New York Law Review

Tag: 2012

  • People v. Jackson, 18 N.Y.3d 738 (2012): Defines ‘Public Place’ for Marijuana Possession

    People v. Jackson, 18 N.Y.3d 738 (2012)

    A person is in a “public place” for the purposes of criminal possession of marijuana in the fifth degree (Penal Law § 221.10[1]) when they are located on a highway, even if they are inside a private vehicle.

    Summary

    Samuel Jackson was arrested for marijuana possession after a traffic stop. He pleaded guilty but appealed, arguing the accusatory instrument was jurisdictionally deficient because it didn’t adequately allege he was in a “public place” or that the marijuana was “open to public view,” elements of the crime. The Court of Appeals affirmed his conviction, holding that a person is in a public place when on a highway, regardless of being in a vehicle. The Court also found the allegation that the marijuana was “open to public view” was sufficiently pled. The Court reasoned that a highway is explicitly defined as a public place and that the “open to public view” element was satisfied by the officer’s observation of the defendant holding a bag of marijuana in his hand.

    Facts

    A police officer observed Jackson commit a traffic infraction while driving in Brooklyn. During the traffic stop, the officer smelled marijuana and saw Jackson holding a ziplock bag of marijuana in his hand. Further search revealed more bags of marijuana. Jackson was charged with criminal possession of marijuana in the fifth degree, among other offenses, and pleaded guilty to the fifth-degree possession charge.

    Procedural History

    Jackson appealed his conviction to the Appellate Term, arguing the accusatory instrument was jurisdictionally deficient. The Appellate Term affirmed the conviction. A Judge of the Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether a person is in a “public place” within the meaning of Penal Law § 221.10(1) when they are inside a vehicle on a public street (highway)?

    2. Whether the allegation that the marijuana was “open to public view” was sufficiently pled in the accusatory instrument?

    Holding

    1. Yes, because Penal Law § 240.00(1) defines a “public place” as a place to which the public has access, including highways, and the location of the vehicle on a highway qualifies as a public place regardless of whether the individual is inside the vehicle.

    2. Yes, because the accusatory instrument alleged that the officer saw the defendant holding a bag of marijuana in his hand, which supports a reasonable inference that the marijuana was unconcealed and visible to the public.

    Court’s Reasoning

    The Court reasoned that Penal Law § 240.00(1) defines a “public place” as “a place to which the public or a substantial group of persons has access, and includes, but is not limited to, highways.” The Court stated that the legislature made possession in a “public place” an element of criminal possession of marijuana in the fifth degree and incorporated a preexisting definition of the phrase from article 240. Jackson was on a highway, which is a location the legislature specifically designated as a public place. The fact that Jackson was in a car does not alter that he was on a highway and thus in a public place.

    The Court rejected the argument that personal automobiles should be excluded from the definition of “public place.” A person driving in a personal automobile will be in a public place only when the vehicle is in a location that qualifies under the statute as a public place.

    Regarding the “open to public view” element, the Court reasoned that the requirement ensures that a person carrying a small amount of concealed marijuana is not subject to misdemeanor prosecution. The Court stated that although not a model of specificity, the allegations were jurisdictionally sufficient to provide reasonable cause to believe that the marijuana was open to public view. The Court found that because the officer was standing outside the vehicle when she saw the substance in the ziplock bag, these allegations support the inference that any other member of the public could also have seen the marijuana from the same vantage point.

  • Ovitz v. Bloomberg L.P., 18 N.Y.3d 753 (2012): Injury Required for Claims Under General Obligations Law and General Business Law

    18 N.Y.3d 753 (2012)

    A plaintiff must demonstrate actual injury to sustain a claim under General Obligations Law §§ 5-901 and 5-903, and General Business Law § 349.

    Summary

    Bruce Ovitz, an Illinois resident, sued Bloomberg L.P. alleging violations of New York General Obligations Law and General Business Law, breach of contract, and other claims, stemming from an automatically renewing subscription agreement for Bloomberg’s financial information services. Ovitz claimed Bloomberg failed to provide advance notice of the automatic renewal, as required by statute. The New York Court of Appeals affirmed the dismissal of Ovitz’s complaint, holding that he failed to demonstrate any actual injury as a result of Bloomberg’s actions, a necessary element for maintaining claims under the relevant statutes. Bloomberg waived its claims for termination fees and arrears. The court emphasized that without a cognizable injury, Ovitz’s claims, including those for declaratory and injunctive relief, could not stand.

