MEMORANDUM OF LAW (Motion #2) March 11, 2019

On November 30, 2018 a Motion,Ex Parte was filed involving a dispute between Spensieri Diversified, Llc, and State Of New York - Office Of General Services, for Special Proceedings - CPLR Article 78 in the District Court of Albany County.

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FILED: ALBANY COUNTY CLERK 03/11/2019 04:23 PM INDEX NO. 907245-18
NYSCEF DOC. NO. 11 RECEIVED NYSCEF: 03/11/2019

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF ALBANY

In the Matter of the Application of
SPENSIERI DIVERSIFIED, LLC,

Petitioner,
Index No. 907245-18
For a Judgment Pursuant to Article 78
of the Civil Practice Law and Rules

-against-

STATE OF NEW YORK, by and through its OFFICE
OF GENERAL SERVICES,

Respondent.

MEMORANDUM OF LAW IN SUPPORT OF
RESPONDENT’S MOTION TO DISMISS PURSUANT TO
CPLR 3211(2), (4) AND (7)

LETITIA JAMES
Attorney General of the State of New York
Attorney for Respondent
The Capitol
Albany, New York 12224

Christopher J. Hummel
Assistant Attorney General, of Counsel
Telephone: (518) 776-2578

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Table of Contents

PRELIMINARY STATEMENT ................................................................................................. 1

STATEMENT OF FACTS ........................................................................................................... 2

ARGUMENT ................................................................................................................................. 3

POINT I ............................................................................................................................. 3

PETITIONER HAS AN ADEQUATE REMEDY AT LAW TO
OBTAIN THE RELIEF SOUGHT IN THE PETITION .................................. 3

POINT II ............................................................................................................................ 5

PETITIONER CANNOT OBTAIN RELIEF UNDER CPLR § 7803(4)......... 5

POINT III .......................................................................................................................... 6

PETITIONER CANNOT OBTAIN RELIEF UNDER CPLR § 7803(2)......... 6

CONCLUSION ............................................................................................................................. 7

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PRELIMINARY STATEMENT

Petitioner, Spensieri Diversified, LLC, a corporation that had contracted to perform work

for the Respondent, the Office of General Services,1 commenced this proceeding pursuant to

Article 78 of the New York State Civil Practice Law and Rules (“CPLR”) by filing the Verified

Petition (“Petition”) on November 30, 2018. See Doc. No. 1. Petitioner challenges Respondent’s

issuance of a demand letter dated September 4, 2018 (“the demand letter”), which concluded that

Petitioner had breached its contract with Respondent and demanded payment of $40,000 in

damages. See id., Wherefore clause (the demand letter is affixed to the Petition as Exhibit A).

Following service of the demand letter, but prior to this proceeding being filed, Respondent filed

a plenary civil action (“the plenary action”) for, inter alia, breach of contract, in Supreme Court,

Albany County on or about October 4, 2018.2

In this proceeding, Petitioner seeks the following relief: (1) declaratory relief finding the

State’s “claims”3 to be unjustified and unreasonable; (2) judgment pursuant to CPLR § 7803(2)

finding that Respondent proceeded in excess of jurisdiction in issuing the demand letter; (3)

judgment pursuant to CPLR § 7803(3) finding the Respondent’s determination of damages in the

demand letter to be arbitrary and capricious and affected by error of law; (4) judgment pursuant to

CPLR § 7803(4) finding the determination of damages in the demand letter to be unsupported by

substantial evidence and made without a hearing held; (5) a determination under CPLR Article 86

that Petitioner is a prevailing party. See Doc. No. 1, Wherefore clause.

1
The caption to the Petition lists Respondent as the “State of New York by and through its Office of General
Services.” Doc. No. 1. To the extent the Petition seeks to name the State of New York as a respondent in this
matter, the Petition must be dismissed. See Patchoque Scrap Iron & Metal Co. v. Ingraham, 57 Misc. 2d 290, 291
(Sup. Ct. Suffolk County 1986) (citing Carmody-Wait 2d New York Practice, vol. 24, § 145:264, p. 64).
2
State of New York v. Spensieri Diversified, LLC, Supreme Court, Albany County, Index No. L-00038-18. The
Verified Complaint filed in this matter is affixed to the Affirmation of Christopher J. Hummel (“Hummel Aff.”) as
Exhibit 1.
3
Although it is not clear from the Petition, it is presumed that the term “claims” refers to the claims enumerated in
the Verified Complaint in the plenary action. See Doc. No. 1, Wherefore clause.

