New York Law Review

Tag: 1993

  • Rosario-Paolo, Inc. v. C & M Pizza Restaurant, Inc., 82 N.Y.2d 120 (1993): Insurer Liability When Ignoring Notice of Equitable Lien

    Rosario-Paolo, Inc. v. C & M Pizza Restaurant, Inc., 82 N.Y.2d 120 (1993)

    An insurer who pays a claim to the insured after receiving notice of a third party’s equitable lien on the insurance proceeds does so at its peril and may be liable to the lienholder.

    Summary

    Rosario-Paolo, Inc. (plaintiff) sold a pizza restaurant to C & M Pizza Restaurant, Inc. (C&M), taking a security interest in the property. The security agreement required C&M to maintain fire insurance naming Rosario-Paolo as a beneficiary. C&M obtained a policy from Investors Insurance Company of America, Inc. (Investors) but failed to name Rosario-Paolo as a beneficiary. After a fire, Rosario-Paolo notified Investors of its security interest and claim to the insurance proceeds. Investors paid C&M directly. The New York Court of Appeals held that Investors, having received notice of Rosario-Paolo’s equitable lien, was liable to Rosario-Paolo for the proceeds up to the amount of its secured interest.

    Facts

    Rosario-Paolo sold a pizza restaurant to C & M on March 6, 1987. As part of the purchase price, C & M executed promissory notes for $63,000. A security agreement required C & M to insure the premises against fire and name Rosario-Paolo as a beneficiary. The agreement stipulated that in case of fire, insurance proceeds would be held in trust by Rosario-Paolo’s attorney to repair or replace damaged items. C & M filed a UCC-1 financing statement on April 9, 1987. C & M obtained an insurance policy from Investors on April 21, 1987, but failed to list Rosario-Paolo as a loss beneficiary. A fire occurred on January 19, 1988. Rosario-Paolo notified Investors by certified letter dated April 13, 1988, of its claim to any fire loss proceeds based on its security agreement. Investors issued a check for $49,598.52 to C & M on May 18, 1988, which C & M deposited into an individual account and refused to pay Rosario-Paolo.

    Procedural History

    Rosario-Paolo sued C & M and Investors. The Supreme Court granted summary judgment against C & M on default, denied summary judgment against Investors, and granted Investors’ cross-motion dismissing Rosario-Paolo’s claim against it. The Appellate Division affirmed. One Justice dissented, arguing that Investors should be liable because it had notice of Rosario-Paolo’s claim. The New York Court of Appeals reversed the Appellate Division’s order, granting Rosario-Paolo’s motion for summary judgment against Investors.

    Issue(s)

    Whether an insurer is liable to a third party who has an equitable lien on insurance proceeds when the insurer pays the insured despite having received notice of the third party’s claim.

    Holding

    Yes, because once an insurer has notice of a third party’s equitable claim to insurance proceeds, it pays the insured at its peril and assumes the risk of resisting the equity claimed by the third party.

    Court’s Reasoning

    The Court of Appeals reasoned that C & M’s covenant in the security agreement to insure the premises for Rosario-Paolo’s benefit created an equitable lien in favor of Rosario-Paolo on any insurance proceeds, up to the amount of its secured interest. Even though Investors had no duty to investigate the legitimacy of Rosario-Paolo’s claim, once it received notice of the claim, it was obligated to preserve the proceeds for the rightful owner. By paying C & M directly despite the notice, Investors assumed the risk of having to pay Rosario-Paolo. The court cited Cromwell v Brooklyn Fire Ins. Co., stating that Investors “assumed the hazard of resisting the equity claimed by the plaintiff.” The court distinguished McGraw-Edison Credit Corp. v Allstate Ins. Co., because in that case, the creditor lacked any legal or equitable claim to the policy proceeds. Here, the security agreement created a direct relationship and obligation. The court suggested that Investors could have protected itself by initiating an interpleader action to determine the rightful owner of the proceeds. The Court emphasized that C&M’s failure to name Rosario-Paolo as a loss beneficiary did not extinguish Rosario-Paolo’s equitable lien. The dissent in the Appellate Division was persuasive: Investors’ only obligation was to preserve the proceeds when confronted with conflicting claims.

  • Sullivan v. New York City Health & Hosps. Corp., 82 N.Y.2d 141 (1993): Public Employee Free Speech Rights

    82 N.Y.2d 141 (1993)

    A public employee’s rights to free speech and association are not absolute and can be restricted when their exercise interferes with the government-employer’s functions; the employer is not obligated to retain an employee whose conduct is deemed disruptive to operations.

