Opinion
Index No. 453187/2023
07-12-2024
City of New York, Plaintiff, v. Joseph M Kaaied, Defendant.
Linebarger Goggan Blair & Sampson LLP, New York, NY (Derek J. Soltis of counsel), Special Assistant Corporation Counsel, for plaintiff. Law Offices of Stuart Salles, New York, NY (Stuart Salles of counsel), for defendant.
Unpublished Opinion
Linebarger Goggan Blair & Sampson LLP, New York, NY (Derek J. Soltis of counsel), Special Assistant Corporation Counsel, for plaintiff.
Law Offices of Stuart Salles, New York, NY (Stuart Salles of counsel), for defendant.
Gerald Lebovits, J.
Gerald Lebovits, J.
On February 28, 2022, the New York City Department of Consumer and Worker Protection (DCWP) concluded that Blue Star Grocery and Candy was selling flavored vapor products without a license. (See NYSCEF No. 16 at ¶¶ 4-7.) A certificate of authority affixed to Blue Star names the defendant, Joseph Kaaied, as the authorized person at Blue Star as of October 2020. (See NYSCEF No. 13.) The DCWP cited Kaaied for Blue Star's illegal sale of flavored vapor products, alleging violations of the Administrative Code of City of NY and the New York State Public Health Law. (See NYSCEF No. 16 at ¶ 3.)
The New York City Office of Administrative Trials and Hearings (OATH) held a hearing to adjudicate the violations, which Kaaied did not attend. (See id., ¶ 5.) On July 18, 2022, OATH rendered a default judgment against Kaaied for $81,250.00. (See NYSCEF No. 1 at ¶¶ 8-11.) OATH allegedly sent the order to Kaaied by first-class mail that same day. (See id.) Kaaied has not paid the judgment. (See id.) Plaintiff, the City of New York, brought this action against Kaaied to enforce the judgment and collect the $81,250.00. (See id.)
Kaaied now moves to dismiss this action under CPLR 3211 (a) (7). Kaaied claims that (1) he has been a Michigan resident since 2016 and has no affiliation with Blue Star; and (2) he did not receive notice about OATH's adjudication until this enforcement action. (See NYSCEF No. 8 at ¶¶ 3-8; NYSCEF No. 7 at ¶¶ 4-21.) Kaaied's motion is denied.
DISCUSSION
The parties do not dispute that this court may enforce an OATH default judgment in general. They do, however, dispute whether Kaaied can collaterally attack the OATH judgment by moving to dismiss this enforcement action based on his notice and lack-of-affiliation arguments.
I. Whether OATH's Determination is a Final Judgment
On a CPLR 3211 (a) (7) motion to dismiss, the court construes pleadings and affidavits liberally in plaintiff's favor, accepting all plaintiff's alleged facts as true. (See Morone v. Morone, 50 N.Y.2d 481, 484-85 [1980]; Rovello v Orofino Realty Co., 40 N.Y.2d 633, 635 [1976].)
The City's enforcement action will survive a CPLR 3211 (a) (7) motion to dismiss only if the City establishes that OATH's administrative determination is a final judgment. (See Godfrey v Winona Lake Dev. Co., 194 Misc. 905, 906-907 [Sup Ct, Albany County 1946, Bergan, J.].) Agency determinations become final, in this sense, once two conditions have been satisfied. (See Walton v New York State Dept. of Correctional Servs., 8 N.Y.3d 186, 194-195 [2007].) First, the determination at issue must "impose an obligation, deny a right or fix some legal relationship as a consummation of the administrative process." (Matter of Essex County v Zagata, 91 N.Y.2d 447, 453 [1998].) Second, "the injury inflicted may not be... significantly ameliorated by further administrative action or by steps available to the complaining party." (Walton, 8 N.Y.3d at 195 [internal quotation marks omitted].)
