Duffy v. Wetzler

• Court: New York Supreme Court
• Writing for the Court: ALAN LeVINE
• Citation: Duffy v. Wetzler, 668 N.Y.S.2d 869, 175 Misc.2d 231 (N.Y. Sup. Ct. 1997)
• Decision Date: 06 November 1997
• Parties: , 1998 N.Y. Slip Op. 98,031 Eugene H. DUFFY et al., Plaintiffs, v. James W. WETZLER et al., Individually and as Present or Former New York State Commissioner of Taxation and Finance, et al., Defendants.

Page 869

668 N.Y.S.2d 869

175 Misc.2d 231, 1998 N.Y. Slip Op. 98,031

Eugene H. DUFFY et al., Plaintiffs, v. James W. WETZLER et al., Individually and as Present or Former New York State Commissioner of Taxation and Finance, et al., Defendants.

Supreme Court, Queens County.

Nov. 6, 1997.

Dennis C. Vacco, Attorney General, White Plains (Kevin C. Reilly, of counsel), for James W. Wetzler and others, defendants.

Jeffrey D. Friedlander, Acting Corporation Counsel of New York City (Frances Henn, of counsel), for Anthony Shorris and others, defendants.

Anderson Kill & Olick, P.C., New York City (Mark L. Weyman, of counsel), O'Neil Cannon & Hollman, Milwaukee, WI (Eugene Duffy, of counsel), and Phelan & Costello, P.C., New York City (John J. Phelan and Robert Costello, of counsel), for plaintiffs.

ALAN LeVINE, Justice.

In this action for declaratory, injunctive and monetary relief, challenging the constitutionality of former Tax Law § 612(c) (former [3]) and Administrative Code of the City of New York, section 11-1712(c) (former [3] ), Defendants James W. Wetzler and Roderick G.W. Chu, the present and former New York State Commissioners of Taxation and Finance, and Edward V. Regan, the former Comptroller of the State of New York (hereinafter the "State defendants"), seek an order dismissing the action on the grounds of collateral estoppel, res judicata and payment pursuant to CPLR 3211(a)(5). Codefendants Anthony Shorris, Stanley E. Grayson, Abraham Biderman and Paul Crotty, the present and former Commissioners of Finance of the City of New York, and the City of New York (hereinafter the "City defendants") separately move to dismiss the complaint on the identical grounds. Plaintiffs cross-move in opposition and seek leave to amend the complaint in the Alderman action in order to add two new causes of action, and leave to reargue or renew the Alderman plaintiffs' earlier motion for class action status and, upon reargument or renewal, granting certification of this action as a class action.

The procedural and litigation history of this action is set forth in Duffy v. Wetzler, 148 Misc.2d 459, 555 N.Y.S.2d 543, mod. 174 A.D.2d 253, 579 N.Y.S.2d 684, appeal dismissed 79 N.Y.2d 976, 583 N.Y.S.2d 190, 592 N.E.2d 798 and 80 N.Y.2d 890, 587 N.Y.S.2d 900, 600 N.E.2d 627, cert. granted 509 U.S. 917, 113 S.Ct. 3027, 125 L.Ed.2d 716 and on remand 207 A.D.2d 375, 616 N.Y.S.2d 48, lv. to appeal denied 84 N.Y.2d 838, 617 N.Y.S.2d 129, 641 N.E.2d 149 and cert. denied 513 U.S. 1103, 115 S.Ct. 779, 130 L.Ed.2d 673; see also, 207 A.D.2d 378, 616 N.Y.S.2d 213, cert. denied 513 U.S. 1103, 115 S.Ct. 779, 130 L.Ed.2d 673, and will not be restated herein.

