National Ass'n of Independent Insurers v. State

• Citation: 89 N.Y.2d 950,655 N.Y.S.2d 853,678 N.E.2d 465
• Parties: , 678 N.E.2d 465 NATIONAL ASSOCIATION OF INDEPENDENT INSURERS, et al., Appellants, v. STATE of New York et al., Respondents.
• Decision Date: 06 February 1997
• Court: New York Court of Appeals

Page 853

655 N.Y.S.2d 853

89 N.Y.2d 950, 678 N.E.2d 465

NATIONAL ASSOCIATION OF INDEPENDENT INSURERS, et al., Appellants, v. STATE of New York et al., Respondents.

Court of Appeals of New York.

Feb. 6, 1997.

Stroock & Stroock & Lavan, New York City (Alvin K. Hellerstein, Martin Minkowitz, Edward P. Grosz and Donald Gabay, of counsel), for appellants.

Dennis C. Vacco, Attorney General, New York City (August L. Fietkau, Robert A. Forte, Rosalie J. Hronsky, Peter H. Schiff and Barbara G. Billet, of counsel), for respondents.

OPINION OF THE COURT MEMORANDUM:

The order of the Appellate Division should be affirmed, with costs.

In an effort to ensure payment of sales tax revenue to the State, the Legislature in 1991 changed the manner in which motor vehicle damage insurance awards are to be paid by enacting article 15 of the Tax Law. Pursuant to article 15, insurance carriers are required to send the sales tax component of an insurance award directly to the State Commissioner of Taxation and Finance (see, Tax Law § 341[b], [c] ). Claimant is then sent a credit voucher, which can be remitted to the repair shop or dealer in lieu of sales tax, if the vehicle is repaired or replaced within a year (see, Tax Law § 341[d][1], [2] ).

Plaintiffs, 13 insurance carriers and their trade association, seek a declaration that article 15 is facially unconstitutional and an injunction to prevent its implementation. Plaintiffs argue that article 15 violates their due process rights because it does not allow for a refund in the event that the funds remitted to the State by insurers exceed the amount of sales tax actually assessed. Plaintiffs further contend that, because repair shops and dealers are not required to accept the vouchers (see, Tax Law § 341[d][2] ), a claimant may be required to pay sales tax that the insurer has already remitted to the Commissioner, thereby resulting in an unconstitutional double taxation without possibility of a refund.

A presumption of constitutionality attaches to article 15, and this Court is required "to avoid interpreting [it] in a way that would render it unconstitutional if such a construction can be avoided" (Alliance of Am. Insurers v. Chu, 77 N.Y.2d 573, 585, 569 N.Y.S.2d 364, 571 N.E.2d 672). Plaintiffs' facial constitutional challenge hinges on speculative assertions regarding possible actions by future claimants, motor vehicle repair shop owners and dealers. The sets of facts posed by plaintiffs, however, are not presently before the Court--indeed, article 15 does not even become effective until July 1997 (see, L. 1996, ch. 309, § 252). At this point, then, we cannot presume...