text:
    The People of the State of New York, Respondent, v Jose Colon, Appellant.
    Argued February 4, 1988;
    decided March 22, 1988

      POINTS OF COUNSEL

      Kevin F. Casey and Philip L. Weinstein for appellant.
    I. Appellant was denied his fundamental right to a public trial, where the court closed the courtroom, over defense objection, during the charge to the jury. (Richmond Newspapers v Virginia, 448 US 555; In re Oliver, 333 US 257; People v Jelke, 308 NY 56; Duncan v Louisiana, 391 US 145; People v Jones, 47 NY2d 409, 444 US 946; Press-Enterprise Co. v Superior Ct. [Press-Enterprise I], 464 US 501; Press-Enterprise Co. v Superior Ct. [Press-Enterprise II], 478 US 1; Matter of Associated Press v Bell, 70 NY2d 32; Waller v Georgia, 467 US 39; Matter of Westchester Rockland Newspapers v Leggett, 48 NY2d 430.) II. Appellant was deprived of due process of law and his right to an impartial jury, by the court’s refusal to sustain appellant’s challenge for cause of a prospective juror who had four close relatives on the police force, in a case where all of the People’s witnesses were police employees. (People v Branch, 46 NY2d 645; Irvin v Dowd, 366 US 717; People v Blyden, 55 NY2d 73; People v Culhane, 33 NY2d 90; People v Provenzano, 50 NY2d 420; Crawford v United States, 212 US 183; People v Johnson, 89 AD2d 506; People v Sellers, 73 AD2d 697; Sims v United States, 405 F2d 1381; People v Smith, 110 AD2d 669, 68 NY2d 737.)

      Elizabeth Holtzman, District Attorney (Nikki Kowalski and
      Barbara D. Underwood of counsel), for respondent.
    I. The trial court’s order prohibiting spectators from entering or leaving the courtroom during the charge was a reasonable measure to prevent disruption and did not deny defendant a public trial, especially where the record does not show that the order prevented any member of the public from attending the charge. (Waller v Georgia, 467 US 39; People v Jones, 47 NY2d 409, 444 US 946; Richmond Newspapers v Virginia, 448 US 555; People v Hinton, 31 NY2d 71; People v Jelke, 308 NY 56; People v Jones, 82 AD2d 674; In re Oliver, 333 US 257; United States v Kobli, 172 F2d 919; People v Joseph, 59 NY2d 496; Tanksley v United States, 145 F2d 58.) II. The trial court correctly rejected defendant’s claim that a juror must be presumed biased because he had children on the police force and thus properly denied defendant’s challenge for cause under CPL 270.20 (1) (c). (People v Branch, 46 NY2d 645; Matter of Westchester Rockland Newspapers v Leggett, 48 NY2d 430; People v Culhane, 33 NY2d 90; People v Provenzano, 50 NY2d 420; People v Smith, 68 NY2d 737; People v Harris, 57 NY2d 335, 460 US 1047; People v Rentz, 67 NY2d 829; People v Purcell, 103 AD2d 938; People v Sellers, 73 AI)2d 697.)
   OPINION OF THE COURT

Alexander, J.

The principal question presented by this appeal is whether locking the courtroom doors during the Trial Judge’s charge to the jury — thereby precluding access to those who arrive after commencement of the charge, and prohibiting those who have elected to stay from leaving during its delivery — violates defendant’s constitutional right to a public trial.

Defendant was charged with criminal sale and possession of cocaine arising out of an undercover drug investigation in February 1983. After the close of evidence, and prior to the court’s charge to the jury, defense counsel inquired of the court whether it intended to close the courtroom during the charge. The Trial Judge responded that he would, as it was his practice, lock the courtroom doors at the time instructions were to begin — requiring those wishing to attend to remain for the duration of the charge — so that the jury would not be distracted by spectators coming and going. Defense counsel objected, arguing that this "sealing” of the courtroom violated defendant’s right to a public trial. Defendant was subsequently convicted of criminal sale of a controlled substance in the third degree (Penal Law § 220.39 [1]) and criminal possession of a controlled substance in the third degree (Penal Law § 220.16 [1]).

The Appellate Division, Second Department, affirmed defendant’s conviction without reference to the issue which had not been briefed to that panel. Subsequently, the First Department ruled, in People v Venters (124 AD2d 57, appeal dismissed 70 NY2d 658), that "courtroom closure during the charge in a criminal case, however hoary and time-honored such a practice may be, does not pass constitutional or statutory muster” (People v Venters, 124 AD2d 57, 58, supra). Citing Venters, defendant moved for reargument. That motion was denied, and defendant was granted leave to appeal by a Judge of this court. For the reasons that follow, we conclude that defendant’s constitutional rights were not violated and therefore affirm the order of the Appellate Division.

I.

Since abolition of the Court of Star Chamber in England in 1641, the right of the accused to a public trial has become well rooted in our common-law heritage (In re Oliver, 333 US 257, 266, and n 14; see, Richmond Newspapers v Virginia, 448 US 555, 566-569; People v Jones, 47 NY2d 409; People v Jelke, 308 NY 56, 61; see generally, Radin, Right to a Public Trial, 6 Temp LQ 381). "From these early times, although great changes in courts and procedure took place, one thing remained constant: the public character of the trial at which guilt or innocence was decided” (Richmond Newspapers v Virginia, 448 US 555, 566, supra). Not only are members of the press and public extended a constitutional right of access —implicit in the First Amendment (Richmond Newspapers v Virginia, 448 US 555, 580, supra; Matter of Associated Press v Bell, 70 NY2d 32, 37) — but a defendant has the constitutional right to a public trial explicitly guaranteed in the Sixth Amendment (US Const 6th Amend ["In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial”]; see, Waller v Georgia, 467 US 39, 47). This mandate is binding on the States through the Fourteenth Amendment (see, Duncan v Louisiana, 391 US 145, 148; Matter of Oliver v Postel, 30 NY2d 171, 178), and in New York, the right is further protected by statute (see, Civil Rights Law § 12; Judiciary Law § 4 [subject to certain stated exceptions the "sittings of every court within this state shall be public”]).

In contrast to the secrecy and concealment of Star Chamber trials, the salutary purposes of open access to criminal proceedings are many and universally acknowledged. Exposing the judicial process to the glare of public scrutiny inspires confidence in the administration of justice and the appropriateness of judicial remedies; it ensures the integrity of the process (Globe Newspaper Co. v Superior Ct., 457 US 596, 605-606; Richmond Newspapers v Virginia, 448 US 555, 569-573, supra; People v Jones, 47 NY2d 409, 416-417, supra). More importantly perhaps, the command that criminal trials be accessible to the public is for the benefit of the accused, " ' "that the public may see he is fairly dealt with and not unjustly condemned, and the presence of interested spectators may keep his triers keenly alive to a sense of their responsibility and to the importance of their functions” ’ ” (Gannett Co. v DePasquale, 443 US 368, 380; see also, In re Oliver, 333 US 257, 270, supra ["The knowledge that every criminal trial is subject to contemporaneous review in the forum of public opinion is an effective restraint on possible abuse”]). It is both the fairness and the appearance of fairness that are sought. Publicity of criminal proceedings is also considered instrumental in fostering testimonial trustworthiness and in bringing notice of the proceedings to the attention of potential witnesses (People v Jelke, 308 NY 56, 63, supra; Tanksley v United States, 145 F2d 58, 59).

Notwithstanding the immeasurable value to the defendant and to society of public accessibility to criminal proceedings, the mandate of a public trial has not been deemed absolute. That right, whether asserted by defendant or members of the public, must be reconciled with, and at times must yield to, other important rights and interests. In order to safeguard, for example, a defendant’s equally fundamental rights to a fair trial and an impartial jury, it has been recognized that a court may exclude spectators from certain proceedings to avoid inflammatory pretrial publicity which could taint potential jurors (Press-Enterprise Co. v Superior Ct. [Press-Enterprise II], 478 US 1 [preliminary hearings]; Waller v Georgia, 467 US 39, supra [suppression hearings]; Press-Enterprise Co. v Superior Ct. [Press-Enterprise I] 464 US 501 [jury selection]; Matter of Associated Press v Bell, 70 NY2d 32, 38, supra [suppression hearings]; Matter of Westchester Rockland Newspapers v Leggett, 48 NY2d 430, 438 [pretrial mental competency hearings]). Similarly, the public may be excluded from a portion of the trial to protect the identity of an undercover agent (see, e.g., People v Hinton, 31 NY2d 71, 73), or to enable a child or emotionally disturbed witness to testify (see, e.g., Globe Newspaper Co. v Superior Ct., 457 US 596, supra [child victim of sex crime]; People v Hagan, 24 NY2d 395). These exceptions notwithstanding, the presumption of openness is not easily overcome: a closure order must be based upon specific findings that closure is necessary to preserve an overriding interest and is narrowly tailored to serve that interest (Press-Enterprise II, 478 US 1, 13-14, supra; Walter v Georgia, 467 US 39, 45, supra; Press-Enterprise I, 464 US 501, 510, supra; Matter of Associated Press v Bell, 70 NY2d 32, 38, supra).

Relying on these principles and on People v Venters (124 AD2d 57, supra), defendant challenges the closing of the courtroom doors during the court’s charge to the jury, over defense objection, as violating his constitutional right to a public trial. In Venters, the First Department concluded that locking the doors during instructions for the single purpose of avoiding potential distraction violated a defendant’s right to a public trial. That court found that the "very importance of the jury charge * * * is itself an argument for its immediate accessibility to the public” (People v Venters, 124 AD2d 57, 60, supra). Moreover, defendant argues, if the jury is distracted during the charge, that portion of the charge is easily repeated, whereas if jurors were distracted during the testimony of a key witness, reenactment of a response or a facial expression is not so readily accomplished. Accordingly, defendant urges the adoption of less onerous alternatives to address the concern of disruption as, for example, a sign posted outside the courtroom, or courtroom personnel stationed near the door, to assure unobtrusive entry and exit. Contending that there are no unusual circumstances necessitating closure in this case, and that the charge to the jury, in general, is not so unique a phase of the trial as to justify routine closure of the doors, defendant concludes that the hypothetical risk of distraction is insufficient and too speculative to overcome his right to insist on open doors.

Defendant’s premise, however, that locking the courtroom doors during the charge to the jury results in a "closure” of the proceedings, does not withstand analysis. Unlike orders explicitly excluding members of the public, the trial court’s action here does not explicitly exclude anybody and is designed solely to regulate the ingress and egress of the spectators. The right to a public trial has always been recognized as subject to the inherent power of trial courts to administer the activities of the courtroom; suitably within the trial court’s discretion is the power to monitor admittance to the courtroom, as the circumstances require, in order to prevent overcrowding, to accommodate limited seating capacity, to maintain sanitary or health conditions, and generally to preserve order and decorum in the courtroom (People v Glover, 60 NY2d 783; People v Jelke, 308 NY 56, 63, supra; People v Miller, 257 NY 54, 60). Locking the doors during the charge to avoid disruption — allowing those already present to remain— does not seek to exclude the public or frustrate the salutary purposes of public scrutiny. Here, members of the press or public were permitted to attend the charge to the jury, upon the condition that they arrive at the beginning of the court’s delivery and not leave until instructions had been completed.

