author: Chief Judge Kaye.

text:
    [663 NE2d 628, 640 NYS2d 472]
    Michelle Teichman, an Infant, by Her Mother and Natural Guardian, Camille Teichman, et al., Respondents, v Community Hospital of Western Suffolk et al., Defendants, and Metropolitan Life Insurance Company, IntervenorAppellant.
    Argued January 4, 1996;
    decided February 15, 1996

      POINTS OF COUNSEL

      Edward Baer, New York City, Alan E. Lazarescu, Michelle D’Arcambal and Lawrence Wolff for intervenor-appellant.
    I. The holding of the court below that Metropolitan Life Insurance Company (MetLife) was required to intervene in the underlying malpractice action is contrary to established practice and precedent. (Aetna Cas. & Sur. Co. v Jackowe, 96 AD2d 37; Pang v Maimonides Med. Ctr.-Maimonides Hosp., 105 AD2d 775; Silinsky v State-Wide Ins. Co., 30 AD2d 1; Baker v Sterling, 39 NY2d 397; Matter of Griffin, 110 AD2d 1054; Dymond v Dunn, 148 AD2d 56; Kozlowski v Briggs Leasing Corp., 96 Misc 2d 337; Faust v Luke, 80 Misc 2d 953.) II. The court below applied an erroneous standard of review of the trial court’s decision to grant a motion to intervene. (Perl v Aspromonte Realty Corp., 143 AD2d 824; Matter of Ginsberg v Lomenzo, 23 NY2d 94; Matter of Nostar Apts. v Town of Clay, 112 AD2d 750; Auerbach v Bennett, 64 AD2d 98, 47 NY2d 619; Silinsky v State-Wide Ins. Co., 30 AD2d 1; Graziane v Continental Cas. Co., 75 AD2d 678.) III. The court below erred in holding that MetLife did not have an equitable lien against respondents’ $4.5 million settlement pursuant to the clear and unambiguous language of the collectively bargained State of New York Empire Plan. (Goldman & Sons v Hanover Ins. Co., 80 NY2d 986; Mall v Johnson, 97 Misc 2d 889; Matter of Griffin, 110 AD2d 1054; Rudzinskas v Coluni, 116 AD2d 843; Kozlowski v Briggs Leasing Corp., 96 Misc 2d 337; Matter of Friedlander, 178 Misc 65.) IV. The court below erred in holding that any alleged ambiguity in the Empire Plan should be construed against the insurer MetLife. (Scinta v Kazmierczak, 59 AD2d 313; Reger v National Assn. of Bedding Mfrs. Group Ins. Trust Fund, 83 Misc 2d 537; Loblaw, Inc. v Employers’ Liab. Assur. Corp., 85 AD2d 880; Standard Mar. Ins. Co. v Federal Ins. Co., 39 AD2d 444; Government Empls. Ins. Co. v Kligler, 42 NY2d 863; Moshiko, Inc. v Seiger & Smith, 137 AD2d 170, 72 NY2d 945; Oliveri v First Rehabilitation Ins. Co., 76 AD2d 858.) V. The court below failed to apply the appropriate standard of review to the trial court’s factual determination. (Niles v State of New York, 201 AD2d 774; Schock v State of New York, 168 AD2d 491; Cordts v State of New York, 125 AD2d 746.) VI. The court below should have remanded the matter to the trial court for a hearing once it found that the trial court did not specifically delineate the amount attributable to medical expenses. (Aetna Cas. & Sur. Co. v Jackowe, 96 AD2d 37; Aetna Cas. & Sur. Co. v Siskind & Sons, 209 AD2d 215; Baker v Sterling, 39 NY2d 397; Pang v Maimonides Med. Ctr.-Maimonides Hosp., 105 AD2d 775.)

      Pegalis & Wachsman, P. C, Great Neck (Steven E. Pegalis of counsel), for respondents.
    I. The collateral source rule established by the New York State Legislature pursuant to CPLR 4545 (a) determined the public policy of the State of New York. II. Had MetLife timely intervened and had this case gone to trial they would not have been able to prove and collect past and future damages. (ABKCO Music v Harrisongs Music, 722 F2d 988.) III. The amicus intervention of the State of New York is misguided. IV. The court below properly precluded MetLife’s claims on procedural and factual grounds.

      Dennis C. Vacco, Attorney-General, Albany (Victoria A. Graffeo, Peter H. Schiff and Michael S. Buskus of counsel), for State of New York, amicus curiae.

    MetLife’s lien is valid and enforceable, provided that plaintiffs are reimbursed for equitable attorneys’ fees. (Teichman v Community Hosp., 205 AD2d 16; Miller v Liberty Mut. Fire Ins. Co., 48 Misc 2d 102, 29 AD2d 982; Montgomery v Daniels, 38 NY2d 41; Ocean Acc. & Guar. Corp. v Hooker Electrochemical Co., 240 NY 37; Pittsburgh Westmoreland Coal Co. v Kerr, 220 NY 137; Pease v Egan, 131 NY 262; Winkelmann v Excelsior Ins. Co., 85 NY2d 577; Casey v State of New York, 119 AD2d 363; Andrulonis v United States, 724 F Supp 1421, 924 F2d 1210, cert granted sub nom. New York State Dept. of Health v Andrulonis, 502 US 801; Matter of Kelly v State Ins. Fund, 60 NY2d 131.)
   OPINION OF THE COURT

Chief Judge Kaye.

This medical malpractice action on behalf of an infant severely injured during birth was settled before trial between plaintiffs and defendant hospital and doctors, with no mention in the infant’s compromise that it included any compensation for medical expenses. At issue is the claim of plaintiffs’ insurer to recoup, out of the settlement proceeds, medical expenses it paid and will yet pay on behalf of its insured. The trial court allowed intervention for that purpose, the Appellate Division reversed. We conclude that, while the insurer had no lien on the funds, intervention was proper to permit the insurer to establish its contractual right to reimbursement of any medical expenses actually included in the settlement.

The infant plaintiff, Michelle Teichman, has cerebral palsy as a result of perinatal complications. Her mother, plaintiff Camille Teichman, was provided health insurance coverage by her employer under the Empire Plan (the Plan), which is administered by appellant Metropolitan Life Insurance Company (MetLife). Starting in June 1986, pursuant to the Plan, MetLife paid covered medical expenses for Michelle, and as of January 1992 had allegedly paid $169,302.27.

In April 1987, Camille Teichman, individually and on behalf of her daughter, commenced this action against the Community Hospital of Western Suffolk and the doctors involved in the birth. MetLife learned of this action no later than February 1989, when it received subpoenas for medical records from defendants’ attorneys as well as a request for records from plaintiffs’ counsel. On March 1, MetLife wrote to Camille Teichman notifying her of a reimbursement provision in the Plan if she is "repaid” for medical expenses from another source.

Nearly three years later, in November 1991, the parties to the malpractice action entered into a stipulation settling the case for $4,500,000, inclusive of all interest, costs, liens and claims of insurance carriers (including MetLife) — in the words of plaintiffs’ counsel at that time, defendants "are buying their peace.” MetLife, however, was not a party to the action, nor was it a part of the settlement negotiations. Its only involvement in the lawsuit was release of the child’s medical records, as well as a letter to Camille Teichman indicating that it maintained a lien in the amount of $105,232.82 and requesting that she sign a "Third Party Reimbursement Agreement.” No response appears in the record.

Days after the stipulation, plaintiffs’ attorney wrote MetLife that the action was being settled, that MetLife had no lien, and that if it wished to assert any rights it should do so within 10 days. MetLife responded that it maintained a lien for medical expenses paid as well as a "subrogation right.” Plaintiffs’ attorney denied both, asserting that in the action his clients had sought no recovery for past medical expenses.

On December 16, 1991, after the stipulation was placed on the record but before the infant compromise order was signed, plaintiffs moved to "vacate” MetLife’s claims for reimbursement and for a declaration, based in part on CPLR 4545, that MetLife was without "any rights to settlement proceeds.” MetLife cross-moved for permission to intervene and a declaration that it was entitled to $169,302.27 already expended plus all future payments for medical expenses. The trial court found CPLR 4545 inapplicable to a settlement, granted intervention, and held that by virtue of a lien created under the Plan, MetLife was entitled to be fully reimbursed out of the settlement fund. While agreeing with the trial court that CPLR 4545 was inapplicable to a settlement, the Appellate Division reversed. The Court concluded that nothing in the Plan created a lien or contractual subrogation right in favor of MetLife, and that any contractual right to a refund from the insured was lost by MetLife’s failure to intervene earlier.

