author: Simons, J.

text:
    [641 NE2d 1368, 617 NYS2d 706]
    In the Matter of East Thirteenth Street Community Association et al., Appellants, v New York State Urban Development Corporation, Respondent.
    Argued September 19, 1994;
    decided October 20, 1994

      POINTS OF COUNSEL

      Gruen & Livingston, New York City (Michael S. Gruen of counsel), for appellants.
    I. The Urban Development Corporation’s (UDC) failure to state the basis for its jurisdictional findings deprives it of jurisdiction to condemn. (Matter of New York Water Serv. Corp. v Water Power Control Commn., 283 NY 23; Matter of Barry v O’Connell, 303 NY 46; Matter of Sherman v Frazier, 84 AD2d 401; Yonkers Community Dev. Agency v Morris, 37 NY2d 478, 423 US 1010; Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588; Matter of Aronsky v Board of Educ., 75 NY2d 997, 78 NY2d 1057; Matter of New York State Superfund Coalition v New York State Dept. of Envtl. Conservation, 75 NY2d 88.) II. The UDC lacks jurisdiction to condemn because the project plan illegally diverts dedicated homeless funds to nonhousing construction and depends upon an illegal negotiated sale by the City. (Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400.) III. The UDC’s project selection authority and override powers are unconstitutional as delegations of legislative authority. (Floyd v New York State Urban Dev. Corp., 33 NY2d 1; Matter of King v Cuomo, 81 NY2d 247; Matter of Schulz v State of New York, 81 NY2d 336; INS v Chadha, 462 US 919; Matter of Levine v O’Connell, 275 App Div 217; Boreali v Axelrod, 71 NY2d 1; Rotunno v City of Rochester, 120 AD2d 160, 71 NY2d 995; People v Klinck Packing Co., 214 NY 121; Matter of Consolidated Edison Co. v Department of Envtl. Conservation, 71 NY2d 186; Packer Coll. Inst. v University of State of N. Y. 298 NY 184.) IV. Housing Finance Agency’s (HFA) and UDC’s environmental analyses do not meet statutory requirements. (Chinese Staff & Workers Assn. v City of New York, 68 NY2d 359; Matter of WEOK Broadcasting Corp. v Planning Bd., 79 NY2d 373; Matter of Kravetz v Plenge, 102 Misc 2d 622; Matter of West Branch Conservation Assn. v Planning Bd., 177 AD2d 917; Matter of Houser v Finnerman, 99 AD2d 926; Center Sq. Assn. v Corning, 105 Misc 2d 6; Matter of Rye Town/King Civic Assn. v Town of Rye, 82 AD2d 474, 56 NY2d 985, 57 NY2d 775; Matter of Oak Beach v Lehman, 100 AD2d 906; Penn Cent. Transp. Co. v New York City, 438 US 104; Goose Hollow Foothills League v Romney, 334 F Supp 877.) V. The UDC lacks jurisdiction because land clearance is not its primary purpose in this project.

      Carter, Ledyard & Milburn, New York City (John R. Casolaro, Joseph M. Ryan and Jeffrey S. Boxer of counsel), for respondent.
    I. Petitioners lack standing to bring this proceeding. (Matter of City of New York v City Civ. Serv. Commn., 60 NY2d 436; Matter of Vaccaro v Jorling, 151 AD2d 34, 75 NY2d 946, 76 NY2d 704, 498 US 963; Town of New Windsor v

      City of Newburgh, 124 AD2d 656; Matter of Mobil Oil Corp. v Syracuse Indus. Dev. Agency, 76 NY2d 428; Matter of Batten-kill Assn. of Concerned Citizens v Town of Greenwich Planning Bd., 156 AD2d 863; Matter of New York Horse & Carriage Assn. v Council of City of N. Y. 169 AD2d 547, 78 NY2d 851; Matter of Har Enters. v Town of Brookhaven, 145 AD2d 562, 74 NY2d 524; Seawall Assocs. v City of New York, 134 Misc 2d 187; Citizens for Preservation of Windsor Terrace v Smith, 122 AD2d 827; Matter of Hare v Molyneaux, 182 AD2d 908.) II. UDC’s findings were sufficient. (Yonkers Community Dev. Agency v Morris, 37 NY2d 478, 423 US 1010; Matter of New York Water Serv. v Water Power Control Commn., 283 NY 23; Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588; Matter of Aronsky v Board of Educ., 75 NY2d 997, 78 NY2d 1057; Kaskel v Impellitteri, 306 NY 73.) III. Permanent housing for homeless families funds were properly spent. (Matter of Neptune Assocs. v Consolidated Edison Co., 125 AD2d 473.) IV. The constitutionality of the UDC Act is well established. (Floyd v New York State Urban Dev. Corp., 33 NY2d 1; Matter of Waybro Corp. v Board of Estimate, 67 NY2d 349; County of Westchester v Village of Mamaroneck, 22 AD2d 143, 16 NY2d 940; Matter of County of Monroe [City of Rochester], 72 NY2d 338; Westhab, Inc. v Village of Elmsford, 151 Misc 2d 1071; Berman v Parker, 348 US 26; Hawaii Hous. Auth. v Nidkiff, 467 US 229; People v Klinck Packing Co., 214 NY 121; Boreali v Axelrod, 71 NY2d 1.) V. The environmental reviews by UDC and HFA were proper. (Matter of Castaways Motel v Schuyler, 24 NY2d 120, 25 NY2d 692; Joanne S. v Carey, 115 AD2d 4; Mondello v New York Blood Ctr. — Greater N. Y. Blood Program, 175 AD2d 718, 80 NY2d 219; Matter of Greenpoint Renaissance Enter. Corp. v City of New York, 137 AD2d 597, 72 NY2d 810; Spring-Gar Community Civic Assn. v Homes for Homeless, 149 AD2d 581; Matter of Board of Visitors — Marcy Psychiatric Ctr. v Coughlin, 60 NY2d 14; Chinese Staff & Workers Assn. v City of New York, 68 NY2d 359; Matter of Hare v Molyneaux, 182 AD2d 908; Matter of Plotnick v City of New York, 148 AD2d 721, 74 NY2d 601.) VI. UDC’s participation in the project is completely within the scope of its jurisdiction under the UDC Act. (Wein v Beame, 43 NY2d 326; Rosenthal & Rosenthal v New York State Urban Dev. Corp., 605 F Supp 612, 771 F2d 44, 475 US 1018; Berman v Parker, 348 US 26; Kaskel v Impellitteri, 306 NY 73; New York State Urban Dev. Corp. v Venderlex Mdse. Co., 98 Misc 2d 264.) VIL Petitioners’ failure to include a return date in their notice of petition precludes this Court from asserting personal jurisdiction over UDC. (Travis v New York State Dept. of Envtl. Conservation, 185 AD2d 714; Matter of RECYCLE v Lacetena, 163 AD2d 693; Matter of Common Council of City of Gloversville v Town Bd. of Town of Johnstown, 144 AD2d 90; Matter of Civil Serv. Empls. Assn. v Albrecht, 180 AD2d 183, 80 NY2d 761; Matter of Lincoln Plaza Tenants Corp. v Dinkins, 171 AD2d 577.)

      Albert K. Butzel, New York City, for City Council Member Pagan and others, amici curiae.

    I. In failing to address the impact of the project on community character and otherwise disregarding its environmental effects, UDC violated SEQRA. (West 97th-W. 98th Sts. Block Assn. v Volunteers of Am. of Greater N. Y., 190 AD2d 303; Chinese Staff & Workers Assn. v City of New York, 68 NY2d 359; Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400; H.O.M.E.S. v New York State Urban Dev. Corp., 69 AD2d 222; Silva v Lynn, 482 F2d 1282; Sierra Club v United States Army Corps of Engrs., 701 F2d 1011; Bliek v Town of Webster, 104 Misc 2d 852; Chelsea Neighborhood Assns. v United States Postal Serv., 516 F2d 378.) II. UDC’s "friendly” condemnation was a fraudulent condemnation without a valid public purpose. (Wein v Beame, 43 NY2d 326; Matter of Waybro Corp. v Board of Estimate, 67 NY2d 349; Floyd v New York State Urban Dev. Corp., 33 NY2d 1; Shelley v Kraemer, 334 US 1.)
   OPINION OF THE COURT

Simons, J.

This appeal concerns the development of a New York City site for public housing. Petitioners are condominium boards, tenants and residents of buildings near the project area who seek to challenge the actions of the condemnor, respondent Urban Development Corporation (UDC). The threshold question presented is whether they have standing to do so in this proceeding brought under EDPL 207. We conclude they do not and therefore affirm.

In 1991, H.E.L.P., a nonprofit sponsor of housing for homeless families, became interested in acquiring a lot between 13th and 14th Streets and Third and Fourth Avenues to which the City of New York had taken title by condemnation in 1968. The site was substantially undeveloped and consisted of a parking lot and three boarded-up vacant buildings. H.E.L.P. planned to construct a 14-story building to house homeless and low income families, preferably from the surrounding community, and an office and community center to serve the facility’s residents. In addition, the plan for the project included a two-story commercial structure, to be constructed by H.E.L.P. at a cost of $4,000,000 but licensed for use by the City, which retained ownership of the 14th Street portion of the site. Funds for the project were to be provided by the City and the State through the Housing Finance Agency (HFA) under the Private Housing Finance Law.

Because HFA itself did not possess either the power of eminent domain or the power to override City regulations which might delay the project, HFA enlisted respondent UDC, which possesses both those powers, as a participant in the project. On February 20, 1992, UDC determined that the project qualified as a "land use improvement project” pursuant to section 6260 (c) of McKinney’s Unconsolidated Laws of NY (New York State Urban Development Corporation Act § 10 [c]; L 1968, ch 174, § 1, as amended), and therefore constituted an appropriate project for UDC involvement. UDC adopted a General Project Plan, and gave notice of a public hearing on the proposed condemnation to be held in July. At the hearing held on July 15, 1992, those present expressed both support and opposition to the project, and the record was left open an additional 30 days for further written comment. On August 19, 1992, UDC issued its determination and findings, which included a declaration that UDC would exercise its power of condemnation over the site in order to implement the project. HFA, as lead agency, had previously undertaken environmental review pursuant to the State Environmental Quality Review Act (SEQRA) and on August 3, 1992, had issued a negative declaration that the project would have no significant adverse effect on the environment requiring the preparation of an Environmental Impact Statement.

