Opinion
No. 508480/14.
09-21-2015
MONT YORK ASSOCIATES, LP, Plaintiff, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, Defendant.
Brian T. Carr, Esq., Herzfeld & Rubin, PC, New York, for Plaintiffs. Michael S. Davi, Esq., New York, for Defendants.
Brian T. Carr, Esq., Herzfeld & Rubin, PC, New York, for Plaintiffs.
Michael S. Davi, Esq., New York, for Defendants.
CAROLYN E. DEMAREST, J.
Defendant Consolidated Edison Company of New York (Con Ed) moves for an order, pursuant to CPLR 3211(a)(2) and CPLR 3211(a)(7), dismissing the complaint.
Plaintiff Mont York Associates, LP, (Mont York) seeks damages for breach of contract and negligent misrepresentation alleging that Con Ed misrepresented the cost to extend gas service to a residential apartment building owned by Mont York. In the complaint, Mont York asserts that in 2012 it contacted defendant and requested information on converting its building from oil to gas (complaint ¶¶ 4–5). In a "Gas Service Layout" dated December 3, 2012, Con Ed allegedly represented that it could extend gas service to Mont York's building at no cost to Mont York (complaint ¶¶ 7–8). Based on this representation, Mont York arranged for the installation of a new boiler and other internal hardware necessary for a gas conversion (complaint ¶¶ 9–10). Mont York further asserts that after initially advising Mont York that it could perform the conversion at no cost, Con Ed proceeded to extend gas service to other buildings in the area at no cost (complaint ¶ 12). After Mont York performed the work necessary to the conversion, Con Ed informed Mont York that the cost would be $2.4 million to extend service to Mont York's building and that the $2.4 million charge was based on the fact that the increased load to the area was being caused solely by Mont York's building (complaint ¶¶ 11, 13). Based on these factual allegations, Mont York has pled five causes of action, the first for specific performance of the purported "no cost" agreement, the second for breach of contract, the third for a violation of General Business Law § 349, the fourth for negligent misrepresentation that service could be extended at no cost, and the fifth for fraud, relying, at least in part, on the allegation that Con Ed had falsely stated that the $2.4 million charge resulted from an increased gas load solely caused by Mont York's building.
Neither party has supplied this document in the moving papers though it appears to be the "contract" upon which suit is brought. Con Ed has provided, annexed to the Reply Affirmation of Attorney Michael Daly, the "Surcharge Calculator" of the estimate of plaintiff's costs dated 11/9/12. It is unclear whether this document was ever provided to plaintiff. It is further of critical significance to plaintiff's claim that it has not paid the sum demanded by defendant for the services plaintiff seeks and has thus sustained no damages (see W. Park Assoc., Inc. v. Everest Natl. Ins. Co., 113 AD3d 38, 44 [2d Dept 2013] ).
Con Ed asserts that it is entitled to dismissal of the complaint pursuant to CPLR 3211(a)(2), based on lack of subject matter jurisdiction, and 3211(a)(7), for failing to state a cause of action. In considering a motion to dismiss for failing to state a cause of action under CPLR 3211(a)(7), the pleading is to be afforded a liberal construction (CPLR 3026 ), and the court should accept as true the facts alleged in the complaint, accord plaintiff the benefit of every possible inference, and only determine whether the facts, as alleged, fit within any cognizable legal theory (see Hurrell–Harring v. State of New York, 15 NY3d 8, 20 [2010] ; Leon v. Martinez, 84 N.Y.2d 83, 87–88 [1995] ). Although evidentiary material may be considered in determining the viability of a complaint, the complaint should not be dismissed unless defendant has established "that a material fact alleged by the plaintiff is not a fact at all and that no significant dispute exists regarding it" (Stewart v. New York City Tr. Auth., 50 AD3d 1013, 1014 [2d Dept 2008] [internal quotation marks and citations omitted]; see also Lawrence v. Miller, 11 NY3d 588, 595 [2008] ; Nunez v. Mohamed, 104 AD3d 921, 922 [2d Dept 2013] ). These same rules of liberal construction apply to the analysis of whether the causes of action alleged in the complaint fall within the subject matter of the court, particularly given that the Supreme Court, as a court of general jurisdiction, "is presumed to have jurisdiction of a cause unless the contrary plainly appears" (Condon v. Associated Hosp. Serv., 287 N.Y. 411, 415 [1942] ; see also Vidal Corp. v. Langley Aviation Corp., 48 N.Y.S.2d 824, 827 [Sup Ct, New York County 1944] ).
Con Ed primarily asserts that Mont York's causes of action implicate the Public Service Commission's (PSC) ratemaking authority because the $2.4 million cost to extend service is derived from a tariff Con Ed filed with the PSC and that dismissal is required because the Public Service Commission has primary jurisdiction over ratemaking issues and because of the filed rate doctrine.