Before us appellant MetLife seeks full reimbursement of its payments and future payments, or a hearing to determine the amount of covered medical expenses actually included in the settlement, arguing that plaintiffs would otherwise enjoy a double recovery at ratepayers’ expense. By contrast, plaintiffs insist that the insurer has no lien or other right to the proceeds both because absolutely no medical expenses were included in the settlement and because it delayed too long in seeking intervention. We agree with the Appellate Division that MetLife has no lien on the settlement proceeds but conclude that intervention was proper to allow the insurer to establish its right to recoup covered medical payments, if any, made to plaintiffs by defendants as part of the settlement.

We begin analysis with the substantive lien issue, and next reach the procedural question of intervention.

As in the construction of contracts generally, including insurance contracts particularly, we give unambiguous terms their plain and ordinary meaning. Courts "may not make or vary the contract of insurance to accomplish [their] notions of abstract justice or moral obligation” (Breed v Insurance Co., 46 NY2d 351, 355, rearg denied 46 NY2d 940).

MetLife bases its lien claim on the following paragraph of the insurance policy:

"refund to metropolitan for overpayment of
BENEFITS
"If Metropolitan pays benefits under this Plan for Covered Medical Expenses incurred on your account, and it is found that Metropolitan paid more benefits than should have been paid because all or some of those expenses were not paid by You, or You were repaid for all or some of those expenses by another source, Metropolitan will have the right to a refund from You.”

The Plan defines "You” as "the Employee, and you, an eligible Dependent member of the Employee’s Family.” The policy thus speaks of a "right to a refund” and says, or suggests, nothing regarding a lien on property. Plainly, this paragraph does not expressly establish a lien, as MetLife readily concedes.

Nor does the paragraph give rise to an "equitable lien” on the settlement proceeds. As we have long recognized, an equitable lien "is dependent upon some agreement express or implied that there shall be a lien on specific property” (James v Alderton Dock Yards, 256 NY 298, 303, rearg denied 256 NY 681; Di Niscia v Olsey, 162 App Div 154). The agreement "must deal with some particular property either by identifying it or by so describing it that it can be identified and must indicate with sufficient clearness an intent that the property so described or rendered capable of identification is to be held, given or transferred as security for the obligation” (James, 256 NY at 303; see also, Scivoletti v Marsala, 61 NY2d 806, 809).

The unambiguous paragraph of the Plan falls far short of these requirements. The refund provision simply states that if the insured is "repaid” for all or some of its medical expenses, appellant "will have the right to a refund.” The Plan does not identify property subject to the right of refund; it does not describe the property in such a way as to make identification possible; and it does not state the parties’ intention that the property be "held, given or transferred as security for [an] obligation.” (James, 256 NY at 303; see also, Datlof v Turetsky, 111 AD2d 364, 365.)

By the same token, the Plan did not create a lien under a theory of equitable subrogation. MetLife was, as the Appellate Division noted, entitled to subrogation by operation of law once it made payment on behalf of its insured (205 AD2d at 21; see also, Federal Ins. Co. v Andersen & Co., 75 NY2d 366, 372; 16 Couch, Insurance § 61:4, at 239-240 [rev ed]). This right of subrogation, formulated to prevent unjust enrichment, is based upon "principles of equity and natural justice” (Ocean Acc. & Guar. Corp. v Hooker Electrochemical Co., 240 NY 37, 47).

As we observed recently, "subrogation is the principle by which an insurer, having paid losses of its insured, is placed in the position of its insured so that it may recover from the third party legally responsible for the loss” (Winkelmann v Excelsior Ins. Co., 85 NY2d 577, 581). But a right to seek recovery from the legally responsible party is not also necessarily a lien, which is a charge or encumbrance upon property. The creation of a lien requires agreement or statute (see, Baker v Sterling, 39 NY2d 397 [lien created by statute]; Matter of Griffin, 110 AD2d 1054 [lien created by contract]; Aetna Cas. & Sur. Co. v Jackowe, 96 AD2d 37 [lien created by statute]; see also, Hospital Serv. Corp. v Pennsylvania Ins. Co., 101 RI 708, 227 A2d 105 [contractual subrogation provision did not of itself create lien]). There is no such expression here.

Thus, we agree with the Appellate Division that MetLife had no lien on the settlement proceeds, whether under the Plan or by virtue of subrogation.

That an insurer does not have a lien entitling it to proceed directly against a particular fund, however, is not the end of the inquiry. Under subrogation principles, an insurer might, for example, seek to recoup covered medical expenses in an action against a tortfeasor; MetLife asserts no such claim here. Rather, MetLife’s remaining claim rests on its right of reimbursement under the insurance contract. Whether it can pursue this claim in the present action is the question to which we now turn.

The Appellate Division determined that although MetLife had a right of refund under its contract, it should not be permitted to intervene because it failed to demonstrate that the settlement actually included payment for past and future medical expenses, a showing MetLife might have made had it sought intervention earlier. That was not the proper test for intervention (see, CPLR 1013). The issue, rather, was as the trial court posited in allowing intervention: that MetLife’s claim for a refund could be adversely affected if intervention were not allowed, that there were common questions of law and fact, and that no prejudice was shown in allowing intervention. While MetLife might have separately pursued its contractual right to a refund, it was after all plaintiffs who made it a part of this action by moving to "vacate” any and all claims for reimbursement and by seeking a declaration that MetLife had no "rights to settlement proceeds.”

Finally, plaintiffs urge that intervention was properly denied by the Appellate Division because the settlement could not possibly have included medical expenses. They point to CPLR 4545 (a), the collateral source rule, which provides that in medical malpractice actions

"evidence shall be admissible for consideration by the court to establish that any such past or future cost or expense was or will, with reasonable certainty, be replaced or indemnified, in whole or in part, from any collateral source such as insurance * * *. If the court finds that any such cost or expense was or will, with reasonable certainty, be replaced or indemnified from any collateral source, it shall reduce the amount of the award by such finding.”

Plaintiffs argue that, had the trial proceeded, CPLR 4545 would have required that amounts paid and payable by MetLife be "set off” against the judgment and must therefore be presumed to have reduced the settlement.

Both the trial court and the Appellate Division rejected this argument, as do we. By its very terms, CPLR 4545 applies to admissibility of evidence at trial and to judgments. The statute is silent as to pretrial settlements. As the Appellate Division noted, nothing in the rules governing settlement of an infant’s claim indicates that such settlements must be reduced by collateral source payments (see, CPLR 1206, 1207, 1208). Parties to the settlement of an infant’s claim may certainly consider whether the infant has received collateral source payments, but CPLR 4545 does not compel the conclusion that medical expenses were necessarily excluded from the settlement.

To the contrary, here there exists the possibility that the settlement did actually include some payment for medical expenses. The complaint’s third cause of action, for example, alleges that "Camille Teichman * * * has been, and will continue to be forced to expend substantial sums of money in an effort to treat and rehabilitate the infant plaintiff.” Although plaintiffs’ attorney maintains that the complaint sought damages only for out-of-pocket expenses and loss of services, the settlement hearing includes the following exchange:

Plaintiff’s attorney: "There is a claimed lien for Metropolitan Life of over $100,000. * * * [T]here appears to be no legal basis for that”.
Defendant’s attorney: "[I]t is my understanding that this settlement is inclusive of all interest, costs, liens and disbursements”.
Plaintiff’s attorney: "Yes, that’s correct.”

The trial court itself noted that "the settlement amount herein is inextricably intertwined with components of pain and suffering and medical expenses.”

Thus, the trial court did not abuse its discretion in permitting intervention by MetLife. Allowing MetLife to seek a refund of any medical expense payments included in the settlement both prevents a potential double recovery by plaintiffs and assures that tortfeasors, not ratepayers, will ultimately bear the expense.

Accordingly, the order of the Appellate Division should be modified, without costs, and the case remitted to Supreme Court, Suffolk County, for further proceedings in accordance with this opinion and, as so modified, affirmed.

Judges Simons, Titone, Bellacosa, Smith, Levine and Ciparick concur.

Order modified, etc.

      . The Plan also contains an exclusion for "services or supplies for which You receive payment or are reimbursed as a result of legal action or settlement, other than from an insurance carrier under an individual policy.” MetLife has not asserted, nor could it, that this provision established the claimed lien.

      . Our conclusion that the provision is unambiguous makes it unnecessary to consider the application of the rule that insurance contracts are to be construed against the drafter (see, 205 AD2d 16, 21), and unnecessary to consider extrinsic evidence of the intent of the parties (see, e.g., W.W.W. Assocs. v Giancontieri, 77 NY2d 157).


