JDG Investigations, Inc. v. City of N.Y.

• Decision Date: 20 February 2018
• Docket Number: Index No. 161609/2015
• Citation: JDG Investigations, Inc. v. City of N.Y., 2018 NY Slip Op 30313(U), Index No. 161609/2015 (N.Y. Sup. Ct. Feb 20, 2018)
• Parties: JDG INVESTIGATIONS, INC., and JOHN GIVENS, Plaintiffs v. CITY OF NEW YORK, NEW YORK CITY COUNCIL, and JULIE MENIN, in her capacity as Commissioner of the New York City Department of Consumer Affairs, Defendants
• Court: New York Supreme Court

2018 NY Slip Op 30313(U)

JDG INVESTIGATIONS, INC., and JOHN GIVENS, Plaintiffs v. CITY OF NEW YORK, NEW YORK CITY COUNCIL, and JULIE MENIN,in her capacity as Commissioner of the New York City Department of Consumer Affairs, Defendants

Index No. 161609/2015

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: IAS PART 46

RECEIVED: February 21, 2018

February 20, 2018

NYSCEF DOC. NO. 49

DECISION AND ORDER

LUCY BILLINGS, J.S.C.:

Plaintiffs JDG Investigations, Inc., a process serving business, and its owner John Givens challenge the authority of defendant Commissioner of the New York City Department of Consumer Affairs (DCA) to adjudicate violations of the New York City Administrative Code and the Rules of the City of New York (R.C.N.Y.) regulating process servers in New York City. Plaintiffs also challenge the DCA Commissioner's authority to impose fines and civil penalties on plaintiffs for violations of those provisions. Plaintiffs claim that the adjudication of violations and imposition of fines and penalties violated plaintiffs' rights to due process and to protection against excessive punishment under the 8th and 14th Amendments to the United States Constitution and Article I, §§ 5 and 6 of the New York Constitution. Plaintiffs further claim that DCA published false statements on its website about JDG Investigations.

I. FACTUAL AND PROCEDURAL BACKGROUND

On November 2, 2011, DCA issued to JDG Investigations a Notice of Hearing on charges that JDG Investigation violated 6 R.C.N.Y. § 2-234a(b) and (c) by failing to submit an affirmation that JDG Investigations had adopted a written Compliance Plan. The notice informed JDG Investigations that it might settle these charges by paying a fine of $1,000 rather than attending a hearing. On December 22, 2011, JDG Investigations signed a Consent Order requiring JDG Investigations to submit (1) a written Compliance Plan, (2) an affirmation that JDG Investigations had adopted that Compliance Plan, and (3) monthly reports regarding JDG Investigations' compliance with the Consent Order and the laws governing process servers. The Consent Order also provided that JDG Investigations' failure to submit the required documents would be grounds for revocation of its process server license and fines of up to $1,000 for each violation of the Consent Order or applicable laws. The Consent Order did not, however, impose any fine on JDG Investigations.

On February 19, 2014, DCA issued another Notice of Hearing to JDG Investigations, alleging over 200 violations of the process server statutes and regulations and the 2011 Consent Order. Plaintiffs commenced a proceeding pursuant to C.P.L.R. Article 78 challenging these violations, but the New York Supreme Court dismissed the proceeding as moot after DCA withdrew the notice.

Defendants now move to dismiss this action based on thecomplaint's failure to state a claim. C.P.L.R. § 3211(a)(7). Plaintiffs cross-move to join a defendant and amend their amended complaint, to convert defendants' motion to a motion for summary judgment, and to grant summary judgment in favor of plaintiffs on their claims. C.P.L.R. §§ 1002(b), 3025(b) and (c), 3211(c), 3212(b).

II. VALIDITY OF THE STATUTES AND REGULATIONS REGULATING PROCESS SERVERS

Plaintiffs claim that the Administrative Code and R.C.N.Y. provisions regulating process servers usurp the New York Legislature's exclusive jurisdiction in violation of New York Constitution Article VI, § 30, and Municipal Home Rule Law § 11(1)(e). In related proceedings by plaintiffs against defendants, this court previously determined that the Administrative Code and R.C.N.Y. provisions regulating process servers do not usurp the New York Legislature's authority. Therefore the court grants defendants' motion to dismiss plaintiffs' same claims here for the same reasons as the court dismissed those claims there. Givens v. City of New York, Index No. 100016/2016, slip op. at 4-6 (Feb. 2, 2018); JDG Investigations v. City of New York, Index No. 100224/2016, slip op. at 4-6 (Feb. 2, 2018).

