In 1986, the New York State Legislature created the Long Island Power Authority (LIPA) to replace the privately-owned Long Island Lighting Company to provide electricity in Nassau County, Suffolk County, and a portion of Queens. In 2006, several LIPA consumers commenced actions against LIPA to recover rate increases LIPA imposed as fuel surcharges between 2001 and 2005. The actions alleged breach of contract, unjust enrichment, and deceptive trade practices in violation of General Business Law § 349. After the actions were consolidated, LIPA moved to dismiss the actions as time-barred.
The Second Department affirmed dismissal of the actions as time-barred. The Court held that since LIPA was a public authority and the complaint essentially alleged that rate increases were made in violation of lawful procedure, affected by an error of law, or were arbitrary and capricious or an abuse of discretion, the proper way to challenge the rate increases was with a proceeding pursuant to CPLR article 78. Article 78 proceedings are governed by a four-month statute of limitations, and thus, the actions were untimely.