Petitioners instituted an original proceeding in the Appellate Division pursuant to EDPL 207 seeking judicial review of the actions of the condemnor. They alleged that UDC had acted outside the scope of its authority in lending its powers to HFA and in involving itself in a project whose primary purpose was something other than the clearance of a substandard area. They further alleged UDC’s determination was jurisdictionally defective for failure to comply with the requirements of the UDC Act, EDPL and SEQRA, and that the proposed construction of a commercial building for the City constituted an illegal use of funding earmarked for homeless families in violation of the Private Housing Finance Law and that the UDC Act unconstitutionally delegates legislative authority to that agency. The Appellate Division addressed these issues on the merits, confirmed the determination and findings of respondent UDC in all respects and dismissed the petition.

Historically, the parties and issues in condemnation proceedings have been limited. Persons having some proprietary interest in property could challenge a governmental taking. They were aggrieved because they possessed rights which would be extinguished by the government’s action and thus were entitled to have those rights recognized and compensated. Generally, however, persons, such as petitioners, could not participate in eminent domain proceedings. They were not aggrieved because they had no personal or property rights which would be affected by the taking. Arguably, the language of EDPL 207 (A) changes those rules. That section provides that ”[a]ny person or persons jointly or severally, aggrieved by the condemnor’s determination and findings * * * may seek judicial review thereof’ (emphasis added). EDPL 103 (C) defines condemnees as "the holder[s] of any right, title, interest, lien, charge or encumbrance in real property subject to an acquisition or proposed acquisition”; i.e., those commonly recognized as aggrieved parties. Section 207 (A), however, by referring to aggrieved persons rather than condemnees, implies that the Legislature intended that persons other than those with proprietary interests possess assertable rights under EDPL. Thus, the question presented by this appeal is whether these noncondemnees may be aggrieved by actions of the condemnor, and therefore have standing to maintain this proceeding pursuant to the EDPL. Their aggrievement necessarily depends on the rights the statute extends to them and whether the condemnor has invaded or jeopardized those rights.

The EDPL was enacted in 1977 and superseded several statutes granting eminent domain powers to various governmental bodies (see, EDPL 104, and cited Cross References in McKinney’s Cons Laws of NY, Book 16A, at 73 et seq.). It was intended to standardize the means for the public acquisition of property and for determining just compensation for those whose property is taken. However, the new statute recognized other purposes as well. Among them was the need "to establish [an] opportunity for public participation in the planning of public projects necessitating the exercise of eminent domain; to give due regard to the need to acquire property for public use as well as the legitimate interests of private property owners, local communities and the quality of the environment, and to that end to promote and facilitate recognition and careful consideration of those interests” (see, EDPL 101). Consistent with these purposes, the statute provides that prior to acquisition the condemnor must hold public hearings to review the proposed public use and the general effect on the environment and residents "at a location reasonably proximate to the property which may be acquired for such project” (see, EDPL 201). The notice and hearing provisions found in EDPL 201-204 are the only provisions in the EDPL which explicitly address the interests of noncondemnees.

The drafters of the legislation viewed the required hearing as a standardization of hearing requirements previously mandated in many cases by Federal, State and local laws (see, 1974 Report of State Commn on Eminent Domain and Real Property Tax Assessment Review, Comment to EDPL 201, at 14). However, when the proposed legislation reached the Legislature, the provision for public hearings was its most controversial feature. There had been increasing public resistance to some projects, accompanied by time-consuming litigation, and many viewed the hearing requirement as an additional step to the condemnation process which would inject further uncertainty and delay in the completion of public projects (see, e.g., Letter of Herbert Smith, Special Assistant for New York State Assn of Counties, Bill Jacket, L 1977, ch 839; Letter of Harold L. Fisher, Chairman, Metropolitan Transp Auth, op. cit; Letter of Theodore Spatz, Counsel to State Comptroller Arthur Levitt, op. cit; but see, Letter of Langdon Marsh, Acting First Deputy Commr of Dept of Envtl Conservation, op. cit.; Mem of NY St Bar Assn. op. cit.). The Commission recognized the charge that increased public participation could delay or even halt projects, but it believed that the proposed procedures of notice and hearing could forestall the increasing amount of litigation and that the narrow scope of judicial review authorized by section 207 would expedite development once the hearing was concluded. The "partnership of planning” envisaged by the statute, the Commission stated, would lessen the public’s "natural” resistance to projects (see, 1974 Report of Commn, op. cit., at 17).

Nothing in the Commission Report or the legislative history suggests that these provisions were intended to extend to noncondemnees standing to challenge the condemnor’s actions in subsequent judicial proceedings. The interest addressed in sections 201-204 was solely to permit public participation in the planning of the project so that the impact of the proposed project could be addressed at the planning stage. Indeed, the Commission Report noted that participation in the judicial proceedings under section 207 was to be limited to those suffering injury, " 'economic or otherwise’ ” (Report, op. cit., at 22, citing Sierra Club v Morton, 405 US 727). Thus all that petitioners are entitled to under EDPL is a properly conducted hearing held on proper notice. Because such a hearing took place here, petitioners have no assertable EDPL standing.

Alternatively, petitioners urge that this Court should take a more expansive approach to the question, one akin to that employed in determining standing in proceedings involving zoning laws. In Matter of Sun-Brite Car Wash v Board of Zoning & Appeals (69 NY2d 406) we extended standing to challenge zoning determinations to property holders in the immediate vicinity of the premises which were the subject of a zoning determination, without their having to plead and prove special damages or injury in fact. Petitioners suggest such a rule is appropriate here. Our holding in Sun-Brite, however, was premised, not only upon the possibility of an adverse effect on the property owners, but on the additional ground that " 'the interest asserted is arguably within the zone of interest to be protected by the statute’ ” (supra, at 412, quoting Matter of Dairylea Coop, v Walkley, 38 NY2d 6, 9). Indeed, the "zone of interest” test has developed into the primary test for standing in the administrative context, focusing on whether the interest sought to be protected is within the concerns the Legislature sought to advance or protect by a statutory enactment (see, Society of Plastics Indus, v County of Suffolk, 77 NY2d 761, 773-774).

There are notable differences between zoning statutes and eminent domain proceedings, which make clear that petitioners are not within the zone of interest contemplated by the EDPL. Standing in zoning cases is a broader concept because zoning statutes seek to protect "the welfare of the entire community” (see, Sun-Brite, supra, at 413), by making a balanced and effective use of the available land and providing for the public need for varying types of uses and structures (see, Berenson v Town of New Castle, 38 NY2d 102; see also, Asian Ams. for Equality v Koch, 72 NY2d 121). In contrast, eminent domain statutes seek primarily to protect the interests of property owners and to ensure that their property is taken only in accord with proper procedure and for just compensation (see, Fifth Ave. Coach Lines v City of New York, 11 NY2d 342; 51 NY Jur 2d, Eminent Domain, § 320). To the extent the New York Eminent Domain Procedure Law now takes cognizance of other interests — the right of the public to be informed of a proposed condemnation and to be given the opportunity to participate in planning of the project — those interests are protected by the statutory mandate of a public hearing.

Petitioners next urge that they have standing because of a recent amendment to the statute. In 1991 the New York State Legislature amended the scope of judicial review under EDPL 207 to include review of compliance with SEQRA (see, EDPL 207 [C] [3], as amended by L 1991, ch 356). Petitioners urge that because they have standing to seek SEQRA review in a CPLR article 78 proceeding, they also have it in this proceeding. They contend further, that such SEQRA standing under the amendment endows them with standing under EDPL for all purposes. The legislative history indicates otherwise.

The amendment was enacted in response to our ruling in Pizzuti v Metropolitan Tr. Auth. (67 NY2d 1039). That case involved an owner whose property was partially taken for improvement of a railroad line and who alleged environmental harm to the remainder. Consistent with the statutory scheme, our decision reaffirmed the narrow scope of review available in eminent domain proceedings and held that the owner of a condemned property could not, in a proceeding brought pursuant to EDPL 207, seek judicial review of the condemnor’s compliance with the demands of SEQRA. Although environmental impact was a factor to be identified and considered by a condemnor during the hearing stage of the proceedings (see, EDPL 204 [B] [3]), review was limited under the former statute, even for the condemnee, to whether there had been compliance with the procedures of EDPL (see, Pizzuti v Metropolitan Tr. Auth., 114 AD2d 943, 944, affd 67 NY2d 1039, supra).

In response, the Legislature expanded the scope of judicial review to include judicial review of whether the condemnor’s determination was in accord with SEQRA requirements. The purpose of incorporating SEQRA review into EDPL was to promote judicial efficiency in proceedings to acquire real property (see, Atty Gen’s Legis Program, Bill Jacket, L 1991, ch 356). Under the prior law, as we construed it in Pizzuti, a condemnee seeking review of SEQRA issues and eminent domain issues had to bring two separate proceedings with two separate Statutes of Limitations, and the Appellate Division could conceivably have been forced to review the same case twice, once on direct appeal from the condemnation determination and again upon appeal from article 78 review of the SEQRA challenge. The 1991 amendment was intended to permit a reviewing court to pass on both the EDPL issues and the SEQRA issues in one proceeding thereby facilitating prompt review and conserving judicial resources (see, Mem of Atty Gen, 1991 NY Legis Ann, at 190).

It is apparent that these purposes will not be realized if SEQRA review under subdivision (C) (3) of section 207 is limited to claims of condemnees. Accordingly, a noncondemnee who cannot only allege but also establish EDPL aggrievement, and who can also maintain a separate article 78 challenge to a SEQRA finding, is entitled to seek SEQRA review in the eminent domain proceeding also. That narrowly expanded scope of review, however, applies only to those first establishing EDPL standing. It does not allow a petitioner possessing only SEQRA standing to acquire EDPL standing generally by bootstrapping EDPL claims onto a legitimate SEQRA claim. The merits of petitioners’ claims, whether under SEQRA, the UDC Act, or the Private Housing Finance Law must be pursued in other appropriate proceedings.

