NY Case Law

1929 Opns. Atty. Gen. 223 Category: NY Sub-category: Case Law

Abrams v. N.Y. City Transit Auth., 39 N.Y.2d 990 (1976) Category: NY Sub-category: Case Law The petition was dismissed on standing grounds because although it alleged noise violations, the noise code only applied once standards had been adopted, and none had. So there were “no specific illegal acts or omissions for which judicial correction may be sought.” The court explained that “it is one thing to have standing to correct clear illegality of official action and quite another to have standing in order to interpose litigating plaintiffs and the courts into the management and operation of public enterprises…. Standing, however, has not and should not be extended to substitute judicial oversight for the discretionary management of public business by public officials.” Judge Cooke dissented, noting that the same entity responsible for approving standards was also responsible for enforcing them, so there was in effect an impenetrable barrier to judicial review.

Albert Ella Building Co. v. N.Y.S. Urban Dev. Corp., 54 A.D.2d 337 (4th Dept. 1976) Category: NY Sub-category: Case Law After the city and the Urban Development Corporation awarded a contract with Pigott to build a convention center, they issued change orders to build an underpass tunnel instead of an overpass. The petitioner claimed that this violated the competitive bidding requirements in the general municipal law and the state finance law. The court agreed, finding that the tunnel was an addition to the contract, rather than a modification, thus requiring public bidding.

Associated General Contractors v. N.Y.S. Thruway Authority, 88 N.Y.2d 56 (1996) Category: NY Sub-category: Case Law In evaluating whether public authorities could require project labor agreements in their RFPs, the court held that procurement statutes do not require unfettered competition, but any restriction on bidding must advance the public interest. Looking to precedent, the court explained that “these cases identify two central purposes of New York’s competitive bidding statutes, both falling under the rubric of promoting the public interest: (1) protection of the public fisc by obtaining the best work at the lowest possible price; and (2) prevention of favoritism, improvidence, fraud and corruption in the awarding of public contracts. Generally, when a public entity adopts a specification in the letting of public work that impedes the competition to bid for such work, it must be rationally related to these twin purposes. Where it is not, it may be invalid.”

Automobile Club of New York v. Port Authority of New York and New Jersey, 887 F.2d 417 (2d Cir. 1989) Category: NY Sub-category: Case Law Publication Date: 10/10/1989 Affirmed the holding of the United States District Court for that Southern District of New York which held that the Port Authority Trans-Hudson Railroad (PATH) was properly included in the rate base of defendant Port Authority’s bridges and tunnels, and that the bridge tolls were “just and reasonable” as required by 33 U.S.C.S. § 508.

AWL Industries, Inc. v. Triborough Bridge and Tunnel Authority, 41 A.D.3d 141 (1st Dept. 2007) Category: NY Sub-category: Case Law Where an RFP required 10 years experience, the authority had the discretion to award the contract to a low bidder that only had 10 years experience if its uncompleted contracts were counted. Moreover, the authority could waive the RFP requirement if it determined that it was in its best interest to do so. And “Finally, where there is no evidence of fraud or collusion, a public procurement contract awarded under Public Authorities Law sec. 2879 is not rendered invalid by noncompliance with the statute[.]”

Bank of Rome v. Rome, 18 N.Y. 38 (1858) Category: NY Sub-category: Case Law

Barnes v. Binghampton Urban Renewal Agency, 115 A.D.2d 803 (3d Dept. 1985) Category: NY Sub-category: Case Law

Buffalo News v. Buffalo Enterprise Development Corp., 173 A.D.2d 43 (4th Dept. 1991) Category: NY Sub-category: Case Law Because the corporation was created to advance the objectives of the city’s department of community development, occupied city offices, invested public funds on behalf of the city, and was required to publicly disclose annual financial reports, the court found that the corporation was a public agency subject to FOIL.

