text:
    The People of the State of New York, Respondent, v Lambert Kitching, Appellant.
    Argued October 17, 1991;
    decided November 26, 1991

      POINTS OF COUNSEL

      Robert P. App and Philip L. Weinstein for appellant.
    I. The trial court deprived appellant of a fair trial when it refused to instruct the jury that it might conclude, from the People’s failure to call one of only two police witnesses to the sale alleged here, that the absent officer’s testimony would have been unfavorable to the People. (People v Gonzalez, 68 NY2d 424; People v Erts, 138 AD2d 506, 73 NY2d 872; People v Dianda, 70 NY2d 894; Graves v United States, 150 US 118; People v Brown, 34 NY2d 658; People v Cruz, 98 AD2d 726; People v Griffin, 100 AD2d 659; People v Paulin, 70 NY2d 685; People v Lewis, 150 AD2d 499; People v Waldron, 154 AD2d 635.) II. By denying appellant’s application for a bench trial, made prior to the presentation of any evidence or opening statements, the trial court deprived appellant of his constitutional right to waive trial by jury. (People ex rel. Rohrlich v Follette, 20 NY2d 297; People v Davis, 49 NY2d 114; People v Duchin, 16 AD2d 483, 12 NY2d 351; People v Firestone, 111 AD2d 696; People v Davidson, 136 AD2d 66; People v Basora, 111 AD2d 248; People v Diaz, 10 AD2d 80, 8 NY2d 1061; People v Kravitz, 140 AD2d 972; People v Caldwell, 107 Misc 2d 62; People v McCarthy, 121 Misc 2d 1086.) III. Appellant was denied his absolute right to be present during the impaneling of the jury when the court conducted the exercise of the for cause and peremptory challenges in chambers, in his absence. (Maurer v People, 43 NY 1; People v Ciaccio, 47 NY2d 431; People v Mehmedi, 69 NY2d 759; People v Anderson, 16 NY2d 282; People v Buford, 69 NY2d 290; People v Mullen, 44 NY2d 1; People v Darby, 75 NY2d 449; Lewis v United States, 146 US 370; United States v Gagnon, 470 US 522; Hopt v Utah, 110 US 574.)

      John J. Santucci, District Attorney (Stephanie D. Schwartz and Spiros A. Tsimbinos of counsel), for respondent.
    I. The court properly denied defendant’s request for a missing witness charge. (People v Gonzalez, 68 NY2d 424; People v Dianda, 70 NY2d 894; People v Erts, 138 AD2d 506, 73 NY2d 872; People v Buckler, 39 NY2d 895; People v Torres, 146 AD2d 658; People v Lewis, 150 AD2d 499; People v Bradley, 112 AD2d 441; People v Fields, 76 NY2d 761; People v Lam Lek Chong, 45 NY2d 64; People v Feldman, 50 NY2d 500.) II. Defendant was not deprived of his constitutional right to waive a jury trial. (People ex rel. Rohrlich v Follette, 20 NY2d 297; People v Pasaro, 79 Misc 2d 504; People v McCarthy, 121 Misc 2d 1086; People v Firestone, 111 AD2d 696; People v Davidson, 136 AD2d 66; People v Basora, 111 AD2d 248; People v Diaz, 10 AD2d 80, 8 NY2d 1061; People v Davis, 49 NY2d 114.) III. This Court’s recent decision in People v Velasco (77 NY2d 469) clearly holds that there was no denial of constitutional rights by appellant’s absence from the exercise of for cause and peremptory challenges in the Judge’s chambers. (People v Mullen, 44 NY2d 1; Maurer v People, 43 NY 1; Snyder v Massachusetts, 291 US 97.)
   OPINION OF THE COURT

Hancock, Jr., J.

Defendant was arrested for selling $10 worth of crack/cocaine to an undercover officer. Following a jury trial, he was convicted of criminal sale of a controlled substance in the third degree and other drug-related crimes. In his appeal to the Appellate Division, defendant argued that the trial court had improperly denied his request for a missing witness charge because of the People’s unexplained failure to call a second undercover officer who allegedly had observed the sale. The Appellate Division rejected defendant’s argument and unanimously affirmed. It cited — but did not distinguish — our recent decision in People v Erts (73 NY2d 872). The defendant has appealed by leave. We now reverse the convictions for sale and possession in the third degree.

I

The alleged "buy” for which defendant was tried and convicted took place shortly after 6:00 p.m. on November 11, 1987 near the corner of 171st Street and Liberty Avenue in Queens. It was dark, very cold and snowy. Undercover Officer 8615, accompanied by another undercover officer, parked on the north side of Liberty Avenue facing west between 171st and 172nd. Across Liberty Avenue near the corner, Officer 8615 observed a man wearing a blue snorkel jacket. He approached him and asked if he had any "nicks” ($5 quantities of crack/ cocaine). The man responded that he only had "dimes” ($10 quantities). Officer 8615 said, "OK, give me one” and the man handed him a clear, plastic vial with a yellow top. He gave the man a prerecorded $10 bill and returned to his car. The "buy” transaction, he testified, lasted 10 to 15 seconds.

Officer 8615 contacted the back-up team and gave them a description of the man who, he said, had gone into the "bodega” on the corner. The back-up team entered the "bodega” and arrested a person who fit the description. At trial, Officer 8615 identified defendant — the man whom the police had arrested — as the person who sold him the drugs.

The police searched defendant immediately following the arrest, but did not find the prerecorded "buy” money. The search did uncover, however, four plastic "baggies” of crack and one of marihuana. According to expert testimony, in the failure of the police to find the "buy” money on defendant and in their discovery of a supply of other drugs, defendant’s arrest differed from the typical drug "buy” arrest. Officer Fenrich of the Queens Narcotics Division testified that in 80 to 90% of drug "buy” cases the prerecorded money is recov ered. Also, according to Fenrich, the seller seldom carries a supply of drugs with him. Thus, in 75% of the cases — as contrasted with defendant’s arrest — the postarrest search turns up no drugs or drug paraphernalia.

On cross-examination, Officer 8615 testified that his partner, another undercover officer, was "in the car watching [him] to make sure that [he was] all right”. Officer 8615 stated that he and the seller were both standing sideways to the vehicle which was parked on the other side of the street. He did not "know if [his partner] could see the hand-to-hand action from where he was sitting”. The People never called the partner to testify.

Before the final summations, defense counsel requested a missing witness charge based on the facts developed in his cross-examination of Officer 8615. The court summarily denied the request, apparently concluding that defendant had not made the requisite prima facie showing of entitlement to the charge under People v Gonzalez (68 NY2d 424, 427-428).

On defendant’s appeal of the convictions to the Appellate Division, that court affirmed in a brief memorandum stating that there was no basis for a reversal "on the ground that the trial court denied [defendant’s] request for a missing witness charge” (165 AD2d 836).

II

In People v Gonzalez (68 NY2d 424, supra), we explained that the instruction "commonly referred to as a 'missing witness charge’, derives from the commonsense notion that 'the nonproduction of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its tenor is unfavorable to the party’s cause’ (2 Wigmore, Evidence § 285, at 192 [Chadbourn rev ed 1979] quoted in Laffin v Ryan, 4 AD2d 21, 25). Of course, the mere failure to produce a witness at trial, standing alone, is insufficient to justify the charge. Rather, it must be shown that the uncalled witness is knowledgeable about a material issue upon which evidence is already in the case; that the witness would naturally be expected to provide noncumulative testimony favorable to the party who has not called him, and that the witness is available to such party” (id., at 427).

Once the party seeking the charge has met the initial burden of showing that the uncalled witness could be expected to have knowledge about a material issue and to testify favorably to the opposing party "it becomes incumbent upon the opposing party, in order to defeat the request to charge, to account for the witness’ absence or otherwise demonstrate that the charge would not be appropriate. This burden can be met by demonstrating that the witness is not knowledgeable about the issue, that the issue is not material or relevant, that although the issue is material or relevant, the testimony would be cumulative to other evidence, that the witness is not 'available’, or that the witness is not under the party’s 'control’ such that he would not be expected to testify in his or her favor” (id., at 428).

In the case before us, no question is raised concerning the "control” or "availability” requirements for the missing witness charge. Indeed, if there had been any doubt on either of these points, the record could not reflect it because the court denied the request without requiring the prosecutor "to account for the witness’ absence or otherwise demonstrate that the charge would not be appropriate” (id., at 428). The People’s sole contention is that defendant failed to sustain his initial burden under Gonzalez of showing that the witness was knowledgeable about a material issue in the case. The initial showing was insufficient, the People argue, because defendant’s "application merely drew bold-faced conclusions and did not supply any details to back them up, nor did counsel even specify upon which issue the witness was allegedly knowledgeable”.

The People’s argument, if adopted, would place on the party requesting the charge a far more onerous burden of making a prima facie showing of the witness’ possession of material knowledge than called for in Gonzalez. A party requesting a missing witness charge with respect to a witness under the control of (and presumably favorable to) the opposite party can hardly know what that witness knows or what the witness would say if called. Because the witness is not called, this necessarily remains a matter of speculation. As a rule, all that the requesting party can do is to show from the witness’ relationship to the issues or events in dispute that the witness was in a position to have knowledge of these issues or to have observed the events. Once this demonstration has been made —in the absence of a showing of why the witness was not called or that the charge, for some reason, would not be proper — the inference may be fairly drawn that the testimony of the missing witness, if called, would have been unfavorable (see, People v Gonzalez, supra, at 427-428).

Here, the factual issue was whether the prosecution could meet its burden of proving that defendant was the person who sold the drugs. The uncalled officer, if he had observed the transaction, would presumably have been a witness for the prosecution on this material issue. Surely, no more specificity was needed on a point which was obvious: that the uncalled witness might have offered material testimony on the critical issue of identity. Nor could defense counsel have reasonably been expected to supply more details on the witness’ presumed knowledge of the events in dispute. Defense counsel’s only means of showing that the uncalled witness was in a position to see what was taking place across the street was the cross-examination of undercover Officer 8615. We conclude that the facts elicited concerning the witness’ location in a car across the street where he was watching out for his partner’s safety were sufficient for defendant’s prima facie showing (see, People v Erts, 73 NY2d 872, supra).

