author: ClPARIGK, J.

text:
    [678 NE2d 460, 655 NYS2d 848]
    George Baczkowski, Appellant, v D.A. Collins Construction Company, Inc., Respondent and Third-Party Plaintiff, et al., Third-Party Defendant.
    Argued February 11, 1997;
    decided March 20, 1997

      POINTS OF COUNSEL

      Grasso, Rodriguez, Grasso & Zyra, Schenectady (Mark A. Juda of counsel), for appellant.

      Taylor, Matalavage & Fallon, Albany (Megan Maureen Brown of counsel), for respondent and third-party plaintiff.
   OPINION OF THE COURT

ClPARIGK, J.

The Appellate Division dismissed plaintiff’s complaint for neglect to prosecute pursuant to CPLR 3216. The question on appeal is whether plaintiff proffered a justifiable excuse for past delay and for failing to file a note of issue within 90 days after receiving a demand to do so from defendant. We hold that plaintiff failed to tender a justifiable excuse and, accordingly, the Appellate Division properly dismissed plaintiff’s complaint.

This action stems from construction-site injuries sustained by plaintiff on November 18, 1986. Plaintiff was operating a truck owned by defendant D.A. Collins Construction Co. and had driven the vehicle atop a hill when the vehicle’s brakes allegedly failed. As the truck started to roll down the hill, plaintiff jumped out and was injured when he hit the ground.

On November 2, 1989, plaintiff commenced this action in negligence and strict products liability by service of a summons and notice. Plaintiff thereafter served a complaint on defendant on December 26, 1989. On January 8, 1990, defendant answered plaintiffs complaint, and, on November 19, 1990, commenced a third-party action against plaintiffs employer, Kubricky Construction Corp. Very little activity occurred in the action during the next four years, aside from defendant taking plaintiffs deposition in February 1991 and September 1992.

On July 27, 1994, defendant served a demand on plaintiff to resume prosecution of the action and file a note of issue within 90 days (see, CPLR 3216 [b] [3]). Plaintiff did not file a note of issue within the 90-day period and took no other step to indicate an intention to proceed with the action. On December 13, 1994, 139 days after serving the 90-day demand, defendant moved to dismiss plaintiffs complaint pursuant to CPLR 3216. Plaintiff submitted no papers opposing the motion to dismiss. Instead, on January 20, 1995, 10 days before the return date of defendant’s motion and 87 days after the expiration of the 90-day period, plaintiff filed a note of issue.

On April 13, 1995, Supreme Court preliminarily ruled on the motion by issuing a conditional order of dismissal, granting plaintiff an additional 30 days to demonstrate a justifiable excuse for the delay and to submit an affidavit of merit. In response, plaintiff submitted a two-page attorney’s affidavit stating that the delay was attributable to uncertainty over the status of third-party discovery requests, as evidenced by plaintiffs written inquiries directed to defendant in September and November 1993. Plaintiffs counsel also explained that on December 21, 1994, his secretary attempted to file a note of issue, but, because she was unfamiliar with recent amendments to the CPLR, her endeavors proved unsuccessful. In lieu of an affidavit of merit from plaintiff, his attorney submitted plaintiffs deposition transcript.

Supreme Court thereafter denied defendant’s motion to dismiss, concluding that plaintiff established a justifiable excuse and a meritorious cause of action. The Appellate Division reversed, with two Justices dissenting. The Court held that plaintiff did not demonstrate a justifiable excuse for failing to comply with the 90-day requirement of CPLR 3216 and dismissed the action. Plaintiff appealed to this Court as of right (see, CPLR 5601 [a]), and we now affirm.

CPLR 3216 is the general statutory authority for neglect-to-prosecute dismissals. The provision has a checkered history, which this Court has recounted on prior occasions (see, e.g., Chase v Scavuzzo, 87 NY2d 228, 231-233; Cohn v Borchard Affiliations, 25 NY2d 237, 244-246; see also, Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3216:l-C3216;4, at 628-635). As a result of a 1967 amendment to CPLR 3216, courts are prohibited from dismissing an action for neglect to prosecute unless the statutory preconditions to dismissal are met (see, CPLR 3216 [b]; Cohn v Borchard Affiliations, supra, 25 NY2d, at 246).

CPLR 3216, as it now reads, is extremely forgiving of litigation delay. A court cannot dismiss an action for neglect to prosecute unless: at least one year has elapsed since joinder of issue; defendant has served on plaintiff a written demand to serve and file a note of issue within 90 days; and plaintiff has failed to serve and file a note of issue within the 90-day period (CPLR 3216 [b]). So long as plaintiff serves and files a note of issue within the 90-day period, all past delay is absolved and the court is then without authority to dismiss the action (CPLR 3216 [c]). However, if plaintiff fails to file a note of issue within the 90-day period, "the court may take such initiative or grant such motion [to dismiss] unless the [defaulting] party shows justifiable excuse for the delay and a good and meritorious cause of action” (CPLR 3216 [e]). Thus, even when all of the statutory preconditions are met, including plaintiffs failure to comply with the 90-day requirement, plaintiff has yet another opportunity to salvage the action simply by opposing the motion to dismiss with a justifiable excuse and an affidavit of merit. If plaintiff makes a sufficient showing, the court is prohibited from dismissing the action.

In this case, the Appellate Division held that plaintiff failed to demonstrate a justifiable excuse for not complying with the 90-day requirement. In view of plaintiffs persistent neglect despite repeated opportunities to resume prosecution of the action and the absence of any timely proffered reasonable excuse for the extensive delay, we agree that dismissal was proper in this case (see, Sortino v Fisher, 20 AD2d 25, 28-32; see generally, Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3216:29-C3216:31, at 656-659 [discussing factors considered on CPLR 3216 motion]).

After commencement of the action in 1989, the action remained virtually dormant for nearly five years, with little indication by plaintiff that he was inclined to proceed. Even after defendant served the 90-day demand pursuant to CPLR 3216, plaintiff failed to file a note of issue or take any other step indicating an intention to resume prosecution of the action, such as moving to vacate the 90-day demand or seeking an extension of time within which to file a note of issue (see, 4 Weinstein-Korn-Miller, NY Civ Prac 3216.10, at 32-378 — 32-380 [detailing options available to a plaintiff encountering difficulty in complying with 90-day demand]; Siegel, NY Prac § 375, at 559 [2d ed] [same]). When defendant thereafter moved to dismiss, 139 days after serving the 90-day demand, plaintiff chose to submit no papers in opposition.

Despite plaintiff’s default on the motion to dismiss, Supreme Court provided plaintiff yet an additional 30 days to demonstrate a justifiable excuse and a meritorious claim. In response, plaintiff finally submitted a two-page attorney’s affidavit, contending that uncertainty over pending third-party discovery excused the delay. This excuse was patently deficient because plaintiff’s counsel admitted to having last inquired about the third-party discovery in November 1993, more than eight months before defendant served the 90-day demand. The alternative excuse that counsel’s secretary had attempted to file a note of issue but was unsuccessful is inadequate: the attempted filing occurred on December 21, 1994, which was 57 days after the expiration of the 90-day period and, therefore, could excuse neither the past delay nor the failure to comply with the 90-day requirement. Of course, it is the professional obligation of counsel, not the secretary, to know and comply with the CPLR.

We note that under the plain language of CPLR 3216, a court retains some discretion to deny a motion to dismiss, even when plaintiff fails to comply with the 90-day requirement and proffers an inadequate excuse for the delay. Thus, the Appellate Division’s statement that in "the absence of any justifiable excuse * * * Supreme Court lacked discretion to excuse plaintiff's default” (227 AD2d 789, 790) is unnecessarily rigid. If plaintiff fails to demonstrate a justifiable excuse, the statute says the court "may” dismiss the action — it does not say "must” (see, CPLR 3216 [e]) — but this presupposes that plaintiff has tendered some excuse in response to the motion in an attempt to satisfy the statutory threshold.

Although a court may possess residual discretion to deny a motion to dismiss when plaintiff tenders even an unjustifiable excuse, this discretion should be exercised sparingly to honor the balance struck by the generous statutory protections already built into CPLR 3216. Even such exceptional exercises of discretion, moreover, would be reviewable within the Appellate Division’s plenary discretionary authority. If plaintiff unjustifiably fails to comply with the 90-day requirement, knowing full well that the action can be saved simply by filing a note of issue but is subject to dismissal otherwise, the culpability for the resulting dismissal is squarely placed at the door of plaintiff or plaintiffs counsel. Were courts routinely to deny motions to dismiss even after plaintiff has ignored the 90-day period without an adequate excuse, the procedure established by CPLR 3216 would be rendered meaningless.

Thus, when a plaintiffs excuse, though inadequate, is timely interposed, a court in its discretion might dismiss the action or, in an appropriate case, deny the motion and impose a monetary sanction on plaintiff or plaintiffs counsel instead (see, e.g., Lichter v State of New York, 198 AD2d 687, 688 [in tripling the sanction imposed by the lower court, court notes "the sanction imposed should be substantial enough to serve as a deterrent to dilatory behavior in the future”]; Neyra y Alba v Pelham Foods,, 46 AD2d 760; see also, 22 NYCRR 130-1.1 [c] [2] [sanctionable frivolous conduct includes conduct "undertaken primarily to delay or prolong the resolution of the litigation”]). As discussed above, plaintiff in this case failed to tender any reasonable excuse in timely response to defendant’s dismissal motion. Therefore, dismissal was the appropriate result.

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

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

Order affirmed, with costs.


source: Caselaw Access Project

author: Titone, J.

license: Public Domain

text:
    [678 NE2d 474, 655 NYS2d 862]
    In the Matter of New York County DES Litigation. Susan Wetherill, Respondent, v Eli Lilly & Company et al., Defendants, and Emons Industries, Inc., Appellant.
    Argued January 6, 1997;
    decided February 11, 1997

      POINTS OF COUNSEL

      Anderson Kill & Olick, P. C., New York City (Jeffrey L. Glatzer and Eric D. Statman of counsel), for appellant.

