Opinion
No. 5617/10.
2010-08-20
RIDGE TRANSPORT SYSTEMS, INC., Petitioner For a Judgment Pursuant to Article 78 of the CPLR v. The CITY OF NEW YORK, Raymond W. Kelly, as the Police Commissioner of the City of New York, Mike's Heavy Duty Towing, Inc., Runway Towing, Inc., and Bosciano Auto Collision, Ltd., Respondents.
Greenberg Freeman LLP, for Petitioner. Nicholas R. Ciappetta, Corporate Counsel, for Respondent.
Greenberg Freeman LLP, for Petitioner. Nicholas R. Ciappetta, Corporate Counsel, for Respondent.
YVONNE LEWIS, J.
On February 12, 2010, Petitioner Ridge Transport Systems, Inc. received an administrative determination from the New York Police Department stating that Ridge had been found “non-responsible” and that its towing permits would not be renewed. Ridge attempted to follow-up with the NYPD, but all requests for additional information were ignored. In a letter dated February 18, 2010, Ridge purported to appeal the February 12, 2010 determination made by Commissioner Kelly, pursuant to Title 9, § 2–08(k) of the Rules of the City of New York. In response, the Committee declined to revise their finding of non-responsibility. On March 12, by order to show cause, Ridge commenced this proceeding seeking a judgment annulling the NYPD's February 12, 2010 determination of non-responsibility, and voiding the conditional award of towing permits to co-respondents Mike's, Runway, and Bosciano. On March 19, 2010, by letter, the Committee amended their February 12 finding on non-responsibility. The new determination explained that Ridge was found non-responsible pursuant to § I(E)(3)(c)(i), (ii), (iii), and (iv) of the Permit Application Request Process (“PAR”).
On March 26, 2010, Justice Lewis granted petitioner's application for temporary injunctive relief. On March 31, respondents brought an Order to Show Cause before the Appellate Division, Second Department seeking (1) leave to appeal pursuant to CPLR § 5702(b)(1) and (c); (2) a stay of the injunctive relief pursuant to CPLR § 5518 and/or § 5519(c); (3) an interim stay of the Supreme Court's order pending a decision on this motion; and (4) such other and further relief that the Court found just and proper. On April 19, 2010, the Appellate Division, Second Department, by Decision and Order on Motion, granted respondent's motion for leave to appeal Judge Lewis' Order and a stay of enforcement of that order pending hearing and determination of the appeal.
Pursuant to the provisions of § 4–07(i) of Title 34, Chapter 4 of the Rules of the City of New York, the towing of disabled vehicles on the City's arterial, or major, highways is prohibited, except by a tow truck under permit issued by the Commissioner of the New York Police Department. Prospective towing companies must go through a process known as the PAR. The PAR process is a three-stage process that requires applicants to submit materials and information regarding the company, including the background information of the company's principals and officers.
The three applicants that score the highest in the first and second stage are asked to come in for an interview before the Arterial Tow Selection Committee (“Committee”). After the interview, the Committee advises the Police Commissioner of the two highest scoring applicants. The Committee's recommendation is not binding on the Police Commissioner and the Commissioner retains the sole discretion to award the permit to the applicant that the Commissioner sees fit.
The PAR also requires that arterial towing permits may only be awarded to applicants deemed to be “responsible”. A responsibility determination is based upon the applicant's technical capability and financial capacity to fully perform the requirements of the contract, as well as the “business integrity” to justify the award of public tax dollars. An applicant's “business integrity” may be adversely affected by, amongst other factors, (a) material misrepresentations or omission concerning the identity of pedigree of an applicant or its principal; (b) a material misrepresentation made during the stage three interview; (c) any other material misrepresentation in the application; and (d) any prior felony conviction or three or more misdemeanor convictions of an applicant or its principal.
Additionally, the award of any permit is subject to the completion and review of a VENDEX questionnaire. The VENDEX questionnaire requires vendors to identify and provide certain background information about its “principal owners” and the “three officers who exercise the most substantial degree of control” over the vendor. The questionnaire also requires the applicants to list, inter alia, whether any of its “principal owners or officers or managerial employees” has been convicted of a felony within the past ten years.
