In the Matter of Tayinha Banos, Respondent,v.John Rhea, et al., Appellants, et al., Respondent.BriefN.Y.March 24, 2015 To Be Argued By: Maria Termini 10 minutes requested Reproduced on recycled paper APL-2014-00078 ______________________ COURT OF APPEALS In the Matter of the Application of TAYINHA BANOS, Petitioner-Respondent, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules, -against- JOHN RHEA, as Chairperson of the New York City Housing Authority, THE NEW YORK CITY HOUSING AUTHORITY, Respondents-Appellants, CONEY ISLAND TOWERS, LLC, Respondent-Respondent. BRIEF OF RESPONDENTS-APPELLANTS KELLY D. MACNEAL Acting General Counsel Nancy M. Harnett, Of Counsel Corina L. Leske, Of Counsel Maria Termini, Of Counsel New York City Housing Authority 250 Broadway, 9th Floor New York, NY 10007 Tel: (212) 776-5125 Fax: (212) 776-5404 maria.termini@nycha.nyc.gov Attorneys for Respondents-Appellants Completion date: May 23, 2014 i TABLE OF CONTENTS Page PRELIMINARY STATEMENT ......................................................................... 1 JURISDICTION ................................................................................................... 7 QUESTIONS PRESENTED ................................................................................ 8 BACKGROUND ................................................................................................. 9 Parties ......................................................................................................... 9 Applicable Federal Regulations ................................................................. 9 Williams Consent Judgment and Subsidy Termination Procedures ............................................................. 10 Termination of Petitioner’s Subsidy ........................................................ 11 This Article 78 Proceeding ...................................................................... 13 ARGUMENT ..................................................................................................... 16 I. THE MAJORITY ERRED IN FAILING TO DISMISS THIS PROCEEDING AS BARRED BY THE STATUTE OF LIMITATIONS ............................................... 16 A. Courts Must Strictly Enforce the Statute of Limitations ............... 16 B. This Proceeding Is Time-Barred Based on Petitioner’s Receipt of the T-3 Notice ..................................... 18 C. This Proceeding Is Time-Barred Based on When Petitioner Knew of the Housing Authority’s Determination .............................................. 22 II. THE MAJORITY ERRED IN CONSIDERING THE MERITS OF A TIME-BARRED CLAIM ..................................... 27 CONCLUSION .................................................................................................. 30 ii TABLE OF AUTHORITIES Page(s) Federal Cases E.E.O.C. v. New York Times Co., 196 F.3d 72 (2d Cir. 1999) ........................ 19 United States v. International Bhd. of Teamsters, 998 F.2d 1101 (2d Cir. 1993) ............................................................................. 18 United States v. Local 359, United Seafood Workers, 55 F.3d 64 (2d Cir. 1995) ................................................................................... 19 Williams v. New York City Hous. Auth., Case No. 81-CV-1801, docketed October 17, 1984 (S.D.N.Y.) ....................................................... passim State Cases 90-92 Wadsworth Ave. Tenants Ass’n v. City of New York Dep’t of Hous. Preserv. & Dev., 227 A.D.2d 331 (1st Dep’t 1996) ................................................................ 22, 23 Best Payphones, Inc. v. Department of Info. Tech. & Telcomms., 5 N.Y.3d 30 (2005) ............................................................................................ 16 Bigar v. Heller, 96 A.D.2d 567 (2d Dep’t 1983) ......................................... 23, 24 Cloverleaf Realty of N.Y., Inc. v. Town of Wawayanda, 43 A.D.3d 419 (2d Dep’t 2007) ................................................................... 22, 24 Consedine v. Portville Ctr. Sch. Dist., 12 N.Y.3d 286 (2009) .......................... 19 Dial v. Rhea, 111 A.D.3d 720 (2d Dep’t 2013) .......................................... passim Fair v. Finkel, 284 A.D.2d 126 (1st Dep’t 2001) .............................................. 28 Fernandez v. New York City Hous. Auth., 284 A.D.2d 202 (1st Dep’t 2001) ...................................................................... 20 iii Page(s) State Cases (continued) ISCA Enters. v. City of New York, 77 N.Y.2d 688 (1991) ............................... 22 John J. Kassner & Co., Inc. v. City of New York, 46 N.Y.2d 544 (1979) ........................................................................................ 26 Lopez v. New York City Hous. Auth., 93 A.D.3d 448 (1st Dep’t 2012), rev’g 30 Misc. 3d 1237(A) (Sup. Ct. N.Y. Co. Feb. 4, 2011) ..................... 14, 20 M & D Contractors v. New York City Dep’t of Health, 233 A.D.2d 230 (1st Dep’t 1996) ...................................................................... 27 McComb v. Town of Greenville, 163 A.D.2d 369 (2d Dep’t 1990) ................. 23 Nassau Ins. Co. v. Murray, 46 N.Y.2d 828 (1978) ............................................ 20 New York City Health & Hosps. Corp. v. McBarnette, 84 N.Y.2d 194 (1994) ........................................................................................ 17 Northern v. Hernandez, 17 A.D.3d 285 (1st Dep’t 2005) ................................. 20 Parks v. New York City Hous. Auth., 100 A.D.3d 407 (1st Dep’t 2012) ......... 20 Riverkeeper, Inc. v. Crotty, 28 A.D.3d 957 (3d Dep’t 2006) ............................ 22 Robinson v. Martinez, 308 A.D.2d 355 (1st Dep’t 2003) ................................. 28 Rodriguez v. Wing, 251 A.D.2d 335 (2d Dep’t 1998) ...................................... 20 Saunders v. Rhea, 92 A.D.3d 602 (1st Dep’t 2012) .......................................... 27 Shamblee v. Rhea, 110 A.D.3d 443 (1st Dep’t 2013) ....................................... 23 Solnick v. Whalen, 49 N.Y.2d 224 (1980) ........................................................ 17 iv Page(s) State Cases (continued) Thornton v. New York City Hous. Auth., 100 A.D.3d 556 (1st Dep’t 2012) ...................................................................... 27 Yeshiva Univ. v. Fidelity & Deposit Co. of Md., 116 A.D.2d 49 (1st Dep’t 1986) ........................................................................ 26 Zumpano v. Quinn, 6 N.Y.3d 666 (2006) .......................................................... 27 Federal Statutes and Regulations 24 C.F.R. § 982 .................................................................................................... 