Shermar, Inc. v State of New York

[*1] Shermar, Inc. v State of New York 2006 NY Slip Op 50770(U) [11 Misc 3d 1088(A)] Decided on April 3, 2006 Ct Cl Hard, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 3, 2006
Ct Cl

Shermar, Inc., Claimant,

against

State of New York, Defendant.



111664



Ann W. Manion, Esq. Defendant's attorney: Hon. Eliot Spitzer, NYS Attorney General By: Joel L. Marmelstein, Assistant Attorney General, Of Counsel

Judith A. Hard, J.

In November 2005, claimant filed this action seeking payment for $71,000.00 in alleged overcharges for workers' compensation insurance premiums. Claimant alleges that it obtained workers' compensation insurance through the SIF. After an audit conducted by the SIF, it billed claimant for premiums for certain individuals whom claimant characterizes as independent contractors. Claimant now brings this action alleging it overpaid and continues to be billed for these individuals, and seeking reimbursement.

It is well settled that when an action concerns the review of an adverse State agency determination, and recovery of damages is incidental to the primary claim, a CPLR article 78 proceeding in Supreme Court is the proper forum for relief (see Matter of Gross v Perales, 72 NY2d 231 [1988]. When a party seeks only monetary relief against the State, the proper forum for such an action is the Court of Claims (see id.). In keeping with this framework, the Third Department noted that "[w]hen the damage allegedly sustained arises from a breach of the contract by a public official or governmental body, then the claim must be resolved through the application of the traditional rules of contract law" (Safety Group No. 194-New York State Sheet Metal Roofing & A.C. Contrs. Asson. v State of New York, 298 AD2d 785, 786 [3d Dept 2002], quoting Abiele Contr v New York City School Constr. Auth., 91NY2d 1, 7-8 [1997]). "However, when a party seeks to annul an agency's determination because it was arbitrary and capricious, then a CPLR article 78 proceeding is appropriate" (id.).

Here, claimant clearly avers that SIF's determination, requiring premium payments for independent contractors/owner-operators, was erroneous. It does not allege that a breach of contract has occurred. As such, claimant is required to seek redress through a CPLR article 78 proceeding.

Accordingly, defendant's motion M-71072 is granted and the claim is dismissed.

Dated: April 3, 2006