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Chino v. Dep't of Fin. Servs.

New York State Court of Claims
Mar 16, 2015
# 2015-049-021 (N.Y. Ct. Cl. Mar. 16, 2015)

Opinion

# 2015-049-021 Claim No. 124835 Motion No. M-85707

03-16-2015

THEO CHINO v. THE DEPARTMENT OF FINANCIAL SERVICES; and BENJAMIN LAWSKY in his official capacity as Superintendent of the NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES

Theo Chino, Pro Se Eric T. Schneiderman, New York State Attorney General By: Joseph L. Paterno, Assistant Attorney General


Synopsis

The Court granted defendant's motion to dismiss as any claim in not ripe.

Case information


UID:

2015-049-021

Claimant(s):

THEO CHINO

Claimant short name:

CHINO

Footnote (claimant name) :

Defendant(s):

THE DEPARTMENT OF FINANCIAL SERVICES; and BENJAMIN LAWSKY in his official capacity as Superintendent of the NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):

124835

Motion number(s):

M-85707

Cross-motion number(s):

Judge:

DAVID A. WEINSTEIN

Claimant's attorney:

Theo Chino, Pro Se

Defendant's attorney:

Eric T. Schneiderman, New York State Attorney General By: Joseph L. Paterno, Assistant Attorney General

Third-party defendant's attorney:

Signature date:

March 16, 2015

City:

Albany

Comments:

Official citation:

Appellate results:

See also (multicaptioned case)


Decision

In a claim filed on August 13, 2014, pro se claimant Theo Chino seeks 1 billion dollars in damages. The claim alleges as follows:

"Defendant has proposed DFS-29-14-00015-P [titled: Regulation of the Conduct of Virtual Currency Businesses] in the New York State Register outside the scope of his authority and allowing those inside the scope of his authority a waiver . . . . Such proposal has forced me to reduce my workforce and maybe close my small business."

Defendant now moves to dismiss the claim, pursuant to CPLR 3211 and 3212 and Court of Claims Act § 11, on the ground that claimant's alleged damages are prospective only, and the claim is premature and therefore fails to state a cause of action. In its supporting affidavit, defendant notes that the public comment period on the regulation was scheduled to close on October 21, 2014, after the claim was filed, and that "any damages are potential and wholly unrealized as claimant has not suffered any actual damages" (Aff. in Supp. ¶ 6).

Defendant also argues for dismissal on the ground that claimant's "potential" injury "was not proven or otherwise substantiated," since there was "no documentary evidence annexed to the claim or a rational basis expressed to support" the contention that claimant had suffered $1 billion in damages (Aff. in Supp. ¶ 8). This particular argument cannot serve as a basis for dismissal In a motion, like this one, that seeks dismissal based on the pleadings, there is no requirement that the claimant "substantiate" or provide "documentary evidence" for its damages claims. Further, although defendant cites CPLR 3212, the summary judgment provision, its motion seeks dismissal on the face of the claim, and is properly viewed through the lens of CPLR 3211.

Claimant has submitted an affidavit in opposition, arguing that his damages became ascertainable the "moment the superintendent published the regulation to the New York State Registry on July 2014," (Aff. in Opp. at 2), although he acknowledges that any challenge to the Department of Financial Services ("DFS") authority to engage in the regulation of virtual currency is a matter for an article 78 proceeding (see id.). Claimant also submits what appears to be a web posting of a statement by DFS Commissioner Benjamin Lawsky regarding the regulation at issue, as well as the DFS proposed rule making from the State Register of July 23, 2014, various articles about bitcoin, and a certificate of incorporation under the laws of Delaware for Chino, Ltd.

Claimant contends that in order to comply with the regulation as written, Chino, Ltd would have to hire a compliance officer, a chief information security officer, and other personnel; purchase new equipment, and make numerous other expenditures which would require him to raise capital. Failing that, he would either have to relocate his business outside of the State, operate illegally, or close his business (Aff. in Opp. at 2).

Under the New York State Administrative Procedure Act, a proposed rule must be published for at least 45 days (see Admin P Act § 202 [1][a]). Claimant's submissions shows this period had not yet passed at the time the claim was filed. Moreover, revised proposed regulations were posted on the DFS webpage, indicating that they would be published in a later edition of the New York State Register, which commences a further 30-day public comment period (see Admin P Act § 202[4-a][a]).

http://www.dfs.ny.gov/legal/regulations/rev_bitlicense_reg_framework.htm

Except under circumstances not relevant here, "no rule shall become effective until it is filed with the secretary of state and the notice of adoption is published in the state register" (see Admin P Act § 203[1]). There is no allegation that this has yet occurred in this case. Thus, according to claimant's own submissions, the rule is still only a proposal, and nothing more.

Claimant's assertion that he has already been damaged by the mere proposal of a new rule, which has yet to have any legal effect, is without merit. A claim accrues "when damages . . . become ascertainable" (Richard A. Hutchens CC, L.L.C. v State of New York, 59 AD3d 766, 768 [3d Dept 2009] [citations omitted]). That cannot be said to have occurred before the final form of the rule at issue is known. Moreover, since the notice and comment process was ongoing, claimant cannot show that the "apparent harm inflicted by the [administrative] action may not be prevented or significantly ameliorated by further administrative action . . . ." (see Matter of Gordon v Rush, 100 NY2d 236 [2003] [citation and internal quotation marks omitted] [articulating standard for ripeness of challenge to action of administrative agency]).

In sum, Chino's claim has not yet accrued, is not ripe, and must be dismissed. In reaching this conclusion, I need intimate no view as to whether Chino could seek damages in this Court under the circumstances alleged, in the event the regulation ultimately goes into effect, nor need I address whether Chino may represent, and seek damages on behalf of, a corporation not itself a party.

In view of the foregoing, it is

ORDERED that motion no. M-85707 be granted and claim no. 124835 be dismissed.

March 16, 2015

Albany, New York

DAVID A. WEINSTEIN

Judge of the Court of Claims

Papers Considered:

1. Defendant's Notice of Motion, Affirmation in Support and annexed exhibit.

2. Claimant's Affidavit in Opposition and annexed exhibits.

3. Defendant's Reply Affirmation.


Summaries of

Chino v. Dep't of Fin. Servs.

New York State Court of Claims
Mar 16, 2015
# 2015-049-021 (N.Y. Ct. Cl. Mar. 16, 2015)
Case details for

Chino v. Dep't of Fin. Servs.

Case Details

Full title:THEO CHINO v. THE DEPARTMENT OF FINANCIAL SERVICES; and BENJAMIN LAWSKY in…

Court:New York State Court of Claims

Date published: Mar 16, 2015

Citations

# 2015-049-021 (N.Y. Ct. Cl. Mar. 16, 2015)