Montalvo v. Consolidated Edison Co. of New York, Inc.

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: Before KUPFERMAN; KUPFERMAN; All concur except ASCH; ASCH
• Citation: Montalvo v. Consolidated Edison Co. of New York, Inc., 460 N.Y.S.2d 784, 92 A.D.2d 389 (N.Y. App. Div. 1983)
• Decision Date: 29 March 1983
• Parties: Carmen MONTALVO, on behalf of herself and her infant children, Whenshely Ruiz, Maribel Ruiz, Osdual Ruiz, Wilfredo Ruiz, Jaimes Ruiz, Wanda Ruiz, Harly Ruiz and Warren Ruiz, Plaintiff-Respondent, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., and The Public Service Commission of the State of New York, Defendants-Appellants, and Ramon Luiz Lopez, Defendant.

Page 784

460 N.Y.S.2d 784

92 A.D.2d 389

Carmen MONTALVO, on behalf of herself and her infant children, Whenshely Ruiz, Maribel Ruiz, Osdual Ruiz, Wilfredo Ruiz, Jaimes Ruiz, Wanda Ruiz, Harly Ruiz and Warren Ruiz, Plaintiff-Respondent, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., and The Public Service Commission of the State of New York, Defendants-Appellants and Ramon Luiz Lopez, Defendant.

Supreme Court, Appellate Division First Department.

March 29, 1983.

Bernard Hulkower, New York City, and Lisa B. Mann, for defendants-appellants Consolidated Edison.

Lawrence G. Malone, Albany, of counsel (David E. Blabey, Albany), for appellant Public Service Com'n.

Stacy Comidas, of counsel (David Goldfarb, New York City), for plaintiff-respondent.

Before KUPFERMAN, J.P., and SANDLER, ASCH, LYNCH and MILONAS, JJ.

KUPFERMAN, Justice Presiding.

Defendants appeal from an order and judgment allowing partial summary judgment in favor of plaintiff on her Constitutional claims against Consolidated Edison Corp. (Con Ed), and the Public Service Commission (PSC).

The judgment held that Con Ed's denial of plaintiff-respondent's application for residential utility service constituted "State action," depriving respondent of a property right protected under the due process clauses of both the New York State (Art. I, § 6), and the United States (Fourteenth Amendment) Constitutions. The Fourteenth Amendment claim is asserted pursuant to 42 U.S.C. § 1983. ¹

Special Term, 110 Misc.2d 24, 441 N.Y.S.2d 768, predicated liability against the PSC on the theory that the Commission's failure to have promulgated regulations which would have required that first-time applicants be afforded procedural due process safeguards before their applications for residential service could be denied, constitutes "State action."

We hold that the acts of Con Ed in denying respondent's application, under the circumstances of this case, constitute private action not properly attributable to the State of New York, and that the inaction of the PSC in its rule-making capacity affords an insufficient predicate to support a finding of "State action." Therefore, the judgment and order should be reversed, and judgment entered dismissing respondent's first two causes of action with prejudice.

Plaintiff-respondent Montalvo, in her own right and on behalf of her eight minor children, maintains this action seeking declaratory and injunctive relief as well as both compensatory and punitive damages ² for personal and economic injuries allegedly suffered as a result of being deprived of utility service for two extended periods totalling approximately forty-two days.

On October 15, 1978, according to the complaint, the Montalvos moved from an apartment on Fox St. to one on Davidson Ave., both in the Bronx. Con Ed admits that when respondent applied for gas and electric service in her own name at the new address, Con Ed denied her application on the ground that utility charges from her Fox St. apartment remained past due.

Respondent maintains that the landlord of the Fox St. premises, Ramon Lopez, agreed that, under the terms of their oral, month-to-month lease, utility charges would be included in the rent. Lopez is named as a defendant in this action, but is not a party to this appeal.

Respondent submits that she attempted to explain to Con Ed personnel at the time her application was denied that the Fox St. charges were against the landlord's account and not her obligation under their lease, but was unsuccessful. Montalvo spoke only Spanish at that time. She states in her complaint that at no time was she afforded the opportunity to present her dispute to Spanish-speaking personnel of Con Ed.

After Con Ed denied respondent's application, she obtained an advance on her entitlement from the Department of Social Services (DOSS), and paid in full the $389.40 that Con Ed was then demanding. Con Ed began furnishing gas and electric service at the Davidson Ave. address on November 10, 1978.

On November 13, 1978, Con Ed rendered a "final bill" to respondent for utility charges from the Fox St. apartment seeking an additional $520.00. In December, respondent made a $52.00 partial payment which Con Ed posted against the Fox St. account. Respondent asserts that she intended the payment to be applied against her account at Davidson Ave.

