Opinion
07-11725.
Decided February 4, 2009.
ALBERT A. NATOLI, P.C., Attorney for Petitioners, New York, New York.
WILLIS H. STEPHENS, JR., ESQ., Attorney for Respondents, Brewster, New York.
RICHARD L. O'ROURKE, ESQ., KEANE BEANE, P.C., Attorneys for Respondent, INDEPENDENT SEWAGE WORKS, INC., New York.
Petitioners, HOME DEPOT U.S.A., Inc. and LNT, INC., have moved for relief pursuant to Article 78 of the Civil Practice Law and Rules directing that Respondents, TOWN BOARD OF THE TOWN OF SOUTHEAST and the TOWN OF SOUTHEAST:
1.Review Respondent, INDEPENDENT SEWAGE WORKS, INC. rates;
2.Consider the issues raised in the Complaint submitted to the Town of Southeast and implement the rate impact of the contracts that are associated with said Complaint;
3.Adjust the rate structure of the rates charged by Respondent, INDEPENDENT SEWAGE WORKS, INC.; and
4.(a)Issue a decision that places Respondent, INDEPENDENT SEWAGE WORKS, INC.'s rates in compliance with the requirements of Transportation Corporations Law § 121; or
(b)Formally decline to issue a decision on the Complaint because it does not have jurisdiction to implement the effect of the contracts between Emgee Highlands Corp. and Petitioners.
Petitioners have filed two petitions that in essence raise the same issues. On July 18, 2002, Respondents TOWN BOARD OF THE TOWN OF SOUTHEAST and TOWN OF SOUTHEAST fixed the sewage rate for Respondent INDEPENDENT SEWAGE WORKS, INC. Less than five years later on June 27, 2007, the petitioner commenced the first Article 78 proceeding, while the second Article 78 proceeding was filed more than five years later, on November 16, 2007. Thereafter, the court approved a Stipulation in which the parties agreed to consolidate the two (2) filed petitions. Respondents have moved to dismiss the consolidated petition and the Petitioners cross-moved for summary judgment.
Petitioners, HOME DEPOT U.S.A. and LNT, INC., leased property within the Town of Southeast, Putnam County, New York. The Petitioners' commercial premises are located in a shopping center developed by Emgee Highlands Corp. Respondent INDEPENDENT SEWAGE WORKS, INC., ("ISW"), a utility company that is affiliated with the developer, is the exclusive provider of sewage services to this shopping center. The Petitioners maintain that the rate structure for sewage that the Respondent ISW charges and which Respondent municipality fixed is not justified, that is, the rates charged to Home Depot U.S.A., Inc. and LNT, Inc. are "not rationally based." Petitioners also allege that pursuant to the contracts entered into between Petitioners and Emgee Highlands Corp., Petitioners have had no alternative but to pay the excessive rates for sewage that Respondent, ISW presented to the Respondent, TOWN OF SOUTHEAST for approval even though according to Petitioners such rates are highly excessive and not "fair, reasonable and adequate" rates as defined in Transportation Corporations Law § 121. Furthermore, Petitioners contend that the rates the municipal Respondents fixed, which were fixed and became effective on July 18, 2002, were determined without public hearing or notice to the Petitioners and that these rates are the highest rates charged to any of their commercial properties in the State of New York. TCL § 121 is silent as to notice to customers or of a requirement by a municipality to first notify the public of the fixing of sewage rates.
Negotiations were allegedly held between Emgee Highlands Corp. and Petitioners to have the water and sewage rates reset and when no resolution was found, an action was filed in United States District Court, Southern District of New York by Petitioner, HOME DEPOT U.S.A., Inc. against ISW, a sister utility that provides water to the Petitioners. In that action Petitioner seeks damages based upon breach of contract by ISW. That lawsuit too stems from the same contracts at issue here. The late Judge Charles Briant stayed that litigation pending the New York State Public Service Commission's (hereinafter referred to as PSC) determination of a water rate schedule. The PSC ultimately dismissed the complaint that otherwise would have required the recalculation of such a water rate schedule. Respondent ISW maintains that the same methods and principles were used to establish both the water and sewage rates and further maintains that the PSC determination applies to the sewer rates and thus such rate is fair, reasonable and adequate as required by TCL § 121. However, the Petitioner filed a proceeding pursuant to Civil Procedure Law and Rules Article 78 in Supreme Court, Albany County challenging the dismissal. A cross-appeal was submitted to the Appellate Division, Third Department and on October 23, 2008, that court, inter alia, remitted the matter back to the PSC for it to reconsider whether Petitioners' water rates should be reduced "prospectively based upon a double recovery of construction costs, taking into account all relevant agreements entered into between Emgee, Home Depot and IWW" (the sister utility). See In the Matter of Home Depot U.S.A., et al. v. New York State Public Service Commission, et al., 55 AD3d 1111, 1114 (3rd Dept. 2008). Thus, clearly ISW's contention of rates that are fair, reasonable and adequate was not a position fully adopted by that court. Although not bound by that decision, as this case involves the authority of review of sewage rates by a municipality, this court nevertheless finds that case to be instructive given the similarity, albeit not identity, of both the parties and issues.
