author:
Kaye, J.
      Bellacosa, J.

text:
    The People of the State of New York, Respondent, v Bienvenido Banch, Appellant.
    Argued October 16,1992;
    decided December 22,1992

      POINTS OF COUNSEL

      Henry R. Deutsch, New York City, and Philip L. Weinstein for appellant.
    I. The prosecution’s failure to disclose nonduplicative Rosario material at the pretrial Huntley hearing until after the close of the hearing was reversible error mandating the holding of a de nova suppression hearing. (People v Rosario, 9 NY2d 286; People v Malinsky, 15 NY2d 86; People v Martinez, 71 NY2d 937; People v Jones, 70 NY2d 547; People v Novoa, 70 NY2d 490; People v Ranghelle, 69 NY2d 56; People v Giles, 73 NY2d 666; People v Dodt, 61 NY2d 408; People v Payton, 51 NY2d 169; People v Rivera, 163 AD2d 65, 78 NY2d 901.) II. It is impermissible for the District Attorney to claim a "work product” exception to the Rosario rule with respect to memorialized statements relating to the subject matter of a prosecutor’s testimony. (People v Pizzali, 159 AD2d 652; People

      v Rayford, 158 AD2d 482; People v Nelu, 157 AD2d 864; People v Pringle, 154 AD2d 410; People v Smith, 150 AD2d 275; People v Wright, 135 AD2d 594; United States v Nobles, 422 US 225; People v Essner, 125 Misc 2d 908; Davis v Alaska, 415 US 308.)

      Richard A. Brown, District Attorney of Queens County, Kew Gardens (Gary Fidel and Barbara D. Underwood of counsel), for respondent.
    I. The courts below correctly concluded that the prosecution’s inadvertent failure to provide certain Rosario material at the pretrial suppression hearing did not require a new hearing because it did not prejudice defendant. (People v Rosario, 9 NY2d 286; People v Malinsky, 15 NY2d 86; People v Jackson, 78 NY2d 638; People v Jones, 70 NY2d 547; People v Ranghelle, 69 NY2d 56; People v Haupt, 71 NY2d 929; People v Martinez, 71 NY2d 937; People v Rivera, 78 NY2d 901; People v Vilardi, 76 NY2d 67.) II. The Rosario claim at trial does not require reversal because the document at issue was attorney work product, the duplicative equivalent of other evidence, and lost at the time of trial. Moreover, the claim is not preserved for this Court’s review. (People v Rosario, 9 NY2d 286; People v Ranghelle, 69 NY2d 56; People v Rogelio, 79 NY2d 843; People v Bryant, 59 NY2d 786; People v Paulin, 25 NY2d 445; United States v Nobles, 422 US 225; People v Adger, 75 NY2d 723; Sega v State of New York, 60 NY2d 183; People v Consolazio, 40 NY2d 446.)
   OPINION OF THE COURT

Kaye, J.

This appeal centers on the People’s conceded failures, during a pretrial suppression hearing and again at trial, to provide defendant with several items of Rosario material. We conclude, for the reasons that follow, that there should be a new hearing and a new trial.

I.

Defendant was convicted, upon a jury verdict, of first degree manslaughter, attempted second degree murder and several related charges stemming from the shooting death of a woman on a Queens sidewalk, and the ensuing pursuit and capture of defendant by witnesses to the shooting. While being subdued, defendant wounded one of his captors, but was himself beaten on the head with an axe handle and shot in the leg.

Following his arrest and treatment for his wounds, defendant made several inculpatory statements. By pretrial motion, he unsuccessfully sought to suppress the statements on the ground that his severe injuries and sleep deprivation rendered the statements involuntary. The People’s initial witness at the suppression hearing was Steven Toto, the first police officer to arrive at the scene, who found defendant scuffling with his captors and later arrested him. Officer Toto recovered a gun, holster and axe handle, and transported defendant to the site of the fatal shooting. There, defendant received first aid from an emergency medical technician before being taken to a hospital. After Toto’s direct testimony at the suppression hearing, the prosecutor gave defense counsel Rosario material, including what he represented to be Officer Toto’s memo book. At the conclusion of Toto’s cross-examination and the testimony of other witnesses, the court ruled that defendant had knowingly and intelligently waived his rights, and denied suppression of the statements.

During Toto’s subsequent trial testimony, however, it was discovered that the memo book was in fact not Officer Toto’s. Defense counsel requested that Toto’s trial testimony be stricken or a mistrial declared. When these applications were denied, defense counsel asked to reopen the suppression hearing so that he could cross-examine Officer Toto with the benefit of the correct memo book. The trial assistant opposed the request, stating that the wrong papers were provided "as a mistake” involving no bad faith by the prosecutor. He argued in addition that the contents of the memo book had no bearing on the issues involved in the suppression hearing. The application to reopen the hearing was denied and the trial continued.

Another trial witness, Detective Richard Sheridan, had also testified at the suppression hearing. At the hearing, he testified that he had several times over a four- or five-hour period administered Miranda warnings to defendant; that defendant’s doctors had cleared him for questioning; and that he had witnessed successive statements made by defendant both at the hospital on the day of the crime and at the precinct the following day. It was not until Detective Sheridan testified at the trial, however, during defense counsel’s cross-examination, that the People made available two affidavits in support of search warrants, which were prepared by Sheridan based in part on statements allegedly made by defendant. Again, the People did not dispute that the affidavits constituted Rosario material. They opposed defendant’s motion for a new suppression hearing and a mistrial by asserting that defendant had not been prejudiced by their delay in disclosing the material. The court denied defendant’s motions.

The People’s apparent inattention to their disclosure obligation was further exposed during the trial testimony of Patrick Yella, a former Assistant District Attorney. Yella had conducted the videotaped interrogation that produced defendant’s sixth inculpatory statement. The primary purpose of Yella’s testimony was to lay the evidentiary foundation for the tape. He briefly described defendant’s physical appearance, noting that defendant had stitches in his head, mouth and lips, and other wounds. He then identified the videotape, which bore his initials, as the one that had been prepared at the time of the interrogation. After the tape was played for the jury, defense counsel learned on cross-examination that the witness had prepared a report concerning his activities on that date.

At a sidebar conference, defense counsel requested production of the report. The trial assistant asserted that he was not aware of the report and did not have it in his possession, but believed it could be found quickly. He was given a short recess to locate the document but was unsuccessful. Although he did not have the report and had never seen it, the trial assistant asserted that it constituted attorneys’ work product and contained nothing more than the name of the detective assigned to the case and a notation that a statement had been taken from the defendant. Yella, however, added that the report he prepared "also reflects the entire homicide arrest, including the officer who was first upon the scene, the names and addresses of any witnesses who were talked to or things like that.” It was prepared, he said, so that the Assistant District Attorney who would present the case to the Grand Jury "could keep track of all the evidence in the case.” The court denied defendant’s motion to strike the testimony of the witness Yella.

Defendant was convicted of first degree manslaughter and other charges and the Appellate Division affirmed. The court concluded that defendant was not prejudiced by the delay in disclosure of Officer Toto’s memo book, and that Yella’s report did not contain either the statements of witnesses or interview summaries drawn from statements of witnesses and qualified as work product not subject to disclosure under CPL 240.10 (2). A Judge of this Court granted defendant leave to appeal, and we now reverse.

II.

For more than 30 years, since our decision in People v Rosario (9 NY2d 286), it has been a fundamental precept of this State’s criminal jurisprudence that the People are obligated to give to the defendant, for use during cross-examinatian, any nonconfidential written or recorded statements of a prosecution witness that relate to the subject matter of the witness’ testimony. Prior to Rosario, the defendant was entitled to see only those statements that, in the judgment of the trial court, contained matter that was inconsistent with the witness’ testimony (see, People v Walsh, 262 NY 140, 149).

We concluded in Rosario, however, that the potential impeachment value of a witness’ prior statement could best be determined by the "single-minded counsel for the accused” (People v Rosario, supra, at 290) and that the trial court’s evaluation was an inadequate substitute. That conclusion, based upon notions of fundamental fairness or, as we termed it in Rosario, "a right sense of justice” (id., at 289), was later endorsed by the Legislature, which codified the Rosario holding and imposed a reciprocal obligation on the defendant (see, CPL 240.45). Our extension of the principle to pretrial hearings (see, People v Malinsky, 15 NY2d 86) was similarly codified (see, CPL 240.44).

The reasoning that spawned the Rosario rule led us also to eschew harmless error analysis in cases arising during direct appeal in which the defendant was deprived of Rosario material at trial (see, People v Jones, 70 NY2d 547; People v Ranghelle, 69 NY2d 56; People v Perez, 65 NY2d 154; People v Consolazio, 40 NY2d 446). Harmless error analysis in such cases would necessarily require weighing the potential impeachment value of the withheld material. An appellate court, however, is ordinarily no better equipped than the trial court to make such an evaluation, and it was the inadequacy of the trial court in that regard — as compared to single-minded counsel for the accused — that compelled the Rosario holding (see, People v Perez, 65 NY2d, at 160, supra). Thus, where a defendant is deprived of Rosario material at trial, a new trial is required.

Underscoring the seriousness of the Rosario obligation, we have recognized only three exceptions to the rule of per se reversal. In cases arising on collateral review pursuant to CPL 440.10, after exhaustion of a defendant’s direct appeal, a new trial is required only if the defendant can demonstrate "a reasonable possibility that the failure to disclose the Rosario material contributed to the verdict.” (People v Jackson, 78 NY2d 638, 649, on remittal NYU, June 16, 1992, at 37, col 3 [ordering new trial].) This exception is grounded in the public interest in the finality of judgments as expressed in CPL 440.10 (1) (f). That statute, under which such collateral claims arise, affords a remedy only upon a showing of prejudice (People v Jackson, supra, at 646).

The second exception applies when Rosario material cannot be produced because it has been lost or destroyed (see, People v Martinez, 71 NY2d 937; People v Haupt, 71 NY2d 929). We have rejected the suggestion that the only alternative is dismissal of the charges (see, People v Haupt, supra, at 931). Instead, in such cases the trial court must try to determine the content of the missing material and the circumstances of the loss or destruction. Depending upon the degree of prosecutorial fault and the resulting prejudice to the defendant, the court must then impose an appropriate sanction — preclusion of the witness’ testimony or an adverse inference charge, for example (see, People v Martinez, supra, at 940). Appellate review is limited to determining whether the trial court acted within the bounds of its discretion in selecting a sanction (see, People v Wallace, 76 NY2d 953, 955; People v Martinez, supra, at 940). Dismissal of the charges is an extreme sanction which "should not be invoked where less severe measures can rectify the harm done by the loss” of the material (People v Kelly, 62 NY2d 516, 521; see, People v Haupt, supra, at 931). On the other hand, where the People have failed to exercise due care in preserving Rosario material and the defendant is prejudiced by the loss or destruction, it is an abuse of discretion for the court to impose no sanction (People v Wallace, supra, at 955).