9 24 C.F.R. § 982.151 ........................................................................................... 10 24 C.F.R. § 982.305 ........................................................................................... 10 24 C.F.R. § 982.308 ............................................................................................. 9 24 C.F.R. § 982.451 ........................................................................................... 10 24 C.F.R. § 982.551 ........................................................................................... 10 24 C.F.R. § 982.552 ........................................................................................... 10 42 U.S.C. § 1437f ................................................................................................. 9 State Statutes CPLR § 201 .................................................................................................. 16, 21 CPLR § 217(1) ............................................................................................ passim CPLR § 2103(b)(2) ............................................................................................ 20 v Page(s) State Statutes (continued) CPLR § 5602(b)(1) .............................................................................................. 7 CPLR § 7803(3) ................................................................................................. 28 PRELIMINARY STATEMENT With leave of the Appellate Division, Second Department (“Second Department”), Respondents-Appellants New York City Housing Authority (“Housing Authority”) and its Chair1 appeal from the order of the Second Department that, over a dissenting opinion, affirmed the order of the Supreme Court, Kings County (Edwards, J.), denying their cross-motion to dismiss this proceeding as barred by the four-month statute of limitations for challenging a final agency determination (“Order”). More than 21 months after the fact, Petitioner-Respondent Tayinha Banos (“Petitioner”) commenced this Article 78 proceeding challenging the Housing Authority’s 2010 determination to terminate her participation in the Section 8 rental subsidy program because she failed to recertify her continuing eligibility for the program as required by federal regulations. The Housing Authority mailed its final and binding determination (known as the “T-3 Notice”) to Petitioner in May 2010. Petitioner concedes she knew about the determination from other sources. In June 2010, Petitioner received from her landlord a copy of a letter the Housing Authority sent to her landlord notifying it that the Housing Authority was terminating Petitioner’s participation in the Section 8 program. That same month, 1 John B. Rhea (“Rhea”), the former Chair of the Housing Authority, also is named as a Respondent in this proceeding. Mayor Bill de Blasio has appointed Shola Olatoye as Chair of the Housing Authority. 2 Petitioner acknowledged in a letter she sent to the Housing Authority that “[t]hey told me my Section 8 was terminated.” Petitioner admits she received the Housing Authority’s written response to her letter in July 2010, which confirmed the Housing Authority had terminated her participation in the Section 8 program and her case would remain closed. Petitioner brought this proceeding alleging the Housing Authority improperly terminated her participation in the Section 8 program because it did not first send three notices to her as required by the first partial consent judgment in Williams v. New York City Hous. Auth., Case No. 81-CV-1801, docketed October 17, 1984 (S.D.N.Y.) (RJW) (“Williams”). The Housing Authority cross-moved to dismiss this proceeding as time-barred under section 217(1) of the Civil Practice Law and Rules (“CPLR”) because Petitioner did not commence it within four months after she received the T-3 Notice, which under Williams triggers the running of the statute of limitations. The Housing Authority established: (1) by the affidavits of two employees that it mailed the T-3 Notice to Petitioner on May 17, 2010; (2) under Williams and the CPLR, Petitioner presumptively received the T-3 Notice on May 22, 2010; (3) the statute of limitations expired four months later on September 22, 2010; and (4) Petitioner did not commence this proceeding until February 28, 2012, more than 17 months later. 3 The Supreme Court denied the Housing Authority’s cross-motion to dismiss because the Housing Authority allegedly did not mail a warning letter or the T-1 Notice of Termination (“T-1 Notice”) to Petitioner and therefore “failed to strictly comply with the notice requirements set forth” in Williams. In a split decision, a majority of the Second Department affirmed the lower court’s order and held “since the [Housing Authority] did not comply with the notice provisions set forth in the Williams first partial consent judgment, the statute of limitations was not properly triggered and did not begin to run.” The majority acknowledged, but disagreed with, the precedent of the Appellate Division, First Department (“First Department”) holding the statute of limitations runs from the T- 3 Notice even where the Housing Authority did not prove it sent all three notices. The majority should have agreed with the dissent’s well-reasoned memorandum, which concluded this proceeding is time-barred because the Housing Authority established a rebuttable presumption Petitioner received the T-3 Notice and Petitioner failed to rebut that presumption with her bald assertion of non-receipt. The dissent explained this proceeding is untimely notwithstanding the Housing Authority’s alleged failure to send a warning letter or the T-1 Notice because “[a]n agency is not required to demonstrate that everything that led up to a determination was in strict accordance with the required procedure in order to establish that the determination was final and binding and that the statute of 4 limitations started running.” Furthermore, even if Petitioner had rebutted the presumption of receipt, the dissent correctly concluded this proceeding still would be time-barred because Petitioner did not commence it within four months of when she had actual notice the Housing Authority had terminated her Section 8 subsidy. This Court should reverse the Order for several reasons. First, it is contrary to section 201 of the CPLR and precedent of this Court and other appellate courts that courts must strictly enforce the statute of limitations to provide repose and to protect government agencies from stale claims and permit them to allocate scarce resources rationally. The majority failed to strictly enforce the statute of limitations even though it did not identify any deficiencies in the Housing Authority’s proof of mailing of the