| Matter of Conners v Town of Colonie |
| 2013 NY Slip Op 05033 [108 AD3d 837] |
| July 3, 2013 |
| Appellate Division, Third Department |
| In the Matter of Michael Conners II et al., Appellants, vTown of Colonie et al., Respondents. |
—[*1] Michael C. Magguilli, Newtownville (Andrew J. Leja of Hiscock & Barclay, LLP,Syracuse, of counsel), for Town of Colonie and others, respondents. Beveridge & Diamond, PC, New York City (Michael G. Murphy of counsel), forCapital Region Landfills, Inc. and another, respondents.
Garry, J. Appeal from a judgment of the Supreme Court (McDonough, J.), enteredApril 11, 2012 in Albany County, which, in a proceeding pursuant to CPLR article 78,among other things, granted respondents' motions to dismiss the amended petition.
Respondent Town of Colonie owns land in the City of Cohoes, Albany County onwhich a landfill and other solid waste management facilities (hereinafter collectivelyreferred to as the landfill) are operated. In 2010, the Town decided to transfer operationalcontrol of the landfill to a private company and solicited proposals pursuant to GeneralMunicipal Law § 120-w (4) (e). A proposal was submitted by respondent CapitalRegion Landfills, Inc. (hereinafter CRL), a wholly-owned subsidiary of respondentWaste Connections, Inc. (hereinafter WCI). In July 2011, respondent Town Board of theTown of Colonie adopted a resolution authorizing the Town to enter into an agreementwith CRL for the landfill's operation and management. Thereafter, the Town and CRLexecuted a "Solid Waste Facility Operating Agreement" (hereinafter the agreement) bywhich, among other things, CRL agreed to manage, maintain and operate the landfill for25 years. The Town then transferred the landfill's operation to CRL.[*2]
Petitioners, all of whom are Town residents,commenced this CPLR article 78 proceeding against the Town, the Board andrespondent Paula A. Mahan, the Supervisor of the Town (hereinafter collectively referredto as the Town respondents), seeking, among other things, to annul the resolution forfailing to comply with Town Law §§ 64 (2) and 90. Following a motion bythe Town respondents to dismiss the petition, petitioners served an amended petitionnaming CRL and WCI as additional parties. CRL, WCI and the Town respondents eachthen moved to dismiss the amended petition alleging, among other things, that theproceeding was precluded by General Municipal Law § 120-w (6). Supreme Courtgranted respondents' motions and dismissed the petition and amended petition, finding,as pertinent here, that the Town respondents were not required to comply with TownLaw § 64 (2), as it conflicts with General Municipal Law § 120-w, and thatthe proceeding was not authorized by General Municipal Law § 120-w (6).Petitioners appeal.
We conclude that Supreme Court properly dismissed the petition and amendedpetition, but we do so for other reasons (see Sega v State of New York, 60 NY2d183, 190 n 2 [1983]; Matter of NANCO Envtl. Servs. v Jorling, 172 AD2d 1, 6 n[1991], lv denied 80 NY2d 754 [1992]; State of New York v Peerless Ins.Co., 117 AD2d 370, 373 [1986]). Town Law § 64 (2) provides that, uponadopting a resolution, a town board may "convey or lease real property in the name of thetown, which resolution shall be subject to a permissive referendum." The petition andamended petition allege that, as the agreement is "the functional equivalent of a lease,"the Town violated Town Law § 64 (2) by adopting the resolution and entering intothe agreement without first conducting a permissive referendum (see Matter of LaBarbera v Town ofWoodstock, 55 AD3d 1093, 1094 [2008]). We disagree, finding that petitioners'documentary evidence establishes conclusively that there was no conveyance subject toTown Law § 64 (2).
Upon a motion to dismiss a CPLR article 78 petition, a court must ordinarily acceptthe petition's allegations as true (see CPLR 7804 [f]; Matter of Albany Law School vNew York State Off. of Mental Retardation & Dev. Disabilities, 81 AD3d 145,148 [2011], mod 19 NY3d 106 [2012]; Matter of Burke v Carey, 82AD2d 953, 954 [1981]). However, when a petition's "legal conclusions and factualallegations are flatly contradicted by documentary evidence, they are not presumed to betrue or accorded every favorable inference, and the criterion becomes whether theproponent of the pleading has a cause of action, not whether he [or she] has stated one"(Griffin v Anslow, 17AD3d 889, 891-892 [2005] [internal quotation marks and citations omitted]; accord Matter of North Dock TinBoat Assn., Inc. v New York State Off. of Gen. Servs., 96 AD3d 1186, 1189[2012]; see Maas v Cornell Univ., 94 NY2d 87, 91 [1999]). Here, petitioners'claims are founded upon their contention that the agreement is a lease. This assertiondoes not present a factual issue; on the contrary, interpreting the contract to determinewhether it is a lease poses questions of law for the court (see Agristor Leasing vBarlow, 180 AD2d 899, 901 [1992], lv dismissed 80 NY2d 826 [1992];see generally Feder v Caliguira, 8 NY2d 400 [1960]; Currier, McCabe & Assoc., Inc. vMaher, 75 AD3d 889 [2010]).
In contending that the agreement is a lease, the petition and amended petition relyprimarily upon a detailed comparison between the terms of the agreement and those of alandfill lease from another county, both of which petitioners submitted as exhibits.Respondents concede that the submitted lease was used as a model for some of theagreement's provisions. Petitioners contend that certain resulting similarities betweenthese documents prove that the true character of the agreement is that of a lease, ratherthan—as respondents contend—an agreement for the operation of a solidwaste management facility, as permitted by General Municipal Law § 120-[*3]w.[FN*]Determining whether the agreement is a lease does not depend upon a comparison withother agreements, nor upon the fact that the parties to the agreement denominated it as anoperating agreement rather than as a lease; rather, the true nature of the transaction mustbe determined by examining the agreement to discern the substantive nature of theobligations it imposes and the rights it confers (see Feder v Caliguira, 8 NY2d at404; Matter of New York World-Tel. Corp. v McGoldrick, 298 NY 11, 18[1948]; Matter of Great Lakes-Dunbar-Rochester v State Tax Commn., 102AD2d 1, 5 [1984], revd on other grounds 65 NY2d 339 [1985]).