    Facts

    In 2000, Ovitz entered a two-year subscription agreement with Bloomberg for financial information services, containing an automatic renewal clause for successive two-year periods unless either party provided 60 days’ written notice of termination. After the initial term expired in 2002, Ovitz continued using Bloomberg’s services. In September 2008, Ovitz notified Bloomberg of his intent to terminate the agreement at the end of the month. Bloomberg informed him the agreement had automatically renewed until June 2010 and he was liable for payments through that date or an early termination fee. Bloomberg allegedly admitted it was their standard policy not to provide advance notice of automatic renewals. Ovitz sent written notice of termination in October 2008. Bloomberg continued to bill him. Bloomberg eventually waived the early termination fee and collection of fees.

    Procedural History

    Ovitz filed a class action lawsuit in December 2008. Supreme Court initially dismissed some claims but allowed claims under General Obligations Law and General Business Law to proceed. The Appellate Division reversed, dismissing the entire complaint. The Appellate Division reasoned that while Bloomberg’s failure to comply with the notice requirements of the General Obligations Law made the automatic renewal provision unenforceable, Ovitz hadn’t alleged he paid for services he didn’t receive. The Court of Appeals granted leave to appeal and affirmed the Appellate Division’s decision.

    Issue(s)

    Whether a plaintiff can sustain claims for violations of General Obligations Law §§ 5-901 and 5-903, General Business Law § 349, and for declaratory and injunctive relief, absent a showing of actual injury.

    Holding

    No, because a plaintiff must demonstrate actual injury to maintain a claim under General Obligations Law §§ 5-901 and 5-903, General Business Law § 349, and to obtain declaratory or injunctive relief.

    Court’s Reasoning

    The Court of Appeals held that even assuming a private right of action exists under General Obligations Law §§ 5-901 and 5-903, Ovitz’s claim failed because he did not suffer any harm. He did not pay service termination fees, nor did he pay for services he did not receive. His argument that he prepaid for services through the end of September 2008 was contradicted by his statement he wanted to terminate at the end of the month. Further, Bloomberg’s waiver of claims extinguished any threat of injury based on alleged credit rating impairment.

    Regarding the General Business Law § 349 claim, the court cited Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 (1995), emphasizing that a plaintiff must demonstrate that the defendant’s deceptive act or practice caused injury to the plaintiff. Since Ovitz demonstrated no injury, this claim also failed. As the court explained, a prima facie showing requires allegations that a “defendant is engaging in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof“

    Finally, the court concluded that absent actual injury and given Bloomberg’s waiver of its claims, there was no justiciable controversy to support declaratory relief, nor was there irreparable harm to warrant injunctive relief. As a result, the court affirmed the dismissal of the entire complaint.

  • Town of Waterford v. New York State Department of Environmental Conservation, 18 N.Y.3d 647 (2012): Clarifying the Scope of FOIL’s Inter-Agency Exemption

    18 N.Y.3d 647 (2012)

    The Freedom of Information Law’s (FOIL) inter-agency and intra-agency exemption, which protects predecisional deliberative materials, does not extend to communications between a New York state agency and a federal agency because the statutory definition of “agency” is limited to state and municipal entities.

    Summary

    The Town of Waterford sought information from the New York State Department of Environmental Conservation (DEC) regarding the Hudson River dredging project, particularly concerning alternative water supplies due to PCB contamination. The DEC denied access to certain records exchanged with the Environmental Protection Agency (EPA), claiming the inter-agency exemption under FOIL. The New York Court of Appeals held that the inter-agency exemption does not apply to communications with federal agencies, as the FOIL statute defines “agency” as state or municipal entities only. The court emphasized FOIL’s policy of open government and narrow interpretation of exemptions, ordering the release of the withheld documents.

    Facts

    The EPA placed a 200-mile portion of the Hudson River on the National Priorities List in 1984 due to PCB contamination.
    The EPA, DEC, and New York State Department of Health (DOH) collaborated on addressing the contamination, with the EPA as the lead agency.
    In 2002, the EPA approved a remediation plan requiring dredging, and General Electric (GE) was directed to prepare a “Water Supply Options Analysis” for the Towns of Waterford and Halfmoon.
    The Town of Waterford subsequently made a FOIL request to DEC seeking documents related to alternative water supplies, PCB levels, and modifications to regulations governing PCB exposure, along with materials related to GE’s analysis.

    Procedural History

    The DEC provided some documents but withheld others, citing the inter-agency or intra-agency exemption and other state/federal law exemptions.
    The Town commenced a CPLR Article 78 proceeding challenging the withholding.
    Supreme Court directed disclosure of additional records, finding the EPA was not an “agency” under the Public Officers Law.
    The Appellate Division modified, holding that communications between federal and state agencies could be considered deliberative material subject to exemption, and remitted for in camera review.
    Supreme Court then concluded the records qualified as exempt deliberative material.
    The Town appealed to the Court of Appeals.