Focusing on the tardy spectator, defendant nevertheless insists that locking the doors during the charge is the functional equivalent of a "closure” with respect to that spectator. This argument, however, would render a "closure” any restriction on admittance to the courtroom, even for example, because of limited seating capacity. Rather, we view the Trial Judge’s action here as a reasonable restriction upon the time and manner of public access to the trial (see, United States v Romano, 684 F2d 1057, 1065). "Just as a government may impose reasonable time, place, and manner restrictions upon the use of its streets in the interest of such objectives as the free flow of traffic, so may a trial judge, in the interest of the fair administration of justice, impose reasonable limitations on access to a trial” (Richmond Newspapers v Virginia, 448 US 555, 581, n 18, supra [citations omitted]). Those cases requiring no less onerous alternative and "specific findings” made on the record to warrant a closure of the proceedings are therefore inapplicable (see, Waller v Georgia, 467 US 39, 45, supra; Press-Enterprise I, 464 US 501, 510, supra; Matter of Associated Press v Bell, 70 NY2d 32, 39, supra). So long as the time and manner restriction on admission is a reasonable one, it should be upheld against defendant’s Sixth Amendment challenge.

The charge to the jury is a solémn and comparatively complex phase of the trial requiring precision and concentration on the part of both the jury and the Trial Judge. Although it is no more critical to defendant’s guilt or innocence, for example, than the testimony of a principal witness, the charge is of special significance. It is during the charge that the jury is instructed on the law applicable to the case, the time they must master often difficult and interrelated principles — principles not usually within their ken — that may be determinative of the outcome. The discourse is imbued with terms not immediately comprehensible, requiring definition, repetition and context. Moreover, the charge, by its nature, occupies the Trial Judge’s full attention placing him or her in a particularly disadvantageous position to police the goings-on in the courtroom. Thus, it cannot be said to be an unreasonable limitation on public access — after inviting all those present to remain — to lock the doors so that the charge may be conveyed without disruption. Indeed, incessant interruptions during the charge could very well give rise to repeated requests for supplemental instructions. We reach no conclusion with respect to the propriety of routinely locking the doors during other portions of the trial, or indeed for the duration of the proceedings between recesses (see, State v Robillard, 146 Vt 623, 508 A2d 709 [routine practice of locking doors after commencement of actual trial proceedings until recess is error]; People v Micalizzi, 223 Mich 580, 194 NW 540).

In sum, we conclude that a Trial Judge’s order to lock the courtroom doors during the charge to the jury, permitting all those who have timely arrived to remain in the courtroom, is not intended to exclude members of the public and does not constitute a "closure” of the proceedings. Rather, it is designed to control the flow of traffic into and out of the courtroom during a unique portion of the trial where the jurors must absorb and master the applicable legal principles and the Trial Judge is singly devoted to assuring comprehension of these principles. The decision to do so is within the discretion of the Trial Judge to assure tranquility and order in the courtroom. We hold, therefore, that the locking of courtroom doors during the charge to the jury — preventing only tardy spectators from entering the courtroom during this time —does not deprive defendant of his constitutional right to a public trial.

II.

Claiming a deprivation of his rights to due process and an impartial jury, defendant also assigns error to the trial court’s refusal to grant a challenge for cause of a prospective juror who had four close relatives on the police force. Citing CPL 270.20 (1) (b) and the prospective juror’s expurgatory oath, the trial court denied the challenge, and defendant resorted to his last peremptory challenge. Defendant contends that the prospective juror had a sufficiently suspect relationship with the police force and the People’s witnesses — all of whom were police officers — to render him inherently biased and justify disqualification for cause under CPL 270.20 (1) (c) and People v Branch (46 NY2d 645 [expurgatory oath not applicable where suspect relationship involved]; see also, People v Provenzano, 50 NY2d 420). The contention is without merit. The prospective juror did not bear a relationship to any of the testifying police officers that falls within the enumerated relationships of CPL 270.20 (1) (c), and the fact that he had relatives in the same profession as the witnesses for the District Attorney, in and of itself, cannot be said to likely preclude an average juror from rendering an impartial verdict within the meaning of that provision (CPL 270.20 [1] [c]; People v Provenzano, 50 NY2d 420, 425, supra). Absent evidence that this particular prospective juror would not have been impartial, and in view of the prospective juror’s expurgatory oath, the trial court cannot be said to have abused its discretion as a matter of law in refusing the challenge for cause.

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

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

Order affirmed.

      . Although abandoned on defendant’s direct appeal to the Appellate Division, we may reach the issue as it was preserved at trial (CPL 470.35 [1]).

      . The Supreme Court has noted that "almost without exception every state by constitution, statute, or judicial decision, requires that all criminal trials be open to the public” (In re Oliver, 333 US 257, 267-268 [footnotes omitted]). New York is one of the few States that does not guarantee the right in its State Constitution but by statute (see, In re Oliver, 333 US 257, 268, n 18, supra; People v Jelke, 308 NY 56, 62).

      . Additionally, in Richmond Newspapers v Virginia (448 US 555, 571), the Supreme Court identified a therapeutic value to the publicity of judicial proceedings: "When a shocking crime occurs, a community reaction of outrage and public protest often follows * * * Thereafter the open processes of justice serve an important prophylactic purpose, providing an outlet for community concern, hostility, and emotion”, thereby discouraging vengeful self-help.

      . The States that have addressed the issue appear to be split not only on whether locking the courtroom during the charge constitutes a violation of the public trial right, but if so, whether such error is reversible (see, Renfroe v State, 49 Ala App 713, 275 So 2d 692 [locking doors during charge within trial court’s discretion]; People v Buck, 46 Cal App 2d 558, 116 P2d 160 [not error to lock doors during charge to avoid disruption]; State v

        Lawrence, 167 NW2d 912 [Iowa] [locking doors during charge constitutes error]; People v Micalizzi, 223 Mich 580, 194 NW 540 [reversible error to lock doors during charge]; State v Robillard, 146 Vt 623, 508 A2d 709 [harmless error to routinely lock doors]).

       Designated pursuant to NY Constitution, article VI, § 2.


source: Caselaw Access Project

author: Dillon, J.

license: Public Domain

text:
    William Iselin & Co., Inc., Appellant, v Mann Judd Landau, Respondent.
    Argued February 4, 1988;
    decided March 22, 1988

      POINTS OF COUNSEL

      Louis Strassberg and Belinda Warshaw for appellant.
    I. Iselin has sufficiently met the three-part criteria established in Credit Alliance to defeat Mann Judd’s summary judgment motion. (Credit Alliance Corp. v Andersen & Co., 65 NY2d 536, 66 NY2d 812; Ultramares Corp. v Touche, 255 NY 170; White v Guarente, 43 NY2d 356; Westpac Banking Corp. v Deschamps, 66 NY2d 16; Hasbro Bradley, Inc. v Coopers & Lybrand, 121 AD2d 870; First Fed. Sav. & Loan Assn. v Oppenheim, Appel, Dixon & Co., 629 F Supp 427.) II. The court below erred in determining there were no issues of fact to be determined at trial. (Zuckerman v City of New York, 49 NY2d 557; Epstein v Scally, 99 AD2d 713; City Univ. of N. Y v Finalco, Inc., 93 AD2d 792; Krupp v Aetna Life & Cas. Co., 103 AD2d 252; Cole v Lawas, 116 AD2d 936; Herman v Powers, 103 AD2d 992; Capelin Assocs. v Globe Mfg. Corp., 34 NY2d 338; Patrolmen’s Benevolent Assn. v City of New York, 27 NY2d 410.)

      Max Folkenflik, Douglas Capuder and Margaret McGerity for respondent.
    I. Iselin has no standing to sue these accountants for simple negligence. (Credit Alliance Corp. v Andersen & Co., 65 NY2d 536; Ultramares Corp. v Touche, 255 NY 170; Glanzer v Shepard, 233 NY 236; Koch Indus. v Vosko, 494 F2d 713; Toro Co. v Krouse, Kern & Co., 827 F2d 155; Equitable Life Assur. Socy. v Grant & Co., 627 F Supp 1023.) II. Iselin’s unrebutted admissions conclusively demonstrate that there was no "justifiable reliance” by Iselin on the accountants’ Review Report. (Matthews v Schusheim, 42 AD2d 217, 35 NY2d 686, 46 AD2d 794, 36 NY2d 867; Sternberg v Citicorp Credit Servs., 69 AD2d 352, 50 NY2d 856; Singer Co. v Stott & Davis Motor Express, 79 AD2d 227; Leventhal v Martin, 25 AD2d 508; Capelin Assocs. v Globe Mfg. Corp., 34 NY2d 338; Erlich v American Moninger Greenhouse Mfg. Corp., 26 NY2d 255; Koppers Co. v Empire Bituminous Prods., 35 AD2d 906, 30 NY2d 609; Patrowich v Chemical Bank, 98 AD2d 318, 63 NY2d 541; Salanger v U.S. Air, 611 F Supp 427; Citera v Chemical Bank, 105 AD2d 636.)

      Dan L. Goldwasser and John C. Grosz for New York State Society of Certified Public Accountants, amicus curiae.

    I. Mann Judd’s "Review” Report was not suited, nor intended, for use by a factor such as Iselin. (Credit Alliance Corp. v Andersen & Co., 65 NY2d 536; Ultramares Corp. v Touche, 255 NY 170; Glanzer v Shepard, 233 NY 236; White v Guarente, 43 NY2d 356; 1136 Tenants’ Corp. v Rothenberg & Co., 36 AD2d 804, 30 NY2d 585; European Am. Bank & Trust Co. v Strauhs & Kaye, 65 NY2d 536.) II. Mann Judd’s contacts with Iselin were untimely and, in any event, did not evince any knowledge of Iselin’s alleged reliance on the Review Reports. (Credit Alliance Corp. v Andersen & Co., 65 NY2d 536; Equitable Life Assur. Socy. v Grant & Co., 627 F Supp 1023; First Fed. Sav. & Loan Assn. v Oppenheim, Appel, Dixon & Co., 629 F Supp 427.)

      Louis A. Craco, Deborah E. Cooper and John J. Halloran, Jr., for American Institute of Certified Public Accountants, amicus curiae.

    This court should affirm the decision below precluding an accountant’s liability in negligence to a noncontractual party who allegedly relies on Review Reports as an opinion on financial condition. (Credit Alliance Corp. v Andersen & Co., 65 NY2d 536; Ultramares Corp. v Touche, 255 NY 170; European Am. Bank & Trust Co. v Strauhs & Kaye, 65 NY2d 536; Westpac Banking Corp. v Deschamps, 66 NY2d 16; Hasbro Bradley, Inc. v Coopers & Lybrand, 121 AD2d 870; C. I. T. Fin. Corp. v Glover, 224 F2d 44; Stephens Indus. v Haskins & Sells, 438 F2d 357; Southern Dev. Co. v Silva, 125 US 247; Gordon v Butler, 105 US 553.)
   OPINION OF THE COURT

Dillon, J.

