author: ClPARICK, J.

text:
    [668 NE2d 395, 645 NYS2d 424]
    In the Matter of John Paterno, Inc., by and through John V. Paterno, as Sublicensee, et al., Respondents-Appellants, v Salvatore R. Curiale, as Superintendent of Insurance of the State of New York, Appellant-Respondent.
    Argued April 30, 1996;
    decided June 6, 1996

      POINTS OF COUNSEL

      Dennis C. Vacco, Attorney-General, New York City (Vincent Leong, Victoria A. Graffeo, Barbara Gott Billett, Thomas D. Hughes and Michael S. Belohlavek of counsel), for appellant-respondent.
    I. Respondent’s determination that petitioners’ long-standing violations of 11 NYCRR part 73 (Insurance Department Regulation 121) demonstrated untrustworthiness should not have been annulled by the Court below. (Matter of Gold v Lomenzo, 29 NY2d 468; Matter of Diona v Lomenzo, 26 AD2d 473; Matter of Eagle v Paterson, 57 NY2d 831; Matter of Smith v Paterson, 88 AD2d 917; Matter of Frank v Department of State, 14 AD2d 139; Matter of Pell v Board of Educ., 34 NY2d 222; 300 Gramatan Ave. Assocs. v State Div. of Human Rights, 45 NY2d 176; Matter of Bravakos v Ward, 146 AD2d 504; Matter of Rivera [State Line Delivery Serv. — Roberts], 69 NY2d 679; Matter of LaChance v Corbisiero, 147 AD2d 80.) II. The Court below abused its discretion in reducing the penalty. (Matter of Donati v Shaffer, 83 NY2d 828; Matter of Turner v Simpson, 60 NY2d 959; Kostika v Cuomo, 41 NY2d 673; Matter of Butterly & Green v Lomenzo, 36 NY2d 250.)

      Abrams & Martin, P. C., New York City (Kevin J. Spencer and Alan Jay Martin of counsel), for respondents-appellants.
    I. Regulation 121 does not apply to nonadmitted insurers. II. The record lacks substantial evidence to support respondent’s determination that there were 1,497 violations of Regulation 121. (Matter of Stork Rest. v Boland, 282 NY 256; 300 Gramatan Ave. Assocs. v State Div. of Human Rights, 45 NY2d 176.) III. The Court below’s unanimous order annulling respondent’s determination that petitioner was untrustworthy was proper. (Matter of Goldstein v Lewis, 90 AD2d 748, 59 NY2d 706; Matter of McKie v Corcoran, 162 AD2d 535, 76 NY2d 714.) IV. It is well within the Court below’s discretion to reduce the fine imposed. (Matter of Montuori v Corcoran, 160 AD2d 621, 76 NY2d 845.)
   OPINION OF THE COURT

ClPARICK, J.

This appeal centers on a determination by the Superintendent of Insurance of the State of New York that petitioners violated Insurance Department Regulation 121 (11 NYCRR part 73) by placing claims-made liquor liability policies in New York through an excess line broker. Petitioners commenced this CPLR article 78 proceeding challenging the Superintendent’s finding that petitioners violated Regulation 121 a total of 1,497 times and that petitioners demonstrated "untrustworthiness” within the meaning of Insurance Law § 2110 (a), and seeking to vacate the penalty imposed by the Superintendent of $45 for each violation for a total fine of $67,365. We conclude that the Superintendent’s determination should in all respects be upheld.

I.

Petitioners John Paterno, Inc., by John V. Paterno as sublicensee and principal, and John V. Paterno individually (collectively, Paterno), are licensed by the State of New York as an insurance agent, broker and consultant. Among other things, Paterno brokers liability insurance policies for owners of New York restaurants, bars and taverns. Starting in 1985, the market to place insurance risks for restaurant, bar and tavern owners in New York contracted, causing Paterno to turn to excess line brokers, which are entities statutorily permitted under certain conditions to procure insurance from insurers not authorized to do business in New York (see, Insurance Law § 2105 [a]; § 2117 [h]). Specifically, during the period 1987 through 1991, Paterno, acting as the broker for various New York establishments, used an excess line broker, V.P. Management, to procure claims-made liquor liability insurance policies from Homestead Insurance Company (Homestead), an insurer not authorized to do business in New York.

Claims-made policies provide liability coverage only when a claim is made against the insured within the policy period, whereas occurrence policies provide liability coverage for injury or damage that occurs within the policy period without regard to when the claim against the insured is asserted (see, 11 NYCRR 73.0 [a]; see generally, Ostrager and Newman, Insurance Coverage Disputes § 4.02 [b] [4], at 95-100 [8th ed]). The Insurance Department has concluded that "claims-made coverage tends to provide less protection than occurrence coverage [and] that claims-made coverage compared to occurrence coverage is a more complicated and confusing method of coverage that can create potential coverage gaps” (11 NYCRR 73.0 [c]). As a result, the Insurance Department promulgated Regulation 121, which dictates that, subject to certain exceptions, "[c]laims-made coverage [may] not be provided in any policy issued or renewed in this State” (11 NYCRR 73.2). The claims-made policies involved in this proceeding — claims-made liquor liability policies — are not among those specifically excepted from the prohibition and are thus outlawed (cf., 11 NYCRR 73.2 [a]).

As a general rule, the Insurance Law prohibits the sale in New York of insurance underwritten by insurers not authorized to conduct business in New York (Insurance Law § 2117 [a]; see, 11 NYCRR 27.0 [a]). A significant exception to this rule is that certain brokers, known as excess line brokers, are permitted by statute to procure insurance from unauthorized insurers (see, Insurance Law § 2105 [a]; § 2117 [h]), but only if they have been unable "after diligent effort” to procure the full amount of required insurance from authorized insurers (Insurance Law § 2118 [b] [1] [as amended by L 1986, ch 220, § 38], amended and redesignated § 2118 [b] [3] by L 1988, ch 630, § 3). Before 1994, and at all times relevant to this proceeding, Regulation 41 provided that "[n]o excess line broker shall place with an unauthorized insurer any risk, individual or group, which is not eligible for such placement under the provisions of the Insurance Law” (11 NYCRR 27.11 [repealed 1994]).

In April 1992, the Insurance Department charged Paterno with violating various statutes and regulations for its placement of Homestead policies, including placing claims-made policies in violation of Regulation 121 and engaging in untrustworthy or incompetent conduct within the meaning of Insurance Law § 2110 (a). After an administrative hearing, the Hearing Officer found that Paterno knowingly violated Regulation 121 by providing its clients with Homestead claims-made liquor liability policies, but recommended that no penalty be imposed on Paterno since it was acting in response to customer demand.

By determination after hearing, the Superintendent modified the Hearing Officer’s findings to recite that between 1987 and 1991, Paterno procured 1,497 Homestead claims-made liquor liability policies through an excess line broker on behalf of clients in New York State. The Superintendent also determined that Paterno’s repeated violation of Regulation 121 demonstrated untrustworthiness within the meaning of Insurance Law § 2110 (a), concluding, "I do not endorse the suggestion that a licensee may bow to customer preference in deciding to violate a regulation of the Department.” After reciting various mitigating factors, the Superintendent imposed a penalty of $45 for each of the 1,497 violations for a total penalty of $67,365.

