text:
    [634 NE2d 940, 612 NYS2d 339]
    Mark Rocanova, Respondent, v Equitable Life Assurance Society of the United States, Appellant. Marsel Mirror & Glass Products, Inc., Respondent, v American International Underwriters Insurance Company, Also Known as American International Underwriters Corporation, et al., Appellants.
    Argued March 23, 1994;
    decided May 10, 1994

      POINTS OF COUNSEL

      Paul, Weiss, Rifkind, Wharton & Garrison, New York City (Sidney S. Rosdeiteher, Jonathan H. Hurwitz, Fay Rosenfeld and William A. Walker of counsel), and Law Office of Norman L. Tolle (Michael W. Brody of counsel), for appellant in the first above-entitled action.
    I. The Court below erred in holding that section 2601 creates a private right of action. (Dano v

      Royal Globe Ins. Co., 59 NY2d 827; Hubbell v Trans World Life Ins. Co., 50 NY2d 899; Royal Globe Ins. Co. v Chock Full O’Nuts Corp., 86 AD2d 315, 58 NY2d 800; Cohen v New York Prop. Ins. Underwriting Assn., 65 AD2d 71; Kurrus v CNA Ins. Co., 115 AD2d 593; Kapeleris v Colonial Penn Ins. Co., 163 AD2d 918; Hoxie’s Painting Co. v Cato-Meridian Cent. School Dist., 76 NY2d 207; Bums Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; Varela v Investors Ins. Holding Corp., 81 NY2d 958.) II. There is no common-law cause of action to recover punitive damages for an alleged bad-faith denial of an insurance claim absent fraud or other egregious tortious conduct. (DiMichel v South Buffalo Ry. Co., 80 NY2d 184; Halpin v Prudential Ins. Co., 48 NY2d 906; Royal Globe Ins. Co. v Chock Full O’Nuts Corp., 86 AD2d 315, 58 NY2d 800; Samovar of Russia Jewelry Antique Corp. v Generali, Gen. Ins. Co., 102 AD2d 279; Porter v Allstate Ins. Co., 184 AD2d 685; Roldan v Allstate Ins. Co., 149 AD2d 20; O’Dell v New York Prop. Ins. Underwriting Assn., 145 AD2d 791; Garrity v Lyle Stuart, Inc., 40 NY2d 354; Trans-State Hay & Feed Corp. v Faberge, Inc., 42 AD2d 535; Borkowski v Borkowski, 39 NY2d 982.) III. The court should not create a common-law cause of action for punitive damages against an insurer based on an alleged pattern of unfair claim settlement practices. (A & E Supply Co. v Nationwide Mut. Fire Ins. Co., 798 F2d 669; Cohen v New York Prop. Ins. Underwriting Assn., 65 AD2d 71; Walker v Sheldon, 10 NY2d 401; Pacific Mut. Life Ins. Co. v Haslip, 499 US 1; Giblin v Murphy, 73 NY2d 769; Thoreson v Penthouse Intl., 80 NY2d 490; Home Ins. Co. v American Home Prods. Corp., 75 NY2d 196; Riffat v Continental Ins. Co., 104 AD2d 301; Roldan v Allstate Ins. Co., 149 AD2d 20; James v Powell, 19 NY2d 249.)

      Beigel Schy Lasky Cohen Rifkin & Hennessey, New York City (Philip Fertik, of the Illinois Bar, admitted pro hac vice, Herbert Beigel and Edward R. Bassetti of counsel), for respondent in the first above-entitled action.
    I. Plaintiff has a common-law right to seek punitive damages from his insurer for the pattern of bad-faith claims practices alleged in the complaint. (Walker v Sheldon, 10 NY2d 401; Home Ins. Co. v American Home Prods. Corp., 75 NY2d 196; Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427; Halpin v Prudential Ins. Co., 48 NY2d 906; Hubbell v Trans World Life Ins. Co., 50 NY2d 899; Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Roldan v Allstate Ins. Co., 149 AD2d 20; Riordan v Nation

      wide Mut. Fire Ins. Co., 756 F Supp 732; Aero Garage Corp. v Hirschfeld, 185 AD2d 775, 81 NY2d 701; Williamson, Picket, Gross v Hirschfeld, 92 AD2d 289.) II. Insurance Law § 2601 does not preempt the common-law right to seek punitive damages. (Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; Hechter v New York Life Ins. Co., 46 NY2d 34.) III. Defendant’s policy arguments are unsupported and misdirected. (Riordan v Nationwide Mut. Fire Ins. Co., 756 F Supp 732; Walker v Sheldon, 10 NY2d 401; Klostermann v Cuomo, 61 NY2d 525; Murphy v American Home Prods. Corp., 58 NY2d 293.)

      D’Amato & Lynch, New York City (Robert E. Kushner and Jeffrey Underweiser of counsel), for appellants in the second above-entitled action.
    I. Plaintiff’s claims are barred by its release. (Standard Chartered Bank v D. Chabbott, Inc., 178 AD2d 112; Corvino v CBS, Inc., 92 AD2d 536; Matter of Schaefer, 18 NY2d 314; Mar Co. Export v Banco De Santander, 99 AD2d 403; Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375.) II. Plaintiff has no statutory private right of action for unfair claim settlement practices. (Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Cohen v New York Prop. Ins. Underwriting Assn., 65 AD2d 71; Royal Globe Ins. Co. v Chock Full O’Nuts Corp., 86 AD2d 315; Riffat v Continental Ins. Co., 104 AD2d 301; J & B Schoenfeld, Fur Merchants v Albany Ins. Co., 109 AD2d 370; Kurrus v CNA Ins. Co., 115 AD2d 593; Roldan v Allstate Ins. Co., 149 AD2d 20; Kent Centre Assocs. v Greater N. Y. Mut. Ins. Co., 139 AD2d 630; Mavroudis v State Wide Ins. Co., 121 AD2d 433; Newsom v Republic Fin. Servs., 130 Misc 2d 780.) III. Plaintiff’s claim for punitive damages under common law is legally insufficient. (Dano v Royal Globe Ins. Co., 59 NY2d 827; Halpin v Prudential Ins. Co., 48 NY2d 906; Hubbell v Trans World Life Ins. Co., 50 NY2d 899; Botway v American Intl. Assur. Co., 151 AD2d 288.)

      Spizz & Cooper, Mineóla (Harvey W. Spizz of counsel), for respondent in the second above-entitled action.
    I. The release which was procured by unfair settlement practices is not effective to bar claims based upon unfair settlement practices. (Bridger v Goldsmith, 143 NY 424; Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Banque Indosuez v Barclays Bank, 181 AD2d 447.) II. A private cause of action for unfair claims settlement was properly recognized by the courts below. (Riordan v Nationwide Mut. Fire Ins. Co., 756 F Supp 732; Pepsico, Inc. v Continental Cas. Co., 640 F Supp 656; Kirke La Shelle Co. v Armstrong Co., 263 NY 79; State of New York v Merchants Ins. Co., 109 AD2d 935; Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Wood v Duff-Gordon, 222 NY 88.) III. The courts below properly found that the complaint stated a valid claim for punitive damages for unfair claims settlement. (Hartford Acc. & Indem. Co. v Village of Hempstead, 48 NY2d 218; Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Underpinning & Found. Constructors v Chase Manhattan Bank, 46 NY2d 459; Walker v Sheldon, 10 NY2d 401.)

      Windels, Marx, Davies & Ives, New York City (Craig P. Murphy and Darrell M. Joseph of counsel), for American Council of Life Insurance and others, amici curiae in the first and second above-entitled actions.
    I. If sustained, the Court below’s rulings will injure the public and the insurance industry. (A & E Supply Co. v Nationwide Mut. Fire Ins. Co., 798 F2d 669; Pacific Mut. Life Ins. Co. v Haslip, 499 US 1.) II. The Court below erred in finding a private right of action under Insurance Law § 2601. (Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Royal Globe Ins. Co. v Chock Full O’Nuts Corp., 86 AD2d 315, 58 NY2d 800; Cohen v New York Prop. Ins. Underwriting Assn., 65 AD2d 71; J & B Schoenfeld, Fur Merchants v Albany Ins. Co., 109 AD2d 370; Riffat v Continental Ins. Co., 104 AD2d 301; Kurrus v CNA Ins. Co., 115 AD2d 593; Kapeleris v Colonial Penn Ins. Co., 163 AD2d 918; LTS Contrs. v Hartford Ins. Co., 99 AD2d 644; Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; Touche Ross & Co. v Redington, 442 US 560.) III. Should this Court hold that a private cause of action exists under section 2601, it nevertheless should disallow claims for punitive damages. (People v Braunhut, 101 Misc 2d 684; Dunrite Auto Body & Motor Works v Liberty Mut. Ins. Co., 153 Misc 2d 440.) IV. The common law precludes punitive damages for alleged breaches of first-party insurance contracts, and this Court should not create such a cause of action. (Halpin v Prudential Ins. Co., 48 NY2d 906; Cohen v New York Prop. Ins. Underwriting Assn., 65 AD2d 71.) V. Any claim for punitive damages, statutory or otherwise, must be measured against a strict standard. (Walker v Sheldon, 10 NY2d 401; Porter v Allstate Ins. Co., 184 AD2d 685; McLaughlin v American Intl. Life Assur. Co., 181 AD2d 444; Matter of Bernstein, 156 AD2d 683; Botway v American Intl. Assur. Co., 151 AD2d 288; Supreme Automotive

      Mfg. Corp. v Continental Cas. Co., 126 AD2d 153, 69 NY2d 1038; Samovar of Russia Jewelry Antique Corp. v Generali, Gen. Ins. Co., 102 AD2d 279; Fleming v Allstate Ins. Co., 106 AD2d 426, 66 NY2d 838, 475 US 1096; Holoness Realty Corp. v New York Prop. Ins. Underwriting Assn., 75 AD2d 569.)

