Corsello v. Verizon NY, Inc.

Citations: 967 N.E.2d 1177; 18 N.Y.3d 777; 944 N.Y.S.2d 732; 2012 NY Slip Op 2343Docket: 51

Court: New York Court of Appeals; March 29, 2012; New York; State Supreme Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Verizon New York, Inc. attached a terminal box to a building owned by the plaintiffs, enabling it to transmit communications to its customers in multiple buildings. The plaintiffs allege that Verizon effectively seized their property without compensation and misled them into believing no payment was due. The court recognizes the plaintiffs' valid inverse condemnation claim for just compensation, stating it is not time-barred. However, their claims for a violation of General Business Law § 349 are dismissed due to the statute of limitations, and their unjust enrichment claim is deemed legally insufficient. The court also affirms the lower courts' decision to deny the plaintiffs' motion for class certification. The plaintiffs' complaint includes claims for inverse condemnation, unjust enrichment, trespass, and deceptive trade practices. While the Supreme Court dismissed the unjust enrichment claim, it upheld the claims for inverse condemnation, trespass, and General Business Law violations. The Appellate Division modified this ruling, confirming the sufficiency of the inverse condemnation claim but ultimately dismissing it based on the statute of limitations.

The court reinstated the unjust enrichment claim and upheld the General Business Law claim in Corsello v Verizon N.Y. Inc., while also affirming the denial of class certification. The Appellate Division modified the order concerning Verizon's motion to dismiss, reinstating the inverse condemnation claim but dismissing two other claims. It affirmed the denial of class certification, agreeing with lower courts that plaintiffs have a valid inverse condemnation claim. Under Transportation Corporations Law § 27, Verizon has the authority to attach cables to private property, which triggers compensation obligations if owners and the corporation cannot agree on terms. Plaintiffs allege Verizon exercised this power by attaching equipment to their building without compensation, invoking constitutional takings clauses. The courts based their decision on Loretto v Teleprompter Manhattan CATV Corp., where the Supreme Court recognized similar actions as a constitutional taking. Verizon contends that the plaintiffs' claim is merely a trespass, arguing that it has not formally exercised its statutory right and thus cannot be liable for inverse condemnation. The court clarified that inverse condemnation can arise even without a formal taking and noted that the legal concept has evolved, emphasizing that it can be an equitable remedy in trespass cases where statutory authority exists but has not been exercised.

The owner of a property is entitled to damages for trespass but is not limited to monetary compensation; they may seek equitable relief to prevent ongoing trespass. In such cases, the court can assess potential damages from continued trespass and may require that, upon payment of these damages, the owner conveys rights to the trespasser, thereby avoiding an injunction. If the trespasser refuses to pay, an injunction will be granted. This framework, established in Pappenheim, allows the trespasser the choice between compensating for the property or facing an injunction. The term "inverse condemnation" was not used in Pappenheim but appeared later in Ferguson, referring to an equitable resolution of property disputes. Over time, "inverse condemnation" evolved to describe a landowner's right to compensation for de facto property takings without formal condemnation proceedings. Modern case law supports that continuous, permanent trespass can constitute a de facto taking, allowing property owners to seek compensation directly from entities exercising eminent domain powers. The argument presented by Verizon challenges the contemporary understanding of inverse condemnation, which recognizes it as a rightful claim for damages rather than a mere option for trespassers.

A proposed limitation on property owners' rights is rejected, as it would be inconsistent with modern legal authorities and unjust. Such a limitation would allow an entity with eminent domain power to temporarily occupy property while facing only damages for trespass, thus deferring the decision on acquisition or abandonment. The court agrees with the Appellate Division's view that a 'continuous, permanent trespass' could be deemed a 'de facto taking.' However, the endorsement of Tuffley's assertion that inverse condemnation is the sole remedy for entities with eminent domain power is not implied, and claims for trespass and ejectment remain viable. A pending trespass claim in this case is acknowledged, and the court refrains from deciding which of the plaintiffs' theories—trespass or inverse condemnation—might succeed based on the nature of the property occupation. The court also clarifies that it does not suggest an entity with eminent domain power can claim a de facto taking without facing trespass or ejectment claims. The court confirms that the complaint alleges sufficient facts for a claim of inverse condemnation based on a continuous and permanent occupation. 

