Berry v. N.Y. State Dep't of Taxation & Fin. & Comm'r Jerry Boone

• Decision Date: 12 June 2017
• Docket Number: Index No.: 158919/2016
• Citation: 2017 NY Slip Op 31345 (U)
• Parties: ARTHUR KEVIN BERRY, Plaintiff, v. NEW YORK STATE DEPARTMENT OF TAXATION and FINANCE AND COMMISSIONER JERRY BOONE, Defendants.
• Court: New York Supreme Court

2017 NY Slip Op 31345(U)

ARTHUR KEVIN BERRY, Plaintiff, v. NEW YORK STATE DEPARTMENT OF TAXATION and FINANCE AND COMMISSIONER JERRY BOONE, Defendants.

Index No.: 158919/2016

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 35

RECEIVED: June 21, 2017

June 12, 2017

NYSCEF DOC. NO. 51

DECISION/ORDER

Mot. Seq. 002

HON. CAROL ROBINSON EDMEAD, J.S.C.

MEMORANDUM DECISION

In this action for, inter alia, declaratory relief, plaintiff, Arthur Kevin Berry ("plaintiff") challenges the constitutionality of the suspension of his driver's license based on outstanding tax liabilities as directed by defendants New York State Department of Taxation and Finance (the "State Tax Department") and Commissioner Jerry Boone pursuant to Section 771-v of New York Tax Law.

Factual Background

According to the complaint, plaintiff, who suffers from a chronic medical condition, works as a part-time consultant for a large pharmaceutical company. Plaintiff uses his driver's license to attend medical appointments, as well as rent cars for work in order to visit plants and offices that are inaccessible by public transportation. Additionally, at least four times a year, plaintiff travels to care for his ailing 86-year old mother in a rural town in Georgia, where the only viable method of travel is by car.

On August 25, 2016, the State Tax Department issued plaintiff a Notice of Proposed Driver's License Suspension Referral ("the Notice") for unpaid income taxes, interest, and penalties totaling approximately $18,900 for the years 2005, 2007, 2008 and 2010.¹

Plaintiff alleges that although New York Tax Law § 171-v requires that a taxpayer receive notice of liabilities and rights prior to the suspension of one's driver's license, defendants' notice and hearing were inadequate as they failed to permit him to present evidence of financial hardship. Defendants' interpretation of a "Satisfactory Payment Plan" does not permit him to be placed in "non-payment status." Plaintiff points out that similar Federal (Internal Revenue Service) Tax Procedures allow taxpayers to present evidence of one's inability to pay before a levy can be approved, and permits the taxpayer to qualify for hardship relief, including "Currently Not Collectible" status, which plaintiff is in due to his financial hardship.

Further, while Section 171-v allows a taxpayer with a suspended license to apply for a restricted license, a restricted license only permits an individual to drive to work, school, child care, and medical appointments. All other uses, such as driving out of state and transporting anyone other than a member of one's household to medical appointments, are prohibited. Thus, defendants' notice and hearing procedures fail to permit consideration of whether a restricted license allows plaintiff to effectively manage his affairs or take care of a loved one.

As a result, plaintiff, purportedly to protect taxpayers who may be subjected to improper deprivation of their driver's license, seeks a declaration pursuant to CPLR 3001 that the notice and hearing provided by defendants in their driver's license suspension program is unlawful, invalid, and unenforceable as it violates the United States and New York State Constitutions(first cause of action). Plaintiff also claims that (1) defendant failed to provide adequate notice and a hearing in violation of the Due Process Clause of the United States Constitution, 42 USC § 1983 and Article I, §6 of the New York State Constitution (second and third causes of action); (2) defendant's suspension of his driver's license constitutes an excessive fine in violation of the Eighth Amendment of the United States Constitution, 42 USC § 1983 and Article I, §5 of the New York State Constitution (fourth and fifth causes of action); and (3) defendant's failure to consider his inability to pay constitutes unfair discrimination in violation of the Equal Protection Clause of the United States Constitution, 42 USC § 1983 and Article I, § 11 of the New York State Constitution (sixth and seventh causes of action).

Defendants now move pursuant to CPLR §§ 3211(a)(2) and (a)(7), to dismiss plaintiff's complaint for failure to state a claim and lack of subject matter jurisdiction, and for a declaration that New York Tax Law § 171-v is constitutional and was constitutionally applied to plaintiff. Plaintiff lacks standing to assert claims and seek relief on behalf of other taxpayers.

