CORSELLO v. VERIZON NEW YORK INC.

CAROLYN E. DEMAREST, J.

Defendants Verizon New York Inc. and Verizon Communications Inc.1 (collectively "Verizon") move for an order pursuant to CPLR 3211(a)(7) dismissing this putative class action brought by plaintiffs William and Evelyn Corsello against Verizon for failure to state a cause of action. For the reasons set forth below defendant's motion is granted in part and denied in part.2

BACKGROUND

Verizon provides telephone service in New York City as the corporate successor to the New York Telephone Company which was incorporated in 1896. Verizon extends its telephone lines to individual homes and businesses by implementing two distinct types of telephone network architectures. The first type of network architecture is designed for non-dense suburban-like neighborhoods. On every square block in these neighborhoods Verizon aerially strings its "outside plant"3 lines between telephone poles situated in the public right of way and directly to the individual premises served from the poles located on public land. Mounted on each pole is a terminal box which enables Verizon to provide various telecommunication services and also acts as a bridge connecting telephone lines from adjacent poles. Most of this equipment is located in the public way. When a subscriber requests service in his or her home or business, Verizon runs a telephone cable from the nearest terminal box directly to the individual's property.

However, because of New York City's requirement that such cables be buried in high density neighborhoods consisting of attached and semi-attached buildings, this outside plant network architecture is modified to what is known as an "inside block architecture" for dense urban neighborhoods in which buildings are attached and access to the street is limited. In those areas, Verizon creates the same circuit of telephone lines by placing the terminal boxes on the rear-wall of privately owned buildings ("rear-wall terminals"), instead of on poles in the public way. The station connection is achieved initially through underground feeder cables run into the contiguous rear yard area for the entire block through a "block entrance" property and into a rear-wall terminal from which 25 to 200 pair wires may emanate. Telephone cable is then strung along the walls of the encumbered building from one host building's terminal box to the next terminal box located on a host building until the "inside plant" network circuit for that particular square block is complete. Each building is then supplied with service through a Network Interface Device (NID) connected to a rear wall terminal. The NID is essential to obtaining service and consumers must accept the affixing of such devices without compensation as a condition of service pursuant to Verizon tariffs approved by the Public Service Commission. Plaintiffs do not complain of the presence of the NID on their building, but of the installation of the rear-wall terminal, which serves other buildings in addition to their own, without compensation.

In response to defendants' motion, plaintiffs submit the affidavit of Jeremy Walsh, who was a telecommunications engineer for Verizon for five years and a field technician for one year. In describing the network architecture, Mr. Walsh points out that Verizon's inside-block-cable architecture requires just one cable from the street to service an entire city block (Walsh Affidavit ¶ 23). According to Mr. Walsh, Verizon's main service lines arrive at each city block from a Verizon central office via an "underground feeder" cable which typically has a capacity of between 900 to 3000 lines (Walsh Affidavit ¶ 24). The "underground feeder" connects to a "block feeder" cable with a capacity of between 150 and 600 lines running underground from the street to the rear yard area of the block through the basement of a "block entrance" property and connecting to the first rear wall terminal box. "Rear wall feeder cable" is affixed to and strung along the rear walls of encumbered buildings connecting the 25 to 50 pair rear wall terminal boxes to each other. Jacks serving up to six individual customers within the building are contained inside the NID attached to a terminal box. According to Mr. Walsh, the NID is the only apparatus attached to the rear-wall of the building that is necessary to service that particular building. Mr. Walsh opines that if Verizon did not employ the described inside-block-cable architecture it would have to employ an underground architecture similar to that used by Con Edison where a separate underground line is provided to service each building, at substantial cost to Verizon.

Plaintiffs complain that this "inside block architecture" creates an unsightly web of telephone lines in the backyards or rear space areas of urban homes. Moreover, plaintiffs claim that the terminal boxes are intended to be permanent as they are affixed to the buildings with heavy anchors that damage the masonry. Plaintiffs describe Verizon's method of installing rear-wall terminals as an "attach and run" policy because Verizon field technicians frequently scale walls or fences to initially install and subsequently gain access to the rear-wall terminals. They also allege that Verizon technicians leave behind cable fragments or wire clippings after they complete unsolicited maintenance of the terminal boxes.