Finally, we have not applied the per se reversal rule in cases where the withheld material is the "duplicative equivalent” of material that was disclosed (see, People v Consolazio, 40 NY2d, at 454, supra). In such cases, although a particular document may have been withheld, it cannot be said that the defendant was deprived of the impeachment value of its contents if the duplicative equivalent was made available. In those circumstances, the defendant in effect suffered no deprivation at all (compare, People v Young, 79 NY2d 365, 370).

In addition to these exceptions to the per se reversal rule, we have recognized a separate category of cases in which the Rosario violation is not a complete failure to disclose the material but rather a delay in its disclosure. In such cases, reversal is not required unless the delay substantially prejudiced the defendant (see, People v Ranghelle, 69 NY2d, at 63, supra; People v Perez, supra, at 159).

Against this background, we turn to the Rosario issues raised in the present case.

III.

Officer Toto’s Memo Book

We first consider the People’s production of the wrong memo book at the suppression hearing. The Appellate Division concluded that defendant deserved no remedy for this Rosario violation because, in the court’s view, he was not prejudiced by the delayed disclosure.

Insofar as it concerns trial error, we find no fault in the Appellate Division’s analysis. The mistake was discovered and corrected during a voir dire examination concerning the admission of physical evidence recovered by Toto. Thus, defense counsel had the benefit of the correct memo book for cross-examination of the witness at trial, and defendant has made no showing that his cross-examination was hampered by the untimely disclosure of the correct memo book.

Indeed, defendant does not now claim that this Rosario violation requires a new trial. Defendant does claim, however —and we agree — that his request to reopen the suppression hearing should have been granted and that, since the trial court failed to grant that relief, a new hearing must now be ordered.

There can be no doubt that defendant was entitled to have the correct memo book for use in cross-examination of Toto at the hearing (see, People v Malinsky, 15 NY2d 86, supra). If the suppression hearing had been reopened as defendant requested when the mistake was discovered at trial, defendant would have had the opportunity to use the correct book in challenging Toto’s hearing testimony. In that case, the Rosario violation would have amounted to a mere delay in disclosure and the appropriate inquiry would be whether defendant was substantially prejudiced by the delay (see, People v Ranghelle, 69 NY2d 56, 63, supra). As it stands, however, defendant was never given the opportunity to cross-examine Toto’s hearing testimony with the correct records. Accordingly, with respect to the hearing, the violation must be viewed as a complete deprivation of Rosario material.

The People, recognizing that such a violation is not ordinarily amenable to harmless error analysis, ask us to create a further exception to the per se reversal rule where the Rosario violation occurs at a pretrial suppression hearing rather than at a trial. This we decline to do.

As we have already held, a defendant is entitled to a new hearing as a remedy for a pretrial Rosario violation, without inquiry into prejudice. In Malinsky, the People failed to produce a detective’s notes at a pretrial suppression hearing. Then-Judge Fuld (the author of Rosario) wrote for a unanimous Court: "In view of our decision in Rosario (9 N Y 2d 286, supra), the judge presiding may not allow the People to keep from the defendants’ counsel statements or notes made by a witness upon the ground that nothing in them could assist the defense or that no prejudice would result from withholding them.” (15 NY2d, at 90-91; emphasis added.) Accordingly, a new suppression hearing was ordered (id., at 91).

Moreover, the considerations that led us to adopt the per se rule when the People fail to turn over Rosario material in the context of a trial (see, e.g., People v Jones, 70 NY2d 547, 552-553, supra; People v Perez, 65 NY2d 154, 160, supra) apply equally when the defendant is deprived of such material at a pretrial suppression hearing. In either setting, “a judge’s impartial determination as to what portions [of Rosario material] may be useful to the defense, is no substitute for the single-minded devotion of counsel for the accused” (People v Perez, supra, at 160) and "there is no way, short of speculation, of determining how it might have been used or how its denial to counsel might have damaged defendant’s case.” (People v Jones, supra, at 552.)

Furthermore, while there are certainly conceptual and procedural distinctions between suppression hearings and trials, none of those advanced by the People supply a basis for a different standard of appellate review. That the fact finder in a suppression hearing is a Judge, for example, does not improve the trial court’s ability, or ours, to reconstruct what might have happened if the violation had not occurred. In short, the People have pointed to no distinctive feature of pretrial suppression hearings, and we perceive none, comparable to those that have justified a departure from the per se reversal rule in other contexts.

We conclude, therefore, that in the circumstances before us defendant is entitled to a new suppression hearing. We note, however, that the remedy for a pretrial Rosario violation is not automatic reversal of the conviction but a new hearing. Retrial is necessary only if, after that hearing, the motion court concludes that defendant should prevail. Thus, contrary to the dissent, in the pretrial context there is even greater reason to adhere to our precedents eschewing harmless-error analysis: if prejudice from the Rosario violation is in fact trivial, the same result will obtain upon the new hearing and the conviction remains intact.

Given this disposition, we need not separately address the People’s additional Rosario violation with respect to Detective Sheridan.

The Yella Report

The report prepared by former Assistant District Attorney Yella, the People contend, was exempt from disclosure because it falls within the "attorneys’ work product” exemption of CPL 240.10 (2). In criminal proceedings, CPL 240.10 (2) extends the exemption only "to the extent that [the material] contains the opinions, theories or conclusions of the prosecutor, defense counsel or members of their legal staffs.”

Yella’s report, according to the descriptions given by the trial assistant and by Yella himself, contained only factual matter — the names of witnesses and police officers involved in the investigation and the fact that defendant had made a statement. There is no suggestion that it contained an attorney’s opinions, theories or conclusions. Accordingly, the report does not fall within the work product exemption.

Moreover, the Appellate Division’s conclusion that the report was not subject to disclosure because it "contained neither the statements of witnesses nor interview summaries drawn from statements of witnesses” (174 AD2d 685, 686) ignores the fact that the author of the report was himself a witness. To the extent the report is a statement by Yella reflecting the activities about which he testified at trial, it constitutes Rosario material and should have been disclosed to defendant.

The People also contend, however, that because the report could not be located, it falls within the exception to the rule of per se reversal that we have recognized for material that has been lost or destroyed (see, People v Martinez, 71 NY2d 937, supra). Thus, they would have us limit our review to considering whether it was an abuse of discretion for the trial court to refuse to strike Yella’s testimony — the sanction sought by defendant. The record is insufficient, however, to sustain the People’s claim.

The burden of establishing that Yella’s report has been lost or destroyed and for explaining its disappearance falls on the People, who are thereby seeking to be excused from their obligation to disclose the material. Disclosure of witnesses’ statements to facilitate effective cross-examination is a matter of basic fairness; the obligation should not be lightly treated or lightly excused.

In this case, the record reflects only that the material was not in the People’s trial folder and that the trial assistant could not locate the report during a very brief trial recess. That is an insufficient basis for the People’s current appellate claim that the report was lost or destroyed. Indeed, no such claim was even made at the trial: the trial assistant simply argued that the report was exempt from disclosure as work product. Accordingly, the trial court did not conduct the inquiry that is required when Rosario material is lost or destroyed — an inquiry into the contents of the material and the circumstances of its disappearance.

Inasmuch as the propriety of the sanction to be imposed depends on both the degree of prosecutorial fault and the resulting prejudice to the defendant, without such an inquiry the court cannot adequately exercise its discretion. Here, the trial court made some effort to discover the contents of the report, but owing to the People’s position that the document was exempt from disclosure no findings were made as to the circumstances of its alleged loss or destruction.

Thus, because the record does not support the People’s claim that Yella’s report was lost or destroyed, and because no other exception applies, our per se reversal rule requires a new trial. The People, of course, are not precluded from establishing at the new trial, if they can, that the report has been lost or destroyed, in which case the court should determine an appropriate sanction.

IV.

The simple principle that underlies Rosario is that the ends of criminal justice are best served by full disclosure of the relevant facts. Neither the rules that have developed in the decades since Rosario nor their underlying principle were honored in the present case.

The dissent’s plea for legislative reexamination prompts us to note that in this case the difficulty is not with the Rosario doctrine but with the People’s seeming lack of care in discharging their discovery obligation. Whatever the requirement —whether one of open-file or more limited discovery — due care must be taken in gathering, identifying and producing documents; an appellate claim of lack of prejudice or loss or destruction is no substitute.

Accordingly, the order of the Appellate Division should be reversed and the case remitted to Supreme Court, Queens County, for further proceedings in accordance with this opinion.

Bellacosa, J.

(dissenting). My vote in this case is to affirm the order upholding the judgment of conviction, upon a jury verdict, for manslaughter in the first degree, attempted murder in the second degree and several other associated crimes. I disagree with the Court’s application of the per se reversal and new suppression hearing remedy for the pretrial Rosario violation (People v Rosario, 9 NY2d 286, rearg denied 9 NY2d 908, cert denied 368 US 866). This is not simply a refusal to create "another exception” to the per se remedy, but rather represents a new variety of expansion of that extreme remedy into the pretrial phase of the criminal adjudication process (contrast, People v Jackson, 78 NY2d 638; People v Bin Wahad, 79 NY2d 787).

Thus, while I would not conclude that the Sheridan and Yella instances constitute Rosario trial violations on this record meriting a new trial, I refrain from joining issue in those respects with the majority of the Court because only the pretrial Rosario aspect, with whose resolution, analysis and discussion, I thoroughly disagree, constitutes for me the crucial, new feature of this case.

A revisitation to the origins of the Rosario rule graphically portrays how far the pendulum has swung. In that seminal case, this Court held that the People must disclose all prior statements of its witnesses based on a "right sense of justice” (People v Rosario, 9 NY2d, at 289, supra). The Court then affirmed a conviction for murder in the first degree, cautiously and wisely observing that:

"This court is exceedingly] slow to disregard error as harmless under section 542 of the Code of Criminal Procedure, particularly in a capital case. However, in the one before us, we are as convinced as judges may ever be, in view of the overwhelming proof of guilt and the absence of any real inconsistency between prior statement and trial testimony, that the jury would not have decided the case differently even if defense counsel had had the use of the statements in question. In other words, it may not be said that any substantial right of the appellant was prejudiced by the trial court’s erroneous ruling” (id., at 291).

That articulation and application by the Court, which created the Rosario rule, thus instructively reflected a respect for the common law and legislative mandates for proportionality. Decisions subsequent to Rosario continued, for a while, to apply Rosario’s own harmless error proportionality (see, People v Hawa, 13 NY2d 718; People v Fasano, 11 NY2d 436, after remittitur 18 AD2d 1137, mod 14 NY2d 43; People v Pereira, 11 NY2d 784, cert denied 370 US 962; People v Hernandez, 10 NY2d 774, rearg denied 10 NY2d 885, cert denied sub nom. Ramirez v New York, 369 US 831; People v Turner, 10 NY2d 839, cert denied 369 US 807; People v Hurst, 10 NY2d 939). With respect to Rosario trial errors, the new per se era dawned with People v Consolazio (40 NY2d 446, cert denied 433 US 914), People v Perez (65 NY2d 154, after new trial 154 AD2d 485, lv denied 75 NY2d 774), and, in my view, reached its nadir with People v Ranghelle (69 NY2d 56), and People v Jones (70 NY2d 547).

