Opinion
INDEX NO.: 02872/17
05-15-2020
THE TOWN OF RIVERHEAD AND THE TOWN BOARD OF THE TOWN OF RIVERHEAD, as the governing body of the RIVERHEAD SEWER DISTRICT, and such TOWN BOARD MEMBER WHO ARE RESIDENT TAXPAYERS OF THE RIVERHEAD SEWER DISTRICT, Petitioner, v. THE COUNTY OF SUFFOLK, Respondent.
PETITIONER'S ATTORNEY: Smith, Finkelstein, Lundberg, Isler & Yakaborski, LLP 456 Griffing Avenue Riverhead, NY 11901-0203 631-727-4100 RESPONDENT'S ATTORNEY: Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. 100 Garden City Plaza Garden City, NY 11530 516-222-6200
DECISION & ORDER
PETITIONER'S ATTORNEY:
Smith, Finkelstein, Lundberg, Isler &
Yakaborski, LLP
456 Griffing Avenue
Riverhead, NY 11901-0203
631-727-4100 RESPONDENT'S ATTORNEY:
Berkman, Henoch, Peterson, Peddy &
Fenchel, P.C.
100 Garden City Plaza
Garden City, NY 11530
516-222-6200
This hybrid Article 78 and Declaratory Judgment proceeding was commenced by The Town of Riverhead and the Town Board of the Town of Riverhead, as the governing body of the Riverhead Sewer District, and such Town Board Members who are resident taxpayers of the Riverhead Sewer District. The Town of Riverhead is a municipal corporation duly formed under the laws of the State of New York with principal offices at 200 Howell Avenue, Riverhead, New York. The Town Board of the Town of Riverhead is the governing body of Riverhead Sewer District (also referred to herein as the "District"), which is a municipal sewer district duly formed under Town Law of the State of New York and is located within the territorial boundary of the County of Suffolk, State of New York, with principal offices at 200 Howell Avenue, Riverhead, New York (collectively "Riverhead"). Certain members of the Riverhead Town Board are alleged to be taxpayer/residents of the Riverhead Sewer District.
The County of Suffolk ("County") is a municipal corporation duly formed under the laws of the State of New York having its principal offices at the H. Lee Denison Building, 100 Veteran's Memorial Highway, Hauppauge, New York.
This proceeding was initiated by Order to Show Cause with a Complaint/Petition attached ("Complaint") requesting: a judgment pursuant to CPLR Article 78, as to the First Cause of Action directing the County to pay Riverhead from the New York Sales Tax revenues collected and paid to the County pursuant to Section 1210-A of the Tax Law of the State of New York, in the sums of $537,140.00 and $1,466,712.00, being the amounts necessary to stabilize Riverhead's assessments and taxes for the years 2016 and 2017 and as mandated pursuant to §C-12-2(D) of Article XII of the Suffolk County Charter, and granting such other and further relief to Riverhead as this Court deems just and proper, together with its costs and disbursements herein.
The Complaint has six causes of actions. The first as noted above, is cast as an Article 78 Mandamus directing the County according to CPLR 7803 (1) to pay Riverhead sums due to stabilize its Sewer Rates for 2016 and 2017.
The Second Cause of Action is for a Declaratory Judgment pursuant to New York CPLR §3001 declaring that pursuant to § C12-2(D) of the County Charter, the County is required to pay the District the sums due to stabilize its Sewer Rate for 2016 and 2017 and for future years where the Sewer Rate exceeds 3% of the Sewer Rate for the immediately preceding year.
The Third Cause of Action is for a finding of waste pursuant to General Municipal Law § 51 and directing the County to restore and make good the funds collected from the tax imposed under Tax Law §1210-A(a) to the Assessment Stabilization Reserve Fund (also referred to herein as "ASRF") that were illegally transferred and expended for purposes other than Sewer Rate stabilization.
The Fourth and Fifth Causes of Action seek that the Court find that the County's actions violated the District's, the Taxpayers, and the other resident taxpayers' rights to equal protection under 42 U.S.C. 1983 and the Fourteenth Amendment of the United States Constitution and Article I, § 11 of the New York State Constitution.
The Sixth Cause of Action is for an accounting so as to compel the County to provide the District and the Taxpayers a full and complete accounting of the Assessment Stabilization Reserve Fund, including, but not limited to, all payments received from the State of New York and all disbursements made from the fund and any other relief the Court deems just and proper.
The County interposed a motion to dismiss the Complaint pursuant to CPLR §§ 7804(f) & 3211(a)(1), (2), (3), (5), (7) & (10) based upon: the failure to join necessary indispensable parties; the applicable statutes of limitations barring such actions; Riverhead's lack of standing; that such claims are non-justiciable; that the County's taxing and spending actions are purely discretionary acts not subject to mandamus; that the claims are barred by laches and estoppel; Riverhead's failure to state a claim for which any court could grant relief and for such other further and different relief as the Court deems equitable and proper.
