New York Law Review

Tag: City of New York v. Verizon

  • City of New York v. Verizon New York, Inc., 5 N.Y.3d 255 (2005): Interpreting Penal Statutes Narrowly

    5 N.Y.3d 255 (2005)

    A statute imposing a penalty must be strictly construed, and any ambiguity in its language should be resolved in favor of the party against whom the penalty is sought.

    Summary

    The City of New York sought to fine Verizon for its delay in relocating above-ground telephone poles and wires pursuant to an “order out” related to a sewer construction project. The City relied on a provision of the New York City Administrative Code that mandates timely relocation of utility facilities when public works projects are underway. Verizon argued that the relevant code section applied only to underground facilities, not above-ground poles and wires. The New York Court of Appeals held that because the Administrative Code provision operated as a penal statute, it must be narrowly construed, and its language did not clearly encompass above-ground facilities. Therefore, the City could not assess a penalty against Verizon under that provision.

    Facts

    The City of New York hired a contractor to construct sewers in Queens. As part of the project, Verizon was notified in December 2000 that certain above-ground telephone poles and wires needed to be relocated. After failing to reach an agreement regarding the relocation plan, the City issued an “order out” on February 5, 2001, directing Verizon to move its facilities. Verizon complied with the order 103 days late, after negotiating a price for the work. The City then assessed a penalty of $515,000 against Verizon, calculated at $5,000 per day of delay.

    Procedural History

    The City initiated an enforcement proceeding in the Supreme Court to collect the penalty. Verizon moved to dismiss the action, arguing that the Administrative Code provision did not apply to above-ground facilities. The Supreme Court denied the motion. The Appellate Division affirmed the Supreme Court’s decision, with one Justice dissenting. The Appellate Division certified the question of whether its order was properly made to the New York Court of Appeals.

    Issue(s)

    Whether New York City Administrative Code § 24-521, which requires utility companies to relocate their facilities when necessary for public works projects, applies to above-ground facilities such as telephone poles and wires, thereby allowing the City to impose a penalty for delays in relocating such facilities.

    Holding

    No, because section 24-521, in conjunction with section 19-150, is a penal provision that must be strictly construed, and its language does not unambiguously extend to above-ground facilities like telephone poles and wires.

    Court’s Reasoning

    The Court of Appeals acknowledged that utility companies have a common-law obligation to relocate their facilities when they interfere with municipal projects, citing Transit Commn. v Long Is. R.R. Co., 253 NY 345, 351 (1930). The court stated the issue was whether the City could assess a fine based on the Administrative Code, rather than pursuing actual damages under common law. The Court found the language of section 24-521 ambiguous, noting that while it refers to “pipes, mains and conduits, and all fixtures and appliances connected therewith or attached thereto,” it does not explicitly mention above-ground or below-ground facilities. Because the statute refers to facilities being laid “in any street,” and the terms “pipes” and “mains” generally refer to underground infrastructure, the court construed the term “conduits” to apply only to underground facilities.

    The Court emphasized that because section 24-521 operates as a penal provision, it must be strictly construed. Quoting Osborne v International Ry. Co., 226 NY 421, 426 (1919), the court stated, “[a] statute awarding a penalty is to be strictly construed, and before a recovery can be had a case must be brought clearly within its terms.” The Court further noted that any reasonable doubt in the interpretation of a statute should be resolved in favor of the party facing the penalty, citing Goodspeed v Ithaca St. Ry. Co., 184 NY 351, 354 (1906). Since the City did not argue that the penalties were remedial, and violating the Code provision could lead to jail time, the Court declined to extend the statute’s reach to Verizon’s conduct regarding above-ground facilities. The court emphasized it was for the City Council, not the court, to clarify the Code text if it intended to cover above-ground facilities.