Papers considered: 1. Verified Petition and Amended Complaint, dated February 21, 2024; 2. Notice of Cross-Motion by the Comptroller, dated March 24, 2024; 3. Affirmation in Support of Cross-Motion of Melanie V. Sadok, Esq., dated March 25, 2024, together with Exhibits A — D; 4. Answer of the State, dated March 25, 2024; 5. Motion of Summary Judgment by the State, dated March 25, 2024; 6. Affirmation in Support of Motion for Summary Judgment of Lela M. Gray, Esq., dated March 25, 2024; 7. Affirmation in Opposition to Cross-Motion and in Support of Motion of Todd E. Soloway, Esq., dated April 11, 2024, together with Exhibits 1-7; 8. Notice of Cross-Motion for Summary Judgment of Petitioner, dated April 12, 2024; 9. Affirmation in Support of Cross-Motion of Kevin Tartaglione, dated April 12, 2024; 10. Affirmation in Support of Cross-Motion of Todd E. Soloway, Esq., dated April 12, 2024, together with Exhibits 1-6; 11. Affirmation in Opposition to Cross-Motion of Todd E. Soloway, Esq., dated May 2, 2024, together with Exhibits 1-2; 12. Affirmation in Further Support of Cross-Motion of Todd E. Soloway, Esq., dated May 2, 2024, together with Exhibits 1-2; 13. Sur-Reply of Melanie V. Sadok, Esq., dated May 9, 2024; and 14. Memorandum of Law in Reply of Lela M. Gray, Esq., dated May 9, 2024. DECISION, ORDER AND JUDGMENT (Motions 1, 2, 3 & 4) Petitioner-Plaintiff (hereinafter “petitioner), is a housing developer of a residential building in City of New York, which includes 109 affordable housing units, built as part of New York State’s Affordable Housing Program (see RPTL §421-a), in exchange for which petitioner received significant tax abatements. To receive these tax abatements, petitioner was required to pay its construction workers $60 an hour; however, an audit by respondent the Office of the Comptroller of the City of New York (hereinafter “the Comptroller”) found that petitioner had underpaid these workers. As part of its investigation of petitioner, the Comptroller sought to hold a fact-finding hearing through the City’s Office of Administrative Trials and Hearings (hereinafter “OATH”). Petitioner thereafter commenced the instant action, seeking (1) a judgment declaring RPTL §421-a (16) (c) (x) unconstitutional, as it violates the separation of powers doctrine and substantive due process, and (2) a writ of prohibition enjoining and restraining the Comptroller from enforcing or attempting to enforce RPTL §421-a (16) (c) (x) against plaintiff, including through holding the OATH hearing. Petitioner also sought a temporary restraining order through an order to show cause, which this Court (Corcoran, J.) denied after holding oral argument. The Comptroller and respondent the State of New York (hereinafter “the State”) answered, and both have cross-moved for summary judgment dismissing the petition/complaint. Petitioner opposes both motions and also moves for summary judgment. I. Petitioner’s Request for a Declaratory Judgment “[I]t is well settled that acts of the Legislature are entitled to a strong presumption of constitutionality” (Matter of County of Chemung v. Shah, 28 NY3d 244, 262 [2016] [internal quotation marks, brackets and citation omitted]; accord American Economy Ins. Co. v. State of New York, 30 NY3d 136, 149 [2017]). The party challenging the constitutionality of a statute “bear[s] the ultimate burden of overcoming that presumption by demonstrating the amendment’s constitutional invalidity beyond a reasonable doubt” (American Economy Ins. Co. v. State of New York, 30 NY3d at 149; see White v. Cuomo, 38 NY3d 209, 216 [2022]). Furthermore, “courts must avoid, if possible, interpreting a presumptively valid statute in a way that will needlessly render it unconstitutional” (LaValle v. Hayden, 98 NY2d 155, 161 [2002]; accord Hernandez v. State of New York, 173 AD3d 105, 121 [3d Dept 2019]). “As a reflection of the pattern of government adopted by the State of New York, which includes by implication the separation of the executive, legislative and judicial powers, it is a fundamental principle of the organic law that each department of government should be free from interference, in the lawful discharge of duties expressly conferred, by either of the other branches” (Matter of New York State Inspection, Sec. & Law Enforcement Empls., Dist. Council 82, AFSCME, AFL-CIO v. Cuomo, 64 NY2d 233, 239 [1984] [citations omitted]). NY Const. Article VI §1 and 7 provide, as relevant, that “[t]here shall be a unified court system for the state,” that “[t]he supreme court shall have general original jurisdiction in law and equity” and “[i]f the legislature shall create new classes of actions and proceedings, the supreme court shall have jurisdiction