SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

961 

CA 15-00302 

PRESENT: SMITH, J.P., CARNI, LINDLEY, VALENTINO, AND DEJOSEPH, JJ. 

 

IN THE MATTER OF LEVEL 3 COMMUNICATIONS, LLC 

AND BROADWING COMMUNICATIONS, LLC, 

PETITIONERS-PLAINTIFFS-APPELLANTS, 

V MEMORANDUM AND ORDER

ERIE COUNTY, CITY OF BUFFALO, CITY OF 

LACKAWANNA, VILLAGE OF NORTH COLLINS, CITY 

OF LACKAWANNA SCHOOL DISTRICT, EDEN CENTRAL 

SCHOOL DISTRICT, LAKE SHORE CENTRAL SCHOOL 

DISTRICT AND NORTH COLLINS CENTRAL SCHOOL 

DISTRICT, RESPONDENTS-DEFENDANTS-RESPONDENTS. 

 

INGRAM YUZEK GAINEN CARROLL & BERTOLOTTI, LLP, NEW YORK CITY (JOHN G.

NICOLICH OF COUNSEL), FOR PETITIONERS-PLAINTIFFS-APPELLANTS. 

MOSEY PERSICO, LLP, BUFFALO (JENNIFER C. PERSICO OF COUNSEL), FOR

RESPONDENT-DEFENDANT-RESPONDENT ERIE COUNTY. 

BENNETT, DIFILIPPO & KURTZHALTS, LLP, EAST AURORA (MAURA C. SEIBOLD OF

COUNSEL), FOR RESPONDENT-DEFENDANT-RESPONDENT CITY OF BUFFALO. 

HARRIS BEACH PLLC, BUFFALO (J. RYAN WHITE OF COUNSEL), FOR

RESPONDENT-DEFENDANT-RESPONDENT LAKE SHORE CENTRAL SCHOOL DISTRICT.

HODGSON RUSS LLP, BUFFALO (MICHAEL B. RISMAN OF COUNSEL), FOR

RESPONDENT-DEFENDANT-RESPONDENT NORTH COLLINS CENTRAL SCHOOL DISTRICT.

ANTONIO M. SAVAGLIO, CITY ATTORNEY, LACKAWANNA, FOR

RESPONDENT-DEFENDANT-RESPONDENT CITY OF LACKAWANNA. 

SCHAUS & SCHAUS, BUFFALO (RICHARD M. SCHAUS OF COUNSEL), FOR

RESPONDENT-DEFENDANT-RESPONDENT VILLAGE OF NORTH COLLINS.

GOLDMAN ATTORNEYS PLLC, ALBANY (PAUL J. GOLDMAN OF COUNSEL), FOR TOWN

OF RAMAPO, AMICUS CURIAE.

 

Appeal from a judgment (denominated order) of the Supreme Court,

Erie County (Timothy J. Walker, A.J.), entered November 7, 2014 in a

CPLR article 78 proceeding and a declaratory judgment action. The

judgment dismissed the petition-complaint. 

It is hereby ORDERED that the judgment so appealed from is

unanimously reversed on the law without costs, the petition-complaint
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is reinstated and granted insofar as petitioners-plaintiffs seek to

compel respondents-defendants City of Buffalo and City of Lackawanna

School District to determine petitioners-plaintiffs’ applications and

to annul the remaining respondents-defendants’ determinations denying

their applications, and the matter is remitted to respondentsdefendants for further proceedings in accordance with the following

memorandum: This hybrid CPLR article 78 proceeding and declaratory

judgment action concerns taxes imposed upon fiber optic cables by

respondents-defendants. Petitioners-plaintiffs (petitioners), Level 3

Communications, LLC and Broadwing Communications, LLC, its corporate

subsidiary, filed applications for correction of the tax rolls for the

2010, 2011 and 2012 tax years. The applications sought correction of

alleged multiple-parcel errors on the ground that no real property tax

was due on the subject properties. In addenda submitted with those

applications, petitioners contended that their fiber optic cables did

not conduct electricity, and thus those cables were unlawfully entered

on the tax rolls because they were not taxable real property within

the meaning of RPTL 102 (12) (i). Respondents-defendants City of

Buffalo and City of Lackawanna School District (Lackawanna School

District) did not respond, and the remaining respondents-defendants

(respondents) denied the applications on the ground that “[v]aluation

error[s are] not correctable under [the] RPTL.” Petitioners then

commenced this proceeding seeking, inter alia, relief in the nature of

mandamus directing the City of Buffalo and the Lackawanna School

District to determine the applications, and directing all respondents

to remove the subject properties from the tax rolls and to refund the

taxes. They now appeal from a judgment that dismissed the petitioncomplaint (hereafter, petition). Supreme Court did not expressly

address respondents’ determinations that valuation errors may not be

corrected by the applications at issue. Nevertheless, we conclude on

the record before us that, by relying on several other grounds in

dismissing the petition, the court implicitly concluded that the

grounds upon which respondents relied were incorrect.

