Schulz v. NYS Legislature

• Decision Date: 15 December 2000
• Citation: 721 N.Y.S.2d 686
• Parties: (A.D. 3 Dept. 2001) ROBERT L. SCHULZ et al., Appellants, v. NEW YORK STATE LEGISLATURE et al., Respondents. 87940 Calendar Date:
• Court: New York Supreme Court — Appellate Division

Page 686

721 N.Y.S.2d 686 (A.D. 3 Dept. 2001)

ROBERT L. SCHULZ et al., Appellants, v. NEW YORK STATE LEGISLATURE et al., Respondents.

87940

SUPREME COURT, APPELLATE DIVISION, THIRD JUDICIAL DEPARTMENT

Calendar Date: December 15, 2000

Decided and Entered: March 1, 2001

Robert L. Schulz, Queensbury, appellant in person.

Eliot Spitzer, Attorney-General (Andrew D. Bing of counsel), Albany, for New York State Legislature and others, respondents.

Hawkins, Delafield & Wood (W. Cullen McDonald of counsel), New York City, for Dormitory Authority of the State of New York, respondent.

Before: Peters, J.P., Spain, Carpinello, Mugglin and Lahtinen, JJ.

Lahtinen, J.

Appeal from an order of the Supreme Court (Malone Jr., J.), entered November 20, 1999 in Albany County, which, inter alia, granted defendants' motions to dismiss the complaint for lack of standing and failure to state a cause of action.

Pursuant to chapter 5 of the Laws of 1998 (the "Albany Plan" authorizing the financing and construction of certain facilities) and chapter 124 of the Laws of 1998 (establishing the Schenectady Metroplex Development Authority), revenue bonds were sold or authorized to be sold by the involved public authorities. In September 1998 plaintiffs, all of whom are citizens, residents, taxpayers and registered voters in the State, commenced this action pursuant to CPLR 3001 and State Finance Law article 7A seeking a declaration that a portion of State Finance Law § 123-b (1) and chapters 5 and 124 of the Laws of 1998 were unconstitutional. Defendants New York State Legislature, Speaker of the Assembly, Senate Majority Leader, Governor and Comptroller (hereinafter collectively referred to as the State defendants) moved to dismiss the complaint, claiming, inter alia, that plaintiffs lacked standing on certain of the issues raised in their complaint and that the complaint failed to state a cause of action. Defendant Dormitory Authority of the State of New York, the sponsor of revenue raising bonds issued to accomplish the purposes of chapter 5 of the Laws of 1998, moved to intervene in the action and sought dismissal of the complaint for failure to state a cause of action or, alternatively, for summary judgment.

Supreme Court granted the motion of the State defendants and dismissed the complaint, finding that plaintiffs failed to allege the existence of an actual or threatened injury and, therefore, lacked standing to maintain their Federal and State constitutional claims with the exception of voter standing to prosecute their claim that chapters 5 and 124 violated NY Constitution, article VII, § 11. Supreme Court dismissed plaintiffs' remaining causes of action, rejecting their challenge to the constitutionality of State Finance Law § 123-b (1), and further finding that their surviving constitutional challenge to chapters 5 and 124 failed to state a cause of action because the bonds sold pursuant to the challenged statutory schemes would not constitute an obligation of the State within the meaning of NY Constitution, article VII, § 11, and plaintiffs failed to state a cause of action for violation of the Voting Rights Act (42 USC § 1973) by failing to allege any facts which demonstrated that these rights had been adversely affected by defendants. In light of its dismissal of the complaint, Supreme Court found the Dormitory Authority's motion to intervene to be moot.

On appeal, plaintiffs focus on two arguments. First, they claim that the portion of State Finance Law § 123-b (1)¹ that excepts a bond issue or notes issued in anticipation thereof from legal challenges by citizen taxpayers is unconstitutional. Second, they claim that NY Constitution, article VII, § 16 requires a finding that the financial obligations arising from the implementation of chapters 5 and 124 are legally enforceable debts of the State, thus making both statutes violative of NY Constitution, article VII, § 11 which prohibits the contracting of State debts without a public referendum.

Plaintiffs argue that Supreme Court's dismissal of their attack on the constitutionality of State Finance Law § 123-b (1) is based upon the extension of erroneous decisions relating back to this Court's decision in Schulz v State of New York (185 A.D.2d 596, appeal dismissed 81 N.Y.2d 336). In that case, this Court held that the provision excepting citizen taxpayer challenges to "revenue raising through State bond issues or anticipation notes is not a right of constitutional dimension * * * [and] in our view, effects no constitutional violation" (id., at 597 [citation omitted]). While plaintiffs contend that Wein v Comptroller of State of N.Y. (46 N.Y.2d 394) was incorrectly cited therein to support a finding that State Finance Law § 123-b (1) was constitutional, we specifically reject such contention, noting that this Court has repeatedly rejected similar claims attacking that statute's constitutionality (see, Matter of Schulz v New York State Executive, 233 A.D.2d 43, 44, affd 92 N.Y.2d 1, cert denied 525 US 965; Schulz v New York State Legislature, 244 A.D.2d 126, 131, appeal dismissed 92 N.Y.2d 946, lv denied 92 N.Y.2d 818, cert denied 526 US 1115; Matter of Schulz v New York State Legislature, ___ A.D.2d ___, 718 N.Y.S.2d 422). Plaintiffs have provided no new argument which would prompt us, much less require us, to change our position on this issue. Accordingly, Supreme Court properly dismissed plaintiffs' constitutional challenge to State Finance Law § 123-b (1).

Plaintiffs do make an attempt to escape the preclusive effects of our prior rulings by claiming common-law standing as citizens (as opposed to taxpayers) seeking judicial review. Plaintiffs maintain that State Finance Law § 123-b (1) is a "door closing" statute which prohibits citizens from, inter alia, asserting their fundamental State and Federal constitutional rights to petition the government for a redress of their grievances, thus rendering it unconstitutional. However, to the extent that the plethora of cases on this point leave any doubt that citizens (as well as taxpayers) have been denied both statutory and common-law standing by the effect of the exception contained in State Finance Law § 123-b (1), we note that plaintiffs have also failed to show that they have suffered an "injury-in-fact" that has not been suffered by the citizenry at large (see, Public Util. Law Project of N.Y. v New York State Pub. Serv. Commn., 252 A.D.2d 55, 59), which is a predicate for standing to seek judicial review (see, Society of Plastics Indus. v County of Suffolk, 77 N.Y.2d 761, 772-773; Matter of Gilkes v New York State Div. of Parole, 192 A.D.2d 1041, 1042, lv denied 82 N.Y.2d 654). Therefore, plaintiffs' contention that they have fundamental, common-law standing as citizens to attack the constitutionality of State Finance Law § 123-b (1) on State or Federal grounds (see, Matter of Schulz v New York State Executive, 92 N.Y.2d 1, 7) must be rejected.

Plaintiffs also press on appeal their argument that the plain language of NY Constitution, article VII, § 16 makes the bonds issued under chapters 5 and 124 legally enforceable debts of the State susceptible to an action by a bondholder to compel the State to make the required annual payments and, therefore, violative of NY Constitution, article VII, § 11. Defendants contend that the financing schemes at issue in this case are indistinguishable from numerous public funding statutes which have been repeatedly upheld by the Court of Appeals and this Court (see, e.g., Comereski...