      Anderson Kill Oliek & Oshinsky, P. C. (Eugene R. Anderson, Robert M. Horkovich and Michael J. Keane of counsel), Robert P. Walton, New York City, and Martha Churchill, of the Illinois Bar, admitted pro hac vice, for New York University and another, amici curiae in the first and second above-entitied actions.
    I. New York Insurance Law and regulations do not provide the exclusive remedy for policyholders. (Riordan v Nationwide Mut. Fire Ins. Co., 756 F Supp 732, 977 F2d 47; In re Insurance Antitrust Litig., 938 F2d 919, 5 F3d 1556; Sulner v General Acc. Fire & Life Assur. Corp., 122 Misc 2d 597; Hartford Acc. & Indem. Co. v Michigan Mut. Ins. Co., 93 AD2d 337, 61 NY2d 569; Unigard Sec. Ins. Co. v North Riv. Ins. Co., 762 F Supp 566, 4 F3d 1049; Walker v Sheldon, 10 NY2d 401; State of New York v Merchants Ins. Co., 109 AD2d 935; Fredericks v Home Indem. Co., 101 AD2d 614; Cornwell v Safeco Ins. Co., 42 AD2d 127; Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445.) II. Allowing for punitive damages in actions alleging bad-faith claims handling practices against insurance companies is sound public policy. (German Alliance Ins. Co. v Kansas, 233 US 389; Hartford Acc. & Indem. Co. v Michigan Mut. Ins. Co., 93 AD2d 337, 61 NY2d 569; Christiania Gen. Ins. Corp. v Great Am. Ins. Co., 745 F Supp 150.) III. Insurance companies should be forced to follow the set of rules they require their policyholders to follow, and not be allowed to have a different set of rules apply to their own conduct.

      Charles Platto, New York City, James Kimble, of the District of Columbia Bar, admitted pro hac vice, and Keith Hopkinson, of the Illinois Bar, admitted pro hac vice, for American Insurance Association and another, amici curiae in the first and second above-entitled actions.
    I. Punitive damages are inappropriate in first-party claims. (Halpin v Prudential Ins. Co., 48 NY2d 906; Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392; Home Ins. Co. v American Home Prods. Corp., 75 NY2d 196.) II. A private cause of action for damages under Insurance Law § 2601 does not lie for any damages no less punitive damages. (Varela v Investors Ins. Holding Corp., 81 NY2d 958; Pilot Life Ins. Co. v Dedeaux, 481 US 41.) III. There are policy reasons for limiting punitive damage claims. (Walker v Sheldon, 10 NY2d 401; Royal Globe Ins. Co. v Chock Full O’Nuts Corp., 86 AD2d 315; A & E Supply Co. v Nationwide Mut. Fire Ins. Co., 798 F2d 669, 479 US 1091.)

      Kriss, Kriss & Brignola, Albany, for Alliance of American Insurers and another, amici curiae in the second above-entitied action.
    I. The Court below improperly held that Insurance Law § 2601 creates a private right of action. (Hoxie’s Painting Co. v Cato-Meridian Cent. School Dist., 76 NY2d 207; Ostrer v Schenck, 41 NY2d 782; Breen v Cunard Lines S. S. Co., 33 NY2d 508; Matter of Medical Malpractice Ins. Assn. v Superintendent of Ins. of State of N. Y, 72 NY2d 753, 490 US 1080; Nassau Neuropsychiatric Socy. v Adelphi Univ., 18 NY2d 370; Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Matter of Janosik, 71 AD2d 1058.) II. This Court should not imply a private right of action but should await the express direction of the Legislature. (Walker v Sheldon, 10 NY2d 401; Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65; Gramatan Home Investors Corp. v Lopez, 46 NY2d 481; Kaufman v Lilly & Co., 65 NY2d 449.)
   OPINION OF THE COURT

Ciparick, J.

In both of these first-party insurance actions alleging unfair claim settlement practices, the issue presented is whether plaintiffs have pleaded actionable claims for punitive damages. We conclude they have not.

I

Rocanova

In 1985, plaintiff Mark Rocanova purchased an individual disability income policy from defendant Equitable Life Assurance Society of the United States. Rocanova later increased his coverage effective November 1987. Shortly thereafter he filed a claim for payment under the policy, asserting that a month after the effective date of the increased coverage he developed a disease known as "dry eye syndrome”. In May 1988, Equitable informed Rocanova that it was rescinding his policy and the increased protection on the grounds that Rocanova was already disabled before the increased coverage became effective and that he had misrepresented his income in applying for the policy. Rocanova commenced this action. He seeks $250,000 in compensatory damages and $450 million in punitive damages.

The complaint alleges six causes of action — (1) common-law fraud, (2) illegal evasion of insurance claims, (3) violation of Insurance Law § 2601, (4) breach of the implied covenant of good faith and fair dealing, (5) breach of fiduciary duties, and (6) intentional infliction of economic damage — and contains two types of allegations: those relating to Rocanova’s individual dispute with Equitable, and those relating to an alleged 10-year fraudulent pattern and practice of selling insurance policies to the general public with the intention of not honoring the policies as written. Rocanova’s complaint specifically refers to 124 disputes between Equitable and other policyholders in support of his assertion that Equitable systematically ignored claimholders, lied, invented artificial disputes, filed groundless lawsuits, and otherwise wrongfully and deliberately evaded claims and withheld moneys, all for the purpose of defrauding claimholders of interest on moneys withheld and extorting principal from claimholders through fear and intimidation.

Equitable moved, pursuant to CPLR 3211 (a) (5) and (7) and 3016 (b), to dismiss Rocanova’s request for punitive damages and to dismiss all causes of action except the fourth. Supreme Court granted the motion to the extent of dismissing the first (common-law fraud), fifth (breach of fiduciary duty), and sixth (intentional infliction of economic damages) causes of action. Supreme Court denied Equitable’s motion to dismiss the second and third causes of action (for illegal evasion of insurance claims and violation of Insurance Law § 2601, which it deemed the same cause of action) as well as the demand for punitive damages. In dismissing the common-law fraud claim, Supreme Court concluded that "no inference of fraudulent intent can be drawn from the mere compilation of the 124 vignettes” of policyholder "difficulties” with Equitable. The court stated that the compilation, spanning approximately two decades, could nevertheless assist Rocanova in demonstrating the pattern and practice of unfair claim settlement practices required to establish a violation of Insurance Law § 2601. On the issue of punitive damages, the court relied on the Appellate Division, First Department’s decision in Belco Petroleum Corp. v AIG Oil Rig (164 AD2d 583) in holding that a violation of Insurance Law § 2601 gives rise to a private right of action for which exemplary damages are recoverable.

The Appellate Division unanimously affirmed, stating that "the law in this Department allows for the recovery of punitive damages as a private cause of action under Insurance Law § 2601” (193 AD2d 569, 570, citing Belco, supra).

Marsel

Plaintiff Marsel Mirror & Glass Products, Inc., a corporation engaged in the business of manufacturing mirrors and glass products for sale to retailers, purchased from National Union Fire Insurance Company of Pittsburgh, Pa., an insolvency risk insurance policy which provided coverage against losses caused by the insolvency of certain of its buyers. Defendant American International Underwriters Insurance Company (AIU), the manager of an insurance fleet which includes National, underwrote the policy and otherwise acted as agent for National. Marsel alleges that it was provided with promotional material representing that, upon a covered customer’s bankruptcy, insurance payments would be made without a waiting period.

In April 1990, a covered buyer, Ames Department Stores, sought bankruptcy protection under chapter 11 of the Bankruptcy Code. In May, Marsel filed with AIU and National a proof of loss in the amount of $1,780,257.44. Marsel was informed that payment would not be made until approximately two years into the bankruptcy process.

In July 1990, Marsel accepted $1,500,000 in full satisfaction of its insurance claim, assigned its claim against Ames to National, agreed to cancellation of the policy before expiration of its term, and released National from all claims related to the policy and Marsel’s claim against defendants. The release and assignment entered into by National was negotiated and signed by AIU as agent for National.

In February 1992, Marsel commenced this action alleging eight causes of action: (1) fraudulent representations prior to entry into the insurance contract; (2) fraudulent inducement into the release; (3) violation of defendants’ duties of good faith and fair dealing in settling the claim; and (4) economic duress. Causes of action five through eight each allege that defendants engaged in a pattern and practice of unfair claim settlement practices. Marsel seeks $304,341.71 in compensatory damages and $3,043,417 in punitive damages.

Defendants moved to dismiss the complaint and to strike the request for punitive damages under CPLR 3211 and 3016 (b). Supreme Court granted defendants’ motion to the extent of dismissing the first, third, and fourth causes of action of the complaint and denied the motion as to the second and fifth through eighth causes of action. As to the final four causes of action for unfair settlement practices, the court cited Belco (supra) and stated that they "are recognized in the First Department as appropriate private civil claims under section 2601 of the Insurance Law.” The court also denied the request to dismiss the punitive damages claim, again relying on Belco (supra).

The Appellate Division unanimously modified, dismissing the second cause of action, and otherwise affirmed. The Appellate Division stated that "a cause of action for punitive damages for violation of Insurance Law § 2601 may be maintained as a private cause of action” (194 AD2d 431, 434).

II

Punitive damages are not recoverable for an ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights (see, Garrity v Lyle Stuart, Inc., 40 NY2d 354, 358). However, where the breach of contract also involves a fraud evincing a "high degree of moral turpitude” and demonstrating "such wanton dishonesty as to imply a criminal indifference to civil obligations”, punitive damages are recoverable if the conduct was "aimed at the public generally” (see, Walker v Sheldon, 10 NY2d 401, 404-405). Punitive damages are available where the conduct constituting, accompanying, or associated with the breach of contract is first actionable as an independent tort for which compensatory damages are ordinarily available, and is sufficiently egregious under the Walker standard to warrant the additional imposition of exemplary damages. Thus, a private party seeking to recover punitive damages must not only demonstrate egregious tortious conduct by which he or she was aggrieved, but also that such conduct was part of a pattern of similar conduct directed at the public generally. Clearly, then, the standard for awarding punitive damages in first-party insurance actions is "a strict one” (see, Cohen v New York Prop. Ins. Underwriting Assn., 65 AD2d 71, 79), and this extraordinary remedy will be available "only in a limited number of instances” (see, Garrity, 40 NY2d, at 358, supra).

III

We now consider whether Rocanova and Marsel have pleaded viable claims for punitive damages.

Rocanova cannot maintain a claim for punitive damages based on his undismissed cause of action for breach of the implied covenant of good faith and fair dealing. Rocanova fails to demonstrate that he was personally aggrieved by tortious conduct arising out of his contractual relationship with Equitable. Indeed, the courts below have dismissed all of Rocanova’s tort claims. In particular, Supreme Court dismissed Rocanova’s fraud claim on the ground that a contract action cannot be converted to one for fraud merely by alleging that the contracting party did not intend to meet its contractual obligations.

