Agway Energy Servs., LLC v. Central Hudson Gas & Elec. Corp.

Agway Energy Servs., LLC v Central Hudson Gas & Elec. Corp. 2026 NY Slip Op 05621 October 2, 2026 Appellate Division, Fourth Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This decision is uncorrected and subject to revision before publication in the Official Reports. AGWAY ENERGY SERVICES, LLC, PLAINTIFF-APPELLANT, v CENTRAL HUDSON GAS & ELECTRIC CORPORATION, DEFENDANT-RESPONDENT. Supreme Court of the State of New York, Appellate Division, Fourth Judicial Department Decided on October 2, 2026 585 CA 25-01131 Present: Whalen, P.J., Lindley, Curran, Greenwood, And Skinner, JJ. COYLE LAW GROUP, P.C., MORRIS PLAINS, NEW JERSEY (JOHN D. COYLE, ADMITTED PRO HAC VICE, OF COUNSEL), FOR PLAINTIFF-APPELLANT. THOMPSON HINE LLP, NEW YORK CITY (RICHARD DEPALMA OF COUNSEL), FOR DEFENDANT-RESPONDENT. Appeal from an order of the Supreme Court, Onondaga County (Robert E. Antonacci, II, J.), entered June 2, 2025, in an action for, inter alia, breach of contract. The order granted the motion of defendant to dismiss the action and dismissed the complaint. [*1] It is hereby ORDERED that the order so appealed from is unanimously modified on the law by denying the motion insofar as it sought to dismiss the complaint, reinstating the complaint, and granting the motion to the extent of staying this action pending a determination by the Public Service Commission in plaintiff's separate proceedings before that administrative agency, and as modified the order is affirmed without costs. Memorandum: In this action to recover damages for, inter alia, breach of contract, plaintiff appeals from an order granting defendant's motion to dismiss the complaint without prejudice. We modify. Plaintiff is an alternative energy supply company (ESCO) providing electricity and gas to customers in the Hudson Valley region and competes for customers with defendant, a regulated utility company providing electric and gas transmission and distribution services. Both parties are subject to regulations promulgated by the Public Service Commission (PSC) (see Matter of National Energy Marketers Assn. v New York State Pub. Serv. Commn., 33 NY3d 336, 343 [2019], rearg denied 33 NY3d 1130 [2019]). In 2007, the parties entered into a billing services agreement that "set[ ] forth the [specific] terms and conditions under which [defendant would] provide rate ready billing service to and purchase accounts receivable from [plaintiff] for [plaintiff's] charges to retail customers for natural gas and/or electricity supply." Among other things, even where a customer had its energy supplied by plaintiff, defendant retained responsibility for conducting meter readings for plaintiff's customers, calculating plaintiff's supply charges under plaintiff's rate, providing plaintiff with data through Electronic Data Interchange (EDI) protocols promulgated by the PSC, issuing a consolidated bill, and collecting and processing customer payments in accordance with the parties' agreement and the applicable rules, regulations, and orders of the PSC. In September 2021, defendant implemented a new billing system, which included a new system for the exchange of EDI material. It is undisputed that the new billing system malfunctioned from the start of its implementation and resulted in, among other things, incorrect bills being sent to plaintiff's customers. Further, plaintiff alleged that, under the new billing system, defendant sent plaintiff incorrect EDI data regarding customers' usage, tax obligations, and other critical information. All of the errors associated with defendant's malfunctioning [*2]billing system allegedly caused plaintiff to expend significant resources and effort to address them. The malfunctioning billing system, among other things, caused plaintiff to commence a proceeding before the PSC. That proceeding remains pending. Thereafter, given the problems with defendant's new billing system and plaintiff's position that defendant implemented the new system despite knowing and concealing that it was not ready to be deployed, plaintiff commenced this action, asserting causes of action for common-law negligence, breach of