The Corsellos own, but do not live in, a residential building located at 185 Vanderbilt Ave in Brooklyn, New York which has a terminal box affixed to its rear wall. They do not receive telephone service from Verizon at that building, but residents of the building do receive service as evidenced by the presence of the NID box adjacent to the larger terminal box of which plaintiffs complain. Plaintiffs allege that Verizon placed the terminal box on their building "in the 1970's or 1980's or earlier" without properly compensating them or obtaining "any written right-of-way agreements from the Corsellos or prior owners of 185 Vanderbilt" (Complaint ¶¶ 30,32). The Corsellos allege that they made at least one complaint to Verizon about the rear-wall terminal prior to 2004. In response to the instant motion, Mr. Corsello states in his affidavit that he began to complain about the terminal box "sometime in the 1980s" to defendants' predecessor AT & T. Mr. Corsello asserts that defendants' representative advised him at that time that the terminal box was necessary and neither offered to remove it nor advised him of his right to compensation. In 2004 or 2005, plaintiffs repeatedly complained about the loose and high capacity wires routed through the terminal boxes and anchored to the Corsellos' building. When Verizon failed to address these complaints, plaintiffs sought the assistance of counsel.

In August 2006, Mr. Corsello's attorney sent a letter to Verizon demanding removal of the Verizon equipment and monetary compensation. In response, two Verizon representatives, including Dennis Neil, met Mr. Corsello at the building. At that meeting, Verizon removed loose wires and debris but did not remove the rear wall terminal box or compensate the Corsellos. According to Mr. Corsello, Mr. Neil told him that Verizon would not pay compensation and would not remove the terminal box. Plaintiffs assert that Verizon was at liberty to remove the terminal box from August 2006 to November 9, 2007, but failed to do so. However, shortly after litigation commenced, following observations of evidence of new work done to the terminal box, plaintiffs' attorney, concerned about spoliation of evidence, sent a letter to Verizon requesting that they refrain from substantial alterations to the terminal box. According to plaintiffs, three months later, just prior to the filing of the instant motion to dismiss, Verizon offered to remove certain wiring but not the rear wall terminal. In its motion to dismiss, Verizon offers to remove the terminal box and all wiring not servicing the plaintiffs' building and pay for any reasonable estimated damages caused by Verizon's equipment (Serino Reply Affirmation ¶ 7). Plaintiffs have declined this offer pending determination of their application for class certification.

THE COMPLAINT

Plaintiffs plead six causes of action on behalf of themselves and all similarly situated building owners in their First Amended Complaint (the "Complaint"). The first is premised upon defendants' de facto taking of their property and demands compensation on a claim for inverse condemnation, requesting payment of retrospective and prospective compensation. The second cause of action requests injunctive relief enjoining Verizon from attaching its terminal boxes to the rear wall of privately-owned buildings without first providing notice to the building owners of their rights to full compensation pursuant to Transportation Corporations Law § 27 and "obtaining an agreement as to compensation or proceeding under the requirements of Eminent Domain Procedure Law" (Complaint ¶ 50). Plaintiffs further seek an order that Verizon "remove all Rear Wall Terminals and associated Outside Plant attachments and remediating [sic] the property damage caused thereby" unless they pay "full compensation" (Complaint ¶ 51). Plaintiffs' third cause of action is for implied tenancy/unjust enrichment, claiming that Verizon was unjustly enriched by its occupation of plaintiffs' property and that an "implied tenancy" was created for which defendant is liable to pay "back rent." The fourth cause of action sounds in continuing trespass for which damages are claimed. Plaintiffs allege in their fifth cause of action that Verizon engaged in deceptive trade practices in violation of General Business Law § 349(h) by deliberately failing to inform and misleading building owners regarding their rights to full compensation or removal when installing the terminal boxes. Plaintiffs' sixth cause of action is for punitive damages based upon defendants' allegedly deceptive trade practices.

