Supreme Court, Kings County, New York. AFA PROTECTIVE SYSTEMS, Inc.; Ready Alarm-Division of United Telephone Services, Inc., Plaintiffs, v. The City Of New York, Defendant. No. 43521/94. Nov. 3, 2005
Slip Copy, 10 Misc.3d 1052(A), 2005 WL 3157931 (N.Y.Sup.), 2005 N.Y. Slip Op. 51924(U)
NOTE: THIS OPINION WILL NOT BE PUBLISHED IN A PRINTED VOLUME. THE DISPOSITION WILL APPEAR IN A REPORTER TABLE.
Supreme Court, Kings County, New York.
AFA PROTECTIVE SYSTEMS, INC.; Ready Alarm-Division of United Telephone Services, Inc., Plaintiffs,
The CITY OF NEW YORK, Defendant.
Nov. 3, 2005.
MARK PARTNOW, J
**1 Upon the foregoing papers, plaintiffs AFA Protective Systems, Inc .(AFA) and Ready Alarm (Ready Alarm)--Division of United Telephone Services, Inc. (United Telephone) move, pursuant to CPLR 3212, for partial summary judgment on the first, fourth and fifth causes of action of their complaint. The City of New York (the City) opposes the instant motion and cross-moves for an order, pursuant to CPLR 3212, dismissing plaintiffs' complaint on the grounds that (1) it is barred by the applicable statute of limitations, and (2) the City is entitled to payment of all monies allegedly due under New York City Administrative Code § 15-127 as a matter of law.
The Statutory and Regulatory Framework The instant action concerns whether § 15-127(a)(1) applies to the plaintiffs, both of which are private fire alarm companies operating in New York City. § 15-127(a)(1) provides, in relevant part, that:
a. Fire Alarm Telegraph Companies.
1. Compensation to be paid by city. All persons engaged in the maintenance and operation of auxiliary fire alarm telegraph systems from which rent, profit or compensation is derived, and which are connected with the fire alarm telegraph system maintained by the city, or who, for the benefit of their patrons, are permitted to make any use whatsoever of such fire alarm telegraph system shall pay such reasonable compensation to the city for such privilege and for such period of time as shall be fixed by the board of estimate on the recommendation of the commissioner.
In 1980, the Board of Estimate, on the recommendation of the Commissioner of the New York City Fire Department (the Fire Department), changed the computation method of such fees from one based upon a percentage of annual gross receipts, which had been the previous method utilized pursuant to prior resolutions, to one based upon a "fee for terminal." Pursuant to the resolution, a fee schedule was established by which a set annual fee would be charged each year per terminal utilized. The terminals, also known as "assignments," referenced were described as "those which said persons, partnerships or corporations [as established by § 15-127] maintain on the premises of their customers and which when activated result in the transmission of a signal to Fire Headquarters." The rule included both the text of § 15- 127 and a "whereas" clause which stated that the rule applied to those entities which operated an auxiliary fire alarm system and maintained a "connection" with the Fire Department communications system.
On August 8, 1983, the Fire Department, pursuant to its regulatory powers, instituted "Rules and Regulations for the Use of Central Signaling Systems, and Private Alarm Companies." These regulations mandated that private fire alarm companies were required to maintain two direct, dedicated telephone connections to the Fire Department Borough Central Office in lieu of the coded telegraphic channels previously used.
On or about January 10, 1990, another resolution was adopted by the Board of Estimate which continued to utilize the annual terminal-based fee method of computing fees owed by entities to which § 15-127 was applicable and also raised the annual fee due for each terminal. Once again, the rule contained the text of § 15-127 and also stated that it applied to entities which operated auxiliary fire alarm systems and were "connected" to the Fire Department's communication system. Thereafter, the Board of Estimate was dissolved, effective on or about September 1, 1990.
**2 On November 29, 1993, the Fire Department published notice in the City Record of its intent to repeal the fee structure set by the Board of Estimate in the 1989 resolution by increasing the fee structure. On May 20, 1994, the Fire Department promulgated a new resolution which became effective on July 2, 1994. The new resolution states that it applies to "fire alarm companies engaged in the operation of auxiliary fire alarm systems as well as those having proprietary protective signaling systems." "Auxiliary fire alarm systems" and "proprietary protective signaling systems" are defined by the resolution, as follows:
"Auxiliary fire alarm system". Auxiliary fire alarm system means the combination of central station and central station signaling system which is used by a fire alarm company to receive fire alarm signals from a protected premises and transmit information from such signals to a Fire Department Borough Communications Office.
"Proprietary protective signaling system." A proprietary protective signaling system means a protective signaling system which is operated by, and whose signals are received by the owner of the protected premises and which signals are capable of transmitting information to a Fire Department Borough Communications Office.
The resolution also contained the following "statement of basis and purpose of ... rule":
The Fire Department proposes to repeal the existing [resolution] and re-promulgate it by establishing a fee based on a cost recovery analysis.