Comereski v. City of Elmira, 308 N.Y. 248 (1995) Category: NY Sub-category: Case Law Comereski, a concerned citizen, claimed that a contract between the city and the parking authority violated art. VIII sec. 1 of the New York State Constitution, which prohibits cities from giving or loaning their credit to corporations, and sec. 1493 of the Public Authorities Law, which specified tha the city was not liable for the authorities obligations. The court dismissed the case, holding that neither the constitution nor the statute prohibited the city from funding the authority for a valid public purpose.

Conduit & Foundation Corp. v. Metropolitan Transp. Auth., 66 N.Y.2d 144 (1985) Category: NY Sub-category: Case Law The MTA issued an RFP and then met individually with each of the bidders to discuss whether their bids could be lowered. The MTA then decided to reject all of the bids and hold a second round. The court held that this action was perfectly legal because the low bidder had no vested right to be awarded the contract, and even if it had, the authority’s realization that its bid estimation was originally too high would be a good reason to hold a second round. The court also held that an appearance of impropriety was not enough to render the second round invalid; the unhappy bidder has to be able to show “actual impropriety or unfair dealing.”

District Council No. 9 v. Metropolitan Transp. Auth., 454 N.Y.S.2d 663 (Sup. Ct. New York Co. 1982) Category: NY Sub-category: Case Law

Farms First v. Saratoga Economic Development Corp., 222 A.D.2d 861 (3d Dept. 1995) Category: NY Sub-category: Case Law Because the corporation was created by private business persons, did not have county office space, and had never employed any county employees, the court held that it was not a public agency subject to FOIL.

Flushing National Bank v. Municipal Assistance Corp., 40 N.Y. 2d 731 (1976) Category: NY Sub-category: Case Law This case involved the New York State Emergency Moratorium Act for the City of New York, which imposed a moratorium on actions to enforce the city’s outstanding short-term obligations. The Act provided that it would only apply to noteholders who had declined to exchange their notes for an equivalent amount of long-term bonds issued by the Municipal Assistance Corp. The court held that the Act violated art. VIII sec. 2 of the New York State Constitution, which prohibits cities from contracting indebtedness unless they have pledged their faith and credit for repayment. As the court explained, “the city is constitutionally obliged to pay and to use in good faith its revenue powers to produce funds to pay the principal of the notes when due. The effect of the Moratorium Act is, however, to permit the city, having given it, to ignore its pledge of faith and credit to ‘pay’ and to ‘pay punctually’ the notes when due. Thus, the act would enable the city to proceed as if the pledge of faith and credit had never been.”

Giuliani v. Hevesi, 90 N.Y.2d 27 (1997) Category: NY Sub-category: Case Law Publication Date: 03/20/1997 Held: the New York City Municipal Water Finance Authority Act did not permit the authority to issue bonds to purchase the city’s water system.

Glens Falls City School District v. Glens Falls IDA, 196 A.D.2d 334 (3d Dept. 1994) Category: NY Sub-category: Case Law Held: the school district was not entitled to receive its proportional share of payments in lieu of taxes (PILOTs) required under an agreement between the developer and the industrial development agency. Amendments requiring proportional distribution to school districts and other affected taxing jurisdictions, in the absence of an agreement to the contrary, were prospective in nature and could not be applied to the project in question.

Griffiss Local Dev. Corp. v. N.Y.S. Authority Budget Office (N.Y. Sup. Ct. Albany Co. Dec. 1, 2009) Category: NY Sub-category: Case Law Publication Date: 12/01/2009

Humane Society v. Empire State Dev. Corp., 53 A.D.3d 1013 (3d Dept. 2008) Category: NY Sub-category: Case Law ESDC awarded a grant to Hudson Valley Foie Gras for a manure treatment center and various improvements. The Humane Society then submitted a FOIL request for project finance documents, arguing that the project was not within the purposes of ESDC’s enabling statute. The court dismissed the case on standing grounds, since the Humane Society was challenging a discretionary decision and not the clear illegality of an important governmental action.

Jered Contracting Corp. v. New York City Transit Authority, 22 N.Y.2d 187 (1968) Category: NY Sub-category: Case Law

Lancaster Development, Inc. v. Power Authority, 145 A.D.2d 806 (3d Dept. 1988) Category: NY Sub-category: Case Law The court held that the low bidder did not have a cause of action to challenge the award of a contract to a more experienced contractor because the Power Authority was not subject to lowest bidder requirements. The state finance law did not apply because state funds were not at issue.

