New York State Court of Claims

New York State Court of Claims
CHEVRON v. THE STATE OF NEW YORK, # 2010-015-100, Claim No. None, Motion No. M-77154

Synopsis

Late claim motion for alleged overpayment of Major Petroleum Facility License Fees was denied. Court of Claims lacked jurisdiction where primary relief sought is available in article 78 proceeding. Claimant failed to exhaust administrative remedies and, in any event, broad grant of immunity afforded the State under the Navigation Law shielded the State from liability.

Case information

UID: 2010-015-100
Claimant(s): CHEVRON U.S.A. INC.
Claimant short name: CHEVRON
Footnote (claimant name) :
Defendant(s): THE STATE OF NEW YORK
Footnote (defendant name) : The caption is amended sua sponte to reflect the only properly named defendant.
Third-party claimant(s):
Third-party defendant(s):
Claim number(s): None
Motion number(s): M-77154
Cross-motion number(s):
Judge: FRANCIS T. COLLINS
Claimant's attorney: Hiscock & Barclay, LLP
By: Michael A. Oropallo, Esquire and
David G. Burch, Esquire
Defendant's attorney: Honorable Andrew M. Cuomo, Attorney General
By: Joan Matalavage, Esquire
Assistant Attorney General
Third-party defendant's attorney:
Signature date: January 12, 2010
City: Saratoga Springs
Comments:
Official citation:
Appellate results:
See also (multicaptioned case)

Decision

By this motion for late claim relief pursuant to Court of Claims Act 10 (6) movant, Chevron U.S.A. Inc. ("Chevron"), asserts a cause of action for money had and received based upon its mistaken payment of Major Petroleum Facility License (MPFL) fees which it alleges were never owed to the State of New York.

The proposed claim and the papers submitted in support of the motion assert that between September 2004 and August 2007 Chevron mistakenly paid a total of $346,505.12 in MPFL fees for asphalt which it wrongly believed had been stored at or shipped to the company's asphalt plant in Troy, New York. In fact, Chevron asserts the Troy plant ceased operation in 1999 although "Chevron continued its asphalt business in the State of New York, using facilities owned and operated by other companies for the physical storage and delivery of the asphalt to Chevron's customers" (proposed claim, movant's Exhibit A, 4 [b]). According to Kevin P. Glynn, an Excise Tax Compliance Supervisor employed by Chevron, between September 2004 and August 2007 all of the company's New York customers received their asphalt either through direct shipment from non-New York sources or from a Castle Oil Corporation in Port Morris, New York(2) (Affidavit of Kevin P. Glynn, 5, 6). Upon discovery of the mistaken MPFL payments Chevron requested a refund of the amounts paid by letter dated October 19, 2007 and provided the Department of Environmental Conservation (DEC) amended MPFL reports for the relevant period. Additional amended MPFL reports were submitted to DEC by correspondence dated June 24, 2009 which requested the refunding of an additional $127,603.55 in MPFL fees paid between June 2003 and August 2004. In total, Chevron seeks recovery of $474,108.67 in MPFL fees mistakenly paid, but not owed, during the period June 2003 through August 2007.

The State of New York has yet to act, by way of repayment, on Chevron's refund request.

Navigation Law Article 12 (Oil Spill Prevention, Control and Compensation) imposes license fees and surcharges on all petroleum refineries, storage or transfer facilities and appurtenances in the State of New York having an above ground or buried storage capacity of at least 400,000 gallons (Navigation Law 172 (11). A license fee is imposed on a "per barrel transferred" basis (Navigation Law 174 [4] [a]) and licensees are required to submit monthly reports to the Commissioner of DEC indicating the number of barrels of petroleum transferred at each of its major facilities and, at the same time, remit the amount of license fees and surcharges owed (Navigation Law 174 [5]).

