author: Kaye, J. Titone, J.

text:
    Bellevue South Associates, Respondent, v HRH Construction Corporation et al., Respondents. Circle Industries Corp., Appellant and Third-Party Plaintiff-Appellant, and Masonite Corporation, Appellant and Third-Party Defendant-Respondent.
    Argued April 30, 1991;
    decided June 13, 1991

      POINTS OF COUNSEL

      Richard A. Rosen for Circle Industries Corporation, appellant.
    I. The trial court erred in dismissing Circle’s cross claim based on Uniform Commercial Code § 2-314. (United States Leasing Corp. v Comerald Assocs., 101 Misc 2d 773; Milau Assocs. v North Ave. Dev. Corp., 42 NY2d 482; Wanamaker v Otis Elevator Co., 228 NY 192; State Univ. Constr. Fund v United Technology Corp., 78 AD2d 748; Guyot v Al Charyn, Inc., 69 AD2d 79; All-Tronics, Inc. v Ampelectric Co., 44 AD2d 693; Walker Mfg. Co. v Dickerson, Inc., 619 F2d 305.) II. The court below erred in affirming the dismissal of Circle’s breach of implied warranty claim against Sykes. (McDermott v City of New York, 50 NY2d 211; Naples v City of New York, 34 AD2d 577; Menorah Nursing Home v Zukov, 153 AD2d 13; Codling v Paglia, 38 AD2d 154, 32 NY2d 330; Titlebaum v Loblaws, Inc., 75 AD2d 985; Schwartz v Macrose Lbr. & Trim Co., 50 Misc 2d 1055, 29 AD2d 781, 24 NY2d 856; Leahy v Mid-West Conveyor Co., 120 AD2d 16, 69 NY2d 606; Icelandic Airlines v Canadair, Ltd., 104 Misc 2d 239; Sam’s Mar. Park Enters. v Admar Bar & Kitchen Equip. Corp., 103 Misc 2d 276; Simchick v Young & Co., 47 AD2d 549, 38 NY2d 921.) III. Alternatively, Circle is entitled to a trial on its warranty claim because the jury’s rationale for rejecting its common-law indemnity claim is unknown, and thus this Court cannot assume a jury would reject Circle’s warranty claim. (Mason v Lory Dress Co., 277 App Div 660; Gurney, Becker & Bourne v Benderson Dev. Co., 47 NY2d 995; Treadway Inns Corp. v Robe of New Hartford, 91 AD2d 828.) IV. Because Bellevue South’s architect’s approval of the Sykes’ tile was a final determination that the tiles were equal, Circle cannot be liable to Bellevue' South for defects in tiles. (Gillet v Bank of Am., 160 NY 549; Dublirer v Lascher, 96 AD2d 474; Oxford Commercial Corp. v Landau, 12 NY2d 362; West, Weir & Bartel v Carter Paint Co., 25 NY2d 535; MacKnight Flintic Stone Co. v Mayor of City of N. Y., 160 NY 72; Carrols Equities Corp. v Villnave, 76 Misc 2d 205, 49 AD2d 672.)

      Jay A. Cartel and Stephen D. Davis, of the Illinois Bar, admitted pro hoc vice, and Lloyd I. Isler for Masonite Corporation, appellant.
    I. Plaintiffs damages for the cost of replacing the tile was economic loss not recoverable in tort. (Schiavone Constr. Co. v Mayo Corp., 81 AD2d 221, 56 NY2d 667; Trustees of Columbia Univ. v Mitchell/Giurgola Assocs., 109 AD2d 449; Miller v United States Steel Corp., 902 F2d 573.) II. Plaintiffs damages are clearly "economic loss” not recoverable in tort under the United States Supreme Court’s East Riv. test. (East Riv. S. S. Corp. v Transamerica Delaval, 476 US 858; Pennsylvania Glass Sand Corp. v Caterpillar Tractor Co., 652 F2d 1165; Aloe Coal Co. v Clark Equip. Co., 816 F2d 110; O’Brien Cos. v Challenge-Cook Bros., 672 F Supp 466; McKernan v United Technologies Corp., 717 F Supp 60; Florida Power & Light Co. v McGraw Edison Co., 696 F Supp 617, 875 F2d 873; Learjet Corp. v Spenlinhauer, 707 F Supp 44, 901 F2d 198; East Miss. Elec. Power Assn. v Porcelain Prods. Co., 729 F Supp 512; Public Serv. Co. v Westinghouse Elec. Corp., 685 F Supp 1281; Laurens Elec. Coop. v Altec Indus., 889 F2d 1323.) III. Plaintiff’s strict liability claim is barred by CPLR 214. (New York Seven-Up Bottling Co. v Dow Chem. Co., 96 AD2d 1051, 61 NY2d 828; Montes v Manufacturers Hanover Trust Co., 78 AD2d 786; Bayridge Air Rights v Blitman Constr. Corp., 160 AD2d 589; State of New York Higher Educ. Servs. Corp. v Zamore, 59 NY2d 933.)

      Gerald D. Roth for HRH Construction Corporation and others, respondents.
    Notwithstanding any reversal or modification of the judgment below, including the ordering of any new trial, there is no basis for disturbing plaintiffs judgment against HRH and HRH’s judgment over against Circle, which parts of the judgment have not been appealed. (Hecht v City of New York, 60 NY2d 57; Matter of Winburn, 270 NY 196; United States Print. & Lithograph Co. v Powers, 233 NY 143.)

      John M. O’Connor and Donald M. Spector for Bellevue South Associates, respondent.
    I. Masonite is liable to the owner under a strict tort liability theory for damages caused by the defective flooring. (Bolm v Triumph Corp., 33 NY2d 151; Lugo v LJN Toys, 146 AD2d 168, 75 NY2d 850; Gardner v Dixie Parking Corp., 80 AD2d 577; Merced v Auto Pak Co., 533 F2d 71; Codling v Paglia, 32 NY2d 330; Dudley Constr. v Drott Mfg. Co., 66 AD2d 368; Schiavone Constr. Co. v Mayo Corp., 56 NY2d 667; Trustees of Columbia Univ. v Exposaic Indus., 122 AD2d 747; City of Greenville v Grace & Co., 827 F2d 975; Butler v Pittway Corp., 770 F2d 7.) II. The United States Supreme Court’s decision in East Riv. is not binding on this Court and does not appropriately reflect the public policy behind strict tort liability. (East Riv. S. S. Corp. v Transamerica Delaval, 476 US 858; Codling v Paglia, 32 NY2d 330; Micallef v Miehle Co., 39 NY2d 376; MacPherson v Buick Motor Co., 217 NY 382; Genesee County Patrons Fire Relief Assn. v Sonneborn Sons, 263 NY 463; City of Greenville v Grace & Co., 827 F2d 975; City of New York v Keene Corp., 132 Misc 2d 745, 129 AD2d 1019; Bancorp Leasing & Fin. Corp. v Agusta Aviation Corp., 813 F2d 272; Consumers Power Co. v Curtiss-Wright Corp., 780 F2d 1093; Pennsylvania Glass Sand Corp. v Caterpillar Tractor Co., 652 F2d 1165.) III. The court below correctly rejected, on several grounds, Masonite’s arguments based upon the Statute of Limitations; the injuries for which plaintiff was awarded damages occurred within three years of the commencement of this action. (Martin v Edwards Labs., 60 NY2d 417; Mead v Warner Pruyn Div., 87 Misc 2d 782, 57 AD2d 340; Immediate v St. John’s Queens Hosp., 48 NY2d 671; Montes v Manufacturers Hanover Trust Co., 78 AD2d 786; Byrd v Genesee Hosp., 110 AD2d 1051; Bayridge Air Rights v Blitman Constr. Corp., 160 AD2d 589; Romano v Metropolitan Life Ins. Co., 271 NY 288, 272 NY 508; Peters v St. Paul Fire & Mar. Ins. Co., 213 F Supp 441.) IV. Circle breached its contractual obligations to the owner by furnishing flooring materials that were defective and were not equal to the product specified in the contract documents; the architect’s approval was for design concept and did not waive the owner’s contractual rights. (Hadden v Consolidated Edison Co., 45 NY2d 466; Alsens Am. Portland Cement Works v Degnon Contr. Co., 222 NY 34; Ingenue Communications v Dell Publ. Co., 49 AD2d 735; Mobil Oil Corp. v Burdo, 69 Misc 2d 153; Glacius v Black, 50 NY 145; Mercantile Trust Co. v Hensey, 205 US 298; Board of Educ. v Barbaresi & Son, 25 AD2d 855.) V. In any event, the judgment against Masonite should not be disturbed, since Masonite is independently liable to plaintiff for breach of implied warranty and the jury reached a just result. (50 New Walden v Federal Ins. Co., 39 Misc 2d 460; Chicago Hgts. Venture v Dynamit Nobel of Am., 575 F Supp 214, 782 F2d 723; R & L Grain Co. v Chicago E. Corp., 531 F Supp 201; United States v Pall Corp., 367 F Supp 976; England v Medical Examiners, 375 US 411; Great N. R. R. v Sunburst Co., 287 US 358.)

      Michael Hoenig and Jay M. Smyser for The Product Liability Advisory Council, Inc., amicus curiae.

    I. The court below predicated its decision on immaterial "evidence”. (Dermatossian v New York City Tr. Auth., 67 NY2d 219; Wecht v Glen Distribs. Co., 112 AD2d 891.) II. The opinion of the court below expands the New York law on strict products liability to include a large measure of economic loss thought to be the province of the law of contract. (Trustees of Columbia Univ. v Mitchell/Giurgola Assocs., 109 AD2d 449; Trustees of Columbia Univ. v Exposaic Indus., 122 AD2d 747; Dudley Constr. v Drott Mfg. Co., 66 AD2d 368; Martin v Dierck Equip. Co., 43 NY2d 583.)
   OPINION OF THE COURT

Kaye, J.