The People argue, nevertheless, that the "facts of this case belie the defendant’s argument that the uncalled officer was in a position to witness the transaction. The officer, if he viewed the transaction at all, viewed it from across Liberty Avenue on a dark, snowy evening * * * [T]he best possible view * * * [he] could have had of him was a profile view of a man wearing a hood”. In short, the People contend that the uncalled witness could see nothing. We reject this argument. What the witness actually saw or could have seen are the precise questions which he could have answered if he had been called to testify and which the prosecution chose to leave unanswered by not calling the witness. To require the party requesting a missing witness charge to furnish details which could only be obtained from the very witness the opposing party has failed to produce — as the People suggest we should —would vitiate the rule that we established in Gonzalez.

Moreover, to impose such a requirement here would be directly contrary to our recent holding in another drug sale case (People v Erts, supra) where, in similar circumstances, we held that a missing witness charge should have been given when the People chose not to call the second undercover officer. People v Dianda (70 NY2d 894), cited by the People, is distinguishable. In Dianda, there was no evidence that the uncalled witness was in the presence of the participants at the time of the critical conversations so that he would have been knowledgeable about what was said.

Ill

We are not persuaded, given the circumstances of this case, that the court’s denial of the requested charge for defendant’s failure to make the Gonzalez prima facie showing was harmless error (see, People v Crimmins, 36 NY2d 230, 238-240). We find no merit in the contention that the trial court erred in its refusal to permit the defendant to waive a jury pursuant to CPL 320.10 inasmuch as the jury had been impaneled and sworn. Nor do we find merit in defendant’s other argument.

Accordingly, the order should be modified by reversing the convictions and ordering a new trial with respect to counts 1 and 2 for criminal sale and criminal possession of a controlled substance in the third degree and, as so modified, affirmed.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone and Bellacosa concur.

Order modified in accordance with the opinion herein and, as so modified, affirmed.

      . In addition to the conviction for the sale, defendant was convicted of criminal possession of a controlled substance in the third degree and unlawful possession of marihuana for substances found on his person at the time of arrest.

      . [3] The court instructed the jury on count 2 that one of the elements of criminal possession of a controlled substance in the third degree is that defendant possessed the four baggies of cocaine with the intent to sell them. The People argued to the jury that the intent to sell in count 2 could be inferred from their finding defendant guilty of count 1, the criminal sale of the vial of cocaine. Because count 2 is factually related to count 1, reversal of count 1, due to the erroneous omission of the missing witness charge, also requires a new trial on count 2 (see, People v Kelly, 76 NY2d 1013, 1015; People v Cohen, 50 NY2d 908, 911). Defendant concedes that the omission of the missing witness charge was unrelated to defendant’s conviction for unlawful possession of marihuana, and requests, based on this error, a new trial limited to counts 1 and 2 of the indictment.


source: Caselaw Access Project

author: Titone, J.

license: Public Domain

text:
    Leo B. Love, Jr., Respondent, et al., Claimant, v State of New York, Appellant.
    (Claim No. 72821.)
    Argued October 11, 1991;
    decided November 26, 1991

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (Michael S. Buskus, O. Peter Sherwood and Peter H. Schiff of counsel), for appellant.
    In a bifurcated personal injury trial where defendant does not appeal from the interlocutory judgment of liability, interest accrues from the date of the decision awarding damages, not from the date of the interlocutory finding of liability. (Gonzalez v City of New York, 148 AD2d 668, 74 NY2d 608; Wilson v City of Troy, 135 NY 96; Lindwall v Talent Cab Corp., 51 Misc 2d 381, 27 AD2d 647; Zegman v State of New York, 99 Misc 2d 473; Pollock v Collipp, 138 AD2d 584; Matter of Rochester Carting Co. v Levitt, 36 NY2d 264; Gunnarson v State of New York, 70 NY2d 923; Trimboli v Scarpaci Funeral Home, 37 AD2d 386, 30 NY2d 687; Daskal v State of New York, 135 Misc 2d 600.)

      Irwin Birnbaum for respondent.
    In a bifurcated personal injury action, interest accrues from the date of the decision on liability. (Hacker v City of New York, 25 AD2d 35; Williams v City of New York, 36 AD2d 620; Trimboli v Scarpaci Funeral Home, 30 NY2d 687; Gunnarson v State of New York, 70 NY2d 923; Malkin v Wright, 64 AD2d 569; Krause v City of New York, 149 Misc 2d 962.)
   OPINION OF THE COURT

Titone, J.

The question presented on this appeal is whether the claimant in this bifurcated personal injury action against the State was properly awarded prejudgment interest from the date of the decision establishing liability, rather than the date of the decision fixing damages, even though the State was not responsible for the extended delay in the assessment of damages. For the reasons that follow, we conclude that interest was correctly calculated from the date of the liability adjudication.

Claimant commenced this action in the Court of Claims to recover for personal injuries allegedly suffered as a result of the State’s negligence. The trial which followed was bifurcated, with the issue of liability being decided in claimant’s favor on November 4, 1988. The State did not appeal from the interlocutory judgment on liability that was subsequently entered. Nonetheless, a decision fixing claimant’s damages was not rendered by the court until November 29, 1989 — more than 10 months after the trial on damages had concluded. The precise cause of the delay is unclear, but it is undisputed that neither party was responsible. When final judgment was thereafter entered it included prejudgment interest, pursuant to CPLR 5002, calculated from the date of the liability determination.

On appeal, the Appellate Division rejected the State’s contention that its lack of blame for the delay in the trial court’s assessment of claimant’s damages relieved it of its obligation to pay interest from the date of the liability determination. The court concluded that, except in rare instances, prejudgment interest in bifurcated trials should be calculated from the date liability is adjudicated regardless of whose fault it is that the court’s fixing of damages is delayed. This Court subsequently granted the State leave to appeal. We now affirm.

A successful plaintiff’s entitlement to interest on a civil damages award is, in general, governed by CPLR article 50. While the plaintiff in a personal injury action is not entitled to recover interest from the date the cause of action accrued (CPLR 5001 [a]; see, 3d Preliminary Report of Advisory Comm on Practice and Procedure, 1959 NY Legis Doc No. 17, at 88), interest may be recovered "upon the total sum awarded” under CPLR 5002 "from the date the verdict was rendered * * * to the date of entry of final judgment.” While the application of this provision is straightforward in the usual case, it poses special difficulties in bifurcated trials, where the issues of liability and damages are tried seriatim (see, Siegel, Supp Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, 1991 Supp Pamph, CPLR 5002, at 529). Inasmuch as there are actually two verdicts in such trials — the first concerning liability and the second concerning damages, the proper application of CPLR 5002’s rule computing interest from "the date the verdict was rendered” becomes somewhat problematic.

In Trimboli v Scarpaci Funeral Home (30 NY2d 687, affg on opn below 37 AD2d 386), we answered one early question that arose in connection with the right of a defendant in a bifurcated trial to appeal from the interlocutory determination of liability and to obtain a stay pending that appeal, thereby delaying the assessment of damages. We held that under such circumstances prejudgment interest under CPLR 5002 begins to accrue on the date of the verdict fixing liability, rather than the date that the verdict assessing damages is rendered. In reaching that conclusion, we noted first that the intent of the statute authorizing prejudgment interest "is to indemnify the plaintiffs for the nonpayment of what is due to them” (id., at 389). Second, we observed that since the defendants had appealed from the interlocutory judgment on liability and had obtained a stay of the trial on damages pending that appeal, "the delay in the rendition of damages may properly be charged against the party causing it” (id., at 389).

Our holding in Trimboli has been widely interpreted as establishing fault as the touchstone for determining in all cases whether interest should run from the date of the liability verdict or the date of the verdict on damages (see, Viscomi v Kresge Co., 159 AD2d 979, 980; Gonzalez v City of New York, 148 AD2d 668, 673-674; Brock v State of New York, 77 AD2d 670, 671; Malkin v Wright, 64 AD2d 569, 571; Zegman v State of New York, 99 Misc 2d 473, 475-476; 5 Weinstein-Korn-Miller, NY Civ Prac ¶ 5002.03, at 50-53; see also, Lindwall v Talent Cab Corp., 51 Misc 2d 381, affd 27 AD2d 647; Brizer v City of New York, 51 AD2d 791; cf., Beyer v Murray, 33 AD2d 246). A number of courts, however, have expressed skepticism over whether a plaintiff’s right to prejudgment interest should be made to turn on the issue of fault (see, Brock v State of New York, supra, at 671; Malkin v Wright, supra, at 570-571 [Fein, J., concurring]), and a few have even questioned whether Trimboli actually requires such a result (Krause v City of New York, 149 Misc 2d 962; see, Viscomi v Kresge Co., supra, at 980 ["fault for the delays appears to have been a prerequisite to the recovery of interest by plaintiffs” (emphasis supplied)]).

On this appeal, the State urges us to follow in the steps of those courts which have broadly read Trimboli as requiring a fault-based analysis whenever a plaintiff’s right to prejudgment interest is at issue. To hold otherwise, argues the State, would be to penalize a defendant by requiring it to pay interest from the date of the liability determination even though it was not responsible for the delay in the assessment of plaintiffs damages. We find this argument to be unpersuasive.

Contrary to the State’s contention, interest is not a penalty. Rather, it is simply the cost of having the use of another person’s money for a specified period (see, Siegel, NY Prac § 411, at 623 [2d ed]). It is intended to indemnify successful plaintiffs "for the nonpayment of what is due to them” (Trimboli v Scarpaci Funeral Home, supra, at 389), and is not meant to punish defendants for delaying the final resolution of the litigation. It accordingly follows that responsibility for the delay should not be the controlling factor in deciding whether interest is to be computed from the date of the liability verdict or, instead, from the date of the verdict on damages.

Rather, what is dispositive on this point is when the plaintiffs right to be compensated for the damages he or she sustained becomes fixed in law. In a bifurcated trial, the plaintiffs right to be made whole becomes fixed when the verdict holding the defendant liable is rendered. At that point, the defendant’s obligation to pay the plaintiff is established, and the only remaining question is the precise amount that is due. The fact that damages are not yet liquidated is of no moment. As we explained in Gunnarson v State of New York (70 NY2d 923, 924), plaintiffs are entitled "to be compensated with interest for the delay in payment of the principal award certainly due them [even though] * * * the amount remain[s] uncertain.” And, there is no logical objection to permitting the plaintiff to recover interest "retroactively]” (id., at 924), after damages are computed. Indeed, as the concurrers in Malkin v Wright (supra, at 571 [Fein, J., concurring]) observed, interest in breach of contract cases is always measured from the "earliest ascertainable date the cause of action existed” (CPLR 5001 [b]), regardless of whether damages are liquidated or unliquidated. The need to compute damages in such cases has never been regarded as an obstacle to measuring the accrual of interest from a date well in advance of the rendition of the final damages verdict. There is no reason why it should be an obstacle here.

