Court Opinion

ID: 4084978
Source: CourtListenerOpinion
Date Created: 2016-10-07 23:57:22.729166+00
Date Added: 2024-06-11T14:33:36.434125
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

360
CA 12-01778
PRESENT: SMITH, J.P., PERADOTTO, LINDLEY, VALENTINO, AND WHALEN, JJ.

CENTER STATE SECURITY CONSULTANTS, INC.,
PLAINTIFF-APPELLANT,

                    V                               MEMORANDUM AND ORDER

SYRACUSE HOUSING AUTHORITY, DEFENDANT-RESPONDENT.

WALTER D. KOGUT, P.C., FAYETTEVILLE (WALTER D. KOGUT OF COUNSEL), FOR
PLAINTIFF-APPELLANT.

BOND, SCHOENECK & KING, PLLC, SYRACUSE (BRIAN J. BUTLER OF COUNSEL),
FOR DEFENDANT-RESPONDENT.

     Appeal from an order of the Supreme Court, Onondaga County (John
C. Cherundolo, A.J.), entered December 7, 2011. The order, inter
alia, granted defendant’s motion for summary judgment.

     It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.

     Memorandum: In this breach of contract action, plaintiff appeals
from an order that, inter alia, granted defendant’s motion for summary
judgment dismissing the complaint. Plaintiff contends that Supreme
Court erred in granting defendant’s motion on the ground that
plaintiff’s contract with defendant was unenforceable under the
common-law term limits rule, which “prohibits one municipal body from
contractually binding its successors in areas relating to governance
unless specifically authorized by statute or charter provisions to do
so” (Matter of Karedes v Colella, 100 NY2d 45, 50). We reject that
contention.

     Plaintiff is owned and operated by Matthew Kwiek, a retired
Syracuse police officer who is also plaintiff’s only employee. In
June 2000, defendant and plaintiff entered into a contract (Agreement)
for a term of 10 years pursuant to which plaintiff was to provide
consultation services for defendant’s security operations. The
Agreement was approved by defendant’s Board of Commissioners (Board).
Defendant did not hire Kwiek directly because Kwiek would not have
been able to work for defendant and receive his pension unless he
received a waiver from the retirement system of his former employer.
In January 2002, the Agreement was amended to increase plaintiff’s
compensation and to allow Kwiek to have vacation and sick time. The
amendment was signed by defendant’s then-Executive Director and Kwiek,
but was not approved by the Board. In June 2006, one week before the
                                 -2-                           360
                                                         CA 12-01778

then-Executive Director retired, the Agreement was amended again
without Board approval. That second amendment extended the Agreement
for another five years, i.e., until June 2015, under the same terms
and conditions. In July 2007, defendant, acting through its Board and
a new Executive Director, terminated the Agreement, whereupon
plaintiff commenced this action seeking damages for breach of the
Agreement and its two amendments.

     Following discovery, defendant moved for summary judgment
dismissing the complaint, and plaintiff cross-moved for partial
summary judgment on liability. In granting the motion, the court
determined that the Agreement violated the term limits rule and that,
even if the initial Agreement was enforceable, the two amendments
thereto were invalid and unenforceable because they had not been
approved by the Board.

     Plaintiff initially contends that the term limits rule does not
apply because defendant is not a municipality, but instead is a public
authority. We reject that contention. In Matter of Lake v Binghamton
Hous. Auth. (130 AD2d 913, 914-915), the term limits rule was applied
to the Binghamton Housing Authority, which is legally
indistinguishable from defendant herein. More recently, we applied
the term limits rule to an urban renewal agency (see Matter of City of
Utica Urban Renewal Agency v Doyle, 66 AD3d 1495, 1496), and we can
perceive no reason why a housing authority should be treated
differently from such an agency.

     Plaintiff further contends that the term limits rule applies only
to actions that require Board approval. According to plaintiff, the
initial Agreement, although approved by the Board, did not require
Board approval under defendant’s procurement policy. We reject that
contention as well. Section II (A) of defendant’s procurement policy
provides that, “[n]otwithstanding the Executive Director’s broad
authority and responsibility to approve and execute SHA procurement
actions, the Executive Director shall submit all contracts or
procurement actions that exceed $50,000 or that are, or may be, the
subject of contested awards to the SHA Board of Commissioners for
consideration and for such action as the Commission may deem proper.”
Pursuant to that provision, the initial Agreement was necessarily
submitted to the Board for its “consideration” because the total
compensation paid thereunder to plaintiff exceeded $50,000.

     Plaintiff nevertheless relies on Section II (C) of the
procurement policy, which provides that “the Board shall maintain the
duty to review and approve the award of purchases and contracts for
equipment, materials, supplies and non-personal services in excess of
$50,000 and that the Board shall also maintain the duty to review and
approve any contract change orders in excess of $50,000” ([emphasis
added]). Plaintiff asserts that its Agreement with defendant did not
provide “non-personal services,” and thus did not require Board
approval. Although the procurement policy does not define “non-
personal services,” we conclude that the security consultation
services rendered by plaintiff were not personal in nature, and that
Board approval was thus required.
                                 -3-                           360
                                                         CA 12-01778

     Finally, we reject plaintiff’s contention that the term limits
rule does not apply because the Agreement did not infringe upon the
ability of future Boards to exercise any governmental powers. As
noted above, the term limits rule “prohibits one municipal body from
contractually binding its successors in areas relating to governance”
(Karedes, 100 NY2d at 50). The rule does not apply, however, to
contracts that relate only to business or proprietary matters, such as
the administration of a municipal golf course in Karedes (id.). Here,
we conclude that providing security to its tenants is not a business
or proprietary matter for defendant. Instead, ensuring the safety of
its residents is one of its core responsibilities and relates directly
to matters of governance. Plaintiff mistakenly focuses on the
specific duties performed by Kwiek, asserting that, because he had no
authority to make decisions concerning defendant’s operations, or
policies, or the employment of off-duty police officers, he did not
exercise any governmental powers. The focus should instead be on
whether defendant was exercising governmental powers when it entered
the contract with plaintiff, and we answer that question in the
affirmative.

     In sum, the term limits rule applies because defendant’s Board
exercised governmental powers when it approved the Agreement with
plaintiff in January 2000, and because the 10-year term of the
Agreement exceeded the term of all members of the Board who approved
the Agreement. Although the terms of the Board members were
staggered, five of the Board members served five-year terms, and two
served two-year terms. When the Board terminated the Agreement in
2007, only three of the seven Board members who approved the Agreement
in 2000 were still on the Board. Under the term limits rule, the 2000
Board was not permitted to bind contractually the 2007 Board or any
subsequent Board to retain plaintiff as a security consultant (see
Karedes, 100 NY2d at 50).

Entered:   March 22, 2013                      Frances E. Cafarell
                                               Clerk of the Court