Finally, petitioners point out that in cases of so-called "friendly condemnation” — in which the condemnee desires the condemnation as ardently as does the condemnor — important

community concerns may receive short shrift. This is especially true where, as here, the condemnor is the UDC with its powers to override local procedural safeguards and controls like the City’s Uniform Land Use Review Procedure. Nevertheless, that concern, standing alone, does not entitle a party to standing (see, Society of Plastics Indus, v County of Suffolk, 77 NY2d 761, 769, supra). If standing is to be expanded to noncondemnees, it is for the Legislature to address the problem created by the exercise of UDC’s override powers in the friendly condemnation context. Petitioners have chosen an inappropriate vehicle in which to challenge the 13th Street project.

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

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

Order affirmed, with costs.

      . In Matter of Jackson v New York State Urban Dev. Corp. (67 NY2d 400), a challenge to the proposed Times Square redevelopment project alleging violations of both SEQRA and EDPL had been brought by, among others, elderly, disabled residents of a neighborhood abutting the project area. We reviewed the case on the merits, without discussion whether this group of petitioners had standing under EDPL. However, the question of standing was not raised by the parties to those proceedings.

      . EDPL 207 (C) limits judicial review to whether (1) the proceeding conformed with the Federal and State Constitutions, (2) the proposed acquisition is within the condemnor’s statutory jurisdiction or authority, (3) the condemnor’s determination and findings were made in accordance with procedures set forth in EDPL article 2 and ECL article 8, and (4) whether a public use, benefit or purpose will be served by the acquisition.


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    [642 NE2d 606, 618 NYS2d 249]
    City of New York et al., Appellants, v 17 Vista Associates et al., Respondents.
    Argued September 21, 1994;
    decided October 25, 1994

      POINTS OF COUNSEL

      Paul A. Crotty, Corporation Counsel of New York City (Elizabeth Dvorkin, Francis F. Caputo and John R. Low-Beer of counsel), for appellants.
    I. The developer’s promise to pay money to a low-income housing trust should not have been deemed void by the Court below. (Matter of Twin State CCS Corp. v Roberts, 72 NY2d 897; Matter of Martin v Ronan, 44 NY2d 374; Matter of Parkview Assocs. v City of New York, 71 NY2d 274, 488 US 801; Andre v Pomeroy, 35 NY2d 361; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Szerdahelyi v Harris, 67 NY2d 42; Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187; Charlebois v Weller Assocs., 72 NY2d 587; Rosasco Creameries v Cohen, 276 NY 274; Murray Walter, Inc. v Sarkisian Bros., 107 AD2d 173.) II. The trial court properly dismissed the affirmative defenses and granted summary judgment to plaintiffs because the developer freely entered into its promise to pay money to the trust, this Court’s Seawall decision is irrelevant to the developer’s obligation and two of the conditions making the note due have occurred. (805 Third Ave. Co. v M. W. Realty Assocs., 58 NY2d 447; Muller Constr. Co. v New York Tel. Co., 40 NY2d 955; Finserv Computer Corp. v Bibliographic Retrieval Servs., 125 AD2d 765; Austin Instrument v Loral Corp., 29 NY2d 124; Sadowsky v City of New York, 732 F2d 312; National Am. Corp. v Federal Republic of Nigeria, 448 F Supp 622, 597 F2d 314; Seawall Assocs. v City of New York, 74 NY2d 92, cert

      denied sub nom. Wilkerson v Seawall Assocs., 493 US 976; Matter of Charles v Diamond, 41 NY2d 318; Noghrey v Acampora, 152 AD2d 660; Slatt v Slatt, 64 NY2d 966.) III. The counterclaim for damages caused by delay in issuing the permits needed to construct the building must be dismissed because there is no such cause of action under New York law. (Rottkamp v Young, 21 AD2d 373, 15 NY2d 831; Arteaga v State of New York, 72 NY2d 212; Tarter v State of New York, 68 NY2d 511; Lloyd v Town of Wheatfield, 109 AD2d 1084, 67 NY2d 809; Boll v Town of Kinderhook, 99 AD2d 898; 154 E. Park Ave. Corp. v City of Long Beach, 52 NY2d 991, 454 US 858; Spitz v Loeffler, 161 AD2d 578; Manuli v Hildenbrandt, 144 AD2d 789; Goldberg v Penny, 163 AD2d 352; Curtis Case, Inc. v City of Port Jervis, 150 AD2d 421.)

      Richards & O’Neil, New York City (Robert J. Ward and Jean Cogill of counsel), for respondents.
    I. This Court lacks subject matter jurisdiction to hear this appeal. (Lizza Indus. v Long Is. Light. Co., 36 NY2d 754; Guthartz v City of New York, 62 NY2d 632; Patrician Plastic Corp. v Bernadel Realty Corp., 25 NY2d 599; Rosemont Enters, v Irving, 41 NY2d 829; Northern Operating Corp. v Town of Ramapo, 26 NY2d 404.) II. The Court below correctly decided that the July 24 letter and note were void and unenforceable for violation of public policy. (Johnston v Fargo, 184 NY 379; Sternaman v Metropolitan Life Ins. Co., 170 NY 13; Szerdahelyi v Harris, 67 NY2d 42; Cheatham v Cheatham, 93 Misc 576; Flegenheimer v Brogan, 284 NY 268; Kirshenbaum v General Outdoor Adv. Co., 258 NY 489; Village of Upper Nyack v Christian & Missionary Alliance, 143 Misc 2d 414, 155 AD2d 530; Hughes v City of Buffalo, 134 Misc 598; Matter of Dunbar, 189 Misc 687; Parfitt v Furguson, 159 NY 111.) III. The Court below was correct as a matter of law in finding that the City fraudulently concealed its determination that the building was not a single-room occupancy multiple dwelling. (Matter of City of New York [Vernon Parkway], 285 NY 326.) IV. Even if the note and July 24 letter were not void for violation of public policy or fraud, the Court below could have granted defendants’ motion on a number of additional grounds. (Seawall Assocs. v City of New York, 74 NY2d 92, cert denied sub nom. Wilkerson v Seawall Assocs., 493 US 976; Five Boro Elec. Contrs. Assn. v City of New York, 12 NY2d 146; Parsa v State of New York, 64 NY2d 143; Mercury Mach. Importing Corp. v City of New York, 3 NY2d 418; Jenad, Inc. v Village of

      Scarsdale, 23 AD2d 784, 18 NY2d 78; Gulest Assocs. v Town of Newburgh, 25 Misc 2d 1004, 15 AD2d 815; I. & I. Holding Corp. v Gainsburg, 276 NY 427; Schlegel Mfg. Co. v Cooper’s Glue Factory, 231 NY 459; Dennis Realty Corp. v Twersky, 190 Misc 936.) V. The Court below could have denied plaintiffs’ summary judgment motion on the additional grounds that there are numerous issues of material fact which require a trial on the merits. (Andre v Pomeroy, 35 NY2d 361; Capelin Assocs. v Globe Mfg. Corp., 34 NY2d 338; D.B.D. Nominee v 814 10th Ave. Corp., 109 AD2d 668; Decision Concepts v Citibank, 91 AD2d 965; Phillips v Kantor & Co., 31 NY2d 307; Dauman Displays v Masturozo, 168 AD2d 204; Cuba Cheese v Aurora Val. Meats, 113 AD2d 1012; Burger King Corp. v Horn & Hardart Co., 893 F2d 525; River Park Assocs. v Meyerbank Elec. Co., 116 AD2d 709; Pantote Big Alpha Foods v Schefman, 121 AD2d 295.) VI. Defendants’ counterclaim properly states a cause of action. (Rottkamp v Young, 21 AD2d 373, 15 NY2d 831; Smith v Rise E. School, 120 AD2d 726; Fraccola v City of Utica, 77 AD2d 161; Frink v Town of Amenia, 91 Misc 2d 491; 154 E. Park Ave. Corp. v City of Long Beach, 76 Misc 2d 445, 49 AD2d 949, 52 NY2d 991, 454 US 858.)
   OPINION OF THE COURT

Smith, J.

The principal issue presented is whether a developer’s promise to pay money to a low-income housing trust in exchange for an expedited and favorable determination for construction permits by a municipality is void as violative of public policy.

I

The Seamen’s Church Institute of New York and New Jersey (the Institute), a not-for-profit religious corporation, maintained headquarters at a State Street site in New York City at which it housed seamen who were in New York between voyages. The certificate of occupancy described the building as a class B multiple dwelling. The occupancy level of the building decreased with the decline of merchant shipping. In the 1980’s, the continuing decline in occupancy, as well as mounting operating costs, threatened the Institute’s survival. It therefore determined that it was necessary to sell the building. In July of 1984, the Institute entered into a contract to sell the property to the defendant 17 Vista Associates (Vista) for $29,000,000. Vista intended to demolish the existing building and erect a high-rise office tower. Closing was scheduled for March 4,1985.

In late February of 1985, however, Vista informed the Institute that it would not close on the sale because its application for a demolition permit had been denied by the Department of Buildings. At issue was the possible application of Local Laws, 1983, No. 19 of the City of New York (now codified as Administrative Code of City of NY § 27-198 [b]), which provided that before the Department of Buildings could issue a permit to alter or demolish a single-room occupancy multiple dwelling (SRO), the owner of the building had first to apply for and obtain from the Commissioner of the Department of Housing Preservation and Development (HPD) a certificate that there had been no harassment of SRO residents, or apply for an exemption from the requirement.

The Institute and Vista agreed to adjourn the closing pending a determination by plaintiff City that the building was not subject to Local Law No. 19. According to Ralph Smith, a member of the board of managers of the Institute, a meeting was held on April 29, 1985 between representatives of the Institute and City officials. After the Institute presented its case for an exemption, the City, according to Smith, "made it clear” that the exemption would not be granted unless the Institute and Vista each made a substantial payment to the City to benefit the homeless. Resolution of the Institute’s entitlement to the exemption would have taken considerable time due to the need for an independent investigation, and the Institute allegedly needed the proceeds of the sale immediately to remain in operation. According to then Commissioner of HPD Anthony Gliedman, the City, therefore, decided to grant the Institute the exemption, without conducting the usual independent evaluation, provided Vista paid $500,000 into a trust created to provide low- and middle-income housing without restriction to seamen. The Institute was also to contribute $1,000,000 from the proceeds of the sale to the trust, known as the 15 State Street Housing Trust, of which two named plaintiffs, City officials, were to serve as trustees.