Accordingly, it follows that, if plaintiffs are to be fully compensated for their losses in bifurcated trials, prejudgment interest must be calculated from the date that liability is established regardless of which party is responsible for the delay, if any, in the assessment of the plaintiffs damages. Such a result undercuts the objection voiced by some that defendants in bifurcated trials should not be "penalized” for exercising a legitimate right ordinarily enjoyed by all litigants —i.e., the taking of an interlocutory appeal (see, Brock v State of New York, supra, at 671; see also, Malkin v Wright, supra, at 571 [Fein, J., concurring]). As previously noted, the defendant is not being "penalized” by the assessment of interest during the pendency of the appeal; rather, the defendant is merely being directed to repay the plaintiff for the use of the plaintiff’s money that the defendant enjoyed during that period.

In this regard, it is worthy of note that the defendant, who has actually had the use of the money, has presumably used the money to its benefit and, consequently, has realized some profit, tangible or otherwise, from having it in hand during the pendency of the litigation. There is thus nothing unfair about requiring the defendant to pay over this "profit” in the form of interest to the plaintiff, the party who was entitled to the funds from the date the defendant’s liability was fixed. Indeed, inasmuch as the defendant was not entitled to the use of the money from the moment that liability was established, a rule that would permit the defendant to retain the cost of using the money (i.e., interest) would provide the defendant with a windfall. Such a result is unacceptable irrespective of which party causes the delay. Regardless of who is responsible, the fact remains that the plaintiff has been deprived of the use of money to which he or she was entitled from the moment that liability was determined. That is a loss for which the plaintiff should be compensated.

In sum, we conclude that in a bifurcated personal injury action prejudgment interest under CPLR 5002 should be calculated from the date of the liability determination irrespective of whose fault it may be that the assessment of the plaintiff’s damages is delayed. Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Hancock, Jr., and Bellacosa concur.

Order affirmed, with costs.

      . Interest from the date of entry of the final judgment until the date of payment is recoverable under CPLR 5003.

        . See, Fortgang v Chase Manhattan Bank (29 AD2d 41).

      . The Trimboli holding was reaffirmed and extended 15 years later in Gunnarson v State of New York (70 NY2d 923), where we concluded that it should be applied to the State when it has taken an interlocutory appeal and, as a result of the automatic stay provisions of CPLR 5519 (a) (1), has delayed the assessment of damages.


author: Kaye, J.

text:
    The People of the State of New York, Respondent, v William Bayes, Appellant.
    Argued November 15, 1991;
    decided December 19, 1991

      POINTS OF COUNSEL

      George Abdella for appellant.
    I. The acts complained of in the information filed in the Town Court of Johnstown do not constitute a violation of section 240.55 of the Penal Law. II. The County Court erred in imposing a reasonable person standard of conduct and compounded the error in not reversing the conviction, since such a standard was never charged to the trial jury. (People v Meyers, 72 Misc 2d 1003; Daas v Pearson, 66 Misc 2d 95.) III. The trial court erred in delegating its responsibility to charge the jury, and in any event, the charge was so confusing that defendant was denied a fair trial. (United States v Jones, 648 F Supp 225; People v Harris, 76 NY2d 810; People v Mehmedi, 69 NY2d 759; People v Ahmed, 66 NY2d 307; People v Malloy, 55 NY2d 296; People v Muniz, 62 AD2d 1025; People v Freaney, 108 AD2d 228; People v Gilbert, 103 AD2d 967.)

      William H Gritsavage, District Attorney (Joseph M. Sise of counsel), for respondent.
    I. The acts of defendant, as charged in the information and as proven at trial, constitute the charge of falsely reporting an incident in the second degree in violation of section 240.55 (1) of the Penal Law of the State of New York. (Daas v Pearson, 66 Misc 2d 95; People v Todaro, 26 NY2d 325; People v Foster, 64 NY2d 1144; Matter of Anthony M., 63 NY2d 270; People v Contes, 60 NY2d 620; Jackson v Virginia, 443 US 307.) II. The application of the reasonable person standard in determining the sufficiency of the proof was appropriate, consistent with the intent of the statute, and did not require reversal of the judgment of conviction despite the lack of a specific jury instruction as to the definition and application of such reasonable person standard. (People v Meyers, 72 Misc 2d 1003; Daas v Pearson, 66 Misc 2d 95; Edmonds, Inc. v Vojka, 332 F2d 309; Dance v Town of Southampton, 95 AD2d 442; People v Robinson, 36 NY2d 224; People v Patterson, 39 NY2d 288, 432 US 197; People v Basora, 75 NY2d 992; People v Dekle, 56 NY2d 835; People v Agosto, 73 NY2d 963.) III. The supplemental instructians provided to the jury, including the explanation of justification as given by defense counsel and the distinction between the original offense and the lower offense by the prosecutor, while not presented by an advisable method, did not result in prejudice to defendant and, therefore, if any error, constitutes harmless error. (People v Ahmed, 66 NY2d 307; People v Mehmedi, 69 NY2d 759; People v Torres, 72 NY2d 1007; People v Ciaccio, 47 NY2d 431; People v Bonaparte, 161 AD2d 774; People v Hernandez, 157 AD2d 472; People v Mercado, 154 AD2d 556; People v Payne, 149 AD2d 542; People v Moreman, 137 AD2d 839; People v Moore, 129 AD2d 590.)
   OPINION OF THE COURT

Kaye, J.

Defendant and John Kennedy were adjoining landowners in the Town of Johnstown, Fulton County. The portion of defendant’s land closest to the property line was occupied by a garage housing Fulton County Motors, an automotive repair business owned by defendant’s son. The structure was separated from the Kennedy residence by a large open lot owned by Kennedy.

On the evening of April 13, 1988, Kennedy, a member of the Sammonsville Fire Department, had decided to clear the lot, and obtained a permit authorizing him to burn debris. In preparation for the burn, Kennedy raked grass away from the property line and gathered the debris into two large piles. Several members of the Sammonsville Fire Department were present with equipment, including fire trucks. After water was sprayed along the property line to keep the fire from crossing onto defendant’s property, Kennedy lit the debris. As he testified, there was only a very slight breeze, blowing away from defendant’s property.

Defendant’s son and another defense witness were in the garage when they saw smoke. Although defendant was not present, his son — fearing that the fire was heading toward the garage, which contained inflammable materials — sought him out.

At approximately 8:14 p.m., defendant called the Fulton County Sheriff’s Department, reported that there was a brush fire next to Fulton County Motors, and demanded that the fire department be dispatched. The Deputy Sheriff who received defendant’s call had previously been told by the fire department that they were at a controlled burn at the Kennedy residence, but nonetheless called the fire truck and learned that the fire was under control. While the Deputy was calling the fire truck, defendant telephoned a second time to demand that the fire department be immediately dispatched. Although he received assurance that the fire department was on the scene and that it was a controlled burn, defendant proceeded to the Sammonsville Fire Department and pulled the alarm, sounding a siren.

Defendant was charged with second degree falsely reporting an incident (Penal Law § 240.55 [1]). A person is guilty of that offense "when, knowing the information reported, conveyed or circulated to be false or baseless, he or she * * * [initiates or circulates a false report or warning of an alleged occurrence or impending occurrence of a fire or an explosion under circumstances in which it is not unlikely that public alarm or inconvenience will result”. Following trial in Town Court, defendant was found guilty as charged, and County Court affirmed.

Defendant challenges his conviction, urging dismissal of the information on the ground that his conduct was not within the ambit of the statute, or for insufficiency of the evidence; alternatively, he seeks a new trial on the ground that the trial court improperly delegated a judicial function to counsel. We conclude that the information should be sustained, but order a new trial on account of the trial court’s improper delegation.

The common element in defendant’s arguments for dismissal is that setting off the fire alarm cannot be considered "falsely reporting an incident” because there was in fact a real fire, notwithstanding evidence — which must be viewed in the light most favorable to the People — that firefighters had control of the situation, the fire posed no threat, and defendant was repeatedly so advised. Under these circumstances, we cannot agree that defendant’s acts could not constitute falsely reporting an incident.

As defendant would read the statute, the existence of a fire —even a fire that threatens no harm whatsoever — would immunize a person from liability under section 240.55. Taken to its extreme, his approach would lead to absurd results, as County Court recognized: "a person who struck a match, placed it on a nonflammable surface and then pulled a fire alarm would clearly be guilty of falsely reporting a fire, despite the actual existence of a fire.” (147 Misc 2d 288, 290.)

To make mere existence of a fire determinative of liability under section 240.55 (1) is inconsistent with the statute itself. It is a distinct offense under a separate subdivision of the statute to report a fire or explosion "which did not in fact occur or does not in fact exist” (Penal Law § 240.55 [2]), and in light of that language the existence of a fire süch as the one here might preclude a prosecution under that subdivision. Defendant, however, was prosecuted under section 240.55 (1), with no such clause.

The falsity of defendant’s report lay not in the fact that there was no fire, but rather in the necessary implication of his act that the fire was such as to demand the fire department’s immediate attention. Here, there was certainly evidence from which the jury could have found that implication false, and concluded that defendant — knowing that the emergency he reported was without basis — had initiated a false report or warning.

Defendant disputes that his actions were taken "under circumstances in which it is not unlikely that public alarm or inconvenience will result” (Penal Law § 240.55 [1]) because the alarm was directed at the fire department rather than the general public. That contention is meritless. By communicating the report of the fire in a manner that required the fire department to respond, defendant made it "not unlikely” that public alarm or inconvenience would result. Defendant’s act caused the fire siren to sound, alerting not only firefighters but also residents within earshot of the existence of a nearby fire. It is not unlikely that requiring unnecessary response to an alarm may inconvenience and indeed endanger the public, by placing rapidly moving emergency vehicles on public roads and keeping firefighters from attending a genuine emergency elsewhere. Moreover, since the harm aimed at by the statute is merely the likelihood that these results will occur, it was unnecessary to prove that they in fact did occur.

Defendant’s argument that affirmance here would inhibit the public from reporting fires is not borne out by the facts before us. Defendant was not convicted because, before sounding an alarm, he failed to investigate whether the fire was out of control. He was convicted because, knowing that the fire department had the situation in hand, he continued to demand emergency action he had been assured by the authorities was unnecessary.

