Van Dussen-Storto Motor Inn, Inc. v. Rochester Telephone Corp.

• Decision Date: 13 July 1978
• Docket Number: DUSSEN-STORTO,No. 2,No. 1,1,2
• Citation: 407 N.Y.S.2d 287,63 A.D.2d 244
• Parties: , 1978-2 Trade Cases P 62,253 VANMOTOR INN, INC., Respondent, v. ROCHESTER TELEPHONE CORPORATION, Appellant. AppealVANMOTOR INN, INC., Respondent, v. ROCHESTER TELEPHONE CORPORATION, Appellant. Appeal
• Court: New York Supreme Court — Appellate Division

Page 287

407 N.Y.S.2d 287

63 A.D.2d 244, 1978-2 Trade Cases P 62,253

VAN DUSSEN-STORTO MOTOR INN, INC., Respondent, v. ROCHESTER TELEPHONE CORPORATION, Appellant. Appeal No. 1.

VAN DUSSEN-STORTO MOTOR INN, INC., Respondent, v. ROCHESTER TELEPHONE CORPORATION, Appellant. Appeal No. 2.

Supreme Court, Appellate Division,

Fourth Department.

July 13, 1978.

Nixon, Hargrave, Devans & Doyle, Rochester, for appellant (Edward Burns, Rochester, of counsel).

Robinson, Williams & Angeloff, Rochester, for respondent (Dirk Adams, Rochester, of counsel).

Before MARSH, P. J., and MOULE, DILLON, DENMAN and SCHNEPP, JJ.

SCHNEPP, Justice:

Appellant appeals from orders denying in part its motions to dismiss respondent's entire complaint on various grounds including res judicata, statute of limitations and lack of standing, and for leave to reargue.

This case is no stranger to the courts. The controversy centers on Rochester Telephone Corporation's ("RTC") refusal to permit Van Dussen-Storto Motor Inn, Inc. ("Van Dussen") to interconnect RTC's telephone system with the equipment of a private supplier, Universal Communications System ("Universal"), because a tariff which RTC had duly filed with the Public Service Commission ("PSC") prohibited this use. In its first lawsuit instituted on November 15, 1971 Van Dussen alleged six causes of action. The first sought rescission of a November 4, 1968 agreement between RTC and plaintiff because of duress; the second alleged that RTC's rates were unreasonable; the third, that RTC tortiously interfered with plaintiff's contract with Universal; the fourth, that RTC acted in violation of State antitrust laws; the fifth, that RTC acted in violation of Federal antitrust laws; and the sixth sought consequential damages flowing from the first five causes of action. RTC's motion to dismiss this complaint was granted with respect to all causes of action except the first (Van Dussen-Storto Motor Inn v. Rochester Tel. Corp., 72 Misc.2d 34, 338 N.Y.S.2d 31). On appeal, this court modified Special Term's decision by dismissing the first cause of action and otherwise affirmed (Van Dussen-Storto Motor Inn v. Rochester Tel. Corp., 42 A.D.2d 400, 348 N.Y.S.2d 404). The court held (Justice Moule writing) that the reasonableness of the tariff, not RTC's action in accordance with it, was at the heart of plaintiff's first cause of action, and that the doctrine of primary administrative jurisdiction mandated that plaintiff attack the reasonableness of the tariff before the PSC ( Van Dussen-Storto Motor Inn v. Rochester Tel. Corp., 42 A.D.2d 400, 402, 348 N.Y.S.2d 404, 406). This reasoning was also applied in affirming the dismissal of the second and third causes of action. The fourth and fifth causes of action were found to be "without merit" because "RTC acted in accordance with its duly filed tariffs". The sixth cause of action fell, since the other causes of action were dismissed ( Van Dussen-Storto Motor Inn v. Rochester Tel. Corp., 42 A.D.2d 400, 402-404, 348 N.Y.S.2d 404, 406-408). The Court of Appeals affirmed on the opinion of Justice Moule ( Van Dussen-Storto Motor Inn v. Rochester Tel. Corp., 34 N.Y.2d 904, 359 N.Y.S.2d 286, 316 N.E.2d 719).

On July 1, 1974 Van Dussen filed a complaint with the PSC, claiming that RTC violated its tariff, coerced plaintiff into signing the 1968 agreement, and "discriminated" against it when RTC "unlawfully refused . . . permission to install the privately supplied telecommunication system". Van Dussen requested that the PSC enter an appropriate order directing RTC to respond in damages, annulling the 1968 agreement and adjudicating the rights and liabilities of the parties. The complaint did not explicitly attack the reasonableness or legality of the tariff or make any mention of a violation of antitrust laws. In a letter to plaintiff, the PSC stated that it could find "no apparent violation by Rochester Telephone Corporation of either its tariffs or the rules and regulations of this commission". The PSC properly noted that the relief requested was not within the scope of their powers to grant, and suggested that Van Dussen's appropriate recourse was to the courts.

