author: Bellacosa, J. Hancock, Jr., J. Kaye, J.

text:
    James J. Gallagher, Appellant, v Benjamin V. Lambert et al., Respondents.
    Argued October 19, 1989;
    decided December 14, 1989

      POINTS OF COUNSEL

      Daniel J. Kornstein, Marvin Wexler and Wayne O. Alpern for appellant.
    I. Respondents’ manipulation of the stockholders’ agreement violated the fiduciary duties they owed to appellant. (Pepper v Litton, 308 US 295; Alpert v 28 Williams St. Corp., 63 NY2d 557; Schwartz v Marien, 37 NY2d 487; Case v New York Cent. R. R. Co., 15 NY2d 150; Kavanaugh v Kavanaugh Knitting Co., 226 NY 185; Clark v Pattern Analysis & Recognition Corp., 87 Misc 2d 385; People v Concord Fabrics, 83 Misc 2d 120, 50 AD2d 787; Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392; Botany Indus. v New York Joint Bd., Amalgamated Clothing Workers, 375 F Supp 485, judgment vacated on other grounds sub nom. Robb v New York Joint Bd., Amalgamated Clothing Workers, 506 F2d 1246; Matter of Dobbs Ferry Union Free School Dist. [Dobbs Ferry United Teachers], 90 Misc 2d 819.) II. Wholly aside from their fiduciary obligations, respondents owed, and breached, a duty of good-faith performance. (Kirke La Shelle Co. v Armstrong Co., 263 NY 79; Van Valkenburgh, Nooger & Neville v Hayden Publ. Co., 30 NY2d 34; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Wood v Duff-Gordon, 222 NY 88; Shepard v Spring Hollow, 87 AD2d 126; Brookfield Indus. v Goldman, 87 AD2d 752; Copy-Data v Toshiba Am., 582 F Supp 231, revd on other grounds sub nom. Sklut Hide & Furs v Prudential Lines, 755 F2d 923, 474 US 824; Zimmer v Wells Mgt. Corp., 348 F Supp 540.) III. In any event, the contract here did not permit respondents to act as they did. (Lacks v Fidelity & Cas. Co., 306 NY 357; Jacobson v Sassower, 66 NY2d 991; Alpert v 28

      Williams St. Corp., 63 NY2d 557; Van Dyke Prods. v Eastman Kodak Co., 12 NY2d 301; Ciofalo v Vic Tanney Gyms, 10 NY2d 294; Lemmon v Cedar Point, 406 F2d 94; Coleman v Graybar Elec. Co., 195 F2d 374; Matter of Pace Photographers [Rosen], 71 NY2d 737.)

      Catherine Samuels and Lynn E. Judell for respondents.
    I. This court’s decision in Ingle v Glamore controls this case. (Ingle v Glamore Motor Sales, 73 NY2d 183; Weisman v Awnair Corp., 3 NY2d 444; Lemmon v Cedar Point, 406 F2d 94; Coleman v Graybar Elec. Co., 195 F2d 374; Matter of Pace Photographers [Rosen], 71 NY2d 737.) II. Plaintiffs causes of action are barred by Murphy v American Home Prods. (Murphy v American Home Prods. Corp., 58 NY2d 293; Keating v BBDO Intl., 438 F Supp 676; Carlson v Viacom Intl., 566 F Supp 289; Bevilacque v Ford Motor Co., 125 AD2d 516; Landorf v Glottstein, 131 Misc 2d 432, 127 AD2d 1016; Sabetay v Sterling Drug, 69 NY2d 329.) III. As a matter of law, plaintiffs claims are precluded by the stockholders’ agreement. (Securities Commn. v Chenery Corp., 318 US 80; Bevilacque v Ford Motor Co., 125 AD2d 516; Coleman v Taub, 638 F2d 628; Jenkins v Haworth, Inc., 572 F Supp 591; Allen v Biltmore Tissue Corp., 2 NY2d 534; Matter of Pace Photographers, 133 AD2d 829; Isaacson v Beau Label Corp., 93 AD2d 880; Concord Auto Auction v Rustin, 627 F Supp 1526; Keating v BBDO Intl., 438 F Supp 676.) IV. As a matter of law, appellant’s employment termination does not constitute a minority shareholder freeze-out. (Matter of Kemp & Beatley [Gardstein], 64 NY2d 63; Matter of Wiedy’s Furniture Clearance Center Co., 108 AD2d 81.) V. Appellant’s cause of action for breach of fiduciary duty should be dismissed for failure to meet basic pleading requirements. (Greenbaum v American Metal Climax, 27 AD2d 225; Greenberg v Acme Folding Box Co., 84 Misc 2d 181; Lanzi v Brooks, 54 AD2d 1057, 43 NY2d 778; Murphy v American Home Prods. Corp., 58 NY2d 293.) VI. Appellant’s claims should have been dismissed for failure to meet the burden on a motion for summary judgment. (Fender v Prescott, 101 AD2d 418; Zuckerman v City of New York, 49 NY2d 557; Twining, Nemia & Hill v Read Mem. Hosp., 89 AD2d 432; Hendries, Inc. v American Express Co., 35 AD2d 412; Oates v Marino, 106 AD2d 289; Fried v Bower & Gardner, 46 NY2d 765.) VII. As a matter of policy, the opinion by the court below should be affirmed. (Coleman v Taub, 638 F2d 628; St. Louis Union Trust Co. v Merrill Lynch, Pierce, Fenner & Smith, 562 F2d 1040, 435 US 925; Alpert v 28 Williams St. Corp., 63 NY2d 457; Sabetay v Sterling Drug, 69 NY2d 329.)
   OPINION OF THE COURT

Bellacosa, J.

Plaintiff Gallagher purchased stock in the defendant close corporation with which he was employed. The purchase of his 8.5% interest was subject to a mandatory buy-back provision: if the employment ended for any reason before January 31, 1985, the stock would return to the corporation for book value. The corporation fired plaintiff prior to the fulcrum date, after which the buy-back price would have been higher.

We must decide whether plaintiffs dismissed causes of action, seeking the higher repurchase price based on an alleged breach of a fiduciary duty, should be reinstated. We think not and affirm, concluding that the Appellate Division did not err in dismissing these causes of action by summary judgment because there was no cognizable breach of any fiduciary duty owed to plaintiff under the plain terms of the parties’ repurchase agreement.

Gallagher was employed by defendant Eastdil Realty as a mortgage broker from 1968 to 1973. Three years later, in 1976, he returned to the company as a broker, officer and director, serving additionally as president and chief executive officer of defendant’s wholly owned subsidiary, Eastdil Advisors, Inc. Gallagher was at all times an employee at will. Still later, in 1981, Eastdil offered all its executive employees an opportunity to purchase stock subject to a mandatory buyback provision, which provided that upon "voluntary resignation or other termination” prior to January 31, 1985, an employee would be required to return the stock for book value. After that date, the formula for the buy-back price was keyed to the company’s earnings. Plaintiff accepted the offer and its terms.

On January 10, 1985, Gallagher was fired by Eastdil Realty. He did not and does not now contest the firing. But he demanded payment for his shares calculated on the post-January 31, 1985 buy-back formula. Eastdil refused and Gallagher sued, asserting eight causes of action. Only three claims, based on an alleged breach of fiduciary duty of good faith and fair dealing, are before us. The trial court denied defendants’ motion for summary judgment on these claims, stating that factual issues were raised relating to defendants’ motive in firing plaintiff. The Appellate Division, by divided vote, reversed, dismissed those claims and ordered payment for the shares at book value. That court then granted leave and certified the following question to us: "Was the order of this Court, which modified the order of the Supreme Court, properly made?”

The parties negotiated a written contract containing a common and plain buy-back provision. Plaintiff got what he bargained for — book value for his minority shares if his employment in the corporation ended before January 31, 1985. There being no basis presented for the courts to interfere with the operation and consequences of this agreement between the parties, the order of the Appellate Division granting summary judgment to defendants, dismissing the first three causes of action, should be affirmed and the certified question answered in the affirmative.

Earlier this year, in Ingle v Glamore Motor Sales (73 NY2d 183), we expressly refrained from deciding the precise issue presented by this case. There, the challenge was directed to the at-will discharge from employment and was predicated on a claimed fiduciary obligation flowing from the shareholder relationship. Relying principally on Sabetay v Sterling Drug (69 NY2d 329, 335-336) and Murphy v American Home Prods. Corp. (58 NY2d 293, 300), we held that "[a] minority shareholder in a close corporation, by that status alone, who contractually agrees to the repurchase of his shares upon termination of his employment for any reason, acquires no right from the corporation or majority shareholders against at-will discharge. ” (Ingle v Glamore Motor Sales, 73 NY2d, supra, at 188 [emphasis added].) However, we cautioned that "[i]t is necessary * * * to appreciate and keep distinct the duty a corporation owes to a minority shareholder as a shareholder from any duty it might owe him as an employee. ” (Id., at 188.)

The causes before us on this appeal are based on an alleged departure from a fiduciary duty of fair dealing existing independently of the employment and arising from the plaintiff’s simultaneous relationship as a minority shareholder in the corporation. Plaintiff claims entitlement to the higher price based on a breach flowing from Eastdil’s premature "bad faith” termination of his at-will employment because, he asserts, the sole purpose of the firing at that time was to acquire the stock at a contractually and temporally measured lower buy-back price formula.

The claim seeking a higher price for the shares cannot be neatly divorced, as the dissent urges, from the employment because the buy-back provision links them together as to timing and consequences. Plaintiff not only agreed to the particular buy-back formula, he helped write it and he reviewed it with his attorney during the negotiation process, before signing the agreement and purchasing the minority interest. These provisions, which require an employee shareholder to sell back stock upon severance from corporate employment, are designed to ensure that ownership of all of the stock, especially of a close corporation, stays within the control of the remaining corporate owners-employees; that is, those who will continue to contribute to its successes or failures (see, Kessler, Share Repurchases Under Modern Corporation Laws, 28 Fordham L Rev 637, 648 [1959-1960]). These agreements define the scope of the relevant fiduciary duty and supply certainty of obligation to each side. They should not be undone simply upon an allegation of unfairness. This would destroy their very purpose, which is to provide a certain formula by which to value stock in the future (Allen v Biltmore Tissue Corp., 2 NY2d 534, 542-543). Indeed, the dissenters in Ingle itself acknowledged that employee shareholders would be precluded from complaining about the terms of an otherwise enforceable buy-back provision (Ingle v Glamore Motor Sales, 73 NY2d, supra, at 192, n 1).

