Chevron U.S.A. Inc. v. Commissioner of Environmental Conservation

Lahtinen, J. Petitioner overpaid the state nearly half a million dollars and its requests for a refund were allegedly answered by the state [839] with, among other things, threats of criminal prosecution and various demands. However, petitioner was never given an official response from the state regarding its requests for a refund and, without that response, it cannot seek administrative or judicial review (see Navigation Law § 174 [6]; Chevron U.S.A. Inc. v State of New York, 86 AD3d 820 [2011] [decided herewith]). This proceeding is not about requiring the state to pay the refund nor does it address in any fashion the sundry defenses that may be available to the state or the various reasons that may exist for not paying a refund. In fact, at this procedural point, it is not even yet about whether petitioner should receive an official response to its inquiry about its overpaid half a million dollars. The limited issue in this appeal from a pre-answer dismissal of the petition is whether, under the equitable doctrine of laches, the state need not even answer the petition. While Supreme Court set forth concerns about the way events unfolded in support of its decision to invoke laches, we nevertheless exercise our discretion under the unique and narrow circumstances presented and determine that the better course is to require the state to answer the petition. Petitioner was licensed to operate a petroleum facility in the City of Troy, Rensselaer County and, thus, was required to pay monthly major petroleum facility license (hereinafter MPFL) fees pursuant to Navigation Law article 12. Monthly MPFL fees are based on the amount of petroleum transferred to the licensee’s facility, and the licensee must submit an MPFL fee report each month to the Department of Environmental Conservation (hereinafter DEC) certifying the barrels of petroleum it transferred (see Navigation Law § 174). Between June 2003 and August 2007, petitioner supplied certified monthly reports regarding its Troy facility with accompanying monthly fees totaling $474,108.67. Petitioner states that it discovered in October 2007 that it had mistakenly paid MPFL fees for the Troy facility because, according to petitioner, the Troy facility had been closed since 1999 and dismantled in 2006. Petitioner thus sent amended monthly reports to DEC in October 2007 for the period September 2004 to August 2007. Thereafter, petitioner submitted additional amended monthly reports for June 2003 to August 2004. Petitioner allegedly made several efforts to resolve the overpayment issue with DEC and eventually DEC orally indicated that the fees would not be returned, prompting petitioner to make an application in September 2009 in the Court of Claims [840] for permission to file a late claim.1 The Court of Claims denied the motion in February 2010, holding that it did not have jurisdiction because an administrative appeal process was available, which petitioner had not pursued, and review thereof would be pursuant to a CPLR article 78 proceeding.2 After the Court of Claims’ decision, petitioner wrote to respondent in May 2010 demanding that, within 20 days, he refund the MPFL fees or issue a determination regarding petitioner’s MPFL fees for the years in dispute. Respondent did not respond and, accordingly, in September 2010, petitioner commenced this proceeding in the nature of mandamus seeking to compel respondent to review its claim for a refund and render a determination regarding the allegedly mistakenly paid MPFL fees. Supreme Court granted respondent’s pre-answer motion to dismiss on the ground that the relief requested was barred by the doctrine of laches. Petitioner appeals. The sole argument on appeal is whether Supreme Court erred in dismissing the petition as barred by laches. In a CPLR article 78 proceeding seeking mandamus to compel a government official to act, the statute of limitations does not begin to run until the petitioner demands that the official act and the official refuses (see Austin v Board of Higher Educ. of City of N.Y., 5 NY2d 430, 442 [1959]; Matter of Mitchell v Essex County Sheriff’s Dept., 14 AD3d 825, 825 [2005]). However, a petitioner may not extend the time to act indefinitely by waiting to make a demand (see Austin v Board of Higher Educ. of City of N.Y., 5 NY2d at 442). “The petitioner must make his or her demand within a reasonable time after the right to make it occurs, or after the petitioner knows or should know of the facts which give him or her a clear right to relief, or else, the petitioner’s claim can be barred by the doctrine of laches” (Matter of Barresi v County of Suffolk, 72 AD3d 1076, 1076 [2010], lu denied 15 NY3d 705 [2010] [citations omitted]; see generally Matter of Board of Educ. of Scotia-Glenville Cent. School Dist. v Shapiro, 85 AD2d 763, 764 [1981]). In the context of “an article 78 [841] proceeding in the nature of mandamus, proof of unexcused delay without more may be enough” to invoke laches (Matter of Sheerin v New York Fire Dept. Arts. 1 & 1B Pension Funds, 46 NY2d 488, 495-496 [1979]; see Matter of Doolittle v County of Broome, 220 AD2d 864, 866 [1995]). When reviewing a discretionary determination by a lower court, this Court “is not limited to determining whether there was an abuse of discretion; [we] may exercise [our] independent discretion” (1 Newman, New York Appellate Practice § 4.01; see e.g. Matter of State of New York v Ford Motor Co., 74 NY2d 495, 501 [1989]; State of New York v Barone, 74 NY2d 332, 336 [1989]; Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C5522:l, at 266). Although Supreme Court is accorded discretion in determining whether to grant mandamus, we conclude that, under the unique circumstances presented, the petition should not have been dismissed as barred by laches. Initially, we note that there was no prior case law addressing the proper procedure for seeking a return of an overpayment of MPFL fees. Moreover, as we indicate in our decision affirming the Court of Claims in Chevron U.S.A. Inc. v State of New York (86 AD3d 820 [2011], supra), the statutory requirement of an administrative procedure to seek the return of overpaid MPFL fees was not set forth with the same level of clarity as administrative requirements of other statutes. Indeed, it is fair to state that it was not clear that petitioner’s initial remedy rested in an administrative procedure until the Court of Claims rendered its decision in February 2010. Within about three months of that decision, petitioner made a formal demand upon respondent regarding its overpayment. Rather than providing petitioner with a response — which would have permitted petitioner to eventually seek judicial review if respondent decided against it — respondent simply did nothing. Once the procedure for pursuing a refund was apparent, petitioner did not delay unduly in making its formal demand to respondent. While reasons may ultimately be found for respondent to reject petitioner’s request, simply ignoring petitioner’s request under the circumstances is not an appropriate response. Spain and Malone Jr., JJ., concur. Footnotes [1] The dissent indicates that oral refusal occurred between December 2007 and January 2008. According to the affidavit submitted by petitioner’s compliance supervisor, between those dates is when the conversation occurred in which an attorney at DEC “threatened to prosecute [the officer] and/or [petitioner] for perjury and ‘administrative fraud.’ ” However, the record reveals that, after this conversation, documents were exchanged and communications continued in an apparent effort to resolve what was for both parties a unique set of circumstances. [2] In an appeal decided herewith, we affirm the Court of Claims (Chevron U.S.A. Inc. v State of New York, 86 AD3d 820 [2011], supra).