Paterno thereafter commenced this CPLR article 78 proceeding for a judgment annulling the Superintendent’s determination. Upon transfer from Supreme Court, the Appellate Division upheld the Superintendent’s finding that Paterno had committed 1,497 violations of Regulation 121, but annulled the Superintendent’s determination of "untrustworthiness,” vacated the penalty of $45 per violation and remanded the matter for imposition of a fine not to exceed $10 per violation. The Appellate Division stated, "[W]e find, as did respondent’s own Hearing Officer, that the actions of the petitioners were dictated by 'market conditions’ and the absolute necessity of their clients to procure insurance coverage otherwise unavailable. In the circumstances, a determination that petitioners were 'untrustworthy’ is without foundation.” (217 AD2d 433.)

This Court granted the Superintendent’s motion and Pater-no’s cross motion for leave to appeal, and we now modify by dismissing the CPLR article 78 petition in its entirety.

II.

Applicability of Regulation 121

Paterno argues that the Superintendent erroneously interpreted Regulation 121 to apply to claims-made policies procured through excess line brokers. However, the Superintendent’s interpretation of Regulation 121, "if not irrational or unreasonable, will be upheld in deference to his special competence and expertise with respect to the insurance industry, unless it runs counter to the clear wording of a statutory provision” (Matter of New York Pub. Interest Research Group v New York State Dept. of Ins., 66 NY2d 444, 448; see also, Matter of Medical Malpractice Ins. Assn. v Superintendent of Ins., 72 NY2d 753, 761-762).

It is undisputed that Regulation 121, as a general rule, outlaws the placement of claims-made liquor liability policies in New York. What is disputed is whether this prohibition extends to claims-made policies procured through excess line brokers. In this regard, the Superintendent interpreted the former version of Regulation 41 (see, 11 NYCRR 27.11 [repealed 1994]), which prohibited excess line brokers from placing risks not "eligible” under law, as prohibiting the placement, through excess line brokers, of claims-made liquor liability policies. Based on the language of Regulations 41 and 121, the Superintendent’s interpretation is entirely reasonable (see, 2 Dunham, New York Insurance Law § 19.08 [1], at 19-89, n 4 ["If the risk would not be 'eligible’ under some provision of the Insurance Law, it is illegal coverage and cannot be obtained”] [citing 11 NYCRR 27.11]). Moreover, the 1994 amendment of Regulation 41, which exempted excess line brokers from the reach of Regulation 121 (see, 11 NYCRR 27.9 [a]), does not diminish the reasonableness of the Superintendent’s position in this case involving the previously applicable regulations. Thus, the Appellate Division properly deferred to the Superintendent’s interpretation of the regulations and upheld the finding that Paterno violated Regulation 121 by placing in New York, through an excess line broker, claims-made liquor liability policies.

Paterno nevertheless argues on its cross appeal that Regulation 121’s prohibition of claims-made policies does not apply to this case because Homestead is an unauthorized insurer beyond the regulatory reach of the Insurance Department. This argument is without merit. Whether Homestead is subject to the Insurance Department’s regulations is not relevant to this case. Paterno, a licensed New York insurance broker, is indisputably subject to these regulations and it is Paterno, not Homestead, which is charged with violating Regulation 121 by placing the prohibited claims-made policies.

The Determination of Untrustworthiness

The next issue is whether the Superintendent rationally determined that Paterno’s repeated violation of Regulation 121 demonstrated "untrustworthiness” within the meaning of Insurance Law § 2110 (a) (4). The Appellate Division, applying the wrong standard of review, overturned this finding based on its conclusion that Paterno acted according to the demands of the market and its intention was to serve, not deceive, its customers. However, the Superintendent had already addressed and rejected Paterno’s market demand defense by concluding, "I do not endorse the suggestion that a licensee may bow to customer preference in deciding to violate a regulation of the Department.”

The Superintendent’s interpretation is not irrational or contrary to statute and accords with the commonsense notion that one who repeatedly violates rules, whether deliberately or carelessly, is less reliable than one who does not (see, 11 NYCRR 27.0 [c] [2] ["failure by an excess line broker to comply with the requirements of this Part may be considered as evidence of * * * incompetency or untrustworthiness within the meaning of section 2110 (a) of the Insurance Law”]). Moreover, this interpretation is consistent with the type of showing that we have recognized as warranting a finding of untrustworthiness: "[T]here should be such factual presentation concerning acts or conduct by the licensee or his agent as would warrant a conclusion of unreliability, and which establishes that any confidence or reasonable expectation of fair dealing to the general public would be misplaced” (Matter of Gold v Lomenzo, 29 NY2d 468, 477 [quoting Matter of Chiaino v Lomenzo, 26 AD2d 469, 472] [involving regulation of real estate brokers]). Under the circumstances, the Appellate Division erred in not deferring to the Superintendent’s rational determination that Paterno’s repeated violation of Regulation 121 demonstrated "untrustworthiness” within the meaning of Insurance Law § 2110 (a) (see, Matter of New York Pub. Interest Research Group v New York State Dept. of Ins., 66 NY2d 444, 448, supra).

The Number of Violations of Regulation 121

Paterno contends that the Superintendent’s finding of 1,497 violations of Regulation 121, which was affirmed by the Appellate Division, is unsupported by substantial evidence. We disagree.

At the administrative hearing, an Insurance Department examiner testified that his staff reviewed the Homestead claims-made liquor liability policies placed with New York clients in which Paterno acted as the retail or producing broker, and counted a total of 1,497 policies that violated Regulation 121. Contrary to Paterno’s argument on appeal, the examiner testified that he included in his calculation only those policies, whether exclusively liquor liability policies or special multiperil policies, that provided liquor liability coverage on a claims-made basis, which constitutes substantial evidence to support the Superintendent’s determination that Paterno committed 1,497 violations of Regulation 121.

Judicial Review of Administrative Penalty

Based on its annulment of the determination of untrustworthiness and its belief that Paterno’s violation of Regulation 121 was attributable to market demand, the Appellate Division vacated the penalty set by the Superintendent at $45 for each violation and remanded the matter to the Superintendent with the instruction that the penalty not exceed $10 per violation. We have already upheld the Superintendent’s determination of untrustworthiness and further conclude that the Appellate Division’s vacatur of the administrative penalty based on its de nova weighing of mitigating factors was inappropriate.

Under CPLR 7803 (3), judicial review of an administrative punishment is guided by the "abuse of discretion” standard, which translates into a circumscribed judicial inquiry: the administrative penalty must be upheld unless it "shock[s] the judicial conscience” (Matter of Donati v Shaffer, 83 NY2d 828, 830 [citing Matter of Pell v Board of Educ., 34 NY2d 222, 233]). In this case, the Superintendent took into account various mitigating factors and imposed a fine of $45 for each violation instead of revoking or suspending Paterno’s license (see, Insurance Law § 2110 [a]) or imposing the maximum authorized fine of $500 per violation (see, Insurance Law § 2127). The Superintendent’s penalty, well within the statutory range, did not constitute an abuse of discretion and therefore must be upheld.

Accordingly, the order of the Appellate Division should be modified, with costs to appellant-respondent, by dismissing the petition in its entirety.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Levine concur.

Order modified, etc.

