D'Alessandro ex rel. Vallemaio Props., LLC v. Kirkmire

• Decision Date: 06 February 2015
• Citation: 3 N.Y.S.3d 216,2015 N.Y. Slip Op. 01018,125 A.D.3d 1309
• Parties: In the Matter of Mary D'ALESSANDRO, on Behalf of VALLEMAIO PROPERTIES, LLC, David Bonis, Deborah Burns, Thomas Turner, Bruce T. Henry, Petitioners–Plaintiffs–Appellants, et al., Petitioner–Plaintiff, v. Gary KIRKMIRE, Director of Inspection and Compliance Services, Bureau of Neighborhood Service Center of City of Rochester, and City of Rochester, Respondents–Defendants–Respondents.
• Court: New York Supreme Court — Appellate Division

125 A.D.3d 1309

3 N.Y.S.3d 216

2015 N.Y. Slip Op. 01018

In the Matter of Mary D'ALESSANDRO, on Behalf of VALLEMAIO PROPERTIES, LLC, David Bonis, Deborah Burns, Thomas Turner, Bruce T. Henry, Petitioners–Plaintiffs–Appellants, et al., Petitioner–Plaintiff,

v.Gary KIRKMIRE, Director of Inspection and Compliance Services, Bureau of Neighborhood Service Center of City of Rochester, and City of Rochester, Respondents–Defendants–Respondents.

Supreme Court, Appellate Division, Fourth Department, New York.

Feb. 6, 2015

Reversed. Santiago Burger Annechino LLP, Rochester (Michael A. Burger of Counsel), for Petitioners–Plaintiffs–Appellants.

Robert J. Bergin, Corporation Counsel, Rochester (John M. Campolieto of Counsel), for Respondents–Defendants–Respondents.

PRESENT: SCUDDER, P.J., FAHEY, PERADOTTO, CARNI, and WHALEN, JJ.MEMORANDUM:

Petitioners-plaintiffs (petitioners) commenced this hybrid CPLR article 78 proceeding and declaratory judgment action seeking, inter alia, to declare section 90–21 of the Municipal Code of the City of Rochester (Code) unconstitutional. That section of the Code permits respondent-defendant City of Rochester (City) to collect a “case management fee” (CMF) of $100 in any case in which a property owner has failed, for over one year, to comply with a notice and order notifying that owner of Code violations related to the property (Code § 90–21). The explicit intent of the CMF is “to obtain some reimbursement for the cost of [property] inspections and to reduce the number of [notice and order] cases” (§ 90–21[A] ). The CMF is assessed by the Director of Inspection and Compliance Services (Director) based upon his or her review of the “case file” (§ 90–21[F] ). A property owner may protest the CMF “in a writing delivered to the Director ... within 10 business days from the date of the notice of assessment” ( id.). That same Director must then “review the case file and the written submission of the owner and make a determination on the protest in writing within 10 business days from the date of the protest” ( id.). The determination of the Director “shall be the final determination of the City ... and shall be subject to review pursuant to [CPLR a]rticle 78” ( id.). In the event that the CMF remains unpaid after 60 days, it shall become a lien against the property and, if unpaid on May 1, shall be added to the property taxes for that property ( see § 90–21[D] ).

Respondent-defendant Gary Kirkmire, in his official capacity as the Director, imposed CMFs on petitioners, although he eventually waived the CMFs imposed on certain petitioners, finding that those CMFs were erroneously imposed. After petitioners commenced this proceeding/action, they moved for summary judgment on the petition/complaint and sought a judgment declaring that section 90–21 is invalid, that it impermissibly authorizes the imposition of the CMF without a trial and that defendants may not collect the CMF from property owners in the City or place an unpaid CMF on the property tax bills. Respondents-defendants (respondents) moved to dismiss the petition/complaint, and Supreme Court issued an order converting that motion, upon the consent of the parties, into a cross motion for summary judgment. The court also enjoined the City from imposing any further CMFs on petitioners or placing any further CMFs, penalties or interest on petitioners' property tax bills.

Following additional submissions by the parties, the court issued a judgment declaring that section 90–21 is constitutional and that the CMFs imposed by section 90–21 were valid and were constitutionally and legally imposed. The court further vacated the injunction previously imposed, concluded that petitioners were not denied procedural due process and confirmed the determinations of the Director with respect to petitioners David Bonis, Deborah Burns and Bruce T. Henry, for whom the CMFs were not waived. We now reverse.

The appealing petitioners contend that the CMF imposed by Code § 90–21 is, in actuality, a fine, and that it is imposed upon property owners without due process. We agree. Although “[t]he exceedingly strong presumption of constitutionality applies ... to ordinances of municipalities[,] ... [that] presumption is rebuttable” ( Lighthouse Shores v. Town of Islip, 41 N.Y.2d 7, 11–12, 390 N.Y.S.2d 827, 359 N.E.2d 337; see Matter of Turner v. Municipal Code Violations Bur. of City of Rochester, 122 A.D.3d 1376, 1377, 997 N.Y.S.2d 876), and we conclude that petitioners have rebutted the presumption of constitutionality. We therefore reverse the judgment and grant judgment in favor of the appealing petitioners, declaring that section 90–21 is unconstitutional.

A determination whether the CMF is a fee or a fine imposed as a penalty is critical to our analysis because “[p]rocedural due process rights do not apply to legislation of general applicability,” and thus the imposition of fees such as licensing fees are “not subject to attack on grounds of procedural due process. Fines [that are imposed as a penalty], however, can implicate procedural due process rights” ( Jones v. Wildgen, 320 F.Supp.2d 1116, 1127 [D.Kan.2004], reconsideration granted in part on other grounds 349 F.Supp.2d 1358 [D.Kan.]; see Twin Lakes Dev. Corp. v. Town of Monroe, 1 N.Y.3d 98, 106–107, 769 N.Y.S.2d 445, 801 N.E.2d 821, cert. denied 541 U.S. 974, 124 S.Ct. 1883, 158 L.Ed.2d 469). Respondents contend that the CMF is a fee charged in exchange for a service or benefit, i.e., the numerous inspections of the property while the notice and order is in effect. In our view, the CMF is the equivalent of a fine imposed as a penalty, i.e., a sum of money required to be paid as a result of either “doing some act which is prohibited, or omitting to do some act which is required to be done” ( City of Buffalo v. Neubeck, 209 App.Div. 386, 388, 204 N.Y.S. 737; see Matter of Dumbarton Oaks Rest. & Bar v. New York State Liq. Auth., 58 N.Y.2d 89, 93–94, 459 N.Y.S.2d 564, 446 N.E.2d 128). The CMF is assessed only after respondents have determined that a property owner has violated the Code in the first instance and that the property owner has failed to abate those violations within one year.

It is well settled that states may not “deprive any person of life, liberty, or property, without due process of law” (U.S. Const., 14th Amend., § 1; see N.Y. Const., art. I, § 6). Having concluded that the CMF is a fine imposed as a penalty on the property owner, we must determine whether the ordinance provides property owners with due process of law. As the Court of Appeals wrote in Morgenthau v. Citisource, Inc., 68 N.Y.2d 211, 508 N.Y.S.2d 152, 500 N.E.2d 850, “[w]e have long recognized that ‘due process is a flexible constitutional concept calling for such procedural protections as a particular situation may demand’ ... [,] and in determining whether [f]ederal due process standards have been met, we look to the three...