Petitioners Peter Young, 820 River Street, Inc., The Altamont Program, Inc., and Vesta Community Housing Development Board, Inc., all doing business as Peter Young Housing Industries and Treatment (PYHIT), move for a preliminary injunction enjoining respondents New York State Office of Alcoholism and Substance Abuse Services (OASAS); Robert Kent, as counsel to OASAS; and the Division of the Budget of the State of New York from (1) "further blocking Petitioners' access to the State Grants Gateway System for Prequalifying Vendors doing business with the State of New York"; (2) "withholding funding for services provided under existing contracts with the State of New York and/or state agencies"; (3) "preventing Petitioners from bidding on future contracts with the State of New York and/or its agencies"; (4) "advising or ordering any other State agencies or vendor not to do business with Petitioners"; and (5) "taking any other actions to discredit Petitioners or interfere with their contracts with the State based upon any actions that have heretofore taken place."^[FN1]

Because petitioners have not demonstrated that they will suffer imminent, irreparable harm absent a preliminary injunction, that the mandatory relief they seek is the appropriate remedy for the wrongs they allege, and that the balance of the equities weighs in their favor, the motion is denied. The Court, however, has set an expedited submission schedule to minimize any potential harm to the important services petitioners provide to people in need of assistance.

Father Peter Young is the founder of petitioners 820 River Street, Inc. (820 River Street), the Altamont Program, and Vesta Community Housing Development Board, Inc. (Vesta), all of which operate under Peter Young Housing Industries and Treatment. 820 River Street, Altamont, and Vesta are not-for-profit corporations with principal offices in the City of Schenectady, County of Schenectady. 820 River Street runs various programs that offer drug and alcohol treatment and job training. The Altamont Program works with 820 River Street to provide training and jobs to people receiving treatment from PYHIT. Vesta works with 820 River Street to provide housing to people in treatment.

Respondent OASAS is a State agency which, among other things, "certifies, funds, and supervises some 1,600 local, community-based programs, and chemical dependence treatment programs and inspects and monitors these programs for quality of care and compliance with state and national standards" (Affirmation of Mark S. Boss, dated 4/13/17). Respondent Robert Kent is General Counsel to OASAS. Both 820 River Street and the Altamont Program are licensed by OASAS. In 2015 and 2016, OASAS issued renewals of the operating certificates of nine 820 River Street chemical dependence programs.

Respondent Division of the Budget is an executive branch agency that oversees the Grants Gateway in coordination with State agencies. The Grants Gateway is a State web portal [*2]through which not-for profits must register and be pre-qualified in order to win competitive grants or contracts with State agencies. The Grants Gateway program and procedures are described in a manual entitled, "New York State Prequalification System for Grants Contract Vendors, A Resource Manual and User's Guide for Not-for-Profit Vendors" (Petition, Exhibit N, hereinafter Grants Gateway Manual).

In 2012, 820 River Street's former Chief Operating Officer and its former Executive Director pleaded guilty to second degree grand larceny for stealing over $ 200,000 in state funds. In 2014, the former Operations Director of the Altamont Program pleaded guilty to second degree grand larceny. Also in 2014, the Chief Financial Officer of the River Street and Altamont Programs pleaded guilty to first degree offering a false instrument for filing and second degree falsifying business records. In 2015, the Chief Operating Officer of the Altamont Program pleaded guilty to two counts of misdemeanor second degree offering a false instrument for filing.

Until October 2014, 820 River Street and the Altamont Program were prequalified under the Grants Gateway program to compete for State contracts. Their prequalification status also allowed them to receive State funding through aid provided by the State to the counties. Petitioners would contract with the counties to receive "deficit funding" to meet expenses not covered by other sources of income. When their prequalification status changed in October 2014, 830 River Street and the Altamont Program could no longer bid for State contracts or enter into new contracts with the counties for deficit funding.

According to Mark S. Boss, an attorney employed by OASAS, "on October 9, 2014, as a result of the information gained by the criminal and administrative investigations, the status of the PYHIT entities as prequalified vendors in the New York State Grants Gateway was placed under review due to the pending criminal investigations. Once placed under review, the PYHIT organizations were no longer treated as prequalified in the Grants Gateway and, therefore, were unable to bid for State grants." Respondents have submitted an email dated October 9, 2014. In that email, in response to a query from a PYHIT employee asking why they could not access the Grants Gateway and "wh[a]t we need to do," a State employee explained that "[p]re-qualification status has been changed as a result of the ongoing AG investigation into programs and staff. This is a standard practice."

