Lewis Tree Service, Inc. v. Fire Department of the City of New York, 66 N.Y.2d 667 (1985)

A determination by a comptroller regarding violations of labor law, if not challenged directly, cannot be collaterally attacked in a subsequent proceeding; however, a single determination does not result in debarment from future bidding on public contracts.

Summary

Lewis Tree Service, Inc. initiated an Article 78 proceeding to challenge the New York City Fire Department’s decision to award a tree-trimming contract to another bidder, despite Lewis Tree Service being the lowest bidder. The Fire Department’s decision was based on a prior determination by the Comptroller that Lewis Tree Service had violated Labor Law § 231(2) by failing to pay prevailing wages to exterminators under previous contracts with the New York City Housing Authority. The Court of Appeals held that the Comptroller’s unchallenged determination could not be collaterally attacked. However, because there was only one such determination, debarment was not warranted. While the contract in question had already been completed, the court converted the proceeding to a declaratory judgment action in favor of Lewis Tree Service, declaring they were not debarred from bidding on state or municipal contracts.

Facts

Lewis Tree Service, Inc. submitted the lowest bid for a tree-trimming contract with the New York City Fire Department. The Fire Department declined to award the contract to Lewis Tree Service. This decision was based on a previous determination by the City Comptroller. The Comptroller determined Lewis Tree Service had violated Labor Law § 231(2) by failing to pay prevailing wages and benefits to approximately 15 exterminators. These violations occurred under two prior tree-spraying contracts with the New York City Housing Authority.

Procedural History

Lewis Tree Service, Inc. commenced an Article 78 proceeding seeking to annul the Fire Department’s determination and compel the award of the contract. The lower courts’ rulings are not specified in this opinion. The Court of Appeals reviewed the case after the contract had already been awarded and completed.

Issue(s)

1. Whether a determination by the Comptroller regarding violations of Labor Law § 231(2), which was not challenged in a direct proceeding, can be collaterally attacked in a subsequent proceeding concerning a different contract?

2. Whether a single determination by the Comptroller of a Labor Law violation warrants debarment from future bidding on state or municipal contracts under Labor Law § 235(7)?

Holding

1. No, because the Comptroller’s determination, made under the authority vested in him by Labor Law § 230 (8), § 235 and Public Housing Law § 152, was never challenged in an article 78 proceeding, and, under settled principles, cannot be collaterally attacked.

2. No, because Labor Law § 235 (7) requires more than a single determination for debarment.

Court’s Reasoning

The Court of Appeals reasoned that the Comptroller’s determination regarding the Labor Law violations was made according to his statutory authority and was not challenged directly via an Article 78 proceeding. The court cited the principle that administrative determinations, once final, cannot be collaterally attacked in subsequent proceedings. The court referenced 2 Am Jur 2d, Administrative Law, §§ 491, 493 and Lacks v Lacks, 41 NY2d 71 in support of this principle. Allowing a collateral attack would undermine the finality and efficiency of administrative decisions. The court emphasized that the appropriate avenue for challenging the Comptroller’s determination was a direct challenge via an Article 78 proceeding. Regarding debarment, the court pointed to Matter of Dadson Plumbing Corp. v Goldin, 66 NY2d 718, clarifying that a single determination by the Comptroller is insufficient to trigger debarment from future bidding under Labor Law § 235 (7). Because the contract had already been completed, the court converted the proceeding into a declaratory judgment action, declaring that Lewis Tree Service was not debarred from bidding on State or municipal contracts. The court rejected the petitioner’s request for money damages.