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Elizabeth CELLA, Winifred Esoff, John McCarthy, Carol Rodgers, and Nicholas Accardi, Plaintiffs, v. SUFFOLK COUNTY, Defendant.
Upon the reading and filing of the following papers in this matter: (1) Notice of Motion, by plaintiffs, dated April 6, 2018, and supporting papers; (2) Reply Affirmation by plaintiffs, dated August 14, 2018, and supporting papers; (3) Notice of Motion by plaintiffs dated April 13, 2018, and supporting papers; (4) Affirmation in Opposition by defendant, dated July 31, 2018, and supporting papers; (5) Reply Affirmation by plaintiffs, dated August 14, 2018, and supporting papers; (6) Notice of Motion by defendant, dated August 29, 2018, and supporting papers; and (7) Affirmation in Opposition by plaintiffs, dated August 14, 2018, and supporting papers; (8) Letter brief from defendant, dated June 30, 2020; (9) Letter brief from plaintiffs, dated June 30, 2020; (10) Letter brief from plaintiffs, dated July 22, 2020; and (11) Letter brief from defendant, dated July 31, 2020; and upon oral argument held on March 6, 2020, it is
ORDERED that the motion by plaintiffs for partial summary judgment in their favor (seq. #2), is DENIED; and it is further
ORDERED that the motion by defendants to dismiss the complaint pursuant to CPLR 3211[a] (seq. #3) is GRANTED; and it is further
ORDERED that the motion by plaintiffs for provisional class certification pursuant to CPLR 901 and 902 (seq. #1) is DENIED as moot, and the within action is dismissed.
This is a proposed class action in which the plaintiffs contest the validity of certain fees charged by Suffolk County and collected by the Suffolk County Clerk for tax map verifications that are required in connection with the filing or recording of mortgages and other real property title-related instruments (for brevity's sake, the “tax map verification fees”) and seek to represent a class of individuals who have, or may in the future, pay such fees. Plaintiffs do not maintain that the county is without the authority to impose any fees for the filing and recording of such instruments by the Suffolk County Clerk. Rather, they contend that the fees charged are disproportionate to the costs incurred by the county in connection with filing and recording real property-title-related instruments and that the fees are, therefore, in effect a tax, which cannot be imposed absent State enabling legislation permitting their imposition.
The fees that are challenged by the plaintiffs are imposed pursuant to Suffolk County Administrative Code § A18-3, which, as last amended, provides, in pertinent part, as follows:
§ A18-3 Verified identification numbers required on all instruments filed pertaining to title of land.
[Derived from L.L. No. 7-1979]
A. The County Clerk is hereby authorized and directed to require that all instruments presented for filing or recording in his office which affect or pertain to the title of land in Suffolk County shall have endorsed thereon a verified number or combination of numbers which identify such land in relation to district, section, block and lot number, or other appropriate indicia, shown on the Real Property Tax Service Agency maps.
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G. The Director of the Real Property Tax Service Agency is entitled, for the verification of Tax Map numbers on instruments presented for recording or filing, to a fee of $200 per parcel; for each additional parcel a fee of $200 for each parcel, up to a dollar amount not to exceed $5,000, payable to the County Clerk at the time of recording or filing. In addition, the Director of the Real Property Tax Service Agency is entitled, for the verification of Tax Map numbers on all mortgage instruments, including but not limited to mortgages, supplemental mortgages, refinance of mortgages, reverse mortgages, consolidations of mortgages, modifications of mortgages, assignment of mortgages, extension of mortgages, collateral mortgages, correction mortgages, substitute mortgages, subordination of mortgages, satisfaction of mortgages, alternative mortgages, miscellaneous mortgages, spreaders, splitters, nomination agreements, building loan agreements, as well as any other form of security agreement affecting real property, presented for recording or filing, a separate and additional fee of $200 per instrument, payable to the County Clerk at the time of recording or filing. The fee shall be frozen for three years from the effective date of this resolution․
(Suffolk County Administrative Code § A18-3 [Amended 8-29-1989 by L.L. No. 30-1989; 1-2-1991 by L.L. No. 2-1991; 11-30-2001 by L.L. No. 24-2001; 12-20-2011 by L.L. No. 11-2012; 5-8-2012 by L.L. No. 35-2012; 11-17-2015 by L.L. No. 34-2015; 9-7-2016 by L.L. No. 26-2016; 12-20-2016 by L.L. No. 36-2016; 4-9-2019 by L.L. No. 19-2019 (fn. Omitted) ].)
