In the Matter of Toussie v. County of Suffolk

• Citation: 809 N.Y.S.2d 573,2006 NY Slip Op 01496,26 A.D.3d 506
• Decision Date: 28 February 2006
• Docket Number: 2004-00336.
• Parties: In the Matter of ROBERT I. TOUSSIE et al., Appellants, v. COUNTY OF SUFFOLK, Respondent.
• Court: New York Supreme Court Appellate Division

26 A.D.3d 506

809 N.Y.S.2d 573

2006 NY Slip Op 01496

In the Matter of ROBERT I. TOUSSIE et al., Appellants, v. COUNTY OF SUFFOLK, Respondent.

2004-00336.

Appellate Division of the Supreme Court of the State of New York, Second Department.

February 28, 2006.

In a hybrid proceeding pursuant to CPLR article 78 to review a determination made by the Ways & Means Committee of the Suffolk County Legislature on December 9, 2002 which disapproved an introductory resolution authorizing the execution and delivery of the deeds for 15 parcels of surplus real property that the petitioners purportedly acquired as the highest bidders at an auction conducted by the County of Suffolk on May 16, 2002 and a subsequent determination made by the Suffolk County Legislature that an introductory omnibus resolution authorizing the execution and delivery of the deeds to all of the successful bidders at the same auction be "stricken," and an action pursuant to CPLR 3001 for a judgment declaring that the petitioners are entitled to delivery of the 15 deeds, the petitioners appeal, as limited by their brief, from so much of a judgment of the Supreme Court, Suffolk County (Baisley, Jr., J.), entered December 15, 2003, as dismissed the proceeding and the action.

Ordered that the judgment is modified by adding a provision thereto declaring that the petitioners are not entitled to delivery of the 15 deeds for the surplus real property that they purportedly acquired as the highest bidders at an auction conducted by the County of Suffolk on May 16, 2002; as so modified, the judgment is affirmed insofar as appealed from, with costs to the respondent.

Section A14-30 (I) of the Suffolk County Administrative Code

(hereinafter the Code provision) provides that the execution and delivery of a deed for surplus real property offered for sale at a public auction is subject to the "express approval" of the Suffolk County Legislature. In addition, paragraph 18 of the terms and conditions of sale set forth in the auction brochure, which was distributed to each prospective bidder, unambiguously states that the sale is "conditioned upon, and subject to the approval of the Suffolk County Legislature." Moreover, at the auction, each successful bidder executed a memorandum of sale and received a receipt for its down payment; those documents repeat the caveat that the sales are subject to cancellation pursuant to the terms and conditions of sale. Notably, the Suffolk County Administrative Code and the auction documents do not impose any limits on the Suffolk County Legislature's discretion to approve or disapprove a sale.

Accordingly, the two legislative determinations which, in effect, rejected the petitioners' bids for the 15 parcels of real property, fell within the purview of the cancellation options set forth in the governing statute and auction documents (see Matter of G.L.G. Mini-Stor. v. County of Nassau, 251 AD2d 329 [1998]; Trick v. County of Westchester, 216 AD2d 555 [1995]; Kigler v. County of Rockland, 186 AD2d 787 [1992]). Contrary to the petitioners' contention, the record reveals that the Suffolk County Legislature's refusal to deliver the 15 deeds was rationally based on legitimate concerns about the petitioners' past and present business practices (see Matter of Mid-State Indus. v. City of Cohoes, 221 AD2d 705 [1995]).

We do not agree with the dissent's position that, merely because there is no need to monitor future performance, the Suffolk County Legislature was prohibited from disapproving the sales based on a concern that the purchasers will convey the properties in question to a related party who has been convicted of a crime. Were the dissent's position correct, i.e., that the Suffolk County Legislature has no authority to disapprove a sale to an otherwise qualified purchaser who has otherwise complied with the contract terms for the sale of surplus property, then the Code provision as well as the express reservation of such authority in the auction brochure would effectively be meaningless and superfluous since the legislature would essentially be limited to judging the ability to perform under the contract, something already covered by the remainder of the bidding and contracting process. The only way to give meaning to this Code provision and the provision in the auction brochure listing this property and conditioning the sales on the County Legislature's approval, which provision is not claimed to be illegal or improper, is to allow the Suffolk County Legislature to exercise its discretion based on factors other than the buyer's fiscal qualifications, as it has done here.