This tracing of the history leads me to the conclusion that the Court has strayed far from the course plotted and intended by the primary precedent, Rosario itself. This Court’s premier purpose and strength, as a case-by-case common-law adjudicatory body, suffers when it increasingly surrenders its process to automatically triggered rubrics. To be sure, the Court should and does make precedential principles, but it does so incrementally, not by sweeping edicts which imitate legislative black-letter ukases. Individualized justice — Rosario’s own "right sense of justice” — is abandoned in both the jurisprudential and practical sense by such per se nostrums. Instead, what emerges is an antithesis of a "right sense of justice” — per se-ness.

I believe it is persuasive, though not controlling, that the Court only recently and painstakingly explored and decided on policy grounds not to inject the per se remedy into the CPL article 440 postjudgment stream of criminal matters (People v Jackson, 78 NY2d 638, supra). Distinct weighty reasons, including the historical perspective and empirical wisdom from repeated applications of the Rosario rule, warrant corresponding judicial forbearance from forcing this latest form of the per se remedy into pretrial phases of criminal proceedings.

While I agree that a pretrial Rosario violation occurred in this case when investigating Officer Toto’s memo book was not turned over for cross-examination at the Huntley hearing, I note also that another police officer’s book was mistakenly turned over and this miscue was not discovered — or revealed —by anyone, including defense counsel, at that time. Then, the correct cross-examination material was turned over to defense counsel at trial and was used to cross-examine Toto before the petit jury. Thus, the trial court was not left to speculate as to "what portions may [have been] useful to the defense” or how "single-minded” defense counsel might have used those portions at the pretrial violation stage (see, People v Perez, 65 NY2d 154, 160, supra). Since defense counsel was able to use the materials to attempt to discredit the People’s witness at trial, a record template exists for the trial court to fashion an appropriate on-the-spot remedy or for appellate courts to gouge the harm, if any, caused by the absence of the material at the pretrial proceedings (contra, majority opn, at 615). It therefore cannot be said, under these circumstances, that "there is no way, short of speculation, of determining how [the materials] might have been used or how [their] denial to counsel might have damaged defendant’s case” (People v Jones, 70 NY2d 547, 552, supra). Rather, courts in such instances have better than usual tools and methods to conduct an effective prejudice/harmless error analysis "weighing the potential impeachment value of the withheld material” (majority opn, at 615).

Further support for a more proportioned approach may also be found in a variety of this Court’s precedents dealing distinctly with the pretrial versus trial dichotomy. In People v Chipp (75 NY2d 327, cert denied 498 US 833), this Court stressed that the claimed right of the defendant to call the complainant as a witness at the Wade hearing must be evaluated in light of defendant’s ability "to examine the witness and explore issues relevant to identification at trial” (id., at 338). We further noted that "[a]ny improprieties in pretrial identification procedures can be investigated under the ’time-honored process of cross-examination’ ” at trial (id., at 338, quoting Watkins v Sowders, 449 US 341, 349). In People v Castillo (80 NY2d 578 [decided today]), the Court states that ”[t]he due process requirements for a hearing may be less elaborate and demanding than those at the trial proper” (id., at 582 [citations omitted for other such illustrations]; see also, People v Morales, 80 NY2d 450, 457).

The balance of remedies approach supports a prejudice/ harmless error analysis for whatever range of corrective ac tian is contemplated where the focus of concern in the pretrial hearing — adequate cross-examination — is effectively reproduced at trial before the critical adjudicator of guilt or innocence — the jury. In this case, Toto’s credibility was finally and fully explored and subjected to challenge with all required and relevant materials at the time when it really counted. That opportunity subsumes, at least in part, the failure to allow for the earlier exploration on pretrial cross-examination. While there is no full substitute for compliance in the earlier instance, neither is there justification to add another sweeping per se corrective remedy for a demonstrably unmeaningful pretrial Rosario lapse. To do so once again catapults the Rosario remedy into a paramount hierarchical ranking above all other kinds of procedural protections and violations (see, People v Jones, 70 NY2d 547, 555, supra [concurring opn]).

The case before us deals with a pretrial hearing on the voluntariness of the defendant’s admissions to the crimes charged. The determination of that question is made by the court alone at the pretrial stage, and then is reviewed again and may be resolved differently by the jury under the dictates of CPL 60.45 and CPL 710.70 (3) (see, People v Graham, 55 NY2d 144). Thus, this additional procedural safeguard further warrants some proportionality in implementing the Rosario remedy in this circumstance because, apart from being able to assess possible harm against a record template, at least some of that harm, if any, based on the pretrial Rosario violation may be directly mitigated and addressed by defense counsel’s use before the petit jury of the Rosario material. A proportionate remedy, short of a new hearing, may, for example, include informing the jury of the pretrial violation during the trial cross-examination and in the instructions to the jury. We have said in another, apt Rosario connection: "The determination of what is appropriate is committed to the trial court’s sound discretion, and while the degree of prosecutorial fault may be considered, the court’s attention should focus primarily on the overriding need to eliminate prejudice to the defendant.” (People v Martinez, 71 NY2d 937, 940.)

The urgency for the Legislature to act and remedy this situation cannot be overemphasized. Five years ago, in People v Jones (70 NY2d 547, supra), I expressed a strongly held concern that: "The new per se error rule unavoidably plants an uncertainty into every tried criminal case. It is a law enforcer’s nightmare and a perpetrator’s delight. Insofar as the rule is not constitutionally rooted, I believe it would be useful for the Legislature to consider a specification in CPL 470.05 and article 240, especially CPL 240.20 and 240.45, overcoming the per se-ness of this exalted court-made rule” (id., at 557). That observation was, in part, premised on another perceived flaw:

"This relatively new absolute rule even blinks the legislative direction * * * that '[a]n appellate court must determine an appeal without regard to technical errors or defects which do not affect the substantial rights of the parties’. It must be supposed that the court overrides the statutory prescription by the fiat that all Rosario errors affect 'substantial rights’ because the court says so. Since the court is the final word, that may be so, even if it is also tautological. The finding in both courts below that the particular nondisclosure was truly harmless, merely duplicative and trivial, accents the extravagance of a per se rule made by a fallible institution which tolerates no imperfection in the law enforcement authorities whose conduct they govern. While the mission of the courts is to render justice, the 'right sense of justice’ referred to in Rosario itself implies an evenhandedness, not the imbalance created by a per se rule of this kind” (id., at 556-557).

United States Supreme Court Justice Robert Jackson sagely admonished in an analogous context that applies as well to this Court: "[The Supreme Court is] not final because [it is] infallible, but [is] infallible only because [it is] final.” (Brown v Allen, 344 US 443, 540 [Jackson, J., concurring], reh denied 345 US 946.)

Perhaps the Legislature agrees with this Court’s toe-in-the-water per se probe in Consolazio, which has since cascaded into a full body immersion (People v Ranghelle, 69 NY2d 56, supra; People v Perez, 65 NY2d 154, supra; People v Jones, 70 NY2d 547, supra; and majority opn herein). If so, the Legislature ought at least to harmonize the court-made rule that countermands the legislative direction to the courts to disregard "technical errors or defects” (CPL 470.05 [1]).

On the other hand, the Legislature might more comprehensively consider halting the wide swing of the Rosario pendulum and restoring it to a proper place of perspective and proportion. One way to accomplish this and effect a sensibly balanced remedy would be open-file pretrial discovery on the criminal side. New York prosecutors, long opposed to this reform, may at long last recognize the lesser price paid by society and victims from prosecutors opening their files to defense counsel in the pretrial discovery phase compared to risking the turmoil and uncertainty of the massive Rosario mine field in countless individual cases. In the end, such a modulated procedural reform would more surely bring about fairness for and less games-playing by both sides, and would definitively restore "a right sense of justice” as an antidote to the spreading threat of the per se virus.

Acting Chief Judge Simons and Judges Titone, Hancock, Jr., and Smith concur with Judge Kaye; Judge Bellacosa dissents and votes to affirm in a separate opinion.

Order reversed, etc.

      . Defense counsel noted that he hadn’t kept a "score card” of police reports and other materials the District Attorney had failed to provide pursuant to his CPL 240.45 demand, but "I think it’s becoming legend.”

      . The two features of Jackson that mandated a showing of prejudice — a statute so requiring and the public interest in the finality of judgments — are not present here, and thus any support the dissent would draw from Jackson is misplaced.

      . We find unworkable the rule advocated by the dissent, whereby a trial or appellate court should look at the trial testimony to gouge prejudice from the pretrial violation (dissenting opn, at 624-625). First, the witness whose statement was recorded in the unproduced Rosario material might not testify at trial. Even if the witness does testify, defense counsel might not use the witness’ prior statements on cross-examination. Indeed, defendants seldom revisit suppression issues before the jury and usually have strong incentive not to; one of the primary reasons defendants are afforded pretrial hearings is that information prejudicial to the guilt determination may be elicited on a motion to suppress. Finally, even if the prior statement is used at trial, the differing functions of the two proceedings render it difficult to know whether counsel would have made the same use of the statement at a pretrial hearing. The dissent’s approach inevitably would lead to undesirable collateral proceedings testing the identity of the issues at the hearing and trial and defendant’s opportunity and incentive for making use of the unproduced Rosario material at trial.

      . We order a new trial in this case only because of an independent trial Rosario violation.