"The filed rate doctrine bars actions against federal- and state-regulated entities which are grounded on the allegation that the rates charged by [those entities] are unreasonable ... Simply stated, the doctrine holds that any filed rate'—that is, one approved by the governing regulatory agency ... is per se reasonable and unassailable in judicial proceedings brought by ratepayers" (W.Park Assoc., Inc. v. Natl. Ins. Co., 113 AD3d 38, 46 [2d Dept 2013], quoting Wegoland Ltd. v. NYNEX Corp., 27 F3d 17, 18 [2d Cir1994] ; Public Service Law § 66[12] ). Thus, "a consumer's claim, however disguised, seeking relief for an injury allegedly caused by the payment of a rate on file with a regulatory commission, is viewed as an attack upon the rate approved by the regulatory commission" and, therefore, barred by the doctrine (Porr v. NYNEX Corp., 230 A.D.2d 564, 568 [2d Dept 1997], lv denied 91 N.Y.2d 807 [1998] ; see also W.Park Assoc., 113 AD3d at 46 ).
Two distinct policy "strands" underlie the filed rate doctrine. One is nondiscrimination, which recognizes that the regulatory agencies are established to provide for uniform rates, and that without the filed rate doctrine, "a discriminatory system would result, with those having recourse to the courts paying less for the same services than other ratepayers who have either not sued, or who, having sued, are granted less substantial relief by different courts and juries" (Porr, 230 A.D.2d at 569 ; see Public Service Law §§ 65[2], 66[12][d] ). The other strand is justiciability, which recognizes that, unlike the regulating agencies, which have special competence to determine reasonable rates, courts do not have the expertise to make rate making decisions, and "are simply ill-suited to systematically second guess the regulators' decisions and overlay their own resolution" (W.Park Assoc., 113 AD3d at 47 [internal quotation marks omitted] ). Indeed, not only are courts ill suited to make such ratemaking decision, a court's interference with such a decision would subvert the primary jurisdiction granted to an administrative agency to set rates and thereby undermine the regulatory scheme established by the legislature (see Walton v. New York State Dept. of Correctional Servs., 13 NY3d 475, 494 [2009] [Read, concurring]; Porr, 230 A.D.2d at 572 ).
Here, the copies of the relevant tariff or rate filed with the PSC that have been submitted by Con Ed provide, among other things, that Con Ed is responsible for absorbing the cost of furnishing or constructing mains or lines up to 100 feet from the centerline of the public right of way (General Rule III, 3[B] ), but that "if, in order to provide service to an applicant [Con Ed] must install mains and appurtenant facilities in addition to those required to be provided without charge ... [Con Ed] shall impose a surcharge" subject to certain conditions not relevant here (General Rule III, 3[C][1] [emphasis added]; see also Public Service Law § 31[4] ).
These copies of the tariffs or rates are admissible without certification and are prima facie evidence of the filed original (CPLR 4540[d] ; Schlesinger v. Con Edison Co. of NY, 1 Misc.3d 903[A], 2003 N.Y. Slip Op 51493[U] [Sup Ct, Kings County 2003] ).
The tariff also requires that the surcharge be reasonably allocated among the Customers being served from the main extension (General Rule III, 3[C][1][c] ).
Given that this tariff mandates the charging of the surcharge whenever the extension of service requires work in addition to that to be provided free of charge, Con Ed cannot agree to a rate other than this rate filed with the PSC and the court cannot enforce an agreement that would allow a customer to avoid paying the mandated surcharge (see Porr, 230 A.D.2d at 571–572 ; see also Purcell v. New York Cent. R.R. Co., 268 N.Y. 164, 170–172 [1935] ; Naevus Intl. v. AT & T Corp., 283 A.D.2d 171, 172–173 [1st Dept 2001] ; American Telephone & Telegraph Co. v. Central Office Telephone, 524 U.S. 214, 224–226 [1998] ). As Con Ed's purported representations that the service could be extended free of charge conflicts with the filed rate, these representations by Con Ed cannot be found to have established an agreement or contract with Mont York. Mont York's breach of contract causes of action are thus barred by the filed rate doctrine and must be dismissed.
In opposition to the motion, Mont York states that it does not challenge the correctness of Con Ed's determination that the filed rate would require Mont York to pay $2,400,000 for the extension of service, but asserts that its challenges, based on Con Ed's misrepresentations regarding the cost of the extension of service, do not implicate the PSC's ratemaking authority and are thus not subject to dismissal pursuant to the filed rate doctrine. Mont York emphasizes that the damages it seeks are based on the cost of converting the building to gas, expenses it would not have incurred in the absence of the alleged misrepresentations. In making this assertion, Mont York correctly points out that claims that do not require inquiry into a regulated entity's filed rates are not precluded by the filed rate doctrine (see Naevus Intl., 283 A.D.2d at 173 ; Batas v. Prudential Ins. Co. of Am., 281 A.D.2d 260, 261 [1st Dept 2001] ; Kross Dependable Sanitation v. AT & T Corp, 268 A.D.2d 874, 875 [3d Dept 2000] ; Lauer v. New York Tel. Co., 231 A.D.2d 126, 129 [3d Dept 1997] ). But Mont York's labeling its claims as misrepresentation and fraud does not insulate the claims from the filed rate doctrine. As noted in Porr v. NYNEX, Corp., "there is no general fraud exception' to the filed rate doctrine" (230 A.D.2d at 572 ), because allowing a plaintiff to recover damages based upon purported reliance on non-disclosure would effectively grant the consumer a reduced rate for the public utility's services in contravention of law and policy (id. at 574 ).