The terms and possible breach of contracts between the parties are not directly at issue here. There is also no dispute that, to date, the municipal Respondents have completely failed to act upon Petitioners' complaint that the TOWN BOARD OF THE TOWN OF SOUTHEAST review the current sewage rates. Petitioners first complained to Respondent, TOWN BOARD OF THE TOWN OF SOUTHEAST on June 23, 2005, seeking an 80 % reduction of the fixed rate. Respondents contend that the Petitioners are not entitled to the requested relief because (a) the application to review the rates is barred by the applicable statute of limitations; (b) the language of Transportation Corporations Law § 121 only provides for review by the Respondent, TOWN BOARD OF THE TOWN OF SOUTHEAST at its discretion under these circumstances; and (c) there is no provision in the Transportation Corporation Law § 121for a sewage customer to seek review of sewage rates fixed by a municipality. The court finds Respondents contention to be unavailing.
First, Respondents maintain that the statute of limitations bars this action. Municipal Respondents never address which statute of limitations is applicable in this case. Respondent, ISW maintains that Petitioners could only complain of the fixed rate no later than four (4) months from the date the rate was fixed. The court disagrees. According to Transportation Corporations Law § 121, the first day the municipal Respondents were permitted to review the rate upon petition of these Petitioners to determine whether such rate was "fair, reasonable and adequate" was July 18, 2007, an interval of no less than five years from the date the rate was fixed. As stated earlier, Petitioners first complaint to the Town Board seeking reduction of sewage fixed rate was on June 23, 2005. These two (2) consolidated actions were commenced by Petitioners on June 27, 2007 and November 16, 2007, less than one month before July 18, 2007, and under four (4) months from that date. Accordingly, this court finds no theory which bars this Article 78 action on statute of limitations grounds.
Turning to the next point, Petitioners aver that inasmuch as more than five years have elapsed since the Respondent municipality set the sewage rates, they are now entitled to have the rates reviewed by the Respondents per the terms of TCL § 121.
Transportation Corporations Law § 121, provides in relevant part, that A sewage-works corporation shall supply each city, town, village or other municipal area or district wherein such corporation operates, and the inhabitants therein, with facilities or make provision for the collection, treatment and disposal of sewage at fair, reasonable and adequate rates agreed to between the corporation and the local governing body or bodies, and, in addition, in the county of Suffolk, the county sewer agency, notwithstanding the provisions of any general, special or local law. Rates shall be reviewable at intervals of not more than five years or at any time by petition of the corporation or motion by the local governing body on written notice after a period of ninety days. (Emphasis supplied.)
Neither party has cited a single case interpreting the word "reviewable" as it is used in the context of this statute and Respondents maintain such review, if any, shall occur only at their discretion. Moreover, Respondents contend that there is no explicit provision in the statute permitting a customer to seek review of the rates that a municipality fixed under any circumstances.
While TCL § 121 does provide for a rate review at any time upon the petition of the corporation or motion of the local governing body after a period of ninety days, the statute is silent as to the proper party or parties who may seek review of sewage rates at intervals of not more than five year intervals. Petitioners contend that the intent of the statute is to mandate review by the municipality no less than five years from the date the municipality fixed the rate and that, notwithstanding the statute's silence on the issue, a customer directly affected by the rate must be a proper party to seek such review and potential redress. The court agrees with Petitioners as to hold otherwise would leave the customer with no recourse with respect to fixed sewage rates.
By its terms, the statute does not deprive a customer receiving sewage service standing to challenge the sewage rates and logic would indeed dictate that the statute allow any person affected by such rate to challenge the sewage rate at some point. See RR Village Ass'n, Inc. v. Denver Sewer Corp., 826 F.2d 1197 (2nd Cir., 1987); International Paper Co. v. Sterling Forest Pollution Control Corp., 105 AD2d 278 (2nd Dept. 1984). To be sure, customers in other cases have been heard in litigation involving sewage rates. See e.g. Heritage Hills Sewage Works Corp. v. Town Bd. of Somers, 189 AD2d 816 (2nd Dept. 1993); Heritage Hills Sewage Works Corp. v. Town Bd. of Town of Somers, 245 AD2d 450 (2nd Dept., 1997). The court thus finds that the intent of the statute by using the words "shall be reviewable" simply means shall be reviewed. Of course, such review shall occur only upon petition/application by an affected party, including a customer, or upon the discretion of, as in this case, a town board. Other statutes similarly worded have been so interpreted. See New York State Public Employment Relations Bd. v. Board of Ed. of City of Buffalo, 39 NY2d 86, 91 (1976); Nassau Educational Chapter Civil Service Emp. Ass'n, Inc. v. Board of Ed. of Farmingdale Union Free School Dist., 61 AD2d 1049 (2nd Dept., 1978).
Accordingly, Respondents' Motion to Dismiss is in all respects DENIED . Petitioners have cross-moved for Summary Judgment. This court has reviewed all pleadings before it and finds no triable issues of fact raised with respect to the single issue of municipal review. Municipal Respondents do not deny that it fixed the sewer rate on July 18, 2002. Petitioners have petitioned to have the Board review the rates as fixed since 2005. There is no issue of fact that municipal Respondents have not reviewed the subject sewer rates and have steadfastly maintained that they are not required to do so in excess of five (5) years since the date such rate was fixed. Accordingly, the issue of failure of review by municipal Respondents is not a fact in dispute.
By reason of the foregoing, Petitioners' Motion for Summary Judgment pursuant to CPLR § 409 and § 2215 is GRANTED to the limited extent that municipal Respondents are directed to review the sewage rates charged by Respondent ISW and fixed by municipal Respondents and that Respondents are to comply in all respects with Transportation Corporation Law Section 121, including the setting of rates that are "fair, reasonable and adequate." See Huff v. C.K. Sanitary Systems, 260 AD2d 892, 897 (3rd Dept. 1999). Such review is to commence no later than forty-five (45) days from the date of this Order.
This constitutes the Decision and Order of this court.