According to plaintiffs, the costs of operating the Real Property Tax Service Agency and the County Clerk's office are far outstripped by the cumulative magnitude of the fee payments generated, which plaintiffs claim exceeds some $70 million annually. For its part, the County contends that the tax map verification process is an integral part of the County's larger property tax and land management system, which encompasses over 584,000 parcels and that the fees collected cover not only the related expenses of the Real Property Tax Service Agency and the County Clerk but also costs associated with the many other County departments and functions with which the Real Property Tax Service Agency “must coordinate,” including Civil Service, Legislation, Law, Public Works and Information Technology. According to the County, it incurs such “mandated” expenses as social security, MTA payroll taxes, welfare benefit fund costs, medical insurance benefits and State pension fund benefits, as well as “Fund 16” or “Interdepartmental Operations and Services” charges, such as software licenses, security costs and telephone/internet access, as well as expenses such as workers' compensation benefits, auto liability insurance, utilities, cartage, extermination fees and custodial costs; costs for certain “capital projects” that must be funded in connection with the Real Property Tax Service Agency and Clerk's Office's operations, including “projects relating to the Agency that are necessary to ensure that the department remains self-sufficient”; the costs of “resources [allocated] to the Law Department to ensure there is access to information relating to issues involving title and border disputes, easements, agrarian rights and copyrights”; and costs associated with the County's Information Technology Department “needed to ensure that the web-based e-filing and e-verification systems are operating and providing accurate information to the County and its residents” and of coordination with the County's Department of Public Works to “ensure[ ] that tax maps are accurately printed and distributed to relevant tax assessors, County departments and requesting residents.” Also according to the County, these costs and expenses total hundreds of millions of dollars each year, “a portion of which is tied to the Real Property Department, Clerk's Office and ancillary departments necessary to provide services to residents.”
Currently before the court are plaintiffs' motions for partial summary judgment, presumably pursuant to CPLR 3212[e], and provisional class certification, pursuant to CPLR 901 and 902, and the County's motion to dismiss the complaint pursuant to CPLR 3211[a] and . Plaintiffs' principal argument in support of their partial summary judgment motion is that the tax map verification fees that are charged are so widely disproportionate to the cost of providing the service — that is, the tax map verification that is required for the filing and recording of mortgages and other real property related instruments — that the tax map verification fees constitute a tax, and that although Municipal Home Rule Law § 10(1)(ii)(a)(9-a) grants the County power for “[t]he fixing, levy, collection and administration of local government rentals, charges, rates or fees, penalties and rates of interest thereon, liens on local property in connection therewith and charges thereon,” and while a municipality has the “implied” authority, whether under its home rule powers, or more otherwise, to fix, levy and collect, among other things, “fees” on “local property” (see, e.g., MHRL § 10(1)(ii)(a)(9-a); Suffolk County Builders Assn, Inc. v. Suffolk County, 46 NY2d 613, 619 ), only the State Legislature has the power to authorize a tax (Matter of United State Steel Corp., 7 NY2d 454, 459 ), and, therefore, the County may not implement and impose taxes not authorized by the State Legislature (see, e.g., Mobil Oil Corp. v. Town of Huntington, 85 Misc 2d 800 [Sup. Ct., Suffolk County]). In so reasoning, plaintiffs rely upon the line of cases that ground a municipality's, or agency's, power to impose fees in its obligation to regulate an activity or undertaking and to so defray the cost of doing so. Because the power to impose fees is incident to the regulatory power that the municipality or agency is exercising, those cases hold, the fees imposed need correlate in some reasonable way with the costs associated with the regulatory power that is being exercised. Thus, in Suffolk County Builders Ass'n, Inc. v. Suffolk County, supra, which involved a challenge to a schedule of site inspection charges promulgated by the Suffolk County Department of Health Services pursuant to a regulation adopted by County Board of Health under the authority of Public Health Law § 347, which conferred regulatory authority upon county boards of health but was silent as to the power to impose fees, the Court of Appeals held that
The power to regulate subsumes the concomitant power to license and to set fees reasonably related to the cost of licensing (see City of Buffalo v. Stevenson, [207 NY 258] p 262; Matter of Torsoe Bros. Constr. Corp. v. Board of Trustees of Inc. Vil. of Monroe, 49 AD2d 461, 464; 9 McQuillin, Municipal Corporations [3d ed rev], §§ 26.27, 26.28). For, without the power to do so, a local governmental agency might well find itself without the means to fulfill its statutory imperative. Thus the power to enact fees may be implied, though, because its provision is then not spelled out in so many words, it must be regarded as circumscribed by a similarly implied limitation that the fees charged be reasonably necessary to the accomplishment of the regulatory program (Jewish Reconstructionist Synagogue of North Shore v. Incorporated Vil. of Roslyn Harbor, 40 NY2d 158, 163, supra).