The Institute and Vista signed the agreement dated July 24, 1985, pursuant to which Vista purchased the property for $29,000,000. Vista also agreed to pay the $500,000 to the trust upon satisfaction of the earliest occurrence of any one of four conditions. On the same date the contract was signed, July 24, 1985, the City, by letter from the general counsel of HPD, issued its determination that the Institute’s building was not an SRO. The letter was from Valerie Asciutto, general counsel of the Department of Housing Preservation, to Luis Munoz, general counsel of the Buildings Department, with copies to the Institute and Vista. It read as follows:

"Based on representations of the Seamen’s Institute of New York and New Jersey (the 'Institute’) and by attorneys and advisors retained and paid by the Institute, the Department of Housing Preservation and Development has determined that the Premises do not constitute a single room occupancy multiple dwelling under Local Law 19 of 1983 of the City of New York because the referenced premises have been used for an 'institutional use’ within the meaning of such law. Consequently, a certificate of no harassment is not required under such law. Furthermore, should the Mayor sign City Council bill 885-A as it was enacted by the Council on July 11, 1985, the Premises, for the same reason and based upon the same representations, will not be considered a single room occupancy multiple dwelling thereunder.”

Also on that date, the Institute paid $1,000,000 to the trust and Vista signed the promissory note for $500,000, which note was also turned over to the trust.

The record reveals that an application for a demolition permit filed by Vista had already been approved by the Department of Buildings on July 12, 1985. Further, the permit application containing the notation, "No SRO. No Landmark. No Special Dist.”, was dated February 6, 1985 and bore the initials of an employee. Vista, however, had never been informed of the approval of this permit application.

After the Department of Buildings issued a permit to Vista on October 1, 1986, the trustees demanded payment on the $500,000 note. The defendants refused to pay and the plaintiffs instituted this action for breach of contract and failure to pay the promissory note. In their answer, the defendants contended, inter alla, that the City did not timely issue the necessary permit as required by the promissory note, and, therefore, payment under the note was not due and owing. They further maintained that since Vista was required to execute the note because of the SRO laws which were later declared unconstitutional, the note was null and void. They also raised duress as an affirmative defense. In their counterclaim, the defendants sought damages in the amount of $70,000,000, allegedly caused by the City’s dilatory actions in issuing the necessary permit. Allegedly due to the City’s delay, the new building was not completed until late 1988, after the stock market decline of 1987, when the real estate market similarly declined.

The plaintiffs thereafter moved, inter alla, for summary judgment on the complaint and for summary judgment dismissing the defendants’ affirmative defenses and counterclaim. The defendants cross-moved for summary judgment dismissing the complaint and for leave to file an amended counterclaim. The Supreme Court, inter alla, awarded the plaintiffs summary judgment on the complaint in the amount of $500,000, plus interest, against Vista. The court dismissed plaintiffs’ claims against the other defendants since only Vista was a party to the documents upon which the complaint was based. The plaintiffs’ motion for leave to file a second amended complaint was also granted. The court denied the defendants’ cross motion and dismissed their affirmative defenses and counterclaim.

The Appellate Division modified the Supreme Court order to deny plaintiffs’ motion for summary judgment and granted defendants’ cross motion for summary judgment dismissing the complaint and for leave to file an amended counterclaim. The Appellate Division stated that the City’s acceptance of money in exchange for an accelerated and favorable determination was an abuse of its governmental power and as such violated public policy, thereby rendering the agreement void and unenforceable.

The Appellate Division granted plaintiffs’ motion for leave to appeal to this Court, and certified the following question: "Was the order of [the Appellate Division], which modified the order of the Supreme Court, properly made?”

II

We hold that the agreement entered into between the parties, whereby the plaintiff, in exchange for a predetermined sum of money, would provide to defendant an expedited and favorable determination as to the SRO status of a building defendant was seeking to purchase, is void as violative of public policy and is unenforceable (Szerdahelyi v Harris, 67 NY2d 42, 48; McConnell v Commonwealth Pictures Corp., 7 NY2d 465, 469). Notably, the City was already aware of the prior determination that the property was not an SRO. The City is restricted from bargaining and agreeing to schemes or arrangements beyond public policy and procedures prescribed by the law, under the guise of "public good.”

The City had a duty to render its determinations as to the status of the building expeditiously and based solely on a review of the relevant criteria. The law should not be applied more favorably to the highest bidder or based on whether or not a party is able to pay. In Seawall Assocs. v City of New York (Seawall II) (74 NY2d 92, cert denied sub nom. Wilkerson v Seawall Assocs., 493 US 976), this Court held unconstitutional, as a physical and regulatory taking, a statute containing a buy-out provision. Local Laws, 1987, No. 9 of the City of New York, imposed a moratorium on the conversion, alteration and demolition of SRO buildings. Owners could, however, make the payment of $45,000 per unit or the cost of a replacement unit, or by providing an equal number of replacement units, purchase an exemption. This Court determined the buy-out exemption of Local Law No. 9 rendered the law constitutionally unacceptable. The Court found that the law permitted owners to avoid the illegal confiscation by paying a "ransom” (74 NY2d, at 113, supra).

Defendant’s counterclaim for damages caused by the delay in issuing the permits needed to construct the building is dismissed as there is no basis for defendant’s cause of action. The decision whether to issue a permit is a discretionary determination and the actions of the government in such instances are immune from lawsuits based on such decisions (see, Rottkamp v Young, 15 NY2d 831, affg 21 AD2d 373, 377; see also, Matter of Parkview Assocs. v City of New York, 71 NY2d 274). Nor is Vista’s counterclaim viable when construed as an action for a breach of contract, as there was not a contract between Vista and the City.

Accordingly, the order of the Appellate Division should be modified, without costs, by granting that branch of plaintiffs’ motion for summary judgment as sought dismissal of the counterclaim and by denying defendants’ cross motion for leave to file an amended counterclaim and, as so modified, affirmed. The Appellate Division’s certified question should be answered in the negative.

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

Order modified, without costs, in accordance with the opinion herein and, as so modified, affirmed. Certified question answered in the negative.

      . Local Law No. 19, was enacted in 1983 and required the Department of Housing Preservation and Development to certify that there had been no harassment of SRO tenants within the previous three years. Without the certification, the Department of Buildings would not issue a demolition permit for an SRO.
      Local Law No. 19 and other SRO laws were designed to protect SRO tenants from being victimized by landlords cutting off all services or hiring persons to terrorize occupants into abandoning their homes. Once the buildings were emptied, the owners could demolish the SRO and erect a more profitable building on the site.

      . The pertinent portion of the July 24, 1985 contract between 17 Vista Associates and Seamen’s Church provides: "Accordingly, and in consideration of the granting of the ground lease to the Property and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Associates agrees to pay to the Trust, the sum of $500,000 upon the earlier of (a) the date a duly issued permit or permits has or have been timely delivered to Associates permitting the lawful construction of the New Building, (b) the date Associates or Fee Associates shall have sold, exchanged or otherwise disposed of its interest in and to the Property, (c) the date (i) JMB/17 Vista Associates and/or K-17 Lease Co. and/or their respective affiliates, shall fail to be both legal and beneficial owner of an aggregate of fifty (50%) percent of the partnership interests in Associates, or (ii) JMB/17 Vista Associates and/or K-17 Fee Co. and/or their respective affiliates, shall fail to be both legal and beneficial owner of an aggregate of fifty (50%) percent of the partnership interests in Fee Associates, or (d) August 1, 1988 but only if Associates shall fail or refuse to promptly and diligently make application for and pursue all permits permitting the lawful construction of the New Building. Associates shall notify the City of any pending sale, exchange or other disposition of (x) its or Fee Associates’ interest in and to the Property and (y) any partnership interest in it or Fee Associates, which when consummated would cause the payment to be due under clause (b) or (c) of this paragraph.”

      . Formerly codified as Administrative Code of City of New York § 27-198.2.

      . Local Law No. 9 is the fourth in a series of SRO laws designed to assist SRO tenants. Local Law No. 59, enacted in 1985, established an 18-month moratorium, retroactive to January 1985, on the demolition of any SRO buildings. Local Law No. 59 expired on July 9,1986.
      Local Law No. 22 of 1986 extended the moratorium of Local Law No. 59 another six months and imposed a rent-up requirement which required landlords to keep all vacant units rented out and forbade warehousing vacancies in anticipation of emptying the building. Local Law No. 22 was declared unconstitutional in Seawall Assocs. v City of New York (Seawall I) (134 Mise 2d 187; Seawall Assocs. v City of New York [Seawall II] 74 NY2d 92, cert denied sub nom. Wilkerson v Seawall Assocs., 493 US 976, supra).

      Local Law No. 9 of 1987 extended the moratorium of Local Laws No. 59 and No. 22 for five years, reenacted the rent-up requirement and contained hardship and buy-out provisions. This law was also declared unconstitutional in Seawall Assocs. v City of New York (Seawall II) (74 NY2d 92, cert denied sub nom. Wilkerson v Seawall Assocs., 493 US 976, supra).


text:
    [642 NE2d 1065, 618 NYS2d 609]
    Zurich Insurance Company, Respondent, v Shearson Lehman Hutton, Inc., Formerly Known as Shearson Lehman Brothers, Inc., Appellant.
    Argued September 21, 1994;
    decided October 25, 1994

      POINTS OF COUNSEL

      McCormick, Fitzpatrick & Mertz, P. C. (Gregory S. Mertz, Keith J. Kasper and Michael J. Straub, of the Vermont Bar, admitted pro hac vice, of counsel), and Jacobson & Triggs, New York City, for appellant.
    I. New York public policy, as articulated by this Court in Home Ins. Co. v American Home Prods. Corp. (75 NY2d 196), demands coverage of the awards at issue. (Aronson v Wiersma, 65 NY2d 592; L.W.C. Agency v St. Paul Fire & Mar. Ins. Co., 125 AD2d 371; Privitera v Town of Phelps, 79 AD2d 1; O’Connell v Press Publ. Co., 214 NY 352; Loughry v Lincoln First Bank, 67 NY2d 369; Doralee Estates v Cities Serv. Oil Co., 569 F2d 716; Roginsky v RichardsonMerrell, Inc., 378 F2d 832; Commercial Union Ins. Co. v Ramada Hotel Operating Co., 852 F2d 298.) II. New York choice of law mandates coverage. (Matter of Allstate Ins. Co. [Stolarz — N. J. Mfrs. Ins. Co.], 81 NY2d 219; Home Ins. Co. v American Home Prods. Corp., 75 NY2d 196; Matter of Zurich Ins. Co. v New York State Tax Commn., 144 AD2d 202; Auten v Auten, 308 NY 155; Union Natl. Bank v Chapman, 169 NY 538; Wilson v Lewiston Mill Co., 150 NY 314; Babcock v

      Jackson, 12 NY2d 473; Schultz v Boy Scouts, 65 NY2d 189; Miller v Miller, 22 NY2d 12; James v Powell, 19 NY2d 249.) III. Shearson should have recovered defense costs herein. (Mighty Midgets v Centennial Ins. Co., 47 NY2d 12; Estate of Coopersmith v Blue Cross & Blue Shield, Vil AD2d 373.)