This appeal — in a case seeking damages for the replacement of defective floor tiles throughout plaintiff owner’s housing complex — presents two discrete issues: first, whether plaintiff can recover its replacement costs against the tile manufacturer in tort (strict products liability) or is limited to contract remedies and second, whether the flooring subcontractor should be indemnified by the tile manufacturer on a theory of breach of implied warranty.

For the reasons that follow, we conclude that plaintiffs tort claim against the tile manufacturer should have been dismissed, and that the flooring subcontractor’s indemnification claim should have been submitted to the jury.

In January 1973, plaintiff (Bellevue South Associates) entered into a contract with defendant HRH Construction Corporation for the construction of Henry Phipps Plaza West in New York City. The development was to consist of eight buildings containing 894 rental units intended for middle- and lower-income tenants. Financing was provided through the State Mitchell-Lama program. Included in the terms of the construction agreement was a requirement that Hartco wood foam-backed tiles, manufactured by Tibbals Flooring Company, be used.

HRH entered into a contract with defendant subcontractor Circle Industries Corporation in November 1974, calling for Circle to supply all wood flooring in the development for $702,000. Circle also agreed to indemnify and hold HRH harmless against liability arising out of performance of the subcontract.

Circle then attempted to substitute a flooring tile manufactured by Sykes Flooring Company for the specified Hartcp tile. (Sykes later merged into defendant Masonite Corporation, and will be referred to as Masonite.) Prior approval of substitutions by the project architect and the Department of Housing and Community Renewal, the State supervisory authority, was required. At this time, Masonite did not manufacture a hardwood floor tile with an attached foam backing, and the sample submitted by Circle was rejected. The architect — Frost Associates — insisted that any substitution conform to the attached-backing requirement. Masonite then purchased equipment that enabled it to attach the foam backing to the tile and submitted a second sample.

The Masonite substitution was approved by Frost on condition that the adhesive coverage — binding the tile to the foam backing — match the 100% coverage of the Hartco tile. While Masonite acknowledged that its tile had only 60% adhesive coverage, Circle argued that there was no specification for adhesive coverage in the contract documents, that the only requirement was an attached foam backing. In August 1975, Frost and the Department of Housing and Community Renewal approved the Masonite tile.

At the time of discussions regarding product substitution, Circle, through a subsidiary, owned a 50% interest in Masonite. That interest — held until September 1976 — was not disclosed to HRH or Bellevue.

The first sale was made by Masonite to Circle in August 1975, and delivery took place between September 1975 and August 1976. All flooring work was completed by September 1976, when tenants began to occupy the rental units. By spring, there were problems with the tiles. A failure of the adhesion between the wood slats and foam backing — a process known as delamination — caused the slats to become loose and break free of the foam. Delamination was first reported in units occupied by wheelchair users.

In September 1977, Masonite reported that the adhesion failure was due to the wheelchair traffic, and that the tile had never been designed to withstand such use. Masonite recommended replacement with rigid nine-inch square block tiles, which HRH completed at no cost to the owner. By January 1978, however, Masonite tiles had begun to fail throughout the complex. Frost concluded that the failures were due to defective materials. In July 1979, HRH and Circle proceeded to replace tiles that had delaminated.

In the summer of 1980, while delamination continued, HRH and Circle refused to undertake further spot replacement. At this time, a rent increase application was being filed, prompting plaintiff to solicit bids for a program to replace the Masonite tile with the Hartco tile on an ongoing basis. As of 1986, Hartco tiles had been installed in 868 units at a cost of $1.7 million. It was projected that the cost of replacing the remaining tiles would be $400,000.

This action was commenced in June 1980. Plaintiff sued HRH and Circle on theories of breach of contract, breach of express warranty, breach of implied warranty of merchantability, and negligence. Plaintiff also sued Masonite for breach of implied warranty, negligence and in strict tort liability. Circle cross-claimed against Masonite for common-law indemnification. Damages alleged included the cost of removing and replacing the defective tiles, additional design and construction costs, carting costs, loss of rental income and diminution of value of the housing project.

The trial court dismissed plaintiff’s Uniform Commercial Code claims for breach of implied warranty against all three defendants on the theory that none had supplied goods to plaintiff. All claims against Masonite, except the cause of action in strict products liability, were also dismissed. In addition, the court dismissed plaintiff’s negligence claim against Circle and Circle’s implied warranty claim against Masonite.

In its verdict sheet, the jury answered that HRH and Circle were liable to plaintiff for breach of contract, for which the jury separately awarded damages of $310,800 against HRH, and $620,600 against Circle. As to Masonite, the jury answered that the tile was defective when it left the factory and that the defect was a proximate cause of plaintiff’s damages, and it fixed damages against Masonite in the amount of $1,157,900. No indemnification was allowed by the jury, but the trial court granted judgment notwithstanding the verdict on HRH’s contractual indemnity claim against Circle.

The Appellate Division affirmed the judgment, holding that Circle was not entitled to indemnity from Masonite because of its relationship with that company and its involvement in the manufacture of the Masonite tile. The court also rejected Masonite’s argument that strict liability could not include plaintiffs economic damages, finding that any such limitation did not extend to situations where the condition caused by the defective product is unduly dangerous. From that affirmance, both Masonite and Circle have appealed.

Plaintiffs Tort Claim Against Masonite

Masonite challenges plaintiff’s verdict against it on the ground that the damages sought were not recoverable under tort law. Plaintiff responds that the floor tile was unduly dangerous, making the manufacturer strictly liable in tort for any damage resulting from the defective product.

The doctrine of strict products liability grew out of a public policy judgment that, with increasingly sophisticated, mass-marketed technologies, consumers hurt by defective products needed greater protection than that afforded by the law of warranty (see, East River S. S. Corp. v Transamerica Delaval, 476 US 858, 866; Codling v Paglia, 32 NY2d 330, 340-341; see generally, 2 American Law of Products Liability § 16:4, at 15 [3d ed]). In developing this doctrine — which allows injured consumers to be compensated by remote manufacturers of defective products, regardless of privity, foreseeability or due care — courts of recent decades have reasoned that the manufacturers could better sustain the losses, which could be spread among all their customers (see, Continental Ins. v Page Eng’g Co., 783 P2d 641, 648-649 [Wyo]; Laurens Elec. Coop. v Altec Indus., 889 F2d 1323, 1324 [4th Cir]).

Whether this extraordinary tort doctrine should be extended to cases where a product fails to meet the expectation of a commercial customer, where the claimed injury is solely to the product itself, and where the only damages sought are replacement costs, is a question that has concerned several courts, with varying outcomes.

In one of the earliest cases, New Jersey’s Supreme Court allowed the purchaser of defective carpeting to recover from the manufacturer on a theory of strict liability (Santor v A & M Karagheusian, 44 NJ 52, 207 A2d 305). Plaintiffs only injury in that case was the reduced value of the carpet — when installed it showed an unusual line.

A contrary view was adopted by the Supreme Court of California in Seely v White Motor Co. (63 Cal 2d 9, 403 P2d 145), a case involving an allegedly defective truck. The court held that the economic loss suffered by the plaintiff — including cost of repair and lost profits — could only be recovered under contract law. In such a case, the court concluded, the manufacturer can only be charged with the risk that its products will not match the purchaser’s economic expectations if it agrees to assume that risk. Finally, the court appears to have left room for a claim for property damage to the product itself in cases where that damage flows from a manufacturing defect (63 Cal 2d, at 19, 403 P2d, at 152).

The only case to present the issue to us was Schiavone Constr. Co. v Mayo Corp. (56 NY2d 667, revg on dissent 81 AD2d 221, 227-234), a strict liability claim for damage to a defective truck hoist. We concluded — with the Appellate Division dissenters — that a tort cause of action could not be sustained for product failure, choosing the approach of Seely over that of Santor.

In Schiavone, the truck hoist could not withstand ordinary use in the plaintiffs business and eventually had to be sold at a loss. Justice Silverman, dissenting at the Appellate Division, cited Seely to the effect that a manufacturer "can appropriately be held liable for physical injuries caused by defects by requiring his goods to match a standard of safety defined in terms of conditions that create unreasonable risks of harm. He cannot be held for the level of performance of his products in the consumer’s business unless he agrees that the product was designed to meet the consumer’s demands.” (63 Cal 2d, at 18, 403 P2d, at 151.) The dissent concluded — and this Court agreed — that plaintiff sought to recover damages for failure of the product to function properly when used for normal business purposes, which was at best a breach of contract, not a tort.

The Schiavone dissent discussed a second case, which explicitly adopted the Seely approach but allowed recovery for injury to the product itself under a theory of product liability. In Dudley Constr. v Drott Mfg. Co. (66 AD2d 368 [Hancock, Jr., J.]), involving a crane with defective bolts, the court concluded that the manufacturer could be held liable for damage to the product resulting from an "accident” caused by the defective parts. As distinguished by Justice Silverman in Schiavone, plaintiff in Dudley was not trying to enforce the benefit of its bargain. Rather, a dangerously defective product was placed into the stream of commerce and caused injury— albeit to the product itself.

Since Schiavone, a third, more restrictive approach has been established by the United States Supreme Court, in East River S. S. Corp. v Transamerica Delaval (476 US 858, supra). East River involved defective turbines that had been installed in several supertankers. Damage resulting from those defects raised the issue "whether a commercial product injuring itself is the kind of harm against which public policy requires manufacturers to protect, independent of any contractual obligation.” (476 US, at 866.) The Court answered this question in the negative, holding that a manufacturer in a commercial relationship has no duty to prevent a product from injuring itself (476 US, at 872). Writing for a unanimous Supreme Court, Justice Blackmun expressly rejected the "intermediate” approach that would permit a tort action where users were "endangered” rather than merely "disappointed.” (476 US, at 869-870.)