In August, 1974 the instant action was commenced by a service of a summons and an "amended" complaint, which sets forth only four causes of action, corresponding directly to the first four causes of action contained in the original complaint. Van Dussen presently contends that RTC applied its tariff in a discriminatory manner by permitting others of its customers to interconnect with non-RTC systems while at the same time it refused to permit Van Dussen to do so. Plaintiff maintains that RTC's discriminatory acts coerced it into entering the 1968 agreement and an April 4, 1971 escrow agreement covering termination charges, and that RTC interfered with Van Dussen's contract with Universal and violated section 340 of the General Business Law. RTC, in turn, moved to dismiss the amended complaint.

Special Term dismissed the second cause of action in all respects and portions of the third and fourth causes as being barred by res judicata, and otherwise denied the motion. RTC's motion for leave to renew or reargue its motion to dismiss was denied, but it was permitted to assert the statute of limitations as a separate affirmative defense in its answer.

We first consider RTC's primary contention that the causes of action are barred by res judicata and collateral estoppel. In the complaint before this court plaintiff does not challenge the reasonableness of RTC's tariff as it did in its first action, but claims that RTC discriminatorily applied the tariff. This claim was not previously before the court and thus the doctrine of res judicata has no application (9 Carmody-Wait 2d, § 63:203). Moreover, the original complaint was dismissed for lack of jurisdiction. Since that did not constitute an adjudication on the merits ( Weissmann v. Euker, 1 A.D.2d 30, 33-34, 147 N.Y.S.2d 101, 104-105 the doctrine of res judicata does not preclude the plaintiff from asserting these causes of action (9 Carmody-Wait 2d, § 63:221).

Furthermore, RTC's argument that plaintiff is estopped from basing its complaint on allegations inconsistent with those set forth in its original complaint has no merit. In the original complaint Van Dussen sought damages caused by "a concerted action on the part of (RTC) . . . requiring all of (its) . . . customers . . . to refuse to deal with and/or use any telephone device not provided by (RTC)". Plaintiff charges in its present complaint that RTC "treated plaintiff differently from other customers similarly situated" and permitted its other customers to install privately supplied telecommunication systems. Although a litigant may be estopped from assuming inconsistent positions in successive law suits (5 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 5011.09), absolute and entire consistency in the allegations of a complaint is not required. Furthermore, absent a showing of prejudice, the principles of estoppel do not apply (21 N.Y.Jur., Estoppel, Ratification & Waiver, § 58).

Even though there was prior action by the PSC, the doctrines of res judicata and collateral estoppel still do not apply. The PSC merely reviewed the petition; it pursued no investigation, held no hearings and made no determination on the merits of Van Dussen's claims (see Public Service Law, § 96 subds. 1, 3; § 97, subd. 2). Its action cannot be characterized as a judicial or quasi-judicial determination entitled to res judicata status ( Taylor v. New York City Tr. Auth., D.C., 309 F.Supp. 785, 791, aff'd 2 Cir., 433 F.2d 665). The PSC's letter does not preclude a formal judicial determination of the issues ( Rembrandt Ind. v. Hodges Int., 38 N.Y.2d 502, 381 N.Y.S.2d 451, 344 N.E.2d 383; Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N.Y. 304, 165 N.E. 456; American Airlines v. Transport Express, 55 A.D.2d 513, 389 N.Y.S.2d 18; Paige v. White Plains Urban Renewal Agency, 51 A.D.2d 733, 379 N.Y.S.2d 126; 9 Carmody-Wait 2d, § 63:205; 5 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 5011:25, 5011:27).

We next consider the viability of RTC's statute of limitations claim, which is properly before this court. Special Term's denial of RTC's motion for leave to reargue its motion to dismiss is not appealable ( Birdsall v. City of New York, 60 A.D.2d 522, 399 N.Y.S.2d 686), but the issue of statute of limitations is preserved for review. Although the issue was not argued at Special Term, it was raised in RTC's notice of motion to dismiss (CPLR 5501, subd. c; Conrad v. Beneficial Finance Co. of N.Y., 57 A.D.2d 91, 95, 394 N.Y.S.2d 923, 926; 10 Carmody-Wait 2d, § 70:301).

Van Dussen's first cause of action for rescission was timely commenced. Rescission is an equitable cause of action ( Overland v. LeRoy Foods, Inc., 113 N.Y.S.2d 124, aff'd 279 App.Div. 1085, 114 N.Y.S.2d 262), therefore the six-year statute of limitations governs (CPLR 213, subd. 1; Buscarello v. Guglielmelli, 44 Misc.2d 1041, 1042-43, 255 N.Y.S.2d 615, 617; 1 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 213.01) and not the three-year statute which controls causes of action created by statute (CPLR 214, subd. 2). A cause of action against a utility for unjust discrimination existed at common law ( N. Y. Telephone Co. v. Siegel-Cooper Co., 202 N.Y. 502, 96 N.E. 109; hence, a statute was not necessary to impose liability (cf. Shepard Co. v. Taylor Publishing Co., 234 N.Y. 465, 138 N.E. 409). At the earliest, plaintiff's first cause of action accrued on November 4, 1968, the date of its agreement with RTC. Therefore, Van Dussen would have until November 4, 1974 to commence its action (CPLR 213, subd. 1). The present action was concededly commenced on or about August 8, 1974.

Plaintiff's third cause of action for tortious interference with a contract is governed by the three-year statute of limitations (CPLR 214, subd. 4; Rolnick v. Rolnick, 29 A.D.2d 987, 290...