An accountant is not immune from liability to a lender for negligence in reviewing a borrower’s financial statements and rendering an uncertified report (Review Report), but where, as here, the lender failed to offer evidence of a relationship sufficiently approaching privity between the lender and the accountant, summary judgment was properly granted to the accountant (see, Credit Alliance Corp. v Andersen & Co., 65 NY2d 536).

Plaintiff, William Iselin & Co., Inc. (Iselin), is a corporation engaged in factoring and commercial finance. In 1976 Iselin began acting as a factor for Suits Galore, Inc. (Suits), a manufacturer of women’s suits and sportswear. In the course of the business relationship, Iselin made secured loans to Suits and purchased its accounts receivable. Additionally, between 1976 and 1981, Iselin extended up to $1 million annually to Suits in unsecured "overadvances”, which consistently were repaid in the same year in which they were made.

Defendant Mann Judd Landau (Mann) is a national accounting firm which was initially engaged by Suits in 1979 to review and report on Suits’ financial statements on an annual basis. At some point following completion by Mann of its Review Report for Suits’ fiscal year ending May 31, 1982, Iselin came into possession of a copy of the Report. Thereafter, Iselin increased Suits’ overadvance line to $2 million. By June 1983, however, the level of unsecured overadvances had actually reached $3.4 million. On July 28, 1983, Mann issued its Review Report for Suits’ fiscal year ending May 31, 1983. Following Iselin’s receipt of the Report in mid-September 1983, Iselin informed Suits that the overadvance level must be substantially reduced. In December 1983, Suits was unable to meet its financial obligations and filed for protection under the bankruptcy laws. Much of its outstanding debt to Iselin remained unpaid.

Iselin commenced this action against Mann, claiming negligence, gross negligence and fraud in the preparation of the Review Reports. The complaint alleges that Mann knew that Iselin was acting as a factor for Suits; knew that the Reports were to be used by Suits to induce Iselin to extend credit and make loans to Suits; knew that Iselin intended to rely upon the Reports in its financial transactions with Suits; and that as a consequence of its reliance upon the Report’s financial statements, which allegedly overstated inventory, understated liabilities and failed to disclose the diversion of corporate assets, Iselin was damaged in the amount of $2,565,000.

After extensive discovery, Mann moved for summary judgment. Supreme Court granted Mann’s motion to the extent of dismissing the causes of action for gross negligence and fraud, but denied the motion on the negligence cause of action. The court found that there were questions of fact whether Mann was aware that its Reports were to be used by Suits to obtain credit and loans from Iselin, and whether Mann was aware that Iselin would rely upon the Reports in its financial dealings with Suits. On appeal from only that part of the order denying summary judgment on the negligence cause of action, the Appellate Division reversed, one Justice dissenting, and granted the motion, holding that Iselin failed to satisfy the test established in Credit Alliance Corp. v Andersen & Co. (65 NY2d 536, 551, supra) for holding an accountant liable to a noncontractual party for negligent preparation of financial reports. We granted leave to appeal to plaintiff and, for reasons that follow, we affirm.

Preliminarily, we note that a Review Report is not to be equated with the traditional certified audit. The latter requires the auditor’s certification that the audit was performed under generally accepted accounting standards (GAAS) to ensure that the financial statements and the underlying information contained in those statements are reliable, and that the statements were prepared according to generally accepted accounting principles (GAAP). Reviewing and reporting a client’s financial statements is a relatively new accounting procedure established in 1978 by the American Institute of Certified Public Accountants. The accountant’s review is not performed under GAAS; no physical inventory is taken; the review consists principally of inquiries of the client’s management and analysis of financial information supplied by the client. The report offers only the limited assurance that the accountant is not aware of any material modifications that should be made to the client’s financial statements in order for them to conform with GAAP (see, American Institute of Certified Public Accountants Statement on Standards for Accounting and Review Services No. 1, § 100 et seq. [1978]).

While the essential character of a Review Report thus differs from that of the traditional audit, the accountant nevertheless has a duty to exercise due care in performance of its engagement. That duty runs primarily, of course, to the party contracting for the accountant’s services. In the absence of a contractual relationship between the accountant and the party claiming injury, the potential for accountant liability is carefully circumscribed. In Credit Alliance Corp. v Andersen & Co. (65 NY2d 536, supra), we said that accountants may be held liable to noncontractual parties who rely to their detriment on negligently prepared financial reports only when certain prerequisites are satisfied: "(1) the accountants must have been aware that the financial reports were to be used for a particular purpose or purposes; (2) in the furtherance of which a known party or parties was intended to rely; and (3) there must have been some conduct on the part of the accountants linking them to that party or parties, which evinces the accountants’ understanding of that party or parties’ reliance” (Credit Alliance Corp. v Andersen & Co., supra, at 551). In sum, the noncontractual party must demonstrate a relationship with the accountants "sufficiently approaching privity” (see, Westpac Banking Corp. v Deschamps, 66 NY2d 16, 19).

In moving for summary judgment, Mann was required to establish its defense " 'sufficiently to warrant the court as a matter of law in directing judgment’ ” in its favor (CPLR 3212 [b]; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1067). Mann met that burden by demonstrating the absence of either a contract or a relationship approaching privity with Iselin. To defeat the motion, Iselin was required to produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact (Zuckerman v City of New York, 49 NY2d 557) on each of the elements of the Credit Alliance test. Notably, "mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient” for that purpose (Zuckerman v City of New York, supra, at 562).

In applying those well-established principles, we conclude that the Appellate Division properly granted summary judgment to defendant Mann. Iselin was obligated to submit evidence of Mann’s awareness that Suits, intending that Iselin would rely on the Reports, would use them for the purpose of procuring credit from Iselin. Beyond that, Iselin was required to show a nexus with Mann from which Mann’s understanding of Iselin’s reliance could be drawn.

In a failed effort to meet those prerequisites, Iselin offers the 1979 engagement letter from Mann to Suits; evidence of Mann’s knowledge that Iselin was acting as a factor for Suits; a number of communications beginning in June 1983 between Mann and Iselin, the substance of which is not disclosed; the conclusory statement of Iselin’s president that throughout the period of those communications, Mann was aware that Iselin was predicating its credit decisions upon the Review Reports; and a hearsay assertion by a Mann partner to the effect that on one occasion in the period 1979-1983, Mann sent a Review Report to Iselin at Suits’ request.

That part of the engagement letter from Mann to Suits which is relied upon by Iselin recites: "During the period of our engagement we will undoubtedly receive credit inquiries and requests for current financial information from banks, Factors, converters, or any other source from whom you would expect to receive credit. It is understood that we have your permission to use our judgment in disclosing whatever information we believe necessary under the circumstances.” While that language may be evidence of an incidental or collateral purpose of the contractual relationship between Mann and Suits (see, Ultramares Corp. v Touche, 255 NY 170), it is no evidence of the purpose to be served by the Review Reports. Indeed, Iselin makes no showing that Mann was employed by Suits for the purpose of inducing Iselin to extend credit, and no proof is submitted showing an intention that Iselin should rely on the Reports in doing so. Nor is it shown that the Review Reports were prepared for Iselin’s use or according to Iselin’s requirements (see, Credit Alliance Corp. v Andersen & Co., 65 NY2d 536, 553, supra).

No evidence in admissible form is offered showing a link between the parties from which Mann’s awareness of Iselin’s reliance may be drawn. The conclusory assertion by Iselin’s president that Mann knew of Iselin’s reliance is clearly insufficient to defeat summary judgment on that critical issue; and even if it were properly shown that a Review Report was sent by Mann to Iselin at Suits’ request, the single act of sending the Report at an undetermined time for an unknown purpose would not satisfy the burden of coming forth with evidence evincing Mann’s understanding of Iselin’s reliance (compare, European Am. Bank & Trust Co. v Strauhs & Kaye, 65 NY2d 536, 554).

Reviewing the whole of Iselin’s submission, we find nothing in relation to the contacts between Mann and Iselin which would establish a nexus between them sufficiently approaching privity (Credit Alliance Corp. v Andersen & Co., supra, at 553-554). Thus, no material issue of fact has been presented requiring a trial.

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.

      . Both Review Reports contained in the record make clear the difference. For example, the report of defendant Mann Judd Landau to Suite Galore, Inc. for fiscal year ending May 31, 1982, recites:
      "We have reviewed the accompanying consolidated balance sheets of Suite Galore, Inc. and subsidiary as of May 31, 1982 and 1981, and the related consolidated statements of income and retained earnings and changes in financial position for the years then ended, in accordance with standards established by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Suite Galore, Inc. and subsidiary.
      "A review consists principally of inquiries of Company personnel and analytical procedures applied to financial data. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.
      "Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements in order for them to be in conformity with generally accepted accounting principles.”

      . Ultramares provides an example of incidental or collateral purpose. There, the accountants’ work product was to be exhibited generally to "banks, creditors, stockholders, purchasers or sellers, according to the needs of the occasion” (255 NY 170, 173-174).


author: Bellacosa, J.

text:
    In the Matter of Robert H. Wedinger et al., Appellants, v Helene G. Goldberger et al., Respondents. In the Matter of Dora Homes, Inc., et al., Appellants, v Cyril M. Moore, Jr., et al., Respondents. Marine Equities Company, Petitioner, v Henry G. Williams, as Commissioner of the New York State Department of Environmental Conservation, et al., Respondents, and Palmieri Brothers, Inc., Appellant. Chesed Avrhom Hacohn Foundation, Petitioner, v Henry G. Williams, as Commissioner of the New York State Department of Environmental Conservation, et al., Respondents, and F.D.M.B., Inc., Appellant.
    Argued February 3,1988;
    decided March 22, 1988

      POINTS OF COUNSEL

      Laurel A. Wedinger and John S. Zachary for appellants in the first above-entitled proceeding.
    I. Constitutional safeguards of due process require a predeprivation hearing when the DEC seeks to amend filed maps. (Mullane v Central Hanover Trust Co., 339 US 306; Boddie v Connecticut, 401 US 371; Greene v McElroy, 360 US 474; Southern Ry. Co. v Virginia, 290 US 190; Ohio Bell Tel. Co. v Commission, 301 US 292; Morgan v United States, 304 US 1; Carter v Kubler, 320 US 243; Reilly v Pinkus, 338 US 269; Goldberg v Kelly, 397 US 254; Fuentes v Shevin, 407 US 67.) II. It was the intent of the Legislature to afford landowners an opportunity to be heard prior to amendment of filed DEC maps. (The Japanese Immigrant Case, 189 US 86; Dismuke v United States, 297 US 167; Ex parte Endo, 323 US 283; American Power Co. v Securities & Exch. Commn., 329 US 90; Hannegan v Esquire, Inc., 327 US 146; Wong Yang Sung v McGrath, 339 US 33; Anniston Mfg. Co. v Davis, 301 US 337; United States v Rumely, 345 US 41; Greene v McElroy, 360 US 474; Boddie v Connecticut, 401 US 371.) III. The ECL laws are zoning regulations and should be strictly construed in favor of property owners. (Matter of 440 E. 102nd St. Corp. v Murdock, 185 NY 298; Matter of Tri Cities Indus. Park v Commissioner of Dept. of Envtl. Conservation, 76 AD2d 232.) IV. The DEC is estopped from exercising jurisdiction over landowners’ property. (Bender v New York City Health & Hosps. Corp., 38 NY2d 662; Matter of Field Delivery Serv. [Roberts], 66 NY2d 516; Jensen v City of New York, 42 NY2d 1079; Armstrong v United States, 364 US 40.)