Although an admiralty case not binding on us as a matter of State tort or contract law, the East River analysis has had significant influence (see, e.g., Nathaniel Shipping v General Elec. Co., 920 F2d 1256 [5th Cir]; Aloe Coal Co. v Clark Equip. Co., 816 F2d 110 [3d Cir], cert denied 484 US 853; Florida Power & Light Co. v Westinghouse Elec. Corp., 510 So 2d 899 [Fla]; Lloyd Wood Coal Co. v Clark Equip. Co., 543 So 2d 671 [Ala]). Courts choosing the East River analysis have stressed that tort law is an improper tool for resolving commercial disputes, and represents an unwarranted extension into an area reserved for contract law (see, Miller v United States Steel Corp., 902 F2d 573, 574 [7th Cir] [describing tort law as a "superfluous and inapt tool” for resolving commercial disputes]; O’Brien Cos. v Challenge-Cook Bros., 672 F Supp 466, 471 [D Colo] [citing the need to stem the "ceaseless march toward the merger of principles of tort and contract”]).

In addition, courts following East River have stressed that the theory behind products liability — the idea that the individual consumer who purchases or uses a defective product capable of inflicting injury should not have to shoulder the economic loss — is inapplicable to disputes between commercial parties over a damaged product (see, Laurens Elec. Coop. v Altec Indus., 889 F2d 1323 [4th Cir], supra). In the case of this purely economic loss, there is no need to shift the loss to the manufacturer to be passed along to and shared by all consumers (see, Continental Ins. v Page Eng’g Co., 783 P2d 641, 647 [Wyo], supra). The East River approach rejects any application of tort law to these commercial disputes.

Not all State courts have adopted the East River analysis. Instead, courts in several jurisdictions have opted for the intermediate approach, finding that the certainty of the East River bright line rule "comes at too high a price.” (Washington Water Power Co. v Graybar Elec. Co., 112 Wash 2d 847, 864, 774 P2d 1199, 1209; Capitol Fuels v Clark Equip. Co., 382 SE2d 311 [Ct of App W Va].) The intermediate or "risk of harm” approach focuses on several factors, including the nature of the defect, type of risk, and manner in which the injury occurred (see, Pennsylvania Glass Sand Corp. v Caterpillar Tractor Co., 652 F2d 1165 [3d Cir]; and Consumers Power Co. v Curtiss-Wright Corp., 780 F2d 1093 [3d Cir] [both pre-East River]). The risk of harm analysis has been used, for example, by courts in holding asbestos manufacturers liable under tort-law principles for creating a substantial and unreasonable risk of harm (see, e.g., City of Greenville v Grace & Co., 827 F2d 975, 978 [4th Cir]; Adams-Arapahoe School Dist. No. 28 v Celotex Corp., 637 F Supp 1207 [D Colo]; cf., Board of Educ. v A, C & S, Inc., 131 Ill 2d 428, 546 NE2d 580 [rejecting intermediate approach but finding asbestos manufacturer liable for marketing an unreasonably dangerous product]).

In the present case, we find it unnecessary to accept or reject Masonite’s invitation to adopt East River as a matter of State law, for plaintiff’s tort claim fails even under the intermediate approach spelled out in Schiavone. The nature of the defect, the injury, the manner in which the injury occurred and the damages sought persuade us that plaintiff’s remedy lies in the enforcement of contract obligations, not the enlargement of strict products liability beyond its intended purposes.

Looking first to the nature of the defect, it is evident that what was involved in "intermediate approach” cases such as Dudley and Pennsylvania Glass Sand is far different from what is at issue here. In those cases allowing tort recovery, the product was manufactured with an undiscovered hazard bound to produce a catastrophic accident or enhance the damages should such an accident occur. Here, no one has asserted that a floor tile with less than 100% adhesive coverage is such an inherently dangerous product. Unlike a crane with defective bolts, these floor tiles may be adequate for a number of uses, even if not the bargained-for use in plaintiffs apartment complex.

The injury — delamination of the tile — was not personal injury or property damage, but solely injury to the product itself. The injury, moreover, was not an abrupt, cataclysmic occurrence, as in Dudley or Pennsylvania Glass Sand, but a process of failure of the product to perform as anticipated under normal business conditions — a traditional breach of contract situation. While there was indication that, over a dozen years, three residents of Phipps Plaza had fallen, plaintiff does not claim that it has been held responsible for any injuries to persons or property. Whether or not those accidents occurred, on this record plaintiffs injury and damages would be precisely the same — the cost of replacing the floor.

That this is simply a case of economic disappointment is brought home by plaintiffs statement that the "wood floor tiles should have lasted the life of the building, at least 40 to 50 years.” In this situation where the bargained-for consideration has failed to meet the expectations of the purchaser — as in Schiavone — the remedy lies in contract-law theories such as express and implied warranties, through which a contracting party can recover the benefit of its bargain, not in a tort-law doctrine that strictly assigns the loss to a remote manufacturer to be shared by all its customers (see, Pennsylvania Glass Sand Corp. v Caterpillar Tractor Co., 652 F2d, at 1175, supra).

Plaintiff further argues that, as a matter of policy, strict liability is necessary because there would otherwise be no incentive to fix the defective floor, making it necessary for someone to suffer a severe injury before remedial action was taken. Even without tort liability, however, a purchaser in plaintiff’s circumstances has every incentive to seek a remedy for the breach of contract. Significantly, plaintiff itself stated that it sought replacement of the tile in relation to a proposed rent increase. Plaintiff would hardly forego legal action against the contractor or subcontractor because no recovery in strict liability was possible against the manufacturer. Commercial interests, together with the fear of liability for any injuries that might occur, are a powerful incentive for such plaintiffs, without the need to open another avenue of redress in the law of torts.

We hold, therefore, that plaintiff should not recover from Masonite in strict liability for failure of the tile to perform according to contract.

Circle’s Indemnity Claim Against Masonite

Although Masonite is not directly liable to plaintiff in strict products liability, the issue remains whether Circle might shift its liability to Masonite on the theory of implied warranty of merchantability (see, UCC 2-314). We conclude that Circle’s indemnification claim on this theory should have been submitted to the jury.

Originally, Circle claimed over against Masonite for common-law indemnity based on two separate theories — Masonite’s active negligence in manufacturing the tile (its "negligence indemnity” claim), and breach of implied warranty (its "implied warranty indemnity” claim). The trial court dismissed plaintiff’s implied warranty claims against HRH and Circle, concluding that those defendants supplied services, not goods. The court concomitantly dismissed Circle’s implied warranty indemnity claim against Masonite, believing that it could not stand once plaintiffs implied warranty claims had been dismissed. Circle’s negligence indemnity claim against Masonite was thus the only indemnity claim submitted to the jury, and it was rejected.

The right of one party to shift the entire loss to another— indemnification — may be based upon an express contract or an implied obligation, as is the case here. Implied indemnification claims, in turn, may rest on various independent grounds — for example, indemnity may be appropriate because of a separate duty owed the indemnitee by the indemnitor, or because one of two parties is considered actively negligent or the primary or principal wrongdoer (see, Mas v Two Bridges Assocs., 75 NY2d 680, 689-690; D’Ambrosio v City of New York, 55 NY2d 454, 461).

In the present case, the Uniform Commercial Code creates an implied warranty between Circle and Masonite, and Circle has grounded its indemnification claims in this legal relationship as well as Masonite’s active negligence in manufacturing and furnishing the floor tiles. Although the issue has never been directly addressed by this Court, courts in other jurisdictions have recognized that implied warranty may provide the requisite basis for an indemnification claim (see, e.g., Crest Container Corp. v Bishop Co., 111 Ill App 3d 1068, 445 NE2d 19, 23-25; see also, Walker Mfg. Co. v Dickerson, Inc., 619 F2d 305 [4th Cir]). It is the implied warranty theory — not concern over primary fault — that is determinative of such an indemnity claim, and that warranty must be examined on its own terms. ,

We first consider the trial court’s dismissal of Circle’s implied warranty indemnity claim against Masonite based on the contemporaneous dismissal of plaintiffs warranty claims, and conclude that Circle’s claim should not have been dismissed on that basis.

Unlike HRH and Circle, Masonite supplied goods, having delivered the floor tiles to Circle in August 1976. Masonite, as the seller, warranted to the buyer, Circle, that the goods were merchantable (see, UCC 2-314). While the trial court apparently believed that the warranty between buyer and seller could not be invoked if warranty liability was not being passed through the chain of distribution from the consumer through the distributor to the manufacturer, no such chain of events has been required as a precondition to warranty liability on the part of the seller to the initial purchaser. The warranty claim formed an independent basis for liability, available to the indemnitee against the indemnitor regardless of the ability of the plaintiff to assert a similar claim (see, e.g., Matter of Feehan v United States Lines, 522 F Supp 811, 815-816 [SD NY]).

It is possible that a plaintiff’s theory of liability against the indemnitee would, as a matter of law, preclude recovery against the indemnitor (see, Mas v Two Bridges Assocs., 75 NY2d 680, 689-690, supra; see also, Codling v Paglia, 32 NY2d 330, 340, supra). In Mas, for example, the plaintiff, who had been injured while attempting to exit a disabled elevator, sued the owner of the building and Otis Elevator Company, the company that had contracted to maintain the elevator. The theories of liability asserted against the owner were failure to maintain and repair the elevator and failure to provide assistance. The jury apportioned 85% liability for failure to maintain and 10% liability for failure to respond. This Court upheld the owner’s judgment on its indemnity cross claim against Otis for 85% of the damages, even though the owner had been found 10% liable for failure to respond. Had the only cause of action been for failure to respond, no indemnity based on the contract for repair would, as a matter of law, have been available to the owner.

