Matter of President Park Inc./Eiges v City of NY Dept. of Envtl. Protection

[*1] Matter of President Park Inc./Eiges v City of NY Dept. of Envtl. Protection 2005 NY Slip Op 51571(U) [9 Misc 3d 1116(A)] Decided on October 3, 2005 Supreme Court, Kings County Lewis, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on October 3, 2005
Supreme Court, Kings County

In the Matter of the Application of President Park Inc./Eiges and Eiges Management Co., Inc., Petitioners,

against

City of New York Department of Environmental Protection, NEW YORK CITY WATER BOARD and THE CITY OF NEW YORK, Respondents.



26302/04

Yvonne Lewis, J.

The petitioner has moved this court for a judgment, pursuant to CPLR Article 78, setting

aside the final determination of the respondents and granting its application to cancel all water meter surcharges and late payments imposed as a result of its alleged failure to have met a July 1, 2000 meter installation deadline, with costs and disbursements of this proceeding. The petitioner is the owner/manager of the real property located at 520 Crown Street, Brooklyn, NY (Block 1300 and Lot 21). Pursuant to the rules and regulations of the Department of Environmental Protection (DEP), property owners were to submit a request by telephone, letter, or the web to either have a meter installed by the DEP or to have their own plumber install a meter and then request reimbursement from DEP by July 1, 2000 in order to avoid water surcharges after said date. On or before June 13, 2000, the DEP advised the petitioner by letter that ". . .any owner could have their (sic) own plumber install a water meter regardless of any request to the DEP for a meter in order to have metered billing sooner." The petitioner by its June 13, 2000 letter, stamped received by the DEP on June 20, 2000, requested that the DEP do the installation, which it failed to do before the deadline. Nevertheless, ". . .the DEP imposed surcharges and late fees despite petitioner's timely request for the installation of a meter."

By its letter of August 17, 2001, the DEP denied petitioner's request for a meter installation on the grounds that the petitioner had "either refused a meter installation or refused installation by DEP contractors." After requesting certain documents and attempting to resolve the matter by letter in October and November 2001, the petitioner received DEP's April 29, 2002

letter which acknowledged receipt of his request for meter installation prior to the deadline and advised that "if this property is included in those letters, then the surcharge should be canceled." The petitioner requested by a May 8, 2002 letter that the DEP cancel its surcharges, whereupon he was directed to treat his request as an appeal to be re-filed with the DEP, which the petitioner [*2]did by a May 9, 2002 letter to the Deputy Commissioner of the DEP. On September 23, 2002, the DEP issued a letter denying the petitioner's claim ". . .by declaring it a final appeal. . .[which] should have been made to the Water Board within 30 days of the DEP's letter[,] dated August 17, 2001." The petitioner appealed its water billing to the Water Board on May 9, 2003. On April 20, 2004, the Water Board denied the appeal ". . .because the petitioner had had a meter installed by its own plumber after June 30, 2000, which negated petitioner's request for a meter installation prior to June 30, 2000." The petitioner notes that it did not have a meter installed until it had been billed for surcharges as a result of the respondents' failure to have installed a meter on the premises, and that the Board's decision was therefore arbitrary and capricious. In short, the petitioner stresses that it would not have had a meter installed if the DEP had complied with its timely request therefor, and that it ". . .should not be penalized for having a meter installed on the premises by its own plumber to conserve water and to avoid additional surcharges."

The respondents, the DEP, The New York City Water Board (Water Board), and the City of New York (City), oppose the relief requested by the petitioner. They note that pursuant to NY Public Authorities Law §1045-j(9), "neither the public service commission nor any state agency shall have any. . .power over the regulation of the fees, rates or other charges established, fixed or revised by the Water Board. . ." The DEP's bureau of customer service acts on behalf of the Water Board for billing and collection services during the upcoming fiscal year, which commences July 1 for the City. As per the July 1, 2000 and 2001 rate schedules, the DEP's

Commissioner was authorized to install or cause to be installed meters on all premises connected to the water supply. The latter rate schedule also provided for the imposition of an annual surcharge equal to one-hundred (100%) percent of either the last annual un-metered water charge or the last annualized meter charge if a customer failed to install a meter or remote meter reading device or refused to permit the installation, repair, replacement or inspection of either such meter, remote meter reading device, or a water consuming fixture. The surcharge would commence from July 1, 2000 in the case of a non-installation or from the date of first refusal until the installation, repair, replacement, or inspection occurred. According to the respondents this case arose as a result of the petitioner's failure to timely install a water meter. However, the facts below argued also suggest an issue with regards to inspection of the premises.

