Supreme Court of the State of New York
County of Erie
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Plaintiff, vs. GEORGE E. PATAKI as Governor of the State of New York, et al., Defendants |
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Plaintiff’s Memorandum of Law in Opposition to Defendant Pataki and Roth’s Motion to Dismiss
Index # I 2002-4880 |
History of this Litigation
On January 3, 2001, Plaintiff filed a complaint in the United States District Court for the Western District of New York, (Warren v. Pataki, Roth, et al, Case # 01-CV-00004 E(M) hereinafter referred to as the “Federal Action”) seeking a declaratory judgment and permanent injunction compelling the State of New York through it Governor and Tax Commissioner (hereinafter referred to as the “State Defendants”) to comply with state law and enforce and collect taxes imposed upon non-Indians on Indian land. Prior to service of the Summons and Complaint Plaintiff filed a First Amended Complaint on February 4, 2001. The State Defendants filed a motion under Fed.R.Civ.P. 12(b)(1 & 6) to dismiss the action for failure to state a claim on which relief could be granted and lack of subject matter jurisdiction based on lack of standing and comity on May 23, 2001. This motion was argued and submitted on August 10, 2001. On October 15, 2001 Plaintiff moved to amend the complaint. Then on October 17, 2001 the State Defendants moved to strike Plaintiff’s memorandum of law in support of the motion to amend. On November 9, 2001 the District Court granted Plaintiff’s motion to amend and denied the State Defendants’ motion to strike as moot. On November 16, 2001 Plaintiff’s Second Amended Complaint was filed and served on all parties. The district court granted the State Defendants’ motion to dismiss in a written opinion dated January 9, 2002. On January 18, 2002 Plaintiff filed with the District Court and served on all adverse parties a motion pursuant to FRCP 59(e) and 60(b) for reconsideration and relief from the judgment entered on January 9, 2002. On May 1, 2002, Plaintiff commenced the instant action by Purchasing an Index Number and filing a Summons with Notice in the Erie County Clerk’s Office (State Defendants incorrectly states that this action was commenced on July 7, 2002 in their “Statement of Facts”). On June 11, 2002, the District Court denied plaintiff’s motion for reconsideration. Defendants Pataki and Roth brought this motion on July 1, 2002. On August 1, 2002 Plaintiff filed a Supplemental Summons with Amended Verified Complaint in accordance with CPLR §§ 1003, 3025(a). This motion is directed only at the first cause of action of the amended verified complaint since the other two causes of action were not contained in the original verified complaint.
Request for the Court to Take Judicial Notice CPLR § 4511(b)
Court files or official records, such as prior orders or kindred documents, may be judicially noticed (e.g., Matter of Allcity Ins. Co. [Kondak], 66 AD2d 531, 533; People v Singleton, 36 AD2d 725; People ex rel. Bloom v Collins, 277 App Div 21, 23, affd 302 NY 603; cf., Sleasman v Sherwood, 212 AD2d 868, 870). Plaintiff requests that this court take Judicial Notice of the Summons with Notice filed on May 1, 2002, the Verified Complaint filed on May 17, 2002, and the Supplemental Summons with Amended Verified Complaint filed in this action on August 1, 2002.
Plaintiff further request that this Court take Judicial Notice of the following documents that were filed in the Federal Action:
1) Defendant Pataki and Roth’s Notice of Motion to Dismiss and Memorandum of Defendants Pataki and Roth in Support of Motion to Dismiss dated May 22, 2001 (attached hereto and marked as Exhibit “A”).
2) The Reply Memorandum of Defendants Pataki and Roth in Support of Motion to Dismiss (attached hereto and marked as Exhibit “B”).
3) The Second Amended Civil Complaint – Class Action dated November 10, 2001 (attached hereto and marked as Exhibit “C”).
4) SUSDJ Elfvin’s Memorandum and Order dated January 9, 2002 (attached hereto and marked as Exhibit “D”).
5) SUSDJ Elfvin’s Order dated June 12, 2002 (attached hereto and marked as Exhibit “E”).
