Opinion
1657/17
12-21-2017
In the Matter of the Application of Nadine DANIEL–HURRY, Individually and Through KJK Tutoring Center, LLC., Plaintiff, v. The NEW YORK CITY DEPARTMENT OF EDUCATION, Defendant.
Leonard W. Stewart, Esq., 32 Court Street, Suite 707, Brooklyn, NY 11201, (718) 62–2125, Attorney for Petitioner Zachary W. Carter, Corporation Counsel of the City of New York, 100 Church Street, Room 3–118, New York, New York 10007, Of Counsel: William B. Scoville, Jr., (212) 356–2048, Attorney for Respondent
Leonard W. Stewart, Esq., 32 Court Street, Suite 707, Brooklyn, NY 11201, (718) 62–2125, Attorney for Petitioner
Zachary W. Carter, Corporation Counsel of the City of New York, 100 Church Street, Room 3–118, New York, New York 10007, Of Counsel: William B. Scoville, Jr., (212) 356–2048, Attorney for Respondent
Francois A. Rivera, J.
Recitation in accordance with CPLR 2219 (a) of the papers considered on the notice of petition and petition of Nadine Daniel–Hurry (hereinafter Daniel–Hurry), individually and through KJK Tutoring Center LLC (hereinafter KJK Tutoring) filed on May 19, 2017, under motion sequence number one, for an order: (1) declaring that the New York City Department of Education's (hereinafter DOE or respondent) decision on September 13, 2016 to rescind its award of a Universal Pre-kindergarten Program (hereinafter UPK) contract to petitioner, made on July 13, 2016, was made in bad faith and was arbitrary and capricious; (2) declaring that any negative, unfavorable or derogatory ratings, letters, findings, assessments or Vendex notations regarding petitioner are cancelled, annulled and vacated; (3) directing respondent to reverse the decision to rescind the UPK contract award made to petitioner and authorize same for the 2017–12018 contract term; in the alternative; (4) remanding the matter for further proceedings whereby respondent is directed to reevaluate petitioner's UPK application; (5) directing the respondent to immediately pay petitioner the sum of $287,280.00 for breach of contract; (6) requiring respondent to immediately to pay the petitioner the sum of $13,981.29 based on petitioner's detrimental reliance and expenditures to prepare for the start of the UPK contract; (7) granting petitioner an award for special and compensatory damages in the sum of $107,800 for the loss of petitioner's family group day care program income for 2016; (8) granting petitioner an award for a sum of not less than $100,000 for defamation and injury to reputation; (9) granting petitioner an award for the sum of not less than $100,000.00 for punitive damages; and (10) granting petitioner an award for attorney's fees, costs, interests and expenses.
Notice of petition
Verified Petition
Exhibits Volume 1: A–Z; Volume 2: A–P
Verified Answer
Memorandum in opposition
Memorandum in reply
BACKGROUND
On May 19, 2017, the petitioner Daniel–Hurry commenced the instant hybrid Article 78 petition to, among other things, review a determination of the DOE that she was an "unreliable" vendor. On July 12, 2017, the DOE answered and opposed the petition.
The petition alleges the following salient facts, among others. Daniel–Hurry is the managing and sole member of KJK Tutoring LLC. DOE is an entity organized and existing pursuant to the New York State Education Law. The DOE awards contracts to vendors for the provision of Pre–K programs so as to provide four-year old children free access to comprehensive early childhood education experiences that promote their social, emotional, creative, physical, cognitive, linguistic and cultural development. In the Spring of 2016, the DOE issued a "Request for Proposals R 1133" which invited vendors to submit proposed contracts with the DOE to provide Pre–K services. Petitioner applied to the DOE for a UPK contract award.
On November 21, 2016, the DOE determined that the petitioner was a "non-responsible" vendor. DOE based its determination on the fact that petitioner had supplied incorrect information regarding a disciplinary proceedings that she was subject to while employed by the DOE in a different capacity. Also, during its due diligence the DOE discovered that the petitioner had been arrested yet failed to disclose such arrest. Petitioner appealed the adverse determination.
On February 7, 2017, the executive director of the DOE's division of contracts and purchasing adopted that recommendation. However, the executive director determined that the arrest was not proper basis for the determination of unreliability. Even discounting the arrest, the DOE maintained that petitioner was unreliable and refused to contract with her for Pre–K services. On February 8, 2017, the DOE mailed petitioner a copy of the adopted recommendation and informed her that her appeal was denied and that such denial constituted final agency action on the matter.