Here, however, the basis for the cause of action asserted against HRH and Circle was entirely consistent with Circle’s implied warranty indemnity claim against Masonite. Although falling under the general description of "breach of contract,” the liability of Circle and HRH rested on the defective product. Dismissal of plaintiff’s implied warranty claims should, therefore, have had no effect on Circle’s claim against the supplier, Masonite (see, State Univ. Constr. Fund v United Technology Corp., 78 AD2d 748; Matter of Feehan v United States Lines, 522 F Supp 811, 815-816, supra).

Nor was Circle’s implied warranty indemnity claim barred as a matter of law by its own conduct. The Appellate Division found that Circle’s relationship with Masonite, along with the fact that Masonite did not manufacture a comparable tile until Circle obtained the subcontract, acted to bar any claim based on implied warranty, and it denied Circle’s implied warranty indemnity claim because "Circle is not an innocent party entitled to shift liability to Masonite.” (160 AD2d 189, 190.)

The "innocent party” language reveals the Appellate Division’s belief that Circle’s two separate indemnification theories share the same elements. A finding by the jury that Circle could not recover on the negligence theory thus would preclude recovery on the warranty theory. Indeed, the Appellate Division’s holding echoes the instruction given by the trial court on the indemnity claim:

"If you determine that. [Masonite] is primarily responsible for the damages sustained by plaintiff and that causing the defendant Circle to pay damages to the plaintiff would result in the unjust enrichment of the defendant [Masonite], then you must return a verdict in favor of the defendant Circle on its cross-claim against the defendant [Masonite].”

The elements of a negligence indemnity claim, however, are not necessarily relevant to an implied warranty indemnity claim.

As discussed above, Masonite — as the seller of the tiles — is deemed to have made an implied warranty as to their merchantability (UCC 2-314). To recover implied warranty indemnity, Circle must show both the existence and breach of the warranty and that the breach was the proximate cause of plaintiff’s damages (see, UCC 2-314, Official Comment 13; see generally, 1 White & Summers, Uniform Commercial Code § 9-9 [Practitioner’s 3d ed]).

Defenses available to claims of breach of the implied warranty of merchantability include the buyer’s contributory conduct, lack of privity, failure to give notice, and the Statute of Limitations (see generally, Special Project, Article Two Warranties in Commercial Transactions, 64 Cornell L Rev 30, 243 [1978]). Under the first of these defenses — the buyer’s conduct — the focus is on "factors that may sufficiently attenuate the causal connection between defendant’s acts and plaintiff’s injury to bar recovery.” (1 White & Summers, Uniform Commercial Code § 11-8, at 541 [Practitioner’s 3d ed].) For purposes of this claim the analysis of Circle’s conduct thus must be made from the perspective of causation rather than from the perspective charged by the trial court, which was one of primary responsibility and unjust enrichment.

Therefore, the jury’s rejection of the indemnity claim that was submitted to it — rendered in response to the trial court’s instructions on principles of primary responsibility and unjust enrichment — is not the final word on Circle’s indemnity claim based on the implied warranty. Rather, it must be determined whether Circle has a meritorious implied warranty indemnity claim against Masonite and whether Masonite has any valid defenses to that claim. In that the trial court erroneously dismissed this indemnity claim, Circle’s request for a new trial should be granted.

Accordingly, on Masonite’s appeal, the order of the Appellate Division should be reversed, with costs, and plaintiffs products liability claim dismissed. On Circle’s appeal, the order of the Appellate Division should be modified, with costs to Circle as against Masonite, by granting Circle a new trial on its implied warranty indemnity claim against Masonite and, as so modified, affirmed, with costs to plaintiff as against defendant Circle.

Titone, J.

(dissenting in part and concurring in part). Faced with the question of whether New York’s strict products liability doctrine permits recovery of economic loss in these circumstances, the majority has postponed decision on the point, holding instead that regardless of the analysis applied the defective product in question here was, as a matter of law, simply not within the category of those that would support a products liability claim. Since this conclusion ignores an affirmed and well-supported jury finding that the product was dangerous, I must take issue with that aspect of the majority’s analysis. Moreover, I disagree with the majority’s ultimate disposition of defendant Masonite’s appeal, since I conclude that a recovery in strict products liability ought to be permitted where, as here, the "economic injuries” for which recovery was sought consisted principally of the expenses that the plaintiff, a remote purchaser, incurred in replacing the defective product specifically to eliminate the proven risk of personal injury that the defective product posed. Such a narrow rule is, in my view, consistent with the policies underlying both tort law in general and the doctrine of strict products liability in particular. Most importantly, it represents the fairest and most sensible means of balancing those policies against the policies underlying the UCC breach of warranty remedies. Accordingly, I dissent.

Initially, there can be little doubt that the jury’s verdict on plaintiffs strict products liability claim represents a finding that the tiles manufactured by Masonite’s predecessor were dangerously defective. The jury was charged that "[a] product is defective if it is not reasonably safe, that is, if the product is likely to be harmful to people so that a reasonable person who had knowledge of its potential for producing injury would conclude that it should not be marketed in that condition.” When asked in a special interrogatory whether the tiles were "defective,” the jury answered affirmatively, thus signaling its finding that the tiles were hazardous. Since the Appellate Division did not disturb that finding and, in fact, indicated that it too would have placed the tiles within the category of products that are "unduly dangerous” (see, 160 AD2d 189, 190), the finding cannot be disturbed unless it is, as a matter of law, not supported by the evidence (Cohen v Hallmark Cards, 45 NY2d 493, 499; see, Siegel, NY Prac § 529, at 827 [2d ed]). Certainly, that conclusion cannot be drawn here.

One representative of plaintiff, an architect by training, testified that he considered the emerging problem with the Masonite tiles to be a "dangerous and hazardous situation.” An agreement between plaintiff, HRH (the general contractor) and Circle (the subcontractor) referred to the tile’s condition in some areas as "hazardous.” Most significantly of all, the trial evidence indicated that injuries such as a compressed and broken vertebra, an injured arm and a bruised leg and foot had been sustained as a result of accidents in which apartment occupants had tripped over defective tiles. While plaintiff was not called upon to pay personal injury damages as a result of these accidents, that fortuity does not in any way detract from the obvious inference that the tiles were dangerous.

The majority brushes aside the finding of dangerousness on the ground that the "intermediate approach” discussed in its opinion requires a legal rather than a factual analysis based on a consideration of three factors: the nature of the defect, the type of risk and the manner in which the plaintiffs injury occurred (majority opn, at 294, n 2; see, e.g., Pennsylvania Glass Sand Corp. v Caterpillar Tractor Co., 652 F2d 1165). However, the dangerousness finding is highly relevant in this three-factor analysis. Indeed, courts which have invoked that analysis have most often "reach[ed] different results depending on the hazardous or non-hazardous nature of the defective product at issue” (Salt Riv. Project Agric. Improvement & Power Dist. v Westinghouse Elec. Corp., 143 Ariz 368, 377, 694 P2d 198, 207 [analyzing and applying prior "intermediate approach” decisions]; accord, East River S. S. Corp. v Transamerica Delaval, 476 US 858, 870 ["(t)he intermediate positions * * * essentially turn on the degree of risk”]). Thus, under the "intermediate approach,” where the product defect "is qualitative in nature and relates to a consumer’s expectations” the claim will be deemed to lie in contract not tort law; but the converse will be true where " 'a product is sold in a defective condition that is unreasonably dangerous to the user’ ” (Board of Educ. v A, C & S, Inc., 131 Ill 2d 428, 440, 546 NE2d 580, 585, quoting Moorman Mfg. Co. v National Tank Co., 91 Ill 2d 69, 88, 435 NE2d 443, 448).

In this case, the majority has concluded that the product defect falls within the former category because "the bargained-for consideration has failed to meet the expectations of the purchaser” (majority opn, at 294). However, the analysis plainly cannot stop at that point since, in addition to "failing to meet the [purchaser’s] expectations,” the tiles failed in a way that rendered them hazardous to life and limb. Thus, this is more than a case of mere “disappointed economic expectations.” Rather it is one involving the risk of actual bodily harm, a subject that the "intermediate approach” would consider well within the policies and reach of tort law (see, Pennsylvania Glass Sand Corp. v Caterpillar Tractor Co., 652 F2d 1165, 1174, supra).

The majority’s observations that a wood tile with less than 100% adhesive coverage "may be adequate for a number of uses, even if not the bargained-for use in plaintiffs apartment complex” (majority opn, at 294) clearly does not provide a persuasive ground for denying recovery under the "intermediate approach.” First, the majority’s observation is highly speculative and, indeed, it is difficult to imagine what other use, apart from mere display, would be suitable for tiles that could not withstand ordinary residential use. Second, the theoretical alternative uses of these tiles, if any, are irrelevant, since the tiles were, in fact, dangerous when put to use in plaintiff’s apartments — the precise use for which they were designed and fabricated.

Similarly, the fact that the product failed through a process of deterioration rather than a "catastrophic accident” — a fact on which the majority relies almost entirely (see, majority opn, at 294) is not decisive (see, Northern Power & Eng’g Corp. v Caterpillar Tractor Co., 623 P2d 324, 328 [Alaska] ["(t)here is nothing magical about the phrase 'sudden and calamitous’ ”]). As one authority has observed, the rationale for some courts’ emphasis on accidents of violence and collision with external objects "is that such situations present a greater safety risk.” (Pennsylvania Sand Glass Corp. v Caterpillar Tractor Co., supra, at 1170, n 14.) In this case, the safety risk is well documented and there is thus no need to consider the nature of the occurrence that led to the product harm to determine whether the product failure implicated human safety as well as contractual expectations. In these circumstances, "[t]o prevent recovery in tort merely because the physical harm did not occur suddenly would defeat the underlying purposes of strict products liability” (Board of Educ. v A, C & S, Inc., 131 Ill 2d, supra, at 449-450, 546 NE2d, supra, at 590 [applying "intermediate approach”]).

