New York State Court of Claims

New York State Court of Claims
O'CONNOR v. STATE OF NEW YORK, # 2010-015-134, Claim No. NONE, Motion No. M-77650

Synopsis

Late claim application for the payment of attorneys fees pursuant to Public Officers Law 17 (2) (b) was denied. Court of Claims lacks jurisdiction where payment was subject to audit by Comptroller and review pursuant to CPLR article 78. Moreover, commencement of a plenary action in the Court of Claims is premature where Comptroller's audit is a precondition to payment.

Case information

UID: 2010-015-134
Claimant(s): MICHAEL J. O'CONNOR AND JEROME CHERRY
Claimant short name: O'CONNOR
Footnote (claimant name) :
Defendant(s): STATE OF NEW YORK
Footnote (defendant name) :
Third-party claimant(s):
Third-party defendant(s):
Claim number(s): NONE
Motion number(s): M-77650
Cross-motion number(s):
Judge: FRANCIS T. COLLINS
Claimant's attorney: Jerome Cherry, Michael J. O'Connor, Esquire
Michael J. O'Connor, Pro Se
Defendant's attorney: Honorable Andrew M. Cuomo, Attorney General
By: Michael C. Rizzo, Esquire
Assistant Attorney General
Third-party defendant's attorney:
Signature date: April 1, 2010
City: Saratoga Springs
Comments:
Official citation:
Appellate results:
See also (multicaptioned case)

Decision

Movants, Michael J. O'Connor, Esq. and Jerome Cherry, move pursuant to Court of Claims Act 10 (6) to file a late claim for reimbursement of the amount of an award rendered against Cherry in a Supreme Court action and attorneys fees and expenses incurred in defending the action.

In 1998 Mr. Cherry was sued by a co-worker for harassment, which allegedly occurred during the course of his employment with the New York State Office of Children and Family Services. Mr. Cherry's defense was first tendered to the Office of the Attorney General pursuant to Public Officers Law 17 on July 9, 1998. The Office of the Attorney General responded by letter dated November 1, 1999 (Exhibit A attached to proposed claim) that although it would be inappropriate for the Attorney General to represent Cherry in the matter, "[w]e are . . . certifying to the Comptroller that you are entitled to be represented by private counsel under Public Officers Law, Section 17 . . . Upon this certification, the State will pay for reasonable attorneys' fees and litigation expenses, subject to (1) certification by the Head of your Agency that you are entitled to representation under Public Officers Law, Section 17, and (2) the audit and warrant of the State Comptroller."

Michael O'Connor represented Mr. Cherry in the Supreme Court case, which was tried during August 2001 and resulted in a decision in favor of the plaintiff against Cherry in the amount of $2,500.00. No judgment has yet been entered or served. According to Mr. O'Connor "[a]t this point, the matter is still not concluded in that an appeal of the judgment is still possible, since [the State] has never been served with notice of entry" (O'Connor affidavit, 7). O'Connor avers that he sent an itemized statement of his claim for attorney's fees and disbursements (totaling $37,223.10) to the New York State Comptroller on November 9, 2009 but has as yet received no response.

Movants contend that Section 17 of Public Officers Law obligates payment by the State of attorneys' fees and expenses as well as the amount of the award in the Supreme Court action. The proposed claim asserts causes of action sounding in common law theories of breach of contract, unjust enrichment, and promissory estoppel based upon the letter from the Office of the Attorney General dated November 1, 1999 in which the State agreed to pay for attorneys' fees and litigation expenses subject to, inter alia, the audit and warrant of the State Comptroller.

The State opposes movants' late claim application on the ground that it is barred by the applicable statute of limitations contained in article 2 of the CPLR. Court of Claims Act 10 (6) permits, in the Court's discretion, the filing of a late claim against the State "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." In support of its contention that the proposed claim is barred by the statute of limitations contained in CPLR article 2, the State notes that the defense of Cherry in the Supreme Court action concluded in 2001 and that the damages were reasonably ascertainable at that time. Applying the six-year statute of limitations for breach of contract actions contained in CPLR 213, the State argues that the claim is time-barred.

Section 17 of the Public Officers Law requires that the State provide for the defense of an employee in any civil action "arising out of any alleged act or omission which occurred or is alleged in the complaint to have occurred while the employee was acting within the scope of his public employment or duties" (Public Officers Law 17 [2] [a]). The statute provides that an employee is entitled to be represented by the Attorney General unless it is determined that such representation would be inappropriate, in which case the Attorney General is required to notify the employee in writing that he or she is entitled to be represented by private counsel (Public Officers Law 17 [2] [b]). With respect to the payment of attorneys' fees and expenses, Public Officers Law 17 (2) (b) provides the following:

"Reasonable attorneys' fees and litigation expenses shall be paid by the state to such private counsel from time to time during the pendency of the civil action or proceeding subject to certification that the employee is entitled to representation under the terms and conditions of this section by the head of the department, commission, division, office or agency in which such employee is employed and upon the audit and warrant of the comptroller. Any dispute with respect to . . . the amount of litigation expenses or the reasonableness of attorneys' fees shall be resolved by the court upon motion or by way of a special proceeding."

