MatterofBoardofEducationoftheCentralIslipUnionFreeSchoolDistrictvSteiner

State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: October 30, 2014 517815

________________________________

In the Matter of BOARD OF

EDUCATION OF THE CENTRAL

ISLIP UNION FREE SCHOOL

DISTRICT et al.,

Appellants,

v MEMORANDUM AND ORDER

DAVID M. STEINER, as

Commissioner of Education,

et al.,

Respondents.

________________________________

Calendar Date: September 11, 2014

Before: Peters, P.J., Lahtinen, Stein, Garry and Devine, JJ.

__________

Hamburger, Maxson, Yaffe & McNally, LLP, Melville (David N.

Yaffe of counsel), for appellants.

Eric T. Schneiderman, Attorney General, Albany (Robert

Goldfarb of counsel), for respondents.

__________

Garry, J.

Appeal from a judgment of the Supreme Court (Melkonian,

J.), entered January 30, 2013 in Albany County, which, in a

combined proceeding pursuant to CPLR article 78 and action for

declaratory judgment, among other things, dismissed the

petition/complaint.

At a special meeting of petitioner Central Islip Union Free

School District (hereinafter the District) in June 2000, voters

authorized petitioner Board of Education of the Central Islip

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Union Free School District to undertake renovation projects in

several of the District's buildings and to levy taxes and issue

bonds to finance the total construction cost of approximately $54

million. The undertaking was planned to take advantage of a

statutory 10% enhancement in state aid that was available at

that time for certain school building projects. Respondent

Department of Education (hereinafter DOE) thereafter approved

plans and specifications submitted by the Board and issued

building permits for the projects. The Board then executed

construction contracts and filed "request for building project

data" (hereinafter SA-139) forms with DOE that, among other

things, provided estimated costs for each project. Under

Education Law former § 3602, DOE was authorized to begin paying

amortized building aid upon receiving these SA-139 forms or 18

months after issuing building permits, whichever was later (see

Education Law § 3602 [6] [e] [3] [former (b)]). DOE began making

such payments during the 2002-2003 school year. Construction

proceeded, and the projects reached substantial completion

between September 2003 and May 2004. The District was required

by regulation to file final cost reports for the projects by the

later of June 30 of the school year in which the certificates of

substantial completion were issued or six months after the

certificates were issued – that is, by the end of 2004 at the

latest (see 8 NYCRR 155.2 [e] [1]). For reasons not clearly

revealed in the record, no such final cost reports were filed

until June 2008. DOE excused the late filing as to one project

but, as to the others, discontinued the apportioned payments and

sought to recoup the aid apportionments that had already been

paid.1

In 2011, petitioners commenced the present combined CPLR

article 78 proceeding and action for declaratory judgment against

DOE and respondent Commissioner of Education seeking, among other

1

DOE is authorized to grant extensions when a school

district establishes that timely submission of a final cost

report was prevented by circumstances beyond its control, but

determined here that the District had failed to establish such

circumstances for all but one of the projects (see 8 NYCRR 155.2

[e] [2]).

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things, to annul DOE's determination. While this matter was

pending, the Legislature enacted amnesty legislation that, in

effect, directed DOE to restore most of the aid that had

originally been awarded (see L 2012, ch 57, part A, § 31 [a]).

Supreme Court thereafter dismissed the combined proceeding and

action as moot. Petitioners appeal.

The underlying dispute distills to what is deemed to

constitute a "claim" as required for the Commissioner to certify

payments of apportionments of state education aid within the

applicable limitation periods (see Education Law § 3604 [5] [a];

8 NYCRR 175.10 [a] [2], [3]; [b]; see also 8 NYCRR 155.2 [e]

[1]). DOE contends that the District's final cost reports

constituted claims for payment within the meaning of these

provisions, that the limitations period for all of the reports

expired, at the latest, in June 2006 – depending on the dates of

the respective certificates of substantial completion – and that

the District's failure to file the final cost reports within the

limitations period precluded the Commissioner from certifying the

projects or paying any aid. Petitioners contend that the SA-139

forms that they timely filed at the inception of the project were

the "claims" referred to in these provisions, and that the

statutory and regulatory requirements were thus fulfilled when

DOE accepted and approved the SA-139 forms, issued building

permits thereon and began making apportioned aid payments.