    Issue(s)

    Whether communications with the EPA, a federal agency, fall within the inter-agency or intra-agency exemption for predecisional materials under Public Officers Law § 87(2)(g).

    Holding

    No, because the statutory definition of “agency” in the Public Officers Law is explicitly limited to state and municipal entities, and does not include federal agencies like the EPA.

    Court’s Reasoning

    The Court of Appeals emphasized that FOIL is based on the principle that “the public is vested with an inherent right to know and that official secrecy is anathematic to our form of government.” Therefore, FOIL must be liberally construed, and its exemptions narrowly interpreted.
    The statute defines “agency” as “any state or municipal department, board, bureau, division, commission, committee, public authority, public corporation, council, office or other governmental entity performing a governmental or proprietary function for the state or any one or more municipalities thereof, except the judiciary or the state legislature” (Public Officers Law § 86 [3]).
    The Court rejected the DEC’s argument that the definition of “agency” should not apply to the phrases “inter-agency” and “intra-agency,” finding no indication of legislative intent to treat the term differently.
    While acknowledging the collaborative relationship between the EPA and DEC, the Court distinguished the EPA from an outside consultant retained by an agency. The Court noted the EPA was the lead agency and represented different constituencies, whose interests may diverge.
    The Court cited the Committee on Open Government’s opinion that the EPA cannot be characterized as a consultant “retained” by the DEC and that the definition of “agency” does not include federal agencies.
    The Court concluded that the DEC failed to meet its burden of proving that the requested material fell within the statutory exemption. “It would make little sense to protect the deliberative process when such reports are prepared by agency employees yet deny this protection when reports are prepared for the same purpose by outside consultants retained by agencies”.

  • People v. Miller, 18 N.Y.3d 704 (2012): Verdict Sheet Annotations and Harmless Error

    18 N.Y.3d 704 (2012)

    A verdict sheet containing annotations beyond those authorized by statute (CPL 310.20(2)) constitutes reversible error, and harmless error analysis does not apply.

    Summary

    Jeffery Miller was convicted of second-degree murder. The verdict sheet included the question of whether the defendant established the affirmative defense of extreme emotional disturbance by a preponderance of the evidence. Miller appealed, arguing the verdict sheet violated CPL 310.20(2). The Appellate Division reversed. The Court of Appeals affirmed, holding that including the burden of proof on the verdict sheet was an unauthorized annotation under the statute. The Court further held that the error was not subject to harmless error analysis, adhering to prior precedent in People v. Damiano despite a 1996 amendment to CPL 310.20(2). This case clarifies the limitations on verdict sheet content and reinforces the strict application of CPL 310.20(2).

    Facts

    Miller was charged with second-degree murder for shooting his former girlfriend. At trial, Miller requested that the jury consider the affirmative defense of extreme emotional disturbance, which, if proven, would reduce the charge to first-degree manslaughter. The trial court provided the jury with a six-page verdict sheet. On the first page, the jury was instructed to consider the extreme emotional disturbance defense only if they found Miller guilty of second-degree murder. The verdict sheet asked: “Has the Defendant established by a preponderance of the evidence that he acted under Extreme Emotional Disturbance?” Miller objected to this language.

    Procedural History

    The trial court convicted Miller of second-degree murder. The Appellate Division reversed and ordered a new trial, finding a violation of CPL 310.20(2) that could not be considered harmless error (People v. Miller, 73 AD3d 1435 [4th Dept 2010]). The People appealed to the Court of Appeals.

    Issue(s)

    Whether the inclusion of language regarding the burden of proof for the affirmative defense of extreme emotional disturbance on the verdict sheet violated CPL 310.20(2).

    Whether a violation of CPL 310.20(2) is subject to harmless error analysis.

    Holding

    1. Yes, because the language constitutes an instruction on burden of proof, which is not authorized by CPL 310.20(2).

    2. No, because the 1996 amendment to CPL 310.20(2) did not alter the established precedent that harmless error analysis is inapplicable when a verdict sheet exceeds the statutory limitations.

