Owners Committee on Elec. Rates, Inc. v. Public Service Com'n of State of N.Y.

• Decision Date: 14 September 1989
• Parties: In the Matter of OWNERS COMMITTEE ON ELECTRIC RATES, INC., Respondent, v. PUBLIC SERVICE COMMISSION OF the STATE OF NEW YORK, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 416

545 N.Y.S.2d 416

150 A.D.2d 45

In the Matter of OWNERS COMMITTEE ON ELECTRIC RATES, INC., Respondent, v. PUBLIC SERVICE COMMISSION OF the STATE OF NEW YORK, Appellant.

Supreme Court, Appellate Division,

Third Department.

Sept. 14, 1989.

William J. Cowan (Lawrence G. Malone and Jonathan D. Feinberg, of counsel), Albany, for appellant.

Seham Klein & Zelman (Joel R. Dichter, Martin C. Sehan and Karen M. Dowd, of counsel), New York City, for respondent.

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

HARVEY, Justice.

In March 1985, respondent commenced an investigation to determine the best means by which savings from the purchase of low-cost Canadian hydroelectric energy by the New York Power Authority would be allocated among the customers of the seven-member investor utilities of the New York Power Pool which purchase such energy from the New York Power Authority. Integral to this determination was whether the utilities should allocate the cost savings equally on a per consumer basis or to allocate savings proportionately on a per kilowatt-hour of consumption basis. Following conferences and the submission of comments by interested parties, a recommended decision of an Administrative Law Judge was issued in March 1986 advocating adoption of the per kilowatt-hour formula. However, in an opinion and order issued on June 16, 1986, respondent ultimately adopted the per consumer formula.

A copy of the determination was mailed to all interested parties on that date including petitioner, a nonprofit membership corporation which advocated the use of the per kilowatt-hour formula. ¹ Petitioner received a copy of the determination on June 19, 1986. ² Thereafter, petitioner commenced this CPLR article 78 proceeding challenging respondent's determination as being arbitrary and capricious and contrary to Public Service Law § 65. Personal service was effected October 20, 1986. ³ Respondent then sought dismissal of the proceeding on the ground that it was not commenced within the four-month Statute of Limitations imposed by CPLR 217. Supreme Court denied this motion. Subsequently, respondent sought leave to appeal and petitioner cross-moved for an order staying enforcement of respondent's order. Supreme Court denied respondent permission to appeal but granted the stay. By order of this court, respondent was granted leave to appeal both orders of Supreme Court.

The present case presents us once again with another instance of the continuing confusion over when a Statute of Limitations period commences in CPLR article 78 proceedings (see generally, Siegel, The Dilemma of Determining When the Four-Month Statute of Limitations Starts to Run in an Article 78 Proceeding, New York Law Digest No. 354, June 1989). Although the necessity for quick resolution of governmental affairs mandates a short limitations period in these cases (CPLR 217; see, Solnick v. Whalen, 49 N.Y.2d 224, 232, 425 N.Y.S.2d 68, 401 N.E.2d 190), courts are also careful not to arbitrarily apply a limitations period and "deny a party his day in court" (Matter of Castaways Motel v. Schuyler, 24 N.Y.2d 120, 127, 299 N.Y.S.2d 148, 247 N.E.2d 124). Because the Statute of Limitations is an affirmative defense, the burden is upon respondent to establish the beginning date of the running of the statute (see, State of New York v. Peerless Ins. Co., 117 A.D.2d 370, 503 N.Y.S.2d 448; Doyon v. Bascom, 38 A.D.2d 645, 326 N.Y.S.2d 896). In this case, there appears to be no precedent directly on point. Consequently, we must fashion a determination taking into consideration such statutes that apply, the philosophy expressed by the courts in interpreting Statute of Limitations questions and the practical problems being encountered by litigants and administrative agencies. We must also take into consideration the plight of lawyers who must practice according to our often confusing determinations. Our decision should be as pragmatic as possible.

