Corsello v. Verizon N.Y., Inc.

• Decision Date: 29 March 2012
• Citation: 967 N.E.2d 1177,18 N.Y.3d 777,2012 N.Y. Slip Op. 02343,944 N.Y.S.2d 732
• Parties: William CORSELLO et al., Respondents–Appellants, v. VERIZON NEW YORK, INC., Formerly Known as New York Telephone Company, et al., Appellants–Respondents.
• Court: New York Court of Appeals Court of Appeals

18 N.Y.3d 777

967 N.E.2d 1177

944 N.Y.S.2d 732

2012 N.Y. Slip Op. 02343

William CORSELLO et al., Respondents–Appellants,

v.VERIZON NEW YORK, INC., Formerly Known as New York Telephone Company, et al., Appellants–Respondents.

Court of Appeals of New York.

March 29, 2012.

Kirkland & Ellis LLP (Patrick F. Philbin of the District of Columbia bar, admitted pro hac vice, of counsel), and Kirkland & Ellis LLP, New York City (Joseph Serino, Jr., of counsel) for appellants-respondents.

Law Offices of David M. Wise, P.A., Cranford, New Jersey (David M. Wise of counsel), and Reilly Like & Tenety, Babylon (Irving Like of counsel), for respondents-appellants.

OPINION OF THE COURT

SMITH, J.

Defendant Verizon New York, Inc. (Verizon) attached a box to a building that plaintiffs own, and used the box to transmit telephone communications to and from Verizon's customers in other buildings. Plaintiffs claim that Verizon took their property without paying them just compensation, and deceived them into believing that no compensation was owed.

We hold that plaintiffs have stated a valid “inverse condemnation” claim for just compensation, and that that claim is not time-barred. However, their claim for an alleged violation of General Business Law § 349 is barred by the statute of limitations, and their unjust enrichment claim is legally insufficient. We also hold that the courts below properly denied plaintiffs' motion for class certification.

I

Plaintiffs own an apartment building in Brooklyn. Many years ago, Verizon's predecessor, the New York Telephone Company, attached to that building a “terminal box” or “rear wall terminal.” According to plaintiffs' complaint, boxes of this kind serve to connect Verizon's “Block Cable”—a single cable serving a number of customers typically located within a single city block—to “Station Connection wires,” which “radiate out” from the box to several buildings in which Verizon customers are found. The complaint alleges that such a box is typically fed by “one or more Block Cables” and is “the termination point of between 25 to 200 individual Station Connection wires.” Thus the box on plaintiffs' building enables Verizon to furnish telephone service not just to that building, but to a number of others. Plaintiffs claim, in substance, that Verizon is using their building as a substitute for a telephone pole, without paying plaintiffs for the privilege.

Plaintiffs also claim that Verizon tricked them into tolerating the box on their property without seeking payment. The complaint asserts that Verizon “never disclosed” that plaintiffs had a right to compensation and “created the false impression” that Verizon had a right to attach the box “as a condition for providing service to the building.” This allegation was made more specific in deposition testimony: plaintiff William Corsello said that a Verizon representative told him in 1986 that Verizon “had a right” to put the box on the wall.

Plaintiffs brought this lawsuit seeking damages and injunctive relief on behalf of themselves and all other building owners similarly situated. The complaint asserts that plaintiffs are entitled to relief on four theories: inverse condemnation; unjust enrichment; trespass; and deceptive trade practices in violation of General Business Law § 349. Verizon moved to dismiss the complaint. Supreme Court dismissed the unjust enrichment claim, but upheld the claims for inverse condemnation, trespass and violation of the General Business Law (21 Misc.3d 1116[A], 2008 N.Y. Slip Op. 52081[U], 2008 WL 4615684 [2008] ). In a later order, Supreme Court denied plaintiffs' motion to certify the case as a class action (25 Misc.3d 1221[A], 2009 N.Y. Slip Op 52232[U], 2009 WL 3682595 [2009] ).

Verizon did not pursue an appeal from so much of Supreme Court's first order as sustained plaintiffs' trespass claim; that claim remains pending in Supreme Court. As to the other asserted grounds for relief, the Appellate Division modified Supreme Court's first order, and affirmed it as modified. The Appellate Division agreed with Supreme Court that plaintiffs had stated a legally sufficient inverse condemnation claim, but dismissed that claim as barred by the statute of limitations. It reinstated the unjust enrichment claim, and affirmed so much of the order as upheld the General Business Law claim ( Corsello v. Verizon N.Y., Inc., 77 A.D.3d 344, 908 N.Y.S.2d 57 [2d Dept.2010] ). In a separate decision on the same day, the Appellate Division affirmed Supreme Court's order denying class certification ( Corsello v. Verizon N.Y., Inc., 76 A.D.3d 941, 907 N.Y.S.2d 431 [2d Dept.2010] ).