Levy v. City Commission on Human Rights, 85 N.Y.2d 740 (1995) (superseded by statute) Category: NY Sub-category: Case Law In this case, the court held that the New York City Transit Authority was subject to the jurisdiction of Commission on Human Rights. Under the city charter, the commission was authorized to investigate discrimination complaints against “private persons, associations, corporations and, after consultation with the mayor, by city officials or city agencies”. The authority claimed that it did not fall within this group because the charter did not specifically give the commission jurisdiction over public benefit corporations. Nor could the authority escape the commission’s jurisdiction by claiming that, as a separate and distinct entity created by the state, only the legislature could authorize such regulation. As the court explained, the freedom and flexibility of public authorities extends only so far as to remove them from those “requirements imposed on other State agencies that would interfere with the accomplishment of the public corporation’s purpose”. Compliance with employment discrimination laws did not in anyway interfere with the authority’s purpose of operating a transit system,

Madison Square Garden, L.P. v. N.Y. Metropolitan Transportation Authority, 19 A.D.3d 284 (1st Dept. 2005) Category: NY Sub-category: Case Law In this case, various petitioners challenged the MTA’s decision to sell the development rights for the West Side rail yards. Nearby residents, an organization representing transit riders, the New York City Public Advocate, and individual transit users were all denied standing. Because it was a bidder, the court held that Madison Square Gardens had standing and explained that it had to be treated fairly by the MTA. Nevertheless, it wasn’t treated unfairly because RFPs don’t need to specify every detail and final contracts aren’t required to conform to the original RFP. Regardless, the MTA did not act irrationally in rejecting Madison Square Garden’s bid because it has the discretion not to award a project to the highest bidder.

Madison Square Garden, L.P. v. N.Y. MTA., 799 N.Y.S.2d 186 (1st Dep’t 2005); New York Post Corp. v. Moses, 10 N.Y.2d 199, 207 (1961) Category: NY Sub-category: Case Law

Matter of Russell v. Jones Beach State Parkway Authority. 363 N.Y.S.2d 448 (Sup. Ct. Nassau Co. 1975) Category: NY Sub-category: Case Law The Parkway Authority increased tolls after reviewing traffic and revenue studies prepared by an independent agency. The court held that the parkway user had standing to challenge the toll increase, but disagreed with his contention that the Parkway Authority could only raise tolls on a showing of necessity. The court explained that the Parking Authority, through its enabling legislation, had been “given the power to exercise judgment and discretion not only as to the nature of improvements to be made but also as to all details of the toll charge permitted by the statute.”

Municipal Testing Lab. v. New York City Transit Auth., 233 A.D.2d 105 (1st Dept. 1996) Category: NY Sub-category: Case Law

New York State Coalition for Criminal Justice v. Coughlin, 103 A.D. 2d 401, 479 NYS 850 Category: NY Sub-category: Case Law

Newell v. People, 7 N.Y. 9 (1852) Category: NY Sub-category: Case Law

Opinion of the Attorney General, 2006-F4 Category: NY Sub-category: Case Law Publication Date: 09/20/2006 The Public Authorities Accountability Act of 2005 permits an exchange of easements without public bidding to facilitate relocation of a gas pipeline in connection with a Thruway reconstruction project.

Opinion of the Attorney General, 2007-F1 Category: NY Sub-category: Case Law Publication Date: 02/28/2007 Public authorities, whose board members pursuant to statute serve without salary or other compensation, may not pay for health insurance for current or retired board members.

Opinion of the Attorney General, 2007-F2 Category: NY Sub-category: Case Law Publication Date: 03/20/2007 Real property transactions expressly authorized by Canal Law sections 53 and 54 are not subject to the public bidding and fair market value requirements of the Public Authorities Accountability Act of 2005, to the extent such requirements conflict with the provisions of those statutes. Leases and sales by the Thruway Authority and Canal Corporation to municipalities for public parks, recreation or public access to the canal system, or for necessary municipal infrastructure projects are likely to be exempt from the public bidding and fair market value requirements. Real property disposals to adjacent landowners are not exempt from the public bidding requirement, unless a statutory exception applies.