Gallagher accepted the offer to become a minority stockholder, but only for the period during which he remained an employee. The buy-back price formula was designed for the benefit of both parties precisely so that they could know their respective rights on certain dates and avoid costly and lengthy litigation on the "fair value” issue (see, Coleman v Taub, 638 F2d 628, 637). Permitting these causes to survive would open the door to litigation on both the value of the stock and the date of termination, and hinder the employer from fulfilling its contractual rights under the agreement. This would frustrate the agreement and would be disruptive of the settled principles governing like agreements where parties contract between themselves in advance so that there may be reliance, predictability and definitiveness between themselves on such matters. There being no dispute that the employer had the unfettered discretion to fire plaintiff at any time, we should not redefine the precise measuring device and scope of the agreement. Defendant agreed to abide by these terms and thus fulfilled its fiduciary duty in that respect.

The dissenting opinion uses a number of rhetorical characterizations about the defendant and about what we are deciding or avoiding to decide, none of which, we believe, require response, because our holding and rationale rest on the application of fundamental contractual principles to the plain terms in the parties’ own stock repurchase agreement.

Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

Hancock, Jr., J.

(concurring). I agree that the complaint should be dismissed. I believe that this court’s holding in Ingle v Glamore Motor Sales (73 NY2d 183) and an analysis of the Ingle complaint which the court dismissed require dismissal of the claim asserted here (see, id., at 192-193 [Hancock, Jr., J., dissenting]; see also, verified complaint in Ingle, appellant’s appx, at A37-A38; appellant’s brief, at 28 ff).

Kaye, J.

(dissenting). By proceeding, as if inexorably, from Sabetay to Ingle to Gallagher, the court avoids confronting plaintiffs true claims and unnecessarily weakens traditional protections afforded minority shareholders in close corporations. I therefore respectfully dissent.

I.

To begin at a point of agreement, this case is significantly different from Ingle v Glamore Motor Sales (73 NY2d 183). As the majority acknowledges, this case presents "an alleged departure from a fiduciary duty of fair dealing existing independently of the employment” that was not present in Ingle (majority opn, at 566).

In Ingle we reached only the corporation’s duty to plaintiff as an employee, carving out and reserving for another day any question of the duty a corporation might owe an employee as a shareholder, which was not in issue. The court was careful to note that Mr. Ingle had already accepted full payment for his shares without reservation; while his complaint referred to a fiduciary duty owed him as a shareholder, the only interest he asserted in the litigation was in his job. In its succinct opinion the court took pains to emphasize at least six separate times that its concern was only with Mr. Ingle’s employment, not in any sense with the duty a corporation owes to a minority shareholder, or with undervaluation of shares (73 NY2d, at 187, 188, 189).

Here, plaintiff does question the duty the corporation owes him as a shareholder. He does contend that the corporation undervalued his shares and that it did not offer a fair price for his equity interest. Indeed, that is the only question he raises; he does not challenge defendant’s absolute right to terminate his employment. Yet despite careful identification and recognition in Ingle of the different considerations such a question would present, now that the question is before us the court finds that the very same answer and the very same rationale are wholly dispositive, with no analysis of the fiduciary obligation owed plaintiff.

The court’s insistence that the rationale of Ingle and the other at-will employment cases must be carried over — lock, stock and barrel — even to the fiduciary obligations owed minority shareholders in close corporations, plainly represents an extension of the law to a different jural relationship. I believe this is wholly unwarranted.

II.

A fuller statement of the facts portrays both plaintiff’s true claims and the error of summary dismissal of his complaint.

Before he was dismissed on January 10, 1985, plaintiff (James V. Gallagher) was an officer and director of both defendant Eastdil Realty, Inc. and its wholly owned subsidiary, Eastdil Advisers, Inc. Eastdil Realty is a closely held real estate investing banking firm. Defendant Lambert is its founder, principal shareholder and chief executive officer. The other defendants are officers and shareholders of the corporation.

Gallagher was first employed by Eastdil Realty as vice-president, from 1968 to 1973, when he left to start his own firm. He returned as a consultant in 1976, and was soon offered a full-time position as vice-president at a base salary of $60,000. In 1978, Gallagher was appointed president and chief executive officer of the newly created Eastdil Advisors, and he was elected to Eastdil’s board of directors in 1980. As Gallagher’s responsibilities increased, his salary and bonuses rose commensurately and steadily — from $135,000 in 1979 to more than a million dollars for the fiscal year ending on January 31, 1984.

In 1981, a number of executives of Eastdil Realty were offered the opportunity to purchase shares of class B nonvoting stock in the company. Gallagher bought 4% — 40 shares— at $100 a share. Lambert continued to own all of the voting stock. In connection with his purchase of shares, Gallagher executed a stockholders’ agreement that contained a mandatory repurchase provision, For a period of two years "commencing with the voluntary resignation or other termination of any class B stockholder’s employment with the company,” the company had a right to reacquire the shares. The agreement set the repurchase price at book value.

In mid-1983, Eastdil implemented a recapitalization plan. All of the voting stock was to be retired, and the nonvoting shares increased and redistributed, and then converted into voting common stock. As Gallagher alleges, the recapitalization was no act of charity by the corporation; it was a response to a mass exodus of valued employees, and an effort to forestall further defections by offering financial incentives to continue with the corporation at least to year-end.

In summer 1984, Gallagher received 8.5% of Eastdil’s stock, becoming the third largest shareholder, and he executed an amended stockholders’ agreement. The agreement continued to provide for mandatory repurchase at book value upon "voluntary resignation or other termination” of employment. But it also stipulated that after January 31, 1985, the buy-out price would be calculated by an escalating formula based on the company’s earnings and the length of the shareholder’s employment. According to Gallagher, the new buy-out price represented "golden handcuffs” designed to induce employees to remain on, at least until January 31, 1985.

On January 10, 1985 — just 21 days before the new valuation formula became effective — Gallagher was fired and Eastdil invoked its right to repurchase his stock at book value. According to Gallagher, book value for the shares was $89,000; the price under the new valuation formula would have been around $3,000,000.

After Gallagher’s refusal to deliver his shares at book value, and defendants’ refusal to pay the higher value, Gallagher began this damages action for breach of contract, breach of fiduciary duty, breach of a duty of good faith and fair dealing, and other alleged wrongdoing. For nearly a year defendants conducted discovery of plaintiff — including a very extensive deposition — and then sought summary judgment; plaintiff had no discovery whatever. The trial court denied defendants’ motion, noting factual issues concerning defendants’ motive for firing plaintiff, and that it "would clearly be an injustice to grant * * * defendants’ motion, when plaintiff has had no disclosure at all.” A divided Appellate Division reversed; dismissed plaintiffs causes of action for breach of contract, breach of fiduciary duty, and breach of a duty of good faith and fair dealing; granted defendants specific performance of the amended stockholders’ agreement; and granted plaintiff leave to appeal to this court on a certified question.

III.

Gallagher alleges that defendants had no bona fide, business-related reason to terminate his employment when they did — assertions we must accept as true on this summary judgment motion. He charges that defendants fired him for the sole purpose of recapturing his shares at an unfairly low price and redistributing them among themselves.

These claims put in issue an aspect of the employee-shareholder relationship that we have not previously considered in our at-will employment cases. Plaintiff claims that defendants, the holders of a majority of the corporate stock, breached distinctly different duties to him by manipulating his termination so as to deprive him of the opportunity to reap the benefits of a "golden handcuffs” agreement, and for no other reason than to effect repurchase of his shares at less than their fair value. In short, plaintiff claims defendants breached two duties related to each other but conceptually unrelated to his at-will employment status: (1) a duty of good faith in the performance of the shareholders’ agreement, and (2) a fiduciary obligation owed to him as a minority shareholder by the controlling shareholders to refrain from purely self-aggrandizing conduct. Neither claim is foreclosed by plaintiff’s status as an at-will employee.

If plaintiff were a minority shareholder, but not an employee, defendants would be barred from acting selfishly and opportunistically, for no corporate purpose, as he alleges they did. The controlling stockholders in a close corporation stand, in relation to minority owners, in the same fiduciary position as corporate directors generally, and are held "to the extreme measure of candor, unselfishness and good faith.” (Kavanaugh v Kavanaugh Knitting Co., 226 NY 185, 193.) Although, without more, the courts will not interfere when parties have set the repurchase price at book value (Allen v Biltmore Tissue Corp., 2 NY2d 534, 542-543), here plaintiff asserts there was more. The corporation agreed, commencing January 31, 1985, to pay a higher price, said to be more reflective of the true value of defendant’s shares. Defendants’ invocation of the pre-January 31 repurchase price was adverse to plaintiffs interests as a minority stockholder, and therefore subject to a standard of good faith under the foregoing principles.

Directors and majority shareholders may not act "for the aggrandizement or undue advantage of the fiduciary to the exclusion or detriment of the [minority] stockholders.” (Alpert v 28 Williams St. Corp., 63 NY2d 557, 569 [citing cases].) Nor is it considered a legitimate corporate interest if the sole purpose is reduction of the number of profit-sharers, or ultimately "to increase the individual wealth of the remaining shareholders” (id., at 573). Yet that is precisely what we must assume defendants’ motive was, and this court now sanctions such conduct.

Defendants’ broad interpretation of the "other termination” language of the repurchase clause amounts to an assertion that plaintiff agreed to waive substantial rights he might otherwise have possessed as a minority shareholder. However, in the absence of evidence that plaintiff knowingly assented to such a waiver, I cannot agree that the general language of the clause unambiguously expresses an understanding that the option could be exploited for the sole personal gain of the controlling shareholders in derogation of their fiduciary obligations to minority shareholders. Notably, the repurchase clause contains no reference to plaintiff’s at-will employment status and no reservation of defendant’s right to discharge plaintiff for any reason at all.

Moreover, defendants’ interpretation denies that defendants themselves had any duty of good faith in connection with the shareholders’ agreement. We have said that "there is an implied covenant that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract, which means that in every contract there exists an implied covenant of good faith and fair dealing.” (Kirke La Shelle Co. v Armstrong Co., 263 NY 79, 87.) This general rule does not apply to at-will employment relationships, as "it would be incongruous to say that an inference may be drawn that the employer impliedly agreed to a provision which would be destructive of his right of termination.” (Murphy v American Home Prods. Corp., 58 NY2d 293, 304-305.) It does not follow, however, that there can be no covenant of good faith implicit in the shareholders’ agreement that gives rise to obligations surviving termination of the employment relationship.

Assuming plaintiff’s claims about the purpose of the amendments to be true, the expectations and relationship of the parties, as structured by the shareholders’ agreement, dictate an implied contractual obligation of good faith, notwithstanding that there is none in their employment relationship (see, Wakefield v Northern Telecom, 769 F2d 109 [2d Cir]). A covenant of good faith is anomalous in the context of at-will employment because performance and entitlement to benefits are simultaneous. Termination even without cause does not operate to deprive the employee of the benefits promised in return for performance.

But the alleged "golden handcuffs” agreement is different. An implied covenant of good faith is necessary to enable the employee to receive the benefits promised for performance. As one court noted, "an unfettered right to avoid payment * * * creates incentives counterproductive to the purpose of the contract itself in that the better the performance by the employee, the greater the temptation to terminate.” (Wake-field v Northern Telecom, supra, at 112-113; Note, Exercising Options to Repurchase Employee-Held Stock: A Question of Good Faith, 68 Yale LJ 773, 779 [1959].)

