Opinion
2003/01952.
Decided January 7, 2004.
Harris, Beach, LLP, Pittsford, New York, Appearing on behalf of the plaintiffs, By: Peter J. Spinelli, Esq., of Counsel.
Chamberlain, D'Amanda, Oppenheimer Greenfield Rochester, New York, Appearing on behalf of the defendants, By: Matthew J. Fusco, Esq., of Counsel.
The Brighton Fire District (Fire District) is a municipal corporation formed pursuant to Article 11 of the Town Law. It provides fire protection service and emergency medical response service within the Towns of Brighton and Pittsford, New York, through the use of both volunteer and paid firefighters. The Brighton Volunteer Fire Department, Inc. (Volunteer Department) is a New York not-for-profit member corporation. The Fire District is governed by a Board of Fire Commissioners (the Board). The Fire District employs approximately 34 paid firefighters who are represented by the Brighton Professional Firefighters Association, Local 2223 (the Union). There are approximately 80 volunteer firefighters who are members of the Volunteer Department.
The Fire Commissioners are elected for five year terms. All five members of the Board are volunteer firefighters and members of the Volunteer Department. The Chairman of the Board is Richard Garrett.
Insurance Law §§ 9104 and 9105 provide that foreign and alien fire insurance companies and mutual fire insurance companies must pay a 2% tax on the amount of all premiums for insurance against loss or damage by fire, and that the money generated by the tax shall be paid to the treasurer or other fiscal officer of the fire department affording fire protection and shall be distributed "to the fire companies constituting the fire department if such fire department is constituted of more than one fire company." It has been held that these sections apply to both paid and volunteer firefighters ( see, Renn v. Kimbeck, 51 NY2d 189; Pillig v. Strange, 239 AD2d 568 [2nd Dept, 1997]). Lawrence M. Howk (Howk) is the appointed treasurer of the Fire District. He is a part-time employee and has held this position since 1973.
It is undisputed that each year Howk receives a check from the New York State Insurance Department representing the Fire District's share of the 2% tax. According to Howk, the check is made payable to the "Treasurer of the Fire Department of the Brighton Fire District." According to Howk, the "Brighton Fire Department" is part of and under the control of the Fire District and is governed by the Board of Fire Commissioners. Further, that the Brighton Fire Department consists of all personnel, both paid and volunteer, who provide fire protection services. He asserts that the Brighton Fire Department does not have a separate treasurer as such and, therefore, he is the appropriate recipient of the 2% monies received from the State of New York. Howk states that since 1992 and upon instructions from the New York State Department of Audit and Control, he has deposited the 2% monies into a trust and agency fund of the Fire District and thereafter, disbursed these funds for lawful purposes of all members, both paid and volunteer. The 2% monies received in 2002 was $42,922.73.
By letter dated June 25, 2002, counsel for the plaintiffs sent a proposed Trust Agreement on behalf of the Union (paid firefighters) and the three individual plaintiffs to counsel for the Brighton Fire District. The essence of the letter was a demand that paid firefighters receive a proportional share of the 2% monies. Counsel exchanged numerous correspondence, including an August 29, 2002 letter from plaintiffs' counsel, demanding the monies be turned over by September 6, 2002 or the Union would "proceed to take legal action." The Fire District maintained it was not in violation of any law regarding the disbursement of the 2% monies. It agreed, however, to seek the advice and counsel of the Office of the State Comptroller with respect to the manner and method for the paid firefighters to participate in the expenditure of the 2% monies. On October 10, 2002, a conference call was conducted with Michael Kuperman (Kuperman), Assistant Counsel for the Office of the State Comptroller, as well as counsel for the plaintiffs and defendants. Kuperman allegedly suggested a vehicle be created to allow, in a formal manner, the paid career firefighters to participate in and vote on the expenditure of these funds. Thereafter, on December 26, 2002, the Board promulgated a regulation formalizing the participation of the Union representatives in the process for expending the 2% monies.
Plaintiffs did not feel that this new regulation adequately addressed their request and in February, 2003 commenced the instant action. Plaintiffs allege five causes of action. The first cause of action alleges that the plaintiffs are entitled to share in the use and participate in deciding the use of the 2% monies received by the Fire District from the State of New York and seeks a judgment declaring that the individual plaintiffs are entitled to share in the use and participate in deciding the use of the 2% monies received from the defendants from the State of New York, and further declaring that the monies received by the defendants are held in trust for all firefighters, including the individual plaintiffs. Plaintiffs also seek an order enjoining the defendants from transferring 100% of the 2% funds to the Volunteer Department or any other companies thereof. The second cause of action seeks a judgment requiring the defendants to pay over to the plaintiffs one-fourth of all the 2% funds received between the years 1997 and 2002. The third cause of action requests judgment providing plaintiffs with an accounting of what the defendants have done with the 2% funds for the years 1997 through the present. The fourth cause of action requests that the plaintiffs receive a judgment against defendant Howk for an alleged breach of his fiduciary duty in the amount of all 2% funds improperly transferred by him from 1997 through the present, and punitive damages in the amount of $250,000. The fifth cause of action seeks a judgment declaring that defendants must turn over to the plaintiff the Brighton Professional Firefighters Mutual Aid Fund (BPFMAF) a proportional share of the 2% monies received from the State of New York annually.
