Matter of Calvary Hosp. Inc. v Tweedy
Annotate this CaseDecided on June 18, 2007
Supreme Court, Queens County
In the Matter of the Application Calvary Hospital, Inc., Cobble Hill Center, Inc., Saint Vincent's Catholic Medical Centers of New York, Terence Cardinal Cooke, Health Care Center Vornado Realty, L.P., Mendik Realty Company, Inc., and UtiliSave, LLC, Petitioners,
against
David B. Tweedy as executive director of the New York City Water Boar, Christopher O. Ward as Commissioner of the Department of Environmental Protection, and the City of New York, Respondents.
18049/2005
Allan B. Weiss, J.
In this Article 78 proceeding petitioners Calvary Hospital Inc., Cobble Hill Health Center, Inc., Saint Vincent's Catholic Medical Centers of New York, Terence Cardinal Cooke Health Care Center, Vornado Realty, LP, Mendick Realty Company, Inc., and UtiliSave, LLC seek a judgment reversing the decisions issued by respondents David B. Tweedy, as executive director of the New York City Water Board and Christopher O. Ward as Commissioner of the Department of Environmental Protection of the City of New York dated April 18, 2005, which denied petitioners' requests for refunds or adjustments to their water bills on the grounds that their claims were untimely.
Petitioners Calvary Hospital Inc. (Calvary), Cobble Hill Health Center, Inc. (Cobble Hill), Saint Vincent's Catholic Medical Centers of New York (Saint Vincent's), Terence Cardinal Cooke Health Care Center (Cooke), Vornado Realty, LP (Vornado), and Mendick [*2]Realty Company, Inc. (Mendick), each retained petitioner UtiliSave, LLC, (Utilisave) to audit their respective billing from the New York City Water Board (Water Board) and to seek refunds from the Water Board for overcharges on the water bills. By letter to the DEP dated December 4, 2002, UtiliSave requested an adjustment to the water bill issued to Calvary on September 12, 1997. UtiliSave also requested an adjustment from the DEP, by letter dated May 8, 2003, of a bill issued to Cobble Hill on March 5, 1998; an adjustment by letter dated January 23, 2004 regarding two bills to St. Vincent's dated February 12, 1998; an adjustment by a letter dated March 8, 2004, to another bill to St. Vincent's dated November 11, 1999; an adjustment by a letter dated July 15, 2003, regarding an erroneous bill to Cooke dated June 12, 1997, and for the failure to cancel bills dated May 11, 1992 and December 25, 1989, when issuing the June 12, 1997 bill; an adjustment by letter dated December 2, 2003 to a bill issued to Vornado on January 29, 1998; and an adjustment by letter dated December 8, 2003 of a bill issued to Mendik on February 26, 1999, covering the period from March 25, 1998 to November 4, 1998.
Each of these claims were denied by the DEP on the grounds that the Water Board's "Water and Wastewater Rate Schedule" (Rate Schedule) provided that a disputed bill would not be adjusted unless the written complaint was filed within four years of the bill date. UtiliSave appealed each of these decisions to the Water Board, which upheld the denials, on the grounds that the original complaints had not been timely filed within four years of the issuance date of the bill in question. The petitioners commenced an Article 78 proceeding on August 11, 2004 in which they sought a judgment vacating respondents' determinations denying their appeals seeking a reduction of water and wastewater charges on the grounds that the claims were untimely.