DISCUSSION

Verizon moves, pursuant to CPLR 3211(a)(7), to dismiss the complaint for failure to state a cause of action arguing that plaintiffs have misinterpreted Transportation Corporations Law § 27 and have failed to assert a right of recovery for trespass because they have not alleged that defendants acted without plaintiffs' permission. Defendants contend that there exists no legal predicate upon which to grant the injunctive relief demanded and that General Business Law § 349 is inapplicable. On a motion to dismiss pursuant to CPLR 3211, the court must accept the facts alleged by the plaintiff as true and liberally construe the complaint, according it the benefit of every possible favorable inference. (Campaign for Fiscal Equity, Inc. v State of New York, 86 N.Y.2d 307, 318 [1995]; see also Sokoloff v Harriman Estates Dev. Corp., 96 N.Y.2d 409, 414 [2001]). The role of the court is to "determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 N.Y.2d 83, 87 [1994]). "A complaint is deemed to allege whatever can be implied from its statements by fair and reasonable intendment" (Tuffley v City of Syracuse, 82 A.D.2d 110, 113 [4th Dept 1981]). Therefore, the complaint must be declared legally sufficient if the court determines that plaintiffs would be entitled to relief on any reasonable view of the facts stated (Campaign for Fiscal Equity, Inc., 86 NY2d at 318).

(a)

Plaintiffs' complaint is premised upon Section 27 of the New York Transportation Corporations Law which provides that telephone companies:

Section 27 of the Transportation Corporations Law is a statutory codification of the constitutional right to receive "just compensation" for private property taken for public use. See New York State Const., Art I, §7(a); see also, Dusenbury v Mutual Telegraph Co., 11 Abb. N. Cas. 440 (Sup Ct, NY Co, 1882); Loretto v Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (analogous installation of equipment related to cable television held to be "a permanent physical occupation" sufficient to constitute a taking of private property requiring payment of just compensation under the Federal Constitution). Although the statute clearly permits, as defendant argues, a consensual contractual arrangement between property owner and the telephone company as to just compensation, including the possibility of a waiver of all compensation and a gratis conferral of a license to occupy the property, by providing a mechanism to determine reasonable value through the exercise of eminent domain, the statute clearly contemplates that, in the absence of agreement, such owner will be compensated by the courts. The statute protects the public interest in securing the availability of telephone service to the community, even at the expense of private property interests, by permitting the privately-owned provider to exercise the police power of the state, but also ensures that the owner of the encumbered property will receive just compensation as constitutionally required.

Plaintiffs' first cause of action for "inverse condemnation" is predicated on their constitutional and statutory right to receive compensation for the de facto taking of their property. Transportation Corporations Law § 27 expressly provides that the telephone company is invested with the authority to obtain the use of private property for its purposes, over the objection of the property owner, by commencing an action in condemnation or eminent domain. Verizon did not commence such action. Plaintiffs therefore contend that their compensation must be determined by the court through "inverse condemnation" (See United States v Clarke, 445 U.S. 253, 257 [1980][inverse condemnation is a "shorthand description of the manner in which a landowner recovers just compensation for a taking of his property when condemnation proceedings have not been instituted"]). The right of a property owner to bring an action for inverse condemnation is, contrary to defendants' contentions, well-recognized (see, e.g., 627 Smith St. Corp. v Bureau of Waste Disposal of the Department of Sanitation of the City of New York, 289 A.D.2d 472 [2d Dept 2001]; Sarnelli v City of New York, 256 A.D.2d 399 [2d Dept 1998]; 2A-6 Nichols on Eminent Domain § 6.03[2]).4

A claim for de facto appropriation or "inverse condemnation" requires a showing that one with eminent domain power has intruded onto property and interfered with the owner's rights to such a degree that the conduct amounts to a constitutional taking requiring the intruder to purchase the property from the owner (627 Smith St. Corp., 289 AD2d at 473; O'Brien v City of Syracuse, 54 N.Y.2d 353, 357 [1981]). Unlike trespass, which is only temporary in nature (see Carr v Town of Fleming, 122 A.D.2d 540, 541 [4th Dept 1986]), "[a] de facto taking is a permanent ouster of the owner or a permanent physical or legal interference with the owner's physical use, possession, and enjoyment of the property by one having condemnation powers" (Ward v Bennett, 214 A.D.2d 741, 743 [2d Dept 1995]).