over such classes of actions and proceedings, but the legislature may provide that another court or other courts shall also have jurisdiction and that actions and proceedings of such classes may be originated in such other court or courts.” a. The Text of RPTL §421-a (16) (c) (x) The crux of petitioner’s argument is that RPTL §421-a (16) (c) (x) contains no provision providing for appeal of the Comptroller’s decision before it is filed and given the effect of a judgment or staying that filing if a judicial proceeding challenging the determination is pending, even though many other similar statutes have such a provision. Petitioner points to caselaw holding that Supreme Court has no jurisdiction to vacate a judgment it did not render, and so argues that once the Comptroller’s determination is given the effect of a judgment, petitioner has no way to seek judicial review of the determination, because Supreme Court would not have jurisdiction to vacate the judgment even if it found the determination to be arbitrary and capricious. The Comptroller and the State respond that petitioner may simply challenge the Comptroller’s determination through CPLR 7803 and seek a stay of the judgment under CPLR 7805, and so the statute is constitutional. Respondents further contend that the pendency of the instant hybrid proceeding is proof that petitioner can seek judicial review of RPTL §421-a (16) (c) (x). RPTL §421-a (16) (c) (x) does not contain a provision specifying that an order stemming from the Comptroller’s investigation is not to be filed and docketed with the effect of a judgment if a proceeding for administrative or judicial review is pending, despite such a provision commonly being included in other statutes with very similar language (see e.g. Labor Law §§218 [3], 220-b [2] [g], 361-b [3], 924 [5]; Workers’ Compensation Law §26). For example, Labor Law §220-b (2) (g) states that a final determination under the statute may be filed with the relevant county clerk, giving it the effect of a judgment, “provided that no relevant proceeding for judicial review shall then be pending and the time for initiation of such proceeding shall have expired.” Similarly, the Workers’ Compensation Law provides that the final decision of Workers’ Compensation Board may be filed with the relevant county clerk, giving it the effect of a judgment of the Supreme Court, unless a timely appeal was taken to the Appellate Division of the Supreme Court (see Workers’ Compensation Law §23; 26). RPTL §421-a (16) (c) (x) has no analogous provision. Instead, it provides that at the conclusion of the Comptroller’s investigation and the OATH hearing, the Comptroller “shall make and file an order…stating [its] determination and forthwith serve a copy of such order, either personally or by mail, together with notice of filing, upon the parties to [the] proceedings.” Upon the filing of the determination, it “shall have the full force and effect of a judgment duly docketed in the office of the county clerk” (RPTL §421-a [16] [c] [x]). Nowhere in the statute is it provided that a defendant has an avenue to review this determination before it is entered as a judgment. b. Supreme Court’s Jurisdiction to Vacate Judgments Respondents contend that this is irrelevant. According to them, a party aggrieved by the Comptroller’s determination may simply file a petition pursuant to CPLR 7803 challenging the determination once it is entered and seek to stay the enforcement of the determination for the pendency of the action pursuant to CPLR 7805 (TRO Oral Argument Transcript: 28-31). However, petitioner’s ability to file a CPLR article 78 petition and its ability to obtain judicial review the Comptroller’s determination are two separate matters, and the latter is the sticking point. The Appellate Division has clearly held that once an administrative determination is entered as a judgment, Supreme Court has no jurisdiction to vacate it (see Workers’ Compensation Bd. of the State of N.Y. v. Williams Auto Parts Inc., 187 AD2d at 1253; Commissioner of Labor of State of N.Y. v. Eagle Comtronics, 104 AD2d 716, 716-717 [4th Dept 1984]). Because it is axiomatic that CPLR article 78 review of a determination can only be had once that determination is final, petitioner may not seek review of the Comptroller’s determination until it is final. However, under RPTL §421-a (16) (c) (x), once the determination is filed, rendering it final, it is given the effect of a judgment. Moreover, it is given the effect of a judgment that Supreme Court has no subject matter jurisdiction to vacate, because it is a judgment of the Comptroller, not a judgment of Supreme Court (see CPLR 5015; id.). Therefore, even if