PINNACLE v. THE STATE OF NEW YORK, #2008-041-004, Claim No. 111212, Motion No.
Claim alleging that state agency negligently suspended claimant’s vehicle
registrations until claimant paid administrative fine imposed against allegedly
separate entity is dismissed since Court of Claims lacks subject matter
jurisdiction over challenge to administrative action of state agency.
|PINNACLE BUS SERVICE, INC.
1 1.The caption has been amended sua sponte to reflect the only proper
Footnote (claimant name)
THE STATE OF NEW YORK
Footnote (defendant name)
FRANK P. MILANO
CUSHNER & GARVEY, L.L.PBy: Lawrence A. Garvey, Esq.
HON. ANDREW M. CUOMO
New York State Attorney
GeneralBy: Saul Aronson, Esq., Assistant Attorney General
March 7, 2008
See also (multicaptioned
Defendant moves to dismiss the claim on the ground that the Court lacks subject
In particular, defendant argues that adjudication of the claim would
necessarily require review of an administrative determination of a state agency
which is only permissible in an Article 78 proceeding brought in Supreme Court.
Claimant Pinnacle Bus Service, Inc. (Pinnacle) opposes the motion, asserting
that the claim is based on the “negligent action and/or inaction by the
Department of Motor Vehicles” and that no “administrative decision
was ever issued in this matter.”
The pertinent facts underlying the motion are not disputed. On June 26, 2003,
the New York State Department of Motor Vehicles (DMV) issued an administrative
determination against Gala Bus Lines, Ltd. (Gala) after a hearing. The hearing
concerned allegations that Gala had committed numerous violations of Article
19-A of the Vehicle and Traffic Law involving mandated background investigations
of drivers employed by Gala to transport New York City pre-kindergarten school
children. The hearing resulted in a finding of more than 160 violations by Gala.
The hearing determination imposed a fine of $80,000 and a 90 day suspension of
the “registrations for vehicles [buses] listed to the
On or about August 18, 2003, enforcement of the determination was stayed,
pending an administrative appeal, as a result of an Article 78 proceeding
commenced by Gala (Claimant’s Exhibit E). During October of 2003, Gala
sold and/or assigned the leases of several of the buses affected by the
determination to Pinnacle. Pinnacle registered the buses in its name and DMV
issued new certificates of title for the buses to Pinnacle.
On December 1, 2003, Gala’s DMV administrative appeal was dismissed and
on December 5, 2003 the registration suspension order was re-issued with an
effective date of December 15, 2003 (Claimant’s Exhibit E). Between
January and December of 2004, Gala and DMV engaged in settlement discussions
concerning the $80,000 fine. In mid-December of 2004, Gala’s attorney
stopped returning DMV’s telephone calls (Claimant’s Exhibit
In late December of 2004, DMV made an administrative determination, pursuant to
Vehicle and Traffic Law § 509-j (g), to deny renewal of the registrations
of the buses obtained by Pinnacle from Gala which had been the subject of the
DMV made this determination, without a hearing, based upon its belief that the
October 2003 bus transfer from Gala to Pinnacle was made in order to avoid
compliance with the DMV-Gala determination of June 26, 2003, and in particular
to avoid payment of the $80,000 fine (Claimant’s Exhibit E and
Defendant’s Exhibits D and E).
Faced with the prospect of not being able to lawfully deploy enough buses to
satisfy its contracts with the New York City Department of Transportation,
Pinnacle paid the $80,000 fine on December 31, 2004 and thereafter commenced
this action to recover $80,000 in damages from defendant.
The claim, in paragraphs 8 through 11, contains the following allegations with
respect to defendant’s purported liability:
“8. The DMV negligently failed to conduct a proper review of the
aforementioned situation; had they performed their duty properly, they would
have determined that Pinnacle and Gala were separate entities, recognized that
Gala’s interest in the vehicles had been transferred and would have
allowed Pinnacle to renew the registrations without paying the fine.
9. Furthermore, had the DMV timely perfected liens or issued registration
suspensions against the vehicles in connection with the aforementioned case
number, Pinnacle would have had notice of the fines and suspensions, the new
vehicle registrations and vehicle titles would not have been issued in
Pinnacle’s name and Pinnacle would not have consummated their agreement
10. The DMV’s negligent record keeping allowed the agreement between
Gala and Pinnacle to be consummated and Pinnacle suffered substantial financial
loss as a result.
11. Finally, Pinnacle was denied any hearing on the matter and due process
In City of New York v State of New York, 46 AD3d 1168, 1169-1170 [3d
Dept 2007]), the court explains that:
“Two inquiries must be made to determine if the Court of Claims has
subject matter jurisdiction. As that court has ‘no jurisdiction to grant
strictly equitable relief’ (Psaty v Duryea, 306 NY 413, 416
), but may grant incidental equitable relief so long as the primary claim
seeks to recover money damages in appropriation, contract or tort cases (see
Ozanam Hall of Queens Nursing Home v State of New York, 241 AD2d 670, 671
), ‘the threshold question is “[w]hether the essential nature
of the claim is to recover money, or whether the monetary relief is incidental
to the primary claim” ’ (Madura v State of New York, 12 AD3d
759, 760 , lv denied 4 NY3d 704 , quoting Matter of Gross
v Perales, 72 NY2d 231, 236 ). The second inquiry, regardless of how a
claimant categorizes a claim, is whether the claim would require review of an
administrative agency’s determination--which the Court of Claims has no
subject matter jurisdiction to entertain (see Hoffman v State of New
York, 42 AD3d 641, 642 ), as review of such determinations are
properly brought only in Supreme Court in a CPLR article 78 proceeding
(see Matter of Scherbyn v Wayne-Finger Lakes Bd. of Coop. Educ.