While concluding that defendant’s conduct was within the ambit of Penal Law § 240.55 (1) and the evidence was sufficient to sustain the conviction, we agree with defendant that the trial court committed reversible error in allowing counsel to answer questions posed by the jury concerning the court’s instructions.

The jurors retired to deliberate at 10:45 p.m. At approximately 1:00 a.m. they returned to the courtroom with questions concerning the instructions on the defense of justification and the distinction between second and third degree falsely reporting an incident. The Trial Judge, apparently not an attorney, several times attempted to respond. However, after jurors continued to express their lack of comprehension, the court allowed the attorneys themselves to explain the instruction. Defense counsel read each instruction to the jury, gave his interpretation, and the prosecutor then added his own views.

The court’s informal handling constituted a surrender of its nondelegable judicial responsibility to supervise jury deliberation, which in effect deprived defendant of his fundamental right to trial by jury and thereby denied him a fair trial. (See, People v Charles F., 60 NY2d 474, 477.)

As we have previously held, a Trial Judge’s delegation to a law secretary of the task of supervising a deliberating jury, including rereading instructions and responding to jury notes, deprives a defendant of the right to trial by jury because an integral part of that right is the supervision of a Judge (People v Ahmed, 66 NY2d 307, 310). Moreover, we concluded that the Judge’s failure to retain control of the jury deliberations, because of its impact on the constitutional guarantee of trial by jury, implicated the organization of the court or mode of proceedings prescribed by law, and therefore presented a question of law even absent timely objection. Nor did defense counsel’s participation constitute a waiver. (Id., at 310-311.)

The principles set forth in Ahmed are applicable here. As in that case, the trial court allowed others to assume the important function of maintaining control of jury deliberations. What even the People concede was the "better practice” — and we determine was the required practice — would have been for the court and counsel to discuss the matter outside the jury’s presence, and then return to open court for the Judge, not the lawyers, to deliver the supplemental instructions.

Accordingly, the order of County Court should be reversed and a new trial ordered.

Chief Judge Wachtler and Judges Simons, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Order reversed, etc.


author: Bellacosa, J.

text:
    David Thompson, Appellant, v Grumman Aerospace Corporation, Respondent.
    Argued October 9, 1991;
    decided November 25, 1991

      POINTS OF COUNSEL

      Joseph Miklos and Meryl R. Neuren for appellant.
    I. The court below abused its discretion by ignoring the written agreement drawn by respondent Grumman and entered into freely between two sophisticated entities, plaintiffs employer Applied Transportation Service and respondent Grumman. (Braxton v Mendelson, 233 NY 122; Grace v Nappa, 46 NY2d 560; Rodolitz v Neptune Paper Prods., 22 NY2d 383; Tantleff v Truscelli, 110 AD2d 240; Laba v Carey, 29 NY2d 302; Mallad Constr. Corp. v County Fed. Sav. & Loan Assn., 32 NY2d 285; Chun Hye Kang-Kim v Feldman, 121 AD2d 590; Schmidt v Magnetic Head Corp., 97 AD2d 151; Jacobson v Sassower, 66 NY2d 991; Ebbecke v Bay View Envtl. Servs., 145 AD2d 524.) II. The court below erred and/or abused its discretion by depriving the jury of the triable issue of fact of special employment. (Stone v Bigley Bros., 309 NY 132; Irwin v Klein, 271 NY 477; Burton v American Bridge Co., 297 NY 993; Regine v United States Trucking Corp., 295 NY 815; Kristiansen v Wagner’s Steel Erectors, 295 NY 668; O’Rourke v Long, 41 NY2d 219; Bartolomeo v Bennett Contr. Co., 245 NY 66; O’Brien v Garden Way Mfg., 72 AD2d 860; Pato v Sweeney Steel Serv. Corp., 117 AD2d 984.) III. Policy considerations mandate that the order of the court below be reversed. (Gross v Sweet, 49 NY2d 102; Kirke La Shelle Co. v Armstrong Co., 263 NY 79.)

      Wilfred R. Caron for respondent.
    As a matter of law, Thompson was an employee of Grumman within the meaning of the Workers’ Compensation Law. The court below correctly held that the compensation benefits Thompson received were his exclusive remedy thereunder. (Matter of Dale v Saunders

      Bros., 218 NY 59; Matter of Bernstein v Beth Israel Hosp., 236 NY 268; Matter of Seymour v Odd Fellows’ Home, 267 NY 354; Matter of Hall v Salvation Army, 261 NY 110; Cameli v Pace Univ., 131 AD2d 419; Richiusa v Kahn Lbr. & Millwork Co., 148 AD2d 690; Poppenberg v Reliable Maintenance Corp., 89 AD2d 791; O’Brien v Garden Way Mfg., 72 AD2d 860; E.B.A. Wholesale Corp. v S. B. Mechanical Corp., 127 AD2d 737.)
   OPINION OF THE COURT

Bellacosa, J.

The issue on this appeal in a summary judgment setting is whether plaintiff Thompson, a general employee of Applied Transportation Service (ATS), was properly determined to be a special employee of Grumman Aerospace Corp. (Grumman) as a matter of law. If so, Thompson’s instant common-law action against Grumman is barred because of the exclusive workers’ compensation benefits Thompson received from ATS. The uncontroverted record supports Grumman’s assertion that from the time Thompson was assigned to work exclusively at its plant until his accident one year later, Grumman exerted comprehensive control over every facet of his work. The Appellate Division correctly determined that Thompson was a special employee of Grumman. We therefore affirm the order granting summary judgment to defendant Grumman on its affirmative defense of workers’ compensation.

Thompson, an experienced sheet metal mechanic, was recruited and hired by ATS in January 1986 to work at defendant Grumman pursuant to a "Purchase Order” agreement between ATS and Grumman. Under that agreement, ATS recruited and provided trained, experienced candidates for employment at Grumman’s Bethpage Operations Center to meet the job descriptions and specifications furnished in advance by Grumman. ATS submitted resumes of qualified applicants to Grumman representatives for consideration; Grumman had the right to interview the candidates and to make the "final selection”. Grumman fixed the hourly wages and benefits; ATS provided Thompson’s paycheck, carried workers’ compensation, liability and unemployment insurance, and withheld Social Security. ATS billed Grumman for labor at a base rate multiplied by a factor which included all ATS costs for "labor, overhead and profit”. Only Grumman could terminate Thompson’s assignment to its facility. ATS was precluded from substituting, reassigning or removing personnel selected by and assigned to work at Grumman. Grumman also had the right to hire, "on a direct basis” and without ATS’s consent, ATS employees assigned to work at Grumman, subject to limitations not pertinent here.

It is uncontroverted that Thompson performed work exclusively for Grumman at its Bethpage facility from the time he was recruited and hired by ATS for Grumman until his injury approximately one year later. He reported daily to a Grumman supervisor, Dan Schmidt, who assigned, supervised, instructed, oversaw, monitored and directed his work duties on a daily basis. Thompson acknowledged Schmidt as his "supervisor”. While the ATS Director of Personnel delivered Thompson’s paycheck each week and "commented” on his job performance, there were no ATS supervisory personnel assigned to or present at the Grumman jobsite.

After he was injured, Thompson filed for and received workers’ compensation benefits based on his employment with ATS. He then commenced this negligence action against Grumman. Grumman asserted as an affirmative defense in its answer and, after discovery, in its motion for summary judgment, that Thompson was its special employee and that his acceptance of workers’ compensation benefits barred this action. Plaintiff cross-moved to dismiss that workers’ compensation affirmative defense.

Supreme Court denied Grumman’s motion and granted Thompson’s cross motion, finding as a matter of law that Thompson was an employee of ATS only and was not a special employee of Grumman. That decision was based on language in the ATS-Grumman contract which provided that "[a]ll persons employed by [ATS] and assigned to work under any Purchase Order shall at all times be employees of [ATS] and not of Grumman.”

The Appellate Division unanimously reversed, concluding as a matter of law that Thompson was in the special employ of Grumman when he was injured (166 AD2d 578). The court reasoned that while the issue of special employment status is generally one of fact, the indicia of special employment in this case — including Grumman’s comprehensive and exclusive daily control of Thompson’s work — established his special employee status. This Court granted leave to appeal to Thompson.

Thompson claims that the ATS-Grumman contract makes him an employee of ATS only. Alternatively, he urges that, at the very least, he raised a question of fact as to his special employment status with Grumman.

We have consistently found as a general proposition that a general employee of one employer may also be in the special employ of another, notwithstanding the general employer’s responsibility for payment of wages and for maintaining workers’ compensation and other employee benefits (Stone v Bigley Bros., 309 NY 132; Irwin v Klein, 271 NY 477; Murray v Union Ry. Co., 229 NY 110, 112-113; Matter of Schweitzer v Thompson & Norris Co., 229 NY 97, 99; see also, Cameli v Pace Univ., 131 AD2d 419, 420). A special employee is described as one who is transferred for a limited time of whatever duration to the service of another (Brooks v Chemical Leaman Tank Lines, 71 AD2d 405, 407). General employment is presumed to continue, but this presumption is overcome upon clear demonstration of surrender of control by the general employer and assumption of control by the special employer (Stone v Bigley Bros., supra, at 140-143 [and cases cited therein]; Sweet v Board of Educ., 290 NY 73, 76-77; Irwin v Klein, supra, at 484-485; Ramsey v New York Cent. R. R. Co., 269 NY 219, 224).

We recognize that a person’s categorization as a special employee is usually a question of fact (Stone v Bigley Bros., supra; Irwin v Klein, supra, at 486-487; Wawrzonek v Central Hudson Gas & Elec. Corp., 276 NY 412, 419; Ramsey v New York Cent. R. R. Co., supra; Braxton v Mendelson, 233 NY 122). These cases usually involve arrangements under which a general employer performed work and provided services for another business and, in the course of doing so, an employee and equipment of the general employer were necessarily used and temporarily assigned to work for that business. These lent employee cases, not surprisingly, rest on their particular facts. They do not create a per se rule that a question of fact always exists in these cases. They do not require that the question of special employment inevitably go to a jury. That is true here where, combined with other indicia of special employment, the uncontroverted record documents an employer’s comprehensive and exclusive daily control over and direction of the special employee’s work duties for almost a full year with the corresponding complete absence of any supervision or control of his work duties by the originating general employer.