Finally, defendants’ construction of the agreement not only is inconsistent with the purpose alleged by plaintiff but also would authorize the forfeiture by plaintiff of significant benefits he claims to have all but earned through his service. Contracting parties surely may agree to terms that are inimical to their interests. But provisions purporting to authorize forfeitures should be strictly construed (3 Corbin, Contracts § 552, at 212), and absent contractual language that permits no other reasonable interpretation, "such provisions will be construed to prevent arbitrary action in reliance on them.” (Lemmon v Cedar Point, 406 F2d 94, 97 [6th Cir 1969].) Here, the language relied upon by defendants cannot be deemed so clear as to unambiguously constitute an agreement by plaintiff to cede the fiduciary duties owed him as a shareholder and relinquish his entitlement to a higher price for his stock solely for defendants’ pecuniary benefit.

IV.

Denial of summary judgment would deprive defendants of no legitimate expectation or right, contractual or otherwise. Under the law, they remain free to terminate plaintiffs employment as agreed; they remain free to buy back his stock at book value as agreed — so long as there is a corporate purpose for their conduct. What controlling shareholders cannot do to a minority shareholder is take action against him solely for the self-aggrandizing, opportunistic purpose of themselves acquiring his shares at the low price, and they cannot do this because in the law it means something to be a shareholder, particularly a minority shareholder.

Because the majority gives no credence whatever to plaintiffs independent status as a shareholder, and because the majority now needlessly extends the at-will employment doctrine yet another notch, to diminish the long-recognized duties owed minority shareholders, I must dissent.

Judges Simons, Alexander and Titone concur with Judge Bellacosa; Judge Hancock, Jr., concurs in a separate opinion; Judge Kaye dissents and votes to reverse in another opinion in which Chief Judge Wachtler concurs.

Order affirmed, etc.

       The majority’s premise that certainty would be undermined, and "costly and lengthy litigation on the 'fair value’ issue” would ensue (majority opn, at 567) simply is without basis. No one proposes a valuation proceeding, or any other uncertainty. The only issue is which of the two values fixed in the agreement should apply.


source: Caselaw Access Project

author: Alexander, J.

license: Public Domain

text:
    In the Matter of Tohr Industries Corp., Respondent, v Zoning Board of Appeals of City of Long Beach, Appellant.
    Argued November 14, 1989;
    decided December 14, 1989

      POINTS OF COUNSEL

      Samuel Ungar, Corporation Counsel (Judith A. Peters of counsel), for appellant.
    I. The variance upon which respondent relies was revoked by Special Term in 1955. (Matter of Hearst Corp. v Clyne, 50 NY2d 707; Zouppas v Yannikidou, 15 AD2d 459; Matter of Weinstein v New York City Tr. Auth., 49 Misc 2d 170.) II. The Long Beach Zoning Board of Appeals has the power to revoke a variance which has not been utilized for a substantial period of time, and where the circumstances surrounding its granting have changed. (Matter of Mendozza v Board of Zoning Appeals, 30 AD2d 863; Matter of 200 W. 79th St. Co. v Galvin, 71 Misc 2d 190; Matter of Hall v Walsh, 137 Misc 448, 221 App Div 756; Matter of Abbey Is. Park v Board of Zoning Appeals, 133 AD2d 150; Matter of CDK Rest, v Krucklin, 118 AD2d 851; Matter of Putrino v Zoning Bd. of Appeals, 115 AD2d 932.) III. Respondent has failed to overcome the heavy presumption that a proper determination was made by the Long Beach Zoning Board of Appeals. (Matter of Town of Bedford v Village of Mount Kisco, 33 NY2d 178; Corter v Zoning Bd. of Appeals, 46 AD2d 184; Matter of Consolidated Edison Co. v Hoffman, 43 NY2d 598; Matter of Cowan v Kern, 41 NY2d 591; Matter of Rostlee Assocs. v Amelkin, 121 AD2d 725.)

      Arthur B. Welsher for respondent.
    I. The purported possible earlier revocation of the variance may not now be considered. (Fonda v Nationwide Mut. Fire Ins. Co., 99 AD2d 680.) II. Appellant Zoning Board exceeded its authority in convening the hearing and in revoking the variance. (Young Israel v Board of Stds. & Appeals, 39 AD2d 51; Matter of Panella v Budney, 59 Misc 2d 542; Matter of Rosenbloom v Crowley, 7 AD2d 193; Matter of 200 W. 79th St. Co. v Galvin, 71 Misc 2d 190; Patrolmen’s Benevolent Assn. v City of New York, 41 NY2d 205.) III. Appellant improperly seeks to shift the burden of proof; due process requires that appellant convincingly demonstrate justification for confiscating respondent’s property rights. (Patterson v Carey, 41 NY2d 714.) IV. The determinations by the Board and the Supreme Court were not supported by the evidence. (Matter of Pokoik v Silsdorf, 40 NY2d 769; Matter of Faymore Dev. Co. v Board of Stds. & Appeals, 45 NY2d 560; Matter of Dubow v Ross, 254 App Div 706.)
   OPINION OF THE COURT

Alexander, J.

Petitioner Tohr Industries Corp. owns an unimproved parcel in the City of Long Beach. In 1941, the land was zoned for a residential use. By resolution dated July 28, 1954, respondent, the Zoning Board of Appeals of the City of Long Beach, granted a variance to the previous owner permitting the construction of a building "to be used for business purposes as permitted in a Business 'A’ District”. Petitioner purchased the land in 1982 with the intention of using it for such a permitted commercial purpose. The Building Commissioner initially advised petitioner that the variance was still in effect, that a retail store could be constructed and that application could be made for the necessary building permits. The Commissioner subsequently determined, however, that based upon a substantial change in the character of the neighborhood and because no vested rights had accrued in the variance since its issuance 32 years earlier, he would petition the Zoning Board of Appeals to conduct a public hearing on the variance. Petitioner’s attempt to judicially challenge this determination was dismissed for failure to exhaust administrative remedies. The Zoning Board of Appeals conducted a hearing in March 1986 and revoked the variance because it determined that the character of the neighborhood had changed substantially since the variance was originally granted.

This article 78 proceeding seeking to annul respondent’s determination ensued. Supreme Court denied the application and dismissed the petition. The Appellate Division reversed, reasoning that there was no claim that respondent had acted "in excess of its jurisdiction” when the variance was originally granted and therefore respondent’s reconsideration and revocation of the variance was illegal (Matter of Tohr Indus. Corp. v Zoning Bd. of Appeals, 148 AD2d 457, 458). We now affirm, but for reasons different than those stated at the Appellate Division.

General City Law § 19 confers upon cities the general powers to regulate, manage and control their property and local affairs. Zoning powers are granted by General City Law § 20. Subdivision (24) of that section empowers cities, inter alia, "[t]o regulate and limit the height, bulk and location of buildings” and subdivision (25) grants the power "[t]o regulate and restrict the location of trades and industries and the location of buildings, designed for specified uses”. To implement these powers, General City Law § 81 (1) authorizes the creation of a Zoning Board of Appeals to "hear and decide all matters * * * upon which they are required to pass under any ordinance * * * adopted pursuant to [General City Law § 20 (24), (25)]”. The Board is also empowered to "hear and decide appeals from and review any order, requirement, decision or determination made by an administrative official charged with the enforcement of any ordinance” (General City Law § 81 [1]) and to grant variances from the regulations or ordinances "relating to the use, construction, structural changes * * * of buildings or structures, or use of land” where practical difficulties or unnecessary hardship are demonstrated (General City Law § 81 [4]).

Respondent argues that authority to revoke a previously granted variance may be implied from the general grant of power in General City Law §81 (1) (cf., Chapmald Realty Corp. v Board of Stds. & Appeals, 76 NYS2d 296 [Board of Standards and Appeals empowered by Charter of the City of New York to rehear variance application]; compare, Town Law § 267 [6] [expressly empowering zoning board to review and "reverse, modify or annul” its prior determination]; Matter of Mendozza v Board of Zoning Appeals, 30 AD2d 863 [construing Town Law § 267 (6)]; Matter of Ambrosio v Zoning Bd. of Appeals, 196 Misc 1005 [same]; see also, Gina Petroleum v Zoning Bd. of Appeals, 127 AD2d 560 [Town Law § 267 (5) and zoning ordinance confer power to extend expired variance]). Thus respondent urges that revocation of the variance for petitioner’s property was within the designated scope of its authority and therefore that the petition should be dismissed.

Respondent’s argument must fail because its authority in this regard is limited by the express language of the Code of Ordinances of the City of Long Beach. While that ordinance confers broad authority upon the Zoning Board to grant both conditional and unconditional variances, it authorizes the Zoning Board to revoke only those variances wherein "any condition imposed by [the Zoning Board] either has not been complied with or has been breached or violated” (Code of Ordinances of City of Long Beach § 20-14 [j]). There is no indication nor any claim that the variance granted to petitioner’s predecessor was in any sense conditional and consequently no indication that a condition was not satisfied.

We cannot determine on the record before us and thus must reject respondent’s alternative contention that the original variance is no longer in existence because the determination granting this variance was annulled by Supreme Court in 1955.

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

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

Order affirmed, with costs.


author: Chief Judge Wachtler.

text:
    In the Matter of Mary G. Mullen, as Executrix of Leo J. Mullen, Deceased, Appellant, v David Axelrod, as Commissioner of Health of the State of New York, Respondent.
    Argued November 20, 1989;
    decided December 19, 1989

      POINTS OF COUNSEL

      Irwin B. Schwartz and James W. Kennedy for appellant.
    I. The courts below erred in denying Mr. Mullen article 78 standing to review respondent’s arbitrary and capricious determination. (Matter of Guardian Life Ins. Co. v Bohlinger, 308 NY 174; United States v Oates, 560 F2d 45; Matter of Asman v Ambach, 64 NY2d 989; Post v 120 E. End Ave. Corp., 62 NY2d 19; Matter of Dairylea Coop. v Walkley, 38 NY2d 6; National Org. for Women v State Div. of Human Rights, 34 NY2d 416; Matter of Bradford Cent. School Dist. v Ambach, 56 NY2d 158; Grant v Cuomo, 130 AD2d 154, 73 NY2d 820; Matter of Burke v Sugarman, 35 NY2d 39; Boryszewski v Brydges, 37 NY2d 361.) II. The decision below improperly disregards Mr. Mullen’s pleadings in dismissing this case. (Guggenheimer v Ginzburg, 43 NY2d 268; Klostermann v Cuomo, 61 NY2d 525.)