In opposition to Chevron's motion for late claim relief, the State argues that this Court lacks subject matter jurisdiction to hear the claim because to do so would require review of an administrative determination which this Court has no subject matter jurisdiction to entertain, citing, inter alia, Berrian v State of New York (45 AD3d 995 [2007]); Madura v State of New York (12 AD3d 759 [2004], lv denied 4 NY3d 704 [2005]) and Safety Group No. 194 - New York State Sheet Metal Roofing & A.C. Contrs. Assn. v State of New York (298 AD2d 785 [2002]). In support of this argument, the State cites Navigation Law 174 (6) which authorizes the DEC Commissioner to determine the amount of license fees or surcharges due in instances where the "certificate required by this section is not filed, or if a certificate when filed is incorrect or insufficient in the opinion of the commissioner . . . ".

The jurisdiction of the Court of Claims is limited by the NY Constitution and statute to actions for money damages against the State in either appropriation, contract or tort (NY Const, art VI, 9; Court of Claims Act 8, 9). Regardless of how the claim is characterized, however, this Court lacks subject matter jurisdiction to hear a claim where the primary relief sought is otherwise available in an article 78 proceeding, (Matter of Gross v Perales, 72 NY2d 231 [1988]; Buonanotte v New York State Off. of Alcoholism & Substance Abuse Servs., 60 AD3d 1142 [2009], lv denied 12 NY3d 712 [2009]; City of New York v State of New York, 46 AD3d 1168 , 1169 [2007]; Heslop v New York State Teachers' Retirement Sys., 195 AD2d 851 [1993]; Young v State of New York, 179 Misc 2d 879 [1999]). Here, the existence of a procedure for administrative appeal and review by way of an article 78 proceeding in the Supreme Court makes clear that this Court lacks subject matter jurisdiction over the claim.

The statutory scheme and implementing regulations make plain the Legislature's intent to vest in the Commissioner of the DEC exclusive original jurisdiction over the matter in dispute in this case. Navigation Law 174 (6) provides the following:

"If a certificate required by this section is . . . incorrect or insufficient in the opinion of the commissioner, the amount of license fee or surcharge due shall be determined by the commissioner from such information as may be available. Notice of such determination, and notice of licensee's right to appeal such determination, shall be given to the licensee liable for the payment of the license fee or surcharge. Such determination shall finally and irrevocably fix the fee or surcharge unless the person against whom it is assessed, within thirty days after receiving notice of such determination, shall apply to the commissioner for a hearing, or unless the commissioner on his own motion shall redetermine the same. After such hearing the commissioner shall give notice of his determination to the person to whom the license fee or surcharge is assessed" .

While Chevron argues that the administrative remedy provided in Section 174 (6) is available only where an incorrect monthly report results in an underpayment of monies actually owed, as may be determined by the Commissioner, the implementing regulation (17 NYCRR 30.9) leaves no doubt that the available administrative remedies are not so limited:

"(f) If the monthly report and fee required by this Part is not filed and paid, or if the report when filed is incorrect or insufficient and accompanied by an incorrect or insufficient fee, the amount of such fee shall be determined by the commissioner from such information as may be available, including, if necessary, an audit of the licensee's books. The commissioner shall notify the licensee, within 30 days after the due date of the monthly report and fee, that he will determine the amount of the fee. The commissioner shall determine the amount of the fee within 60 days after the due date of the monthly report and fee, and give the licensee notice of the amount of fee as determined by the commissioner and of the licensee's right to appeal such determination. The commissioner's determination may also include an additional fee assessed at a rate of one percent of the additional amount due per month, when the commissioner determines that the licensee has unreasonably and unjustifiably failed or refused to pay such fee or part thereof. Such additional fee shall accrue at a rate of one percent for each month until actual payment to the commissioner.

(g) The determination of the commissioner of the amount of the fee and/or additional fee due shall be final unless the licensee, within 30 days of receipt of the determination, applies to the commissioner for a hearing. Upon receipt of such a request for a hearing, the commissioner shall appoint a hearing officer who shall conduct a hearing in accordance with the provisions of the State Administrative Procedure Act and shall provide the commissioner with findings of fact and a recommended determination. The hearing shall be held within 60 days of receipt by the commissioner of the request for hearing. The hearing officer's report and recommendation shall be transmitted to the commissioner within 30 days of the completion of the record of hearing, including a full transcript. The commissioner's final determination shall be made within 30 days of receipt of the hearing officer's report and recommendation."