Supreme Court also concluded, and we agree, that no inference of fraudulent intent can be drawn in this case from the mere compilation of 124 "vignettes” of policyholder "difficulties” with Equitable. This portion of Rocanova’s complaint, an attempt to satisfy the "public wrong” requirement of punitive damages awards, possesses no legal significance absent his ability to state a claim to the effect that he was personally the victim of a cognizable tort arising out of his contractual relationship with Equitable, and to demonstrate that the wrong to him not only rose to the level of "such wanton dishonesty as to imply a criminal indifference to civil obligations” (Walker, 10 NY2d, at 404-405), but was also part of a pattern of similar, publicly directed misconduct. Thus, Rocanova fails to state a claim for punitive damages based on his cause of action for breach of the implied covenant of good faith and fair dealing.

Rocanova’s cause of action for violation of Insurance Law § 2601 must be dismissed. Contrary to the First Department’s holding in this case, the law of this State does not currently recognize a private cause of action under Insurance Law § 2601 (see, Kapeleris v Colonial Penn Ins. Co., 163 AD2d 918; Kurrus v CNA Ins. Co., 115 AD2d 593, 594; J & B Schoenfeld, Fur Merchants v Albany Ins. Co., 109 AD2d 370, 374; Riffat v Continental Ins. Co., 104 AD2d 301, 303; Royal Globe Ins. Co. v Chock Full O’Nuts Corp., 86 AD2d 315, 316; Cohen, 65 AD2d, at 78-79, supra). To the extent the decisions below hold otherwise, they are not to be followed.

In both of the cases before us, the Courts below misconstrued the Belco decision. The issue before the Court in Belco was whether Insurance Law § 2601 preempted the common-law right to seek punitive damages. The First Department in Belco correctly disagreed with the Second Department’s decision in Roldan v Allstate Ins. Co. (149 AD2d 20) and held that an insured’s common-law right to sue an insurer for punitive damages for morally culpable conduct directed at the general public was not preempted by the enactment of section 2601. Contrary to the statements contained in the decisions below, Belco did not hold that section 2601 constitutes an independent basis for a private right of action on behalf of insureds. Indeed, Rocanova does not even urge this possibility; instead, he grounds his right to recover punitive damages in the common law.

Rocanova contends that his second cause of action for "illegal evasion of insurance claims payment” states a claim for punitive damages based on an independent common-law right of action for a pattern of publicly directed bad-faith conduct in handling insurance claims. According to Rocanova, such a pattern, if proven, is legally sufficient to support a claim for punitive damages.

We conclude that this cause of action must also be dismissed. A complaint does not state a claim for compensatory or punitive damages by alleging merely that the insurer engaged in a pattern of bad-faith conduct. The complaint must first state a claim of egregious tortious conduct directed at the insured claimant. Only then does an alleged pattern of bad-faith conduct attain legal significance insofar as it demonstrates that a public wrong would be vindicated by the award of punitive damages.

Walker (supra), upon which Rocanova relies, does not suggest otherwise. In Walker, this Court imposed the "public wrong” requirement as a limitation on the availability of punitive damages where a cause of action in fraud was stated; there is not the slightest indication in that decision that a pattern of misconduct aimed at the public can, without more, constitute an independent basis for a punitive damages award.

Accordingly, Equitable’s motion to dismiss the second and third causes of action as well as the request for punitive damages should be granted.

IV

Marsel’s four remaining causes of action each allege that, as part of a larger pattern of unfair claim settlement practices, National and AIU acted in bad faith and failed to deal fairly with Marsel’s claim under the policy.

We conclude that Marsel’s causes of action are barred by its negotiation and execution of a release and assignment which "release[d] the Company from all debts, claims, demands, damages, actions and causes of action of whatsoever character and consequence which in any way is related to the Policy, including, but not limited to, the Claim.”

Marsel does not dispute that its unfair claims settlement causes of action are covered by the release. Marsel argues, however, that the release is ineffective because it was extracted through bad-faith settlement practices on the part of AIU and National. The allegations contained in Marsel’s remaining causes of action differ in no material respect from the allegations contained in the first four causes of action dismissed by the courts below. Thus, Marsel argues that the release is ineffective on grounds already held to be legally insufficient to support claims of fraudulent inducement in entering into the release, fraud, economic duress, and breach of contract. Marsel fails to establish any of the traditional bases for setting aside a release — duress, illegality, fraud, or mutual mistake (see, Mangini v McClurg, 24 NY2d 556, 563). Inasmuch as the "language of the release is clear, effect must be given to the intent of the parties as indicated by the language employed” (Matter of Schaefer, 18 NY2d 314, 317; see also, Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375, 383 ["(s)trong policy considerations favor the enforcement of settlement agreements”]). Accordingly, the motion to dismiss the fifth through eighth causes of action of Marsel’s complaint should be granted.

Finally, in light of our conclusion that the release bars Marsel’s remaining causes of action, Marsel cannot recover punitive damages since it is unable to assert an underlying cause of action upon which a demand for punitive damages can be grounded. A demand or request for punitive damages is parasitic and possesses no viability absent its attachment to a substantive cause of action such as fraud (see, Hubbell v Trans World Life Ins. Co., 50 NY2d 899, 901 ["absent a valid claim for compensatory damages, there could be none for punitive damages”]; Lee Mfg. v Chemical Bank, 186 AD2d 548, 550 ["a demand for punitive damages does not amount to a separate cause of action”]; Goldstein v Winard, 173 AD2d 201, 202-203 ["there can be no separate cause of action for punitive damages”]). Accordingly, the motion to dismiss the claim for punitive damages should be granted.

In Rocanova, the order of the Appellate Division should be reversed, with costs, and Equitable’s motion to dismiss the claim for punitive damages and the second and third causes of action of plaintiff’s first amended complaint should be granted and the certified question answered in the negative.

In Marsel, the order of the Appellate Division should be reversed, with costs, and defendants’ motion to dismiss the claim for punitive damages and the fifth through eighth causes of action of plaintiff’s complaint should be granted and the certified question answered in the negative.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Levine concur.

In Rocanova v Equitable Life Assur. Socy.: Order reversed, etc.

In Marsel Mirror & Glass Prods, v American Inti. Underwriters Ins. Co.: Order reversed, etc.

       Insurance Law § 2601 prohibits insurers from engaging in "unfair claim settlement practices”. The term is defined by reference to certain types of conduct, such as "not attempting in good faith to effectuate prompt, fair and equitable settlements of claims submitted in which liability has become reasonably clear”, that are "committed without just cause and performed with such frequency as to indicate a general business practice” (§ 2601 [a] [4]).


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    [634 NE2d 946, 612 NYS2d 345]
    County of Columbia, Appellant, v Continental Insurance Company et al., Respondents.
    Argued March 15, 1994;
    decided May 12, 1994

      POINTS OF COUNSEL

      Whiteman Osterman & Hanna, Albany (Jean F. Gerbini and John Hanna, Jr., of counsel), for appellant.
    I. Columbia County is entitled to coverage against claims arising from "wrongful entry or eviction, or other invasion of the right of private occupancy.” (Continental Cas. Co. v Rapid-Am. Corp., 80 NY2d 640; Avondale Indus. v Travelers Indem. Co., 887 F2d 1200, 894 F2d 498; Brooklyn Law School v Aetna Cas. & Sur. Co., 849 F2d 788; Munzer v St. Paul Fire & Mar. Ins. Co., 145 AD2d 193; Commercial Pipe & Supply Corp. v Allstate Ins. Co., 36 AD2d 412, 30 NY2d 619; Autotronic Sys. v Aetna Life & Cas., 89 AD2d 401; Brook Shopping Ctr. v Liberty Mut. Ins. Co., 80 AD2d 292; Matthews v American Cent. Ins. Co., 154 NY 449; Westchester Resco Co. v New England Reins. Corp., 818 F2d 2; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304.) II. The "pollution exclusion” contained in the subject policies is inapplicable to the coverage afforded for "wrongful entry or eviction, or other invasion of the right of private occupancy.” (Continental Cas. Co. v Rapid-Am. Corp., 80 NY2d 640; Rajchandra Corp. v Title Guar. Co., 163 AD2d 765; Gould Inc. v Arkwright Mut. Ins. Co., 829 F Supp 722; Titan Holdings Syndicate v City of Keene, 898 F2d 265; American Universal Ins. Co. v Whitewood Custom Treaters, 707 F Supp 1140; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304.) III. No "willful violation of penal statute” has been proven or even alleged. (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304; International Paper Co. v Continental Cas. Co., 35 NY2d 322; Federal Ins. Co. v Cablevision Sys. Dev. Co., 637 F Supp 1568, 836 F2d 54; Hartford Acc. & Indem. v Krekeler, 491 F2d 884.) IV. Respondent Aetna Casualty & Surety Company cannot avoid its duty to defend the underlying suit on the basis of its limited pollution exclusion. (D’Agostino Excavators v Globe Indem. Co., 7 AD2d 483; Lee & Palmer v Employers Commercial Union Ins. Co., 360 F Supp 654; Vito v General Mut. Ins. Co., 15 AD2d 289; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304; Muller v Sun Indem. Co., 302 NY 634; Continental Cas. Co. v Rapid-Am. Corp., 80 NY2d 640; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66; Powers Chemco v Federal Ins. Co., 74 NY2d 910.)

      Carter, Conboy, Bardwell, Case, Blackmore & Napierski, Albany (Dianne Bresee Mayberger of counsel), for Continental Insurance Company and another, respondents.
    I. New York law requires that insurance policies be interpreted as written. (Metpath, Inc. v Birmingham Fire Ins. Co., 86 AD2d 407; Breed v Insurance Co., 46 NY2d 351; Caporino v Travelers Ins. Co., 62 NY2d 234; Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46, 66 NY2d 1020; Weinberg & Holman v Providence

      Wash. Ins. Co., 254 NY 387; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66; Servidone Constr. Corp. v Security Ins. Co., 64 NY2d 419.) II. Continental and Firemen’s have no duty to defend or indemnify the County because the factual allegations of the underlying complaint fall within the ambit of the absolute pollution exclusion. III. Personal injury coverage does not apply to environmental property damage claims; Continental and Firemen’s therefore have no duty to defend or indemnify the County under the personal injury provisions of their respective policies of insurance. (American Universal Ins. Co. v Whitewood Custom Treaters, 707 F Supp 1140; Caporino v Travelers Ins. Co., 62 NY2d 234; Adorable Coat Co. v Connecticut Indem. Co., 157 AD2d 366; Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46, 66 NY2d 1020; Gregory v Tennessee Gas Pipeline Co., 948 F2d 203; Aetna Cas. & Sur. Co. v First Sec. Bank, 662 F Supp 1126; American & Foreign Ins. Co. v Church Schools, 645 F Supp 628; Martin v Brunzelle, 699 F Supp 167; Leprell v Kleinschmidt, 112 NY 364.) IV. Coverage under the policies by Continental and Firemen’s is barred because the County admitted that its landfill operations were polluting the environment prior to the inception of the policies. (Standard Oil Co. v United States, 340 US 54; Dow Chem. Co. v Royal Indem. Co., 635 F2d 379; Texas E. Transmission Corp. v Marine Off.-Appleton & Cox Corp., 579 F2d 561; Panizzi v State Farm Mut. Auto. Ins. Co., 386 F2d 600; Millar v New Amsterdam Cas. Co., 248 App Div 272; Fogelson v Home Ins. Co., 129 AD2d 508; Inland Waters Pollution Control v National Union Fire Ins. Co., 997 F2d 172; City of Johnstown v Bankers Std. Ins. Co., 877 F2d 1146; Township of Gloucester v Maryland Cas. Co., 668 F Supp 394.)