      Robert Abrams, Attorney-General (Evelyn M. Tenenbaum, O. Peter Sherwood and Lawrence Kahn of counsel), for respondent.
    I. An article 78 proceeding does not lie to review an administrator’s refusal to proceed with discipline of a professional under his or her jurisdiction. (Klostermann v Cuomo, 61 NY2d 525; Grant v Cuomo, 130 AD2d 154, 73 NY2d 820; Matter of Savastano v Prevost, 66 NY2d 47; Gaynor v Rockefeller, 15 NY2d 120; People v Bunge Corp., 25 NY2d 91; Matter of Haydock v Passidomo, 121 AD2d 540; Queens County Business Alliance v New York State Racing Assn., 89 AD2d 46; Mitrofanis v Smith, 130 Misc 2d 518; Heckler v Chaney, 470 US 821; Matter of Grattan v People, 65 NY2d 243.) II. Petitioner lacks standing because he has suffered no injury from the Commissioner’s determination. (Matter of City of New York v City Civ. Serv. Commn., 60 NY2d 436; Matter of Dental Socy. v Carey, 61 NY2d 330; Matter of Dairylea Coop. v Walkley, 38 NY2d 6; Matter of MFY Legal Servs. v Dudley, 67 NY2d 706; Matter of Bradford Cent. School Dist. v Ambach, 56 NY2d 158; Matter of Burke v Sugarman, 35 NY2d 39; Wilkins v Perales, 128 Misc 2d 265; National Org. for Women v State Div. of Human Rights, 34 NY2d 416; Begandy v Richardson, 134 Misc 2d 357; Matter of Douglaston Civic Assn. v Galvin, 36 NY2d 1.)
   OPINION OF THE COURT

Chief Judge Wachtler.

The petitioner in this article 78 proceeding is Mary Grace Mullen, executrix of the estate of her father, Leo J. Mullen, who died on January 10, 1989. It is Mr. Mullen’s care during the final years of his life that is at issue in this appeal. In January 1985, Mr. Mullen entered the Mary Manning Walsh Home in New York City. Petitioner alleges that less than a year later, he was near death as a result of the abuse, mistreatment and neglect that he suffered there. According to petitioner, Mr. Mullen sustained an ankle injury in an altercation with an orderly, and the nursing home staff failed to treat the injury properly. As a result, Mr. Mullen’s general condition worsened dramatically and gangrene set in, necessitating the amputation of Mr. Mullen’s right leg above the knee. Further, no one at the home reported any of the instances of mistreatment and abuse that allegedly led to the over-all deterioration of Mr. Mullen’s health to the State Department of Health (Department), as is required by Public Health Law § 2803-d (1).

On February 10, 1986, petitioner submitted a report to the Department on her father’s behalf, charging the Mary Manning Walsh Home with various instances of abuse, mistreatment and neglect (see, Public Health Law § 2803-d [2]). The Department commenced an investigation of the charges as required by Public Health Law § 2803-d (6) (a). The investigation included an analysis of the information submitted by the petitioner, a review of documentation and records from the nursing home, and interviews with nursing home staff and with others involved in Mr. Mullen’s case, including the petitioner. By letter dated February 3, 1987, the Department informed petitioner of its determination that there was "insufficient credible evidence to sustain a violation of the Public Health Law § 2803-d in this instance.”

In May of 1987, Mr. Mullen commenced this article 78 proceeding seeking to set aside the Department’s determination that insufficient credible evidence existed to substantiate his complaints of abuse, mistreatment and neglect. The Supreme Court dismissed that proceeding, holding that the petition failed to state a cause of action and that Mr. Mullen additionally lacked standing to bring the article 78 proceeding. The Appellate Division affirmed by order dated December 22, 1988. After Mr. Mullen’s death, this court, by order dated July 6, 1989, granted Mary Grace Mullen’s motion for party substitution and additionally granted leave to appeal.

"While a mandamus is an appropriate remedy to enforce the performance of a ministerial duty, it is well settled that it will not be awarded to compel an act in respect to which the officer may exercise judgment or discretion.” (People ex rel. Hammond v Leonard, 74 NY 443, 445; see also, Klostermann v Cuomo, 61 NY2d 525, 539; Gaynor v Rockefeller, 15 NY2d 120, 131; Matter of Gimprich v Board of Educ., 306 NY 401, 406.) This court has additionally held that a public entity’s decision not to invoke authorized penalties falls within "the areas of management of public affairs and discharge of public duties where judicial intervention in the ordinary case is least fitting.” (Gaynor v Rockefeller, supra, at 131.)

In the case now before us, the respondent Department of Health Commissioner David Axelrod (Commissioner) was vested with the discretion to determine whether, based on available evidence, penalties against the nursing home were appropriate. The Commissioner’s designee conducted an extensive investigation of the petitioner’s allegations of abuse, mistreatment and neglect. The basis of petitioner’s cause of action appears to be that the Commissioner’s designee abused his discretion by concluding that there was insufficient evidence to sustain a violation of the Public Health Law and by consequently declining to take disciplinary action against the nursing home. An examination of the applicable case law would thus appear to compel the conclusion that mandamus does not lie in this case since the Commissioner’s finding at issue here involved a discretionary decision not to impose penalties authorized by the Public Health Law (see, Public Health Law § 2803-d [7]).

Petitioner argues, however, that the language of a 1986 amendment to Public Health Law § 2803-d (6) (c) effectively gives her standing to challenge the Department’s determination in this case. Prior to its amendment, this section read in relevant part that "[a]ll information relating to any allegation which the commissioner has determined would not be sustained shall be expunged forthwith”. The statute was amended to read that "[a]ll information relating to any allegation which the commissioner has determined would not be sustained shall be expunged one hundred twenty days following notification of such determination to the person who made the report pursuant to this section, unless a proceeding per taining to such allegation is pending pursuant to article seventy-eight of the civil practice law and rules” (emphasis added). Petitioner contends that this reference to a pending article 78 proceeding must have been intended by the Legislature to give those people who report nursing home misconduct standing to challenge a finding by the Department that their allegations of abuse, mistreatment or neglect were unsupported by sufficient evidence.

Our examination of the amendment’s language and legislative history does not reveal an unequivocal intention to create standing in this area. In his memorandum approving the amendment, Governor Cuomo noted that "[t]he bill is intended to preserve the evidence assembled by the Department for a limited period of time to give the complainant the opportunity, after learning of the Department’s determination, to seek reconsideration or review. The bill does not explicitly establish new grounds or standing to appeal these determinations, but is designed to provide an opportunity for the Department and the complainant to reconsider the case and to evaluate any evidence that may have been overlooked” (1986 McKinney’s Session Laws of NY, at 3165 [emphasis added]). The petitioner, however, has culled language from other legislative sources that suggests that the amendment was in fact intended to create standing to challenge determinations by the Department that charges of nursing home misconduct had not been sustained (see, e.g., New York State Assembly, Transcript of June 26, 1986, Assembly Debates on Bill No. 10559-A, Rules Report No. 709, at 111 [statement of Assemblywoman Helene Weinstein]).

Reasonable minds could differ as to whether this amendment was intended to create standing to challenge Department determinations in this area. Because neither the words of the statute nor the amendment’s legislative history clearly create standing, there is no basis for the courts to confer it on petitioner in this case. We conclude, therefore, that this case falls within the scope of our prior decisions, cited earlier, that stand for the proposition that mandamus is inappropriate to compel the performance of a purely discretionary act by a public entity, especially where that exercise of discretion involves a decision not to invoke penalties otherwise authorized by law (see, People v Bunge Corp., 25 NY2d 91, 98).

We have considered petitioner’s other arguments and find them to be without merit. Accordingly, the order of the Appellate Division should be affirmed, with costs.

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

Order affirmed, with costs.


author: Kaye, J.

text:
    Herman Weiner, Appellant, v Doubleday & Company, Inc., et al., Respondents.
    Argued November 14, 1989;
    decided December 14, 1989

      POINTS OF COUNSEL

      Murray Kagel, Lyman Stansky and Richard E. Mischel for appellant.
    I. Accusations of criminal or illegal activity even in the form of opinion are not constitutionally protected. (Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369; Cianci v New Times Publ. Co., 639 F2d 54; Silsdorf v Levine, 59 NY2d 8; Meyer v Somlo, 105 AD2d 1007; Jordan v Lewis, 20 AD2d 773; Chalpin v Amordian Press, 128 AD2d 81; Ollman v Evans, 750 F2d 970.) II. The opinion of the court below affirming the lower court’s opinion that as a matter of law plaintiff was a private figure but by reason of the mention of him in the book "Nutcracker,” considered to be a writing in the public interest, as a matter of law, holding Weiner to the standard of proving gross irresponsibility instead of ordinary negligence is error. (Lerman v Chuckleberry Publ., 521 F Supp 228; Gaeta v New York News, 62 NY2d 340.) III. It was error to conclude that defendant Alexander has responsibly researched the defamatory opinions so as to sufficiently confirm them for publication in the face of a record bare of any proof of investigation, any validation or any substantiation. (Chapadeau v Utica Observer-Dispatch, 38 NY2d 196; New York Times Co. v Sullivan, 376 US 254; Gaeta v New York News, 62 NY2d 340; James v Gannett Co., 40 NY2d 415.) IV. Plaintiff has sustained, by a preponderance of the evidence, his burden of establishing falsity. (Oates v Marino, 106 AD2d 289; Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369.) V. Plaintiff has established libel per se, damages to reputation and emotional and mental anguish. (Mencher v Chesley, 297 NY 94; Sharon v Time Inc., 575 F Supp 1162; Buckley v Littell, 394 F Supp 918, 539 F2d 822.) VI. Summary judgment for plaintiff was properly granted because he has established that there are no triable issues as to the unambiguous language in suit and its falsity. He has established by a preponderance of the admissible evidence that respondents have acted in a grossly irresponsible manner without due consideration for the standards of information gathering and dissemination ordinarily followed by responsible parties. It was error to grant summary judgment to defendants and to dismiss plaintiff’s complaint. (Moore v Francis, 121 NY 199; Oates v Marino, 106 AD2d 289.)