Originally, the fee structure was based on a percentage of revenue of the private fire alarm companies. However, this mode proved too unwieldy and in 1980, the Board of Estimate passed a resolution establishing a fixed fee method. Thereafter, the fee was increased incrementally over a ten year period, but without reviewing the basic structure of the fee or Fire Department costs.
In 1989, the Board of Estimate passed a new resolution fixing the fee at $24 per year [per terminal--the prior yearly fees had increased from $17-$22 per year per terminal during the preceding ten years]. The resolution was left open-ended in that it had no expiration date.
The Fire Department has now revisited the fee structure and the fees set forth ... are based on a cost recovery analysis. The estimated cost to the Fire Department of managing the private fire alarm system is approximately $800,000 per year. The current fee of $24 per year produces revenue of approximately $336,000 per year, leaving a shortfall of approximately $464,000 per year. The proposed fee will recover the Fire Department's costs.
* * * The fee schedule set a $135 annual fee per terminal for all Class E terminals (those terminals required to be situated in a building classified as Occupancy Class E-Business, pursuant to § 27-253 of the New York City Building Code) and Class J terminals (all terminals required to be situated in a building classified as Occupancy Group J--Residential, pursuant to § 27-263 of the New York City Building Code), while all other types of terminals would be subject to a $45 annual fee.
**3 The new fee schedule was applicable to "all terminals placed in operation after the first day of the month of July ." Thereafter, "the [Fire] Department shall at the beginning of each quarter, bill each entity for an amount, in accordance with the schedule set forth above, based on the number of new terminals it placed in operation during the previous quarter and that amount shall be payable by the first day of the next succeeding quarter. In addition, "the cancellation of terminals shall not be subject to the refund of the terminal fee or any portion thereof."
Factual Basis for Plaintiff's Claims
In support of their motion for summary judgment, plaintiffs submit an affidavit by Philip Kleinman, the Chairman of both AFA and United Telephone, the parent of Ready Alarm. Mr. Kleinman describes plaintiffs' businesses, as follows:
The [p]laintiffs are in the business of furnishing alarm services to subscribers, including burglar, fire, elevator and supervisory alarm systems.
The [p]laintiffs' fire alarm service in New York City involves the installation and monitoring of devices on their subscribers' premises. These devices are activated by a fire emergency and send a coded signal to one of the [p]laintiffs' central stations indicating the nature and location of the fire emergency. Upon receipt of such a coded signal, the [p]laintiffs telephone the appropriate New York City Fire Borough Communication Center over the regular, non-dedicated public lines to report the fire emergency.
Prior to 1983, the plaintiffs reported fires to the City via direct, dedicated telegraphic connections with the City. In or about February 1983, the plaintiffs learned that the City had discontinued the existence and maintenance of telegraphic connections between plaintiffs and the City. By May 1983, plaintiffs installed direct, dedicated non-public telephone connections to replace such discontinued telegraphic connections. The plaintiffs continued to maintain their direct telephone connections with the City's fire alarm system until 1993.
On November 10, 1993, AFA notified the Fire Department that it would no longer utilize direct, dedicated telephone lines to transmit alarm signals. Pursuant to such notice, AFA disconnected all of its direct, dedicated lines to the Fire Department and began reporting alarms to the Fire Department by regular non-dedicated public lines. Accordingly, rather than having immediate pick-up by the Fire Department on all alarm calls, such calls would go into the general public call queue since such calls were being made over public lines in a manner indistinguishable from that of a member of the general public calling in an alarm.
Mr. Kleinman also stated that on June 8 and June 22, 1994, the plaintiffs notified the Fire Department in writing that they were transferring, effective July 1, 1994, their monitoring of various "non-fire department mandated accounts" to an out-of-state, non-Fire Department approved central station and that they were discontinuing 3,228 terminals associated with such non-Fire Department mandated accounts. Thereafter, the plaintiffs transferred the monitoring of said accounts to a central station located in New Jersey by June 30, 1994 and have continued to monitor such accounts from that facility.
**4 On September 16, 1994, pursuant to its 1994 fee setting resolution, the Fire Department issued its first invoice to AFA. The invoice charged fees of $178,335 and acknowledged the termination of all but 281 of the terminals discontinued by AFA as a result of its transfer of the monitoring of non-fire Department mandated accounts to an out-of-state central station. On October 4, 1995, AFA acknowledged receipt of the invoice and stated that the 281 terminals included therein should have been deleted along with the other terminals.
Subsequently, on October 31, 1994, the Fire Department issued a revised invoice to AFA whereby it did not delete the 281 terminals and, in fact, it added charges for an additional 2,306 terminals which had been discontinued by AFA effective June 30, 1994. The invoice included current charges for $270,405.