Having concluded that the so-called "intermediate approach” would permit tort liability under these facts, I turn now to the question the majority has declined to answer: whether that approach should be adopted in New York. I begin with the premise that under well-established tort principles strict liability recovery has not previously been limited to personal injury claims. Section 402 A of the Restatement (Second) of Torts states that strict products liability recovery may be had where there has been injury to person or property. Although our Court has not explicitly adopted this aspect of the Restatement rule, other courts in this State have and there is no reason to believe that we would do otherwise if the question were squarely presented to us (see, e.g., Dudley Constr. v Drott Mfg. Co., 66 AD2d 368; see also, Schiavone Constr. Co. v Mayo Corp., 81 AD2d 221, 228-229 [Silverman, J., dissenting], revd on dissent 56 NY2d 667). Indeed, in a case decided shortly after MacPherson v Buick Motor Co. (217 NY 382), the paradigmatic strict products liability case, this Court anticipated section 402 A by holding that a manufacturer’s duty to remote purchasers includes protecting their property as well as their persons (Genesee County Patrons Fire Relief Assn. v Sonneborn Sons, 263 NY 463, 469, 473).

Adoption of the Restatement’s position on property damage, however, does not end the inquiry. As the majority notes, the Supreme Court’s 1985 decision in East River S. S. Corp. v Transamerica Delaval (476 US 858, supra), an admiralty case, raised important questions about the viability of the so-called "intermediate approach” in cases where the product defect caused injury only to the product itself (see generally, Annotation, Strict Products Liability: Recovery for Damage to Product Alone, 72 ALR4th 12). Focusing on the narrow question of whether and when recovery should be permitted for injury to the defective product itself, the Court reviewed the various approaches and distinctions that had been tried elsewhere to permit recovery and concluded that none were satisfactory. The Court specifically rejected the "intermediate approach” as "too indeterminate” and instead held that, regardless of the degree or type of risk posed by the defective product, claims involving injury to the product itself are best resolved by application of "[c]ontract law, and the law of warranty in particular, [which] is well suited to commercial controversies of th[is] sort” (476 US, supra, at 870, 872).

The broad East River holding has many persuasive elements, particularly its assurance of clarity and certainty. Moreover, for most cases involving product harm leading to mere economic loss, the holding results in a sensible method of drawing the often elusive line between contract and tort law. However, in circumstances such as those presented here, the East River holding does not serve that salutary purpose, and instead actually operates to undermine the important public policies underlying our tort law. It is my concern for those policies that leads me to take the analysis yet one step further here.

The factor that, for me, distinguishes this case from the garden-variety injury-to-product cases discussed in the majority opinion is the nature of the damages the plaintiff here seeks. Unlike East River (supra), Seely v White Motor Co. (63 Cal 2d 9, 403 P2d 145) and virtually every other case in the injury-to-product line (e.g., Trustees of Columbia Univ. v Mitchell/Giurgola Assocs., 109 AD2d 449; Schiavone Constr. Co. v Mayo Corp., supra; Dudley Constr. v Drott Mfg. Co., supra), the plaintiff in this case is seeking to recover the costs it incurred in removing and replacing the dangerously defective tiles before further accidents — and further injury — occurred. In this situation, the policies that inform tort law suggest that a strict products liability recovery should be permitted.

The traditional concerns of contract law, and warranty law in particular, are the protection of the parties’ freedom of contract and the fulfillment of reasonable economic expectations. Tort law, on the other hand, is concerned with deterring carelessness, preventing accidents and distributing risk in a socially useful way. Where a product malfunctions and, as a result, is itself damaged, it can fairly be said that the product simply "has not met the customer’s expectations” — a disappointment that has traditionally been addressed through the breach of warranty remedies provided in the UCC (East River S. S. Corp. v Transamerica Delaval, supra, at 872). Furthermore, as the East River Court observed, "[t]he tort concern with safety is reduced when an injury is only to the product itself.” (Id., at 871.) In contrast, where, as here, the product was provably hazardous and the recovery sought is the cost of eliminating the hazard or making the product safe, there is clearly more at stake than mere economic disappointment or frustrated expectations and the tort law’s concern for safety is directly implicated.

Those concerns point to an analysis that considers the effect of the proposed rule on the goals of accident prevention and the fair social distribution of costs. Both of these goals are advanced by a rule that would permit a remote user/owner to recover in strict products liability for the costs actually and reasonably incurred in eliminating or ameliorating a hazard posed by a dangerously defective product. Just as " '[a] consumer should not be charged * * * with bearing the risk of physical injury when he buys a product on the market’ ” (Schiavone Constr. Co. v Mayo Corp., 81 AD2d, supra, at 231 [Silverman, J., dissenting], quoting Seely v White Motor Co., 63 Cal 2d, supra, at 18, 403 P2d, supra, at 151), so too should the consumer be able to shift the cost to the manufacturer when the latter’s product poses an unreasonable safety risk requiring expensive repair or replacement. Indeed, the contrary rule would run directly counter to the tort aim of accident prevention, since it denies recovery to a conscientious remote purchaser who takes steps to ameliorate the risk of harm while permitting recovery by one who sits back and waits for an accident to happen (see, City of Greenville v Grace & Co., 827 F2d 975, 977).

Accordingly, under the facts in this case, I would hold that plaintiff may recover from Masonite the expenses it incurred in replacing the dangerously defective tiles. Since the majority’s holding denies plaintiff its tort recovery, I respectfully dissent from that part of its decision.

Chief Judge Wachtler and Judges Simons, Alexander, Hancock, Jr., and Bellacosa concur with Judge Kaye; Judge Titone dissents on Masonite’s appeal only and, as to that appeal, votes to affirm in a separate opinion.

On Masonite’s appeal, order reversed, with costs, and plaintiff’s products liability claim dismissed. On Circle’s appeal, order modified, with costs to Circle as against Masonite, by remitting to Supreme Court, New York County, for further proceedings in accordance with the opinion herein, and, as so modified, affirmed, with costs to plaintiff as against defendant Circle.

      . New Jersey itself has stepped away from Santor, more recently holding that a commercial buyer seeking damages for economic loss resulting from the purchase of defective goods may recover under a warranty theory but not in strict liability (Spring Motors Distribs. v Ford Motor Co., 98 NJ 555, 489 A2d 660).

      . The dissent rests entirely on the tile’s "dangerousness” — that it was hazardous to life and limb, that the safety risk was well documented, that there was an affirmed finding to this effect. In fact, during the 12 or more years the tile had been in use in plaintiff’s 894 apartments, there was a total of one documented injury and two reported slip-and-fall incidents. As for the "affirmed finding,” under the intermediate approach, the determination whether a tort claim is stated is one that must be made in the first instance by the court, applying factors such as the nature of the defect, type of risk, and manner in which the injury occurred. The jury in the present case of course had no opportunity or occasion to weigh those factors, and its finding on an issue that should have been resolved as a threshold law question in no way limits our review.
      The dissent’s distinguishing test, moreover — that liability should be allowed where the recovery sought is the cost of eliminating the hazard or making the product safe (dissenting opn, at 304) — is no distinction at all. Whether a defective piece of equipment such as a truck hoist, or floor tiles, or virtually any other product, recovery of replacement costs always can be said to be sought for eliminating the hazard or making the product safe.

      . Circle’s claim that it should be wholly absolved for liability to plaintiff —because plaintiffs architect approved the substitution — requires little discussion. The jury’s rejection of Circle’s contention that this was more than design approval is amply supported by the record (see also, 160 AD2d, at 190).

      . Masonite claims that the four-year limitations period — measured from delivery of the goods — expired prior to commencement of this action (see, UCC 2-725 [2]). It is clear, however, that Circle’s quasi-contractual indemnity claim is governed by the six-year contract Statute of Limitations. Moreover, such a claim accrues upon payment by the party seeking indemnity (see, McDermott v City of New York, 50 NY2d 211, 217).

      . [4] Plaintiff asks that the verdict against Masonite be affirmed on an alternative ground — either Masonite’s breach of implied warranty, or that Masonite should have been held jointly and severally liable to plaintiff for the total amount found against all three defendants. The trial court dismissed plaintiffs implied warranty claim against Masonite, and refused plaintiffs requests for a judgment in the total amount against each defendant jointly and severally. Thus, plaintiffs present requests, which if meritorious would require reversal of the trial court’s rulings and a new trial, go beyond affirmance of the judgment and cannot be awarded to a nonappealing party (see, Parochial Bus Sys. v Board of Educ., 60 NY2d 539, 545-546; Hecht v City of New York, 60 NY2d 57).

      . The majority first considers the fact that the tiles’ defects were not "bound to produce a catastrophic accident” in connection with the first prong of the "intermediate approach,” i.e., the inquiry into the nature of the defect (majority opn, at 293,294). The majority then considers the same factor in connection with the second prong, i.e., the inquiry into the nature of the injury (id., at 294 [injury "was not an abrupt, cataclysmic occurrence”]).

      . Interestingly, the majority opinion, which attempts to avoid deciding whether or not to adopt East River, actually stumbles on the same indeterminacy problem that concerned the East River Court, i.e., the difficulty and unpredictability of making an abstract legal determination about a particular product’s dangerousness.