A sample copy of the DEP's March 2000 "Final Notice Regarding Water Meters" read in pertinent part that "[y]ou will not receive a surcharge if you request a meter installation (or install one with your own plumber. . .) by [April 14, 2000" which was extended to] June 30, 2000. By letter, dated February 7, 2000, the petitioner's agent, New York Water Management Co., sent the DEP notice of its intent to install a meter under the reimbursable metering program in connection with the petitioner's property, which it failed to do by the June 30, 2000 deadline. Instead, shortly before said expiration date, the petitioner's agent requested that the DEP do the installation. On July 1, 2000, the subject premises was assessed a surcharge on the water and wastewater account. On May 30, 2001, DEP's agent, Varsity, was denied access to the petitioner's premises for an inspection despite having received permission therefor on the prior day. On May 9, 2003, a final administrative appeal was filed by the petitioner after numerous unsuccessful attempts to have the surcharge lifted. On or about July 2, 2003, the DEP issued a meter installation permit to the petitioner which allowed for the install and reimbursement option. On July 15, 2003, the meter was installed by the petitioner. "DEP cancelled the [*3]surcharge effective July 18, 2003, the day the permit was returned to the DEP, in accordance with the Water Board Rate Schedule, effective July 1, 2003. . . .For the period between July 1, 2000 and July 18, 2003, the Petitioner was surcharged $36,534.09." The respondents ultimately denied the petitioner's request for vacatur of the surcharge on two rationales; to wit, that "[w]hen the plumber applied for a permit to install the meter, any meter installation request to DEP was negated and the work order removed from DEP's system" and "[s]ince the permit negated the work order request and [the] client's plumber failed to install the meter by the June 30, 2000 deadline. . .the imposition of the surcharge was warranted in this case."

The DEP deems its decision rational and reasonable on the grounds that 1. extensive warnings (via letter, advertisement, etc.) had been provided in the years leading up to the June 30th deadline; 2. an owner had mutually exclusive options to avoid the surcharge: either request that the DEP install the meter by June 30, 2000 or the owner should have had the meter installed by said date and requested reimbursement; 3. only when it became clear that the petitioner could not meet the deadline for self-installation as it had requested [2/7/00], did it at the "eleventh hour" [6/13/00] request that DEP perform the installation; 4. its June 30, 2000 deadline would have been undermined if after being advised by the petitioner [2/7/00] that it would do its own installation, the petitioner was allowed to request [6/13/00] that DEP install a meter before the deadline [6/30/00] to avoid a surcharge, but then the petitioner was granted permission after the deadline [7/2/03] to do its own installation after having refused inspection by the DEP [5/30/01]; 5. a meter installed under the reimbursement option had to be in place by June 30, 2000 or a surcharge was applicable; 6. the availability of the reimbursement option does not constitute a waiver of surcharge imposition; and, 7. the only six instances in which surcharges have been cancelled are (i) when an owner was given a 45 day extension to perform necessary repairs to permit meter installation, (ii) when an owner had requested that DEP install the meter prior to the 6/30/00 deadline and is awaiting compliance, (iii) two instances when DEP staffers erred, and (iv) twice where meters were installed by DEP contractors, not through the reimbursement option. Finally, the respondents assert that the Water Board's interpretation of its own regulation is rational and had a reasonable basis in law, and hence its determination is entitled to deference by this court (Gaines v. NYS Div. of Housing & Community Renewal, 90 NY2d 545 (1997); Lower Manhattan Loft Tenants v. New York City Loft Board, 104 AD2d 224 (1984); and Matter of Herzog v. Joy, 74 AD2d 372).

The petitioner, in reply to the foregoing, cites five concordant court holdings to the effect that ". . .the Water Board's upholding of surcharges by determining that the owner's subsequent

installation of a meter had voided the owner's timely request for a meter, was arbitrary and