The law is clear that "one who objects to the act of an administrative agency must exhaust available administrative remedies before being permitted to litigate in a court of law" (Watergate II Apts. v Buffalo Sewer Auth., 46 NY2d 52, 57 [1978]; Matter of Board of Educ. of Wappingers Cent. School Dist. v Watkins, 189 AD2d 1069 [1993]). This doctrine furthers the goal of relieving the courts of the burden of deciding issues entrusted to a state agency, and prevents judicial interference "with the administrators' efforts to develop . . . a co-ordinated, consistent and legally enforceable scheme of regulation and affording the agency the opportunity, in advance of possible judicial review, to prepare a record reflective of its 'expertise and judgment' " (Watergate II Apts. v Buffalo Sewer Auth., supra, 46 NY2d 52, 57). Where a statute provides an administrative appeal process and review is available by way of an Article 78 proceeding, as it is here, the Court of Claims is precluded from considering the claim (Heslop v New York State Teachers' Retirement Sys., supra; cf. CWM Chem. Servs., L.L.C. v Roth, 6 NY3d 410 [2006]).

In any event, even if jurisdiction over the instant controversy existed in this Court, the broad grant of immunity afforded the State by virtue of Navigation Law 176 (2) (b) shields the State from liability in this case. It states:

"Section eight of the court of claims act or any other provision of law to the contrary notwithstanding, the state shall be immune from liability and action with respect to any act or omission done in the discharge of the department's responsibility pursuant to this article; provided, however, that this subdivision shall not limit any liability which may otherwise exist for unlawful, willful or malicious acts or omissions on the part of the state, state agencies, or their officers, employees or agents or for a discharge in violation of section one hundred seventy-three of this article" (emphasis added).

The grant of immunity provided the defendant herein by Navigation Law 176 (2) (b) specifically references Court of Claims Act 8 and applies in otherwise unlimited terms to "any act or omission done in the discharge of the department's responsibility pursuant to this article". Such a broad statement of immunity cannot be ignored and acts to immunize the State from liability under the facts of this case. While the statute exempts from its protective ambit unlawful, willful or malicious acts or omissions, no argument is made that the acts or omissions forming the basis of Chevron's proposed claim fall within any of these exceptions.

Notwithstanding this broad grant of immunity, however, article 78 relief is available to challenge the State's actions under the more deferential "arbitrary and capricious standard"

(State of New York v Speonk Fuel, Inc., 3 NY3d 720, 724 [2004]; State of New York v Dennin, 17 AD3d 744 [2005], lv dismissed 5 NY3d 824 [2005]; State of New York v Robin Operating Corp., 3 AD3d 767 [2004]; Matter of George Moore Truck & Equip. Corp. v New York State Dept. of Envtl. Conservation Gas and Oil, 12 Misc3d 1178 [A]). The availability of relief under article 78 together with the broad grant of immunity provided under Navigation Law 176 (2) (b) make clear that this Court lacks jurisdiction to entertain a plenary action under the guise of a claim for money had and received.

Based on the foregoing, Chevron's motion for late claim relief is denied.

January 12, 2010

Saratoga Springs, New York

FRANCIS T. COLLINS

Judge of the Court of Claims

The Court considered the following papers:

  1. Notice of motion dated August 12, 2009;
  2. Memorandum of law of Michael A. Oropallo and David G. Burch dated August 12, 2009;
  3. Affirmation of Michael A. Oropallo dated August 12, 2009 with exhibit;
  4. Affidavit of Kevin P. Glynn sworn to June 24, 2009 with exhibits;
  5. Affidavit of Diane Rodrigues sworn to July 8, 2009 with exhibits;
  6. Affidavit of Joan Matalavage sworn to September 22, 2009;
  7. Memorandum of law of Michael A. Oropallo and David G. Burch dated October 5, 2009.

2. Castle Oil Corporation paid the MPFL fees due on the asphalt shipped/stored at its Port Morris, New York terminal (movant's Exhibit A).