    Court’s Reasoning

    The Court of Appeals relied on its prior holdings in People v. Spivey and People v. Damiano, which established that it is reversible error to provide a jury with a verdict sheet containing unauthorized annotations. The 1996 amendment to CPL 310.20(2) permits including dates, names of complainants, or specific statutory language to distinguish between counts, but does not authorize instructions on the burden of proof. The court rejected the argument that the 1996 amendment opened the door for harmless error analysis when a verdict sheet exceeds the statutory limits. The court stated, “legislative history cannot supply something that is just not in the statute.” The court contrasted the legislative response to People v. Ranghelle, where the legislature explicitly allowed for harmless error analysis in cases involving Rosario violations. The absence of similar language in the CPL 310.20(2) amendment indicated that the legislature did not intend to alter the existing rule against harmless error analysis in verdict sheet cases. The dissenting opinion argued that the 1996 amendment was specifically intended to countermand the strict precedent established in Spivey and Damiano and that the Governor’s Approval Memorandum supported this interpretation. The dissent concluded that the error was harmless given the overwhelming evidence of Miller’s guilt and the weakness of his extreme emotional disturbance defense.

  • Baker v. Poughkeepsie City School District, 19 N.Y.3d 714 (2012): Disqualification of Decision-Makers Who Testify at Disciplinary Hearings

    Baker v. Poughkeepsie City School District, 19 N.Y.3d 714 (2012)

    A decision-maker who testifies at a disciplinary hearing in support of the charges against an employee is considered personally involved in the disciplinary process and must disqualify themselves from reviewing the hearing officer’s recommendations and rendering a final determination.

    Summary

    Jeffrey Baker, the Business Manager of the Poughkeepsie City School District, faced disciplinary charges under Civil Service Law § 75. Two members of the Board of Education, Ellen Staino and Raymond Duncan, testified at the disciplinary hearing. Staino’s testimony supported a charge related to Baker contacting her, while Duncan testified about errors Baker made in the district budget. After the hearing officer recommended Baker’s termination, the Board, including Staino and Duncan, adopted the recommendation. Baker challenged the Board’s determination via a CPLR article 78 proceeding. The Appellate Division annulled the determination, ordering a review by the Board excluding Staino and Duncan. The New York Court of Appeals affirmed, holding that their testimony rendered them personally involved in the disciplinary process, requiring their disqualification.

    Facts

    In July 2007, the Superintendent of Schools brought eight charges of misconduct and incompetence against Jeffrey Baker, the Business Manager. These charges included errors in calculating the former superintendent’s pay, failing to make required contributions, and violating directives. Charge I specifically addressed Baker’s attempt to influence Board President Ellen Staino regarding staffing decisions. Staino testified in support of Charge I, and Board member Duncan testified about a budget error discovered by him.

    Procedural History

    The Board of Education appointed a hearing officer who found Baker guilty and recommended termination. The Board adopted the recommendation, leading to Baker’s termination. Baker initiated a CPLR article 78 proceeding challenging the Board’s decision. The Appellate Division granted the petition, annulled the determination, and remitted the matter back to the Board, excluding Staino and Duncan. The Court of Appeals granted leave to appeal and affirmed the Appellate Division’s order.

    Issue(s)

    Whether members of a Board of Education who testify at a Civil Service Law § 75 disciplinary hearing regarding charges against an employee must disqualify themselves from subsequently reviewing the hearing officer’s recommendations and acting on those charges.

    Holding

    Yes, because the testimony of Board members Staino and Duncan, concerning the charges levied against Baker, rendered them personally involved in the disciplinary process, disqualifying them from reviewing the hearing officer’s recommendations and rendering a final determination.

    Court’s Reasoning

    The Court of Appeals reasoned that while not all involvement in a disciplinary process necessitates recusal, individuals personally or extensively involved should disqualify themselves from reviewing recommendations and acting on charges. Citing Matter of Ernst v Saratoga County, the court emphasized the need for disqualification where a witness testifies concerning the charges, as it allows that person to pass upon his or her own credibility as a witness.

    The court clarified that disqualification is required only when the testimony directly supports or negates the charges, making the decision-maker personally involved and potentially partial. However, the rule of necessity allows a person to participate in a decision even if they would normally be disqualified if their participation is essential to effectuate a decision.

    In this case, Staino’s extensive involvement stemmed from Baker’s communication with her being the basis for Charge I, and she testified to sustain that charge. Duncan’s testimony regarding the budget discrepancy and his communication with Baker’s supervisor also demonstrated his personal involvement. The court noted that neither Staino nor Duncan’s votes were necessary for disciplinary action, thus their disqualification was appropriate. As the court stated, testifying witnesses should not review recommendations and act upon charges because that “permits that person to pass upon his or her ‘own credibility as a witness’”.

  • Abacus Federal Savings Bank v. ADT Security Services, Inc., 18 N.Y.3d 675 (2012): Enforceability of Exculpatory Clauses and Gross Negligence

    Abacus Federal Savings Bank v. ADT Security Services, Inc., 18 N.Y.3d 675 (2012)

    While contractual clauses can limit liability for ordinary negligence, they are unenforceable against allegations of gross negligence, which requires conduct that smacks of intentional wrongdoing or reckless indifference to the rights of others.

