New York State Court of Claims

New York State Court of Claims

ARAMARK v. STATE OF NEW YORK, #2007-034-508, Claim No. 109870, Motion Nos. M-69098, M-72584


Synopsis


Niagara Falls Convention Center was transferred to Seneca Nation of Indians as part of gaming compact. Claimant, management company for the convention center, sued for appropriation under Court of Claims Act § 10 (1). Defendant moved to dismiss claim as untimely, asserting actions complained of were not an “appropriation” within meaning of section 10 (1), and thus were subject to 90-day filing and service requirements of Court of Claims Act § 10 (3). Court denied motion to dismiss holding that the taking was a “de facto” appropriation, and subject to three-year filing requirements of section 10 (1).

Case Information

UID:
2007-034-508
Claimant(s):
ARAMARK ENTERTAINMENT, INC.
Claimant short name:
ARAMARK
Footnote (claimant name) :

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

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
109870
Motion number(s):
M-69098, M-72584
Cross-motion number(s):

Judge:
MICHAEL E. HUDSON
Claimant’s attorney:
PHILLIPS LYTLE LLPBY: THOMAS S. WISWALL, ESQ.
Defendant’s attorney:
HON. ANDREW M. CUOMO
New York State Attorney General
BY: PAUL VOLCY, ESQ.Assistant Attorney General
Third-party defendant’s attorney:

Signature date:
July 19, 2007
City:
Buffalo
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

Claimant has sought late claim relief pursuant to Court of Claims Act § 10 (6) (Motion No. M-69098). Defendant has moved to dismiss the claim,[1] as filed on September 20, 2004 (motion No. M-72584). On review, the Court will deny Claimant’s motion, and grant the State’s application, in part.

The Court has reviewed the following documents:

1. Notice of Motion (Motion No. M-69098), dated September 17, 2004, filed September 17, 2004;[2]

2. Affidavit of David I. Buckman, sworn to September 17, 2004, with attachments, and Claimant’s Memorandum of Law;

3. “Verified Statement of Claims” verified September 17, 2004, filed September 20, 2004, with attached exhibits;

4. Opposing Affirmation of Paul Volcy, dated November 8, 2004, filed November 9, 2004, with attached exhibit;

5. Reply Affidavit of Thomas M. Molchan, sworn to January 5, 2007, with Claimant’s Reply Memorandum of Law, filed January 8, 2007;

6. Notice of Motion (Motion No. M-72584), dated November 24, 2006, filed November 28, 2006;

7. Supporting Affirmation of Paul Volcy, dated November 24, 2006, with attached exhibits;

8. Answering Affirmation of Thomas S. Wiswall, dated January 30, 2007, filed January 31, 2007;

9. Reply Affirmation of Paul Volcy, dated January 26, 2007, filed January 29, 2007, with attached exhibits;

10. Reply Affirmation of Paul Volcy, dated February 2, 2007, filed February 6, 2007;

11. Copy of Deed from New York State Urban Development Corporation to Seneca Nation of Indians, executed October 24, 2002, dated October 25, 2002, with annexed transfer record.

Claimant Aramark Entertainment, Inc. (“Aramark”) seeks to recover damages for the termination of its contract to manage the Niagara Falls Convention and Civic Center in conjunction with the transfer of that facility from the New York State Urban Development Corporation (“Urban Development Corporation”) to the Seneca Nation of Indians (“Seneca Nation”) in October of 2002. Aramark filed and served its claim on September 20, 2004, asserting four causes of action: appropriation without just compensation; deprivation of property without due process of law and just compensation in violation of the Fifth and Fourteenth Amendments to the United States Constitution and article 1, §§ 6 and 7 of the New York State Constitution; impairment of contract in violation of article I, § 10 of the United States Constitution (the “Contract Clause”); and tortious interference with contractual relations. In and about that time Claimant also moved for late claim relief pursuant to Court of Claims Act § 10 (6), to the extent that any cause of action within the claim might be deemed untimely. In response Defendant has sought dismissal of the claim as untimely, and has opposed late claim relief on several grounds.