    Summary

    Sullivan, a Director at Goldwater Memorial Hospital, was discharged after the hospital investigated the financial practices of Friends of Goldwater Hospital, Inc., a non-profit organization where Sullivan was president, and Sullivan authorized a lawsuit against HHC challenging its authority to conduct the audit. The HHC President requested Sullivan’s removal, citing concerns about his conduct related to the lawsuit. Sullivan argued his discharge violated his rights to free speech, association, and access to the courts. The New York Court of Appeals held that HHC’s interests in efficiently discharging its mandate outweighed Sullivan’s constitutional rights, as the allegations of financial improprieties justified the decision to remove him.

    Facts

    Sullivan was the Director of Psychology Service at Goldwater Memorial Hospital, owned and operated by the New York City Health and Hospitals Corporation (HHC). He also served as Associate Director of Rehabilitation Medicine. Sullivan was the president of Friends of Goldwater Hospital, Inc. (Friends). In 1987, HHC demanded a financial audit of Friends. Sullivan authorized a lawsuit on behalf of Friends against HHC, challenging its authority to conduct the audit. HHC investigated Friends and found evidence of improper loans and expenditures. HHC President requested that NYU (the entity providing professional services at Goldwater) remove Sullivan.

    Procedural History

    Sullivan filed an Article 78 proceeding seeking reinstatement. The Supreme Court initially granted the petition, finding bad faith and remanding for a hearing. The Appellate Division reversed, finding no hearing was required because Sullivan was an at-will employee. The Court of Appeals heard the appeal as a matter of right.

    Issue(s)

    Whether the respondents’ determination to discharge petitioner and not consider his request for reinstatement abridged petitioner’s constitutional rights to free speech, free association, and access to the courts.

    Holding

    No, because Sullivan failed to demonstrate that his discharge was for constitutionally impermissible reasons, violative of a statutory proscription, or contrary to an express contractual provision; the hospital’s interests in efficient operations outweighed Sullivan’s rights in this situation.

    Court’s Reasoning

    The Court recognized that public employees have rights to free speech, free association, and access to the courts. However, these rights are not absolute and can be restrained when their exercise interferes with the government-employer’s functions. The Court emphasized that the aggrieved employee bears the burden of proving the dismissal was constitutionally impermissible. The court stated, “As a public employer, respondent HHC is under no constitutional or legal obligation to retain an employee whose conduct the public employer deems disruptive of its operation.” HHC’s interests in effectively and efficiently discharging its mandate outweighed Sullivan’s constitutional rights. The court found Sullivan’s reliance on the letter denying reinstatement insufficient to establish a violation of his constitutional rights, as Sullivan’s association with Friends and the lawsuit did not rise to the level of protected speech or a petition to enforce a constitutional right. The court noted that Sullivan was an at-will employee and his employment was subject to removal whenever his continued employment was no longer in HHC’s best interests. The allegations of financial improprieties against Friends justified HHC’s decision to remove Sullivan. The court concluded that the termination was not impermissibly retaliatory and that Sullivan was not entitled to a hearing because he did not avail himself of a formal appeal process.

  • People v. Holmes, 81 N.Y.2d 1056 (1993): Objective Credible Reason for Police Inquiry

    People v. Holmes, 81 N.Y.2d 1056 (1993)

    A police officer’s request for information is permissible when based on an objective, credible reason, and a suspect’s abandonment of contraband in response to such a request is not necessarily the product of an unlawful seizure.

    Summary

    This case addresses the level of police intrusion permissible during an encounter with a suspect. The Court of Appeals held that police officers acted permissibly when they approached the defendant for information based on observing him in a drug-prone area, clutching his jacket, and briskly walking away from a group of men. The court further found that the defendant’s act of dropping a brick of cocaine was not a direct result of police coercion, therefore the evidence was admissible. The court emphasized the need to balance individual rights against public safety concerns in assessing police conduct.

    Facts

    Two uniformed police officers in a marked van patrolled a drug-prone area. They saw the defendant clutching the inside of his jacket beneath his armpit, putting both hands in his pockets, and quickly walking away from a group of men. As the officers approached, one officer yelled, “Hey, stop, excuse me” or similar words. When the defendant stopped and turned, a kilogram brick of cocaine fell from his armpit. After arresting the defendant, a search revealed another kilogram of cocaine hidden in his jacket and $280.