The main issue in this matter is that the petitioner applied for a specific designation by the DOE. The designation would allow the petitioner to operate as a Universal Pre–Kindergarten. The petitioner alleges that she properly filled out the required application. Petitioner also alleges that the DOE misread the application and relied on improper and incorrect information as a basis for denying her application. Petitioner seeks to annul the determination of the DOE and seeks an award of damages.
LAW AND APPLICATION
Petitioner seeks two separate types of relief in the instant petition. The first four items delineated in the petition seek review of the DOE finding that she was a unreliable vendor pursuant to Article 78. The determination that she was an unreliable vendor is significant in that the DOE refused to contract with her for Universal Pre–K services based on that label.
The second type of relief sought in the instant petition is for an accelerated judgment on various claims not encompassed by the Article 78 review. In particular, the petitioner seeks an accelerated judgment awarding damages for, among other things, breach of contract; detrimental reliance; lost income; injury to reputation; and attorney's fees, costs, interests and expenses.
The Article 78 Claims
In Article 78 proceedings, the doctrine is well settled that neither the Appellate Division nor the Court of Appeals has power to upset the determination of an administrative tribunal on a question of fact; the courts have no right to review the facts generally as to weight of evidence, beyond seeing to it that there is substantial evidence (see, Pell v. Board of Ed. of Union Free School Dist. No. 1 of Towns of Scarsdale and Mamaroneck, Westchester County , 34 NY2d 222 at 230–231 [1974] ). The approach is the same when the issue concerns the exercise of discretion by the administrative tribunals (Id. ). The courts cannot interfere unless there is no rational basis for the exercise of discretion or the action complained of is arbitrary and capricious (Id. ). Under both the substantial evidence rule and the arbitrary and capricious standard the Court focuses on the concept of rationality (Id. ).
Further, the "arbitrary and capricious test chiefly relates to whether a particular action should have been taken or is justified ... and whether the administrative action is without foundation in fact. Arbitrary action is without sound basis in reason and is generally taken without regard to the facts" ( Id. at 231 ; see also Jackson v. New York State Urban Dev. Corp. , 67 NY2d 300, 417 [1986] ). On review of agency action under Article 78, the courts may not "second guess the agency's choice, which can be annulled only if arbitrary, capricious or unsupported by substantial evidence ( Montefusco v. New York State Div. of Housing and Community Renewal , 2009 WL 595564 [NY Sup.2009] ).
Denials of applications based on incorrect or incomplete Vendex forms are held to be rational (see Ridge Transp. Sys., Inc. v. City of New York , 95 AD3d 1217 [2nd Dept 2012] ; Matter of Montauk Improvement v. Proccacino , 41 NY2d 913, 913 [1977] ; SEC v. Chenery Corp. , 332 US 194, 196 [1947] ; see Matter of Terrace Ct., LLC v. New York State Div. of Hous. & Community Renewal , 18 NY3d 446, 453 [2012] ; Matter of Charles A. Field Delivery Serv. , 66 NY2d 516, 519–520 [1985] ).
In the instant matter, the petitioner alleges that the DOE improperly viewed and relied upon information that was contained in the Vendex system to deny her the contract. The record reflects, however, that the DOE reviewed the Vendex application, requested additional information and clarification of answers contained within it and discounted the incorrect arrest information that it had obtained. DOE provided ample opportunity to the petitioner to correct the Vendex form or explain the incorrect information. The explanation that she provided was determined to lack merit and, accordingly, she was deemed unreliable. There is no indication that the determination that the petitioner was not reliable was arbitrary or capricious. Accordingly the determination of the DOE that the petitioner is an unreliable vendor is confirmed, and the first four delineated claims in the petition are denied and dismissed.
The Remaining Claims
The petitioner also seeks an order requiring the respondent to immediately pay damages for breach of contract and detrimental reliance; and special and compensatory damages for the loss of petitioner's family group day care program income; defamation; and for punitive damages.
CPLR 7806 provides
The judgment may grant the petitioner the relief to which he is entitled, or may dismiss the proceeding either on the merits or with leave to renew. If the proceeding was brought to review a determination, the judgment may annul or confirm the determination in whole or in part, or modify it, and may direct or prohibit specified action by the respondent. Any restitution or damages granted to the petitioner must be incidental to the primary relief sought by the petitioner, and must be such as he might otherwise recover on the same set of facts in a separate action or proceeding suable in the supreme court against the same body or officer in its or his official capacity.