Rejecting plaintiffs' reliance on Loretto v Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), to justify their claim, defendants contend that the intrusion of their terminals onto plaintiffs' property is not sufficiently permanent to constitute a taking for the purposes of inverse condemnation. In Loretto, a case closely paralleling the case here, a cable television company, Teleprompter, installed two large boxes and cables on appellant landlord's property. The installation involved a permanent direct physical attachment of plates, boxes, wires, bolts, and screws to the building, occupying portions of the roof and side of the building's exterior wall. On a given square block, Teleprompter, like Verizon, connected terminal boxes and cables from building to building, "circumnavigating the city block, with service cables periodically dropped over the front or back of a building in which a tenant desired service." Also like Verizon, Teleprompter affixed two different types of cables to the building: "crossover" cables, that did not service tenants in the building, and "noncrossover" cables that provided service directly to tenants in the building. (Id. at 422). At issue in Loretto was former New York Executive Law § 828 (now Public Service Law § 228 [see L.1995, c. 83, §§ 121, 122]) which required building owners/landlords to permit cable companies to install equipment upon their property if a tenant requested cable television service. The law not only prohibited the landlord from interfering with the installation of the cable equipment, but also prohibited the landlord from demanding compensation from a tenant or from the cable company beyond that determined to be reasonable by the regulatory commission.5

In Loretto, the United States Supreme Court upheld the New York Court of Appeals' determination that the statute was a proper exercise of the State's police power (see Loretto v Teleprompter Manhattan CATV Corp., 53 N.Y.2d 124, 153 [1981]), but reversed the finding that Teleprompter's minimal invasion did not effect an unconstitutional taking of appellant's property (458 US at 425). The Supreme Court held that the operation of the statute effectuated a permanent appropriation of the landlord's property with each cable installation and thus constituted a taking (458 USat 438). The Supreme Court's determination that the installation was a permanent appropriation turned on the residential landlord's inability to control the "timing, extent or nature of the invasion" (458 US at 436), as well as the landlord's inability to force removal of Teleprompter's equipment so long as the company wished to retain the installation (Id. at 439 ["So long as the property remains residential and a CATV company wishes to retain the installation, the landlord must permit it."]). This Court finds no significant difference between the facts upon which the Supreme Court predicated its finding regarding the installation of cable television equipment pursuant to the statute at issue in Loretto and the circumstances at bar in which plaintiffs lack control regarding the installation of telephone equipment by defendants possessed of similar non-negotiable authority under Transportation Corporations Law § 27. Accordingly, this Court finds the holding of the Supreme Court in Loretto to be dispositive: defendants' installation of the rear-wall terminals and connecting wires constitutes a permanent taking of plaintiffs' property that must be compensated.

As defendants argue, the Transportation Corporations Law grants telephone companies the same powers as other "business corporations" (Transportation Corporations Law § 4). This includes the power "[t]o purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated" (Bus Corp Law § 202[a][4]). As acknowledged in Section 27 of the Transportation Corporations Law, telephone companies may therefore acquire the right to maintain their fixtures on private property by means other than condemnation, such as by obtaining a license or easement from the property owner.6 (See Antonopulos v Postal Telegraph Cable Co., 261 A.D. 564, 569 [2d Dept 1941], affd 287 N.Y. 712 [1942]; see also Bunke v New York Telephone Co., 110 A.D. 241, 247 [1st Dept 1905]). An easement, which does confer an interest in land that may be permanent, requires a writing which, it is not disputed, does not exist here.7 However, because "a license does not imply an interest in land but is a mere personal privilege to commit some act or series of acts on the land of another,"it is valid even if granted by parol. (See Millbrook Hunt, Inc. v Smith, 249 A.D.2d 281, 282 [2d Dept 1998]; see also In re Ford, 48 A.D.2d 473 [3d Dept 1975]; 49 NY Jur 2d Easements § 218). Thus, defendants' representation, that it had orally received license to place its terminal on plaintiffs' rear wall at some time in the past, though not supported by any documentation, is not without legal significance.

It has been held however that the grant of a license to erect and maintain telephone fixtures on property is revokable at will (Bunke, 110 AD at 247-248 [finding that any license to attach telephone wires to property would be "revokable at pleasure"]; see also, 103 NY Jur 2d Telecommunications § 34). The licensor's sale of the land upon which the telephone fixtures are situated also acts to revoke the license (Antonopulos, 261 AD at 569). Thus, even if plaintiffs or their predecessor did orally grant permission for the placement of defendants' equipment on their property at sometime in the past, plaintiffs' complaints effectively revoked such license. Where a telephone company has lost its license to maintain its fixtures on another's property, it may resort to condemnation proceedings pursuant to Transportation Corporations Law § 27, but, a telephone company has no right to maintain its fixtures, absent a license or easement, if it does not invoke condemnation proceedings under Section 27 (see Antonopulos, 261 AD at 569 and Bunke, 110 AD at 249; see also Eels v American Telephone & Telegraph Co., 143 N.Y. 133, 135 [1894]; 103 NY Jur. 2d Telecommunications § 30]).