    Procedural History

    The defendant moved to suppress the evidence, but the motion was denied after a hearing. He then pleaded guilty to criminal possession of a controlled substance in the second degree. The Appellate Division affirmed the denial of the suppression motion. The dissenting justices at the Appellate Division level prompted the appeal to the New York Court of Appeals.

    Issue(s)

    1. Whether the police officers’ actions constituted an unlawful seizure of the defendant, requiring suppression of the evidence.
    2. Whether the defendant’s relinquishment of the cocaine was a direct result of police coercion, thus rendering the evidence inadmissible.

    Holding

    1. No, because the police action constituted a permissible request for information based on an objective, credible reason.
    2. No, because the Appellate Division’s determination that defendant’s relinquishment of the first kilogram brick of cocaine was not based upon submission to police authority is a mixed question of law and fact that is supported by the record.

    Court’s Reasoning

    The Court of Appeals upheld the lower court’s decision, finding the police officers’ actions justified under the four-tiered framework established in People v. De Bour and People v. Hollman. The court reasoned that the defendant’s behavior (clutching his jacket in a drug-prone area while walking away from a group of men) provided an objective, credible reason for the officers to approach him and request information. This initial encounter was a minimal intrusion and did not constitute a seizure. The court cited People v Hollman, 79 NY2d 181, 191 and People v De Bour, 40 NY2d 210, 223. The court also emphasized that the defendant’s act of dropping the cocaine was not a direct result of police coercion. Since the initial encounter was lawful and the cocaine was abandoned voluntarily, the evidence was admissible. The court declined to further review the Appellate Division’s determination, stating, “In addition, the Appellate Division’s determination that defendant’s relinquishment of the first kilogram brick of cocaine was not based upon submission to police authority is a mixed question of law and fact that is supported by the record, and, thus, is not subject to our further review.”

  • People v. Favor, 82 N.Y.2d 254 (1993): Defendant’s Right to be Present at Voir Dire is Statutory, Not Constitutional

    People v. Favor, 82 N.Y.2d 254 (1993)

    A defendant’s right to be present during sidebar discussions with prospective jurors, particularly when those discussions concern potential juror bias, is a statutory right under New York law (CPL 260.20), not a constitutional right.

    Summary

    The New York Court of Appeals clarified that a defendant’s right to be present during sidebar discussions with prospective jurors is based on state statute (CPL 260.20) and not on constitutional grounds. The defendant argued that because the voir dire questioning concerned “specific bias,” his right to be present was constitutional, making the rule retroactive. The Court of Appeals disagreed, holding that the right to be present at voir dire sidebars is statutory, whether the inquiry concerns “specific” or “general” bias, and therefore not retroactive under People v. Mitchell. This case distinguishes between the statutory right to be present and instances where no such right exists, emphasizing that the presence of counsel alone may suffice in certain ancillary proceedings.

    Facts

    Defendant was convicted of selling cocaine to an undercover officer. During jury selection (voir dire), several prospective jurors indicated potential bias or familiarity with the defendant, his family, or the crime location during sidebar discussions with the judge. These discussions occurred outside the defendant’s hearing, although defense counsel participated. The defendant objected to the jury’s racial composition after it was impaneled but did not object to his absence from the sidebar conferences during jury selection.

    Procedural History

    The Appellate Division initially reversed the conviction based on People v. Antommarchi, which addressed a defendant’s right to be present at sidebar conferences. However, the Court of Appeals subsequently held in People v. Mitchell that the Antommarchi rule was prospective only. The People’s motion for reargument, considering the Mitchell decision, was denied. The case reached the Court of Appeals to determine if the defendant’s situation was distinguishable from Antommarchi, warranting retroactive application.

    Issue(s)

    Whether the defendant’s right to be present at sidebar conferences during voir dire, where questioning concerned potential jurors’ specific biases, is a constitutional right that should be applied retroactively.

    Holding

    No, because the right to be present at voir dire sidebars, regardless of whether the inquiry concerns specific or general bias, is conferred solely by CPL 260.20, making it a statutory right, not a constitutional one, and therefore subject to prospective application only.

