| Keyspan Generation, LLC v Nassau County |
| 2014 NY Slip Op 01721 [115 AD3d 812] |
| March 19, 2014 |
| Appellate Division, Second Department |
| Keyspan Generation, LLC, et al.,Respondents, v Nassau County et al., Appellants. (Action No. 1.) Long IslandLighting Company, Respondent, v Board of Assessors et al., Appellants. (Action No.2.) |
—[*1] Cullen and Dykman LLP, Garden City, N.Y. (Karen I. Levin, Jennifer A.McLaughlin, and Hayley M. Kelch of counsel), for respondents.
In two related actions, inter alia, for judgments declaring that the imposition ofspecial ad valorem taxes for garbage and refuse collection services against certain "mass"property owned by the plaintiffs is illegal and void, the defendants appeal (1), as limitedby their brief, from so much of an order of the Supreme Court, Nassau County(Woodard, J.), entered October 24, 2011, as denied their motion pursuant to CPLR 3211(a) to dismiss the complaint in action No. 1, and granted those branches of the plaintiffs'cross motion in action No. 2 which were for summary judgment declaring that theimposition of the taxes at issue in that action is illegal and void and that the defendantsare liable for refunds, if any, due to the plaintiffs, and to impose sanctions against thedefendants, and directed a hearing on the amount of any such refunds and sanctions, and(2) from an order of the same court entered June 7, 2012, which, in effect, granted thosebranches of the plaintiffs' cross motion in action No. 1 which were for summaryjudgment declaring that the imposition of the taxes at issue in that action is illegal andvoid and that the defendants are liable for any refunds due to the plaintiffs.
Ordered that on the Court's own motion, the notice of appeal from so much of theorder entered October 24, 2011, as directed a hearing on the amount of any refunds andsanctions that might be due to the plaintiffs is deemed to be an application for leave toappeal from that portion of the order, and leave to appeal is granted (see CPLR5701 [c]); and it is further,
Ordered that the order entered October 24, 2011, is modified, on the facts and in theexercise of discretion, (1) by deleting the provision thereof granting that branch of theplaintiffs' [*2]cross motion in action No. 2 which was toimpose sanctions against the defendants, and substituting therefor a provision denyingthat branch of the cross motion, and (2) by deleting the provision thereof directing ahearing on the amount of sanctions that might be due to the plaintiffs; as so modified, theorder entered October 24, 2011, is affirmed insofar as appealed from; and it is further,
Ordered that the order entered June 7, 2012, is affirmed; and it is further,
Ordered that the matter is remitted to the Supreme Court, Nassau County, for furtherproceedings, including the entry of judgments, inter alia, declaring that the defendants'imposition of special ad valorem taxes for garbage and refuse collection services againstthe subject properties is illegal and void; and it is further,
Ordered that one bill of costs is awarded to the plaintiffs.
These appeals concern "mass property" owned by the plaintiffs or their successors ininterest. In the context of these appeals, the term "mass property" refers to equipmentsuch as lines, wires, cables, poles, supports, transformers, conductors, and enclosures forelectrical conductors, which constitute a type of real property that is not amenable tohuman occupation and has been erected on public and private real property owned bypersons or entities other than the plaintiffs (see New York Tel. Co. v Supervisor of Town of Oyster Bay, 4NY3d 387, 390 [2005]). In 1997, Long Island Lighting Company (hereinafterLILCO) commenced an action challenging the legality of the imposition of special advalorem taxes relating to garbage and refuse collection services for its mass propertylocated in Nassau County (hereinafter action No. 2). In 1999, Keyspan Generation LLC,Keyspan Corporate Services LLC, and Keyspan Gas East Corporation, doing business asBrooklyn Union of Long Island (hereinafter collectively the Keyspan plaintiffs),commenced an action seeking the same relief (hereinafter action No. 1). The Keyspanplaintiffs later acquired portions of LILCO's mass property and operations (seeMatter of Town of Islip v Long Is. Power Auth., 301 AD2d 1, 4-6 [2002]) and, withit, the right to prosecute action No. 2. The two actions were both asserted against theCounty of Nassau and various ancillary bodies of the County (hereinafter collectively theCounty defendants), and the actions were joined for trial. In the complaints, both LILCOand the Keyspan plaintiffs (hereinafter collectively the plaintiffs) sought declarations thatthe imposition of special ad valorem taxes on mass property is illegal and void and that,pursuant to former Nassau County Administrative Code (hereinafter NCAC) §6-26.0 (b) (3) (c), which is popularly known as "the County Guaranty," they were entitledto refunds of the taxes they paid in connection with the levies on the mass property. TheCounty Guaranty provides that "[n]otwithstanding any provisions of this chapter, or anyother general or special law to the contrary, any deficiency existing or hereafter arisingfrom a decrease in an assessment or tax under subdivisions one, four and seven of section6-24.0, or sections 6-12.0 or 5-72.0 of the code or by reason of exemption or reductionsof assessments shall be a County charge" (NCAC § 6-26.0 [b] [3] [c]).