Statutory Standing under State Finance Law Article 7-a
Plaintiff has standing under State Finance Law § 123-b, which provides that "Notwithstanding any inconsistent provision of law, any person, who is a citizen taxpayer, whether or not such person is or may be affected or specially aggrieved by the activity herein referred to, may maintain an action for equitable or declaratory relief, or both, against an officer or employee of the state who in the course of his or her duties has caused, is now causing, or is about to cause a wrongful expenditure, misappropriation, misapplication, or any other illegal or unconstitutional disbursement of state funds or state property". "Since most activities can be viewed as having some relationship to expenditures * * * too broad a reading of section 123-b would create standing for any citizen who had the desire to challenge virtually all governmental acts" (Rudder v. Pataki, 93 NY2d 273, 281), and governmental acts which only incidentally involve State finances cannot be challenged based on State Finance Law § 123-b (see, id., at 280-281; Matter of Transactive Corp. v New York State Dept. of Social Servs., 92 NY2d 579, 588-589; Public Util. Law Project of N.Y. v New York State Pub. Serv. Commn., 252 AD2d 55, 58-59; Matter of Gerdts v. State of New York, 210 AD2d 645, 647-648, lv denied 85 NY2d 810, appeal dismissed 85 NY2d 856). It cannot be said that the illegal de facto tax exemption at issue in this litigation is not related to State Finances
The Governor owes a duty to the people of the State of New York to ". . . take care that the laws are faithfully executed." (New York Constitution Article 4 § 3). That by directing the taxes not be collected on purchases made through enterprises that are specified by him (and not the legislature) is no different from a store cashier while charged with a duty to collect all money on purchases to allow some select group walk through without payment without authorization from the store owner. This is clearly an illegal, unconstitutional misapplication or misappropriation of state and county funds.
Qualifications under the State Finance Law are residence in the State and past or present payment of State income or sales taxes (§ 123-a). Plaintiff satisfies the necessary criteria since the movants have not factually challenged the complaint and these facts are alleged in the Amended Verified Complaint (¶¶ 1 & 2)
Defendants note (State Defendants’ Memorandum in Support of Motion to Dismiss (Page 6, footnote 2)) that standing of a taxpayer must be accorded where failure to allow standing would in effect erect an impenetrable barrier to any judicial scrutiny of governmental action (Boryszewski v Brydges, 37 N.Y.2d 361). As the Third Department stated in State Communities Aid Association et al. v. Edward Regan, 492 N.Y.S.2d 497, 112 A.D.2d 681, “This was the reason for the enactment of State Finance Law article 7-A (see, Elia Bldg. Co. v New York State Urban Dev. Corp., 54 A.D.2d 337). The "public interest" of a governmental action was the test established for standing under State Finance Law article 7-A (Memorandum of Welfare Inspector General, Aug. 6, 1975, Governor's Bill Jacket, L 1975, ch 827).”
The cases cited by the State Defendants in support of their argument were either decided prior to the enactment of State Finance Law Article 7-a or were not brought as taxpayer actions against governmental entities and therefore not controlling.
The State Defendants assert (State Defendants’ Memorandum in Support of Motion to Dismiss (second paragraph under Statement of Facts) “Previously, the plaintiff— apparently in an attempt to avoid the controlling decision in New York Association of Convenience Stores v. Urbach, 275 A.D.2d 520 (3d Dept. 2000), which upheld the state defendants’ policies — commenced an action raising similar claims in the United States District Court for the Western District of New York.” First and foremost I commenced an action in Federal Court to vindicate my federal rights. As the court can see from the orders of Judge Elfvin together with the State Defendants’ submissions in that court this so-called controlling decision was raised by them and the court still held that I had standing, I had stated federal claims but due to comity it had to dismiss my claims without prejudice. Furthermore, the decision in New York Association of Convenience Stores v. Urbach, 275 A.D.2d 520 is not controlling in the litigation at bar. First, that action did not question whether the State Defendants could establish a de facto exemption in violation of the State Constitution. Secondly, that action did not concern invidious discrimination while this action does and therefore strict scrutiny is the applicable standard not rational basis., Lastly, this action also involves the effect of this violation of the separation of powers principle on plaintiff’s vote.
Common Law Taxpayer Standing
Failure to grant standing to plaintiff in this action "would be in effect to erect an impenetrable barrier to any judicial scrutiny of" this executive action (Boryszewski v Brydges, 37 N.Y.2d 361, 364, supra; Matter of Burke v Sugarman, supra, at p 45; see Faden v Philadelphia Housing Auth., 424 Pa 273; 74 Am Jur 2d, Taxpayers' Actions, § 1, at p 182) and the belief that "the taxpayer, as the ultimate bearer of the burdens" of the governmental agency involved should have a remedy against burdens unjustly imposed (Queens County Water Co. v Monroe, 83 App Div 105, 108).