Patterson v. Carey, 83 Misc.2d 372 (Sup. Ct. Albany Co. 1975) Category: NY Sub-category: Case Law Following Russell v. Jones Beach State Parkway Authority, 80 Misc.2d 698 (Nassau Couty 1975), in which the court held that the authority had the power to raise tolls, the state legislature enacted a law rolling back the toll increases and prescribing a process for future toll increases. Another section of the authority’s enabling act provided that the state would not “limit or alter” the rights of the authority. The board members claimed that this created a contract between the authority’s bond holders and the state, and they argued that the law rolling back the toll increase interfered with this contract in violation of the U.S. contracts clause. The court held that the rollback of the toll increase was an impairment of contract, and that it was not a reasonable police power regulation. While it accordingly struck this provision down, the court upheld the law’s other provisions relating to procedures for future toll increases.

Pleasant Township v. Aetna Life Ins. Co., 138 U.S. 67 (1891) Category: ALL Sub-category: Case Law In this nineteenth century case, the Court held that an Ohio statute authorizing certain townships to issue bonds for railroad construction violated the state constitution’s prohibition on providing public aid to private corporations.

Plumbing, Heating, Piping & Air Conditioning Contr. Ass’n v. New York State Thruway Auth., 5 N.Y.2d 420 (1959) Category: NY Sub-category: Case Law The contractors association brought suit to compel the Thruway to unbundle a bid according to the requirements of the State Finance Law. The court explained that authority was separate and independent from the state, and thus not bound by the strict public bidding requirements for state agencies and departments.

Purcell v. Regan, 126 A.D.2d 849 (3d Dept. 1987) Category: NY Sub-category: Case Law

Quirk v. Municipal Assistance Corporation, 41 N.Y.2d 644 (1977) Category: NY Sub-category: Case Law

Robertson v. Zimmermann, 268 N.Y. 52 (1935) Category: NY Sub-category: Case Law

Rye v. Metropolitan Transp. Auth., 24 N.Y.2d 627 (1969) Category: NY Sub-category: Case Law

Schulz v. State, 84 N.Y.2d 231 (1994) Category: NY Sub-category: Case Law The court of appeals in this case upheld an act authorizing certain public authorities to issue debt against the claim that it violated the state constitution’s prohibition against contracting for long term state debt without voter approval. Even though the act provided funding to the authorities for servicing their bonds, the court explained that the act clearly did not obligate future legislatures to continue funding the authorities, and thus did not create “debt.” This was further supported by the act’s requirement that disclaimers of any moral obligation be included with all bonds. As the court explained, if “modern ingenuity, even gimmickry, have in fact stretched the words of the Constitution beyond the point of prudence, that plea for reform in State borrowing practices and policy is appropriately directed to the public arena”.

Smith v. Levitt, 37 A.D.2d 418 (3d Dept. 1971), aff’d 30 N.Y.2d 934 (1972) Category: NY Sub-category: Case Law Taxpayers filed suit under a provision of the State Finance Law authorizing standing, with consent of the appellate division, to challenge the disbursement of state monies without the required approval by the comptroller. The action complained of was the expenditure of proceeds of certain bonds issued by the Urban Development Corporation; the taxpayers alleged various other constitutional and statutory violations associated with the use of those monies. The UDC contended that it was not required to have the comptroller audit its funds, which were separate from the state’s, and that the $2.5 million in state funds granted to the UDC were preaudited by the comptroller. The court agreed that no monies of the state had been spent without the comptroller’s audit, and so dismissed the petition.

