Burns v. Egan

• Decision Date: 01 July 1985
• Citation: 492 N.Y.S.2d 666,129 Misc.2d 130
• Parties: Heywood BURNS, Ramsay Clark, Rev. Graham Hodges, Dorothy M. Keller and Lanny E. Walter, Plaintiffs, v. John C. EGAN, as Commissioner of the New York State Office of General Services; Edward V. Regan, as Comptroller of the State of New York; Michael Finnerty, as the New York State Director of the Budget; Thomas A. Coughlin, III, as Commissioner of the New York State Department of Correctional Services; The New York State Urban Development Corporation: and William Stern, as Chairman of the New York State Urban Development Corporation, Defendants.
• Court: New York Supreme Court

Page 666

492 N.Y.S.2d 666

129 Misc.2d 130

Heywood BURNS, Ramsay Clark, Rev. Graham Hodges, Dorothy M.

Keller and Lanny E. Walter, Plaintiffs, v. John C. EGAN, as Commissioner of the New York State Office

of General Services; Edward V. Regan, as Comptroller of the

State of New York; Michael Finnerty, as the New York State

Director of the Budget; Thomas A. Coughlin, III, as

Commissioner of the New York State Department of

Correctional Services; The New York State Urban Development

Corporation: and William Stern, as Chairman of the New York

State Urban Development Corporation, Defendants.

Supreme Court, Special Term,

Albany County.

July 1, 1985.

Madeline Kochen, and Arthur Eisenberg, New York Civil Liberties Union, New York City, for plaintiffs.

Robert Abrams, Atty. Gen., Albany (Lawrence L. Doolittle, Albany, of counsel), for defendants.

JOHN G. CONNOR, Justice.

This decision is rendered on plaintiffs' motion for reargument of this Court's decision dated April 10, 1985 and judgment entered thereon April 19, 1985 in Albany County. Before addressing the legal issues, a review of the background of this and a related case is necessary.

In 1983 the Legislature enacted an elaborate funding scheme for the development of State correctional facilities (McKinney's Uncons.Laws of N.Y., Sec. 6267 L.1983, ch. 56, as amended by L.1983, chs. 712, 713.

The purpose of the statute was to finance the construction of new correctional facilities as well as, the renovation and expansion of existing facilities to alleviate prison overcrowding caused by an "unprecedented growth" in the population of the State's correctional facilities (Prison Construction Act Sec. 1). The sum of $284,200,000.00 was appropriated from the State Capital Projects Fund to the State Department of Correctional Services to accomplish that purpose (Prison Construction Act Sec. 3). ¹

Additionally, the statute authorizes the State Urban Development Corporation (UDC) to issue bonds and notes totalling $380,000,000.00. The proceeds of these bonds and notes are to be used to repay the Department of Corrections, which would apparently then convey title to newly developed correctional facilities to UDC (Prison Construction Act Secs. 5, 6). Thereafter, the State, through the Commissioner of General Services, is authorized to lease the facilities from UDC and in turn sublet them to the Department of Corrections. The State's lease from UDC must specify a term no shorter than the debt service period on the UDC bonds and notes. Also, the rental payments are to be equal to the debt service on the bonds and notes. At the expiration or termination of the lease, the State is to purchase the facilities from UDC at a nominal price (Prison Construction Act sec. 7).

It is interesting to note that this elaborate financing scheme was devised after the voters of this State, by a referendum in November of 1981, defeated a direct State bond issue of $500,000,000.00 for the construction and renovation of correctional facilities (see L.1981, ch. 850, sec. 10).

In a previous action, plaintiffs, joined by several organizations including the New York State Coalition for Criminal Justice, Inc., challenged the constitutionality of the statutory financing scheme asserting legal On appeal, the Court of Appeals affirmed, but on the ground that the individual plaintiffs lacked taxpayer standing and, therefore, never addressed the merits (New York State Coalition for Criminal Justice v. Coughlin, 64 N.Y.2d 660, 662, 485 N.Y.S.2d 247, 474 N.E.2d 607). Significantly, the Court of Appeals and the Appellate Division expressly refused to consider voter standing since plaintiffs improperly raised that issue for the first time on appeal (New York State Coalition for Criminal Justice v. Coughlin, 64 N.Y.2d 660, 662 n., 485 N.Y.S.2d 247, 474 N.E.2d 607, affg. 103 A.D.2d 40, 43, 479 N.Y.S.2d 85, supra ). ²