Indeed, though recognized as an exception to the general approach and analysis, we have held that the determination of special employment status may be made as a matter of law where the particular, undisputed critical facts compel that conclusion and present no triable issue of fact (Sweet v Board of Educ., 290 NY, at 76, supra; Irwin v Klein, 271 NY, at 487, supra; Ramsey v New York Cent. R. R. Co., 269 NY, at 223-224, supra; Charles v Barrett, 233 NY 127, 129; Murray v Union Ry. Co., 229 NY, at 112, supra; see also, Delisa v Arthur F. Schmidt, Inc., 285 NY 314, 320; Fallone v Misericordia Hosp., 23 AD2d 222, 227, affd without opn 17 NY2d 648; Richiusa v Kahn Lbr. & Millwork Co., 148 AD2d 690, 692; Cameli v Pace Univ., 131 AD2d, at 420, supra; Doboshinski v Fuji Bank, 78 AD2d 537, 538; Brooks v Chemical Leaman Tank Lines, 71 AD2d, at 407, supra). Thus, we have never held that the issue of special employment must always be submitted to a fact finder where the undisputed facts establish that the general employer was performing no work for the special employer and did not retain control over the special employee. This, when combined with other factors, allows a determination of special employment status as a matter of law (compare, Andre v Pomeroy, 35 NY2d 361).

Many factors are weighed in deciding whether a special employment relationship exists, and generally no one is decisive (Braxton v Mendelson, 233 NY 122, 124, supra). While not determinative, a significant and weighty feature has emerged that focuses on who controls and directs the manner, details and ultimate result of the employee’s work (Stone v Bigley Bros., 309 NY 132, supra; Sweet v Board of Educ., 290 NY 73, 76-77, supra; Irwin v Klein, 271 NY 477, 484, supra; Ramsey v New York Cent. R. R. Co., 269 NY 219, 224, supra; Wawrzonek v Central Hudson Gas & Elec. Corp., 276 NY 412, 419, supra; Wyllie v Palmer, 137 NY 248, 257).

The record in this case is uncontroverted in that respect and supports the conclusion that Thompson was Grumman’s special employee. Although ATS was responsible for Thompson’s paychecks and employee benefits, all essential, locational and commonly recognizable components of the work relationship were between Thompson and Grumman. As soon as ATS hired Thompson, it permanently assigned him exclusively to Grumman’s plant on a full-time basis for the entire year prior to the work-related accident at Grumman’s facility. Thompson considered a Grumman supervisor to be his boss and he knowingly accepted the terms of his exclusive work at Grumman; thus, he was aware of and consented to his special employee status (1C Larson, Workers’] Compensation Law §§ 48.15, 48.16; see also, Murray v Union Ry. Co., 229 NY 110, 112-113, supra). He reported daily to this Grumman supervisor only, who regularly directed, instructed, assigned, supervised and controlled his work duties. The work Thompson performed was solely in furtherance of Grumman’s business at its facility. He was recruited and hired by ATS solely to meet Grumman’s specified employee needs. He could not be reassigned by ATS and his assignment to Grumman could be terminated only by Grumman. In no respect could it be said that ATS itself was performing Grumman’s work or had any direct control, knowledge or expertise with respect to the labor Thompson was performing for Grumman (see, McNamara v Leipzig, 227 NY 291, 295). Rather, ATS surrendered direction and control over Thompson to Grumman to perform the latter’s work, and Grumman assumed and exercised that exclusive control (Sweet v Board of Educ., 290 NY 73, 76-77, supra; see also, Delisa v Arthur F. Schmidt, Inc., 285 NY 314, 319-320, supra; McNamara v Leipzig, supra).

Plaintiffs motion papers fail to raise any material, disputable fact. The only conclusion that may reasonably be reached on this record is that Grumman was, at the operative time, the special employer of Thompson. The indicia of special employment in this particular case convincingly and as a matter of law support the Appellate Division analysis and order.

While the ATS-Grumman contract provides that ATS is to be considered Thompson’s employer, that provision alone is insufficient to establish as a matter of law that Thompson was not also a special employee of Grumman. Moreover, in the context of this record, it fails to raise a question of fact as to his special employment status, as Thompson contends and the trial court concluded. First, we note that while this issue may in some cases turn on the terms of a written contract (see, Braxton v Mendelson, 233 NY 122, 124-125, supra), the ATS-Grumman contract is silent on and does not purport to define or resolve the issue of Thompson’s special employment status, generally or with respect to workers’ compensation benefits or consequences (compare, Wawrzonek v Central Hudson Gas & Elec. Corp., 276 NY 412, 416-420, supra). Second, Thompson was not a party to that contract. Thus, the question whether the workers’ compensation benefits Thompson received bar this negligence action is not resolved on that independent contract basis (see, Matter of Morton [Miller], 284 NY 167, 175). While employers certainly may contract as between themselves to define their business relationships and accomplish their business objectives, an agreement between the employers may not be determinative of the issue of special employment. The agreement involved here is not determinative of that issue and does not displace judicial assessment of the employee’s actual relationship with Grumman to ascertain the special employment status for workers’ compensation purposes and consequences.

Therefore, Thompson’s receipt of workers’ compensation benefits as an employee of ATS is his exclusive remedy and he is barred from bringing this negligence action against Grumman (Workers’ Compensation Law §§ 11, 29 [6]; Burlew v American Mut. Ins. Co., 63 NY2d 412, 416; Werner v State of New York, 53 NY2d 346; Fallone v Misericordia Hosp., 23 AD2d 222, affd without opn 17 NY2d 648, supra).

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

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone and Hancock, Jr., concur.

Order affirmed, with costs.


text:
    In the Matter of Laura Thomasel, on Behalf of Herself and Others, Appellant, v Cesar Perales, as Commissioner of the New York State Department of Social Services, Respondent, et al., Respondent.
    Argued October 17, 1991;
    decided November 26, 1991

      POINTS OF COUNSEL

      Peter Vollmer for appellant.
    I. The Federal Constitution, Federal law and Federal regulations require the prehearing continuation of Aid to Families with Dependent Children benefits. (Goldberg v Kelly, 397 US 254; Almenares v Wyman, 453 Fed 1075; Kelly v Wyman, 294 F Supp 893.) II. The prehearing reduction of AFDC benefits to appellants who timely request fair hearings violates 42 USC § 1983. (Oklahoma City v Tuttle, 471 US 808; Kraft v Jacka, 872 F2d 862; J & J Anderson v Town of Erie, 767 F2d 1469; Zombro v Baltimore City Pub. Dept., 868 F2d 1364; Smith v Robinson, 468 US 992; Paratt v Taylor, 451 US 527; Daniels v Williams, 474 US 327; Davidson v Cannon, 474 US 344; Augustine v Doe,
      740 F2d 322; Willis v Lascaris, 499 F Supp 749.) III. The prehearing reduction of AFDC benefits is a substantial Federal violation which supports an attorney’s fee award pursuant to 42 USC § 1988. (Matter of Johnson v Blum, 58 NY2d 454; Mine Workers v Gibbs, 383 US 715; Newman v Piggie Park Enters., 390 US 400; Maher v Gagne, 448 US 122; Hewitt v Helms, 482 US 755; Hanrahan v Hampton, 446 US 754; Larsen v Sielaff, 702 F2d 116, 464 US 956; Institutionalized Juveniles v Secretary of Pub. Welfare, 758 F2d 897; Hennigan v Quachita Parish School Bd., 749 F2d 1148.)

      Robert Abrams, Attorney-General (Robert J. Schack and O. Peter Sherwood of counsel), for Cesar Perales, respondent.
    I. Petitioner’s proceeding to enforce compliance with respondent State Commissioner’s aid continuing directions to the local agency fails to state a substantial Federal claim warranting an award of attorney’s fees against him. (Matter of Beaudoin v Toia, 45 NY2d 343; Matter of Rozier v Perales, 74 NY2d 933; Oberlander v Perales, 740 F2d 116; Matter of Misuraca v Perales, 120 AD2d 592; Matter of Patterson v Blum, 86 AD2d 893; Matter of Williams v D’Elia, 119 AD2d 678; Matter of Gross v Perales, 72 NY2d 231; Matter of Toia v Regan, 54 AD2d 46, 40 NY2d 837, 429 US 1082; Maine v Thiboutot, 448 US 1; Patsy v Florida Bd. of Regents, 457 US 496.) II. Petitioner did not alter her legal relationship with respondent State Commissioner, nor obtain any relief from him and, therefore, is not entitled to an award of attorney’s fees against him. (Texas Teachers Assn. v Garland School Dist., 489 US 782; Kentucky v Graham, 473 US 159; Matter of Rozier v Perales, 74 NY2d 933; Matter of Williams v D'Elia, 119 AD2d 678; Matter of Patterson v Blum, 86 AD2d 893; Matter of Martinez v Perales, 135 AD2d 818; Matter of Beaudoin v Toia, 45 NY2d 343.)

      Andrew J. Simons and Joseph W. Ryan, Jr., for Bar Association of Nassau County, Inc., amicus curiae.

    I. The award of an attorney’s fee is consistent with statutory and decisional law. (Newman v Piggie Park Enters., 390 US 400; Northcross v Memphis Bd. of Educ., 412 US 427; Matter of Johnson v Blum, 58 NY2d 454.) II. The award of counsel fees in cases such as this will deter agency misconduct. III. The critical need of the poor for legal services will be alleviated by an award of counsel fees in cases such as this.

      Scott M. Karson and Warren H. Richmond for Suffolk County Bar Pro Bono Foundation, amicus curiae.

    Attorney’s fees should be awarded pursuant to 42 USC § 1988 in those cases where a litigant has successfully challenged the reduction or denial of public assistance benefits notwithstanding the fact that there existed an alternative nonconstitutional ground for setting aside the government action. (Sargeant v Sharp, 579 F2d 645; Collins v Chandler Unified School Dist., 644 F2d 759; Mid-Hudson Legal Servs. v G & U, Inc., 578 F2d 34; Matter of Johnson v Blum, 58 NY2d 454; Carreras v City of Anaheim, 768 F2d 1039; Kimbrough v Arkansas Activities Assn., 574 F2d 423; Allen v Housing Auth., 563 F Supp 108; Almenares v Wyman, 453 F2d 1075.)
   OPINION OF THE COURT

Bellacosa, J.