(Suffolk County Builders Ass'n, Inc. v. Suffolk County, 46 NY2d at 619.) However, the cost incurred by the municipality in carrying out its regulatory obligations is not the only factor to be considered in assessing the sustainability of a fee. As the Court of Appeals explained more recently in Walton v. New York State Dept. of Correctional Services, 13 NY3d 475 :
In the regulatory arena, fees must bear at least “a rough correlation to the expense to which the State is put in administering its licensing procedures or to the benefits those who make the payments receive” (see American Ins. Assn., 50 NY2d at 622, 431 N.Y.S.2d 350, 409 N.E.2d 828; see generally National Cable Television Assn., Inc. v. United States, 415 U.S. 336, 94 S.Ct. 1146, 39 L.Ed.2d 370  ). Typically, fees are paid to obtain access to a government service or benefit, such as the fees paid to obtain licenses to practice professions in particular jurisdictions.
(Walton v. New York State Dept. of Correctional Services, 13 NY3d at 485 [emphasis supplied].) As the Appellate Division, Third Department, wrote in New York Ins. Ass'n, Inc. v. State, 145 AD3d 80 [3d Dept 2016]:
The label assigned to an assessment (i.e., tax or fee) is not determinative of its true nature (see American Ins. Assn. v. Lewis, 50 NY2d 617, 623, 431 N.Y.S.2d 350, 409 N.E.2d 828 ; New York Tel. Co. v. City of Amsterdam, 200 AD2d at 317, 613 N.Y.S.2d 993; Albany Area Bldrs. Assn. v. Town of Guilderland, 141 AD2d 293, 298, 534 N.Y.S.2d 791 , affd. 74 NY2d 372, 547 N.Y.S.2d 627, 546 N.E.2d 920 ; Matter of Joslin v. Regan, 63 AD2d at 470, 406 N.Y.S.2d 938). Therefore, courts must examine the purpose and use of the funds collected, as well as the government benefits received by the entities to be regulated (see Matter of Walton v. New York State Dept. of Correctional Servs., 13 NY3d at 488 n. 9, 893 N.Y.S.2d 453, 921 N.E.2d 145; Jewish Reconstructionist Synagogue of N. Shore v. Incorporated Vil. of Roslyn Harbor, 40 NY2d at 162, 386 N.Y.S.2d 198, 352 N.E.2d 115). Funds collected are found to be taxes where they are not reasonably necessary to the accomplishment of the regulatory purposes of the agency charged with their collection or the entities to be regulated are not primarily or proportionally benefitted through their expenditure (see American Ins. Assn. v. Lewis, 50 NY2d at 622, 431 N.Y.S.2d 350, 409 N.E.2d 828; Jewish Reconstructionist Synagogue of N. Shore v. Incorporated Vil. of Roslyn Harbor, 40 NY2d at 163, 386 N.Y.S.2d 198, 352 N.E.2d 115; Matter of Phillips v. Town of Clifton Park Water Auth., 286 AD2d 834, 835, 730 N.Y.S.2d 565 , lv. denied 97 NY2d 613, 742 N.Y.S.2d 606, 769 N.E.2d 353 ; Coconato v. Town of Esopus, 152 AD2d 39, 44, 547 N.Y.S.2d 953 , lv. denied 76 NY2d 701, 558 N.Y.S.2d 891, 557 N.E.2d 1187 ; Matter of Torsoe Bros. Constr. Corp. v. Board of Trustees of Inc. Vil. of Monroe, 49 AD2d 461, 465, 375 N.Y.S.2d 612  ).
(New York Ins. Ass'n, Inc. v. State, 145 AD3d at 91 [3d Dept 2016] [emphasis supplied].)