Here, respondent's principal arguments are premised upon the assumption that the limitation period began to run on June 16, 1986, the date the determination became effective and was mailed to petitioner. In response, petitioner maintains that the proceeding was timely because the limitations period did not commence until June 19, 1986, the date it received the notice of the determination. Respondent relies on Public Service Law § 23(1), which states, in part, that "[e]very order of [respondent] shall take effect at a time therein specified" (emphasis supplied). The issue here, however, is not when respondent's determination became effective but, rather, when the Statute of Limitations began to run. It is well established that the fact that a determination is final for purposes of its execution does not necessarily mean that on that date the Statute of Limitations begins to run (see, In re New York Cent. R.R. Co. v. Public Serv. Commn., 238 N.Y. 132, 135, 136, 144 N.E. 365). Rather, since the Statute of Limitations is entirely a creature of statute (see, Siegel, NY Prac § 33, at 34), a determination of when the limitations period for this proceeding begins to run depends solely upon an interpretation of CPLR 217, which the parties concede is the governing statute herein (see, e.g., Eve v. Power Auth. of State of N.Y., 123 A.D.2d 532, 534, 506 N.Y.S.2d 700).

CPLR 217 provides, in pertinent part, that:

* * * a proceeding against a body or officer must be commenced within four months after the determination to be reviewed becomes final and binding upon the petitioner * * * (emphasis supplied).

The phrase "final and binding" has been interpreted to mean at the time the action has its impact upon the petitioner and when it becomes clear that he was aggrieved thereby (see, e.g., Langham v. State of New York, 124 A.D.2d 405, 406, 507 N.Y.S.2d 766, lv denied 69 N.Y.2d 605, 513 N.Y.S.2d 1026, 506 N.E.2d 537). The Court of Appeals recently held that a party cannot be aggrieved by an administrative determination until he receives notice thereof (Matter of Biondo v. New York State Bd. of Parole, 60 N.Y.2d 832, 470 N.Y.S.2d 130, 458 N.E.2d 371). Clearly, "a petitioner should not be held to have been dilatory in challenging a determination of which he was not aware"(id., at 834, 470 N.Y.S.2d 130, 458 N.E.2d 371).

Here, the plain language of Public Service Law § 23(1) provides:

Every order of [respondent] shall be served upon every person or corporation to be affected thereby, either by personal delivery of a copy thereof; or by mailing a copy thereof * * * to the person to be affected thereby * * * (emphasis supplied).

Petitioner did not receive notice of respondent's determination until the agreed-upon date of June 19, 1986 and, therefore, the principles of Matter of Biondo v. New York State Bd. of Parole (supra) mandate that the Statute of Limitations commence from that date (see also, Matter of Edmead v. McGuire, 67 N.Y.2d 714, 499 N.Y.S.2d 934, 490 N.E.2d 853). Respondent did make service in accordance with Public Service Law § 23(1) by utilizing the alternative of service by mail. We believe that both methods should be placed on the same footing. To accomplish this and following the policy established by the Court of Appeals in Matter of Biondo v. New York State Bd. of Parole (supra), we establish the date of notice as the date on which the decision was received. That was June 19, 1986.

Respondent contends that in making its decision it was acting in its quasi-legislative capacity. Because of that fact, it apparently argues that Public Service Law § 23 was not the controlling statute. Rather it claims that it did everything required simply by mailing the decision and filing it with the Secretary of State. The thrust of its argument is that its quasi-legislative functions affect the general public in a manner similar to those of the Legislature and, therefore, it would be impossible to personally notify each interested party. Alternatively, respondent suggests that its alleged filing of its determination with the Secretary of State constituted sufficient constructive notice of it to commence the running of the time limitation.

In our view, the reasoning of respondent is flawed. As previously mentioned, Public Service Law § 23(1) provides for actual notice to interested parties so there can be no question of the necessity for notice. Respondent was unquestionably aware of this statutory mandate since it did mail a copy of its order to petitioner. It did not simply rely on the mere fact that it was effective on the date of issue and then take no further action. Respondent's constructive notice argument fails on several grounds. To begin with, it is clear that constructive notice is not an issue in this case at all. The record contains no proof that the decision was actually filed with the Secretary of State on June 16, 1986. It only contains a general statement that it was respondent's normal practice to do so. In the absence of proof that proper filing ever occurred in this case, we decline to consider the issue of whether filing with the Secretary of State constituted sufficient constructive notice.

In addition, we note that there is no proof in the instant record of publication of respondent's determination in the State Register or elsewhere such as to have given petitioner constructive notice. While we agree with respondent that publication in the State Register was not necessary to make a rule of the instant type (State Administrative Procedure Act § 102[2][a][ii] effective (see, State Administrative Procedure Act § 203[1][iii], we note that publication is nonetheless necessary as a constitutional mandate for meaningful constructive notice to the public. The NY Constitution requires that a rule of an agency not only be filed in the office of the Department of State but also that the Legislature provide for the "speedy publication" of such rules (N.Y. Const., art. IV, § 8; see also, People v....