STEVENS v. AMERICAN WATER SERVICES INC

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Supreme Court, Appellate Division, Fourth Department, New York.

Mary Ann STEVENS and Virginia Stewart, Individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. AMERICAN WATER SERVICES, INC., formerly known as American Anglian Environmental Technologies, L.P., Buffalo Water Board and Buffalo Sewer Authority, Defendants-Respondents.  (Appeal No. 3.)

Decided: September 22, 2006

PRESENT:  PIGOTT, JR., P.J., HURLBUTT, MARTOCHE, AND GREEN, JJ. Bouvier Partnership, LLP, Buffalo (Norman E.S. Greene of Counsel), and Malakoff Doyle & Finberg, P.C., Pittsburgh, Pennsylvania, for Plaintiffs-Appellants. Jaeckle Fleischmann & Mugel, LLP, Buffalo (Charles C. Swanekamp of Counsel), for Defendant-Respondent American Water Services, Inc., formerly known as American Anglian Environmental Technologies, L.P. Hiscock & Barclay, LLP, Buffalo (Thomas F. Knab of Counsel), for Defendants-Respondents Buffalo Water Board and Buffalo Sewer Authority.

 Plaintiffs commenced this class action challenging the authority of defendants Buffalo Water Board (Water Board) and Buffalo Sewer Authority (Sewer Authority) to impose 21% surcharges on past due accounts of their water and sewer customers.   Plaintiffs alleged, inter alia, that defendants were unjustly enriched by receipt of the surcharges and violated General Business Law § 349, and they sought actual damages and injunctive relief.   Supreme Court properly dismissed the complaint as time-barred under the four-month statute of limitations for CPLR article 78 proceedings.   A CPLR article 78 proceeding is the appropriate procedural vehicle by which to challenge the agreements at issue, i.e., those between the Water Board and Sewer Authority and defendant American Water Services, Inc., formerly known as American Anglian Environmental Technologies, L.P. (see generally Matter of Pearl Leather Finishers v. Gloversville-Johnstown Joint Sewer Bd., 79 N.Y.2d 430, 583 N.Y.S.2d 809, 593 N.E.2d 263;  Matter of Fawcett v. City of Buffalo, 275 A.D.2d 954, 713 N.Y.S.2d 610, lv. denied 96 N.Y.2d 701, 722 N.Y.S.2d 793, 745 N.E.2d 1015).   Although plaintiffs seek monetary damages, the primary relief they seek is a judgment enjoining the Water Board and Sewer Authority from collecting the surcharges (see Matter of Gross v. Perales, 72 N.Y.2d 231, 235-236, 532 N.Y.S.2d 68, 527 N.E.2d 1205).

Plaintiffs contend that the Water Board and Sewer Authority acted in excess of their power or jurisdiction and without statutory authority, and thus that CPLR article 78 is not applicable.   Plaintiffs rely on Matter of Foy v. Schechter, 1 N.Y.2d 604, 612, 154 N.Y.S.2d 927, 136 N.E.2d 883, in which the Court held that the determination of an administrative board or agency is “void and subject to collateral attack where it is made either without statutory power or in excess thereof” (see also Abiele Contr. v. New York City School Constr. Auth., 91 N.Y.2d 1, 8-10, 666 N.Y.S.2d 970, 689 N.E.2d 864;  Watergate II Apts. v. Buffalo Sewer Auth., 46 N.Y.2d 52, 412 N.Y.S.2d 821, 385 N.E.2d 560).   On the other hand, if the administrative board or agency had the authority to act, but exercised that authority arbitrarily, then a CPLR article 78 proceeding is appropriate (see Foy, 1 N.Y.2d at 612, 154 N.Y.S.2d 927, 136 N.E.2d 883).

In determining whether the Water Board and Sewer Authority acted within their authority in imposing the surcharges, we must examine the pertinent statutes (see Abiele, 91 N.Y.2d at 10-11, 666 N.Y.S.2d 970, 689 N.E.2d 864), and our review of those statutes establishes that they indeed acted within their authority (see Matter of Town of Ohio v. New York State Off. of Real Prop. Servs., 241 A.D.2d 878, 661 N.Y.S.2d 90, lv. denied 91 N.Y.2d 801, 666 N.Y.S.2d 563, 689 N.E.2d 533).   The Water Board is required to “establish, fix and revise, from time to time, fees, rates, rents or other charges” (Public Authorities Law § 1048-j [1] ).   Likewise, the Sewer Authority “is authorized to establish a schedule of rates, rentals or charges” (§ 1180).   Thus, the issue here is not whether the Water Board and Sewer Authority acted in excess of their power or jurisdiction and without statutory authority but, rather, the issue is whether the determinations of the Water Board and Sewer Authority were “made in violation of lawful procedure, w[ere] affected by an error of law or w[ere] arbitrary and capricious or an abuse of discretion” (CPLR 7803[3] ).   The four-month statute of limitations applicable to CPLR article 78 proceedings therefore governs, and the complaint must be dismissed as time-barred (see New York City Health & Hosps. Corp. v. McBarnette, 84 N.Y.2d 194, 204-205, 616 N.Y.S.2d 1, 639 N.E.2d 740, rearg. denied 84 N.Y.2d 865, 618 N.Y.S.2d 9, 642 N.E.2d 328).

It is hereby ORDERED that the judgment so appealed from be and the same hereby is unanimously affirmed without costs.

MEMORANDUM: