Bennett Road Sewer Co., Inc. v. Town Bd. of Town of Camillus

• Decision Date: 29 April 1998
• Citation: 672 N.Y.S.2d 587,243 A.D.2d 61
• Parties: , 1998 N.Y. Slip Op. 4125 BENNETT ROAD SEWER COMPANY, INC., Respondent, v. TOWN BOARD OF TOWN OF CAMILLUS, Town of Camillus, Milton Avenue Sewer District, Milton Avenue Sewer District Extension and Westover Sewer District, Appellants.
• Court: New York Supreme Court — Appellate Division

Page 587

672 N.Y.S.2d 587

243 A.D.2d 61, 1998 N.Y. Slip Op. 4125

BENNETT ROAD SEWER COMPANY, INC., Respondent, v. TOWN BOARD OF TOWN OF CAMILLUS, Town of Camillus, Milton Avenue Sewer District, Milton Avenue Sewer District Extension and Westover Sewer District, Appellants.

Supreme Court, Appellate Division Fourth Department.

April 29, 1998.

Dirk J. Oudemool, Syracuse, for Defendant-Appellant.

Hiscock and Barclay by Catherine Johnson, Syracuse, for Plaintiff-Respondent.

Before DENMAN, P.J., and HAYES, BALIO, BOEHM and FALLON, JJ.

BOEHM, Justice:

Plaintiff is a "sewage-works corporation", so designated and organized pursuant to article 10 of the Transportation Corporations Law. This action stems from a long-standing dispute over the sewer rates recoverable by plaintiff for the use of its sewer facilities located in Camillus. On June 3, 1968, defendant Town of Camillus (Town) and Fabo S. Casale entered into an agreement providing for the formation of plaintiff corporation, which would construct, service and operate a sewer system in a defined area of the Town (franchise area). Plaintiff would be paid maintenance charges and transportation fees to be collected by the Town, a tap-in fee of $360 for each unit connected to the corporation's sewer lines, and an annual charge (sewer rate) of $75 per unit per year for a period of 30 years from the completion of the system. In accordance with the agreement, Casale incorporated plaintiff and completed a comprehensive plan for the installation of a sewer system within the franchise area. On October 16, 1968, defendant Town Board of the Town of Camillus (Board) by resolution unanimously consented to the incorporation of plaintiff, as required by Transportation Corporations Law § 116, and to the June 3rd agreement.

Plaintiff constructed the sewer system in seven separate sections between 1973 and 1982. In July 1984, the Board adopted a resolution providing that, in accordance with the agreement, it would collect and pay to plaintiff the sewer fees and charges.

On August 3, 1992, plaintiff filed a petition with the Board requesting that the current annual sewer rate be increased from $75 to $427.35 per unit pursuant to Transportation Corporations Law § 121, which provides that sewer rates be "fair, reasonable and adequate". Plaintiff asserted that the current rate of compensation set forth in the agreement was not fair, reasonable or adequate because it was based upon estimates of costs, construction and installation of the sewer facilities applicable in 1968 and did not take inflation into account for the years between 1973 and 1982, when the sewer system was under construction. Plaintiff based the new rate on the cost of construction and installation of the sewer facilities and applied a 6% return on its investment over a 20-year period. Plaintiff further asserted that the current rate was unfair because sewer fees and charges from the unimproved properties in the franchise area should be collected by the Town and, although commercial and industrial users generated more sewage, the Town charged them the same rate charged to single-family residential users. Plaintiff also requested that the Town collect sewer fees and charges from the unimproved properties in the franchise area because the presence of the sewer facilities enhanced the value of those properties.