      . Counts one and nine of the indictment should be dismissed without prejudice to an application by the People for leave to resubmit to a Grand Jury the facts upon which those convictions were based (see, Matter of

        Anthony M., 63 NY2d 270, 284; People v Gonzalez, 61 NY2d 633, 635; People v Mayo, 48 NY2d 245, 253.)


source: Caselaw Access Project

author: Hancock, Jr., J.

license: Public Domain

text:
    Howard L. Wieder, Appellant, v Murray L. Skala et al., Respondents, et al., Defendant.
    Argued October 21,1992;
    decided December 22, 1992

      POINTS OF COUNSEL

      David C. Vladeck and Alan B. Morrison of the District of Columbia Bar, admitted pro hac vice, and Vladeck, Waldman, Elias & Engelhard, P. C., New York City (Judith P. Vladeck and Ellen A. Harnick of counsel), for appellant.
    I. Wieder states a cause of action for wrongful discharge. (Matter of First Natl. Bank v Brower, 42 NY2d 471; Gair v Peck, 6 NY2d 97, 361 US 374; People ex rel. Karlin v Culkin, 248 NY 465; Hanna v Mitchell, 202 App Div 504, 235 NY 534; Weiner v Weintraub, 22 NY2d 330; Cohen v Lord, Day & Lord, 75 NY2d 95; New York Criminal & Civ. Cts. Bar Assn, v Jacoby, 61 NY2d 130; Dunton v County of Suffolk, 729 F2d 903; Niesig v Team I, 76 NY2d 363.) II. Wieder’s complaint also states a claim for breach of contract. (Cohen v Lord, Day & Lord, 75 NY2d 95; New York Criminal & Civ. Cts. Bar Assn, v Jacoby, 61 NY2d 130; Weiner v McGraw-Hill, Inc., 57 NY2d 458; Dunton v County of Suffolk, 729 F2d 903; Clients’ Sec. Fund v Grandeau, 72 NY2d 62; Paralegal v Lawyer, 783 F Supp 230; Matter of De Graff, Foy, Conway & Holt-Harris v McKesson &

      Robbins, 31 NY2d 862; Metro-Goldwyn-Mayer, Inc. v Scheider, 40 NY2d 1069; Ingle v Glamore Motor Sales, 73 NY2d 183.)

      Feder, Kaszovitz, Isaacson, Weber & Skala, New York City (Gabriel Kaszovitz, Murray L. Skala, Jay D. Lukowski and Bruce Robins of counsel), for respondents.
    I. New York does not recognize a common-law public policy exception to the at-will employment rule. (Murphy v American Home Prods. Corp., 58 NY2d 293; Sabetay v Sterling Drug, 69 NY2d 329; Remba v Federation Empl. & Guidance Serv., 76 NY2d 801.) II. As a matter of public policy the Legislature has limited and conditioned the availability of wrongful discharge claims. (Leibowitz v Bank Leumi Trust Co., 152 AD2d 169; Martin v New York Life Ins. Co., 148 NY 117.) III. The framework for disciplining attorney misconduct is in place and effective. The rulings of the disciplinary committees are not and should not be subject to contrary determinations in plenary proceedings. IV. As a matter of public policy, this Court should not create an exception to the at-will rule to protect attorneys only. (Willy v Coastal Corp., 647 F Supp 116, 855 F2d 1160; Easter-son v Long Is. Jewish Med. Ctr., 156 AD2d 636; Cohen v Lord, Day & Lord, 75 NY2d 95; Niesig v Team I, 76 NY2d 363; Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392; Reed, Roberts Assocs. v Strauman, 40 NY2d 303; Recovery Consultants v Shih-Hsieh, 141 AD2d 272; Matter of Krauss, 144 Misc 2d 34; Schaffer v Talerico, 118 Misc 2d 66.) V. Plaintiffs claim for breach of employment contract fails to state a cause of action. (Murphy v American Home Prods. Corp., 58 NY2d 293; Weiner v McGraw-Hill, Inc., 57 NY2d 458; Sabetay v Sterling Drug, 69 NY2d 329.)

      Leonard Gross, for Leonard Gross and others, amici curiae. I. Plaintiff has an implied contractual right not to be discharged for reasons which contravene the Code of Professional Responsibility.

      (Weiner v McGraw-Hill, Inc., 57 NY2d 458.) II. Creating a narrow exception to the employment-at-will doctrine is a proper function of this Court and will further the integrity of the legal system by enhancing adherence to the rules of professional responsibility. (Dunton v County of Suffolk, 729 F2d 903; Matter of Walker, 87 AD2d 555; Matter of Dowd, 160 AD2d 78; Matter of Lefkowitz, 105 AD2d 161; Murphy v American Home Prods. Corp., 58 NY2d 293; Wald-man v Englishtown Sportswear, 92 AD2d 833; Sabetay v Sterling Drug, 69 NY2d 329; Wieder v Skala, 144 Misc 2d 346.)

      Daniel J. Capra, New York City, for The Committee on Professional Responsibility of the Association of the Bar of the City of New York, amicus curiae.

    I. The order of the Court below puts attorneys in the impossible position of choosing between the risk of disbarment for failure to report misconduct, and the risk of loss of employment for so reporting. (Matter of Dowd, 160 AD2d 78.) II. This Court has the authority to adopt an exception to the employment-at-will doctrine for attorneys who are discharged for complying with their ethical obligations. (Remba v Federation Empl. & Guidance Serv., 76 NY2d 801; Caceci v Di Canio Constr. Corp., 72 NY2d 52; Buckley v City of New York, 56 NY2d 300; Murphy v American Home Prods. Corp., 58 NY2d 293; Cohen v Lord, Day & Lord, 75 NY2d 95; Martin v Camp, 219 NY 170.) III. Because the employment contract at issue was made between lawyers, it impliedly incorporated the ethical standards applicable to lawyers. (Weiner v McGraw-Hill, Inc., 57 NY2d 458; Martin v Camp, 219 NY 170.)
   OPINION OF THE COURT

Hancock, Jr., J.

Plaintiff, a member of the Bar, has sued his former employer, a law firm. He claims he was wrongfully discharged as an associate because of his insistence that the firm comply with the governing disciplinary rules by reporting professional misconduct allegedly committed by another associate. The question presented is whether plaintiff has stated a claim for relief either for breach of contract or for the tort of wrongful discharge in violation of this State’s public policy. The lower courts have dismissed both causes of action on motion as legally insufficient under CPLR 3211 (a) (7) on the strength of New York’s employment-at-will doctrine. For reasons which follow, we modify the order and reinstate plaintiff’s cause of action for breach of contract.

I.

In the complaint, which must be accepted as true on a dismissal motion under CPLR 3211 (a) (7), plaintiff alleges that he was a commercial litigation attorney associated with defendant law firm from June 16, 1986 until March 18, 1988. In early 1987, plaintiff requested that the law firm represent him in the purchase of a condominium apartment. The firm agreed and assigned a fellow associate (L.L.) "to do 'everything that needs to be done’ ”. For several months, L.L. neglected plaintiff’s real estate transaction and, to conceal his neglect, made several "false and fraudulent material misrepresentations”. In September 1987, when plaintiff learned of L.L.’s neglect and false statements, he advised two of the firm’s senior partners. They conceded that the firm was aware "that [L.L.] was a pathological liar and that [L.L.] had previously lied to [members of the firm] regarding the status of other pending legal matters”. When plaintiff confronted L.L., he acknowledged that he had lied about the real estate transaction and later admitted in writing that he had committed "several acts of legal malpractice and fraud and deceit upon plaintiff and several other clients of the firm”.

The complaint further alleges that, after plaintiff asked the firm partners to report L.L.’s misconduct to the Appellate Division Disciplinary Committee as required under DR 1-103 (A) of the Code of Professional Responsibility, they declined to act. Later, in an effort to dissuade plaintiff from making the report himself, the partners told him that they would reimburse his losses. Plaintiff nonetheless met with the Committee "to discuss the entire matter”. He withdrew his complaint, however, "because the [f]irm had indicated that it would fire plaintiff if he reported [L.L.’s] misconduct”. Ultimately, in December 1987 — as a result of plaintiff’s insistence — the firm made a report concerning L.L.’s "numerous misrepresentations and [acts of] malpractice against clients of the [f]irm and acts of forgery of checks drawn on the [f]irm’s account”. Thereafter, two partners "continuously berated plaintiff for having caused them to report [the] misconduct”. The firm nevertheless continued to employ plaintiff "because he was in charge of handling the most important litigation in the [Qirm”. Plaintiff was fired in March 1988, a few days after he filed motion papers in that important case.

Plaintiff asserts that defendants wrongfully discharged him as a result of his insistence that L.L.’s misconduct be reported as required by DR 1-103 (A). In his fourth cause of action, he alleges that the firm’s termination constituted a breach of the employment relationship. In the fifth cause of action, he claims that his discharge was in violation of public policy and constituted a tort for which he seeks compensatory and punitive damages.

Defendants moved to dismiss the fourth and fifth causes of action as legally insufficient pursuant to CPLR 3211 (a) (7). Supreme Court granted defendants’ motion because his employment relationship was at will, holding:

"since [the] 'Whistleblowers Law’ [Labor Law § 740] is not applicable to the facts of this case, and plaintiff has not pleaded facts to come within the exception set forth in Weiner v. McGraw-Hill,
Inc., 57 N.Y.2d 458 (1982), the rules governing the causes of action for wrongful discharge are those set forth in Murphy [v American Home Prods.
Corp. (58 NY2d 293)]. Accordingly, since under the facts pleaded herein, the law firm had the right to terminate plaintiff, the fourth and fifth causes of action are dismissed.”

The Appellate Division affirmed. It also concluded that plaintiff failed to state a cause of action because, as an at-will employee, the firm could terminate him without cause. This Court granted leave to appeal.

II.

We discuss first whether, notwithstanding our firmly established employment-at-will doctrine, plaintiff has stated a legal claim for breach of contract in the fourth cause of action. The answer requires a review of the three cases in which that doctrine is fully explained.

The employment-at-will doctrine is a judicially created common-law rule "that where an employment is for an indefinite term it is presumed to be a hiring at will which may be freely terminated by either party at any time for any reason or even for no reason” (Murphy v American Home Prods. Corp., 58 NY2d 293, 300, supra [citing Martin v New York Life Ins. Co., 148 NY 117]). In Murphy, this Court dismissed the claim of an employee who alleged he had been discharged in bad faith in retaliation for his disclosure of accounting improprieties. In so doing, we expressly declined to follow other jurisdictions in adopting the tort-based abusive discharge cause of action for imposing "liability on employers where employees have been discharged for disclosing illegal activities on the part of their employers”, being of the view "that such a significant change in our law is best left to the Legislature” (id., at 301).

With respect to the contract cause of action asserted in Murphy, the Court held that plaintiff had not shown evidence of any express agreement limiting the employer’s unfettered right to fire the employee. For this reason, the Court distinguished Weiner v McGraw-Hill, Inc. (57 NY2d 458, supra), where such an express limitation had been found in language in the employer’s personnel handbook. Finally, in Murphy, the Court rejected the argument that plaintiff’s discharge for disclosing improprieties violated a legally implied obligation in the employment contract requiring the employer to deal fairly and in good faith with the employee, explaining:

"No New York case upholding any such broad proposition is cited to us by plaintiff (or identified by our dissenting colleague), and we know of none.
New York does recognize that in appropriate circumstances an obligation of good faith and fair dealing on the part of a party to a contract may be implied and, if implied will be enforced (e.g., Wood v Duff-Gordon, 222 NY 88; Pernet v Peabody Eng.
Corp., 20 AD2d 781). In such instances the implied obligation is in aid and furtherance of other terms of the agreement of the parties. No obligation can be implied, however, which would be inconsistent with other terms of the contractual relationship.
Thus, in the case now before us, plaintiff’s employment was at will, a relationship in which the law accords the employer an unfettered right to terminate the employment at any time. In the context of such an employment 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”
(id., at 304-305 [emphasis added]).