      Siff Rosen, P. C, New York City (Ignatius John Melito and S. Dwight Stephens of counsel), for respondent.
    I. The law and public policy of New York and this Court’s holding in Home Ins. Co. v American Home Prods. Corp. (75 NY2d 196) govern this case. (Matter of Zurich Ins. Co. v New York State Tax Commn., 144 AD2d 212; National Screen Serv. Corp. v United States Fid. & Guar. Co., 364 F2d 275, 385 US 958; McGinniss v Employers Reins. Corp., 648 F Supp 1263; Steinbach v Aetna Cas. & Sur. Co., 81 AD2d 382; Champion Intl. Corp. v Continental Cas. Co., 546 F2d 502, 434 US 819; Hartford Acc. & Indem. Co. v Village of Hempstead, 48 NY2d 218.) II. Under the controlling Home Ins. Co. v American Home Prods. Corp. (75 NY2d 196) decision, there is no coverage, as a matter of New York public policy, for the punitive damage awards assessed against Shearson in the underlying cases. (Hartford Acc. & Indem. Co. v Village of Hempstead, 48 NY2d 218; Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392; Soto v State Farm Ins. Co., 83 NY2d 718; Unker v Joseph Markovits, Inc., 643 F Supp 1043; Clevenger v Baker Voorhis & Co., 19 AD2d 340, 14 NY2d 536; Doralee Estates v Cities Serv. Oil Co., 569 F2d 716; Loughry v Lincoln First Bank, 67 NY2d 369; Rose v Imperial Engine Co., 127 App Div 885, 195 NY 515; Gill v Montgomery Ward & Co., 284 App Div 36.) III. Shearson is not entitled to its defense costs in this action. (Mighty Midgets v Centennial Ins. Co., 47 NY2d 12; Doyle v Allstate Ins. Co., 1 NY2d 439; Sukup v State of New York, 19 NY2d 519; Rekemeyer v Empire Mut. Ins. Co., 60 AD2d 492; Commercial Union Ins. Co. v International Flavors & Fragrances, 639 F Supp 1401; Hartford Acc. & Indem. Co. v Peck Mem. Hosp., 162 AD2d 659; Allstate Ins. Co. v Aetna Cas. & Sur. Co., 123 Misc 2d 932; National Grange Mut. Ins. Co. v Continental Cas. Ins. Co., 650 F Supp 1404.) IV. Shearson’s counterclaims for bad faith should be dismissed.
   OPINION OF THE COURT

Simons, J.

This is a declaratory judgment action instituted by plaintiff insurer seeking a determination that it had no duty to indemnify its insured for punitive damages awarded against the insured in two separate out-of-State slander actions. The question is whether New York’s public policy precluding indemnification for punitive damages should prevail over the public policies of the judgment States, which allow indemnification.

The action originally encompassed five separate underlying personal injury suits. Three have been resolved. In the first of the two remaining actions, Alexander Simon, the business manager for the actor Burt Reynolds, decided to close the Reynolds account with Shearson because of heavy losses. The Shearson broker then forged Simon’s name to a letter authorizing payment of the funds from that account to Simon’s family and friends. After two senior Shearson executives informed Reynolds of the letter, Reynolds terminated his relationship with Simon. Simon then brought suit in Federal District Court in Georgia for negligence, fraud and slander. He prevailed on the fraud and slander claims, recovering both general and punitive damages, but the District Court set aside the award. On review, the Eleventh Circuit Court of Appeals reinstated the damages awarded on the slander claim when Simon agreed to accept a reduced amount (see, Simon v Shearson Lehman Bros., 895 F2d 1304).

In the second action, Stuart Tucker was dismissed as a Shearson broker for selling limited partnerships without prior approval. In an attempt to retain Tucker’s clients for the brokerage, a Shearson senior vice-president informed them that the Securities and Exchange Commission was going to take away Tucker’s broker’s license, and that he would never be able to work again as a broker. Tucker successfully sued for slander in Texas District Court, winning both compensatory and punitive damages. The Texas Court of Appeals affirmed.

Under the standard general comprehensive liability policy issued to Shearson, Zurich Insurance agreed to pay "all sums” Shearson might become legally obligated to pay as damages in a personal injury action. The policy specifically included an action for slander and contained no choice of law provision. When damages were awarded against Shearson in the out-of-State slander actions, Shearson sought indemnification from its carrier for both the compensatory and punitive damages awarded. In turn, Zurich brought this declaratory judgment action seeking a declaration that it had no duty to provide coverage for the punitive damage awards, because New York law precludes indemnification for punitive damages.

On Zurich’s motion for summary judgment, Supreme Court ruled that under this Court’s holding in Home Ins. Co. v American Home Prods. Corp. (75 NY2d 196), New York’s policy against indemnification for punitive damages would apply even though the punitive damages were incurred in a foreign State. However, the court concluded that New York’s policy would preclude indemnification only for the Georgia award, although the conduct in both underlying personal injury actions would support an award of punitive damages in New York. Because Texas law recognized a compensatory component to a punitive damages award, the court reasoned, the award was not solely for punitive purposes and thus did not offend New York’s policy. On cross appeals by both parties, the Appellate Division held that indemnification for the Texas award should be precluded as well, because the jury there had been charged only on the exemplary purposes of punitive damages, and there was no indication that the award included any compensatory elements. Notably, in both cases the Appellate Division relied on Home Ins. for the proposition that New York policy concerning indemnification for punitive damages applied to punitive damages awarded in a foreign State against a New York insured. There is an important contextual distinction between this case and Home Ins., however: in Home Ins., the public policy of the judgment State, like that of New York, precluded indemnification for punitive damages, while here the judgment States permit it. Thus, this case presents a choice of law issue not present in, or decided by, Home Ins.

We conclude that New York choice of law principles require application of New York’s public policy. However, that public policy would not, under the circumstances of this case, preclude indemnification for the punitive damages awarded in the underlying action in the State of Georgia, only for those awarded in the action in the State of Texas.

Shearson attempts first to remove this case from the Home Ins. universe entirely by arguing that the tortious conduct in the underlying personal injury actions would not support an award of punitive damages in New York. Under Home Ins. this is a necessary threshold determination for if the damages awarded would not be "punitive” under New York law, indemnification would not be precluded by New York public policy. In that case there would be no conflict between New York and the judgment States concerning indemnification and the choice of law problem central to this appeal would not arise.

Addressing the Georgia judgment, Shearson points out that in that action it was necessary to resort to extrinsic evidence to establish that the statements at issue constituted slander per se. Under New York law, if slander per se is established by extrinsic evidence, the plaintiff must plead and prove special damages as an element of the claim, or recovery is barred (see, Aronson v Wiersma, 65 NY2d 592). Because Simon, the Georgia plaintiff, did not plead and prove special damages (California law did not require it), Shearson argues that his recovery would be barred in New York and thus the conduct at issue would not support an award of punitive damages in this State. Shearson has failed, however, to distinguish between the conduct and the method of its proof.

In Home Ins., we stated that a New York court "must examine the nature of the claim, including the degree of wrongfulness for which the damages were awarded” (75 NY2d, at 201). We meant by this that the court must ascertain whether the conduct at issue exhibits the degree of culpability necessary to sustain a punitive award in New York, not whether the form of evidence or the method of proof acceptable to the judgment State would be sufficient in New York. Home Ins. in fact precludes the New York court from undertaking collateral review of the factual determinations or the legitimacy of the proceedings of the judgment State as part of its determination whether to apply New York’s policy on punitive damages. The Georgia court found the statement at issue was made with "actual malice”, which satisfies New York’s legal standard for slander, and thus the conduct in the Georgia action would support a New York punitive damage award.

The rule in Home Ins. similarly disposes of Shearson’s argument that Tucker, the plaintiff in the Texas action, would not have prevailed in New York because the Shearson executive who uttered the slanderous statements was not sufficiently highly placed to establish the necessary level of corporate complicity. The Texas Court of Appeals affirmed that the standard for corporate liability under Texas law was satisfied, and under Home Ins. New York will not undertake collateral review of a sister State’s application of its own law. Because the Texas jury found the statements had been made with "actual malice”, the standard of culpability to support a New York punitive award is met here as well.

Shearson next argues that because the concept of punitive damages under Georgia and Texas law differs so fundamentally from that of New York, New York’s public policy would not be offended by indemnification. Thus, it contends that indemnification for the Georgia award should be permitted because it is impossible to determine whether the jury awarding punitive damages contemplated an exemplary or a compensatory purpose, or indeed both, and that Shearson should accordingly be afforded the benefits of "the presumption of coverage”.

We have consistently adhered to the view that the purpose of punitive damages is solely to punish the offender and to deter similar conduct on the part of others (see, Soto v State Farm Ins. Co., 83 NY2d 718; Hartford Acc. & Indem. Co. v Village of Hempstead, 48 NY2d 218). Punitive damages are not intended to compensate or reimburse the plaintiff (see, Home Ins. Co. v American Home Prods. Corp., 75 NY2d 196, supra). However, under the Georgia statute in effect at the time of the Simon action (Ga Code Annot § 51-12-5 [a]), a jury in a tort action with "aggravating circumstances” could award "additional damages to deter the wrongdoer * * * or as compensation for the wounded feelings of the plaintiff”. The trial court indicated at the charge conference that her charge on punitive damages would track this statutory language. Inasmuch as the court charged the jury that the punitive damage award could include both punitive and compensatory elements and there was evidence to support each, the plaintiff must supply coverage. Home Ins. firmly establishes that only when the damage award is of a "punitive nature” is indemnification precluded by New York policy. On the record before us, it appears that the damages awarded in the Simon action also had a compensatory purpose and plaintiff must indemnify its insured for them.