       Regulation 41 was amended in 1994 to exempt excess line brokers from Regulation 121’s prohibition of claims-made policies (see, 11 NYCRR 27.9 [a]). The effect of this exemption is that excess line brokers are now permitted to procure claims-made policies from unauthorized insurers, as long as the risk was declined by three authorized insurers (see, Insurance Law § 2118 [b] [4]) and the insured was advised in writing, before placement, that in the event of insolvency of the unauthorized insurer, losses would not be covered by any New York State security fund (see, 11 NYCRR 27.4 [e] [2]). The amendment, which took effect January 1, 1994, does not apply to this case which involves conduct from 1987 through 1991.


source: Caselaw Access Project

author: Simons, J.

license: Public Domain

text:
    [668 NE2d 399, 645 NYS2d 428]
    In the Matter of Insurance Premium Finance Association of New York State et al., Respondents, v New York State Department of Insurance et al., Appellants.
    Argued May 2, 1996;
    decided June 6, 1996

      POINTS OF COUNSEL

      Dennis C. Vacco, Attorney-General, New York City (August L. Fietkau, Victoria A. Graffeo, Kevin C. Reilly and Rosalie A. Hronsky of counsel), for New York State Department of Insurance and another, appellants.
    I. The State Administrative Procedure Act does not apply to the Superintendent’s approval of the Six Payment Plan amendment. (Matter of Bowley Assocs. v State of New York Ins. Dept., 98 AD2d 521, 63 NY2d 982; Matter of State Farm Mut. Auto. Ins. Co. [Wynns], 129 Misc 2d 661;
      Matter of 1777 Penfield Rd. Corp. v Morrison-Vega, 116 AD2d 1035; Matter of Goldberg v Kroeger, 81 AD2d 519, 56 NY2d 610; Incorporated Vil. of Great Neck Plaza v Nassau County Rent Guidelines Bd., 69 AD2d 528; Matter of Casillo v St. John’s Episcopal Hosp., 151 Misc 2d 420; People v Cull, 10 NY2d 123.) II. The Superintendent’s decision to approve the 1992 amendment without conducting a public hearing was neither arbitrary not capricious. (Matter of Associated Blind Hous. Dev. Corp. v State of New York Dept, of Pub. Serv., 142 AD2d 825; Matter of GASDA, Ltd. v Adduci, 179 AD2d 173.)

      Morrison Cohen Singer & Weinstein, LLP, New York City (Martin J. Hertz and Arthur J. Ciampi of counsel), for New York Automobile Insurance Plan, appellant.
    Amendments to the rules of private entities — such as the plan — are not subject to the State Administrative Procedure Act. (Incorporated Vil. of Great Neck Plaza v Nassau County Rent Guidelines Bd., 69 AD2d 528; Matter of Hill v New York State Teachers’ Retirement Sys., 97 Misc 2d 95; Unt v Aerospace Corp., 765 F2d 1440; Ehm v National R. R. Passenger Corp., 732 F2d 1250, 469 US 982; Railway Labor Executives’ Assn. v Consolidated Rail Corp., 580 F Supp 777; St. Michael’s Convalescent Hosp. v State of California, 643 F2d 1369; Servido v Superintendent of Ins., 77 AD2d 70, 53 NY2d 1041; Matter of American Mut. Ins. Co. v Merchants Ins. Group, 123 Misc 2d 331; Matter of Alonzo M. v New York City Dept. of Probation, 72 NY2d 662.)

      Meltzer, Lippe, Goldstein, Wolf, & Schlissel, P. C., Mineola (Richard Gabriele and Alan L. Mittman of counsel), for respondents.
    I. The lower court and the Court below correctly determined that the Insurance Department violated the State Administrative Procedure Act in adopting the Six Payment Plan. (Matter of Cordero v Corbisiero, 80 NY2d 771; Matter of Jones v Smith, 64 NY2d 1003; People v Cull, 10 NY2d 123; Aetna Cas. & Sur. Co. v O’Connor, 8 NY2d 359; Matter of Bowley Assocs. v State of New York Ins. Dept., 98 AD2d 521, 63 NY2d 982; Matter of State Farm Mut. Auto. Ins. Co. [Wynns], 129 Misc 2d 661; Dubendorf v New York State Educ. Dept., 97 Misc 2d 382, 71 AD2d 837; Wegmans Food Mkts. v Department of Taxation & Fin., 126 Misc 2d 144, 115 AD2d 962.) II. Appellants’ challenges to the applicability of the State Administrative Procedure Act do not withstand scrutiny. (Matter of Alonzo M. v New York City Dept. of Probation, 72 NY2d 662; Burns v United States, 501 US 129; Matter of Dreyfus Special Income Fund v New York State Tax Commn., 72 NY2d 874; Scott v

      Snelling & Snelling, 732 F Supp 1034; Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588; Doctors Council v New York City Employees’ Retirement Sys., 71 NY2d 669; Matter of Moran Towing & Transp. Co. v New York State Tax Commn., 72 NY2d 166; People v Smith, 79 NY2d 309.) III. It was arbitrary and capricious for the Insurance Department in promulgating the Six Payment Plan to depart without reasons or explanation from its prior practice and precedent. (Matter of Field Delivery Serv. [Roberts], 66 NY2d 516; Matter of Lafayette Stor. & Moving Corp. [Hudacs], 77 NY2d 823, 197 AD2d 742, 83 NY2d 758; Matter of Pesek v Hitchcock, 156 AD2d 690; Regular Common Carrier Conference v United States, 307 F Supp 941; Matter of Associated Blind Hous. Dev. Corp. v State of New York Dept. of Pub. Serv., 142 AD2d 825.)
   OPINION OF THE COURT

Simons, J.

This is a CPLR article 78 proceeding instituted by several premium finance agencies and the trade association representing them. They seek to annul a determination by respondent Salvatore Curíale, Superintendent of Insurance of the State of New York, approving and adopting an amendment for financing assigned risk insurance policies proposed by respondent New York Automobile Insurance Plan (AIP). The Superintendent adopted the amendment without publishing any notice of the proposed rule, affording any opportunity for public comment, issuing either a regulatory impact statement or regulatory flexibility analysis, or filing the proposed amendment with the Secretary of State. Because of those omissions, petitioner contends the Plan failed to satisfy the requirements of the State Administrative Procedure Act, Executive Law § 102 and the filing requirements of article IV, § 8 of the New York Constitution. Supreme Court granted the petition and nullified the Plan. The Appellate Division affirmed and granted respondents leave to appeal. We conclude that the cited provisions do not apply to AIP or the amendment and therefore reverse.

In New York, all automobile owners are required to purchase and maintain automobile liability insurance (Vehicle and Traffic Law § 312). Some owners are unable to obtain coverage, however, because insurers believe they pose unreasonable risks. In order to provide insurance for all motorists owning and operating automobiles in New York, the Legislature enacted article 53 of the Insurance Law authorizing the Superintendent of Insurance to approve a "reasonable plan” requiring private insurance companies to provide automobile insurance to owners who are unable to purchase insurance in the open market (see, former Insurance Law § 63 [now § 5301]). The first assigned risk Automobile Insurance Plan was created and adopted pursuant to this authority in 1947.

In addition to the problems that these automobile owners have in obtaining insurance on the open market, they are often unable to pay the required premiums for assigned risk insurance. To enable and assist such persons to participate in the AIP, the State Legislature enacted article XII-B of the Banking Law in 1960, which authorizes the Banking Department to license companies (known as "premium finance agencies”) to finance the payment of insurance premiums, to regulate the content of finance agreements, and to set financing limitations (Banking Law §§ 554-578). Petitioner Insurance Premium Finance Association is a trade association representing premium finance agencies licensed and operating pursuant to those statutes and the remaining petitioners are premium finance agencies.