      Robert Abrams, Attorney-General (Ezra I. Bialik and O. Peter Sherwood of counsel), for respondents in the first above-entitled proceeding.
    I. The court below correctly rejected petitioners’ due process claim. (United States v Riverside Bayview Homes, 474 US 121; Church of St. Paul & St. Andrew v Barwick, 67 NY2d 510; Spears v Berle, 48 NY2d 254; Mathews v Eldridge, 424 US 319; Goldberg v Kelly, 397 US 254; Matter of Jones v Berman, 37 NY2d 42; Campo v New York City Employees’ Retirement Sys., 653 F Supp 895; Oberlander v Perales, 740 F2d 116; Bradford Audio Corp. v Pious, 392 F2d 67.) II. The court below correctly ruled that the Act did not entitle petitioners to prior notice and a prior hearing. (Matter of Bernstein v Toia, 43 NY2d 437.) III. The "Freshwater Wetlands Act” should be liberally construed to protect wetlands. (Matter of Rappl & Hoenig Co. v New York State Dept. of Envtl. Conservation, 61 AD2d 20, 47 NY2d 925; Matter of Tri Cities Indus. Park v Commissioner of Dept. of Envtl. Conservation, 76 AD2d 232; Matter of Thompson v Department of Envtl. Conservation, 130 Misc 2d 123; United States v Riverside Bayview Homes, 474 US 121; United States v Akers, 785 F2d 814; Brown v Village of Owego, 260 App Div 328, 284 NY 655; Matter of Stefco Realty Corp. v Commerdinger, 29 Misc 2d 587; Matter of Bruchhausen v Murdock, 170 Misc 187, 258 App Div 797; Matter of Gencarelli v Balint, 11 Misc 2d 707.) IV. DEC is not estopped from exercising jurisdiction over petitioners’ land. (Matter of Tri Cities Indus. Park v Commissioner of Dept. of Envtl. Conservation, 76 AD2d 232; Jack Coletta, Inc. v New York State Dept. of Envtl. Conservation, 128 AD2d 755, 70 NY2d 602; Matter of Hamptons Hosp. & Med. Center v Moore, 52 NY2d 88; Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30; Matter of City of New York v City Civ. Serv. Commn., 60 NY2d 436; Public Improvements v Board of Educ., 56 NY2d 850; Matter of Milano v New York State Dept. of Health, 108 AD2d 916; People v System Props., 281 App Div 433, 2 NY2d 330; United States v Ruby Co., 588 F2d 697.)

      John Z. Marangos for appellants in the second above-entitled proceeding.
    I. The DEC is equitably estopped from declaring Dora’s property as being wetlands. (Matter of Lefrak Forest Hills Corp. v Galvin, 40 AD2d 211, 32 NY2d 796, cert denied sub nom. Baum v Lefrak Forest Hills Corp., 414 US 1004; Matter of D’Amico v Felten, 122 AD2d 528; Matter of Field Delivery Serv. [Roberts], 66 NY2d 516; Scruggs-Leftwich v Rivercross Tenants’ Corp., 119 AD2d 88.) II. The action of the DEC violated due process. (Mullane v Central Hanover Trust Co., 330 US 306; Sniadach v Family Fin. Corp., 395 US 337; Matter of Maxwell v Commissioner of Motor Vehicles, 109 Misc 2d 62; Vitek v Jones, 445 US 480; Greene v McElroy, 360 US 474; Southern Ry. Co. v Virginia, 290 US 190; Ohio Bell Tel. Co. v Commission, 301 US 232; Morgan v United States,
      304 US 1; Carter v Kubler, 320 US 243; Reilly v Pinkus, 338 US 269.) III. The Department of Environmental Conservation failed to show appellant Dora’s lands were part of a 12.4-acre area designated wetland pursuant to ECL 24-0301 (1) and its actions were contra to law and jurisdictionally lacking. (Matter of Galuppi v New York State Liq. Auth., 12 AD2d 987; Matter of Mas v Lavine, 76 Misc 2d 344, 43 AD2d 831; People v Bondi, 104 Misc 2d 627; Dougherty v Milliken, 163 NY 527; Koch v Consolidated Edison Co., 62 NY2d 548; B. R. DeWitt, Inc. v Hall, 19 NY2d 141; Schwartz v Public Adm’r, 24 NY2d 65; Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 62 NY2d 539; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Tilles v Williams, 119 AD2d 233.) IV. Respondent DEC must not be permitted to take alternative positions to successive action. (Matter of Waterside Assocs. v New York State Dept. of Envtl. Conservation, 130 Misc 2d 951; Environmental Concern v Larchmont Constr. Corp., 101 AD2d 591; Davis v Wakelee, 156 US 680; Kasmarski v Terranova, 115 AD2d 640; Commissioner of Labor v Hinman, 103 AD2d 886.)

      Robert Abrams, Attorney-General (Helene G. Goldberger, O. Peter Sherwood, Ezra I. Bialik and Harvey M. Berman of counsel), for respondents in the second above-entitled proceeding.
    I. Petitioners did not have a due process right to notice and a hearing prior to the designation of their property on the tentative map. (United States v Riverside Bayview Homes, 474 US 121; Church of St. Paul & St. Andrew v Barwick, 67 NY2d 510; Spears v Berle, 48 NY2d 254; French Investing Co. v City of New York, 39 NY2d 587, 429 US 990; Matter of Seidner v Town of Islip, 56 NY2d 1007; Goldhirsch v Flacke, 114 AD2d 998; Harbour Point v Flacke, 104 AD2d 927, 64 NY2d 610; Mathews v Eldridge, 424 US 319; Parratt v Taylor, 451 US 527; Goldberg v Kelly, 397 US 254.) II. The Act did not entitle petitioners to prior notice and a prior hearing. (Matter of Bernstein v Toia, 43 NY2d 437.) III. Petitioners have no vested rights in the status of the land use of their property. (Matter of Alaimo v Town of Greece, 68 AD2d 743; Matter of Lefrak Forest Hills Corp. v Galvin, 40 AD2d 211, 32 NY2d 796, cert denied sub nom. Baum v Lefrak Forest Hills Corp., 414 US 1004.) IV. DEC is not estopped from exercising jurisdiction over petitioners’ land. (Matter of Tri Cities Indus. Park v Commissioner of Dept. of Envtl. Conservation, 76 AD2d 232; Eden v Board of Trustees, 49 AD2d 277; Scruggs-Leftwich v Rivercross Tenants’ Corp., 70 NY2d 849; Matter of Hamptons

      Hosp. & Med. Center v Moore, 52 NY2d 88; Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30; Matter of City of New York v City Civ. Serv. Commn., 60 NY2d 436; United States v Ruby Co., 558 F2d 697, 442 US 917; Utah Power & Light Co. v United States, 243 US 389.)

      John J. Purvey and Abe Reiss for appellants in the third and fourth above-entitled proceedings.
    I. The Commissioner lacks jurisdiction to regulate appellants’ land under the "Freshwater Wetlands Act”. (Noce v Kaufman, 2 NY2d 347; Matter of Field Delivery Serv. [Roberts], 66 NY2d 516; Matter of Johnson Co. v State Tax Commn., 65 NY2d 726; Matter of New York Tel. Co. v Public Serv. Commn., 62 NY2d 57; Matter of Dresher [Lubin], 286 App Div 591; Matter of Fitzgerald v State Div. of Dept. of Pub. Serv., 262 App Div 393; Atchison, Topeka & Sante Fe Ry. Co. v Wichita Bd. of Trade, 412 US 800; Greater Boston Tel. Corp. v Federal Communications Commn., 444 F2d 841, 403 US 923; Cobb v Gramatan Natl. Bank & Trust Co., 261 App Div 1086; Logan v Guggenheim, 230 NY 19.) II. In any event, good causes of action are stated by appellants’ allegations that their building programs may continue because they were initiated before the Commissioner announced his intention to add their land to the freshwater wetlands map, because DEC has violated due process, and because DEC is estopped from regulating their land under the Act. (Matter of Lefrak Forest Hills Corp. v Galvin, 40 AD2d 211, 32 NY2d 796, cert denied sub nom. Baum v Lefrak Forest Hills Corp., 414 US 1004; Matter of D’Amico v Felten, 122 AD2d 528; Matter of Field Delivery Serv. [Roberts], 66 NY2d 516; Scruggs-Leftwich v Rivercross Tenants’ Corp., 119 AD2d 88; First English Evangelical Lutheran Church v County of Los Angeles, 482 US —, 107 S Ct 2378.)

      Robert Abrams, Attorney-General (William J. Caplow, O. Peter Sherwood, Harvey M. Berman and Ezra I. Bialik of counsel), for respondents in the third and fourth above-entitled proceedings.
    I. The designation of appellants’ property as wetlands subject to regulation did not violate their due process rights. (Spears v Berle, 48 NY2d 254; United States v Riverside Bayview Homes, 474 US 121; Church of St. Paul & St. Andrew v Barwick, 67 NY2d 510; Free Synagogue of Flushing v Board of Estimate, 35 AD2d 599, 28 NY2d 481; Mount Vernon Hous. Auth. v Goldman, 67 AD2d 392; Matter of Nicholas v Kahn, 47 NY2d 24.) II. The Act did not entitle appellants to prior notice and a prior hearing. (Matter of

      Bernstein v Toia, 43 NY2d 437; Matter of Knight-Ridder Broadcasting v Greenberg, 70 NY2d 151.) III. This court should decline appellants’ invitation to make factual findings concerning the wetlands status of their property. (Matter of Samuel v Ortiz, 105 AD2d 624; Matter of La Rocque v Farnan, 51 AD2d 1057; Matter of Sibarco Stas. v Risman, 34 AD2d 890; Matter of Rubin v Board of Educ., 71 AD2d 606; Matter of Flacke v Freshwater Wetlands Appeals Bd., 53 NY2d 537; Goldhirsch v Flacke, 114 AD2d 998; Harbour Point v Flacke, 104 AD2d 927, 64 NY2d 610.) IV. DEC is not estopped from exercising jurisdiction over appellants’ land. (Matter of Tri Cities Indus. Park v Commissioner of Dept. of Envtl. Conservation, 76 AD2d 232; Matter of Hamptons Hosp. & Med. Center v Moore, 52 NY2d 88; Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30; Scruggs-Leftwich v Rivercross Tenants’ Corp., 70 NY2d 849; Matter of City of New York v City Civ. Serv. Commn., 60 NY2d 436; Public Improvements v Board of Educ., 56 NY2d 850; Matter of Milano v New York State Dept. of Health, 108 AD2d 916; Matter of Thompson v Department of Envtl. Conservation, 130 Misc 2d 123.) V. Appellants have not acquired rights to develop their property under the grandfathering provisions of the ECL or its regulations.
   OPINION OF THE COURT

Bellacosa, J.

