Town of Verona v. Cuomo

• Decision Date: 17 December 2015
• Citation: 136 A.D.3d 36,22 N.Y.S.3d 241
• Parties: In the Matter of TOWN OF VERONA et al., Appellants, v. Andrew M. CUOMO, as Governor of the State of New York, et al., Respondents, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

136 A.D.3d 36

22 N.Y.S.3d 241

In the Matter of TOWN OF VERONA et al., Appellants,

v.Andrew M. CUOMO, as Governor of the State of New York, et al., Respondents, et al., Respondents.

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

Dec. 17, 2015.

O'Connell & Aronowitz, Albany (Cornelius D. Murray of counsel), for appellants.

Eric T. Schneiderman, Attorney General, Albany (Victor Paladino of counsel), for Andrew M. Cuomo and others, respondents.

Before: GARRY, J.P., EGAN JR., ROSE and CLARK, JJ.

GARRY, J.P.

Appeal from a judgment of the Supreme Court (Ceresia Jr., J.), entered July 8, 2014 in Albany County, which, among other things, in a combined proceeding pursuant to CPLR article 78 and action for declaratory judgment, granted respondents' motion for summary judgment dismissing the petition/complaint.

In May 2013, the Oneida Nation of New York entered into a settlement agreement (hereinafter the agreement) with respondents Madison County and Oneida County (hereinafter collectively referred to as the Counties) and the State of New York that resolved various longstanding disputes. The agreement included a covenant that the Oneida Nation would support a public referendum to amend the N.Y. Constitution to authorize casino gambling and would not fund any opposing campaigns or litigation. The Oneida Nation received various concessions, including a guarantee of geographic exclusivity prohibiting competition from other casino owners in a 10–county region. The State and the Counties further agreed to resolve or discontinue various legal and administrative disputes involving the Oneida Nation, including federal litigation challenging a decision by the United States Department of the Interior (hereinafter the Department) that had placed 13,000 acres of land located in the Counties into trust. The State and the Counties also agreed that they would not oppose the Oneida Nation if it sought to place an additional 12,000 acres in trust. Later in 2013, legislation was enacted, known as the Upstate New York Gaming Economic Development Act of 2013 (L. 2013, chs. 174, 175) (hereinafter UNYGEDA), that ratified the settlement and provided a framework for the implementation of legalized casino gambling in New York (see Executive Law § 11 ; Racing, Pari–Mutuel Wagering and Breeding Law art 13). Thereafter, the N.Y. Constitution was amended by public referendum to permit casino gambling at certain facilities authorized by the Legislature (see N.Y. Const., art. I, § 9 [1] ).

Petitioners Town of Vernon and Town of Verona (hereinafter collectively referred to as the Towns), as well as four residents of the Towns—petitioners Michael McDonough, Daniel Deal, James Anderson and Michael Phillips (hereinafter collectively referred to as the individual petitioners)—commenced this combined action for a declaratory judgment and proceeding pursuant to CPLR article 78 to challenge the agreement. The first cause of action alleges that the agreement constituted an improper attempt by the State to buy votes and "rig" the outcome of the referendum in violation of the individual petitioners' voting rights and their rights to freedom of speech and equal protection. The second cause of action asserts that the agreement illegally deprived the Towns of the right to govern and control land within their boundaries, including the right to regulate land use and levy taxes. The third cause of action seeks to invalidate the UNYGEDA on the ground that it was prematurely passed before the N.Y. Constitution was amended by the referendum.

Respondents removed the matter to federal court, where the United States District Court for the Northern District of New York determined that petitioners lacked standing, dismissed the petition and remitted the matter to Supreme Court (Town of Verona [Oneida County] v. Cuomo, 2013 WL 5839839, *6–7, 2013 U.S. Dist. LEXIS 155283, *21–22 [N.D.N.Y., Oct. 30, 2013, No. 1:13–CV–1100 (LEK/DEP) ] ). Respondents then answered and moved for summary judgment dismissing the combined action/proceeding. Petitioners cross-moved to amend the combined petition/complaint. Supreme Court denied the cross motion and granted respondents' motion. Petitioners appeal.