      Day, Berry & Howard (Thomas J. Groark, Jr., Ruth A. Kurien and Mitchell R. Harris of counsel, of the Connecticut Bar, admitted pro hac vice), and Ainsworth, Sullivan, Tracy, Knauf, Warner and Ruslander, Albany (Frank M. Pell of counsel), for Aetna Casualty & Surety Company, respondent.
    I. The Aetna policies do not provide coverage for pollution damage that is not caused by a sudden and accidental discharge. (Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66; Powers Chemco v Federal Ins. Co., 74 NY2d 910; Borg-Warner Corp. v Insurance Co., 174 AD2d 24; Continental Cas. Co. v Rapid-Am. Corp., 80 NY2d 640.) II. The personal injury endorsement does not provide the County coverage. (Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46, 66 NY2d 1020; Government Empls. Ins. Co. v Kligler, 42 NY2d 863; McLeod & Henry Co. v Employers’ Fire Ins. Co., 46 AD2d 242; Birnbaum v Jamestown Mut. Ins. Co., 298 NY 305; Thompson-Starrett Co. v American Mut. Liab. Ins. Co., 276 NY 266; Gregory v Tennessee Gas Pipeline Co., 948 F2d 203; Titan Holdings Syndicate v City of Keene, 898 F2d 265; Pipefitters Welfare Educ. Fund v Westchester Fire Ins. Co., 976 F2d 1037.)

      Anderson Kill Olick & Oshinsky, P. C, New York City (Eugene R. Anderson, R. Mark Keenan and Stephen A. Dvorkin of counsel), for Rheem Manufacturing Company and another, amici curiae.

    I. Broad form personal injury liability coverage encompasses nearly all forms of tort and third-party liability including claims of trespass, wrongful entry and eviction from environmental contamination. (International Paper Co. v Continental Cas. Co., 35 NY2d 322; Martin v Brunzelle, 699 F Supp 167; Schiff Assocs. v Flack, 51 NY2d 692; Colonie Motors v Hartford Acc. & Indem. Co., 145 AD2d 180; Fireguard Sprinkler Sys. v Scottsdale Ins. Co., 864 F2d 648; Pipefitters Welfare Educ. Fund v Westchester Fire Ins. Co., 976 F2d 1037; Titan Holdings Syndicate v City of Keene, 898 F2d 265; Hartford Acc. & Indem. v Krekeler, 491 F2d 884; Hirschberg v Lumbermens Mut. Cas., 798 F Supp 600.) II. The ordinary meaning of the personal injury liability terms requires coverage in respect of trespass claims. (Leprell v Kleinschmidt, 112 NY 364; Colonie Motors v Hartford Acc. & Indem. Co., 145 AD2d 180; Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390; Government Empls. Ins. Co. v Kligler, 42 NY2d 863; Mansbacher v Prudential Ins. Co., 273 NY 140, 274 NY 487; Johnson v Travelers Ins. Co., 269 NY 401; I Q Originals v Boston Old Colony Ins. Co., 85 AD2d 21, 58 NY2d 651; Long Is. R. R. Co. v Interboro Mut. Indem. Ins. Co., 84 AD2d 809; HS Equities v Hartford Acc. & Indem. Co., 609 F2d 669; Miller v Continental Ins. Co., 40 NY2d 675.) III. If there is ambiguity in the scope of coverage afforded by the personal injury liability insuring agreement, that ambiguity should be construed against the insurance companies and in favor of coverage. (Little v Blue Cross, 72 AD2d 200; McCormick & Co. v Empire Ins. Co., 878 F2d 27; Schiff Assocs. v Flack, 51 NY2d 692; Miller v Continental Ins. Co., 40 NY2d 675; Michigan Millers Mut. Ins. Co. v Christopher, 66 AD2d 148.)

      O’Melveny & Myers, New York City (John L. Altieri, Jr., and Thomas J. Di Resta of counsel), and Wiley, Rein & Fielding (Laura A. Foggan, Daniel E. Troy and Russell Sullivan of counsel, of the District of Columbia Bar, admitted pro hac vice), for Insurance Environmental Litigation Association, amicus curiae. I. The pollution exclusions in the insurers’ policies preclude coverage of any liability arising out of the County’s long-term and intentional discharge of waste. (Budofsky v Hartford Ins. Co., 147 Misc 2d 691; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66, 893; Powers Chemco v Federal Ins. Co., 74 NY2d 910; Heileman Brewing Co. v Royal Group, 779 F Supp 736, 969 F2d 1042; Broderick Inv. Co. v Hartford Acc. & Indem. Co., 954 F2d 601.) II. The personal injury provisions at issue do not cover the contamination caused by the County’s polluting activities. (Gregory v Tennessee Gas Pipeline Co., 948 F2d 203; Martin v Brunzelle, 699 F Supp 167; Leprell v Kleinschmidt, 112 NY 364; Barash v Pennsylvania Term. Real Estate Corp., 26 NY2d 77; Banks v Pierpont Estates, 27 Misc 2d 778; Titan Holdings Syndicate v City of Keene, 898 F2d 265; Pipefitters Welfare Educ. Fund v Westchester Fire Ins. Co., 976 F2d 1037.) III. The selected extrarecord extrinsic materials that the County and its amici seek to inject into its appeal are inadmissible and irrelevant. (W.W.W. Assocs. v Giancontieri, 77 NY2d 157; Bates v Cooke, Inc., 615 F Supp 662.) IV. Public policy supports application of the contractual language as written.
   OPINION OF THE COURT

Smith, J.

This is a declaratory judgment action in which plaintiff seeks an order that defendants are required to provide legal representation and coverage for an action brought against it. Specifically, the issue is whether "personal injury” endorsements in policies issued to plaintiff by defendants require representation and coverage for liability arising from alleged property damage resulting from the leaching of toxic chemicals.

I

Each of the defendants insured plaintiff under comprehensive general liability policies during the period in question. All of the policies contained a personal injury and advertising injury liability endorsement, under which the insurers agreed to "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of personal injury * * * to which this insurance applies, sustained by any person or organization and arising out of the conduct of the named insured’s business.” Personal injury was defined to include injury arising out of "wrongful entry or eviction or other invasion of the right of private occupancy.”

The subject policies also provided coverage, with certain exceptions, for property damage, bodily injury and personal injury liability. The sections of the policies providing coverage for bodily injury and property damage stated that the insurers would "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injur[] or property damag[] to which this insurance applies caused by an occurrence,” and that the insurers had a duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage.

Each of the policies contained an exclusion for pollution-related bodily injury and property damage. Specifically, the policies excluded from coverage "bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water.” The exclusion did not apply "if such discharge, dispersal, release or escape [was] sudden and accidental.”

II

The facts giving rise to the underlying action, as well as to this action, are as follows. In 1981, the County agreed to develop a solid waste management disposal system in the Town of Claverack (Town), a municipality within the County. In May 1986, after they were charged with violations of the Environmental Conservation Law, the County and the Town signed a Department of Conservation (DEC) Order on Consent, which stated, among other things, that the "solid waste management facility is currently discharging leachate into the groundwater and is thus in violation of Sections 360.8 (a) (3) and 703.5 of 6 NYCRR.” A penalty of $1,000, assessed against the Town, was suspended provided the Town closed the solid waste management facility completely by December 30, 1988.

In 1988, when the County did not cease using the facility as a solid waste management disposal site, the Town initiated an action against it, alleging, among other things, that the solid waste management facility on the Town property was discharging dangerously high levels of leachate into the groundwater, a primary source of water, thereby impairing the health and safety of all persons using the water source and constituting a public nuisance, and that the County expanded the facility, all in violation of the DEC regulations.

In January 1989, H.K.S. Hunt Club, Inc. (HKS), a corporation that owns property adjacent to the facility, commenced an action against the County and the Town (H.K.S. Hunt Club v Town of Claverack & County of Columbia [the underlying action]) seeking injunctive relief and damages for the impairment of the "soil, air, ground and surface waters * * * under and over [its] property” by leachate pollution and contamination from the solid waste management disposal site. The complaint incorporated the allegations in the Town’s complaint against the County and alleged further that the use of the property by the County constitutes a "continuing nuisance” and a "continuing trespass,” and "has put [HKS] out of its own property in an unlawful manner and continues to hold and keep [HKS] out of its property by unlawful means.” The County then requested that defendants provide it with a defense under their insurance policies. Defendants disclaimed coverage, asserting that pollution exclusion clauses in the subject policies relieved them of any duty to defend the County in the underlying action.

The County commenced this action seeking a declaration of its rights and liabilities under the policies issued by defendants. Defendant Aetna moved and defendants Firemen’s and Continental cross-moved for summary judgment dismissing the complaint. Plaintiff cross-moved for partial summary judgment on the issue of defendants’ duty to defend the underlying action. Supreme Court granted defendants’ motion and cross motion for summary judgment and denied the County’s cross motion for partial summary judgment, concluding that defendants were not obligated to defend the action because (1) the complaint in that action alleged that the County intentionally deposited refuse and other solid waste into the solid waste management facility, which risk is expressly excluded from coverage, (2) the complaint did not allege a claim of "wrongful entry or eviction or other invasion of the right of private occupancy,” and (3) the County’s willful violation of a penal statute or ordinance precludes coverage under the Personal Injury and Advertising Injury Liability endorsement of the policies. The Appellate Division affirmed, with two Justices dissenting (189 AD2d 391). The majority concluded that defendants are not obligated to defend the County in the underlying action because (1) the allegations in the underlying complaint fall squarely within the pollution exclusions, precluding coverage under the bodily injury/property damage provisions in the subject policies, and (2) the underlying complaint does not allege a "wrongful entry or eviction or other invasion of the right of private occupancy” cause of action so as to come within the Personal Injury and Advertising Injury Liability endorsement (see, id.). The dissent determined that the defendants have a duty to defend the County in the underlying action because the complaint in that action alleges sufficient facts to bring the claim of trespass within the scope of the "wrongful entry” provision in the Personal Injury and Advertising Injury Liability endorsements in the subject policies (see, id.). The County of Columbia appeals as of right pursuant to CPLR 5601 (a).