In Dudley v Kerwick (52 NY2d 542), the Court of Appeals described the "gist of the petitions is that they allege a broad perversion of the entire process of granting exemptions, with the resulting deterioration of the tax base and imposition on petitioners of a hugely disproportionate share of municipal expenses" (id., at 550). The petitions in Dudley alleged that the town assessor had granted exemptions to 88% of the town's landowners as officers in a single, purported religious denomination calling itself the Universal Life Church. The Court of Appeals concluded in Dudley that “In this situation, if we hold he may do so with impunity, we would, in essence, give assessors unbridled authority to create new grounds for exemption as they please, by the device of warping those statutory exemptions presently in effect. It is axiomatic that the Legislature, not the assessor has authority to create grounds for exemption from taxation. When an assessor grants exemption from taxation in wholesale fashion indicating that he has arrogated this legislative power to himself, he cannot cloak himself with protection surrounding individual discretionary decisions. . .” (cf: Colella v. Board Of Assessors Of The County Of Nassau, 95 N.Y.2d 401, 95 N.Y.2d 401, 741 N.E.2d 113, 741 N.E.2d 113, 718 N.Y.S.2d 268, 718 N.Y.S.2d 268 (N.Y. 11/30/2000))
If the Plaintiff is not allowed to pursue this action, it is unlikely that a judicial challenge to the State Defendants’ actions/policy can be mounted. On this basis the court should grant plaintiff standing.
Standing pursuant to General Municipal Law § 51
"It is well recognized that with respect to declaratory judgment, the party who seeks same must have a 'standing to sue'. In determining whether there is such standing, it must be shown that the plaintiff's personal or property rights will be directly and specifically affected. 'Thus, a private citizen who does not show any special rights or interests in the matter in controversy, other than those common to all taxpayers and citizens, has no standing to sue' (24 Carmody-Wait 2d, New York Practice, § 147:28). However, a taxpayers' action for declaratory judgment is governed by section 51 of the General Municipal Law and is a separate and distinct remedy. 'Under the statutes, it is the status of the plaintiff as a taxpayer, not a special injury to the particular plaintiff, that gives him the right to sue as a taxpayer' (21 Carmody-Wait 2d, New York Practice, § 128:1; see Carmody-Wait 2d, § 128:38)." (Wein v City of New York, 47 A.D.2d 367, 370-371, mod on other grounds 36 N.Y.2d 610.) See also Korn v Gulotta, 72 N.Y.2d 363; Boryszewski v Brydges, 37 N.Y.2d 361; Kradjian v City of Binghamton, 104 A.D.2d 16, 17.
In Korn v Gulotta, 72 N.Y.2d 363 the Court of Appeals stated “We have recognized that an action pursuant to General Municipal Law § 51 may take the form of action for a declaratory judgment if it satisfies the statute's requirements (Wein v City of New York, 36 N.Y.2d 610, 621; Bloom v Mayor of City of N. Y., 35 A.D.2d 92, 95, affd 28 N.Y.2d 92). Section 51, entitled "Prosecution of officers for illegal acts", provides that: "All officers * * * and other persons acting, or who have acted, for and on behalf of any county * * * in this state, and each and every one of them, may be prosecuted, and an action may be maintained against them to prevent any illegal official act on the part of any such officers * * * or other persons, or to prevent waste or injury to, or to restore and make good, any property, funds or estate of such county" (emphasis added). Although the disjunctive phrasing of the statute would appear to authorize suits if there is either an "illegal official act" or "to prevent waste" we have held that a showing of mere illegality is not enough (see, Mesivta of Forest Hills Inst. v City of New York, 58 N.Y.2d 1014; Kaskel v Impellitteri, 306 NY 73, cert denied 347 U.S. 934; Western N. Y. Water Co. v City of Buffalo, 242 NY 202).” Nevertheless, a plaintiff is not required to show waste in the strict sense (Aldrich v City of New York, 208 Misc 930, affd 2 A.D.2d 760). The governing rule is stated in Altschul v Ludwig (216 NY 459, 467): "[the] mere illegality of the official act in and of itself does not justify injunctive relief [under section 51]. To be entitled to [injunctive] relief, when waste or injury is not involved, it must appear that in addition to being an illegal official act the threatened act is such as to imperil the public interests or calculated to work public injury or produce some public mischief" (citations omitted). The court went on to state “In this case, respondent County Executive submitted an allegedly illegal budget to the Board of Supervisors. In acting upon it, the Board relied upon a false premise, i.e., that the full estimated cash balance had been included in the proposed budget when in fact the estimate did not comply with the legal requirements of the County Charter. The Board lacked the power to authorize a budget that was illegal and its action in adopting the budget was a nullity. It is irrelevant that the Board members knew of the deficiency when they acted or that they acted in good faith; the Board's action could not legalize a budget which did not comply with statutory mandates. Petitioner has met his burden of demonstrating a public injury entitling him to maintain a section 51 action because county moneys, available to reduce property taxes, were not lawfully appropriated at the time of the passage of the 1988 budget, but were held off-budget. Their existence, unaccounted for, was illegal and threatened the public interest.”