      . The majority’s assertion that "recovery of replacement costs always can be said to be sought for eliminating the hazard” (majority opn, at 294, n 2 [emphasis added]) is manifestly inaccurate. In East River (supra), Seely (supra), Trustees of Columbia Univ. (supra), Schiavone (supra), Dudley (supra) and Pennsylvania Glass (supra), to name just a few, the recovery for replacement costs was sought after an accident had occurred and the product itself was either substantially destroyed or rendered nonfunctional. Thus, in none of these cases could an argument be made that the plaintiff was seeking reimbursement for the cost of making the defunct product safe.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Intercontinental Credit Corporation Division of Pan American Trade Development Corp., Respondent, v Henry A. Roth, Appellant.
    Submitted July 22, 1991;
    decided September 10, 1991

      APPEARANCES OF COUNSEL

      Louis H. Benjamin for appellant.

      Matthew S. Dontzin for respondent.
   OPINION OF THE COURT

Per Curiam.

On June 13, 1991, this Court dismissed as untimely a motion by defendant for leave to appeal (78 NY2d 909). By notice of motion served July 12, 1991, defendant moved for reargument, contending that the Court misapprehended the nature of the relief he sought. Plaintiff then cross-moved for sanctions pursuant to part 130 of the Rules of the Chief Administrator of the Courts (22 NYCRR 130-1.1 et seq.), alleging that defendant’s reargument motion was frivolous and made solely to delay the progress of enforcement proceedings pending against defendant in Israel. For the reasons that follow, defendant’s motion for reargument should be denied and plaintiff’s cross motion for sanctions granted.

Defendant’s initial motion invoking CPLR 5514’s special extension for attorney disability was wholly without basis in the statute. The present motion is premised on a claim that we mistakenly treated the initial motion as one for leave to appeal rather than as one for permission to make such a motion "out of time.” That claim, similarly, is frivolous. The utter lack of merit in these motions and the virtual impossibility of affecting the final judgment at this late stage in the litigation confirm plaintiff-cross-movant’s contention that this reargument motion was made primarily to delay enforcement of a judgment in Israel. Indeed, although defendant has disputed plaintiffs characterizations of some of the background facts, he has made no more than a token effort to defend the merits of the present motion. Thus, his papers raise no significant issues requiring a further inquiry (see, 22 NYCRR 130-1.1 [d]X

It is clear that the present motion was "undertaken primarily to delay or prolong” the Israeli enforcement proceedings (see, 22 NYCRR 130-1.1 [c] [2]). This is precisely the type of misuse of judicial process that part 130 was adopted to curtail. In imposing a sanction on both defendant and his attorney, we have considered the facts that plaintiff has been inappropriately hampered in its efforts to enforce a valid judgment, that this was defendant’s second misguided effort to invoke the jurisdiction of this Court for purposes essentially unrelated to the legitimate settlement of controversies and that a specific, well-founded request for sanctions against both defendant and his counsel has been made (cf., Matter of Minister, Elders & Deacons of Refm. Prot. Dutch Church v 198 Broadway, 76 NY2d 411, 414-415).

Accordingly, defendant’s motion for reargument should be denied; a sanction in the amount of $2,500 should be imposed on defendant Henry Roth, a separate sanction in the amount of $2,500 should be imposed on his attorney, Louis H. Benjamin, and plaintiffs cross motion should otherwise be denied.

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

Motion for reargument of motion for leave to appeal denied. Cross motion for imposition of sanctions granted and sanctions imposed upon defendant Henry Roth and upon Louis H. Benjamin, Esq., each in the amount of $2,500; cross motion otherwise denied.

       [2] Plaintiff also sought an order "certifying” that defendant has "exhausted all of his New York appellate remedies,” presumably to enable the Israeli courts to proceed with the enforcement litigation. However, there is no procedural or jurisdictional predicate for this Court to issue such an order.


author: Hancock, Jr., J.

text:
    Rodney Mon et al., Respondents, v City of New York et al., Appellants, et al., Defendant.
    Argued June 4, 1991;
    decided September 17, 1991

      POINTS OF COUNSEL

      Victor A. Kovner, Corporation Counsel (William J. Thom and Fay Leoussis of counsel), for appellants.
    I. The hiring of Officer Shankman was not negligent. (Milker v City of New York, 36 NY2d 973; Detone v Bullit Courier Serv., 140 AD2d 278, 73 NY2d 702; Lopez v Burns Intl. Detective Agency, 48 NY2d 645; Francella v 2465 Crotona Ave. Corp., 44 AD2d 660; Stevens v Lankard, 31 AD2d 602, 25 NY2d 640; Haddock v City of New York, 75 NY2d 478.) II. There was no evidence at trial that the arrest of Andre Mon was ratified by the City. (Lucey v City of New York, 73 AD2d 998; Stavitz v City of New York, 98 AD2d 529.)

      Edward S. Rudofsky, Aaron J. Broder and Arlene H. Green-berg for respondents.
    I. This appeal should be dismissed or the order appealed from should be summarily affirmed, with costs and sanctions. (Haddock v City of New York, 75 NY2d 478; Rodney v New York Pyrotechnic Prods. Co., 112 AD2d 410; Quain v Buzzetta Constr. Corp., 69 NY2d 376.) II. The evidence amply supports the finding that Patrolman Shankman was negligently hired and respondents’ claim in this regard is not barred by the immunity "principles enunciated in” Haddock v City of New York (75 NY2d 478). (Milker v City of New York, 36 NY2d 973; Detone v Bullit Courier Serv., 140 AD2d 278, 73 NY2d 702; Lopez v Burns Intl. Detective Agency, 48 AD2d 645; McCrink v City of New York, 296 NY 99; Francella v 2465 Crotona Ave. Corp., 44 AD2d 660; Stevens v Lankard, 31 AD2d 602, 25 NY2d 640; Conte v Large Scale Dev. Corp., 10 NY2d 20.) III. The evidence amply supports the finding that there was implied ratification by the City of Andre Mon’s arrest. (Holm v C.M.P. Sheet Metal, 89 AD2d 229; Mobil Oil Corp. v Burdo, 69 Misc 2d 153; Allied Stores v Funderburke, 52 Misc 2d 872; Rolnick v Borden’s Farm Prods. Co., 214 App Div 259; Lucey v State of New York, 73 AD2d 988; Stavitz v City of New York, 98 AD2d 529.)
   OPINION OF THE COURT

Hancock, Jr., J.

Defendant Shankman, then a probationary police officer, fired his revolver and injured both plaintiffs in attempting to apprehend them. A judgment was recovered against the City of New York for personal injuries and false arrest based on this incident. The ground for the personal injury recoveries was the allegedly negligent hiring of Shankman. In the City’s appeal from a unanimous affirmance of the judgment at the Appellate Division, the principal question is whether the City has governmental immunity from liability for negligence in hiring.

We hold that (1) the duties and functions of the officials who made the hiring decisions entail such discretion as would entitle the City to the protection of governmental immunity, and (2) because the decisions were made in the exercise of that discretion, they cannot result in the City’s liability. Accordingly, to the extent that the judgment represents recoveries for personal injury, there should be a reversal. Since there was no exception to the trial court’s submission of the false arrest claims to the jury, no legal issue with respect to those claims is preserved for our review. Therefore, as to that portion of the judgment, there should be an affirmance.

I

The lawsuit arises out of events which occurred in The Bronx on August 21, 1982 near the intersection of Brady and Holland Avenues following an altercation between defendant Shankman and plaintiffs, Andre Mon and his brother, Rodney Mon. Shankman, a recently appointed police officer, while off-duty, shot his service revolver twice, hitting both plaintiffs and injuring Andre Mon seriously. Plaintiffs were arrested but all charges against Andre Mon were dismissed and the charge against Rodney Mon resulted in acquittal. Their damage claims against the City for false arrest and for personal injuries on the theory of negligent hiring were tried together before a jury.

The jury awarded damages for false arrest against the City to Andre Mon, only. In submitting the case to the jury, the court charged, without objection, that if the jury found that the City, by its positive actions following the incident, had ratified defendant Shankman’s conduct in making the arrest it could bring in a verdict against the City. In an answer to one of several intérrogatories, the jury specifically found that the City had ratified Shankman’s arrest of Andre Mon. In exercising our limited review of this issue we conclude that the Appellate Division properly held that there was sufficient evidence in the record for submission of the ratification question to the jury. Further discussion of the false arrest claim is unwarranted.

Nor is it necessary to detail the facts surrounding the shooting incident. Suffice it to say, we find more than enough evidence in the record for the jury to have concluded that Shankman’s behavior was not acceptable police conduct and to support its findings, in answers to other special questions, that he was not justified in shooting either plaintiff. A discussion of the City’s claim of immunity from liability for negligent hiring, however, requires a brief summary of the facts surrounding Shankman’s appointment as a police officer.

In October 1981, Shankman applied for appointment to the New York City Police Department. In his original application, he omitted a 1979 arrest involving his participation in an incident at a Rite-Aid drugstore and his previous employment at that store. The incident, which involved damage to equipment in the store from a shot fired by Shankman’s companion, resulted in Shankman’s conviction for disorderly conduct on his plea of guilty. Police Investigator Kelly who investigated Shankman’s family, education, military and employment background, found nothing unfavorable. Notwithstanding the 1979 arrest and the arresting officer’s strenuous objection to Shankman’s application, Officer Kelly, based on his review of the entire applicant file, recommended Shankman’s approval and forwarded his recommendation and the file to Lieutenant Springer for his action. Upon his review of the applicant’s file, Lieutenant Springer approved Shankman’s appointment.

At the conclusion of all the evidence, the City renewed the motion it had reserved at the close of plaintiffs’ case to dismiss the negligent hiring claims, without submissions to the jury, for failure to establish a prima facie case, citing, inter alia, Haddock v City of New York (140 AD2d 91) and McCrink v City of New York (296 NY 99). The court reserved decision on the City’s dismissal motion until after the jury’s verdict and denied that motion as well as the City’s postverdict motion under CPLR 4404 (a). In the appeal here, the central focus is whether the City may claim governmental immunity for the hiring decisions of its servants in light of our decision in Haddock v City of New York (75 NY2d 478). For reasons to be stated, we hold that under the rationale of Haddock and our prior decisions on governmental immunity (see, e.g., Arteaga v State of New York, 72 NY2d 212; Tarter v State of New York, 68 NY2d 511; and Tango v Tulevech, 61 NY2d 34) the negligent hiring causes of action should have been dismissed as a matter of law either before submission to the jury or on the Court’s reserved decision after the verdict was returned.