T-3 Notice, did not address the Housing Authority’s argument that Petitioner’s bald claim of non-receipt was insufficient to rebut the presumption of receipt, and acknowledged Petitioner indisputably knew from sources independent of the T-3 Notice about her termination from the program more than 21 months before she commenced this proceeding. The majority’s failure to strictly enforce the statute of limitations hinders the ability of individuals, agencies, and other entities to rely on the repose offered by the statute of limitations set by the Legislature. After the four-month statute of limitations expires, government agencies must be able to rely on the finality of their determinations to budget and plan. Repose from claims brought by terminated 5 participants years or even decades after the fact is especially important to the Housing Authority because the federal government does not permit it to make retroactive subsidy payments using current fiscal year funds. Second, the majority ignored appellate precedent holding a court may not add, delete, or distort terms of a contract. The Order failed to follow Williams, which explicitly states, “for the purposes of Section 217 and Article 78 of the Civil Practice Law and Rules, the determination to terminate a subsidy shall, in all cases, become final and binding upon receipt of . . . [the T-3] Notice of Default,” which is presumed to occur “on the fifth date following the date of mailing.” Third, the majority ignored precedent of this Court and other appellate courts that the statute of limitations runs from when a litigant knew or should have known of the determination she is challenging. The Order failed to address the Housing Authority’s alternative argument that even if Petitioner did not receive the T-3 Notice – which she did not establish – the four-month statute of limitations began to run in July 2010 at the latest, when Petitioner knew the Housing Authority had terminated her Section 8 subsidy because she had (1) received from her landlord a copy of a letter the Housing Authority sent to her landlord notifying it of her termination from the Section 8 program; (2) written a letter to the Housing Authority acknowledging she had been informed of her termination; and (3) received a responsive letter from the Housing Authority, confirming it had 6 terminated her participation in the Section 8 program the month before for her failure to comply with the annual recertification process and her case would remain closed. Petitioner still failed to commence her Article 78 proceeding until more than 19 months after when she admits she received the Housing Authority’s response. As the dissenting justice correctly explained, even if Petitioner had rebutted the presumption she received the T-3 Notice, which she did not, this proceeding is time-barred because “the record conclusively demonstrates that the petitioner had actual notice of the Housing Authority’s final determination . . . in July 2010, and the proceeding was not brought within four months after this later date.” Nothing in Williams precludes applying the knew-or-should-have-known analysis. As the dissent correctly stated, Williams does not “purport to alter” “the applicable case law which defines when an agency determination becomes ‘final and binding’ for the purposes of CPLR 217(1).” The Second Department’s decision would result in a toll of the statute of limitations period indefinitely, regardless of when a former participant becomes aware of the determination, if the Housing Authority cannot locate a record to establish it mailed all three notices, no matter how many years the former participant waits to assert a claim. Parties, however, cannot contract to extend or toll the statute of limitations before a cause of action accrues. 7 Fourth, the Order conflicts with this Court’s precedent holding a Court may not decide time-barred claims. The Housing Authority’s alleged failure to comply with Williams in terminating Petitioner’s participation in the Section 8 program is precisely the type of claim Petitioner should have timely raised. Because the statute of limitations bars claims regardless of whether they have merit, the majority erred in considering the merits of Petitioner’s time-barred claim. For each of these reasons, as discussed more fully below, this Court should reverse the Order and dismiss this proceeding as barred by the statute of limitations. JURISDICTION This Court has jurisdiction to hear this appeal under CPLR section 5602(b)(1) because the Second Department granted leave to appeal its Order, which did not finally determine the proceeding. Petitioner served the Housing Authority with notice of entry of the Order on January 28, 2014. On February 20, 2014, the Housing Authority moved before the Second Department for leave to appeal to this Court. On March 28, 2014, the Second Department granted the Housing Authority’s motion. 8 QUESTIONS PRESENTED The appeal to this Court raises for consideration the following questions for review: Whether the Order affirming the lower court’s denial of the Housing Authority’s cross-motion to dismiss this proceeding challenging Petitioner’s termination from the Section 8 rental subsidy program more than 21 months earlier because it is barred by the four-month statute of limitations: (a) conflicts with precedent of this Court and other appellate courts holding (1) statutes of limitations must be strictly enforced to provide repose from stale claims and permit rational planning; (2) consent decrees should be construed as contracts and, under Williams, the statute of limitations for challenging termination from the Section 8 program runs from the participant’s receipt of the T-3 Notice; (3) alternatively, the statute of limitations runs from when the party knew or should have known of the determination; (4) parties cannot contract to extend or toll the statute of limitations before a cause of action accrues; and (5) a court cannot consider the merits of a time-barred claim; and (b) conflicts with state law prohibiting a court from extending the statute of limitations. The Housing Authority respectfully submits this Court should answer these questions in the affirmative. 