      Ronald R. Benjamin, Binghamton, for respondent.

      Herzfeld & Rubin, P. C, New York City (Michael Hoenig, David B. Hamm and Linda M. Brown of counsel), and Hugh F. Young, Jr., of the Virginia Bar, admitted pro hac vice, for Product Liability Advisory Council, Inc., amicus curiae.

   OPINION OF THE COURT

Titone, J.

CPLR 214-c (2) provides that the time for initiating a cause of action for damages resulting from exposure to a harmful substance begins to run from the date that the "injury” was discovered or could have been discovered with reasonable diligence. The specific issue before us in this appeal is whether an "injury” is discovered within the meaning of CPLR 214-c (2) when the symptoms become apparent or instead when the connection between those symptoms and the injured’s exposure to a toxic substance is recognized. We hold that the time for bringing the action begins to run under the statute when the injured party discovers the primary condition on which the claim is based.

According to the papers submitted on the motion for summary judgment, plaintiff Susan Wetherill was treated in 1978 or 1979 for dysplasia, a diagnosis indicating a "pre-cancerous” condition in her cervix. Thereafter, plaintiff had a series of reproductive difficulties, suffering four successive miscarriages in 1980 or 1981, 1984, early 1986 and late 1986. In 1987, after having sought help identifying the reasons for her repeated miscarriages, plaintiff was advised that she had a T-shaped uterus, and she underwent surgery for the removal of adhesions and a uterine septum. Less than a year later, plaintiff delivered a preterm baby after 24 weeks of gestation, but the infant did not survive. Several months after this delivery, plaintiff was advised that she had an "incompetent” cervix. She was subsequently treated for this condition.

Plaintiff testified at her deposition that it was not until shortly after her 1988 preterm delivery that she first learned that her mother may have taken a harmful drug during her own pregnancies that could have affected her daughters’ reproductive health. Plaintiff had not previously heard about diethylstilbestrol (DES), the drug that is now known to cause abnormalities and pathological conditions in some of its users’ female offspring (see, Hymowitz v Lilly & Co., 73 NY2d 487, 502-503). According to her deposition testimony, plaintiff first learned about DES and the possibility that her mother had ingested it during a telephone conversation with her sister that took place in or about March of 1988. Plaintiff’s sister was unable to state with certainty that her mother had taken DES because her own efforts to locate the medical records had been unsuccessful. Plaintiff did not immediately pursue the matter by asking her mother directly about the drugs she may have taken during pregnancy. Instead, she waited until late 1989, at which time she overheard the physician who was treating her for her current pregnancy tell a medical assistant that her medical history revealed "classic symptoms of DES.”

On August 14, 1992, plaintiff commenced the present action against a host of DES manufacturers. After discovery was had, several of the defendants moved for summary judgment dismissing the complaint on the ground that it was time-barred under CPLR 214-c (2). The moving defendants argued that the action was untimely because it was commenced more than three years after plaintiff had discovered the reproductive ailments that formed the basis of her claim. Plaintiff opposed the motion, arguing that the time to commence her action did not begin to run until late 1989, when she overheard the conversation between her physician and a medical assistant and thereby learned that her symptoms were likely to be DES related.

The Supreme Court rejected plaintiff’s argument and dismissed her complaint. Relying on Michael v Ametelco, Inc. (150 Misc 2d 507, affd sub nom. Michael v Eastern Alloys, 175 AD2d 667), the court held that the Statute of Limitations began to run when plaintiff’s reproductive ailments were discovered and that "it is not necessary, for statute of limitations purposes for * * * plaintiff to have known * * * that th[ose injuries] were caused by DES.”

On plaintiff’s appeal from the Supreme Court’s order, the Appellate Division reversed. That Court ruled that "the 'discovery’ to which [CPLR 214-c (2)] refers is not merely the discovery of the condition or symptoms suffered by the plaintiff, * * * but includes the discovery of the fact that those symptoms are attributable to an injury inflicted upon the plaintiff by a third party” (225 AD2d 372). Reasoning that the parties’ submissions gave rise to a question of fact as to when this plaintiff had sufficient information to cause her or a reasonable person in her position to associate her physical symptoms with DES, the Court concluded that summary judgment on the Statute of Limitations question was inappropriate. The Appellate Division subsequently granted defendant Emons Industries, Inc. leave to appeal to this Court, certifying the following question of law: "Was the order of this Court, which reversed the order of the Supreme Court, properly made?”

Enacted in 1986 as part of a larger "tort reform” package (L 1986, ch 682), CPLR 214-c (2) provides that "the three year period within which an action to recover damages for personal injury or injury to property caused by the latent effects of exposure to any substance or combination of substances * * * must be commenced shall be computed from the date of discovery of the injury by the plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered by the plaintiff, whichever is earlier.” The focus of this dispute is the intended meaning of the phrase "discovery of the injury.” Inasmuch as plaintiff unquestionably knew about the medical condition forming the basis of her claim more than three years before the commencement of her 1992 action, she can succeed in defeating defendants’ dismissal motion only if, as she contends, the "discovery of the injury” is not complete within the meaning of the statute until the injured party discerns both the bodily symptoms and the fact that those symptoms have a nonbiological cause.

The interpretation plaintiff urges has some superficial appeal, since it would benefit potential claimants whose symptoms, like plaintiff’s, are ambiguous and are not always associated with exposure to a foreign substance. Indeed, plaintiff’s theory has enough appeal to commend itself to several courts and commentators (see, e.g., Cochrane v Owens-Corning Fiberglas Corp., 219 AD2d 557 [1st Dept]; Scherrer v Time Equities, 218 AD2d 116; Braune v Abbott Labs., 895 F Supp 530 [ED NY]; Alexander, Supp Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 214-c, 1997 Pocket Part, at 157-158). We conclude, however, that in the final analysis plaintiff’s construction is out of harmony with the statutory design and is unsupported by the provision’s legislative history. Consequently, it must be rejected.

The central flaw in plaintiff’s argument is the difficulty of sustaining it in light of CPLR 214-c (4), which expressly provides for situations in which the plaintiff was aware of the "injury” itself but there was a delay in the discovery of its "cause.” Specifically, the provision states:

"Notwithstanding the provisions of subdivisions two and three of this section, where the discovery of the cause of the injury is alleged to have occurred less than five years after discovery of the injury or when with reasonable diligence such injury should have been discovered, whichever is earlier, an action may be commenced * * * within one year of such discovery of the cause of the injury; provided, however, if any such action is commenced * * * after the period in which it would otherwise have been authorized pursuant to subdivision two or three * * * the plaintiff or claimant shall be required to allege and prove that technical, scientific or medical knowledge and information sufficient to ascertain the cause of his injury had not been discovered, identified or determined prior to the expiration of the period within which the action or claim would have been authorized.”

As is apparent from the above-quoted language, the Legislature anticipated and made specific provision for the problem that arises when the plaintiff has discernible bodily symptoms but the toxic etiology of those symptoms has not yet been discovered. An extension of the time to commence the action is granted under these circumstances, but only if a set of statutorily prescribed conditions is satisfied.

In an effort to avoid the import of CPLR 214-c (4), plaintiff urges us to distinguish between situations in which only the precise toxic substance that caused the injury is unknown and those in which the person experiencing the manifestations of exposure knows neither of the cause nor of the very fact that those symptoms have a nonnatural cause. In plaintiff’s view, only the former class of cases are addressed by CPLR 214-c (4). In the latter class of cases, plaintiff contends, the individual cannot be said to have discovered the "injury” — a term that implies harm caused by an outside, nonbiological source. These cases, according to plaintiff, involve something other than discovery of the disorder’s "cause” and, thus, there is no inconsistency in by-passing CPLR 214-c (4) provisions for "discovery of the [injury’s] cause” in these circumstances.

We conclude, however, that the distinction plaintiff advances is more semantic than real. The knowledge that particular symptoms are attributable to an outside cause is almost invariably coupled with an awareness of the identity of that cause. As a practical matter, physicians do not diagnose medical problems as having a nonbiological cause in a vacuum. It is usually only after the discovery by researchers of the relationship between a particular toxic substance and a particular set of symptoms, such as the now known relationship between thalidomide and certain birth defects or between asbestos and certain lung diseases, that diagnosticians connect the observed symptoms to a nonbiological, outside cause (see generally, Senate Introducer’s Mem in Support of Silicone Revival Statute, Bill Jacket, L 1993, ch 419 [describing diagnostic confusion that existed "before any causation * * * was made between the silicone and the injury”]). Indeed, before a scientifically documented connection between a set of symptoms and a particular substance is identified, a diagnosis that an illness or disorder has a nonbiological etiology is necessarily speculative. Thus, for all intents and purposes, discovery that a plaintiffs symptoms were attributable to an injury inflicted by an outside force is the same as "discovery of the cause of the injury” within the meaning of CPLR 214-c (4), and the plaintiff’s proposed distinction is illusory.

That CPLR 214-c (2)’s reference to "discovery of the injury” was intended to mean discovery of the condition on which the claim was based and nothing more is also apparent from the legislative history of the provision. As we recently observed in Rothstein v Tennessee Gas Pipeline Co. (87 NY2d 90, 93), CPLR 214-c was enacted to overcome the effect of a line of Court of Appeals decisions holding that toxic tort claims accrue upon "impact” or exposure even though the resulting illness may not be manifested for a long time thereafter (Sponsor’s Mem in Support of L 1986, ch 682, 1986 NY Legis Ann, at 287; see, e.g., Matter of Steinhardt v Johns-Manville Corp., 54 NY2d 1008; Thornton v Roosevelt Hosp., 47 NY2d 780; Reis v Pfizer, Inc., 48 NY2d 664; Schwartz v Heyden Newport Chem. Corp., 12 NY2d 212, cert denied 374 US 808; Schmidt v Merchants Desp. Transp. Co., 270 NY 287; see also, Martin v Edwards Labs., 60 NY2d 417). These decisions were regarded as overly harsh because they barred claims by individuals suffering from the latent effects of a harmful substance before the harm was even discovered (see, Sponsor’s Mem, op. cit.). The goal of the Legislature in adopting CPLR 214-c was to "provide relief to injured New Yorkers whose claims would otherwise be dismissed for untimeliness simply because they were unaware of the latent injuries until after the limitations period had expired” (id., at 287; see, Jensen v General Elec. Co., 82 NY2d 77, 84).