In the Tucker action Texas law authorizing punitive awards permitted the jury to consider both exemplary and compensatory damages. Nevertheless, the court charged the jury that it should consider only exemplary damages and there is no evidence that the award was for other than deterrent purposes. Accordingly, because New York public policy precludes indemnification for the punitive damages awarded in the Tucker action, we must address the choice of law question not disposed of by our decision in Home Ins.

Historically, courts faced with a choice of law question in contract cases applied the law of the State where the contract was made or was to be performed (see, Restatement of Conflict of Laws § 370). However, as the flaws in the mechanical application of these rigid rules became apparent, our Court developed more flexible approaches to choice of law questions. In Auten v Auten (308 NY 155) we inaugurated the use of "center of gravity” or "grouping of contacts” as the appropriate analytical approach to choice of law questions in contract cases.

The purpose of grouping contacts is to establish which State has "the most significant relationship to the transaction and the parties” (see, Restatement [Second] of Conflict of Laws § 188 [1]). The Second Restatement, in addition to the traditionally determinative choice of law factor of the place of contracting, offers four other factors to be considered in establishing this "most significant relationship”: the places of negotiation and performance; the location of the subject matter; and the domicile or place of business of the contracting parties (see, id., § 188 [2]). Shearson has its principal place of business in New York, where the insurance contract was negotiated and issued, and where claims under the policy were handled. The parties dispute whether Zurich, a Swiss corporation with its headquarters in Illinois, is a New York resident. In Matter of Zurich Ins. Co. v New York State Tax Commn. (144 AD2d 202), however, the Third Department noted that Zurich has maintained a selling office in New York, which has acted as the main supervisor of plaintiffs United States branch and its accounts examiner; thus, it stated, Zurich "is considered an adopted domestic of this State” (id., at 202). The Appellate Division here took judicial notice of this ruling and concluded Zurich qualifies as a "New York insurer”. Thus, the Second Restatement factors to be considered in a grouping of contacts point to the application of New York law.

Beyond these general contract principles, however, the Second Restatement also separately addresses that special subset of contracts that involves insurance, and takes the position that where liability insurance contracts are concerned, the applicable law is "the local law of the state which the parties understood was to be the principal location of the insured risk * * * unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6[] to the transaction and the parties” (see, Restatement [Second] of Conflict of Laws § 193). Shearson and Zurich take diametrically opposed views on the question of what the parties understood to be the location of the risk. Shearson maintains that it was orally agreed between the parties that the law of the judgment State would determine whether indemnification for punitive damages would be available. Zurich contends that there was no such oral agreement and that, because the risk insured against was the risk of financial loss, New York, as the center of Shearson’s financial interests, is the effective location of that risk. We need not, however, attempt to resolve this dispute, or even to try to shape an abstract rule of general applicability concerning the location of the risk in general liability contracts where the insured party conducts business in many States. Under the circumstances of this case, even if we were to determine that the risks insured against were located in the judgment States, New York public policy would still apply.

We have previously noted that even in contract cases, where

grouping of contacts is the primary analytical tool, in certain instances "the policies underlying conflicting laws in a contract dispute are readily identifiable and reflect strong governmental interests, and therefore should be considered” (see, Matter of Allstate Ins. Co. [Stolarz], 81 NY2d 219, 226; see also, Zeevi & Sons v Grindlays Bank, 37 NY2d 220, 227 [application of New York law to implementation of an international letter of credit, to maintain New York’s preeminent position as world finance center]). Theoretically, in a proper case, a foreign State’s sufficiently compelling public policy could preclude an application of New York law otherwise indicated by the grouping of contacts analysis, particularly where New York’s policy is weak or uncertain. This, however, is not that case. The strength of New York’s unambiguous policy against insurance coverage for punitive damages is such that an identical result obtains even when public policy and governmental interests are taken into account in the grouping of contacts.

Initially, we note that such consideration of governmental interests does not transform the analytical paradigm into one of "interest analysis”, our approach to choice of law questions in tort cases. Under interest analysis, controlling effect must be given to the law of the jurisdiction which "has the greatest concern with the specific issue raised in the litigation” (see, Babcock v Jackson, 12 NY2d 473, 481), unless the public policy exception, available only when " 'some deep-rooted tradition of the common weal’ ”, dictates a contrary result (see, Cooney v Osgood Mach., 81 NY2d 66, 78 [recently formulated New York policy permitting contribution against an employer did not preclude application of Missouri’s workers’ compensation statute which bars such contribution]). Although Shearson urges that tort cases provide the proper analytical framework for resolving conflicts over "tort-like issues” of punishment and deterrence, what is involved here is an insurance policy— a contract. Moreover, because a question of whether New York’s interest precludes indemnification for punitive damages focuses more on the conduct of the insured than on that of the insurer, the New York domicile of that insured becomes an even weightier contact once the governmental interest is taken into consideration.

We recently affirmed the continuing and unabated force of our public policy precluding indemnification for punitive damages in Soto v State Farm Ins. Co. (83 NY2d 718, supra). In Soto, the insurance carrier had in apparent bad faith refused a settlement offer in the underlying personal injury action which was within the policy limits. At the ensuing trial, the injured parties recovered compensatory damages well in excess of the policy coverage, as well as a sizable award of punitive damages. The insured sought to recover from the insurance carrier the amount of the punitive damages. Although we noted that the punitive damages award under the circumstances was "no different in principle” (id., at 723) from the award of excess personal injury damages, because both represented unindemnified liabilities to which the insured was exposed because of the carrier’s bad faith, we concluded that to allow recovery would nevertheless be "unsound public policy” (id., at 724). Recognizing that the deterrent value of the rule precluding indemnification for punitive damages was "somewhat attenuated” in the context of the case, we nonetheless adhered to it because "the rule’s equally important goal of preserving the condemnatory and retributive character of punitive damage awards remains clear and undiminished” (id., at 724). Here, the deterrent as well as the condemnatory character of the award is implicated.

Admittedly, the policy question is more problematic in cases where the liability for punitive damages is solely vicarious. The issue has been widely debated (see, e.g., Comment, Broker Churning: Who is Punished? Vicariously Assessed Punitive Damages in the Context of Brokerage Houses and Their Agents, 30 Hous L Rev 1775 [1993]; Parlee, Vicarious Liability for Punitive Damages: Suggested Changes in the Law Through Policy Analysis, 68 Marq L Rev 27 [1984]). Indeed, several States whose public policy prohibits liability insurance coverage of punitive damages have recognized an exception in cases of vicarious liability (see, Annotation, Liability Insurance Coverage as Extending to Liability for Punitive or Exemplary Damages, 16 ALR4th 11, § 4).

In Texas, unlike Georgia, there is no statutory authority explicitly authorizing insurance coverage for punitive damages, but the Texas courts have interpreted the general insurance law to permit such coverage, taking the view that coverage is particularly justifiable in cases of vicarious corporate liability (see, American Home Assur. Co. v Safway Steel Prods. Co., 743 SW2d 693, 703). New York, however, has taken the position that the imposition of vicarious punitive damages can significantly advance the deterrence goal by motivating an employer adequately to supervise its employees, particularly those whose actions may reflect what has come to be known as “the corporate culture” and implicate the "institutional conscience” (see, Aldrich v Thomson McKinnon Sec., 589 F Supp 683, 686 [SD NY], judgment vacated on other grounds 756 F2d 243), and to take preventive and corrective measures (see, Loughry v Lincoln First Bank, 67 NY2d 369, 377). We have not deviated from this policy choice. That Texas has made another, equally legitimate choice, is not sufficient to compel a New York court to disregard our State’s unswerving policy against permitting insurance indemnification for punitive damage awards, when New York choice of law principles dictate the application of that policy.

Accordingly, the order of the Appellate Division should be modified, without costs, by declaring that the punitive damage award arising out of the Simon action is covered by the Zurich policy at issue, and, as so modified, affirmed.

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

Order modified, without costs, etc.

      . Shearson then commenced two separate actions, one in Georgia and one in Texas, seeking declarations of coverage, and moved in Supreme Court for a dismissal or stay of Zurich’s declaratory judgment action because of the pendency of the Georgia and Texas actions. Supreme Court denied Shearson’s motion and granted Zurich’s cross motion for a preliminary injunction restraining Shearson from pursuing the Georgia and Texas actions.

      . The slanderous statement was made in a telephone conversation between a Shearson attorney in New York and another attorney in California.

      . Georgia has now amended its statute on punitive damages to specify that such damages "shall be awarded not as compensation to a plaintiff but solely to punish, penalize, or deter a defendant” (see, Ga Code Annot § 51-12-5.1 [c]).

      . In reinstating the punitive award, the United States Court of Appeals indicated that there was evidence in the record supporting an award for deterrence and also "sufficient to demonstrate that the slander * * * caused an impairment of Simon’s reputation, personal humiliation, and mental anguish and suffering” (see, Simon v Shearson Lehman Bros., 895 F2d 1304, 1319, supra).

      . Section 6 of Restatement (Second) of Conflict of Laws embodies the general choice of law principles. The Restatement notes in comment c to this section that these principles "will point in different directions in all but the simplest case”, and that especially in complex situations like contract cases, all that can be done is to state a general principle "which provides some clue to the correct approach”.


author: Bellacosa, J.

text:
    [642 NE2d 1071, 618 NYS2d 615]
    Leonard P. Cummins, as Successor Administrator of the Estate of Karen A. Cummins, Deceased, Appellant, v County of Onondaga, Respondent, et al., Defendant.
    Argued September 21, 1994;
    decided October 25, 1994

      POINTS OF COUNSEL

      Robert E. Lahm, Syracuse, for appellant.
    The courts below were mistaken as a matter of law where they overturned the jury’s verdict awarding damages for conscious pain and suffering and granted judgment notwithstanding the verdict, despite support for the award in the record. (Rochester Tel. Corp. v Green Is. Constr. Corp., 51 NY2d 788; Martin v City of Albany, 42 NY2d 13; Cohen v Hallmark Cards, 45 NY2d 493; Torelli v City of New York, 176 AD2d 119; Halvorsen v Ford Motor Co., 132 AD2d 57; Rowe v Board of Educ., 120 AD2d 850, 68 NY2d 609; Fotiu v Ewing, 90 AD2d 602; Nicastro v Park, 113 AD2d 129; Muth v J & T Metal Prods. Co., 74 AD2d 898; Triggs v Advance Trucking Corp., 23 AD2d 777.)