9 BACKGROUND Parties The Housing Authority is one of the agencies that administer the Section 8 program in the City of New York through which the federal government provides rent subsidies to lower-income families to enable them to rent privately owned housing. See generally 42 U.S.C. § 1437f; 24 C.F.R. § 982 et seq. The Housing Authority administers its Section 8 program in accordance with regulations and directives promulgated by the United States Department of Housing and Urban Development (“HUD”). See Record on Appeal (“R”) 66 at ¶ 3. Petitioner is a former participant in the Housing Authority’s Section 8 program. See R 233-34 at ¶¶ 1 & 3. Applicable Federal Regulations One form of Section 8 housing assistance is tenant-based in which the participant uses a HUD-funded housing voucher to obtain a subsidy for a portion of the rent at a privately owned apartment building. The tenant-based subsidy involves four distinct legal relationships: (1) the relationship between the Housing Authority and the participant governed by the voucher; (2) the relationship between the participant and the landlord governed by the lease (see 24 C.F.R. §§ 982.308(a)-(d)); (3) the relationship between the Housing Authority and the landlord governed by a Housing Assistance Payments (“HAP”) contract, whereby 10 the Housing Authority agrees to pay the difference between the contract rent and the tenant’s share of the rent (see 24 C.F.R. §§ 982.305(c) & (e); 24 C.F.R. § 982.451); and (4) the relationship between the Housing Authority and HUD, which regulates and finances the voucher program pursuant to an Annual Contributions Contract (see 24 C.F.R. § 982.151(a)). Generally, tenants who receive Section 8 rental assistance are required to pay 30 percent of their income for rent. See R 66- 67 at ¶ 4. Federal regulations require Section 8 recipients to regularly furnish the Housing Authority with information regarding their income. These regulations also authorize the Housing Authority to terminate a Section 8 subsidy if the recipient fails to comply. See R 67 at ¶ 5; 24 C.F.R. §§ 982.551 & 982.552. Williams Consent Judgment and Subsidy Termination Procedures Williams sets forth the notice and hearing procedures the Housing Authority follows before terminating a participant’s Section 8 subsidy, including sending a warning notice, a T-1 Notice, and a T-3 Notice to the participant, all of which inform the participant that he or she has violated a program obligation, give the participant an opportunity to resolve the matter, and warn the participant that the Housing Authority will terminate the subsidy absent a resolution or a request for a hearing. See R 67 at ¶ 6; R 79-80. Williams explicitly states the T-3 Notice “shall have the same force and effect as a determination after a hearing to terminate the 11 subsidy.” R 80 at ¶ 3(e). Williams establishes “for the purposes of Section 217 and Article 78 of the Civil Practice Law and Rules, the determination to terminate a subsidy shall, in all cases, become final and binding upon receipt of . . . [the T-3] Notice of Default” (R 88 at ¶ 22(f)), which is presumed to occur “on the fifth date following the date of mailing” (R 88 at ¶ 22(g)). At the time relevant to this proceeding, the Housing Authority’s regular business practice was to mail the T-3 Notice by both certified and regular mail. When the Housing Authority prepared a copy of the T-3 Notice to be mailed by certified mail, it also prepared a copy of the T-3 Notice to be mailed by regular mail. See R 201 at ¶¶ 3-6. The Housing Authority submitted its certified mail to the United States Postal Service (“USPS”) with a mail log, listing the certified mail numbers and names and addresses for each piece of mail. See R 200 at ¶ 4. The USPS certified it had received and accepted the certified mail by stamping the mail log. See R 201-02 at ¶ 7. Termination of Petitioner’s Subsidy In May 2010, after Petitioner failed to submit her complete annual income certification documents, the Housing Authority mailed a T-3 Notice to Petitioner at her apartment by certified and regular mail consistent with its regular business practice. See R 200-02 at ¶¶ 2-7; R 211-12 at ¶¶ 2-4. An entry of the certified mail number for the T-3 Notice, together with Petitioner’s name and address, was 12 made in a T-3 mail log. See R 201 at ¶ 4; R 207. The USPS returned the T-3 mail log to the Housing Authority with the USPS’s stamp attesting to its receipt of the listed items on “MAY 17 2010.” See R 201-02 at ¶ 7; R 207. The USPS Track and Confirm database shows the USPS left notice of the certified mail for Petitioner on May 18, 2010. See R 201-02 at ¶ 7; R 209. The T-3 Notice notified Petitioner she had violated her obligations by failing to provide proof of her income. The T-3 Notice further informed Petitioner the Housing Authority would terminate her Section 8 subsidy 45 days after the letter if she did not request a hearing within that period. See R 204. On May 13, 2010, the Housing Authority informed Petitioner’s landlord it was terminating Petitioner from the Section 8 program effective June 30, 2010, more than 45 days after the date of the T-3 Notice, for failure to comply with her annual recertification obligation. See R 116; R 68-69 at ¶ 9. Petitioner admits her landlord received this letter and sent a copy of it to her “on or about June 15, 2010.” R 235 at ¶ 9; R 69 at ¶ 9. On June 23, 2010, the Housing Authority again informed Petitioner’s landlord it was terminating Petitioner from the Section 8 program effective June 30, 2010. See R 118; R 69 at ¶ 9. Petitioner never requested a hearing to challenge the termination of the subsidy. See R 69 at ¶ 10. Petitioner wrote a letter to the Housing Authority, dated June 29, 2010, in which she states “[t]hey told me my Section 8 was 13 terminated.” R 248; see R 69 at ¶ 10. The Housing Authority’s Leased Housing Correspondence Unit responded to Petitioner by letter dated July 9, 2010, confirming the Housing Authority had terminated her participation in the Section 8 program for her failure to comply with the annual recertification process, and her case would remain closed. See R 124; R 69 at ¶ 10. Petitioner admits she received this response in July 2010. See R 236 at ¶ 14. This Article 78 Proceeding At the earliest, Petitioner commenced this Article 78 proceeding on February 28, 2012, when she filed the Request for Judicial Intervention. See R 126; R 69 at ¶ 11. Petitioner argued she did not receive the warning notice, the T-1 Notice, or the T-3 Notice. See R 237-38 at ¶¶ 18-23. The Housing Authority cross-moved to dismiss the proceeding as time-barred by the four-month statute of limitations. See R 61-214. The Housing Authority proved by the affidavits of two employees that it mailed its final and binding determination, the T-3 Notice, to Petitioner by both regular and certified mail in May 2010, over 21 months before Petitioner commenced this proceeding in February 2012. See R 126, 199-212. The lower court found this proceeding to be timely and denied the Housing Authority’s cross-motion to dismiss because the Housing Authority allegedly failed to send a warning letter or a T-1 Notice to Petitioner. See R 19. The Second 14 Department granted the