    Court’s Reasoning

    The Court of Appeals reasoned that while a defendant has a constitutional right to be present at core proceedings where witnesses or evidence are presented, the right to be present at ancillary proceedings, such as voir dire sidebars, is governed by CPL 260.20. The court emphasized that the state statute provides broader protection than the federal constitution. The Court distinguished the case from situations like People v. Velasco, where sidebar inquiry is directed only to ministerial matters (availability for jury service), in which case the statutory right isn’t even triggered. In People v. Sloan, the court had explained that where bias is at issue, a defendant’s presence would permit assessment of a juror’s facial expressions and demeanor. However, the court clarified that reliance on Snyder v. Massachusetts in the context of the state statutory right is to construe the scope of the statutory right. The court stated, “Under our own body of State law, we now look to the effect that defendant’s absence might have on the opportunity to defend as measure of whether the statutory right to be present at an ancillary trial proceeding is triggered.” The court concluded that the defendant’s claim is determined by People v. Mitchell and cannot be given retroactive effect.

  • In re Dale P., 624 N.E.2d 172 (N.Y. 1993): Court Authority to Order Social Services to Initiate Termination Proceedings

    In re Dale P., 81 N.Y.2d 70 (1993)

    When a child has been directly placed with a custodian by the Family Court with the acquiescence of the Commissioner of Social Services, the court has the authority to order the Commissioner to initiate proceedings to terminate parental rights, even if the child is not technically in the Commissioner’s foster care.

    Summary

    This case concerns a child, Dale P., abandoned by his mother at birth and cared for by a friend, Mary H. The Family Court ordered the New York City Commissioner of Social Services to initiate termination proceedings so Dale P. could be permanently placed with Mary H. The Commissioner argued that because Dale P. was not in official foster care, the court lacked the authority to direct her actions. The New York Court of Appeals affirmed the Family Court’s order, holding that the direct placement of the child by the court, with the Commissioner’s approval, justified the order to initiate termination proceedings, even though the child was not technically in the Commissioner’s foster care system. The court modified the order, however, striking down a provision that would have required the Commissioner to provide legal services to Mary H. if the Commissioner failed to initiate termination proceedings.

    Facts

    Dale P. was born in 1987 to Nancy P., a cocaine addict. Nancy abandoned Dale shortly after birth. Mary H., a friend, voluntarily took care of Dale. The biological mother did not respond to court petitions. In April 1988, the Family Court found neglect and continued Dale’s placement with Mary H. for 18 months, with the Commissioner’s approval. In July 1989, the Family Court extended Dale’s placement with Mary H. for another year, again with the Commissioner’s consent.

    Procedural History

    In 1990, the Commissioner petitioned for another one-year extension of Dale’s placement with Mary H. The Family Court granted this extension. On its own motion, the court then ordered the Commissioner to institute termination of parental rights proceedings. The Commissioner moved to vacate this second order, arguing lack of authority. The Family Court modified the order, stating that if the Commissioner did not bring a termination proceeding within 30 days, Mary H. could bring an adoption proceeding, with the Commissioner providing her legal representation. The Commissioner appealed, and the Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the Family Court may direct the New York City Commissioner of Social Services to commence a proceeding to terminate parental rights of a child directly placed by the Family Court with a non-relative custodian under Family Court Act § 1055 and Social Services Law § 384-b (3) (b) and (4) (b), when the child is not formally part of the foster care system.

    Holding

    Yes, because where a child has been directly placed by the Family Court with the acquiescence of the Commissioner, the court has the authority to order the Commissioner to initiate proceedings to terminate parental rights, even if the child is not technically in the Commissioner’s foster care.

    Court’s Reasoning

    The Court of Appeals reasoned that Dale P.’s placement with Mary H. was in the child’s best interest, as he had been abandoned by his biological mother and Mary H. had provided consistent care since 1988. The court emphasized the importance of permanency planning for children in such situations. While acknowledging the Commissioner’s concern about statutorily authorized process, the court found that the technical foster care processing was not the exclusive channel in this case. The court noted that requiring a formal placement into the foster care system before initiating termination proceedings would be an unnecessarily circuitous step. The court distinguished this case from situations where such a transfer would be necessary to preserve procedural safeguards for biological parents. The court also cited Social Services Law § 384-b (1) (b), which emphasizes the need for timely procedures for terminating parental rights in appropriate cases to reduce unnecessary stays in foster care. The Court of Appeals specifically noted, “[t]he Commissioner’s contention that Dale P. falls within gaps in the statutory scheme is contrary to the legislative intent expressed in Social Services Law § 384-b (1).” While the Commissioner argued that directly placed children do not automatically qualify for Federal foster care funds and that her authority over such children is limited, the court found these concerns were not pertinent in this specific case, given that the child was abandoned. The court concluded that the Family Court is empowered to guard the welfare of the child and is authorized to order the Commissioner to take further actions toward permanent placement. However, the court struck the portion of the order directing the Commissioner to provide legal services to Mary H. if the Commissioner failed to initiate termination proceedings, finding this issue unnecessary to resolve.

