Alouette Fashions, Inc. v. Consolidated Edison Co. of New York, Inc.

• Decision Date: 15 April 1986
• Citation: 501 N.Y.S.2d 23,119 A.D.2d 481
• Court: New York Supreme Court — Appellate Division
• Parties: ALOUETTE FASHIONS, INC., et al., Plaintiffs-Respondents, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Defendant, and The City of New York, et al., Defendants-Appellants, and Helmsley Spear, Inc., et al., Defendants. MILLIKEN & CO., et al., Plaintiffs-Respondents, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Defendant, The City of New York, Defendant-Appellant, Empire City Subway Company, (Limited), Defendant.

Page 23

501 N.Y.S.2d 23

119 A.D.2d 481

ALOUETTE FASHIONS, INC., et al., Plaintiffs-Respondents, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Defendant, and The City of New York, et al., Defendants-Appellants,

and

Helmsley Spear, Inc., et al., Defendants.

MILLIKEN & CO., et al., Plaintiffs-Respondents, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Defendant, The City of New York, Defendant-Appellant, Empire City Subway Company, (Limited), Defendant.

Supreme Court, Appellate Division First Department.

April 15, 1986.

L.J. Kravitz, J.B. Bloom, New York City, for plaintiffs-respondents.

P. Agree, New York City, for defendants-appellants.

Before MURPHY, P.J., and ROSS, ASCH, LYNCH and ELLERIN, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County (Edward J. Greenfield J.) entered September 25, 1984, in the Alouette action, which granted plaintiffs' motion to quash subpoenas, affirmed without costs.

Order, Supreme Court, New York County, (Edward J. Greenfield, J.) entered August 7, 1984, in the Alouette action which granted plaintiffs' motion for a protective order and vacated the Comptroller's Demands for Examination, modified on the law to the extent of requiring plaintiffs to submit to such examination, upon oral questions only, pursuant to General Municipal Law § 50-h, within 90 days from the date of entry of this Court's order, and otherwise affirmed without costs.

Order, Supreme Court, New York County (Edward J. Greenfield, J.) entered August 7, 1984, in the Alouette action, which granted plaintiffs' motion to strike the defendant City of New York's affirmative defense of the failure of the plaintiffs to submit to an examination pursuant to General Municipal Law § 50-h and denied defendant City of New York's motion to dismiss the complaint, modified on the law to the extent of denying plaintiffs' motion and reinstating the affirmative defense and granting defendant's motion to dismiss the complaint as to all plaintiffs except Alouette Fashions, Inc., George Sottiriou, Roman Edith Assoc., Me & Teddy McGee, Inc., Superior Locksmith Corp., Roman Managed Lists, Inc., and Stevez Bros. Electronics, without prejudice to recommencement of the action within 30 days after the completion of the Comptroller's examination, where not yet held, or within 30 days from the date of the entry of this Court's order with respect to any claimants who have already submitted to, and completed, such examination, and said order is otherwise affirmed without costs.

Order, Supreme Court, New York County (Edward J. Greenfield, J.) entered September 18, 1984, in the Milliken action, which granted plaintiff's motion to quash subpoenas, affirmed without costs.

The two actions herein seek recovery for property damages suffered by 109 plaintiffs (39 in the Alouette action and 64 in the Milliken action) as a result of a City water-main break at 7th Avenue and 38th Street, on August 10, 1983, and the ensuing electrical fire at the Consolidated Edison substation and transformer vault at that location with a resultant three day blackout of the area commonly known as the "garment center", extending from 30th Street to 42nd Street, between 6th and 7th Avenues. Plaintiffs in these actions represent approximately a third of the more than 300 parties who have filed claims against the City in connection with this occurrence.

THE ALOUETTE ACTION

Seven of the plaintiffs in the "Alouette Action" filed notices of claim in September 1983 and commenced the action by service of a summons on October 18, 1983. The other 32 plaintiffs filed their notices of claim between October 28, 1983 and November 14, 1983. A supplemental summons on their behalf was served on the City on January 13, 1984 and on that same day a complaint was served on behalf of all 39 plaintiffs.