In January 1979, respondent received a notice from Con Ed stating that if she did not pay the sum of $132.60 within two business days, electric service at the Davidson Ave. address would be discontinued. As a result of respondent's failure to make that payment, electricity was shut off at the Davidson Ave. apartment from January 10 until January 26, 1979.

After counsel from the Legal Aid Society interceded with the PSC on respondent's behalf, the PSC directed Con Ed to restore service to the Montalvos, to refund the amount previously collected for the Fox St. arrearages, and to cancel the remaining claim against respondent for the Fox St. arrearages. Con Ed complied in all respects.

The thrust of respondent's constitutional claims is that she was not afforded notice of any procedure for contesting her liability with respect to the Fox St. arrearages before her application was denied. She alleges that in fact no such procedure then existed, but the PSC refers us to regulations, then in effect, which set forth a procedure for resolving disputes over billings. ³ Thus, if denial of due process were applicable, respondent's claim would be grounded on lack of notice of the existence of the procedure.

Respondent alleges that Con Ed never advised her of any grievance procedure or even of the existence of the PSC. She states that Con Ed personnel told her to get an advance from DOSS to pay the charges which were her responsibility because she used the electricity.

Respondent argues that by the enactment of Transportation Corporations Law § 12, ⁴ the Legislature created an entitlement to residential electric service upon written demand, subject to certain conditions. Respondent characterizes this entitlement as a property right protected against deprivation as a result of State action under both due process clauses. Inasmuch as we find that the threshold requirement of State action is not met by the conduct of either Con Ed or the PSC, we do not consider whether TCL § 12 creates such a protected right.

Special Term denied motions by Con Ed and the PSC to dismiss the first two causes of action, granted respondent's cross-motion for partial summary judgment, and severed for trial the remaining tort causes of action against Con Ed and Lopez. However, the Court granted the PSC's motion to dismiss only to the extent of dismissing the damage claim without prejudice, but granted respondent leave to renew the cause in the Court of Claims. ⁵ Special Term declared that Con Ed's acts constituted "State action" for due process purposes, relying on Bronson v. Consolidated Edison Corp., 350 F.Supp. 443, for the dictum that Con Ed furnishes power as an agent of the State of New York. The decision stated that Con Ed's failure to afford respondent procedural due process protections before denying her application directly caused her alleged injuries.

Procedural due process safeguards apply only where the aggrieved party can show deprivation of a protected right as a result of "State action". Purely private conduct is not subject to the requirements of due process. Analysis of the cases deciding State action vel non suggests that the degree of state involvement required before due process will be deemed applicable varies with the factual setting. A stricter scrutiny of state involvement will be applied in a case involving racial discrimination in housing like Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161, cited by Special Term, than in cases involving only property rights.

The inquiry set by the United States Supreme Court for deciding whether the acts of a public utility are attributable to the State for Federal due process purposes is "... whether there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may fairly be treated as that of the State itself." See Jackson v. Metropolitan Edison Corp., 419 U.S. 345, 351, 95 S.Ct. 449, 453, 42 L.Ed.2d 477, citing Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627.

A further inquiry in deciding whether actions undertaken by private entities should be attributed to the State for due process purposes is whether the private entity is performing a public function exercising powers traditionally reserved exclusively to the State. See Jackson v. Metropolitan Edison Corp., supra, 419 U.S. at 352, 95 S.Ct. at 454; but see Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 172 n. 8, 98 S.Ct. 1729, 1742 n. 8, 56 L.Ed.2d 185 (Stevens, J., dissenting) (rejecting the requirement of exclusivity in favor of an inquiry "... whether a particular action is a uniquely sovereign function..."); see also Sharrock v. Dell Buick-Cadillac, Inc., 45 N.Y.2d 152, 162, 408 N.Y.S.2d 39, 379 N.E.2d 1169 (resolving a dispute over lien foreclosure is an exclusively governmental function).

To establish the required nexus between the State and the challenged action, for Fourteenth Amendment purposes, where the impetus for that conduct is private, a showing is required that the State has put its own weight behind a practice by ordering it. See Jackson v. Metropolitan Edison Corp., supra, 419 U.S. at 357, 95 S.Ct. at 456. The mere fact that a State permits an action while not compelling it, is insufficient under the Fourteenth Amendment to convert otherwise private conduct into State action. See Flagg Brothers, Inc. v. Brooks, supra, 436 U.S. at 165, 98 S.Ct. at 1738.

Respondent advances numerous grounds on which to predicate a finding of State action, among them, Con Ed's monopoly status within its franchise area, the...