| Matter of HD Servs., LLC v New York State Comptroller |
| 2008 NY Slip Op 04417 [51 AD3d 1236] |
| May 15, 2008 |
| Appellate Division, Third Department |
| In the Matter of HD Services, LLC, Doing Business as KensingtonShareholder Services, Respondent, v New York State Comptroller,Appellant. |
—[*1] Goetz Fitzpatrick, L.L.P., New York City (Susan M. Pascale of counsel), forrespondent.
Cardona, P.J. Appeal from a judgment of the Supreme Court (McNamara, J.), enteredJanuary 29, 2007 in Albany County, which, among other things, granted petitioner's application,in a proceeding pursuant to CPLR article 78, to compel respondent to comply with theAbandoned Property Law and process certain claims in the absence of a notarized finderagreement.
The State Office of Unclaimed Funds (hereinafter OUF) is a branch of respondent and servesas the recipient, fiduciary and disbursement office for abandoned or unclaimed assets held byrespondent. Companies such as petitioner are referred to as "finders" and are engaged in thebusiness of locating individuals who are entitled to such property and then assisting them withfiling claims to recover their assets. Pursuant to Abandoned Property Law § 1416, noagreement between a property owner (hereinafter claimant) and a finder to locate property heldby respondent is valid "unless that agreement: (a) is in writing and signed by the property owner;(b) discloses the nature of the property; and (c) discloses the name and address of the holder."Such agreements are submitted to OUF as part of the claim process and must be accepted prior tothe release of confidential information or delivery of payment to the finders on behalf of the[*2]claimants. According to OUF's Director, "[a]lthoughnotarization of Finder's agreements is not expressly required by statute, it [has been] the longestablished requirement of OUF" that the claimants' signatures be notarized.[FN1]
Nevertheless, the record indicates that, in 2004, petitioner requested approval from OUF of arevised finder agreement form that, among other things, did not provide for notarization.Petitioner was advised that this was not acceptable and any unnotarized finder agreementsreceived after a certain date would be rejected, with processing of those claims suspendedpending submission of forms that OUF deemed appropriate. Thereafter, following additionaldisagreements between petitioner and OUF regarding other proposed changes to the contents ofpetitioner's forms, petitioner commenced this CPLR article 78 proceeding claiming, among otherthings, that a notarized finder agreement is not required by Abandoned Property Law §1416 and OUF's requirement in that regard amounted to a rule mandating compliance with theState Administrative Procedure Act. Along with other relief, petitioner sought to compel OUF toprocess finder agreements without notarizations. Supreme Court, among other things, granted thepetition to the extent of finding that the challenged notarization requirement was anunpromulgated rule that could not be enforced. Respondent now appeals.[FN2]
Respondent maintains that Supreme Court improperly held that the notarization requirementconstitutes a rule under State Administrative Procedure Act § 102 (2). We do not agree. Arule is " 'a fixed, general principle to be applied by an administrative agency without regard toother facts and circumstances relevant to the regulatory scheme of the statute it administers' "(Matter of New York City Tr. Auth. v New York State Dept. of Labor, 88 NY2d 225,229 [1996], quoting Matter of Roman Catholic Diocese of Albany v New York State Dept. ofHealth, 66 NY2d 948, 951 [1985]; see Matter of Cordero v Corbisiero, 80 NY2d771, 772-773 [1992]; Matter of Taylor v New York State Dept. of Correctional Servs.,248 AD2d 799, 800 [1998]). While it is true, as pointed out by respondent, that the StateAdministrative Procedure Act exempts from the definition of "rule" those "forms andinstructions, interpretive statements and statements of general policy which in themselves haveno legal effect but are merely explanatory" (State Administrative Procedure Act § 102 [2][b] [iv]; see Matter of Elcor Health Servs. v Novello, 100 NY2d 273, 279 [2003]; Matter of Suffolk Regional Off-TrackBetting Corp. v New York State Racing & Wagering Bd., 47 AD3d 133, 136 [2007],lv granted 10 NY3d 706 [2008]; Matter of HMI Mech. Sys. v McGowan, 277AD2d 657, 658 [2000], lv denied 96 NY2d 705 [2001]; see also Cubas v Martinez, 8 NY3d611, 621 [2007]), we do not [*3]find that this exemptionapplies herein.
Notably, respondent proffers several arguments in support of his assertion that notarization isa reasonable requirement. Nonetheless, regardless of the merit of these contentions, the factremains that notarization, as enforced by OUF, was a nondiscretionary and "rigid. . . policy invariably applied across-the-board . . . without regard toindividualized circumstances or mitigating factors" (Matter of Senior Care Servs., Inc. v New York State Dept. of Health, 46AD3d 962, 964-965 [2007] [internal quotation marks and citation omitted]; see Matter ofCordero v Corbisiero, 80 NY2d at 772-773; Matter of Pallette Stone Corp. v State ofN.Y. Off. of Gen. Servs., 245 AD2d 756, 758 [1997]). Therefore, we find no basis to disturbSupreme Court's ruling that OUF's finder agreement notarization policy was, in fact, a rule and,thus, it was required to comply with the State Administrative Procedure Act (see Matter ofSchwartfigure v Hartnett, 83 NY2d 296, 301 [1994]).
Carpinello, Rose, Malone Jr. and Stein, JJ., concur. Ordered that the judgment is affirmed,without costs.
Footnote 1: Notably, the AbandonedProperty Law expressly provides for verified documents under certain circumstances in othersections of the statute (see e.g. Abandoned Property Law § 301 [1]; § 401[1]; §§ 503, 603, 1406, 1408), but there is no such requirement for claimantsspecifically stated with respect to Abandoned Property Law § 1416.
Footnote 2: We note that although petitioneroriginally filed a cross notice of appeal challenging those aspects of Supreme Court's judgmentwhich ruled in favor of OUF, petitioner has now withdrawn its cross appeal.