Housing Authority’s motion for leave to appeal the Supreme Court’s order. See R 15. In a split decision, the Second Department affirmed the Supreme Court’s order.2 Although the majority acknowledged the statute of limitations under Williams begins to run upon the participant’s receipt of the T-3 Notice and did not identify any deficiencies in the Housing Authority’s proof it mailed that notice, it affirmed the Supreme Court’s order because the Housing Authority did not prove it mailed a warning notice and the T-1 Notice to Petitioner. See R 8. The majority acknowledged, but disagreed with and declined to follow, Lopez v. New York City Hous. Auth., 93 A.D. 3d 448 (1st Dep’t 2012), in which the First Department dismissed as untimely the petitioner’s Article 78 proceeding challenging her termination from the Section 8 program because she did not commence it within four months of her receipt of the T-3 Notice, even though the Housing Authority did not prove it first sent the warning notice. See id. The Order did not specifically address the Housing Authority’s alternative argument that the statute of limitations began to run when Petitioner knew her Section 8 subsidy had been terminated but stated the Housing Authority’s “remaining contentions either are without merit or have been rendered academic in light of our determination.” Id. 2 On the same day the Second Department issued the Order in this case, it also issued a decision in Dial v. Rhea, 111 A.D.3d 720 (2d Dep’t 2013), affirming the lower court’s denial of the Housing Authority’s cross-motion to dismiss another Article 78 proceeding challenging the termination of a Section 8 subsidy. On April 29, 2014, the Second Department granted the Housing Authority’s motion for leave to appeal its order in Dial to this Court. 15 Justice Robert J. Miller dissented and explained, “[t]he terms of the Williams first partial consent judgment do not purport to alter the statutorily- prescribed limitations period enacted by the Legislature. To the contrary, the Williams first partial consent judgment incorporates ‘Section 217 . . . of the Civil Practice Law and Rules.’” R 12. The dissent concluded the Housing Authority “established, prima facie, that this proceeding was untimely, since it was commenced more than 1½ years after the final determination that the petitioner seeks to annul and that, in response to this prima facie showing, the petitioner failed to raise a question of fact.” R 10. “[E]ven if the [P]etitioner had adequately rebutted the presumption of receipt of the T-3 [Notice] established by the Housing Authority’s proof of mailing, the petitioner nonetheless failed to raise a question of fact as to whether the proceeding was untimely, since the state of limitations would still have begun to run when the [P]etitioner concededly had notice of the Housing Authority’s final determination in July 2010, and the proceeding was not brought within four months after this later date.” R 11. The dissent further noted, “[t]he fact that an agency may or may not have followed proper procedure in reaching its determination relates to the merits of the underlying petition. It does not affect the finality of the agency’s determination for statute of limitations purposes.” R 12. 16 ARGUMENT POINT I THE MAJORITY ERRED IN FAILING TO DISMISS THIS PROCEEDING AS BARRED BY THE STATUTE OF LIMITATIONS A. Courts Must Strictly Enforce the Statute of Limitations Under section 201 of the CPLR, “[a]n action . . . must be commenced within the time specified in [Article 2 of the CPLR on limitations of time] unless a different time is prescribed by law or a shorter time is prescribed by written agreement. No court shall extend the time limited by law for the commencement of an action.” Section 217(1) of the CPLR states, “[u]nless a shorter time is provided in the law authorizing the proceeding, a proceeding against a body or officer must be commenced within four months after the determination to be reviewed becomes final and binding upon the petitioner.” CPLR § 217(1). As this Court has explained in strictly enforcing the statute of limitations, the New York State Legislature deliberately imposed a short statute of limitations to protect government operations from stale litigation and permit rational planning for government agencies charged with allocating scarce resources funded by taxpayer dollars. See Best Payphones, Inc. v. Department of Info. Tech. & Telcomms., 5 N.Y.3d 30, 34 (2005) (“[a]n article 78 proceeding must be brought within four months after the determination to be reviewed becomes final and binding upon the 17 petitioner. A strong public policy underlies the abbreviated statutory time frame: the operation of government agencies should not be unnecessarily clouded by potential litigation[.]”) (citations and quotations omitted); New York City Health & Hosps. Corp. v. McBarnette, 84 N.Y.2d 194, 205 (1994) (“A rule that requires those subject to regulatory decisions such as Medicaid rate-making to bring their challenges promptly facilitates rational planning by all concerned parties[.]”); Solnick v. Whalen, 49 N.Y.2d 224, 232 (1980) (strict adherence to the statute of limitations is grounded in a “strong policy, vital to the conduct of certain kinds of governmental affairs, that the operation of government not be trammeled by stale litigation and stale determinations”) (citation omitted). For example, the Housing Authority cannot adequately plan and budget to effectively administer the Section 8 program if terminated participants reappear years or even decades later to claim new vouchers and a share of the Housing Authority’s limited funding. A stale claim is especially prejudicial to the Housing Authority because HUD only permits the Housing Authority to use current fiscal year funds to pay current fiscal year HAP contracts. See PIH 2012-9 at ¶ 9, found at portal.hud.gov/huddoc/pih2012-9.pdf. HUD does not permit the Housing Authority to make retroactive subsidy payments using current fiscal year funds but instead requires the retroactive payments to be paid using available program 18 reserve funds, which are held by HUD and which the Housing Authority no longer can rely on. See id. Furthermore, if agencies cannot rely on the finality of their determinations after the statute of limitations has run, they will be forced to store documents and information for an indeterminate period of time or risk losing court cases in the future because they are unable to prove they complied with all procedural requirements in making a years- or decades-old determination. Even if an agency expends considerable resources in an attempt to store documents and information relating to old determinations, it may lose them for