We agree with petitioners that the court erred in dismissing the

petition on grounds different from those on which respondents relied

in denying the applications. It is well settled that “[a] reviewing

court, in dealing with a determination . . . which an administrative

agency alone is authorized to make, must judge the propriety of such

action solely by the grounds invoked by the agency. If those grounds

are inadequate or improper, the court is powerless to affirm the

administrative action by substituting what it considers to be a more

adequate or proper basis” (Matter of Scherbyn v Wayne-Finger Lakes Bd.

of Coop. Educ. Servs., 77 NY2d 753, 758 [internal quotation marks

omitted]; see Matter of National Fuel Gas Distrib. Corp. v Public

Serv. Commn. of the State of N.Y., 16 NY3d 360, 368). Thus, the court

was without power to uphold the administrative determinations on a

different basis, no matter how sound that basis may be.

Contrary to petitioners’ further contention, however, we may not

grant the ultimate affirmative relief requested in the petition, i.e.,

removal of the subject properties from the tax rolls and a refund of

the taxes paid. The Court of Appeals has noted that courts 

“ ‘regularly defer to the governmental agency charged with the
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responsibility for administration of [a] statute’ in those cases where

interpretation or application ‘involves knowledge and understanding of

underlying operational practices or entails an evaluation of factual

data and inferences to be drawn therefrom,’ and the agency’s

interpretation ‘is not irrational or unreasonable’ ” (Matter of

Lighthouse Pointe Prop. Assoc. LLC v New York State Dept. of Envtl.

Conservation, 14 NY3d 161, 176, quoting Kurcsics v Merchants Mut. Ins.

Co., 49 NY2d 451, 459). We conclude that “this case involves a

question concerning the specific application of a broad statutory

term, . . . and therefore is one in which the agency which administers

the statute must determine it initially” (Xerox Corp. v Department of

Taxation & Fin. of State of N.Y., 140 AD2d 945, 946, lv denied 72 NY2d

809 [internal quotation marks omitted]), because in such a situation,

“ ‘the reviewing court’s function is limited’ ” (Matter of American

Tel. & Tel. Co. v State Tax Commn., 61 NY2d 393, 400, rearg denied 62

NY2d 943; see Matter of Easylink Servs. Intl., Inc. v New York State

Tax Appeals Trib., 101 AD3d 1180, 1181-1182, lv denied 21 NY3d 858). 

Here, respondents denied petitioners’ applications solely on the

ground stated above, and thus they did not address the issues upon

which the court based its determination. Although we agree with the

court insofar as it implicitly concluded that the ground cited by

respondents was incorrect, and that respondents therefore erred in

denying the applications on that ground, the deference due to

respondents’ administrative functions requires that they be permitted

to make the initial determination of the remaining issues raised in

the applications (see generally Matter of Nye v Zoning Bd. of Appeals

of the Town of Grand Is., 81 AD3d 1455, 1456). We therefore reverse

the judgment and grant the petition insofar as it sought to annul

respondents’ determinations, and we remit the matter to respondents

for reconsideration of petitioners’ applications, including

determining whether the applications are timely and procedurally

proper, whether the taxes that petitioners paid may be recovered

despite the lack of protest by them (see Matter of Level 3

Communications, LLC v Essex County, 129 AD3d 1255, 1256-1257), and

whether the fiber optic cables at issue constitute taxable real

property within the meaning of the RPTL. 

Finally, we further grant the petition insofar as it sought to

compel the City of Buffalo and the Lackawanna School District to

determine petitioners’ applications (see generally Clostermann v

Cuomo, 61 NY2d 525, 540; Matter of Matty’s W. 49th St. Rest. v New

York State Liq. Auth., 38 AD2d 815, 815), and we remit the matter to

those two respondents to make those determinations.

Entered: October 2, 2015 Frances E. Cafarell

Clerk of the Court