Ill

It is plaintiffs contention that the personal injury endorsement obligates defendants to provide a defense in the underlying action. Defendants claim that the personal injury endorsement is inapplicable and that, in any event, the pollution exclusion eliminates both coverage and any duty to defend.

"The duty to defend arises whenever the allegations in a complaint against the insured fall within the scope of the risks undertaken by the insurer” (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310; see also, Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 669). The insurer bears the burden of proving that the facts alleged in the complaint do not fit within the range of the policy’s coverage (see, International Paper Co. v Continental Cas. Co., 35 NY2d 322, 327; Prashker v United States Guar. Co., 1 NY2d 584, 592).

It is clear that the personal injury endorsement does not provide coverage for the claims in the underlying complaint. As stated, that complaint alleged, among other things, that the use of the property by the County constitutes a "continuing nuisance” and a "continuing trespass,” and has put HKS "out of its own property in an unlawful manner and continues to hold and keep [HKS] out of its property by unlawful means.” These allegations of continuing nuisance, continuing trespass and invasion are not among the enumerated offenses covered by the personal injury endorsement. Nor do those offenses constitute the enumerated offense of "wrongful entry or eviction or other invasion of the right of private occupancy.”

We agree with the Appellate Division that the coverage under the personal injury endorsement provision in question was intended to reach only purposeful acts undertaken by the insured or its agents. Evidence that only purposeful acts were to fall within the purview of the personal injury endorsement is provided, in part, by examining the types of torts enumerated in the endorsement in addition to wrongful entry, evictian and invasion: false arrest, detention, imprisonment, malicious prosecution, defamation and invasion of privacy by publication. Read in the context of these other enumerated torts, the provision here could not have been intended to cover the kind of indirect and incremental harm that results to property interests from pollution.

Moreover, it is settled that in construing an endorsement to an insurance policy, the endorsement and the policy must be read together, and the words of the policy remain in full force and effect except as altered by the words of the endorsement (see, Birnbaum v Jamestown Mut. Ins. Co., 298 NY 305, 310; Thompson-Starrett Co. v American Mut. Liab. Ins. Co., 276 NY 266, 270; see also, Matter of Garelick v Rosen, 274 NY 64). As noted, defendants provided coverage for bodily injury and property damage to the County through broad form comprehensive general liability insurance polices, all of which contain pollution exclusions. Under the construction of the policies urged by plaintiff, those pollution-related claims that are eliminated from coverage by the pollution exclusion would nevertheless be included in the personal injury endorsement. However, such construction does not give full force and effect to the words in the policy. An insurance contract should not be read so that some provisions are rendered meaningless (see, Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46, 49-50, affd for reasons stated at App Div 66 NY2d 1020). It would be illogical to conclude that the claims fail because of the pollution exclusion while also concluding that the insurer wrote a personal injury endorsement to cover the same eventuality. Thus, we conclude that the coverage provided for in the personal injury endorsement is not available to injuries arising from pollution-generated property damage.

It should be noted that a number of the jurisdictions that have considered this question have held that the standard personal injury endorsement affords no coverage for pollution-related property damage (see, e.g., Gregory v Tennessee Gas Pipeline Co., 948 F2d 203, 209; Agway, Inc. v Travelers Indem. Co., US Dist Ct, ND NY, Dec. 6, 1993, No. 93-CV-557 [slip opn]; National Union Fire Ins. Co. v Rhone-Poulenc Basic Chems. Co., 1992 WL 111201 [Del Super Ct 1992]; Straits Steel & Wire Co. v Michigan Millers Mut. Ins. Co., Mich Cir Ct, June 10, 1992, No. 91-72991-CK [slip opn]; Morton Thiokol, Inc. v General Acc. Ins. Co., NJ Super Ct, Aug. 27, 1987, No. C-3956-85 [slip opn]; see also, W.H. Breshears, Inc. v Federated Mut. Ins. Co., 832 F Supp 288; but see, e.g., City of Edgerton v General Cos. Co., 172 Wis 2d 518, 493 NW2d 768; Titan Holdings Syndicate v City of Keene, 898 F2d 265; Northrop Corp. v American Motorist Ins. Co., Cal Super Ct, Apr. 7, 1992, No. C710571; Hirschberg v Lumbermens Mut. Cas., 798 F Supp 600 [ND Cal 1992]).

The County’s argument that defendant Aetna is independently obligated to defend the underlying action because its policies contain a schedule that lists "Garbage or Refuse Dumps” as a rating classification, is untenable. The schedule expressly states that the rating classifications, except as specifically provided elsewhere, do not modify any of the provisions of the policy. Nowhere do the policies provide that the rating classifications alter the covered risks or exclusions.

Having concluded that defendants are not obligated to defend the County in the underlying action, we do not reach the remaining arguments.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa and Ciparick concur; Judge Levine taking no part.

Order affirmed, with costs.

      . During the period June 1, 1980 through June 1, 1986, defendant Aetna Casualty & Surety Company (Aetna) insured plaintiff County under comprehensive general liability policies. From June 1, 1986 through June 1, 1987, defendant Firemen’s Insurance Company of Newark, N. J. (Firemen’s) provided similar coverage, as did defendant Continental Insurance Company (Continental) from June 1, 1986 through June 1, 1990.

      . The Continental policy in effect from June 1, 1988 through June 1, 1989 defined personal injury to include "[wjrongful entry into, or eviction of a person from a room, dwelling or premises that the person occupies.”

      . In several of the policies, bodily injury was defined as "bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.”

      . The policies defined property damage as "(1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.”

      . The Aetna policy in effect from June 1, 1985 through June 1, 1986, as well as the Firemen’s policy, contained a pollution exclusion that excluded from coverage "bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants: * ** * at or from premises owned, rented or occupied by the named insured * * * [or] at or from any site or location used by or for the named insured or others for the handling, storage, disposal, processing or treatment of waste.” Also excluded from coverage was "any loss, cost or expense arising out of any governmental direction or request that the named insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants.” Pollutants were defined as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” Waste included "materials to be recycled, reconditioned or reclaimed.”


author: Ciparick, J.

text:
    [634 NE2d 951, 612 NYS2d 350]
    The People of the State of New York, Respondent, v Anthony Guidice, David Guidice and James Smith, Appellants.
    Argued March 24, 1994;
    decided May 12, 1994

      POINTS OF COUNSEL

      Kim P. Bonstrom, New York City, Judd Burstein and Marc Fernich for appellants.
    I. It was an abuse of discretion as a matter of law for the Trial Judge to admit the electronic surveillance evidence without a proper foundation. (People v Ely, 68 NY2d 520; People v McGee, 49 NY2d 48; People v Washington, 46 NY2d 116; People v Brown, 80 NY2d 729; People v Kennedy, 68 NY2d 569; People v Foster, 27 NY2d 47; People v D’Agostino, 120 Misc 2d 437.) II. Because there was insufficient proof that defendants manifested any community of purpose or shared intent in New York County, the trial court lacked geographical jurisdiction over them. (People v Moore, 46 NY2d 1; People v Sosnik, 77 NY2d 858; People v Ribowsky, 77 NY2d 284; People v Nieves, 135 AD2d 579; People v La Belle, 18 NY2d 405; People v Benzinger, 36 NY2d 29; People v Ligouri, 284 NY 309; People v Akptotanor, 158 AD2d 694; People v King, 61 AD2d 1035; People v Topino, 151 Misc 2d 764.) III. Anthony Guidice’s intercepted telephone conversations, which were the only evidence connecting Guidice to the alleged assault, constituted circumstantial, not direct evidence; as a result, the court’s refusal to give a circumstantial evidence charge was reversible error. (People v Bretagna, 298 NY 323, 336 US 919; Pease v Smith, 61 NY 477; People v Duffy, 124 AD2d 258; People v Williams, 121 AD2d 145; People v Sanchez, 61 NY2d 1022.) IV. Tom Meyer’s testimony, which was the only evidence regarding his supposed injuries, provided no objective indicia from which the jury could properly conclude that Meyer sustained "physical injury” or "substantial pain,” as required under Penal Law § 120.05. (People v Oquendo, 134 AD2d 203; Matter of Philip A., 49 NY2d 198; Carella v California, 491 US 263; People v Brown, 145 AD2d 301; People v Carney, 179 AD2d 818; People v Rolando, 168 AD2d 578; People v Franklin, 149 AD2d 617; People v Holden, 148 AD2d 635; People v Foster, 162 AD2d 703.) V. The proof at trial demonstrated that an unnamed and unindicted person delivered the blow which allegedly caused physical injury to the complainant; as a result, the People’s proof affected a constructive amendment of the "theory of prosecution” reflected in the indictment. (People v Grega, 72 NY2d 489; People v Boyd, 59 AD2d 558; People v Hill, 102 Misc 2d 814; People v Powell, 153 AD2d 54; People v Rodriguez, 164 AD2d 832.)