Damages can be awarded in an Article 78 proceeding if they are incidental to the primary relief sought by the petitioner ( Gross v. Perales , 72 NY2d 231 [1988] ).
Incidental damages are generally confined to monies that an agency either collected from or withheld from a petitioner and then was obligated to reimburse after a court annulled a particular agency determination ( Metro. Taxicab Bd. of Trade v. New York City Taxi & Limousine Comm'n , 115 AD3d 521 [1st Dept 2014] ). A statutory duty is not essential for a finding of incidental damages but the obligation to reimburse must arise "from the agency's withholding of amounts it should have paid to the petitioner or its retention of amounts it should not have collected ( Id. at 523–24 ).
Compensatory damages such as lost profits are not considered incidental ( Gross, 72 NY2d 231, see also Golomb v. Board of Educ. of City School Dist. of City of New York , 92 AD2d 256, 260 [2nd Dept 1983] ). Similarly, damages arising from torts related to loss of economic advantage and injury to reputation do not qualify as incidental damages ( Murphy v. Capone , 191 AD2d 683 [2nd Dept 1993] ).
In the instant action the damages sought by the petitioner are not incidental to the primary relief sought in the petition. As discussed above, the damages are for breach of contract, detrimental reliance and defamation. There is no amount that has been withheld that the agency should reimburse the petitioner, rather the petitioner seeks consequential damages arising out the DOE's finding that she was a unreliable vendor. Related torts and breach of contract claims are not considered incidental to an Article 78 proceeding.
On the remaining claims delineated in the petition as five through and including ten, the petitioner failed to make a prima facie showing of entitlement to any of the alleged claim asserted. On the tenth claim for attorney's fees the following principle applies. "Under the general rule, attorney's fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule" ( Pickett v. 992 Gates Ave. Corp. , 114 AD3d 740 [2nd Dept 2014]citing Hooper Assoc. v. AGS Computers , 74 NY2d 487, 491 [1989] ). Petitioners have offered no factual or legal basis for the awarding of attorney's fees. The claims delineated in the petition as five through and including ten are resolved as follows. The first four delineated claims are dismissed and the five through tenth claim are deemed converted to a plenary action. The petition is deemed a complaint and the parties may continue the prosecution and defense of the action.
CONCLUSION
The motion by Nadine Daniel–Hurry, individually and through KJK Tutoring Center LLC, for an order:
(1) declaring that the New York City Department of Education's (hereinafter DOE or respondent) decision on September 13, 2016 to rescind its award of a Universal Pre-kindergarten Program (hereinafter UPK) contract to petitioner, made on July 13, 2016, was made in bad faith and was arbitrary and capricious;
(2) declaring that any negative, unfavorable or derogatory ratings, letters, findings assessments or Vendex notations regarding petitioner are cancelled, annulled and vacated;
(3) directing respondent to reverse the decision to rescind the UPK contract award made to petitioner and authorize same for the 2017–12018 contract term; in the alternative;
(4) remanding the matter for further proceedings whereby respondent is directed to reevaluate petitioner's UPK is denied
The determination of the DOE is confirmed, this branch of the petition is denied and these four delineated claims are dismissed.
The motion made by Nadine Daniel–Hurry, individually and through KJK Tutoring Center LLC, for an order:
(5) requiring respondent to immediately pay petitioner the sum of $287,280.00 for breach of contract;
(6) requiring respondent immediately to pay petitioner, as detrimental reliance for monies expended by petitioner to directly prepare for the start of the UPK contract, the sum of $13,981.29;
(7) requiring respondent immediately to pay petitioner, as special and compensatory damages, for the loss of petitioner's family group day care program income for 2016, the sum of $107,800.00 as further set forth in the verified petition
(8) requiring respondent immediately to pay petitioner, as special and compensatory damages, for defamation and injury to reputation, the sum of not less than $100,000.00;
(9) requiring respondent immediately to pay petitioner, as punitive damages, the sum of not less than $100,000.00, as further set forth in the verified petition; and
(10) granting the petitioner an award for attorney's fees, costs, interests and expenses is denied.
The fifth through tenth causes of action are converted into a plenary action and the petition is deemed to be a complaint for further proceedings.
The foregoing constitutes the decision and order of this Court.