Case Name: In the Matter of Board of Education, Lakeland Central School District of Shrub Oak, Appellant, v. State Education Department et al., Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1986-01-30
Citations: 116 A.D.2d 939
Docket Number: 
Parties: In the Matter of Board of Education, Lakeland Central School District of Shrub Oak, Appellant, v State Education Department et al., Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 116
Pages: 939–945

Head Matter:
In the Matter of Board of Education, Lakeland Central School District of Shrub Oak, Appellant, v State Education Department et al., Respondents.

Opinion:
— Harvey, J.
— Ap peal from a judgment of the Supreme Court at Special Term (Connor, J.), entered March 20, 1985 in Albany County, which, in a proceeding pursuant to CPLR article 78, granted respondents' motion to dismiss the petition for failure to state a cause of action.
In this CPLR article 78 proceeding, petitioner seeks to compel respondents to reimburse it for State aid funds which were withheld on a retroactive basis from its June 1984 State aid payment. Respondents moved for dismissal of the petition, asserting objections in point of law pursuant to CPLR 7804 (f). As permitted by that provision, respondents did not submit an answer to the petition prior to their dismissal motion.
In their motion to dismiss, respondents asserted that article 78 relief is barred by operation of the four-month Statute of Limitations (CPLR 217). We, as did Special Term, disagree with that contention. The controlling date which commenced the running of the applicable Statute of Limitations was June 29, 1984, the date petitioner received its Board of Cooperative Educational Services (BOCES) State aid payment from which the decision was made. Here, as in Matter of Chemical Bank v Regan (90 AD2d 581, 582, affd 58 NY2d 809), the right to commence this article 78 proceeding accrued when respondent Comptroller's audit decision became final and binding. That occurred when the deduction on the basis of the audit was actually made from petitioner's 1984 BOCES State aid payment (see, supra, at p 582). Thus, the instant proceeding was timely commenced by service of the petition within four months thereafter (cf. Board of Educ. v Ambach, 49 NY2d 986, 987, cert denied 449 US 874).
The second objection in point of law is respondents' contention that the petition does not state a cause of action. Special Term granted the motion on that ground, determining that the first stated cause of action raised only constitutional issues in which petitioner had no standing and the second cause of action based upon equitable estoppel was not maintainable against a governmental agency. We agree as to the second cause of action, but disagree as to the first for the reason that more than a constitutional issue is raised.
Since respondents elected not to submit an answer prior to moving for dismissal, we are required to treat their motion as one directed only to the sufficiency of the pleadings in a manner similar to the determination of a CPLR 3211 motion (see, Matter of Nassau BOCES Cent. Council of Teachers v Board of Coop. Educ. Servs., 63 NY2d 100, 102-103; McLaugh lin, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C7804:7, p 507). On such a motion, we are limited to examining the petition to determine whether it states a cause of action (Matter of De Paoli v Board of Educ., 92 AD2d 894; Matter of Stokes v Connelie, 81 AD2d 988, 989). In examining the sufficiency of the petition, we must accept the facts alleged therein as true and interpret them in the light most favorable to petitioner (Matter of Burke v Carey, 82 AD2d 953, 954; Matter of Stokes v Connelie, supra, p 989; Matter of Board of Educ. v Allen, 32 AD2d 985). Only affidavits submitted by petitioner in support of his causes of action may be considered on a motion of this nature (Rovello v Orofino Realty Co., 40 NY2d 633, 635-636; Matter of Burke v Carey, supra, p 954). It is significant that although Special Term could have considered the matter as a motion for summary judgment upon proper notice to the parties (CPLR 3211 [c]), it did not do so.
