In the Matter of Bordeleau v. State, 2009 NY Slip Op 50380(U) (N.Y. Sup. Ct. 2/27/2009)

Decision Date27 February 2009
Docket Number6582-08.
Citation2009 NY Slip Op 50380
PartiesIN THE MATTER OF THE APPLICATION OF LEE BORDELEAU, ET AL., Plaintiffs, v. THE STATE OF NEW YORK, THE NEW YORK STATE ASSEMBLY, THE NEW YORK STATE SENATE, DAVID PATTERSON, individually and as Governor of the STATE OF NEW YORK, ET AL., Defendants.
CourtNew York Supreme Court

JAMES OSTROWSKI, ESQ., Buffalo, New York, Attorneys for Plaintiff.

ANDREW M. CUOMO, Attorney General of the State of New York, (Robert A. Siegfried, of Counsel), Albany, New York, Attorneys for the State of New York Defendants.

CRAVATH, SWAINE & MOORE, (Teena-Ann Sankoorikal, Esq., of Counsel) New York, New York, Attorneys for Defendant IBM.

GREENBERG TRAURIG, ESQ., (Michael Koenig, Esq., of Counsel), Albany, New York, Attorneys for defendant AMD.

GIBSON, McASKILL & CROSBY, (Robert Scott, Esq., of Counsel), Buffalo, New York, Attorneys for Defendant American Axle.

LIPPES, MATHIAS, WEXLER FRIEDMAN, LLP, (Lisa D. Primerano, Esq., of Counsel), Buffalo, New York, Attorneys for West Genesee Hotel Associates.

GOLDBERG SEGALLA, LLP, (William J. Greagan, Esq., of Counsel), Albany, New York, Attorneys for Defendant Delphi Harrison.

MICHAEL C. LYNCH, J.

By Order to Show Cause (Egan, J.) dated August 4, 2008, plaintiffs commenced this declaratory judgment action seeking to enjoin defendants from distributing or receiving state funds appropriated in the New York State budget in purported violation of the New York State Constitution. The State defendants have moved to dismiss the complaint, as have several of the individually named defendants. Oral argument was held on the motions on December 3, 2008.

To begin, State legislative enactments enjoy a strong presumption of constitutionality and plaintiffs bear the heavy burden of proving unconstitutionality beyond a reasonable doubt (Schultz v. State of New York, 84 NY2d 231, 241). On a motion to dismiss, this Court "must afford the pleadings a liberal construction,...accept the facts as alleged in the [complaint] as true, accord [plaintiffs] the benefit of every possible favorable inference, and determine only whether the facts as alleged in the [pleadings] fit within any cognizable legal theory" (Matter of Maron v. Silver, ___ AD2d ___ [3rd Dept. 11-13-08], quoting Leon v. Martinez, 84 NY2d 83, 87-88 [internal quotations omitted]).

In their complaint, plaintiffs essentially maintain that the appropriation and use of State funds to promote economic development through private entities violates Article VII §8 of the New York State Constitution. The State duly acknowledges that "Article VII §8 prohibits the gift or loan of state money or credit to any private corporation; or private undertaking" (see State, Memo of Law, Point I at p. 11; see Wein v. State of New York, 39 NY2d 136, 142-144). The challenged appropriations, however, pertain to the funding of economic development programs through the Urban Development Corporation, which functions as the Empire State Development Corporation (ESDC), a public benefit corporation (see New York Unconsolidated Laws §6254[1] [McKinney's]); as well as the Department of Agriculture and Markets. The essence of the State's motion to dismiss is that these appropriations foster the public purpose of economic development and do not violate Article 7 §8. This Court agrees with the State.

The State is authorized to provide funding to a public benefit corporation, including ESDC (see Schultz v. State of New York, 84 NY2d 231, 246; Wein v. State of New York, supra, at 145-146; Comerseki v. City of Elmira, 308 NY 248, 252). The very purpose of the ESDC is to promote the State's policy of enhancing job opportunities, urban renewal and economic development (New York Unconsolidated Laws §6251 et seq. [McKinney's]). As delineated in the supporting affidavit of Douglas Wehrle, Senior Vice President of the ESDC Loans and Grants Department, recipients of ESDC funds are required to fulfill their commitments under the agreement and to meet the job retention/creation and economic development goals prescribed by the ESDC. For example, the ESDC accepted a $65,000,000.00 Capital Grant Incentive Proposal from the International Business Machines Corporation ("IBM") to expand nanotechnology research, development and manufacturing activities within the State. For its part, IBM will invest $1.5 billion dollars in New York State from 2008 through 2011 to expand this program (see Affidavit of Douglas Wehrle, at paragraphs 40 and 41). Subsequent to oral argument, counsel for IBM has informed the Court that IBM and the ESDC have signed a grant agreement and on December 15, 2008, ESDC disbursed $44,349,388.21 to IBM (see 1/26/09 letter from Attorney Sankoorikal).

A review of the ESDC projects at issue here shows that each speaks to a viable public, economic development purpose (see New York Unconsolidated Laws §6252 [McKinney's]). The contrary and speculative affidavit of plaintiffs' expert, William Anderson, does not compel a contrary finding, or raise a genuine issue of fact on the question of public purpose.Accordingly, the court finds no violation of Article VII §8 in the appropriation of funds to the ESDC for these grants.

This holds true for the appropriations channeled through the Department of Agriculture and Markets ("Dep...

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