Four years after Murphy, the Court decided Sabetay v Sterling Drug (69 NY2d 329). There, the Court dismissed the complaint of an employee who claimed he was fired for "blowing the whistle” and refusing to engage in improper and unethical activities. As in Murphy, the Court found no basis for an express limitation on the employer’s right to discharge an at-will employee and, adhering to Murphy as a precedent, declined to base any such limitation on an implied-in-law obligation of dealing fairly and in good faith with its employee.

Not surprisingly, defendants’ position here with respect to plaintiffs breach of contract cause of action is simple and direct, i.e., that: (1) as in Murphy and Sabetay, plaintiff has shown no factual basis for an express limitation on the right to terminate of the type upheld in Weiner; and (2) Murphy and Sabetay rule out any basis for contractual relief under an obligation implied-in-law. We agree that plaintiffs complaint does not contain allegations that could come within the Weiner exception for express contractual limitations (see, Weiner v McGraw-Hill, Inc., supra, at 465). As to an implied-in-law duty, however, a different analysis and other considerations pertain.

In arguing that the law imposes no implied duty which would curtail their unlimited right to terminate the employment contract, defendants rely on the holding in Murphy that ”[n]o obligation can be implied, however, which would be inconsistent with other terms of the contractual relationship * * * [and] 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” (58 NY2d 293, 304-305, supra; accord, Sabetay v Sterling Drug, supra, at 335-336). The decisions in Murphy and Sabetay, however, are not controlling here.

As plaintiff points out, his employment as a lawyer to render professional services as an associate with a law firm differs in several respects from the employments in Murphy and Sabetay. The plaintiffs in those cases were in the financial departments of their employers, both large companies. Although they performed accounting services, they did so in furtherance of their primary line responsibilities as part of corporate management. In contrast, plaintiffs performance of professional services for the firm’s clients as a duly admitted member of the Bar was at the very core and, indeed, the only purpose of his association with defendants. Associates are, to be sure, employees of the firm but they remain independent officers of the court responsible in a broader public sense for their professional obligations. Practically speaking, plaintiffs duties and responsibilities as a lawyer and as an associate of the firm were so closely linked as to be incapable of separation. It is in this distinctive relationship between a law firm and a lawyer hired as an associate that plaintiff finds the implied-in-law obligation on which he founds his claim.

We agree with plaintiff that in any hiring of an attorney as an associate to practice law with a firm there is implied an understanding so fundamental to the relationship and essential to its purpose as to require no expression: that both the associate and the firm in conducting the practice will do so in accordance with the ethical standards of the profession. Erecting or countenancing disincentives to compliance with the applicable rules of professional conduct, plaintiff contends, would subvert the central professional purpose of his relationship with the firm — the lawful and ethical practice of law.

The particular rule of professional conduct implicated here (DR 1-103 [A]), it must be noted, is critical to the unique function of self-regulation belonging to the legal profession. Although the Bar admission requirements provide some safeguards against the enrollment of unethical applicants, the Legislature has delegated the responsibility for maintaining the standards of ethics and competence to the Departments of the Appellate Division (see, Judiciary Law §90 [2]; and see, e.g., Rules of App Div, 1st Dept [22 NYCRR] § 603.2). To assure that the legal profession fulfills its responsibility of self-regulation, DR 1-103 (A) places upon each lawyer and Judge the duty to report to the Disciplinary Committee of the Appellate Division any potential violations of the Disciplinary Rules that raise a "substantial question as to another lawyer’s honesty, trustworthiness or fitness in other respects”. Indeed, one commentator has noted that, "[t]he reporting requirement is nothing less than essential to the survival of the profession” (Gentile, Professional Responsibility — Reporting Misconduct By Other Lawyers, NYU, Oct. 23, 1984, at 1, col 1; at 2, col 2; see also, Olsson, Reporting Peer Misconduct: Lip Service to Ethical Standards is Not Enough, 31 Ariz L Rev 657, 658-659).

Moreover, as plaintiff points out, failure to comply with the reporting requirement may result in suspension or disbarment (see, e.g., Matter of Dowd, 160 AD2d 78). Thus, by insisting that plaintiff disregard DR 1-103 (A) defendants were not only making it impossible for plaintiff to fulfill his professional obligations but placing him in the position of having to choose between continued employment and his own potential suspension and disbarment. We agree with plaintiff that these unique characteristics of the legal profession in respect to this core Disciplinary Rule make the relationship of an associate to a law firm employer intrinsically different from that of the financial managers to the corporate employers in Murphy and Sabetay. The critical question is whether this distinction calls for a different rule regarding the implied obligation of good faith and fair dealing from that applied in Murphy and Sabetay. We believe that it does in this case, but we, by no means, suggest that each provision of the Code of Professional Responsibility should be deemed incorporated as an implied-in-law term in every contractual relationship between or among lawyers.

It is the law that in "every contract there is an implied undertaking on the part of each party that he will not intentionally and purposely do anything to prevent the other party from carrying out the agreement on his part” (Patterson v Meyerhofer, 204 NY 96, 100; see, e.g., Arc Elec. Constr. Co. v Fuller Co., 24 NY2d 99, 103-104; Wakefield v Northern Telecom, 769 F2d 109, 112, mod after remand 813 F2d 535). The idea is simply that when A and B agree that B will do something it is understood that A will not prevent B from doing it. The concept is rooted in notions of common sense and fairness (see, Farnsworth, The Law of the Contract § 7.16, at 524 [1982]). "What courts are doing [when an omitted term is implied]”, Professor Corbin explains, "whether calling the process 'implication’ of promises, or interpreting the requirements of 'good faith’, as the current fashion may be, is but a recognition that the parties occasionally have understandings or expectations that were so fundamental that they did not need to negotiate about those expectations” (3 Corbin, Contracts § 570, 1992 Supp, at 411).

Just such fundamental understanding, though unexpressed, was inherent in the relationship between plaintiff and defendant law firm (see also, Wakefield v Northern Telecom, 769 F2d 109, 112, supra ["Implied contractual obligations may coexist with express provisions which seemingly negate them where common expectations or the relationship of the parties as structured by the contract so dictate” (emphasis added)]). Defendants, a firm of lawyers, hired plaintiff to practice law and this objective was the only basis for the employment relationship. Intrinsic to this relationship, of course, was the unstated but essential compact that in conducting the firm’s legal practice both plaintiff and the firm would do so in compliance with the prevailing rules of conduct and ethical standards of the profession. Insisting that as an associate in their employ plaintiff must act unethically and in violation of one of the primary professional rules amounted to nothing less than a frustration of the only legitimate purpose of the employment relationship.

From the foregoing, it is evident that both Murphy and Sabetay are markedly different. The defendants in those cases were large manufacturing concerns — not law firms engaged with their employee in a common professional enterprise, as here. In neither Murphy nor Sabetay was the plaintiff required to act in a way that subverted the core purpose of the employment. The company rules underlying the firing of Murphy and Sabetay were not, as in this case, general rules of conduct and ethical standards governing both plaintiff and defendants in carrying out the sole aim of their joint enterprise, the practice of their profession (see, Judiciary Law § 90 [2]; and see, e.g., Rules of App Div, 1st Dept [22 NYCRR] § 603.2). Unlike Murphy and Sabetay, giving effect to an implied understanding — that in their common endeavor of providing legal services plaintiff and the firm would comply with the governing rules and standards and that the firm would not act in any way to impede or discourage plaintiff’s compliance — would be "in aid and furtherance of [the central purpose] of the agreement of the parties” (Murphy v American Home Prods. Corp., supra, at 304). Thus, the case is distinguishable from Murphy and Sabetay where giving effect to the implied obligation would have been "inconsistent with” and "destructive of’ an elemental term in the agreement (id., at 304-305). We conclude, therefore, that plaintiff has stated a valid claim for breach of contract based on an implied-in-law obligation in his relationship with defendants.

III.

Plaintiff argues, moreover, citing our decision in Cohen v Lord, Day & Lord (75 NY2d 95, 101), that the dictates of public policy in DR 1-103 (A) have such force as to warrant our recognition of the tort of abusive discharge pleaded in the fifth cause of action. While the arguments are persuasive and the circumstances here compelling, we have consistently held that "significant alteration of employment relationships, such as the plaintiff urges, is best left to the Legislature” (Sabetay v Sterling Drug, supra, at 336 [citing Murphy v American Home Prods. Corp., supra, at 301-302]). We believe that the same rationale applies here. In 1984, the Legislature enacted a "Whistleblower” statute (Labor Law § 740, added by L 1984, ch 660, § 2). We have noted that, although the present "statute has been criticized by commentators for not affording sufficient safeguards against retaliatory discharge (see, Minda and Raab, Time for an Unjust Dismissal Statute in New York, 54 Brooklyn L Rev 1137, 1138, 1182-1187 [1989]; Dworkin and Near, Whistleblowing Statutes: Are They Working?, 25 Amer Bus LJ 241, 253 [1987]), any additional protection must come from the Legislature” (Remba v Federation Empl. & Guidance Serv., 76 NY2d 801, 803).

Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be modified, with costs to plaintiff, by denying defendant’s motion to dismiss the fourth cause of action and, as so modified, affirmed.

Acting Chief Judge Simons and Judges Kaye, Titone and Bellacosa concur; Judge Smith taking no part.

Judgment appealed from and order of the Appellate Division brought up for review modified, etc.

      . DR 1-103 (A) provides: "A lawyer possessing knowledge, not protected as a confidence or secret, of a violation of DR 1-103 that raises a substantial question as to another lawyer’s honesty, trustworthiness or fitness in other respects as a lawyer shall report such knowledge to a tribunal or other authority empowered to investigate or act upon such violation.”

      . See also, Matter of Rowe (80 NY2d 336, 340 ["The Code of Professional Responsibility * * * counsels that * * * (l)awyers play a critical role in sustaining the rule of law and * * * the courts are charged with the responsibility of insisting that lawyers exercise the highest standards of ethical conduct * * * Conduct that tends to reflect adversely on the legal profession as a whole and to undermine public confidence in (the Bar) warrants disciplinary action”]).