Defendants further argue that plaintiffs' cause of action for inverse condemnation is barred by the statute of limitations. In Sarnelli v City of New York, 256 A.D.2d 399 (2d Dept 1998), lv denied, 93 N.Y.2d 804 (1999), the Appellate Court held that a claim for de facto appropriation or inverse condemnation was barred by the three-year statute of limitations which ran from the time when the defendant Transit Authority fenced off plaintiffs' property and "continuously used the property as part of their railway yard", depriving plaintiffs of free access to their land, ten years prior to commencement of suit. Since plaintiffs here acknowledge that defendants placed the rear wall terminal on their property in the 1970s or 1980s or earlier, there is no question that a claim for inverse condemnation would be time barred if defendants' use did not involve the placement of wires and cables in providing its service. (See CPLR 214(4); Carr v Town of Fleming, 122 A.D.2d 540 [alleged taking by installation of sewer system]).

However, Real Property Law § 261 (RPL § 261), captioned "Maintenance of telegraph or other electric wires raises no presumption of grant," expressly provides:

As plaintiffs argue, this statute implicitly guarantees a property owner's right to demand removal of telephone equipment at any time, regardless of a prior grant of license, revokable at the grantor's pleasure (Bunke, 110 AD at 247-48), and the company's recourse is limited to that provided under Transportation Corporations Law § 27 to establish a right to remain by eminent domain (Antonopulos, 261 A.D. 564). The statute prohibits telephone companies from gaining a prescriptive right or title to land by virtue of adverse possession (O'Meara v Postal Telegraph-Cable Co., 279 N.Y. 282, 286 [1938]). Therefore, unless a telephone company has taken the property through Section 27's grant of condemnation power, actions in inverse condemnation cannot be barred by the statute of limitations because RPL § 261 prohibits a telephone company from obtaining title through adverse possession. (See RPL § 261; O'Meara, 279 NY at 286; cf. 509 Sixth Ave. Corp. v New York City Transit Auth., 15 N.Y.2d 48, 52 [1964] ["Suits predicated on a continuous trespass are barred only by the expiration of such time which would create an easement by prescription or change title by operation of law"]). Thus, plaintiffs' cause of action for inverse condemnation is not barred by the statute of limitations.

While proof that plaintiffs had granted a license to Verizon that remained effective at the commencement of suit would preclude their retrospective recovery for inverse condemnation, the complaint clearly does set forth a viable cause of action upon such theory under Transportation Corporations Law § 27. (See Antonopulos v Postal Telegraph Cable Co., 261 AD at 569). The motion to dismiss the first cause of action is denied.

(b)

Plaintiffs' second cause of action is for injunctive relief. In the Complaint, plaintiffs request that the Court enjoin Verizon from "expanding the size or function of existing [terminal boxes]" without first notifying building owners of their right to compensation under Transportation Corporations Law § 27 and "obtaining an agreement as to compensation or proceeding under the requirements of the Eminent Domain Procedure" (Complaint ¶ 50). Plaintiffs also seek an Order directing Verizon to "remove all Rear Wall Terminals and associated Outside Plant attachments and remediating [sic] the property damage caused thereby" unless they pay "full compensation" (Complaint ¶ 51). The motion to dismiss this cause of action is denied at this time as it seeks a remedy which is contingent upon the merits of other claims pleaded. Although it has been held that in exercising the power of eminent domain, "neither the Constitution nor judicial decisions require the sovereign to give advance notice to the condemnees of its intention to take their property" (Fifth Avenue Coach Lines, Inc. v City of New York, 11 N.Y.2d 342, 347 [1962]), suggesting that at least some of the injunctive relief requested would not be available to plaintiffs, the rule would not benefit defendants herein as they are not the sovereign and exercise the power of eminent domain only pursuant to statute. It may be that the claim for injunctive relief is subsumed in other causes of action, but such determination need not be made at this point.

(c)

Plaintiffs' third cause of action is for implied tenancy/unjust enrichment. Specifically, plaintiffs allege in the Complaint that "[d]efendant has profited from its occupancies of the Encumbered Buildings, thereby unjustly enriching itself ... Under this implied tenancy, Defendant had a duty to pay rent equal to the fair rental value of these partial possessions, but did not do so" (Complaint ¶¶ 54-55).