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    [663 NE2d 633, 640 NYS2d 477]
    Parma Tile Mosaic & Marble Co., Inc., Respondent, v Estate of Fred Short, Doing Business as Sime Construction Co., Defendant, and MRLS Construction Corp., Appellant.
    Argued and submitted January 9, 1996;
    decided February 20, 1996

      POINTS OF COUNSEL

      Gelacio M. Cordero and Ridley M. Whitaker, New York City, for appellant.
    I. The causes of action alleged in the complaint against MRLS are barred by the applicable Statute of Frauds. (Steinberg v Universal Machinenfabrik, 24 AD2d 886, 18 NY2d 943.) II. Even assuming, arguendo, that the proposal was deemed to have been subscribed by MRLS the material terms of the purported guaranty are not set forth in the proposal with the requisite specificity to constitute an enforceable guaranty. III. Even assuming, arguendo, that the causes of action alleged against MRLS are not barred by the applicable Statute of Frauds, such causes of action are barred by loches of plaintiff. IV. Even assuming, arguendo, that the causes of action alleged against MRLS are not barred by loches of plaintiff, the liability of MRLS is limited by the terms of the proposal. V. MRLS is entitled to set off against the tile purchase price the aggregate amount of two checks paid by MRLS to Sime in respect to the Nehemiah project, which Sime, in turn, endorsed to plaintiff.

      Martin Gallent, Jackson Heights, and Daria Aumand for respondent.
    I. The courts below have correctly held that summary judgment should be granted in favor of plaintiff since the enforceability of the MRLS guaranty is not barred by the Statute of Frauds. (Marine Midland Bank v Dino & Artie's Automatic Transmission Co., 168 AD2d 610; American Express Bank v Uniroyal, Inc., 164 AD2d 275, 77 NY2d 807; Andre v Pomeroy, 35 NY2d 361; Consarc Corp. v Marine Midland Bank, 996 F2d 568; Bazak Intl. Corp. v Mast Indus., 73 NY2d 113; La Mar Hosiery Mills v Credit & Commodity Corp., 28 Misc 2d 764; Hawley Fuel Coalmart v Steag Handel, 796 F2d 29; Inter-ocean Shipping Co. v National Shipping & Trading Corp., 523 F2d 527; Taiheiyo Kisen Kaisha v Goodman, 94 Misc 2d 903.) II. The trial court properly found that the material terms of the guaranty are clearly set forth in the proposal to constitute an enforceable guaranty. (Dupack v Nationwide Leisure Corp., 73 AD2d 903; Powers v Clarke, 127 NY 417; Consarc Corp. v Marine Midland Bank, 996 F2d 568; Gates v McKee, 13 NY 232; Community Natl. Bank & Trust Co. v Cognetta, 88 AD2d 897; Richardson v County of Steuben, 226 NY 13.) III. The causes of action against MRLS are not barred by the equitable doctrine of loches. IV. MRLS’ liability on the enforceable guaranty extends through to the period of the project’s completion. V. MRLS is not entitled to credits for payments made to Sime on behalf of plaintiff outside this cause of action.
   OPINION OF THE COURT

Smith, J.

The issue presented on this appeal is whether the automatic imprinting, by a fax machine, of the sender’s name at the top of each page transmitted, satisfies the requirement that a writing be subscribed under New York State’s general Statute of Frauds (General Obligations Law § 5-701). We reverse the order of the Appellate Division because we conclude that a subscription requires an act to authenticate the writing as defendant’s. Defendant did not so subscribe the writing in this case.

In September 1989, Sime Construction Co. (Sime), a subcontractor, sought to purchase from plaintiff a large quantity of ceramic tile for use in a construction project. When plaintiff expressed reluctance to enter into such a large contract without a guaranty, Sime suggested that plaintiff approach MRLS Construction Corporation (MRLS), the general contractor on the project, for a guaranty of payment. Plaintiff contacted MRLS and after several discussions, MRLS faxed a document to plaintiff which plaintiff asserts is a guaranty. MRLS contends that it merely transmitted an unsubscribed proposal for a guaranty by fax.

Plaintiff’s copy of the document bore a heading at the top of each page which indicated the name "MRLS Construction,” a telephone number, the date and time, an unidentified number and a page number. It is undisputed that sometime before sending the document at issue, MRLS had programmed its fax machine to automatically imprint this information on every transmitted page. By this method, the heading would appear only on the recipient’s faxed copy, not on the originating document. The two-page fax document in issue was not preceded by a cover letter or any other identifying document.

After the facsimile transmission, plaintiff began furnishing Sime with quantities of ceramic tile. When Fred Short, the principal of Sime, died in April 1990, plaintiff sought payment for Sime’s outstanding invoices from MRLS. MRLS refused to make payment on the ground that the document was not an enforceable guaranty.

Plaintiff commenced this action against MRLS and Sime (sued as the estate of Fred Short herein) to recover the outstanding balances for the ceramic tiles furnished to Sime. After issue was joined, plaintiff and MRLS moved for summary judgment, and the trial court, finding issues of fact, denied both motions. Both parties moved for reargument. After reargument, the trial court granted plaintiff’s motion on the third cause of action, which alleged a guaranty of payment, severed the third cause of action from the rest of plaintiff’s complaint, and directed entry of judgment against MRLS.

In granting summary judgment to plaintiff, the trial court rejected MRLS’ contention that the fax document had not been subscribed as required by the Statute of Frauds. The court held that the heading automatically imprinted by the fax machine on plaintiff’s copy of the document satisfied the subscription requirement because an intent to be bound had been demonstrated. MRLS appealed the judgment, and the Appellate Division affirmed the trial court. We granted leave to appeal.

"Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent if such agreement, promise or undertaking * * * [i]s a special promise to answer for the debt, default or miscarriage of another person” (General Obligations Law § 5-701 [a] [2]). MRLS argues that the heading imprinted on the top of each page transmitted by its fax machine serves merely as identification, and was not intended to serve as a subscription within that term’s special meaning under the Statute of Frauds. MRLS contends that the fax document does not satisfy the requirement in section 5-701 (a) that a writing be subscribed. Plaintiff, by contrast, argues that because MRLS intentionally programmed its fax machine to print its name on top of all faxed documents, the subscription requirement has been satisfied.

Plaintiff has failed to demonstrate that MRLS affixed its "signature” to the document sent by facsimile machine sufficient to fulfill the subscription requirement. As former Chief Judge Cardozo has observed, a signature for Statute of Frauds purposes may be "a name, written or printed, [but] is not to be reckoned as a signature unless inserted or adopted with an intent, actual or apparent, to authenticate a writing” (Mesibov, Glinert & Levy v Cohen Bros. Mfg. Co., 245 NY 305, 310; see also, Crabtree v Elizabeth Arden Sales Corp., 305 NY 48, 53-54; La Mar Hosiery Mills v Credit & Commodity Corp., 28 Misc 2d 764). Plaintiff contends that we may infer satisfaction of this requirement because the fax machine had been programmed by MRLS to identify each page of the document with "MRLS Construction.”

The act of identifying and sending a document to a particular destination does not, by itself, constitute a signing authenticating the contents of the document for Statute of Frauds purposes and we reject plaintiffs argument that such an inference is warranted here. It is undisputed that MRLS’ fax machine, after being programmed to do so, automatically imprinted "MRLS Construction” on every page transmitted, without regard to the applicability of the Statute of Frauds to a particular document. We also reject plaintiffs contention that the intentional act of programming a fax machine, by itself, sufficiently demonstrates to the recipient the sender’s apparent intention to authenticate every document subsequently faxed. The intent to authenticate the particular writing at issue must be demonstrated.

The argument that the Statute of Frauds was not meant to permit parties to evade an obligation otherwise incurred begs the question of whether this writing satisfied the statutory requirement. "The purpose of Statutes of Frauds is to avoid fraud by preventing the enforcement of contracts that were never in fact made” (Fox Co. v Kaufman Org., 74 NY2d 136, 140). To this end, General Obligations Law § 5-701 (a) contains two threshold requirements for proving the existence of a binding agreement, promise or undertaking: a writing, and a subscription of the writing by the party to be charged therewith. Since the Legislature selected these objective elements to determine, in the first instance, the existence of an enforceable agreement, promise or undertaking, the absence of a writing or a subscription cannot be remedied by arguing that obligations. were nevertheless incurred.

Accordingly, the order of the Appellate Division should be reversed, with costs, plaintiffs motion for summary judgment as to the third cause of action denied, defendant MRLS Construction Corporation’s cross motion for summary judgment as to the third cause of action granted and the third cause of action as against MRLS Construction Corporation dismissed.

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

Order reversed, etc.

      . The Statute of Frauds also requires that an intent to authenticate a particular document be demonstrated for qualified financial contracts. Effective as of September 18, 1994, the Legislature amended section 5-701 of the General Obligations Law to provide that: "the tangible written text produced by telex, telefacsimile, computer retrieval or other process by which electronic signals are transmitted by telephone or otherwise shall constitute a writing and any symbol executed or adopted by a party with the present intention to authenticate a writing shall constitute a signing” (General Obligations Law § 5-701 [b] [4]).