The Appellate Division reversed a $2,092 attorney’s fee granted to petitioner by Supreme Court against the State Department of Social Services (State DSS). The fee was awarded in connection with a lawsuit against the State DSS and the New York City Department of Social Services (City DSS) to restore petitioner’s public assistance benefits, which were unlawfully reduced pending a fair hearing. The case culminated in an out-of-court settlement, with a stipulated restoration of benefits. We agree with Supreme Court that petitioner qualified for an award of attorney’s fees under 42 USC § 1988 and that the State is properly chargeable for the payment. We therefore reverse the order of the Appellate Division.

In September 1987, respondent City DSS informed petitioner, a recipient of public assistance under the Aid to Families with Dependent Children (AFDC) program, that her benefits would be reduced to recover overpayments and an advance which had been issued to avoid utility shutoffs. Petitioner promptly wrote to the State DSS and requested a decision reversing the City DSS’s determination or, alternatively, a fair hearing. She also requested that the State DSS direct the City DSS to continue her benefits without reduction until a decision was rendered. The City DSS subsequently determined that a hearing would be required; nevertheless, it reduced petitioner’s benefits. She notified the State DSS and again requested that it direct the City DSS to restore her benefits and continue them until after her hearing. The State DSS next informed petitioner that it had sent the City DSS a directive to continue her benefits pending a decision after hearing, and that a fair hearing had been scheduled for December 1. Petitioner’s benefits, however, remained at their reduced level. At the scheduled fair hearing, the Administrative Law Judge ordered the City attorney to direct the appropriate personnel to restore petitioner’s benefits, and adjourned the hearing at the City DSS’s request until January 19, 1988. The City DSS persisted in not restoring petitioner’s benefits despite several subsequent additional directives from the State DSS.

Petitioner, with the assistance of pro bona counsel, sued both DSS agencies on December 17, 1987, alleging that their failure to continue her benefits during the fair hearing process violated both the Federal and State Constitutions (US Const 5th, 14th Amends; NY Const, art XVII, § 1), Federal laws and regulations (42 USC §§ 602, 1983; 45 CFR 205.10 [a] [6]) and State laws and regulations (Social Services Law §§ 22, 343; 18 NYCRR 358.8 [former (c) (1)]). In addition, she alleged that the failure of the State DSS to compel the City DSS to pay continued benefits pending her fair hearing violated the duty of the State DSS under State law to supervise and enforce the AFDC program (Social Services Law § 34 [1], [2], [3] [d], [e]). Petitioner sought declaratory relief, restoration of past underpayments of benefits, an injunction against reduction of her benefits during the pendency of the hearing decision, and an award of reasonable attorney’s fees pursuant to 42 USC § 1988.

Prior to the scheduled fair hearing, the parties settled out of court. The State and City DSS agreed to restore petitioner’s benefits to their prereduction level pending a decision in her administrative appeal, and to repay her the amount of the retroactive shortfall. While there was no admission of liability by either respondent, the settlement agreement was expressly without prejudice to an application for attorney’s fees.

Petitioner thereafter moved for reasonable attorney’s fees of $2,091.66. Supreme Court concluded that she was a prevailing party for purposes of 42 USC § 1988 and awarded judgment in her favor against the State DSS, dismissing the application against the City DSS. The State DSS appealed. Petitioner did not cross-appeal as to the dismissal against the City DSS.

The Appellate Division reversed and denied the application for attorney’s fees against the State DSS (161 AD2d 646). It held that the controversy involved solely "the administrative application of State statutes and regulations,” and that petitioner failed to show a "violation of any constitutional right, or violation by the State of any right created by Federal law” (id., at 647). Thus, she had no "bona fide civil rights claim pursuant to 42 USC § 1983 which would require an award of attorney’s fees” (id.). This Court granted petitioner leave to appeal.

We conclude that an award of attorney’s fees under section 1988 is available when an asserted Federal constitutional claim is "substantial” and is joined with State claims with which it has a "common nucleus of operative fact”, and when the claims are subsequently settled without specifying or fixing precise liability and settled without prejudice to an application for attorney’s fees. Petitioner’s case satisfies these criteria as against the State DSS.

Congress recognized that attorney’s fees are an "integral part of the remedy necessary to achieve compliance” with civil rights laws such as 42 USC § 1983 (S Rep No. 1011, 94th Cong, 2d Sess, at 3 [reprinted in 1976 US Code Cong & Admin News 5910]). In furtherance of that goal, Congress enacted the Civil Rights Attorney’s Fees Awards Act in 1976 (Pub L 94-559, § 2, codified at 42 USC § 1988), which authorizes courts in their discretion to allow the prevailing party a reasonable attorney’s fee in an action to enforce section 1983 or various other "civil rights” statutes.

In keeping with this remedial objective, we have liberally construed section 1988 (Matter of Johnson v Blum, 58 NY2d 454, 459). While the statute intones "discretion,” the legislative history and judicial precedents emphasize that “[a] party seeking to enforce the rights protected by the statutes covered by [section 1988], if successful, should ordinarily recover an attorney’s fee unless special circumstances would render such an award unjust.” (S Rep No. 1011, 94th Cong, 2d Sess, at 2, 4 [reprinted in 1976 US Code Cong & Admin News 5912], citing Newman v Piggie Park Enters., 390 US 400, 402; Matter of Johnson v Blum, 58 NY2d 454, 458, supra).

A wide variety of Federal rights are encompassed by section 1983 and can, therefore, qualify for a discretionary fee award under section 1988. Most obviously, rights secured by the Due Process Clause of the Fifth and Fourteenth Amendments are protected by section 1983. The predecessor to section 1983— section 1 of the Civil Rights Act of 1871 — was enacted specifically to enforce the provisions of the Fourteenth Amendment (Ngiraingas v Sanchez, 495 US 182, 187, citing Quern v Jordan, 440 US 332, 354 [Brennan, J., concurring]). However, section 1983 protection is not restricted to constitutional rights. It also encompasses claims based on purely statutory violations of Federal law (Maine v Thiboutot, 448 US 1, 4). In Thiboutot, section 1983 was held to encompass a claim based on a violation of the Federal Social Security Act, 42 USC § 602 (a) (7) (see also, Rosado v Wyman, 397 US 397 [violation of 42 USC § 602 (a) (23)]; King v Smith, 392 US 309 [violation of 42 USC § 602 (a) (former 9)]; Edelman v Jordan, 415 US 651, 675; Koster v Perales, 903 F2d 131 [violation of 42 USC § 602 (a) (3)]). Importantly, this Court has recently concluded that violations of Federal regulatory provisions in the framework of out-of-court settlements can also support an award under section 1988 (Matter of Martinez v Perales, 77 NY2d 923, 925).

It is settled that a plaintiff need not obtain relief by judicial decree or formal judgment to obtain a section 1988 attorney’s fee award (Matter of Martinez v Perales, supra; Maher v Gagne, 448 US 122). Moreover, as we noted in Matter of Johnson v Blum (58 NY2d 454, supra), attorney’s fees are available under section 1988 where relief is sought on both State and Federal grounds, but nevertheless awarded on State grounds only. In such a case, if a constitutional question is involved, fees may be awarded if the constitutional claim is "substantial” and arises out of a " 'common nucleus of operative fact’ ” as the State claim (supra, at 458, n 2, citing Mine Workers v Gibbs, 383 US 715; HR Rep No. 1558, 94th Cong, 2d Sess, at 4, n 7).

Inasmuch as an attorney’s fee award is authorized when a favorable judgment is rendered on a State claim, we discern no justification for denying a fee — without any exercise of required discretion — when no formal adjudication is rendered on either State or Federal claims because a case is settled. Thus, in Matter of Martinez v Perales (77 NY2d 923, supra), we held that a petitioner who had asserted both Federal and State claims against the State and City DSS and agreed to a settlement that did not contain an admission of respondents’ liability on any specified claim qualified for an attorney’s fee award under section 1988. The same circumstances are present in this case although, significantly, the stipulation here expressly reserves "without prejudice” the right to make a "subsequent application for attorney’s fees.” Thus, the outright denial of a fee award by the Appellate Division, as the appellant and amici strongly urge, contradicts congressional intent in enacting the Fees Awards Act. Failure to exercise appropriate discretion with respect to attorney’s fees for parties who settle disputes, without specifying or fixing liability for whatever reason, might discourage settlements and encourage bitter-end litigation, detrimental overall to the parties and the social services and judicial systems.

Petitioner sought relief on both State and Federal grounds. One of her Federal claims was that the failure of the State and City DSS "to provide continuation of petitioner’s full benefits during the pendency of her administrative review [was] arbitrary, capricious and violative of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution”. This claim is encompassed by section 1983 and can therefore serve as the basis for an attorney’s fee award under section 1988. Thus, under Johnson, the critical questions in this appeal distill to whether this constitutional claim is "substantial” and arises out of a "common nucleus of operative fact” as petitioner’s State claims.

The threshold for establishing substantiality of a Federal claim is minimal: the claim must not be "wholly insubstantial”, "obviously frivolous” or "obviously without merit.” (Hagans v Lavine, 415 US 528, 537-538; Matter of Johnson v Blum, 58 NY2d 454, 458, n 2, supra.) The Appellate Division held petitioner-appellant to a much higher standard, essentially requiring her to prove the merits of her Federal claims to qualify for discretionary consideration of an attorney’s fee —a burden she could not possibly meet because of the settlement.

Petitioner’s constitutional claim is "substantial”. The United States Supreme Court has held that prehearing termination or suspension of AFDC benefits violates the 14th Amendment (Goldberg v Kelly, 397 US 254; Wheeler v Montgomery, 397 US 280). Since this Court and the United States Supreme Court have not yet considered whether reduction of AFDC benefits pending an administrative hearing violates Federal constitutional due process protections (see, Wheeler v Montgomery, supra, at 284-285 [Burger, Ch. J., dissenting]; Daniel v Goliday, 398 US 73), it can hardly be said that petitioner’s Federal constitutional question is "obviously frivolous” or "absolutely devoid of merit” (see, Almenares v Wyman, 453 F2d 1075). Moreover, the State and Federal claims asserted by petitioner arose out of a "common nucleus of operative fact” — the failure by both respondents to continue or restore her benefits pending a fair hearing.

The State DSS nevertheless resists the imposition of attorney’s fees against it, arguing that while the City DSS may have violated petitioner’s rights, the State DSS did not and petitioner is therefore not a "prevailing party” against it. The State DSS argues that it did everything in its power to restore petitioner’s benefits, pointing to its repeated directives to the City DSS, its lack of administrative capacity to directly deliver the continuing aid petitioner sought, which was the responsibility of the local agency, and the fact that the City DSS ultimately restored petitioner’s aid pursuant to the settlement.

