Matter of Broadway Collision & Towing, Inc. v Mintz
2012 NY Slip Op 30930(U)
April 4, 2012
Sup Ct, New York County
Docket Number: 111165/11
Judge: Saliann Scarpulla
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SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY
s ' ~ M P U ~
MOTION SEQ. NO.
< D Z G if-wJh &v
The followlng papers, numbered 1 t o
MOTION CAL. NO.
were read on this motion tolfor
Notice of Motion/ Order to Show Cause - Affidavlts - Exhibits
Answering Affidavits - Exhibits
Upon the foregolng papers, It la ordered that this m
FINAL DISPOSITION '
Check if appropriate:
0 DO NOT POST
d SUBMIT ORDER/ JUDG.
0 SETTLE ORDER/ JUDG.
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW Y O N : CIVIL TERM: PART 19
In the Matter of the Application of
BROADWAY COLLISION & TOWING, INC.,
and DANIEL STEININGER ,
Index No.: 111165/11
Submission Date: 11/02/20 11
For an Order and Judgment under and pursuant
to Article 78 of the CPLR and for other relief,
JONATHAN MINTZ, as Commissioner of the New
York City Department of Consumer Affairs, and
NEW YORK CITY DEPARTMENT OF
Lazzaro Law Firm, P.C.
360 Court Street
Brooklyn, NY 1 123 1
DECISION AND ORDER
Michael A. Cardozo, E3q.
CorporRtion Counsel of the City ofNew York
100 Church Street
New York, NY 10007
Papers considered in review of petition:
Order to Show Cause. . . . . . . . I
Verified Petition . . . . . . . . . . . 2
Affin Opp . . . . . . . . . . . . . . . 3
Aff in Opp. . . . . . . . . . . . . . . . .4
Mem of Law in Opp . . , , . , . , .5
Reply AfT . . . . . . . . . . . . . . . , 6
HON. SALIANN SCARPLLLA, J.:
In this special proceeding, petitioners Broadway Collision & Towing, Inc.
("Broadway") and Daniel Steininger ("Steininger") (collectively "petitioners") seek an
order pursuant to Article 78 of the CPLR reversing the September 16, 20 11 determination
by respondents Jonathan Mintz, Commissioner of the New York City Department of
Consumer Affairs (âMintzâ), and the New York City Department of Consumer Affairs
(âDCAâ), (collectively ârespondentsâ) revoking Broadwayâs Tow Truck Company
License and Second Hand Dealer General License (âlicensesâ), and DCAâs refusal to
make Broadway eligible to participate in the Direct Accident Response Program
(âDARPâ), and its failure to settle the matter with petitioners, as arbitrary, capricious and
As stated in the verified petition, Broadway is licensed by DCA as a towing
business in the City of New York. Broadway was owned and operated by Richard Turek
(âTurekâ) until July 2010.2 On or about July 29,2010, Turek and Steininger entered into
a contract for Turek to sell his interest in Broadway to Steininger for $299,000.00.
Pursuant to the sales contract, Steininger made an initial payment of $100,000, and then
later made monthly payments of $8,500.00.
Petitioners also sought a temporary restraining order and preliminary injunction
to prevent DCA from revoking Broadwayâs licenses and barring Broadway froin
participating in DARP.
Broadway and Turek also initiated an article 78 proceeding against respondents,
challenging the removal of Broadway from the DAW program for failure to comply with
subpoenas duces tecum. See Broadway v. Mintz, Index No. 1 1 1052/11. As a result of the
charges brought against Broadway and Turek for failure to comply with the subpoenas, a
hearing was held before Administrative Law Judge Judith Gould (âGouldâ) on May 10
and 17,2011. Gould issued a recommendation that Broadway be fined $350 and have its
license suspended for fifteen (1 5 ) days. By Decision and Order dated June 10,201 1,
principal Administrative Law Judge James M. Plotkin did not approve Gouldâs
recommendation, and instead fined Broadway $500 and revoked Broadwayâs license.
Broadway pursed an administrative appeal of the decision, and obtained DCAâs
agreement to stay the revocation pending the resolution of the administrative appeal.
As alleged in the verified petition, Steininger currently owns Broadway and Turek
has no legal interest remaining in Broadway.
However, Steininger learned that DCA
threatened to revoke Broadwayâs tow license and to make Broadway ineligible for DARP
âdue to the management of the former ownership.â In July 2010, DCA suspended
Broadway from DARP. See Broadway v. Mintz, Index No. 1 11052/11.