In short, the question of whether the tax map verification fees are just that or should instead be deemed to constitute a tax does not reduce to a mere arithmetic assessment of the costs properly associated with the operation of the Real Property Tax Service Agency, the County Clerk's office and the administration of the county property tax and land management system and such other departments and functions that contribute to the cost of tax map verifications, but also requires a calculation of the benefits payors receive in exchange for their fee payments. It is well settled that the proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering enough evidence to eliminate any material issues of fact from the case. Before summary judgment may be granted, it must clearly appear that no material and triable issue of fact is presented (Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395, 165 NYS2d 498 ). The movant has the initial burden of proving entitlement to summary judgment (Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 487 NYS2d 316 ). Failure to make such a showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Winegrad v. New York Univ. Med. Ctr., supra). Moreover, the court's function on such a motion is to determine whether issues of fact exist, not to resolve issues of fact or to determine matters of credibility, the facts alleged by the opposing party and all inferences that may be drawn from them are to be accepted as true (see Roth v. Barreto, 289 AD2d 557, 735 NYS2d 197 [2d Dept 2001]; O'Neill v. Fishkill, 134 AD2d 487, 521 NYS2d 272 [2d Dept 1987]). On that basis alone, the plaintiffs' motion for summary judgment must be denied on the current record.
However, even without regard to the factually complex question of whether the fees charged for tax map verifications are so disproportionate to the costs of providing them or to the benefits conferred upon those who obtain the verifications as to transform them into a tax, plaintiffs' motion for partial summary judgment must be denied and their claims for declaratory and injunctive relief dismissed as the alleged deficiency upon which their claims of invalidity are based — the want of State legislative authorization for the county's imposition of the tax map verification fees — was addressed, and to the extent rectification was required, rectified, by the State Legislature's enactment of Laws of 2019, Chapter 55, Part SS, § 1, which became effective on April 12, 2019, amending CPLR §§ 8019 and 8021 as follows:
Section 1. Subdivision (a) of section 8019 of the civil practice law and rules, as amended by chapter 773 of the laws of 1965, is amended to read as follows:
NY CPLR § 8019
(a) Application. The fees of a county clerk specified in this article shall supersede the fees allowed by any other statute for the same services, except in so far as the administrative code of the city of New York sets forth different fees for the city register of the city of New York and the county clerk of Richmond, and except that such fees do not include the block fees as set out in the Nassau county administrative code or the tax map number verification fees on instruments presented for recording or filing as set out in the Suffolk county administrative code, which are to be charged in addition to the fees specified in this article. This subdivision does not apply to the fees specified in subdivision (f) of section 8021.
§ 2. Subparagraph (b) of paragraph 1 of subdivision (f) of section 8021 of the civil practice law and rules, as amended by chapter 784 of the laws of 1983, is amended to read as follows:
NY CPLR § 8021
(b) if the real estate is in the city of New York or the county counties of Suffolk or Nassau, any block fees allowed by the administrative code of the city of New York or the Nassau county administrative code or any tax map number verification fees on instruments presented for recording or filing allowed by the Suffolk county administrative code;
§ 3. This act shall take effect immediately.
(L.2019, c.55, pt. SS, § 1, eff. April 12, 2019 [redlining in original.) Accordingly, as a result of the 2019 State legislation, the pertinent provisions of CPLR §§ 8019[a] and 8021[ f][b] provide as follows
CPLR § 8019. County clerks generally. (a) Application. The fees of a county clerk specified in this article shall supersede the fees allowed by any other statute for the same services, except in so far as the administrative code of the city of New York sets forth different fees for the city register of the city of New York and the county clerk of Richmond, and except that such fees do not include the block fees as set out in the Nassau county administrative code or the tax map number verification fees on instruments presented for recording or filing as set out in the Suffolk county administrative code, which are to be charged in addition to the fees specified in this article. This subdivision does not apply to the fees specified in subdivision (f) of section 8021․
§ 8021. County clerks other than as clerks of court. Whenever a county clerk renders a service other than in his capacity as clerk of the supreme or a county court, or other than in an action pending in a court of which he is clerk, he is entitled to the fees specified in this section, payable in advance.
(f) Services rendered pursuant to part four of article nine of the uniform commercial code.
