Plaintiff New York Racing Association, Inc. (NYRA), operates three race tracks in New York State: Saratoga, Aqueduct, and Belmont, pursuant to a franchise that expires December 31, 2007. By Agreement dated January 1, 1996, and a Memorandum of Understanding dated November 13, 1998 (the MOU), between NYRA and defendant New York City Off-Track Betting, Inc. (OTB), NYRA agreed to provide OTB with its simulcast signal, which enables OTB to broadcast live audio and visual showings of horse races at OTB's betting parlors and other locations. The 1998 Agreement succeeded an agreement dated November 19, 1990, and expired by its terms on June 1, 1996.

Simulcasting of horse races is regulated by the New York State Racing and Wagering Board, under the provisions of Article X of the Racing, Parimutuel Wagering and Breeding Law [*2](Racing Law).

The annual fee for the simulcast signal under the MOU through November 13, 2002, was $7.5 Million, payable at the rate of $625,000 per month. The MOU also provided for a contingent supplemental simulcast fee based on increases in real estate taxes for its Aqueduct facility through January 1, 2002.

The MOU expired by its terms on November 13, 2002. Article IV of the MOU, captioned, "Renewal Arrangements and Binding Arbitration," provides, as pertinent, that upon expiration of the initial four-year term of the MOU, as of November 13, 2002:

[t]he parties will enter into negotiations for the terms of a renewal or replacement agreement. If by [December 13, 2002], the parties have not successfully concluded negotiations toward a renewal or replacement agreement, either party may elect to have the terms and conditions for a new two year ... agreement ... established through compulsory binding arbitration ... . Pending the conclusion of the parties' negotiations, or, if necessary, completion of the binding arbitration process, all of the terms and conditions of the expired agreement shall be continued in full force and effect, except that the simulcast fee paid by NYCOTB to NYRA shall be increased by 7 3/4% on a base $9 Million as of [December 14, 2002].

According to the affidavit of Robert Palumbo, an operations officer of plaintiff who was involved in the negotiations, NYRA is entitled to contractual damages for the claimed increase of the simulcast fee at the rate of $2,197,500 per year since December 14, 2002. The total claimed for the simulcast fee increase is $4,395,000 as of July 26, 2004, the date of the summons and complaint. Irene M. Posio, Vice-President and Chief Financial Officer of NYRA submits an affidavit supporting Mr. Palumbo's assertion of NYRA's claim for $973,986, less $1,593.05, representing adjustments, for the supplemental simulcast fee with respect to the Aqueduct tax assessment for tax years 2002/2003 and 2003/2004.

These damage calculations are apparently based on NYRA's contention that the MOU was renewed for a two-year period, and that the supplemental simulcast fee was also extended. There is no basis in the contractual language of the MOU for either of these contentions. The only way either party could elect to renew the MOU for a two year period, other than through negotiation, was through binding arbitration. No arbitration was ever commenced. Both in its brief and at oral argument, NYRA has ignored the restrictive language "through compulsory binding arbitration," when presenting its argument that either side can elect to have the MOU extended for a two-year period. In any event, neither party ever evinced its intent to elect to extend the agreement for a two-year term.

Nor is there any basis for NYRA's claim of entitlement to a supplemental simulcast fee after expiration of the four-year term of the MOU. Section II of the MOU provides for such fee only through tax year 2001-2002.

Because the MOU only provided for payment of the increased simulcast fee "pending the conclusion of the parties' negotiations," and no new agreement was ever executed, NYRA's right under the MOU to the increased simulcast fee would end as of the date that negotiations ended. It is undisputed that no new two-year agreement was ever executed; nor, obviously, were "the terms and conditions for a new two year ... agreement ... established through compulsory [*3]binding arbitration." At oral argument, counsel for NYRA stated its position that negotiations ended on January 24, 2004 (see transcript p. 8).

NYRA has continued to provide the simulcast signal to OTB, and OTB has continued to pay at the rate of $625,000 per month, since December 2002 through commencement of this action. The MOU does not provide for such an at-will arrangement, only that the terms and conditions of the MOU shall continue through negotiations or completion of arbitration. The submissions do not contain any evidence of a demand by NYRA for the increase in the simulcast fee.