Square Parking Systems, Inc. v. Metropolitan Transp. Auth., 92 A.D.2d 782 (1st Dept. 1983) Category: NY Sub-category: Case Law MTA solicited bids for a parking garage company for a five year contract. One of the low bidders then raised the possibility of buying out MTA’s own lease of the property. In response, MTA rejected all of the bids and solicited new bids for a two year contract; this would give the authority time to work out a deal with the bidder from the first round. The plaintiff claimed that it was the real low bidder in the first round, and it sued to enjoin the second RFP. The court found that MTA’s issuance of a second RFP was rational given the new possibility of sale.

Tri-State Aggregates Corp. v. Metropolitan Transp. Auth., 108 A.D.2d 645 (1st Dept. 1985) Category: NY Sub-category: Case Law The court held that Tri-State was not entitled to be awarded the MTA contract just because it made the low bid, and dismissed its article 78 proceeding. “The MTA does not have to bid at all on public contracts…. However, once it does solicit bids, it is required to act fairly toward all bidders.” The court explained that Tri-State didn’t even give the lowest bid; the MTA had misplaced a lower bid that was timely made. “MTA did the sensible thing, and rebid the contract.” Having a lower bid was a perfectly rational reason for rejecting Tri-State’s.

Wein v. Levitt, 42 N.Y.2d 300 (1977) Category: NY Sub-category: Case Law The plaintiff challenged a law directing the State Insurance Fund to invest in certain public authorities. The law included indemnity and immunity provisions covering state officers controlling the fund, and the plaintiff alleged that this violated the state constitution’s requirement that state debt only be contracted for a single work or purpose approved by the voters (art. VII, sec. 11). The court held that any liability incurred by state officers, and indemnified by the state, would not be long term debt, but would rather be “a contingent cost of doing State business payable routinely out of the general fund, should the obligation arise.” Accordingly, it created no debt within the meaning of article VII. The dissenting judge referred to the challenged action as another “fiscal gimmick” and explained that “In ultimate effect, the State has placed its guarantee, however indirect the manipulation, on the bonds of the public benefit corporations to be purchased by the State Insurance Fund. It has lent its credit into the future by way of guarantee, the very result prohibited by section 8 of article VII of the State Constitution.”

Wein v. State, 39 N.Y.2d 136 (1976) Category: NY Sub-category: Case Law The question presented in this case was “whether appropriations… of $250 million to the City of New York and $500 million to the Municipal Assistance Corporation…, to be funded by short-term State borrowing in the form of revenue or tax anticipation notes, constitute a gift or loan of the credit of the State to public corporations, in violation of constitutional limitations (N.Y. Const., art. VII, sec. 8, subd. 1).” The court held that it did not, because short-term loans made “in advance of authentically anticipated revenues” did not amount to an extension of the state’s credit. “Temporary notes validly issued in authentic anticipation of taxes and revenues to be received within one year, are… functionally equivalent to the commitment of incoming taxes and revenues. Hence, the use of short-term borrowing to finance an appropriation of money to a municipal or other public corporation does not violate the prohibition against giving or lending the State’s credit, provided the short-term borrowing is authentically in anticipation of actually committed taxes or other revenues.” The court warned, however, that temporary financing could become violative of the constitution if were allowed to be “rolled over.” One judge dissented, explaining his belief that “these transactions were an ill-disguised effort to evade the limitations imposed by the people of this State, in their Constituion, on the power of State government to arrange its finances.” He characterized the majority opinion as relying on “attenuated reasoning” and “gloss[ing] over the invasion of credit with an articulate veneer of words….”

Williamsburgh Savings Bank v. State, 243 N.Y. 231 (1926) Category: NY Sub-category: Case Law In a case that would lead to constitutional amendments in 1938, the court in Williamsburgh Savings Bank held that the state had a moral obligation to repay certain bonds issued by a public works commission. However, the court reached this conclusion based on facts tending to show that the state had voluntarily taken on this moral obligation. As the court explained, the state would not have been liable for the bonds had the legislature reasonably demonstrated an intent not to take responsibility for them.In 1938, this case was partially overruled by a constitutional amendment that precludes the state from assuming the debts, legally or morally, of public authorities. Art. X, sec. 5. See Schulz v. State, 84 N.Y.2d 231 (1994), for additional discussion of this case.