      Victor A. Kovner, Harriette K. Dorsen, Katherine Trager, Laura R. Handman and Pamela M. Parker for respondents.
    I. The language in suit, read in context, does not contain defamatory statements of fact as a matter of law. (Gertz v Robert

      Welch, Inc., 418 US 323; Hotchner v Castillo-Puche, 551 F2d 910, cert denied sub nom. Hotchner v Doubleday & Co., 434 US 834; Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369, 434 US 969; Ollman v Evans, 750 F2d 970, 471 US 1127; Mr. Chow of N. Y. v Ste. Jour Azur, 759 F2d 219; Janklow v Newsweek, Inc., 788 F2d 1300, 479 US 883; Information Control Corp. v Genesis One Computer Corp., 611 F2d 781; Steinhilber v Alphonse, 68 NY2d 283; Cianci v New Times Publ. Co., 639 F2d 54.) II. Respondents acted at all times with due consideration for the standards of information gathering and dissemination followed by responsible publishers. (Gertz v Robert Welch, Inc., 418 US 323; Chapadeau v Utica Observer-Dispatch, 38 NY2d 196; Cottom v Meredith Corp., 65 AD2d 165, 46 NY2d 711; Lerman v Chuckleberry Publ., 521 F Supp 228; Campo Lindo for Dogs v New York Post Corp., 65 AD2d 650; Zetes v Rich-man, 86 AD2d 746; Gasta v New York News, 62 NY2d 340; Karaduman v Newsday, Inc., 51 NY2d 531; Long Is. Cent. Sta. v New York Tel. Co., 54 AD2d 893; Pollnow v Poughkeepsie Newspapers, 107 AD2d 10, 67 NY2d 778.) III. In any event, summary judgment is not available to appellant because respondents have established, at the least, that there are triable issues regarding the construction of the language in suit, satisfaction of the applicable standard of care and substantial falsity. (Karaduman v Newsday, Inc., 51 NY2d 531; Mr. Chow of N. Y. v Ste. Jour Azur, 759 F2d 219; Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369; James v Gannett Co., 40 NY2d 415; Matherson v Marchello, 100 AD2d 233; Davis v Costa-Gavras, 619 F Supp 1372; Philadelphia Newspapers v Hepps, 475 US 767; Fairley v Peekskill Star Corp., 83 AD2d 294.)

      Edward A. Miller and Slade R. Metcalf for Association of American Publishers, Inc., and another, amici curiae.

    I. Read in context, the statements at issue constitute nonactionable opinion, not defamatory statements of fact. (Gertz v Robert Welch, Inc., 418 US 323; Hotchner v Castillo-Puche, 551 F2d 910, cert denied sub nom. Hotchner v Doubleday & Co., 434 US 834; Steinhilber v Alphonse, 68 NY2d 283; Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369, 434 US 969; Ollman v Evans, 750 F2d 970; Mr. Chow of N. Y. v Ste. Jour Azur, 759 F2d 219; Janklow v Newsweek, Inc., 788 F2d 1300, 479 US 883; Information Control Corp. v Genesis One Computer Corp., 611 F2d 781; Price v Viking Penguin, 881 F2d 1426; Potomac Valve & Fitting v Crawford Fitting Co., 829 F2d 1280.) II. A publisher acts responsibly, and in conformity with established standards, when it relies on the research product of a writer of proven reputation. (Chapadeau v Utica Observer-Dispatch, 38 NY2d 196; Nelson v Globe Intl., 626 F Supp 969; Ortiz v Valdescastilla, 102 AD2d 513; Karaduman v Newsday, Inc., 51 NY2d 531; Masson v New Yorker Mag., 686 F Supp 1396; Geiger v Dell Publ. Co., 719 F2d 515.) III. Summary judgment is particularly favored in defamation cases. (Washington Post Co. v Keogh, 365 F2d 965, 385 US 1011; Karaduman v News-day, Inc., 51 NY2d 531; New York Times Co. v Sullivan, 376 US 254; Speiser v Randall, 357 US 513; Smith v California, 361 US 147.)

      Arthur N. Eisenberg and Kenneth P. Norwick for New York Civil Liberties Union, amicus curiae.

    A full contextual analysis of the statements at issue here supports the conclusion of the court below that such statements constitute opinion and do not, therefore, give rise to a suit in defamation. (Steinhilber v Alphonse, 68 NY2d 283; Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369; Hotchner v Castillo-Puche, 551 F2d 910; Curtis Publ. Co. v Birdsong, 360 F2d 344; Greenbelt Publ. Assn. v Bresler, 398 US 6; Silberman v Georges, 91 AD2d 520; Janklow v Newsweek, Inc., 788 F2d 1300.)
   OPINION OF THE COURT

Kaye, J.

The pivotal issue in this libel action, brought by a plaintiff who is not a public figure against the author and publisher of a nonfiction book, is whether defendants’ investigation of allegedly defamatory statements was sufficient to shield them from liability, or whether they "acted in a grossly irresponsible manner without due consideration for the standards of information gathering and dissemination ordinarily followed by responsible parties.” (Chapadeau v Utica Observer-Dispatch, 38 NY2d 196,199.)

Defendant Shana Alexander, a well-known journalist, wrote a book entitled "Nutcracker: Money, Madness, Murder: A Family Album,” published by codefendant Doubleday & Company. "Nutcracker” is a nonfictional exploration of the Salt Lake City murder of Mormon multimillionaire Franklin Bradshaw, a murder which Bradshaw’s then 17-year-old grandson Marc Schreuder was convicted of committing. At a subsequent trial, based on Marc Schreuder’s testimony, his mother— Franklin Bradshaw’s daughter — Frances Bradshaw Schreuder, was convicted of planning the murder and dispatching Marc to carry it out.

Although "Nutcracker” attempts to reconstruct the murder and surrounding events, the book is more than a blow-by-blow account of the crime. Rather, it purports to be a searching inquiry into the Bradshaw family’s history of emotional disturbance, with particular focus on family influences in the formation of Frances Schreuder’s personality. Schreuder is portrayed as a person whose deep emotional disturbances were manifested in varied extreme forms, including child abuse, persistent lying and two stormy, broken marriages. The primary sources of Alexander’s psychological portrait are the other members of the extended Bradshaw family and Richard Behrens, Frances Schreuder’s only friend and confidant during much of the period covered by the book.

The statements that give rise to this defamation action appear in a section of "Nutcracker” that is prefaced as follows: "Details of Frances’s domestic existence must of necessity be reconstructed from the recollections of other members of her always carefully locked and guarded household: children, ex-husbands, ex-servants, Behrens and Berenice [Schreuder’s mother] — her only visitors. Not the best of sources in any circumstances, especially these”. Sevéral pages later appear the two paragraphs that contain the book’s only reference to plaintiff:

"In 1966 Frances put herself for two years under the care of a Park Avenue psychiatrist named Herman Weiner, who seems to have encouraged his patient to stand up to her overprotective mother. Berenice was attempting to infantilize her, Frances decided. She told Marc that Granny had a neurotic need for 'babies to smother,’ which could account for Berenice’s intense dislike of the man she began to habitually refer to as 'Weenie, the big, fat, ugly Jew.’
"Robert Reagan remembers Dr. Weiner arriving in court to testify for Frances, during the divorce proceedings, eccentrically costumed in bright red slacks and a loud plaid jacket. Marilyn Reagan remembers the size of one of his bills: Frances owed her psychiatrist $3,000. 'My understanding was that her problem was inability facing reality,’ says Marilyn. The huge unpaid bill made her sister think it might be the psychiatrist who had this problem, not his patient. Later, when Behrens claimed that 'Frances always slept with her shrinks,’ the Reagans said they were not at all surprised. They’d suspected 'hanky panky,’ they confessed. Berenice has said the same.”

Plaintiff contends that the sentence "Frances always slept with her shrinks,” read in the context of the rest of the paragraph, defamed him, as it falsely accused him of having sexual relations with his patient.

In response, defendants contend that the challenged statements are simply not specific enough to be defamatory and, in any event, are a constitutionally protected expression of "opinion” as to which no claim of defamation will lie. Alternatively, defendants argue that the statements concern a subject "reasonably related to matters warranting public exposition” (Chapadeau v Utica Observer-Dispatch, 38 NY2d, at 199, supra), and that plaintiff has failed to demonstrate — as he must to prevail on a claim of defamation with respect to such subject matter — that defendants acted without due consideration for responsible standards of information gathering and dissemination (id.). Reversing the trial court, which had directed summary judgment for plaintiff on the issue of liability, the Appellate Division granted defendants’ joint cross motion for summary judgment and dismissed the complaint, on the basis of all three somewhat inconsistent grounds asserted by defendants (142 AD2d 100). We now affirm, on the last ground alone.

At the outset, we reject defendants’ contention that under common law, the challenged statements are not susceptible of the defamatory meaning ascribed to them by plaintiff. Whether the contested statements are reasonably susceptible of a defamatory connotation is in the first instance a legal determination for the court. In analyzing the words in order to make that threshold decision, the court must not isolate them, but consider them in context, and give the language a natural reading rather than strain to read it as mildly as possible at one extreme, or to find defamatory innuendo at the other (see, James v Gannett Co., 40 NY2d 415, 419-420).

Applying these principles, we conclude that in this case the sentence "Frances always slept with her shrinks” is reasonably susceptible of a defamatory meaning. In isolation, it might be mere exaggeration or hyperbole, as defendants contend; removed from its context in the book, the confirmation by Frances’ relatives that they suspected "hanky panky” might be pure speculation. But viewing the quoted paragraphs as a whole, as we are obliged to do, the focus is not on Frances’ promiscuity in general or on her relationship with psychiatrists in general, but on plaintiff alone and his relationship with Frances. Contrary to defendants’ claim, it is not so unmistakably clear that the sole purpose of these paragraphs is to demonstrate the hostility of Frances’ family and Behrens toward the psychiatric profession that a more specific defamatory connotation may not also be understood.

We next turn to defendants’ claim under the First Amendment to the Federal Constitution. It is settled that expressions of opinion, in contrast to assertions of fact, are privileged and, however offensive, may not be the subject of an action for defamation (Steinhilber v Alfonse, 68 NY2d 283). Defendants argue that this protection applies to the language singled out by plaintiff.

According to defendants, Alexander’s method in assembling the "family album” was simply to recount the memories of those close to Schreuder, often in their own words, and to present sometimes conflicting points of view without necessarily attempting to reconcile them. Defendants characterize the book as "a kaleidoscope of often uncertain impressions”. This indeed is an accurate description of Alexander’s technique; at several points she casts doubt on the accuracy and veracity of her informants. The resulting document, of a sort not entirely unfamiliar to readers of "true crime” accounts, is a hybrid genre. Largely a pastiche of statements by interviewees who are unendorsed and at times openly disparaged by Alexander herself, it eludes ready classification as "fact” or "opinion.”

Defendants’ efforts to fit the challenged statements into the protected "opinion” classification are predicated upon the peculiar genre of the work. In essence, defendants contend that because the statements merely summarize the contents of interviews with third persons, and because Alexander herself lends no authorial endorsement to the statements of Behrens and the Bradshaw family (and in fact elsewhere suggests that the reader might be well advised to reserve a measure of skepticism for their judgments), the average reader would be disinclined to assume that "Frances always slept with her shrinks” was an accurate statement of fact. Therefore, the argument concludes, inasmuch as the universe of libel law is divided into "fact” and "opinion,” the statements must be "opinion.”

As literary criticism, defendants’ claim may be unassailable. As a statement of law, it is problematic. We are not unmindful that the technique employed by Alexander is a popular one, and that presentation of the unedited statements and views of the subjects of a documentary work may be integral to the author’s purpose, as Alexander states (see, e.g., Price v Viking Penguin, 881 F2d 1426, 1444-1445 [8th Cir]). That Alexander’s voice can be separated from the voice of her subjects does not, however, necessarily transform their otherwise factual assertions into her "opinion.” Indeed, in Hogan v Herald Co. (58 NY2d 630, affg 84 AD2d 470, 476-480 [Simons, J.]), we rejected a claim that a "neutral reporting” privilege should be extended to a newspaper that published an objective report of newsworthy charges with proper attribution to sources. While the defendants in that case did not frame their contention in terms of "opinion,” the protection sought differed little from that asserted by defendants here — a privilege to repeat the statements of third parties so long as no endorsement was given.