On September 16, 1994, the Fire Department issued an invoice to Ready Alarm in the amount of $16,245 and acknowledged the termination of all but 24 of the terminals discontinued by Ready Alarm. On October 5, 1995, Ready Alarm acknowledged receipt of the invoice and stated that the Fire Department had failed to delete said 24 terminals along with the others. Thereafter, on October 31, 1994, the Fire Department issued a revised invoice to Ready Alarm which included current charges of $42,435 and added charges for 617 of the terminals discontinued by Ready Alarm effective June 30, 1994.
Factual Basis for Defendant's Opposition and Counterclaims In support of its opposition to plaintiffs' motion, as well as in support of its counterclaims for the fees to which it alleges it is entitled pursuant to § 15-127, the City submits the affidavit of Samuel A. Pepper, the director of the Headquarters Inspection Group of the Bureau of Fire Prevention of the Fire Department. In his affidavit, Mr. Pepper explains the evolution of the Fire Department's fire alarm system:
Initially, voice communications either did not exist or were not widespread, and communications were conducted telegraphically. Indeed, New York City Administrative Code ... § 15-126 ... authorizing the Fire Department's Fire Alarm System is called the "Fire Alarm Telegraph System." As standardized and reliable voice communications became available, communications were received over the phone, not by telegraph. [Private fire alarm companies] became connected to Fire Department dispatchers by means of dedicated copper "ring down" telephone lines, which automatically ring in the Fire Department dispatcher's office when the telephone was lifted off the switchboard in the Central Station facility.... 3 RCNY 17-01(c)(6)(1). [exhibit omitted]. These "hot lines" run directly from the [private fire alarm company] to a console in the Fire Department's Dispatcher's Office. Thus, the moment that a [private fire alarm company] employee picks up the phone of one of these lines, a light flashes on the Dispatcher's Office telephone console and a Fire Department dispatcher immediately takes the call. Conversely, a Fire Department dispatcher can contact a [private fire alarm company] with similar directness through these dedicated lines.
**5 In recent years, however, the Fire Department's dispatchers' offices were unable to accommodate the ring-down lines of the growing number of [private fire alarm companies]. In addition, the [private fire alarm companies] complained to the Fire Department about the high cost of maintaining such dedicated lines (up to $50,000 for two dedicated lines to each borough department). Accordingly, the Fire Department determined to allow alternative technology in addition to or in lieu of the ring-down lines, by installing in each borough dispatcher' office regular dialed telephone lines designated for use only by the [private fire alarm companies]. Today, 16 of the 20 approved [private fire alarm companies] use these designated lines and two continue to use ring down lines. [FN1] Plaintiffs primarily use the telephone lines in the dispatchers' offices for public use, which is unauthorized.
FN1. Apparently, this number has since increased to 17, but the total number of certified fire alarm companies has dropped to 18.
For access to its fire alarm communications system (whether by telegraph, ring-down telephone line, or designated telephone lines) and attendant benefits, the Fire Department was and is authorized to charge [private fire alarm companies] a reasonable fee. Admin. Code § 15-127(a)(1), 3 RCNY 17- 01(e)(3), 17-04(c).
Mr. Pepper also describes the operation of the present-day fire alarm dispatcher system, as follows:
For each premise that is monitored through a [private fire alarm service company] (voluntary or mandatory), a Fire Department TB-60 form must be filled out listing exact location of premises including cross streets, type and size of building, ownership information (for notification purposes), the precise apartment number or floor of the premises, the nature of the occupancy and the name of the business occupying the space and the type of fire detection or signaling device.... 3 RCNY 17-01(f) [exhibit number omitted]. Each premises is assigned a box number and terminal assignment number by the Fire Department. The box number is the nearest fire alarm box on a New York City Street. A "terminal" assignment number is a numerical identification number that indicates the location of a fire detection or signaling device at a monitored premises, depending on the size of the building and the different types of fire detection or signalling devices (such as manual or automatic fire alarms, sprinklers, and smoke detectors).
The information on the TB-60 plus box and terminal numbers and predesignated response is maintained in the Fire Department computer which is printed out and distributed in printout form to Fire Department dispatchers at the Borough Dispatcher's Office. In preparing the predesignated response plan, the Fire Department evaluates the type of Fire Department response that would be most appropriate in the case of activation of the particular terminal, such as nearest fire company, and particular type of apparatus necessary (engines and ladder companies). This permits a responding fire company to know from which street it should approach the fire building (some buildings abut on more than one street), which floor should be targeted, approximately how many occupants may be involved (from the nature of the occupancy), and (in a building with many similar occupancies) the name of the business so that the correct entrance can be targeted. Thus an identification as specific as a smoke detector at the rear of the fourth floor of a carpet warehouse located at 600 West First Street, at the intersection of Tenth Avenue can be made. The information on file with the Department or provided by the [private fire alarm company's] dispatcher allows the responding fire company to determine the best route to the part of the building from which the alarm emanated. Thus, precious time, property and lives are saved.