      . In Cohen, the Court held that a term in a law firm partnership agreement which conditions payment of earned but uncollected partnership revenues upon a withdrawing partner’s refraining from practicing law in competition with the firm restricts the practice of law in violation of DR 2-108 (A) and is, therefore, unenforceable as against public policy.


author: Kaye, J.

text:
    Continental Casualty Co. et al., Appellants, v Rapid-American Corporation et al., Respondents.
    Argued January 6,1993;
    decided February 11, 1993

      POINTS OF COUNSEL

      Ford Marrin Esposito Witmeyer & Gleser, New York City (Charles A. Booth, Victor G. Gleser and Mona Jha of counsel), for appellants.
    I. The exclusion of coverage for irritants, pollutants and contaminants excludes coverage for asbestos claims. (Powers Chemco v Federal Ins. Co., 74 NY2d 910; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66; Breed v Insurance Co., 46 NY2d 351; Niagara County v Utica Mut. Ins. Co., 103 Misc 2d 814, 80 AD2d 415, 54 NY2d 608.) II. Rapid’s practical construction as to what triggers its insurance program should be controlling. (American Motorists Ins. Co. v Squibb & Sons, 95 Misc 2d 222; American Home Prods. Corp. v Liberty Mut. Ins. Co., 565 F Supp 1485, 748 F2d 760; Nocoll v Sands, 131 NY 19.) III. Rapid has not proven that the claims against it resulted from conduct neither expected nor intended. (Watts v Swiss Bank Corp., 27 NY2d 270; Krull v Celotex Corp., 611 F Supp 146; Tretter v Rapid Am. Corp., 514 F Supp 1344; Alpert’s Newspaper Delivery v New York Times Co., 876 F2d 266; Ellentuck v Klein, 570 F2d 414; Jonas & Naumburg Corp. v Michlin, 220 App Div 649; Blanding v Cohen, 101 App Div 442, 184 NY 538; County of Broome v Aetna Cas. & Sur. Co., 146 AD2d 337, 74 NY2d 614; Ford Nursing Home Co. v Fireman’s Ins. Co., 86 AD2d 736, 57 NY2d 656; Drew Chem. Corp. v Fidelity & Cas. Co., 96 Misc 2d 503, 60 AD2d 552, 46 NY2d 851.) IV. The defense and indemnity burden must be allocated among overlapping insurers and self-insurers. Federal Ins. Co. v Atlantic Natl. Ins. Co., 25 NY2d 71; Jefferson Ins. Co. v Glens Falls Ins. Co., 88 AD2d 925; Uniroyal, Inc. v Home Ins. Co., 707 F Supp 1368; National Grange Mut. Ins. Co. v Continental Cas. Ins. Co., 650 F Supp 1404; Mendes & Mount v American Home Assur. Co., 97 AD2d 384; Cordial Greens Country Club v Aetna Cas. & Sur. Co., 41 NY2d 996; Insurance Co. v Forty-Eight Insulations, 633 F2d 1212, 657 F2d 814, 454 US 1109; Budd Co. v Travelers Indem. Co., 820 F2d 787.)

      Rubin Baum Levin Constant & Friedman, New York City (Stephen A. Marshall and Martin J. Schwartz of counsel), for Rapid-American Corporation, respondent.
    I. Since the underlying asbestos-related bodily injury complaints permit proof of facts establishing coverage, CNA must defend Rapid. (Colon v Aetna Life & Cas. Ins. Co., 66 NY2d 6; Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d 875; International Paper Co. v Continental Cas. Co., 35 NY2d 322; Muhlstock & Co. v American Home Assur. Co., 117 AD2d 117; Suburban Bindery Equip. Corp. v Boston Old Colony Ins. Co., 150 AD2d 767; Servidone Constr. Corp. v Security Ins. Co., 64 NY2d 419; Fitzpatrick v American Honda Motor Co., 78 NY2d 61; Allstate Ins. Co. v Zuk, 78 NY2d 41; Villa Charlotte Bronte v Commercial Union Ins. Co., 64 NY2d 846; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304.) II. The pollution exclusion clause is inapplicable. (International Paper Co. v Continental Cas. Co., 35 NY2d 322; Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66; Powers Chemco v Federal Ins. Co., 74 NY2d 910; Dube v Pittsburgh Corning, 870 F2d 790; Heist Caribe Corp. v American Home Assur. Co., 640 F2d 479; Niagara County v Utica Mut. Co., 103 Misc 2d 814, 80 AD2d 415; Westchester Fire Ins. Co. v City of Pittsburg, 768 F Supp 1463; Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390; Forward Indus, v Rolm of N. Y. Corp., 123 AD2d 374; Barsh v Town of Union, 126 AD2d 311.) III. CNA cannot establish as a matter of law that the injuries alleged in the underlying lawsuits were expected or intended. (Allstate Ins. Co. v Zuk, 78 NY2d 41; City of Johnstown v Bankers Std. Ins. Co., 877 F2d 1146; Cocchi v National Union Fire Ins. Co., 156 AD2d 535; Munzer v St. Paul Fire & Mar. Ins. Co., 145 AD2d 193; Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392; Spodek v Liberty Mut. Ins.

      Co., 155 AD2d 439; Matter of Town of Huntington v Hartford Ins. Group, 69 AD2d 906; County of Broome v Aetna Cas. & Sur. Co., 146 AD2d 337, 74 NY2d 614; General Acc. Ins. Co. v Manchester, 116 AD2d 790.) IV. CNA is obligated to provide Rapid with a complete defense and no portion of such defense costs may be allocated to Rapid. (Unigard Sec. Ins. Co. v North Riv. Ins. Co., 79 NY2d 576; Servidone Constr. Corp. v Security Ins. Co., 64 NY2d 419; Mendes & Mount v American Home Assur. Co., 97 AD2d 384; Lac D’Amiante Du Quebec v American Home Assur. Co., 613 F Supp 1549; Avondale Indus, v Travelers Indem. Co., 887 F2d 1200; American Dredging Co. v Federal Ins. Co., 309 F Supp 425; Keene Corp. v Insurance Co., 667 F2d 1034, cert denied sub nom. Liberty Mut. Ins. Co. v Keene Corp., 455 US 1007; Owens-Ill., Inc. v Aetna Cas. & Sur. Co., 597 F Supp 1515; ACandS, Inc. v Aetna Cas. & Sur. Co., 764 F2d 968; New Castle County v Continental Cas. Co., 725 F Supp 800.)

      Lester Schwab Katz & Dwyer, New York City (Steven B. Prystowsky and Eric A. Portuguese of counsel), for National Union Fire Insurance Company of Pittsburgh, respondent.
    I. CNA’s appeal as to National must be dismissed. The Court below reasonably exercised its discretion in refusing to grant nonappealing CNA summary judgment for contribution against National because it was premature. The Court of Appeals cannot review the Court below’s exercise of discretion absent abuse as a matter of law. (Cover v Cohen, 61 NY2d 261; Arrow Bldrs. Supply Corp. v Public Serv. Mut. Ins. Co., 39 AD2d 672; R.C.S. Farmers Mkts. Corp. v Great Am. Ins. Co., 56 NY2d 918; Home Indem. Co. v Cipollone, 99 AD2d 441; Matter of Von Bulow, 63 NY2d 221; Matter of De Zimm v Connelie, 64 NY2d 860; Barasch v Micucci, 49 NY2d 594.) II. The Court below correctly denied CNA’s application for contribution from National since it was premature, there being outstanding discovery concerning Rapid’s payments, if any, under its self-insured retention clause. (Federal Ins. Co. v Atlantic Natl. Ins. Co., 25 NY2d 71; Jefferson Ins. Co. v Glens Falls Co., 88 AD2d 925; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851; Matter of Minister, Elders & Deacons of Refm. Prot. Dutch Church v 198 Broadway, 76 NY2d 411.)

      Mudge Rose Guthrie Alexander & Ferdon, New York City (John L. Altieri, Jr., and Robert D. Goldaber of counsel), and Wiley, Rein & Fielding, of the District of Columbia Bar, admitted pro hoc vice (Thomas W. Brunner, Laura A. Foggan,

      Marilyn E. Kerst and Dennis A. Tosh of counsel), for Insurance Environmental Litigation Association, amicus curiae.

    I. The court should reject any interpretation of the pollution exclusion that ignores or violates the language of the exclusion itself. (Matter of Davis v Block & Smith, 297 NY 20; Johnson v Travelers Ins. Co., 269 NY 401; Sullivan County Gas Serv. v Phoenix Mut. Life Ins. Co., Ill AD2d 542; Ogden Corp. v Travelers Indem. Co., 681 F Supp 169; Technicon Elecs. Corp. v American Home Assur. Co., 141 AD2d 124, 74 NY2d 66; Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46, 66 NY2d 1020; Metpath, Inc. v Birmingham Fire Ins. Co., 86 AD2d 407; Novak v All City Ins. Co., 43 NY2d 854; Government Empls. Ins. Co. v Kligler, 42 NY2d 863; Powers Chemco v Federal Ins. Co., 74 NY2d 910.) II. Because the pollution exclusion is unambiguous, a court must not consider purported extrinsic evidence to vary its meaning. (Ñamad v Salomon Inc., 74 NY2d 751; Slatt v Slatt, 64 NY2d 966; Intercontinental Planning v Daystrom, Inc., 24 NY2d 372; Matter of Silberman, 23 NY2d 98; Oxford Commercial Corp. v Landau, 12 NY2d 362; Loch Sheldrake Assocs. v Evans, 306 NY 297; Lombardi v Spera, 151 AD2d 649, 75 NY2d 702.) III. The definition of an "occurrence” bars coverage where the insured should have known that harm would result from its conduct. (Munzer v St. Paul Fire & Mar. Ins. Co., 145 AD2d 193; Green Bus Lines v Consolidated Mut. Ins. Co., 74 AD2d 136, 52 NY2d 701; La Pierre, Litchfield & Partners v Continental Cas. Co., 59 Misc 2d 20, 32 AD2d 353; Borg-Warner Corp. v Insurance Co., 174 AD2d 24; County of Broome v Aetna Cas. & Sur. Co., 146 AD2d 337, 74 NY2d 614.) IV. Rapid-American is responsible for its share of defense costs for uninsured claims. (Budd Co. v Travelers Indem. Co., 820 F2d 787.)

      Anderson Kill Olick & Oshinsky, P. C., New York City (Jerold Oshinsky, Randy Paar, David L. Elkind and Robert L. Carter of counsel), for W.R. Grace & Company-Conn, and others, amici curiae.

    I. The Court below correctly held that the pollution exclusion is not applicable. (International Paper Co. v Continental Cas. Co., 35 NY2d 322; Villa Charlotte Bronte v Commercial Union Ins. Co., 64 NY2d 846; ACandS, Inc. v Aetna Cas. & Sur. Co., 764 F2d 968; Eagle-Picher Indus, v Liberty Mut. Ins. Co., 682 F2d 12, 460 US 1028; Keene Corp. v Insurance Co., 667 F2d 1034, cert denied sub nom. Liberty Mut. Ins. Co. v Keene Corp., 455 US 1007; Porter v American Opt. Corp., 641 F2d 1128; Insurance Co. v Forty-Eight Insula

      tians, 633 F2d 1212, 657 F2d 814, 454 US 1109; Carey Canada v Columbia Cas. Co., 940 F2d 1548; Teehnicon Elecs. Corp. v American Home Assur. Co., 74 NY2d 66.) II. The Court below correctly held that CNA is obligated to pay for Rapid’s defense fully in the underlying asbestos actions, without allocation to other insurance companies or to Rapid. (Fitzpatrick v American Honda Motor Co., 78 NY2d 61; Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d 875; Mendes & Mount v American Home Assur. Co., 97 AD2d 384; Avondale Indus, v Travelers Indem. Co., 887 F2d 1200, 496 US 906; Servidone Constr. Corp. v Security Ins. Co., 64 NY2d 419.)
   OPINION OF THE COURT

Kaye, J.

