Lotto v. Long Island Lighting Co.
| Decision Date | 10 November 1975 |
| Citation | 375 N.Y.S.2d 955,84 Misc.2d 347 |
| Parties | Gerald L. LOTTO, suing on behalf of himself and all other similarly situated customers of the Long Island Lighting Company, et al., Plaintiffs, v. LONG ISLAND LIGHTING COMPANY, Defendant, and Town of Islip, Intervenor-Defendant. |
| Court | New York Supreme Court |
Edward M. Barrett, Mineola, for defendant.
Francis G. Caldeira, Islip Town Atty., Islip, for intervenor-defendant.
The defendant, Long Island Lighting Company (LILCO) has moved to dismiss the cross-complaint brought by the Town of Islip (Islip) on the grounds that it has a defense founded upon documentary evidence; that the Court has no jurisdiction over the subject matter of the cause of action; and that the complaint fails to state a cause of action (CPLR § 3211, subd. (a), pars. 1, 2 and 7).
Islip has moved to dismiss the defenses interposed by LILCO on the grounds of res judicata and documentary evidence and has moved for summary judgment on the ground that there is no valid defense to its complaint (CPLR § 3211, subds. (b) and (c)).
From the complaint and the papers submitted by the parties in support of their respective motions, it appears that Islip seeks reimbursement for so much of city and village gross revenue taxes imposed upon LILCO as were, prior to May, 1973, included in the utility's operating expenses in establishing rate schedules and thus charged and collected from LILCO's users in the unincorporated areas of Islip and from Islip itself.
In order to fully understand the present action, a brief review of the history concerning the gross revenue tax is necessary. * In 1937, Tax Law, Section 186--a (Chapter 321 of the Laws of 1937) was enacted to authorize the State of New York to impose a gross revenue tax on utilities doing business within the State. In the same year, the General City Law was amended to add Section 20--b, which provided that any city in this State could impose a tax such as was imposed by Section 186--a of the Tax Law, although at the limited rate of one percent (1%). In 1950, the Village Law was amended to add Section 138--d (renumbered Section 131 in 1954) to grant similar taxing power to the Villages of the First Class. In 1967, this taxing power was extended to authorize any village to impose a tax on the gross revenues of utilities operating within any such village (Village Law, § 5--530).
These city and village gross revenue taxes, during the period prior to 1973, were treated by LILCO as normal operating expenses incurred in the conduct of its business and such taxes as were imposed by cities and villages were recovered from all the customers it serviced, pursuant to filed rate schedules approved by the Public Service Commission. As stated in Lotto v. Long Is. Light. Co., 80 Misc.2d 8, 11, 361 N.Y.S.2d 961, 965, 'the effect obviously was to pass on to LILCO's users not resident in a city or a village that imposed a gross revenues tax, a share of the increase in rates required by the imposition of such a tax by such local municipalities as did in fact impose one.'
In 1970, the Public Service Commission, in a proceeding involving the Consolidated Edison Company (10 N.Y. PSC Rep. 434, 85 PUR 3d 276), approved a tariff provision for rate differentials reflecting the tax rates applicable in various jurisdictions, i.e., the Commission approved the imposition by Consolidated Edison of a surcharge on the residents of those cities and villages which imposed a gross revenue tax. Thereafter, in 1973, the Public Service Commission, in cases numbered 26283 and 26284, approved a similar provision with respect to LILCO's rate schedule and authorized LILCO to collect a surcharge equivalent to the tax from those consumers within the cities and villeges which imposed the gross revenue tax. This rate schedule filed by LILCO was found to be legal and valid by Mr. Justice DiPaola in Lotto v. Long Is. Light Co., supra.
It is against this background that we examine the defenses raised by LILCO to Islip's action and the claim by Islip that those defenses were the exception of the claim that the complaint fails to state a cause of action have been resolved adversely to LILCO in Lotto v. Long Is. Light Co., supra and may not now be relitigated.
We turn first to Islip's claim that LILCO's defenses that (1) the Court has no jurisdiction over the subject matter of Islip's cause of action and (2) that it has a defense founded on documentary evidence have been conclusively resolved against LILCO in the case of Lotto v. Long Is. Light. Co., supra. In order to invoke the doctrine of res judicata or collateral estoppel, "(t)here must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and . . . there must have been a full and fair opportunity to contest the decision now said to be controlling." (Vavolizza v. Krieger, 33 N.Y.2d 351, 356, 352 N.Y.S.2d 919, 923, 308 N.E.2d 439, 442; S. T. Grand, Inc. v. City of New York, 31 N.Y.2d 300, 304, 344 N.Y.S.2d 938, 941, 298 N.E.2d 105, 107). While there is no question that LILCO had a full and fair opportunity to contest the decision of the Court in Lotto v. Long Is. Light. Co., supra, the issues presented in that case and the issue presented in the instant case are not identical. In the Lotto case, the Court held that the rate schedule of LILCO, ettective in May, 1973, was valid and legal and that the procedure made therein for the allocation of the expense of city and village gross revenue taxes on LILCO, i.e., authorizing LILCO to collect a surcharge equivalent to the tax from those consumers within cities and villages which imposed the tax, was proper and reasonable. In the instant case, the issue is whether LILCO, prior to May, 1973, acted in contravention of law when it recovered local gross revenue taxes as general operating expenses from all its customers rather than from only customers within villages and cities which imposed the tax. Since there is no 'identity of issue', Islip's claim that the Lotto decision mandates that this Court strike all the defenses raised by LILCO in the present action, with the exception of the defense that the complaint fails to state a cause of action, is without merit.
Turning then to LILCO's defenses to Islip's action, the main thrust of LILCO's motion is that Islip's claim constitutes an impermissible collateral attack upon determinations made by the Public Service Commission that local municipal gross revenue taxes were to be treated as general operating expenses in LILCO's rate schedules prior to May, 1973. Assuming that the manner in which all costs, including taxes, are treated in the rate schedules of public utilities is a matter reserved to the Public Service Commission in the first instance, as urged by LILCO (Cf. City of Troy v. United Traction Co., 202 N.Y. 333, 95 N.E. 759; City of Rochester v. Rochester Gas & Electric Corp., 233 N.Y. 39, 49, 134 N.E. 828, 831), that is not dispositive of this matter, since the issue here presented is whether the Public Service Commission properly construed the various taxing statutes prior to 1973. This latter issue is one for resolution by the Courts (Cf. Kovarsky v. Brooklyn Union Gas Co., 279 N.Y. 304, 313, 314, 18 N.E.2d 287, 290, 291; Matter of Mounting & Finishing Co. v. McGoldrick, 294 N.Y. 104, 108, 60 N.E.2d 825, 827).
In resolving this issue, the Court notes that the statutes involved herein, Village Law § 5--530 and its predecessors, and General City Law § 20--b, are ambiguous with respect to whether the gross revenue tax should be treated as part of a system operating cost. In one portion of the Village Law, the following language is contained: 'A tax imposed pursuant to this section shall have application only within the territorial limits of any such village.' (Village Law, § 5--530, subd. 1). The same provision may be found in General City Law § 20--b. In both of these two statutes, however, the following provision also appears: 'all of the provisions of section one hundred eighty-six-a of the tax law, so far as the same are or can be made applicable, with such...
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