**6 In 1996, the Fire Department implemented its newly promulgated Fire Department Rules, 3 RCNY § 17-01(b)(6)(ii), by installing new telephone lines in each of its Borough dispatcher's offices solely for [private fire alarm companies]. This system is being used by 16 of the 20 approved [private fire alarm companies]. Each telephone line is designed to automatically hunt for an available telephone line. If all of the telephone lines in the hunt group are busy (indicating that all of the dispatchers in the dispatchers' office are occupied answering calls), the call is automatically routed to the dispatcher's office in another borough. Thus the calls from [private fire alarm companies] receive priority routing, which is critical during periods of heavy call volume.
The system by which [private fire alarm companies] are legally required by Fire Department Rules to report fire alarm signals to the Fire Department using the new technology is as follows. The [private fire alarm company] is required to program its telephone equipment to dial the telephone numbers designated in each of the five Fire Department borough dispatcher's offices for Central Station use. Upon receipt of an alarm signal from a protected premises, [the private fire alarm company] dispatcher is required to immediately call one of the designated telephone numbers in the appropriate borough dispatcher's office. Whether communicating on a ring down line or by means of a designated number [the private fire alarm company] verbally communicates to the Fire Department dispatcher who answers the call the following information: the "terminal assignment number" for the fire alarm device transmitting the alarm signal; the fire alarm box number nearest the fire location; the address of the location (including multiple addresses or names of the building); the type of alarm device transmitting the signal (manual alarm or valve); [the private fire alarm company's] name, dispatcher name, and call back number (if not a ring-down line). 3 RCNY 1701(d)(3)(iv) [exhibit omitted].
Fire alarms communicated by [private fire alarm companies] to Fire Department dispatchers have two additional advantages. First, the telephone numbers (10 lines) designated for [private fire alarm companies'] use in each of the Fire Department borough dispatcher's offices ensure that a fire alarm can be transmitted irrespective of the volume of calls being received from the general public. In the case of a large fire or other emergency, 9-1-1 lines and other public telephone lines to Fire Department dispatcher's office may be temporarily flooded with calls, delaying a property owner's ability to report an unrelated fire alarm. The designated central station telephone lines, on the other hand, would not be affected by such call volume.
Second, fire alarms communicated by [private fire alarm companies] using terminal assignment numbers receive an immediate, assured response. Such fire alarm communications are reliable and Fire Department dispatchers do not need to inquire further, either to confirm the veracity of the call ... or to obtain all of the necessary particulars as to the location of the fire. When a member of the public calls in an alarm, the Fire Department dispatcher must elicit information from the caller, which very often takes several minutes, and which the caller may not always be able to provide to provide accurately. Moreover, when an alarm is received from the public, less information--only location of fire and call back number--is conveyed than when an alarm is received from a [private fire alarm company]. Further, [p]laintiffs' use of the public telephone line in the dispatcher's office, in addition to violating Fire Department rules, improperly ties up lines designated for use by the general public.
**7 With regard to the difference between "mandatory" and "voluntary" alarm systems, Mr. Pepper states the following:
As modern safety equipment and standards evolved, it was determined that the public interest required that certain classes of buildings be central station monitored and thereby connected to the Fire Department's Fire Alarm Dispatcher System, to ensure prompt reporting of a fire condition and a prompt Fire Department response. Admin. Code § 15-127(b)(1).... As set forth in the New York Building Code, Admin. Code. § 27-968, such buildings include hotels, factory buildings, stores, and businesses. [Private fire alarm companies] provide a means for these buildings to comply with the law and receive specialized attention from the Fire Department in case of a fire. These are called "mandatory" systems. 3 RCNY § 17-01(b).
However, other property owners not mandated by law to be central station monitored have chose to avail themselves of this service, both to obtain the benefits of a direct connection to Fire Department dispatchers and the pre-arranged response to a central station-transmitted alarm, and to receive rate reductions offered by insurance companies to premises that maintain such monitoring. Such fire alarm systems are "voluntary" in the sense that the property owner is under no legal duty to install them, and can remove them. However, as long as they are maintained, they must be monitored by a [private fire alarm company] in the same way as "mandatory" fire alarm systems, and the [private fire alarm company] performing such monitoring is under the same requirements as a "mandatory" fire alarm system. A [private fire alarm company] must report all alarm signals to the designated Fire Department dispatcher using the appropriate terminal number. 3 RCNY 17-01(d)(3)(iii). Thus, for purposes of [private fire alarm company] monitoring and Fire Department response, there is no difference between "mandatory" and "voluntary" accounts.
Mr. Pepper also states that the central station maintained by plaintiff in New Jersey is unapproved and does not have a valid certificate of operation.