      Robert M. Morgenthau, District Attorney of New York County, New York City (Hilary Hassler and James M. McGuire of counsel), for respondent.
    I. The trial court correctly ruled that the wiretap linesheets were admissible as business records, and the only narrow objection defendants raised to their admission is meritless. (People v Ely, 68 NY2d 520; People v Jackson, 76 NY2d 908; People v George, 67 NY2d 817; People v Chisholm, 174 AD2d 629; People v Mountain, 66 NY2d 197; People v Lindsay, 72 NY2d 843; People v Liccione, 50 NY2d 850; People v Sugden, 35 NY2d 453; Johnson v Lutz, 253 NY 124.) II. Defendants were properly tried in New York County. (People v Botta, 100 AD2d 311; People v Dekle, 56 NY2d 835; People v Ribowsky, 77 NY2d 284; People v Moore, 46 NY2d 1; People v McLaughlin, 80 NY2d 466.) III. The People adduced legally sufficient evidence establishing the element of "physical injury”. (People v Rojas, 61 NY2d 726; People v Oquendo, 134 AD2d 203; Matter of Philip A., 49 NY2d 198; People v McDowell, 28 NY2d 373; People v Greene, 70 NY2d 860; People v Malave, 158 AD2d 435; People v Harper, 145 AD2d 933, 75 NY2d 313; People v Williams, 105 AD2d 465; People v Pope, 174 AD2d 319; People v Tejeda, 165 AD2d 683, 77 NY2d 883.) IV. The jury was properly permitted to consider whether defendants were liable as accomplices of an unidentified coparticipant in the assault. (People v Grega, 72 NY2d 489; People v Ralston, 112 AD2d 758; People v Valerio, 64 AD2d 516; People v Doles, 165 AD2d 689; People v McEachin, 188 AD2d 433; People v Kimbrough, 155 AD2d 935; People v Katz, 209 NY 311; People v Bliven, 112 NY 79; People v Duncan, 46 NY2d 74, 442 US 910.) V. Justice Galligan correctly denied defendant Anthony Guidice’s request for a circumstantial evidence charge. (People v Silva, 69 NY2d 858; People v Ruiz, 52 NY2d 929; People v Barnes, 50 NY2d 375; People v Rumble, 45 NY2d 879; People v Licitra, 47 NY2d 554; People v Daddona, 81 NY2d 990; People v Sanchez, 61 NY2d 1022; People v Bretagna, 298 NY 323, 336 US 919; People v Johnson, 65 NY2d 556; People v Benzinger, 36 NY2d 29.)
   OPINION OF THE COURT

Ciparick, J.

The primary issue on this appeal is whether certain "line-sheet” entries made in the course of a police surveillance operatian are admissible in evidence under the business records exception to the hearsay rule.

On August 7, 1989, defendant David Guidice was involved in a physical altercation with a co-worker, Tom Meyer, at their construction jobsite. David left the work site and called his father, defendant Anthony Guidice, for help. Anthony contacted his nephew, defendant James Smith, and instructed him to assist David in exacting retribution. Smith and an unidentified, unapprehended male, described as a blonde bodybuilder, arrived at the construction site in a two-tone Lincoln Continental. David pointed out Meyer. Smith punched Meyer in the face and the unidentified male hit Meyer in the arm with a baseball bat, after which Meyer fled.

Defendants were convicted, after a jury trial, of assault in the second degree. The prosecution’s sole witness at trial was Meyer. The People additionally offered tape recordings of six intercepted telephone conversations involving the defendants. Because the conversations were recorded pursuant to electronic surveillance in an unrelated investigation involving numerous monitoring agents, the People proposed to establish the unbroken chain of custody by admitting, as business records, certain "linesheets” prepared by the monitoring agent at the time each phone conversation was intercepted. These linesheets were entries made by monitoring agents contemporaneously with each intercepted phone conversation. The linesheets contained the number of the master tape, the date it was used, the sequential number of the call, the times when the conversations began and ended, and the corresponding counter numbers on the recorder.

Defense counsél made an unsuccessful pretrial application to preclude the linesheets, arguing:

"The issue is whether or not the line sheets are admissible as business records and I submit they are not for a very simple reason. They are not records of regularly conducted activity because they are documents that are prepared for the sole purpose of litigation.”

The Appellate Division affirmed the judgments of conviction, and we now affirm.

Defendants’ contention that the electronic surveillance tapes were admitted without a proper evidentiary foundation must be rejected. We conclude that the linesheets were properly admitted as business records under CPLR 4518. That section provides:

"Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible in evidence in proof of that act, transaction, occurrence or event, if the judge finds that it was made in the regular course of any business and that it was the regular course of such business to make it, at the time of the act, transaction, occurrence or event, or within a reasonable time thereafter.” (CPLR 4518 [a].)

There is no question that law enforcement agencies constitute "businesses” for purposes of the rule (see, People v Foster, 27 NY2d 47, 52). The essence of the business records exception to the hearsay rule is that "records systematically made for the conduct of a business * * * are inherently highly trustworthy because they are routine reflections of day-to-day operations and because the entrant’s obligation is to have them truthful and accurate for purposes of the conduct of the enterprise” (People v Kennedy, 68 NY2d 569, 579).

In Foster (supra), the trial court admitted in evidence police "speedometer deviation records” that were made at regularly scheduled intervals for the purpose of testing the accuracy of police speedometers used in clocking vehicles. This Court approved of their reception as business records, stating that while it was foreseeable that they might later be used for litigation purposes, such was not their sole purpose when made (id.; see also, Farrell, 58 NY2d 637, 638).

Applying the aforementioned principles, we conclude that the linesheets were records made in the ordinary course of police business. We note that the linesheets served an important administrative function in the daily conduct of a police surveillance operation; they were required to be made pursuant to a court order; their purpose was to maintain an inventory of the tapes and to safeguard them against tampering; and they were included in the progress reports that were filed regularly with the Judge supervising the wiretap order. Finally, the fact that their preparation was incidental to a police surveillance operation does not make them inadmissible (see, Foster, supra; see also, People v Farrell, 58 NY2d 637, supra).

Defendants’ assertion that the People’s proof failed to establish venue in New York County lacks merit. Whenever a defendant commits an act in a county sufficient to establish an element of a charged offense, codefendants may likewise be tried in that county (CPL 20.40 [1] [a]; see also, People v Ribowsky, 77 NY2d 284, 292; Preiser, Practice Commentaries, McKinney’s Cons Laws of NY, Book 11 A, CPL 20.40, at 107). Because defendant Anthony Guidice formulated the requisite criminal intent to commit assault in New York County, venue was properly laid there (CPL 20.40 [1]).

The trial court did not err in refusing to give a circumstantial evidence charge with respect to defendant Anthony Guidice. A circumstantial evidence charge is required where the evidence against a defendant is "wholly circumstantial” (People v Silva, 69 NY2d 858, 859). A defendant’s statement is considered direct evidence if it constitutes "a relevant admission of guilt” (People v Rumble, 45 NY2d 879, 880; see, People v Licitra, 47 NY2d 554, 558-559). Here, Anthony Guidice’s statements, among others, that he "sent two guys to break [Meyer’s] legs”, and that he "put him in the hospital”, amount to acknowledgments that he solicited, requested, or commanded the attack with intent to cause physical injury under Penal Law § 20.00. As the evidence against defendant Anthony Guidice was not wholly circumstantial, a circumstantial evidence charge was not required.

We must also reject defendants’ challenge to the sufficiency of the evidence relating to Meyer’s sustaining "physical injury” or "substantial pain” within the meaning of Penal Law § 120.05 and as defined by Penal Law § 10.00 (9). Generally, these are questions for the trier of fact (People v Rojas, 61 NY2d 726, 727). Lack of medical treatment is but a factor to consider in resolving such issues (People v Pope, 174 AD2d 319, 321, lv denied 78 NY2d 1079), for pain is subjective and different persons tolerate it differently (Matter of Philip A., 49 NY2d 198, 200). The jury was entitled to credit Meyer’s testimony that he lost sensation in his arm, that it became discolored and swollen, and that he suffered substantial pain as the result of being struck with the baseball bat. The jury was also entitled to believe Meyer’s testimony that the absence of medical intervention was due to his subjective ability to withstand pain and/or to his lack of medical insurance.

Finally, defendants’ assertion that the People impermissibly constructively amended the indictment by advancing a new theory at trial — that defendants acted with an unapprehended fourth man — must also be rejected. The People are not required to specify in an indictment whether a defendant is being charged as a principal or as an accomplice. For charging purposes, the distinction between principal and accomplice is academic.

Accordingly, the order of the Appellate Division should be affirmed.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Levine concur.

Order affirmed.


author: Smith, J. Chief Judge Kaye

text:
    [634 NE2d 954, 612 NYS2d 353]
    The People of the State of New York, Respondent, v James Brancoccio, Appellant.
    Argued March 17, 1994;
    decided May 3, 1994

      POINTS OF COUNSEL

      Robert P. Hall-App, New York City, and Philip L. Weinstein for appellant.
    The Criminal Court was not divested of jurisdiction over the misdemeanor complaint by the voting, without filing, of the indictment, and appellant’s conviction of trespass therefore precluded his subsequent prosecution for burglary arising from the same acts. (Matter of Corbin v Hillery, 74 NY2d 279, affd sub nom. Grady v Corbin, 495 US 508; North Carolina v Pearce, 395 US 711; Blockburger v United States, 284 US 299; Brown v Ohio, 432 US 161; People v Snyder, 99 AD2d 83; People v Dishaw, 54 AD2d 1122; Matter of Campbell v Pesce, 60 NY2d 165; People ex rel. Leventhal v Warden, 102 AD2d 317; People v Kendzia, 64 NY2d 331; People v Ferro, 63 NY2d 316.)

      Charles J. Hynes, District Attorney of Kings County, Brooklyn (Leonard Joblove and Roseann B. MacKechnie of counsel), for respondent.
    The prosecution of defendant on the indictment was not barred by the prohibition against double jeopardy, because the action of the Grand Jury divested the Criminal Court of jurisdiction prior to defendant’s guilty plea in that court. (People v Modica, 64 NY2d 828; People v Barkin, 49 NY2d 901; People v Simmons, 178 AD2d 972; People v Legree, 176 AD2d 983; People v Conde, 131 AD2d 586; People v Farrar, 52 NY2d 302; Matter of Albano v Kirby, 36 NY2d 526; Green v United States, 355 US 184; People v Tychanski, 78 NY2d 909; People v Phillips, 66 AD2d 696, 48 NY2d 1011.)
   OPINION OF THE COURT

Smith, J.

The issue here is whether CPL 170.20 (2) (a), which authorizes divestiture of jurisdiction from the local criminal court where an indictment "results” in a superior court prior to the entry of a plea on the accusatory instrument in criminal court, requires filing for operative effect. We hold that, for purposes of removing jurisdiction from the criminal court, filing is not required.

Defendant was arrested on December 1, 1989, after the complainant identified him as the man who, that same day, attempted to unlawfully enter her apartment through a window. In Criminal Court, defendant was charged by misdemeanor complaint with criminal trespass in the second degree and criminal mischief in the fourth degree.