Prior to July 1, 1999 customers were afforded six years from the date of billing to file a water bill overcharge complaint. An amendment to the Rate Schedule, effective July 1, 1999, provided that for all bills issued after July 1, 1999, a written complaint regarding a disputed bill had to be filed within two years from the date of the bill. The Water Board, however, continued to the existing six-year period of limitations for bills issued prior to July 1, 1999. On October 23, 2001 the State Legislature adopted an amendment requiring a complaint to be filed no less than six years from the date of the bill for services. This act took effect immediately but only remained in effect for 16 days, and was superceded by a four year statute of limitations which was adopted by the State Legislature on November 13, 2003 (Public Authorities Law § 1045-g). This four-year period of limitations was "to take effect immediately," but was "deemed to have been in full force and effect on or after October 23, 2001" thus negating the short-lived six-year period of limitations. The Rate Schedule effective July 1, 2002, instituted a requirement that a customer file a written complaint of a disputed water bill within four years of the bill date, in response to Public Authorities Law § 1045-g. In Bethco Corp. v Tweedy, (7 Misc 3d 1011[A]) the court determined that the shortened statute of limitations applied retroactively and that due process required petitioners therein to have been afforded a reasonable time in which to file their complaint. The court in Bethco remanded the matter to the respondents for a determination of whether the claimant was afforded a reasonable time to file its complaint after the applicable limitations period had been shortened.
This court, in an order dated February 7, 2005, determined that respondents were previously found, in other litigation, to have used a six-year limitation period when reviewing [*3]complaints filed for bills issued prior to July 1, 1999, and continued the practice through June 30, 2002. The respondents thus were collaterally estopped from contending otherwise. This court further stated that the amended Rate Schedule, effective July 1, 2002, required that a customer file a written complaint of a disputed water bill within four years of the bill date. In agreement with the court in Bethco, this court determined that the four-year limitation period applied retroactively to claims that accrued but were not yet interposed by the effective date of the amendment. However, respondents were required to acknowledge the right of customers to bring complaints within a reasonable time after the effective date of the amended Rate Schedule when considering the retroactive application of the amended time limitation to complaints. Respondents' determinations were, therefore, vacated and the matter was remanded for further proceedings.
On March 4, 2005, the Water Board issued a resolution providing for a three-month grace period which extended the time in which to file a claim to September 30, 2002, following the implementation of the four-year limitations period in 2002. On April 18, 2005, the Water Board denied each of the petitioner's claims on the grounds that the claims were untimely, as they were filed after September 30, 2002. Petitioners commenced the within proceeding on August 17, 2005, and assert that the three-month grace period is arbitrary, capricious, unreasonable and violates the claimants' due process rights. The matter was thereafter adjourned pending the Appellate Division determination of the same issues raised in Matter of Amalgamated Warbasse Houses, Inc. v Tweedy, (33 AD3d 807 [October 17, 2006]) and Matter of 38 Park Ave. Assn., LLC v Tweedy, (33 AD3d 794 [October 17, 2006]). In Amalgamated Warbasse Houses (supra), the Appellate Division reversed the Supreme Court's decision, reinstated the petition, and stated as follows:
"On May 12, 1999, a notice promulgated by the New York City Water Board (hereinafter the Board) and posted on its website provided, inter alia, that water and wastewater bills issued before July 1, 1999, had to be challenged within six years of the date of issuance. Sometime in 2002, the Board changed its rules to limit the time within which a complaint had to be filed to four years. On March 4, 2005, the Board issued a resolution providing for a three-month grace period for filing a complaint following the implementation of the four-year limitations period in 2002. The petitioners contend that the respondents improperly applied the four-year limitations period to the complaints they filed in May 2003, rather than the six-year limitations period, since the bills they challenged were issued before July 1, 1999. The petitioners further contend that, in the event the four-year limitations period is applied, the resolution providing for a three-month grace