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MADLIN v. ORANGE & ROCKLAND UTILS. CORP.

October 14, 1998

HOWARD MADLIN and MARION MADLIN, and those similarly situated, Plaintiffs, against ORANGE AND ROCKLAND UTILITIES CORPORATION, Defendant.


The opinion of the court was delivered by: PARKER

MEMORANDUM DECISION AND ORDER

 BARRINGTON D. PARKER, JR., U.S.D.J.

 Plaintiffs Howard and Marion Madlin and those purportedly similarly situated claim pursuant to 42 U.S.C. § 1983 that defendant Orange and Rockland Utilities Corporation ("O&R") failed properly to report to state taxing authorities its special franchise property and that this failure resulted in higher local taxes for them. As relief, they seek an order from this Court directing O&R to pay alleged past due taxes to various municipalities. O&R moves under Fed. R. Civ. P. Rules 12(b)(1) and 12(b)(6) to dismiss the complaint. The motion is granted.

 BACKGROUND

 Since 1985, Howard and Marion Madlin have resided and owned real property in the Village of Montebello ("Village"), located in the Town of Ramapo ("Town"), Rockland County, New York. The Village was incorporated in 1985. The property is located within the boundaries of the Ramapo Central School District ("Ramapo Central"). O&R is a New York corporation having a principal place of business in the Village of Spring Valley in Ramapo. O&R is a public utility that provides gas and electricity to customers within Orange, Rockland and Sullivan Counties. As a regulated utility, O&R is required to file reports on its operations and properties to the New York State Public Service Commission and the New York State Office of Real Property Services ("ORPS"). O&R pays real estate taxes on utility property that it owns or controls, including property that is located on right of ways in the Village. This property is known as special franchise property.

 The plaintiffs allege that O&R did not file all reports and information required by ORPS and Article 6 of the Real Property Tax Law ("RPTL"), and thus underpaid real estate taxes on the special franchise property to the Village for assessment years 1988 through 1995, and to the Town, Ramapo Central and Rockland County for assessment years 1987 through 1995.

 Section 604 of the RPTL requires a special franchise property owner to provide to ORPS the following information:

 
[A] full description of such special franchise, a copy of the special law, grant, ordinance or contract under which the same is held, or if acquired under a general law, a reference thereto, and a statement of any condition, obligation or burden imposed upon such special franchise, or under which the same is held, together with any other information relating to the value thereof which may be required by the state board. (2) The state board may require from any special franchise owner an annual report and, from time to time, a further or supplemental report, containing such information as it may specify.

 RPTL § 604(1)(2).

 The plaintiffs claim that Article 6 delegates to O&R the responsibility of providing the data and information necessary for the correct assessment of its special franchise property. Plaintiffs further claim the ORPS staff is limited and that it does not have the resources to verify the accuracy and completeness of the O&R special assessment reports, and thus O&R, by omitting information or filing incomplete information, underpaid its real estate taxes. Specifically, plaintiffs claim that O&R's failure properly to report and pay appropriate assessments has resulted in significant financial harm for them and other residents of the Village, the Town, Ramapo Central and Rockland County in the form of higher taxes. By saddling them with higher taxes, the plaintiffs contend that O&R deprived them of property without due process of law in violation of the Fourteenth Amendment of the United States Constitution.

 The plaintiffs believe that for each year the franchise tax was omitted, $ 350,000 should have reached, but did not, the municipal coffers, and, as a consequence, the residents incurred $ 373,337 in extra taxes. As relief, plaintiffs seek to have their future tax obligations to the affected municipalities reduced by the amount of taxes improperly avoided by O&R.

 DISCUSSION

 A. Standard of Review

 In considering a motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, the Court must accept as true all the allegations contained in the complaint and construe them in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir. 1995); Wolff v. City of New York Financial Servs. Agency, 939 F. Supp. 258, 263 (S.D.N.Y. 1996). A court must dismiss an action pursuant to 12(b)(1) sua sponte or on motion if it lacks subject matter jurisdiction and pursuant to 12(b)(6) only if "'it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994)(quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). The court may consider only 1) the facts stated on the face of the complaint, 2) documents appended to the complaint, 3) ...


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