It is apparent from this history that, in enacting a new "discovery” rule for the commencement of toxic torts, the Legislature had in mind only the discovery of the manifestations or symptoms of the latent disease that the harmful substance produced. The dichotomy in the case law that the Legislature intended to address was that between impact or exposure on the one hand and resulting infirmity on the other. Given that narrow focus, the only reasonable inference is that when the Legislature used the phrase "discovery of the injury” it meant discovery of the physical condition and not, as plaintiff argues, the more complex concept of discovery of both the condition and the nonorganic etiology of that condition.

In this case, it is undisputed that the primary conditions that form the basis of plaintiff’s claim — her dysplasia, her miscarriages, her misshapen uterus, and her incompetent cervix — were all known to her by 1988. Thus, her 1992 action was commenced more than three years after her "discovery of the injury” and her complaint was properly dismissed without further inquiry into the reasonableness of plaintiff’s late discovery of the connection between her symptoms and her mother’s ingestion of DES.

We note in closing our agreement with the general proposition that CPLR 214-c is a remedial measure and that, as such, it should be liberally construed to effectuate its purposes (see, Rothstein v Tennessee Gas Pipeline Co., supra, at 96; McKinney’s Cons Laws of NY, Book 1, Statutes § 96, at 209). Even with that axiom of statutory construction, however, we are obliged to interpret the statute in a way that makes sense in light of both the legislative design and the specific problem that the provision was adopted to remedy. Despite the concerns that the dissent expresses, there is nothing in either the language of the statute or its history to suggest that the Legislature intended to make the running of the Statute of Limitations depend on claimants’ subjective understanding of the etiology of their conditions. Indeed, if the interpretation and rationale advanced by the dissent were to prevail, the date for commencing an action under CPLR 214-c (2) would depend on such fortuitous circumstances as the medical sophistication of the individual plaintiff and the diagnostic acuity of his or her chosen physician. It is apparent from the over-all statutory plan, however, that only the technical knowledge of the scientific and medical communities were to he considered in determining whether the injured’s delay following the discovery of injury should be excused. With that principle in mind, we conclude that the Appellate Division erred in its adoption of plaintiffs view of CPLR 214-c (2).

Accordingly, the order of the Appellate Division should be reversed, with costs, the complaint against defendant Emons Industries, Inc. dismissed and the certified question answered in the negative.

Smith, J. (dissenting). CPLR 214-c (2) states, in relevant part, that the three-year Statute of Limitations period for an injury "caused by the latent effects of exposure to any substance or combination of substances, in any form, upon or within the body * * * shall be computed from the date of discovery of the injury by the plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered by the plaintiff, whichever is earlier.”

The majority concludes that since CPLR 214-c (4) provides for a five-year extension of the Statute of Limitations where technical, scientific or medical knowledge is insufficient to link an injury with a particular agent, the three-year Statute of Limitations under CPLR 214-c (2) commences from the "discovery of the manifestations or symptoms of the latent disease” (majority opn, at 514) even if the plaintiff does not know that such symptoms are attributable to exposure from a harmful substance. I dissent because the majority effectively removes the factual inquiry into a plaintiff’s "exercise of reasonable diligence” under CPLR 214-c (2) from the jury in favor of an objective standard which dispenses with any need to ascertain a plaintiff’s knowledge as to the etiology of an injury.

From 1980 or 1981 to March 7, 1988, plaintiff endured four miscarriages and one unsuccessful preterm delivery. In December 1989, plaintiff overheard her doctor, Dr. Kassis, tell another person that she displayed "classic symptoms” of DES exposure. Plaintiff commenced this lawsuit in 1992.

From her first miscarriage until the time plaintiff overheard Dr. Kassis’ comment about DES in 1989, plaintiff consulted at least five gynecologists about her inability to carry a child to full term. Although plaintiff was informed that she had dysplasia, a T-shaped uterus and uterine septate, intrauterine adhesions, and an incompetent cervix, none of these gynecologists informed plaintiff that her reproductive difficulties could have arisen from in útero exposure to DES. Plaintiff testified at her deposition that in 1988 she talked with her sisters about the possibility that her mother had taken DES but none of the medical practitioners she consulted raised the possibility that a foreign agent or substance could have caused her injuries.

Supreme Court concluded that this action was time-barred because plaintiff’s "bodily structures were affected by her exposure to DES” and plaintiff knew of the physical conditions cited as DES-related injuries prior to 1989. The Appellate Division reversed, concluding that the relevant inquiry was not whether plaintiff knew about her physical abnormalities but whether plaintiff knew that such abnormalities had been caused by the intervention of a "third party,” that is, exposure to the "any substance” referred to in CPLR 214-c (2) (225 AD2d 372). Noting the existence of factual questions relating to when plaintiff should have discovered that her physical abnormalities were attributable to DES, the Appellate Division held that this inherently factual issue should be referred to a jury.

We have recently affirmed the long-standing rule in New York State that a person is injured upon exposure to a toxic substance, not upon the physical manifestation of the injury in the human body (see, Consorti v Owens-Corning Fiberglas Corp., 86 NY2d 449; see also, Rothstein v Tennessee Gas Pipeline Co., 87 NY2d 90, 93). Since exposure to DES occurs in útero, until the Legislature enacted CPLR 214-c and the accompanying revival statute (L 1986, ch 682, § 4), injured parties could not seek redress for the harmful and latent effects of DES exposure because such effects could not be detected until well after the three-year Statute of Limitations had expired (see, CPLR 214).

This Court has observed that the primary motivation behind the Legislature’s enactment of CPLR 214-c was the concern that persons who are unaware that they have been injured by exposure to a particular substance would be unable to pursue their claims by the time they discovered the nature of their injury (Rothstein v Tennessee Gas Pipeline Co., supra, 87 NY2d, at 96; Jensen v General Elec. Co., 82 NY2d 77, 82-85; Enright v Lilly & Co., 77 NY2d 377, 383). Thus, it was not the abnormal physical condition per se (for example, a T-shaped uterus) which prompted legislative action, but the lack of awareness on the part of injured persons that a particular substance could cause deleterious physical effects which led the Legislature to act.

We have previously noted the sentiment of a member of the New York State Senate that CPLR 214-c was required to " 'provide relief to injured New Yorkers whose claims would otherwise be dismissed for untimeliness simply because they were unaware of the latent injuries until after the limitation period had expired’ ” (Jensen v General Elec. Co., supra, 82 NY2d, at 84, quoting from Mem of Senator R. B. Stafford, reprinted in 1986 NY Legis Ann, at 287; see also, majority opn, at 513-514). However, the existence of such "latent injuries” cannot be determined in a vacuum. They must be linked to a particular substance. The Legislature addressed its concern that injured parties would be unable to discover this link between a substance and the physical manifestation of injury within three years of exposure to the substance by enacting CPLR 214-c. The majority’s attempt to parse out these inextricably intertwined concepts by divorcing the "resulting infirmity” from "impact or exposure” (majority opn, at 514) cannot withstand scrutiny. An infirmity "results” only if a substance exerts harmful effects.

Moreover, the majority now burdens plaintiffs with the obligation to commence a lawsuit before any potential defendants have been identified. Without the benefit of hindsight which links a particular substance to a "primary condition” (majority opn, at 509) plaintiffs must now deal with an expiring Statute of Limitations when the only knowledge in their possession is the existence of an abnormal physical condition.

In an apparent repudiation of the Legislature’s concern that injured parties would lose access to courts because they lack knowledge that a certain substance causes a certain somatic effect, the majority holds today that, as a matter of law, knowledge of DES exposure induced injury can be imputed to a plaintiff if that plaintiff suffers from some unspecified "medical condition” (majority opn, at 511). That a plaintiff may not know that this condition could give rise to a claim apparently holds no relevance for the majority. The majority similarly disregards the diligence exercised by plaintiffs in attempting to discover the causes of their medical problems.

In taking this stance, the majority transforms a fact-intensive inquiry into the nature of a plaintiff’s knowledge as to the deleterious effects of a substance, and the reasonableness of a plaintiff’s diligence in acquiring such knowledge, into an objective standard based on the manifestation of physical symptoms identified by the technical, scientific or medical community. The difficulty of determining the reasonableness of the diligence exercised by the plaintiff here is illustrated by the fact that she consulted several medical practitioners for her reproductive problems and none of them mentioned DES as a causal factor of her difficulties.

The implication of the majority’s holding is that once scientific, technical or medical knowledge links a substance to a physical condition (see, CPLR 214-c [4]), that knowledge is imputed to the layperson as a matter of law even if that condition may result from a wide variety of causes. This conclusion is troubling because while DES may cause conditions such as a T-shaped uterus and uterine septate in some women, not every uterine septate can be attributed to DES. Moreover, the majority assumes, as a matter of law, that a layperson would know that DES could cause a septate uterus or some undefined "primary condition.”

Here, plaintiff contends that she did not know that the physical infirmities identified by her doctors could have been caused by in útero exposure to DES until 1989. Instead of permitting a jury to decide, as an issue of fact, when a plaintiff who suffers from a T-shaped uterus, or the combination of conditions which afflicted the plaintiff here, acts with reasonable diligence in discovering that DES caused her symptoms, such knowledge is simply assumed. The imputation of such technical, scientific and medical knowledge to laypersons as a matter of law is unwarranted given the undoubtedly wide disparity in familiarity with scientific and medical knowledge among women of child-bearing age who could be afflicted with injuries from DES.