period was not a reasonable amount of time to bring a complaint and violated their right to due process. The Supreme Court properly determined that the Board's retroactive application of the four-year limitations period within which customers may challenge their water and wastewater bills was not arbitrary, capricious, or an abuse of discretion (see CPLR 7803[3]; Matter of Featherstone v Franco, 95 NY2d 550, 555; Matter of Vil. of Scarsdale v New York City Water Bd., 15 AD3d 590, 591; Matter of L.G.B. Assoc. v New York State Div. of Hous. & Community Renewal, 292 AD2d 609, 609-610,; Matter of Good Samaritan Hosp. v Axelrod, 150 AD2d 775, 777; see also Bethco Corp. v Tweedy, 7 Misc 3d 1011[A]). Although the retroactive application of statutes is not favored absent language expressly or by necessary implication requiring it (see Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 584), the Board's elimination of the distinction between the application of the limitations period [*4]to bills issued prior to the implementation of the relevant rate schedule and those issued thereafter, as well as the legislative history, supports a finding that the four-year limitations period was intended to be applied retroactively (see Bethco Corp. v Tweedy, supra at 3; cf. Majewski v Broadalbin-Perth Cent. School Dist., 231 AD2d 102, 106-107, affd 91 NY2d 577, [elimination of language from earlier version of Omnibus Act, which had explicitly provided for retroactive application, indicated legislative intent that act was not to apply retroactively]). However, when, as here, a limitations period is statutorily shortened, or when a limitations period is created where none previously existed, "[d]ue process requires that potential litigants be afforded a reasonable time ... for the commencement of an action before the bar takes effect" (Brothers v Florence, 95 NY2d 290, 300-301, quoting Terry v Anderson, 95 US 628, 632-633). Following entry of the Supreme Court's judgment in this matter and the order in Bethco Corp. v Tweedy (supra), the Board issued a resolution dated March 4, 2005. We note that although the resolution is dehors the record, it may be considered on appeal as it is a matter of public record, and its existence and accuracy are not disputed (see Brandes Meat Corp. v Cromer, 146 AD2d 666, 667). Since the Supreme Court was unable to consider whether the resolution was reasonable and complied with the aforementioned due process requirements, or was arbitrary, capricious, or an abuse of discretion, we remit the matter to the Supreme Court, Queens County, for a determination of those issues (see CPLR 7803[3]; Brothers v Florence, supra at 301; Matter of Featherstone v Franco, supra at 554; Matter of Westmoreland Apt. Corp. v New York City Water Bd., 294 AD2d 587, 588; see also Matter of Arceri v Town of Islip Zoning Bd. of Appeals, 16 AD3d 411, 412; Matter of Bracke v Zoning Bd. of Appeals of Town of Phillipstown, 304 AD2d 663, 663-664)." (Id. at 795, 796.)
In Matter of 38 Park Ave. Assn (supra), the Appellate Division reversed the Supreme Court's decision, reinstated the petition, and stated that:
"[w]e find it appropriate to remit this matter to the Supreme Court, Queens County, for further proceedings and a new determination to consider whether the rate schedule as amended by a resolution of the New York City Water Board dated March 4, 2005, was reasonable and complied with due process requirements, or was arbitrary, capricious, or an abuse of discretion and failed to comply therewith (see CPLR 7803[3]; see Brothers v Florence, 95 NY2d 290, 301,; Matter of Amalgamated Warbasse Houses v Tweedy, 33AD3d 794, [decided herewith])."
Petitioners now assert that the three-month grace period is arbitrary and capricious, an abuse of discretion and violates petitioners' procedural due process rights in that it ran from the date of the Rate Schedule amendment and not from the date of the remand of this proceeding to the Water Board, and expired prior to the commencement of this Article 78 proceeding. Petitioners further assert that the DEP should be required to adopt a two-year limitations period to resolve and rectify over billing claims, as any other time period will result in their claims being time barred. It is asserted that the three-month grace period is unacceptable to petitioners as the process of locating and conducting appropriate investigations of their water bills is time consuming, and far exceeds three months, despite [*5]having engage the services of UtiliSave. It is also asserted that UtiliSave represents hundreds of clients and tens of thousands of accounts, and as the DEP now requires such firms to submit a notarized letter of authorization, it takes UtiliSave some four to eight month's to obtain the necessary authorizations from the CEO's of their institutional clients, and a year to formulate these claims.
