Town of Webster v. Village of Webster

• Decision Date: 07 February 2001
• Citation: 280 A.D.2d 931,720 N.Y.S.2d 664
• Parties: TOWN OF WEBSTER et al., Appellants,<BR>v.<BR>VILLAGE OF WEBSTER et al., Respondents. (Appeal No. 2.)
• Court: New York Supreme Court — Appellate Division

280 A.D.2d 931

720 N.Y.S.2d 664

TOWN OF WEBSTER et al., Appellants,

v.VILLAGE OF WEBSTER et al., Respondents. (Appeal No. 2.)

Decided February 7, 2001.

Present — Pigott, Jr., P.J., Wisner, Hurlbutt, Burns and Lawton, JJ.

Order and judgment unanimously modified on the law and as modified affirmed without costs in accordance with the following Memorandum: This case involves a dispute between, inter alia, plaintiff Town of Webster (Town) and defendant Village of Webster (Village), regarding the water rates charged by the Village to certain Town residents. For years, the Village provided water to the Town for resale to Town residents. In 1987 the Village and Town entered into a contract (1987 contract) whereby the Village agreed to operate, maintain and repair the water delivery system of all water districts in the Town and to sell water to Town residents at the same rate charged to Village residents. The 1987 contract was for a term of 30 years, but was subject to renegotiation at five-year intervals. In 1996 the Village notified the Town that it wished to renegotiate the 1987 contract. Due to the failure of the parties to renegotiate material terms, including the rate to be charged to Town customers for their water consumption, the 1987 contract expired in 1997 (see, Village of Webster v Monroe County Water Auth., 269 AD2d 781). The Village, however, continued to supply Town residents with water. In December 1997, when it became apparent to the Village that the Town planned to change its supplier of water to the Monroe County Water Authority, the Village Trustees adopted a resolution, effective May 1998, that, inter alia, raised the water rates charged by the Village to certain Town residents.

In December 1998 the Town commenced this action, alleging that the resolution of the Village Trustees to increase the water rates was irrational, arbitrary and capricious, exceeded the "fair return" requirement of General Municipal Law § 94, and constituted a denial of equal protection. The Town further alleged that the conduct of the Village in providing Town residents with water at the same rate charged to Village residents after the expiration of the 1987 contract gave rise to an implied contract. The Town sought, inter alia, a declaration that the rate increase resolution was null and void, and a refund of monies paid by Town consumers of Village water in excess of the water rates and base fees charged to Village residents or, alternatively, in excess of the rates and fees authorized by General Municipal Law § 94. Plaintiffs Peter Burkardt and Robert Wiesner, Town residents, concurrently commenced a class action seeking the same relief, which action was eventually consolidated with that of the Town.

With respect to the order in appeal No. 1, the court, inter alia, denied the motion of Burkardt and Wiesner seeking, inter alia, class certification (see, CPLR 902). With respect to the order and judgment in appeal No. 2, defendants moved for summary judgment seeking, inter alia, a declaration that plaintiffs are not entitled to the relief requested in the complaint. Plaintiffs cross-moved to compel defendants to comply with outstanding discovery demands. Defendants then moved for leave to amend the answers to assert the affirmative defense of the Statute of Limitations. The court granted defendants' summary judgment motion and declared that defendants' actions in effecting the rate increase were constitutional, and denied all other motions as moot.

We conclude that the court properly granted defendants' summary judgment motion insofar as it sought dismissal of the complaint and amended complaint, but erred in granting that part of defendants' motion seeking a declaration and in failing to grant defendants' motion for leave to amend the answers to assert the Statute of Limitations defense. We further conclude that plaintiffs' General Municipal Law § 94 and equal protection causes of action (non-contract causes of action) are time-barred. A meritorious Statute of Limitations defense that has been waived under CPLR 3211 (e) "can nevertheless be interposed, with court leave, in an amended answer, provided the amendment does not cause the plaintiff `prejudice or surprise resulting directly from the delay'" (Armstrong v Peat, Marwick, Mitchell & Co., 150 AD2d 189, 190, quoting Fahey v County of Ontario, 44 NY2d 934, 935; see, Henderson v Gulati, 270 AD2d 308; Architectural Bldrs. v Pollard, 267 AD2d 704; Nortic Vil. Corp. v Empire Elec. Supply Co., 195 AD2d 1029). Here, such defense is meritorious and plaintiffs failed to demonstrate prejudice or surprise from defendants' delay in asserting the defense, and thus defendants' motion for leave to amend the answers should have been granted (see, Nortic Vil. Corp. v Empire Elec. Supply Co., supra, at 1030).

We agree with defendants that plaintiffs' non-contract causes of action are untimely because they could have been asserted in a CPLR article 78 proceeding and therefore are governed by the four-month Statute of Limitations. "The appropriate Statute of Limitations is determined by the substance of the action and the relief sought" (Bennett Rd. Sewer Co. v Town Bd., 243 AD2d 61, 66; see, New York City Health & Hosps. Corp. v McBarnette, 84 NY2d 194, 200-201, rearg denied 84 NY2d 865; Press v County of Monroe, 50 NY2d 695, 701). "[I]f the claim could have been made in a form other than an action for a declaratory judgment and the limitations period for an action [or...