The first issue for determination is whether or not the Court of Claims has jurisdiction to entertain the claim. As set forth above, the statutory preconditions to payment for attorneys' fees and expenses include an audit by the Comptroller. In Board of Educ. of City of N.Y. v State of New York (88 AD2d 1057 [1982], affd 60 NY2d 716 [1983]) the Court of Appeals affirmed, on the decision below, the holding of the Appellate Division, Third Department (88 AD2d at 1057), which stated the following:

"Where, as here, the Comptroller exercises his power to audit, he acts in a quasi-judicial capacity (see NY Const, art V, 1; City of New York v State of New York, 40 NY2d 659, 667; People ex rel. Grannis v Roberts, 163 NY 70). Accordingly, since the State has not waived its immunity for acts involving the exercise of discretion or judgment of a quasi-judicial nature (Abruzzo v State of New York, 84 AD2d 876, 877; Gross v State of New York, 33 AD2d 868), the Court of Claims lacks jurisdiction of the subject matter. The proper method for claimant to have challenged the Comptroller's determination was by commencing a CPLR article 78 proceeding against the Comptroller to review the audit" (cf. Quayle v State of New York, 192 NY 47, 54).

Thus, the Court of Appeals has determined that the Court of Claims lacks subject matter jurisdiction of actions seeking monies allegedly due from the State, the payment of which is conditioned upon the Comptroller's exercise of his or her discretionary, quasi-judicial audit powers. The express language of 17 (2) (b) requiring that disputes regarding the amount of litigation expenses or the reasonableness of the attorneys' fees be resolved "by the court upon motion or by way of a special proceeding" fully supports this conclusion

The Comptroller's alleged failure to exercise his audit power in the instant matter does not authorize the commencement of an action in the Court of Claims. Rather, movants' recourse is a proceeding to compel the performance of an audit pursuant to CPLR article 78 (see Matter of Galvin & Morgan v McCall, 251 AD2d 869 [1998]). Once the Comptroller exercises his audit power, a timely proceeding to review the amount paid may then be brought either by motion in the court in which the underlying action is pending or the Supreme Court pursuant to CPLR article 78 (id.; see also Board of Educ. of City of N.Y. v State of New York, supra; Matter of O'Brien v Regan, 182 AD2d 869 [1992], lv denied 80 NY2d 758 [1992]). Inasmuch as the underlying action has been concluded, movants' recourse lies in a proceeding pursuant to CPLR article 78, not a plenary action in the Court of Claims.

While there are cases emanating from the Court of Claims concerning the State's obligation for the payment of attorneys fees under Public Officers Law 17, none have directly addressed the jurisdiction of the Court of Claims (see Slate v State of New York, 284 AD2d 767 [2001]; Frontier Ins. Co. v State of New York, 172 AD2d 13 [1989]; Lapidot v State of New York, 88 Misc 2d 1090 [1976]). Even if these cases implicitly stand for the proposition that jurisdiction lies in the Court of Claims, the movants' failure to fulfill the necessary preconditions to the right to receive payment forecloses the monetary relief requested in the proposed claim. This issue was addressed by the Court of Appeals in City of New York v State of New York (40 NY2d 659 [1976]), which stated the following:

"[T]he language imposing the requirement of a comptroller's audit creates a precondition to the right to receive payment that is most consequential . . . [A] claimant's cause of action does not accrue until it possesses the legal right to be paid and to enforce its right to payment in court. It follows that where, by contract or by statute, the State's obligation to pay is conditioned upon an audit, no suit can be brought by a claimant until the official charged with making the audit has done so and has formally rejected all or some part of the claim. Moreover, where the audit is to be performed by a particular official, here the State Comptroller, neither an opinion of the Attorney-General nor a rejection by some other branch of the State government triggers the running of the statutory period within which to initiate litigation [citations omitted]" (Id. at 668).

The Court of Appeals has thus clarified that where the performance of an audit is a precondition to the receipt of payment, commencement of an action prior to the performance of an audit is premature (see also John J. Kassner & Co. v City of New York, 46 NY2d 544 [1979]; Edlux Constr. Corp. v State of New York, 277 NY 635 [1938]). Here, the audit requirement is set forth as a precondition to payment in both Section 17 of the Public Officers Law and the Attorney General's agreement to pay movants' legal fees and expenses. As this precondition has not been met, commencement of an action sounding in breach of contract, whether express or implied, is premature (id.).

To the extent movants' proposed claim seeks indemnity for the payment of the $2,500.00 award in the underlying action, absent a judgment there is no statutory requirement for indemnification (Public Officers Law 17 [3] [a]). Notably, in this regard "a losing party who feels aggrieved by the prevailing party's failure to seek entry may have the judgment entered and need not wait for the prevailing party to act" (Funk v Barry, 89 NY2d 364, 368 n [1996]).

Based on the foregoing, movants' application for late claim relief is denied.

April 1, 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 December 22, 2009;

2. Affidavit of Michael J. O'Connor sworn to December 22, 2009

with Exhibits A-D;

3. Affidavit in opposition of Michael Rizzo sworn to January 8, 2010 with Exhibit A.