The Appellate Division determined that inverse condemnation actions are subject to a three-year statute of limitations from the time of taking, which is not contested by the plaintiffs. Under the assumption that this ruling is correct, the plaintiffs' claim would be time-barred unless Real Property Law § 261 applies. The court concludes that § 261 is applicable, thus making the claim timely. This statute prevents the presumption of a grant or the establishment of a perpetual right due to the passage of time for attachments like wires or cables on private property. Verizon's argument that this statute does not pertain to inverse condemnation claims is rejected as overly narrow, undermining the statute's intent to protect property owners from unlawful attachments that could negate their remedies over time.

Section 261, enacted in 1909, initially required property owners to seek relief through actions for trespass or ejectment, where companies could defend using adverse possession or prescriptive easement. Currently, owners can pursue inverse condemnation actions, allowing companies to assert a statute of limitations defense based on the passage of time, similar to prior defenses. Despite changes in legal doctrines, the intent of section 261 should prevent a lapse-of-time defense from succeeding, affirming that the plaintiffs' inverse condemnation claim is not time-barred.

Conversely, the plaintiffs' claim under the General Business Law (GBL) is barred by the statute of limitations. GBL § 349 prohibits deceptive business practices and allows injured parties to recover damages. The plaintiffs allege that Verizon deceptively attached a box to their building without informing them of their entitlement to compensation and falsely claimed a right to affix the box. While these allegations might support a valid claim under GBL § 349, they fall under a three-year limitations period outlined in CPLR 214 (2). The complaint does not establish any successful deception within three years prior to filing, validating Verizon's statute of limitations defense.

The Appellate Division previously held that Verizon was estopped from raising this defense due to alleged concealment of wrongdoing, referencing cases where there were additional acts of deception. However, the current case differs as the plaintiffs did not allege any subsequent misrepresentation beyond the initial acts of deception. To invoke equitable estoppel, plaintiffs must demonstrate specific actions by the defendants that impeded timely suit filing, which they failed to do. Furthermore, the plaintiffs' reliance on Gaidon, suggesting that the statute of limitations begins upon the discovery of deception, is misinterpreted; Gaidon clarifies that the statute runs from when the plaintiff suffered injury.

In Gaidon, the court addressed alleged deceptive practices involving life insurance policies, where the defendants misrepresented the likelihood of dividends covering premiums. The court determined that plaintiffs sustained no injury and that the statute of limitations did not begin until their unrealistic expectations were unmet. In the current case involving Verizon, the plaintiffs' injury occurred when they relied on Verizon's omissions and representations and failed to demand payment or removal of a box attached to their property, which happened over three years prior to filing, rendering their General Business Law § 349 claim time-barred.

The court also found that the plaintiffs failed to establish a valid unjust enrichment claim, which requires that the defendant received a benefit that should justly be paid to the plaintiff. Unjust enrichment cannot serve as a substitute for failing contract or tort claims. Here, the plaintiffs asserted actionable wrongs against Verizon, including trespass and deception regarding compensation. Thus, if these claims are valid, the unjust enrichment claim is duplicative; if they fail, the unjust enrichment claim cannot address those defects.

Regarding class certification, the court noted that it typically reviews such decisions for abuse of discretion. The lower courts did not abuse their discretion in denying class certification despite the case appearing suitable for it. The plaintiffs alleged a systematic practice by Verizon of attaching equipment to private buildings without proper consent and failing to inform property owners of their rights, as described by an expert witness.

The case centers on class-wide issues regarding the legality of Verizon's practices and potential remedies. Plaintiffs argue their claims reflect those of a class of building owners, supported by allegations and expert testimony. However, Verizon's evidence challenges this narrative, presenting a 1911 signed document granting permission for cable attachment on the plaintiffs' building, which undermines their claims of being victims of an unauthorized "attach and run" policy. Additionally, Verizon submitted evidence of oral permissions granted by William Corsello in 1978 and 1986 for cable work on the property, despite no written documentation. Testimony from the plaintiffs' expert witness described Verizon's practices in a manner that did not support allegations of deception. This evidence raises significant doubts about the existence of the alleged unauthorized practices. As a result, the courts found that essential criteria for class action certification—common questions of law or fact and typicality of claims—were not met, justifying the denial of class certification. The Appellate Division's decision is modified to reinstate the plaintiffs' inverse condemnation claim while dismissing their General Business Law and unjust enrichment claims, affirming the denial of class action certification.