    Summary

    Abacus Federal Savings Bank sued ADT and Diebold for breach of contract and negligence after a burglary at its branch. The bank alleged the security systems provided by the defendants were inadequate and malfunctioning. The New York Court of Appeals held that while exculpatory clauses are generally enforceable, they do not protect against gross negligence. The Court found Abacus’s allegations against ADT sufficient to state a claim for gross negligence, but upheld the dismissal of claims against Diebold due to a waiver-of-subrogation clause in their contract. The court also clarified that Abacus lacked standing to assert claims for losses sustained by its safe deposit box customers. Finally, the court determined that the facts of the case did not give rise to separate liability in tort.

    Facts

    Abacus Federal Savings Bank contracted with ADT to install and maintain a 24-hour central station security system for its branch, including the vault. Abacus also contracted with Diebold for a backup alarm system. A burglary occurred at the Abacus branch over a weekend. Burglars broke into the vault, stole cash, and accessed safe deposit boxes. The alarm systems failed to alert authorities during the burglary. Abacus alleged that both ADT and Diebold knew their systems were malfunctioning for weeks or months before the burglary, with numerous phone line failures and other issues that went uninvestigated and unreported to the bank.

    Procedural History

    Abacus sued ADT and Diebold, alleging breach of contract and negligence. The Supreme Court initially denied the motion to dismiss the breach of contract and gross negligence claims. The Appellate Division reversed, dismissing the entire complaint. The Appellate Division held that the allegations amounted to ordinary negligence, not gross negligence, and that a waiver-of-subrogation provision in Diebold’s contract barred claims against them. Abacus appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the exculpatory and limitation of liability clauses in the contracts between Abacus and ADT and Diebold are enforceable, considering Abacus’s allegations of gross negligence.

    2. Whether the waiver-of-subrogation clause in the contract between Abacus and Diebold acts as a complete defense to Abacus’s claims against Diebold.

    3. Whether Abacus has standing to assert claims for losses sustained by its safe deposit box customers.

    4. Whether the facts of this case give rise to a separate cause of action in tort.

    Holding

    1. No, because New York public policy prohibits parties from insulating themselves from damages caused by grossly negligent conduct.

    2. Yes, because the waiver-of-subrogation clause is a valid risk allocation provision.

    3. No, because Abacus failed to allege sufficient facts to demonstrate standing to pursue claims for the losses of its safe deposit box customers.

    4. No, because the allegations do not establish a duty independent of the contractual relationship.

    Court’s Reasoning

    The Court of Appeals reaffirmed the principle that contracts can absolve parties from liability for ordinary negligence but not for gross negligence. Gross negligence requires conduct that “smacks of intentional wrongdoing” or shows “reckless indifference to the rights of others,” quoting Kalisch-Jarcho, Inc. v City of New York, 58 NY2d 377, 385 (1983). The Court distinguished this case from David Gutter Furs v Jewelers Protection Servs., 79 NY2d 1027 (1992), where the allegations only amounted to ordinary negligence. Here, Abacus alleged that the defendants knew of the malfunctioning equipment for weeks or months but failed to investigate or notify the bank, which, if proven, would constitute gross negligence.

    Regarding Diebold, the Court upheld the waiver-of-subrogation clause, citing Board of Educ., Union Free School Dist. No. 3, Town of Brookhaven v Valden Assoc., 46 NY2d 653 (1979), and reiterated that such clauses are valid when they require one party to obtain insurance for all parties. Since Abacus agreed to obtain insurance and waive claims against Diebold, the waiver was enforceable.

    The Court found that Abacus’s contract with ADT did not contain a similar waiver-of-subrogation clause. The contract did not require Abacus to obtain insurance and did not include an express waiver of claims against ADT; therefore, the exculpatory clause did not act as a complete defense. However, the Court found that Abacus did not adequately plead standing to recover for the losses of its safe deposit box customers.

    Finally, the Court held that the breach of contract, even if grossly negligent, did not give rise to a separate tort cause of action because there was no duty independent of the contract, citing Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389 (1987). The Court distinguished the case from Sommer v Federal Signal Corp., 79 NY2d 540, 551-553 (1992), where the defendant’s conduct affected a significant public interest.

  • People ex rel. McManus v. Horn, 18 N.Y.3d 660 (2012): Bail Statute Requires at Least Two Forms of Bail

    People ex rel. McManus v. Horn, 18 N.Y.3d 660 (2012)

    New York Criminal Procedure Law 520.10(2)(b) requires a court to designate at least two forms of bail, offered in the alternative, and prohibits a court from setting cash-only bail.