The "fact/opinion” distinction in the law of defamation is an evolving one. As courts are increasingly sensitive to the effect of protracted litigation on the delicate balance between protection of a free press and protection of individual reputation, "opinion” has come to mean more than it does outside the libel law context (see, e.g., Immuno, AG. v Moor-Jankowski, 74 NY2d 548 [decided today]; Price v Viking Penguin, 881 F2d 1426, supra; Ollman v Evans, 750 F2d 970 [DC Cir], cert denied 471 US 1127).

We leave for another day, however, the question whether "opinion” protection should be enlarged to encompass the type of work that is the focus of the present controversy. Defendants have merely insisted that the challenged statements must be deemed opinion as a matter of settled law, and we conclude that this argument should be rejected. Important though it is to eschew rigidity in the area of First Amendment concerns, on this record of briefing and argument we have no basis for considering any alteration in the sensitive policy balance that has been struck to date. Instead, we move to the third ground urged by defendants — the adequacy of their investigatory process — and on this ground we conclude that they must prevail.

We agree with the Appellate Division that the challenged statements were sufficiently confirmed for publication. Preliminarily, we are satisfied that the standard to be applied in determining defendants’ liability is that set forth in Chapadeau v Utica Observer-Dispatch (supra). In Chapadeau, we held that "where the content of the article is arguably within the sphere of legitimate public concern, which is reasonably related to matters warranting public exposition,” the defamed party must establish "that the publisher acted in a grossly irresponsible manner without due consideration for the standards of information gathering and dissemination ordinarily followed by responsible parties.” (38 NY2d, at 199, supra.)

We are únpersuaded by plaintiff’s contention that a simple negligence standard should govern. Plaintiff does not dispute that the general subject of "Nutcracker” falls within the Chapadeau guidelines, but argues that the particular topic of his relationship with Frances Schreuder is a detour from legitimate public concern into the realm of mere gossip and prurient interest. This is precisely the sort of line-drawing that, as we have made clear, is best left to the judgment of journalists and editors, which we will not second-guess absent clear abuse (Gaeta v New York News, 62 NY2d 340, 349). "Nutcracker” is, in part, clearly intended as an inquiry into the failure of family and professional figures to halt the progression of Schreuder’s illness before it resulted in murder. Her relationship with plaintiff is not so remote from that subject as to constitute a clear abuse of editorial discretion.

Plaintiff has failed to come forward with evidence sufficient to raise a triable issue of fact as to whether defendants satisfied their duty of care under Chapadeau.

As to defendant Doubleday, as the Appellate Division noted, citing Geiger v Dell Publ. Co. (719 F2d 515 [1st Cir]), to require a publisher to do original research with respect to every potentially defamatory reference would impose undue financial burden (142 AD2d, at 107). We have held that without "substantial reasons” to doubt the accuracy of the material or the trustworthiness of its author, a publisher is entitled to rely on the research of an established writer (Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369, 382-383, cert denied 434 US 969; see also, Karaduman v Newsday, Inc., 51 NY2d 531, 551). Doubleday both relied on Alexander, whose experience and reputation are unquestioned, and conducted its own review of the contents of the book. The circumstances of this case did not require it to go further in order to meet its obligation under Chapadeau.

That burden was also met by defendant Alexander. She employed an experienced researcher, who several times interviewed Behrens. Alexander herself interviewed the Reagans and Berenice Bradshaw, the only other people likely to be at all familiar with Frances Schreuder’s "carefully locked and guarded household.” The challenged paragraphs accurately summarize the statements made to Alexander and her researcher. Plaintiff does not dispute that Behrens was Frances Schreuder’s confidant during the period she was in treatment with plaintiff, and knowledgeable about the details of Schreuder’s personal life. This was additionally demonstrated by Behrens’ testimony at Schreuder’s trial, which revealed his intimate knowledge of her life.

The independent views of the Reagans and Berenice Bradshaw tended to corroborate Behrens’ statements. More importantly, the accuracy of the statement was further confirmed by the fact that a friend of both Schreuder and Behrens who was interviewed recalled that Behrens had earlier related the same information to her. In short, reasonable confirmation of the statement was obtained, given the narrow circle of people whom it would have been productive to question.

Accordingly, no triable issue having been raised as to defendant’s gross irresponsibility, the Appellate Division’s order awarding summary judgment to defendants should be affirmed, with costs.

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

Order affirmed, with costs.

       In his original complaint, plaintiff claimed that other portions of the two paragraphs were also defamatory, but he does not press those claims on this appeal.


author: Per Curiam.

text:
    In the Matter of Calvin Schrotenboer, Appellant, v Brenda Soloff, as Acting Justice of the Supreme Court Supervising the Current Term Grand Jury, et al., Respondents.
    Argued November 20, 1989;
    decided December 21, 1989

      POINTS OF COUNSEL

      Robert M. Beecher for appellant.
    I. A writ of prohibition is the appropriate vehicle, indeed, the only appropriate remedy under the circumstances, to prevent the unlawful prosecution of appellant. (Matter of Doe v Axelrod, 71 NY2d 484; Matter of Rush v Mordue, 68 NY2d 348; Matter of Schumer v Holtzman, 60 NY2d 46; Matter of B. T. Prods. v Barr, 44 NY2d 226; Matter of Dondi v Jones, 40 NY2d 8; Matter of Morgenthau v Erlbaum, 59 NY2d 143; Matter of Forte v Supreme Ct., 48 NY2d 179.) II. The District Attorney’s written agreement not to prosecute appellant is absolutely enforceable and its violation offends notions of fair dealing, due process, and constitutes impermissible prosecutorial misconduct. (People v Chin, 67 NY2d 22; People v Benedict, 115 AD2d 795, 68 NY2d 832, 998; United States v Carter, 454 F2d 426; Berger v United States, 295 US 78; People v Esajerre, 35 NY2d 463; Matter of Gribetz v Edelstein, 66 AD2d 788; Matter of Gold v Booth, 79 AD2d 691; Kastigar v United States, 406 US 441; United States v Kurzer, 534 F2d 511; United States v Gallo, 859 F2d 1078.)

      Robert M. Morgenthau, District Attorney (Kevin J. Fee and Marc Frazier Scholl of counsel), respondent pro se.

    I. A CPLR article 78 proceeding does not lie to test whether a promise not to prosecute should be enforced. (Matter of Lipari v Owens, 70 NY2d 731; Matter of Ward v McQuillan, 40 AD2d 974; Matter of Kraemer v County Ct., 6 NY2d 363; Matter of Rush v Mordue, 68 NY2d 348; Matter of Dondi v Jones, 40 NY2d 8; Matter of Blake v Hogan, 25 NY2d 747; People v Dunbar, 53 NY2d 868.) II. Petitioner is not constitutionally or statutorily entitled to enforce a promise not to prosecute extorted from authorities on the threat that he will not safely return children to their mother in the absence of the promise. Where the welfare of persons are at stake and where petitioner agreed to do nothing more than he was obligated to do by a prior judicial order, public policy mandates that a promise of amnesty not be enforceable. (Cowles v Brownell, 73 NY2d 382; United States v Bridgeman, 523 F2d 1099, cert denied sub nom. Johnson v United States, 425 US 461; United States v Gorham, 523 F2d 1088; United States v West, 607 F2d 300; People v Dunbar, 53 NY2d 868; People v McConnell, 49 NY2d 340; Santobello v New York, 404 US 257; Rowe v Griffin, 676 F2d 524; United States v Goodrich, 493 F2d 390; People v Seaberg, 74 NY2d 1.)
   OPINION OF THE COURT

Per Curiam.

In that an agreement of immunity from prosecution exacted by petitioner in exchange for the return of children to their lawful custodian pursuant to a Family Court order is unenforceable, petitioner’s article 78 proceeding to prohibit prosecution for custodial interference was correctly dismissed by the Appellate Division.

In accordance with the visitation provisions of a Family Court order of custody, petitioner — an attorney — during the summer of 1988 took charge of his three young children, who were to be returned to the custody of their mother (petitioner’s former spouse) by July 31. On July 16, petitioner was seen in New Jersey in his car with two children; the car was pulling a trailer packed with boxes. When the children were not returned by July 31, with no word of their whereabouts, their mother contacted the authorities, and on August 3, a warrant was issued for petitioner’s arrest, for the felony of custodial interference in the first degree (Penal Law § 135.50 [1]).

Some weeks later — on August 31 — petitioner called an Assistant District Attorney and offered to return the children by September 8, but only on condition that he received absolute immunity from prosecution and that his former spouse agree not to seek any change in the visitation provisions of the Family Court order. When petitioner telephoned the ADA two days later, she read him a draft agreement and then transmitted a copy electronically to the office of petitioner’s brother, an attorney in California. The agreement provided full immunity from prosecution for the return of the children safely and in good health by September 8, 1988, and represented that the prosecutor would use "all reasonable and best efforts” to prevent the children’s mother from seeking any change in the Family Court order that would adversely affect petitioner’s visitation privileges.

Petitioner informed the ADA of spelling errors in the draft; he solicited her promise that the District Attorney would take steps to insure that he would not be prosecuted under any Federal statute; and he demanded that he not be required to deliver the children personally. On September 6, a signed agreement incorporating these revisions was sent to the office of petitioner’s brother and on September 8, petitioner delivered the children to their mother’s apartment. He was thereafter arrested pursuant to the August warrant.

In response to a felony complaint charging him with custodial interference, petitioner initiated the present article 78 proceeding seeking to prohibit prosecution as a violation of the agreed immunity. The Appellate Division dismissed the petition, without opinion, and this court granted leave to appeal. We now affirm.

The core of petitioner’s argument is that prohibition is required because refusal to honor this "negotiated arrangement” offends notions of fair dealing and due process, and constitutes a breach of the obligations of public prosecutors. We have no quarrel with petitioner’s observations that a high trust is reposed in prosecutors, and that prosecutorial integrity is central to the entire criminal justice system (see, Matter of Chaipis v State Liq. Auth., 44 NY2d 57; see also, People v McConnell, 49 NY2d 340, 349). But we cannot agree that these principles have any application to the facts at hand. While petitioner complains of a lack of good-faith bargaining, these parties were not engaged in any true bargaining, a process that contemplates that each side will contribute something in exchange for a desired compromise.

Petitioner instituted this "negotiation,” and escalated his demands, while secreting three children in violation of a court order, their welfare unknown. In exchange for the prosecutor’s concessions, petitioner contributed nothing, and agreed to do no more than the law already required of him — return the children to their lawful custodian, safe and in good health. Mandating enforcement of an agreement exacted in these circumstances is a perversion, not a requirement, of public policy (see, United States v Gorham, 523 F2d 1088, 1097 [DC Cir]).

