New York State Court of Claims

New York State Court of Claims
WALSH v. THE STATE OF NEW YORK, # 2021-041-021, Claim No. 131993, Motion No. M-96481

Synopsis

Defendant's motion to dismiss claim for lack of subject matter jurisdiction in action alleging that defendant unreasonably revoked claimant/employee's revocable permit to occupy state-owned real property is granted.

Case information

UID: 2021-041-021
Claimant(s): CRAIG WALSH
Claimant short name: WALSH
Footnote (claimant name) :
Defendant(s): THE STATE OF NEW YORK
Footnote (defendant name) :
Third-party claimant(s):
Third-party defendant(s):
Claim number(s): 131993
Motion number(s): M-96481
Cross-motion number(s):
Judge: FRANK P. MILANO
Claimant's attorney: SUSSMAN AND ASSOCIATES
By: Jonathan R. Goldman, Esq.
Defendant's attorney: HON. LETITIA JAMES
New York State Attorney General
By: Thomas J. Reilly, Esq.
Assistant Attorney General
Third-party defendant's attorney:
Signature date: April 5, 2021
City: Albany
Comments:
Official citation:
Appellate results:
See also (multicaptioned case)

Decision

Defendant moves to dismiss the claim pursuant to CPLR 3211 (a) (2) for lack of subject matter jurisdiction "because the issues presented in this claim may only be determined in a CPLR Article 78 proceeding."

Claimant opposes the defendant's motion to dismiss the claim.

The claim alleges that claimant was employed as a correction officer at Wallkill Correctional Facility (Wallkill) for nineteen years and that for eight of those years claimant resided in "state-supplied housing" at Wallkill. The claim states that the "state-supplied housing" was provided to claimant pursuant to "annual written contracts signed by him and the Superintendent of Wallkill Correctional Facility."

The claim further alleges that in "October 2017, the Superintendent of the facility . . . evicted him from the housing" without providing claimant a "good faith or reasonable explanation for her action."

The claim further states that the "[s]uperintendent provided no reasonable basis for the exercise of her discretion in evicting claimant from this housing and did not claim that the eviction was for any cause like misconduct or termination [from employment]."

The claim alleges that the "Superintendent's baseless Order . . . broke the terms of the agreed upon lease and so caused claimant substantial emotional distress and hardship" and "economic and non-economic harm."

Despite the claim's references to a contract and a lease, it is indisputable that the operative controlling written agreement in this claim, upon which the claimant's purported breach of contract is based, is a "REVOCABLE PERMIT" entered into between claimant and the New York State Department of Corrections and Community Supervision (DOCCS), attached as Exhibit E to defendant's motion to dismiss the claim.

The "REVOCABLE PERMIT" identified claimant as a part of "key facility staff" and stated that the "privilege of occupancy" was offered to claimant "for the convenience of the Department."

Although the "term" was for one year, paragraph 14 of the "REVOCABLE PERMIT" provided that claimant's "privilege of occupancy" was subject to termination "sooner" at the "reasonable discretion of the Superintendent."

The Court notes that the "REVOCABLE PERMIT," upon which the purported breach of contract is based, does not require "cause like misconduct," as referenced in the claim, for the defendant's discretionary termination of the claimant's "privilege of occupancy."

The "privilege of occupancy" housing term at issue was due to expire on March 31, 2018. On October 3, 2017, DOCCS notified claimant in writing that it "has been determined by the Facility, that the unit you reside in is needed to house another Wallkill employee. Therefore, this letter will service as an official 30-day notice to vacate the premises."

On October 27, 2017, DOCCS again notified claimant in writing that, pursuant to paragraph 14 of the "REVOCABLE PERMIT," claimant's occupancy of the state-supplied housing unit was terminated effective November 2, 2017.

Claimant vacated the state-supplied housing unit on November 1, 2017, as ordered by the DOCCS Superintendent.

The Court finds that the claim is a challenge to the discretionary administrative determination of the DOCCS Superintendent, made pursuant to the terms of the "REVOCABLE PERMIT," to terminate claimant's "privilege of occupancy" as provided in paragraph 14 of the "REVOCABLE PERMIT." The claim directly challenges whether the DOCCS Superintendent acted with "reasonable discretion" in terminating the claimant's "privilege of occupancy."

