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Keyspan Generation, LLC v. Nassau County

Supreme Court of New York, Second Department

March 19, 2014

Keyspan Generation, LLC, et al., respondents,
v.
Nassau County, et al., appellants. (Action No. 1) Long Island Lighting Company, respondent,
v.
Board of Assessors, et al., appellants. (Action No. 2) Index Nos. 11695/97, 11440/99

Rivkin Radler LLP, Uniondale, N.Y. (William M. Savino, Stephen J. Smirti, Jr., M. Paul Gorfinkel, and Frank Misiti of counsel), and Carnell T. Foskey, County Attorney, Mineola, N.Y. (Lisa LoCurto of counsel), for appellants (one brief filed).

Cullen and Dykman LLP, Garden City, N.Y. (Karen I. Levin, Jennifer A. McLaughlin, and Hayley M. Kelch of counsel), for respondents.

WILLIAM F. MASTRO, J.P., MARK C. DILLON, JOHN M. LEVENTHAL, COLLEEN D. DUFFY, JJ.

DECISION & ORDER

In two related actions, inter alia, for judgments declaring that the imposition of special ad valorem taxes for garbage and refuse collection services against certain "mass" property owned by the plaintiffs is illegal and void, the defendants appeal (1), as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Woodard, J.), entered October 24, 2011, as denied their motion pursuant to CPLR 3211(a) to dismiss the complaint in Action No. 1, and granted those branches of the plaintiffs' cross motion in Action No. 2 which were for summary judgment declaring that the imposition of the taxes at issue in that action is illegal and void and that the defendants are liable for refunds, if any, due to the plaintiffs, and to impose sanctions against the defendants, and directed a hearing on the amount of any such refunds and sanctions, and (2) from an order of the same court entered June 7, 2012, which, in effect, granted those branches of the plaintiffs' cross motion in Action No. 1 which were for summary judgment declaring that the imposition of the taxes at issue in that action is illegal and void and that the defendants are liable for any refunds due to the plaintiffs.

ORDERED that on the Court's own motion, the notice of appeal from so much of the order entered October 24, 2011, as directed a hearing on the amount of any refunds and sanctions that might be due to the plaintiffs is deemed to be an application for leave to appeal from that portion of the order, and leave to appeal is granted (see CPLR 5701[c]); and it is further,

ORDERED that the order entered October 24, 2011, is modified, on the facts and in the exercise of discretion, (1) by deleting the provision thereof granting that branch of the plaintiffs' cross motion in Action No. 2 which was to impose sanctions against the defendants, and substituting therefor a provision denying that branch of the cross motion, and (2) by deleting the provision thereof directing a hearing on the amount of sanctions that might be due to the plaintiffs; as so modified, the order entered October 24, 2011, is affirmed insofar as appealed from; and it is further,

ORDERED that the order entered June 7, 2012, is affirmed; and it is further,

ORDERED that the matter is remitted to the Supreme Court, Nassau County, for further proceedings, including the entry of judgments, inter alia, declaring that the defendants' imposition of special ad valorem taxes for garbage and refuse collection services against the subject properties is illegal and void; and it is further,

ORDERED that one bill of costs is awarded to the plaintiffs.

These appeals concern "mass property" owned by the plaintiffs or their successors in interest. In the context of these appeals, the term "mass property" refers to equipment such as lines, wires, cables, poles, supports, transformers, conductors, and enclosures for electrical conductors, which constitute a type of real property that is not amenable to human occupation and has been erected on public and private real property owned by persons or entities other than the plaintiffs (see New York Tel. Co. v Supervisor of Town of Oyster Bay, 4 N.Y.3d 387, 390). In 1997, Long Island Lighting Company (hereinafter LILCO) commenced an action challenging the legality of the imposition of special ad valorem taxes relating to garbage and refuse collection services for its mass property located in Nassau County (hereinafter Action No. 2). In 1999, KeySpan Generation LLC, KeySpan Corporate Services LLC, and KeySpan Gas East Corporation, doing business as Brooklyn Union of Long Island (hereinafter collectively the KeySpan plaintiffs), commenced an action seeking the same relief (hereinafter Action No. 1). The KeySpan plaintiffs later acquired portions of LILCO's mass property and operations (see Matter of Town of Islip v Long Is. Power Auth., 301 A.D.2d 1, 4-6) and, with it, the right to prosecute Action No. 2. The two actions were both asserted against the County of Nassau and various ancillary bodies of the County (hereinafter collectively the County defendants), and the actions were joined for trial. In the complaints, both LILCO and the KeySpan plaintiffs (hereinafter collectively the plaintiffs) sought declarations that the imposition of special ad valorem taxes on mass property is illegal and void and that, pursuant to former Nassau County Administrative Code (hereinafter NCAC) § 6-26.0(b)(3)(c), which is popularly known as "the County Guaranty, " they were entitled to refunds of the taxes they paid in connection with the levies on the mass property. The County Guaranty provides that "[n]otwithstanding any provisions of this chapter, or any other general or special law to the contrary, any deficiency existing or hereafter arising from a decrease in an assessment or tax under subdivisions one, four and seven of section 6-24.0, or sections 6-12.0 or 5-72.0 of the code or by reason of exemption or reductions of assessments shall be a county charge" (NCAC § 6-26.0[b][3][c]).

In 2005, while these actions were pending, the Court of Appeals, in New York Tel. Co. v Supervisor of Town of Oyster Bay (4 N.Y.3d 387), determined that, pursuant to RPTL 102(14), the imposition of special ad valorem taxes for garbage and refuse collection on utility mass property, which, by its nature, was incapable of producing garbage, was illegal and void (id. at 392-395).

In 2009, the County defendants moved pursuant to CPLR 3211(a)(7) to dismiss the complaint in Action No. 1. The County defendants argued that refunds of special ad valorem taxes did not fall within the scope of the County Guaranty. The County defendants further contended that, even if the County Guaranty did apply, pursuant to Matter of Hellerstein v Assessor of Town of Islip (37 N.Y.2d 1) and its progeny, the Supreme Court should decline to award the plaintiffs the refunds they sought on the ground that to do so would result in "fiscal chaos" due to the County defendants' dire financial distress. The plaintiffs cross-moved for summary judgment in both actions declaring that the imposition of special ad valorem taxes on their mass property is illegal and void and awarding them refunds as well as sanctions on the ground that the County defendants' arguments in support of their motion were frivolous.

In an order entered October 24, 2011, the Supreme Court, inter alia, denied the County defendants' motion to dismiss the complaint in Action No. 1, and granted those branches of the plaintiffs' cross motion which were for summary judgment in Action No. 2 declaring that the imposition of the subject taxes is illegal and void and that the County defendants were liable for any refunds, and for an award of sanctions. In an order entered June 7, 2012, the Supreme Court, in effect, granted those branches of the plaintiffs' cross motion which were for summary judgment in Action No. 1 declaring that the imposition of the subject taxes is invalid and that the County defendants were liable for any refunds.

Although the County defendants contend that the language of the County Guaranty does not encompass refunds of special ad valorem taxes, in New York Tel. Co. v Supervisor of Town of N. Hempstead (77 A.D.3d 121), this Court stated that the question before us was "whether Nassau County Administrative Code § 6-26.0(b)(3)(c) (L 1939, chs 272, 701-709, as amended), known as the County Guaranty, ' requires the County of Nassau... rather than the Town of North Hempstead and several special districts located in the Town, to refund certain special ad valorem levies judicially determined to be invalidly imposed upon the plaintiff's real property" (id. at 122). In that case, we ...


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