Accordingly, the judgment of the Appellate Division should be affirmed, without costs.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa concur in Per Curiam opinion.

Judgment affirmed, without costs.


text:
    In the Matter of Central General Hospital, Inc., Respondent, v Leslie Lukash, as Medical Examiner of the County of Nassau, et al., Appellants.
    Argued March 28, 1989;
    decided May 2, 1989

      APPEARANCES OF COUNSEL

      Edward T. O’Brien, County Attorney (Patricia M. Carroll and William S. Norden of counsel), for appellants.

      Allan D. Goldstein, Irving A. Cohn and Robert A. Eagan for respondent.
   OPINION OF THE COURT

Order affirmed, with costs, for the reasons stated in the opinion by Justice Arthur D. Spatt at the Appellate Division (140 AD2d 113).

Concur: Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa.


text:
    Zurich-American Insurance Companies, Respondent, v Atlantic Mutual Insurance Companies et al., Doing Business as The Atlantic Companies, Appellants.
    Argued March, 22, 1989;
    decided May 2, 1989

      APPEARANCES OF COUNSEL

      Howard. R. Cohen and Sidney Rosen for appellants.

      Ignatius John Melito and S. Dwight Stephens for respondent.
   OPINION OF THE COURT

Memorandum.

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

We agree with the majority at the Appellate Division that, because Atlantic’s policies extended coverage to employees of the church, the allegations in the complaints that injuries were caused by the putative individual insureds while acting in the church’s employ triggered Atlantic’s obligation to defend (see, Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310). As the court noted, the answers of those individuals, denying that they were church employees, merely posed factual and legal issues to be resolved in the underlying actions.

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

Order affirmed, with costs, in a memorandum.


text:
    In the Matter of J. Sinclair Armstrong et al., Appellants, v Rector, Church Wardens and Vestrymen of St. Bartholomew’s Church in the City of New York et al., Respondents.
    Submitted February 14, 1989;
    decided May 2, 1989
   Motion, insofar as it seeks leave to appeal from so much of the Appellate Division order as affirmed the Supreme Court order denying a preliminary injunction, dismissed upon the ground that that portion of the order does not finally determine the proceeding within the meaning of the Constitution; motion for leave to appeal otherwise denied.


text:
    John B. Bell, Appellant, v New York Higher Education Assistance Corporation et al., Defendants, and Chemical Bank, Respondent.
    Submitted March 20, 1989;
    decided May 2, 1989
   Motion, insofar as it seeks leave to appeal from the February 9, 1989 Appellate Division order denying reargument and so much of the December 13, 1988 Appellate Division order as affirmed Supreme Court’s March 10, 1988 order denying reargument, dismissed upon the ground that those orders insofar as sought to be appealed from do not finally determine the action within the meaning of the Constitution; motion for leave to appeal otherwise denied.


text:
    Brian LaPaglia, an Infant, by His Father and Natural Guardian, Vincent LaPaglia, et al., Respondents, v Sears Roebuck & Co., Inc., et al., Appellants, and John J. Ryan et al., Respondents.
    Submitted February 21, 1989;
    decided May 2, 1989
   Motion, insofar as it seeks leave to appeal from so much of the Appellate Division order as affirmed Supreme Court’s order denying defendants’ motion to vacate the judgment, dismissed upon the ground that that portion of the order does not finally determine the action within the meaning of the Constitution; motion for leave to appeal otherwise denied.


text:
    In the Matter of the Arbitration between Roy Licorish, as Vice-President of Local 377, U.S.E.U., Respondent, and A & K Company and Andreas Andreadis, as Copartners, Appellants.
    Submitted February 14, 1989;
    decided May 2, 1989
   Motion for leave to appeal dismissed upon the ground that no appeal lies from an Appellate Division order dismissing an appeal from a determination entered upon a default (CPLR 5511).


text:
    125 East 31st Street Realty Co., Respondent, v Frances Watts, Appellant, and Gideon Moore et al., Respondents.
    Submitted February 6, 1989;
    decided May 2, 1989
   Motion for leave to appeal dismissed upon the ground that this court does not have jurisdiction to entertain a motion for leave to appeal from an order of the Appellate Division entered in a proceeding commenced in the Civil Court of the City of New York (NY Const, art VI, § 3 [b] [7]; CPLR 5602 [a]).


text:
    Property Clerk of New York City Police Department, Respondent, v Leonard Weisbard, Appellant.
    Submitted February 27, 1989;
    decided May 2, 1989
   Motion for leave to appeal dismissed upon the ground that the order sought to be appealed from does not finally determine the proceeding within the meaning of the Constitution and is not a nonfinal order of the type within the meaning of CPLR 5602 (a) (2).


text:
    In the Matter of Jerry Young, Appellant, v Thomas A. Coughlin III, et al., Respondents.
    Submitted February 27, 1989;
    decided May 2, 1989
   Motion, insofar as it seeks leave to appeal from the Appellate Division order of November 10, 1988, dismissed as untimely; motion for leave to appeal otherwise dismissed upon the ground that the January 3, 1989 order denying reargument sought to be appealed from does not finally determine the proceeding within the meaning of the Constitution.


text:
    In the Matter of Edward J. Kiley.
    Decided May 4, 1989
   OPINION OF THE COURT

On the court’s own motion, it is determined that Honorable Edward J. Kiley is suspended, with pay, effective immediately, from his office of Judge of the District Court, Suffolk County, pending disposition of his request for review of a determination by the State Commission on Judicial Conduct.

Concur: Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa.


text:
    In the Matter of Crain Communications, Inc., Appellant, v Thomas J. Hughes, as a Justice of the Supreme Court, New York County, Respondent. BRI Holding Corp., Respondent.
    Argued February 14, 1989;
    decided May 4, 1989

      APPEARANCES OF COUNSEL

      Robert D. Sack, Mitchell A. Karlan, Stuart D. Karle and David P. Sanders for appellant.

      Jerome M. Leitner and Arthur H. Sobel for BRI Holding Corp., respondent.

      Deborah R. Linfield, Douglas P. Jacobs, Roberta Brackman, Philip E. Kucera and Richard N. Winfield for New York Times Company and others, amici curiae.

   OPINION OF THE COURT

Memorandum.

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

Petitioner commenced this proceeding in an effort to obtain access to all public documents filed in a separate action to which it was not a party, which had been sealed by a court order dated October 24, 1986. Its claim was based on the premise that there is a common-law right of access to inspect and copy judicial documents (see, Nixon v Warner Communications, 435 US 589). Whether this article 78 proceeding is viewed as one seeking prohibition to enjoin enforcement of the prior sealing order or mandamus to compel the release of sealed documents, the proceeding does not lie.

The extraordinary remedy of prohibition is available "when a court exceeds its jurisdiction or authorized power in such a manner as to implicate the legality of the entire proceeding, as for example, the prosecution of a crime committed beyond the county’s geographic jurisdiction” (Matter of Rush v Mordue, 68 NY2d 348, 353; Matter of Kisloff v Covington, 73 NY2d 445). The standards governing the availability of article 78 relief in the nature of mandamus are equally clear. It will not be awarded to " 'compel an act in respect to which the officer may exercise judgment or discretion’ ” (Matter of Gimprich v Board of Educ., 306 NY 401, 406, quoting People ex rel. Hammond v Leonard, 74 NY 443, 445).

Neither mandamus nor prohibition is available to petitioner in this case. Since courts have the inherent power to control the records of their own proceedings (see, e.g., Matter of Dorothy D., 49 NY2d 212, 215-216), there is no merit to the argument that the sealing order was a judicial act in excess of the court’s jurisdiction. Additionally, mandamus is unavailable because the decision to initially seal or to later disclose must, by its very nature, involve the balancing of competing interests, an inquiry which obviously involves a measure of discretion and precludes mandamus (see, e.g., Nixon v Warner Communications, supra; Matter of Gannett Co. v De Pasquale, 43 NY2d 370, 378).

Although an article 78 proceeding does not lie, petitioner is not without remedy. While petitioner, a nonparty in the original proceeding, could not have brought a direct appeal, it could have sought and may still seek relief from the sealing order via a motion to vacate pursuant to CPLR 5015 (a) in which all interested parties may be joined (see, Oppenheimer v Wescott, 47 NY2d 595, 602; Ladd v Stevenson, 112 NY 325, 332; Michaud v Loblaws, Inc., 36 AD2d 1013, 1014; 5 Weinstein-Korn-Miller, NY Civ Prac ¶¶ 5015.12, 5015.15).

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

Judgment affirmed, with costs, in a memorandum.


text:
    In the Matter of Park Ten Associates, Respondent-Appellant, v City of New York Department of Finance et al., Appellants-Respondents.
    Argued March 21, 1989;
    decided May 4, 1989

      APPEARANCES OF COUNSEL

      Peter L. Zimroth, Corporation Counsel (Amy F. Nogid, Edith I. Spivack, Peter Rabinowitz and Glen Newman of counsel), for appellants-respondents.

      Michael P. Richman and Steven S. Miller for respondent-appellant.

      Joseph L. Forstadt and Lauren G. Klein for New York State Land Title Association, amicus curiae.

   OPINION OF THE COURT

Memorandum.

The judgment of the Appellate Division should be modified, with costs to appellants-respondents, by reinstating so much of respondents’ determination as disallowed the deduction of the consolidated mortgage of $9,954,474.91 from the net consideration subject to the real property transfer tax and, as so modified, affirmed.

This appeal arises out of respondents’ assessment of a deficiency in the amount of real property transfer tax petitioner owes as a result of its sale of an apartment building located at 10 West 66th Street in New York City. In August of 1979, petitioner obtained a loan and executed a mortgage in favor of Chemical Bank to finance its purchase of the building. The loan agreement contained provisions expressly recognizing petitioner’s intention to convert the building to cooperatively owned residences and then resell it to a cooperative corporation. Under the agreement’s terms, petitioner was required to submit a proposed offering plan to the Attorney-General within nine months, the mortgagee had the right to grant or withhold consent to the final conversion plan, and, upon the conversion, the mortgage executed by petitioner was to become "the [permanent [mjortgage encumbering the premises.” The mortgage and accompanying note were subsequently severed, with a portion representing approximately half of the outstanding balance assigned to Connecticut General Life Insurance Co. (CGLIC).

In May of 1980, petitioner entered into a contract to sell the building to a cooperative corporation (the grantee), which would then become the permanent owner and assume the CGLIC mortgage. Thereafter, the amount borrowed under the CGLIC mortgage was increased, and an amendment to the offering plan was filed reflecting the change in the obligation that the grantee was expected to assume. At the closing on May 1, 1981, just before the deed was to be transferred from petitioner to the cooperative corporation, a complex series of financing transactions ensued, resulting in a consolidation and further splitting of the mortgages held by Chemical and CGLIC, a subordination of the former to the latter, and extensive alterations in the mortgages’ terms and payment obligations. The mortgage held by Chemical was assigned to the grantee under an agreement specifically providing that there would be no merger with the fee interest. Finally, following delivery of the deed, the grantee assumed the severed CGLIC mortgage.