The Appellate Division granted leave to appeal from both of its orders. We now modify the order that addressed Verizon's motion to dismiss, reinstating the inverse condemnation claim but dismissing the other two claims that are before us. We affirm the order denying class certification.

II

We agree with both of the courts below that plaintiffs' complaint states a valid inverse condemnation claim.

It is undisputed that, under Transportation Corporations Law § 27, Verizon has the power to take plaintiffs' property for the purpose of attaching its cables and wires. Section 27 says, in relevant part:

“Any such corporation may erect, construct and maintain the necessary fixtures for its lines upon, over or under any of the public roads, streets and highways ..., and may erect, construct and maintain its necessary stations, plants, equipment or lines upon, through or over any other land, subject to the right of the owners thereof to full compensation for the same. If any such corporation can not agree with such owner or owners upon the compensation to be paid therefor, such compensation shall be ascertained in the manner provided in the eminent domain procedure law.”

In their inverse condemnation claim, plaintiffs assert that Verizon has de facto exercised its section 27 power, and taken plaintiffs' property, by attaching its “equipment” and “lines” to their building. Plaintiffs sue for the “compensation” for this taking to which they say they are entitled under section 27 and the takings clauses of the State and Federal Constitutions.The courts below held this claim to be legally sufficient, relying on Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982), in which the United States Supreme Court decided that the installation of cables on the roof of an apartment building by a cable television company acting pursuant to authority granted by a state statute was a taking in the constitutional sense.

Verizon argues that inverse condemnation is not an available remedy because plaintiffs have alleged at most a trespass, not a taking of their property. Loretto is distinguishable, Verizon argues, because the cable television company in Loretto not only had a statutory right to install its equipment, but had expressly invoked that right. According to Verizon, unless it has affirmatively chosen to take plaintiffs' property under section 27, or unless it has inflicted an injury on the property that “is incapable of actual, physical repair and, therefore, in its nature and of necessity permanent” ( Dietzel v. City of New York, 218 N.Y. 270, 272, 112 N.E. 720 [1916] ), it has committed no more than a trespass and cannot be sued for inverse condemnation. Verizon's argument rests on an outmoded understanding of the relationship between inverse condemnation and trespass.

“Inverse condemnation” is a term relatively new to the law of eminent domain. Originally, at least as used by New York courts, it described not an independent basis for a lawsuit, but an equitable remedy given in actions for trespass when the trespasser had, but had not exercised, the power to condemn the property in question. In Pappenheim v. Metropolitan El. Ry. Co., 128 N.Y. 436, 28 N.E. 518 (1891), we considered a trespass action in which plaintiff sought an injunction and damages based on the operation of a railway in front of her property that interfered with her easement of light, air and access. Though the defendants were authorized to exercise the right of eminent domain and thus to acquire the easement, they had not done so and had paid plaintiff no compensation. In such a case, we said, the owner was entitled to damages for trespass, but was not limited only to a monetary remedy:

“[T]he owner may resort to equity for the purpose of enjoining the continuance of the trespass, and to thus prevent a multiplicity of actions at law to recover damages; and in such an action the court may determine the amount of damage which the owner would sustain if the trespass were permanently continued, and it may provide that, upon payment of that sum, the plaintiff shall give a deed or convey the right to the defendant, and it will refuse an injunction when the defendant is willing to pay upon the receipt of a conveyance. The court does not adjudge that the defendant shall pay such sum and that the plaintiff shall so convey. It provides that, if the conveyance is made and the money paid, no injunction shall issue. If defendant refuse to pay, the injunction issues.” ( Id. at 444, 28 N.E. 518.)

Thus under Pappenheim the trespasser could be given a choice: condemn and pay for the property, or accept an injunction against the trespass. We did not label this remedy as “inverse condemnation” in Pappenheim; we first used that term more than 40 years later, in Ferguson v. Village of Hamburg, 272 N.Y. 234, 240, 5 N.E.2d 801 (1936), where we said that the method approved in Pappenheim and similar cases “of expeditiously disposing of the entire matter in a court of equity” was “sometimes termed ‘inverse condemnation.’ ” Over the next several decades, the term was occasionally used in the same sense ( see Trippe v. Port of N.Y Auth., 17 A.D.2d 472, 474, 236 N.Y.S.2d 312 [2d Dept.1962], rev'd. on other grounds14 N.Y.2d 119, 249 N.Y.S.2d 409, 198 N.E.2d 585 [1964];Boomer v....