In 2005, while these actions were pending, the Court of Appeals, in New York Tel. Co. v Supervisor ofTown of Oyster Bay (4 NY3d 387 [2005]), determined that, pursuant to RPTL102 (14), the imposition of special ad valorem taxes for garbage and refuse collection onutility mass property, which, by its nature, was incapable of producing garbage, wasillegal and void (id. at 392-395).
In 2009, the County defendants moved pursuant to CPLR 3211 (a) (7) to dismiss thecomplaint in action No. 1. The County defendants argued that refunds of special advalorem taxes did not fall within the scope of the County Guaranty. The Countydefendants further contended that, even if the County Guaranty did apply, pursuant toMatter of Hellerstein v Assessor of Town of Islip (37 NY2d 1 [1975]) and itsprogeny, the Supreme Court should decline to award the plaintiffs the refunds theysought on the ground that to do so would result in "fiscal chaos" due to the Countydefendants' dire financial distress. The plaintiffs cross-moved for summary judgment inboth actions declaring that the imposition of special ad valorem taxes on their massproperty is illegal and void and awarding them refunds as well as sanctions on theground that the County defendants' arguments in support of their motion were frivolous.[*3]
In an order entered October 24, 2011, theSupreme Court, inter alia, denied the County defendants' motion to dismiss the complaintin action No. 1, and granted those branches of the plaintiffs' cross motion which were forsummary judgment in action No. 2 declaring that the imposition of the subject taxes isillegal and void and that the County defendants were liable for any refunds, and for anaward of sanctions. In an order entered June 7, 2012, the Supreme Court, in effect,granted those branches of the plaintiffs' cross motion which were for summary judgmentin action No. 1 declaring that the imposition of the subject taxes is invalid and that theCounty defendants were liable for any refunds.
Although the County defendants contend that the language of the County Guarantydoes not encompass refunds of special ad valorem taxes, in New York Tel. Co. v Supervisor ofTown of N. Hempstead (77 AD3d 121 [2010]), this Court stated that thequestion before us was "whether Nassau County Administrative Code § 6-26.0 (b)(3) (c) (L 1939, chs 272, 701-709, as amended), known as the 'County Guaranty,'requires the County of Nassau . . . rather than the Town of NorthHempstead and several special districts located in the Town, to refund certain special advalorem levies judicially determined to be invalidly imposed upon the plaintiff's realproperty" (id. at 122). In that case, we stated, without qualification, that "[w]econclude that the 'County Guaranty' applies to the judicially directed refunds of thesubject levies" (id. at 123).
The County defendants argue that even if the County Guaranty applies to the refundssought by the plaintiffs, "fiscal chaos" would result if the County defendants were heldliable for refunds in this and similar actions and, thus, the plaintiffs should be affordedonly prospective relief, not retroactive refunds. We disagree.