For purposes of these motions the following is undisputed. On March 15, 1971, the Urban Development Corporation, which at times also does business as the Empire State Development Corporation (“ESDC”), leased a tract of land it owned to the City of Niagara Falls (“City”) for a 42-year term, to facilitate the construction of a convention center (see Reply Affirmation of Paul Volcy, dated January 26, 2007, Exhibit A). The Niagara Falls Convention and Civic Center was later constructed, and was operated for a number of years by the City. On January 29, 1999, pursuant to a redevelopment plan, the City transferred management responsibility for the facility to Niagara Falls Convention Center, LLC (“NFCC”) for an initial term of ten years, renewable for an additional ten-year term. Thereafter, on July 15, 1999, NFCC subcontracted the management and operation of the convention center to Ogden Entertainment, Inc. (“Ogden Entertainment”), a predecessor to Claimant’s interests herein.[3] The subcontract provided for Ogden Entertainment to manage the facility until January 31, 2009, although again with a right of renewal for the lesser of either the balance of the underlying lease term, or a ten-year period of time. The manager assumed operation of the facility on August 1, 1999, and continued in that capacity until September 18, 2002, when it was compelled to terminate its functions in conjunction with the transfer of the convention center to the Seneca Nation, as addressed below.

On June 20, 2001, Governor George E. Pataki entered into a memorandum of understanding with Cyrus M. Schindler, President of the Seneca Nation, to create a nation-state gaming compact between the State of New York and Seneca Nation. The memorandum included provisions wherein the State agreed to assist the Seneca Nation in acquiring parcels of real estate, extending to the transfer of fee title to the convention center by “[t]he State, through the Empire State Development Corporation (ESDC)” (see Verified Statement of Claims, Exhibit C, p. 2 [Memorandum of Understanding between the State of New York and the Seneca Nation of Indians, dated June 20, 2001]). Thereafter, on October 29, 2001, the Legislature enacted Chapter 383, Part B, section 2 of the Laws of 2001, adding Executive Law § 12, which granted authority to the Governor to ratify the proposed compact. On August 18, 2002, the State and Seneca Nation executed the compact, which included a provision that title to the convention center be transferred within 30 days of its execution “ through the Empire State Development Corporation (“ESD”) or otherwise ” (see Affidavit of David I. Buckman [“Buckman Affidavit”], attachment 1, p. 1 [Memorandum of Understanding between New York State Urban Development Corporation d/b/a Empire State Development Corporation and City of Niagara Falls, dated September 20, 2002, recital to provision 11 (b) (2) (a) of compact of August 18, 2002]). The ESDC and City then entered into a memorandum of understanding (see Buckman Affidavit, attachment 1), terminating their 1971 lease for the convention center, in light of the passage of Chapter 383 of the Laws of 2001, and the anticipated transfer of fee title to those premises to the Seneca Nation pursuant to the compact. That agreement also required the ESDC to defend and indemnify the City for any claims by the convention center manager or a third party under the 1999 management agreement for the operation of that facility (see Buckman Affidavit, attachment 1, pp. 3-4, clause 4).

Pursuant to a deed dated October 25, 2002, but executed on October 24, 2002, and later recorded on November 4, 2002, the Urban Development Corporation transferred title to the convention center to the Seneca Nation, as called for under the compact.[4]
Motion to Dismiss
Defendant seeks to dismiss the claim for appropriation as untimely. The State urges that the actions complained of were not an appropriation within the meaning of Court of Claims Act § 10 (1) and EDPL § 103 (a), and thus were subject to the 90-day filing and service provisions within Court of Claims Act § 10 (3),[5] rather than the three-year statute of limitations set forth in section 10 (1). Defendant further asserts that since title to the convention center property was vested in the ESDC, and not the State of New York, this Court lacks subject matter jurisdiction over this matter. Claimant opposes the motion and contends that actions of the State amounted to a de facto taking separate and apart from the actions of the ESDC, for which compensation must be paid.