However, the AFDC administrative scheme creates an interconnected and inextricable chain of authority, with ultimate power reposed in the State DSS. The State, under Federal and State law, has the duty to supervise AFDC plans and is authorized to sanction local districts for failure to comply with State DSS rules (42 USC § 602 [a] [3]; Social Services Law §34 [3] [d]; §20 [3] [e]). Local social service commissioners "act on behalf of and as agents for the State. Each is a part of and the local arm of the single State administrative agency.” (Matter of Beaudoin v Toia, 45 NY2d 343, 347.) Imposing responsibility for attorney’s fees on the State DSS takes this structure into account and avoids evasion of responsibility by bureaucratic fingerpointing and red-tape shufflings (see, e.g., Matter of Zellweger v New York State Dept. of Social Servs., 74 NY2d 404; Matter of Sabot v Lavine, 42 NY2d 1068).

Finally, we note that the State DSS was a signatory to the stipulation of settlement and agreed to the relief accorded to petitioner to end the lawsuit. The settlement agreement provides that the respondents (State and City DSS) would "restore petitioner’s public assistance grant”, would "remit a retroactive public assistance grant” and would "correct this underpayment within two weeks of filing.” To allow the State DSS to escape from the plain import of this language would contravene the words and spirit of the Fees Awards Act, by discouraging the availability of needed legal assistance to individuals whose rights have been violated and who require vindication.

We cannot say on the state of the law and on the basis of this record that the Supreme Court abused its discretion by granting the attorney’s fee award to petitioner against the State DSS (Matter of Martinez v Perales, 77 NY2d 923, supra; Matter of Unger v Blum, 117 AD2d 607).

Accordingly, the order of the Appellate Division should be reversed, with costs, and the order and judgment of Supreme Court, Queens County, reinstated.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone and Hancock, Jr., concur.

Order reversed, etc.


text:
    Leonard S. Fiore, Sr., et al., Respondents, v Oakwood Plaza Shopping Center, Inc., et al., Appellants.
    Argued November 20, 1991;
    decided December 23, 1991

      POINTS OF COUNSEL

      Allen C. Cohen and Donald S. Snider for appellants.
    I. The Court of Appeals in Atlas (presciently anticipating Overmyer
      and Swarb), distinguished between "predispute” and "postdispute” cognovit provisions, and properly held that without a prior judicial hearing, "predispute” cognovit judgments are unconstitutional and not entitled to full faith and credit treatment in this State. (Atlas Credit Corp. v Ezrine, 25 NY2d 219.) II. In a "predispute” cognovit situation, where there are no clear and unequivocal indicia of a knowing, voluntary, and intelligent waiver of due process, both Federal and State courts have, subsequent to Atlas, Overmyer and Swarb, refused to uphold these "predispute” cognovit judgments, and have held that in order for these "predispute” cognovit judgments to be constitutional, there must be a judicial hearing to determine whether there was a knowing, voluntary and intelligent waiver of due process. (Overmyer Co. v Frick Co., 405 US 174; Swarb v Lennox, 405 US 191; Osmond v Spence, 327 F Supp 1349, 405 US 971, 359 F Supp 124; Scott v Danaher, 343 F Supp 1272; Virgin Islands Natl. Bank v Tropical Ventures, 358 F Supp 1203; Fuentes v Shevin, 407 US 67.) III. The cases in which the United States Supreme Court and lower Federal courts have held that the signing of a document containing a cognovit provision may constitute a knowing, voluntary and intelligent waiver of due process, always involve the "postdispute” cognovit situation or its functional equivalent. (Overmyer Co. v Frick Co., 405 US 174.)

      Roy A. Powell, of the Pennsylvania Bar, admitted pro hoc vice, and Stuart M. Steinberg for respondents.
    I. Appellants never raised the "waiver” argument regarding a "predispute” versus a "postdispute” confessed judgment before any other court; therefore, they have waived their argument on that point. (Matter of Schwartz v Cuomo, 111 AD2d 759; Cibro Petroleum Prods. v Chu, 67 NY2d 806.) II. Appellants’ entire argument based upon the premise that there is a distinction between "predispute” and "postdispute” confessions of judgment is frivolous. (Atlas Credit Corp. v Ezrine, 25 NY2d 219; Overmyer Co. v Frick Co., 405 US 174; Swarb v Lennox, 405 US 191; Money Mgt. v Vetere, 107 Misc 2d 861.) III. The Pennsylvania judgments obtained through the filing of a complaint in confession of judgment comport with all constitutional due process requirements and are entitled to full faith and credit in New York. (Durfee v Duke, 375 US 106; Parker v Hoefer, 2 NY2d 612, 355 US 833; Williams v State of North Carolina, 317 US 287; Augusta Lbr. & Supply v Sabbeth Corp., 101 AD2d 846; Gramatan Home Investors Corp. v Lopez, 46 NY2d 481; Matter of Shea, 309 NY 605; Chisholm-Ryder Co. v Sommer & Sommer, 78 AD2d 143; 119 Rosset Corp. v Blimpy of N. Y. Corp., 65 AD2d 683; Atlas Credit Corp. v Ezrine, 25 NY2d 219; Overmyer Co. v Frick Co., 405 US 174.)
   OPINION OF THE COURT

Kaye, J.

Judgments by confession, recognized both as "the loosest way of binding a man’s property that ever was devised in any civilized country” (Alderman v Diament, 7 NJL 197, 198) and as devices that "serve a proper and useful purpose in the commercial world” (Overmyer Co. v Frick Co., 405 US 174, 188), in this State have been strictly limited by the Legislature (see, CPLR 3218). The present case calls upon us to determine whether a Pennsylvania cognovit judgment, obtained under that State’s laws, should be given full faith and credit here (see, US Const, art IV, § 1; 28 USC § 1738). Given the procedures followed in Pennsylvania, we agree with the trial court and the Appellate Division that the Pennsylvania judgment may be enforced against defendant-appellants in New York.

I.

In July 1986, plaintiffs contracted to sell a 14.8 acre parcel located in Patton Township, Centre County, Pennsylvania, to State College Development Company, predecessor in interest to defendant Oakwood Plaza Shopping Center. Defendants Joseph Aronow and Anthony Galioto are principals in Oak-wood. Under the agreement, the purchase price was to be determined by the number of square feet approved by the local authorities for use as retail sales space. Initially, the full purchase price was to be paid at closing — to occur no later than March 1987.

At defendants’ request, a rider was later executed that changed the payment terms: $600,000 to be paid at closing, the remainder secured by a purchase-money mortgage and note. Closing took place on December 23, 1986, at which time plaintiffs delivered the deed to the parcel and defendants paid $700,000 toward the purchase price. Oakwood executed a $1.1 million purchase-money mortgage. Additionally, Oakwood, as well as Aronow and Galioto individually, executed a "bond and warrant” obligating them to pay $1.1 million with interest at 9% per annum. The bond contained a "warrant of attorney” through which defendants authorized plaintiffs’ attorney to confess judgment against them in the amount of $1.1 million.

Defendants failed to make the required payments. On September 9, 1988, in the Pennsylvania Court of Common Pleas, plaintiffs filed a complaint in confession of judgment as well as a praecipe to enter judgment against defendants (Pa Rules Civ Pro, rule 2951). On the same day, the prothonotary entered final judgment against defendants in the amount of $1,216,145 and sent them a notice of entry of final judgment and a copy of the complaint. A second judgment — in the amount of $1,287,713 — was obtained against defendant Oak-wood on the purchase-money mortgage after Oakwood failed to appear and defend the action.

In November 1988, plaintiffs served a demand for discovery in aid of execution upon defendants. After defendants failed to respond, plaintiffs filed a motion in the Pennsylvania Court of Common Pleas to compel discovery and impose sanctions which the court, in January 1989, granted.

Defendants, in May 1989, filed a petition to open or strike the judgment (Pa Rules Civ Pro, rule 2959). The Court of Common Pleas, after a hearing, denied the petition, concluding that the petition was both untimely and raised no meritorious defense. Three months later, in September 1989, defendants filed an untimely appeal of that decision which was later withdrawn. In October 1989, the Pennsylvania court, after a hearing, held defendants in criminal contempt for failure to comply with the court’s order directing them to respond to plaintiffs’ discovery requests. Substantial monetary penalties were imposed.

Frustrated in their enforcement efforts in Pennsylvania, plaintiffs commenced the present New York action in January 1989 by summons and notice of motion for summary judgment in lieu of complaint (see, CPLR 3213). The action, originally framed as one "upon an instrument for the payment of money only” (based on the bond and warrant), was later converted into an action upon the two Pennsylvania judgments. Defendants filed a cross motion to dismiss for legal insufficiency (CPLR 3211 [a] [7]).

Supreme Court granted plaintiffs’ motion for summary judgment, concluding that the Pennsylvania court had personal jurisdiction over defendants, that due process requirements had been satisfied, and that the judgments were valid and conclusive in the forum State. As a result, the court concluded, the Pennsylvania judgments were entitled to full faith and credit. Finally, the court denied defendants’ cross motion, holding that it was precluded from looking beyond the jurisdictional aspects of the Pennsylvania proceedings.

The Appellate Division affirmed, agreeing that the Pennsylvania cognovit judgment on the bond and warrant should be accorded full faith and credit. The court concluded that under the circumstances "where the parties were engaged in an arm’s length business transaction, were represented by counsel, and the defendant was on actual notice of the entry of the judgment and, in fact, sought to challenge same prior to execution, it cannot be said that the cognovit judgment amounted to a deprivation of property rights without due process.” (164 AD2d 737, 742.)

On this appeal, defendants again attempt to argue the merits of the Pennsylvania judgment. In addition, defendants argue that cognovit judgments as a matter of law are not entitled to full faith and credit in this State, citing this Court’s decision in Atlas Credit Corp. v Ezrine (25 NY2d 219). Plaintiffs respond that United States Supreme Court decisions rendered after Atlas have made clear that cognovit judgments are not per se unconstitutional. Rather, plaintiffs assert, a case-by-case analysis is required to determine whether defendants voluntarily, knowingly and intelligently waived their rights to notice and an opportunity to be heard. The facts clearly demonstrate that such a valid waiver was effected, according to plaintiffs, and therefore the Pennsylvania judgment should be afforded full faith and credit. Agreeing with plaintiffs’ arguments, we now affirm the Appellate Division order.

II.