One must observe that when an action is brought against public officials "to prevent any illegal official act * * * or to prevent waste or injury to, or to restore and make good, any property, funds or estate [of the municipality]" it is an action under General Municipal Law § 51 (Wein v City of New York, supra). That statute requires, as a sine qua non, that the litigant be a taxpayer as defined by the section (New York Pub. Interest Research Group v Board of Assessment Review, 104 Misc. 2d 128).
In Rogers v. O'Brien (153 N. Y. 357, 361) the Court of Appeals said: "The words 'to prevent any illegal official act,' * * * plainly relate to acts germane to the purpose of the new legislation, which was to extend the remedy for the protection of taxpayers against frauds and peculations of public officials and to prevent usurpation by public bodies or agents, of powers not granted, the exercise of which may imperil the public interests." The Court of Appeals in reviewing the history of legislation in respect to taxpayers' actions in Altschul v. Ludwig (216 N. Y. 459, 466-467) said: "If, therefore, the plaintiff can succeed it must be by virtue of the provisions of section 51 of the General Municipal Law which authorize the maintenance of a taxpayer's action to prevent an 'illegal official act' * * * The mere illegality of the official act in and of itself does not justify injunctive relief at the request of the taxpayer. To be entitled to this relief, when waste or injury is not involved, it must appear that in addition to being an illegal act the threatened act is such as to imperil the public interests or calculated to work public injury or produce some public mischief." In this case a theatre had been built by private capital. There was no waste of public funds and the taxpayer was permitted to maintain an action to restrain a violation of the building code which imperiled the public interests. The court on page 470 said: " but when the board acts beyond its limited statutory jurisdiction its action is void and in such cases the courts may and in proper cases doubtless will review and correct action taken by the board in excess of its authority."
In accordance with section 51 of the General Municipal Law, redress may only be had "when the official acts complained of are found to be corrupt * * * or where 'there is a total lack of power in defendants, under the law, to do the acts complained of '". (Stahl Soap Corp. v. City of New York, 5 N.Y.2d 200, 204; Kaskel v. Impellitteri, 306 N. Y. 73, 79, cert. denied 347 U.S. 934; 8 McQuillin, Municipal Corporation [3d ed.], p. 126.) It may be here remarked that the State Defendants "may not ignore the legislative command, nor should courts close their eyes to a violation of the mandate." (Loos v. City of New York, 257 App. Div. 219, 223.) Section 51 of the General Municipal Law is remedial and our courts have held said section is to be liberally construed for the purpose of protection of the taxpayer. (Meinhardt v. Britting, 10 Misc. 2d 757; Fox v. Smith, 123 App. Div. 369; Hicks v. Eggleston, App. Div. 73; Eagle Nest Corp. v. Carroll, 179 Misc. 99; Queens County Water Co. v. Monroe, 83 App. Div. 105; Shiebler v. Griffing, 83 Misc. 363; in a dictum by Judge Cardozo in Smith v. Hedges [223 N. Y. 176, 186] is the following language: " The scope of the taxpayer's action has steadily expanded [Altschul v. Ludwig, 216 N. Y. 459]. * * * We must not limit the just effectiveness of the remedy by any narrow construction.")
Whether or not the State Defendants’ waste of state revenue is reviewable by this court, their waste of Erie County’s compensating and use tax under Article 29 of the Tax Law is. They are clearly “agents * * * and other persons acting, or who have acted, for and on behalf of any county * * * in this state, and each and every one of them, may be prosecuted, and an action may be maintained against them to prevent any illegal official act on the part of any such officers * * * or other persons, or to prevent waste or injury to, or to restore and make good, any property, funds or estate of such county" "A decision made without authority is an illegal official act." (Aldrich v. City of New York, 208 Misc. 930, 936, affd. 2 A.D.2d 760.)