NYRA moves for summary judgment awarding it contractual damages as set forth above. OTB cross-moves for summary judgment dismissing the complaint for failure to file a timely notice of claim in compliance with Racing Law § 618. The motion is denied and the cross-motion is granted.

NYRA served its notice of claim (NOC), dated January 26, 2004, on the Comptroller of the City of New York, and the Corporation Counsel of the City of New York. The NOC states that the nature of the claim is for breach of contract and tort damages resulting from the "actions and/or inactions of the City of New York, its agents, servants, licensees, contractors, employees and other affiliate agencies and departments, including the New York City Off-track Betting Corporation." There is no tort claim pleaded.

New York City Off-Track Betting Corporation is a public benefit corporation created pursuant to sections 601 and 603 of the Racing Law. OTB denies, without contradiction, that it is an agency or department of the City of New York.

Section 618 of the Racing Law, captioned,"[n]otice of claim; action against corporation," provides for service of a notice of claim on OTB, as pertinent:

1. In every action against the corporation for damages, for injuries to real or personal property, or for the destruction thereof, or for personal injuries, the complaint shall contain an allegation that at least thirty days have elapsed since notice of claim was presented to the corporation and that the corporation has neglected or refused to make an adjustment or payment thereof for thirty days after such presentment 2. The notice of claim ... shall set forth

...

b. The nature of the claim;

c. The time when, the place where and the manner in

which the claim arose; and

d. The items of damage or injuries claimed to have

been sustained so far as practicable to determine.

3. The notice shall be served on the corporation by delivering a copy thereof, in duplicate, personally or by registered mail, to an officer, director or to any other agent authorized by appointment to receive such service.

...

5. [A]n action against the corporation shall not be commenced more than one year and ninety days after the cause of action thereof shall have accrued, nor unless a notice of claim as required in subdivisions one and two of this section and served as set forth in subdivision three of this section shall have been served upon the corporation within ninety days after such cause of action shall have accrued [emphasis supplied] ... .

The complaint contains two causes of action. The first is a contractual claim for the increase in the simulcast fee, and the supplemental simulcast fee. The second is for unjust enrichment. OTB correctly argues that the second cause of action is not cognizable. As the Court of Appeals recently stated the rule: "plaintiff fails to state a cause of action for unjust enrichment as the existence of a valid contract governing the subject matter generally precludes recovery in quasi contract for events arising out of the same subject matter" [citation omitted] (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 23 [2005]). The validity of the MOU is not in dispute.

It is undisputed that OTB did not pay NYRA the increase in the simulcast fee that the MOU required for the payment due December 14, 2002, but continued to pay NYRA at the same monthly rate as the expired contract. Thus, when NYRA received the first monthly payment after expiration of the four-year term under the MOU, the claim for the increase was ascertainable and could then be asserted. NYRA had 90 days from receipt of the first payment after expiration of the MOU in which to file a notice of claim, at least as to any claim for that monthly underpayment.

There can be no genuine dispute that a contractual cause of action for the increased simulcast fee accrued more than ninety days before January 26, 2004, when the notice of claim was filed. A claim accrues for the purpose of establishing the start of the three month period for filing a notice of claim "when their damages accrued (as distinguished from the event which incurs them), that is, when their damages were ascertainable" (see Matter of Board of Ed. of Enlarged Ogdensburg City School Dist. v Wager Const. Corp., 37 NY2d 283, 290 [1975]; (Koren-DiResta Const. Co., Inc. v New York City School Construction Authority, 293 AD2d 189, 192 [1st Dept 2002])(holding that claims accrue under Public Authorities Law § 1744 [2] "on the date on which plaintiff knew it had been damaged").

NYRA cannot allege in its complaint that it served a notice of claim on OTB in compliance with the Racing Law. Not only is the NOC untimely because it was filed more than three months after the claim accrued, but it is directed against the wrong party. A party seeking to bring an action against OTB must allege timely filing of a complying notice of claim as a condition precedent to maintaining the action (see Zoll v Suffolk Regional Off-Track Betting Corp., 259 AD2d 696 [2nd Dept 1999]).