Respondents, in opposition, assert that UtiliSave lacks standing to bring this Article 78 proceeding; that there is no relationship between the six named petitioners and therefore bringing this proceeding jointly is improper; and that even if the proceeding was properly commenced by the respondents, the denial of their claims on the grounds that they are untimely was neither arbitrary nor capricious or an abuse of discretion and therefore the petition should be dismissed. Respondents further assert that upon reconsideration petitioners' claims were properly denied, as they were untimely under the three-month grace period which expired on September 20, 2002. It is asserted that the three-month grace period was reasonable and comported with due process, based upon the history of the complaint filing period, the Water Board's notification efforts pertaining to the shortened statute of limitations, the subject matter, and the lack of a valid expectation on the part of customers that they could file a claim under the previous six-year filing period.
Standing is a "threshold determination, resting in part on policy considerations, that a person should be allowed access to the courts to adjudicate the merits of a particular dispute that satisfies the other justiciability criteria." (Society of Plastics Indus. v County of Suffolk, 77 NY2d 761, 769 [1991].) Under state law, the standing requirement derives from the common law precept that a court has no inherent power to act unless the rights of the plaintiff or petitioner are affected. (Id. at 772.) In order to establish standing, a plaintiff or petitioner must show that it has suffered an injury in fact, distinct from that of the general public, and that the alleged injury falls within the zone of interest sought to be promoted or protected by the statute under which the government has acted (Matter of Transactive Corp. v New York State Dept. of Social Servs., 92 NY2d 579, 587 [1998]; Society of Plastics Industry v County of Suffolk, 77 NY2d 761 [1991]; Long Island Pine Barrens Society, Inc. v Town of Southampton, 301 AD2d 528 [2003]).
Petitioner UtiliSave's assertion that it has standing to challenge the water bills and the three-month grace period is rejected. UtiliSave entered into written retainer and contingent fee agreements with petitioners Calvary, Cobble Hill, St. Vincent's, Cooke, Vornado and Mendik whereby it performed audits of their water bills, and filed claims with the DEP and appeals with the Water Board. In the event that these claims were [*6]successful, UtiliSave would be entitled to recover as its fee 50% of the savings realized by each of its clients. UtiliSave's potential compensation by its clients, however, does not constitute an injury in factan actual legal stake in the matter being adjudicated. Since the right to challenge a water bill belongs to property owner/customer and as the three-month grace period is designed to protect the due process rights of property owners/customers who were affected by the shortened statute of limitations, UtiliSave does not fall within the "zone of interest" that these provisions were designed to promote or protect. In addition, the possibility of UtiliSave recovering a contingent fee is too remote to give rise to a property interest or financial stake in the outcome of this proceeding.
Finally, the fact that UtiliSave represented its clients' interests in proceedings before the DEP and Water Board, and in prior court actions, does not confer standing upon this petitioner. It is noted that the issue of UtiliSave's standing was not determined in the prior court proceedings. UtiliSave was the authorized representative of the water bill customers in the administrative proceedings. Although the immediate parties to an administrative proceeding are aggrieved persons who may seek judicial review (Sun-Brite Car Wash, Inc. v Board of Zoning & Appeals, 69 NY2d 406, 413 [1987]), the aggrieved parties here are the property owner/customers who challenged their water bills, and not their representative UtiliSave.
Petitioners Calvary, Cobble Hill, St. Vincent's, Cooke, Vornado and Mendik each have standing to maintain this proceeding. Each petitioner seeks to challenge their respective claims and could have commenced separate proceedings. However, as each petitioner seeks to challenge the three-month grace period, as well as the denial of their individual claims, it is in the interest of judicial economy to determine these claims in a single proceeding.
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 Colton v Berman, 21 NY2d 322 [1967].) Since the only issue presented here is one of law, a trial on the issue of the grace period is not warranted.
The retroactivity of the four-year period of limitations has been upheld by the Appellate Division in Amalgamated Warbasse Houses, Inc. v Tweedy, (33 AD3d 807 [October 17, 2006]), and will not be revisited here. The Water Board, in response to this court's order of February 7, 2005, as well as the order in Bethco and the then pending appeals of Amalgamated Warbasse Houses and Matter of 38 Park Ave. Assn., adopted a resolution establishing a three-month grace period on March 5, 2005. The grace period thus extended the four-year statute of limitations until September 30, 2002. [*7]
The claims of petitioners Calvary, Cobble Hill, St. Vincent's (February 12, 1998 bills), Cooke, and Vornado, were immediately barred by the application of both the application of the shortened four year limitations period, and the three-month grace period.