Prior to October 1992 persons applying for insurance coverage under the AIP had two payment options, i.e., the Installment Premium Payment Option (the Advance Option) and the Installment Option. The latter allowed persons subject to an annual premium of over $100 to pay for their insurance in three installments: 40% of the total estimated annual premium (plus a service charge of $3) upon application, an additional 30% (and $3) within three months of the effective date of the policy and the balance (plus another $3) within six months of the effective date of the policy. Persons not electing this Installment Option, or not eligible for it, could elect the Advance Option which required that they pay at least 30% of the total annual premium upon application and the balance within 30 days after receipt of the policy or notice of premium due.

In June 1992, the AIP proposed the amendment which petitioners challenge in this litigation (the "Six Payment Plan”). The Superintendent approved it in October of that year. The Plan was adopted by AIP after several months of study by a Task Force investigating the subject and after AlP’s Governing Committee had extensively reviewed it. Neither the Superintendent nor the Insurance Department participated in formulating the Plan.

The Six Payment Plan modified the previous structure in four ways. First, the Installment Option for those persons seeking to insure private passenger risks was altered to provide for six payments, rather than three. Second, payment was made by a deposit of 25% on applying for insurance — instead of 40% required under the Installment Option or the 30% required under the Advance Option — and five 15% installments due at designated monthly intervals after the effective date of the policy. Third, the service charge of $3, payable with the deposit and each installment, was increased to $4. Finally, the Six Payment Plan increased the minimum total annual premium required to be eligible for any of the installment options under the AIP from $100 to $300. The amendment thus provided insureds with an additional, more affordable and interest-free method of paying premiums.

Admittedly, respondents did not follow the procedural requirements of the State Administrative Procedure Act before adopting the Six Payment Plan. They contend that they were not obliged to do so because AIP is not subject to the statute and its Plan is not a "rule” as defined by the State Administrative Procedure Act, Executive Law § 102 or the State Constitution.

The State Administrative Procedure Act applies only to the rule-making activities of State agencies. Section 102 defines an "agency” as:

"any department, board, bureau, commission, division, office, council, committee or officer of the state, or a public benefit corporation or public authority at least one of whose members is appointed by the governor” (subd [1] [emphasis added]).

Both parties agree that the AIP is not an "agency” within that definition because the Governor does not appoint any of its members. Manifestly, however, the Insurance Department is a State agency and petitioners contend that since the Six Payment Plan could not become effective without approval of the Superintendent, the amendments constitute agency action and are subject to the State Administrative Procedure Act. Supreme Court agreed. It also concluded that the Six Payment Plan is a rule of a State agency because it is a "statement of general applicability which prescribes requirements for that segment of the general public over which the Insuranee Department exercises authority” (see, State Administrative Procedure Act § 102 [2]). Accordingly, it held that respondents’ failure to follow the procedural requirements of the State Administrative Procedure Act invalidated the rule.

Whether AIP should be deemed an agency of the State under these circumstances depends on whether the degree of control and supervision exercised by the Department of Insurance over AIP’s activities is so substantial that the act of AIP may be considered the act of the State rather than that of an independent entity (see, Incorporated Vil. of Great Neck Plaza v Nassau County Rent Guidelines Bd., 69 AD2d 528, 533-534). The nature and scope of AIP’s activities are regulated by statute, as are those of many entities, but unless it can be said that the State exercises "extensive, detailed and virtually day-to-day supervision” over AIP, it cannot be considered an instrumentality of the State or be subjected to the requirements of the statute (see, Forsham v Harris, 445 US 169, 180; Unt v Aerospace Corp., 765 F2d 1440, 1448 [9th Cir 1985] [construing the Federal Administrative Procedure Act]).

AIP was created by private insurers to provide liability insurance for drivers unable to otherwise obtain it and to distribute the risk of insuring those drivers among the motor vehicle insurers doing business in New York State (see, former Insurance Law § 63 [now § 5301]; see generally, 1 Russ and Segalla, Couch on Insurance 3rd § 1:27). It is administered by a 15-member Governing Committee all of whom, except two appointed by the Superintendent to represent the public interest, are elected by the member insurance companies. It is funded entirely by private assessments against the insurer members and staffed by private employees paid from the funds so collected. Thus, the AIP is self-governing, as are the members who comprise it.

The Legislature authorized insurers to organize AIP so that "a detailed and comprehensive set of regulations governing the rights and liabilities of the parties entering into assigned risk insurance contracts” could be established (Aetna Cas. & Sur. Co. v O’Connor, 8 NY2d 359, 362; Matter of Bowley Assocs. v State of New York Ins. Dept., 98 AD2d 521, affd 63 NY2d 982). The AIP Committee sets service standards to be observed by insurers participating in the AIP including but not limited to the timely issuance of policies, certificates and endorsements, financial security forms, and the collection of required deposits (Insurance Law § 5302 [b]). The AIP also establishes various rules and regulations governing insurance coverage, eligibility, rates, payment of premiums, submission and adjustment of claims and the resolution of claims disputes.

Respondents contend that AIP may not be deemed a State agency nor its Plan the rule of a State agency because the Superintendent did not direct AIP to amend the payment plan, he was not involved in its revision and his approval consisted entirely of a determination that the Plan was consistent with existing laws and regulations. They assert that the Superintendent’s function was limited to examining the reasons for the change, the procedure for implementing it and whether the proposed amendment was in accordance with the Insurance Law. Moreover, respondents note that the amendments submitted by AIP involved matters which the Superintendent routinely approves when submitted by insurers (see, e.g., Insurance Law § 2307 [forms]; § 2305 [rates]), and they contend that the mere approval of the amendments under these circumstances does not constitute the adoption of an agency rule within the intendment of the State Administrative Procedure Act any more than the approval of a private insurer’s rate schedule would constitute an agency rule.

We conclude that AIP is not a State agency within the definition of the statute and the Insurance Department’s status as an agency may not be imputed to AIP merely because the Superintendent approved the Six Payment Plan. The Superintendent’s actions did not constitute agency rule making because the amendment related to the operations of a private entity rather than the Insurance Department. Moreover, the Superintendent did not exercise such extensive supervision and control over AIP that it may be considered an instrumentality of the State. Inasmuch as the AIP is not a State agency, the Six Payment Plan is not an agency rule and neither the requirements of the State Administrative Procedure Act, Executive Law § 102 nor the filing requirements of article IV, § 8 of the New York Constitution apply to it.

This view of AIP’s status is confirmed by its history. AIP was established in 1947, 29 years before the State Administrative Procedure Act was enacted. When the Legislature enacted the State Administrative Procedure Act, it did not define the entities subject to the new statute to include AIP. Indeed, AIP is one of several industry entities the Legislature has similarly authorized to address specialized insurance needs and it has never required any of them to comply with the provisions of the State Administrative Procedure Act (see, e.g., Motor Vehicle Accident Indemnification Corporation [Insurance Law art 52]; New York Property Insurance Underwriting Association [Insurance Law art 54]; Medical Malpractice Insurance Association [Insurance Law art 55]). And this is so even though AIP has had active consultation with government officials during its existence and the Superintendent has adopted AIP amendments in the past without complying with the State Administrative Procedure Act. Though cognizant of AIP’s activities and the Superintendent’s actions, the Legislature has defined the agencies to which the State Administrative Procedure Act applies in a way which clearly excludes AIP and similar entities.

Finally, petitioners contend that even if AIP was not subject to the State Administrative Procedure Act, respondents acted arbitrarily in failing to hold a public hearing on the proposal before adopting it. Although the Superintendent was not required to do so, he did provide petitioner Insurance Premium Finance Association of New York State with an opportunity to express its opposition to the Plan. Petitioners contend, however, that the opportunity to be heard did not meet statutory standards.