The Grants Gateway Manual states that, "[a]t any time, the reviewing State agency or any other partner State agency may review the vendor's prequalification status." Reasons for review include acts representing "an unacceptable risk in allowing the vendor to remain prequalified" (§ 4.7). A vendor's prequalification status may be revoked when a State agency finds, among other things, that a vendor has violated the law or where there have been "any convictions for fraud or matters reflecting the integrity of the vendor" (§ 4.8 — Revocation of Prequalification Status). The State agency must give the vendor notice "in writing" and specify "all matters that may have prompted the decision to suspend." The vendor must be given "an opportunity to state a case for why its prequalification status should not be suspended." The agency Executive Deputy is tasked with making the final determination. If the State agency suspends a vendor's prequalification, the vendor is entitled to a "formal appeal, in writing, to the Prequalification Officer." (§ 4.9 — Appeals). "Upon completion of his/her investigation, the Prequalification Officer will convene an expert review panel to render an opinion." The vendor must be informed in writing of the reasons for the panel's decision. (Id.)

Petitioners and OASAS engaged in a series of discussions regarding efforts to strengthen petitioners' management and administrative controls to prevent further instances of misappropriation of State funds. On January 5, 2016, respondent OASAS General Counsel Robert A. Kent sent a letter to Kevin Luibrand, President of the 820 River Street Board of Directors. In that letter, Mr. Kent acknowledged that, to that end, 820 River Street, the Altamont Program, and the Addictions Care Center of Albany, Inc. (ACCA) had entered into an exclusive management contract and that OASAS and the contracting parties were working toward a "merger or consolidation of the parties' programs." Mr. Kent stated that

"as long as the parties continue to work towards a solution to address both 820's and Altamont's administrative issues, OASAS is willing to certify and fund the 820 programs. However, [it] is important to understand that if the [management] Agreement is terminated without sufficient cause, or if by the 120 day decision deadline ^[FN2] specified in the Agreement, a viable plan to permanently solve 820's and Altamont's administrative deficiencies is not reached, OASAS will proceed to discontinue both certification and funding of the 820 programs"

On January 19, 2016, Mr. Luibrand sent a letter to Mr. Kent asking him to "advise when the Grants Gateway Block is lifted." Mr. Luibrand stated that the block was adversely impacting the ability of 820 River Street and the Altamont Program to provide jobs to former inmates in addiction recovery. By letter dated February 1, 2016, Mr. Luibrand again asked Mr. Kent when the Grants Gateway block would be lifted, and requested a meeting between PYHIT representatives and Mr. Kent regarding OASAS's concerns regarding petitioners' operations. Mr. Luibrand also stated that 820 River Street and the Altamont Program could not meet the January 31, 2016 deadline referred to in Mr. Kent's letter regarding the $ 649,103 in capital construction funds, but expressed openness to selling the property while asking to discuss specifics and alternatives.

On July 14, 2016, representatives of OASAS, 820 River Street Board members, and officials from the New York State Division of Criminal Justice Services held a meeting to discuss 820 River Street's efforts to improve leadership, organization, and operations. According to various accounts of the meeting, Mr. Kent told 820 River Street's representatives, "We are sick of you. We should have put you out of business two years ago," and "The State does not want to do . . . business with you people. This is . . . over . . . . No mistake, I speak on behalf of [*3]the State of New York." Additionally, he apparently told Father Young, "You don't get it. You are . . . done." (Expletives omitted).

Negotiations to continue 820 River Street's and the Altamont Program's contractual relationship with ACCA broke down. By letter dated December 27, 2016, Mr. Luibrand advised OASAS that the merger would not occur and that 820 River Street and the Altamont Program had declined to extend the management contract. By letter dated January 18, 2017, Mr. Kent informed petitioners that "[c]onsistent with my January 5, 2016 letter and the multiple conversations which occurred throughout the year, please be advised that, effective April 30, 2017, OASAS will terminate all OASAS contracts and funding with 820 River St., Inc." The letter also advised that OASAS would "begin the recoupment of the $ 649,103 that 820 River Street owes OASAS . . . through offsets of 820 River Street's OASAS contract advances" unless 820 River Street paid the balance of that amount in full.^[FN3]

Following news reports about the July 14, 2016 meeting, some state senators and assemblypersons expressed concern to the OASAS commissioner, Arlene González-Sánchez. On March 17, 2017 Commissioner González-Sánchez responded to a letter from Assemblyperson Patricia Fahy. Commissioner González-Sánchez's letter stated that

"OASAS and other state agencies, along with the Office of the Attorney General, have been unsuccessful in their efforts to persuade PYHIT to take the steps necessary to correct their administrative, operational, and fiscal deficiencies. PYHIT's unwillingness to undertake these measures is what led the State to reluctantly conclude that PYHIT would not be permitted to submit applications for future state contracts."