Article 5-A of County Law authorizes the establishment or extension of County water, sewer, drainage or refuse districts. Districts are funded through special ad valorum levies, special benefit assessments or a system of user rates, charges and rentals. (County Law §§ 250, 266, 270-71). There are twenty-six sewer districts in Suffolk County.
The Riverhead Municipal Sewer District duly exists and was formed under Article 12 of Town Law. It is governed and operated by the Town Board of the Town of Riverhead.
In 1984, the New York State Legislature passed § 1210-A of the Tax Law authorizing the County to adopt a one-quarter of a percent (1/4%) county-wide sales tax. The County Legislature adopted a resolution in 1984 levying the sales tax and setting an Assessment Stabilization Reserve Fund ("ASRF").
Tax Law § 1210-A provided that the collection from the tax "for a period beginning December first, nineteen hundred eighty-four and ending November thirtieth, nineteen hundred eighty-eight shall...be deposited in a special fund, to be designated as an assessment stabilization reserve fund ... [which monies] in said fund may be appropriated from and transferred to in order of priority to, (i) "an account or accounts for the Southwest Sewer District... in such amount or amounts as shall be determined by the county executive...and approved by the county legislature...as necessary to stabilize assessments in such sewer district in any given year; (ii) to an account or accounts for any other sewer district established by the County of Suffolk in such amount or amounts as shall be determined by the county executive and approved by the county legislature...as necessary to stabilize assessments; and (iii) for distribution to the towns and villages within said county which have established or created a sewer district or benefitted area to provide sewer improvements or are constructing a sewer or sewage system in such amount or amounts as shall be determined by the county executive... and approved by the county legislature...to stabilize assessment or taxes. The dates for which these taxes could be utilized for sewer rate stabilization for the recipients (i.e. December 1, 1984 to November 30, 1988), for continuing payments to Town/Village has not been extended by the State or County Legislatures.
Money deposited in the ASRF was distributed in the form of loans. Since 1985, Riverhead and six other Town/Village Districts received monies from the ASRF as elective payments/subsides to help stabilize sewer assessments and taxes as recommended by the County Executive and appropriated by the Legislature,
The Suffolk County Drinking Water Protection Program ("DWPP") was added to the County Charter in 1987. See Local Laws 40-1987 and 35-1988. This replaced the ASRF and broadened the environmental and countywide purposes for which the Tax Law § 1210-A quarter percent (1/4%) sales tax funds could be used. These amendments removed sewer stabilization as was previously set forth in Tax Law § 1210-A(b), and provided that such future sales tax be utilized solely for countywide environmental programs and purposes. Recurring additional funding of the ASRF was terminated. See Local Law 35-1988.
To provide continued sewer tax stabilization to districts (including those in towns and villages) which had previously received funds, Charter § 12-7 provided that the money remaining in the ASRF as of December 31, 1988, together with "an amount equal to the actual amount of the sales compensating use tax that would have been collected from the "sewer district quarter-percent sales tax' in 1989" would be a guaranteed amount to be spent by the County Executive and the County Legislature, in their discretion until depleted. See: Local Law 40-1987; Tax Law §1210-A(b).
In 1988, the New York State Legislature amended Tax Law §1210-A by extending the quarter percent (1/4%) tax to November 20, 2000, and ending yearly recurring and continuous replenishment funding for the ASRF, and also created the Drinking Water Protection Program. See: Tax Law §1210-A (d).
The State Legislature removed requirements that any new funds from the 1/4% sales tax be extended as to the priorities and recipients previously set forth in the statute. This new amended law is vacant of any recurring or direct appropriation from the new DWPP fund for sewer rate stabilization. See: Tax Law §1210-A (d).
In July 2000, Tax Law § 1210-A (d) was amended to extend the sales tax to November 20, 2013 and to provide that the DWPP could be utilized to include sewer taxpayer protection. There was no provision requiring the County to consider the needs of the Town/Village Districts included in the DWPP Tax Law §1210-A(d)(i-v ). Aside from constantly depleting the ASRF under Tax Law §1210-A(d)-(b), the Town/Village Districts were not among the general or specific purposes permitted by the new DWPP.
In 2000, an amendment to the County Charter, which took effect on December 1, 2000 and was valid through December 31, 2013, the County Legislature changed DWPP. This amendment included sewer district tax rate stabilization, environmental protection, and property tax mitigation to help fund programs in the annual County Operating Budget. See: Local Law 35-1999. The purpose of this Local Law was to provide for sewer district tax rate stabilization...environmental programs and protection and property tax mitigation.
The purpose of the funding as set forth more specifically in this 2000 Amendment was open space acquisitions, water quality protection, farmland acquisition and sewer tax payer protection. No particular reference to any public or private sewer district is made in the 2000 Amendment. This amendment provided that 35.70% of net collection of 1/4% sales tax was to be deposited into a New Assessment Stabilization Reserve Fund ("New ASRF").
