85 N.Y.2d 760 (1995)

The CPLR’s commencement-by-filing provisions apply to a Tax Law § 2016 proceeding originating in the Appellate Division, meaning that filing the notice of petition and petition with the clerk tolls the Statute of Limitations; however, proper service on the respondents is still required to obtain personal jurisdiction.

Summary

Spodek challenged a tax assessment by filing a notice of petition and petition with the Appellate Division on the last day of the statute of limitations. He failed to properly serve the respondents. The Court of Appeals addressed whether the commencement-by-filing rules applied to proceedings originating in the Appellate Division and held that they do, thus the statute of limitations was tolled. However, the Court affirmed the dismissal of the petition because Spodek failed to properly serve the respondents, a prerequisite for obtaining personal jurisdiction.

Facts

The Department of Taxation and Finance assessed Spodek $58,877 in transfer gains tax in August 1988. Spodek paid the tax, applied for a refund, and, after a partial refund was granted, requested a full refund hearing. The Tax Appeals Tribunal denied his full refund request on November 19, 1992. On March 19, 1993, the final day to commence a proceeding under the four-month statute of limitations, Spodek filed a notice of petition and petition for review with the Appellate Division. Spodek only mailed copies of the documents to the Department of Taxation and Finance, the Tax Appeals Tribunal, and the Attorney General’s office, failing to properly serve them.

Procedural History

The Commissioner moved to dismiss the proceeding as time-barred. The Appellate Division initially denied the motion, but after a hearing, dismissed the petition, holding Spodek failed to serve the respondents before the statute of limitations expired. The Appellate Division reasoned that the filing system only applies to actions commenced in Supreme Court, County Court and Surrogate’s Court, as the statutes refer to procedures inapplicable to proceedings originating in the Appellate Division. Spodek appealed to the Court of Appeals.

Issue(s)

1. Whether the CPLR’s commencement-by-filing provisions apply to a Tax Law § 2016 proceeding originating in the Appellate Division.
2. Whether, if the commencement-by-filing provisions apply, the petitioner’s failure to properly serve the respondents requires dismissal of the petition.

Holding

1. Yes, because Tax Law § 2016 states that such proceedings should be commenced “in the manner provided by article seventy-eight of the civil practice law and rules,” and CPLR 304, as amended, requires filing to commence a proceeding.
2. Yes, because filing tolls the statute of limitations, but proper service is still required to obtain personal jurisdiction over the respondents.

Court’s Reasoning

The Court of Appeals reasoned that Tax Law § 2016, read in conjunction with the CPLR, reasonably requires filing the petition with the clerk of the only court with jurisdiction over the matter – the Appellate Division, Third Department. The Court found no indication that the service of process requirement continues to survive in proceedings challenging determinations of the Tax Appeals Tribunal. While the filing provisions refer to proceedings in Supreme and County Court, lacking procedures applicable to the Appellate Division, this irregularity does not mean the Legislature intended to exclude these proceedings from CPLR 304. The Court emphasized that the Legislature specifically excluded lower courts from the commencement-by-filing act but took no such action regarding proceedings originating in the Appellate Division.

The Court referenced the 1994 amendments to the Real Property Tax Law, clarifying that filing marks commencement, to show legislative intent that all actions and proceedings not specifically excluded should fall under the 1992 commencement-by-filing act. The Court stated, “when the Legislature by the use of general language has given an act a general application, the failure to specify particular cases which it shall cover does not warrant the court in inferring that the Legislature intended their exclusion.” The Court noted the potential for confusion if different commencement rules existed for Article 78 proceedings based on where they originated. While the safest practice would be to file and serve within the limitations period, the Court found that the Legislature did not intend to exclude the instant proceeding from CPLR 304.

Despite finding that the proceeding was timely commenced, the Court affirmed the Appellate Division’s judgment because Spodek failed to properly serve the respondents and acquire personal jurisdiction over them.