These cases pit the property interests of several individuals and corporations against the New York State Department of Environmental Conservation’s (DEC) efforts, under legislative mandate, to preserve freshwater wetlands on Staten Island. The battles have raged in the courts and in the legislative corridors for years and have culminated in these four proceedings with appeals in this court and in recent remedial legislation (L 1987, ch 408).

The common and decisive issue, among several raised by appellants, is whether DEC’s failure to designate their Bloeser’s Pond properties on a tentative map prepared in 1981 exempts the properties from DEC jurisdiction and regulation. Subsequent tentative and final mappings in 1986 and 1987 included the properties. We agree with the Appellate Division and affirm that court’s orders. DEC has continuing jurisdiction under the "Freshwater Wetlands Act” to identify and to map potential freshwater wetlands at least up to and including the promulgation of a final map.

The "Freshwater Wetlands Act” (ECL art 24) was enacted in 1975 "to preserve, protect and conserve freshwater wetlands and the benefits derived therefrom, to prevent the despoliation and destruction of freshwater wetlands, and to regulate use and development of such wetlands” (ECL 24-0103). To accomplish this desirable goal, the Act assigns the Commissioner of DEC the formidable task, "as soon as practicable”, to study and to map parcels of wetlands throughout the State having an area of at least 12.4 acres or areas measuring less than 12.4 acres deemed of "unusual local importance” (ECL 24-0301 [1]). DEC is responsible for regulating the use of designated wetlands, and ECL 24-0701 prohibits landowners from engaging in certain activities on the designated properties unless a permit is obtained from DEC.

As stages of its review progress and are completed in a particular area, the DEC is directed to prepare tentative maps, detailing the boundaries of the areas determined up to that point in time to be freshwater wetlands (ECL 24-0301 [2]). Pending completion of the mapping process, interim permits are available for parcels tentatively designated as wetland (ECL 24-0703 [5]; 6 NYCRR part 662). Any landowner who is unaware of a particular parcel’s status may make a written inquiry to DEC, and the agency is required to respond, in writing, within 30 days (ECL 24-0703 [5]).

Prior to promulgation of a final map, DEC is required to give the community and affected landowners specific notice and opportunity to be heard (ECL 24-0301 [4]). Once promulgated, a final map may even be amended by the Commissioner to correct any deficiencies and to effect any additions, deletions or technical changes on the map. Prior to amending a final map, however, the Commissioner must first provide to each owner of record further notice and opportunity to be heard (ECL 24-0301 [6]; see also, 6 NYCRR part 664).

In 1981, DEC prepared a tentative map for Richmond County designating approximately 700 acres as freshwater wetlands. Although the statute does not require DEC to do so, the tentative map was filed with the Richmond County Clerk’s office. Shortly afterwards, a public hearing was held (ECL 24-0301 [4]). Based upon public comment and upon continued investigation of the area, DEC determined that it had not designated, on that first map, several hundred additional acres which qualified under the statute. As a result, in 1986, DEC issued a second tentative map which almost doubled, to 1,300 acres, the designated freshwater wetland properties on Staten Island. In July 1986, another public hearing was held relating to the revised tentative map. In September 1987 a final map was promulgated.

The properties of appellants in these four cases were not designated on the 1981 tentative map, but they were on the 1986 tentative map and the 1987 final map. Indeed, the appellants in these four proceedings purchased interests in parcels of land located in the Bloeser’s Pond area of Richmond County only in 1984, when none of the subject parcels were as yet on any wetlands map.

In 1985, DEC began its study of the Bloeser’s Pond area as a possible freshwater wetland. Initially, DEC was considering designating the site as an area of "unusual local importance”, the alternative predicate under the statute. It was later discovered, however, that the site contained 14.6 acres of wetlands and could therefore qualify on aggregate acreage as a wetland, without invoking the "unusual local importance” standard.

While conducting its investigation for designation purposes, DEC discovered that the appellants were beginning to develop their newly purchased lands in an apparent effort to anticipate and avoid any subsequent wetlands designation. DEC formally notified the appellants by letter that their lands were tentatively identified as freshwater wetlands, and that if they wanted to continue development they had to apply first for a permit from DEC pursuant to ECL 24-0703 (5) (see also, 6 NYCRR part 662). The properties were still not on any wetlands map.

Rather than seeking the interim permits from DEC, appellants challenged, in article 78 proceedings, DEC’s attempt to regulate their properties. The appellants alleged that they had expended substantial money in preparing to build on their properties and that DEC had failed to give them any prior notice that their parcels constituted wetlands. They also claimed that DEC’s "interim designations” of the property as wetlands were arbitrary and capricious and constituted a deprivation of property without just compensation and without notice.

Supreme Court, Richmond County, granted the petitions solely on the ground asserted, sua sponte, by the trial court that DEC lacked "jurisdiction” over the subject properties. The Appellate Division unanimously reversed all four cases and dismissed the petitions. It correctly upheld the DEC’S jurisdiction and actions in every respect (see, Matter of Wedinger v Goldberger, 129 AD2d 712).

We turn first to jurisdiction. The trial court erred in concluding that DEC had no jurisdiction over the subject properties. It alluded to the definition in ECL 24-0107 (1) defining a freshwater wetland, in part, as "lands and water of the state as shown on the freshwater wetlands map”. Then it reasoned that since appellants’ properties did not appear on the 1981 tentative map, the properties fell outside the statutory definition of a wetland and outside of DEC regulation under the Act.

The definition may not be interpreted so slenderly, for we would then be ignoring other relevant and integrated portions of the statutory scheme and the plain purpose of the "Freshwater Wetlands Act”. For example, ECL 24-0703 (5) provides: "Prior to the promulgation of the final freshwater wetlands map in a particular area and the implementation of a freshwater wetlands protection law or ordinance, no person shall conduct or cause to be conducted, any activity for which a permit is required under section 24-0701 of this article on any freshwater wetland unless he has obtained a permit from the commissioner under this section. Any person may inquire of the department as to whether or not a given parcel of land will be designated a freshwater wetland subject to regulation. The department shall give a definite answer in writing within thirty days of such request as to whether such parcel will or will not be so designated” (emphasis added).

This provision would be rendered meaningless if DEC lacked jurisdiction to regulate wetlands during the entire evolving period up to and including final mapping. The effective date of the legislation (L 1975, ch 614, eff Sept. 1, 1975) and the promulgation of a final map is the critical span of jurisdictional life we must examine for purposes of deciding these cases. The mere fact that a particular property was not placed on a tentative map is not decisive and certainly does not deprive the DEC of legislatively delegated jurisdiction. The length of time it has taken DEC to fulfill its mandate, however unfortunate, does not determine or diminish the jurisdiction delegated to it by the Legislature.

Sound statutory construction, relevant authorities, and the expert interpretation of the agency itself support the conclusion we reach, along with the Appellate Division, that DEC has jurisdiction of the subject properties in these cases under the Act. We adopt the fine summary expressed by former Justice Sweeney: "The plain language of this subdivision [ECL 24-0703 (5)] proscribes activity on said lands prior to promulgation of a final wetland map unless a permit has been issued. This clear language, together with the express public policy and intent of the legislation as declared in ECL 24-0103, confers * * * jurisdiction in DEC for the entire period between the effective date of the act and promulgation of a final map. To hold otherwise would frustrate the clear intent and purpose of the legislation” (Matter of Tri Cities Indus. Park v Commissioner of Dept. of Envtl. Conservation, 76 AD2d 232, 235-236 [emphasis supplied], Iv denied 51 NY2d 706 [1980]; see also, Matter of Drexler v Town of New Castle, 62 NY2d 413 [1984]; see, Weinberg, Practice Commentary, McKinneys Cons Laws of NY, Book 171/2, ECL 24-0107, at 469-470, and 1988 Cum Ann Pocket Part, at 60).

Appellants, further, have contended that the mere tentative designation as a "wetland” amounts to a deprivation of property without just compensation and without prior notice, relying principally on French Investing Co. v City of New York (39 NY2d 587, appeal dismissed 429 US 990 [1976]). The reliance is misplaced and the argument fails. In French, the zoning ordinance converted private lands into public domain and a deprivation was effected by operation of the ordinance itself. In sharp contrast, under ECL article 24, tentative designation as a wetland does not prohibit development nor does it convert the ownership from private to public in any property sense; it merely requires that those holding property interests and wishing to engage in certain activities obtain an administrative permit. The Act itself does not constitute a deprivation because the landowner may continue development pursuant to a permit. Indeed, by resorting to the courts instead of exhausting available administrative remedies, appellants have acted prematurely and are not entitled to any relief on this "taking” issue (see, Matter of Parkview Assocs. v City of New York, 71 NY2d 274; Church of St. Paul & St. Andrew v Barwick, 67 NY2d 510).

In Spears v Berle (48 NY2d 254 [1979]), we held that in order to sustain a claim of a taking, a landowner has "a heavy burden of proof’ (id., at 263). A "taking” can be established only if a permit has been sought and denied and the owner has demonstrated "that under no permissible use would the parcel as a whole be capable of producing a reasonable return or be adaptable to other suitable private use” (id., at 263). In the instant cases, appellants, by not seeking a permit prior to commencing this action, have failed to take even the threshold step in this orderly two-step process.

Appellants insist, however, that their failure to seek a permit is not fatal to their taking argument. They direct us to First English Evangelical Lutheran Church v County of Los Angeles (482 US —, 107 S Ct 2378 [1987]) for the proposition that a temporary regulatory taking nevertheless requires compensation for the period of time prior to the final mapping. In First Evangelical, the Supreme Court stated: "We merely hold that where the government’s activities have already worked a taking of all use of property, no subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective” (482 US —, 107 S Ct 2378, 2389, supra). Significantly, the case does not change the requirement for a landowner first to establish that a taking has occurred. Here, the appellants have not and cannot make that indispensable showing without at least first seeking a permit under the Act, so First Evangelical is inapposite.

Relevantly, appellants were also afforded notice and opportunity to be heard at the time of the 1986 tentative mapping and again prior to final mapping. DEC’s notification to all affected landowners and to the community produced a July 1986 public hearing. The trial court’s view that each landowner was entitled to an individual hearing upon tentative designation of its wetlands finds no support in the statute or in the fair and practical implementation of this statutory scheme. It erroneously relied in this respect on 6 NYCRR 664.7 (a) (2) (i) which requires individual hearings only prior to amendment of a final map, a situation not present or pertinent here.