    Summary

    Shaun McManus was arrested for arson and related offenses while on parole. After violating an order of protection, bail was set at $20,000 cash only. McManus challenged this, arguing that CPL 520.10(2)(b) requires at least two forms of bail. The lower courts upheld the cash-only bail. The New York Court of Appeals reversed, holding that the statute mandates a court offer at least two alternative forms of bail, to ensure flexible options for pretrial detainees who are presumed innocent. The court reasoned that this interpretation aligns with the legislative intent to reform restrictive bail practices.

    Facts

    Shaun McManus was arrested for arson and related offenses against a victim while on parole. After initially posting bail, he violated an order of protection against the same victim by threatening him with weapons. At arraignment for the new charges, bail was set. Subsequently, McManus was indicted based on the initial incidents. The Supreme Court then ordered bail to be set at $20,000 “CASH ONLY.”

    Procedural History

    After the Supreme Court set bail at $20,000 cash only and denied a motion to increase it, McManus was unable to secure a bail bond. He sought alteration of the bail ruling, which was denied. McManus then commenced a CPLR article 70 proceeding for a writ of habeas corpus, arguing the cash-only bail was illegal. The Supreme Court dismissed the petition. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether CPL 520.10(2)(b) prohibits a court from designating only one form of bail, specifically cash only, or whether the statute allows a court the discretion to mandate a single form of bail.

    Holding

    Yes, CPL 520.10(2)(b) prohibits a court from fixing only one form of bail because the statute’s language and legislative purpose indicate that a defendant is entitled to at least two alternative choices for bail.

    Court’s Reasoning

    The Court of Appeals analyzed the language of CPL 520.10(2)(b), which refers to “any one of two or more of the forms” of bail. While acknowledging the District Attorney’s argument that the statute’s reference to a singular “form” of bail and the use of “may” could suggest judicial discretion to impose a single type of bail, the Court found McManus’s interpretation more consistent with the statute’s overall structure and legislative purpose.

    The Court reasoned that the inclusion of “may” in both subdivisions (2)(a) and (2)(b) was to allow the court discretion between two methods of fixing bail: setting an amount without specifying a form (allowing the accused to choose an unsecured bond) or specifying the forms of bail (requiring at least two options). The Court stated, “Providing flexible bail alternatives to pretrial detainees—who are presumptively innocent until proven guilty beyond a reasonable doubt—is consistent with the underlying purpose of article 520.”

    The Court highlighted the legislative intent behind CPL 520.10, which was to reform the restrictive bail scheme under the former Code of Criminal Procedure to improve pretrial release availability. The Court further explained that if a court believes a substantial personal undertaking is necessary, CPL 520.10(2)(b) allows the court to order a higher cash bail alongside another form of bail that is virtually indistinguishable. For example, the court could order a high cash bail along with a high partially-secured appearance bond requiring a 10% deposit.

    The Court also addressed the argument regarding cases where courts order $1 cash bail, explaining that this is done for the defendant’s benefit, allowing credit for time served. The Court concluded by stating, “For these reasons, we hold that CPL 520.10 (2) (b) prohibits a court from fixing only one form of bail.”

  • Abacus Federal Savings Bank v. ADT Security Services, Inc., 18 N.Y.3d 675 (2012): Enforceability of Exculpatory Clauses and Gross Negligence

    18 N.Y.3d 675 (2012)

    Exculpatory clauses and liquidated damages clauses in contracts are unenforceable against allegations of gross negligence, which is conduct that evinces a reckless indifference to the rights of others.

    Summary

    Abacus Federal Savings Bank sued ADT and Diebold for losses from a burglary, alleging inadequate security systems. The contracts had clauses limiting liability to $250. Abacus argued gross negligence invalidated these clauses. The Court of Appeals held that while exculpatory clauses are generally enforceable, they cannot shield parties from gross negligence. The Court found Abacus sufficiently alleged gross negligence against ADT due to knowledge of malfunctioning equipment and failure to notify the bank. However, a waiver-of-subrogation clause in the Diebold contract barred claims against Diebold. The court reinstated the breach of contract claim against ADT, excluding claims for safe deposit box customer losses and affirmed dismissal of the tort claim.

    Facts

    Abacus Bank contracted separately with ADT and Diebold for security services at its branch. ADT was to provide a 24-hour monitored security system, including vault detectors. Diebold was to provide a backup alarm system. A burglary occurred where intruders broke into the vault and stole cash and safe deposit box contents. Abacus alleged the security systems were inadequate and defendants knew of malfunctions (false alarms and phone line failures) but failed to investigate or notify the bank.