As new owner, in or around August 201 1, Steininger with counsel, attempted to
negotiate with DCA, through DCAâs Deputy General Counsel Sanford Cohen (âCohenâ),
to retain Broadwayâs tow licenses and be reinstated in DARP. Petitioners state that
tentative agreements were reached whereby Steininger would pay a $50,000 fine to DCA
and cooperate with any DCA investigation into the sale of Broadway, and in exchange
DCA would reinstate Broadwayâs tow licenses and Broadway would be eligible to again
participate in D A W after a one (1) year suspension. However, after negotiations,
petitioners assert that DCA , thorough Cohen, refused to go forward with the agreed upon
settlement. Petitioners noted that DCA settled with many other tow companies for
violations involving similar allegations.
Petitioners now assert that DCAâs decision was arbitrary and capricious, as it
failed to follow and clear standard in deciding appropriate punishment, as evidenced by
DCAâ inconsistent and arbitrary decisions and settlements for the various tow companies
which were alleged to have violated similar rules.
In opposition, DCA argues that Steininger withheld the fact of his ownership of
Broadway for more than a year while DCA pursued its investigation into Broadway and
defended the Turek Article 78 proceeding. Cohen asserts that DCA learned of
Steiningerâs ownership of Broadway on or about August 10, 201 1, from Steininger. DCA
further argues that Steiningerâ s purchase of Broadway voided Broadwayâs Towing license
as ofthe date of the purchase, and that Steininger knew the license was voided, and thus
rendered Broadway ineIigible to participate in DAW for at least one year. DCA asserts
that Steininger kept silent: regarding his ownership while âTurek hid, from this Court and
the [DCA], the fact that he had sold all of his interest in Broadway . . , .â
DCA alleges that from July 29, 2010, the date of the contract of sale until August
10, 20 1 1, Steininger âhad participated in a fraud to conceal the true ownership of
Broadway,â and that the fraud prevented the immediate voiding of Broadwayâs tow
license, allowed Broadway to remain in DARP until January 20 1 1, and obtain a say of the
revocation of Broadwayâs license in June 201 1However, DCA, after learning of Steiningerâs purchase of Broadway, offered a
settlement, in the form of a fine and barring Broadway and Steininger from towing for
one year. According to DCA, only when the parties were unable to reach a settlement,
DCA informed Broadway, by letter dated September 2,201 1, that DCA had received
infomation that Turek sold his interest in Broadway to Steininger3, and that as a result
Broadwayâs licenses were void. DCA gave Broadway until September 13,20 1 1 to
DCA concedes that Steininger informed it of the sale, and cites no other source
for âlearningâ the information.
provide evidence showing that Steininger did not purchase more than 10% of Broadwayâs
In a letter dated September 16,2011, DCA informed Broadway that in the absence
of any evidence that Steininger did not purchase more than 10% of Broadwayâs stock, its
licenses were revoked. The letter does not provide the legal or statutory basis for the
revocation. DCA now notes that
5 20- 110 of the Administrative Code provides for the
automatic voiding of a tow license where the tow company is sold without prior approval
by the DCA, and that under Administrative Code 5 20- 5 18(a)(4), when a company loses
its tow license, it becomes ineligible for DAW.
DCA states that Broadway lost its second hand dealer license because the
application filed in March 20 11 falsely listed Turek as Broadwayâs owner, in violation of
6 RCNY 5 1-01.1.4 Moreover, DCA asserts that it did not treat Broadway differently than
other companies with which it settled, but rather that the settlements offered to those
companies were based on different sets of circumstances.
Lastly, DCA asserts that the settlement negotiations it had with Broadway and
Turek were premised on Broadwayâs failure to comply with the subpoenas, while DCA
believed that Turek was the sole owner of Broadway. It contrasts the settlement
negotiations it had with Broadway and Steininger, whom it characterized as participating
6 RCNY 1-0 1.1 provides that an applicant for a license or renewal must
âprovide complete and truthful responses to all the information requested on an
application. . . .â In addition, an applicant may not conceal âinformation, make a false
statement or falsify or allow to be falsified any certificate, form, signed statement,
application or report required to be filed with an application for a license.â
âin the fraudulent concealment of the true ownership of Broadway in administrative
proceedings before DCA . . . [and] fraudulently maintaining for a year a towing license
voided upon Broadwaysâ sale on or about July 29,2010.â As a result, DCA maintains
that any settlement with Broadway and Steininger was contingent on them being banned
from towing for one year.
It is well settled that judicial review of an administrative determination pursuant to
CPLR Article 78 is limited to a review of the record before the agency and the question of
whether its determination was arbitrary or capricious and has a rational basis in the
record. See CPLR Â§7803(3); Gilman v. N. Y State Div.of Hous. & Community Renewal,
99 N.Y.2d 144 (2002); Nestor v. New York State Div.of Hous. & Community Renewal,
257 A.D.2d 395 (1st Depât 1999). âIn short, â,Q]udicial review of an administrative
determination is limited to the grounds invoked by the agency. ââ Matter o Rizzo v.