Racing Law § 618 does not provide for service of a late notice of claim, and General Municipal Law § 50-e, which allows for service of late notices of claims even under the Racing Law, by its terms, only applies to tort actions (see Marino v New York City Off-Track Betting, 12 AD3rd 606 [2nd Dept 2004]; Whitestone Shopping Center, Inc. v New York City Off-Track Betting Corp., 256 AD2d 331 [2nd Dept 1998]).

NYRA has not moved for any relief with respect to correcting the obvious defects in the NOC. Cases that have granted relief to a party that had served the wrong governmental entity involve tort claims and rely on Municipal Law § 50-e (5), which, as noted, applies only to tort claims (see Santana v Off-Track Betting Corp., 2 AD3rd 1304 [4th Dept 2003]; Lemma v Off Track Betting Corp., 272 AD2d 669 [3rd Dept 2000], or on a theory of estoppel (see Quintero v Long Island Rail Road, 55 Misc 2d 813, affd, 31 AD2d 844 [2nd Dept 1969]).

Section 618 (6) of the Racing Law requires that all actions against OTB shall be tried "in the county within the City in which the cause of action arose." The parties' submissions include an Assembly bill that would vest jurisdiction for actions against OTB in the Court of Claims, [*5]which would have authority to entertain NYRA's application under these circumstances (see Court of Claims Act § 10; Quintero v Long Island Rail Road, supra, 55 Misc 2d at 816.

NYRA argues that a notice of claim should not be required for contract actions. NYRA contends that because the Legislature used the language, "every action against the corporation for damages, for injuries to real or personal property, or for the destruction thereof, or for personal injuries," it must not have intended to include contractual damages, because it would have been unnecessary to specify the three specific categories which are also actions for damages.

Unfortunately for NYRA, the weight of authority holds otherwise. The Appellate Division specifically rejected this construction in Zoll v Suffolk Regional Off-Track Betting Corp., supra, stating:

Racing, Pari-Mutuel Wagering and Breeding Law § 514 establishes that the notice of claim requirement applies to any action for "damages", not just tort claims based on injury to personal property, real property, and for personal injuries, as the plaintiff argues. In relevant part, Racing, Pari-Mutuel Wagering and Breeding Law § 514 (1) provides: "In every action against a corporation for damages, for injur[y] to real or personal property, or for the destruction thereof, or for personal injuries, the complaint shall contain an allegation that ... [a] notice of claim was presented to the corporation". In Quicksilver Assoc. v Catskill Regional Off-Track Betting Corp. (213 AD2d 389) this Court construed this statute as being applicable to all actions for damages, including contract actions. The phrase "all actions for damages brought against an off-track betting corporation" is not subject to any exceptions based on the nature of the underlying legal theory (Quicksilver Assocs. v Catskill Regional Off-Track Betting Corp., supra, at 389; Broadmeadow Lanes v Catskill Regional Off-Track Betting Corp., 151 AD2d 631; see also, Justy v New York City Off-Track Betting Corp., supra) and hence, the plaintiff's contention, that the notice of claim provisions of Racing, Pari-Mutuel Wagering and Breeding Law § 514 (1) are inapplicable to actions sounding in contract, is without merit (see, Zoll v New York City Off-Track Betting Corp., 258 AD2d 267). Id. at 697.

The provisions of Racing Law sections 514 and 618 are identical. Section 514 applies to regional off-track betting corporations. Section 618 applies within the City of New York.

Moreover, the Court of Appeals recently held not only that the notice of claim provision, for claims against a school board (Education law § 3813 [1]), applies to contract actions, but that the claimant must file a new notice of claim during the pendancy of an action, for claims that accrue subsequent to the filing of the action (see Varsity Transit, inc. v Bd. Of Education of the City of New York, 5 NY3rd 532 [2005]). The Court of Appeals reiterated its position on notice of claim requirements, in words that are applicable here:

[plaintiff's] policy-based position, while plausible, is best addressed to the Legislature. As we have long held, "statutory requirements conditioning suit [against a governmental entity] must be strictly construed" [citation omitted] ... We have repeatedly rejected, and now reject again, proposals to compromise the [*6]strict statutory notice of claim requirement, because to do so would lead to uncertainty and vexatious disputes. Id. at 536.