      . The issue of whether a properly subscribed writing adequately describes the terms of an agreement, promise or undertaking is a different question which is not before this Court.


author: Simons, J.

text:
    [663 NE2d 635, 640 NYS2d 479]
    Brooke Group Ltd. et al., Appellants, v JCH Syndicate 488 et al., Respondents.
    Argued February 13, 1996;
    decided March 21, 1996

      POINTS OF COUNSEL

      Milbank, Tweed, Hadley & McCloy, New York City (Michael L. Hirschfeld and Alisa Odeen of counsel), for appellants.
    The lower courts improperly dismissed the action on the ground of forum non conveniens. (Ideal Mut. Ins. Co. v Elkhorn Re Ins. Co., 109 AD2d 1110; Rokeby-Johnson v Kentucky Agric. Energy Corp., 108 AD2d 336; The Bremen v Zapata Off-Shore Co., 407 US 1; Price v Brown Group, 206 AD2d 195; International Ins. Co. v McDermott Inc., 956 F2d 93; British W. Indies Guar. Trust Co. v Banque Internationale A Luxembourg, 172 AD2d 234.)

      Breindel & Ferstendig, P. C, New York City (David L. Ferstendig of counsel), for respondents.
    I. The Service of Suit Clause does not bar application of the forum non conveniens doctrine. (Columbia Cas. Co. v Bristol-Myers Squibb Co., 215 AD2d 91; Rokeby-Johnson v Kentucky Agric. Energy Corp., 108 AD2d 336; Price v Brown Group, 206 AD2d 195; Blanco v Banco Indus. De Venezuela, 997 F2d 974; Gulf Oil Corp. v Gilbert, 330 US 501; Silver v Great Am. Ins. Co., 29 NY2d 356; Brown v Bullock, 17 AD2d 424; Piper Aircraft Co. v Reyno, 454 US 235; National Bank & Trust Co. v Banco De Vizcaya, 72 NY2d 1005, 489 US 1067; The Bremen v Zapata Off-Shore Co., 407 US 1.) II. The forum non conveniens doctrine dictates affirmance of the dismissal of Brooke’s complaint. (Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 469 US 1108; Kastendieck v Kastendieck, 191 AD2d 328.) III. The service of suit endorsement is not a forum selection clause. (Cruden v Bank of N. Y., 957 F2d 961; Proyecfin de Venezuela v Banco Indus. de Venezuela, 760 F2d 390; Weiss v Weiss, 52 NY2d 170; Laba v Carey, 29 NY2d 302; NECA Ins. v National Union Fire Ins. Co., 595 F Supp 955; Mc-Dermott Intl. v Lloyds Underwriters of London, 944 F2d 1199; Hart v Orion Ins. Co., 453 F2d 1358; Ideal Mut. Ins. Co. v Elkhorn Re Ins. Co., 109 AD2d 1110; Matter of City of New York (Marinello), 53 NY2d 1023, cert denied sub nom. Marinello v City of New York, 458 US 1108; Spano v Perini Corp., 25 NY2d 11.) IV. Public policy dictates that the dismissal of Brooke’s action be affirmed. (Carey v Southern Peru Copper Corp., 29 AD2d 744; Inryco, Inc. v Parsons & Whittemore Contrs. Corp., 55 NY2d 666; Pepsi-Cola Metro. Bottling Co. v Columbia-Oxford Beverages, 100 AD2d 868.)
   OPINION OF THE COURT

Simons, J.

The issue presented is whether a "Service of Suit Clause”, common to many Lloyd’s of London contracts of insurance, constitutes a mandatory forum selection clause requiring defendants to litigate this dispute in New York and precluding dismissal on forum non conveniens grounds.

Plaintiff, Brooke Group Ltd., is a Delaware corporation with its principal place of business in Miami, Florida. Plaintiff BrookeMil Ltd. is a subsidiary of Brooke Overseas Ltd., one of its subsidiaries. Defendants are JCH Syndicate 488, an English entity with its principal place of business in London, and its managing agent. In 1990, Brooke Overseas Ltd. entered into a joint venture agreement with a Soviet enterprise to engage in the manufacture and sale of cigarettes in the then Soviet Union, and to own and develop the existing factory in Moscow and the real property surrounding it. For that purpose, the Moscow City Government conveyed various leaseholds and titles, interests eventually united in BrookeMil Ltd.

In June 1982, plaintiffs entered into an insurance contract with certain Lloyd’s of London underwriters for "Expropriation and Forced Abandonment Insurance” covering plaintiffs’ property and business assets located in Russia. Defendant JCH Syndicate 488 was the lead underwriter, insuring a little more than 29% of the risk. The insurance policy was issued out of the Lloyd’s Policy Signing Office in London, and contained a broad arbitration clause by which the parties agreed that "all disputes” concerning the interpretation, validity and performance of the policy or relating to "the determination of the amount of loss” compensable would be governed by the law of England and submitted to arbitration at the London Court of International Arbitration in accordance with its rules. The clause also provided that any award rendered by the Arbitrator would be final and binding upon the parties and a judgment could be entered thereon in any court having jurisdiction. In addition, the policy contained a "Service of Suit Clause” by which the parties agreed that in the event the underwriters failed to pay any amount claimed to be due on the policy, the underwriters would, at the plaintiff’s request, submit to the jurisdiction of a court of competent jurisdiction within the United States.

In January 1993, the Mossoviet (the Moscow City Council of People’s Deputies) concluded that the real property transactions with the joint venture group were inconsistent with the subsequently enacted Russian Privitization Law. It recommended that the transactions be invalidated and the plaintiff’s interest in the Russian property be extinguished. With the consent of the underwriters, plaintiffs negotiated a resolution with the Mossoviet resulting in substantial forfeitures of their interests in the real property. The plaintiffs submitted a claim to defendants alleging that such forfeitures constituted an "expropriation or forced abandonment", as defined by the terms of the insurance policy, but defendants refused to pay the claim.

After plaintiffs commenced this action, defendants instituted arbitration of the controversy in London, seeking a declaration that they were not liable under the policy. They then moved in Supreme Court to dismiss the New York complaint on forum non conveniens grounds. The Supreme Court granted their motion, resting its decision on findings that the suit was between two foreign corporations, concerned insurance issued in England, covered property in Russia, and that there was already an arbitration forum available to resolve the dispute. The Appellate Division affirmed, as do we.

L

Plaintiff maintains that the "Service of Suit Clause" in the insurance contract constituted a mandatory forum selection clause providing an alternative to arbitration and precluding dismissal on forum non conveniens grounds. Defendants contend that although they agreed to submit to the jurisdiction of a court within the United States, there was no agreement between the parties that jurisdiction would be limited to a particular venue. Defendants also contend that interpreting the Service of Suit Clause as a forum selection provision would conflict with the contract’s mandatory arbitration provision and violate a fundamental rule of contract interpretation: i.e., when interpreting a contract, the entire contract must be considered so as to give each part meaning (Weiss v Weiss, 52 NY2d 170, 174; Laba v Carey, 29 NY2d 302, 308; see also, Cruden v Bank of N. Y., 957 F2d 961, 976 [2d Cir 1992]). Citing authority from other jurisdictions and an opinion in the record by an expert in English law (which governs the contract), defendants assert that the apparent conflict between the arbitration and Service of Suit provisions could be reconciled by giving full effect to the arbitration clause and interpreting the Service of Suit Clause as facilitating the enforcement of arbitration awards (see, e.g., McDermott Intl. v Lloyds Underwriters of London, 944 F2d 1199, 1205 [5th Cir 1991]; NECA Ins. v National Union Fire Ins. Co., 595 F Supp 955, 958 [SD NY 1984]).

Although once disfavored by the courts, it is now recognized that parties to a contract may freely select a forum which will resolve any disputes over the interpretation or performance of the contract. Such clauses are prima facie valid and enforceable unless shown by the resisting party to be unreasonable (The Bremen v Zapata Off-Shore Co., 407 US 1; Columbia Cas. Co. v Bristol-Myers Squibb Co., 215 AD2d 91 [overruling Rokeby-Johnson v Kentucky Agric. Energy Corp., 108 AD2d 336]; Price v Brown Group, 206 AD2d 195). Forum selection clauses are enforced because they provide certainty and predictability in the resolution of disputes, particularly those involving international business agreements (see, The Bremen, supra; British W. Indies Guar. Trust Co. v Banque Internationale A Luxembourg, 172 AD2d 234). By contrast, a Service of Suit Clause generally provides no more than a consent to jurisdiction. It does not bind the parties to litigate in a particular forum, or give the insured the exclusive right to choose a forum unrelated to the dispute.