Appellants in two of the four present cases, Marine Equities and Chesed Avrhom, urge additionally that 6 NYCRR 664.7 (a) (2) (i) allows them to continue construction activity initiated on their properties prior to tentative designation as wetlands on a map. They are mistaken. The cited regulation applies only to landowners whose properties do not appear on a final map; here, the properties were not only on the final map, but also on the 1986 tentative map.

Appellants’ arguments that they relied on DEC’s 1981 tentative map when they acquired, in 1984, their property interests and that DEC should be equitably estopped from enforcing the 1986 mapping designation are refuted by undeviating precedents of this court (see most recently, Matter of Parkview Assocs. v City of New York, 71 NY2d 274, supra; Matter of E.F.S. Ventures Corp. v Foster, 71 NY2d 359; Scruggs-Leftwich v Rivercross Tenants’ Corp., 70 NY2d 849, 851-852).

We also note that these controversies include appellants’ assertions that the statute does not authorize a second tentative mapping. While no one anticipated or desired that the identification and mapping process would span a dozen years, and while the statute does not expressly authorize a second tentative mapping, nothing prohibits this step (see, concerns expressed in Memoranda [1] of Association of Towns to Governor Carey [July 24, 1975] and [2] of the Secretary of State to Counsel to Governor [July 25, 1975], both in Governor’s Bill Jacket to L 1975, ch 614). This statute, when interpreted reasonably, contemplates a mapping process, however long; it does not create an artificial, intermittently circumscribed jurisdictional anomaly.

Moreover, appellants and other landowners are not left without remedies. While we cannot pass on the 1987 amendatory legislation, we note that shortly after the Appellate Division rendered its decisions in these cases, additional administrative review and appeal procedures were created especially for Richmond County landowners who may have suffered "undue hardship” as a result of the second tentative mapping (L 1987, ch 408). That legislation reflects, at the very least, a 1987 statutory recognition of the second tentative mapping step under the 1975 authorization for a mapping process (see, ECL 24-1104, 24-1105 [2]; 24-1301 [4]).

DEC has acted lawfully and within its jurisdictional powers in these cases.

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

Chief Judge Wachtler and Judges Simons, Kaye, Alexander and Hancock, Jr., concur; Judge Titone taking no part.

In each case: Order affirmed, with costs.


author: Alexander, J.

text:
    Planned Consumer Marketing, Inc., Appellant, v Coats and Clark, Inc., Respondent. In the Matter of Coats and Clark, Inc., Respondent, v Dry Dock Savings Bank et al., Respondents, and Edwin Lee, Individually and as Alleged Trustee of the Planned Consumer Marketing, Inc., Profit Sharing Plan, Appellant.
    Argued February 8,1988;
    decided March 24, 1988

      POINTS OF COUNSEL

      Stanley Geller for Planned Consumer Marketing, Inc., appellant, and Edwin Lee, appellant pro se.

    I. The court below erred in holding that State law in the form of CPLR article 52, providing for the enforcement of judgments by restraint on and recovery of funds in the hands of the judgment debtor or a third party, is not preempted by the provision of ERISA and the regulations promulgated under that statute which expressly prohibit the alienation of the funds of a covered plan.
      (Shaw v Delta Air Lines, 463 US 85; Sasso v Vachris, 66 NY2d 28; American Tel. & Tel. Co. v Merry, 592 F2d 118; Allied Structural Steel Co. v Spannus, 438 US 234; Alessi v Raybestos-Manhattan, Inc., 451 US 504; Helmsley-Spear, Inc. v Winter, 74 AD2d 195; Jones v Rath Packing Co., 430 US 519; Fidelity Fed. Sav. & Loan Assn. v De la Cuesta, 458 US 141; United Metal Prods. Corp. v National Bank, 811 F2d 297; Ellis Natl. Bank v Irving Trust Co., 786 F2d 466.) II. The court below erred in holding that the gravamen of this case and the questions of fact and law that might arise at any trial are not such as may properly be determined only by a Federal court under the provisions of ERISA giving such court exclusive jurisdiction of such questions.

      Joseph J. Schiavone and Edwin David Robertson for Coats & Clark, Inc., respondent.
    The court below properly held that respondent’s claims are not preempted by ERISA. (Alessi v Raybestos-Manhattan, Inc., 451 US 504; Sasso v Vachris, 66 NY2d 28; Cornell Mfg. Co. v Mushlin, 70 AD2d 123; Deiches v Carpenters’ Health & Welfare Fund, 572 F Supp 766; Sharp v Kosmalski, 40 NY2d 119.)
   OPINION OF THE COURT

Alexander, J.

The Employee Retirement Income Security Act (ER-ISA) (29 USC § 1001 et seq.) mandates that all State laws, insofar as they relate to employee benefit plans, are superseded (29 USC § 1144 [a]) and that benefits provided by an employee benefit plan qualified under the act may not be assigned or alienated (29 USC § 1056 [d] [1]). The question presented is whether these provisions preclude a judgment creditor from proceeding in State court for a turnover of funds deposited into a qualified ERISA plan allegedly in violation of State laws prohibiting fraudulent conveyances (see, Debtor and Creditor Law §§ 273, 273-a, 274, 276; Business Corporation Law §§ 510, 719; EPTL 7-3.1). We conclude that ERISA does not preempt vindication of these State laws whose purpose is to inhibit the transfer of money in defraud of creditors, not to assess or regulate employee benefit plans.

I.

Planned Consumer Marketing, Inc. (PCM), was incorporated in 1972 by Edwin Lee and his brother as a joint venture. In 1973 and 1974 PCM entered into two contracts with Coats and Clark, Inc. (C&C), agreeing to promote that company’s products. When C&C refused to pay the full amount due under the contracts, PCM sued for breach; C&C, alleging inadequate performance, counterclaimed for recovery of money already received. At trial, C&C prevailed on its counterclaim and judgment was entered in 1981 in the amount of $72,838.75. PCM failed to satisfy the judgment, claiming to have had no employees and not to have conducted any business since 1977 or 1978. C&C subsequently discovered, however, that PCM— by Edwin Lee, its president — had deposited various sums of money into accounts at Dry Dock Savings Bank and Dollar Savings Bank (since merged) amounting to over $200,000 in the name of Planned Consumer Marketing Profit Sharing Plan (Plan). The Plan had been established in 1974, and qualified by the Internal Revenue Service as an employee benefit fund under the Employee Retirement Income Security Act of 1974 (29 USC § 1001 et seq.). The beneficiaries under the Plan were identified as Edwin Lee, Lee’s brother and Lee’s secretary; Edwin Lee and his brother were the trustees.

C&C commenced a special proceeding pursuant to CPLR article 52, seeking to have both banks turn over the funds out of which C&C might satisfy the judgment against PCM. The petition contains nine causes of action alleging, among other things, that PCM created and contributed to the Plan during the period PCM was purportedly inoperative in order to defraud C&C in violation of various provisions of the Debtor and Creditor Law (§§ 273, 273-a, 276), the Business Corporation Law (§§ 510, 719) and EPTL (7-3.1), and that Edwin Lee operated PCM and the Plan for his personal benefit. PCM and Lee moved to dismiss the proceeding on the ground that Supreme Court lacks subject matter jurisdiction over the Plan insofar as ERISA preempts State laws that relate to employee benefit plans, and, in any event, precludes the alienation of assets in a trust regulated by that act.

Supreme Court denied the motion, concluding that the gist of the petition was the violation of State fraud laws, not provisions of ERISA. The Appellate Division modified by dismissing the first two causes of action as relating solely to issues regulated by ERISA, striking the relief requested in the seventh and eighth causes of action as improperly seeking to reach ERISA funds, and finding ERISA did not preempt the third, fourth, fifth, sixth and ninth causes of action. The court held that these claims were not preempted by ERISA because "Congress never intended that ERISA be invoked to shield the use of an employee benefit plan as an instrumentality of fraud to defeat the rights of creditors” (127 AD2d, at 370). The appeal is before this court by leave of the Appellate Division, certifying the following question: "Was the order of this Court, which modified the order of the Supreme Court, properly made?” For the reasons that follow, we affirm the order of the Appellate Division and answer the question certified in the affirmative.

II.

A.

After careful study of the inequities and inconsistencies plaguing private retirement pension programs, Congress enacted ERISA in 1974 to protect "the interests of participants in employee benefit plans and their beneficiaries” (29 USC § 1001 [b]; Shaw v Delta Air Lines, 463 US 85, 90-91; Sasso v Vachris, 66 NY2d 28, 31). As described by the United States Supreme Court, ERISA is "a 'comprehensive and reticulated statute’ * * * adopted * * * to ensure that 'if a worker has been promised a defined pension benefit upon retirement — and if he has fulfilled whatever conditions are required to obtain a vested benefit * * * he actually receives it’ ” (Alessi v Raybestos-Manhattan, Inc., 451 US 504, 510, quoting Nachman Corp. v Pension Benefit Guar. Corp., 446 US 359, 361, 375). In furtherance of these purposes, ERISA prescribes requirements for reporting and disclosure of financial information, authorizes certain methods of funding and vesting of benefits, and establishes standards of conduct and responsibility for the fiduciaries of employee benefit plans (29 USC §§ 1021-1114).

To assure uniformity in the creation and administration of these plans, Congress eliminated the potential for conflicting or inconsistent State regulation by including a supersedure clause, stating that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” (29 USC § 1144 [a]; see generally, Hutchinson & Ifshin, Federal Preemption of State Law Under the Employee Retirement Income Security Act of 1974, 46 U Chi L Rev 23 [1978]). This preemption clause has been described as "virtually unique” in its breadth and scope (Franchise Tax Bd. v Laborers Vacation Trust, 463 US 1, 24, n 26). The language, "relate to”, is to be interpreted broadly (Shaw v Delta Air Lines, 463 US 85, 96-97, supra), and the statute itself defines the term "State” for purposes of preemption as "a State, any political subdivisions thereof, or any agency or instrumentality of either, which purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans” (29 USC § 1144 [c] [2] [emphasis added]). Hence, ERISA "preclude[s] the States from avoiding through form the substance of the preemption provision” (Alessi v Raybestos-Manhattan, Inc., 451 US 504, 525, supra).

Relying on these principles, and on our decision in Retail Shoe Health Commn. v Reminick (62 NY2d 173, cert denied sub nom. Reminick v Maltz, 471 US 1022), PCM and Edwin Lee, individually, challenge the finding of subject matter jurisdiction over the third, fourth, fifth, sixth and ninth causes of action, arguing that application of the State Debtor and Creditor Law, the Business Corporation Law, and EPTL to funds deposited into a trust regulated by ERISA is expressly preempted by that act.