"To state a cause of action for unjust enrichment, a plaintiff must allege that it conferred a benefit upon the defendant, and that the defendant will obtain such benefit without adequately compensating plaintiff therefor" (Smith v Chase Manhattan Bank, USA, N.A., 293 A.D.2d 598, 600 [2d Dept 2002], quoting Nakamura v Fujii, 253 A.D.2d 387, 390 [1998]). Plaintiffs' complaint does adequately allege the necessary elements of a claim for unjust enrichment in that their property was encumbered by defendants which derived a substantial benefit from that encumbrance. However, in Granchelli v Walter S. Johnson Building Co., Inc., 85 A.D.2d 891 (4th Dept 1981), a case analogous to that at bar, plaintiff sued defendant in both trespass and unjust enrichment for the "wrongful use of plaintiff's property to store ... equipment ... in connection with a construction contract," seeking damages measured against the rental value of the real estate (Id. at 891). As here, plaintiff argued that defendant was unjustly enriched because defendant saved expenses and realized profits from the unlawful occupancy of plaintiff's land. The Court rejected that argument finding "no authority in law" to support it, but found the complaint sufficient to entitle plaintiff to compensation in trespass for defendants' use of his property. The Court dismissed plaintiff's unjust enrichment cause of action as duplicative of the trespass claim (Id. at 891).

Similarly, this Court finds that plaintiffs' unjust enrichment cause of action is duplicative of plaintiffs' trespass claim since both seek to recover damages incident to the alleged trespass, which may include both the cost of repairing actual damage to the building, as well as the value of the use to defendants. Any benefit realized from Verizon's alleged unlawful occupation of plaintiffs' property does not give rise to a separate cause of action for unjust enrichment but merely supports plaintiffs' claim for damages (Cassata v New York New England Exchange, 250 A.D.2d 491[1st Dept 1998]). The third cause of action for unjust enrichment is dismissed as duplicative of the trespass cause of action.

(d)

Plaintiffs allege a "continuing trespass" as their fourth cause of action. Generally, an encroaching structure on the property of another constitutes a continuous trespass (509 Sixth Ave. Corp., 15 NY2d at 51, 52). It is settled that the maintenance of telephone wires and fixtures on the property of another without a license or easement is a continuous trespass (Bunke, 110 AD at 249 ["We think that the defendant became a trespasser upon the conveyance of the property to the plaintiff, regardless of whether or not there was a previous license, and that by thus maintaining the wires throughout that period it became a continuous trespasser and is liable in damages as such"]), a claim for which cannot be defeated by the passage of time as the right of the property owner is expressly protected by Real Property Law § 261 (O'Meara, 279 NY at 286). The installation of telephone cables and the terminal box upon the Corsellos' building is a continuous trespass for which they may seek redress.

Defendants argue that plaintiffs do not state a cause of action for trespass because they do not explicitly allege that Verizon was on their property without permission. A cause of action for trespass requires an intrusion upon the property of another without permission (Curwin v Verizon Communications (LEC), 35 A.D.3d 645 [2d Dept 2006]). Permission to occupy property may be granted by oral license, but such license may be revoked at any time (Bunke, 110 AD at 247-248).8

In determining the sufficiency of pleadings, whatever can be implied by fair and reasonable interpretation from the facts alleged must be deemed to have been stated (Vitale v Fowler Oil Company, Inc., 238 A.D.2d 794, 795 [3d Dept 1997]); Tuffley, 82 AD2d at 113). Plaintiffs allege that they lodged many complaints asking Verizon to remove their fixtures. Prior to commencing suit, they had their attorney make a written demand for compensation or removal. Therefore, on this motion to dismiss, the Court must afford the Corsellos the inference that, even if they unwittingly granted a license to defendants, and, as alleged, acquiesced in the continued use of their property due to defendants' representations that they had no choice but to submit, plaintiffs clearly revoked such permission when they demanded removal and/or compensation from defendants. Therefore, taking the allegations in the complaint as true and viewing them as a whole, the complaint sufficiently pleads a cause of action for trespass and defendant's motion to dismiss plaintiffs' fourth cause of action for continuing trespass is denied.