Servs., 77 NY2d 753, 757 ).”
The law is also clear that “[a] public employee's discretionary
acts--meaning conduct involving the exercise of reasoned judgment--may not
result in the municipality's liability even when the conduct is negligent. By
contrast, ministerial acts--meaning conduct requiring adherence to a governing
rule, with a compulsory result--may subject the municipal employer to liability
for negligence” (Lauer v City of New York, 95 NY2d 95, 99
There is no question that Vehicle and Traffic Law § 509-j (g) provided the
Commissioner of Motor Vehicles with the discretionary authority to deny renewal
of the registrations at issue:
“Upon the suspension of a vehicle registration pursuant to subdivision (d)
or (e) of this section, the commissioner shall have the authority to deny a
registration or renewal application to any other person for the same vehicle and
may deny a registration or renewal application for any other motor vehicle
registered in the name of the applicant where the commissioner has reasonable
grounds to believe that such registration or renewal will have the effect of
defeating the purposes of this article.”
The statute does not require a hearing prior to the Commissioner denying
registration or renewal.
In order to award Pinnacle damages of $80,000 (representing the administrative
fine) the Court would necessarily have to review and annul the discretionary
determination of the Commissioner of Motor Vehicles to deny renewal of the
subject registrations until the DMV-Gala fine was paid.
The essence of the claim is a complaint about the administrative actions or
inactions of a state agency. The claim alleges DMV’s failure to conduct a
“proper review,” and a failure of the agency to perform its
“duty properly.” It further alleges that DMV was under some
statutory or regulatory duty, without identifying the source of this duty, to
“timely” perfect liens or issue registration suspensions. Pinnacle
also claims to have been denied a hearing in violation of due process.
Contrary to the assertion of claimant’s counsel, these questions are
properly raised in an Article 78 proceeding:
“§ 7803. Questions raised.
The only questions that may be raised in a proceeding under this article
1. whether the body or officer failed to perform a duty enjoined upon it by law;
2. whether the body or officer proceeded, is proceeding or is about to proceed
without or in excess of jurisdiction; or
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; . . . .”
Necessary to its recovery of $80,000, Pinnacle seeks to have this Court rule
that the Commissioner’s determination made pursuant to § 509-j (g)
was “arbitrary and capricious or an abuse of discretion” and made
“in violation of lawful procedure.” The Court lacks the subject
matter jurisdiction to do so.
Although Pinnacle urges that Article 78 is unavailable since “no
[written] administrative decision was ever issued,” the law states
otherwise. An agency determination need not be in writing in order to be
reviewed pursuant to Article 78 (Matter of Hill Park Health Care Ctr., Inc. v
Novello, 12 AD3d 1010 [3d Dept 2004]).
Similarly, the fact that the determination was made without a hearing does not
preclude Article 78 review. The only Article 78 ground which requires that an
administrative hearing precede judicial review is found at CPLR § 7803
“[W]hether a determination made as a result of a hearing held, and at
which evidence was taken, pursuant to direction by law is, on the entire record,
supported by substantial evidence.”
The case cited by Pinnacle in support of subject matter jurisdiction over the
claim in the Court of Claims, Lobel Fin. Corp. v State of New York (8
Misc 3d 662 [Ct Cl 2005]), is inapplicable. In Lobel, the Commissioner of
Motor Vehicles, in his discretion (see Vehicle and Traffic Law § 2107),
issued a certificate of title which reflected claimant’s lien against the
vehicle’s title. In thereafter issuing a replacement title, the
Commissioner inexplicably failed to include claimant’s lien. This was
clearly a negligent ministerial act since DMV had no discretion to omit
claimant’s lien from the replacement title.
Although the claim alleges “negligent record keeping” by the
defendant, Pinnacle has identified no mandated ministerial duty with respect to
“record keeping” allegedly breached by defendant. Further,
claimant’s Exhibit E shows that the DMV was stayed from enforcing the
DMV-Gala determination (in particular, suspending the relevant registrations) at
the time Pinnacle purchased the buses from Gala.
Pinnacle essentially challenges the administrative policies and practices of
the Department of Motor Vehicles. The appropriate remedy is not a Court of
Claims action for money damages but “a CPLR article 78 proceeding in
Supreme Court” (Matter of Rye Psychiatric Hosp. Ctr. v State of New
York, 177 AD2d 834, 835 [3d Dept 1991], lv denied 80 NY2d 751
The Court of Claims is a court of limited jurisdiction and the powers conferred
upon it do not include the authority to provide the type of equitable relief
requested by claimant (see Madura v State of New York, 12 AD3d
759, 760 [3d Dept 2004], lv denied 4 NY3d 704 ). The jurisdiction
of the Court of Claims is invoked where money damages are the essential object
of the claim, unlike an instance where the principal claim is equitable in
nature (such as a challenge to the administrative actions and policies of a
state agency), with monetary relief being incidental to the principal claim
(see Harvard Fin. Servs. v State of New York, 266 AD2d 685 [3d
Dept 1999]; Matter of Gross v Perales, 72 NY2d 231, 236 ).
For all of the foregoing reasons, defendant’s motion to dismiss the claim
is granted. The claim is dismissed.
March 7, 2008
HON. FRANK P. MILANO
Judge of the Court of Claims
Defendant’s Notice of Motion, filed December 28, 2007;
Affirmation of Saul Aronson, affirmed on December 27, 2007, with annexed
Affirmation of Lawrence A. Garvey, affirmed on February 6, 2008 and annexed
Affidavit of Aleksandr Ginzburg, sworn to February 6, 2008.