More specifically, the new regulation calls for a committee of six volunteer firefighters and two paid firefighters to develop a budget proposal and present the proposal to the full membership. Plaintiffs assert that under this new regulation, the Volunteer Department would continue to control the 2% monies by virtue of its majority representation on the committee and its overwhelming majority among the membership of the Fire District.
The BPFMAF is a trust fund which the plaintiffs have established for the purpose of receiving and disbursing the 2% funds to the paid firefighters, both union and non-union, employed by the Fire District.
The defendants have moved to convert the action to a special proceeding pursuant to Article 78 of the CPLR and also seek dismissal of the complaint or special proceeding pursuant to CPLR §§ 3211 and 7804(4). The grounds for the relief sought by the defendants are as follows:
1. The action is properly a proceeding against a body or officer pursuant to Article 78 of the CPLR and must be converted by the court into its proper form pursuant to CPLR § 103(c);
2. Plaintiffs failed to file a notice of petition or order to show cause as required by CPLR § 304;
3. Plaintiffs' claims are barred by the applicable statute of limitations;
4. Plaintiffs in this matter lack standing or capacity to maintain this proceeding against the defendants;
5. The claim must be dismissed with respect to Howk because defendant Howk acted within the scope of his employment as Fire District treasurer and is, therefore, entitled to immunity from individual liability as a matter of law;
6. As a matter of law, plaintiffs have failed to state of cause of action against respondent Howk;
7. Plaintiffs have failed to state a cause of action for which punitive damages may be granted;
8. Plaintiffs failed to serve a notice of claim on the Fire District as required by the General Municipal Law;
9. As a matter of law, plaintiffs failed to state any cause of action for which relief may be granted.
The plaintiffs have cross-moved for summary judgment on their first, second, third, and fifth causes of action.
DISCUSSION
There is no merit to the defendants' first and second objections in point of law that the declaratory judgment action should be converted to an Article 78 proceeding and then dismissed pursuant to CPLR § 304 for failure to file a notice of petition or order to show cause. Numerous cases which have dealt with recovery of monies under Insurance Law §§ 9104 and 9105 have done so in the context of a declaratory judgment action ( see, Renn v. Kimbeck, 51 NY2d 189) ; Town of Mamaroneck Professional Firefighters Association v. Volunteer and Exempt Firemen's Benevolent Association of Town of Mamaroneck, 292 AD2d 375 [2nd Dept, 2002]; Pillig v. Strange, 239 AD2d 568 [2nd Dept, 1997].
The Court concludes that the declaratory judgment causes of action are governed by the four month statute of limitations for CPLR Article 78 proceedings ( see, Mohawk Group L.P. v. Town of Amherst Industrial Development Agency, 309 AD2d 1184, 1186 [4th Dept, 2003]; Town of Webster v. Village of Webster, 280 AD2d 931 [4th Dept, 2001]; see generally, Solnick v. Whalen, 49 NY2d 224). The statute with regard to the 2% monies for 2002 commenced to run on December 26, 2002 which is the date of the resolution and first official act of the Fire District which effectively denied the plaintiffs' demand. It is on that date that the Fire District's actions became final and binding. The Court rejects the defendants' argument that the statute of limitations started to run on September 6, 2002, which was the first deadline given by plaintiffs' counsel for the distribution of the 2% funds for 2002. This action was commenced on February 20, 2003 and, therefore, is timely with regard to the claims for the 2% monies for 2002. The claims regarding the 2% monies for the years 1997 through 2001 are time-barred, the four month statute of limitations having commenced no later than the date the funds were distributed and spent.
The Court also finds that the plaintiffs have a sufficient interest in the subject matter to maintain this action and that the complaint alleges a justiciable controversy ( see, Niagara Falls Fire Department Mutual Aid Association, Inc. v. The Exempt Firemen's Association of the City of Niagara Falls, 25 AD2d 484 [4th Dept, 1966]; Eisinger v. Stern, 57 Misc 2d 16 [S.Ct., Oneida Co., 1968]. The determination with regard to standing to commence this action is a separate issue from whether any of the plaintiffs may ultimately be designated as a statutory recipient of the 2% monies.
The complaint does not allege facts sufficient to support a claim for punitive damages. The motion to dismiss the remaining claim against defendant Howk is denied without prejudice. The defendants' motion papers include evidentiary affidavits which are more properly considered on a motion for summary judgment. Regardless of how persuasive the evidentiary affidavits may appear, the proper procedure is for the defendants to answer and then move for summary judgment.
The only claim remaining against defendant Howk is for an alleged breach of fiduciary duty with regard to the transfer of the 2% funds for 2002.
Similarly, the plaintiffs' cross-motion for summary judgment on their first, second, third, and fifth causes of action is premature inasmuch as defendants have not answered. Additionally, the second, third and fourth causes of action have been dismissed insofar as they seek relief for any years prior to 2002. The defendants are granted 20 days after service of an order with entry to interpose their answer. Once issue is joined, the parties may move for summary judgment if so inclined.
So ordered.