Genn v. Schwarz

138 Misc.2d 154, 523 N.Y.S.2d 937 (Sup. Ct. N.Y. Cty. 1987)

We represented: Petitioner

Silbermann, J.

Upon the foregoing papers it is ordered that this motion pursuant to CPLR Section 5001 for an order granting petitioner interest upon the sum awarded from the earliest date petitioner's cause of action existed is decided as follows.

The underlying proceeding challenged respondent's calculations of petitioner's entitlement to certain accrued terminal leave benefits mandated by the policies, procedures and orders of the New York City Department of Personnel and the Charter of the City of New York. Petitioner worked as an attorney for the City of New York in both competitive class titles and exempt managerial positions. In the prior proceeding Hon. Bruce McM. Wright held that respondent had incorrectly calculated petitioner's terminal benefits by applying the formula used for exempt managerial positions as opposed to the formula used for competitive class titles.

Thereafter respondent appealed the order to the Appellate Division, First Department. On Oct. 24, 1989, the Appellate Division affirmed the order for the reasons stated by Hon. Bruce McM. Wright.

On November 27, 1990 respondent moved for leave to appeal to the New York State Court of Appeals. On February 15, 1990 the Court of Appeals denied respondent's motion for leave to appeal.

Shortly thereafter Jay B. Itkowitz, Esq., petitioner's attorney, sent a letter dated March 23, 1990 to respondent's attorney wherein he requested clarification as to whether the Law Department conceded that interest was due on the amount owed. Respondent's attorney wrote in answer that respondent could not agree to any payment of interest in this case. The parties agreed that $16,658.49 was the correct recalculated amount of petitioner's terminal pay and petitioner agreed to accept that amount without prejudice in a letter dated May 24, 1990. However, the check that was sent to petitioner was accompanied by a letter stating it was in complete satisfaction of the judgment.

This motion is brought pursuant to CPLR Section 5001. That Section provides for the recovery of interest on judgments.

Respondent argues in its affirmation in opposition that although it is designated as a motion pursuant to CPLR Section 5001 it is properly a motion to amend the final judgment. Respondent also argues that an Article 78 proceeding seeking a recomputation of petitioner's "terminal leave" payment upon a separation from city service based upon a construction of Section 1104 (since renumbered as Section 820) of the New York City Charter does not fall within the category of judgments to which interest may be added pursuant to the terms of CPLR Section 5001. Further, the right to interest under CPLR Section 5001 is purely statutory and extends solely to amount awarded "because of a breach of performance of a contract, or because of an act or omission depriving or otherwise interfering with title to or possession or enjoyment of property . . . "

In the Matter of Gross v. Perales (72 NY2d 231), the Court of Appeals held in affirming the Appellate Division, First Department, that in order to recover any restitution or damages under CPLR Section 7806 it must be incidental to the primary relief sought by the petitioner and must be such as he might otherwise recover on the same set of facts in a separate action or proceeding suable in the Supreme Court against the same body or officer in its or his official capacity (CPLR Section 7806) (Matter of Gross v. Perales, at p. 235). The Court of Appeals held that where the threshold inquiry was whether the State acted arbitrarily and capriciously because its determination was premised solely on the City's failure to comply with New York State Department of Social Services internal audit criteria. The Court also held that the requirement that the restitution or damages awarded must be such as petitioner might otherwise recover in the same set of facts in a separate action or proceeding suable in Supreme Court; should not be read restrictively (Matter of Gross v. Perales, supra, at p. 237). The court noted that "there is absolutely no indication that the Legislature intended to otherwise limit the power of the Supreme Court to award incidental monetary damages in an Article 78 proceeding" (Matter of Gross v. Perales, supra, p. 237).

Here, the underlying proceeding sought a recalculation of petitioner's terminal leave benefits on the basis that the computation was arbitrary and capricious and in violation of Section 1104 of the Charter of the City of New York (Decision of Hon. Bruce McM. Wright dated October 22, 1987, p. 1).

In this case the relief sought is the recomputation of leave benefits. Hence, the essential nature of the claim was the recovery of money, not the interpretation of the statute. Damages were therefore properly recoverable in the proceeding under the Gross v. Perales doctrine.