In Retail Shoe, an ERISA plan brought an action in State court against its accountants for alleged negligence in failing to detect and report the misappropriation of fund assets. The accountants subsequently asserted third-party claims against the individual trustees for contribution or indemnity based on allegations that they contributed to the losses sustained by the plan due to breaches of their fiduciary duties as ERISA trustees (Retail Shoe Health Commn. v Reminick, 62 NY2d 173, 176, supra). We held that State courts were foreclosed from entertaining the claims against the trustees. The gravamen of the claims over, we said, was liability due to breaches of fiduciary duties established by ERISA. "It is substantive claims of just this character that fall squarely within the scope and thus the pre-emption of ERISA” (Retail Shoe Health Commn. v Reminick, 62 NY2d 173, 178, supra). Insofar as the act (29 USC § 1132) provides that the District Courts of the United States shall have exclusive jurisdiction over civil actions arising under ERISA (with certain exceptions not relevant), the claims against the individual trustees could not be entertained in State court.

The exercise of Federal supremacy, however, is not lightly presumed (Alessi v Raybestos-Manhattan, Inc., 451 US 504, 522, supra), and preemption of State laws " 'is not favored "in the absence of persuasive reasons — either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained” ’ ” (Alessi v Raybestos-Manhattan, Inc., 451 US 504, 522, supra, quoting Florida Lime & Avocado Growers v Paul, 373 US 132, 142). Although Congress expressly reserved for Federal jurisdiction regulation of employee benefit plans, no court has held that ERISA precludes any State court action even where an ERISA plan is only tangentially implicated. As the Supreme Court has recognized, some State actions "may affect employee benefit plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law 'relates to’ the plan” (Shaw v Delta Air Lines, 463 US 85, 100, n 21, supra). Only State laws that purport to regulate, directly or indirectly, the terms and conditions of employee benefit plans are preempted (Sasso v Vachris, 66 NY2d 28, 32). The causes of action stated here, unlike the indemnity actions in Retail Shoe, do not purport to relate, directly or indirectly, to the terms and conditions of employee benefit plans and are therefore not preempted by ERISA. We turn first to the three causes of action alleging violations of the Debtor and Creditor Law.

The Debtor and Creditor Law renders certain conveyances of assets void as to creditors: a conveyance made without fair consideration, rendering the transferor insolvent (Debtor and Creditor Law § 273); a conveyance made without fair consideration by a business person leaving him or her with unreasonably small capital (Debtor and Creditor Law § 274); a conveyance made by a defendant during the pendency of an action for money damages or after the docketing of such judgment is void as to the plaintiff in that action (Debtor and Creditor Law § 273-a); and a conveyance made with actual intent to defraud is fraudulent as to both present and future creditors (Debtor and Creditor Law § 276; see generally, 30 NY Jur 2d, Creditors’ Rights and Remedies, §§ 230-270). The third, fourth and fifth causes of action allege that PCM created and contributed to the Plan, with the intent to avoid creditors, at a time when PCM was a counterclaim defendant against C&C, and when PCM was insolvent and inoperative, leaving it with an unreasonably small capital — all in violation of these provisions.

The gravamen of these causes of action have no relation to the provisions established by ERISA; rather their thrust is that the Plan was used as a vehicle for Lee to shield the assets of PCM from PCM’s creditors. The statutory provisions invoked by C&C seek to inhibit fraudulent conveyances and to protect creditors from debtors’ efforts to elude payment. They do not purport to relate, directly or indirectly, to employee benefit plans in general, nor do they have the effect of impermissibly regulating such plans; they neither prohibit, nor permit any particular method of administering an ERISA plan or of calculating the benefits to be derived therefrom (see, Alessi v Raybestos-Manhattan, Inc., 451 US 504, 524, supra). Moreover, C&C does not seek to enforce rights under the Plan, nor could it as it is not one of the enumerated parties empowered to bring a civil action under ERISA (see, 29 USC § 1132 [a]). That the conveyances at issue here were directed to an ERISA fund is incidental. Congress could not have intended by the supersedure clause that ERISA foreclose the vindication of State laws that prohibit conveyances in defraud of creditors.

The sixth cause of action claims that Edwin Lee, as director and officer of PCM, violated the Business Corporation Law by wrongfully distributing corporate assets. Business Corporation Law § 720 enables a judgment creditor of a corporation to bring an action against a director or officer "[t]o set aside an unlawful conveyance, assignment or transfer of corporate assets, where the transferee knew of its unlawfulness”. Corporations are creatures of State law whose internal affairs are to be governed by State law unless Federal law expressly provides otherwise (Burks v Lasker, 441 US 471, 478; Santa Fe Indus. v Green, 430 US 462, 479, quoting Cort v Ash, 422 US 66, 84). Thus, in Sasso v Vachris (66 NY2d 28, supra), we held that Business Corporation Law § 630, which provides an enforcement mechanism for employees to recover unpaid wages, salaries and contributions to employee benefit funds directly from the 10 largest shareholders of a closely held corporation, is not preempted by ERISA. The purpose of Business Corporation Law § 630, we concluded, was remedial in nature, providing ah additional enforcement mechanism by which employees could recover delinquent contributions, and did not "relate to” the terms and conditions of employee benefit plans, but to the scope of shareholder immunity.

Similarly, the purpose of Business Corporation Law § 720 is to furnish a means of redressing the wrongful disposition of corporate assets by the corporation’s officers and directors (Cornell Mfg. Co. v Mushlin, 70 AD2d 123, 131). Such a cause of action does not purport to relate to the management of an ERISA trust, or to the trustee’s fiduciary obligations. The cause of action implicates the Plan tangentially — only insofar as it was the ERISA plan allegedly used as a device to effectuate a fraudulent scheme. The rights sought to be vindicated do not arise under ERISA. C&C does not challenge Lee in his capacity as trustee of an ERISA fund but as an officer of a corporation who has mismanaged that corporation’s funds in such a way as to avoid the corporation’s obligations to its creditors. We conclude that such a State cause of action under the Business Corporation Law, vindicating fraud and corporate mismanagement, is not preempted by ERISA (see, Cornell Mfg. Co. v Mushlin, 70 AD2d 123, 129-130, supra [State cause of action for corporate misconduct involving excessive contributions to ERISA fund under Business Corporation Law § 720 not preempted]; Goben v Barry, 237 Kan 822, 703 P2d 1378 [ERISA plan established in violation of State law of corporate fiduciary duty at a time when assets placed therein were subject to court action based upon breach of that duty may be garnished pursuant to judgment rendered in action]; Smith v Crowder Jr. Co., 280 Pa Super 626, 421 A2d 1107 [ERISA does not preempt State cause of action against officer or director for wrongfully contributing corporate assets to ERISA trust for personal benefit]; cf., Deiches v Carpenters’ Health & Welfare Fund, 572 F Supp 766 [ERISA does not preempt application of State insolvency and reorganization preference statute]).

With regard to the ninth cause of action — arising under EPTL 7-3.1 — we conclude, as above, that Lee’s interest in the ERISA account may be reached by C&C upon proof that Lee created the trust for his own benefit to defraud creditors. EPTL 7-3.1 (a) provides that a "disposition in trust for the use of the creator is void as against the existing or subsequent creditors of the creator.” If C&C establishes sufficient evidence of circumstances such as would warrant piercing the PCM corporate veil, C&C may reach Lee’s interest in the Plan because it would have been created by Lee himself for his own benefit and, by definition, would be subject to the "spendthrift trust” rule enunciated in EPTL 7-3.1.

Moreover, it is worth noting that, following the Appellate Division decision in this case, the Legislature amended EPTL 7-3.1 to provide for an exception from the "spendthrift trust” rule for certain retirement plans even though created for the benefit of the creator — i.e., by a self-employed individual, or toy a partner of the entity or a shareholder of the corporation sponsoring the retirement plan (L 1987, ch 108, § 2, eff June 8, 1987, added subd [b]). The purpose of the amendment is to afford to employee benefit plans created by nonincorporated entities the same protection granted in Helmsley-Spear, Inc. v Winter (74 AD2d 195, affd 52 NY2d 984, supra) to ERISA plans created by corporate employers (see, Governor’s Bill Jacket, L 1987, ch 108). The amendment, however, specifically provides that conveyances to such plans "shall not be exempt from application to the satisfaction of a money judgment if (i) made after the date that is ninety days before the interposition of the claim on which such judgment was entered, or (ii) deemed to be fraudulent conveyances under article 10 of the debtor and creditor law” (EPTL 7-3.1 [b] [2], as amended [emphasis added]). To hold that EPTL 7-3.1 (a) is preempted here by ERISA would create the anomalous result that judgment creditors could, under the amended provision, reach assets fraudulently conveyed to retirement plans that otherwise fit the definition of a "spendthrift trust”, but could not reach assets fraudulently conveyed into an ERISA plan. Finally, we need not address the concern that the preemption provision in section 1144 of ERISA may bar rescission by a State court of an employer’s contributions to an employee benefit trust, no matter how fraudulent the conveyance, where the integrity of the plan’s funding would be jeopardized and innocent participants in the plan would be thereby injured (see, Smith v Crowder Jr. Co., 280 Pa Super 626, 421 A2d 1107, 1114, supra), insofar as here, C&C seeks to reach only Lee’s interest in the Plan, and those funds may not be shielded merely because they have been deposited in an ERISA trust.

B.

Alternatively, PCM and Lee argue that to the extent State laws dealing with fraudulent conveyances, corporate wrongdoing and the creation of spendthrift trusts authorize a judgment creditor to reach assets in an ERISA trust, their application here impermissibly conflicts with the antialienation clause of ERISA, and is therefore preempted. In support of this argument, they cite Helmsley-Spear, Inc. v Winter (74 AD2d 195, affd 52 NY2d 984, 986, supra) and Ellis Natl. Bank v Irving Trust Co. (786 F2d 466 [2d Cir]), both of which rejected a "fraud” exception to the antialienation provision of ERISA.

ERISA requires that each pension plan provide that benefits may not be assigned or alienated (29 USC § 1056 [d] [1]), and the Internal Revenue Service has promulgated regulations pursuant to ERISA to the effect that "benefits provided under the plan may not be * * * assigned * * * alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process” (Fed Treas Reg [26 CFR] § 1.401 [a]-13 [b] [1] [1980]). In Helmsley-Spear, the employer sought to attach the assets, including those in an ERISA fund, of an employee convicted of having stolen checks from his employer. The Appellate Division held, and we agreed, that under those circumstances, vested benefits from an ERISA trust are exempt from attachment by creditors (Helmsley-Spear, Inc. v Winter, 74 AD2d 195, 198, supra). Similarly, in Ellis (supra), the Second Circuit held that the antialienation provision of ERISA prohibits an employer from reclaiming certain funds contributed to an ERISA trust even though those funds represent moneys ultimately derived from fraudulent practices against the employer for which the employee was convicted. Both cases involved an employer’s attempt to reach assets of an employee in satisfaction of a judgment based on wrongdoing wholly unrelated to the creation and disposition of funds into an ERISA account. The fraud occurred separately from and independently of the employee’s ERISA interests, and there was no attempt to abuse the Federal shield of ERISA assets in order to violate State fraud laws.