any one of a number of reasons, including natural disaster, technical failure, or human error. As discussed below, the Second Department erred by not strictly enforcing the statute of limitations in this case. If left undisturbed, the Order will deprive the Housing Authority and parties like it of the repose the Legislature saw fit to provide. B. This Proceeding Is Time-Barred Based on Petitioner’s Receipt of the T-3 Notice Consent judgments “should be construed basically as contracts.” United States v. International Bhd. of Teamsters, 998 F.2d 1101, 1106 (2d Cir. 1993) (citations omitted). “A court may not replace the terms of a consent decree with its own, no matter how much of an improvement it would make in effectuating the decree’s goals.” Teamsters, 998 F.2d at 1107. While courts do have “equitable powers to enforce consent decrees, such power exists only to ensure compliance 19 with the decrees’ terms.” E.E.O.C. v. New York Times Co., 196 F.3d 72, 78 (2d Cir. 1999) (citing United States v. Local 359, United Seafood Workers, 55 F.3d 64, 69 (2d Cir. 1995)). A court reviewing a contract “may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing.” Consedine v. Portville Ctr. Sch. Dist., 12 N.Y.3d 286, 293 (2009) (quotations and citations omitted). In the Order, the majority acknowledged that under paragraph 22(f) of Williams, the T-3 Notice is the final and binding determination that triggers the running of the statute of limitations for Article 78 review. See R 8 (“Pursuant to paragraph 22(f) of the Williams first partial consent judgment, the four-month statute of limitations of CPLR 217 begins to run on the date of receipt of the [T-3 Notice]”); see R 88 at ¶¶ 22(f) & (g) (“for the purposes of Section 217 and Article 78 of the Civil Practice Law and Rules, the determination to terminate a subsidy shall, in all cases, become final and binding upon receipt of . . . [the T-3] Notice of Default,” which is presumed to occur “on the fifth date following the date of mailing.”). The Housing Authority mailed its final determination, the T-3 Notice, to Petitioner by both certified and regular mail on May 17, 2010. See R 200-202 at ¶¶ 2-7; R 211-12 at ¶¶ 2-4. Petitioner is presumed to have received the T-3 Notice 20 within five days of its mailing, or by May 22, 2010.3 See R 88 at ¶ 22(g); CPLR § 2103(b)(2). Pursuant to CPLR 217(1), the statute of limitations expired on September 22, 2010. Petitioner, however, did not commence this proceeding until February 28, 2012, more than 17 months after the statute of limitations expired. See R 126. Thus, the Second Department should have reversed the lower court’s order and dismissed this proceeding as untimely. See Parks v. New York City Hous. Auth., 100 A.D.3d 407, 408 (1st Dep’t 2012) (“Pursuant to paragraph 22(f) of the first partial consent judgment in Williams . . . the four-month statute of limitations of CPLR 217 began to run on the date of receipt of” the T-3 Notice); Lopez, 93 A.D.3d at 448 (same), rev’g 30 Misc. 3d 1237(A); Fernandez v. New York City Hous. Auth., 284 A.D.2d 202, 202 (1st Dep’t 2001) (“Under paragraph 3 The Second Department did not credit Petitioner’s conclusory claim she did not receive the T-3 Notice. See R 236 at ¶ 15. The affidavits of Housing Authority employees establish the Housing Authority properly mailed the T-3 Notice to Petitioner by both certified mail and regular mail. See R 199-212; R 68 at ¶ 8. Thus, the Housing Authority is entitled to a presumption of receipt, which Petitioner cannot rebut with a bald claim of non-receipt. See Nassau Ins. Co. v. Murray, 46 N.Y.2d 828, 829-30 (1978) (“Denial of receipt by the insureds, standing alone, is insufficient to rebut the presumption.”); Northern v. Hernandez, 17 A.D.3d 285, 286 (1st Dep’t 2005) (“A mere conclusory denial of receipt would be insufficient to rebut that presumption [of receipt]”); Rodriguez v. Wing, 251 A.D.2d 335, 336 (2d Dep’t 1998) (“[T]he conclusory assertions of the petitioner of lack of receipt were insufficient to rebut the presumption of mailing.”) (citations omitted). Petitioner asserts she “may” have rebutted the presumption of receipt by raising “more than a bald assertion” of non-receipt because her address on the mail log “could have been misconstrued by the [USPS because] Petitioner’s apartment number is hard to make out and it appears the letter ‘N’ was superimposed on the number ‘8.’” R 58 at ¶ 4 (emphasis added). Petitioner’s equivocal, hypothetical assertion fails. As explained in the affidavit of one of its employees, the Housing Authority placed the T-3 Notice in “window” envelopes so Petitioner’s address as printed on the T-3 Notice showed through the envelope’s window. See R 201 at ¶¶ 3, 5. Petitioner has not alleged any defect in the address printed on the T-3 Notice. Accordingly, any supposed confusion resulting from the handwriting on the mail log could not have affected the USPS’s delivery of the window envelopes containing the properly addressed T-3 Notice. 21 22(f) of the first partial consent judgment in Williams . . . the four-month statute of limitations of CPLR 217 began to run on the date of receipt of” the T-3 Notice). Instead of strictly enforcing the statute of limitations, the majority imposed on the Housing Authority the “burden of proving compliance with the three-notice requirement” for the statute of limitations to run. See R 8; see also Dial, 111 A.D.3d at 722 (the Housing Authority has the “burden of satisfying the condition precedent of serving all three notices upon the Section 8 participant before its determination to terminate a participant’s subsidy can be considered final and binding upon the participant”). The majority concluded the Housing Authority’s alleged failure to send the warning letter and the T-1 Notice meant “the statute of limitations was not properly triggered and did not begin to run.” R 8. This analysis violated CPLR 201 and appellate precedent. As the dissent explained, Williams does not purport to alter “the statutorily – prescribed limitations period enacted by the Legislature.” “To the contrary, [Williams] incorporates Section 217 . . . of the Civil Practice Law and Rules.” R 12. The dissent is correct. If the parties had intended to make the running of the statute of limitations contingent on a tenant’s receipt of all three notices, they would clearly have stated that requirement. Instead, the parties identified receipt of a single document, the T-3 Notice, as the trigger for the statute of limitations. 