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Respondent moves to dismiss the Petition under CPLR §§ 3211(2), (4) and (7) on the

grounds that: (1) the plenary action constitutes an adequate remedy at law to obtain all relief sought

in this Petition with respect to the issuance of the demand letter, the determination of damages in

the demand letter, and the claims raised in the plenary action; (2) Petitioner is not entitled to relief

under CPLR § 7803(4) because the challenged determination of damages was not the product of a

judicial or quasi-judicial hearing; (3) Petitioner is not entitled to relief under CPLR § 7803(2)

because the challenged act of issuing the demand letter is not judicial or quasi-judicial in nature.

Accordingly, Respondent respectfully submits that the Petition should be dismissed in its entirety.4

STATEMENT OF FACTS

As alleged in the Petition, Respondent and Petitioner entered into a contract on or about

January 21, 2015 to have Petitioner perform maintenance on fixtures at the Cape Vincent

Correctional Facility, a state-owned property. Petition, ¶¶ 5, 6.5 Work was purportedly completed

on or about May 20, 2016. Id. at ¶ 9.6 By letter dated May 11, 2018, Respondent attempted to

initiate a warranty claim with respect to defects in the work performed. Id. at ¶¶ 10.7 Petitioner

insisted that the one-year warranty period provided for in the contract had expired. Id. at ¶ 11. In

response, on September 4, 2018, Respondent sent a letter, through Assistant Attorney General

Denis R. Hurley, Jr., to Petitioner demanding payment of $40,000, the cost to correct the defects

in Petitioner’s work. Id. at ¶ 16 and Exhibit A. After Petitioner refused to pay the requested sum,

Respondent commenced the plenary action in Supreme Court, Albany County, asserting claims of

4
Further, because this Petition must be dismissed, Petitioner is not entitled to a finding that it is a prevailing party
under CPLR Article 86.
5
The Verified Complaint in the plenary action indicates that the particular contract to perform work at Cape Vincent
Correctional Facility was entered into on or about March 2, 2015. Hummel Aff. Ex. 1 at ¶ 5.
6
In the Verified Complaint, Respondent alleges that Petitioner completed work on September 7, 2018. Hummel
Aff. Ex. 1 at ¶ 6.
7
The Verified Complaint in the plenary action indicates that Respondent sent a letter to Petitioner dated May 18,
2018 concerning such defects. Hummel Aff. Ex. 1 at ¶ 10.

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breach of contract, negligence, breach of express warranty, breach of implied warranty, and

violations of state finance laws, and seeking compensatory damages in the amount of $40,000. Id.

at ¶ 22; see also Ex. 1 at ¶¶ 13-37. Petitioner then commenced this action for declaratory judgment

and relief pursuant to Article 78. Doc. No. 1.

ARGUMENT

POINT I

PETITIONER HAS AN ADEQUATE REMEDY AT LAW TO OBTAIN THE RELIEF
SOUGHT IN THE PETITION

Article 78 expressly provides that proceedings pursuant to the article do not lie when an

adequate remedy at law exists. CPLR § 7801(1); see also Matter of Art-Tex Petroleum, Inc., 93

N.Y.2d 830, 832 (1999). Where the parties to an Article 78 proceeding are already subject to a

court’s jurisdiction in a plenary civil action concerning the same subject matter and claims, the

plenary action provides an adequate remedy at law, and the Article 78 proceeding must be

dismissed. See Matter of Art-Tex Petroleum, 93 N.Y.2d at 832 (dismissal of Article 78 proceeding

appropriate where petitioner sought to challenge NYS DEC’s assessment of a lien against

petitioner, but had opportunity to dispute State’s claims and assessment of the lien in a pending

plenary civil action); Great Lakes Dredge & Dock Co. v. Wagner, 46 A.D.2d 721, 722 (4th Dep’t

1974) (dismissal of Article 78 proceeding appropriate where jurisdiction had already been obtained

over all relevant parties in a pending plenary action where the conflicting contractual claims of the

parties could be determined); see also St. Paul & Marine Ins. Co. v. State, 99 Misc. 2d 140, 156

(Ct. Cl. 1979).

