New York State Court of Claims

New York State Court of Claims

SHERMAR, INC. v. THE STATE OF NEW YORK, #2006-032-031, Claim No. 111664, Motion No. M-71072


Synopsis



Case Information

UID:
2006-032-031
Claimant(s):
SHERMAR, INC.
Claimant short name:
SHERMAR, INC.
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
111664
Motion number(s):
M-71072
Cross-motion number(s):

Judge:
JUDITH A. HARD
Claimant's attorney:
Ann W. Manion, Esq.
Defendant's attorney:
Hon. Eliot Spitzer, NYS Attorney GeneralBy: Joel L. Marmelstein, Assistant Attorney General, Of Counsel
Third-party defendant's attorney:

Signature date:
April 3, 2006
City:
Albany
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

Defendant moves this Court for an order pursuant to CPLR 3211, dismissing this claim for lack of subject matter jurisdiction. Specifically, defendant argues that the claim, in essence, challenges a determination by the State Insurance Fund [hereinafter SIF], and is the type of grievance which must be brought in a CPLR article 78 proceeding in Supreme Court. For the reasons to be stated, Court agrees and grants the motion to dismiss.

In November 2005, claimant filed this action seeking payment for $71,000.00 in alleged overcharges for workers' compensation insurance premiums. Claimant alleges that it obtained workers' compensation insurance through the SIF. After an audit conducted by the SIF, it billed claimant for premiums for certain individuals whom claimant characterizes as independent contractors. Claimant now brings this action alleging it overpaid and continues to be billed for these individuals, and seeking reimbursement.

It is well settled that when an action concerns the review of an adverse State agency determination, and recovery of damages is incidental to the primary claim, a CPLR article 78 proceeding in Supreme Court is the proper forum for relief (see Matter of Gross v Perales, 72 NY2d 231 [1988]. When a party seeks only monetary relief against the State, the proper forum for such an action is the Court of Claims (see id.). In keeping with this framework, the Third Department noted that "[w]hen the damage allegedly sustained arises from a breach of the contract by a public official or governmental body, then the claim must be resolved through the application of the traditional rules of contract law" (Safety Group No. 194-New York State Sheet Metal Roofing & A.C. Contrs. Asson. v State of New York, 298 AD2d 785, 786 [3d Dept 2002], quoting Abiele Contr v New York City School Constr. Auth., 91NY2d 1, 7-8 [1997]). "However, when a party seeks to annul an agency's determination because it was arbitrary and capricious, then a CPLR article 78 proceeding is appropriate" (id.).

Here, claimant clearly avers that SIF's determination, requiring premium payments for independent contractors/owner-operators, was erroneous. It does not allege that a breach of contract has occurred. As such, claimant is required to seek redress through a CPLR article 78 proceeding.

Accordingly, defendant's motion M-71072 is granted and the claim is dismissed.




April 3, 2006
Albany, New York

HON. JUDITH A. HARD
Judge of the Court of Claims


Papers Considered:


1. Notice of Motion filed December 19, 2005;

2. Affirmation of Joel L. Marmelstein dated December 19, 2005; Exhibits A-B annexed;

3. Affirmation of Ann W. Manion dated January 10, 2006;

4. Reply Affirmation of Joel L. Marmelstein dated January 19, 2005.