Supreme Court were to find the Comptroller’s determination arbitrary and capricious or otherwise invalid, it would be without jurisdiction to vacate the judgment the Comptroller has entered pursuant to RPTL §421-a (16) (c) (x). As such, under the structure of RPTL §421-a (16) (c) (x), petitioner is prevented from seeking judicial review of the Comptroller’s determination, because the statute makes no provision for administrative review of the determination nor stays the entry of the judgment during the pendency of a judicial proceeding challenging the determination. While petitioner may still seek CPLR article 78 review of the constitutionality of the statute and the Comptroller’s powers to issue a decision — as petitioner is doing in the instant hybrid proceeding — such a challenge cannot review the substance of the Comptroller’s determination, as that determination is not yet final (see Commissioner of Labor of State of N.Y. v. Eagle Comtronics, 104 AD2d at 717). In sum, then, petitioner is barred from seeking judicial review of the substance of the Comptroller’s determination. c. RPTL §421-a (16) (c) (x) Violates the Separation of Powers Doctrine Because the structure of RPTL §421-a (16) (c) (x) bars judicial review of the Comptroller’s determination, it violates the separation of powers doctrine by eliminating Supreme Court’s general jurisdiction in law and equity. The State argues that Supreme Court’s ability to review a challenged determination pursuant to CPLR article 78 can be read into a statute, as occurred in Matter of Board of Educ. of City of Rochester v. Nyquist, where the Court of Appeals held that the determination of the Commissioner of Education was still subject to review even though Education Law §310 explicitly held that the Commissioner’s determinations were “final and conclusive, and not subject to question or review in any place or court whatever” (48 NY2d 97, 103 [1979] [internal quotation marks and citation omitted]). However, the key difference here is that Education Law §310 did not contain the language giving the administrative determination the effect of a judgment, and so Supreme Court had the ability to vacate a determination it found arbitrary. Even if the Court were to read the availability of CPLR article 78 review into RPTL §421-a (16) (c) (x), the Court would be without subject matter jurisdiction to vacate a judgment it found unlawful. Moreover, petitioner cannot use CPLR 7805 to stay the enforcement of the determination after it has been given the effect of a judgment, because Supreme Court would lack jurisdiction over the judgment and so could not stay it (see Workers’ Compensation Bd. of the State of N.Y. v. Williams Auto Parts Inc., 187 AD2d at 1253; Commissioner of Labor of State of N.Y. v. Eagle Comtronics, 104 AD2d at 717). As such, by failing to include a provision similar to those contained in Labor Law §§218 [3], 220-b [2] [g], 361-b [3] or 924 [5], or Workers’ Compensation Law §§23 and 26, RPTL §421-a (16) (c) (x) violates the separation of powers by precluding Supreme Court review of the Comptroller’s determination and is therefore unconstitutional. Because the statute contains a severability clause, this judgment only renders unconstitutional that part of RPTL §421-a (16) (c) (x) that permits the entry of the Comptroller’s determination as a judgment without appellate review. However, the portion of the statute that permits the holding of the OATH hearing must accordingly also be struck, as holding the hearing without the ability to enter a judgment from it would be an exercise in futility. Any remaining arguments not specifically addressed herein have been considered and found to be lacking in merit or need not be reached in light of this determination. Accordingly, it is hereby ORDERED and ADJUDGED that the amended complaint is granted, to extent that the portions of RPTL §421-a (16) (c) (x) which (1) fail to provide for judicial review of the Comptroller’s decision prior to its entry as a judgment and (2) permit the holding of an OATH hearing are hereby declared unconstitutional. This memorandum constitutes the Decision, Order and Judgment of the Court. The original Decision, Order and Judgment is being returned to the Attorney General for filing. A copy of this Decision, Order and Judgment together with all papers are being forwarded to the Albany County Clerk for filing. The signing of this Decision, Order and Judgment and delivery of the copy of the same to the County Clerk shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of that rule with respect to filing, entry, and notice of entry of the original Decision, Order and Judgment. SO ORDERED AND ADJUDGED. Dated: June 10, 2024