When a vendor is determined to be “non-responsible” for any reason, such determination will remain part of the VENDEX database for a period of ten (10) years. In all instances where a vendor is deemed “non-responsible”, the Agency's Chief Contracting Officer that made the determination is required to provide a “specific, written determination of non-responsibility.” A vendor may appeal the determination of non-responsibility. If the decision is upheld, the vendor may then further appeal to the Mayor, who may delegate the determination of the appeal to the City Chief Procurement Officer. Any agency considering a vendor for a City contract is mandated by law to check the vendor's VENDEX information before a contract is awarded. A finding of non-responsibility in VENDEX precludes the vendor from being awarded a City contract for the 10–year period that the entry remains in the VENDEX database.
On or about May 4, 2009, the NYPD released its PAR applications for arterial highway segments 13, 14, and 15. Completed applications, together with current and updated VENDEX questionnaires were due to the NYPD by July 10, 2009. Because the PAR application and VENDEX questionnaire was identical in all material respects to the PARs issued by the NYPD over the last 10 years, Ridge argues that the information contained on both the PAR and VENDEX questionnaire are identical to the information Ridge submitted in 2006 when it was awarded the arterial towing permits for segments 13, 14, and 15. On both the 2006 and 2009 PAR and VENDEX questionnaire, Mrs. Fava was listed as the sole principal and officer of the corporation. Ridge further argues, on information and belief, that Ridge was the only applicant who timely applied for the tow permits covering segments 13 and 14.
On December 1, 2009, Ridge received a letter from the NYPD inviting Ridge to attend an oral interview to “clarify and support” its application for towing permits covering segments 13, 14, and 15. The interview was conducted on December 14, 2009, and Ridge was represented at the interview by Mrs. Fava and three of its managers: Mr. Scifo, Mr. Fava, and Mr. Zurita. During the interview, Mr. Fava was specifically asked about his role within the company since he seemed to have a substantial role within the company. When asked why Mr. Fava was not listed on the VENDEX questionnaire as an officer of the company, Mrs. Fava stated that it was a “mishap”. The Committee also questioned why Mr. Fava's conviction for felony mail fraud was not included in the PAR application or VENDEX questionnaire. Ridge argues that the VENDEX only requires the disclosure of a manager's felony conviction that occurred “less than 10 years” before the VENDEX questionnaire was submitted. Mr. Fava's conviction was in 1984, well beyond the ten-year requirement. Ridge further argues that Mrs. Fava emailed Mr. Bello, a member of the Committee, with the precise wording from the VENDEX questionnaire and asked for Mr. Bello to inform her if he believed that Ridge was reading the question regarding felony convictions incorrectly. Mr. Bello informed Ridge that he could not assist its representatives in interpreting or answering the VENDEX questionnaire, and on February 12, 2010, Ridge received notice that they were deemed as “non-responsible” and would not be awarded the arterial towing permits for segments 13, 14, and 15.
The petitioners herein, Ridge Transport Systems, Inc., seek, by way of Article 78 relief, to annul and vacate an amended administrative determination of “non responsibility” made by respondents The City of New York, et. al. regarding an arterial tow permit, on grounds the determination was “arbitrary and capricious” and that this determination violated petitioner's due process. Ridge also seeks a stay or comparable injunctive relief to enjoin further action. Ridge asserts respondent's February 12, 2010 letter deeming petitioner “non-responsible” was arbitrary and capricious since respondents had no valid reasoning behind the determination and that respondents also failed to adequately explain its decision for determining Ridge as non-responsible. According to Ridge, the PAR application and VENDEX questionnaire which led to their determination of non-responsibility were identical to the previous PAR application and VENDEX questionnaire Ridge had submitted in 2006 upon which they were awarded the arterial towing permit for the three aforementioned segments of the Brooklyn–Queens Expressway. Based on the respondent's previous determination of Ridge as responsible rising from Ridge's previous, identical PAR and VENDEX, Ridge argues that respondents had no valid reasoning in determining them as non-responsible, as stated in the February 12, 2010 letter.
Respondent The City of New York, Raymond W. Kelly as the Police Commissioner of the City of New York, Mike's Heavy Duty Towing, Inc., Runway Towing, Inc., and Bosciano Auto Collision, Ltd., by their attorneys, responded to the foregoing by requesting a dismissal of the action on two grounds: (1) The City argues that the Police Department's determination of Ridge as “non-responsible” was not arbitrary and capricious and did not violate Ridge's due process since there was substantial evidence regarding material misrepresentations made by Ridge in it's PAR and VENDEX, and (2) an amended determination dated March 19, 2010 was sent to Ridge setting forth the City's basis for determining Ridge as non-responsible.