The "Service of Suit Clause” in this case provides that "in the event of the failure of the Underwriters hereon to pay any amount claimed to be due” the underwriters will, "at the request of the Insured * * * submit to the jurisdiction of a Court of competent jurisdiction within the United States.” Lloyd’s of London began to incorporate this type of clause in its policies some years ago to assure potential policyholders that Lloyd’s and its underwriters would be amenable to service of process in the United States (Price v Brown Group, supra; Appalachian Ins. Co. v Superior Ct., 162 Cal App 3d 427, 208 Cal Rptr 627). The plaintiffs claim that it must be viewed as a mandatory forum selection clause and enforced pursuant to the Supreme Court’s holding in Bremen. The provision in dispute here is markedly different from that found in the Bremen case, however, which specifically provided that any dispute between the parties " 'must be treated before the London Court of Justice’ ” (The Bremen, supra, at 2). The present clause contains no such mandatory language binding the parties to a particular forum, but provides only that the underwriters will submit to the jurisdiction of a United States court. The words and phrases used by the parties must, as in all cases involving contract interpretation, be given their plain meaning (Levine v Shell Oil Co., 28 NY2d 205, 211), and the plain meaning of the words used by the parties to this contract do not manifest an intention to limit jurisdiction to a particular forum.

Accordingly, we interpret the "Service of Suit Clause” as permissive and conclude that its terms do not require defendants to litigate this dispute in New York. Under the circumstances, defendants could seek dismissal on conveniens grounds pursuant to CPLR 327.

IL

While a Service of Suit Clause is a factor the court should consider in deciding a forum non conveniens motion, the courts below did not abuse their discretion in concluding that the other factors involved in the dispute, unrelated to New York, supported defendant’s motion to dismiss (see, Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 479, cert denied 469 US 1108; Banco Ambrosiano v Artoc Bank & Trust, 62 NY2d 65, 73).

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

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

Order affirmed, with costs.


author: Levine, J. Smith, J.

text:
    [663 NE2d 872, 640 NYS2d 831]
    The People of the State of New York, Respondent, v Shannon Siegel, Appellant.
    Argued October 26, 1995;
    decided December 27, 1995

      POINTS OF COUNSEL

      Dershowitz & Eiger, P. C., New York City (Nathan Z. Dershowitz and Amy Adelson of counsel), for appellant.
    I. Defendant was deprived of a fair trial when the trial court drove his key witness off the stand, then insisted that the witness invoke his Fifth Amendment privilege in front of the jury, and then instructed the jury it could consider the witness’ invocation of the privilege, and by the prosecutor’s derogatory comments to the jury about the witness. (People v Thomas, 51 NY2d 466; Washington v Texas, 388 US 14; Webb v Texas, 409 US 95; United States v Arthur, 949 F2d 211; People v Ramos, 63 AD2d 1009; Berg v Morris, 483 F Supp 179; People v Shapiro, 50 NY2d 747; Brown v United States, 356 US 148; People v Cassidy, 213 NY 388; People v Ballard, 167 AD2d 895.) II. The jury was improperly instructed to convict defendant if it found that "another participant” committed the assaults, regardless of defendant’s participation or intent. (People v Odell, 230 NY 481; People v Flynn, 79 NY2d 879; Lanzano v City of New York, 71 NY2d 208; People v Wesley, 76 NY2d 555.) III. The trial court erred in excluding an "excited utterance” made by a prosecution witness immediately following the incident that corroborated defendant’s testimony. (People v Edwards, 47 NY2d 493; People v Brown, 70 NY2d 513; People v Caviness, 38 NY2d 227; People v Brooks, 71 NY2d 877; People v Davis, 203 AD2d 300.) IV. Defendant was unjustly deprived of his valuable statutory right to exercise peremptory challenges. (People v McQuade, 110 NY 284; People v Dixon, 202 AD2d 12; Batson v Kentucky, 476 US 79; People v Jenkins, 84 NY2d 1001; People v Bolling, 79 NY2d 317; People v Smith, 186 AD2d 35, 81 NY2d 875; People v Figueroa, 194 AD2d 551; People v Mathews, 201 AD2d 588; People v Simmons, 79 NY2d 1013.) V. The trial court’s repeated and unjustified interference with defendant’s ability to elicit favorable testimony from witnesses deprived defendant of his constitutional right to present a defense. (Douglas v Alabama, 380 US 415; Davis v Alaska, 415 US 308; United States v Dees, 34 F3d 838; People v Torres, 51 AD2d 225; People v Wise, 46 NY2d 321; People v Hadden, 95 AD2d 725; People v Kennedy, 70 AD2d 181; People v Bishop, 206 AD2d 884; People v Sepulveda, 105 AD2d 854.) VI. Defendant was deprived of a fair trial by the prosecutor’s flouting of the court’s Sandoval ruling, his abusive questioning of witnesses, and his inflammatory comments during summation. (People v Sandoval, 34 NY2d 371; People v Wilkens, 177 AD2d 678; People v Butchino, 141 AD2d 986; People v Cavallerio, 71 AD2d 338; People v Beckford, 138 AD2d 613; People v Balkum, 94 AD2d 933; People v Ashwal, 39 NY2d 105; People v Fielding, 158 NY 542.)

      Denis Dillon, District Attorney of Nassau County, Mineóla (<Judith R. Sternberg and Peter A. Weinstein of counsel), for respondent.
    I. Defendant’s guilt was established beyond a reasonable doubt by overwhelming proof. II. The refusal of a defense witness to submit to cross-examination by the prosecutor is no basis for reversal of the conviction. (People v Shapiro, 50 NY2d 747; Steinbrecher v Wapnick, 24 NY2d 354; McCarthy v Arndstein, 262 US 355; People v Bagby, 65 NY2d 410; Klein v Har

      ris, 667 F2d 274; Webb v Texas, 409 US 95; United States v Arthur, 949 F2d 211; Berg v Morris, 483 F Supp 179; People v Ramos, 63 AD2d 1009; People v Lee, 58 NY2d 773; People v Moore, 194 AD2d 695, 82 NY2d 807.) III. The court’s charge to the jury properly explained the concept of accessorial liability. (People v Coonan, 48 NY2d 772.) IV. Defendant failed to preserve his argument that the evidence he sought to introduce constituted an "excited utterance”; at any rate, the evidence was properly excluded, and, even assuming arguendo that the court erred, the unpreserved error was harmless. (People v McDowell, 47 NY2d 858; People v Qualls, 55 NY2d 733; People v Logan, 74 NY2d 859; People v Norton, 164 AD2d 343, 79 NY2d 808; People v Edwards, 47 NY2d 493; People v Brown, 70 NY2d 513; People v Marks, 6 NY2d 67.) V. The Trial Judge correctly disallowed defendant’s peremptory challenges of two prospective jurors because of their race. (Batson v Kentucky, 476 US 79; People v Bolling, 79 NY2d 317; People v Kern, 75 NY2d 638, 498 US 824; People v Hernandez, 75 NY2d 350; People v Mondello, 191 AD2d 462, 81 NY2d 1077; People v Green, 181 AD2d 693, 79 NY2d 1049; People v Kaplan, 176 AD2d 821; People v Childress, 81 NY2d 263; People v Duncan, 177 AD2d 187, 79 NY2d 1048.) VI. Defendant’s right to examine witnesses was not improperly curtailed. (People v Bruno, 77 AD2d 922; People v Torres, 51 AD2d 225; People v Brooks, 131 NY 321; People v Chin, 67 NY2d 22; People v Thomas, 46 NY2d 100; People v Duncan, 46 NY2d 74, 442 US 910; People v Wise, 46 NY2d 321; Halloran v Virginia Chems., 41 NY2d 386; People v Hudy, 73 NY2d 40; People v Kuss, 32 NY2d 436.) VII. The prosecutor’s conduct did not deprive defendant of a fair trial. (People v Green, 207 AD2d 318, 84 NY2d 935; People v Esquillin, 141 AD2d 838, 73 NY2d 854; People v Cody, 149 AD2d 722; People v Galloway, 54 NY2d 396; People v Arce, 42 NY2d 179; People v Bailey, 58 NY2d 272; People v Butler, 185 AD2d 141; People v Beckford, 138 AD2d 613; People v Crossman, 69 AD2d 887; United States v Weiss, 930 F2d 185.)
   OPINION OF THE COURT

Levine, J.

Defendant Shannon Siegel was convicted, after a jury trial, of various felony and misdemeanor charges in connection with a life-threatening assault on an African-American teenager by -a group of white young men.