  • Szeli v. Prudential Property and Casualty Ins. Co., 81 N.Y.2d 492 (1993): Determining Underinsured Status with Single Limit Policies

    Szeli v. Prudential Property and Casualty Ins. Co., 81 N.Y.2d 492 (1993)

    When comparing insurance policies to determine underinsured status under New York Insurance Law § 3420(f)(2) in a multiple-victim accident, the insured’s ‘per accident’ bodily injury limit should be compared to the tortfeasor’s policy limit, considering any required allocation for property damage within the tortfeasor’s ‘single limit’ policy.

    Summary

    In a case involving multiple injuries from a single accident, the New York Court of Appeals addressed how to determine if a tortfeasor is underinsured when their insurance policy has a ‘single limit’ covering both bodily injury and property damage. Brian Szeli was injured in an accident caused by a tortfeasor with a $300,000 single-limit policy. Szeli sought underinsured motorist (SUM) coverage under his father’s Prudential policy, which had a $100,000 per person/$300,000 per accident split limit for bodily injury. The Court held that when comparing the policies, the insured’s per-accident limit should be considered, and the tortfeasor’s single limit must be construed to include the minimum required property damage coverage, thus potentially reducing the amount available for bodily injury. This makes the tortfeasor underinsured, entitling Szeli to arbitration.

    Facts

    Brian Szeli and two other teenagers were hit by a car, causing serious injuries. The tortfeasor’s insurance policy had a single limit of $300,000 per accident for both bodily injury and property damage. The tortfeasor’s insurer paid the full $300,000 policy limit, allocating $95,000 to Szeli and $205,000 to the other two injured individuals. Szeli sought supplementary underinsured motorist (SUM) coverage under his father’s insurance policy with Prudential, arguing his damages exceeded the settlement amount.

    Procedural History

    Prudential denied Szeli’s claim for SUM coverage, leading Szeli to seek arbitration. Prudential then filed a petition in Supreme Court to stay the arbitration. The Supreme Court denied Prudential’s petition and ordered arbitration. The Appellate Division reversed, finding that the tortfeasor’s policy was equal to or greater than Szeli’s policy. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether, in a multiple-victim accident with a single SUM claimant, the insured’s bodily injury limit for comparison purposes should be the per person or per accident amount.

    2. Whether, for comparison purposes, the tortfeasor’s entire single limit should be considered their bodily injury limit, even when it also covers property damage.

    Holding

    1. No, because in a multiple-victim accident, the ‘per accident’ limit of the insured’s policy should be used for comparison.

    2. No, because the tortfeasor’s single limit must be construed to include the minimum legally required amount of property damage coverage, effectively reducing the amount available for bodily injury claims.

    Court’s Reasoning

    The Court reasoned that Insurance Law § 3420(f)(2) aims to provide insureds with the same level of protection they would provide others if they were the tortfeasor. The Court framed the inquiry as whether the insured (Szeli’s father) would have greater bodily injury coverage than the tortfeasor, considering the circumstances of a multiple-victim accident. The Court emphasized a “facial comparison of the policy limits without reduction from the judgment of other claims arising from the accident.”

    The Court rejected Prudential’s argument that the $100,000 per person limit should be used because only one person was claiming under the Prudential policy. The court stated that the determination of whether SUM coverage is available requires a comparison of each policy’s bodily injury liability coverage as it operates under the policy terms. This determination is made “without reference to the terms of the SUM endorsement.”

    The court noted that Vehicle and Traffic Law § 311 requires New York motorists to have at least $5,000 in property damage liability coverage. Therefore, the tortfeasor’s $300,000 single limit policy necessarily includes this minimum property damage coverage, meaning less than $300,000 is actually available for bodily injury. The court reasoned that “a policy facially offering $300,000 exclusively for bodily injury liability insurance provides greater bodily injury coverage than one facially offering $300,000 divided between bodily injury and property damage.”