Turning first to the claims raised by the Towns, Supreme Court properly determined that they do not have the capacity to bring this combined action/proceeding. "Capacity to sue is a threshold matter ... [that] concerns a litigant's power to appear and bring its grievance before the court" (Silver v. Pataki, 96 N.Y.2d 532, 537, 730 N.Y.S.2d 482, 755 N.E.2d 842 [2001] [internal quotation marks and citation omitted]; accord Matter of Graziano v. County of Albany, 3 N.Y.3d 475, 478–479, 787 N.Y.S.2d 689 [2004] ). As municipalities are political subdivisions of the State, they ordinarily lack the capacity to contest State decisions that "affect[ ] them in their governmental capacity or as representatives of their inhabitants" (Matter of County of Nassau v. State of New York, 100 A.D.3d 1052, 1055, 953 N.Y.S.2d 339 [2012] [internal quotation marks and citation omitted], lv. dismissed and denied 20 N.Y.3d 1092, 965 N.Y.S.2d 77, 987 N.E.2d 638 [2013] ; see Matter of County of Oswego v. Travis, 16 A.D.3d 733, 735, 791 N.Y.S.2d 189 [2005] ). This general rule has several recognized exceptions, one of which applies when a municipality's claim is based upon a violation of its home rule powers, which are guaranteed by the N.Y. Constitution and not subject to the will of the Legislature (see N.Y. Const. art. IX; Matter of New York Blue Line Council, Inc. v. Adirondack Park Agency, 86 A.D.3d 756, 758, 927 N.Y.S.2d 432 [2011], appeal dismissed 17 N.Y.3d 947, 936 N.Y.S.2d 71, 959 N.E.2d 1019 [2011], lv. denied18 N.Y.3d 806, 940 N.Y.S.2d 215, 963 N.E.2d 792 [2012] ). The Towns argue that this exception is applicable here, contending that the agreement, and the provisions of the UNYGEDA that ratified it, undermined their home rule powers by violating their rights to tax, regulate and govern the land within their boundaries (see City of New York v. State of New York, 86 N.Y.2d 286, 291–292, 631 N.Y.S.2d 553, 655 N.E.2d 649 [1995] ; see also Town of Black Brook v. State of New York, 41 N.Y.2d 486, 489, 393 N.Y.S.2d 946, 362 N.E.2d 579 [1977] ). Specifically, the Towns assert that they were deprived of the power to regulate land use—"one of the core powers of local governance" (Matter of Wallach v. Town of Dryden, 23 N.Y.3d 728, 743, 992 N.Y.S.2d 710, 16 N.E.3d 1188 [2014] )—by the placement of land within their boundaries into trust, which removed the property from the Towns' zoning and environmental regulatory authority. The Towns further contend that they lost the ability to impose and collect property taxes on this land, as well as sales tax revenues from transactions on the land that had previously been distributed to them.

These negative consequences, however, did not result from the agreement or from the UNYGEDA, but, instead, from the decision by the Department to place the lands in trust. That decision had already been made when the agreement was executed, and it was unaffected by any State action other than the agreement's provision that the State and the Counties would discontinue then—pending federal litigation that challenged the Department's decision. In 2014, the State and Counties did so (New York v. Jewell, 2014 WL 841764, *12, 2014 U.S. Dist LEXIS 27042, *39–40, [N.D.N.Y., Mar. 4, 2014, No. 6:08–CV–0644 (LEK/DEP) ] ). The State has no constitutional obligation to pursue litigation, nor have petitioners established that the litigation would have resulted in the reversal of the Department's decision to place the lands in trust if it had not been settled. Further, the discontinuance of the State's claims did not foreclose the Towns from pursuing separate federal litigation that challenged the Department's action, which they did until the action was dismissed on the merits in 2015 (Town of Verona v. Jewell, 2015 WL 1400291, *10, 2015 U.S. Dist LEXIS 38100, *26 [N.D.N.Y., Mar. 26, 2015, No. 6:08–CV–0647 (LEK/DEP) ] ). Thus, the State's actions did not cause the harm that forms the basis of the Towns' claims.¹ Accordingly, the Towns failed to establish that the agreement and the UNYGEDA impinged upon their home rule powers, and Supreme Court properly ruled that they lacked the capacity to bring this action/proceeding.²

As for the claims of the individual petitioners, only the second and third causes of action remain to be addressed, as petitioners concede that Supreme Court was correct in dismissing the first cause of action on the ground that it was rendered moot when the public referendum was held and the N.Y. Constitution was amended to authorize casino gambling. With regard to the remaining claims, respondents first contend that the individual petitioners lack standing because they did not demonstrate that they "suffered an injury in fact, distinct from that of the general public[,] ... [and] that the injury claimed falls within the zone of interests to be protected by the [constitutional provision or] statute challenged" (Lancaster Dev., Inc. v. McDonald, 112 A.D.3d 1260, 1261, 978 N.Y.S.2d 398 [2013], lv. denied 22 N.Y.3d 866, 2014 WL 1362325 [2014], quoting Matter of Transactive Corp. v. New York State Dept. of Social Servs., 92 N.Y.2d 579, 587, 684 N.Y.S.2d 156, 706 N.E.2d 1180 [1998] ). However, Supreme Court's determination that the individual petitioners had standing to bring the second and third causes of action was not premised on a determination that they had suffered the requisite injury. On the contrary, the court found that the individual petitioners had standing as citizen-taxpayers pursuant to State Finance Law § 123–b, which permits a citizen-taxpayer to challenge an allegedly unlawful expenditure of state funds without a showing of injury in fact when such claims "have a sufficient nexus to fiscal activities of the State" (Saratoga County Chamber of Commerce v. Pataki, 100...