    Procedural History

    Abacus sued ADT and Diebold. The Supreme Court denied the motion to dismiss the breach of contract and gross negligence claims. The Appellate Division reversed, dismissing the entire complaint, finding only ordinary negligence and enforcing a waiver-of-subrogation clause in Diebold’s contract. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether the exculpatory and limitation of liability clauses in the contracts are enforceable given the allegations of gross negligence.
    2. Whether the waiver-of-subrogation clause in the Diebold contract acts as a complete defense to Abacus’s claims against Diebold.
    3. Whether Abacus has standing to assert claims for the losses sustained by its safe deposit box customers.
    4. Whether the allegations of gross negligence in the breach of contract give rise to a separate cause of action in tort.

    Holding

    1. No, because New York’s public policy prohibits a party from insulating itself from damages caused by grossly negligent conduct.
    2. Yes, because the waiver-of-subrogation clause is valid and enforceable requiring Abacus to seek recovery from its insurer.
    3. No, because Abacus failed to allege sufficient facts to confer standing to pursue the losses allegedly sustained by its safe deposit box customers.
    4. No, because the allegations do not give rise to a duty independent of the contractual relationship.

    Court’s Reasoning

    The Court of Appeals reasoned that while parties can contract to absolve themselves from ordinary negligence, public policy prevents them from avoiding liability for gross negligence. Gross negligence “smack[s] of intentional wrongdoing” and is conduct that “evinces a reckless indifference to the rights of others.” Unlike David Gutter Furs v Jewelers Protection Servs., where the allegations only amounted to ordinary negligence, Abacus alleged ADT and Diebold knew of malfunctioning equipment and failed to investigate or notify the bank, which, if true, constitutes gross negligence.

    However, the waiver-of-subrogation clause in Diebold’s contract, similar to that upheld in Board of Educ., Union Free School Dist. No. 3, Town of Brookhaven v Valden Assoc., requires Abacus to seek recovery from its insurer and waives all claims against Diebold covered by such insurance. The Court distinguished this from clauses exempting a party from liability, as it simply requires one party to provide insurance for all. The court held that Abacus did not plead sufficient facts to establish standing to assert claims on behalf of its safe deposit box customers. The court found the complaint did not allege conduct that would give rise to separate liability in tort as the breach of contract did not give rise to a duty independent of the contractual relationship.

  • Eastside Exhibition Corp. v. 210 East 86th Street Corp., 18 N.Y.3d 617 (2012): De Minimis Exception to Actual Partial Eviction

    18 N.Y.3d 617 (2012)

    A minimal, inconsequential retaking of leased commercial space by a landlord does not constitute an actual partial eviction warranting total rent abatement if the interference is small and has no demonstrable effect on the tenant’s use and enjoyment of the space.

    Summary

    Eastside Exhibition Corp. leased space from 210 East 86th Street Corp. to operate a movie theater. Years into the lease, the landlord installed cross-bracing between support columns, taking up 12 square feet of a 15,000-19,000 square foot space, to prepare for adding floors to the building. Eastside stopped paying rent, claiming partial eviction, and sought an injunction and rent abatement. The trial court ruled the taking was de minimis and did not justify rent abatement. The Appellate Division found an actual partial eviction but ruled damages, not abatement, were the appropriate remedy, then found no damages. The Court of Appeals affirmed, holding that such a minor intrusion did not warrant the “draconian remedy” of total rent abatement.

    Facts

    Eastside Exhibition Corp. (tenant) leased two floors from 210 East 86th Street Corp. (landlord) for a movie theater. The lease ran from 1998 to 2016.
    In 2002, the landlord installed cross-bracing between existing support columns on both floors without notice to the tenant. The cross-bracing occupied approximately 12 square feet of a 15,000 to 19,000 square foot space. The tenant claimed this altered foot traffic on the first floor and slightly diminished the second-floor waiting area. The tenant ceased paying rent, claiming partial eviction.

    Procedural History

    The tenant sued for an injunction and rent abatement. The Supreme Court initially granted a temporary restraining order. After a nonjury trial, the Supreme Court dismissed the tenant’s claim, finding the taking de minimis and entering judgment for the landlord for unpaid rent.
    The Appellate Division modified, holding that any unauthorized taking constituted eviction but awarded damages instead of abatement and remanded for a damages hearing. On remand, the Supreme Court found no damages. The Appellate Division affirmed, citing law of the case. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether a minimal and inconsequential retaking of space that has been leased to a commercial tenant constitutes an actual partial eviction relieving the tenant from all obligation to pay rent.