The City also submits the affidavit of Barry Greenspan, the Deputy Agency Chief Contracting Officer with the Bureau of Fiscal Services of the Fire Department. With regard to the determination of the actual fees to be assessed pursuant to § 15-127, Mr. Greenspan states:
[T]he first step in the process [of setting fees based on terminals used] was to compute the cost of salary and fringe benefits of the personnel associated with the administration of the Fire Department communications dispatchers ("direct personal service" cost). The salary and fringe cost was allocated to the fee based on the percentage of the calls received from [private fire alarm companies] (3.93%). The percentage was computed by dividing the number of calls received in FY92 by the Fire Department's dispatchers from [private fire alarm companies] (36, 175) by the total number of calls received (920,808). [exhibit omitted]. The salary and fringe cost derived in this manner, amounting to $433,660, was the single largest cost item in the computation of the fee.
**8 A similar analysis was done to allocate a portion of the time spent by agency supervisory personnel on [private fire alarm company] matters ("indirect personnel service" cost), direct "other than personal service" (OTPS) costs associated with the Fire Department's Bureaus of Communications and Fiscal Services (including computers and other equipment), indirect OTPS costs (such as rent), and city overhead costs (including the time spent by the Law Department and Office of Management and Budget on central station issues). The salary and fringe benefits for time included in the indirect personnel service cost included a portion of my time (as Private Alarm Unit supervisor), the time of my immediate supervisor (the Director of the Bureau of Fiscal Services) and the Assistant Commissioner for Budget responsible for the Private Fire Alarm unit, the supervisor of the Bureau of Electrical Service (who provided technical assistance), and clerical staff.
The total annual costs of administering the Private Fire Alarm Unit and otherwise regulating the [private fire alarm companies] in Fiscal Year 1992, $701,433 was then divided by 15,921, the number of terminals registered with the Fire Department as of July 1, 1992 (adjusted to count Class E and J terminals as three). This produced an annual terminal assignment fee of $44.06, which, for administrative convenience, was rounded to $45. This figure was multiplied by three to obtain the terminal assignment fee for Class E and Class J terminals.
This manner of computing the terminal assignment fees accurately reflected the actual costs associated with operating the Private Fire Alarm Unit and servicing the [private fire alarm companies] with Fire Department dispatchers.
A related affidavit from Stephen Rush, the Assistant Commissioner for Budget of the Fire Department of the City of New York, reiterates the fee-setting methodology of Mr. Greenspan and arrives at a comparable figure for fiscal year 2004.
Procedural History This action was commenced on December 15, 1994. On March 18, 1996, plaintiffs moved for partial summary judgment. On March 5, 1998, the City cross-moved to dismiss the complaint and for summary judgment on its counterclaims. The parties then initiated settlement discussions and the case was marked off the calendar. On March 28, 2003, the case was restored to the calendar. Settlement negotiations commenced once more in early 2005, but were not successful. Accordingly, the parties agreed to restore their motions to the calendar for decision.
Analysis As an initial matter, the court finds that the Fire Department is the appropriate agency to set user fees pursuant to § 15-127. Although the fee-setting function was previously fulfilled by the Board of Estimate under the statute, the Board of Estimate was abolished effective September 1, 1990, pursuant to section 1152(e) of the New York City Charter. Section 1152(e) provides that "the powers and responsibilities of the board of estimate, set forth in any state or local law, that are not otherwise devolved by the terms of such law, upon another body, agency or officer shall devolve upon the body, agency or officer of the city charged with comparable and related powers and responsibilities under this charter, consistent with the purposes and intent of this charter."
**9 The Charter does not specifically assign to any body, agency or officer the power previously exercised by the Board of Estimate pursuant to § 15- 127. However, under § 15-127, the Board of Estimate only had the power to set fees upon the recommendation of the Commissioner of the Fire Department. Also, as noted by the City, a number of functions once performed by the Board of Estimate on behalf of city agencies have since been assumed by the agencies themselves (see e.g. Charter Chapter 13 [agency heads, acting pursuant to the regulations of the Procurement Policy Board, may enter into procurement contracts which previously required Board of Estimate approval]; Charter § 364 [ revocable consents for the private use of City property, which previously required the approval of the Board of Estimate, may now be awarded directly by the Department of Transportation]; Charter § 362(c) [franchising responsibilities, once delegated to the Board of Estimate, can now be undertaken by the "responsible agency" designated as having "primary expertise and responsibility for the type of franchise involved"]; Charter § 373 [concessions may be awarded by the agency of jurisdiction in accordance with rules promulgated by the Franchise Concession and Review Committee] ).
Here, the Fire Department, as the agency imbued with the authority to promulgate rules pertaining to central station companies, central station facilities and central station signaling systems, as well as other regulations pertaining to the operations of private fire alarm companies, has the necessary expertise to determine fees consistent with the purpose of the City Charter and § 15-127. Although plaintiffs argue that the New York City Franchise and Concession Board is the appropriate agency to set such statutory fees, the court finds that, absent any legislation to the contrary, the Franchise and Concession Board, which primarily regulates grants of property for compensation other than in the form of administrative costs, is not in a better position than the Fire Department, which can base fees upon its own costs regarding the maintenance of its communications system, to make appropriate fee determinations pursuant to § 15-127. Accordingly, the court finds that the Fire Department is the appropriate agency to set fees pursuant to § 15-127.