(e)

In their fifth cause of action, plaintiffs allege that Verizon has violated section 349 of New York's General Business Law, which prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state." Plaintiffs' allegations fall into two distinct categories: the first is that Verizon's failure to affirmatively notify them of their right to receive compensation for encumbrances placed on their building violated an obligation under Transportation Corporations Law § 27 and constituted a deceptive practice; and, the second is that Verizon deliberately concealed their rights and created a false impression that building owners were required by law to consent to equipment being installed on their buildings in order to receive telephone service thereby perpetrating a deceptive practice under General Business Law § 349 (GBL § 349).

Plaintiffs support their claims of deception under GBL § 349 with Mr. Corsello's affidavit in which he describes several attempts to communicate his concerns to Verizon beginning "sometime in the 1980's" to which "Verizon's representative stated that the terminal attached to 185 was necessary to provide telephone service to the building" and "never [advised] that we could have the terminal and associated wiring removed at will without loss of telephone service to the building, or that we were entitled to compensation for hosting the terminal, nor did [he] have any reason to know these things" (Corsello Affidavit ¶¶ 8-10). Mr. Corsello further states that, in response to Verizon's routing of new cables in 2004 or 2005, he lodged additional complaints that were not answered. Finally, in response to his attorney's letter of August 4, 2006, two representatives met him at the building. One of them, Dennis Neil, is alleged to have specifically told Mr. Corsello "that Verizon would not pay us any compensation and would not remove the terminal box ... that Verizon had a right to attach the box to the building without paying compensation" (Corsello Affidavit ¶¶ 17-18).

Plaintiffs also submit the affidavit of Jeremy Walsh, a former Verizon outside plant engineer who, based upon his training and knowledge of Verizon policies, describes Verizon's practices with respect to the rear-wall terminals as "attach and run." He states in his affidavit:

To state a cause of action for deceptive trade practices under GBL § 349, a plaintiff must show: "first, that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act" (Stuntman v Chemical Bank, 95 N.Y.2d 24, 29 [2000]). In this case plaintiffs allege that defendants have, as a deliberate course of conduct, consistently intruded upon private property, without notice to or permission from the owner thereof, to affix defendants' equipment to privately owned buildings thereby causing actual damage to the encumbered structures, without providing compensation and without notifying the owners of their right to be compensated. Indeed, plaintiffs further allege that, not only do defendants fail to apprise property owners of their constitutional and statutory right to receive compensation pursuant to Transportation Corporations Law § 27, but defendants also misinform the property owners as to their rights and implicitly represent to such owners that defendants are entitled by law to take their property without compensation. Thus, it is alleged that GBL § 349 is violated by acts of both omission and commission.

As heretofore established, as owners of the encumbered structure, plaintiffs are entitled to compensation for what has been determined by the United States Supreme Court to constitute a taking (see Loretto, 458 U.S. 419). In addition to their right to be compensated for the continuing use of their property for defendants' benefit, there is also evidence of actual physical damage to the building itself. The acts alleged to be deceptive, actual misrepresentations and disinformation, as well as the initial intrusion by stealth and the failure to respond to plaintiffs' demands and inquiries, are sufficiently material in causing injury to plaintiffs to support a GBL § 349 claim. While defendants argue that plaintiffs could have ascertained their rights by searching the law, whether, as lay members of the public, they could reasonably have obtained the necessary information without resort to legal expertise, or were likely to have been misled by defendants' conduct, are questions of fact which would preclude dismissal upon defendants' motion. See Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, NA, 85 N.Y.2d 20 (1995), in which a far more sophisticated consumer, the administrator of a union pension fund, likely to have ready access to legal advice, was found to have stated a cause of action for deceptive acts and practices under GBL § 349. "The test is not whether the average man would be deceived. Sections 349 and 350 of the General Business Law were enacted to safeguard the vast multitude which includes the ignorant, the unthinking and the credulous'" (People v Volkswagen of America, Inc., 47 A.D.2d 868 [1st Dept 1975], quoting, Floersheim vWeinburger, 346 F.Supp. 950, 957).

A more difficult issue is presented regarding whether the practices herein alleged to be deceptive are sufficiently consumer-oriented to fall within the purview of GBL § 349. "[S]ection 349 is directed at wrongs against the consuming public" and is designed to protect the public from fraudulent business practices. "Consumer-oriented conduct does not require a repetition or pattern of deceptive behavior.... [T]his law was intended to afford a practical means of halting consumer frauds at their incipiency.'" (Oswego, 85 N.Y.2d 24-25, quoting Mem. of Governor Rockefeller, 1970 NY Legis. Ann., at 472-473). It is essential to a viable claim under GBL § 349 that plaintiff "demonstrate that the acts or practices have a broader impact on consumers at large" (Oswego, 85 NY2d at 25).

