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In re Dannible & McKee, LLP

Supreme Court of New York, Third Department

October 17, 2013

In the Matter of DANNIBLE & McKEE, LLP, Appellant,
v.
NEW YORK DEPARTMENT OF ECONOMIC DEVELOPMENT, Also Known as EMPIRE STATE DEVELOPMENT, et al., Respondents.

Calendar Date: September 11, 2013

Bond, Schoeneck & King, PLLC, Syracuse (J.P. Wright of counsel), for appellant.

Eric T. Schneiderman, Attorney General, Albany (Owen W. Demuth of counsel), for respondents.

Before: Peters, P.J., Rose, Lahtinen and Egan Jr., JJ.

MEMORANDUM AND ORDER

Egan Jr., J.

Appeal from a judgment of the Supreme Court (McGrath, J.), entered November 23, 2011 in Albany County, which, among other things, partially dismissed petitioner's application, in a combined proceeding pursuant to CPLR article 78 and action for declaratory judgment, to, among other things, declare the retroactive decertification of petitioner as an empire zone business by respondent Empire Zone Designation Board to be unconstitutional.

Petitioner is an accounting firm in Onondaga County that obtained certification as an empire zone business enterprise in 2002. Following legislative amendments to the New York State Empire Zones Act (see General Municipal Law § 955 et seq.) in April 2009 (see L 2009, ch 57, part S-1, § 3), [1] petitioner was advised by respondent Department of Economic Development that it was being decertified as an empire zone business enterprise pursuant to General Municipal Law § 959 (a) (v) (5) and 5 NYCRR 11.9 (c) (1) effective January 1, 2008 [2]. Petitioner's subsequent administrative appeal to respondent Empire Zone Designation Board proved to be unsuccessful, prompting it to commence this combined CPLR article 78 proceeding and action for declaratory judgment seeking, among other things, to annul the Board's determination and request a declaration that the retroactive application of the 2009 statutory amendments was unconstitutional. Supreme Court dismissed petitioner's declaratory judgment action, reasoning that an adequate remedy existed within the context of the CPLR article 78 proceeding, but annulled the administrative determination and remitted the matter to the Board for reconsideration [3]. This appeal by petitioner ensued.

Although a CPLR article 78 proceeding indeed is the appropriate procedural device for determining whether a statute "has been applied in an unconstitutional manner" in a particular instance (Matter of R & G Outfitters v Bouchard, 101 A.D.2d 642, 643 [1984] [emphasis added]), "[a] declaratory judgment action is the proper vehicle for challenging the [general] constitutionality of a statute" (Matter of Velez v DiBella, 77 A.D.3d 670, 671 [2010]). Inasmuch as petitioner is contesting the overall constitutionality of the April 2009 amendments to the Empire Zones Act, Supreme Court erred in dismissing the declaratory judgment action.

Turning to the merits, as respondents readily acknowledge, the Court of Appeals recently concluded that retroactive application of the April 2009 amendments violates the due process rights of Empire Zone Program participants and is, therefore, unconstitutional (see James Sq. Assoc. LP v Mullen, 21 N.Y.3d 233, 248-250 [2013]). Accordingly, petitioner is entitled to a declaration that revocation of its Empire Zone Program certification cannot be made retroactive to January 1, 2008.

Peters, P.J., Rose and Lahtinen, JJ., concur.

ORDERED that the judgment is modified, on the law, without costs, by reversing so much thereof as dismissed the action for declaratory judgment; petition granted to the extent that it is declared that the April 2009 amendments to General Municipal Law § 959 may not be applied retroactively to January 1, 2008; and, as so modified, affirmed.


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