contract, tortious interference with contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and violations of General Business Law § 349. Defendant moved to dismiss the complaint arguing, inter alia, that the PSC had primary jurisdiction over plaintiff's claims. As noted, Supreme Court granted defendant's motion and dismissed the complaint without prejudice, applying the doctrine of primary jurisdiction. We conclude that the court did not err in determining that the primary jurisdiction doctrine applied to this case. "The doctrine of primary jurisdiction is intended to co-ordinate the relationship between courts and administrative agencies to the end that divergence of opinion between them not render ineffective the statutes with which both are concerned, and to the extent that the matter before the court is within the agency's specialized field, to make available to the court in reaching its judgment the agency's views concerning not only the factual and technical issues involved but also the scope and meaning of the statute administered by the agency" (Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d 11, 22 [1982]; see Hewitt v New York, New Haven & Hartford R.R. Co., 284 NY 117, 123-124 [1940]; see generally United States v Western Pac. R.R. Co., 352 US 59, 63-64 [1956]). "[W]hile concurrent jurisdiction does exist, where there is an administrative agency which has the necessary expertise to dispose of an issue, in the exercise of discretion, resort to a judicial tribunal should be withheld pending resolution of the administrative proceeding" (Calle v National Grid USA Serv. Co., Inc., 230 AD3d 556, 557 [2d Dept 2024] [internal quotation marks omitted]; see Flacke v Onondaga Landfill Sys., 69 NY2d 355, 362 [1987]; Matter of Schwartz v East Ramapo Cent. Sch. Dist., 127 AD3d 763, 764 [2d Dept 2015]). Although "[t]here is no fixed formula governing the application of the doctrine to the facts of a particular case . . . [,] the court must determine in each case whether the reasons for the doctrine are present and whether the purposes of the doctrine will be served by its application" (Heller v Coca-Cola Co., 230 AD2d 768, 769 [2d Dept 1996], lv denied in part & dismissed in part 89 NY2d 856 [1996]). Factors considered by courts in determining whether the doctrine applies include, "(1) whether the question at issue is within the conventional experience of judges or whether it involves technical or policy considerations within the agency's particular field of expertise; (2) whether the question at issue is particularly within the agency's discretion; (3) whether there exists a substantial danger of inconsistent rulings; and (4) whether a prior application to the agency has been made" (Ellis v Tribune Tel. Co., 443 F3d 71, 82-83 [2d Cir 2006]; see Palmer v Amazon.com, Inc., 51 F4th 491, 506 [2d Cir 2022]). It also bears noting that "[t]he doctrine of primary jurisdiction is applicable even if the agency has no power to award the damages sought in the court action" (Heller, 230 AD2d at 770; see Riverdale Jewish Ctr. v Brooklyn Union Gas. Co., 237 AD3d 414, 415 [1st Dept 2025]; see generally Alberta Gas Chems. v Celanese Corp., 650 F2d 9, 13-14 [2d Cir 1981]). Further, "once a court determines that the doctrine applies, it has discretion either: (1) to retain jurisdiction or (2) dismiss the case without prejudice" (Palmer, 51 F4th at 505). If the court retains jurisdiction, it merely stays the matter pending until the relevant administrative agency has rendered a determination on the issues within its primary jurisdiction (see Flacke, 69 NY2d at 362; Palmer, 51 F4th at 505; Riverdale Jewish Ctr., 237 AD3d at 415). Here, we conclude that the PSC has primary jurisdiction over plaintiff's claims because "the determination of the issues involved, under a regulatory scheme, depends upon the specialized knowledge and experience of th[at] agency" (Romine v Laurito, 186 AD3d 913, 915 [3d Dept 2020], appeal dismissed 36 NY3d 939 [2020], lv denied & appeal dismissed 36 NY3d 1088 [2021]). Specifically, the complaint raises numerous challenges to defendant's implementation of new billing practices, which are alleged to have resulted in, among other