Under the foregoing analysis and applicable law, the NOC would be timely for the increase in the simulcast fee for the 90 day period preceding its filing. This would depend upon finding both that negotiations continued until the filing of the NOC, and that the contractual relationship that resulted after expiration of the MOU was a monthly at-will agreement, though governed by the terms of the expired MOU. This, of course, assumes the legal sufficiency of the NOC.

NYRA argues that the NOC was properly served on two officers of OTB pursuant to Racing Law § 618 (3). NYRA argues that the Comptroller of the City of New York as chief fiscal officer of NYRA (Racing Law § 603 [11]), and the Corporation Counsel of the City of New York as chief legal officer (Racing Law § 603 [12]), were properly served.

The NOC did not indicate that either official was being served in any capacity other than as an official of the City of New York. While it is not clear that such statutorily designated officials are officers for purposes of accepting service on behalf of NYRA, the issue of service is not material because the NOC is insufficient on its face to satisfy Racing Law § 618.It states an intention to sue the City of New York, not OTB. Also, it does not state with particularity the elements of its purported claim, as required by Racing Law § 618 (2):

c. [t]he time when, the place where and the manner in which the claim arose; and

d. [t]he items of damage or injuries claimed to have been sustained so far as then practicable to determine.

Putting aside the claim for the supplemental simulcast fee, which was clearly not provided for beyond 2001-2002, the NOC describes its principal claim as pertinent:

[t]he actions and/or inactions of the City of New York consist of the following: the continued failure of the NYCOTB to comply with the terms and conditions of the simulcast agreement between NYRA and NYCOTB ... . The claim arose in 2003 ... . These damages are comprised of the following: the direct monetary consideration currently due and owing by NYCOTB to NYRA under the MOU consisting of the sum of Two Million One Hundred Ninety-Seven Thousand Five Hundred Dollars ($2,197,500.00).

In Zoll v New York City Off-Track Betting Corp, 258 AD2d 267 (1st Dept. 1999), the First Department, affirmed the dismissal of a contract claim against OTB that had asserted that OTB improperly calculated plaintiff's winnings, holding that the notice of claim was defective in that it did not state with particularity the dates, tracks and races, in which the bets were allegedly made, or the horses on which the plaintiff had allegedly placed bets.

In addition to stating an intention to sue the wrong party, the NOC does not contain any explanation as to how the claimed damages are calculated, or when they arose other than in 2003. Thus, in addition to the obvious defect of naming the wrong party, the NOC does not meet the particularity requirement, and affords no basis for OTB to attempt to adjust the claim (see Lepkowski v State of New York, 1 NY3d 207 [2003]; Zoll v New York City Off-Track Betting Corp, supra).

NYRA's error in naming the City rather than OTB in the NOC may be understandable [*7]considering the inclusion of "New York City" in the name of defendant. However, OTB is not an agency of the City. And while it may be interwoven with the City as demonstrated by the statutory designation of the New York City Comptroller as chief financial officer of OTB, and the New York City Corporation Counsel as chief legal officer of OTB, and the fact that OTB generates revenue for the City - the fact remains that it is not an agency of the City. .

While it also may be that the notice of claim requirement, in these circumstances, arguably presents OTB with a legal although perhaps unfair means of avoiding its contractual commitment, as poignantly explained in the 1940s by Judge Desmond, in describing the "genesis and birth" of Municipal Law § 50-e:

[t]he requirement of notice is one of the safeguards devised by the law to protect municipalities against fraudulent and stale claims for injuries to person and property. It is designed to afford the municipality opportunity to make an early investigation of the claim while the facts surrounding the alleged claim are still 'fresh'. On the other hand, ' these provisions (notice statutes) were not intended as a trap for the unwary and the ignorant.' An examination of the decisional law, however, indicates that far too often technicalities in this field have prevented the disposition of honest claims on their merits.' (Tenth Annual Report of NY Judicial Council, 1944, p. 265 ...).(Martin v School Bd. of Union Free Dist. No. 28, Long Beach, 301 NY 233, 236-237 [1950]).

Accordingly, it is

ORDERED, that plaintiff's motion for summary judgment is denied; and it is

ORDERED, that defendant's cross-motion to dismiss is granted and the complaint is dismissed, and it is further

ORDERED, that the Clerk shall enter judgment accordingly.

Dated:

_______________________________

J. S. C.