More to the point, they note that AIP proposed a similar plan in 1977 and held a hearing at that time to allow all interested parties to comment on the proposal. The then Superintendent of Insurance rejected the proposal, relying heavily on reasoning voiced in opposition at the public hearing. Pointing out that respondent did not hold a hearing in 1992, petitioners maintain that respondents are duty bound to explain the inconsistent procedures and why facts essentially the same as those produced in 1977 were not deemed an obstacle to approval now.

Petitioner relies on Matter of Field Delivery Serv. (Roberts) (66 NY2d 516) and similar decisions. The Field decision, however, addressed actions of an administrative agency acting in a quasi-judicial capacity, not those which are quasi-legislative. Our decision imposes a stare decisis constraint on administrative agencies requiring them to explain inconsistent decisions. There is no similar rule applicable to quasi-legislative actions of an administrative agency adopting new rules (cf., Matter of Richardson v Commissioner of N. Y. City Dept. of Social Servs., 88 NY2d 35).

Accordingly, the order of the Appellate Division should be reversed, with costs, and the petition dismissed. The certified question is not answered upon the ground that the Appellate Division order is final and the certified question is thus unnecessary.

Chief Judge Kaye and Judges Titone, Bellacosa, Smith, Levine and Ciparick concur.

Order reversed, etc.

       Insurance Law § 5301 (b) provides: "Amendments to the plan may be made by the committee designated to administer the plan, subject to the approval of the superintendent, or shall be made at the direction of the superintendent” (emphasis added).


text:
    [668 NE2d 404, 645 NYS2d 433]
    Mount Vernon Fire Insurance Company, Plaintiff and Counter-Defendant, v Creative Housing Ltd. et al., Defendants and Counter-Claimants, et al., Defendant.
    Argued April 25, 1996;
    decided June 11, 1996

      POINTS OF COUNSEL

      Thurm and Heller, New York City (Michael A. Miranda of counsel), for plaintiff and counter-defendant.
    I. U.S. Underwriters Ins. Co. v Val-Blue Corp. (85 NY2d 821) upheld the unambiguous use of the phrase "based on an assault and battery” to preclude coverage for the plethora of negligence claims stemming from an assault and battery injury; nor has there been any confusion in the case law because Val-Blue represented this Court’s continued adherence to its decision in Duncan Petroleum, and its limitation of the Cone-Lalomia holdings to homeowners’ policies. (Erie R. R. Co. v Tompkins, 304 US 64; Lalomia v Bankers & Shippers Ins. Co., 35 AD2d 114, 31 NY2d 830; Cone v Nationwide Mut. Fire Ins. Co., 75 NY2d 747; Matter of Duncan Petroleum Transp. v Aetna Ins. Co., 96 AD2d 942, 61 NY2d 665; Progressive Cas. Ins. Co. v Jackson, 151 Misc 2d 479, 181 AD2d 1035; Ruggerio v Aetna Life & Cas. Co., 107 AD2d 744; State Farm Fire & Cas. Co. v Wolford, 116 AD2d 1011; Byer v Continental Ins. Co., 155 AD2d 503; Monarch Ins. Co. v Hetherly, 148 Misc 2d 594, 182 AD2d 1138.) II. The second clause of the exclusion clearly precludes coverage for assaults committed by nonemployees. (Commissioners of State Ins. Fund v Insurance Co., 80 NY2d 992; Theatre Guild Prods. v Insurance Corp., 25 AD2d 109, 19 NY2d 656; Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46, 66 NY2d 1020; Sanabria v American Home Assur. Co., 68 NY2d 866; D’Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659; State Farm Fire & Cas. Co. v Joslyn, 99 AD2d 631; Melito v Romano, 160 AD2d 1081; Zandri Constr. Co. v Calkins, 54 NY2d 999; Allstate Ins. Co. v Zuk, 78 NY2d 41.)

      Beck & Ianuzzi, P. C., Mineola (Michael Majewski and Nicole Norris of counsel), for defendants and counter-claimants.
    The underlying personal injury plaintiff is not suing Creative Housing for assault, nor is said plaintiff’s claim exclusively "based on” assault. (U.S. Underwriters Ins. Co. v Val-Blue Corp., 85 NY2d 821; Bird v St. Paul Fire & Mar. Ins. Co., 224 NY 47; Kratzenstein v Western Assur. Co., 116 NY 54; Uniroyal Inc. v Home Ins. Co., 707 F Supp 1368; Jacqueline S. v City of New York, 81 NY2d 288; 2500 Motel Corp. v Investors Ins. Co., 169 AD2d 604; Western World Ins. Co. v Jean & Benny’s Rest., 69 AD2d 260.)

      Fitzgerald & Fitzgerald, P. C., Yonkers (Brian J. Farrell of counsel), for defendant.
    I. The language "based on” is narrower than the language "arising out of’. The Val-Blue decision does not address nor establish the ambiguity of either clause. (Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304; Nallan v Helmsley-Spear, Inc., 50 NY2d 507; Jacqueline S. v City of New York, 81 NY2d 288; Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d 875; Cone v Nationwide Mut. Fire Ins. Co., 75 NY2d 747; Lalomia v Bankers & Shippers Ins. Co., 35 AD2d 114, 31 NY2d 830; 2500 Motel Corp. v Investors Ins. Co., 169 AD2d 604; Matter of Duncan Petroleum Transp. v Aetna Ins. Co., 96 AD2d 942, 61 NY2d 665.) II. Because the assault alleged herein was perpetrated by a third person the basis of Hunter’s claim against the insured is negligent failure to maintain safe premises. (Stiglich v Tracks, D.C., 721 F Supp 1386; Servidone Constr. Corp. v Security Ins. Co., 64 NY2d 419.)
   OPINION OF THE COURT

Simons, J.

The United States Court of Appeals for the Second Circuit has certified this matter to us to settle important questions of law in this State respecting insurance coverage (see, 22 NYCRR 500.17). The questions arise from the following facts.

In April 1991, Lynette Hunter was criminally assaulted in an apartment building owned and managed by defendant Creative Housing Ltd. Hunter sued, the owner, alleging negligent supervision, management and control of the premises. Creative Housing sought a defense and indemnification from its insurer, plaintiff Mount Vernon Fire Ins. Co., under a policy in which Mount Vernon had agreed to pay "those sums that the insured shall become legally obligated to pay as damages because of 'bodily injury’ or 'property damage’ to which this insurance applies.” Mount Vernon instituted this diversity action in Federal court, seeking a declaratory judgment that it had no duty to defend or indemnify Creative Housing in Hunter’s civil lawsuit because its policy excluded coverage for claims based on assault and battery. The exclusion provided:

"It is agreed that no coverage shall apply under this policy for any claim, demand or suit based on Assault and Battery, and Assault and Battery shall not be deemed an accident whether or not committed by or at the direction of the insured.”

The District Court dismissed Mount Vernon’s action, holding that the exclusion was ambiguous and should, under settled rules of law, be construed against the insurer and in favor of the insured. The court noted first that reasonable minds could differ on whether the language "based on assault” excluded coverage for negligence claims arising from assaults, and that it was unclear whether Hunter’s claims against Creative Housing were based on assault or on negligent maintenance of the premises. It also found the exclusion ambiguous when, as happened here, it was applied to an intentional tort committed by a third party wholly unrelated to the insured. Accordingly, the court held that the policy covered Creative Housing in Hunter’s suit.