The 2000 amendments required that a County sewer district must show a 3% increase in taxes, to be considered eligible to receive funding from the New ASRF. It also allowed the County to carry over excess fund balances for sewer district tax rate stabilization. The amendment did not direct that the County provide funds from the New ASRF to Towns/Villages under DWPP, it did not direct that the County appropriate New ASRF funds on a yearly basis to ensure that any sewer district's increase of rates were lowered to exactly 3%; but merely that the 3% increase acted as a threshold requirement in order to merely be considered eligible to receive such assistive funding. It did not direct that any yearly excess funds in the New ASRF were required to be expended at all because a fund balance rollover was authorized.
In May 2003, Riverhead requested an increase in the fixed amount of stabilization funds which had been annually appropriated by the County Legislature in the amount of $146,688.00. This was done without Riverhead showing that sewer tax rates increased by 3%. The then Suffolk County Budget Director(Robert Bortzfield) in a letter to then Supervisor of the Town of Riverhead , Robert F. Kozakiewicz, dated May 21, 2003 regarding the Calverton Sewer District in the Town of Riverhead stated, "the County has included annual allocations in County operating budgets each year to certain Towns and Villages and payments have continued to be made year after year with no justification provided by the Towns and Villages, it is not mandated to, and amounts to be paid are subject to the determination of the County Executive and approval by the Suffolk County Legislature; the law sets minimum annual rate increase requirements for County sewer districts to meet before they would be eligible to receive any of these funds"; and (iv)" as we do with all County sewer districts, if a Town or Village sewer district has excess funds in any year, the excess funds must be returned to the ASRF annually. In this manner, the ASRF is constantly replenished, thereby extending the life of the fund and the ability to provide continued rate stabilization where needed." Riverhead never challenged the County's position as set forth in the 2003 Bortzfield. Letter.
In 2007, New York State extended the DWPP program to November 20. 2030 and expanded its purposes. See Tax Law 1210-A. At the same time the County Charter was amended to provide changes in environmental program to 2030, and to change the amounts to be placed in the New ASRF. See Local Law 24-2007. The application of the New ASRF was left to the County.
In 2011, the County Charter was amended to provide a $140 million cap on the excess fund balance of the New ASRF. It also provided the County with the explicit authority to utilize excess New ASRF monies for the operations, maintenance, improvements, and water protection projects for Town/Village Districts outside the County Districts. The Charter Amendment permitted the County Executive and the County Legislature to consider providing New ASRF funding or assistance to Town/Village for sewer related projects outside the boundaries of County Districts. See Local Law 44-2011. However, Local Law 44-2011 was invalidated because it was not approved by public referendum. See Long Island Pine Barrens Soc'y, Inc. V. Cty. Of Suffolk, 122 A.D.3d, 688, 692, 996 N.Y.S.2d 162, 167 (2nd Dept. 2014). The same law was re-enacted in 2014 after public referendum. See: Local Law 31-2014,
On November 9, 2015, Riverhead demanded an increase in County's sewer tax rate stabilization payments based upon increased expenses. No increase in its annual subsidization payment was recommended by the County Operating Budget adopted in November 2015. In March 2016, Riverhead received the same annual payment that it had received since 1992-$146,688.00.
In 2017, the Suffolk County Operating Budget, adopted in November 2016 by the Suffolk County Legislature, appropriated to Riverhead an annual subsidy of $146,688.00.
Riverhead filed a Notice of Claim on December 22, 2016 seeking payments they alleged were required to be paid pursuant to Tax Law §1210-A. On June 1, 2017, Riverhead commenced this hybrid action by Order to Show Cause seeking Article 78 mandamus relief pursuant to CPLR §7803(1) and posited plenary claims.
CPLR § 217 provides a four-month statute of limitations for Article 78 proceedings, Simon v. New City Transit Auth., 34 A.D.3d 823,825 N.Y.S.2d 552 (2nd Dept. 2006). In an action for mandamus to compel, a party must first make a demand for another to perform a nondiscretionary duty, and await a refusal to perform such duty, as the statute of limitations does not begin to run until the time of the refusal. Schwartz v. Morgenthau, 23 AA.D.3d 231, 803 N.Y.S.2d 553 (1st Dept. 2005) Any such demand must be made within a reasonable time after either (i) the right to make it occurs, or (ii) after petitioner knows or should know of the facts which present a clear right to relief, or risk being barred by laches. Blue v. Comm'r of Soc. Servs., 306A.D.2d 527, 762 N.Y.S. 2d 630 (2nd Dept. 2003). Here, there are four distinct demands and refusals, all outside of the four month statute of limitations which bar Riverheads' claims.