Petitioners commenced this proceeding by order to show cause and petition filed on March 22, 2017. The petition's first cause of action alleges that petitioners' suspension from the Grants Gateway was arbitrary, capricious, and illegal because OASAS did not follow its own protocols requiring it to provide written notice of a suspension and the reasons therefore, and because OASAS had issued operating certificates to the 820 River Street programs, which demonstrates the fitness of the programs. The second cause of action alleges that the suspension violated due process because it failed to give petitioners notice and an opportunity to be heard. The third cause of action alleges that respondents' withholding of funds from counties is arbitrary, capricious, and illegal. The fourth cause of action alleges that respondents acted arbitrarily, capriciously, and illegally by directing counties not to contract with PYHIT.

In its requests for relief, the petition seeks removal of petitioners' suspension from the Grants Gateway Program and the right to bid on future State contracts; rescission of respondents' determination to cease funding of and contracts with petitioners; and injunctive relief preventing [*4]respondents from withholding monies due counties for services rendered under existing contracts and from taking actions to interfere with or shut down petitioners' programs without following proper procedures. The order to show cause requested the specific preliminary relief outlined in the opening paragraph of this decision. Respondents submitted papers in opposition to the request for preliminary relief. No answer has yet been filed. The Court held oral argument on June 12, 2017.

To obtain a preliminary injunction, the proponent "must demonstrate a probability of success on the merits, danger of irreparable injury in the absence of an injunction and a balance of the equities in its favor" (see CPLR 6301; Rural Community Coalition, Inc. v Vil. of Bloomingburg, 118 AD3d 1092, 1095 [3d Dept 2014] [internal quotation marks omitted]). The "function of a provisional remedy is not to determine the ultimate rights of the parties, but to maintain the status quo until there can be a full hearing on the merits" (Lehey v Goldburt, 90 AD3d 410, 411 [1st Dept 2011] [internal quotation marks omitted]; see Moore v Ruback's Grove Campers' Assn., Inc., 85 AD3d 1220, 1221 [3d Dept 2011]). Moreover, "[a] mandatory injunction, which is used to compel the performance of an act, is an extraordinary and drastic remedy which is rarely granted and then only under unusual circumstances where such relief is essential to maintain the status quo" (Zoller v HSBC Mtge. Corp., 135 AD3d 932, 933 [2d Dept 2010]).

The Court will begin with the analysis of the irreparable injury prong, for without irreparable injury, a preliminary injunction will not lie. To qualify as irreparable harm, petitioner must demonstrate that the alleged injury is "imminent, not remote or speculative" (White v F.F. Thompson Health Sys., Inc., 75 AD3d 1075, 1077 [4th Dept 2010] [internal quotation marks omitted]; see Winkler v Kingston Hous. Auth., 238 AD2d 711, 712 [3d Dept 1997]). Here, petitioners have not established that they will suffer imminent irreparable harm absent preliminary injunctive relief.

Petitioners argue in somewhat conclusory fashion that, "absent immediate relief from this Court," respondents will "effectively prevent PYHIT from continuing to operate its vitally important programs throughout the State that treat those afflicted with alcohol and/or drug dependency or addiction." But counsel for petitioners conceded at oral argument that only 820 River Street and the Altamont Program are at issue, not all PYHIT programs throughout the State, and that there are no current contracts between OASAS and petitioners. Counsel for petitioners did not dispute respondents' counsel's assertion at oral argument that 820 River Street is currently running at full capacity, and has funding in place to allow it to continue to operate in the near future. And according to OASAS attorney Kevin Boss, OASAS is not seeking to revoke 820 River Street's operating certificates and any future attempt to revoke operating certificates will be made in accordance with Mental Hygiene Law § 32.21.

Further militating against a finding of imminent irreparable harm is the fact that 820 River Street and the Altamont Program have been unable to access the Grants Gateway since October 2014. Thus, the status quo is that petitioners' prequalification status has been suspended for nearly three years. Petitioners argue that, although the Grants Gateway block has been in effect for nearly three years, the financial harm to 820 River Street and the Altamont Program is just now accruing because county deficit funding has ceased and petitioner is now ineligible to [*5]renew deficit funding contracts with the counties. However, petitioners have long known that their county contracts were expiring and that future contracts were at risk unless OASAS was satisfied with their administrative and financial reforms.

Nor have petitioners demonstrated that preliminary relief would necessarily ameliorate the alleged irreparable harm. Petitioners have made no showing that, if the Court were to issue an order of the sort petitioners envision, they would be able to secure county and/or State funding in the immediate future through the Grants Gateway program (see Matter of Glenman Indus. & Commercial Contr. Corp. v NY State Off. of The State Comptroller, 75 AD3d 986, 988—989 [3d Dept 2010]; see also Grants Gateway Resource Manual § 2.1 — No Guarantee of Award).