      Jon A. Gerber, County Attorney of Onondaga County, Syracuse (Joanna Gozzi of counsel), for respondent.
    The courts below were correct in setting aside the jury’s verdict for conscious pain and suffering and granting respondent a judgment notwithstanding the verdict since no evidence was submitted at trial to support such a verdict. (Cohen v Hallmark Cards, 45 NY2d 493; Torelli v City of New York, 176 AD2d 119; Halvorsen v Ford Motor Co., 132 AD2d 57; Rowe v Board

      of Educ., 120 AD2d 850; Fotiu v Ewing, 90 AD2d 602; Jones v Simeone, 112 AD2d 772; Huertas v State of New York, 84 AD2d 650; Blunt v Zinni, 32 AD2d 882, 27 NY2d 521; Bruck v Meatto Trucking Corp., 20 AD2d 521; Fiederlein v New York City Health & Hosps. Corp., 56 NY2d 573.)
   OPINION OF THE COURT

Bellacosa, J.

The action is for wrongful death and conscious pain and suffering, but the appeal relates exclusively to whether there was any line of reasoning which could support the jury’s damage verdict for conscious pain and suffering. The Appellate Division affirmed the trial court’s order setting aside the pain and suffering award, with two Justices dissenting to uphold the jury verdict. We agree with the lower courts that plaintiff’s evidence here failed to meet the minimum legal threshold and affirm the order of the Appellate Division.

On the night of January 24, 1988, decedent was killed in a single-car accident when she lost control of her car, causing it to veer off a county road, flip over and come to rest upside down in a pond of water adjacent to the roadway. The Onondaga County Medical Examiner determined drowning and hypothermia as the causes of death. Decedent’s estate representatives sued the County. Liability was asserted based on the County’s failure to provide adequate or proper design of the highway, adequate posting and lighting and maintenance of the roadway. The jury found the County negligent in failing to install a guardrail beside the road and determined that decedent was 50% at fault. The jury awarded decedent’s estate $63,700 for the wrongful death pecuniary loss and $400,000 for her pain and suffering. On the County’s motion to set aside the verdict, the trial court granted judgment notwithstanding the verdict and vacated the conscious pain and suffering award as a matter of law. The Appellate Division affirmed, stating that "[tjhere was no evidence presented by plaintiff at trial from which the jury could infer that decedent was conscious” (198 AD2d 875). We agree.

Plaintiffs have the threshold burden of proving consciousness for at least some period of time following an accident in order to justify an award of damages for pain and suffering (see, Fiederlein v New York City Health & Hosps. Corp., 56 NY2d 573, 574-575; see also, McDougald v Garber, 73 NY2d 246). The burden can be satisfied by direct or circumstantial evidence (see, Gonzalez v New York City Hous. Auth., 77 NY2d 663). However, "[m]ere conjecture, surmise or speculation is not enough to sustain a claim for [pain and suffering] damages” (Fiederlein v New York City Health & Hosps. Corp., supra, at 574). Without legally sufficient proof of consciousness following an accident, a claim for conscious pain and suffering must be dismissed (see, Blunt v Zinni, 32 AD2d 882, affd 27 NY2d 521).

In this case, the record lacks evidence, circumstantial or otherwise, to demonstrate that decedent was conscious following the onset of her fatal accident. The undisputed evidence demonstrates that the decedent’s car was travelling over 45 m.p.h. when it spun out of control. The autopsy revealed a bruise on her scalp, which was consistent with a large dent found on the roof of the car. Although there was an eyewitness to the inception of the accident, no testimony emerged that the decedent cried out or made any noise in pain or in seeking aid following the accident. Police officers, who arrived at the scene within minutes after the rollover accident, testified that the decedent was found fastened in her operable seat belt, with the ignition keys still engaged in the "on” position. The officers observed no scratch marks or other manifestations inside the car, which would indicate any attempt by decedent to extricate herself after the accident. When decedent’s body was recovered from the car and water, approximately 10 minutes after the accident, she had no vital signs. Resuscitation was attempted, but she never regained consciousness. The testimony of the officers and eyewitness to the accident, as a matter of law, provides no direct or circumstantial basis for a jury to conclude rationally that decedent was conscious after the rollover of the vehicle. The little evidence present is to the contrary.

The medical expert, plaintiff’s witness, also supplied inconclusive testimony on this key issue. On direct examination, the expert noted that decedent had sustained a bruise to her scalp. When asked whether decedent was conscious when she was immersed in the water, the doctor replied, "I can’t say.” He added that he could not tell from examining the body whether decedent was conscious when and after she and the vehicle entered the water.

Based on this record, there is "mere conjecture, surmise or speculation” and simply no evidentiary basis from which a rational jury could have found that the decedent was con-

scious following the accident (cf., Mirand v City of New York, 84 NY2d 44, 48; see also, Cohen v Hallmark Cards, 45 NY2d 493, 499). This indispensable ingredient to support and sustain a conscious pain and suffering verdict not having been supplied, this Court cannot say that the Appellate Division erred in upholding the trial court’s vacatur of the jury award on that cause of action.

Gonzalez v New York City Hous. Auth. (77 NY2d 663, supra) is factually and procedurally distinguishable and does not control or aid in the disposition of this case. In that case, the Court found sufficient circumstantial evidence that decedent was conscious during a vicious attack, noting that if she was not awake, there would have been no likely reason for the murderer to have elaborately bound, gagged and injured her as he did.

Plaintiff additionally urges in support of this appeal that we apply the doctrine of "presumption of continuance” as a substitute for the proof of decedent’s consciousness after the accident. This argument, assuming the theory were to be adopted in circumstances such as these, would turn on record evidence that the decedent was conscious and driving just before the onset of the accident (see, Richardson, Evidence § 74 ¡Prince 10th ed]). This rule provides that "[p]roof of the existence of * * * a condition * * * at a given time raises a presumption that it continued for as long as is usual with things of that nature” (id.). The real significance and thrust of this broadly general rule comes from its specific application and in the kinds of situations and circumstances where it might be allowed.

In any event, in this case, the theory was not timely raised or advanced before the trial court, and thus is unpreserved for the Court’s review. We therefore reject the argument for lack of preservation. We note, however, that no implications are intended and no inferences should be drawn as to how this Court would resolve the merits, pros and cons, of a proposed extension and application of the so-called presumption of continuance into this conscious pain and suffering area of the law. That would have to be weighed carefully in an appropriate case, because availability and application of the rule would affect long-standing and delicate burdens of proof and major risk and damage policy allocations (compare, Noseworthy v City of New York, 298 NY 76, 80).

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

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

Order affirmed, with costs.


text:
    [642 NE2d 1073, 618 NYS2d 617]
    In the Matter of Met Council, Inc., et al., Appellants, v Matthew Crosson, as Chief Administrator of the Courts of the State of New York, et al., Respondents.
    Argued September 20, 1994;
    decided October 27, 1994

      POINTS OF COUNSEL

      Raun J. Rasmussen, John C. Gray, Jr., Sarah Dranoff, Laura Nelsen, Brooklyn, Andrew Scherer, New York City, David Robinson, Finder, Novick, Kerrigan & Anderson (Andrea T. Novick of counsel), Wayne Hawley, Michelle Schreiber and Susan Cohen for appellants.
    I. Housing Judges may not hold over after the expiration of their five-year terms. (Patrolmen’s Benevolent Assn. v City of New York, 41 NY2d 205; Matter of Allstate Ins. Co. v Libow, 106 AD2d 110; Strutt v Mont, 97 Misc 2d 744; Glass v Thompson, 51 AD2d 69; Babigian v Wachtler, 69 NY2d 1012; People v Scalza, 76 NY2d 604.) II. Respondents lacked authority to apply the reappointment process to applicants whose terms as Housing Judges had expired. (Finkelstein v Kins, 69 NY2d 1023; Matter of

      Roher v Dinkins, 40 AD2d 956; Sylvia Lake Co. v Northern Ore Co., 242 NY 144; People v Scully, 110 AD2d 733.) III. The Civil Court Act mandates that reappointment decisions be made by the Administrative Judge, not by the Chief Administrator. (Matter of Schumer v Holtzman, 94 NY2d 516, 60 NY2d 46; Matter of Wilcox v Dwyer, 73 AD2d 1016; Matter of Blyn v Bartlett, 39 NY2d 349; Durante v Evans, 94 NY2d 141, 62 NY2d 719; Bartlett v Evans, 110 AD2d 612; Tenney v Sise, 122 AD2d 370.)

      Kenneth Falk, New York City, Michael Colodner and John Eiseman for respondents.
    I. The three incumbent Housing Judges properly were subject to the reappointment process notwithstanding the expiration of their terms in office because Housing Judges hold over in office until successors are appointed. (Matter of O’Day v Yeager, 308 NY 580; Glass v Thompson, 51 AD2d 69; Babigan v Wachtler, 133 Misc 2d 111, 126 AD2d 445, affd sub nom. Babigian v Wachtler, 69 NY2d 1012; Ferres v City of New Rochelle, 68 NY2d 446; Matter of Sutka v Conners, 73 NY2d 395; People v Eulo, 63 NY2d 341.) H. The three incumbent Housing Judges properly were subject to the reappointment process because they were appointed as their own successors to the same office. III. Housing Judges are subject to the appointment authority of the Chief Administrator of the Courts. (Corkum v Bartlett, 46 NY2d 424; Matter of Blyn v Bartlett, 39 NY2d 349; Durante v Evans, 94 AD2d 141, 62 NY2d 719; Tenney v Sise, 122 AD2d 370, 68 NY2d 910; Bartlett v Evans, 110 AD2d 612.)
   OPINION OF THE COURT

Smith, J.