By declining to conduct any inquiry into whether reasonable diligence would have revealed that a particular substance caused plaintiffs physical abnormalities, the majority permits "fortuitous circumstances” (majority opn, at 515) to reign supreme. While the level of technical, medical and scientific knowledge is relevant in determining whether a plaintiff has exercised reasonable diligence in discovering a "primary condition,” a jury should determine whether this fact alone or in tandem with others should commence the running of the Statute of Limitations.

As the majority notes, "CPLR 214-c is a remedial measure and that, as such, it should be liberally construed to effectuate its purposes” (majority opn, at 514). By narrowly construing "discovery of the injury,” the majority removes the fact-intensive issue of when a layperson should know of specialized scientific and medical concepts from the jury and concludes that courts may determine which physical conditions plaintiffs should be assumed to know and when they should have acquired this knowledge as a matter of law. I cannot agree that such an interpretation accords with the remedial purposes of a statute which was enacted because of a desire to permit injured parties court access, when such parties would otherwise be foreclosed from bringing their claims because they lacked awareness that exposure to a particular substance could lead to somatic injuries within a certain time frame.

Chief Judge Kaye and Judges Levine, Ciparick and Wesley concur with Judge Titone; Judge Smith dissents and votes to affirm in a separate opinion; Judge Bellacosa taking no part. Order reversed, etc.

      . Because she was then unable to identify the manufacturer of the DES she believed her mother had taken, plaintiff sued a large group of manufacturers under the "market share” theory approved by this Court in Hymowitz v Lilly & Co. (supra).

      . The moving defendants were Eli Lilly & Co., Kremers-Urban Co., Premo Pharmaceutical Laboratories, Inc., Chromalloy American Corp. and Rhone-Povlenc Rorer Pharmaceuticals, Inc.

      . Plaintiff had moved in the Supreme Court for permission to amend her complaint "to add allegations under CPLR 214-c (4).” The court, however, denied the motion, noting that "plaintiff * * * has failed to make any showing that technical, scientific or medical knowledge had not been discovered sufficient to allow plaintiff to ascertain the cause of her injury prior to the expiration of the statute of limitations.” Further, the court stated, "[p]laintiff cannot seriously suggest that [such] knowledge did not exist in 1988 to diagnose her injuries and their relationship to DES.” This ruling is not before us on the present appeal.

      . We recognize that there may be situations in which the claimant may experience early symptoms that are too isolated or inconsequential to trigger the running of the Statute of Limitations under CPLR 214-c (2). We need not decide in this case, however, precisely where the threshold lies, since there is no doubt that by 1988 this plaintiff was formally diagnosed as having a combination of serious reproductive abnormalities, the very abnormalities that constitute the harm for which she seeks recovery. Under these facts, we need hold only that a "discovery of the injury” occurs within the meaning of CPLR 214-c (2) when the plaintiff is diagnosed with the primary condition for which damages are sought.

      . The weakness in the dissent’s suggested subjective approach is evident from the facts in this case. The consequences of in útero exposure to DES, as well as the most commonly experienced physical manifestations of such exposure, have been well publicized in the past 20 years and there is, thus, considerable public awareness that conditions such as dysplasia misshapen uterus and cervical abnormalities could signal a DES-related injury. Indeed, in this instance, there was evidence that, whatever plaintiff's own level of knowledge was, plaintiff’s sister was aware of the existence of a DES risk even before she and plaintiff discussed the matter in March of 1988. As is apparent from these circumstances, awareness of matters concerning public health is often spread unevenly throughout the population, depending on such variables as an individual’s interest in current events and his or her exposure to news media. The rule of law the dissent suggests would make the commencement of the statutory limitations period depend on such personal variables, giving rise to an unacceptable degree of randomness and arbitrariness.

      . Plaintiff consulted Dr. Michael Cummings, Dr. Michael Shaw, Dr. Bad-away, Dr. Michael Baggish, and Dr. Iskander Kassis. Plaintiff also saw a family physician at Endwell Family Physicians for Pap smears. Endwell Family Physicians diagnosed plaintiff’s incompetent cervix.

      . Indeed, making such assumptions as a matter of law may also remove the issue of causation from the jury. Here, defendant contends that "Miscarriages clearly have biological causes independent of DES exposure, and, in fact, Emons does not concede that DES exposure causes miscarriages.” Moreover, at least one DES manufacturer has argued that plaintiffs seeking redress for DES induced injuries cannot point "to a single study or article that in any way evidences the purported causal connection between DES and a uterine septum. The reason for this failure is simple. There is no such evidence.”


author: Wesley, J.

text:
    [678 NE2d 482, 655 NYS2d 870]
    The People of the State of New York, Respondent, v Edwin Vasquez, Appellant. In the Matter of Jose Cordero, Appellant, v Daniel K. Lalor, as County Judge of Greene County, et al., Respondents.
    Argued February 12, 1997;
    decided March 20, 1997

      POINTS OF COUNSEL

      Carl J. Silverstein, Monticello, for appellant in the first above-entitled action.

      James T. Hayden, District Attorney of Chemung County, Elmira, for respondent in the first above-entitled action.

      Greg D. Lubow, Public Defender of Greene County, Catskill, for appellant in the second above-entitled proceeding.

      Edward G. Cloke, District Attorney of Greene County, Catskill, for Robert E. Carpenter, respondent in the second above-entitled proceeding.

      Dennis C. Vacco, Attorney-General, Albany (Barbara G. Billet, Peter H. Schiff and Martin A. Hotvet of counsel), for State Department of Correctional Services, amicus curiae in the first above-entitled action and second above-entitled proceeding.

      Lopinto, Schlather, Solomon & Salk, Ithaca (Diane V. Bruns and Mark J. Solomon of counsel), for New York State Association of Criminal Defense Lawyers, amicus curiae in the second above-entitled proceeding.
   OPINION OF THE COURT

Wesley, J.

The primary issue in each of these appeals is whether the Double Jeopardy Clauses of the State and Federal Constitutions bar the criminal prosecution of an inmate who has previously been the subject of internal prison disciplinary sanction. We conclude that the disciplinary sanctions imposed do not constitute "criminal punishment” triggering double jeopardy protections. Thus, the claims that the criminal prosecutions were barred under double jeopardy principles were correctly rejected.

I.

People v Vasquez

On February 26, 1994, while incarcerated at the Elmira Correctional Facility, defendant Vasquez was searched by prison guards after setting off a metal detector during a routine walk-through. During the search, the guards saw defendant throw a metal object into a nearby laundry basket. The object was a sharpened eight-inch piece of metal, commonly referred to as a "shank.” At the time, defendant was serving an indeterminate sentence of 5 to 10 years for criminal possession of a controlled substance and a concurrent indeterminate sentence of 2/2 to 5 years for criminal possession of a weapon. Defendant was charged by prison officials with a Tier III violation of the standards of inmate behavior (7 NYCRR 270.2). Pursuant to 7 NYCRR 270.3, a Superintendent’s hearing was held on or about March 23, 1994, and defendant was found guilty. By decision dated March 26, 1994, the Hearing Officer imposed a disciplinary penalty of 180 days in the Special Housing Unit and six months loss of privileges and good time. This penalty was ultimately modified by the Southport Disciplinary Review Committee to 145 days in the Special Housing Unit.

On April 14, 1994, defendant was indicted by the Chemung County Grand Jury and charged with one count of promoting prison contraband, a class D felony (Penal Law § 205.25). By omnibus motion dated April 29, 1994, defendant moved to dismiss the charge on double jeopardy grounds. The motion was denied by the trial court. Defendant was convicted upon a jury trial and ultimately sentenced as a second felony offender to an indeterminate consecutive term of 3 to 6 years’ imprisonment. The Appellate Division affirmed. A Judge of this Court granted defendant leave to appeal.

Matter of Cordero

The charges in Cordero’s case also involved a shank, this one having been used to stab a fellow inmate at the Coxsackie Correctional Facility on March 26, 1995. Prison officials charged Cordero with four violations of the standards of inmate behavior (7 NYCRR 270.2): assault on an inmate (rule 100.10); fighting (rule 100.13); possession of a weapon (rule 113.10); and refusing to obey a direct order (rule 106.10). After a Tier III disciplinary hearing, Cordero was found guilty of all specifications of misconduct. The Hearing Officer recommended that Cordero receive 48 months in a Special Housing Unit, loss of privileges and 12 months’ loss of good time. On administrative appeal, Cordero’s placement in the Special Housing Unit was reduced to 24 months, and was further reduced to 18 months by the Southport Disciplinary Review Committee.

One week after the decision on the disciplinary hearing, Cordero was indicted by the Greene County Grand Jury and charged with two counts of second degree assault (Penal Law § 120.05 [2], [7]), one count of third degree criminal possession of a weapon (Penal Law § 265.02 [1]), and one count of first degree promoting prison contraband (Penal Law § 205.25 [2]). On September 12, 1995, Cordero pleaded guilty to the first count of second degree assault in full satisfaction of all charges, subject to his right to challenge the proceedings on double jeopardy grounds. The trial court held a hearing to determine the merits of Cordero’s double jeopardy claim on October 10, 1995. Despite finding that the disciplinary action constituted punishment, the court held that the Double Jeopardy Clause did not bar criminal prosecution of Cordero.

Thereafter, Cordero commenced a CPLR article 78 proceeding in the nature of a writ of prohibition in the Appellate Division, arguing that his criminal prosecution should be prohibited on double jeopardy grounds under both the Federal and State Constitutions and CPL article 40. The Appellate Division dismissed the petition. With respect to the statutory claim, the Court held that the double jeopardy protections afforded by article 40 are not triggered by an administrative action. With respect to the constitutional claim, the Court noted that it has consistently held that a prior disciplinary proceeding does not bar a subsequent criminal conviction. The Appellate Division further rejected petitioner’s argument that the Supreme Court’s decision in United States v Halper (490 US 435) dictated a contrary result. The Court relied on the Second Circuit decision in United States v Hernandez-Fundora (58 F3d 802, 806) which rejected the same argument. Cordero appeals to this Court as of right, asserting a substantial constitutional question.

