New York State Ass'n of Community Action Agency Bd. Members v. Shaffer

• Decision Date: 03 April 1986
• Citation: 500 N.Y.S.2d 838,119 A.D.2d 871
• Parties: In the Matter of NEW YORK STATE ASSOCIATION OF COMMUNITY ACTION AGENCY BOARD MEMBERS et al., Appellants, v. Gail S. SHAFFER, as Secretary of State of the State of New York, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 838

500 N.Y.S.2d 838

119 A.D.2d 871

In the Matter of NEW YORK STATE ASSOCIATION OF COMMUNITY ACTION AGENCY BOARD MEMBERS et al., Appellants, v. Gail S. SHAFFER, as Secretary of State of the State of New York, Respondent.

Supreme Court, Appellate Division Third Department.

April 3, 1986.

Tabner, Scher & Laudato (David S. Mackay, of counsel), Albany, for appellants.

Robert Abrams, Atty. Gen. (Lisa Margaret Smith, of counsel), Albany, for respondent.

Before MAHONEY, P.J., and KANE, WEISS, LEVINE and CASEY, JJ.

LEVINE, Justice.

Appeal from an order of the Supreme Court at Special Term (Conway, J.), entered January 18, 1985 in Albany County, which denied petitioners' motions for reargument of a previous motion of respondent for dismissal of the petition, for leave to file an amended petition and for issuance of a subpoena duces tecum.

A CPLR article 78 proceeding was initiated to challenge the awarding of grants by respondent to local community action program agencies pursuant to the Federal Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. §§ 9901-9912), commonly called the Community Services Block Grant Act (CSBGA). Under CSBGA, Federal block grants for poverty programs are made to the various states for distribution to statutorily defined eligible entities providing designated services for the poor. In response to CSBGA, New York enacted its own Community Service Block Grant program (Executive Law, art. 6-D; L.1982, ch. 728), giving respondent the responsibility for State-wide distribution of funding for such programs.

The petitioners who originated the article 78 proceeding on August 2, 1984 were the New York State Alliance of Community Action Programs, Inc. (the Alliance), a not-for-profit corporate umbrella organization of the Associations of Community Action Program Directors and of board members of such agencies, and the New York State Association of Community Action Agency Board Members (the Association). The petition alleged in essence that respondent had improperly granted CSBGA funding applications to entities which were ineligible to receive them under the criteria set forth in CSBGA and that, by doing so, jeopardized New York's share in the Federal program and subjected the ineligible entities to recoupment. Petitioners sought relief by way of prohibition against the awarding and distribution of grants to the ineligible agencies.

By notice of motion dated August 10, 1984, respondent moved to dismiss the petition on the grounds that petitioners (1) lacked standing in that neither they nor their members were aggrieved; (2) failed to join as necessary parties the alleged ineligible agencies to whom grants have been awarded; and (3) failed to state a cause of action in that no facts were alleged establishing that the approved grantees were ineligible. Special Term reserved decision. By order to show cause dated August 31, 1984, petitioners sought leave to amend their petition and to permit the Yonkers Community Action Program, Inc. to intervene as a petitioner. The decision was also reserved on this motion.

Special Term rendered a decision mailed October 1, 1984 granting respondent's motion to dismiss the original petition on the ground that petitioners failed to set forth facts showing that they or their members would have been entitled to funding but for the illegal awards and, hence, were not aggrieved by respondent's acts. Petitioners then moved to reargue on the basis of the proposed amended petition, the motion in connection therewith still having been undecided. Petitioners also applied for a subpoena duces tecum requiring respondent to produce the funding applications of some 32 agencies claimed to be ineligible. Special Term rejected petitioners' motion to reargue, holding that the proposed amended petition failed to correct the deficiencies in the original petition concerning petitioners' lack of standing. The court also denied petitioners' application for a subpoena duces tecum as moot, in view of its denial of the motion to reargue. Petitioners then took this appeal from the adverse determinations of their motions.

The first issue to be addressed is respondent's contention that the entire appeal should be dismissed since its true underlying basis is an attack on Special Term's nonappealable denial of petitioners' motion to reargue the prior dismissal of the petition. It is of course true that denial of a motion to reargue is not appealable (see, e.g., Kagan v. Alpert, 109 A.D.2d 910, 486 N.Y.S.2d 1010), and that element of petitioners' appeal must therefore be dismissed. However, petitioners have also appealed from Special Term's denial of their application for leave to amend the petition. Special Term's order recites that the proposed amended petition was "accepted * * * for the purpose of consideration of petitioners' application for reargument only". The court's reception of the amended petition for that limited purpose certainly did not constitute the granting of petitioners' motion to amend, particularly since the decision evinces a clear intent to finally dispose of all of petitioners' claims. Otherwise, petitioners' motion for the issuance of a subpoena duces tecum could not have been dismissed as moot. Denial of permission to amend a pleading is not only appealable, but constitutes a reversible abuse of discretion in the absence of prejudice or surprise resulting from the delay in pleading the new matter originally (McCaskey-Davies & Assoc. v. New York City Health & Hosps. Corp., 91 A.D.2d 516, 517, 456 N.Y.S.2d 388, mod. on other grounds 59 N.Y.2d 755, 463 N.Y.S.2d 434, 450 N.E.2d 240; Bronson v. Potsdam Urban Renewal Agency, 74 A.D.2d 967, 968, 426 N.Y.S.2d 174). There is an exception to the general requirement of a showing of prejudice for denial of leave to amend when the proposed amended pleading is patently devoid of merit (Walter v. Bauer, 88 A.D.2d 787, 788, 451 N.Y.S.2d 533). Since petitioners sought to amend their petition within 30 days of the commencement of the proceeding, prejudice to the respondent clearly is not a viable ground for denial of leave to amend. Therefore, the only plausible interpretation of Special Term's order and decision is that leave to amend was in fact denied on the basis of Special Term's expressed conclusion that the amended petition failed to cure the deficiencies in the original petition as to petitioners' standing to sue.

This aspect of the appeal thus turns on whether Special Term was correct in holding that the amended petition and petitioners' moving papers failed to set forth a factual basis establishing standing.

Petitioners' allegations on their motion for leave to amend may be summarized as follows. The Alliance and the Association represent poverty agencies eligible for funding under CSBGA and who in prior years actually received awards under the predecessor...