Plaintiff failed to demonstrate that Tax Law § 171-v is unconstitutional "in every conceivable application" so as to represent similarly situated taxpayers, and thus, only has standing to bring claims on behalf of himself. Since New York State provides an adequate remedy for constitutional challenges to determinations under the Tax Law, plaintiff is prohibited from bringing Section 1983 claims. Plaintiff's claim for damages relief under State law may only be heard before the Court of Claims, and thus, must be dismissed. And, state agencies such as the defendant herein, are not "persons" for purposes of liability under Section 1983. Further, economic legislation such as Tax Law § 171-v is rationally related to a legitimate government purpose of raising revenue, and thus, does not violate plaintiff's Equal Protection rights.Plaintiff's Equal Protection challenge fails also because plaintiff may still submit an application for consideration in the "Offer in Compromise Program"² and have his economic circumstances taken into account, which if accepted, would cancel the proposed suspension. Nor does Tax Law § 171-v violate plaintiff's substantive Due Process rights; it does not implicate a "fundamental right" or suspect classification and is rationally related to the legitimate government purpose of raising revenue by ensuring that overdue taxes are paid. And, plaintiff's arguments do not sufficiently raise any ground to find that the notice and hearing provided to plaintiff violated a procedural Due Process right. Plaintiff had a pre-depravation right to challenge the suspension of his license with a full hearing, and a right to appeal. And, notwithstanding the Offer in Compromise Program afforded to plaintiff, plaintiff has no property interest in receiving tax leniency on liabilities he concedes are due and owing. Finally, the suspension of plaintiff's driver's license does not constitute a "fine" under the Eighth Amendment excessive fines clause.

In opposition, plaintiff argues that the Court has subject matter jurisdiction over all of his claims, including plaintiff's 42 USC § 1983 claims and prospective relief sought against defendants, and the limited jurisdiction of the Court of Claims covers monetary relief, and does not include his primary claims for declaratory judgment against an agency of the State and alleged violations of the United States Constitution as alleged here. Plaintiff argues that discovery is necessary in order to fully determine whether defendant's enforcement of the Tax Law violates the US and New York Constitutions, and cure any deficiencies in the complaint.Plaintiff also has standing to assert the constitutional infirmity of Tax Law § 171-v and its application to himself and others, and alleges sufficient facts to support his challenge to Tax Law § 171-v. Further, defendants failed to implement their license suspension with fairness, consistency, and transparency, and unless defendant can cancel a license suspension based on financial or other hardship, the statute is unconstitutional. It is premature to dismiss plaintiff's "facial" and "as applied" challenge to Tax Law § 171-v. Plaintiff's Due Process claims are also adequately alleged, in that caselaw holds that a driver's license is a property interest that cannot be taken away without procedural Due Process guaranteed by the Fourteenth Amendment and the State will not be burdened by a hardship or other financial exemption. The Offer in Compromise Program is not part of the notice and hearing procedures at issue herein. Punishing people who are unable to pay, as opposed to unwilling to pay, violates the Fourteenth Amendment, Equal Protection and Due Process protections. And, the rational standard of review does not apply in this context, and even assuming it did, fails as to plaintiff's equal protection claims. Plaintiff's financial hardship prevents him from opting for the installment plan offered by defendant, and thus, as discovery will show, the statute discriminates based on wealth. And, there is no rational relationship between raising revenue and classifying based on wealth as the State will not raise money by suspending driver's licenses of indigent people. For the same reasons, Tax Law § 171-v is an improper, excessive fine in that it results in a forfeiture of one's property interest without distinguishing between those able to pay and those willing but unable to pay their taxes. The gravity of losing one's driver's license grossly outweighs the harm caused by one's failure to pay taxes. And, defendant cannot cause the suspension to be lifted because he is unable to pay any portion of the tax.

In reply, defendants add that plaintiff failed to adequately oppose dismissal of his complain in that he failed to distinguish controlling caselaw and misapplies inapplicable caselaw. Defendant ignores that the Offer in Compromise Program permits one to obtain a restricted license and ensures that defendants consider whether the taxpayer is unable to pay basic living expenses and that defendants do not collect income exempt from collection.

Discussion

Pursuant to CPLR 3211 (a)(1), a party may move for judgment dismissing one or more causes of action asserted against him on the ground that "a defense is founded upon documentary evidence." A motion to dismiss on the basis of a defense founded upon documentary evidence may be granted "only where the documentary evidence utterly refutes [the complaint's] factual allegations, conclusively establishing a defense as a matter of law" (Goshen...