At issue before us is an insurer’s duty to defend actions for personal injuries sustained through exposure to asbestos products manufactured by the insured’s predecessor corporation. We resolve the questions raised in favor of the insured, concluding that in the circumstances presented, the standard form comprehensive general liability (CGL) policy requires defense of the actions.

Plaintiffs, Continental Casualty Company and Transportation Insurance Company (collectively CNA), issued four CGL policies covering the period January 1, 1971 through January 1, 1980 to defendant Rapid American Corporation (Rapid) and its predecessor Glen Alden Corporation, both successor corporations to Philip Carey Manufacturing Corporation. The policies require CNA to pay on behalf of the insured all damages for bodily injury, property damage, personal injury or employer’s malpractice liability "caused by or arising out of an occurrence happening during the policy period.” "Occurrence” is defined as "an accident or a happening or event or a continued or repeated exposure to conditions which unexpectedly and unintentionally results during the policy period in Bodily Injury, or Property Damage or Personal Injury, or Employer’s Malpractice Liability.” "Bodily Injury” is defined as "bodily injury, mental injury, mental anguish, shock, sickness, disease or disability, including death resulting therefrom sustained by any person.”

The policies also contain "pollution exclusions” providing that they do not apply:

"To personal injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.”

Finally, the policies impose upon CNA the duty to defend any suit against the insured seeking damages payable under the policies "even if any of the allegations of the suit are groundless, false or fraudulent.”

Defendant National Union Fire Insurance Company of Pittsburgh (National) became Rapid’s primary CGL carrier after January 1, 1979. On or about that date, CNA and National entered into an indemnity agreement acknowledging the intention of CNA and National that all CGL-covered losses occurring on or after January 1, 1979 would be covered by National and not CNA.

Philip Carey Manufacturing Corporation was engaged in manufacturing and distributing asbestos products, and Rapid, as one of its successors, inherited Philip Carey asbestos-related liabilities. From October 1990 forward, Rapid timely notified CNA of 14 asbestos-related bodily injury actions brought against it and requested CNA to defend and indemnify. The complaints alleged personal injury and wrongful death suffered by contractors such as electricians, insulators, steelworkers and carpenters who had worked with or around the Philip Carey asbestos products for sustained periods of time from the 1950’s through the 1980’s. CNA disclaimed coverage and brought this action to declare the parties’ rights and responsibilities under the policies.

Rapid thereafter sought partial summary judgment declaring that CNA was obligated to defend the underlying asbestos suits. CNA cross-moved for summary judgment declaring it had no liability under its policies and thus no duty to defend, and argued alternatively that if the court found a duty to defend, National and Rapid itself must share defense costs pro rata.

Supreme Court granted summary judgment to CNA, declaring it had no obligation to defend. The Appellate Division reversed and granted partial summary judgment to Rapid declaring that CNA must defend Rapid in the underlying suits. The Appellate Division refused to declare that National

or Rapid should share in defense costs, finding such request premature. We now affirm.

I.

Analysis begins by setting the framework for determining the particular issues raised. This appeal involves an insurer’s duty to defend, which is "exceedingly broad” (Colon v Aetna Life & Cas. Ins. Co., 66 NY2d 6, 8). An insurer must defend whenever the four corners of the complaint suggest — or the insurer has actual knowledge of facts establishing — a reasonable possibility of coverage (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 66-67; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311-312). The duty is broader than the insurer’s obligation to indemnify: "[t]hough policy coverage is often denominated as liability insurance’, where the insurer has made promises to defend It is clear that [the coverage] is, in fact, "litigation insurance” as well.’ ” (Seaboard Sur., 64 NY2d, at 310, supra.) Applying these established principles, we conclude that CNA must defend its insured in the asbestosrelated actions.

II.

We first address whether the underlying complaints allege an "occurrence” covered by the CNA policies. Prior to 1966, the standard CGL policy provided coverage for injury "caused by accident.” The insurance industry changed to occurrence-based coverage in 1966 to make clear that gradually occurring losses would be covered so long as they were not intentional. Thus, "occurrence” was defined to include "continuous or repeated exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected or intended from the standpoint of the insured.” (Olin Corp. v Insurance Co., 762 F Supp 548, 556 [SD NY], affd 966 F2d 718 [2d Cir]; Note, The Pollution Exclusion Clause Through the Looking Glass, 74 Geo LJ 1237, 1241-1251 [1986].) The definition of occurrence in the CNA policies is a later version of this standard clause — "continued or repeated exposure to conditions which unexpectedly or unintentionally results during the policy period in Bodily Injury” — with substantially the same meaning (Olin Corp., 762 F Supp, at 562-564, supra).

CNA argues that the underlying complaints allege no "occurrences” covered by the CNA policies, that it therefore has no indemnity liability and thus no duty to defend. This argument has two parts. First, CNA contends, the asbestos contamination alleged in the underlying suits was not "unexpected or unintentional.” Second, if there were occurrences, by Rapid’s own practical construction, they were not within the CNA policy periods. We disagree with both contentions and conclude the underlying complaints allege covered occurrences that trigger CNA’s duty to defend.

A.

For an occurrence to be covered under the CNA policies, the injury must be unexpected and unintentional. We have read such policy terms narrowly, barring recovery only when the insured intended the damages. Resulting damage can be unintended even though the act leading to the damage was intentional (McGroarty v Great Am. Ins. Co., 36 NY2d 358, 364; see also, Miller v Continental Ins. Co., 40 NY2d 675). A person may engage in behavior that involves a calculated risk without expecting that an accident will occur — in fact, people often seek insurance for just such circumstances (Allstate Ins. Co. v Zuk, 78 NY2d 41, 46; see also, City of Johnstown v Bankers Std. Ins. Co., 877 F2d 1146, 1150 [2d Cir] [ordinary negligence does not constitute an intention to cause damage; neither does a calculated risk amount to an expectation of damage]).

CNA urges that Rapid is collaterally estopped from contesting intent to cause injury by an assortment of punitive damage judgments against Celotex, another successor to the Philip Carey asbestos business. Several juries have awarded punitive damages against Celotex based upon findings that Philip Carey’s actions were heedless, reckless, wanton, intentional, oppressive, willful, malicious, or in wanton or reckless disregard for the rights of others.

Collateral estoppel permits the determination of an issue of fact or law raised in a subsequent action by reference to a previous judgment on a different cause of action in which the same issue was necessarily raised and decided (Gramatan Home Investors Corp. v Lopez, 46 NY2d 481, 485). In addition to identity of issues — a factor not necessarily met here — the party seeking the benefit of collateral estoppel must show that the party to be estopped had a full and fair opportunity to contest the dispositive decision, or was in privity with one who did (id., at 485-486).

The lawsuits cited by CNA, however, all involve punitive damage judgments against Celotex, not Rapid. Rapid was not a party to or involved in the defense of those actions, and could only be estopped if it were in privity with Celotex.

Rapid and Celotex have no common ownership. Through a series of complex corporate mergers prior to 1972, Celotex and Rapid each succeeded to the asbestos liability of Philip Carey. However, mere succession to the same potential liability does not place two corporations in privity with one another. Absent some obligation of Rapid to Celotex or common financial interest, Rapid does not have the requisite interest in the judgments against Celotex for privity between the two corporations (see, e.g., Green v Santa Fe Indus., 70 NY2d 244, 253-254).

Having presented no uncontested evidence other than the Celotex verdicts to demonstrate the asbestos injuries were expected or intended, CNA has failed to "establish as a matter of law that there is no possible factual or legal basis on which it might eventually be obligated to indemnify its insured under any policy provision” (Allstate Ins. Co. v Zuk, 78 NY2d, at 45, supra).

B.

CNA next contends that the underlying lawsuits do not involve occurrences "during the policy period” — 1971 through 1979. Specifically, CNA argues that for a number of years Rapid conducted its insurance program under the theory that asbestos injury occurs upon discovery, or manifestation, of disease; that Rapid is now bound by this "practical construction;” and that, applying a manifestation theory, none of the underlying suits were triggered between 1971 and 1979.

The question of what event constitutes "bodily injury” sufficient to trigger coverage under the standard form CGL policy, where latent injury is caused by prolonged exposure to a toxic substance such as asbestos, has been hotly contested over the past decade. (See generally, Asbestos Ins. Coverage Cases in San Francisco Superior Ct., Judicial Council Coordination Proceeding No. 1072 [Phase III, Jan. 24, 1990]; Comment, Insurance Coverage of Asbestosis Claims — Running for Cover or Coverage, 32 Emory LJ 901 [1983]; Note, The Calculus of Insurer Liability in Asbestos-Related Disease Litigation: Manifestation + Injurious Exposure = Continuous Trigger, 23 BC L Rev 1141 [1982].)

Decisions on when coverage is triggered for asbestos-related injury generally may be divided into four categories: (1) on exposure to asbestos (see, e.g., Commercial Union Ins. Co. v Sepco Corp., 765 F2d 1543 [11th Cir]); (2) on manifestation of disease (see, e.g., Eagle-Picher Indus, v Liberty Mut. Ins. Co., 682 F2d 12 [1st Cir], cert denied 460 US 1028); (3) on onset of disease, whether discovered or not ("injury-in-fact”) (see, e.g., American Home Prods. Corp. v Liberty Mut. Ins. Co., 565 F Supp 1485 [SD NY], mod 748 F2d 760 [2d Cir]); and (4) all of the above — in other words, a "continuous trigger” (Keene Corp. v Insurance Co., 667 F2d 1034 [DC Cir], cert denied sub nom. Liberty Mut. Ins. Co. v Keene Corp., 455 US 1007). Federal courts have concluded that the "injury-in-fact” rule is most consistent with New York law (see, Abex Corp. v Maryland Cas. Co., 790 F2d 119, 121 [DC Cir]; American Home Prods. Corp., 748 F2d, at 765, supra; but see, American Motorists Ins. Co. v Squibb & Sons, 95 Misc 2d 222, 225 [applying manifestation test to DES-related injury]). No New York appellate court has determined the issue.

Applying an "injury-in-fact” test, which rests on when the injury, sickness, disease or disability actually began, Rapid contends that the asbestos injuries claimed in the underlying lawsuits could fall within the period covered by CNA, thus giving rise to CNA’s duty to defend. Significantly, CNA does not argue for a different test under New York law, but instead urges that Rapid has demonstrated its own "practical construction” that a covered event "occurs” upon manifestation of the disease by previously looking to National instead of CNA to defend asbestos suits where the manifestation of asbestosis occurred after 1979. Rapid disputes this characterization of its claims program, pointing out that it has made demands on CNA to defend many asbestos suits where manifestation occurred after 1979.