Without question the Court of Claims lacks jurisdiction over the ESDC (Gembala v Audobon Assn., 97 AD2d 345 [1983]). However, Claimant has not asserted a claim against that entity, and instead has specifically set forth allegations of a wrongful taking against the State itself. That the actionable conduct may have occurred through one or more corporations created by the State is not dispositive under the circumstances alleged. An exercise of the power of eminent domain by action of the Legislature will support a claim against the State for de facto appropriation, even where the taking is effected indirectly through one of its corporations (see Keystone Assoc. v State of New York, 39 AD2d 176, 178-179 [1972], affd 33 NY2d 848 [1973]). So also, that the State allegedly acted without resort to the EDPL does not preclude a claim for the taking of property without compensation. “A De facto appropriation requires compensation to the same extent as a De jure appropriation” (Keystone Assoc., 39 AD2d at 178). That right to compensation is derived from the deprivation of the owner’s property within the meaning of the Constitution (see City of Buffalo v Clement Co., 28 NY2d 241, 252-253 [1971]), as well as the EDPL. Claims for de facto appropriation are subject to the time limitations of Court of Claims Act § 10 (1) (Stewart v State of New York, 248 AD2d 761 [1998]). Since the claim was filed and served within three years, it is timely to the extent that the first two causes of action seek recovery for de facto appropriation, as derived from article 1, §§ 6 and 7 of the Constitution, in addition to the EDPL. The right to recover for wrongful taking is not limited to appropriations of fee interests in real property (see EDPL 708; see also Great Atl. & Pac. Tea Co. v State of New York, 22 NY2d 75, 84 [1968] [addressing leasehold interest]). In view of the limited scope of Defendant’s motion to dismiss, the Court at this point will not address whether claimed takings and due process violations of the Fifth and Fourteenth Amendments to the United States Constitution, as set forth within the second cause of action, can properly be adjudicated in an appropriation claim against the State.[6]

The third and fourth causes of action must be dismissed as untimely. As applicable herein, Court of Claims Act § 10 (3) requires that a claim to recover for negligence or other unintentional tort be filed and served within 90 days of accrual. The time limitations set forth within section 10 are jurisdictional in nature, and are to be strictly construed as conditions of the State’s waiver of sovereign immunity (Alston v State of New York, 97 NY2d 159 [2001]).

Since the claim herein was not filed and served until September 20, 2004, more than two years after Claimant was compelled to terminate its management functions, any recovery for either an impairment of contract in violation of article I, § 10 of the United States Constitution, or tortious interference with contract, would be untimely.

The Court rejects Claimant’s assertion that, pursuant to Brown v State of New York, 250 AD2d 314, 318-319 (1998), the statute of limitations for a cause of action alleging a constitutional tort against the State would be three years, under CPLR 214 (5). Rather, the commencement limitations set forth within Court of Claims Act § 10 would govern (see Lyles v State of New York, 3 NY3d 396 [2004]; Alston, 97 NY2d 159). The provisions of CPLR 214 (5) instead apply as the Court later weighs the timeliness of Claimant’s motion for late claim relief under Court of Claims Act § 10 (6), which compels that such an application be made “at any time before an action asserting a like claim against a citizen of the state would be barred under the provisions of article two of the civil practice law and rules.”[7]
Late Claim Relief
Pursuant to Court of Claims Act § 10 (6) Claimant has moved for leave to file and serve a late claim to the extent that any of the four causes of action set forth within the claim it filed and served on September 20, 2004, would be deemed untimely. Section 10 (6) sets forth six factors among those to be considered in reviewing such an application, although the presence or absence of any specific factor is not controlling (Bay Terrace Coop. Section IV v New York State Employees’ Retirement Sys. Policemen’s & Firemen’s Retirement Sys., 55 NY2d 979, 981 [1982]; Matter of Gavigan v State of New York, 176 AD2d 1117, 1118 [1991]), and the Court possesses broad discretion in reviewing such relief (see Matter of Gavigan, 176 AD2d at 1118). Those factors consist of the following: whether the delay in filing the claim was excusable; whether the State had notice of the essential facts constituting the claim; whether the State had an opportunity to investigate the circumstances underlying the claim; whether the claim appears to be meritorious; whether the failure to file and serve a timely claim or serve a timely notice of intention resulted in substantial prejudice to the State; and whether Claimant has any other available remedy. Upon weighing those factors the Court will deny late claim relief with respect to the third and fourth causes of action.