II.

The Double Jeopardy Clause of the Fifth Amendment provides "nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb” (US Const Fifth Amend). This Federal constitutional protection is made applicable to the States by virtue of incorporation through the Fourteenth Amendment (see, Benton v Maryland, 395 US 784; see also, NY Const, art I, § 6). The Double Jeopardy Clause prohibits both multiple prosecutions for the same offense (following either conviction or acquittal) and multiple punishments for the same offense (United States v Halper, supra, 490 US, at 440; Helvering v Mitchell, 303 US 391, 399). It is the latter prong that is implicated in this case; Cordero and Vasquez contend that, having been previously subject to prison disciplinary punishment, they may not be made to suffer again for the same conduct through formal criminal proceedings.

The Double Jeopardy Clause has deep common-law roots, which must be considered in properly construing its boundaries and limitations (United States v DiFrancesco, 449 US 117, 133-134). Historically, the primary function of the Double Jeopardy Clause has been to bar consecutive criminal prosecutions stemming from the same conduct (Breed v Jones, 421 US 519, 528; United States ex rel. Marcus v Hess, 317 US 537, 548-549; Helvering v Mitchell, supra; People v Goodwin, 18 Johns 187, 202). Indeed, it was not until the Supreme Court’s decision in Helvering v Mitchell (supra) that courts in this country began to consider the argument that double jeopardy protections may be extended to proceedings which are not nominally criminal. Notably, prior to its 1989 decision in United States v Halper (supra), the Supreme Court had never held that double jeopardy protections extended to a noncriminal proceeding (see, Department of Revenue of Mont. v Kurth Ranch, 511 US 767, 800 [Scalia, J., dissenting]).

In Helvering v Mitchell (supra), the Supreme Court considered whether the assessment of a tax penalty for filing a fraudulent return was barred on double jeopardy grounds where the taxpayer had previously been acquitted of criminal charges for willfully attempting to evade income taxes. The Court looked beyond whether the proceedings were traditionally classified as criminal or civil, and instead focused on whether the sanctions involved were remedial rather than punitive. The Court stressed, however, that the fundamental question was whether the tax penalty amounted to criminal punishment, "for the double jeopardy clause prohibits merely punishing twice, or attempting a second time to punish criminally, for the same offense. The question for decision is thus whether [the taxing statute] imposes a criminal sanction” (Helvering v Mitchell, supra, 303 US, at 399). A decade later, in United States ex rel. Marcus v Hess (supra, 317 US, at 548-549), the Court noted that criminal punishment, for double jeopardy purposes, means punishment designed "to vindicate public justice.”

While the argument does not appear to have been made with great frequency prior to Helvering, courts considering the question had held that prison disciplinary action did not trigger the protections of the Double Jeopardy Clause (State v Cahill, 196 Iowa 486, 194 NW 191; People v Huntley, 112 Mich 569, 71 NW 178). Nothing in Helvering suggests a contrary result, and in the years after it was decided, courts continued to adhere to this general proposition (see, Hutchison v United States, 450 F2d 930; Patterson v United States, 183 F2d 327; Pagliaro v Cox, 143 F2d 900; State v Mead, 130 Conn 106, 32 A2d 273; Ex parte Kirk, 96 Okla Cr 272, 252 P2d 1032).

In Matter of Escobar v Roberts (29 NY2d 594, mot to amend remittitur granted 29 NY2d 709), this Court first considered the issue, and reached the same conclusion as the courts cited above. Our affirmance and rejection of defendant’s argument in that case silently implied what we today make explicit: the Double Jeopardy Clause does not bar criminal prosecution of a prison inmate simply because the inmate was previously subjected to internal prison disciplinary action for the same conduct.

Prison disciplinary action is not designed to "vindicate public justice,” but rather to further the separate and important public interest in maintaining prison order and safety. In reaching this conclusion, we recognize that the disciplinary sanctions imposed in these cases did, in some sense, constitute a form of punishment. This does not, however, inexorably lead to the conclusion that these sanctions constitute "punishment” within the meaning of double jeopardy jurisprudence.

As the Second Circuit recently observed in United States v Hernandez-Fundora (supra, 58 F3d, at 806), "[p]unitive interests and remedial interests * * * are nowhere so tightly intertwined as in the prison setting, where the government’s remedial interest is to maintain order and to prevent violent altercations among a population of criminals.” Prisoners, by virtue of their status (resulting from a prior violation of the Penal Law) are subject not only to criminal laws, aimed at vindicating societal interests, but also to a whole array of internal prison rules and regulations, which serve the separate, legitimate and important institutional purposes of preserving prison order and safety. A prisoner who commits a crime in prison breaks both sets of rules, and may thus be sanctioned both internally to carry out the goals of the penal institution, and through criminal prosecution to vindicate public justice, so long as the disciplinary sanction does not stray so far beyond the bounds of the separate State interest in maintaining prison order and safety that the sanction can only be viewed as constituting criminal punishment.

Both appellants contend that the Supreme Court’s decision in United States v Halper (490 US 435, supra) controls our analysis with respect to where legitimate prison discipline crosses over into criminal punishment for double jeopardy purposes. Appellants urge that, under Halper, the penalties imposed upon them are so disproportionate that they must be viewed as constituting essentially criminal punishment. We are not persuaded.

In Halper, the Court considered whether a civil monetary penalty constituted criminal punishment. Halper had filed 65 false claims for reimbursement for medical services. The overpayments amounted to $585 (United States v Halper, supra, at 437). Following his conviction, Halper was fined $5,000 and sentenced to two years in prison. The Government then commenced a civil action against Halper under the Civil False Claims Act (31 USC §§ 3729-3731) based on the criminal convictions. The "civil” penalties available under the False Claims Act amounted to $2,000 for each false claim. The Court held that because the civil penalty was "so extreme and so divorced from the Government’s damages and expenses” it constituted punishment triggering double jeopardy protection (United States v Halper, supra, at 442).

In reaching this conclusion, the Court first determined that the Government’s legitimate noncriminal objective was to seek remuneration. Given this purpose, the Court had no trouble deciding that the fine at issue was so disproportionate to that purpose that it also constituted criminal punishment. The Government’s actual damages including the overpayments and litigation costs in the original proceeding were estimated at $16,000, while the defendant faced a fine of over $130,000.

In Halper, a straightforward economic balancing was not only feasible but simple, since both the Government’s interests and the amount of the penalty could be easily quantified. The Court was careful to note that its analysis was "a rule for the rare case * * * where a fixed-penalty provision subjects a prolific but small-gauge offender to a sanction overwhelmingly disproportionate to the damages he has caused” (United States v Halper, supra, at 448-449).

In United States v Ursery (518 US —, 116 S Ct 2135) the Supreme Court recognized that, in general, the State interests and the penalties imposed in a particular case are not easily quantified. Ursery involved two civil drug forfeiture statutes that required forfeiture of property used by the defendants to facilitate the processing and distribution of a controlled substance or to launder money obtained from the sale of drugs (supra, 518 US, at —, 116 S Ct, at 2138-2139). In each case, the circuit courts had held that the forfeiture statutes ran afoul of the Double Jeopardy Clause because they constituted punishment under the Halper analysis (id.). The Supreme Court rejected the Halper analysis in civil forfeiture cases. The Court noted the long history of parallel in rem civil forfeiture actions and criminal proceedings based on the same conduct (supra, 518 US, at —, 116 S Ct, at 2140). The Court further noted that in civil forfeiture cases it had always employed a two-stage analytical framework. First, the Court reviewed Congress’ intent — was the statute intended to serve as a remedial civil sanction. That determination was predicated upon several findings: (1) the historic view of the proceedings; (2) the scope of the seizure compared to the criminal conduct in question; and (3) the remedial goals of the civil proceeding. Second, the Court determined whether the scheme was so punitive in purpose or effect as to negate Congress’ intent to establish a civil remedy (supra, 518 US, at —, 116 S Ct, at 2141).

The Court noted that Halper was a "case specific” inquiry and was limited to civil penalties — fines (supra, 518 US, at —, 116 S Ct, at 2144). The Court focused on the distinct difference between forfeitures and fines. While fines serve a remedial/ reimbursement purpose,

"[forfeitures serve a variety of purposes, but are designed primarily to confiscate property used in violation of the law, and to require disgorgement of the fruits of illegal conduct. Though it may be possible to quantify the values of the property forfeited, it is virtually impossible to quantify, even approximately, the nonpunitive purposes served by a particular civil forfeiture. Hence, it is practically difficult to determine whether a particular forfeiture bears no rational relationship to the nonpunitive purposes of that forfeiture. Quite simply, the case-by-case balancing test set forth in Halper, in which a court must compare the harm suffered by the Government against the size of the penalty imposed, is inapplicable to civil forfeiture.” (United States v Ursery, supra, 518 US, at —, 116 S Ct, at 2145.)

We, likewise, reject the Halper balancing test in circumstances like the two instant appeals. As in Ursery, it is virtually impossible to quantify the nonpunitive purposes served by the prison disciplinary sanctions at issue in these cases. Rather than employ the Halper balancing test, Ursery suggests that the inquiry is more properly directed at whether these disciplinary sanctions are intended to constitute criminal punishment, and, assuming they are not, whether they are so grossly unrelated to the noncriminal governmental objectives at stake in a prison environment that they may only be viewed as criminal punishment.