    Holding

    No, because for an intrusion to be considered an actual partial eviction it must interfere in some, more than trivial, manner with the tenant’s use and enjoyment of the premises; a taking of less than one-tenth of one percent of the space, so located that its absence has no measurable effect on the tenant’s use, is de minimis.

    Court’s Reasoning

    The Court recognized the established rule that withholding rent is the proper remedy for partial eviction but distinguished cases where the intrusion is so minimal that total rent abatement is unjustified. It cited Lounsbery v. Snyder for the proposition that not every intrusion warrants full rent abatement, and damages are appropriate when there has been no substantial interference. “If it were necessary, [one] might properly invoke the application of the familiar maxim, `de minimis non curat lex’” (id. at 516). The Court reasoned that applying a full rent abatement rule to a trivial taking is inequitable, especially given modern commercial lease negotiation realities. The Court noted that the intrusion must interfere more than trivially with the tenant’s use. Because the tenant failed to demonstrate any actual damages or loss of enjoyment due to the cross-bracing, the intrusion was de minimis, and neither injunctive nor monetary relief was warranted. The court emphasized that “So far as we know, no cases actually granted a 100% rent abatement for a so called “eviction” as trivial as this one—a taking of less than one-tenth of one percent of the space, so located that its absence has no measurable effect on the tenant’s use.”

  • Federal Insurance Co. v. International Business Machines Corp., 18 N.Y.3d 642 (2012): ERISA Coverage Limited to Fiduciary Actions

    Federal Insurance Co. v. International Business Machines Corp., 18 N.Y.3d 642 (2012)

    Insurance policies covering ERISA violations apply only when the insured party is acting in its capacity as an ERISA fiduciary, not as a plan settlor.

    Summary

    Federal Insurance Company sought a declaratory judgment that its excess insurance policy with IBM did not cover IBM’s settlement payments for attorney fees in a class action alleging ERISA violations. The New York Court of Appeals held that the policy, which covered breaches of fiduciary duties imposed by ERISA, did not apply because IBM’s actions in amending its benefit plans were taken as a plan settlor, not as an ERISA fiduciary. The Court emphasized the importance of interpreting insurance contracts based on the reasonable expectations of the average insured, finding the policy language unambiguous in its limitation of coverage to actions taken in a fiduciary capacity.

    Facts

    IBM amended its employee benefit plans in 1995 and 1999, leading to a class-action lawsuit (Cooper v. IBM Personal Pension Plan) alleging age discrimination in violation of ERISA. The Cooper action was settled, and IBM sought reimbursement from Federal Insurance Company under an excess insurance policy, arguing that the underlying Zurich policy limits had been exhausted. Federal then sued, seeking a declaration that its policy didn’t cover the attorney’s fees paid by IBM in settling the Cooper case.

    Procedural History

    The Supreme Court initially denied Federal’s motion for summary judgment and granted IBM’s. The Appellate Division reversed, granting summary judgment to Federal. IBM appealed to the New York Court of Appeals.

    Issue(s)

    Whether the insurance policy’s coverage for “any breach of the responsibilities, obligations or duties by an Insured which are imposed upon a fiduciary of a Benefit Program by [ERISA]” extends to actions taken by IBM as a plan settlor, rather than as an ERISA fiduciary.

    Holding

    No, because the policy language unambiguously limits coverage to breaches of fiduciary duties under ERISA, and IBM’s actions in amending the benefit plans were performed in its capacity as a plan settlor, not as a fiduciary.

    Court’s Reasoning

    The Court emphasized that insurance contracts must be interpreted by affording a fair meaning to the language employed, leaving no provision without force and effect. If the language is unambiguous, it must be applied as written. The Court determined that the average insured would reasonably interpret the policy to cover only acts undertaken in the capacity of an ERISA fiduciary. Quoting Lockheed Corp. v. Spink, the court reiterated that plan sponsors who alter the terms of a plan do not fall into the category of fiduciaries. IBM’s argument that the term “fiduciary” should be given its plain, ordinary meaning (broader than the ERISA definition) was rejected as a strained interpretation. The Court reasoned that adopting IBM’s interpretation could lead to an unreasonably broad scope of coverage, potentially encompassing almost any lawsuit. The Court also addressed IBM’s contention that the policy’s definition of “Wrongful Act” would be redundant if both prongs had different meanings, clarifying that the second prong extends coverage to claims arising solely from an insured’s position as a fiduciary, even absent a breach of duty. The court stated, “The policy language is clear that coverage requires that the insured be acting in its capacity as an ERISA fiduciary in committing the alleged ERISA violation.” The Court also dismissed the relevance of Federal revising its policy language in 2002, finding that the Zurich policy was sufficiently clear on its face and declining to speculate about the revision’s impact on the analysis.