Here, however, the very creation and enhancement, of the trust is alleged to have been in defraud of creditors. Although the legislative history of this provision is sparse (see, Ellis Natl. Bank v Irving Trust Co., 786 F2d 466, 470, supra, citing Northwest Airlines v Roemer, 603 F Supp 7, 9-10; and H Conf Rep No. 93-1280, 93d Cong, 2d Sess, reprinted in 1974 US Code Cong & Ad News 4639, 5061), suggested purposes of the antialienation clause include the protection of the spendthrift employee from " 'his own financial improvidence in dealing with third parties’ * * * and the prohibition of involuntary levies by third party creditors on vested plan benefits” (Ellis Natl. Bank v Irving Trust Co., 786 F2d 466, 470, supra, quoting American Tel. & Tel. Co. v Merry, 592 F2d 118, 124). The antialienation provision, however, has never been held to be absolute, and indeed several courts have recognized, for example, an exception for family support orders (see, e.g., American Tel. & Tel. Co. v Merry, 592 F2d 118, supra; the exception has since been codified see, 29 USC § 1056 [d] [3], added 1984, Pub L 98-397). These purposes neither expressly nor impliedly conflict with the prevention of debtor fraud — a field traditionally within the power of the States to police. We conclude, therefore, that the application of State laws voiding conveyances made in defraud of creditors does not impermissibly conflict with the identified purposes of the antialienation provision in ERISA.

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

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

Order affirmed, with costs, and certified question answered in the affirmative.

      . With continuing accrual of postjudgment interest, the amount has surpassed $100,000.

      . CPLR 5225 (b) provides in relevant part: "Upon a special proceeding commenced by the judgment creditor, against a person in possession or custody of money * * * in which the judgment debtor has an interest, or against a person who is a transferee of money * * * from the judgment debtor, where it is shown that the judgment debtor is entitled to the possession of such property or that the judgment creditor’s rights to the property are superior to those of the transferee, the court shall require such person to pay the money, or so much of it as is sufficient to satisfy the judgment”. Similarly, CPLR 5227 provides for the same proceeding for recovery of a debt owed the judgment debtor (see, Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C5227:3, at 287).

      . The first cause of action alleged that the Plan did not exist as a legal entity because there was no written indenture of trust. PCM produced the document, however, and that claim was dismissed as moot, or in the alternative as preempted by ERISA. The second cause of action alleged that the Plan was not a legal entity because Lee engaged in activities in contravention of the terms of the Plan, which claims, the Appellate Division held, are preempted by ERISA.

      . The seventh and eighth causes of action allege the unlawful transfer of corporate assets in violation of Debtor and Creditor Law and Business Corporation Law, but do not allege the fraudulent transfer of assets into the Plan itself. Thus, to the extent that the wrongs alleged in these claims do not implicate the validity of transfers to the ERISA plan, the Plan’s funds, the Appellate Division held, are beyond the reach of creditors under these claims (Helmsley-Spear, Inc. v Winter, 74 AD2d 195, affd 52 NY2d 984).

      . The Appellate Division interpreted the sixth cause of action as having stated a claim pursuant to Business Corporation Law §§ 510 and 719, which provide remedies for enforcement of a director’s liability exclusively to the corporation, not to the creditors of the corporation. The count was dismissed with leave to renew, however, under Business Corporation Law § 720, which authorizes an action, by a judgment creditor, to set aside unlawful conveyances. Insofar as PCM is aggrieved by the dismissal with leave to replead, we address the challenge to the subject matter jurisdiction of that cause of action as well.

      . The statute provides for exceptions to the preemption mandate for State laws which regulate insurance, banking and securities, and "any generally applicable criminal law of a State” (20 USC § 1144 [b]X

      . The Federal circuits appear to be split with respect to ERISA’s antialienation provision and the garnishment or attachment of an employee’s ERISA funds (compare, United Metal Prods. v National Bank, 811 F2d 297 [6th Cir 1987], appeal pending — US —, 97 L Ed 2d 760 [no implied exception to antialienation provision allowing employer to garnish employee’s ERISA pension when employee commits fraud against employer]; and Ellis Natl. Bank v Irving Trust Co., 786 F2d 466 [2d Cir 1986] [no criminal misconduct exception to ERISA’s antialienation provision], with Crawford v La Boucherie Bernard, 815 F2d 117 [DC Cir 1987], cert denied sub nom. Goldstein v Crawford, — US —, 98 L Ed 2d 355 [traditional trust remedies for wrongful depletion of assets not preempted by antialienation provision of ERISA]; and St. Paul Fire & Mar. Ins. v Cox, 752 F2d 550 [11th Cir 1985] [garnishment undertaken to satisfy liabilities arising from criminal misconduct toward employer constitutes exception to antialienation provision of ERISA]).

       Designated pursuant to NY Constitution, article VI, § 2.


author: Per Curiam.

text:
    In the Matter of James R. Lenney, a Justice of the Herkimer Village Court, Petitioner. State Commission on Judicial Conduct, Respondent.
    Argued March 18,1988;
    decided March 29, 1988

      POINTS OF COUNSEL

      G. Gerald Fiesinger, Jr., for petitioner.
    I. The Commission on Judicial Conduct lacked jurisdiction to impose any sanction upon petitioner because it denied petitioner due process and it violated its own rules. (Hutchins v Conciliation & Appeals Bd., 125 Misc 2d 809.) II. The sanction imposed upon petitioner was excessive under the circumstances. (Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Quinn v State Commn. on Judicial Conduct, 54 NY2d 386; Matter of Schilling, 51 NY2d 397; Matter of Sobel, 8 NY2d [a]; Matter of Steinberg, 51 NY2d 74; Matter of Rogers v State Commn. on Judicial Conduct, 51 NY2d 224; Matter of Cooley, 53 NY2d 64; Matter of Vincent, 70 NY2d 208; Matter of Pfingst, 33 NY2d [a]; Matter of Kane, 50 NY2d 360.) III. The Court of Appeals should allow petitioner to expand the record on appeal to include all the material submitted to the Commission by both sides on petitioner’s motion to reconsider. (Matter of Gelfand, 70 NY2d 211; Matter of Cooley, 53 NY2d 64; First Natl. Bank & Trust Co. v Classic Collateral Corp., 44 AD2d 868.)

      Jean M. Savanyu and Gerald Stern for respondent.
    I. Petitioner’s conduct violated established ethical standards and demonstrates his lack of fitness for judicial office. (Matter of Petrie v State Commn. on Judicial Conduct, 54 NY2d 807; Matter of Cooley, 53 NY2d 64; Matter of Vincent, 70 NY2d 208; Matter of Rater, 69 NY2d 208; Matter of Rogers v State Commn. on Judicial Conduct, 51 NY2d 224; Matter of Quinn v State Commn. on Judicial Conduct, 54 NY2d 386; Matter of Kuehnel v State Commn. on Judicial Conduct, 49 NY2d 465; Matter of Reedy, 64 NY2d 299.) II. Petitioner was not deprived of due process; the Commission’s determination of removal was proper and in full compliance with its rules and with the law of the State of New York. (Matter of Petrie v State Commn. on Judicial Conduct, 54 NY2d 807.) III. Petitioner’s motion to expand the record should be denied; petitioner had ample opportunity to present his evidence but chose not do do so.
   OPINION OF THE COURT

Per Curiam.

The State Commission on Judicial Conduct found that four charges of misconduct had been sustained against petitioner, an attorney and part-time Herkimer Village Justice since 1974, and determined that the sanction of removal was appropriate. First, the Commission found that, based upon 35 criminal cases and six civil cases, petitioner had "engaged in a persistent and pervasive pattern of neglect of his judicial and administrative duties. Because he permitted lawyers and litigants to continually adjourn cases, simple criminal, traffic and small claims matters took years to conclude.” The second sustained charge concerned one of the six civil cases — a $325 matter, which prompted the complaint to the Commission. Nearly three years had elapsed before trial (plaintiffs counsel made several requests for a trial date), then four months passed before petitioner rendered his decision, and for more than two years thereafter — even after he knew of the Commission’s investigation and complaint, and despite repeated inquiry from plaintiffs counsel — petitioner did not furnish a proper transcript of judgment. Third, the Commission found that from June 1984 until July 1986, petitioner failed to file reports and remit court funds to the State Comptroller within the first 10 days of the month succeeding collection; during a 26-month period, petitioner’s reports apparently were late an average of 25 days in every month. Finally, the Commission found that petitioner failed to cooperate in that he did not respond to letters requesting information in connection with its investigation.

The Commission, several years earlier, had dismissed a complaint against petitioner concerning delay of at least four months in rendering a decision, and further delay of at least nine months in notifying the parties, cautioning him at that time to adhere to the applicable Rules Governing Judicial Conduct, particularly that a Judge should promptly dispose of the court’s business and diligently discharge administrative responsibilities. The continuation of a $325 claim for more than six years despite the documented efforts of plaintiffs counsel to conclude it earlier and despite the Commission’s own complaint, together with petitioner’s failure to make timely reports and remittances to the State Comptroller in every month throughout a 26-month period — after a prior caution particularly reminding him of his obligations both to dispose of court business promptly and to discharge administrative responsibilities diligently — support the imposition of a strict sanction. Moreover, petitioner’s explanation for his asserted failure to respond to the Commission’s letters requesting information — that he actually did respond but used the wrong zip code — remains unsatisfactory in light of the Commission’s repeated advice to him that it had received no response, with no additional (or duplicate) submission forthcoming from petitioner. While we agree with petitioner that removal of a Judge from the office to which he has been elected is an extreme sanction not to be imposed lightly, here we conclude that removal was supported by the record and not excessive (see, Matter of Vincent, 70 NY2d 208; Matter of Rater, 69 NY2d 208; Matter of Sims, 61 NY2d 349, 357; Matter of Cooley, 53 NY2d 64).

We reach this conclusion, however, without addressing the Commission’s determination regarding petitioner’s handling of the 41 cases, or indeed without agreeing even that the Commission acted within its jurisdiction in its review of the day-to-day progress of those cases. The Commission’s contentions, for example, that "no judge need allow such cases to stay on the calendar for periods of two years or more”, and that "[i]f the district attorney’s office does not act within a reasonable period, the judge can indicate that the matters will be dismissed”, betray an intrusion into matters of internal court administration and substantive law that may well exceed the Commission’s ambit of responsibility. In view of the other sustained contentions which support petitioner’s removal, we need not now resolve the questions raised by this aspect of the Commission’s determination.

Accordingly, the determined sanction of the State Commission on Judicial Conduct should be accepted, without costs.

Chief Judge Wachtler and Judges Simons, Kaye, Titone, Hancock, Jr., and Bellacos a concur in Per Curiam opinion; Judge Alexander taking no part.

Determined sanction accepted, without costs, and James R. Lenney is removed from his office of Justice of the Herkimer Village Court.