As such, the Court lacks subject matter jurisdiction over the claim.

The subject matter 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 to review action or inaction by a state agency), with monetary relief being incidental to the principal claim (see Harvard Fin. Servs. v State of New York, 266 AD2d 685, 685 [3d Dept 1999]; Matter of Gross v Perales, 72 NY2d 231, 236 [1988]).

In City of New York v State of New York (46 AD3d 1168, 1169-1170 [3d Dept 2007], lv denied 10 NY3d 705 [2008]), 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 [1954]), 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 [1997]), '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 [2004], lv denied 4 NY3d 704 [2005], quoting Matter of Gross v Perales, 72 NY2d 231, 236 [1988]). 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 [2007]), 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 [1991])."

(Emphasis Added)

In order to award claimant money damages in this action, the Court would necessarily be required to review the administrative determination of the DOCCS Superintendent to terminate claimant's "privilege of occupancy" of the state-supplied housing unit prior to the end of the term, a determination made pursuant to the express provisions of the "REVOCABLE PERMIT."

The Court lacks subject matter jurisdiction to do so.

CPLR section 7803 offers a remedy when the following questions, among others, are raised against an agency:

"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."

The essential factual allegations of the claim fit squarely into the jurisdictional parameters of CPLR section 7803 (3) and judicial review of the DOCCS Superintendent's discretionary administrative determination is properly brought only in Supreme Court in a CPLR Article 78 proceeding (City of New York, 46 AD3d at 1169-1170).

Claimant seeks to avoid the Court's lack of subject matter jurisdiction by asserting in his memorandum of law that the defendant is "precluded" by "judicial estoppel" or "collateral estoppel" from asserting that the claim should have been brought as a CPLR Article 78 proceeding in Supreme Court to review the DOCCS exercise of discretion, rather than as a breach of contract action in the Court of Claims.

Claimant bases his estoppel argument on his prior Supreme Court action which alleged a breach of contract cause of action against the State of New York and which joined a cause of action pursuant to 42 USC 1983 against the DOCCS Superintendent, individually, for allegedly violating claimant's right to be free from unreasonable search and seizure.

The claimant's prior Supreme Court cause of action against the State of New York was based upon the same essential facts alleged in this action.

In that Supreme Court action, the State of New York moved to dismiss, for lack of subject matter jurisdiction, the claimant's self-styled breach of contract cause of action against the State of New York by correctly asserting that a breach of contract action against the State of New York must be brought in the Court of Claims.

In response to the State's Supreme Court motion to dismiss, claimant conceded that the Court of Claims has "exclusive jurisdiction" over a breach of contract claim against the State of New York and consented to an order dismissing the Supreme Court complaint against the State of New York.

Claimant then commenced this action in the Court of Claims.

Claimant's focus on whether defendant is precluded by judicial estoppel or collateral estoppel from asserting the Court's lack of subject matter jurisdiction over the claim is misplaced.

As succinctly stated in Rodriguez v State Of New York (307 AD2d 657 [3d Dept 2003]):

"[L]ack of subject matter jurisdiction is a defect that cannot be overlooked or remedied by either waiver or estoppel."

Further, "a defect in subject matter jurisdiction may be raised at any time, even for the first time on appeal, because it relates to the competence of the court to consider a matter" Pritchard v Curtis, 101 AD3d 1502, 1503 [3d Dept 2012]); see Caci v State of New York, 107 AD3d 1121, 1122-23, [3d Dept 2013]).

Tellingly, as stated in Caffrey v N. Arrow Abstract & Settlement Servs., Inc. (160 AD3d 121, 133-34 [2d Dept 2018]):

"Subject matter jurisdiction is a concept that is absolute--it either exists in its entirety or it does not exist at all. A defect in subject matter jurisdiction may be raised at any time by any party or by the court itself, and subject matter jurisdiction cannot be created through waiver, estoppel, laches, or consent."

The Court lacks subject matter jurisdiction over the claim, which challenges the discretionary administrative determination of the DOCCS Superintendent made pursuant to the terms of the "REVOCABLE PERMIT." For the claimant to prevail in this action, the Court would be required to review the DOCCS Superintendent's discretionary administrative determination and find that the DOCCS Superintendent failed to exercise reasonable discretion in making her determination.