On December 4, 1989 defendant, represented by an attorney, appeared in Criminal Court, Part AR2 for arraignment on the misdemeanor complaint. At this appearance, the Assistant District Attorney commented on defendant’s history of burglaries, his status as a predicate felon, and indicated that he sought an adjournment for presentation to a Grand Jury. On December 7, 1989, the Grand Jury heard evidence in this case and voted an indictment charging defendant with burglary in the second degree. On December 8, 1989, defendant appeared in Criminal Court, Part AP3, where defendant’s attorney sought an offer for defendant. The Assistant District Attorney responded, "The offer on this case is a burglary in the second degree, five to ten years.” Defense counsel noted that defendant was charged with misdemeanors, but the Assistant District Attorney viewed the case as involving a felony. The parties discussed defendant’s parole status and, subsequently, defendant pleaded guilty to criminal trespass in the second degree in satisfaction of the misdemeanor complaint, and received a 90-day sentence.

On December 13, 1989, the indictment voted by the Grand Jury on December 7, 1989, charging defendant with burglary in the second degree, was filed with the Clerk of Supreme Court, Kings County. Defendant was arraigned on this indictment on December 29, 1989.

Defendant moved to dismiss the indictment by notice of motion dated April 4, 1990, claiming that "further prosecution is barred by reason of double jeopardy.” Defendant argued that the indictment, filed on December 13, 1989, after defendant pleaded guilty on the misdemeanor complaint, was based on the same facts as the misdemeanor complaint, and thus constituted double jeopardy. The People argued that the guilty plea was a nullity because Criminal Court was divested of jurisdiction on December 7, 1989 when the Grand Jury voted to indict defendant. The People claimed that the Assistant District Attorney’s statements to the court on December 4, 1989 constituted an application for an adjournment to present the case to the Grand Jury and to proceed with defendant’s prosecution by indictment.

Defense counsel disagreed with the People concerning the appropriate charges against defendant because, in his view, Criminal Court maintained jurisdiction to accept defendant’s plea until the indictment was filed. The indictment was not filed until December 13, 1989 and, according to defendant, prior to that date, on December 8, 1989, Criminal Court acted within its jurisdiction and accepted defendant’s plea.

Supreme Court denied defendant’s motion to dismiss, agreeing with the People that Criminal Court had lost jurisdiction and that CPL 170.20 governed this case. The Appellate Division affirmed, noting that the language of subdivisions (1) and (2) of CPL 170.20 contemplate two totally different circumstances (189 AD2d 525). Defendant was granted leave to appeal by a Judge of this Court.

We agree with the Appellate Division that Criminal Court was divested of jurisdiction pursuant to CPL 170.20 when, on December 4, 1989, the Assistant District Attorney requested an adjournment to present the case to the Grand Jury and an indictment resulted prior to the December 8 plea. Thus, there was no double jeopardy.

CPL 170.20 reads as follows:

"1. If at any time before entry of a plea of guilty to or commencement of a trial of a local criminal court accusatory instrument containing a charge of misdemeanor, an indictment charging the defendant with such misdemeanor is filed in a superior court, the local criminal court is thereby divested of jurisdiction of such misdemeanor charge and all proceedings therein with respect thereto are terminated.
"2. At any time before entry of a plea of guilty to * * * an accusatory instrument specified in subdivision one, the district attorney may apply for an adjournment of the proceedings in the local criminal court upon the ground that he intends to present the misdemeanor charge in question to a grand jury with a view to prosecuting it by indictment in a superior court. In such case, the local criminal court must adjourn the proceedings to a date which affords the district attorney reasonable opportunity to pursue such action * * *. Following the granting of such adjournment * * * the proceedings must be as follows:
"(a) If such charge is presented to a grand jury within the designated period and either an indictment or a dismissal of such charge results, the local criminal court is thereby divested of jurisdiction of such charge, and all proceedings in the local criminal court with respect thereto are terminated.”

The critical issue here is the construction of the phrase "and either an indictment or a dismissal of such charge results” in CPL 170.20 (2) (a). Benefitting from the status of his misdemeanor charge in Criminal Court, defendant argues that that court maintained jurisdiction because the indictment did not "result” when the Grand Jury voted it on December 7, 1989, but did so on December 13, 1989 when the indictment was filed, five days after defendant pleaded to the misdemeanor. We disagree with defendant’s interpretation of the terms of the statute.

First, when the Legislature uses distinct terms in subdivisions of a statute, the corresponding meanings should be construed as intended (see, Matter of Albano v Kirby, 36 NY2d 526, 530). Courts must give eifect to "all the language employed by the particular legislation” (see, Ferrin v New York State Dept. of Correctional Servs., 71 NY2d 42, 47).

CPL 170.20 (1) explicitly refers to effects of the filing of an indictment while misdemeanor charges are pending in criminal court. Subdivision (2) of that section, however, describes the consequences when an indictment "results” under the same circumstances. The reference in CPL 170.20 (2) to an indictment that "results” as opposed to one that is "filed” necessarily implicates a broadened view of what constitutes an "indictment” at that stage. We should credit the Legislature with having intentionally made the distinction. "When * * * the Legislature uses unlike terms in different parts of a statute it is reasonable to infer that a dissimilar meaning is intended” (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 236, at 403; Matter of Albano v Kirby, 36 NY2d 526, 530, supra).

Next, affirmance here is consistent with our decision in People v Cade (74 NY2d 410). In Cade we held that although CPL 190.65 (3) requires filing of an indictment upon the Grand Jury’s vote, the failure to file in that case was not a jurisdictional defect because no time limits were imposed on the filing (id., at 416). We noted in Cade that the filing requirement was only "directory” and thus the statutory mandate was met when the indictment was subsequently filed (see also, Dawson v People, 25 NY 399, 405-406 [indictment would have been valid if it remained in hands of court and was not filed]). Subdivision (2) of this statute gives no indication that, absent filing, the indictment is void of effect for purposes of removing jurisdiction from the criminal courts.

Accordingly, the order of the Appellate Division should be affirmed.

Chief Judge Kaye

(dissenting). I agree with the majority that the "critical issue” here is construction of CPL 170.20 (2) (a). (Majority opn, at 642.) I cannot agree, however, with the majority’s resolution of that issue.

Defendant was arrested on December 1, 1989 and the next day charged in Criminal Court with criminal trespass and criminal mischief, both misdemeanors. On December 4, defendant was produced in Criminal Court, where the Assistant District Attorney obtained an adjournment to December 8, pursuant to CPL 170.20, for the purpose of seeking a felony indictment before the Grand Jury. On December 7, the Grand Jury voted to indict defendant for second degree burglary.

On the December 8 adjourned date, defendant again appeared in Criminal Court, and this time pleaded guilty to the misdemeanor trespass charge, admitting in a full allocution by the court that he had broken a lock and entered complainant’s house. On the record, the People consented to entry of the misdemeanor plea.

Five days later, on December 13, the burglary indictment was filed in Supreme Court, Kings County. Defendant’s motion to dismiss that indictment on double jeopardy grounds was denied, and he was convicted of attempted burglary in the second degree. This Court, erroneously in my view, now affirms defendant’s conviction on the ground that "Criminal Court was divested of jurisdiction pursuant to CPL 170.20 when, on December 4, 1989, the Assistant District Attorney requested an adjournment to present the case to the Grand Jury and an indictment resulted prior to the December 8 plea.” (Majority opn, at 641.)

CPL 170.20 provides that, following an adjournment granted to the District Attorney for the purpose of seeking an indictment, "[i]f such charge is presented to a grand jury within the designated period and either an indictment or a dismissal of such charge results, the local criminal court is thereby divested of jurisdiction of such charge” (CPL 170.20 [2] [a]). Thus, under the statute, Criminal Court jurisdiction is divested when an indictment or dismissal "results.”

The majority now holds that the point at which an indictment "results” under CPL 170.20 is different from the time when an indictment is filed. This misreads the statute. The word "results” is used in CPL 170.20 (2) (a) to accommodate "either an indictment or a dismissal. ” (Emphasis supplied.) It does not change the requirement of filing for an indictment.

An indictment is defined in the CPL as "a written accusation by a grand jury, filed with a superior court” (CPL 200.10). By definition an indictment "results” when it is filed.

In this case, if the original adjourned date did not "afford[ ] the district attorney reasonable opportunity” to complete the Grand Jury process (CPL 170.20 [2]), the proper procedure was to seek another brief adjournment to do so. To affirm defendant’s conviction in the circumstance presented condones what is at best sloppy practice, and in the process enlarges the statutory definition of an indictment.

I would reverse the conviction and dismiss the indictment. Judges Simons, Bellacosa and Levine concur with Judge Smith; Chief Judge Kaye dissents and votes to reverse in a separate opinion in which Judges Titone and Ciparick concur.

Order affirmed.

       In People v Cade (74 NY2d 410, 416), the Court held that there is no strict time limit for filing the indictment, not that an indictment is valid without being filed.


author: Levine, J.

text:
    [634 NE2d 958, 612 NYS2d 357]
    Bob Vatore et al., Respondents, v Commissioner of Consumer Affairs of the City of New York et al., Appellants.
    Argued March 16, 1994;
    decided May 5, 1994

      POINTS OF COUNSEL

      Paul A. Crotty, Corporation Counsel of New York City (Helen P. Brown and Larry A. Sonnenshein of counsel), for appellants.
    Public Health Law article 13-F does not generally preempt Administrative Code of the City of New York § 17-177. Rather section 1399-ff provides an express preemption provision applicable only to the free distribution of cigarettes and not to the other sections of the Act including the sale of cigarettes in vending machines. The legislative history of the State law directly supports the ability of localities to enact additional laws regulating cigarette vending machines. Indeed, the State itself asserts that it never intended general preemption of the field. (People v Cook, 34 NY2d 100; Good Humor Corp. v City of New York, 290 NY 312; New York State Club Assn. v City of New York, 69 NY2d 211, 487 US 1; Sonmax, Inc. v City of New York, 43 NY2d 253; Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91; Council for Owner Occupied Hous. v Koch, 119 Misc 2d 241; People v New York Trap Rock Corp., 57 NY2d 371; Board of Educ. v Cohalan, 135 Misc 2d 358; Boreali v Axelrod, 71 NY2d 1; People v Ortiz, 125 Misc 2d 318.)

      Schapiro & Reich, Lindenhurst (Perry S. Reich, Steven M. Schapiro and Cary David Kessler of counsel), for respondents.
    Basic rules of State-municipal preemption and the legislative history of article 13-F of the Public Health Law establish State preemption of local laws on the subject. (Matter of Ardizzone v Elliott, 75 NY2d 150; Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 372; Dougal v County of Suffolk, 102 AD2d 531, 65 NY2d 668; Hertz Corp. v City of

      New York, 80 NY2d 565; Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91; Council for Owner Occupied Hous. v Koch, 119 Misc 2d 241, 61 NY2d 942; Sonmax, Inc. v City of New York, 43 NY2d 253; Robin v Incorporated Vil. of Hempstead, 30 NY2d 347; Matter of Kress & Co. v Department of Health, 283 NY 55.)