We agree with Supreme Court that, as a consequence of the

subsequent enactment of the 2012 amnesty legislation, we cannot

now reach the merits of these competing arguments. Judicial

power is limited to active controversies, such that a court is

effectively deprived of jurisdiction when a matter is rendered

moot by changed circumstances (see Saratoga County Chamber of

Commerce v Pataki, 100 NY2d 801, 810-811 [2003], cert denied 540

US 1017 [2003]; Matter of Cerniglia v Ambach, 145 AD2d 893, 894

[1988]), lv denied 74 NY2d 603 [1989]). Here, the amnesty

legislation "ratified and validated" the actions and omissions of

any school district that failed to file timely final cost reports

for otherwise-eligible school construction projects, so long as

the reports were filed – as they were here – by December 31, 2012

(L 2012, ch 57, part A, § 31 [a]). Upon such filing, DOE is

directed to pay apportioned aid to the affected district in full,

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except for a penalty for the late filing that is calculated as a

percentage reduction based on the lateness of the filing in

relation to the useful life of the project (see L 2012, ch 57,

part A, § 31 [c]).

Petitioners fall squarely within the ambit of this

legislation, as their aid had been withheld because of the

failure to file timely final cost reports, and the reports were

later filed before the qualifying date of December 31, 2012.

Accordingly, DOE must pay the apportioned aid to petitioners,

less the penalty, without regard to whether it was previously

correct in withholding the aid; petitioners' aid must be reduced

by the amount of the penalty – approximately $5.46 million –

without regard to whether they were previously correct that the

aid should not have been withheld. Further, contrary to

petitioners' contention, the reduction in aid resulting from the

penalty does not directly affect their rights as a consequence of

the determination of this matter, and thus does not preclude a

determination that the matter is moot. The express language of

the amnesty legislation bases the penalty not upon the alleged

failure to submit timely claims that previously formed the ground

for DOE's refusal to pay, but instead upon petitioners'

undisputed delay in filing the final cost reports. Petitioners

now contend that they should be relieved from the penalty on

grounds of fairness because DOE's previous position was

incorrect, but this Court cannot address that contention and

cannot disregard the express direction contained in the amnesty

legislation (see Matter of Cerniglia v Ambach, 145 AD2d at 894).2

Accordingly, an adjudication of the parties' dispute would have

no effect on their rights and obligations, and Supreme Court

properly determined that the matter is moot (see Matter of

Association for Community Living, Inc. v New York State Off. of

Mental Health, 92 AD3d 1066, 1067-1068 [2012], lv dismissed 19

2

Notably, petitioners did not seek leave to amend the

petition/complaint to request a judgment declaring the penalty

provision unconstitutional or invalid, nor did they raise any

other direct challenge to the penalty's validity (see CPLR 3025

[b]; compare Matter of New York State School Bds. Assn. v New

York State Bd. of Regents, 210 AD2d 654, 655 [1994]).

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NY3d 874 [2012]; Ryan, Inc. v New York State Dept. of Taxation &

Fin., 83 AD3d 482, 483 [2011], lv denied 17 NY3d 707 [2011]; New

York Pub. Interest Research Group v Regan, 91 AD2d 774, 774-775

[1982], lv denied 58 NY2d 610 [1983]; see also Matter of NRG

Energy, Inc. v Crotty, 18 AD3d 916, 918-919 [2005]; Matter of

Spano v Wing, 285 AD2d 809, 811 [2001]).

Petitioners do not contend that the exception to the

mootness doctrine is applicable (see generally Matter of Hearst

Corp. v Clyne, 50 NY2d 707, 714 [1980]). Nonetheless, it bears

noting that the issues presented here will not recur, as the

Education Law has been amended to provide that DOE may not pay

apportioned aid for building projects approved after July 1, 2011

until either 18 months after such approval or receipt by DOE of

the certificate of substantial completion and final cost report,

whichever is later (see Education Law § 3602 [6] [e] [3] [b], as

amended by L 2011, ch 97, part C, subpart F, § 4).

Peters, P.J., Lahtinen, Stein and Devine, JJ., concur.

ORDERED that the judgment is affirmed, without costs.

ENTER:

Robert D. Mayberger

Clerk of the Court