuary 2008, that argument may be raised upon remittal in connection with thenewly-added cause of action.