Evidence of practical construction may only be referenced where the policy provisions are ambiguous (Slatt v Slatt, 64 NY2d 966). If ambiguity exists, "[t]o show a practical construction * * * there must have been conduct by the one party expressly or inferentially claiming as of right under the doubtful provision, coupled with knowledge thereof and acquiescence therein, express or implied, by the other.” (Niagara Falls Intl. Bridge Co. v Grand Trunk Ry. Co., 212 App Div 705, 710, mod on other grounds 241 NY 85; see also, City of New York v New York City Ry. Co., 193 NY 543.)

While both parties currently proffer the same occurrence trigger — injury-in-fact—the long-simmering differences in fixing the timing of an occurrence evidence ambiguity in the clause. However, Rapid’s actions vis-á-vis National are irrelevant for the purposes of determining rights and obligations with respect to CNA. As the Appellate Division noted, "[t]he fact that Rapid called upon other insurance coverage issued [by National] or obtained indemnification elsewhere, cannot be considered a concession that would relieve CNA of their contractual responsibilities” (177 AD2d 61, 70). By claiming under other policies, Rapid has not by implication "claim[ed] as of right under [a] doubtful provision, coupled with knowledge thereof and acquiescence therein” with respect to the CNA policies.

Thus, we conclude that the underlying complaints allege an "occurrence” within the CNA policies. Neither CNA’s estoppel claim nor its assertion of practical construction is sufficient to avoid its duty to defend its insured.

III.

We next consider whether coverage would nonetheless be excluded by the policies’ "pollution exclusion.” To negate coverage by virtue of an exclusion, an insurer must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case (Seaboard Sur., 64 NY2d, at 311, supra; Kratzenstein v Western Assur. Co., 116 NY 54, 59). CNA has not met that burden.

A pollution exclusion was required in all liability policies from 1971 through 1982 (see, former Insurance Law § 46 [13], [14]) to "assure that corporate polluters bear the full burden of their own actions spoiling the environment” (1971 McKinney’s Session Laws of NY, at 2633). Though the provision remains in use, since 1982 it has not been mandated because no payments were being made on such liabilities. Corporate polluters who could not insure themselves simply went out of business when the liability arose (1982 McKinney’s Session Laws of NY, at 2628-2629).

Our first step is to determine whether the pollution exclusion in the CNA policies is ambiguous as applied to claims for bodily injury sustained by persons working with or around asbestos products. Clauses can, of course, be ambiguous in one context and not another (compare, Hicks v American Resources Ins. Co., 544 So 2d 952, 954 [Ala] [exclusion not ambiguous as to acids, alkalis and toxic chemicals], with Motion, Allen, & Williams v St. Paul Fire & Mar. Ins. Co., 347 So 2d 95, 99 [Ala] [exclusion is ambiguous with regard to "natural material”]).

CNA contends that Technicon Elecs. Corp. v American Home Assur. Co. (74 NY2d 66) and Powers Chemco v Federal Ins. Co. (74 NY2d 910) stand for the proposition that the pollution clause is "unambiguously plain and operative” for all purposes. This contention is erroneous. In Technicon, the insured was sued for "intentional, long-term discharge of toxic waste chemicals” from its manufacturing plant into Frontera Creek in Humacao, Puerto Rico (Technicon, 74 NY2d, at 71-72, supra). There was no question that the primary terms of the pollution exclusion applied; rather, the dispute centered on the "sudden and accidental” exception (Technicon, 74 NY2d, at 75, supra). In Powers, similarly, the insured was sued as a result of hazardous wastes leaching out of drums stored by the insured’s predecessor. Again, there was no doubt that pollutants had been discharged into land, triggering the pollution exclusion; the issue was whether such discharge was "sudden and accidental” as to the successor landowner (Powers, 74 NY2d, at 911, supra).

This case deals with a different question: whether the exclusion on its face would ever apply in the context of liability for disease contracted by exposure to asbestos products in a confined space, even indoors. Asbestos could certainly be an irritant, contaminant or pollutant of the type encompassed by the clause (see, e.g., Labor Law § 900 [asbestos defined as "known carcinogenic agent”]; 42 USC § 7412; 40 CFR 61.01; part 122, Appendix D, Table V [asbestos listed as "toxic pollutant”]; and 33 USC § 1317; 40 CFR 401.15 [asbestos is "toxic pollutant”]). We conclude, however, that the clause is ambiguous with regard to whether the asbestos fibers at issue —fibers inhaled by persons working closely with or suffering long-term exposure to asbestos products — were discharged into the "atmosphere” as contemplated by the exclusion.

CNA claims that any inhalation presupposes a discharge into the "atmosphere,” citing dictionary definitions of atmosphere such as "the air in any given space” (Webster’s New World Dictionary [2d coll ed 1976]). Rapid counters with other dictionary definitions: "the gaseous envelope surrounding the earth” (Random House Dictionary of the English Language [unabridged ed 1983]) and "the whole mass of air surrounding the earth” (Webster’s Third New International Dictionary [unabridged ed 1983]). These differing definitions point toward ambiguity in the meaning of "atmosphere.”

Ambiguity is further revealed by examining the purpose of the clause, meant to exclude coverage for environmental pollution (see, West Am. Ins. Co. v Tufco Flooring E., 104 NC App 312, 323, 409 SE2d 692, review dismissed 332 NC 479, 420 SE2d 826). The terms used in the exclusion to describe the method of pollution — such as "discharge” and "dispersal”— are terms of art in environmental law used with reference to damage or injury caused by disposal or containment of hazardous waste (see, Atlantic Mut. Ins. Co. v McFadden, 413 Mass 90, 595 NE2d 762). Further, the three places for discharge contemplated by the policy exclusion — into or upon land, the atmosphere, or any water course or body of water — read together support the conclusion that the clause was meant to deal with broadly dispersed environmental pollution — "exposure to chemical carcinogens in the ambient atmosphere”— not the possibly confined environs of the present complaints. (See, National Std. Ins. Co. v Continental Ins. Co., US Dist Ct, ND Tex, Oct. 4, 1983, Hill, J.; see also, Stonewall Ins. Co. v National Gypsum Co., 1992 US Dist LEXIS 7607, 1992 WL 123144 [SD NY, May 27, 1992, 86 Civ 9671]; United States Fid. & Guar. Co. v Wilkin Insulation Co., 144 111 2d 64, 79-80, 578 NE2d 926, 933; Asbestos Ins. Coverage Cases in San Francisco Superior Ct., Judicial Council Coordination Proceeding No. 1072, at 18 [Phase IV, Jan. 24, 1990]; Note, The Pollution Exclusion in the Comprehensive General Liability Insurance Policy, 1986 U 111 L Rev 897, 938.) The crucial distinction, therefore, is not whether the asbestos products were launched into the stream of commerce or remained under the control of the manufacturer, but rather whether asbestos was placed into the environment.

Even if the word "environment” encompassed all areas through which asbestos passes, the asbestos fibers in the underlying complaints could well have been transmitted by direct contact with hands or clothing (see, e.g., Dube v Pittsburgh Corning, 870 F2d 790, 791). Thus, CNA has not demonstrated that the injuries alleged in the suits occurred solely through asbestos contamination of air. Where contamination could occur in a variety of ways, only one of which is potentially excluded, CNA cannot meet the heavy burden of showing that the exclusion applies in the particular case and is subject to no other reasonable interpretation (Seaboard Sur., 64 NY2d, at 311, supra), and it therefore must defend its insured.

Rapid additionally argues that CNA should be bound by its own "practical construction” that the clause does not apply, pointing to CNA’s prior defense of many asbestos suits on behalf of Rapid over a period of 16 years despite pollution exclusion clauses. In that CNA disputes defending such actions, this question cannot be resolved on summary judgment. We note, however, that such defense, if proven, would provide another ground for requiring CNA to defend in the instant underlying litigations.

We thus conclude that since the pollution exclusion is ambiguous in these circumstances and could be construed against the insurer-drafter and in favor of potential coverage for the policyholder, CNA cannot escape its duty to defend.

IV.

Finally, CNA urges that if any obligation to defend exists, National and Rapid itself should have to contribute pro rata to defense costs — National because it was the insurer after 1979 and Rapid because it allegedly "went bare,” or was self-insured, for some periods prior to 1971.

We agree with the Appellate Division that the question whether CNA had a claim for contribution against National is premature. National may eventually have to contribute both to defense costs and to indemnification (Federal Ins. Co. v Atlantic Natl. Ins. Co., 25 NY2d 71; see also, Uniroyal, Inc. v Home Ins. Co., 707 F Supp 1368, 1391 [allocating insureds’ "net loss” among insurers — and insured to extent self-insured —after settlement of underlying litigations]). However, the duty to defend is broader than the duty to pay, requiring each insurer to defend if there is an asserted occurrence covered by its policy (Cordial Greens Country Club v Aetna Cas. & Sur. Co., 41 NY2d 996), and the insured should not be denied initial recourse to a carrier merely because another carrier may also be responsible (Squibb & Sons v Accident & Cas. Ins. Co., 1992 US Dist LEXIS 6255, 1992 WL 133899 [SD NY, Apr. 21, 1992, 82 Civ 7327]). That is the "litigation insurance” the insured has purchased (Servidone Constr. Corp. v Security Ins. Co., 64 NY2d 419, 424-425). When more than one policy is triggered by a claim, pro rata sharing of defense costs may be ordered, but we perceive no error or unfairness in declining to order such sharing, with the understanding that the insurer may later obtain contribution from other applicable policies (see, Asbestos Ins. Coverage Cases in San Francisco Superior Ct. [Phase IV], at 41-42, supra; see also, Avondale Indus, v Travelers Indent. Co., 887 F2d 1200, 1207 [2d Cir], cert denied 496 US 906).

Similarly, the allegation that Rapid was self-insured for a period of time predating the CNA coverage cannot operate to deny Rapid the complete defense to which it is entitled under the CNA policies in the event of overlapping occurrence periods. The question whether the insured itself must contribute to defense costs — an issue on which courts have divided (compare, Keene Corp. v Insurance Co., 667 F2d 1034, 1050-1051 [DC Cir], supra, with Insurance Co. v Forty-Eight Insulations, 633 F2d 1212, 1224-1225 [6th Cir]) — is appropriately deferred at least until such time as the underlying lawsuits are shown to involve "occurrences” during self-insured periods. In any event, issues of fact concerning whether Rapid was self-insured for any period make this determination inappropriate for summary judgment.

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

Acting Chief Judge Simons and Judges Titone, Hancock, Jr., and Bellacosa concur; Judge Smith taking no part.

Order affirmed, etc.