As a matter of full faith and credit, review by the courts of this State is limited to determining whether the rendering court had jurisdiction, an inquiry which includes due process considerations (Parker v Hoefer, 2 NY2d 612, cert denied 355 US 833; see also, Augusta Lbr. & Supply v Sabbeth Corp., 101 AD2d 846; 4 Weinstein-Korn-Miller, NY Civ Prac ¶ 3213.04). Thus, inquiry into the merits of the underlying dispute is foreclosed; the facts have bearing only in the limited context of our jurisdictional review (Parker v Hoefer, supra, at 616-617). Moreover, although this is a confessed judgment, defendants have been offered, and have availed themselves of, a full and fair opportunity to argue the merits in the Pennsylvania courts.

The cognovit is a contractual provision, employed as a security device, whereby the obligor consents in advance to the creditor’s obtaining a judgment without notice or hearing (see, Overmyer Co. v Frick Co., 405 US, at 176, supra). In the present case, the cognovit contained a "warrant of attorney,” a provision that empowers any attorney to enter the obligor’s appearance in any court of record and to waive — on the obligor’s behalf — process and consent to the entry of judgment (Atlas Credit Corp. v Ezrine, 25 NY2d, at 225, supra).

In Atlas, this Court held that the Pennsylvania cognovit judgment in issue was not entitled to full faith and credit. First, we concluded that the cognovit "judgment” was a judgment in name only, having none of the "mínimums of judicial process” usually associated with that term. For that reason alone, the cognovit judgment was not entitled to full faith and credit (25 NY2d, at 229-230, supra). Second, as recognition of the judgment was not constitutionally mandated, we determined that enforcing the cognovit judgment would be repugnant to New York policy (25 NY2d, at 230). Finally, we held that even assuming the cognovit could qualify as a judgment for full faith and credit purposes, the Pennsylvania judgment was not enforceable in this State because cognovit judgments that provide for entry of a judgment by confession anywhere in the world without notice are per se unconstitutional (25 NY2d, at 231-232).

In Atlas, this Court noted that United States Supreme Court precedent considering cognovit judgments stood only for the proposition that the terms of a warrant of attorney should be strictly construed (25 NY2d, at 227, supra). The Supreme Court had not yet spoken on the constitutionality of such judgments. Several years after Atlas — in the companion cases Overmyer Co. v Frick Co. (405 US 174, supra) and Swarb v Lennox (405 US 191) — the United States Supreme Court did have the opportunity to consider whether cognovit judgments were per se unconstitutional.

In Overmyer, the Court ruled that Ohio’s cognovit procedure was not per se unconstitutional (405 US, at 187, supra). Instead, the Court directed attention to the effectiveness of the obligor’s waiver of due process rights, a necessarily fact-specific inquiry, concluding from the facts that the obligor there had effectively waived those rights (id.). First, the Court assumed that the proper standard for determining the effectiveness of the waiver was the same as in criminal proceedings, "that is, that it be voluntary, knowing, and intelligently made” (405 US, at 185). The Court emphasized that the obligors were sophisticated corporations, represented by counsel, involved in an arm’s length commercial transaction. Furthermore, the cognovit clause was contained in a contract modification that had been effected after the obligor defaulted on its obligations and for which it received consideration. Thus, the Court concluded, the obligor in Overmyer had effectively waived its right to notice and a hearing.

Finally, the Court in Overmyer observed that the obligor was not — by execution of the cognovit clause — rendered defenseless (405 US, at 188, supra). Rather, under Ohio law the obligor could seek to vacate the judgment — indeed, the obligor had in fact had a postjudgment hearing in an Ohio court. The concurrence emphasized the availability of postjudgment hearing as an avenue of relief for an obligor with a legitimate defense (405 US, at 189-190 [Douglas, J., concurring]).

In Swarb, the Supreme Court considered a constitutional challenge to the Pennsylvania cognovit judgment scheme, and rejected plaintiffs’ argument that the procedure was invalid on its face. The Court, citing Overmyer, reiterated that "under appropriate circumstances, a cognovit debtor may be held effectively and legally to have waived those rights he would possess if the document he signed had contained no cognovit provision.” (405 US, at 200, supra.)

We therefore consider the impact of Overmyer and Swarb on our earlier holding in Atlas that Pennsylvania cognovit judgments are not entitled to full faith and credit.

It is evident that the conclusion reached in Atlas concerning the per se unconstitutionality of the Pennsylvania cognovit scheme is itself no longer valid in light of the subsequent Supreme Court decisions (see, Money Mgt. v Vetere, 107 Misc 2d 861, 863-864; In re PCH Assocs., 122 Bankr 181, 194-195 [SD NY] [questioning the continued validity of the Atlas analysis in light of Overmyer and Swarb]; see also, Siegel, NY Prac § 300, at 430-431 [Prac 2d ed] [same]). Cognovit judgments entered in other jurisdictions cannot automatically be denied full faith and credit; rather, enforceability must depend on the facts of each case. More particularly, it must be determined that the judgment debtor made a voluntary, knowing and intelligent waiver of the right to notice and an opportunity to be heard.

In that Overmyer and Swarb did not raise full faith and credit issues, it is arguable that the determination in Atlas that cognovit judgments are not judgments in the ordinary sense of the word would bar enforcement of such judgments in this State. Even assuming the continued validity of this line of reasoning, however, we note that the Pennsylvania cognovit judgment scheme has been amended in several areas relevant to the concerns expressed in Atlas (see, Pa Rules Civ Pro, rule 2951 et seq.). The main concern in Atlas was that the Pennsylvania cognovit procedure provided little in the way of judicial intervention, resembling more a "purely personal act.” (25 NY2d, at 230, supra.) In addition to amending the procedure for opening the cognovit judgment to reduce the burden on the petitioning judgment debtor — thereby facilitating access to a judicial determination of the merits of the underlying claim —the Pennsylvania statute now provides that notice of entry be mailed by the court clerk rather than the plaintiff’s attorney (Pa Rules Civ Pro, rule 236). Judgments rendered pursuant to this procedure are therefore "judgments” for full faith and credit purposes.

Defendants make one additional threshold argument concerning the validity of the Pennsylvania judgment, claiming that in the "predispute” context a hearing must be held to determine waiver prior to the entry of judgment in the forum State (see, Isbell v County of Sonoma, 21 Cal 3d 61, 145 Cal Rptr 368, 577 P2d 188, cert denied 439 US 996). The distinction, according to defendants, rests on the indicia of reliability present when the cognovit judgment is entered into following the development of a full-blown controversy. This argument is without merit.

Rather than an artificial dichotomy based on the timing of the "dispute” — one that finds no support whatever — the need for a hearing should be determined on a case-by-case basis. A hearing at some stage would clearly be warranted where the record is insufficient to support a waiver determinatian (see, In re PCH Assocs., 122 Bankr, at 193-194, supra). We cannot agree with defendants, however, that as a matter of law there must in every instance be a prejudgment hearing to determine whether the debtor waived its right to notice and a prejudgment hearing.

Thus, there is no per se constitutional barrier to enforcement of Pennsylvania cognovit judgments.

III.

We are left then with the Supreme Court’s conclusion that "due process rights to notice and hearing prior to a civil judgment are subject to waiver.” (Overmyer Co. v Frick Co., 405 US, at 185, supra.) All that remains is to apply the waiver analysis in the present case to determine whether defendants voluntarily, knowingly and intelligently waived those rights. We conclude that they did waive those rights as a matter of law.

Defendants were sophisticated parties involved in an arm’s length commercial transaction — the transfer of a parcel of land for development as a shopping mall (see, In re FRG, Inc. v Manley, 919 F2d 850, 857 [3d Cir]). The purchase price of the land alone was well in excess of $1 million, indicating the magnitude of the project. Furthermore, the parties were represented by counsel in negotiating the terms of the agreement. Defendant Aronow claims not to have had counsel — a fact disputed by plaintiffs — but Aronow himself is an attorney.

Defendants also claim that they received no consideration for the cognovit provision, citing the Supreme Court’s observation in Overmyer that the creditors in that case had made specific concessions in order to obtain the confession of judgment clause. In fact, the present case resembles Overmyer in this respect: defendants sought modification of the payment terms — from a lump sum due at closing to a two-year payment schedule — and in return for this modification executed the bond and warrant. Clearly, that security device was given in exchange for the extended payment schedule.

Finally, defendants argue that, unlike the obligors in Overmyer, they were unaware of the cognovit clause, which they claim was "buried” in the bond and warrant. In Overmyer, the Supreme Court noted that the obligor did not contend that it was unaware of the cognovit provision and that "[i]ndeed, it could not do so in the light of the facts.” (405 US, at 186, supra.) The facts before us likewise belie defendants’ assertion that they were unaware of the cognovit provision. The bond and warrant is a three-page document, with the cognovit clause the only provision on the last page, several lines above defendants’ signatures. The bald assertion that these sophisticated defendants, entering upon a significant transaction, did not read the document cannot excuse their legal obligation or overcome the substantial evidence of waiver (see, Metzger v Aetna Ins. Co., 227 NY 411, 416).

As the Supreme Court noted, "where the contract is one of adhesion, where there is great disparity in bargaining power, and where the debtor receives nothing for the cognovit provision, other legal consequences may ensue.” (Overmyer Co. v Frick Co., 405 US, at 188, supra.) By contrast, the contract here was not one of adhesion, but rather represented a bargain struck between sophisticated commercial parties. It is clear that defendants made a voluntary, knowing and intelligent waiver of their right to notice and an opportunity to be heard, and should be held to the consequences of their conduct.

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

Chief Judge Wachtler and Judges Simons, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Order affirmed, with costs.

      . Justice Douglas contrasted the Ohio postjudgment procedure with the Pennsylvania procedure involved in Swarb v Lennox (405 US 191), which he found imposed a stiffer — and "undue” — burden of persuasion on the debtor (405 US, at 190, n, supra). The Pennsylvania procedure was subsequently amended, and now places the same burden of persuasion on the debtor as was found in the Ohio scheme — sufficient evidence to raise a jury question (see, Pa Rules Civ Pro, rule 2959 [e]).

      . The California Supreme Court in Isbell was concerned with an entirely different procedure. That court — in concluding that a hearing prior to entry of judgment was required — contrasted the California scheme to the Ohio scheme involved in Overmyer by emphasizing that California provided for no notice of entry of judgment and severely restricted the grounds for postjudgment attack (577 P2d 188, 195). As noted, the Pennsylvania scheme is identical to the Ohio scheme in these respects.