22 C. This Proceeding Is Time-Barred Based on When Petitioner Knew of the Housing Authority’s Determination In cases where a party alleges lack of notice, this Court and the departments of the Appellate Division have held the statute of limitations runs from when the party knew or should have known of the determination. See ISCA Enters. v. City of New York, 77 N.Y.2d 688, 696-97 (1991) (affirming dismissal of proceeding as time-barred as measured from plaintiff’s actual notice because, even though plaintiff claimed not to have received notice of tax foreclosure in 1981, plaintiff “became aware of the tax foreclosure” in December 1983); Cloverleaf Realty of N.Y., Inc. v. Town of Wawayanda, 43 A.D.3d 419, 421 (2d Dep’t 2007) (“Merely because the plaintiffs couched their claim as an alleged denial of constitutional due process because they did not receive direct notice of a public hearing prior to a special assessment, it does not follow that the plaintiff’s compliance with the statute of limitations applicable to CPLR article 78 proceedings is abrogated, since it is undisputed that the plaintiffs received actual notice of the assessment.”); Riverkeeper, Inc. v. Crotty, 28 A.D.3d 957, 961 (3d Dep’t 2006) (claims challenging extension of permit beyond 1997 were time-barred because petitioners were “aware by 1997 that the extension had lasted more than the claimed permissible period” but did not file within four months); 90-92 Wadsworth Ave. Tenants Ass’n v. City of New York Dep’t of Hous. Preserv. & Dev., 227 A.D.2d 23 331, 331-32 (1st Dep’t 1996) (“In circumstances where a party would expect to receive notification of a determination, but has not, the Statute of Limitations begins to run when the party knows, or should have known, that it was aggrieved by the determination.”); McComb v. Town of Greenville, 163 A.D.2d 369, 370 (2d Dep’t 1990) (“[t]he four-month period must be measured from . . . th[e] date the plaintiff knew or should have known he was aggrieved”); Bigar v. Heller, 96 A.D.2d 567, 568 (2d Dep’t 1983) (“In a situation in which a party would be expected to receive notice of the determination of a public agency pursuant to statutory requirements, but has not, the Statute of Limitations begins to run when he knows or should know that he has been aggrieved by a determination.”). The First Department recently applied this knew-or-should-have-known analysis in a case involving Williams. In Shamblee v. Rhea, 110 A.D.3d 443 (1st Dep’t 2013), the First Department held the proceeding was time-barred because, regardless of whether petitioner timely received the T-3 Notice, she did not commence it within four months of when she “had to have known” the Housing Authority was no longer paying her Section 8 subsidy. See id. at 443 (citing 90-92 Wadsworth Ave. Tenants Ass’n, 227 A.D.2d at 331-32)). Similarly, the dissent in this case stated the proceeding is time-barred because Petitioner did not commence it within four months of July 2010, when she admits she received a letter from the Housing Authority stating it had terminated her Section 8 subsidy and would not 24 reopen her case. See R11 (“even if [P]etitioner had adequately rebutted the presumption of receipt . . . the statute of limitations would still have begun to run when [P]etitioner concededly had notice of the Housing Authority’s final determination in July 2010, and the proceeding was not brought within four months after this later date”). The majority should have applied the same analysis here. Instead, it declined – without explanation – to consider the Housing Authority’s argument this proceeding is time-barred as measured from when Petitioner knew the Housing Authority had terminated her Section 8 subsidy. See R 8 (the Housing Authority’s “remaining contentions either are without merit or have been rendered academic in light of our determination”). The majority’s failure even to acknowledge Petitioner’s admission she knew her Section 8 subsidy was terminated is puzzling for two reasons. First, in other cases, the Second Department measured running of the statute of limitations from actual notice notwithstanding alleged deficiencies with notice requirements. See Cloverleaf Realty, 43 A.D.3d at 421; Bigar, 96 A.D.2d at 568. Second, in this case, the Second Department’s stated concern in using the mailing of the T-3 Notice as the benchmark triggering the running of the statute of limitations is that it would not give participants sufficient notice about the termination of their Section 8 subsidies (see Dial, 111 A.D.3d at 722; see also R 8 (citing Dial in support of rejection of statute of limitations defense)), 25 something Petitioner indisputably had here. The record shows there was no reason for the majority to doubt Petitioner knew the Housing Authority had terminated her Section 8 subsidy. Petitioner admits, “on or about June 15, 2010,” she received a copy of the letter the Housing Authority sent to the landlord stating it was terminating Petitioner from the Section 8 program effective June 30, 2010. See R 235 at ¶ 9; R 244. On June 29, 2010, Petitioner wrote to the Housing Authority and acknowledged “[t]hey told me my Section 8 was terminated.” R 120; see R 246, 248; R 236 at ¶ 13. Petitioner admits she received the Housing Authority’s response letter in July 2010 “informing her that her Section 8 subsidy was terminated by [the Housing Authority] on June 30, 2010.” R 236 at ¶ 14; see R 246. At the latest, the statute of limitations expired in November 2010, four months after Petitioner received the Housing Authority’s response letter in July 2010. Petitioner, however, did not commence this proceeding until February 28, 2012, and the majority erred in failing to reverse the lower court’s order and dismiss this time-barred proceeding. Williams does not preclude the Housing Authority from relying on the case law that holds the statute of limitations starts to run when a party knew or should have known of a determination. The dissent properly recognized Williams does not “purport to alter” “the applicable case law which defines when an agency determination becomes ‘final and binding’ for the purposes of CPLR 217(1).” R 26 12. The Second Department’s decision would result in a toll of the statute of limitations period indefinitely, regardless of when a former participant becomes aware of the determination, if the Housing Authority cannot locate a record to establish it mailed all three notices, no matter how many years the former participant waits to assert a claim. See R 8 (citing Dial in support of rejection of statute of limitations defense); Dial, 111 A.D.3d at 723 (“under circumstances such as those presented in this case, the statute of limitations would indefinitely be tolled” based on the Housing Authority’s alleged failure to mail the three termination notices pursuant to the Williams consent judgment). This holding would violate this Court’s precedent that parties cannot waive their