Executive Comm. of Group 472 of State Ins. Fund v State Ins. Fund
Annotate this CaseDecided on November 2, 2005
Supreme Court, New York County
Executive Committee of Group 472 of the State Insurance Fund, G.C.G. RISK MANAGEMENT INC., as Group Manager of Group 472 of the State Insurance Fund and TAV DISTRIBUTORS, INC., Petitioners,
against
State Insurance Fund and the Department of Labor of the State of New York, Respondents.
604286/04
Charles J. Tejada, J.
Petitioners brings this Civil Practice Law and Rules (CPLR) Article 78 proceeding seeking "(a) judgement that the FUND's actions relating to the removal of TAV DISTRIBUTORS, INC. (TAV) from Group 472 are ultra vires, are unauthorized, illegal, arbitrary and capricious; (b) judgement decreeing that FUND's purported revisions of the rules applicable to safety groups of the STATE INSURANCE FUND and to Group 472 were not in effect at the time of the removal of TAV; ( c) judgement decreeing that such purported revisions are not presently in effect; (d) an Order directing the FUND to comply with applicable rules as well as with Title 12 of the NYCRR in making or revising rules; and, (e) an order and judgement directing the FUND to (I) reinstate TAV to membership in Safety Group 472, nunc pro tunc without lapse; (ii) refund to TAV all moneys paid by it in excess of what it would have paid had it been a member of Group 472 continuously and without lapse; and, (iii) restoring to TAV its rights to all dividends which it would have been entitled if it had been a member of the Group continuously; and (f) granting all other and further relief as to this Court may be [sic] seem just and proper."
Respondents oppose the motion and seeks CPLR 3211(a)(7) relief as to respondent DEPARTMENT OF LABOR (DOL) for failure to state a cause of action against the DOL.
CPLR 3211(a)(7) provides that "[a] party may move for judgment dismissing one or more causes of action asserted against him on the grounds that . . . the pleadings fail to state a cause of action." Under this rule, a complaint or article 78 petition that is "devoid of any factual allegation of the underlying wrongful conduct for which the plaintiff seeks to hold defendant vicariously liable" is subject to dismissal. Kamhi v. Tay, 244 AD2d 266 (1st Dept 1997); see [*2]also, Sawh v. Schoen, et al., 215 Ad2d 291 (1st Dept 1995). Applying these standards to the cause of action against DOL, the petition is dismissed pursuant to CPLR 3211(a)(7).
Respondents further argue that the Respondent STATE INSURANCE FUND (SIF) has the authority to remove safety group members, that the SIF's removal of TAV from the safety group was rational and was neither arbitrary, capricious nor an abuse of discretion, that the revised regulations and group rules are in effect, and, that petitioners lack standing to assert the causes of action in the instant petition.
The "function of the Court upon an application for relief under CPLR Article 78 is to determine, upon the proof before the administrative agency, whether the determination had a rational basis in the record or was arbitrary and capricious." Fanelli v. New York City Conciliation and Appeals Bd., 58 NY2d 952, 90 AD2d 756, 447 NE2d 82, 460 NYS2d 534 (1983).
It has long been settled that where "the interpretation of a statute or its application involves knowledge and understanding of underlying operations practice or entails evaluation of factual data and inferences to be drawn therefrom, the courts regularly defer to the governmental agency charged with the responsibility for administration of the statute. If its interpretation is not irrational or unreasonable, it will be upheld." Matter of Ansonia Resident Ass'n v. New York State Division of Housing & Community Renewal, 75 NY2d 206, 213 (1989). See also, Schaper v. New York State Division of Housing and Community Renewal, 289 AD2d 260.
As to petitioner's claim that SIF acted ultra vires when it removed TAV from Safety Group 472, not only is there nothing in any statute or any other authority that prohibits SIF from removing a safety group member, but New York Codes Rule and Regulations (NYCRR) § 451.7 grants authority to the Executive Committee of a safety group to exclude any member from continued membership "subject to the approval of the State [Insurance] Fund." Further NYCRR § 451.7 provides the State Insurance Fund with the exclusive power to remove, terminate or discontinue the membership of any member of a group, "if in the opinion of the State Insurance Fund management, after consultation with the group manager and/or the Executive Committee, continued membership in the group would not serve the basic objectives for which the group was formed."
Additionally, NYCRR § 451.9 provides SIF with the power to regulate and establish safety groups and states, inter alia, that "(t)he management of the State Insurance Fund is authorized and directed to formulate such uniform regulations as may be necessary to assure the establishment and conduct of safety groups pursuant to this Part." As such, SIF has the authority and power to create, manage, direct and approve or disapprove membership in a safety groups.
Moreover, the record establishes that the initial decision to remove TAV was decided in August, 2003, after the underwriting personnel determined that TAV's poor loss experience records created a detrimental effect on the other members of Safety Group 472. Nevertheless and despite their poor loss record, SIF allowed TAV to remain a safety group member for a one year probationary period and under certain agreed upon conditions. At the end of the one year period, in 2004, SIF, once again, determined through their underwriting personnel, and after consultation with the group manager, that TAV's continued membership in Safety Group 472 would not serve the basic objectives for which the group was formed as they were unable to comply with the conditions set forth in 2003. [*3]
Further, the manner in which an agency like SIF implements its policies and procedures as they apply retroactively to proceedings pending before them is a matter that the Courts have consistently upheld so long as it was made for valid reasons and are not arbitrary or discriminatory." Matter of Charles A. Field Delivery Service, 66 NY2d 516, 518,519; see also Matter of Michael T. Clements v. DHCR, Index No. 26883/02, Sup. Ct., Qns Cty, (Glover, J.).
Based on the foregoing, this Court finds that SIF's determination to remove TAV from Safety Group 472 was made for valid reasons and was neither arbitrary or capricious, nor in violation of applicable law. Pell v. Board of Ed. of Union Free School Dist., 34 NY2d 222 (1974); see also Matter of Korein v. Conciliation and Appeals Bd of the City of New York, 443 NE2d 473, 457 NYS2d 225 (1982); Ansonia Residents Ass'n v. New York State Div. of Housing and Community Renewal, 75 NY2d 206, 551 NE2d 72, 551 NYS2d 871. Furthermore, the actions of SIF in removing TAV from Safety Group 472 were acts fairly and reasonably within the grant of power constitutionally conferred by the legislature upon SIF. Consequently, SIF did not act ultra vires in removing TAV. All other claims by petitioners are denied.
This constitutes the decision, opinion and order of this Court.
DATED: November 2, 2005__________________________
J.S.C.
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