II

Whether an action of a governmental employee or official is cloaked with any governmental immunity requires an analysis of the functions and duties of the actor’s particular position and whether they inherently entail the exercise of some discretion and judgment (see, Arteaga v State of New York, supra, at 216; Tarter v State of New York, supra, at 518-519). If these functions and duties are essentially clerical or routine, no immunity will attach (see, Tango v Tulevech, supra, at 40-42). As we stated in Haddock v City of New York (supra):

"[W]hen official action involves the exercise of discretion or expert judgment in policy matters, and is not exclusively ministerial, a municipal defendant generally is not answerable in damages for the injurious consequences of that action (see, Tango v Tulevech, 61 NY2d 34, 40; Arteaga v State of New York, 72 NY2d 212, 216; Weiss v Fote, 7 NY2d 579). Whether absolute or qualified, this immunity reflects a value judgment that — despite injury to a member of the public — the broader interest in having government officers and employees free to exercise judgment and discretion in their official functions, unhampered by fear of second-guessing and retaliatory lawsuits, outweighs the benefits to be had from imposing liability for that injury.” (Id., at 484.)

If a functional analysis of the actor’s position shows that it is sufficiently discretionary in nature to warrant immunity, it must then be determined whether the conduct giving rise to the claim is related to an exercise of that discretion. Obviously, governmental immunity does not attach to every action of an official having discretionary duties but only to those involving an exercise of that discretion (see, Haddock v City of New York, 75 NY2d 478, 484-485, supra).

In determining whether plaintiff’s negligent hiring claims must fail because of the City’s governmental immunity, we look first at the functions and duties of Investigator Kelly and Lieutenant Springer, the two police officers responsible for hiring Shankman. Unquestionably, the responsibilities of Officers Kelly and Springer for investigating and evaluating the background and qualifications of police officer candidates and making the recommendations and final decisions for such appointments entailed the exercise of some judgment and discretion. We have no difficulty in concluding that these functions and duties were sufficiently discretionary to call for immunity. Haddock v City of New York (supra) supports this conclusion.

In Haddock (supra), we decided that the City could be held liable for its negligent hiring and retention of a parks department employee who raped a child. But we did not decide in Haddock that the actions of a municipality in hiring or retaining an employee were not of the sort that could be subject to governmental immunity. On the contrary, we indicated that such actions could involve the sort of discretionary judgments to which immunity would attach. We found the issue not determinative, however, because, under the particular facts presented, the immunity doctrine could not have been applicable in any event. We explained:

"We need not determine whether the City’s retention of Johnson at the Parkside Playground would be subject to absolute or qualified immunity because the City’s argument for any immunity here has a fundamental flaw. The difficulty with the City’s contention that it is entitled to a cloak of immunity for the discretionary decision to retain Johnson in his status is that there is no evidence that, prior to the rape, the City in fact made any such decision or exercised any such discretion * * * There is no indication that, before the attack on plaintiff, the City made any effort to comply with its own personnel procedures for employees with criminal records, and no indication that it made a judgment of any sort when it learned that Johnson both had a criminal record and lied egregiously about it. ” (Id., at 485 [emphasis added].)

That the departmental responsibilities of Officers Kelly and Springer for hiring were sufficiently discretionary to receive immunity does not end the inquiry, however. Immunity could not apply unless the negligent hiring resulted from the exercise of their discretion. We conclude that it did. Officer Kelly, as the investigator assigned to Shankman’s application, was required to make a judgment in evaluating the biographical and background information derived from the application and his interview with Shankman. When he learned of Shank-man’s previous employment at Rite-Aid and of his 1979 arrest, Officer Kelly was faced with making discretionary decisions concerning the seriousness of the incident leading to the disorderly conduct conviction and how much, if any, additional investigation was warranted. Whether to make a favorable recommendation in spite of the Rite-Aid incident and Shankman’s failure to disclose it necessarily required Officer Kelly to exercise discretion in weighing these factors against Shankman’s otherwise favorable record. Lieutenant Springer’s decision to accept Officer Kelly’s recommendation and to overlook the disorderly conduct conviction — while unwise, as it turned out — was nevertheless based on the exercise of judgment.

Concededly, there may be some acts in the hiring process which, if isolated from the rest, could be viewed as nondiscretionary and thus support a claim for negligence. But, viewing the record as a whole, it is evident that the claim for negligently hiring Shankman, despite the known unfavorable information as to his character, essentially arises from a misjudgment that was discretionary. It is in this crucial respect that the case before us differs from Haddock v City of New York (supra) where the "key fact [was] that no City employee in the relevant time frame weighed the impact of [the employee’s] record on his work assignment or made a judgment that he should be retained at the Parkside Playground” (id., at 485).

Plaintiffs argue, again relying on Haddock (supra), that the City cannot be immune because it allegedly violated various statutory and regulatory provisions concerning employment practices (see, Civil Service Law § 50 [4]; 4 NYCRR 3.2). These provisions, plaintiffs maintain, flatly prohibit the employment of anyone who supplies false information and, thus, in hiring Shankman, despite the nondisclosure of his arrest and work at Rite-Aid, the City contravened its own rules. Under our decision in Haddock, the argument goes, the violation of these rules forecloses the City from claiming any immunity (see, id., at 485). We disagree for two reasons.

First, the hiring of Shankman did not violate these rules. The only reference to false statements or deception in either provision is the permissive term in Civil Service Law § 50 (4) to the effect that a municipality "may refuse * * * to certify an eligible” (emphasis added); nor do we construe the applicant’s initial nondisclosures of the Rite-Aid incident to be such as would mandate his disqualification for noncooperation under 4 NYCRR 3.2 (c). Second, as contrasted with the violation of the hiring procedures in Haddock which resulted in the total failure to exercise discretion, any violation of these provisions which may be claimed to have occurred was because the officials did exercise their discretion, but did so improperly in appointing Shankman despite their knowledge of information casting doubt on his character.

In sum, we hold that because the essence of plaintiffs’ negligent hiring claims is the allegedly mistaken exercise of discretion by Officers Kelly and Springer in hiring Shankman, the City is protected from liability therefor under the doctrine of governmental immunity (see, Haddock v City of New York, supra, at 484-485; Arteaga v State of New York, supra, at 216; Tarter v State of New York, supra, at 517-518; Tango v Tulevech, supra, at 40-42; cf., McCrink v City of New York, 296 NY, at 106 supra). Based on the foregoing, the only sustainable award is for the false arrest of Andre Mon, established below in the principal sum of $50,000. Accordingly, the order should be modified, without costs, and the case remitted to Supreme Court, Bronx County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed.

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

Order modified, etc.

       Civil Service Law § 50 (4) provides in part:
      "4. Disqualification of applicants and eligibles. The state civil service department and municipal commissions may refuse to examine an applicant, or after examination to certify an eligible
      "f. who has intentionally made a false statement of any material fact in his application; or
      "g. who has practiced, or attempted to practice, any deception or fraud in his application, in his examination, or in securing his eligibility or appointment”.
      4 NYCRR 3.2 provides in part:

        "3.2 Disqualification, (a) Good moral character and habits and a satisfactory reputation shall be requirements for appointment to a position subject to these rules. Any applicant who is found to lack such requirements shall be disqualified for examination or, after examination, for certification and appointment * * *
      "(c) The burden of establishing his qualifications to the satisfaction of the Civil Service Department shall be upon the applicant. Any applicant who refuses to permit the department to investigate matters necessary for the verification of his qualifications or who otherwise hampers, impedes or fails to cooperate with such department in such investigation shall be disqualified for examination or, after examination, for certification and appointment.”


author: Chief Judge Wachtler.

text:
    In the Matter of New York City Department of Environmental Protection, Appellant, v New York City Civil Service Commission et al., Respondents.
    Argued June 5, 1991;
    decided September 12, 1991

      POINTS OF COUNSEL

      Victor A. Kovner; Corporation Counsel (Elizabeth Dvorkin and Francis F. Caputo of counsel), for appellant.
    I. This Court should adhere to its holding that decisions on appeal by a Civil Service Commission made pursuant to Civil Service Law § 76 are reviewable in the courts of this State. (Matter of New York City Dept. of Sanitation v New York City Civ. Serv. Commn., 68 NY2d 978; Board of Commrs. v Nassau County Civ. Serv. Commn., 121 AD2d 494; Matter of Board of Educ. v Cappola, 83 AD2d 751, 54 NY2d 611; Matter of City Council v Carbone, 54 AD2d 461; Matter of Pauling v Smith, 46 AD2d 759; Matter of Santella v Hoberman, 29 AD2d 655; Matter of New York City Hous. Auth. v New York City Civ. Serv. Commn., 94 Misc 2d 183, 72 AD2d 973, 49 NY2d 707; Matter of Board of Educ. v Allen, 6 NY2d 127; Matter of Pell v Board of Educ., 34 NY2d 222.) II. The Civil Service Commission’s decision was purely arbitrary because it reversed a determination made after a full administrative trial based solely on its own reassessment of the witnesses’ credibility, after it found both witnesses’ stories plausible. (Matter of Berenhaus v Ward, 70 NY2d 436; 300 Gramatan Ave. Assocs. v State Div. of Human Rights, 45 NY2d 176; Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Allman v Koehler, 161 AD2d 114, 76 NY2d 706; Matter of Stork Rest. v Boland, 282 NY 256; Eschbach v Eschbach, 56 NY2d 167; 829 Seventh Ave. Co. v Reider, 111 AD2d 670, 67 NY2d 930; Northern Westchester

      Professional Park Assocs. v Town of Bedford, 60 NY2d 492; Janowitz Bros. Venture v 25-30 120th St. Queens Corp., 75 AD2d 203; Oelsner v State of New York, 66 NY2d 636.)