    Referencing other jurisdictions, the court cited Heirs of Leetz v Arnica Mut. Ins. Co., 839 P2d 511, 513 (Colo App) and Staub v Hanover Ins. Co., 251 NJ Super 66, 68, 596 A2d 1096, 1097, and concluded that the “per accident limit ($300,000) should be employed in the underinsurance comparison when there is a multiple-victim accident but only one underinsurance claimant.”

  • Matter of Extrom Associates v. Commissioner of Finance, 82 N.Y.2d 553 (1993): Deductibility of Partnership Payments

    Matter of Extrom Associates v. Commissioner of Finance, 82 N.Y.2d 553 (1993)

    Payments made in liquidation of a partnership interest, representing the outgoing partner’s share in the amortization of player contracts, are deductible from the partnership’s unincorporated business gross income and are not considered payments “for services or for use of capital” under section 11-507 of the Administrative Code of the City of New York.

    Summary

    The New York Court of Appeals addressed whether payments made to retiring partners of the New York Yankees, representing their share of amortized player contracts, could be deducted from the partnership’s gross income for Unincorporated Business Income Tax (UBIT) purposes. The Commissioner of Finance argued that these payments were essentially for services or capital use, thus not deductible under the city’s tax code. The court disagreed, holding that the payments were not truly for services or capital, despite their treatment under federal tax law, and thus were deductible for UBIT purposes.

    Facts

    Extrom Associates, an Ohio limited partnership operating the New York Yankees, made payments to five retiring partners in 1978, 1979, and 1981, liquidating their partnership interests. These payments included the retiring partners’ share in player contracts that had been amortized by the partnership. For federal income tax, the partnership treated these payments as the retiring partners’ distributive share of partnership income and unrealized receivables, claiming a deduction for these guaranteed payments under Internal Revenue Code (IRC) sections 736(a)(2) and 707(c). The partnership sought the same deduction for New York City Unincorporated Business Income Tax (UBIT).

    Procedural History

    The City’s Department of Finance disallowed the deductions, assessing a deficiency. Extrom Associates filed a deficiency petition. The Commissioner of Finance denied the petition, but the Supreme Court annulled the determination, holding that the payments were not for services or capital use. The Appellate Division affirmed. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether payments made in liquidation of partnership interests, representing the outgoing partners’ share in the amortization of player contracts, are payments “for services or for use of capital” within the meaning of section 11-507 of the Administrative Code of the City of New York and, thus, not deductible from the partnership’s unincorporated business gross income.

    Holding

    No, because nothing in the statutory provisions restricts the payments to payments for services or the use of capital for City unincorporated business tax purposes. The Federal provisions are intended only to implement the “recapture rule” and prevent taxpayers from benefiting from differences in the tax rates between ordinary income and capital gains when the actual depreciation of an asset is less than the amount amortized.

    Court’s Reasoning

    The court emphasized that the plain language of section 11-507(3) of the Administrative Code disallows deductions only for amounts paid “for services or for use of capital.” The payments in question, representing unrealized receivables from amortized player contracts, did not fall under this prohibition. The court rejected the Commissioner’s argument that federal tax law characterization of these payments as “guaranteed payments” under IRC section 707(c) automatically made them non-deductible for UBIT purposes.

    The court reasoned that section 707(c) of the IRC doesn’t define guaranteed payments as payments for services or the use of capital. Instead, it provides a specific tax treatment for such payments under federal law, primarily to prevent tax avoidance related to depreciation. The court stated, “That Internal Revenue Code § 707 (c) gives guaranteed payments the same tax treatment as payments for services or the use of capital does not mean that the guaranteed payments attributable to amortized player contracts at issue here are in fact payments for services or the use of capital within the meaning of the Unincorporated Business Income Tax provisions of the Administrative Code.” The court emphasized that simply because payments receive a certain characterization under federal tax law for federal income tax purposes does not automatically dictate their characterization under the City’s UBIT provisions.

  • People v. Sinistaj, 81 N.Y.2d 232 (1993): Criminal Court Jurisdiction and Grand Jury Indictments

    People v. Sinistaj, 81 N.Y.2d 232 (1993)

    A local criminal court is divested of jurisdiction over a misdemeanor charge when the charge is presented to a grand jury within a designated adjournment period, and either an indictment or dismissal results, which occurs when the indictment is filed with a superior court.