Having determined that the Fire Department is the proper rate-setting agency, the court must now determine whether the instant action is one for declaratory relief or, as urged by the City, more properly construed as an Article 78 proceeding challenging the Fire Department's determination which assessed fees to plaintiffs pursuant to the relevant enabling statute. It is well settled that a declaratory judgment action is the most appropriate vehicle for determining the validity of a legislative act (see e.g. Clark Disposal Service, Inc. v. Town of Bethlehem, 51 A.D.2d 1080, 1080  [appropriate vehicle to test the existence or non-existence of legislative acts or the validity or non-validity of statutes, ordinances, rules or regulations is a declaratory judgment action and not an Article 78 proceeding] ). However, the Court of Appeals has held that "where a quasi-legislative act by an administrative agency such as a rate determination is challenged on the ground that it 'was made in violation of lawful procedure, was affected by an error or law or was arbitrary and capricious or an abuse of discretion' (CPLR 7803  ), a proceeding in the form prescribed by article 78 can be maintained and, as a corollary matter, the four-month Statute of Limitations that ordinarily governs such proceedings is applicable" (New York Health and Hospital Corporation v. McBarnette, 84 N.Y.2d 194, 204  ). It is true that, although plaintiffs, in part, have challenged the Fire Department's authority to promulgate fees pursuant to § 15-127, the gravamen of plaintiffs' complaint is directed at an agency determination by the Fire Department that plaintiffs, despite using public telephone lines to connect with the Fire Department dispatchers, were determined to owe fees to the City pursuant to § 15-127 due to their putative connection to or use of the Fire Department's fire alarm communication system. The plaintiffs do not challenge the validity or constitutionality of the enabling statute; rather, they object to the determination by the Fire Department, based upon its interpretation of the enabling statute, that plaintiffs' use of the fire communications system, even through public telephone lines and an out-of-state central station not affiliated with the Fire Department, constituted a sufficient connection to or use of the Fire Department communications system to warrant the imposition of fees pursuant to § 15-127. Plaintiff's complaint is not, however, limited to challenging such determination, but also seeks a judgment from the court, which would, in essence, find that the1994 rule at issue here, which explicitly applies not only to entities having a connection to the Fire Department communications system, but encompasses all private fire alarm companies whether directly connected to the Fire Department or not, is invalid. The court finds that this aspect of plaintiff's claim targets not merely the rate-setting aspect of the 1994 resolution or the Fire Department's individual rate assessment with regard to plaintiffs, but also challenges the rule's inclusion of non-directly connected private fire alarm companies within the category of companies required to pay fees to the City (see generally Solnick v. Whalen, 49 N.Y.2d 224, 232  [holding that declaratory judgment was proper remedy for determination of invalidity of rate increases, ordinances, local laws or statutes of general applicability, but was not appropriate vehicle for determining the validity of an ad hoc determination of, for example, an individual's right of reimbursement under an agency regulation which would be "more accurately classified as administrative than legislative"] ). Concomitantly, the plaintiffs also appear to seek, in effect, a determination that, given the existence of former rules which allegedly limited § 15-127's applicability to those companies which had a direct connection to the Fire Department's communication system, the statute cannot be applied to an entity which merely makes some use of said communication system. Accordingly, in light of the legislative and statutorily-based nature of plaintiff's action, the court will construe it as one for declaratory relief.
**10 In order to determine whether the subject rule is invalid and/or the statute is inapplicable to plaintiffs, the court must look to the texts of both the enabling statute, § 15-127, and the challenged 1994 rule. As a general principle, an agency's interpretation of the statute it is responsible for administering and its own regulations are entitled to great deference (see Tommy and Tina, Inc. v. Department of Consumer Affairs of the City of New York, 95 A.D.2d 724, 724 , aff'd 62 N.Y.2d 671  ). It is well settled, however, that "an administrative agency, in exercising its rule-making authority, cannot extend the meaning of statutory language to apply to circumstances not intended to fall within the [enabling] statute" (Perry Thompson Third Co. v. City of New York, 279 A.D.2d 108, 115  ). "Moreover, an agency may not promulgate a rule out of harmony with or inconsistent with the plain meaning of the statutory language" (id.; see also Campagna v. Schaffer, 73 N.Y.2d 237, 242  ). Stated differently, "[u]nder standard canons of statutory construction, the plain meaning of the statutory phrasing must be honored by the agency, and by the courts" (Vink v. New York State Division of Housing and Community Renewal, 285 A.D.2d 203, 209 . Accordingly, "although an agency cannot engraft additional requirements or assume additional powers not contained in the enabling legislation," a court should nonetheless "presume that any regulation is in accord with the stated purpose of the enabling statute" (id.).