CPLR 217 provides that a proceeding against a body or an officer must be commenced within four months "after the respondent's refusal, upon the demand of the petitioner...to perform its duty." Where, as here, a proceeding against a body or officer is in the nature of a mandamus to compel, the statute of limitations for commencing such proceeding begins to run against Riverhead when the County issued the Bortzfield letter rejecting Riverhead's demands for funding and then again from the issuance of the County's 2016 and 2017 budgets. Surtin Contracting Corp. v. New York City School Construction Authority, 81 A.D.3d 654, 916 N.Y.S.2d 157 (2nd Dept, 2011): Ruskin associates, LLC v. State division of Housing and Community Development, 77 A.D.3d 401, 908 N.Y.S.2d 392 (1st Dept. 2010).
The County denied Riverhead's May 2003 demand for increased funding based upon (i) Towns/Villages not being eligible to receive New ASRF funding (ii) any subsidies allocated to Riverhead were based on the County Executive/Legislature's discretionary recommendations and/or appropriation, as prioritized and allocated on a yearly basis consummated by the adoption of the County Budget (with no "right" to such monies); and (iii) the County had planned (but never adopted) legislation authorizing the inclusion of the Town/Village Districts as recipients of New ASRF monies.
In November 2015, Riverhead demanded an increase in funding based on a shortfall to cover its annual expenses. There was no increase in subsidies for Riverhead in the 2016 County Budget adopted November 13, 2015.
There was no increase in funding in the 2017 County Budget adopted on November 21, 2016, Riverhead served Payment Vouchers and a Notice of Claim on the County on or about December 22, 2016 demanding increased funding for sewer rate stabilization for fiscal years 2016 and 2017. The statute of limitations cannot be circumvented by making a new demand upon the County to perform a duty that has previously been denied. Smith v. Kunkel, 152,A.D.2d 893, 554 N.Y.S.2d 240 (3rd Dept. 1989); Walsh v. Superintendent of Highways of Town of Postenkill, 135 A.D.2d 968, 552 N.Y.S.2d 698 (3rd Dept. 1987).
All four demands set forth above were outside the four month statute of limitations. The denials were clear by either refusal to supply funds back in 2003, the adoption of the County budget or the failure to object to the adoption of Article XII of the County Charter in 2000.
Riverhead's claims that (i) the failure of the County to provide for an "ASRF application process" prevents any Article 78 claim from ever accruing under CPLR § 217; (ii) the 2003 Letter from the County to Riverhead denying additional ASRF funding under the new charter provision is irrelevant; and (iii) the Town never formally demanded any additional funding so as to begin the running of any limitations period all fail.
If Riverhead states, the County had a yearly ministerial nondiscretionary duty to appropriate sufficient funds in the County's Budget in order to reduce Riverhead's tax increases to the alleged 3% tax cap, then the failure to appropriate such funds and comply with this ministerial duty upon the passing of the County Budget started the four-month statute of limitations in November 2015 and November 2026.
The 2003 Bortzfield Letter is relevant to the accrual of Riverhead's mandamus and plenary claims. By that letter the County refused to increase funding to Riverhead for one of its sub-districts. The Bortzfield Letter placed Riverhead on notice that Towns/Villages were not eligible to receive New ASRF funding under Article XII of the Charter; and that any subsidies allocated to Riverhead were based on the County Executive and County Legislature's discretionary recommendation and/or appropriation, as prioritized and allocated on a yearly basis consummated by the adoption of the County Budget. Riverhead cannot deny or ignore the passage of the applicable 2000 Charter provision.
All of this can only be looked on as putting Riverhead on notice and starting the running of the four month statute of limitations. Lubin v.Board of Education of the City of New York, 60 N.Y.2d 974, 471 N.Y.S.2d 256 (1983); Pettus v. New York State Insurance Department, 93 A.D.3d 1067, 941 N.Y.S.2d 299 (2nd Dept. 2012), lv. To app. den 19 N.Y.3d 814 (2012); Hurwitz v. New York City Housing Authority, 92 A,D,2d 884, 939 N.Y.S.2d 127 (2nd Dept. 2012).
A proceeding pursuant to CPLR Article 78 must be commenced within four months after the determination to be reviewed becomes final and binding. For a determination to be final upon a petitioner it must be clear that the petitioner who is seeking review has been aggrieved by it. Matter of Martin v. Roman, 44 N.Y.2d 374, 380, 405 N.Y.S.2d 671 (1978): CPLR Section 217. A determination becomes binding when the aggrieved party is notified. Matter of Vil. of Westbury v. Department of Transp. of State of N.Y., 75 N.Y.2d 62, 72, 550 N.Y.S.2d 604 (1989). The burden rests on the party seeking to assert the statute of limitations as a defense to establish that its decision provided notice more than four months before the proceeding was commenced. Berkshire Nursing Ctr., Inc. v. Novello, 13 A.D.3d 327, 786 N.Y.S.2d 209 (2nd Dept. 2004); Matter of Vil. of Westbury v.of Westbury v. Department of Transp. of State of N.Y., 75 N.Y.2d at 73; Matter of Chaban v. Board of Educ. of City of N.Y., 201 A.D.2d 636, 608 N.Y.S.2d 229 (1994). The County did just that here and Riverhead raises no facts that establish the action is timely.