The events that gave rise to defendant’s conviction began at a large party in Atlantic Beach, Long Island, which defendant attended with Gourdin Heller, a neighborhood friend, and four young men from Bayside, Queens — David Donahue, Gregory Kussoff, Ian Pearl and James Peralta. According to the People’s proof, while at the party, defendant was accused of using a racial epithet to refer to Jermaine Ewell, who was dating a former girlfriend of defendant. A confrontation between Ewell and defendant erupted. Defendant then left the party with Heller, the young men from Bayside, and two young women. They were chased by a large group of Ewell’s friends. Defendant spoke with Heller and then drove away with the two young women while Heller remained. The young men from Bayside left in another car and rendezvoused at defendant’s house where they collected stickball bats and discussed what they should do in response to the incident at the party. Ultimately, they decided to drive back to the Atlantic Beach boardwalk in the vicinity of the site of the party.

By the time they returned, many of the young people who had attended the party had gathered on the boardwalk, including Ewell, who was talking to defendant’s former girlfriend near the top of the boardwalk ramp.

According to prosecution witnesses, defendant approached Ewell from behind and hit him on the back of his head with a bat. As Ewell lay on the ground, he was repeatedly beaten with the bats and sticks, suffering multiple skull fractures. Two young white men, Anthony Franzese and Stephen Lieberman, attempted to intervene on Ewell’s behalf but they were attacked with bats and sticks as well. Defendant and the other attackers then fled. Ewell was brought to a hospital where he underwent emergency surgery to remove a blood clot from his brain; though severely injured by the attack, he survived.

Defendant was charged in a nine-count indictment, along with codefendants Donahue, Kussoff, Pearl, and Peralta, with various offenses arising out of the attack, including attempted murder, assault in the first and second degrees, riot, conspiracy, racially motivated aggravated harassment, criminal possession of a weapon and misdemeanor violations of the Civil Rights Law. Eleven witnesses, including the complainants and Donahue, who had pleaded guilty to a misdemeanor riot charge, testified as to defendant’s active role in the assault.

Defendant testified on his own behalf. He explained that he had been scared by the large threatening crowd that had chased him and that he returned to the boardwalk not to attack Ewell, but to locate Gourdin Heller who had told him, as they were being chased from the party, that if they became separated defendant should meet him back at the boardwalk. According to defendant, he intended to use his bat only in a defensive manner in the event there was additional trouble, and that it was not he, but rather Peralta and his friends from Bayside who were motivated to "take care” of the crowd that had chased them from the party. Defendant further testified that when they arrived at the boardwalk Peralta and the others ran ahead of him and that when he joined the crowd on the ramp in search of Heller, the attack on Ewell had already begun.

Defendant was convicted of assault, first and second degrees, conspiracy in the fourth degree, riot in the second degree, and possession of a weapon in the fourth degree. The Appellate Division affirmed the judgment of conviction and sentence (207 AD2d 919). The Chief Judge of this Court granted defendant leave to appeal, and we now affirm.

On appeal to this Court, the primary issues relied upon by defendant in urging reversal relate to the trial court’s treatment of the assertion by Gourdin Heller of his Fifth Amendment privilege against self-incrimination during his cross-examination as a defense witness.

Gourdin Heller was an important defense witness; his testimony on direct examination corroborated defendant’s position that he did not return to the boardwalk with the intention of causing bodily harm to Ewell or others, but that he returned only to locate and, if need be, assist Heller. Thus, Heller testified that when events at the party escalated, defendant told him that if anything was to happen he would look for Heller later at the boardwalk. Heller also indicated that Ewell was the aggressor in his initial confrontation with defendant at the party.

On cross-examination, however, Heller’s credibility became the focus of an immediate attack. In addition to revealing that portions of Heller’s trial testimony as to collateral matters were inconsistent with prior statements he had made in connection with the case, the prosecutor also elicited testimony from Heller demonstrating a variance between his trial testimony and his prior Grand Jury testimony as to a material matter — whether the attack by defendant and his companions was racially motivated. At that point, the court expressed concern that Heller was in danger of committing the crime of first degree perjury and accordingly, over a defense objection and outside the presence of the jury, the court explained to Heller the potential legal consequences of such inconsistent testimony and asked Heller if he would like to consult with counsel before continuing his cross-examination testimony. At Heller’s request, an attorney was assigned to represent him and the court agreed to postpone the completion of cross-examination. At the next scheduled day of trial, Heller’s counsel informed the court that Heller could testify further, but would refuse to answer certain questions concerning the incident and the subsequent investigation, and that as to those questions he would assert his Fifth Amendment privilege against self-incrimination. Again over defense objection, the court ruled that Heller would be questioned in front of the jury. Heller then returned to the witness stand, but in response to a question regarding his prior trial testimony, he asserted his Fifth Amendment privilege and refused to answer. After Heller refused to answer the next few specific questions, he indicated that he would continue to assert the privilege as to all interrogation regarding the events he had testified to on direct examination, and the court ordered the termination of further cross-examination.

Although the court had earlier informed the prosecution that it could move to strike all of Heller’s testimony, no motion to strike was made. However, at the People’s request, the court in instructing the jury explained that every witness has the right to invoke his or her Fifth Amendment privilege against self-incrimination, and then, over defendant’s objection, charged: "[T]he mere fact that a witness invokes his right does not give rise to any inference. However, you may consider it on the issue of witness’ credibility”.

Defendant maintains that the trial court committed four separate errors in connection with Heller’s testimony: first, that by warning Heller of the consequences of giving inconsistent sworn testimony and by advising him that he could consult with an attorney on this issue, the court improperly intimidated Heller into invoking the privilege; second, that the court erred in requiring Heller to invoke the privilege in the presence of the jury; third, that the court erred in instructing the jury it could consider a witness’ refusal to testify on Fifth Amendment grounds on the issue of credibility; and fourth, that the court permitted the prosection to improperly comment on Heller’s refusal to testify during his closing arguments.

We find no error committed by the trial court’s treatment of Heller’s testimony in any respect. Our precedents approve the conduct of a trial court in advising a witness, who it can be reasonably anticipated will give self-incriminating testimony, of the possible legal consequences of giving such testimony and of the witness’ Fifth Amendment privilege to refuse to testify (see, People v Lee, 58 NY2d 773, 775; see also, People v Shapiro, 50 NY2d 747, 761-762).

To be sure, there are limitations upon the exercise of that authority. Thus, a defense witness may not be singled out in advance of giving any testimony and threatened by the court with the punitive consequences of giving perjured testimony that the court will personally administer (see, Webb v Texas, 409 US 95, 97-98; People v Ramos, 63 AD2d 1009). Nor may the court repeatedly badger a witness into remaining silent or actively encourage a witness not to testify (see, United States v Arthur, 949 F2d 211, 215-216 [6th Cir]). None of these abuses of a trial court’s discretion to advise a witness of possible self-incrimination is present in the instant case. Heller was not deterred from testifying for the defense, since the trial court’s intervention did not occur until after Heller had given all of his favorable direct testimony. Moreover, the court did not anticipate in advance the possibility of Heller incriminating himself on the witness stand. It was only after Heller was directly shown to have given opposing sworn testimony on the same facts at the trial and before the Grand Jury that the court interrupted his testimony on cross-examination to advise him of the possibility of prosecution for perjury as a result of his conflicting versions of the same events. The court did not advise Heller not to testify, but suspended further cross-examination until Heller had an opportunity to seek advice from an attorney the court assigned at his request.

The remaining objections to the treatment of Heller’s assertion of his Fifth Amendment privilege turn essentially on the trial court’s conclusion that Heller’s refusal to answer questions on self-incrimination grounds could be considered by the jury in weighing his credibility. We hold that, in the circumstances of this case, the trial court was correct. Most certainly, Heller’s direct testimony was favorable to defendant. Also beyond contest is that when Heller indicated he would continue to assert his privilege to remain silent as to all questions regarding the subject matter of his direct testimony and was then excused from the witness stand, the prosecution was effectively deprived of the right of cross-examination to test the truth of Heller’s entire direct testimony. Under such circumstances, the prosecution was entitled to have Heller’s direct testimony stricken in its entirety and the jury instructed to disregard it (see, People v Chin, 67 NY2d 22, 28; see also, Lawson v Murray, 837 F2d 653, 655-656 [4th Cir] [defense witness’ direct testimony stricken], cert denied 488 US 831).

The important precedents on this subject do not, however, regard striking all of the witness’ testimony as the exclusive remedy when cross-examination has been thwarted by the assertion of the privilege against self-incrimination. On the contrary, striking the witness’ entire testimony is considered the most drastic relief. As we held in Chin, the trial court has wide discretion in fashioning the appropriate corrective response, depending on the degree of prejudice that was incurred by the party whose right of cross-examination of the witness was impaired by the claim of the privilege (67 NY2d, at 29, supra).