The Board denied plaintiff's petition for a rate increase on the ground that plaintiff failed to establish that the current rate was not fair, reasonable and adequate. Plaintiff then commenced an action seeking a judgment declaring that it is entitled to the relief requested in the petition. Additionally, plaintiff alleged that two other sewer systems, the Milton Avenue Sewer District Extension and the Westover Sewer District, which was established by the Town, infringed upon its franchise rights and that it is entitled to those tap-in fees and transportation charges. Plaintiff further alleged that "defendants have not collected [or] paid to [plaintiff] any tap-in or transportation fees for the use of its sewer facilities by the Milton Avenue Sewer District Extension or any other Defendants [i.e., Milton Avenue Sewer District, Westover Sewer District, the Town and the Board] for the years [1990-1993]".

In August 1994, plaintiff presented a second petition for a rate increase. Plaintiff appended to the petition material contained in the 1992 petition as well as additional material, including records of the actual construction costs for sections 1, 2, and 3 of the sewer system, amounting to $123,310.08. In addition, because detailed records of the construction costs for sections 4 through 7 of the sewer system could not be located, plaintiff hired environmental and engineering consultants O'Brien & Gere to review plaintiff's construction documentation and calculate the cost of sections 4 through 7. O'Brien & Gere calculated the total cost of those sections at $379,319.97. Based upon the foregoing figures, plaintiff alleged that the construction cost of the sewer system was $502,620.05 and that, applying a 6% return on its investment over a 20-year period, the annual sewer rate charge per unit should be increased to $427.35. Plaintiff also sought tap-in fees and transportation charges, increased sewer rates for commercial and industrial users, and application of the same sewer rates charged by the Town in its sewer district to the unimproved parcels of land in the franchise area.

The Board refused to act on plaintiff's petition, stating as its reason that five years had not elapsed since the first petition was presented in 1992. The Town then commenced an action seeking a judgment declaring that plaintiff's 1994 petition could not be maintained and that plaintiff had abandoned its sewer system and title thereto had passed to the Town. Plaintiff counterclaimed for a judgment declaring its right to the relief requested in the 1994 petition, and moved to consolidate the two actions and for summary judgment.

Without disposing of those actions, Supreme Court, by consent order dated November 22, 1995, remitted plaintiff's petitions to the Board for a hearing. The consent order directed, inter alia, that the Milton Avenue Sewer District pay plaintiff the $360 tap-in fee as well as annual transportation costs to be determined at the hearing. After the hearing, the Board denied plaintiff's request for a rate increase "based on failure to prove a case for an increase of the rate". The Board made no reference to transportation costs.

On May 8, 1996, plaintiff commenced this action seeking a judgment declaring its right to a rate increase, tap-in fees and transportation charges, an increase in the rates charged to commercial and industrial users based upon the waste generated, and application of the same rates charged by the Town in its sewer district to unimproved property in the franchise area. After issue was joined, plaintiff moved to consolidate this action with the two other actions and for summary judgment. Defendants cross-moved to dismiss the present action as time-barred. Because issue had been joined, defendants should have moved for summary judgment rather than moving to dismiss plaintiff's action (see, CPLR 3212[a] ). We ignore that technical irregularity and treat the motion as one for summary judgment (see, CPLR 2001; see also, Technical Tape v. Spray-Tuck, Inc., 146 A.D.2d 517, 518, 536 N.Y.S.2d 457, lv. dismissed 74 N.Y.2d 791, 545 N.Y.S.2d 106, 543 N.E.2d 749).

The court determined that the Board had breached its statutory duty to agree to a fair, reasonable and adequate sewer rate, and that plaintiff had provided adequate documentation to support its request for a rate increase. In addition, the court held that, based upon the agreement and the 1984 Resolution authorizing the Town to collect the tap-in fees, plaintiff was entitled to payment of those fees. The court directed the Town to collect and pay to plaintiff a $360 tap-in fee for each unit that had tapped into plaintiff's facilities. The court granted the request by plaintiff for increased sewer rates from the commercial users of its facilities based upon the volume of waste generated because of the "substantially greater burden" placed upon the sewer facilities. Finally, the court determined that the sewer rates for owners of unimproved parcels of land in the franchise area...