In a decision dated August 11, 1995 and an order entered on September 29, 1995, this court determined that the moving law firms representing the Duffy and Alderman plaintiffs pursuant to individual written retainer agreements were entitled to the payment of legal fees equal to 20% of each client's tax refund, together with interest. On October 27, 1994, the State defendants had tendered to the Alderman and Duffy plaintiffs checks for 80% of the total tax refund each individual was eligible to receive including interest. The remaining 20% remained in a fund until the determination of the claim for an attorney's charging lien. The State Department of Taxation and Finance on October 13, 1995 accounted to and paid Phelan and Costello, P.C., as representatives of plaintiffs' attorneys, these legal fees. At least one plaintiff, Eugene Duffy, refused to accept the refund check, as he claimed he was entitled to a refund for tax year 1985. Mr. Duffy died on July 31, 1997, at the age of 85, and by operation of law, his surviving spouse, plaintiff Alice Duffy, succeeds to his interest in the refund claim (Tax Law 686[d] ). There are at present three categories of plaintiffs who did not receive refunds: (1) Plaintiffs who refused the checks; (2) plaintiffs who claimed they filed timely administrative claims for which defendants have no records; and (3) plaintiffs who failed to file administrative claims.

The court now finds that after eight years of litigation and appeals, this action has come to an end. Defendants' motions for an order dismissing the action, therefore, are granted, and plaintiffs' cross-motion is denied in its entirety.

Contrary to plaintiffs' assertions, the consolidation of the Duffy and Alderman actions resulted in a fusion or merger of the two actions into a single action. (2 Weinstein-Korn-Miller, N.Y.Civ.Prac. p 602.02; Kelley v. Galina-Bouquet Inc., 155 A.D.2d 96, 552 N.Y.S.2d 305; Keim v. Orel, 263 App.Div. 779, 31 N.Y.S.2d 321). Inasmuch as the Alderman action was consolidated with the Duffy action for all purposes pursuant to a so ordered stipulation dated June 28, 1995, there are no remaining independent Alderman claims. Moreover, there are no remaining claims to be litigated in this action. Plaintiffs' cross motion to add new causes of action to the Alderman action, therefore, is denied, as no such action exists. Furthermore, plaintiffs' assertion that the Alderman plaintiffs' claims were never determined on the merits and, therefore, survived the consolidation of the two actions, is without merit. The plaintiffs in Alderman were represented by the same counsel as the Duffy plaintiffs, and concede that they agreed to hold their action in abeyance, pending the outcome of the Duffy appeals. The Alderman plaintiffs thereafter sought to take advantage of the State's refund decision announced in Duffy v. Wetzler (207 A.D.2d 375, 616 N.Y.S.2d 48) and initiated the stipulation to consolidate the two actions. The Alderman plaintiffs, thus, sought a complete consolidation of the actions and not a joint trial. The Alderman plaintiffs, along with the Duffy plaintiffs, were thereafter paid refunds and their counsel received payment for legal fees pursuant to this court's order of September 29, 1995. The Alderman plaintiffs, having chartered their course, and having reaped the benefits of consolidation with the Duffy action, cannot now seek to undo the effects of the consolidation.

The issues of remedy and refund which were raised in the remittitur to the Appellate Division were declared to be academic in light of the State's decision to pay full refunds with interest to eligible federal retirees (Duffy v. Wetzler, 207 A.D.2d 375, 616 N.Y.S.2d 48). Neither the decisions of the United States Supreme Court in Davis v. Michigan Department of T reasury, 489 U.S. 803, 109 S.Ct. 1500, 103 L.Ed.2d 891, and Harper v. Virginia Department of Taxation, 509 U.S. 86, 113 S.Ct. 2510, 125 L.Ed.2d 74, nor the decisions and orders of the Appellate Division and this court require the defendant to pay full refunds to the plaintiffs regardless of their compliance with State tax refund claims law and procedure. Rather, it has always been the position of this court that plaintiffs, like all other State taxpayers, are required to follow State law and procedure in order to receive a refund.

The plaintiffs and nonparty federal retirees have sought to obtain full refunds with interest, regardless of their filing timely claims, through negotiations with ...