      Jean Rodgers Mills for New York City Civil Service Commission, respondent.
    I. A Civil Service Commission possesses a special expertise in employee discipline and other civil service matters; therefore, a court, if it is permitted to review a Commission’s determination, should have a very limited scope of review. (Matter, of City Council v Carbone, 54 AD2d 461; Matter of Board of Educ. v Allen, 6 NY2d 127; Matter of City of New York v City Civ. Serv. Commn., 141 Misc 2d 276; Matter of Shurgin v Ambach, 56 NY2d 700; Matter of Horvat [Corsi], 300 NY 704; Matter of Ahsaf v Nyquist, 37 NY2d 182; Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Allman v Koehler, 161 AD2d 114, 76 NY2d 706; Matter of City of New York v City Civ. Serv. Commn., 60 NY2d 436; Matter of Simpson v Wolansky, 38 NY2d 391.) II. Under any standard of review, the Commission acted properly here. (300 Gramatan Ave. Assocs. v State Div. of Human Rights, 45 NY2d 176; Edison Co. v Labor Bd., 305 US 197; Universal Camera Corp. v Labor Bd., 340 US 474; Matter of Sowa v Looney, 23 NY2d 329.)

      Jeffrey S. Wasserman for John Daly, respondent.
    I. The decision of the Civil Service Commission should be final and conclusive. (Matter of City Council v Carbone, 54 AD2d 461; Matter of State of New York [Abrams] v Ford Motor Co., 74 NY2d 495; Matter of Board of Educ. v Allen, 6 NY2d 127.) II. The scope of review of the decision of the Civil Service Commission is limited to whether they acted purely arbitrarily. (Matter of City Council v Carbone, 54 AD2d 461; Board of Commrs. v Nassau County Civ. Serv. Commn., 121 AD2d 494; Matter of Short v Nassau County Civ. Serv. Commn., 59 AD2d 157; Matter of Pauling v Smith, 46 AD2d 759; Matter of Leisner v Bahou, 97 AD2d 860, 61 NY2d 985, 62 NY2d 605; Matter of Allman v Koehler, 161 AD2d 114, 76 NY2d 706; Matter of Board of Educ. v Cappola, 83 AD2d 751; 300 Gramatan Ave. Assocs. v State Div. of Human Rights, 45 NY2d 176.)
   OPINION OF THE COURT

Chief Judge Wachtler.

Respondent John Daly, an employee of the Department of Environmental Protection’s Owl’s Head Water Pollution Control Plant, was charged with threatening Jerome Gibbs, a fellow employee, and then punching him in the stomach and knocking him into a wall. Earlier in the day, Gibbs had allegedly been the subject of a racially motivated attack. According to Gibbs, Daly’s threats were designed to keep Gibbs from pressing criminal charges against the two coemployees who had been involved in the earlier incident.

In July of 1986, the Department charged Daly with misconduct arising out of the incident. After a hearing at which both Daly and Gibbs testified, the Administrative Law Judge credited Gibbs’ testimony and recommended that Daly be dismissed. The Commissioner of the Department adopted the findings of the Administrative Law Judge and terminated Daly’s employment effective October 31,1986.

Daly appealed the determination to the Civil Service Commission pursuant to Civil Service Law § 76. The Commission reviewed the transcript of the administrative hearing and reversed the determination of guilt and penalty of dismissal, ordering Daly restored to his position with full back pay. The Department commenced this CPLR article 78 proceeding in August 1988, seeking a judgment reversing the determination of the Civil Service Commission and reinstating the determination of guilt and the penalty of dismissal. Supreme Court, New York County, transferred the matter to the Appellate Division, which confirmed the determination of the Civil Service Commission and dismissed the proceeding, with two Justices dissenting.

On this appeal, we must construe the language of section 76 of the Civil Service Law to determine whether there is any impediment to our review of the Civil Service Commission’s determination. Section 76 permits certain aggrieved employees to appeal a determination in a disciplinary proceeding either to the Commission or to the courts through an article 78 proceeding. If the employee chooses to take an appeal to the Commission, as Daly did in this case, subdivision (3) provides that the Commission’s decision "shall be final and conclusive, and not subject to further review in any court.” We must decide, then, the extent to which this language affects our competence to review the determination at issue here.

We conclude, based on the language of the statute, its legislative history and our case law, that the merits of the determination of the Civil Service Commission in this case are not reviewable in the courts.

This Court has recognized that the Legislature is permitted to restrict the availability of judicial review. In Matter of Guardian Life Ins. Co. v Bohlinger (308 NY 174), we stated that "[although the courts will be exceeding [sic] slow to rule that the discretion of an administrative officer or board 'may be exercised unhampered by judicial review’ * * * it is settled that the legislature may, if it sees fit, provide that certain action 'is not a matter open to [such] review’ ” (id., at 180, citing Matter of Millman v O’Connell, 300 NY 539, 540; Matter of Schwab v McElligott, 282 NY 182, 186; Reckler v Quinn, 280 NY 768; Matter of Calvary Presbyt. Church v State Liq. Auth., 275 NY 552; Switchmen’s Union v Board, 320 US 297, 300). In Matter of Guardian Life, we held that the decision of the Superintendent of Insurance to deny an application submitted by the petitioner insurance company for approval to purchase real property was not subject to judicial review because there was no provision in the Insurance Law authorizing judicial review of such determinations. The Court held that although there was no provision expressly prohibiting review, this was the clear intent of the Legislature, which elsewhere in the statute had specifically indicated which determinations of the Superintendent were to be subject to review (id., at 181).

In Abbott Labs. v Gardner (387 US 136, 140), the United States Supreme Court, applying a "clear and convincing evidence” test, held that "judicial review of a final agency action by an aggrieved person will not be cut pif unless there is persuasive reason to believe that such was the purpose of Congress” (see also, Barlow v Collins, 397 US 159; but see, Johnson v Robison, 415 US 361). Our own cases state a similar rule (see, e.g., Matter of Dairylea Coop. v Walkley, 38 NY2d 6, 11).

The language contained in section 76 is clear and unambiguous in its intent to preclude judicial review of Commission decisions. The legislative history further supports this conclusion. In an April 28, 1941 letter to Governor Lehman, Senator Seymour Halpern, the sponsor of the 1941 bill which added this language to the Civil Service Law, wrote that "[the bill was] designed to make removals and disciplinary procedure a matter of administration and to keep such cases out of the courts.”

Our consideration of this question does not end with the statutory language and its legislative history, however. "Even where judicial review is proscribed by statute, the courts have the power and the duty to make certain that the administrative official has not acted in excess of the grant of authority given * * * by statute or in disregard of the standard prescribed by the legislature” (Matter of Guardian Life Ins. Co. v Bohlinger, supra, at 183).

This standard of review, however, is exceedingly limited. In earlier cases construing former Education Law § 310, which precluded judicial review in language similar to that at issue here, we looked to whether the agency action was "purely arbitrary” (see, e.g., Matter of Baer v Nyquist, 34 NY2d 291, 298; Matter of Ross v Wilson, 308 NY 605; Matter of Levitch v Board of Educ., 243 NY 373, 375). In Baer (supra), we stated that "purely arbitrary” decisions are those that "contravene statutes or constitutional provisions, or countenance their contravention” (id., at 298). Because of the similarity between "purely arbitrary” and "arbitrary and capricious,” an entirely separate standard of review applicable to most agency actions, our use of the "purely arbitrary” terminology has led to some confusion. "Purely arbitrary” and "arbitrary and capricious” are not the same and should not be understood as providing the same kind or degree of review.

For clarity, we abandon the "purely arbitrary” terminology in referring to the standard of review applicable when the Legislature has evinced its intent that judicial review be precluded. But we emphasize that however explicit the statutory language, judicial review cannot be completely precluded. First, if a constitutional right is implicated, some sort of judicial review must be afforded the aggrieved party. We suggested as much in dictum in Long Is. Coll. Hosp. v Cather-wood (23 NY2d 20, 36, n 3), in which we noted that "in the absence of some procedure for the review of a final agency action, a serious constitutional question might arise, for, as was recently observed, 'there must be some type of effective judicial review of final, substantive agency action which seriously affects personal or property rights’ ” (quoting Gardner v Toilet Goods Assn., 387 US 167, 177, per Fortas, J.).

Second, judicial review is mandated when the agency has acted illegally, unconstitutionally, or in excess of its jurisdiction. In Matter of Pan Am. World Airways v New York State Human Rights Appeal Bd. (61 NY2d 542, 548), for example, we stated that even if statutory language precluded review, ”[s]ome standards to guide [the agency’s] broad discretion are necessary if the statute is to be valid.” Quoting from Baer (supra), we said that a court should step in if an agency acts in violation of the Constitution, statutes or its own regulations (id., at 547-548; see also, Marine Midland Bank v New York State Div. of Human Rights, 75 NY2d 240, 246).

This, we believe, was the original understanding of the term "purely arbitrary.” As noted above, this is an extremely narrow standard of review. Once courts have determined that an agency has not acted in excess of its authority or in violation of the Constitution or of the laws of this State, judicial review is completed.

Given this limited standard, the substance of the Commission’s determination in this case is unreviewable in the courts. Despite the fact that the Commission disregarded the credibility determinations of the Administrative Law Judge, there is no showing that this was unconstitutional, illegal, or outside the Commission’s jurisdiction. This determination should be treated, therefore, in all respects as final and conclusive.

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

Judges Simons, Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Judgment affirmed, with costs.