Of the six factors set forth in section 10 (6), the appearance of merit has been characterized as the most decisive, since it would be futile to permit a meritless claim to proceed (see Dippolito v State of New York, 192 Misc 2d 395, 396-397 [2002]; Matter of Santana v New York State Thruway Auth., 92 Misc 2d 1 [1977]). To meet that burden a movant must establish: that the proposed claim is not patently groundless, frivolous or legally defective; and that from a review of the record there is reasonable cause to believe that a valid claim exists (see Dippolito, 192 Misc 2d at 396-397; Matter of Santana, 92 Misc 2d at 11-12). Here, on the submissions neither the third nor the fourth causes of action present an appearance of merit. As to the claim for tortious interference with contract, initially set forth in the fourth cause of action, the State is immune from liability in tort for the discretionary determinations made by its officials in the performance of their governmental duties (Gross v State of New York, 33 AD2d 868 [1969] [State immune from liability for alleged negligence of employee engaged in quasi-judicial capacity]; see generally Tango v Tulevech, 61 NY2d 34, 40-41 [1983] [addressing immunity of municipal officials for discretionary acts]). That immunity from liability has been recognized as applying to a cause of action for tortious interference with contractual relations (4430 N. Bailey, Inc. v Town of Amherst, 9 AD3d 853 [2004]; Cristo Bros. v Troy Urban Renewal Agency, 116 AD2d 793 [1986], affd 68 NY2d 819 [1986]).

Similarly, the third cause of action, urging an impairment of contract in violation of article I, § 10 of the United States Constitution, is of questionable merit. First, it has long been recognized that the power of eminent domain is inherent in and essential to the effective operation of government, and is not subject to the Contract Clause (People v Adirondack Ry. Co., 160 NY 225, 236-237 [1899], affd sub nom Adirondack Ry. Co. v State of New York, 176 US 335 [1900]; see Westchester Cr. Corp. v New York City School Constr. Auth., 286 AD2d 154, 162 [2001], affd 98 NY2d 298 [2002]; Matter of Kaufmann’s Carousel v City of Syracuse Indus. Dev. Agency, 301 AD2d 292, 304 [2002], lv denied 99 NY2d 508 [2003]). Moreover, the Court questions whether a cause of action for money damages under the Contract Clause could be pursued against the State in the absence of an affirmative waiver of its constitutional sovereign immunity by the Legislature (see Alden v Maine, 527 US 706, 732 [1999], citing Hans v Louisiana, 134 US 1 [1890] [state sovereign immunity not limited to federal statutory causes of action, but also “immunity in a private suit arising under the (United States) Constitution itself”]); see also Manning, 140 NM at 539-541[state sovereign immunity applies to Contract Clause claim, absent waiver]).