Mont York cannot allege damages based on the difference between the filed rate and the allegedly misrepresented rate since it apparently has not agreed to proceed with the service connection.
Contrary to Mont York's assertion, to the extent that Mont York alleges fraud based on Con Ed's misrepresenting that the need for increased capacity was caused solely by the potential gas usage of Mont York's building, any finding of liability would require this court to determine whether Con Ed correctly calculated and applied the filed rate. Indeed, any finding that Con Ed improperly imposed the cost of the surcharge solely on Mont York, rather than allocating the cost amongst other new customer's in the area, would require an analysis of the gas usage of the various customers in the area and the proper allocation of the costs of providing service to Mont York and the other area customers. Since such an analysis undoubtedly falls within the special expertise of the PSC, it would be improper for this court to determine this aspect of Mont York's claim (see Township of Thompson v. New York State Elec. & Gas Corp ., 25 AD3d 850, 851–852 [3d Dept 2006], lv denied 6 NY3d 713 [2006] ; Brownsville Baptist Church v. Consolidated Edison Co., 272 A.D.2d 358, 359 [2d Dept 2000] ; Van Dussen–Storto Motor Inn v. Rochester Tel. Corp., 42 A.D.2d 400, 402–403 [4th Dept 1973], affd on the opinion below 34 N.Y.2d 904 [1974] ; Marcus v. AT & T Corp., 138 F3d 46, 62–63 [2d Cir1998] ). Plaintiff may appropriately seek redress for any perceived injustice in the allocation of costs by Con Ed by appeal to the Public Service Commission (see Public Service Law § 66(5) ).
To the extent that the main extension was for more than one customer, the tariff expressly requires that the surcharge be reasonably allocated amongst the customers served by the main extension (General Rule III, 3(C)(1)(c)). ?
Moreover, since the customer is conclusively presumed to know the filed rate, the customer cannot establish its reliance on the alleged misrepresentations of the utility required as an element of a fraud or misrepresentation claim (see Porr, 230 A.D.2d at 574 ; Marcus, 138 F3d at 63–64 ; Richardson v. Standard Guar. Ins. Co ., 371 NJ Super 449, 468–469, 853 A.2d 955, 966–967 [App.Div.2004] ). Here, the filed rate provides notice that a surcharge may be required under some circumstances, and although the customer does not have knowledge of Con Ed's gas system and cannot know that a surcharge may apply in any particular instance, any impropriety in the assessment by Con Edison with respect to the application of the tariff, even as to its disproportionate impact on plaintiff, is properly determined in the first instance by the Public Service Commission, whose decision may then be challenged in an Article 78 proceeding (see Porr, 230 A.D.2d at 570–571 ; Purcell v. New York C.R. Co., 268 N.Y. 164, 171–172 [1935] ).
Mont York's third cause of action, premised on a violation of General Business Law § 349 fails to state a cause of action because there is no allegation in the complaint that Con Ed's conduct affected consumers at large. In other words, there is no allegation suggesting that the misrepresentations relating to the surcharge were part of a larger practice of misrepresentations aimed at the general public rather than, as suggested by the allegations here, that the misrepresentations were part of a single transaction involving only Mont York (see New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 320–321 [1995] ; JP Morgan Chase Bank, N.A. v. Hall, 122 AD3d 576, 581 [2d Dept 2014] ; Air & Power Transmission, Inc. v. Weingast, 120 AD3d 524, 525 [2d Dept 2014] ; cf. North State Autobahn, Inc. v. Progressive Ins. Group Co., 102 AD3d 5, 12–14 [2d Dept 2012] ). The claim that the many residential tenants of 440 Audubon are adversely affected is insufficient to demonstrate the broader public impact required for a cause of action under General Business Law § 349. In any case, the presumptions of the filed rate doctrine preclude an action alleging a violation of General Business Law § 349 (Porr, 230 A.D.2d at 576 ).
CONCLUSION
Con Ed's motion is granted as to plaintiff's first, second, fourth and fifth causes of action based upon the filed rate doctrine and the nonjusticiability of the claims before this court prior to submission to the Public Service Commission. The third cause of action is dismissed for failure to state a cause of action under General Business Law § 349. Accordingly, the complaint is dismissed in its entirety.
This constitutes the decision and order of the court.