Long Island Lighting Co. v. Assessor of Town of Brookhaven

• Decision Date: 02 March 1990
• Citation: 154 A.D.2d 188,552 N.Y.S.2d 336
• Parties: In the Matter of LONG ISLAND LIGHTING COMPANY, Respondent, v. ASSESSOR OF the TOWN OF BROOKHAVEN, et al., Appellants; Shoreham-Wading River Central School District, Intervenor-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 336

552 N.Y.S.2d 336

154 A.D.2d 188

In the Matter of LONG ISLAND LIGHTING COMPANY, Respondent, v. ASSESSOR OF the TOWN OF BROOKHAVEN, et al., Appellants Shoreham-Wading River Central School District, Intervenor-Appellant.

Supreme Court, Appellate Division Second Department.

March 2, 1990.

Murphy and Bartol, Mineola (Cathleen M. Deutsch, of counsel), for appellants Assessor of the Town of Brookhaven and Bd. of Assessment Review for the Town of Brookhaven.

Lewis & Greer, P.C., Poughkeepsie (Lou Lewis, of counsel), for intervenor-appellant.

Shea & Gould, New York City (John B. Grant, Jr., Michael Lesch, Peter C. Neger and Richard L. Gabriel, of counsel), and Anthony F. Earley, Jr., Hicksville, for respondent (one brief filed).

Before MOLLEN, P.J., and BROWN, KOOPER and MILLER, JJ.

PER CURIAM.

Within the context of these tax certiorari proceedings we are again asked to pass upon the constitutionality of an aspect of a portion of the Long Island Power Authority Act of 1986 (Public Authorities Law §§ 1020-1020-hh) (see, Long Is. Light. Co. v. Mack, 137 A.D.2d 285, 529 N.Y.S.2d 502). The issues raised herein relate particularly to Public Authorities Law § 1020-q, which deals with the tax implications of the Act and, more specifically, with subdivision 3 thereof, which addresses the subject of real property tax refund claims made with respect to some of the property affected by the Act.

By way of background, the purpose of the Long Island Power Authority Act was to create a publicly-owned power authority (hereinafter LIPA) which could acquire any or all of the stock or assets of the Long Island Lighting Company (hereinafter LILCO) with an eye toward "assuring the provision of an adequate supply of gas and electricity in a reliable, efficient and economic manner" to the residents of Long Island (Public Authorities Law § 1020-h[1][n]. An integral part of the Act was LIPA's acquisition of the nuclear-powered facility owned by LILCO and located at Shoreham, New York (hereinafter Shoreham plant; see, Public Authorities Law § 1020-b[18]. This was ultimately achieved on February 28, 1989, by virtue of a settlement agreement entered into between Governor Mario M. Cuomo and LILCO (see, Long Is. Light. Co. v. Cuomo, 888 F.2d 230, 232).

Since 1976, LILCO has been involved in litigation with the Town of Brookhaven respecting the Town's tax assessments of the Shoreham plant. The instant tax certiorari proceedings were commenced by LILCO for the tax years 1976-1977 through 1978-1979 and 1980-1981 through 1986-1987, wherein LILCO seeks review of the Town's assessments of the Shoreham plant for those years on the grounds that they are excessive, unequal and unlawful. If totally successful, LILCO would be entitled to a refund, inclusive of interest, in excess of $400 million. The Shoreham-Wading River School District (hereinafter the School District) has been permitted to intervene in these proceedings by virtue of its potential liability for any such tax refunds (see, L.1983, ch. 1018).

Upon the enactment of the LIPA Act, the School District and the Town, by its Assessor and Board of Assessment Review, moved for summary judgment, relying upon Public Authorities Act § 1020-q(3), which provides, as follows:

"No municipality or governmental subdivision, including a school district or special district, shall be liable to the authority or any other entity for a refund of property taxes originally assessed against the Shoreham plant. Any judicial determination that the Shoreham plant assessment was excessive, unequal or unlawful for any of the years from nineteen hundred seventy-six to the effective date of this title shall not result in a refund by any taxing jurisdiction of taxes previously paid by LILCO pursuant to such Shoreham plant assessment. The authority shall discontinue and abandon all proceedings, brought by its predecessor in interest, which seek the repayment of all or part of the taxes assessed against the Shoreham plant".

Arguing that the phrase "any other entity" includes LILCO, the School District and Town asserted upon their summary judgment motions that LILCO was barred from obtaining any redress herein, and thus that its petitions failed to state a cause of action. In opposition, LILCO did not dispute the fact that § 1020-q(3) applied to it, but argued instead that that provision was unconstitutional in that it violated the Equal Protection and Due Process Clauses of the United States and New York State Constitutions, and constituted a bill of attainder.