"It is the transfer of absolute control and possession of property at an agreed rentalwhich differentiates a lease from other arrangements dealing with property rights"(Feder v Caliguira, 8 NY2d at 404; see Slutzky v Cuomo, 114 AD2d116, 118 [1986], appeal dismissed 68 NY2d 663 [1986]). Initially, the agreementcontains no provisions that explicitly convey property rights, such as the demise of aleasehold or any other estate in land, or a covenant of peaceful enjoyment during theagreement's term. Instead, the agreement's stated purpose is for the Town to "authorize[ ]and direct[ ]" and CRL to "covenant[ ] and agree[ ]" that CRL will "manage, maintainand operate the [landfill] in accordance with the agreements, covenants and conditionsset forth herein." Consistent with this purpose, the agreement neither divests the Town ofabsolute possession and control over the landfill nor grants such rights exclusively toCRL. The Town retains the unlimited right to enter the property "at all reasonable times"to inspect CRL's operations, books, and records. There is no requirement for advancenotice, and CRL must facilitate such inspections by informing the Town of the locationswhere pertinent records are kept. Additionally, the Town may enter the property andoperate the landfill in the event of CRL's failure to do so in conformity with theagreement or other default. The Town further retains the right to use the property inconnection with a preexisting lease of a gas-to-energy plant and other related contractswith a third party, as well as the obligation to indemnify CRL for any liability arisingfrom this use or otherwise from the Town's "use, possession, operation and managementof the [landfill]." Additionally, the Town reserves rights and obligations under a leaseagreement with another third party regarding a cellular tower installation, and it retainsall oil, natural gas and mineral rights as well as the right to enter the landfill property andgrant licenses to others to explore and develop these resources in a manner that does not"materially interfere" with CRL's operations.
CRL's operation of the landfill is correspondingly subject to numerous contractualrequirements and restrictions. CRL is required to keep the landfill in continuousoperation throughout the term of the agreement, and must do so in conformity withapplicable laws and regulations, the landfill's existing 6 NYCRR part 360permit—which remains in the Town's name—and procedures set out in "theOperations and Maintenance Manual for the Town of Colonie." The agreementspecifically limits the rates that CRL may charge and the rate adjustments that may beimposed upon Town residents, businesses and others, obligates CRL to honor existingwaste disposal contracts and to provide free disposal within specified limits to a numberof named entities, and precludes CRL from accepting waste from certain metropolitanareas without the Town's written consent. The agreement further makes CRL responsiblefor certain financial assurances and other regulatory obligations related to closure andpost-closure care of the landfill.[*4]
As for financial obligations, the agreementrequires CRL to make an initial payment to the Town and additional payments atspecified intervals thereafter. Although these payments bear some similarity to rent, theagreement provides that they are made in consideration for CRL's right to retain revenuesgenerated by landfill operations rather than for its possession and use of the property.Further suggesting that these payments are not equivalent to rent, the agreement providesthat the payment obligation ends on "the last day on which the [l]andfill accepts[q]ualified [w]aste for disposal" rather than at the end of the agreement's term, and thereis no provision for payment of installments to the Town until the end of the agreement'sstated term in the event of an early termination caused by CRL's default. Finally,although CRL has "the obligation and the right" to make capital improvements to thelandfill, it may do so only after reasonable notice to the Town, must obtain requiredpermits and comply with other requirements set out in the agreement, and may carry outany landfill expansion only upon consultation with the Town.
We agree with petitioners that "the important requirement of permissive referendum"is not to be denigrated (Atkins v Town of Rotterdam, 266 AD2d 631, 633[1999]; see Matter of Millar v Tolly, 252 AD2d 872, 873 [1998]). However,Town Law § 64 (2) confines this requirement to conveyances and leases of realproperty (see Aiardo v Town ofE. Greenbush, 64 AD3d 849, 852 [2009]). Had the Legislature intended toexpand the Town Law requirement to include nonlease landfill operating agreements orto institute a referendum requirement for all solid waste management contracts executedpursuant to General Municipal Law § 120-w, it could have done so. In view of thesignificant restrictions on CRL's authority and control of the landfill and the rights andpowers retained by the Town, the agreement does not convey "absolute control andpossession" to CRL and is not a lease as a matter of law (Feder v Caliguira, 8NY2d at 404; see Matter of New York Pub. Interest Research Group v Town of N.Hempstead, 153 AD2d 743, 745-746 [1989]; Slutzky v Cuomo, 114 AD2dat 118; Matter of Riverview Apts. Co. v Golos, 97 AD2d 917, 918 [1983], lvdismissed 62 NY2d 606 [1984], lv dismissed 62 NY2d 976 [1984]).
Accordingly, petitioners' claim that a permissive referendum was required by TownLaw § 64 (2) is without merit. As they make no claim that the proceduralrequirements of General Municipal Law § 120-w were violated, or that annulmentof the resolution and the agreement is otherwise justified, the petition was properlydismissed. We need not determine whether any conflict exists between Town Law§ 64 (2) and General Municipal Law § 120-w, nor address the parties'remaining contentions.
Peters, P.J., Lahtinen and McCarthy, JJ., concur. Ordered that the judgment isaffirmed, without costs.
Footnote *: This statute does notimpose a permissive referendum requirement.