GBL § 349(a) states: "Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful." Most commonly, GBL § 349 has been applied to thwart or remedy deception directed at customers for the defendant's product for the purpose of inducing such consumers to purchase defendant's services or wares. See e.g., Gaidon v Guardian Life Ins. Company, 94 N.Y.2d 330, 334-348 (1999); Karlin v IVF America, Inc., 93 N.Y.2d 282 (1999) and cases cited therein at 290-91; Oswego, 85 NY2d at 25; Genesco Entertainment, Inc. v Koch, 593 F.Supp. 743, 751 (SDNY 1984) ("The typical violation contemplated by the statute involves an individual consumer who falls victim to misrepresentations made by a seller of consumer goods usually by way of false and misleading advertising").

However, as noted in Karlin, (93 NY2d at 290), GBL § 349 and its companion, GBL § 350, "apply to virtually all economic activity and their application has been correspondingly broad." There can be no argument that defendants are engaged in economic activity and that, in conducting their business, they are bound to the standards of "an honest market place where trust prevails between buyer and seller'" (Oswego, 85 NY2d at 25, quoting Mem. of Governor Rockefeller, 1970 NY Legis. Ann., at 472). Although plaintiffs do not receive defendants' service at the subject location,9 as landlords to defendants' customers residing in their building, they are possessed of the property interest affected by the alleged deceptive practices and have standing as "consumers" to bring this action. Cf. Securitron Magnalock Corp. v Schnalbolk, 65 F.3d 256, 264 (2d Cir 1995) (competitors accorded standing as long as harm to public at issue); New York v Feldman, 210 F.Supp.2d 294, 301 (SDNY 2002). Moreover, it is probable that most members of the proposed class on behalf of whom suit has been brought are, in addition to owners of encumbered buildings, also residents of those buildings and actual customers for defendants' service. These customers, according to plaintiffs' allegations, are deceived by defendants' practices into submitting their property to defendants' use without the compensation to which they are entitled under the law of this State in the belief that they are required to forego their property rights as a condition of receiving service. In the City of New York, such owners must number in the thousands. The injury alleged strikes at a significant public interest that is reflected in Transportation Corporations Law § 27, to afford fair compensation for defendants' de facto taking of private property. This Court finds defendants' alleged acts to be sufficiently "consumer-oriented" to meet the requirements of GBL § 349. See Verizon Directories Corp. v Yellow Book USA, Inc., 338 F.Supp.2d 422, 428 (EDNY 2004); Oswego, 85 N.Y.2d 20; Karlin, 93 N.Y.2d 282. The motion to dismiss the fifth cause of action is denied.

(f)

Plaintiffs' sixth and final cause of action is for "punitive damages." Plaintiffs allege in the complaint that their "cause of action" for punitive damages arises from "the unlawful taking and use of their property through deception; and ... the inability of Plaintiffs, as a direct result of this deception, to recover the full amount of the damages incurred due to the workings of the statute of limitations ..." (Complaint ¶ 69).

"A demand for punitive damages does not amount to a separate cause of action for pleading purposes" (Fiesel v Nanuet Prop. Corp., 125 A.D.2d 292 [2d Dept 1986]; see also, Vanguard Equip. Rentals, Inc. v Cab Assocs., 288 A.D.2d 306, 306-307 [2d Dept 2001]; Rose Lee Mfg., Inc. v Chemical Bank, 186 A.D.2d 548, 550 [2d Dept 1992]). Moreover, the predicate for plaintiffs' claim for punitive damages is GBL § 349. Plaintiffs' claim for punitive damages is therefore subsumed in the fifth cause of action. The sixth cause of action for punitive damages must be dismissed.

CONCLUSION

Defendants' motion to dismiss is granted as to plaintiffs' third and sixth causes of action and is otherwise denied. Defendants are directed to serve and file their Answer within 30 days. The parties are directed to appear for a preliminary conference on January 7, 2009, in Commercial Division I, Courtroom 756 at 9:30 am.

This constitutes the decision and Order of the Court.