While these summary judgment motions were sub judice, LILCO commenced a separate action in the United States District Court for the Northern District of New York against Governor Cuomo and others (hereinafter the LIPA defendants), in which the School District and the Town similarly intervened, alleging that the LIPA Act and the Used and Useful Act (L.1986, ch. 518) ¹ were facially unconstitutional. As is relevant to this appeal, the United States District Court, adopting the LIPA defendants' position, concluded that § 1020-q(3) did not apply to LILCO. The court wrote, in pertinent part, as follows:

"Furthermore, the court believes that § 1020-q(3), when read in context and with the overall purpose of §§ 1020-p and 1020-q in mind, is not all that ambiguous. Section 1020-p exempts LIPA from paying property taxes. N.Y.Pub.Auth.Law § 1020-p(2) and (3). The removal of Shoreham as a source of tax income poses a grave financial burden on local taxing jurisdictions that had depended on such tax income to fund the public services they provided. Section 1020-q was devised as a means to ease the transition for these local taxing jurisdictions to other sources of revenue. N.Y.Pub.Auth.Law § 1020-q. Thus, it is provided that LIPA will make payments in lieu of property taxes to municipalities and school districts over a ten year period in progressively decreasing amounts 'after property theretofore owned by LILCO is acquired by the authority.' N.Y.Pub.Auth.Law § 1020-q(1). Subsection 1020-q(3), quoted above, is another device intended to alleviate some of the financial burden to local taxing jurisdictions that would result if Shoreham were removed as a potential source of tax revenue. It seems clear that the legislature intended that the terms of § 1020-q(3) would only apply if LILCO is taken over by LIPA, and thus that subsection's reference to 'the authority or any other entity' does not apply to LILCO (unless it somehow becomes a successor in interest to LIPA in the property at issue)" (Long Is. Lighting Co. v. Cuomo, 666 F.Supp. 370, 401-402). ²

During the same period, LILCO and one of its shareholders also commenced an action in the Supreme Court, Nassau County, seeking judgment declaring the LIPA and Used and Useful Acts unconstitutional as violative of substantive due process and equal protection of the laws. Relying on the opinion of the United States District Court, the Supreme Court declared "that the LIPA Act is valid as measured by the substantive due process and equal protection requirements of both the Constitution of the State of New York and, as has already been determined by the United States District Court, the United States Constitution" (Long Is. Light. Co. v. Long Is. Power Auth., 138 Misc.2d 745, 753, 525 N.Y.S.2d 497). The shareholder's appeal from the order of the Supreme Court is currently pending before this court. ³

By order dated January 20, 1988, the Supreme Court, Suffolk County, denied the summary judgment motions made in the instant tax certiorari proceedings, finding that in light of the decision of the United States District Court, "this Court has no other alternative but to deny Respondents' application for summary judgment and to stay all of the Petitioners' tax review proceedings". The School District and the Assessor and Board of Assessment Review have appealed from this order.

We affirm, but do so on the ground that Public Authorities Law § 1020-q(3), as applied to LILCO, is unconstitutional in that it violates the Equal Protection and Due Process Clauses of both the New York State and the United States Constitutions.

Initially, it should be noted that LILCO no longer argues that § 1020-q(3) is not applicable to it. Thus, there is no need for us to interpret this provision. Were we to do so, however, we would conclude that based upon the plain language of the statute and the clear intent of the Legislature, LILCO is included within the term "any other entity" to which no municipality shall be liable for any refund of property taxes originally assessed against the Shoreham plant by virtue of the first sentence of subdivision 3 of § 1020-q. This conclusion is made even more apparent by reference to the second sentence of that section, which provides that "[a]ny judicial determination that the Shoreham plant assessment was excessive, unequal or unlawful for any of the years from nineteen hundred and seventy-six to the effective date of this title [January 15, 1987] shall not result in a refund by any taxing jurisdiction of taxes previously paid by LILCO pursuant to such Shoreham plant assessment" (Public Authorities Law § 1020-q[3]. This sentence erases all doubt as to whether the Legislature intended to preclude LILCO from recovering in the pending tax certiorari proceedings where, coincidentally, LILCO is challenging tax assessments on the Shoreham plant for the tax years 1976-1977 through 1986-1987, exclusive of 1979-1980. In this regard we note also that the Supreme Court was in error when it concluded that in light of the decision of the United States District Court, it had "no other alternative" but to deny the summary judgment motions (see, People v. Weiner, 63 A.D.2d 722, 405 N.Y.S.2d 282; Walker v. Walker, 51 A.D.2d 1029, 381 N.Y.S.2d 310; Matter of Greenwald v. Frank, 47 A.D.2d 628, 630-631, 363 N.Y.S.2d 955 [Shapiro, J., dissenting]; see also, United States ex rel. Lawrence v. Woods, 432 F.2d 1072,...