On appeal to the United States Court of Appeals for the Second Circuit, Mount Vernon maintained that the District Court’s holding was in direct conflict with New York law recently established in U.S. Underwriters Ins. Co. v Val-Blue Corp. (85 NY2d 821). In Val-Blue we held an exclusion clause containing language identical to the language found in this policy was unambiguous and precluded coverage of negligence claims. We applied a "but-for” test to determine coverage in such cases: if no cause of action would exist but for the assault, the claim is based on assault and the exclusion applies. Mount Vernon contended that under Val-Blue the District Court order had to be reversed.

The Second Circuit certified the matter to us seeking answers to the following questions:

"1. Is the language 'based on’ narrower than the language 'arising out of when used in an insurance policy and does the Val-Blue decision establish that neither is ambiguous?
"2. When a third party rather than an insured’s employee perpetrates an assault, is the basis of the victim’s claim against the insured assault or the negligent failure to maintain safe premises?”

We accepted the certified questions and now answer both in favor of plaintiff Mount Vernon by reaffirming our prior holdings that the phrases "based on” and "arising out of”, when used in insurance policy exclusion clauses, are unambiguous and legally indistinguishable, and that when a third party perpetrates an assault, the basis of the victim’s claim for negligent failure to maintain safe premises against the insured is assault.

I

The Federal courts’ uncertainty with respect to the first certified question arises from two prior New York decisions in negligent entrustment cases.

Lalomia v Bankers & Shippers Ins. Co. (35 AD2d 114, affd on opn below 31 NY2d 830), involved a claim against a father after the motorized bicycle his son was operating collided with decedent’s automobile. The father sought coverage under his homeowners’ insurance policy for the claim asserted against him. The Appellate Division determined that a clause in the father’s policy which excluded coverage for damages "directly related to the 'ownership, maintenance, operation and use’ ” of a vehicle did not preclude coverage of a negligent entrustment claim arising from the accident. (35 AD2d, at 117.) We affirmed.

More recently, in Cone v Nationwide Mut. Fire Ins. Co. (75 NY2d 747) under facts substantially similar to those in Lalomia, we adopted the Lalomia reasoning and held that a claim of negligent entrustment of an automobile was not excluded from coverage under a similar motor vehicle exclusion in defendant’s homeowners’ policy. Moreover, we held that any minor variation in the language between "arising out of’, used in the policy exclusion in Cone, and the "based directly on” language, used in the policy exclusions in Lalomia, was "too insignificant to permit varying legal consequences” (id., at 749).

Those decisions were followed by U.S. Underwriters Ins. Co. v Val-Blue Corp. (supra). Val-Blue involved a claim by an off-duty police officer shot by a nightclub’s security guard when he tried to use the club’s telephone on business. He sued the nightclub on a claim based upon negligent hiring, supervision and training. In contrast to the Lalomia and Cone decisions, the Val-Blue Court refused to separate the police officer’s theory of liability, i.e., negligent hiring and supervision, from the operative act of assault excluded from coverage under the policy. We held that inasmuch as the negligence claim could not be established without proving the underlying assault the exclusion applied.

Similarly, though Hunter’s claim sounds in negligence, the theory she asserts has little to do with whether the injury sought to be compensated was based on an assault excluded under the policy. Instead, the language of the policy controls this question and while the theory pleaded may be the insured’s negligent failure to maintain safe premises, the operative act giving rise to any recovery is the assault. While the insured’s negligence may have been a proximate cause of plaintiffs injuries, that only resolves its liability; it does not resolve the insured’s right to coverage based on the language of the contract between him and the insurer. Merely because the insured might be found liable under some theory of negligence does not overcome the policy’s exclusion for injury resulting from assault (see, New Hampshire Ins. Co. v Jefferson Ins. Co., 213 AD2d 325; Ruggerio v Aetna Life & Cas. Co., 107 AD2d 744).

Creative Housing has sought to avoid the impact of the clear language of the policy exclusion here by claiming that its language is ambiguous and does not foreclose coverage for the nonexcluded conduct pleaded. However, provisions in a contract are not ambiguous merely because the parties interpret them differently (see, Sayers v Rochester Tel. Corp., 7 F3d 1091, 1095 [2d Cir 1993]) and nothing can obscure the fact that Hunter’s claim is based upon an assault for which coverage is excluded (see, Matter of Duncan Petroleum Transp. v Aetna Ins. Co., 96 AD2d 942, 943, affd on opn below 61 NY2d 665).

Our interpretation of the exclusionary language in Cone and Val-Blue resolves the first question certified. There is no significant difference between the meaning of the phrases "based on” and "arising out of’ in the coverage or exclusion clauses of an insurance policy (Cone v Nationwide Mut. Fire Ins. Co., 75 NY2d, at 749, supra; U.S. Underwriters Ins. Co. v Val-Blue Corp., 85 NY2d, at 823, supra). Moreover, we find neither phrase to be ambiguous.

Insofar as our decisions in Cone v Nationwide Mut. Fire Ins. Co. (supra) and Lalomia v Bankers & Shipper’s Ins. Co. (35 AD2d 114, affd 31 NY2d 830, supra) cannot be readily harmonized with Val-Blue, those decisions should be limited to their facts.

II

The Court of Appeals also asked:

"2. When a third party rather than an insured’s employee perpetrates an assault, is the basis of the victim’s claim against the insured assault or the negligent failure to maintain safe premises?”

Our interpretation of the exclusion clause fully resolves the question of coverage. If no cause of action would exist "but for” the assault, it is immaterial whether the assault was committed by the insured or an employee of the insured on the one hand, or by a third party on the other. Moreover, the language of the exclusion clause provides that there will be no coverage for any suit based on assaults "whether or not committed by or at the direction of the insured.” That language encompasses claims based on assault committed by employees of insured or unrelated third parties. Coverage is excluded on either ground.

Accordingly, certified question No. 1 should be answered in the negative and certified question No. 2 answered by stating that the basis of the victim’s claim against the insured is assault.

Chief Judge Kaye and Judges Titone, Bellacosa, Smith, Levine and Ciparick concur.

Following certification of questions by the United States Court of Appeals for the Second Circuit and acceptance of the questions by this Court pursuant to section 500.17 of the Rules of the Court of Appeals (22 NYCRR 500.17), and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question No. 1 answered in the negative and certified question No. 2 answered by stating that the basis of the victim’s claim against the insured is assault.


author: Smith, J.

text:
    [668 NE2d 407, 645 NYS2d 436]
    In the Matter of Town of Brookhaven et al., Appellants, v New York State Board of Equalization and Assessment, Respondent.
    Argued April 30, 1996;
    decided June 13, 1996

      POINTS OF COUNSEL

      Lewis & Greer, P. C., Poughkeepsie (Michael J. Englert and Lou Lewis of counsel); Emily Pines, Town Attorney of Town of Brookhaven, Medford; Richard Charles Hamburger, P. C., Melville; Murphy, Bartol & O’Brien, Mineola (Ernest T. Bartol and Jeffrey P. Sharkey of counsel); Robert J. Cimino, County Attorney of Suffolk County, Hauppauge (Robert L. Garfinkle of counsel); and Sapienza & Frank, Massapequa (Salvatore Sapienza of counsel), for appellants.
    RPTL 545 specifically requires the certification of transition assessments regarding property acquired by a State agency when such agency also makes payments in lieu of taxes pursuant to law. (Matter of Industrial Liasion Comm. v Williams, 72 NY2d 137; Matter of Barklee Realty Co. v New York State Div. of Hous. & Community Renewal, 159 AD2d 416, 76 NY2d 709; Matter of Mid-State Mgt. Corp. v New York City Conciliation & Appeals Bd., 112 AD2d 72, 66 NY2d 1032; Matter of Nyboe v Allen, 7 AD2d 822; Matter of Public Serv. Commn. v Peyton Automotive Transp. Serv., 16 Misc 2d 1007; Batterton v Francis, 432 US 416; Citizens to

      Preserve Overton Park v Volpe, 401 US 402; Matter of Johnson v Ambach, 74 AD2d 986; Matter of Town of Arietta v State Bd. of Equalization & Assessment, 56 NY2d 356; Matter of Consolidated Edison Co. v Department of Envtl. Conservation, 71 NY2d 186.)