The reason for the short statute of limitations is the strong policy, vital to the conduct of certain kinds of governmental affairs, that the operation of government not be trammeled by stale litigation and stale determination. Solnick v. Whalen, 49 N.Y.2d 224, 425 N.Y.S.2d 68 (1980).
The plenary claims as independent claims under different theories, are subject to the Article 78 statute of limitations and are barred by the applicable statute of limitations. If an examination of the substance of the relationship out of which the claim arises reveals that the rights of the parties sought to be established in the declaratory judgment action are, or could have been resolved through a form of proceedings for which a specific limitation period is statutorily provided, then that statutorily specific period limits the time for commencement of the declaratory judgment action that Riverhead claims. Thus, the four month statute of limitation applies to Riverhead's plenary claims. Solnick v. Whalen, 49 N.Y.2d 224, 425 N.Y.S.2d 68 (1980); Suffolk Family Equity Inc. v. County of Nassau, 233 A.D.2d 436, 650 N.Y.S.2d 21 (2nd Dept. 1996); PN Tiffany Properties v. Village of Tuckahoe, 33 A.D.3d 61, 817 N.Y.S.2d 395 (2nd Dept. 2006).
If the Court found that the plenary claims were not subject to the four month statute of limitations, the claims still must be dismissed as Riverhead failed to assert their claim within 6 years following the adoption of ArticleXII of the Charter in 2000 or the 2003 Borztfield letter refusing to apply the statutes as Riverhead demanded.
The extraordinary remedy of mandamus will lie only to compel the performance of the ministerial act, and only where there exists a clear legal right to the relief sought. North Fork Management & Maintenance, LLC v. New York State Department of Labor, 98 A.D.3d 514, 949 N.Y.S.2d 445 (2nd May 15, 2020ept. 2012), Klosterman v. Cuomo, 61 N.Y.2d 529, 539, 475 N.Y..2d 247 (1984). "When interpreting a law, a court must always look to legislative intent which 'is to be ascertained from the words and language used, and the statutory language is generally to be construed according to its natural and most obvious sense without restoring to an artificial or forced construction...'" Rivers v. Birnbaum, 102 A.D.3d 26, 36 953 N.Y.S.2d 232 (2nd Dept, 2012); McKinney's Cons. Laws of N.Y., Book 1, Statue §9). Mandamus to compel to enforce a clear legal right lies where the public official has failed to perform a duty enjoined by law. New York Civ. Liberties Union v. State of New York, 4 N.Y.3d 175, 791 N.Y.S.2d 507 ( 2005); Matter of Schmitt v. Skovira, 53 A.D.3d 918, 862 N.Y.2d 167 (3rd Dept. 2008). The remedy, however, is available only to compel a governmental entity or officer to perform a ministerial duty. It does not lie to compel an act which involves an exercise of judgment or discretion. Matter of Brusco v. Braun, 84 N.Y.2d 674, 679, 621 N.Y.S.2d 291, 292 (1994); Yager v. Massena Cent. School Dist., 119 A.D.3d 1066, 989 N.Y.S.2d 177 (3rd Dept. 2014). Where the interpretation of a statute or its application involves knowledge and understanding of underlying operational practices, a court will defer to the governmental agency charged with administration of the statute. Lysander v. Hafner, 96 N.Y.2d 558, 733 N.Y.S.2d 358 (2001); Inc. Vill. of Lynbrook v. New York State Pub. Empl. Rel. Bd., 48 N.Y.2d 398, 423, N.Y.S.2s 466 (1979); Matter of Levitt v. Board of Collective Bargaining of City of N.Y., Off. of Collective Bargaining, 79 N.Y.2d 120,580 N.Y.S.2d 917 (1992); Matter of Niagara Falls Power Co. v. Water Power and Contol Comm., 267 N.Y. 265, 196 NE 51 (1935); County of Nassau v. New York State Pub. Empl. Relations Bd., 151 A.D.2d 168, 547, N.Y.S.2d 339 (2nd Dept. 1989); aff sub nom. Matter of County of Nassau (Nassau Community Coll.) v. New York State Pub. Empl. Relations Bd., 76 N.Y.2d 579, 561 N.Y.S.2d 895 (1990). The presumption is that an administrative agency or governmental entity charged with implementing the policies of a statute has an expertise that requires a court to accept its construction and its interpretation of the statute or regulation if not unreasonable or irrational. Matter of Incorporated Vil of Lynbrook v. New York State Pub. Empl. Relations Bd., 48 N.Y.2d 398, 423 N.Y.S.2d 466 (1979),: Matter of Marzec v. DeBuono, 95 N.Y.2d 262, 716 N.Y.S.2d 376 (2000).