The principal issues presented are (1) whether Housing Court Judges may hold over after the expiration of their five-year term and (2) whether Housing Court Judges are subject to the reappointment authority of the Chief Administrator of the Courts.

I

Jack Dubinsky and Emanuel Haber were originally appointed to five-year terms as Housing Judges on July 23, 1981 and reappointed to second five-year terms on July 23, 1986. Their second terms expired on July 22, 1991. However, because respondents had not yet completed their investigations of the qualifications of Housing Judges Dubinsky and Haber for a third term, respondent Silbermann, the Administrative Judge of the Civil Court of the City of New York, issued letters extending their terms as Housing Judges through September 23, 1992.

Harriet George was originally appointed to a five-year term as Housing Judge on April 1, 1977, reappointed to a second five-year term on April 1, 1982, and reappointed to a third five-year term on April 1, 1987. Housing Judge George’s third term expired on March 31, 1992. Because respondents had not yet completed their investigations of Housing Judge George’s qualifications for a fourth term, respondent Silbermann issued letters extending her term as Housing Judge through September 23,1992.

On July 14, 1992, petitioners commenced this proceeding in the Appellate Division, pursuant to CPLR article 78, seeking judgment prohibiting respondents from allowing Housing Judges Dubinsky, Haber and George to continue to sit as Housing Judges, directing respondents to remove them from their positions, and prohibiting their reappointment to new terms unless they were appointed in the same manner as new Housing Judges were appointed. Approximately two weeks later, on August 4, 1992, respondents reappointed Housing Judges Dubinsky, Haber and George as Housing Judges for five-year terms.

Petitioners then served an amended petition, essentially seeking the same relief as their original petition. The Appellate Division denied petitioners’ application and dismissed the petition, without opinion. Petitioners appeal, pursuant to leave granted by this Court. Petitioners argue that Housing Court Judges may not hold over after the expiration of their five-year terms; that respondents lacked authority to apply the reappointment process to applicants whose terms as Housing Court Judges had expired; and that the Civil Court Act mandates that reappointment decisions be made by the Administrative Judge of the Civil Court, not by the Chief Administrator of the Courts.

II

Chapter 982 of the Laws of 1972 amended the New York City Civil Court Act (CCA) by inserting a new section 110 to establish the Housing Part of the Civil Court of the City of New York. CCA 110 (f) provided for the appointment of "hearing officers” by the Administrative Judge of the Civil Court from a list of persons found qualified by the "advisory council for the housing part.”

In Glass v Thompson (51 AD2d 69), the Appellate Division held constitutional the appointment of Hearing Officers to preside over nonjury trials in the Housing Part of the Civil Court. The Court suggested that although Hearing Officers were able to preside over housing matters and exercise judicial functions, their office was distinct from that of a Judge of the Civil Court. Since Judges of the Civil Court are elected or appointed in accordance with article VI of the State Constitution, the Court in Glass determined that attorneys with special expertise in housing matters who preside over proceedings in the Housing Court need not be selected in accordance with constitutional provisions because as Hearing Officers they are essentially Referees, that is, nonjudicial officers of the court appointed to assist it in the performance of its judicial functions (Glass v Thompson, 51 AD2d, at 74, supra).

CCA 110 was amended by chapter 310 of the Laws of 1978 to change references to "hearing officers” of the Housing Part to "housing judges.” The intent of the Legislature in changing the title of Hearing Officer to Housing Judge was to improve the stature of the officers who presided in the Housing Court and thereby improve the stature and effectiveness of the entire court.

Senator Manfred Ohrenstein, Minority Leader and sponsor of the Senate bill, in his memorandum in support of the legislation, explicitly stated that it was not the intent of this bill to change the result in Glass v Thompson. Then Governor Hugh L. Carey, in his memorandum approving the legislation, acknowledged that the intent of the legislation was to "provide a change in nomenclature from Hearing Officer to Housing Judge in an effort to foster respect and establish the decorum needed in a judicial proceeding” (Bill Jacket, L 1978, ch 310). Section 110 was amended a second time in 1984 in relation to Housing Judges, to provide that Housing Judges are "duly constituted judicial officers” (L 1984, ch 528). Governor Mario Cuomo stated that the amendment was intended to clarify the nature of the 1978 amendment. It was not intended "to confer any additional jurisdiction, powers or benefits” on Housing Judges. (See, Governor’s Mem approving L 1984, ch 528,1984 McKinney’s Session Laws of NY, at 3619.)

It is clear from this history that the legislative amendments to CCA 110 did little more than change the title of Hearing Officer to Housing Judge, with the 1984 amendment clarifying the intent of the 1978 amendment. The effect of the amendments was not a delegation of new and different powers or change in status. The nature and duties of the position were not changed from "nonjudicial” when the title was "Hearing Officer” to "Judicial” as "Housing Judge.” "Housing Judges” remain essentially a form of "referee”, nonjudicial officers of the court, appointed to assist the Judges of the Civil Court in the performance of their judicial functions (Glass v Thompson, 51 AD2d 69, 74, supra).

As the 1978 and 1984 amendments to the Civil Court Act did not intend to confer any additional benefit, status or privilege upon Housing Judges, so, too, the statute did not intend Housing Judges to be judicial officers within the meaning of Public Officers Law § 5. Judicial officers cannot hold over under section 5 of the Public Officers Law but other officers, including Referees, can. Since Hearing Officers were previously not prohibited from holding over after their terms had expired, the same applies to Housing Judges, since only their title and not the nature of their position has changed.

Ill

CCA 110 (f), provides for the appointment of Housing Judges and sets forth the criteria required. This appointment is by the Administrative Judge from a list of qualified applicants compiled by the Advisory Council for the Housing Part. The Advisory Council is made up of 14 individuals from various backgrounds who conduct initial prescreening interviews and evaluations of applicants. In compiling this list, the Advisory Council considers "training, interest, experience, judicial temperament and knowledge of federal, state and local housing laws and programs” (CCA 110 [f]).

CCA 110 (i) provides for reappointment of Housing Judges as follows:

"Housing judges shall have been admitted to the bar of the state for at least five years, two years of which shall have been in active practice. Each housing judge shall serve full-time for five years. Reappointment shall be at the discretion of the administrative judge and on the basis of the performance, competency and results achieved during the preceding term.”

Petitioners contend that the reappointment of the three Housing Judges was improper under CCA 110 (i), arguing that once the Housing Judges’ term of office was up, they were no longer Housing Judges for purposes of reappointment and were therefore required to apply through the new appointment process. This argument is not supported by the statute. The statute, CCA 110 (i), does not require that Housing Judges be reappointed "before” their term has expired. The incumbent Housing Judges in this case continued to be Housing Judges until they were reappointed because they were lawfully holding over and there was no vacancy in the office or lapse in their tenure. Therefore, under these circumstances, there was no need to go through the original screening process.

Alternatively, appellants argue that even if the reappointment of the three Housing Judges was proper under CCA 110 (i), the reappointments were nonetheless void because the Chief Administrator rendered the decision to reappoint and not the Administrative Judge as expressly provided by the statute.

Notwithstanding that the Civil Court Act provides for appointment and reappointment of Housing Judges by the Administrative Judge of the Civil Court (CCA 110 [f], [i]), State Constitution, article VI, § 28 expressly vests the Chief Administrator, on behalf of the Chief Judge, with the broad power to supervise the administration and operation of the Unified Court System. 5The powers of the Chief Judge are said to be "complete” and may be exercised fully by the Chief Administrator on behalf of the Chief Judge (see, Corkum v Bartlett, 46 NY2d 424, 428-429). Similarly, 22 NYCRR 80.1 (b) (3) states that among the powers and duties of the Chief Administrator is the power to appoint and remove all nonjudicial officers and employees (see, Durante v Evans, 94 AD2d 141, 144, affd for reasons stated by App Div 62 NY2d 719).

Although the title of Hearing Officer has been changed to Housing Judge, the nature of the position has not changed. The legislative amendments meant only to change the title of the position, without conferring any additional benefit, status, authority or privilege upon it. Housing Judges are still "nonjudicial officers of the court,” as the Court in Glass v Thompson (51 AD2d, at 74, supra) determined. As such, they are subject to the constitutional appointment power of the Chief Administrator, notwithstanding CCA 110. Since the appointment powers of the Chief Administrator flow from the State Constitution, they cannot be abrogated by statute. Thus, although the New York City Civil Court Act provides that the Administrative Judge has the power of appointment and reappointment of Housing Judges, it is the Chief Administrator who in fact has the ultimate power of appointment and reappointment. The New York City Civil Court Act must be read together with, and be applied consistently with, the Constitution.

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

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

Judgment affirmed, with costs.

      . (L 1978, ch 310.) With the change in title of the Hearing Officer, the legislative amendment also changed references to Judges of the Housing Court. References to actual Judges of the Housing Court were clarified by the simultaneous addition of the terms "civil court” and "acting civil court” before the term "judge” as it previously existed in the statute (L 1978, ch 310, § 4). This was an attempt to distinguish between Judges elected under the provisions of article VI of the State Constitution and Hearing Officers, who were merely receiving a change in title.

      . Public Officers Law §5 in pertinent part provides: "Every officer except a judicial officer * * * having duly entered on the duties of [the] office, shall * * * hold over and continue to discharge the duties of [the] office after the expiration of the term for which he shall have been chosen, until his successor shall be chosen and qualified; but after the expiration of such term, the office shall be deemed vacant for the purpose of choosing his successor.”

      . This council was established pursuant to CCA 110 (g) to assist in the initial selection of new Housing Judges. The evaluation and prescreening of new applicants, followed by recommendations by the Advisory Council is important, as these individuals are new to the Unified Court System and court administrators are generally unfamiliar with their backgrounds.

      . Article VI, §28 (b) of the State Constitution provides: "The chief administrator, on behalf of the chief judge, shall supervise the administration and operation of the unified court system. In the exercise of such responsibility, the chief administrator of the courts shall have such powers and duties as may be delegated to him by the chief judge and such additional powers and duties as may be provided by law.”

      . 22 NYCRR 80.1, provides: "(b) * * * [T]he Chief Administrator shall: "(3) appoint and remove, upon nomination or recommendation of the appropriate administrative judge * * * all nonjudicial officers and employees”.