right to assert the statute of limitations by contract before a cause of action accrues. See John J. Kassner & Co., Inc. v. City of New York, 46 N.Y.2d 544, 551 (1979) (“[i]f the agreement to “waive” or extend the Statute of Limitation is made at the inception of liability it is unenforceable because a party cannot ‘in advance, make a valid promise that a statute founded in public policy shall be inoperative’”) (citations omitted); Yeshiva Univ. v. Fidelity & Deposit Co. of Md., 116 A.D.2d 49, 51-52 (1st Dep’t 1986) (“An agreement to waive or even extend the Statute of Limitations, adopted at the inception of the contract and not after the cause of action has accrued, is against public policy and void”). Williams, which was executed in 1984, cannot constitute a tolling agreement for challenges to the 27 termination of Petitioner’s participation in the Section 8 program in 2010, 26 years later. POINT II THE MAJORITY ERRED IN CONSIDERING THE MERITS OF A TIME-BARRED CLAIM A reviewing court should not reach, much less decide, the merits of an untimely claim. See Zumpano v. Quinn, 6 N.Y.3d 666, 671 (2006) (refusing to address plaintiffs’ claims where the consolidated actions were time-barred and stating “[t]he merits of these claims are not before us and we have no occasion to pass upon the strength of the allegations”); Thornton v. New York City Hous. Auth., 100 A.D.3d 556, 557 (1st Dep’t 2012) (“This Court cannot extend the statute of limitations (see CPLR 201), nor does it have discretion to address the merits of petitioner’s other arguments”); Saunders v. Rhea, 92 A.D.3d 602, 603 (1st Dep’t 2012) (“[S]ince the proceeding is time-barred, petitioner’s argument that her right to due process was violated cannot be addressed.”); M & D Contrs. v. New York City Dep’t of Health, 233 A.D.2d 230, 231 (1st Dep’t 1996) (“As the proceeding is time-barred, petitioner’s argument that its right to due process was violated by the placement of liens on the property before it had been given notice of any violations cannot be addressed.”). If courts reached the merits to determine the timeliness of a claim, court would usurp the role of the Legislature by gutting the statute of limitations. Even meritorious claims must be timely brought. 28 The majority rejected the Housing Authority’s statute of limitations defense after concluding the Housing Authority’s termination of Petitioner’s Section 8 subsidy was “in violation of lawful procedure” because the Housing Authority allegedly “failed to mail to [P]etitioner either the warning letter or the [T-1 Notice].” R 8. Therefore, the majority expressly considered the merits of Petitioner’s claim in reaching its conclusion. See CPLR 7803(3) (listing possible grounds for an Article 78 proceeding, including “whether a determination was made in violation of lawful procedure”). The majority relies on Dial, decided on the same day as this Order, and two other cases, which are inapposite. Fair v. Finkel, 284 A.D.2d 126 (1st Dep’t 2001), a case involving public housing, not Section 8, is inapposite because the Housing Authority did not assert a statute of limitations defense in that case. See id. at 129. Robinson v. Martinez, 308 A.D.2d 355 (1st Dep’t 2003), another public housing case, is unavailing because, in that case, the First Department first found the proceeding was timely before holding the lower court properly granted the petition because the Housing Authority failed to comply with its procedures. See id. at 355. The majority’s reliance on these inapplicable First Department public housing cases is misplaced considering the majority then chose not to follow a relevant First Department Section 8 case, Lopez, which measured the statute of limitations from the T-3 Notice. See R 8 (citing Lopez with a “but see” signal); Dial, 111 A.D.3d at 722 (“To the extent that 29 the Appellate Division, First Department, holds differently, we disagree and decline to follow that holding.”) (citing Lopez). As the dissent explained, the majority erred in considering the merits of a time-barred claim: The fact that an agency may or may not have followed proper procedure in reaching its determination relates to the merits of the underlying petition. It does not affect the finality of the agency’s determination for statute of limitations purposes. To hold otherwise would effectively eliminate the statute of limitations for every determination that was made in violation of lawful procedure and would require courts to determine the merits of such petitions before they could determine when, if ever, the statute of limitations began to run. R 12. The majority’s conclusion is impermissibly based on a claim Petitioner failed to timely raise and conflicts with the precedent of this Court and of the First Department. CONCLUSION Based on the foregoing, Respondents-Appellants respectfully request this Court reverse the Order and dismiss this Article 78 proceeding in its entirety. Dated: . New York, NY May 23, 2014 Nancy M. Harnett Corina L. Leske Maria Termini, Of Counsel TO: Ferdinand Ubozoh, Esq The Legal Aid Society 111 Livingston Street, 7th Floor Brooklyn, NY 11201 (718) 422-2851 KELLY D. MACNEAL Actirig General Counsel New York City Housing Authority 250 Broadway, 9th Floor New York, NY 10007 (212) 776-5125 Attorneys for Respondents-Appellants By: Maria Termini, Of Counsel Attorneys for Petitioner-Respondent Tayinha Banos Moses Ginsberg, Esq. Gutman, Mintz, Baker & Sonnenfeldt, P.e. 813 Jericho Turnpike· New Hyde Park, NY 11040 (516) 775-7007 Attorneys for Respondent-Respondent Coney Island Towers, LLC 30 AFFIRMATION OF SERVICE BY OVERNIGHT MAIL . MARlA TERMINI, an attorney duly admitted to practice hiw in the State of New York, hereby affirms under penalties of perjury as follows: I am not a party to this proceeding, I am over 18 years of age, and I am an Agency Attorney with the New York City Housing Authority with offices at 250 Broadway, New York, NY 10007. On May 23, 2014, I served three copies of the . within Brief of Respondents-Appellants upon: Ferdinand Ubozoh, Esq The Legal Aid Society III Livingston Street, 7th Floor Brooklyn, NY 11201 (718) 422-2851 Attorneys for Petitioner-Respondent Tayinha Banos Moses Ginsberg, Esq. Gutman, Mintz, Baker & Sonnenfeldt, P.C. 813 Jericho Turnpike New Hyde Park, NY 11040 (516) 775-7007 Attorneys for Respondent-Respondent Coney Island Towers, LLC by placing true copies of these papers in postage paid properly addressed envelopes, addressed as set forth above, and depositing them in a receptacle under the exclusive care and custody of UPS Express for overnight delivery service for delivery within the State of New York, to arrive on May 27, 2014. Dated: New York, NY May 23, 2014 Maria Termini