    Summary

    The New York Court of Appeals addressed the issue of when a criminal court is divested of jurisdiction under CPL 170.20(2)(a) when a case is presented to a grand jury. The defendant was arrested and charged with misdemeanors. The Assistant District Attorney (ADA) sought an adjournment to present the case to the Grand Jury, which voted to indict the defendant on felony charges before the adjourned date. On the adjourned date, the defendant pleaded guilty to the misdemeanor. The indictment was filed after the plea. The Court held that Criminal Court was divested of jurisdiction when the indictment resulted (filing), prior to the guilty plea.

    Facts

    Defendant was arrested on December 1, 1989, and charged with misdemeanor criminal trespass and criminal mischief.

    On December 4, 1989, the ADA obtained an adjournment to December 8, 1989, to seek a felony indictment from the Grand Jury.

    On December 7, 1989, the Grand Jury voted to indict defendant for second-degree burglary.

    On December 8, 1989, defendant pleaded guilty to the misdemeanor trespass charge in Criminal Court, with the People’s consent.

    On December 13, 1989, the burglary indictment was filed in Supreme Court.

    Procedural History

    Defendant was convicted of attempted burglary in the second degree in Supreme Court, Kings County, after his motion to dismiss the indictment on double jeopardy grounds was denied.

    The New York Court of Appeals affirmed the conviction.

    Issue(s)

    Whether Criminal Court was divested of jurisdiction pursuant to CPL 170.20 when the ADA requested an adjournment to present the case to the Grand Jury, and an indictment resulted prior to the defendant’s guilty plea in Criminal Court.

    Holding

    Yes, because Criminal Court was divested of jurisdiction pursuant to CPL 170.20 when the indictment was filed, which occurred before the guilty plea. The Court interpreted the statute to mean that divestiture occurs when an indictment “results,” which is upon filing with the superior court.

    Court’s Reasoning

    The Court focused on interpreting CPL 170.20 (2) (a), which states that a local criminal court is divested of jurisdiction when a charge is presented to a grand jury within the designated period and either an indictment or dismissal of such charge results. The Court emphasized that the word “results” accommodates either an indictment or a dismissal. An indictment, as defined in the CPL 200.10, is “a written accusation by a grand jury, filed with a superior court.” The Court reasoned that an indictment “results” when it is filed, not merely when the grand jury votes to indict. The majority held that because the indictment was filed with the Supreme Court prior to the acceptance of the guilty plea in criminal court, that the criminal court lacked subject matter jurisdiction to accept the plea. Chief Judge Kaye dissented, arguing that Criminal Court jurisdiction is divested only when an indictment is filed, and the majority’s interpretation condones sloppy practice and enlarges the statutory definition of an indictment. She cited People v. Cade, 74 N.Y.2d 410, 416, noting that the case held there is no strict time limit for filing the indictment, but does not hold that an indictment is valid without being filed.

  • Schwartz v. Selig, 81 N.Y.2d 883 (1993): Application of the Continuous Treatment Doctrine

    Schwartz v. Selig, 81 N.Y.2d 883 (1993)

    The continuous treatment doctrine tolls the statute of limitations for medical malpractice claims only when there is a continuing effort by a doctor to treat a particular condition, not when consultations are independent and lack an expectation of future contact.

    Summary

    In this medical malpractice case, the New York Court of Appeals held that the continuous treatment doctrine did not apply to toll the statute of limitations. The plaintiff alleged that the defendant physician negligently failed to diagnose liver cancer during initial consultations. However, the court found that these consultations, conducted to assess the impact of psoriasis treatment on the decedent’s liver, were distinct from a later consultation nine months later when cancer was detected. Because the initial consultations were independent and did not contemplate ongoing treatment or future contact, the continuous treatment doctrine was inapplicable, and the malpractice claim was time-barred.

    Facts

    In January and February 1987, Dr. Selig (defendant) examined the decedent at the request of her dermatologist to determine if a psoriasis drug would harm her liver. Dr. Selig detected a nodule but concluded the drug wouldn’t be harmful. No further examinations or follow-up consultations were proposed or contemplated at that time. Nine months later, in November 1987, the decedent consulted her internist, who referred her back to Dr. Selig. Dr. Selig then detected liver cancer, from which the decedent died shortly after.