In particular, where the subject matter of an Article 78 proceeding seeks to determine the

rights and obligations of parties to a public contract, a plenary civil action sounding in contract is

the appropriate remedy and not an Article 78 proceeding. See Abiele Contracting, Inc. v. New

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York City School Construction Auth., 91 N.Y.2d 1, 7-8 (1997) (“…where the language of the

complaint asserts violations of a plaintiff’s rights under a contract and the primary thrust of the

allegations in in contract, a plenary action sounding in contract is the appropriate remedy.”).

In the instant proceeding, Petitioner challenges Respondent’s issuance of the demand letter

alleging breach of contract and the determination of damages in the amount of $40,000. Doc. No.

1, Wherefore clause. Petitioner also asserts that the one-year warranty term provided in the

contract had expired at the time Respondent made its warranty claim. Petition, ¶¶ 12-15. The

Verified Complaint filed in the plenary action alleges, inter alia, a claim for breach of contract and

breach of express and implied warranties, and seeks $40,000 in damages. See Hummel Aff. Ex.

1, ¶¶ 13-37. Accordingly, although Petitioner specifically challenges the issuance of the demand

letter and the determination of damages asserted therein, they are effectively challenging the merits

of Respondent’s claims in the plenary action. Id. at ¶¶ 13-37.

As a result, the claims for Article 78 relief amount to nothing more than a collateral attack

upon the State’s claims in the contract action. The arguments raised in the Petition can be raised

in the plenary action to defend Petitioner’s position. Petitioner may present evidence in the plenary

action that proves its interpretation of the warranty provisions of the contract, proves that it did not

breach the contract, or demonstrates that Respondent cannot prove damages in the amount of

$40,000. Therefore, the plenary action constitutes an adequate remedy at law and Petitioner’s

claims for relief under Article 78 must be dismissed.

Turning to Petitioner’s action for declaratory judgment, a court may decline jurisdiction

over such a proceeding “…if there are other remedies available, and it must dismiss the action if

there is already pending between the parties another action in which all the issues can be

determined.” Morgenthau v. Erlbaum, 59 N.Y.2d 143, 148 (1983) (citing Woolard v. Schaffer

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Stores Co., 272 N.Y. 304 [1936]); see also Clarity Connect, Inc. v. AT&T Corp., 15 A.D.3d 767

(3d Dep’t 2005). In this proceeding, Petitioner seeks to have the Court declare that the claims

raised in the plenary action are unjustified and unreasonable. Doc. No. 1, Wherefore clause. A

request for such relief is a direct collateral attack on a pending proceeding that is perfectly suited

to resolving the merits of Respondent’s claims. Thus, the plenary action is a pending action

between the parties which will resolve the issues raised by Petitioner in the instant action, requiring

dismissal of Petitioner’s claim for declaratory relief.

Accordingly, Petitioner’s claims for declaratory relief and relief pursuant to Article 78 must

be dismissed, and the Petition must be dismissed in its entirety.

POINT II

PETITIONER CANNOT OBTAIN RELIEF UNDER CPLR § 7803(4)

Petitioner seeks review of Respondent’s determination of damages reflected in the

September 4, 2018 demand letter pursuant to CPLR § 7803(4). Doc. No. 1, Wherefore clause.