With respect to the first inquiry, we are satisfied that prison disciplinary rules are intended to serve legitimate noncriminal objectives. Prison disciplinary proceedings have long been viewed in this State, and in many other States, as civil in nature (Matter of Escobar v Roberts, 29 NY2d 709, supra; Garrity v Fiedler, 41 F3d 1150, 1153; Commonwealth v Brooks, 330 Pa Super 355, 362, 479 A2d 589, 593; State v Mead, supra, 130 Conn, at 112, 32 A2d, at 276; State v Cahill, 196 Iowa 486, 194 NW 191, supra; People v Huntley, 112 Mich 569, 71 NW 178, supra). The scope of conduct covered by the standards of inmate behavior is far broader than conduct subject to criminal sanctions under the Penal Law (e.g., refusing to obey a direct order [rule 106.10]). That such rules are necessary to the safe, orderly and effective functioning of prisons seems to us so fundamental as to require no further elaboration.

With respect to the second inquiry, we note again that prison disciplinary rules serve the noncriminal goals of maintaining prison safety (for inmates and corrections personnel), discipline and order. This Court must afford deference to the decisions of the Legislature and prison authorities as to what discipline is necessary and proper to serve these important institutional interests (United States v Newby, supra, 11 F3d, at 1146). While sanctions do have a deterrent effect, that deterrent effect is aimed exclusively at deterring conduct within the prison setting. Neither loss of good-time credits and other special privileges nor placement in a Special Housing Unit extend the period of incarceration originally imposed. The sanctions are aimed exclusively at the terms and conditions of the sentence being served by the inmate. Thus, we hold that the disciplinary sanctions imposed upon appellants do not constitute criminal punishment triggering double jeopardy protections. Assuming without deciding that, under rare circumstances, a prison disciplinary sentence might be so harsh and extreme as to invoke double jeopardy protections, that is not the case here.

III.

Appellants’ remaining contentions do not merit much further discussion. Both urge that, even if their criminal prosecutions are not barred under constitutional double jeopardy principles, they are barred by the statutory protections afforded by CPL article 40. They characterize article 40 as expanding double jeopardy protections. CPL 40.20 (1) provides that "[a] person may not be twice prosecuted for the same offense.” CPL 40.30 defines a "previous prosecution”.* *****

While CPL 40.20 and 40.30 do afford additional protections beyond that which the dual sovereign doctrine would require (Matter of Booth v Clary, 83 NY2d 675), that aspect of the Double Jeopardy Clause is not implicated here. Article 40 does not expand double jeopardy protections in any way that is relevant to these cases. Indeed, as the Appellate Division noted in its decision in Matter of Cordero v Lalor (227 AD2d 848, 848-849) the definition of "previous prosecution” for article 40 purposes clearly excludes a prison disciplinary proceeding as a basis for a statutory double jeopardy claim (CPL 40.30 [1]), since the disciplinary proceeding is not commenced with the filing of an accusatory instrument in a court (id.).

Finally, in the absence of any objection to the trial court’s failure to stenographically record the jury voir dire, defendant’s Vasquez’s contention that reversal is required under Judiciary Law § 295 is not preserved for our review (CPL 470.05).

Accordingly, the order of the Appellate Division in People v Vasquez and the judgment of the Appellate Division in Matter of Cordero should be affirmed, without costs.

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

In People v Vasquez: Order affirmed.

In Matter of Cordero v Lalor: Judgment affirmed, without costs.

      . The record does not reflect the specific section of the standards of inmate behavior that Vasquez violated.

      . Since no claim has been made that the State provision affords greater protection than the Federal Double Jeopardy Clause, Federal law controls our analysis.

      . Unlike many other protections embodied in our Federal Constitution, the Double Jeopardy Clause cannot be traced directly to the Magna Charta or the English Bill of Rights of 1689. It does, however, have antecedents in ancient Greek, Roman, Hebrew and Ecclesiastical Law. Our constitutional provision is most directly rooted in the English commonlaw pleas of autrefois acquit and autrefois convict, which may have developed as early as the thirteenth century, and were firmly established by the seventeenth and eighteenth centuries, as shown by the works of Coke and Blackstone. These pleas were applicable only in criminal proceedings (res judicata being the appropriate plea in civil proceedings) and were analogous to the double jeopardy limitation on multiple prosecutions for the same offense (see, Mack, Double Jeopardy — Civil Forfeitures and Criminal Punishment: Who Determines What Punishments Fit the Crime, 19 Seattle U L Rev 217, 220-221 [1996]; Sorrow, The New Al Capone Laws and the Double Jeopardy Implications of Taxing Illegal Drugs, 4 S Cal Interdisciplinary LJ 323, 329-330 [1995]; McAninch, Unfolding the Law of Double Jeopardy , 44 SC L Rev 411, 414-415 [1993]).

      . We note the many appellate decisions which have addressed this issue since Halper was decided, all of which have concluded that prison disciplinary sanctions do not trigger the protections of the Double Jeopardy Clause (see, e.g., United States v Reyes, 87 F3d 676 [5th Cir 1996]; United States v Hernandez-Fundora, supra; United States v Newby, 11 F3d 1143 [3d Cir 1993]; Commonwealth v Forte, 423 Mass 672, 671 NE2d 1218 [1996]; State v Harlin, 260 Kan 881, 925 P2d 1149 [1996]; State v O’Connor, 681 A2d 475 [Me 1996]).

      . Cordero restricts his challenge to the sanction which required that he be placed in the Special Housing Unit.

      . Cordero argues that the disproportionality test of Halper can be easily applied in this case by employing the guidelines set forth by the Commissioner for disciplinary dispositions. Cordero’s argument (which would prove fatal to the claim of Vasquez since his Special Housing Unit sanction was within the guidelines) overlooks several key factors. One, the guidelines are nothing more than that — they do not bind the Hearing Officer; two, the record tells us nothing of Cordero’s prior disciplinary background. Cordero apparently contested the Special Housing Unit sanction in light of his prior background and the facts of this case and received two reductions in the sanction (see, 7 NYCRR 254.9). While courts can be called upon to examine the severity of the sanction in an article 78 proceeding (Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Massop v LeFevre, 127 Misc 2d 910), that analysis is separate and distinct from our efforts here. Our task is to identify the nature of the proceeding and the sanction and juxtapose it to the rational State purposes of maintaining order, safety and discipline in correctional institutions.

      . The statute provides that:
      "[A] person 'is prosecuted’ for an offense, within the meaning of section 40.20, when he is charged therewith by an accusatory instrument filed in a court of this state or of any jurisdiction within the United States, and when the action either:
      "(a) Terminates in a conviction upon a plea of guilty; or
      "(b) Proceeds to the trial stage and a jury has been impaneled and sworn or, in the case of a trial by the court without a jury, a witness is sworn” (CPL 40.30 [1]).


author: Ciparick, J. Wesley, J.

text:
    [678 NE2d 870, 656 NYS2d 184]
    In the Matter of Rose E. Anello, Appellant, v Zoning Board of Appeals of the Village of Dobbs Ferry et al., Respondents. Briary Woods Neighborhood Association, Intervenor-Respondent.
    Argued January 7, 1997;
    decided February 18, 1997

      POINTS OF COUNSEL

      Morvillo, Abramowitz, Grand, Iason & Silberberg, P. C., New York City (Catherine M. Foti of counsel), for appellant.

      Plunkett & Jaffe, P. C, White Plains (Kevin J. Plunkett and Elizabeth S. Torkelsen of counsel), for respondents.

      Morgan, Lewis & Bockius LLP, New York City (David Stoelting of counsel), for intervenor-respondent.
   OPINION OF THE COURT

Ciparick, J.

Petitioner contends that the denial of a variance from Dobbs Ferry’s "steep slope” ordinance, which prevents her from building a one-family dwelling on a parcel, constitutes a taking of property for which she is entitled to just compensation (see, US Const 5th Amend; NY Const, art I, § 7). We disagree and conclude that because petitioner acquired her property after the enactment of the steep-slope ordinance, its enforcement does not deprive her of any property interest.

In 1989, the Village enacted the steep-slope ordinance in an effort to "protect environmentally sensitive lands, preserve the Village’s natural resources and promote the orderly development of land * * * with excessively steep slope areas” (Dobbs Ferry Village Code § 300-35.D). To determine whether a lot is large enough to be developed, the ordinance requires a percentage reduction of the property’s gross area depending upon the degree of the property’s slope, which yields the buildable area. Applying the steep-slope ordinance to petitioner’s property, the buildable area is less than 4,200 square feet, well below the Zoning Code’s minimum buildable area of 5,000 square feet.

Petitioner sought to construct a one-family dwelling on the property and applied for a variance from the steep-slope ordinance. The Zoning Board of Appeals denied the variance, reasoning that petitioner "acquired the property over two years after the steep slope law came into effect and therefore had full knowledge that the lot was unbuildable and nonconforming.” The Board also found that granting a "variance would have a substantial detrimental impact upon the surrounding area and constitute a detriment to the health, safety and welfare of the neighborhood.” On petitioner’s subsequent CPLR article 78 proceeding, Supreme Court annulled the Board’s decision, holding that petitioner was entitled to a variance under the "single and separate ownership” theory. While the Board’s appeal was pending before the Appellate Division, this Court rendered its decision in Matter of Khan v Zoning Bd. of Appeals (87 NY2d 344), rejecting the "single and separate ownership” doctrine. The Appellate Division thereafter reversed the order of Supreme Court based solely on Khan and dismissed the petition, concluding that the Board’s denial of a variance was not arbitrary or capricious and was supported by substantial evidence.

On appeal to this Court, petitioner’s main argument is that the denial of a variance from the steep-slope ordinance works a taking of her property. Petitioner’s takings claim must fail because she never acquired an unfettered right to build on the property free from the steep-slope ordinance. Petitioner purchased the property in 1991, two years after the steep-slope ordinance was enacted. This statutory restriction thus encumbered petitioner’s title from the outset of her ownership and its enforcement does not constitute a governmental taking of any property interest owned by her (accord, Soon Duck Kim v City of New York, 90 NY2d 1, 14 [decided today] [enforcement of preexisting statutory lateral-support obligation not a taking of a property interest]; Matter of Gazza v New York State Dept. of Envtl. Conservation, 89 NY2d 603, 615-616 [decided today] [enforcement of preexisting statutory wetlands restriction not a taking of a property interest]).