      Dennis C. Vacco, Attorney-General, Albany (Frank K. Walsh, Victoria A. Graffeo and Peter H. Schiff of counsel), for respondent.
    The lower court correctly ruled that the PILOTS provided by Public Authorities Law § 1020-q were intended by the Legislature to supersede the transition assessments provided. by RPTL 545 with respect to the Shoreham plant. (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; City of Buffalo v Lewis, 192 NY 193; Morrall v County of Monroe, 271 NY 48; Matter of Brigham v City of New York, 227 NY 575.)
   OPINION OF THE COURT

Smith, J.

This appeal raises the issue of whether, transition assessments as provided for by RPTL 545 are applicable to decreases in tax revenue resulting from the takeover and decommissioning of the Shoreham nuclear power plant by the Long Island Power Authority (LIPA), a corporate municipal instrumentality of New York State. Since the LIPA Act does not explicitly supersede RPTL 545, and transition assessments are consistent with LIPA’s obligation to make payments in lieu of taxes (PILOTS) (Public Authorities Law § 1020-q), the order of the Appellate Division should be reversed and the matter remitted for further proceedings.

In 1987, the Legislature enacted the LIPA Act (Public Authorities Law § 1020 et seq.) which contemplated replacing the Long Island Lighting Company (LILCO) as the owner of the Shoreham nuclear power plant with LIPA. Shoreham was eventually transferred to LIPA on February 29, 1992, and litigation over LIPA’s PILOT obligations as set forth in Public Authorities Law § 1020-q ensued (the PILOT Litigation). Since the history surrounding that litigation is set forth at length in Long Is. Power Auth. v Shoreham-Wading Riv. Cent. School Dist. (88 NY2d 503 [decided herewith]), only the circumstances relevant to the controversy surrounding transition assessments are described in detail here.

Section 1020-q of the Public Authorities Law provides that in the first year after acquiring Shoreham, LIPA must pay PILOTS equal to the taxes which the taxing jurisdictions would have received if there had been no State takeover of the nuclear power plant. Thereafter, PILOTS decrease by 10% each succeeding year until they are equivalent to the taxes and assessments which would have been levied on Shoreham in an inoperative state.

RPTL 545 provides in relevant part,

"1. Whenever the state or an agency of the state acquires real property which becomes exempt as a result of such acquisition and which constitutes two per cent or more of the total taxable assessed valuation of the latest preceding assessment roll * * * the state board shall establish a 'transition assessment’ which will in effect prevent any loss of taxable assessed valuation on the assessment roll for the first year affected by such occurrence or occurrences. For each succeeding year, the state board shall establish a transition assessment which will in effect limit to two per cent of the total taxable assessed valuation on the latest preceding assessment roll the loss in taxable assessed valuation on such roll as a result of such occurrence or occurrences * * *
"6. In making transition assessments pursuant to this section:
"(a) for property acquired by a state public authority or by the state for the purposes of a state public authority, such transition assessments shall be reduced to take into account any payments in lieu of taxes made pursuant to law by such state public authority to the tax district, so that the total of state aid paid on each transition assessment and the payment in lieu of taxes received by the tax district would be in effect equal to the state aid payable on such transition assessment computed without regard to this subdivision”.

Since LIPA was a public authority as defined by RPTL 545 at the time Shoreham was transferred (see, RPTL 545 [7] [g]), appellants, various taxing jurisdictions affected by the removal of Shoreham from the Town of Brookhaven’s tax roll, applied to respondent New York State Board of Equalization and Assessment (SBEA) for transition assessments. The transition assessments were sought to reduce the shortfall in revenue from the 10% decreases in PILOTS mandated by the LIPA Act.

In a certificate of transition assessments dated December 7, 1992, the SBEA certified that the proper transition assessment for the Town of Brookhaven’s 1992 tax roll was zero on the assumption that LIPA’s PILOT obligation was equal to the taxes which appellants would have received for the 1992-1993 tax year. However, noting that the outcome of the pending PILOT Litigation could affect the amount of transition assessments, the SBEA certification also stated, "[t]he State Board reserves the right to reconsider these transition assessments if, in its opinion, such action should be warranted.”

In March of 1993, the Supreme Court issued a decision in the PILOT Litigation. In July 1993, the SBEA reviewed its December 7, 1992 certification in light of that decision and adhered to its earlier determination that no transition assessments for the 1992-1993 tax year were warranted. In November 1993, the SBEA certified transition assessments totalling approximately $53,684,080 for the 1993-1994 tax year because of the 10% decrease in PILOTS mandated by the LIPA Act.

In January 1994, the Appellate Division affirmed the order of the Supreme Court in the PILOT Litigation stating, "we disagree with the defendants and conclude that the Legislature intended that the Long Island Power Authority Act make PILOTS a complete substitution for real property taxes and assessments that otherwise would be due on the Shoreham property” (Long Is. Power Auth. v Shoreham-Wading Riv. Cent. School Dist., 195 AD2d 140, 146). Soon thereafter, the SBEA, citing to the Appellate Division opinion in the PILOT Litigation, rescinded both of its certifications on the ground that the transition assessment provisions of RPTL 545 did not apply to LIPA’s acquisition of Shoreham "unless there should be further judicial or legislative clarification of this question.”

Appellants commenced a CPLR article 78 proceeding challenging the resolution by which the SBEA rescinded the transition assessment certifications. Thereafter, the SBEA made a motion to dismiss the proceeding for failure to state a cause of action and Supreme Court granted the motion. Supreme Court held that RPTL 545 did not apply to the Shoreham transfer because the reduction in PILOTS was not solely attributable to the State takeover of the plant. Instead, Supreme Court concluded that the decrease in revenue to the taxing jurisdictions could be primarily attributed to the shutdown and decommissioning of Shoreham. Supreme Court also agreed with the Appellate Division decision that PILOTS were intended to be a "complete substitution” for all taxes and assessments which would otherwise be due on Shoreham.

On appeal, the Appellate Division affirmed. The Appellate Division held that SBEA’s decision to rescind its certifications was rational. The Appellate Division further held that the declining PILOTS mandated by the LIPA Act were in recognition of the inoperative condition of Shoreham, a condition which existed before the State takeover. Thus, any decline in revenue to the taxing jurisdictions could not be attributed to the State takeover of Shoreham, but to the declining value of the plant itself. The Appellate Division concluded that the Legislature intended PILOTS to compensate appellants for any loss of revenue from the removal of Shoreham from the tax rolls.