Two other factors also weigh strongly against a grant of relief. First, Claimant’s explanation for its delay in filing the claim, which amounts to inadvertence by an out-of-state party or counsel, does not constitute an appropriate excuse (see Sevillia v State of New York, 91 AD2d 792 [1982] [claim of ignorance of filing requirements by nonresident insufficient excuse]; Modern Transfer Co. v State of New York, 37 AD2d 756 [1971] [foreign corporation’s lack of knowledge of filing requirements insufficient excuse]; see also Almedia v State of New York, 70 AD2d 712 [1979] [law office error insufficient excuse]). The Court would add that the claim arose out of Claimant’s ongoing business activities within this State, rather than some incidental contact or transaction. Second, Claimant possesses other available remedies. The first two causes of action remain pending to the extent Claimant seeks to recover for de facto appropriation, and related litigation also is being pursued pending in Supreme Court, Niagara County.

The Court notes that the three interrelated factors of notice, an opportunity to investigate, and lack of prejudice all favor Claimant’s position. Clearly, Defendant did not receive notice of this claim in the traditional manner. However, the facts that have been given rise to this claim are substantially undisputed, and are supported by documentary evidence. Further, the conduct in question largely involves affirmative actions taken by the State or related entities. Thus, Defendant’s opportunity to investigate, or lack thereof, is not crucial to its ability to adequately defend this matter. The Court also notes that Defendant has not alleged any prejudice on its part. Nevertheless, on balance the Court will deny late claim relief.

Based upon the above, it is hereby

ORDERED, that Defendant’s motion to dismiss the claim as untimely is granted, in part, and the third and fourth causes of action are hereby deemed struck from the claim filed on September 20, 2004; and it is further

ORDERED, that Claimant’s motion for late claim relief under Court of Claims Act § 10 (6) is denied.


July 19, 2007
Buffalo, New York

HON. MICHAEL E. HUDSON
Judge of the Court of Claims




[1]. Denominated “Verified Statement of Claims.”
[2]. At the request of the parties oral argument and final submission were repeatedly deferred in favor of the pursuit of a related action in Supreme Court, Niagara County. This matter became fully submitted on February 7, 2007.
[3]. In an attorney’s affirmation in opposition to late claim relief the State has challenged the foundation upon which Claimant set forth its relationship with Ogden Entertainment. In the Court’s view the affidavits of David I. Buckman and Thomas M. Molchan are sufficient to establish that Claimant possesses standing to urge recovery as a successor to the interests of Ogden Entertainment.
[4]. It appears that the deed also transferred title to an adjoining parcel of land.
[5]. It is undisputed that Claimant did not serve a timely notice of intention to file a claim upon the Attorney General, so as to extend its time for commencement as of right under section 10 (3) to two years from accrual.
[6]. Causes of action based upon damage remedies for deprivations of federal constitutional rights pursuant to 42 USC §§ 1981 and 1983 cannot lie against the State, which is not a “person” under section 1983 (see Brown v State of New York, 89 NY2d 172, 184-186 [1996]). However, in Manning v Mining & Minerals Div. of the Energy, Minerals & Natural Res. Dept., 140 NM 528, 144 P3d 87 (2006), cert denied __ US __, 127 S Ct 663 (2006), the Supreme Court of New Mexico recently held that the state’s sovereign immunity under the Eleventh Amendment did not bar a Takings Clause claim in state court under the Fifth and Fourteenth Amendments, since the Fifth Amendment provides for a self-executing damage remedy for appropriations that does not require congressional action under Section 5 of the Fourteenth Amendment.
[7]. The Court notes that Brown addressed a State constitutional tort claim, rather than the alleged violation of a right under the United States Constitution, as set forth by Claimant within its third cause of action. While the Court of Appeals in Lyles (3 NY3d 396) addressed the timeliness of both federal and state constitutional tort claims without reaching the question of whether the Court of Claims possessed jurisdiction to consider a claim against the State under the Fourth and Fourteenth Amendments to the United States Constitution, the Appellate Division, Second Department, in Lyles had affirmed the trial court’s dismissal of that cause of action for lack of subject matter jurisdiction (Lyles v State of New York, 2 AD3d 694, 696 [2003], affg 194 Misc 2d 32, 35-36 [2002]).