Neither the cases cited by the dissent nor General Municipal Law § 103 prohibit the action taken by the Suffolk County Legislature. General Municipal Law § 103 is inapplicable as that section regulates purchases and other expenditures by municipalities. In contrast, here we are concerned with the sale by a municipality of surplus property, something not regulated nor even mentioned by that section.

Nor do the cases cited by the dissent require a different result. It is true that in those cases, interpreting the validity of a procurement contract under General Municipal Law § 103 (e.g., Matter of New York State Ch., Inc., Associated Gen. Contrs. of Am. v. New York State Thruway Auth., 88 NY2d 56, 68 [1996]; Associated Bldrs. & Contrs. v. City of Rochester, 67 NY2d 854, 856 [1986]; Matter of Council of City of N.Y. v. Bloomberg, 16 AD3d 212 [2005], affd 6 NY3d 380 [2006]), the courts spoke of protection of the public fisc and prevention of, inter alia, favoritism and fraud in the awarding of competitively bid contracts involving the purchase of items by, or the providing of services to, a municipality, as being two permissible objectives of local legislation. However, neither the New York State Legislature, nor the Court of Appeals have extended that same qualification to the conditions that are allowed to be attached to the sale of surplus property by a municipality. In fact, the petitioners have not challenged the validity of the provision, only its exercise against them.

Finally, we note that although a cancellation may seem unfair to a successful bidder, this prospect is one of the clearly stated risks of bidding at a public auction. It was clearly spelled out prior to the bidding and was not a condition which the petitioners challenge as illegal per se (see L.J.B. Corp. v. City of New York, 182 AD2d 485 [1992]; Min-Lee Assoc. v. City of New York, 28 AD2d 553 [1967], affd 27 NY2d 790 [1970]).

The petitioners' remaining contentions are without merit.

Florio, J.P., Schmidt and Santucci, JJ., concur.

Spolzino, J.,

dissents and votes to reverse the judgment appealed from, on the law, to grant the petition, and to declare that the petitioners are entitled, upon payment of the balance of the purchase price, to delivery of the 15 deeds.

The issue presented by this appeal is whether the County of Suffolk (hereinafter the County) may lawfully refuse to sell surplus property to an otherwise qualified purchaser on the basis of concerns that the purchaser will convey that property to a related party who has been convicted of a crime involving the use of real property. Because I believe that it is arbitrary and capricious for the County to do so, I dissent, respectfully.

The petitioners are a group of related individuals and business entities who were the successful bidders for 15 parcels of surplus real property sold by the County at auction on May 16, 2002. Not among the group, but at the center of this controversy, is Isaac Toussie, the son of the petitioner Robert Toussie, who pleaded guilty in 2001 to making false statements in applications for federally-guaranteed loans. The County claims that it was justified in refusing to sell property to the petitioners because they may convey that property to Isaac Toussie, who may use it for some nefarious purpose. The County attempts to bolster its action by adding that the petitioner Robert Toussie was, himself, involved in a real-property purchasing scandal with respect to prior sales of County property. The County further alleges, although there is no evidentiary support for the allegation in the record, that there is an ongoing criminal investigation involving Isaac Toussie and all or some of the petitioners.

The County entered into a contract to sell the parcels to the petitioners after the petitioners had been certified as the highest bidders at public auction. The respective obligations of the parties under the contract were simple. Upon the petitioners' tender of the purchase price, the County would convey marketable title to them. Pursuant to its terms, the contract was "binding upon both the Purchaser and the County unless the sale is disapproved by operation of the Suffolk County legislative process." When the Suffolk County Board of Legislators (hereinafter the Board) refused to approve the conveyance of the subject parcels to the petitioners, the County terminated the contract.

The petitioners commenced this hybrid proceeding pursuant to CPLR article 78 challenging the action of the Board and action seeking a declaration of their entitlement to the conveyance. Notably, the petitioners have not brought a cause of action alleging breach of contract, since, as a result of the contract contingency, there is no dispute that the County was within its contractual rights in terminating the contract once the Board refused its approval (see Orelli v. Ambro, 41 NY2d 952 [1977]; Matter of G.L.G. Mini-Stor. v. County of Nassau, 251 AD2d 329 [1998]; Trick v. County of Westchester, 216 AD2d 555 [1995]; Kigler v. County of Rockland, 186 AD2d 787, 789 [1992]; Min-Lee Assoc. v. City of New York, 28 AD2d 553 [1967], affd 27 NY2d 790 [1970]). Nevertheless, as the County recognizes, the Board's refusal to approve the contract constituted an administrative act subject to judicial review under an arbitrary and...