      Russ Haven, New York City, for Alliance For Smoke-Free Air and others, amici curiae.

    The Legislature expressly provided that the Adolescent Tobacco-Use Prevention Act have a narrow preemptive effect, limited to preempting only local laws regulating the free distribution of tobacco products. (Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Thoreson v Penthouse Intl., 80 NY2d 490; Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91; People v New York Trap Rock Corp., 57 NY2d 371; Monroe-Livingston Sanitary Landfill v Town of Caledonia, 51 NY2d 679.)

      G. Oliver Koppell, Attorney-General, New York City (Jerry Boone and Harvey M. Berman of counsel), for State of New York, amicus curiae.

    Public Health Law article 13-F does not invalidate the challenged City law. (New York State Club Assn. v City of New York, 69 NY2d 211; Consolidated Edison Co. v Town of Red Hook, 60 NY2d 99; Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 327; Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91.)
   OPINION OF THE COURT

Levine, J.

This appeal presents a question of statutory interpretation: whether the Legislature, in enacting the Adolescent Tobacco-Use Prevention Act (the Act) (Public Health Law art 13-F [L 1992, ch 799]), intended to preempt local municipal regulation of tobacco sales and distribution through vending machines in public places. In particular, the question is whether the State statute preempts Local Laws, 1990, No. 67 of the City of New York.

In 1990, the New York City Council enacted Local Law No. 67 (adding Administrative Code of City of NY § 17-177), with the stated purpose of reducing the access of minors to tobacco products through restrictions on distribution of tobacco products in vending machines. The local law prohibits the siting of tobacco product vending machines in public places other than taverns (§ 17-177 [b]), defined as "establishments] where aleoholic beverages are sold and served for on-site consumption and in which the service of food, if served at all, is incidental to the sale of such beverages” (§ 17-177 [a] [5]). Plaintiffs — a vending machine operator, its trade association, a restaurant and a tavern located in the City of New York — commenced this action to declare invalid and permanently enjoin the enforcement of Local Law No. 67. Plaintiffs contended that Local Law No. 67 was inconsistent with, and therefore was preempted by, then-existing State statutes which regulated the sale and use of tobacco products.

Supreme Court granted defendants’ cross motion to dismiss plaintiffs’ complaint for failure to state a cause of action. The court determined that Local Law No. 67 was not inconsistent with existing State law, and that the Legislature had not adopted a comprehensive scheme of regulation which either expressly or impliedly preempted the City’s authority to regulate tobacco product vending machines (154 Mise 2d 149).

While plaintiffs’ appeal was pending before the Appellate Division, Governor Cuomo signed into law the Adolescent Tobacco-Use Prevention Act (Public Health Law, art 13-F, §§ 1399-aa through 1399-ff). Like Local Law No. 67, the express purpose of the Act was to restrict the availability of tobacco products, with the particular objective of discouraging tobacco use by adolescents. Section 1399-dd of the Public Health Law (eff Apr. 1, 1993), which concerned the placement of tobacco product vending machines, permitted the siting of such vending machines in more places and with fewer restrictions than did Local Law No. 67. Although the Appellate Division agreed that Local Law No. 67 had not been preempted by the State law in existence at the time of Supreme Court’s decision, it unanimously reversed and dedared Local Law No. 67 invalid. Specifically, the Appellate Division concluded that Local Law No. 67 was preempted by Public Health Law article 13-F because it added additional and inconsistent regulation "in an area where the State Legislature has already evidenced its desire to preempt the field of regulation” (192 AD2d 520, 522). We granted defendants’ motion for leave to appeal and now reverse the order of the Appellate Division and declare Local Law No. 67 valid.

Where the State has preempted an entire field, a local law regulating the same subject matter is inconsistent with the State’s interests if it either (1) prohibits conduct which the State law accepts or at least does not specifically proscribe (see, New York State Club Assn. v City of New York, 69 NY2d 211, 221, affd 487 US 1; Monroe-Livingston Sanitary Landfill v Town of Caledonia, 51 NY2d 679, 683), or (2) imposes restrictions beyond those imposed by the State law (see, Robin v Incorporated Vil. of Hempstead, 30 NY2d 347, 350-352). Because Local Law No. 67 imposes greater restrictions on the allowable sites for tobacco vending machines than does section 1399-dd of the Public Health Law, and imposes additional distance and signage requirements as well, the dispositive issue is whether the Legislature in enacting Public Health Law article 13-F intended to preempt the field of regulation of tobacco product distribution through vending machines, thereby precluding any further local regulation in this area.

Undisputedly, article 13-F does not express any general preemptive intent. Preemptive intent, however, may be inferred from the nature of the subject matter being regulated and the purpose and scope of the State legislative scheme (see, Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 372, 377; Consolidated Edison Co. v Town of Red Hook, 60 NY2d 99, 105). Thus, in Albany Area Bldrs., the detailed provisions of State law explicitly limiting the amount of taxation for highway purposes and the manner of expenditure of such funds constituted a preemptive legislative scheme grounded in the need to safeguard the public fisc without distinction between localities (74 NY2d, at 378-379, supra). In Consolidated Edison, the legislative declaration accompanying the enactment at issue specifically asserted a need for uniform State control of the regulation of utility siting (60 NY2d, at 105-106, supra). In People v De Jesus (54 NY2d 465, 468-470), we found the elaborate and detailed regulatory scheme laid out in the Alcoholic Beverage Control Law, in conjunction with the declared goal of the statute (§ 2) to "regulate and control the manufacture, sale and distribution within the state of alcoholic beverages”, determinative in our conclusion that the State had preempted the regulation of establishments selling alcoholic beverages.

By contrast, in the case of Public Health Law article 13-F, the legislative declaration accompanying the Act does not contain an expression of need for uniform State-wide control of tobacco product vending machines, nor is the statutory scheme so broad and detailed in scope as to require a determination that it has precluded all local regulation in the area, particularly where, as here, the local law would only further the State’s policy interests (see, Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91, 97-99).

The inclusion of a specific, limited preemption provision in the Act (L 1992, ch 799 [which added article 13-F to the Public Health Law]) additionally supports our holding that the Act has no implied general preemptive effect. The Act contains a narrow express preemption provision (see, L 1992, ch 799, § 6) giving preclusive effect to section 1399-bb of article 13-F, governing the distribution of tobacco products without charge. Under generally applicable principles of statutory construction, the inference to be drawn from the Legislature’s having given preclusive effect to one section of article 13-F is a concomitant intention not to give preclusive effect to any other section of article 13-F (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 240; see also, Thoreson v Penthouse Intl., 80 NY2d 490, 498-499; Varela v Investors Ins. Holding Corp., 81 NY2d 958, 961).

Applying this principle to the case before us, we conclude that the Legislature, in including a limited preemption provision applicable solely to one specified section of article 13-F (i.e., § 1399-bb, governing the free distribution of tobacco products), intended not to preempt local regulation of the other areas covered by article 13-F. Plaintiffs contend that this explicit preemption provision was included in the Act in order to limit the preemptive effect of article 13-F in this one area to future legislation, while still giving general preemptive effect to the remainder of article 13-F. We find this argument unpersuasive. Had the Legislature intended that the remainder of article 13-F have a general preemptive effect, it could have so stated. The absence of either an express general preemption provision or an expressed preemption directed to article 13-F’s regulation of tobacco product vending machines is particularly significant since the State statute was enacted after the enactment of Local Law No. 67 (see, Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91, 99, supra).

Indeed, although reliance on the legislative history of the Act is not necessary, its legislative history supports our conclusion with particular respect to the regulation of tobacco product vending machines. Although the Legislature considered various versions of the bill exhibiting a wide spectrum of proposals concerning the preemptive effect to be given to article 13-F, none of those proposals gave preemptive effect to its vending machine provisions. Moreover, the Joint Sponsors’ Memorandum in support of the final version explicitly interpreted the Act to "permit[ ] localities to adopt additional provision[s] which comply with at least the minimum requirements of the vending machine provisions of this act” (Joint Sponsors’ Mem, Bill Jacket, L 1992, ch 799). A letter from the General Counsel of the Department of Health to the Governor’s Counsel, supporting the final version of the bill, similarly interpreted the proposed legislation (Letter of Dept of Health General Counsel Peter Millock, Aug. 3, 1992, op. cit.). While not, of course, determinative, "a contemporaneous interpretation of a statute is entitled to considerable weight in discerning legislative intent” (Matter of Knight-Ridder Broadcasting v Greenberg, 70 NY2d 151, 158).

We thus conclude that article 13-F of the Public Health Law has not preempted the entire field of regulation of vending machine distribution of tobacco products. The argument that Local Law No. 67 is invalid because it prohibits that which the State statute would allow is therefore without merit, as this general principle applies only where the Legislature has shown its intent to preempt the field (see, New York State Club Assn. v City of New York, 69 NY2d 211, 221, supra).

Accordingly, the order of the Appellate Division should be reversed, with costs, and judgment granted declaring valid Local Laws, 1990, No. 67 of the City of New York.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Ciparick concur.

Order reversed, etc.

      . Plaintiffs cited section 480-a of the Tax Law, which requires dealers and vending machine operators to register with the State Department of Taxation; section 399-e of the General Business Law, which requires the posting of a notice prohibiting sale to minors on all cigarette vending machines; section 260.20 of the Penal Law, which prohibits the sale of tobacco to minors; and article 13-E of the Public Health Law, which regulates indoor smoking in buildings open to the public.

      . Public Health Law § 1399-dd permits the location of cigarette vending machines "(a) in a bar * * * or the bar area of a food service establishment with a valid, on-premises full liquor license; (b) in a private club; (c) in a tobacco business * * *; or (d) in a place of employment which has an insignificant portion of its regular workforce comprised of people under the age of eighteen years and only in such locations that are not accessible to the general public”.

      . Chapter 799, § 1 of the Laws of 1992 states that "it is the purpose of this act to restrict the distribution of tobacco products for purposes of encouraging the use or sale of such products, to restrict the dispensing of tobacco products in vending machines, and to take other related actions in order to protect the health, welfare and safety of the people, especially adolescents”.

      . Chapter 799, § 6 of the Laws of 1992 provides: "[t]he provisions of section 1399-bb of article 13-F of the public health law * * * shall govern and take precedence over the provisions of any local law, ordinance, rule, regulation, resolution, charter or administrative code hereafter enacted by any political subdivision of the state.”