Suffolk County v. Long Island Power Authority

• Decision Date: 26 July 1999
• Citation: 694 N.Y.S.2d 91
• Parties: In the Matter of SUFFOLK COUNTY, respondent, v. LONG ISLAND POWER AUTHORITY, appellant.
• Court: New York Supreme Court — Appellate Division

Page 91

694 N.Y.S.2d 91

In the Matter of SUFFOLK COUNTY, respondent, v. LONG ISLAND POWER AUTHORITY, appellant.

Supreme Court, Appellate Division, Second Department, New York.

July 26, 1999.

Rivkin, Radler & Kremer, Uniondale, N.Y. (Arthur J. Kremer, Evan H. Krinick, and Michael P. Versichelli of counsel), and Stanley Klimberg, Uniondale, N.Y., for appellant (one brief filed).

Shaw, Licitra, Bohner, Esernio & Schwartz, P.C., Garden City, N.Y. (Anton J. Borovina of counsel), for respondent.

Farrell Fritz, P.C., Uniondale, N.Y. (Dolores Fredrich and Eric W. Penzer of counsel), and Owen B. Walsh, County Attorney, Mineola, N.Y., for County of Nassau, amicus curiae (one brief filed).

DANIEL W. JOY, J.P., GABRIEL M. KRAUSMAN, HOWARD MILLER and SANDRA J. FEUERSTEIN, JJ.

PER CURIAM.

In this proceeding, the petitioner, Suffolk County, seeks, inter alia, to bar the Long Island Power Authority (hereinafter LIPA) from enforcing a judgment obtained by its predecessor-in-interest, the Long Island Lighting Company (hereinafter LILCO), for refunds of taxes paid by LILCO based on overassessments of real property taxes on the Shoreham Nuclear Power Plant (hereinafter the Shoreham plant) (see, Matter of Long Is. Light. Co. v. Assessor for Town of Brookhaven, 246 A.D.2d 156, 675 N.Y.S.2d 615). The judgment was rendered in eight consolidated tax certiorari proceedings seeking to review the real property tax assessments levied against the Shoreham plant for the tax years 1984-1985 through 1991-1992 (see, Matter of Long Is. Light. Co. v. Assessor for Town of Brookhaven, supra; see also, Long Is. Light. Co. v. Assessor for Town of Brookhaven, 202 A.D.2d 32, 616 N.Y.S.2d 375). Relying on Public Authorities Law § 1020-q(3), the Supreme Court, Suffolk County, concluded that LIPA is barred from enforcing the entire amount of the judgment obtained by LILCO. We disagree and therefore modify.

I

In 1986 the State Legislature enacted the Long Island Power Authority Act (Public Authorities Law, article 5, title 1-A) (hereinafter the LIPA Act) in response to the economic crisis resulting from the "imprudent" construction of the Shoreham plant (Public Authorities Law § 1020-a). As the Court of Appeals has observed:

"Enacted in 1986, the LIPA Act created a public power authority having the prerogative to acquire all or part of LILCO's assets through a negotiated settlement, tender offer for LILCO's capital stock or the exercise of eminent domain (PAL § 1020-h). The Act further stipulated, however, that upon acquisition of the Shoreham plant, LIPA was to close and decommission the plant 'forthwith' (PAL § 1020-h ).

"The LIPA Act gave LIPA tax-exempt status, as a public authority, respecting any property it acquired from LILCO (PAL § 1020-p). In recognition of the potentially drastic fiscal impact of the loss of local property tax revenues because of the exemption, the LIPA Act provided for LIPA's payment of PILOTs [payments in lieu of taxes] to the municipalities and school districts affected by any such acquisition of LILCO property (PAL § 1020-q ).

"In February 1989, then Governor Cuomo, LIPA and LILCO entered into a 'Settlement Agreement' for the acquisition by LIPA of only the Shoreham plant, for $1 (see, Matter of Citizens For an Orderly Energy Policy v. Cuomo, 78 N.Y.2d 398, 408 [576 N.Y.S.2d 185, 582 N.E.2d 568] rearg. denied 79 N.Y.2d 851 [580 N.Y.S.2d 202, 588 N.E.2d 100], [79 N.Y.2d] 852 [580 N.Y.S.2d 203, 588 N.E.2d 101]). The settlement agreement was immediately the subject of a legal challenge in the Matter of Citizens For an Orderly Energy Policy case. Transfer of Shoreham was blocked until the final disposition of that suit by this Court's decision upholding the settlement; therefore, the actual transfer of title to LIPA did not occur until February 29, 1992" (Long Island Power Auth. v. Shoreham-Wading River Centr. School Dist., 88 N.Y.2d 503, 508-510, 647 N.Y.S.2d 135, 670 N.E.2d 419).

Thereafter, in March 1997 LIPA and LILCO entered into an Agreement in Principle whereby LIPA would acquire, through a stock acquisition, LILCO's electric transmission and distribution facilities and retail operations. Additional agreements between LIPA and LILCO resolved various ancillary issues and the final acquisition of LILCO by LIPA was consummated on May 28, 1998.