In enacting Tax Law § 1210-A, the New York State Legislature provided Suffolk County with a broad grant of authority and discretion subject only to the requirement to deposit monies into an assessment stabilization reserve fund. Riverhead's mandamus and declaratory judgment claims fail as they are not asserted to enforce or compel any mandatory, ministerial, non-discretionary, and non-judgmental duties placed on the County of Suffolk, the County Executive or County Legislature. (Neither the County Executive or the County Legislature are named as parties in this proceeding).
Riverhead alleges the Charter refers to the reduction of the "County's general property taxes" in relation to the other uses of DWPP funding under §C12-2(A), (B), & (C), and avers that the Charter only refers to "sewer taxpayer protection" without any reference limiting it to County taxes under §C12-2(D), and thus infers that the legislature must have intended the provisions to apply to Town/Village districts as well. This argument fails because a lack of a reference to "County" taxes in §C12-2(D) relates to the fundamental difference between County real property taxes and sewer district taxes. Unlike County real property taxes, which are assessed on a County-wide basis, sewer districts are separate special improvement districts created under Article 5-A of the County Law which individually tax the residents of the special districts, The reason for the lack of any reference to "County sewer taxes" in §C12-2(D) is not due to an intention to include Towns and Villages but rather because there is no such entity as a County sewer tax. The absence of the word "County" in front of the phrase "sewer taxes" is due to difference in the taxes and does not reflect that this County Law is a funding mechanism for every non-County operated sewer district.
The language in C12-2(D) mandates that monies in the ASRF may only be appropriated for sewer taxpayer protection pursuant to a discretionary act of the County Legislature. Nowhere does the language of the Charter mandate that the DWPP must be used to cap sewer assessment increases at a maximum of 3%. It merely provides that the County Legislature shall utilize the DWPP to effectuate sewer taxpayer protection by a resolution. To interpret the language to describe such a resolution as one upon which the County has no discretion to exercise when they vote, would render the County Legislature's role as an elected public body immaterial and only existing for the performance of a ministerial nondiscretionary act. Riverhead's argument that the Charter's definition of "Excess Assessment Stabilization Reserve Fund Balance" (i.e. "Balance greater than needed for sewer district tax rate stabilization") implies that the 3% figure is a tax cap. Riverhead disregards that the County Executive and County Legislature appropriate what is needed to sufficiently stabilize sewer rates with ASRF loans pursuant to the Charter and the provisions of Tax Law §1210-A. The only objective control over such discretion being the criteria to only provide the funds to a district that will increase taxes by at least 3%.
Riverhead claims that their mandamus/declaratory judgment claims are based on the opening paragraph of §12-2 including the word "shall" as well as the provisions of Tax Law 1210-A. The Charter provides that the funds of the DWPP shall be allocated annually only in accordance with a formula (Specific Environmental Protection Program - 31.10%); Water Quality Protection and Restoration Program and land Stewardship Initiatives - 11.75%; County-wide Property Tax Protection - 32.15%; Sewer Taxpayer Protection -25%) This provision only mandates how the 100% of the DWPP funds collected in any given year are to be allocated between the funds/programs permitted by Tax Law §1210-A (D). It does not mandate how they are to be expended nor do they take away the County Executive's or County Legislature's discretionary authority in passing a resolution to utilize such funds as they deem necessary or desirable. Riverhead characterizes the provisions of Tax Law § 1210-A as a mere enabling act, and allege that the clear discretionary provisions are not relevant. New York State Tax Law controls the uses for, and recipients of the DWPP or ASRF funds. The County is to operate and manage these funds, and the County Executive and County Legislature have the discretion as to the management of the ASRF. As such, dismissal is required on these grounds also.
Even if the County Executive and County Legislature were divested of all discretion under the Charter, the requirement under §C12-2(D) that the appropriations shall be effectuated via a duly enacted resolution provides the County Executive and County Legislature authority to alter and/or abrogate such alleged duties by appropriation bills which can alter existing statutory law by the budgeting process, Pataki v. New York State Assembly, 4 N.Y. 3075, 79 N.Y.S.2d 458 (2004); Cnty. Of Suffolk v. Kin, 18 A.D.3d 1010, 1011, 794 N.Y.S.2d 695 (3rd Dept. 2005); Matter of Town of N. Hempstead v. Cnty. Of Nassau, 24 N.Y.3d 67, 76, N.Y.S.2d 203 (2014). .
Questions of judgment, discretion, allocation of resources and priorities are inappropriate to be resolved or determined in the judicial arena and are better left to the executive officials, administrative agencies and local legislative bodies. Matter of Abrams v. New York City Tr. Auth., 39 N.Y.2d 990, 992, 387 N.Y.S.2d 235, 355 N.E.2d 289 (1976).