The writ of certiorari, embodied in Section 7803(4), is available only to review judicial or quasi-

judicial determinations of administrative agencies. Matter of Francello v. Mendoza, 165 A.D. 3d

1555, 1556 (3d Dep’t 2018). The hallmark of judicial and quasi-judicial decision-making is the

conducting of a trial-type hearing to enable the fact-finding upon which the decision is based. A

trial type hearing is one in which the “party whose rights are being determined must be fully

apprised of the claims of the opposing party and… be given the opportunity to cross-examine

witnesses, to inspect documents and to offer evidence in explanation or rebuttal.” Hecht v.

Monaghan, 307 N.Y. 461, 470 (1954). In addition, to fall within the scope of certiorari review,

the trial-type hearing must be one that is required by law, i.e., by statute or other legal compulsion.

Colton v. Berman, 21 N.Y. 2d 322, 329 (1967).

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Here, the determination of damages reflected in the September 4, 2018 letter issued by

Assistant Attorney General Denis Hurley Jr. was not the product of a ‘trial-type’ hearing. Further,

no statute required a ‘trial-type’ hearing to be held in order to determine the amount of damages

that would be claimed in the September 4, 2018 demand letter or in the plenary action. As a result,

review under CPLR § 7803(4) is not available to Petitioner.

Accordingly, to the extent that Petitioner seeks relief pursuant to CPLR § 7803(4), the

Petition must be dismissed.

POINT III

PETITIONER CANNOT OBTAIN RELIEF UNDER CPLR § 7803(2)

Petitioner seeks a writ of prohibition under CPLR § 7803(2) arguing that the State

proceeded without proper jurisdiction or in excess of jurisdiction in issuing the September 4, 2018

demand letter. Doc. No. 1, Wherefore clause. The extraordinary writ of prohibition, embodied in

CPLR § 7803(2), is to be used sparingly. The courts have imposed a number of restrictions upon

the use of the writ of prohibition as liberal encouragement of prohibition would threaten the

“orderly administration of justice.” La Rocca v. Lane, 37 N.Y.2d 575, 579 (1975). The writ may

only be used to prevent a body or officer who is acting in a judicial or quasi-judicial capacity from

proceeding or threatening to proceed without, or in excess of, jurisdiction. See Matter of Newfield

Cent. School Dist. v. New York State Div. of Human Rights, 66 A.D.3d 1314, 1315 (3d Dep’t

2009). It may be invoked “to prevent or control judicial or quasi-judicial action only, as

distinguished from legislative, executive or ministerial action.” See Matter of Dondi v. Jones, 40

N.Y.2d 8, 12 (1976). Further, the error must be of a jurisdictional nature, rather than an error of

substantive or procedural law. See Rush v. Mordue, 68 N.Y.2d 348, 353 (1986) (Errors of

substantive or procedural law are beyond the purview of prohibition “however egregious the error

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may be, and however cleverly the error may be characterized by counsel as an excess of

jurisdiction and power.”).

Here, the purported issuance of the September 4, 2018 demand letter by Assistant Attorney

General Denis Hurley Jr. does not constitute a judicial or quasi-judicial act that may be subject to

a prohibition under CPLR § 7803(2). The decision to issue the demand letter was not made in the

course of, or following a ‘trial-type’ hearing in any capacity. In any event, it cannot be gainsaid

that the State has the authority to issue a letter to a contractor with the State demanding that the

contractor perform its obligations pursuant to a contract or otherwise make compensatory payment

for breach.

Accordingly, to the extent the Petition seeks relief under CPLR § 7803(2), the Petition

must be dismissed.

CONCLUSION

Based upon the forgoing, Respondent respectfully submits that the Petition must be

dismissed in its entirety.

Dated: Albany, New York
March 11, 2019
LETITIA JAMES
Attorney General of the State of New York
Attorney for Respondent
The Capitol
Albany, New York 12224

By: __Christopher J. Hummel___________
Christopher J. Hummel
Assistant Attorney General, of Counsel
Telephone: (518) 776-2578
TO: Theodore M. Baum, Esq.
Ernstrom & Dreste, LLP
Attorneys for Petitioner
(via NYSCEF)

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Document Filed Date

March 11, 2019

Case Filing Date

November 30, 2018

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Motion,Ex Parte: Spensieri Diversified, Llc v. State Of New York - Office Of General Services

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