capricious or irrational and contrary to law." (Application of 770 Owners Corp./Allstate v. The City of New York Department of Environmental Protection, et al, J. Lewis Douglass, Supreme Court, Kings County, Index No. 23811/04; and Application of 222 Management Corp./Katz Realty Management v. The City of New York Department of Environmental Protection, et al, Index No. 23545/04, Application of K.P. Realty, LLC v. The City of New York Department of Environmental Protection, Index No. 24645/04, and Application of 1773 E. 12th Street, LLC v. The City of New York Department of Environmental Protection, Index No. 26616/04, all by J. Herbert Kramer, Supreme Court, Kings County (2004 WL 2952849, 2004 NY Slip Op. 51647 [*4][U]); and, Application of S.P. Lenox Realty, LLC/Sheldrake Management v. The City of New York Department of Environmental Protection, et al, J. Martin Solomon, Supreme Court, Kings County, Index No. 26616/04). In addition, the petitioner asserts that according to a 1999 report by Charles Sturken, the Chief of Staff to the DEP's Commissioner, ". . .the surcharges could be avoided simply by sending a postcard to DEP by July 1, 2000 requesting that it install a meter." Furthermore, the petitioner asserts that there is no basis in law to justify that ". . .an owner's request [for] or installation of a meter was mutually exclusive, that is, irrevocable." Furthermore, if the respondents had intended the options to be such, they could have clearly stated that either election would be irrevocable as in the case of the Water Board's rule regarding an owner's election for metered billing. Insofar as the respondents' reliance that the surcharges are proper as per the Application of 77 Realty, LLC, et al v. New York City Water Board, et al, J. E. H. Lehner, Supreme Court, New York County, Index No. 104802/03, it is to be noted that the case dealt with the failure to have acted on either option prior to the deadline date and hence is herein inapplicable. The respondents' retort to the foregoing was to cite the ruling in the Application of 512-514 Realty, LLC v. The City of New York Department of Environmental Protection, et al, J. Michael D. Stallman, Supreme Court, New York county, Index No. 111243/04, wherein the court held that ". . .the Water Board correctly noted that an Owner had mutually exclusive options to avoid the surcharge: either the owner had to submit to DEP a request for DEP to install a meter by

June 30, 2000, or the owner had to have had installed the water meter by that time." That court

went on to conclude that "[t]he Water Board rationally found that petitioner had to chose one option and that when the plumber applied for a permit to install the meter, any meter installation request to DEP was negated and the work order removed from DEP's system. By choosing this option, the owner invoked the rules governing reimbursable meter installation by a private plumber and was then responsible for having a meter installed by the June 30, 2000 deadline to avoid the imposition of a surcharge. . . .petitioner did not install a water meter by the June 30, 2000 deadline and therefore it was not arbitrary, capricious or contrary to law for DEP to impose a surcharge upon petitioner and for the Water Board to uphold the surcharge." This court disagrees with this holding and finds no basis therefor in law or equity.

The level of review herein required is the arbitrary and capricious standard. provided by CPLR §7803 (3). "A court may remit an administrative determination to a board for further proceeding, including reconsideration." (See Matter of 50 Plaza Co. v. New York City Conciliation & Appeals Board, 104 AD2d 886). However, "it is well settled that the Court's power to review an administrative action is limited to whether the determination was warranted in the record, has a reasonable basis in law and is neither arbitrary nor capricious." (See Matter of Pell v. Board of Education, 34 NY2d 222, 356 NYS2d 833; Matter of Colton v. Berman, 21 NY2d 322, 287 NYS2d 647). Hence, for this court to set aside the final determination of the respondents and cancel all water meter surcharges and late payments imposed as a result of the petitioner's alleged failure to have met a July 1, 2000 meter installation deadline, it must find that said decision was arbitrary and capricious, i.e., that it was without reason, unsupported by substantial evidence, or erroneous as a matter of law.

In the game of baseball, whether the batter bunts or lets it rip, the key is that he hits the ball before striking out and makes it to base before being tagged out. That's the rule. Here, the [*5]guidelines established by the DEP likewise allowed for a switch up; i.e., an owner could either self install or make a request that DEP do the installation by June 30, 2000 in order to avoid a surcharge. In fact, the latter option had an earlier termination date of April 14, 2000 which was extended to coincide with the later deadline. Consequently, the respondents' urging that this court now categorize the petitioner's switch from self to DEP installation at [what they term to have been] the "eleventh hour" as an impermissible attempt to profit from a loophole cannot prevail. Loopholes are legal. In any event, the petitioner simply availed itself of the DEP guidelines which contained no exclusivity of election provision. To impose a surcharge on that amended basis would indeed constitute an ultra vires act to be set aside (See the Matter of Management Corp./Katz Realty Management v. The City of New York Department of Environmental Protection, et al, supra, (2004 WL 2952849, 2004 NY Slip Op. 51647 [U]). Accordingly, inasmuch as the standing rate schedule did not provide for the imposition of a surcharge in any instance where DEP had been requested to do the installation by June 30, 2000 or a meter had been self installed by said date, the surcharges herein imposed would clearly have to be deemed impermissible and unlawful (See Matter of 770 Owners Corp./Allstate Realty Assoc. v. City of New York Dept. of Envtl. Protection, 2005 NY Slip Op. 06121). That is obviously the case with the time period from June 30, 2000 to May 29, 2001. However, inasmuch as there is an assertion of a May 30, 2001 inspection refusal by the petitioners and the events ensuing therefrom have not been elaborated upon by the parties, this court finds that the matter must be remitted to the Board for a hearing solely to determine if surcharges are warranted as a result of said refusal and, if so, for what length of time. This constitutes the decision and order of this Court.

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