things, erroneous bills being sent to plaintiff's customers. Additionally, central to many of [*3]plaintiff's claims are allegations that defendant failed to appropriately generate and transmit to plaintiff data pursuant to EDI protocols developed by the PSC. It has been held that "[c]ontrol of the billing procedure, a process necessarily adjunct to the furnishing of utility service, . . . fits neatly into the PSC's supervisory role[,] . . . [and] provides ample justification for commission oversight of billing envelope content" (Matter of Consolidated Edison Co. of N.Y. v Public Serv. Commn. of State of N.Y., 47 NY2d 94, 104 [1979], revd on other grounds 447 US 530, 557 [1980]). Inasmuch as the complaint raises issues concerning the propriety of defendant's billing procedures—which necessarily implicate the utility's tariff—and its handling of the PSC-governed EDI material, those issues fall within the jurisdiction and special expertise of the PSC (see Mycklebust v Consolidated Edison Co. of N.Y., Inc., 244 AD3d 540, 541 [1st Dept 2025]; Riverdale Jewish Ctr., 237 AD3d at 415). Furthermore, the fact that " 'a prior application to the [PSC] [was] made,' " and is still pending, involving many of the central issues raised in this action, also supports the court's conclusion that the primary jurisdiction doctrine applies here (Palmer, 51 F4th at 506). We also reject plaintiff's contention that the primary jurisdiction doctrine does not apply here because some of the relief sought could not be awarded by the PSC. Rather, courts have determined that "[t]he doctrine of primary jurisdiction also applies to . . . claims of fraud, deceptive business practices, or unjust enrichment, even if the agency has no power to award the damages [a] plaintiff[ ] seek[s] in this action" (Riverdale Jewish Ctr., 237 AD3d at 415 [internal quotation marks omitted]). Nevertheless, we agree with plaintiff that the court abused its discretion to the extent that it dismissed the complaint without prejudice instead of staying the action pending the PSC's determination in the proceedings pending before it. In determining the appropriate disposition where the primary jurisdiction doctrine applies, "[a] court in its discretion may choose to dismiss the case without prejudice—but only if the parties would not be unfairly disadvantaged" (Palmer, 51 F4th at 505 [internal quotation marks omitted]; see Reiter v Cooper, 507 US 258, 268-269 [1993]). In making that determination, "a court can look to the relief that the party is seeking" (Palmer, 51 F4th at 505). Here, plaintiff was primarily seeking monetary damages, not injunctive relief. "[U]nlike a suit for injunctive relief from continuing conduct—a suit that could easily be reinstituted if and when the [agency] determined the questions at issue—a damage[s] action for past conduct cannot be easily reinstated at a later time because [s]uch claims are subject to the Statute of Limitations" (id. [emphasis added]; see Mathirampuzha v Potter, 548 F3d 70, 84-85 [2d Cir 2008]). Indeed, as plaintiff contended in its opposition to defendant's motion, by dismissing the complaint without prejudice instead of staying the action, the court would unfairly disadvantage plaintiff because, if plaintiff were to commence another action after the PSC issued its determination, the court might dismiss some of its claims on statute of limitations grounds (see generally CPLR 214 [2], [4]; Corsello v Verizon N.Y., Inc., 18 NY3d 777, 788-789 [2012], rearg denied 19 NY3d 937 [2012]). However, if the action is stayed, those claims, which were apparently filed within the statute of limitations, would not be dismissed on that basis. In light of that fact, and the fact that the court failed to expressly address the issue of the stay in its decision and order (see generally McMillian v Burden, 136 AD3d 1342, 1343 [4th Dept 2016]), we conclude that the court abused its discretion in dismissing the complaint and that it should have stayed the action pending the PSC's determination (see generally Flacke, 69 NY2d at 362; Riverdale Jewish Ctr., 237 AD3d at 415). We modify the order accordingly. Entered: October 2, 2026 Ann Dillon Flynn Clerk of the Court