State Defendants are Collaterally Estopped from Raising Standing as a Defense
The State Defendants are collaterally estopped from contesting plaintiff’s standing. The doctrine of collateral estoppel, as traditionally stated, precludes the re-litigation of an issue of fact or law which was necessarily determined in a prior action between the same parties or those in privity with them. (Schuylkill Fuel Corp. v B. & C. Nieberg Realty Corp., 250 NY 304; Statter v Statter, 2 N.Y.2d 668; Restatement, Judgments, § 68; Siegel, New York Practice, § 457 et seq.) In Schwartz v Public Administrator of County of Bronx (24 N.Y.2d 65), the court held that there are now but two necessary requirements for the application of collateral estoppel: (1) an identity of issue which has necessarily been decided in the prior action and which is decisive of the present one, and (2) a full and fair opportunity to contest the decision now said to be controlling. Indeed, "the doctrine of collateral estoppel will permit any discrete factual issue necessarily decided in the prior action to be given preclusive effect, regardless of the over-all legal context" (Lee v Jones, 230 AD2d 435, 438, lv denied 91 NY2d 802 [emphasis supplied]; In re Interboro Institute, 682 N.Y.S.2d 301 (N.Y.App.Div. 3rd Dept. 12/24/1998)).
The State Defendants made this assertion before Judge Elfvin in the Federal Action. The Second Circuit Court of Appeals in Bigio v. Coca-Cola Co., 235 F.3d 63, 239 F.3d 440, 235 F.3d 63, 239 F.3d 440 (2d Cir. 12/07/2000) held that “We have been instructed by the Supreme Court to address questions as to the district court's jurisdiction before deciding dispositive issues on the merits. In Steel Co. v. Citizens for a Better Environment, the Supreme Court held that a question regarding the plaintiff's standing under Article III of the Constitution must be resolved in the plaintiff's favor before the court may address the merits of the plaintiff's claims. 523 U.S. 83, 88-89 (1998). *fn5 In so holding, the Court disapproved of the practice of "assuming jurisdiction for the purpose of deciding the merits," id. at 94 (internal quotations omitted), which had previously been employed by many circuit courts, including our own, in situations where the jurisdictional issues in a case were "difficult and far-reaching," the merits were "clearly in favor of one party," and the assumption of jurisdiction would "not do injustice to the parties by determining the outcome of the case," see Browning-Ferris Indus. v. Muszynski, 899 F.2d 151, 154-59 (2d Cir. 1990) (quoted material at 159).”
Federal courts must determine at the threshold of every case whether "a party has a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy." Sierra Club v. Morton, 405 U.S. 727, 731 (1972); see also Warth v. Seldin, 422 U.S. 490, 498 (1975); United States v. Cambio Exacto, S.A., 166 F.3d 522, 526 (2d Cir. 1999).
The District Court ruled in its Memorandum and Order dated January 9, 2002, that Plaintiff had standing before reaching the State Defendants’ comity argument consistent with the principle stated above by the Second Circuit. Although plaintiff questioned the District Court’s decision as it related to standing in the Motion for Reconsideration, because of a factual error, in that the court stated I was “an owner of a convenience store. . .” The court in its Order dated June 11, 2002, denied my motion for reconsideration and in doing so stated “This Court considered all plaintiff’s arguments, including his asserted grounds of standing. In any event, inasmuch as plaintiff’s action was dismissed on the ground” of comity the courts discussion containing the factual error regarding plaintiff’s standing is dicta and provided no basis for his motion for reconsideration. Therefore, the District Court impliedly ruled that plaintiff has standing and since these orders are final the State Defendants are collaterally estopped from asserting this as a defense in this action.
Wherefore, Plaintiff respectfully prays for an order of this court denying the State Defendants’ motion in its entirety and awarding Plaintiff costs pursuant to CPLR §§ 8106, 8202 in a sum of up to $100.00.
DATED: August 5, 2002
Buffalo, New York
Yours,etc.,
_______________________________
Daniel T. Warren
Plaintiff, Pro Se
836 Indian Church Road
West Seneca, New York 14224-1235
TO: Peter B. Sullivan, Esq.
Office of the Attorney General
107 Delaware Avenue
Buffalo, New York 14202
CC: Andrew B. Eisenberg, Esq.
Erie County Department of Law
69 Delaware Ave. – Suite 300
Buffalo, New York 14202