CHINO v. NEW YORK DEPARTMENT OF FINANCIAL SERVICES (2019)

Judgment, Supreme Court, New York County (Carmen Victoria St. George, J.), entered on or about December 21, 2017, granting respondents' motion to dismiss the proceeding, and denying petitioners' motion seeking discovery, unanimously affirmed, without costs.

This action arises from petitioners' application for a license pursuant to 23 NYCRR § 200.3(c)(2), pertaining to virtual currency.  DFS neither approved nor rejected the application because the information petitioners provided was so sparse that no determination could be made, including whether the business activity plaintiffs were seeking to engage in required licensing under the challenged regulation.  Petitioners never sought to provide the missing information;  nor did they ever pay the required licensing fee.  Petitioners neither exhausted their administrative remedies, nor demonstrated applicability of one of the exceptions to the doctrine of exhaustion (see Watergate II Apts. v. Buffalo Sewer Auth., 46 N.Y.2d 52, 57, 412 N.Y.S.2d 821, 385 N.E.2d 560 [1978];  Sohn v. Calderon, 78 N.Y.2d 755, 767, 579 N.Y.S.2d 940, 587 N.E.2d 807 [1991];  Martinez 2001 v. New York City Campaign Fin. Bd., 36 A.D.3d 544, 548–549, 829 N.Y.S.2d 55 [1st Dept. 2007] ).  As for their direct constitutional claims, the motion court correctly determined that petitioners lack standing, as they failed to show some actual or threatened injury to a protected interest by reason of the operation of an unconstitutional feature of the regulation at issue (Cherry v. Koch, 126 A.D.2d 346, 351, 514 N.Y.S.2d 30 [2d Dept. 1987], lv denied 70 N.Y.2d 603, 518 N.Y.S.2d 1026, 512 N.E.2d 552 [1987] ).  Indeed, any injury suffered by petitioners was self-created, by abandonment of the licensing process after submission of an incomplete application.  Their motion seeking discovery was properly denied as moot.

We have considered petitioners' remaining contentions and find them unavailing.