In construing the enabling statute itself, however, courts should be mindful that "questions of pure legal interpretation of statutory language do not warrant judicial deference to administrative expertise" (Matter of Toys "R' Us v. Silva, 89 N.Y.2d 411, 419  ), since it is axiomatic that "the clearest indicator of legislative intent is the statutory test, [and] the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof" (Mejewski v. Broadalbin-Perth Central School District, 91 N.Y.2d 577, 583]  Moreover, agencies deserve less deference when they issue regulations inconsistent with positions they have previously taken (see Matter of Richardson v. Commissioner of N.Y. City Dept. of Social Services, 88 N.Y.2d 35, 39  ).
Here, the 1994 rule, by its own terms, applies generally to "fire alarm companies engaged in the operation of auxiliary fire alarm systems as well as those having proprietary signaling systems." Previous resolutions, such as those enacted in 1980 and 1990, applied to "each person, partnership or corporation engaged in the maintenance and operation of auxiliary fire-alarm systems" where such "systems were connected with the fire telegraph system maintained by the City of New York. The 1980 and 1990 rules, however, as well as the 1994 rule, also include the full text of § 15-127, which states that fees may be charged to "all persons engaged in the maintenance and operation of auxiliary fire alarm telegraph systems from which rent, profit or compensation is derived, and which are connected with the fire alarm telegraph system maintained by the city, or who, for the benefit of their patrons, are permitted to make any use whatsoever of such fire alarm telegraph system."
**11 In construing § 15-127, the enabling statute at issue here, the court finds that its plain language authorizes fees to be assessed not only against those companies which are directly connected with the Fire Department's communications system, but also against those companies which are permitted "to make any use whatsoever" of such system. Moreover, as the term "connection" itself is not defined more narrowly, it appears that any connection, including a public telephone line, and not just a "direct" connection such as, for example, a "ring down" line, would be encompassed by the plain language of the statute. Given this exceedingly broad language, the court does not find that the 1994 rule at issue is inconsistent with the enabling statute or that such statute is inapplicable to plaintiffs. Although plaintiffs contend that they only use public telephone lines to connect to the Fire Department's dispatchers and, in the case of so-called "voluntary" customers, do not even utilize a central station located in New York City or controlled by the Fire Department, it is undisputed that all calls emanating from private alarm companies must, by necessity, be ultimately routed through the Fire Department's communications system in order for the appropriate Fire Department response to be dispatched and such companies, therefore, are either ultimately connected to or make some use of the communications system. Moreover, in the case of plaintiffs' so-called "mandatory" clients, such clients apparently continue to enjoy the benefits--albeit through the use of public telephone lines--of the terminal number system that was developed by, and is still in use at, the Fire Department and which allows the Fire Department to gain access to a wide array of information it can then utilize in its response to a particular alarm.
In addition, such interpretation does not necessarily run afoul of previous rules promulgated pursuant to § 15-127. For example the 1980 and 1990 rules, although explicitly pertaining to entities "connected"--without such connection being further defined--to the Fire Department's communications system, did not limit the application of § 15-127 to such entitles and included the text of § 15-127 itself in the body of the resolution. Moreover, it was not clear that any further definition was required at the time of said rules, given that they were issued during a time period when plaintiffs did have a direct connection to the Fire Department communications system in the form of dedicated "ring down" lines which were not discontinued by plaintiffs until 1993. The court therefore gives deference to the Fire Department's statement in the 1994 rule that the rule applied to all fire alarm companies operating auxiliary or proprietary fire alarm services, thereby re-affirming that § 15-127 applied to "any use whatsoever" of the Fire Department communications system and not just to those entitles which had a direct connection to same.
**12 Moreover, to the extent that fire alarm companies are required, as stated by Mr. Pepper, to use specific telephone lines which are maintained for their exclusive use and also to utilize central stations which are approved by the Fire Department, pursuant to RCNY 17-01 et seq., adopted in 1996, it is also in keeping with the enabling statute, which authorizes the Fire Department to set performance and certification standards for central station companies, central station facilities and central station signaling systems, that such required use of the fire communications system, whether actually complied with or not, would support the imposition of a fee for the costs and expenses associated with such regulations pursuant to § 15-127, under the "any use whatsoever" clause of that provision.