For the reasons fully elaborated in Kim (supra, at 7-8) and Gazza (supra, at 613-614), we are unpersuaded by the arguments in the dissenting opinion. Importantly, petitioner does not seek to invalidate the steep-slope ordinance as an improper exercise of the Village’s police power, but only challenges the ordinance as applied to her property (see, Gazza, supra, at 614; Vernon Park Realty v City of Mount Vernon, 307 NY 493, 500-501).

Moreover, we disagree with the dissent’s assertion that our holdings in these cases will impede the alienability of property. The rule that preexisting regulations inhere in a property owner’s title will affect the value of property, but this should furnish ample incentive to the prior owner — the party whose title has been redefined by the promulgation of a new regulation — to assert whatever compensatory takings claim it might have. If a prior owner, whether immediate or not, fails to assert a takings claim, it is this prior owner who might suffer the potential loss because the purchase price of the property will very likely reflect any restrictions inhering in title. Of course, the parties can condition sale on receipt of the necessary use allowances or prosecution of a takings claim. Any compensation received by a subsequent owner for enforcement of the very restriction that served to abate the purchase price would amount to a windfall, and a rule tolerating that situation would reward land speculation to the detriment of the public fisc. Additionally, the rule advanced by the dissent would have the effect of unsettling property law and other land-use restrictions throughout the State. The bright-line rule articulated in Kim and Gazza, which allows for a subsequent purchaser to challenge the validity of previously enacted laws (as opposed to pursuing a compensatory takings claim), will enhance certainty and, to that extent, facilitate transferability of title.

Furthermore, if property owners were permitted to assert compensatory takings claims based on enforcement of preexisting regulations, the traditional takings analysis articulated in Penn Cent., and its inquiry into "the extent to which the regulation has interfered with distinct investment-backed expectations,” would be rendered hopelessly circular (see, Penn Cent. Transp. Co. v New York City, 438 US 104, 124). To illustrate based on the facts of this case: If petitioner’s title was defined without regard to the steep-slope restriction, then her investment-backed expectations would include the possibility of winning a compensatory takings lawsuit as a result of the Village’s enforcement of the ordinance. However, the success of her compensatory takings lawsuit would depend largely on the extent to which the ordinance interferes with her investment-backed expectations, which would in turn depend on the possible success of the compensatory takings claim, and so on. This inevitable circularity points up the analytical flaw in permitting a subsequent purchaser to assert a compensatory takings claim based on a property interest that has already been defined out of the owner’s title.

Petitioner’s other arguments are unpreserved or without merit. Accordingly, the order of the Appellate Division should be affirmed, with costs.

Wesley, J.

(dissenting). I disagree that the enforcement of the steep-slope ordinance does not constitute a taking of petitioner’s property merely because the ordinance was enacted prior to petitioner’s acquisition of the property. I, therefore, respectfully dissent.

In Lucas v South Carolina Coastal Council (505 US 1003, 1029), the United States Supreme Court held that a confiscatory regulation, i.e., one that prohibits all economically beneficial use of land, "cannot be newly legislated or decreed (without compensation), but must inhere in the title itself, in the restrictions that background principles of the State’s law of property and nuisance already place upon land ownership.” If the Village ordinance in. this case prohibits all economically beneficial use of Mrs. Anello’s property, then Mrs. Anello must be compensated for the property unless she had already been restricted from developing it by the very nature and location of the lot or by another principle of the law of property of New York.

The majority holds that Mrs. Anello had already been restricted from developing the property by the ordinance itself, because the ordinance had been in effect for two years before she acquired the property. If so, then for any parcel of property that is completely deprived of its value by the ordinance, the Village has, " 'by ipse dixit, * * * transformed] private property into public property without compensation’ ” once the parcel is transferred to another (Lucas v South Carolina Coastal Council, supra, 505 US, at 1031, quoting Webb’s Fabulous Pharmacies v Beckwith, 449 US 155, 164).

The fact that a parcel is transferred should not make a oncecompensable taking become noncompensable. As we reaffirm today, "a subsequent purchaser may attack previously enacted regulations that affect the purchased property as beyond government’s legitimate police power” (Matter of Gazza v New York State Dept. of Envtl. Conservation, 89 NY2d 603, 614, citing Pennsylvania Coal Co. v Mahon, 260 US 393, 413; and Vernon Park Realty v City of Mount Vernon, 307 NY 493, 500-501).

The majority reaffirms this rule only in the context of a challenge to the validity of a regulation itself, and not in the context of a claim that an otherwise valid regulation has worked a taking of all the economic value of a particular piece of property. I see no reason to draw such a distinction; to the contrary, I believe that there are compelling reasons why no such distinction should be drawn.

"A rule that a purchaser of real estate takes subject to all existing zoning provisions without any right to challenge any of them would threaten the free transferability of real estate, ignore the possible effect of changed circumstances, and tend to press owners to bring actions challenging any zoning provision of doubtful validity before selling their property. Moreover, such a rule of law would in time lead to a crazy-quilt pattern of the enforceability of a zoning law intended to have uniform applicability” (Lopes v City of Peabody, 417 Mass 299, 303, 629 NE2d 1312, 1315).

Although the court in Lopes noted that "the rights of a subsequent purchaser to takings damages might well stand in a posture significantly different from that of one seeking to have a zoning provision invalidated” (Lopes, supra, at n 8), I believe that each of the considerations applies in this case. For all of these reasons, I would hold that, as long as the Village could not have deprived the prior owners of the parcel of all economically beneficial use of the property without compensation, "the prior owners must be understood to have transferred their full property rights in conveying the lot” (Nollan v California Coastal Commn., 483 US 825, 833-834, n 2; see also, K & K Constr. v Department of Natural Resources, 217 Mich App 56, 64, 551 NW2d 413, 417-418).

If a prior owner cannot transfer a potential taking claim to a subsequent purchaser, then the property’s value is destroyed by the transfer without the government having to pay compensation for it. As suggested by the court in Lopes, and as noted in my concurring opinion in Gazza, the majority’s reasoning effectively forces New York property owners to keep abreast of regulatory enactments and, if an enactment appears to deprive a parcel of its economic value, to seek compensation for the taking. Any property owner who overlooks or misinterprets a regulatory enactment, or who lacks the resources to commence a taking action, cannot transfer the property to someone else without destroying the property’s value. Instead, he or she will find that the property has, without compensation, been dedicated to whatever governmental purpose formed the basis for the regulatory enactment.

The majority’s opinion also has the potential to work an interesting alchemy on the estate of a decedent who, through infirmity or other reason, could not challenge a confiscatory regulation prior to the decedent’s death. The majority’s view also creates the prospect of adjacent landowners with similar lots and similar land use regulations who sue to challenge a regulation as confiscatory, but receive totally different results, dependent upon the date of ownership and the date of the regulation’s enactment. I do not believe that such a restriction on alienability comports with the intent of those who drafted the Constitution (see generally, Kmiec, The Original Under standing of the Taking Clause is Neither Weak nor Obtuse, 88 Colum L Rev 1630 [1988]).

I recognize that "[t]here is an inherent tendency towards circularity” if a taking is defined by the reasonable expectations of the owner, but "[s]ome circularity must be tolerated in these matters” (Lucas v South Carolina Coastal Council, supra, 505 US, at 1034 [Kennedy, J., concurring]). More importantly, as Justice Kennedy points out, the definition is not entirely circular as long as "[t]he expectations protected by the Constitution are based on objective rules and customs that can be understood as reasonable by all parties involved” (Lucas v South Carolina Coastal Council, supra, 505 US, at 1035). Thus, for example, in Gazza the taking issue was not determined by Mr. Gazza’s expectation that the property would be worth $396,000 as a single-family residential lot. That expectation was not reasonable because, as Supreme Court determined, the property had value as a result of other uses permitted under the Tidal Wetlands Act and the local zoning ordinance.

In this case, by contrast, we have no basis for determining whether Mrs. Anello’s expectations were reasonable at this point. I am aware of no principle of New York common law, and the majority cites none, that would have prohibited all economically beneficial use of Mrs. Anello’s property because its over-all slope is approximately 21%. There is, however, no need for us to conduct such a "logically antecedent inquiry into the nature of the owner’s estate” (Lucas v South Carolina Coastal Council, supra, 505 US, at 1027), because no court has yet determined that the denial of the variance from the ordinance deprived the property of all economic use (Spears v Berle, 48 NY2d 254, 263-264). As the majority notes, Supreme Court relied upon the now-discredited principle of "single and separate ownership” in granting the petition without an evidentiary hearing, and neither Supreme Court nor the Appellate Division addressed Mrs. Anello’s claim of a taking. I agree with the majority that Mrs. Anello’s other arguments are unpreserved or without merit. I would, however, modify by deleting so much of the order of the Appellate Division that dismisses the petition, and remit the case to Supreme Court for a hearing on petitioner’s taking claim (Spears v Berle, supra).

Chief Judge Kaye and Judges Bellacosa, Smith and Levine concur with Judge Ciparick; Judge Wesley dissents and votes to modify in a separate opinion; Judge Titone taking no part. Order affirmed, with costs.

      . As the dissent notes, Justice Kennedy opined in Lucas that "[s]ome circularity must be tolerated in these matters,” but Justice Kennedy was discussing the impact of newly enacted regulations on a property owner’s investment-backed expectations, and not the separate issue of preexisting restrictions inhering in title (see, Lucas v South Carolina Coastal Council, 505 US 1003, 1034-1035 [Kennedy, J., concurring]). In this connection, Justice Kennedy observed that "[tjhe common law of nuisance is too narrow a confine for the exercise of regulatory power in a complex and interdependent society. * * * The State should not be prevented from enacting new regulatory initiatives in response to changing conditions * * *. The Takings Clause does not require a static body of state property law” (id., at 1035 [citation omitted]).