The demands for examination that are here in issue were served by the Comptroller of the City of New York on the first seven plaintiffs in November 1983, a time subsequent to the commencement of their action. Similar demands were sent to the other 32 plaintiffs, between November 22 and December 15, 1983, in each instance before the action had been commenced on behalf of the particular claimant and within 90 days of the filing of that claimant's notice of claim. These demands, stated to be pursuant to New York City Administrative Code § 93d-1.0, provided for oral examination The plaintiffs moved for a protective order to vacate these demands for examination, asserting that a demand for such examination was inoperative after commencement of the action and further alleging that the detailed documentation here requested was a calculated and improper attempt to harass the claimants.

under oath of the particular claimant and also contained an extensive request for the production of various documents, including schedules of computation of damages, financial statements and tax returns for a three year period, insurance policies, loan applications, and "all other documentation".

While the motion for a protective order was pending, the municipal defendants served an amended answer asserting as an affirmative defense that plaintiffs had failed to comply with the condition precedent of submitting to an examination as required by General Municipal Law § 50-h(5). Upon plaintiffs moving to strike this affirmative defense, the municipal defendants cross-moved for dismissal of the complaint.

Thereafter, the Comptroller of the City of New York served subpoenas duces tecum on the plaintiffs demanding the production of extensive records (similar to those demanded in the earlier notices for examination). Plaintiffs moved to quash the subpoenas and the City cross-moved to enforce them, arguing that the Comptroller's authority to issue these subpoenas derived from City Charter § 93 and Administrative Code § 93d-1.0.

We turn first to Special Term's decision dated August 2, 1984, granting the motion to strike defendant City's affirmative defense that "plaintiffs failed to submit to an examination prior to commencement of this action as provided in section 50-h of the General Municipal Law" and denying the City's similarly grounded cross-motion for dismissal of the complaint. That decision is based upon Special Term's conclusion that a notice of a "Comptroller's hearing" pursuant to section 50-h, must be given to the claimant "within 30 days of receipt of claim by defendant in order to prevent commencement of an action pursuant to General Municipal Law 50-i" and that once 30 days have elapsed defendant may not limit plaintiff's right to commence an action by making a demand for such hearing. Consistent with other language in that decision which appears to hold untimely any notice of examination which is served more than 30 days after the notice of claim is filed, Special Term contemporaneously granted plaintiff's motion for a protective order and vacated all of the Comptroller's demands for examination. Its decision in that regard merely notes that the defendant "may proceed with examination pursuant to CPLR."

Special Term misapprehended the import of the relevant statutory provisions governing the time frames applicable to examinations of claimants by a municipality in relation to the claimant's right to commence an action. Sections 50-h and 50-i of the General Municipal Law must be read together and in harmony to give meaning and effect to both provisions in order to fully carry out the legislative intent underlying their enactment. Section 50-h grants the City a period of 90 days from the date of the filing of the notice of claim within which to serve a demand for examination of the claimant and also provides (in subd. 5) that once a demand for examination has been served, no action shall be commenced unless the claimant has complied with the demand for examination. Section 50-i, on the other hand, permits an action to be commenced by the claimant against the municipality provided that three conditions are met--i.e., that a notice of claim has been timely filed, that 30 days have elapsed since the service of such notice and that the action is commenced within 1 year and 90 days after the occurrence on which the claim is based. Nowhere in Section 50-i is there a requirement that claimant shall have complied with a demand for examination prior to commencing suit.

A reading of the two sections together makes clear that a claimant may not, under any circumstances, commence a A reading of Sections 50-h and 50-i in tandem indicates that, where the City's demand for examination has not yet been served, a claimant may properly institute an action against the City more than 30 days and less than 90 days after the filing of the notice of claim even though no Comptroller's hearing has been held. This does not mean, however, as plaintiffs urge, that once the action is commenced the City is foreclosed from pursuing that hearing. Section 50-h grants the City 90 days within which to demand an examination and it is entitled to that full period within which to make its demand, and to thereafter hold that hearing separate and distinct from any rights to discovery under the CPLR, whether the action has been commenced or not. (See Franklin Society Fed. Sav. & Loan Assoc. v. City of New York, 66 Misc.2d 675, 322 N.Y.S. 186 and Bergman v. Town of Hempstead, 61 Misc.2d 149, 304 N.Y.S.2d 1020.) Of course, if the demand has been served within the 90 day period at a time when no action has yet been instituted, the claimant may not thereafter commence an action until the demand has been complied with.

suit against the City within 30 days after the filing of a notice of claim, but can do so thereafter provided that no demand for an examination has yet been served by the City. Contrary to the City's assertion, Section 50-h does not create a 90 day waiting period before a party can commence an action. To so construe that section would be to ignore and render meaningless the 30-day waiting period specified...