                standing as taxpayers.  The basis of their constitutional challenge was, inter alia, that the statute in reality caused the State to incur a long-term debt without voter approval in contravention of N.Y. Constitution, Article VII, sec. 11.  This Court, by judgment entered December 22, 1983 in Albany County, determined that all plaintiffs in that action lacked taxpayer standing and dismissed the case.  One cause of action dealing with affirmative action provisions of the Prison Construction Act was not dismissed, but is not at issue here.  The Appellate Division, Third Department, held that while the organizations lacked taxpayer standing, the individual plaintiffs in that action (the only plaintiffs in the present case) had taxpayer standing (New York State Coalition for Criminal Justice v. Coughlin, 103 A.D.2d 40, 42-44, 479 N.Y.S.2d 850).   On the merits, the Appellate Division upheld the constitutionality of the statute and affirmed summary judgment in favor of defendants (id. at 45-46, 479 N.Y.S.2d 85)
                

The individual plaintiffs from Coughlin I brought the present action challenging the constitutionality of the statutory financing scheme solely on the basis that it violates N.Y. Constitution, article VII, sec. 11. Plaintiffs assert standing as voters and taxpayers. Defendants moved for summary judgment dismissing the complaint and by order to show cause, plaintiffs cross-moved for leave to serve an amended complaint containing more specific allegations and seeking to have specific sections of the Prison Construction Act declared unconstitutional. This Court found in favor of defendants on their motion and against plaintiffs on the cross-motion. Plaintiffs' motion for reargument ensued.

STANDING

As in Coughlin I, plaintiffs challenge the constitutionality of the financing scheme created by the Prison Construction Act. Plaintiffs assert that the substance of this action differs from that of Coughlin I in that only the UDC bond issuing provisions were the only aspects of the Prison Construction Act challenged in Coughlin I. In reality, however, Coughlin I also apparently dealt with the leaseback and repurchase provisions of the Act as is evident from the Appellate Division decision. Plaintiff challenges these same provisions here.

Although plaintiffs' proposed amended complaint specifies only certain sections of the statute which are challenged, these sections comprise the operative provisions of the funding structure, the heart of which is the issuance of bonds and notes by UDC. While the proposed amended complaint is carefully phased to omit a challenge to Prison Construction Act sec. 5 which authorizes UDC to issue bonds and notes, plaintiffs challenge to the operative provisions of the statute is tantamount to a challenge of the "entire funding scheme" (Original complaint paragraph 25). Such a challenge includes the bond and note issuing provisions of the Act at issue in Coughlin I. Plaintiffs in Coughlin I also sought to permanently enjoin UDC from issuing bonds yet the primary focus was, as here, to declare the Prison Construction Act unconstitutional. Following the Court of Appeals decision, this Court is constrained to deny plaintiffs standing as taxpayers in the present action (New York State Coalition for Criminal Justice v The issue of voter standing, however, requires a more detailed analysis. New York has a judicially adopted "zone of interest" test for legal standing (Matter of Dairylea Coop. v. Walkley, 38 N.Y.2d 6, 9, 377 N.Y.S.2d 451, 339 N.E.2d 865). To obtain standing, a plaintiff must show that the governmental action complained of will cause him injury in fact and that the interest he advances is arguably within the zone of interest to be protected by statute. As to the second requirement, the class of persons entitled to judicial review of the validity of governmental action is broadly defined and standing should be denied only where there is a clear legislative intent to negate judicial review or there is no injury in fact (see Matter of District Attorney of Suffolk County, 58 N.Y.2d 436, 442, 461 N.Y.S.2d 773, 448 N.E.2d 440; Matter of Goldberg v. Axelrod, 104 A.D.2d 520, 520-521, 479 N.Y.S.2d 887, lv. denied 64 N.Y.2d 602, 475 N.E.2d 125).

Coughlin, 64 N.Y.2d 660, 485 N.Y.S.2d 247, 474 N.E.2d 607, supra ).

As voters, plaintiffs satisfy both aspects of the zone of interest test. If plaintiffs are correct in their assertion that The Prison Construction Act amounts to a long term State debt without voter approval, their right as voters to pass on such an issue has been abridged (N.Y. Const. art. VII, sec. 11). An injury in fact need not be an out-of-pocket loss (Matter of Dental Soc. of State of N.Y. v. Carey, 61 N.Y.2d 330, 333-334, 474 N.Y.S.2d 262, 462 N.E.2d 362), and an abridgment of the right guaranteed by the State Constitution would be an injury in fact to plaintif...