Mendik's time in which to dispute the bill dated February 26, 1999 expired on February 26, 2003, and St Vincent's time in which to dispute the bill dated November 16, 1999 expired on November 16, 2003. These claims thus were not immediately barred by either the four year statute of limitations or the grace period. Since Mendik protested its bill on December 8, 2003 and St. Vincent's protested its bill on March 8, 2004, these claims were properly denied as untimely.
In examining the three-month grace period adopted by the Water Board, the court is required to make a balanced determination of what definite time period would fairly be necessary to afford a reasonable opportunity to interpose the type of claim affected by the new Statute of Limitations, and then apply that period generally to all otherwise time-barred administrative actions on such claims. In determining whether this three-month period is consistent with due process, the court must consider the importance of the "subject matter" of the claims being curtailed by the new Statute of Limitations (see Brothers v Florence, 95 NY2d 290 [2000]). Here, the subject matter of the claims is the right to challenge water bills that were issued and received by the customers years before they sought to file a protest. Petitioners do not claim that they were unaware of their right to protest the water bills. The court finds that the subject matter of these claims is not so grave as to require an extensive grace period.
The court must also balance the respondents interest here, in substantially accelerating the date of repose from challenges to water bills against the legitimate interests of potential claimants in being afforded a fair opportunity to bring their claims after the effective date of July 1, 2002. This requires an examination of potential claimants' legitimate expectations or anticipation of the permissible time to challenge their water bills after the effective date of a new period of limitations (see Brothers v Florence, supra). Petitioners' urge that the court reject the three-month grace period and adopt a two-year grace period, based upon the time UtiliSave requires to investigate and prepare claims on behalf of their clients. A two-year grace period from the from the effective date of the amendment does not reflect the appropriate balance between the legislative objective and fairness to all claimants, not merely clients of UtiliSave. The goal of the Legislature and the Water Board in adopting a four year statute of limitations was to immediately curtail the application of the six-year period of limitations to water bill challenges. Giving accrued claims a grace period of two years fails to accomplish the intended result.
Moreover, adopting a two-year grace period would give petitioners and all such parties the benefit of the prior six-year period of limitations. Such a result would substantially undermine the legislative intent in enacting this amendment. Moreover, fairness to claimants whose claims would otherwise be time-barred upon the effective date does not require extending the new Statute of Limitations to two years from the amendment's effective date. Considering the Water Board's elimination of the distinction between the application of the limitations period to bills issued prior to the implementation of the relevant rate schedule and those issued thereafter, as well as the legislative history, and the intent that the four-year limitations period be applied retroactively, a rule continuing to give many claimants an additional two years in which [*8]to file their protest would have far exceeded their reasonable expectations. Petitioners' claim that the grace period should run from the date of the remand of this matter, rather than from the effective date of the amendment, is also rejected.
Upon consideration of the foregoing factors, the court finds that the three-month grace period for claims immediately time-barred upon the effective date of the amendment to the statute of limitations strikes the appropriate balance between government's and petitioners' personal interests for procedural due process purposes. This grace period comports with the legislative goal and the reasonable expectations of potential claimants. It also gives due consideration to the importance of the "subject matter" of the claims affected by the new period of limitations.
In view of the foregoing, the court finds that the Water Board's resolution of March 4, 2005 which established a three-month grace period for challenges to water bills that were immediately barred as of July 1, 2002, comports with procedural due process and is neither arbitrary nor capricious nor an abuse of discretion. Respondents' denial of the petitioners' claims as untimely, therefore, was proper. Petitioners' request to vacate respondents' determinations of April 17, 2005 is denied, and the petition is dismissed.
Settle judgment.
J.S.C.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