Appellants argue that this appeal involves a matter of statutory interpretation and that deference should not be accorded to SBEA’s conclusion that RPTL 545 is inapplicable to LIPA’s takeover of Shoreham. Appellants also contend that RPTL 545 mandates transition assessments in this case because the LIPA Act does not impliedly or explicitly supersede the transition assessment provisions of RPTL 545 and appellants face a shortfall in revenue from declining PILOTS, a circumstance attributable to the takeover of Shoreham by LIPA, a State public authority. The SBEA concedes that this appeal only raises issues of statutory interpretation but contends that the proper application of the statutes supports its determination that RPTL 545 does not apply to Shoreham.

SBEA’s decision to rescind its certifications stemmed from its reliance on a judicial interpretation of the LIPA Act by the Appellate Division in the PILOT Litigation, not from any exercise of administrative expertise. Since matters of statutory construction and interpretation are particularly within the competence of the judiciary (see, Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459) and present pure questions of law, we are not limited to determining whether SBEA’s determination was rational on this appeal. We turn to the issues of whether RPTL 545 applies to LIPA’s acquisition of Shoreham and, if so, whether the LIPA Act supersedes RPTL 545.

Section 545 of the RPTL is a statute of general applicability which applies whenever "the state or an agency of the state acquires real property which becomes exempt as a result of such acquisition” and that acquisition constitutes "two per cent or more of the total taxable assessed valuation of the latest preceding assessment roll.” The statute does not contain any exemptions or restrictions for any category of real property. Nor does the statute limit its applicability to State takeovers of property for certain purposes.

The fact that Shoreham’s declining value as a power plant may lower appellants’ tax revenues is irrelevant to the issue of whether RPTL 545 applies here. The statute requires only that (1) an agent of the State acquire real property, which occurred when Shoreham was transferred to LIPA; (2) the real property become tax exempt as a result of the acquisition, which occurred here by operation of law (Public Authorities Law § 1020-p); and (3) the real property constitute at least 2% of the total taxable assessed valuation of the latest preceding tax roll, a fact not disputed by the parties to this appeal. Since the threshold criteria set forth in the statute have been satisfied, nothing in section 545 prohibits appellants from seeking transitian assessments. We must now determine whether the LIPA Act supersedes the transition assessment provisions of RPTL 545.

The LIPA Act does not contain any references to RPTL 545 or to transition assessments. The LIPA Act also lacks an explicit declaration that PILOTS are intended to be a complete substitution for all taxes or assessments which would otherwise have been due on Shoreham, or due to the State takeover of the nuclear power plant. Consequently, we must determine whether the LIPA Act implicitly repeals RPTL 545 in the case of Shoreham.

"Repeal by implication is distinctly not favored in the law. Obviously, the judiciary should not lightly infer that the Legislature has repealed one of its own enactments when it has failed to do so expressly; the Legislature is hardly reticent to repeal statutes when it means to do so. Generally, a statute is deemed impliedly repealed by another statute only if the two are in such conflict that it is impossible to give some effect to both. If a reasonable field of operation can be found for each statute, that construction should be adopted [citations omitted]. These principles apply with particular force to statutes relating to the same .subject matter, which must be read together and applied harmoniously and consistently” (Alweis v Evans, 69 NY2d 199, 204).

The LIPA Act also provides, "Insofar as the provisions of this title are inconsistent with the provisions of any other law or any part thereof, the provisions of this title shall be controlling” (Public Authorities Law § 1020-gg).

Like PILOTS, RPTL 545 transition assessments are a form of State aid intended to provide a cushion against the loss of tax revenues due to State takeover of property (Matter of Town of Arietta v State Bd. of Equalization & Assessment, 56 NY2d 356, 361-362). Consequently, the LIPA Act and RPTL 545 relate to the same subject matter — the level of State aid to be provided to taxing jurisdictions when formerly taxable property becomes tax exempt as a result of the State’s acquisition of the property. Given the absence of an explicit statement by the Legislature to the contrary, settled jurisprudence requires us to read the statutes, if possible, in a manner which gives effect to both (Matter of Consolidated Edison Co. v Department of Envtl. Conservation, 71 NY2d 186, 195; Matter of Natural Resources Defense Council v New York City Dept. of Sanitation, 83 NY2d 215, 222-223; Alweis, supra).

Here, it is possible to give effect to both RPTL 545 and the LIPA Act. RPTL 545 (6) requires the SBEA to decrease transition assessments to take into account any PILOT which may be mandated by law. Thus, the Legislature has already contemplated the possibility that transition assessments and PILOTS will apply to the same property. Instead of superseding one form of State aid with the other in those instances where both apply, the Legislature determined that PILOTS should be subtracted from the State aid calculated on transition assessments. We may not disturb the Legislature’s decision to balance these two forms of State aid in the manner set forth in RPTL 545 in the absence of an explicit directive by the Legislature to do so.

SBEA’s contention that the Legislature intended to displace all other laws, "consistent or not, with respect to the specific subject matter covered by the LIPA Act” is unpersuasive because the LIPA Act does not contain such an unequivocal declaration. Indeed, the only explicit statement pertaining to the repeal of other legislation refers to laws inconsistent with the LIPA Act, and RPTL 545 is consistent with LIPA’s obligation to make PILOTS.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the matter remitted to Supreme Court, with directions to remand to the State Board of Equalization and Assessment for further proceedings in accordance with this opinion including a determination of what effect, if any, judicial reductions in the assessed valuation of Shoreham will have on entitlement to transition assessments and the amounts thereof.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Levine and Ciparick concur.

Order reversed, with costs, and matter remitted to Supreme Court, Albany County, with directions to remand to the State Board of Equalization and Assessment for further proceedings in accordance with the opinion herein.

      . Section 1020-q (1) of the Public Authorities Law provides: "Each year after property theretofore owned by LILCO is acquired by the authority by any means authorized by this title and, as a consequence, is removed from the tax rolls, the authority shall make payments in lieu of taxes to municipalities and school districts equal to the taxes and assessments which would have been received from year to year by each such jurisdiction if such acquisition had not occurred, except for such taxing jurisdictions which tax the Shoreham plant, in which case the in lieu of tax payments shall in the first year after acquisition be equal to one hundred percent of the taxes and assessments which would have been received by such taxing jurisdictions. In each succeeding year such in lieu of tax payments shall be decreased by ten percent until such time as such payments equal taxes and assessments which would have been levied on such plant in a nonoperative state.”

      . The SBEA concluded that Supreme Court had erred on the law by holding, inter alla, that a payment made by LIPA in June 1992 was a PILOT rather than a tax payment. This holding had the effect of reducing LIPA’s PILOT obligations for the 1992-1993 tax year, thereby affecting the December 7, 1992 certification. Nevertheless, the SBEA did not recalculate that transition assessment, asserting that it was not bound by Supreme Court’s decision bécause it had not been a party in the PILOT Litigation. The SBEA’s decision to adhere to its December 7, 1992 certification was challenged in a CPLR article 78 proceeding. The Appellate Division annulled SBEA’s determination that recalculation of the December 7,1992 certification was unnecessary, and ordered the SBEA to ascertain transition assessments for the 1992-1993 tax year in accordance with the judicial determinations in the PILOT Litigation (Matter of County of Suffolk v New York State Bd. of Equalization & Assessment, 207 AD2d 233).

      . The record reflects that the assessed value of Shoreham for the 1991-1992 tax year was $156,579;980. This represented over 90% of the taxable assessed value of the Shoreham-Wading River Central School District, the Shoreham-Wading River Public Library District, and the Wading River Fire District, and over 25% of the taxable assessed value of the Town of Brookhaven and the Town of Brookhaven Lighting District.