Reviewing the petition, we find that petitioner has stated a claim for article 78 relief. The petition sets forth that, in 1976, petitioner sought and received approval of respondent Commissioner of Education, pursuant to the provisions of Education Law § 1950 (4) (d), to contract with its BOCES to provide certain instructional services for handicapped students. This program was later carried out by utilizing five resource rooms located within petitioner's school district and by instructional services provided by BOCES. From time to time, petitioner was billed for those instructional services and paid said bills in accordance with the BOCES contract approved by the Commissioner (Education Law § 1950 [4] [f]). Each participating component school district was granted State aid in accordance with a formula computed upon the basis of student participation. The statute imposed the requirement that a school district receiving BOCES State aid must provide the programs "on a cooperative basis" (Education Law § 1950 [4] [d]).
The thrust of the petition is that petitioner fully complied with all aspects of law and regulations and received State aid as provided by law. Petitioner received a communication from the Commissioner with a copy of a letter dated April 2, 1979 and signed by the Comptroller, which revealed a policy not previously expressed. The letter stated that in performing audits, the Comptroller had discovered that in certain instances the sharing of BOCES programs was accomplished only on a token basis and that the practice would not be tolerated beyond July 1, 1979. The letter stated specifically that there would be forgiveness of any claim for retroactive disallowance of State aid payments made. The petition further alleges that in spite of said assurance by the Comptroller, respondent Department of Education disallowed $75,970.73 of the State aid previously given to petitioner for the 1976-1977 school year.
It is the contention of petitioner that it is entitled to a return of the disallowed State aid for three reasons. The first is that the decision of the Comptroller as to shared programs was illegal, arbitrary and capricious. The petition, including the exhibits attached thereto, states the contention that although conceivably only a token sharing of resource rooms might have taken place to a minor degree within petitioner's school district, the over-all program was available to all of the component districts and the total program was shared by more than a token number of students. Secondly, it is contended that the Comptroller's decision represented a change of policy which could not be given retroactive effect. Third, if it were assumed that the change of policy was proper and did have a legal retroactive effect, petitioner claims that the Comptroller waived any right to the retroactively imposed disallowance.
Special Term dismissed the first cause of action, finding that it sought only relief for alleged violations of petitioner's constitutional rights by respondents. That court also dismissed petitioner's second cause of action, asserting that respondents should be estopped from recovering the BOCES State aid. While dismissal as to the second cause of action was proper, it was error with reference to the first cause of action set forth in the petition. Article 78 provides a remedy for actions of an administrative body which are illegal or arbitrary and capricious (Matter of Conley v Ambach, 61 NY2d 685, 687; Matter of Pell v Board of Educ., 34 NY2d 222, 231-234; Matter of Johnson v Ambach, 74 AD2d 986; Siegel, NY Prac § 557, at 774; McLaughlin, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C7801:3; CPLR C7801:4, pp 30-31). "Whether administrative action violates applicable statutes and regulations is a question within the traditional competence of the courts to decide" (Matter of Dental Socy. v Carey, 61 NY2d 330, 335).
The petition also claims error in respondents' recoupment predicated on a retroactive application of the Comptroller's policy. Recoupment by respondents may be improper (see, Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30, 33- 34; see also, Hurlbut v Whalen, 58 AD2d 311, 318-319, lv denied 43 NY2d 643).
Finally, petitioner asserts that respondents waived recoupment of the BOCES State aid. Here, too, petitioner has stated a claim for relief which could be sustained upon proper proof. The exhibits attached to the petition create an issue to be resolved at trial (see, Hadden v Consolidated Edison Co., 45 NY2d 466, 469; see also, City of New York v State of New York, 40 NY2d 659, 669; 21 NY Jur, Estoppel, Ratification, and Waiver, § 93, at 131 [1961]).
In so deciding, we find only that petitioner has sufficiently set forth at least those three claims for article 78 relief. We do not intend our decision to limit or exclude any other matters which may reasonably be inferred from the pleadings, nor do we determine that petitioner is necessarily entitled to relief. That determination must await receipt of proof on the issues raised.
Judgment modified, on the law, with costs to petitioner, by reversing so much thereof as dismissed petitioner's first cause of action; motion denied as to that cause of action; and, as so modified, affirmed. Mahoney, P. J., Main, Yesawich, Jr., and Harvey, JJ., concur.