When petitioner computed the amount due New York City under the real property transfer tax (Administrative Code of City of New York, ch 46, tit II), it deducted from the total consideration paid the amounts outstanding under the Chemical ($6.5 million) and CGLIC ($9,954,474.91) mortgages that had been assigned or assumed by the grantee. In deducting these amounts, petitioner relied on Administrative Code § II46-1.0 (5) (now § 11-2101 [5]), which defines the "net consideration” subject to the tax as "[a]ny consideration, exclusive of any mortgage or other lien or encumbrance on the real property * * * which existed before the delivery of the deed and remains thereon after the delivery of the deed” (emphasis supplied). Respondents, however, disallowed the deductions. Relying on a regulation which provides that "[n]o deduction shall be made on account of any lien or encumbrance placed on the property in connection with the sale” (Real Property Transfer Tax Regs art 5 [emphasis supplied]), respondents found that both mortgages "represented permanent mortgage financing which was contemplated as early as August 1979” and were therefore "placed on the property in connection with the anticipated cooperative conversion.”

Petitioner commenced the present article 78 proceeding to challenge respondents’ determination. Upon transfer from the Supreme Court (see, CPLR 7804 [g]), the Appellate Division concluded that there was not substantial evidence to support respondents’ finding that the Chemical and the CGLIC mortgages had been placed on the property "in connection with the sale” to the grantee. Construing the phrase "in connection with the sale” to require, "[a]t the very least,” that "the placement of the encumbrance * * * be imminent in time to that sale”, the Appellate Division held that the regulatory exclusion was inapplicable here and that the deduction for preexisting encumbrances was therefore available, at least for the severed CGLIC mortgage assumed by the grantee (136 AD2d, at 312-313).

We disagree. There is nothing in the plain language of the regulation to suggest a standard based upon temporal proximity. Thus, respondents’ interpretation of the regulation, which permits its application without regard to the amount of time elapsed between the placement of the lien and the taxable sale, was clearly not irrational (see, Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459).

Further, respondents’ application of the regulation to the facts in petitioner’s case was supported by substantial evidence. The explicit terms of the mortgages, as well as the manner in which they were modified after the contract of sale was executed, demonstrates that, from the outset, they were intended to be an integral part of the financing for the cooperative conversion and the building’s ultimate sale to the cooperative corporation. That a specific purchaser for the property had not yet been identified at the time the mortgages were first executed is irrelevant in these circumstances, since it is clear that a cooperative conversion involving a sale to some corporate entity was contemplated. Indeed, in contrast to cases involving ordinary assumable mortgages, which ordinarily merely provide a future buyer with the option to assume in the event of a resale, the mortgages in this case required petitioner to exert its best efforts to effect a resale and expressly provided for conversion to permanent financing upon completion of that resale.

Finally, contrary to petitioner’s contentions, the regulation disallowing deductions for encumbrances placed "in connection with the sale” of real property is not inconsistent with the governing statute. Rather, it is merely a reasonable measure to protect against circumvention of the transfer tax through simple manipulation of the sequence in which the mortgage and sale closings occur. Furthermore, while not dispositive, the fact that the regulation is virtually identical to regulatory provisions adopted under similar State and Federal transfer tax statutes (see, 20 NYCRR 575.3; 2 Fed Tax Regs [26 CFR] § 43.4361-1 [1970] [implementing 26 USC former § 4361 (repealed in 1976)]) supports the conclusion that respondents’ interpretation of the governing statute, as reflected in the challenged regulation, is rational (see, Kurcsics v Merchants Mut. Ins. Co., supra, at 459). Chief Judge Wachtler and Judges Simons, Alexander, Titone, Hancock, Jr., and Bellacosa concur in memorandum; Judge Kaye taking no part.

Judgment modified, etc.

       The court, however, upheld respondents’ disallowance of a deduction for the $6.5 million mortgage that was assigned to the grantee. Agreeing with respondents’ alternative argument, the court concluded that, notwithstanding the nonmerger clause in the assignment agreement, the assignment of that mortgage to the grantee-fee owner, as a practical matter, had obliterated the mortgage obligations and, consequently, the mortgage no longer had significance for tax purposes. Petitioner disputes this conclusion on its cross appeal. However, because we uphold respondents’ disallowance of both mortgage deductions under article 5 of the Real Property Transfer Tax Regulations, we need not consider its contentions.


text:
    The People of the State of New York, Respondent, v Jerome Bellinger, Appellant.
    Argued March 30, 1989;
    decided May 4, 1989
    APPEARANCES OF COUNSEL

      Arza Rayches Feldman and Steven A. Feldman for appellant.

      Robert M. Morgenthau, District Attorney (Kathleen E. Fay and Norman Barclay of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

Defendant pleaded guilty to robbery in the second degree after his motion to suppress certain inculpatory evidence obtained after his arrest was denied. On this appeal, he argues only that his arrest was effected without the requisite probable cause because the arresting officers, who relied on information provided by a bystander, failed to ascertain the informant’s basis of knowledge before taking action (see, People v Rodriguez, 52 NY2d 483, 491; People v Elwell, 50 NY2d 231, 237, 241; see also, Spinelli v United States, 393 US 410). However, although one of the arresting officers testified that he did not know the source of the informant’s knowledge at the time of the arrest, the other arresting officer specifically recalled having been told by the informant that he had obtained his information from the victim of the crime. Consequently, there is support for the hearing court’s undisturbed finding of probable cause, and defendant’s argument suggests no basis for reversal (see, People v Harrison, 57 NY2d 470, 477-478).

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

Order affirmed in a memorandum.


text:
    In the Matter of Gregory Mead, Appellant, v Judith Levitt, as Director of the Department of Personnel of the City of New York, et al., Respondents.
    Argued March 21, 1989;
    decided May 4, 1989

      APPEARANCES OF COUNSEL

      John J. Maguire for appellant.

      Peter Zimroth, Corporation Counsel (Jane S. Earle and Francis F. Caputo of counsel), for respondents.
   OPINION OF THE COURT

Memorandum.

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

We agree with the Appellate Division’s statement, in its order granting leave to appeal, that the issues addressed by petitioner in his appellate brief are unpreserved and are, therefore, beyond the scope of our review.

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

Order affirmed, with costs, in a memorandum.


text:
    The People of the State of New York, Respondent, v David Negron, Also Known as Teodore Figueroa, Appellant.
    Argued March 28, 1989;
    decided May 9, 1989

      APPEARANCES OF COUNSEL

      Roger L. Stavis and Steven R. Kartagener for appellant.

      Paul Gentile, District Attorney (Richard L. Kellner of counsel), for respondent.
   OPINION OF THE COURT

Order affirmed (see, People v White, 73 NY2d 468 [decided herewith]).

Concur: Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa.


text:
    The People of the State of New York, Respondent, v Edison Perez, Appellant.
    Argued March 28, 1989;
    decided May 9, 1989

      APPEARANCES OF COUNSEL

      James W. Kennedy for appellant.

      Robert M. Morgenthau, District Attorney (Maryjane C. Shimsky and Norman Barclay of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

Defendant had no right to file a supplemental pro se brief in the Appellate Division and under the circumstances presented we find no abuse of discretion by the court in denying him permission to do so (see, People v White, 73 NY2d 468 [decided herewith]). In affirming, however, we note that the police identification of defendant from a mug shot several weeks later, based upon observation of him at the time of the crime, could not be considered a proper confirmatory identification (see, People v Riley, 70 NY2d 523). Inasmuch as the Appellate Division found on sufficient evidence that the officer also had an independent basis for his identification, the error does not require reversal.

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

Order affirmed in a memorandum.


text:
    The People of the State of New York, Respondent-Appellant, v Franklin Beauchamp, Appellant-Respondent.
    Argued March 30, 1989;
    decided May 9, 1989

      APPEARANCES OF COUNSEL

      Joel B. Rudin for appellant-respondent.

      Robert T. Johnson, District Attorney (Peter D. Coddington and Terrence J. Sweeney of counsel), for respondent-appellant.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be modified by reversing the convictions of the crimes charged in counts 15, 16 and 17 of the indictment and dismissing those counts with leave to the People, should they be so advised, to resubmit the charges to another Grand Jury and, as so modified, affirmed.

On these cross appeals, we agree with defendant that his pretrial motion to dismiss all counts for duplicitousness should have been granted. In People v Keindl (68 NY2d 410, 417-418) we stated that "each count of an indictment [may] charge only one offense” and that "where one count alleges the commission of a particular offense occurring repeatedly during a designated period of time, that count encompasses more than one offense and is duplicitous” (see, CPL 200.30 [1]; 200.50 [3]). We rejected the use of a "continuing crime” theory, for single act offenses, as a means of bypassing the one crime per count requirement (see, id., at 420-421). Here, although the indictment charged only one single act offense per count, the bill of particulars, as to the charge in each count, specifically alleged (see, CPL 200.95) that defendant had engaged "in a continuous course of conduct” over a period in excess of nine months. Thus, defendant’s motion to dismiss should have been granted because the charges, as precisely framed by the bill of particulars, were duplicitous. That the trial evidence subsequently narrowed the scope of defendant’s alleged illegal conduct is irrelevant. Defendant was entitled to pretrial notice of the charges so that he would be able to adequately prepare a defense (see, People v Keindl, supra, at 416; People v Iannone, 45 NY2d 589, 594).

In addition, we agree with defendant’s contention that all of the charges should have been dismissed on the further ground that the time period during which the crimes were alleged to have occurred (Oct. 31,1983-Aug. 1, 1984, excluding weekends) was so excessive that it was unreasonable (see, People v Keindl, supra, at 419; People v Morris, 61 NY2d 290, 295). Where an indictment charges a time interval which is so large that it is virtually impossible for a defendant to answer the charges and to prepare a defense, dismissal should follow even though the People have acted diligently and a shorter time period cannot be alleged (see, People v Keindl, supra, at 419; People v Morris, supra, at 295). The time period alleged here, even considering the nature of the crime and the ages of the victims, is an excessive interval.

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

Order modified, and, as so modified, affirmed, etc.

       The crimes defendant was charged with committing — sodomy, sexual abuse, and rape — are all single act offenses and are not crimes, such as endangering the welfare of a child (Penal Law §260.10), which may be properly charged under a "continuing crime” theory (see, People v Keindl, 68 NY2d 410, 421).


text:
    In the Matter of Salvatore A. F. Bono, Appellant, v County Court of Nassau County et al., Respondents.
    Submitted December 27, 1988;
    decided May 9, 1989
   Motion for leave to appeal dismissed and, on the court’s own motion, appeal taken as of right dismissed, without costs, each upon the ground that the issue presented has become moot. Motion for poor person relief dismissed as academic.