The case relied upon by claimant to argue that this Court has subject matter jurisdiction over the instant claim, Abiele Contracting, Inc. v New York City Sch. Constr. Auth. (91 NY2d 1 [1997]), did not involve a revocable permit for the occupancy of real property terminable by the exercise of reasonable discretion of the property owner.

Abiele involved a standard arms-length $16.5 million construction contract for the renovation of a school in which the defendant (NYCSCA) terminated the contract for cause and plaintiff (Abiele) asserted that NYCSCA had breached a contractual term requiring it be given notice and an opportunity to cure, and further alleged that NYCSCA had breached the construction contract's implied obligation of good faith.

NYCSCA had directed Abiele to cease work pending a meeting of the NYCSCA's "Default Committee," an entity created by NYCSCA and unmentioned in the construction contract. Abiele was advised that it could attend the meeting, with counsel, to present its position. The NYCSCA "Default Committee" and Abiele met on several occasions and at those meetings, Abiele contested NYCSCA's allegations of Abiele's purportedly poor contractual performance. The parties submitted arguments and exhibits and each party called witnesses. No transcript or other record of the meetings was created. NYCSCA thereafter notified Abiele in writing that its contract was terminated for cause. Abiele appealed to the President of NYCSCA regarding termination of the construction contract but its appeal was denied.

The present claim is unlike the issue presented in Abiele, in which the court held, at 91 NY2d 6, that:

"[S]ince [NYCSCA] had neither statutory nor contractual authority to render a quasi-judicial determination, it was not empowered to issue a final and binding determination of default reviewable only in an article 78 proceeding. Thus, a plenary action sounding in contract is not precluded under the circumstances presented here."

The Abiele court denied NYCSCA's attempt to convert a standard arms-length breach of contract dispute into an administrative proceeding requiring CPLR Article 78 proceedings. The Abiele court rejected NYCSCA's assertion that plaintiff was limited to bringing an Article 78 proceeding regarding the alleged breach and the termination decision of NYCSCA because NYCSCA lacked contractual or statutory authority to convert the parties meetings into some sort of binding administrative hearing. NYCSCA further lacked contractual or statutory authority to render a quasi-judicial, final and binding administrative determination subject to CPLR Article 78 review.

Again, unlike in Abiele, the DOCCS Superintendent here had express written authority, set forth in the "REVOCABLE PERMIT," to make an administrative determination, using "reasonable discretion," to terminate the claimant's "privilege of occupancy" at any time during the term of the permit.

Contrary to the arms-length construction contract dispute in Abiele, the issue here is an administrative dispute between employer and employee regarding a revocable occupancy permit offered to claimant as a member of DOCCS "key facility staff." The "REVOCABLE PERMIT" was expressly intended "for the convenience of the Department" as opposed to an arms-length mutually binding contractual relationship and was terminable at any time at the "reasonable discretion of the Superintendent."

Notably, claimant's suggestion that the DOCCS Superintendent breached an implied covenant of good faith in the "REVOCABLE PERMIT" (the claim alleges that defendant failed to offer claimant a "good faith or reasonable explanation for her action") is simply another way of alleging that she failed to exercise "reasonable discretion" in making her determination and is akin to the CPLR 7803 (3) review standards set forth earlier ("violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion").

Finally, unlike the construction contract at issue in Abiele, the "REVOCABLE PERMIT" makes no reference to either DOCCS or claimant's "right to seek money damages" (91 NY2d at 10).

The Court finds no particular relevance of the other case briefly mentioned by claimant, Dalton v Educational Testing Service (87 NY2d 384 [1995]), a straightforward breach of contract action, to the issues presented on the defendant's motion to dismiss the claim.

The defendant's motion to dismiss the claim for lack of subject matter jurisdiction is granted. The claim is dismissed.

April 5, 2021

Albany, New York

FRANK P. MILANO

Judge of the Court of Claims

Papers Considered:

1. Defendant's Notice of Motion to Dismiss, filed February 8, 2021;

2. Affirmation of Thomas J. Reilly, dated February 8, 2021, and attached exhibits;

3. Affirmation in Opposition of Jonathan R. Goldman, dated March 17, 2021, and attached exhibits;

4. Reply Affirmation of Thomas J. Reilly, dated March 22, 2021.