1. For filing, indexing and furnishing filing data for a financing statement or a continuation statement on a form conforming to standards prescribed by the secretary of state, three dollars, or if the statement otherwise conforms to the requirements of part four of such article, four dollars and fifty cents, plus, in either case,
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(b) if the real estate is in the city of New York or the counties of Suffolk or Nassau, any block fees allowed by the administrative code of the city of New York or the Nassau county administrative code or any tax map number verification fees on instruments presented for recording or filing allowed by the Suffolk county administrative code;
Just as local laws are “entitled to an ‘exceedingly strong presumption of constitutionality’ ” (Nicholson v. Inc. Vil. of Garden City, 112 AD3d 893, 894 [2d Dept 2013], quoting Lighthouse Shores v. Town of Islip, 41 NY2d 7, 11 ; see also Town of Huntington v. Park Shore Country Day Camp of Dix Hills, 47 NY2d 61, 65 ; ATM One, LLC v. Incorporated Vil. of Hempstead, 91 AD3d 585 [2d Dept 2012]; American Ind. Paper Mills Supply Co., Inc. v. County of Westchester, 65 AD3d 1173, 1175 [2d Dept 2009]), so, too, are the enactments of the State Legislature (Town of E. Hampton v. Cuomo, 179 AD2d 337, 345 [2d Dept 1992](“It is well settled that every legislative enactment carries a strong presumption of constitutionality. To overcome this presumption, a party must present evidence to demonstrate beyond a reasonable doubt that there is no factual basis for the legislative determination”)). Thus, however the tax map verification fees may be characterized, the State Legislature has validated the authority of the County to set and collect them.
Plaintiffs' remaining claims, for the refund or repayment of such tax map verification fees as they may have paid, styled in the complaint as a claim for money had and received, must also be dismissed because there is no allegation that any of the plaintiffs in fact paid such fees under an express protest or under the kind of duress that excuses formal protest. As the Court of Appeals has held:
Payment under express protest is an indication that a tax is not paid voluntarily (see, Mercury Mach. Importing Corp. v. City of New York, 3 NY2d, at 424, supra). Where protest has been interposed, the municipality is notified that it may be obliged to refund the taxes and must be prepared to meet that contingency (see, id., at 426). Otherwise, moneys remitted as taxes or fees are applied to authorized public expenditures, and financial provision is not made for refunds. In situations where payment of the tax or fee is made under actual duress or coercion, which is present when payment is necessary to avoid threatened interference with present liberty of person or immediate possession of property, the failure to formally protest will be excused. (See, Mercury Mach. Importing Corp. v. City of New York, 3 NY2d, at 425, supra; Five Boro Elec. Contrs. Assn. v. City of New York, 12 NY2d 146, 149-150: Adrico Realty Corp. v. City of New York, 250 NY, at 32, supra.)
(Video Aid Corp. v. Town of Wallkill, 85 NY2d 663, 666-67 . See also Joy Apartments, LLC v. Town of Cornwall, 160 AD3d 958, 960 [2d Dept 2018].) The bare conclusory assertion of “duress,” without any allegation that the payment was in fact made “to avoid threatened interference with present liberty of person or immediate possession of property” is insufficient to excuse the failure to protest expressly at the time of payment, even if the failure to make the payment would result in adverse economic or transactional consequences for the payor (see City of Rochester v. Chiarella, 58 NY2d 316, 325  (“the weight of more recent authority in this State is to the effect that imposition of a lien and/or exaction of interest, without more, falls short of what is to be recognized as duress in this context”)). Accordingly, plaintiffs' claims for refund or repayment of any tax map verification fees they may have paid are dismissed.
In light of the dismissal of plaintiffs' claims for injunctive and declaratory relief and for the refund or repayment of any tax map verification fees they may have paid, their motion for provisional class certification is denied as moot (see O'Neill v. Dublinsky, 133 AD2d 680 [2d Dept 1987]), and the complaint is dismissed.
The court has considered the remaining contentions of the parties and finds that they do not require further discussion or alter the above determinations.1
The foregoing constitutes the decision and order of the court.
1. Plaintiffs have provided the court with a copy of the decision and order in Falk v. Nassau County, et al., Index No. 600868-17 (March 6, 2020, Supreme Court, Nassau County) (Brown, J.). It should be noted that the motions in that matter were made after discovery had been completed and involved facts and law specific to the Nassau County Code Provision at issue there and to Nassau County government and its administration, and that the effect of the State Legislature's enactment of Laws of 2019, Chapter 55, Part SS, § 1 was not addressed by the Court in its decision.
Sanford Neil Berland, J.
Response sent, thank you
Docket No: 620580/2017
Decided: December 31, 2020
Court: Supreme Court, Suffolk County, New York.
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