DHCR, 6 N.Y.3d 104, 1 10 (2005) (quoting Matter ofAronoslcy v. Board ofEduc.,
Community School Dist. No. 22 of City o f N . Y , 75 N.Y.2d 997,1000 (1990)). An action
is arbitrary and capricious, or an abuse of discretion, when the action is taken âwithout
sound basis in reason and without regard to the facts.ââ Matter of Rohan v. New York Ct
HousingAuthority, 2009 NY Slip Op 30177U, at *6-â7 (Sup. Ct. N.Y. Co. Jan. 23,2009)
(quoting Matter of Pel/ v. Board of Education, 23 N.Y. 2d 222,23 1 (1974)).
Steininger avers that Turek owned Broadway until July 201 0, at which time
Steininger became the owner. Pursuant to section 20- 110 of the Administrative Code,
such a change in ownership is to be approved by the DCA.s DCA asserts that Turek,
Broadway and Steininger concealed this information from the DCA. DCA asserts that it
âlearned ofâ the change in ownership on August 10, 20 11, but does not provide the source
of that information other than from Steininger himself.
Administrative Code $20-504 provides that
After due notice and opportuniQ to be heard, the commissioner may refuse
to renew any license required under this subchapter and may suspend or
revoke any such license upon the occurrence of any one or more of the
following conditions . . , (c) the person holding a tow truck operatorâs
license, or the person holding a license to engage in towing . . . have made a
material false statement or concealed a material fact in connection with the
filing of any application pursuant to this subchapter. . . .
Similarly, pursuant to Administrative Code 5 20- 104(e)(l), DCA is authorized
upon notice and a hearing to impose penalties âfor the violation o f . . . any of the
provisions of any . . . law, rule or regulation, the enforcement of which is within the
jurisdiction of the department . , . provided that such violation is committed in the course
of an is related to the conduct of the business, trade or occupation which is required to be
licensedâ (emphasis added).
âAdministrative Code 20- 110 provides that â[wlhere any person or organization
becomes the beneficial owner of ten percent or more of the stock of an organization to
which a license has been granted . . . if such person or organization previously did not
hold at least a ten percent interest, such license shall immediately become void unless
prior written approval of the commissioner or the commissionerâs designee is obtained.â
The September 16, 20 11 revocation letter fails to provide Broadway and Steininger
the basis for the license revocation. Further, the Administrative Code inakes it clear that
the commission ((mayârevoke a license â[alfter due notice and opportunity to be heard.â
The hearing before. Gould, which resulted in the stayed revocation of Broadwayâs license
was only addressed to the charges relating to Broadwayâs and Turekâs compliance with
DCAâs subpoenas. DCAâs revocation of Broadwayâs licenses in the letter dated
_ - -
September 16, 20 1 1, for Steiningerâs failure to produce evidence that he did not purchase
10% or more of Broadwayâs stock, were never the subject of a hearing.
Because Broadway and Steininger have not had adequate notice and an
opportunity for a hearing on the license revocation premised on ownership issues, the
September 16, 2001 determination by the DCA is arbitrary and capricious, and lacks a
rational basis. It is well settled that the âconstruction given statutes and regulations by the
agency responsible for their administration, âif not irrational or unreasonable,â should be
upheld.â Samiento v. World Yacht Inc., 10 N.Y.3d 70,79 (ZOOS) (citing Matter of
Chesterfield Assoc. v New York State Dept. of Labor, 4 N.Y.3d 597, 604 (2005)). Here,
however, assuming that the revocation is premised on the Administrative Code, it is clear
that the DCAâs construction of the Adrninistrativr Code âs unreasonab4e; as it-failedto
afford Broadway and Steininger notice of the pro&xon$qpon which it was relying on or
the opportunity for a hearing.
In accordance with the foregoing, it is hereby
ORDERED and ADJUDGED that the petition of Broadway Collision & Towing,
Inc. and Daniel Steininger to vacate the decision of respondents Jonathan Mintz, as
Commissioner of the New York City Department of Consumer Affairs and the New York
City Department of Consuiner Affairs on September 16,20 1 1 is granted; and it is further
ORDERED and ADJUDGED that the matter is remanded to the New York City
Department of Consumer Affairs for notice and an opportunity to be heard regarding
DCAâs assertion that Steininger and or/Broadway violated the Administrative Code; and
it is further
ORDERED that the motion by petitioners Broadway Collision & Towing, Inc.
and Daniel; Steininger for a preliminary injunction and temporary restraining order is
denied; and it is further
ORDERED that the Clerk of the Court is directed to enter judgment accordingly.
This constitutes the decision, order and judgment of the Court.
New York, New York
April 4, 20 12