The next question that this court must answer is whether the present motion is the proper vehicle to be used to recover them.

Petitioner initially states that the motion is made pursuant to the authority of CPLR Section 5001.

CPLR Section 5001 (a) provides as is applicable here that:

"Interest shall be recovered upon a sum awarded because of a breach of performance of a contract, or because of an act or omission depriving or otherwise interfering with title to, or possession or enjoyment of property . . . "

Petitioner argues that his entitlement to lump sum retirement pay is a "vested right" that cannot be deprived without offending the "property" provisions of the 5th and 14th Amendments of the United States Constitution. (Article 5, Section 7 of the New York State Constitution; see, Kranker v. Levitt, 30 NY2d 574 (1972); Clift v. City of Syracuse, 45 AD2d 596 (4th Dept., 1974); Gilmore v. City of New York, 58 Misc.2d 1029 (App. Term, 1st Dept., 1968); Smith v. City of New York, 114 Misc.2d 564 (Civ. Ct., N.Y. Co., 1982); Matter of Taylor v. McGuire, 100 Misc.2d 834 (Sup. Ct., N.Y. Co., 1979 (per Kassal, J.); Christian v. County of Ontario, 92 Misc.2d 51 (Sup. Ct., Ontario Co., 1977); Periconi v. State of N.Y., 91 Misc.2d 823 (Ct. of Claims, 1977); Vaccaro v. Board of Education, 54 Misc.2d 206 (Civ. Ct., Queens Co., 1967); Fuerst v. Inc. Village of Bayville, 40 Misc.2d 909 (Dist. Ct., Nassau Co., 1963).) Petitioner asserts, therefore, that its claim is equally protected by the even broader interpretation afforded the term "property" in CPLR Section 5001(a).

Respondent argues in this regard that interest is not recoverable on salary recovered by an employee in an Article 78 proceeding. (Citing Davis v. Rosenblatt, -- AD2d --, 559 NYS2d 401 (3rd Dept., 1990); Matter of Gorden v. Board of Education of the City of New York, 52 Misc.2d 175 (Sup. Ct., Kings Co., 1966) rev'd on other grounds, 26 AD2d 545; Weinstein, Korn & Miller, New York Civil Practice Section 5005.05, p. 50-21).)

In the case presently before the court, the court finds that petitioner's rights are vested property rights.

Interest, pursuant to CPLR Article 5000, has frequently been awarded in Article 78 proceedings that review administrative actions. (See, Matter of Rochester Casting Co. v. Levitt, 36 NY2d 264 (1975); Kobler v. Board of Education, 142 AD2d 676 (2d Dept., 1988); app. den. 74 NY2d (1989).) Interest has also been awarded in Article 78 proceedings under other sections of CPLR Article 5000. (See, Brodsky v. Murphy, 25 NY2d 518 (1969); Estate of Oltermann, 90 Misc.2d 856 (Sup. Ct., N.Y. Co., 1977); Matter of Whellan, 39 Misc.2d 446 (Sup. Ct., N.Y. Co., 1963).) Accordingly, there is no reason why interest should not be awarded under CPLR Section 5001(b) and especially in the present case where the court has concluded that petitioner has a vested property right pursuant to CPLR Section 5001(a) in his lump sum award. An award of interest is particularly appropriate here, as the respondent has withheld payment on a sum certain due petitioner since July 1985. Respondent litigated this case to the Court of Appeals all the while withholding payment of the specified sum, depriving petitioner of his benefits. Respondent's conduct is all the more egregious given the fact that it had a clear obligation to make the payment by virtue of the holding in McLaughlin v. Spinnato, 106 AD2d 253 (1st Dept. 1983).

To the extent that Matter of Gorden v. Board of Education of the City of New York, supra, and Davis v. Rosenblatt, supra, apply, they are distinguishable on their facts. They involve the payment of salary and not vested rights which are protected under modern notions of property law.

Settle order providing for interest from August 1, 1986, the date petitioner deemed his cause of action to have accrued.