Plaintiffs also claim that the Administrative Code and R.C.N.Y. provisions regulating, process servers are void because DCA and the City of New York failed to comply New York City Charter § 1043(d) by not reviewing the provisions and reporting specific findings to the New York City Council. This courtpreviously determined these claims as well in the two proceedings cited above, finding that DCA and the City did prepare the required report and submitted it to the City Council September 13, 2013. Givens v. City of New York, Index No. 100016/2016, slip op. at 6-7 (Feb. 2, 2018); JDG Investigations v. City of New York, Index No. 100224/2016, slip op. at 6-7 (Feb. 2, 2018). Res judicata thus bars all plaintiffs' claims challenging the validity of Administrative Code and R.C.N.Y. provisions regulating process servers. Matter of Hunter, 4 N.Y.3d 260, 269 (2005); Bevilacgua v. CPR/Extell Parcel I, L.P., 126 A.D.3d 429, 429 (1st Dep't 2015); Andrade v. New York City Police Dept., 106 A.D.3d 520, 521 (1st Dep't 2013); Pitcock v. Kasowitz, Benson, Torres & Friedman, LLP, 80 A.D.3d 453, 454 (1st Dep't 2011). See Landau, P.C. v. LaRossa, Mitchell & Ross, 11 N.Y.3d 8, 13 (2008).

III. THE REGULATORY FRAMEWORK UNDERLYING DCA'S AUTHORITY

New York City Charter § 2203 sets forth the DCA Commissioner's powers to enforce violations of the Administrative Code and R.C.N.Y. provisions regulating process servers:

(f) The commissioner, in the performance of said functions, including those functions pursuant to subdivision e of this section, shall be authorized to hold public and private hearings, administer oaths, take testimony, serve subpoenas, receive evidence, and to receive, administer, pay over and distribute monies collected in and as a result of actions brought for violations of laws relating to deceptive or unconscionable trade practices, or of related laws, and to promulgate, amend and modify rules and regulations necessary to carry out the powers and duties of the department.

. . . .

(h)(1) Notwithstanding any inconsistent provision of law, the department shall be authorized, upon due notice andhearing, to impose civil penalties for the violation of any laws or rules the enforcement of which is within the jurisdiction of the department pursuant to this charter, the administrative code or any other general, special or local law. The department shall have the power to render decisions and orders and to impose civil penalties for all such violations . . . .

Administrative Code § 20-104 includes parallel provisions:

d. The commissioner or the commissioner's designee shall be authorized to conduct investigations, to issue subpoenas, to receive evidence, to hear complaints regarding activities for which a license is or may be required, to take depositions on due notice, to serve interrogatories, to hold public and private hearings upon due notice, to take testimony and to promulgate, amend and modify procedures and practices governing such proceedings.

e. (1) The commissioner shall be authorized, upon due notice and hearing, to suspend, revoke or cancel any license issued by him or her in accordance with the provisions of chapter two and to impose or institute fines or civil penalties for the violation of (i) any of the provisions of chapter two of this title and regulations and rules promulgated under chapter two of this title and (ii) any of the provisions of any other law, rule or regulation, the enforcement of which is within the jurisdiction of the department . . . . Except to the extent that dollar limits are otherwise specifically provided such fines or civil penalties shall not exceed five hundred dollars for each violation.

Administrative Code § 20-106(a), in Chapter 1 of Title 20, sets forth the fines to be imposed upon conviction of violations of the Administrative Code and R.C.N.Y. provisions governing licensing and regulating of process servers:

Except as otherwise specifically provided in chapter two of this title, or in subdivision b of this section, any person, whether or not he or she holds a license issued under chapter two, who violates any provision of chapter two or any regulation or rule promulgated under it shall, upon conviction thereof, be punished for each violation by a fine of not less than twenty-five dollars nor more than five hundred dollars, or by imprisonment not exceeding fifteen days, or both; and any such person shall be subject also to a civil penalty in the sum of one hundred dollars for each violation, to be recovered in a civil action.

Administrative Code § 20-409.1, in Chapter 2 of Title 20, sets forth civil penalties for violations of the Administrative Code's provisions governing process servers:

Any person who, after notice and hearing shall be found guilty of violating any provision of this subchapter, shall be punished in accordance with the provisions of chapter one of this title and shall be subject to a penalty of not less than seven hundred dollars nor more than one thousand dollars for each violation.

IV. DCA'S AUTHORITY TO ENFORCE VIOLATIONS OF THE STATUTES AND REGULATIONS GOVERNING PROCESS SERVERS

Plaintiffs claim that DCA lacks the authority to initiate administrative proceedings against plaintiffs for their alleged violations of the Administrative Code and R.C.N.Y because New York criminal courts maintain exclusive jurisdiction over adjudication of these violations. New York City Charter § 2203(f) and (h)(1) and Administrative Code § 20-104(e)(1), however, expressly empower the DCA Commissioner to enforce the statutes and regulations governing process servers through hearings and imposition of fines or civil penalties for violations of those provisions. Nor does the New York Constitution, Penal Law, or Criminal Procedure Law limit DCA in administratively adjudicating violations of the process server statutes and regulations. N.Y. Penal Law § 5.10(3); Miller v. Schwartz, 72 N.Y.2d 869, 870 (1988); Rosenthal v....