“It is well settled that the Court's power to review an administrative action is limited to whether the determination was warranted in the record, has a reasonable basis in law and is neither arbitrary nor capricious.” ( See Matter of Pell v. Board of Education, 34 N.Y.2d 222, 356 N.Y.S.2d 833;Matter of Colton v. Berman, 21 N.Y.2d 322, 287 N.Y.S.2d 647). The City claims that material misrepresentations were made in Ridge's PAR application and VENDEX surveys. Specifically, the City argues that Ridge misrepresented one of its “principals” in the PAR survey and VENDEX questionnaire and that misrepresentations were also made regarding a principal's alleged affiliation with organized crime. The definitions set forth in Section 2(A)(5) of the PAR, define a principal:' “[f]or the purposes of these permit specifications, (a) an individual shall be considered to hold stock in a corporation where such stock if owned directly or indirectly by or for (i) such individual; (ii) the spouse of such individual;(iii) the children, grandchildren and parents of such individual.” It is undisputed that Mr. Fava is the spouse of the direct owner of Ridge and indirectly owns stock in Ridge because of his marital status. The City also argues that Ridge failed to include Mr. Fava's previous felony conviction for mail fraud in the PAR application and VENDEX questionnaire, as required under the PAR rules. Furthermore, the City argues that when asked about his alleged ties to organized crime, Mr. Fava stated that he did not have any affiliations, although the City claims that they had credible information from the Federal Bureau of Investigation regarding alleged links to an organized crime family. Ridge argues that in the absence of admissible evidence to support the accusation, the allegation cannot be used to support the City's determination of non-responsibility.
The March 19, 2010 amended determination issued by the City came after an order to show cause by Ridge was submitted to this Court. Allowing an administrative agency to amend its prior determination would “unfairly disadvantage” the petitioner (Scanlan v. Buffalo Public School System, 90 N.Y.2d at 663 (1997)). Because the amended determination was entered only after this legal proceeding was commenced, the amended determination is hereby annulled and vacated and the Court will only consider the original administrative determination issued by the City for the purposes of this action.
Under § 7803 of the CPLR, “the only questions that may be raised in a proceeding under this article are: (3) whether a determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion, including abuse of discretion as to the measure or mode of penalty or discipline imposed;” In an Article 78 proceeding, the petitioner bears a heavy burden in its attempt to annul and vacate an agency's determination on grounds that the determination was arbitrary and capricious. Under settled New York law, “[a] decision of an administrative agency which neither adheres to its own prior precedent nor indicates its reasons for reaching a different result on essentially the same fact is arbitrary and capricious.” Tall Trees Const. Corp. v. Zoning Bd. of Appeals of Town of Huntington, 97 N.Y.2d 86, 93 (2001) (superseded on other grounds) (quoting Knight v. Amelkin, 68 N.Y.2d 975, 977 (1986)). Previously, Ridge had been determined as responsible and awarded arterial towing permits for three segments of the Brooklyn–Queens Expressway.
“It has long been the rule that judicial review of an administrative determination is limited to the grounds presented by the agency at the time of its determination.” Scanlan, 90 N.Y.2d at 678). The February 12, 2010 administrative determination issued by the City did not provide Ridge with a valid explanation for their deviation from the City's prior determinations of Ridge as responsible. “It follows that when an agency determines to alter its prior stated course it must set forth its reasons for doing so Absent such an explanation, failure to conform to agency precedent will, therefore, require reversal on the law as arbitrary” Matter of Charles A. Field Delivery Service, Inc., 66 N.Y.2d 516, 520 (1985). The City acknowledged that they had the information regarding Mr. Fava's previous felony conviction and the information regarding his alleged ties with organized crime prior to administering their February 12, 2010 administrative determination, but still did not provide petitioner Ridge with a reasoning for their determination. On the basis of the foregoing, this Court finds that the City's February 12, 2010 administrative determination was arbitrary and capricious.
Although the Court finds that the administrative determination given to Ridge was arbitrary and capricious, there is no evidence of any violation of Ridge's due process. Rather, petitioner Ridge's opportunity to commence this Article 78 proceeding is a fulfillment of Ridge's due process under the Constitution of the United States. This constitutes the decision and order of this Court.