      . The dissent’s arguments concerning the ability of an owner to separately transfer a compensatory takings claim to a successor-in-interest and the right of a decedent’s estate to assert such a claim are directed to issues not before us. As noted in Gazza (89 NY2d, at 614, n 4), we leave for another day the issues of transferability left open by these cases.


author: Levine, J.

text:
    [678 NE2d 874, 656 NYS2d 188]
    Standard Funding Corp., Respondent, v Jeffrey Lewitt et al., Defendants, and Public Service Mutual Insurance Company, Appellant.
    Argued February 4, 1997;
    decided March 20, 1997

      POINTS OF COUNSEL

      Landman Corsi Ballaine & Ford, P. C., New York City (William G. Ballaine and Melanie K. Suhrada of counsel), for appellant.

      Stuart R. Jablonski, Glen Cove, and Joel B. Meirowitz for respondent.
   OPINION OF THE COURT

Levine, J.

Plaintiff Standard Funding Corporation, an insurance premium financing company, entered into a series of financing agreements with Lewitt Agency, Inc. to finance the premiums on insurance polices of defendant Public Service Mutual Insurance Company. Standard Funding had provided Lewitt with its financing agreement forms which Lewitt and the prospective insureds were to complete and sign. Before entering into the first financing agreement with Lewitt, Standard Funding contacted Public Service Mutual whose personnel confirmed that Lewitt was an agent in good standing with the company, licensed to sell all lines of business.

Pursuant to the financing agreements, Standard Funding would finance the bulk of an insured’s initial insurance policy premium in exchange for a security interest in all unearned premiums. The insured would agree to repay Standard Funding on an installment schedule; if the insured defaulted, the financing agreement gave Standard Funding the authority to cancel the insurance policy and assert a right to all unearned premiums due under the policy.

At issue on this appeal are four such agreements that Standard Funding and Lewitt entered into in October and December 1989 to finance premiums ranging from $15,500 to $153,500 for policies purportedly issued by Public Service Mutual. On October 20, 1989, Lewitt tendered two executed financing agreements to Standard Funding. Each form, which was signed by Lewitt and the insured, indicated that Public Service Mutual had issued policies to the insureds and that the insureds had paid approximately 25% of the premiums to the insurance company. Standard Funding accepted the financing agreements, and in accordance with their terms, issued two checks to Lewitt totaling $23,325. Standard Funding then sent Public Service Mutual "Notice of Financing” forms containing copies of the checks issued to Lewitt. In mid-December, Lewitt completed two additional financing agreements for the financing of Public Service Mutual premiums and received two checks from Standard Funding in the total amount of $204,000. Again, Standard Funding sent notice of financing forms with copies of the checks to Public Service Mutual. Public Service Mutual did not respond to any of the notices.

After Standard Funding failed to receive payments from the alleged insureds, it contacted Public Service Mutual who investigated the matter and discovered that these four financing agreements covered fictitious policies and false insureds. No policies were ever issued in connection with these agreements and Public Service Mutual received no premiums for them. Public Service Mutual thereafter terminated Lewitt’s agency contract.

Standard Funding commenced this damages action against Lewitt and Public Service Mutual. The claim against Public Service Mutual was premised on the theory that the insurer was liable for the fraudulent acts of Lewitt acting as its agent. After Lewitt filed for bankruptcy, the claim against Public Service Mutual proceeded to trial. Following a nonjury trial, Supreme Court entered judgment in favor of Standard Funding in the amount of $227,325 plus interest. The Appellate Division affirmed, holding that although the financing agreements between Lewitt and Standard Funding were outside the scope of Lewitt’s actual authority, Standard Funding had reasonably relied upon Lewitt’s authority to issue Public Service Mutual policies and collect premiums in tendering its checks to Lewitt, and thus, Public Service Mutual was liable under the doctrine of apparent authority. Because we conclude that Lewitt had neither actual nor apparent authority to enter into the financing agreements on behalf of Public Service Mutual, we now reverse.

There is no basis to conclude that the agency contract between Lewitt and Public Service Mutual endowed Lewitt with actual authority to procure on behalf of Public Service Mutual the financing of premiums for proposed insureds. The agency agreement granted Lewitt authority to "solicit and accept proposals for insurance covering such risks as the Company may authorize to be insured in the [agent’s] territory * * * subject [to] all the terms, covenants and conditions of this agreement.” Under the terms of its agency agreement, Lewitt was also endowed with "full power and authority to receive, collect and receipt for premiums on insurance tendered by the Agent to and accepted by the Company.” Thus, Lewitt was expressly authorized only to issue insurance policies and to receive and collect premiums; nothing in the agency agreement authorized Lewitt to negotiate or enter into premium financing agreements on behalf of Public Service Mutual.

We reject plaintiffs contention that premium financing is an activity incidental to or reasonably necessary for the performance of those express powers. In the case of First Trust & Deposit Co. v Middlesex Mut. Fire Ins. Co. (284 NY 747, affg 259 App Div 80), on facts strikingly similar to those presented here, we held that an insurance agent’s frauds perpetrated in the context of premium financing were not within the scope of the agent’s actual authority (see also, National Premium Budget Plan Corp. v National Fire Ins. Co., 106 NJ Super 238, 241-242 [App Div], 254 A2d 819, 820, cert denied 54 NJ 515, 257 A2d 113; Cupac, Inc. v Mid-West Ins. Agency, 626 F Supp 559, 562-563; contra, New England Acceptance Corp. v American Mfrs. Mut. Ins. Co., 4 Mass App 172, 344 NE2d 208, 212-213, affd 373 Mass 594, 368 NE2d 1385).

In First Trust (supra), a copartnership acted as agent for the defendant insurance company for whom it was authorized to issue insurance policies and collect premiums. As required by law, the insurance company had certified to the State Insurance Department "the good reputation and integrity of the copartnership” as its agent (259 App Div, at 82). Just as Lewitt here, the agency in First Trust tendered a fictitious insurance policy and instrument of indebtedness to an institution engaged in premium financing and vouched for their genuineness. When both the policy and the debt instrument turned out to be fraudulent, plaintiff, as assignee of the financing company, sought recovery from the insurance company on an agency theory.

The Appellate Division rejected plaintiffs argument that the insurance agent had been acting as agent for the defendant insurance company in procuring premium financing for proposed insureds. Instead, the Court held that the debt instrument and warranty "were given in a transaction on behalf of the copartnership as an entity, or on behalf of ostensibly insured, or on behalf of the investment corporation, and not in behalf of the copartnership as agent for the defendant” (id., at 88 [emphasis supplied]). This Court agreed, affirming "on the ground that the fraud of the defendant’s agent was not perpetrated in the course of the agent’s employment” (284 NY, at 748). Likewise here, we hold that Lewitt’s activities in entering into the premium financing agreements with Standard Funding fall outside the scope of activities authorized by its agency agreement.

Nor do we find any record support for a determination that Lewitt had apparent authority to enter into or procure financing agreements on behalf of Public Service Mutual. "Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction” (Hallock v State of New York, 64 NY2d 224, 231 [emphasis supplied]; accord, Greene v Hellman, 51 NY2d 197, 204; Ford v Unity Hosp., 32 NY2d 464, 472-473). In such circumstances, the third party’s reasonable reliance upon the appearance of authority binds the principal (Hallock v State of New York, supra, 64 NY2d, at 231; Ernst Iron Works v Duralith Corp., 270 NY 165, 170).

Public Service Mutual made no representations regarding Lewitt’s authority to procure on its behalf premium financing for its proposed insureds. Rather, Public Service Mutual’s representations were limited to Lewitt’s power to write insurance policies and accept premiums for them. Moreover, all representations in the premium financing agreements were purely those of the agent. The financing agreements set forth the obligations of the insured and contained a warranty clause entitled "Brokers and/or Agents Representations and Undertaking” whereby the signatory agent or broker agreed to "warrant ] the validity of this agreement and the truth of the facts contained therein,” including the genuineness of the insured’s signature and the fact that an individual policy had been issued. The only signatures required on the form were those of the "Broker or Agent” and the "Insured.” Correspondingly, the checks issued by Standard Funding pursuant to the financing agreements were payable solely to Lewitt. Under these circumstances, the very terms of the agreements belie Standard Funding’s allegation that from its perspective, Lewitt appeared to be acting as agent for Public Service Mutual.

The only explicit representation Standard Funding can point to in order to establish apparent authority is Public Service Mutual’s certification that Lewitt was an agent in good standing authorized to write all lines of business for it. In First Trust (supra), however, where the insurance company had certified to the State Insurance Department "the good reputation and integrity of the copartnership” as the insurance company’s agent, the Appellate Division held this very type of representation insufficient to support application of the doctrine of apparent authority (259 App Div, at 82, 87-88). We agree with the reasoning of that Court and hold that, in merely confirming Lewitt’s good repute and status as an agent to write insurance policies, Public Service Mutual did not clothe Lewitt’s representations in the premium financing agreements with apparent authority (see, Ford v Unity Hosp., 32 NY2d, at 473, supra).

Finally, plaintiffs reliance on the fact that Public Service Mutual received notices of financing as a basis for imposing liability on Public Service Mutual is also unavailing. The notices of financing stated that payment from Standard Financing was "subject to your acceptance of the terms and conditions of the premium finance agreement.” It is undisputed that Public Service Mutual never signified any acceptance of the terms and conditions of the financing agreements, as the notices required. Thus, no express ratification by Public Service Mutual ever took place (see, Restatement [Second] of Agency § 82 and comment a [principal may become liable for its agent’s unauthorized acts by adopting the agent’s actions and electing to become a party to the transaction]). Moreover, the rule that ratification may be implied where the principal retains the benefit of an unauthorized transaction with knowledge of the material facts (see, Deyo v Hudson, 225 NY 602, 614, rearg denied 226 NY 685; 2 NY Jur 2d, Agency, §§ 170, 171, 173), has no application here, since it is undisputed that Public Service Mutual received no premiums or any other benefit in connection with the fraudulent financing agreements.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the complaint against Public Service Mutual dismissed.

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

Order reversed, etc.