Navigating Legal Disputes in New York City

Lesley Brovner & Mark Peters
September 27, 2024

Legal disputes with New York City come in many different types. With its $112 billion budget, the City has immense numbers of contracts with companies and nonprofits that provide vital services to New Yorkers but is chronically late in paying for those services. As such, legal disputes with the City over payment for work performed is an increasingly significant issue. At the same time, the City has multiple agencies with investigatory powers who can issue subpoenas or other demands on companies that do business within the City. Thus, responding to City investigations can seriously impact the day-to-day as well as long-term prospects of the companies and nonprofits that operate within the City’s investigatory ambit. Finally, the City can take administrative actions that negatively impact an entity’s operations and these too may turn into legal disputes that need to be resolved.

The Importance of Early Dispute Resolution

Early dispute resolution with the City – when it is possible – is key. There are a number of reasons for this.

To begin with, an investigation by a City agency can not only disrupt day-to-day operations but, if it becomes public, can negatively impact the reputation of the entity being investigated. Moreover, the longer the investigation takes, the more likely it is that the City investigators will demand substantial fines or remedial action. Therefore, as soon as an entity gets a subpoena or other investigatory inquiry, it is important to contact counsel experienced in dealing with City investigations who can reach out to the City, determine the scope and subject of the investigation, and see if a speedy resolution is possible.

Furthermore, litigation is expensive and time consuming. To sue the City for nonpayment on contracts can cost hundreds of thousands of dollars and take several years; a pre-litigation resolution may be preferable when the City is willing to negotiate. Also, there can be limitations periods on how long you have to sue after nonpayment. Thus, as soon as nonpayment becomes an issue you should contact counsel experienced with these issues to determine your next steps.

Finally, where a City agency takes administrative action that negatively impacts an entity, there may be internal appeals processes that need to be followed quickly (sometimes within 30 days) to preserve the right to seek judicial relief later.

Understanding the Different Types of Disputes

There are many types of legal disputes with the City. Three of them are particularly important and discussed here:

First, the City or a City agency can begin an investigation into an company or nonprofit and its business practices. Depending on the scope of the investigation, and whether or not the entity has violated any sort of law, rule or regulation, this can become a protracted process that needs to be handled carefully. On the one hand, it is important to cooperate, where possible, with investigators who have the power advantage in such situations; on the other hand, it is equally important to push back when such investigations overreach or are otherwise unreasonable – this may even, in extreme cases, require judicial intervention, though that should be a last resort. Experienced legal counsel can help you balance these competing needs.

Second, the City or a City agency can make an administrative determination or ruling that negatively impacts a particular entity. The City must have a rational basis for such determinations, and where the decision lacks such rational, or is otherwise legally improper, it can be challenged in court through what’s known as an “Article 78 proceeding.” However, the timeframe to file such a proceeding is quite short – generally just four months from a final determination by the City – and so it is important to consult legal counsel as soon as such a dispute arises.

Third, the City can fail to honor its contractual obligations, most notably by failing to make timely payments for services provided to New Yorkers on the City’s behalf. The City’s payment process – and when it is obligated to make payments – is fairly complex and not intuitive. Therefore, at the first sign that payments are being delayed, it is important to contact experienced counsel who can advise you of your rights in this regard.

Steps to Take Before Entering into Litigation

The first step to take is to hire competent counsel with experience in City government who can guide you through these issues.

The next step to take – even before approaching the government – is to determine your rights and obligations:

• Where the situation involves a government investigation, it is important to have counsel quickly and thoroughly conduct an internal review to determine if the entity involved is in compliance with all of its legal and regulatory obligations. If not, the entity needs to quickly take steps to get and stay in compliance.
• Where the situation involves an adverse administrative action or rule, lawyers need to review the law and analyze the situation to determine how best to proceed.
• Finally, where the situation involves the government’s failure to pay, a review of the entity’s services and billing practices is needed, to make sure that the services were provided and documented, and that proper billing has occurred.

Finally, once the above internal review has taken place, counsel should approach the government to see if a pre-litigation resolution of the matter can take place. Sometimes that is not possible, but for all of the reasons listed above, it is important to try. Also, if you do go into litigation, the Court may want to see evidence that you tried to resolve the matter before filing a lawsuit.

Overview of the Litigation Process

The litigation process begins with the filing of a Complaint (or for Article 78 Proceedings a Petition). The Complaint sets out your factual claims and the legal basis supporting it. When you are seeking money damages from the City, you must first file a “Notice of Claim” with the City before you can file your Complaint.

The next step in the process is that the City will either answer the Complaint or move to dismiss the Complaint. A motion to dismiss the Complaint must accept, for the purposes of the motion, the facts alleged in the complaint but argue that despite those facts there is no legal basis to grant relief.

For Article 78 proceedings, the Court will usually decide the matter at this point without insisting on discovery. For other types of cases, assuming a case is not dismissed on a motion to dismiss, the case will then go to discovery, where each side will produce relevant documents and take the testimony of relevant witnesses under other (called depositions). Once discovery is completed either side can move for Summary Judgment, arguing to the Court that based on the discovery provided, their side is entitled to win the case without the need for a trial.

If summary judgment is not granted, the case can then go to trial. This entire process can sometimes take years to complete, which is why prelitigation resolution is important if it is possible.

Why Hiring the Right Attorney for Your Business Matters

Solving legal disputes with the City – whether seeking payment on contracts, challenging unfair administrative rulings or defending regulatory investigations – takes experienced lawyers familiar with both the City and its operations as well as with litigation and investigations. The City, it’s rules, processes and investigations are complex and multifaceted and can have unique aspects and so a lawyer familiar with them is essential.

Contact Peters Brovner Today!

If you or someone you know is having a dispute with the City, please contact the experienced lawyers at Peters Brovner LLP for a consultation. The lawyers at Peters Brovner have many years of experience in high level positions in City and State government. Additionally, they have successfully represented numerous clients in legal disputes with the City and State.