In Chin, we recognized one of the alternative less drastic remedies when cross-examination has been blocked by the witness’ exercise of the privilege against self-incrimination — striking only some but not all of the testimony (id., at 28). In the leading case of United States v Cardillo (316 F2d 606 [2d Cir], cert denied 375 US 822, 887), the court posed three graduated levels of remedial action. The first is where the witness refused to testify on questions of matters "so closely related to the commission of the crime that the entire testimony of the witness should be stricken” (id., at 613). The second is where the refusal to answer was "connected solely with one phase of the case in which event a partial striking might suffice” (id.). The third and least drastic relief "would involve collateral matters or cumulative testimony concerning credibility which would not require a direction to strike and which could be handled (in a jury case) by the judge’s charge if questions as to the weight to be ascribed to such testimony arose" (id. [emphasis supplied]).

McCormick agrees with the Cardillo analysis, stating that where the witness invokes the privilege on collateral matters such as relating to general credibility "[t]he trial judge can properly consider measures short of striking the witness’s direct testimony, such as having the witness invoke the privilege before the jury or instructing the jury to consider the testimony in light of the defendant’s reduced ability to cross-examine" (1 McCormick, Evidence § 140, at 526-527 [4th ed] [emphasis supplied]; see also, United States v Stephens, 492 F2d 1367, 1374-1375 [6th Cir] [applying the three-level analysis], cert denied 419 US 852, 874; People v Holguin, 141 Mich App 268, 367 NW2d 846, 848 [same]). Less severe alternatives are particularly worthy of consideration when a defense witness has invoked the privilege, in view of the defendant’s Sixth Amendment right to present testimony (1 McCormick, op. cit., § 140, at 527 [4th ed]).

Since (as we have shown) the trial court would have been justified in striking all of Heller’s direct testimony with instructions to the jury completely to disregard it, defendant is hardly in a position to complain of the less drastic remedy the court applied for the deprivation of the People’s right of cross-examination, inviting the jury to consider its bearing on Heller’s credibility. We note that the court properly charged the jury that his assertion of the privilege did not justify an inference on the merits of the case.

The trial court’s choice of advising the jury that it could consider Heller’s invocation of the privilege on his credibility, rather than striking his testimony, was not only consistent with proper concern for defendant’s Sixth Amendment right to call witnesses on his own behalf, it was also fitted to the actual significance of Heller’s action. By the assertion of his privilege to refuse to answer the prosecutor’s questions, Heller’s direct testimony was never subjected to the truth-testing process of cross-examination, and the jury was properly permitted to take this into account. This position is also consistent with other cases holding that a witness’ obstruction of cross-examination is a factor for the jury to weigh on credibility (see, Delaware v Fensterer, 474 US 15, 21-22; Government of Virgin Is. v Riley, 754 F Supp 61, 65 [DVI]).

It follows from the foregoing that the jury had to be made aware that Heller claimed the privilege in response to questions on cross-examination, in order to assess its bearing on his credibility (see, People v Rocco, 170 AD2d 626, lv denied 77 NY2d 1000; United States v Seifert, 648 F2d 557, 560-561 [9th Cir]; 1 McCormick, Evidence § 140, at 526-527 [4th ed]). Thus, the limited interrogation of Heller on cross-examination when he invoked the privilege in the presence of the jury as permitted by the trial court, was proper. People v Thomas (51 NY2d 466) and People v Vargas (86 NY2d 215), relied upon by defendant on this issue, are inapposite. Heller was not called as a prosecution witness and his invocation of the Fifth Amendment privilege was not exploited, directly or indirectly, by the People in order to add substantive weight to the evidence of defendant’s guilt. And the prosecutor in summation could properly refer to Heller’s claim of the privilege in attacking his credibility. Thus, no errors were committed by the trial court in connection with Gourdin Heller’s assertion of his Fifth Amendment privilege during cross-examination.

We have considered defendant’s remaining assignments of error and find them either unpreserved or without merit.

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

Smith, J.

(concurring). While I agree with the majority that reversal of defendant’s conviction is not required, I write separately because I cannot agree that the trial court did not err in its treatment of Gourdin Heller’s testimony "in any respect” (majority opn, at 542). Notwithstanding the errors below, given the overwhelming evidence of defendant’s guilt, the trial court’s errors were harmless and I would affirm the order of the Appellate Division.

I.

Defendant attended a "keg” party on June 1,1991 with Gourdin Heller and several other friends from his neighborhood, at a house on Atlantic Beach, Long Island. The party was attended by as many as 250 young people, mostly of high school and college age. Jermaine Ewell also attended the party with several of his friends, as well as his girlfriend Nicole Diamond. Diamond had dated the defendant prior to dating Ewell.

At some point during the party, defendant conversed briefly with Nicole Diamond. The substance of their conversation is disputed. However, it was Diamond’s understanding that defendant made a racial slight towards Ewell, who is African-American, and Diamond relayed that slight to Ewell. Ewell confronted defendant and defendant denied making any statement, racial or otherwise about Ewell. As a crowd began to form, heated comments were exchanged between friends of both defendant and Ewell, and ultimately the party broke up. As defendant and his friends left the party, they were chased by Ewell and his friends.

Defendant and his friends returned to their cars and, without Gourdin Heller, left the scene and met at a local gas station. The group discussed the events of the party and decided to return to the boardwalk near where the party had been locoted. The group left the gas station, proceeded to defendant’s house to get bats and sticks and went to the Atlantic Beach boardwalk.

Ewell was apparently attacked by defendant and his friends with the sticks and bats they obtained from defendant’s house. Ewell was hit in the head with either a bat or a stick and rendered unconscious. He sustained severe injuries and head trauma. Several other young men at the beach, both friends of defendant, attempted to assist Ewell, but were similarly attacked by defendant and his friends and beaten. Defendant and his friends fled the scene.

Defendant was convicted, after a jury trial, of first degree assault, second degree assault, fourth degree conspiracy, second degree riot and fourth degree criminal possession of a weapon in connection with his participation in the incident on the beach. At trial, defendant’s main witness, Gourdin Heller, corroborated defendant’s version of the facts. Heller testified on direct examination that after the confrontation between defendant and Ewell, defendant and his friends left the party and walked towards their cars. Heller further testified that as defendant and his friends were at their cars, Ewell and his friends came within 50 yards of defendant and his friends, carrying bottles and holding their fists in the air. It was Heller’s testimony that he and defendant agreed to meet at the boardwalk if they became separated. After defendant and defendant’s friends went to their cars, Heller testified that Ewell and Ewell’s friends chased defendant’s car down the street. At no time, Heller testified, did he hear either defendant or any of his friends yell racial slurs at Ewell or. his friends.

On cross-examination, the prosecution confronted Heller with Grand Jury testimony which contradicted Heller’s testimony during direct examination. Heller alleged that he had been pressured when he gave Grand Jury testimony by the officer investigating the beach incident. Heller stated that because he was already on probation, the officer coerced him into making statements that were not true.

The trial court intervened and after a bench conference, called a recess. Outside of the jury’s presence, the trial court advised Heller of the potential risks accompanying the commission of perjury, advised him of his right to counsel, and appointed, counsel to represent Heller. After consulting with his client, Heller’s counsel indicated to the court that Heller would invoke the Fifth Amendment privilege against self-incrimination as to any questions regarding the events of June 1, 1991.

Defense counsel argued that a break in the trial to allow Heller to consult with an attorney regarding his conflicting testimony, essentially "regroup”, and then invoke his Fifth Amendment privilege regarding the events of June 1, 1991, would be too prejudicial to the defendant’s case and that the court should not allow Heller to testify any further. In the alternative, defense counsel argued that it should have the opportunity to conduct a redirect examination of Heller for the purpose of inquiring about material other than the events of June 1, 1991. The People argued that they should be allowed to finish questioning Heller regardless of whether he invoked his Fifth Amendment privilege and that any prejudice that inured to defendant was his own making because defendant had called Heller as a witness.

On advice of counsel, Heller chose not to testify and asserted his Fifth Amendment privilege when questioned on cross-examination. Over defendant’s objection, the court instructed the jury that an adverse inference could be drawn from Heller’s invocation of his Fifth Amendment right against self-incrimination. Specifically, the court charged:

"You will recall that Gourdin Heller and Patrick Keon, while testifying, refused to answer questions upon the grounds that the answers might incriminate them. Our law provides that no person shall be compelled to be a witness against himself. That right is guaranteed to all persons and the mere fact that a witness invokes his right does not give rise to any inference. However, you may consider it on the issue of witness’ credibility.”

Also testifying for the prosecution were many of the young people present at the boardwalk on the night of June 1, 1991. Many of these witnesses were close friends of the defendant. Some witnesses knew Jermaine Ewell although they were not friends with him, and others did not know Jermaine Ewell.

n.