In Matter of Hellerstein v Assessor of Town of Islip (37 NY2d at 3), ataxpayer commenced an action challenging the method by which property in the Town ofIslip was assessed, contending that it violated RPTL 306. The Court of Appeals agreedthat the method of taxation, although widespread and of longstanding practice, wascontrary to statute (see id. at 9-10). However, in part because the plaintiff soughtonly prospective relief, the Court did not order retroactive refunds of property taxes(id. at 13-14). In so doing, the Court stated that "the courts should not act 'so asto cause disorder and confusion in public affairs even though there may be a strict legalright' " (see id. at 13-14, quoting Matter of Andresen v Rice, 277 NY271, 282 [1938]). The Court explained that "it is incumbent on the courts, where theirdiscretion is involved, to exercise the same degree of restraint whenever a settledassessment roll or property rights based thereon are challenged for illegality" (Matterof Hellerstein v Assessor of Town of Islip, 37 NY2d at 14; see Foss v City ofRochester, 65 NY2d 247, 260 [1985] [invalidating a local law and its application ofRPTL art 18, but declining to apply the invalidation retroactively since the defendant cityhad relied upon revenues collected under those provisions]).
Contrary to the County defendants' argument, Matter of Hellerstein andFoss do not stand for the proposition that whenever the award of damages orrefunds against a municipality will result in financial hardship, a court may decline toaward the relief to which the plaintiff is otherwise entitled. Instead, these cases stand forthe more limited proposition that, where a municipality has reasonably relied upon awidespread and longstanding practice (as in Matter of Hellerstein) or a statute islater invalidated (as in Foss), and where applying the invalidation retroactivelywould call into question "a settled assessment roll or property rights based thereon," acourt may exercise its discretion by giving its holding only prospective application(Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d at 14; seeGandolfi v City of Yonkers, 101 AD2d 188, 197-198 [1984], affd 62 NY2d995 [1984]; Hurd v City of Buffalo, 41 AD2d 402, 406 [1973], affd 34NY2d 628 [1974]). Here, the County defendants' submissions have not demonstrated thatawarding the plaintiffs the refunds they seek would call into question settled assessmentrolls or property rights based thereon.
For the foregoing reasons, the Supreme Court properly denied the Countydefendants' motion to dismiss the complaint in action No. 1 for failure to state a cause ofaction (see CPLR 3211 [a] [7]). Moreover, in opposition to the plaintiffs' primafacie showing of entitlement to judgment as a matter of law in connection with bothactions, the County defendants failed to raise a triable issue of fact (see generallyAlvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Accordingly, [*4]the Supreme Court properly granted those branches of theplaintiffs' cross motion which were for summary judgment for the declaratory reliefrequested and an award of refunds in both actions.
Pursuant to 22 NYCRR 130-1.1, sanctions may be imposed against a party or theparty's attorney for frivolous conduct (see 22 NYCRR 130-1.1 [b]). "Conductduring litigation, including on an appeal, is frivolous and subject to sanction and/or theaward of costs when it is completely without merit in law or fact and cannot be supportedby a reasonable argument for the extension, modification, or reversal of existing law; it isundertaken primarily to delay or prolong the resolution of the litigation, or to harass ormaliciously injure another; or it asserts material factual statements that are false" (Mascia v Maresco, 39 AD3d504, 505 [2007]; see 22 NYCRR 130-1.1). Under the facts of this case, theCounty defendants' conduct in action No. 2 was not frivolous. Accordingly, the SupremeCourt improvidently exercised its discretion in granting that branch of the plaintiffs' crossmotion in action No. 2 which was to impose sanctions against the County defendants (see Muro-Light v Farley, 95AD3d 846, 848 [2012]).
Since these are, in part, declaratory judgment actions, the matter must be remitted tothe Supreme Court, Nassau County, for the entry of judgments, inter alia, declaring thatthe imposition of special ad valorem taxes for garbage and refuse collection services onthe plaintiffs' mass property is illegal and void (see Lanza v Wagner, 11 NY2d317, 334 [1962], appeal dismissed 371 US 74 [1962], cert denied 371 US901 [1962]). Mastro, J.P., Dillon, Leventhal and Duffy, JJ., concur. [Prior CaseHistory: 2011 NY Slip Op 32800(U).]
[Recalled and vacated, see 118 AD3d 949.]