On March 26, 1997 (prior to LIPA's acquisition of LILCO), a judgment was entered in favor of LILCO in tax litigation involving the real property tax assessment on the Shoreham plant for the tax years 1984-1985 through 1991-1992 for overassessments on the Shoreham plant. The amount of the judgment was over $868,000,000, which included interest through the date of judgment. Interest on this amount continues to accrue at $214,145.48 per day (see, Long Is. Light. Co. v. Assessor for Town of Brookhaven, supra).

II

Suffolk County, the petitioner in the instant litigation, contends that LIPA is barred from enforcing the entire amount of this judgment. In support of its position, it relies on Public Authorities Law § 1020-q(3), which states as follows:

"1020-q. Payments in lieu of taxes

"3. No municipality or governmental subdivision, including a school district or special district, shall be liable to the authority or any other entity for a refund of property taxes originally assessed against the Shoreham plant. Any judicial determination that the Shoreham plant assessment was excessive, unequal or unlawful for any of the years from nineteen hundred seventy-six to the effective date of this title shall not result in a refund by any taxing jurisdiction of taxes previously paid by LILCO pursuant to such Shoreham plant assessment. The authority shall discontinue and abandon all proceedings, brought by its predecessor in interest, which seek the repayment of all or part of the taxes assessed against the Shoreham plant".

III

Initially, we note that in a prior proceeding commenced by Suffolk County, the extent of LIPA's powers under Public Authorities Law § 1020-q was considered by the Supreme Court, Nassau County (see, Matter of Suffolk County v. Long Is. Power Auth., 177 Misc.2d 208, 673 N.Y.S.2d 545). There, the court sustained LIPA's August 21, 1997, determination which ratified agreements between it and LILCO and accepted conditions imposed by the Public Authorities Control Board. These agreements served as the basis for LIPA's ultimate acquisition of LILCO (see, Matter of Suffolk County v. Long Is. Power Auth., supra, at 214, 673 N.Y.S.2d 545). One of the issues considered by the court was whether, in acquiring LILCO, LIPA could compensate LILCO for the value of the tax judgment LILCO had obtained with respect to the Shoreham plant. Suffolk County specifically argued that Public Authorities Law § 1020-q(3) barred LIPA from compensating LILCO for "its as yet unenforced tax certiorari judgment" (Matter of Suffolk County v. Long Is. Power Auth., supra, at 220, 673 N.Y.S.2d 545). In rejecting this argument, the court determined that "a careful examination of section 1020-q(3) does not bar LIPA from compensating LILCO for judgments and only precludes LIPA from obtaining tax refunds from 1976 to 1987" (see, Matter of Suffolk County v. Long Is. Power Auth. supra, at 220, 673 N.Y.S.2d 545 [emphasis supplied] ).

Suffolk County's instant claim is that Public Authorities Law § 1020-q(3) precludes the enforcement, by LIPA, of any tax judgment obtained by LILCO. Since this claim has been specifically rejected by the court in the aforementioned proceeding (see, Matter of Suffolk County v. Long Is. Power Auth., supra), Suffolk County is barred under the doctrine of res judicata from relitigating it herein (see, O'Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 445 N.Y.S.2d 687, 429 N.E.2d 1158; Gramatan Home Investors Corp. v. Lopez, 46 N.Y.2d 481, 485, 414 N.Y.S.2d 308, 386 N.E.2d 1328; Lake Anne Homeowners Assn. v. Lake Anne Realty Corp., 220 A.D.2d 560, 561, 632 N.Y.S.2d 811; Coliseum Towers Assocs. v. County of Nassau, 217 A.D.2d 387, 389-390, 637 N.Y.S.2d 972; see also, Initiative for Competitive Energy v. Long Island Power Authority, 178 Misc.2d 979, 996, 683 N.Y.S.2d 391).

IV

In any event, we conclude that Public Authorities Law § 1020-q(3) only bars LIPA from enforcing that portion of the judgment at issue attributable to real property taxes assessed on the Shoreham plant prior to enactment of the LIPA Act. In Long Is. Power Auth. v. Shoreham-Wading Riv. Cent. School Dist., 88 N.Y.2d 503, 647 N.Y.S.2d 135, 670 N.E.2d 419, supra, the Court of Appeals construed Public Authorities Law § 1020-q(3), in the context of determining LIPA's obligations to make payments in lieu of taxes (hereinafter PILOTs). In that case, the court stated as follows:

"[W]e agree with the courts below that Public Authorities Law § 1020-q(3) should not be read as completely immunizing the various taxing jurisdictions from refund liability for PILOT overpayments based upon the inflated assessed valuations of the Shoreham plant following enactment of the LIPA Act * * * Section 1020-q bespeaks of a legislative intent limited to relieving the local taxing jurisdictions from the drastic impact of substantial refund liability for past taxes and assessments challenged by LILCO, not PILOTs prospectively imposed following LIPA's acquisition of the Shoreham plant. Thus, section 1020-q (3) prevents refund liability for 'property taxes originally assessed' against the Shoreham plant, or for 'refund[s] of taxes' based upon a judicial determination of overassessed evaluation 'for any of the years from [1976] to the effective date of this title [January 15, 1987]' * * * While section 1020-q looks backward to taxes previously assessed, defendants' liability for PILOT refunds was, as of the effective date of the Act, wholly prospective. Thus, the plain language of Public Authorities Law § 1020-q(3) limits its application to proceedings to recover taxes overpaid during a specific period of time.

"Our limited reading of ...