The creation and enactment of a local budget is a responsibility peculiar to the executive and legislative branches of government. Saxton v. Carey, 44 N.Y.2d 545, 549, 406 N.Y.S.2d 732, 378 N.E.2d 95 (1978). The executive branch has the responsibility and the obligation to ascertain the financial needs of the various departments and projects of the local government, and to submit to the local legislative body for its consideration a budget and various appropriation bills incorporating those needs, Saxton v. Carey supra. It is for the local legislative body to approve or disapprove of the various expenditures proposed. A budget prepared in clear violation of a statutory or constitutional mandate is subject to review by the courts. Wein v. Carey, 41 N.Y.2dx 498, 393,N.Y.S.2d 995, 362 N.E.2d 587 (1977). Judicial intervention is permitted only in the narrowest of instances and a court will not review a local budget plan directly. See: Wein, supra. This is exactly what Riverhead is requesting. The Court will not substitute its opinion as to the use of funds or intervene in the budgeting process of the County Executive and the County Legislature.
Pursuant to General Municipal Law § 51, a taxpayer may maintain an action against "[a]ll officers...and other persons acting, or who have acted for and on behalf of any county...to prevent any illegal official act on the part of any such officers... or other persons, or to persons, or to prevent waste or injury to, or to restore and make good, and property, funds or estates of such county." A taxpayer action pursuant to General Municipal Law § 51, however, "lies only when the acts complained of are fraudulent, or waste of public property in the sense that they represent a use of public property or funds for entirely illegal purposes. Mesivta of Forest Hills Inst. v. City of New York, 58 N.Y.2d 1014, 1016, 462 N.Y.2d 433 (1983), Kaskel v. Impellitteri, 306 N.Y. 73, 79, 115 N.E.2d 659 (1953); Godfrey v. Spano, 13 N.Y.3d 358, 892 N.Y.S.2d 272 (2009); Matter of Sanitation Garage Brookyln Dists. 3 & 3A, 32 A.D.3d 1031, 882 N.Y.2d 97 (2nd Dept. 2006). The mere failure to observe statutory provisions does not constitute the fraud or illegality necessary to maintain a taxpayer action under General Municipal Law § 51, as the law is intended to combat fraud and corruption committed by public officers or bodies. Mesivta of Forest Hills Inst. v. City of New York, 58 N.Y.2d 1014, 1016, 462 N.Y.2d 433 (1983), Kaskel v. Impellitteri, 306 N.Y.73,79,115 N.E.2d 659; Matter of Resnick v. Town of Canaan, 38 A.D.3d 949, 832 N.Y.S.2d 102 (2nd Dept. 2007); Beresford Apts. v. City of New York, 238 a.D.2d 218, 659 N.Y.S.2d 607 (1st Dept. 1997). Any other construction of General Municipal Law §51 would subject the discretionary action of all local officers and municipal bodies to review by the courts in suits of taxpayers, a result which would burden the courts with litigation, without increasing the efficiency of local government. Talcott v. City of Buffalo, 125 N.Y.280, 288, 26 N.E. 263 (1891). General Municipal Law § 51 is not to be asserted to address a correction of procedural irregularities by a governmental body. Council of the City of New York v. Giuliani, 5 A.D.3d 330, 331 773 N.Y.S.2d 557 (1st Dept. 2004). Riverhead failed to allege any facts sufficient to state a cause of action under General Municipal § 51. There are no allegations of fraudulent acts or the use of public property or funds for illegal purposes by the County.
Furthermore, a General Municipal § 51 claim must establish a taxpayer's status and allege an official act which causes waste or injury, imperils the public interest or is calculated to work public injury or to produce some public mischief. A "taxpayer suit will succeed, however only if defendants' official acts (1) wasted public funds by using public funds for "entirely illegal purposes" or (2) were fraudulent." Thomas v. New York City Dept.of Educ., 54 Misc.3d 1202 (A) (2016), citing Godfrey v Spano 13 N.Y.3d.358,373,892 N.Y.S.2d 272, 920 N.E.2d 328 (2009); Mestiva of Forest Hills Inst v City of New York, 58 N.Y.2d 1014, 1016, 462 N.Y.S. 2d 433, 448 N.E.2d 1344 (1983).
First, Riverhead fails to specifically identify any particular taxpayer in its Complaint. It merely states that several of the Town Board Members are taxpayers of the sewer district. Riverhead generally alleges either technical noncompliance with statutes or an under-payment of subsidies which factors do not satisfy the standard of the fraudulent or entirely illegal purposes element. Moreover, the alleged injury does not rise to the level of waste or injury caused by bad faith required under General Municipal § 51 The submission of a short affidavit in opposition to the County's application to demonstrate the payment of taxes by a non-party Riverhead simply states his taxes are over $1,000.00. This affidavit, without more, is insufficient.