To establish the definitive nature of OATH's default determination in this case, the City submits the final OATH order, which it alleges to have been mailed to Kaaied on July 18, 2022. (See NYSCEF No. 1 at ¶ 9 [complaint]; NYSCEF No. 18 [OATH final decision]; NYSCEF No. 19 [OATH recommended decision].) The City also contends that the order was final because Kaaied failed to exhaust his administrative remedies. (See NYSCEF No. 1 at ¶ 10; NYSCEF No. 16 at ¶ 22.) The court agrees that Kaaied failed to exhaust.
If a party aggrieved by an administrative determination is entitled to a rehearing upon request, the agency's determination is nonfinal. (See Matter of Angello v National Fin. Corp., 1 A.D.3d 850, 851-852 [3d Dept 2003]; Matter of Seidner v Town of Colonie, 79 A.D.2d 751, 751 [3d Dept 1980].) But an agency's" discretionary power to rehear or reopen matters... is not sufficient to render an otherwise final order nonfinal." (Matter of Angello, 1 A.D.3d at 852 [emphasis added; internal quotation marks omitted].)
A party against whom an OATH determination has been rendered on default may move to vacate that determination. (See 48 RCNY 6-21 [a].) But the party is entitled to a new hearing on a motion to vacate only when the motion was filed within 75 days of mailing of the decision; thereafter, the determination whether to grant a new hearing is discretionary. (See 48 RCNY 6-21 [b]-[c].) Here, the determination that Kaaied now seeks to challenge became final on October 3, 2022, when 77 days elapsed from OATH's mailing of the order to Blue Star without a motion to vacate. (See NYSCEF No. 1 at ¶ 9.)
The extra two days in this case stemmed from the fact that the 75th day of the period was a Saturday. (See 48 RCNY 1-06.)
II. Whether Kaaied May Collaterally Attack OATH's Determination
A party may ordinarily challenge an administrative agency's judgment only through an article 78 proceeding after exhausting administrative remedies. (See CPLR 7801; People v Liden, 19 N.Y.3d 271, 273 [2012].) Quasi-judicial agency determinations are otherwise entitled to claim-preclusive effect. (See Ryan v New York Tel. Co., 62 N.Y.2d 494, 499 [1984].) And claim preclusion extends to a judgment rendered on default that has not been vacated. (See Robbins v Growney, 229 A.D.2d 356 [1st Dept 1996].)
To be sure, an exception to this principle exists when the administrative determination is "'made either without statutory power or in excess thereof'"- i.e., when the agency acts without subject-matter jurisdiction. (Abiele Contracting, Inc. v New York City School Constr. Auth., 91 N.Y.2d 1, 10 [1997], quoting Matter of Foy v Schechter, 1 N.Y.2d 604, 612 [1956].) But that exception does not help Kaaied here. A challenge to the validity of an agency's notice to a party of an administrative proceeding, like the one that Kaaied asserts in this case, does not go to the agency's power to conduct the proceeding in the first place. Rather, it "implicates a violation of lawful procedure (CPLR 7803 [3])" in the conduct of the proceeding, "for which plaintiff is required to seek relief in a special proceeding (CPLR 7801)." (California Suites, Inc. v Russo Demolition Inc., 98 A.D.3d 144, 152 [1st Dept 2012] [internal quotations omitted].) The same is true of Kaaied's merits defense that he was not affiliated with Blue Star (and thus should not be held liable for any violations committed by Blue Star).
Kaaied thus may not collaterally attack the OATH determination against him by moving to dismiss the City's action to enforce that determination.
Kaaied requests in the alternative that this court refer the matter back to OATH for rehearing. (See NYSCEF No. 23 at ¶ 20.) But Kaaied provides no authority that might suggest this court has power to effect a referral of that sort. Kaaied may administratively seek vacatur of the OATH determination under 48 RCNY 6-21 (f). But this court sees no basis to direct OATH in the exercise of its discretion to consider that request.
Accordingly, it is
ORDERED that Kaaied's motion to dismiss is denied; and it is further
ORDERED that the parties are directed to appear before this court for a telephonic preliminary conference on August 2, 2024.