Plaintiffs argue at some length that positions allegedly taken by the City in prior litigation between the parties and statements allegedly made by various City officials to the effect that § 15-127 only applies to entities which have a direct connection to the Fire Department communications system, should estop the City from claiming that § 15-127 encompasses "any use" of the Fire Department communications system. Such an argument is, however, unavailing for the purpose of demonstrating that the 1994 rule and § 15-127 itself only apply to entities with direct connections to the Fire Department communications system. As an initial matter, there is the plain language of § 15-127 itself, which does not limit the assessment of fees to those companies possessing a direct connection to the Fire Department. Moreover, there is no indication that the court in any previous litigation between the parties relied on such interpretations in rendering a decision (see e.g. Kalikow 78/79 Co. v. State, 174 A.D.2d 7 , lv dismissed 78 N.Y.2d 1040  ). In addition, an individual is not allowed to rely upon the statements of a government official to the extent that such statements conflict with a clear statutory mandate (see e.g. Simon v. Myerson, 36 N.Y.2d 300  ). Finally, to the extent that such positions were taken or that statements were made prior to the promulgation of RCNY 1701-01 et seq. and the 1994 rule, they did not take into account either the current rule that fire alarm companies must utilize specific designated telephone lines to communicate with the Fire Department's dispatchers or the 1994 rule's statement that the scope of such rule applied to all fire alarm companies maintaining auxiliary fire alarm services. Such statements, to the extent expressed, largely were made in the context of prior rules, such as those made in 1980 and 1990, which stated explicitly that they applied to those entities which were connected to the Fire Department's communications system. Accordingly, plaintiff's estoppel arguments are not supported by either the plain language of the enabling statute or by any other applicable law.
To the extent that plaintiffs challenge the amount of the City's fee pursuant to § 15-127, such argument must also fail. It is well established that an agency's rate-making activities are to be treated with deference by the court. Here, the City has submitted evidence demonstrating the basis for the Fire Department's calculation of costs and expenses. The plaintiffs have raised only conclusory objections to such fee determinations and have not introduced an expert affidavit or any other evidence to support their contention that such fees are unreasonable and constitute a tax. Moreover, although plaintiffs claim that because they use only public telephone lines they do not derive any greater benefit from use of the Fire Department communications system than does a member of the general public, § 15-127 does not require that fire alarm companies are only subject to fees to the extent they derive some special use of the Fire Department's communications system but, rather, imposes a fee for "any use whatsoever" of such system by an entity operating an auxiliary fire alarm system. Moreover, in light of the 1996 rules promulgated pursuant to RCNY § 17-01 et seq., the maintenance of the Fire Department's dispatching system, including the designated telephone lines and terminal system reserved for fire alarm company use, and the volume of calls coming into the Fire Department communications system from plaintiffs, the court cannot find that plaintiffs receive no significant benefit from the Fire Department communications system as a whole and, specifically, from the special provisions made by the Fire Department for calls originating from fire alarm companies, even if plaintiffs choose not to utilize them. Further, to the extent that, once again, any City official made formal or informal representations which could be construed as questioning the fees, such statements pre-dated the1996 rules establishing dedicated telephone numbers for private alarm companies and also cannot be used to abrogate the statute itself or relied upon as a definitive interpretation thereof. Rather, the court finds that the Fire Department, as the agency with expertise in matters related to receiving and responding to private alarm company calls, is to be afforded deference in its assessment of the appropriate fees pursuant to § 15-127.
**13 Finally, the court does not find plaintiffs' arguments with regard to the alleged selective enforcement of § 15-127 to be persuasive. Plaintiff has not established that any other appropriately certified fire alarm company-- as opposed to a burglar alarm company or uncertified fire alarm company--has utilized the Fire Department communications system without being assessed fees pursuant to § 15-127. Moreover, such selective enforcement would not, in any event, negate the plain meaning of the statute with regard to requiring fees for "any use whatsoever" of the Fire Department communications system.
As a result, plaintiffs have failed to establish, prima facie, that they are entitled to a declaratory judgment determining that they are not required to pay any fees to the City pursuant to § 15-127 for their use of the Fire Department's communications system. The City has established its prima facie case, however, that it is entitled to judgment on its counterclaims seeking compensation pursuant to § 15-127 from the period from January 1, 1994 to September 30, 1994 and for all charges incurred to date, and plaintiff has failed to raise a triable issue of fact with regard to the City's entitlement to such funds. [FN2]
FN2. The court finds that such relief is limited to the fees to which the City is entitled pursuant to § 15-127 without reaching the issue as to whether such fees would also be recoverable under a theory of unjust enrichment or quantum meruit. Moreover, although the City has asked for an order revoking plaintiffs' Fire Department-issued certificates of operation, such revocation is more properly handled administratively by the Fire Department and, in any event, was not included as a counterclaim herein.
Accordingly, the plaintiffs' motion for partial summary judgment is denied. The City's motion seeking the dismissal of plaintiffs' complaint and summary judgment with respect to its counterclaims is granted. Pursuant to Article 22 of the Judiciary Law, in accordance with the provisions of Part 122 of the Rules of the Chief Administrator of the Courts, and upon the filing of the requisite forms and the approval of the Administrative Law Judge, this action is assigned to a Judicial Hearing Officer in the JHO Part for a determination as to the amount of fees due from plaintiffs to the City pursuant to § 15- 127.
The foregoing constitutes the decision and order of the court.
AFA Protective Systems, Inc. v. City of New York
Slip Copy, 10 Misc.3d 1052(A), 2005 WL 3157931 (N.Y.Sup.), 2005 N.Y. Slip Op. 51924(U) Unpublished Disposition