It sounds as if the DMV gave you the Answer. Pay the $50 and apply. You can't sue anyhow, until you exhaust your administrative remedies.
If you'd like to discuss, please feel free to call. Jeff Gold Gold, Benes, LLP 1854 Bellmore Ave Bellmore, NY 11710 Telephone -516.512.6333 Email - Jgold@goldbenes.com