Under these circumstances, petitioners have not met their burden of demonstrating imminent irreparable harm, let alone their extraordinary burden required to obtain what arguably is a mandatory injunction that would give them the ultimate relief they seek on a provisional basis until the litigation is resolved on the merits (see Zoller, 135 AD3d at 933).

Petitioners have presented a strong argument that respondents' suspension of their prequalification status did not comply with the procedural guidelines set forth in the Grants Gateway Manual. Respondents have made no real effort to establish that they complied with the guidelines for suspending a not-for-profit's prequalification status. The October 9, 2014 email appears patently insufficient to meet the notice requirements specified in the Grants Gateway Manual. At oral argument, respondents' counsel was unable to identify who made the decision to suspend access in this case or who is ordinarily tasked with making such decisions. Further, there is evidence before the Court that supports petitioners' overall characterization of the basic facts: that Counsel Kent claimed and asserted ultimate authority over petitioners' ability to receive state funding and OASAS certifications, that petitioners engaged in protracted negotiations with Counsel Kent to strengthen their management and administrative controls, and that he summarily terminated negotiations to restore their prequalification status.

But petitioners have not demonstrated a likelihood of success with respect to the ultimate relief they seek for failure to comply with such procedures in the Grants Gateway Manual—court-ordered reinstatement of their prequalification status. Petitioners ask for such mandatory relief nearly three years after the suspension was imposed during which time the parties have attempted to negotiate with petitioners to strengthen internal controls. Even if the Court were to find that respondents failed to comply with proper procedures when they suspended the prequalification status of 820 River Street and the Altamont Program, petitioners have not shown that the appropriate remedy is an injunction or order directing mandatory State action, as opposed to a remand for further administrative proceedings (see Hudson Riv. Rafting Co. v Niagara Mohawk Power Corp., 148 AD2d 856, 857 [3d Dept 1989]). As respondents argue, petitioners seek relief akin to a writ of mandamus, which is an "extraordinary remedy that lies only to compel the performance of acts which are mandatory, not discretionary, and only when there is a clear legal right to the relief sought" (Matter of Johnson v Fischer, 104 AD3d 1004, 1004—1005 [3d Dept 2013] [internal quotation marks omitted]). Thus, petitioners have not shown a likelihood of success on the merits to the extent that they seek relief in the form of mandatory restoration of their prequalification status.

Lastly, petitioners have not shown that the balance of equities weighs in their favor. On the one hand, the Court recognizes that 820 River Street and the Altamont Program rely on government funding and that the loss of such funding represents a real hardship to PYHIT's programs. The Court also recognizes the vital nature of the services provided by 820 River Street and the Altamont Program to the people they serve.

On the other hand, a preliminary injunction requiring respondents to allow 820 River Street and the Altamont Program to access the Grants Gateway would alter the long-standing status quo (see Moore, 85 AD3d at 1221). Moreover, the State has a duty to protect public funds. That duty is doubtless implicated by the convictions of multiple officers of 820 River Street and the Altamont Program for financial and reporting crimes. Although petitioners repeatedly characterize all crimes as having been committed seven years ago, and contend that all administrative deficiencies have been remedied, the Chief Operating Officer of the Altamont Program continued to work in that position up until 2015 when she pleaded guilty to two counts of misdemeanor second degree offering a false instrument for filing.

Had petitioners established imminent irreparable harm to their programs and the people they serve and a likelihood of success in obtaining the relief they seek, the balance of equities might tip in their favor. But since they have not, the Court finds that respondents' interests weigh in favor of continuation of the status quo—that is continuation of the suspension of petitioners' prequalification status. Nevertheless, the Court can conceive of the increased potential for harm to petitioners and the people they serve if this litigation is protracted. Accordingly, the Court has set an expedited schedule for submissions and review in this proceeding.

Based on the foregoing, it is

Ordered that petitioners' motion for a preliminary injunction is denied; and it is

Ordered that the proceeding shall continue on the following schedule: respondents are to file an answer and/or other further submissions in response to the petition by July 20, 2017, with any responsive submission from petitioners to be filed by July 31, 2017. Respondents' papers shall be served electronically as well as by regular or overnight mail. The Court will then issue its decision as expeditiously as possible.

This constitutes the decision and order of the Court. The original decision and order is being transmitted to respondents' counsel. All other papers are being transmitted to the County Clerk for filing. The signing of this decision and order does not constitute entry or filing under CPLR 2220 and counsel is not relieved from the applicable provisions of that rule respecting filing and service.