As discussed above, the four month statute of limitations also applies to this claim. Based upon the foregoing, Riverhead's cause of action for waste is dismissed.
The right to an accounting is permitted upon the existence of a confidential or fiduciary relationship and a breach of the duty imposed by that relationship respecting property in which the party seeking the accounting has an interest. Lawrence v. Kennedy, 95 A.D.3d 955, 944 N.Y.S.2d 577 (2nd Dept. 20102); Dee v. Rakower, 112 A.D.3d 204, 976, N.Y.S.2d 470 (2nd Dept. 2013); Palazzo v. Palazzo, 121 A.D.2d 261, 265, 503 N.Y.S.2d 381 (2nd Dept. 1986).
The basis of an equitable action for an accounting is the existence of a fiduciary or trust relationship respecting the subject matter of the controversy. Grossman v. Laurence Handprints-N.J., Inc., 290 A.D.2d 95455 N.Y.S.2d 852 2ndDept. 1982) ;Pelkey v. Pelkey, 236 App. Div.55, 258 N.Y.S.562(4thDept.1932) The existence of a bare agency is not sufficient, Marvin v. Brooks, 94 N.Y.71, 80 (1893). The right to maintain an action for an accounting against depends upon whether or not there is a breach of fiduciary duty, Silber v. Rainess & Co., 34 A.D.2d 188, 191, 310 N.Y.S.2d 179, 181 (1st Dept. 1970).
The failure to allege a fiduciary relationship is fatal to Riverhead's claim for an accounting, See: Dee, supra; Michnick v. Parkell, 215 A.D.2d 462, 626 N.Y.S.2d 522 265 (2nd Dept. 1995). In addition, the existence of publically available operating and capital budgets detailing revenues and expenses of the County renders Riverhead's request for an accounting unwarranted. Thus, Riverhead's claim for accounting is dismissed.
Riverhead grounds its' claims in its' Fourth and Fifth causes of action, on the Equal Protection Clause under the Fourteenth Amendment to the United States Constitution and the New York State Constitution. These claims cannot avoid the application of the four month statute of limitations. Fed'n of Mental Health Ctrs. v. Debuono, 275 A.D.2d 557, 671, 712 N.Y.S.2s 667 (3rd Dept. 2000); Matter of New York State Assn. Of Cemeteries Inc. v. Fishman, 13 Misc. 3d 1212(A), 824 N.Y.S.2d 756 (Sup. Ct. 2006); Roebling Liquors v. Urbach, 245 A.D. 2829, 666 N.Y.S.2d 328 (3rd Dept. 1997).
Riverhead does not allege how it is being treated differently than other Town/Village or County operated districts. Riverhead has received subsidy payments greater than a number of Town/Village Districts and a greater subsidy than 15 of 20 County Districts. There is no allegation by Riverhead to the contrary. Riverhead does not allege how it was treated in a dissimilar manner or allege any type of improper class distinction.
The appropriation and retention of funds in a particular fund does not violate Riverhead's constitutional rights because the County Districts and Town/Village Districts have differing needs for both annual and long-term funding, have distinct taxing sources for each of those districts, and have different municipal entities which control the budgets, operations, maintenance, taxing, revenues, and expenditures to meet these distinct funding needs.
The two classes alleged here to be similarly situated by Riverhead are based solely on the jurisdiction of the sewer district and the municipal entity which operates them. Neither of these criteria constitute any alleged suspect class, nor is there any impairment of a fundamental right. The creation of these alleged classes enjoys a presumption of constitutionality which can only be overcome by the most explicit demonstration that such classification is a hostile and oppressive discrimination against particular persons. Riverhead did not attempt to meet this standard.
The New York Equal Protection clause (NY Const. Art 1 § 11), modeled after its federal counterpart, commands that persons 'similarly situated should be treated alike'. Unless a suspect class or fundamental right is involved, a classification that creates distinctions between similarly-situated individuals will be upheld, if there is any reasonably conceivable state of facts that could provide a rational basis for the classification. Walton v. New York State Dept. of Correctional Servs., 13 NY3d 475, 893 N.Y.S.2d 453 (2009); Tilles Inv. Co. v. Gulotta, 288 A.D.2d 303, 305 733 N.Y.S.2d (2nd Dept. 2001); Supreme Associates v. Suozzi, 932 N.Y.S.2d 835 (Nas.Cty. 2011). As to the Equal Protection claims contained in the Petitioner's Fourth and Fifth causes of action, Riverhead's claims fail to warrant the relief sought. Accordingly, Riverhead's Equal Protection Causes of Action are dismissed. The foregoing constitutes the decision and order of this Court. Dated: May 15, 2020
Central Islip, New York
/s/_________
HON. JOHN J. LEO, J.S.C.