    Procedural History

    The plaintiff commenced a medical malpractice action more than two years after the November examination, alleging negligent failure to diagnose cancer during the initial consultations. The defendant moved for summary judgment based on the statute of limitations. The plaintiff argued the continuous treatment doctrine tolled the statute. The lower courts ruled in favor of the plaintiff, but the Court of Appeals reversed, granting the defendant’s motion for summary judgment.

    Issue(s)

    Whether the decedent’s visits to the defendant constituted a single course of treatment, thereby invoking the continuous treatment doctrine to toll the 2.5-year statute of limitations for medical malpractice claims under CPLR 214-a.

    Holding

    No, because the initial consultations were for a purpose wholly independent of the later consultation and involved neither ongoing provision of services by the defendant nor the expectation of any future contact between the patient and physician after discharge from the hospital.

    Court’s Reasoning

    The Court of Appeals reasoned that the continuous treatment doctrine applies only when there are “continuing efforts by a doctor to treat a particular condition.” The court distinguished this case from situations where there is an ongoing relationship between the doctor and patient. The court emphasized that the initial consultations were undertaken for a purpose wholly independent of the later consultation, specifically to assess the impact of psoriasis treatment on the liver. There was no ongoing provision of services or expectation of future contact after the initial consultations were completed. The court cited Davis v City of New York, 38 NY2d 257, 259 and McDermott v Torre, 56 NY2d 399, 406 to further emphasize the requirements of continuing treatment and expectation of future contact. The court also stated, “The fact that the condition allegedly overlooked in the first consultations was the condition ultimately diagnosed in the later consultation does not bring this case within the continuous treatment doctrine even if a correct diagnosis would have led to an ongoing course of treatment (see, Nykorchuck v Henriques, 78 NY2d 255, 259).” The court explicitly rejected the argument that a missed diagnosis, even if related to a later-diagnosed condition, automatically triggers the continuous treatment doctrine. The court’s decision emphasizes the importance of a clear and continuous doctor-patient relationship for the doctrine to apply.

  • People v. Construction Refuse, Inc., 81 N.Y.2d 861 (1993): Interpreting Ambiguous Statutes Regarding Builder Responsibilities

    People v. Construction Refuse, Inc., 81 N.Y.2d 861 (1993)

    An ambiguous penal statute should be interpreted narrowly and in favor of the defendant, especially when the statute’s language and context suggest a specific intended application.

    Summary

    Construction Refuse, Inc. was charged with violating a New York City Administrative Code provision related to builders placing equipment on roadways. The company’s employee placed a dumpster on the street without protective planking. The Court of Appeals reversed the Appellate Term’s order, finding that the statute, at best ambiguous, applied to “builders,” not equipment “owners” like the defendant. The Court emphasized that the restrictions, including the planking requirement, were tied to permits issued to builders, and a broader interpretation would lead to unintended, far-reaching criminal penalties. The information was dismissed.

    Facts

    An employee of Construction Refuse, Inc. placed a dumpster on an asphalt roadway in New York City without first laying down protective planking.

    The City of New York charged Construction Refuse, Inc. with violating former Section 19-122 of the Administrative Code of the City of New York.

    Procedural History

    The case reached the New York Court of Appeals after an order from the Appellate Term.

    The Court of Appeals reversed the Appellate Term’s order and granted the defendant’s motion to dismiss the information.

    Issue(s)

    Whether former section 19-122 of the Administrative Code of the City of New York applied to equipment owners like Construction Refuse, Inc., or only to “builders”.

    Holding

    No, because the penal statute, ambiguous at best, applied on its face to “builders,” not to equipment “owners” such as defendant.

    Court’s Reasoning

    The court reasoned that the statute was ambiguous, and penal statutes should be narrowly construed. The court examined the language and structure of former section 19-122 of the Administrative Code.

    The court noted that the restrictions listed in subdivision (d) of the statute, including the planking requirement, related to permits issued to builders under subdivision (a). The court found support in the fact that subdivision (d)(2) also required every permit to contain a notice that protective planking is required.

    The court reasoned that interpreting the statute broadly to apply to “any person” who places “any equipment” in the street without protective planking would lead to an absurd result that the City Council could not have intended.

    The court stated: “Were this provision not limited in application to “builders,” the broad statutory language would subject to criminal penalties “any person” who places any equipment’ in the street without protective planking. Such a far-reaching result could not have been the intent of the City Council.”

    Therefore, the court reversed the Appellate Term’s order and dismissed the information against Construction Refuse, Inc.