"[A] witness’ refusal to testify on constitutional grounds does not, in and of itself, have any real probative significance, although it may have a disproportionate impact upon the minds of the jurors and may tend to create the impression that the witness is guilty of a particular crime” (People v Thomas, 51 NY2d 466, 472). We have recognized that the trial court has a duty to intercede when there is a danger that a jury may draw an unwarranted inference against either the defendant or the People from a witness’ refusal to testify. To combat this danger we have provided that:

"the trial court should, upon request, give the jurors a neutral instruction advising them that the witness has become unavailable for reasons beyond the defendant’s control and that, consequently, no adverse inferences may be drawn from the witness’ failure to appear” (Thomas, 51 NY2d, at 473-474, supra; see also, People v Berg 59 NY2d 294).

Because a witness’ decision to take the Fifth has no "real probative significance,” neither the People nor the defendant should benefit from any unwarranted inferences that a jury might draw from it. Thus, Federal courts and other jurisdictions have held that jurors are not entitled to draw any inference from invocation of the privilege against self-incrimination, not even as to credibility (see, e.g., United States v Nunez, 668 F2d 1116, 1123 [defendant’s request for charge that jury could consider prosecution witness’ refusal to testify as to the witness’ credibility was properly denied, since it is inappropriate for the jury to draw any inference]; Bell v State, 614 So 2d 562, 564 [Fla] [court’s denial of defense request for instruction that jury could draw adverse inference as to credibility from prosecution witness’ invocation of Fifth Amendment was proper]).

Here it was the defense who called Heller. That, however, does not alter the fact that Heller’s refusal to testify on Fifth Amendment grounds was not probative as to his credibility or otherwise. To be sure, whether a party deliberately called a witness knowing he or she would refuse to testify or whether a defendant’s confrontation rights were infringed are factors relevant to whether the objectionable and unwarranted inferences arising from assertion of the privilege were prejudicial to the defense or the prosecution (see, People v Berg, 59 NY2d 294, supra [courts must determine whether allowing prosecution to call witness solely to invoke privilege in presence of jury outweighed possible prejudice to the defendant from the unwarranted inferences that may he drawn]). Regardless of who called the witness or whether a defendant’s confrontation rights are implicated, the premise acknowledged in Thomas— that a witness’ decision to refuse to testify on self-incrimination grounds has little probative significance — is controlling here. We have never held that a trial court may affirmatively charge the jury that a witness’ invocation of the Fifth Amendment as to noncollateral matters may be considered for any purpose. Consequently, the trial court erred when it instructed the jury that Heller’s invocation of the Fifth Amendment could be considered on the issue of Heller’s credibility.

Moreover, Heller’s refusal to testify did not merely go to the question of Heller’s credibility as a witness or to collateral matters. Heller testified to the events of June 1, 1991 stating a chronology which favored the defendant and differed from other witness’ recollections of the events. As the majority notes, Heller was an "important defense witness.”

The majority’s reliance on United States v Cardillo (316 F2d 606, cert denied 375 US 822) in this regard is misplaced. In Cardillo, the Second Circuit explained that a jury instruction, as opposed to striking the direct testimony, is appropriate where the witness’ answer would have related to collateral matters concerning credibility (compare, 1CJI[NY] 7.14, at 289 [where defense witness invokes privilege solely as to collateral matters, court should charge jury that "since the questions relate solely to his own credibility as a witness, you may take into consideration his refusal to answer such questions in determining, as you may with all witnesses, to what extent you believe his testimony and how much weight you wish to give his testimony”], with 1 CJI[NY] 7.14, at 291 [where defense witness invokes privilege as to noncollateral matters, jury should be instructed to draw no inference whatsoever or to speculate as to what the witness’ answers might have been]).

Heller did not invoke the Fifth Amendment in response to a collateral matter, such as crimes or other bad acts which Heller may have committed and which would reflect badly on his credibility as a witness. Heller invoked the Fifth Amendment in response to the threat of perjury proceedings because of substantive differences between his trial testimony and Grand Jury testimony. The trial court’s charge that the jury could draw a negative inference against Heller, because Heller exercised his privilege against self-incrimination, permitted the jury to infer that Heller lied during direct examination and that the differing versions given by other witnesses was the truth. Despite the majority’s conclusion to the contrary, the trial court’s instruction negatively affected the defendant.

The majority notes that the trial court "properly charged” the jury not to draw any inferences on the merits of the case (majority opn, at 545). However, the charge is worded ambiguously. The jury was instructed that "the mere fact that a witness invokes his [Fifth Amendment] right does not give rise to any inference.” In the next sentence, the jury is told, "However, you may consider it on the issue of witness’ credibility.” The trial court never explicitly instructed the jurors not to draw any inference on the merits of the case or against the defendant as a result of the Heller’s exercise of the privilege against self-incrimination. Moreover, in the absence of a specific instruction not to draw any inferences, a jury may draw a negative inference against a defendant’s credibility, especially in a case where the defendant has also refused to testify, because the jury has been permitted to draw a negative inference against other witness’ refusals to testify. However, because the defendant did not invoke the Fifth Amendment here, and because of the overwhelming evidence of defendant’s guilt, the trial court’s error was harmless.

The majority contends that because the People were entitled to strike Heller’s direct testimony, defendant should not be heard to complain about the court’s charge, which it describes as a "less drastic remedy.” The charge authorized the jury to make an inappropriate inference from Heller’s assertion of his privilege not to testify. The erroneous nature of the court’s instruction was not mitigated by the fact that Heller’s direct testimony was allowed to stand.

The prosecutor’s comments on Heller’s invocation of the privilege against self-incrimination were also improper because a witness’ exercise of the Fifth Amendment has no probative value and the defendant should not be penalized because a witness has exercised a constitutionally protected right. Moreover, pointed and repeated references to a witness’ failure to testify may create a spillover effect and prejudice a defendant in a case where the defendant has also failed to testify. Defendant’s right to remain free from any comments or inferences resulting from his invocation of the Fifth Amendment privilege against self-incrimination would be eroded as a result.

Judges Simons, Bellacosa and Ciparick concur with Judge Levine; Judge Smith concurs in result in a separate opinion in which Chief Judge Kaye and Judge Titone concur.

Order affirmed.

       Moreover, defendant objected to only one of these references in the prosecutor’s summation and the trial court sustained the objection and ordered the remark stricken.

      . The colloquy between Heller and the court was as follows:
      "Q: Mr. Heller, you’ve been asked a series of questions.
      "A: Yes, I have.
      "Q: And you are under oath now and you, of course, realize that?
      "A: Yes.
      "Q: And you were under oath before a Grand Jury when you testified?
      "A:Yes.
      "Q: There seems to the court to be a basic inconsistency in certain answers you gave under oath in the Grand Jury and under oath in this proceedings.
      "A: Yes.
      "Q: There is a crime called perjury.
      "A: Right.
      "Q: It is a felony and a very serious matter and I feel it is my obligation right now to advise you. Do you want a lawyer to represent you at this stage of the proceeding?
      "A: I don’t know. I don’t know. I’m just here to tell the truth; you know what I mean?
      * * *
      "Q: You realize that any thing you do say can be used against you; do you understand that?
      "A: Yes, I do. * * *
      "Q: Do you want to discuss this with an attorney.
      "A: Yes, I’d like to.”

      . When questioned by counsel for the People, Heller responded as follows:

        "Q: Mr. Heller, did you testify in your direct examination on Tuesday that you saw Shannon Siegel take a stickball bat out of his car at the party?
      "A: On advise [sic] of counsel I refuse to answer that question on the grounds that it may incriminate me.
      "Q: I asked if you saw Shannon Siegel take a bat out of the trunk of the car?
      "A: On advise [sic] of counsel I refuse to answer that question on the grounds that it may incriminate me.
      "Q: Mr. Heller, did you testify on your direct-examination that before Shannon Siegel drove away from the party, that he told you if anything happens, that you should meet him at the boardwalk?
      "A: On the advise [sic] of counsel I refuse to answer that question on the grounds that it may incriminate me.
      "Q: Did you testify on direct-examination that after Mr. Siegel drove away, you, Pat Keon and Dennis Tveter went to the west end of the boardwalk to the Sunny Atlantic Beach Club?
      "A: On the advise [sic] of counsel I refuse to answer that question on the grounds that it may incriminate me.
      "Q: Mr. Heller, do you intend to invoke your 5th Amendment privilege with respect to any question that is asked?
      "A: Yes.”

      . Janine DeCandia and Jennifer Levy testified that although they knew both defendant and Ewell, they considered themselves good friends with the defendant. Andrew Schneider, who had known defendant since elementary school and had never laid eyes on Ewell before the night of the incident, also testified for the prosecution. Antonio Franzese, Stephen Lieberman and Daniel Ligorner all attended high school with the defendant and also considered themselves good friends with him, but testified for the prosecution that defendant was with the group of teens that attacked Ewell on the boardwalk.