text:
    [624 NE2d 1027, 604 NYS2d 932]
    The People of the State of New York, Respondent, v Buenaventura Martinez, Appellant. The People of the State of New York, Respondent, v Howard Pearson, Appellant.
    Decided November 23, 1993
    Argued October 14, 1993;
    decided November 23, 1993

      POINTS OF COUNSEL

      Diana L. Fogle, New York City, and E. Joshua Rosenkranz for appellant in the first above-entitled action.
    Appellant was denied his right to a public trial when the trial court closed the courtroom during the testimony of the undercover police officer because the undercover continued merely to conduct buy-and-bust operations in Bronx County. (People v Hinton, 31 NY2d 71; Waller v Georgia, 467 US 39; People v Kin Kan, 164 AD2d 771, 78 NY2d 54; People v Clemons, 162 AD2d 948, 78 NY2d 48; People v Bowden, 156 AD2d 372; People v McLenonn, 156 AD2d 478; People v Brown, 169 AD2d 934; People v Echevarria, 161 AD2d 449; People v Cordero, 150 AD2d 258, 75 NY2d 757; Ip v Henderson, 710 F Supp 915, 888 F2d 1376.)

      Robert T. Johnson, District Attorney of Bronx County, Bronx (Daniel S. Ratner and Peter D. Coddington of counsel), for respondent in the first above-entitled action.
    The trial court rightly closed the courtroom during the testimony of an active undercover officer. (Waller v Georgia, 467 US 39; People v Santos, 154 AD2d 284; People v Iannelli, 69 NY2d 684, 482 US 914; People v Kin Kan, 78 NY2d 54; People v Vidal, 172 AD2d 228; People v Jones, 47 NY2d 409; People v Hinton, 31 NY2d 71; Globe Newspaper Co. v Superior Ct., 457 US 596.)

      Diana L. Fogle, New York City, and E. Joshua Rosenkranz for appellant in the second above-entitled action.
    The trial court denied Mr. Pearson his right to a public trial by locking the courtroom during the testimony of an undercover officer, although the officer was engaged in no ongoing investigation; no spectators were expected except for one who was known to the court; there was no reason to believe that unlocking the courtroom would make retaliation against the officer likely, and the trial court explored no alternative to complete closure of the courtroom. (People v Jelke, 308 NY 56; In re Oliver, 333 US 257; People v Clemons, 78 NY2d 48; Waller v Georgia, 467 US 39; Gannett Co. v DePasquale, 443 US 368; Santos v Brown, 596 F Supp 214; People v Jones, 47 NY2d 409; Press-Enter. Co. v Superior Ct. of Cal., 464 US 501; People v Kin Kan, 78 NY2d 54; Jones v Henderson, 683 F Supp 917.)

      Robert M. Morgenthau, District Attorney of New York County, New York City (Diana Fabi Samson and Norman Barclay of counsel), for respondent in the second above-entitied action.
    The trial court properly declined to endanger the undercover officer’s life and closed the courtroom during her testimony. (People v Hinton, 31 NY2d 71; In re Oliver, 333 US 257; People v Jelke, 308 NY 56; People v Jones, 47 NY2d 409, 444 US 946; Press-Enter. Co. v Superior Ct. of Cal., 464 US 501; Waller v Georgia, 467 US 39; People v Davis, 72 AD2d 798; People v Garcia, 51 AD2d 329, 41 NY2d 861; People v

      Cordero, 150 AD2d 258, 75 NY2d 757; People v Colon, 71 NY2d 410, 487 US 1239.)
   OPINION OF THE COURT

Chief Judge Kaye.

These appeals of two "buy-and-bust” cases present the question whether defendant’s right to a public trial was violated when the trial court ordered the courtroom closed during the testimony of the undercover officer who made the buy. We conclude in the first case that defendant’s right was violated, but uphold closure in the second.

People v Martinez

According to the trial testimony, on February 14, 1990, an undercover officer approached defendant at 158th Street and Melrose Avenue in the Bronx, and obtained two "glossines” of heroin from him in exchange for $20 of prerecorded "buy money.” The officer then returned to his vehicle and radioed a description to fellow members of the Bronx Tactical Narcotics Team (TNT), and defendant was thereafter arrested and identified in a "drive-by” by the undercover.

At trial, the prosecutor requested that the courtroom be closed during the undercover officer’s testimony, defendant objected, and a closed hearing was held to explore the issue. The sole witness at the hearing was the undercover, whose direct testimony in its entirety was as follows:

"Q Detective, are you presently an undercover for Bronx TNT?
"A Yes, I am.
"Q Are you still actively engaged in cases in the Bronx area?
"A Yes, I am.
"Q Do you have any open cases which have still not yet gone to trial?
"A Yes.
"Q Do you fear for your safety if the courtroom is not closed in this case?
"A Yes.”

On cross-examination, defense counsel established that the officer’s open cases were all "street level buy operations” in which arrests had already been made, and the trial court elicited that the officer’s area of operations was "the whole Bronx.” Defense counsel argued that a sufficient showing had not been made, but the court rejected that argument and ordered the courtroom closed during the undercover officer’s testimony, finding "serious possibility that any pending investigations or the officer’s safety would be jeopardized absent closing the courtroom.”

After open-court testimony by the arresting officer and entry of a stipulation that the glossines contained one grain of heroin, defendant was convicted of third degree criminal sale of a controlled substance, and sentenced to an indeterminate prison term of 4 Vi to 9 years. The Appellate Division affirmed, concluding that the undercover’s testimony warranted closure.

People v Pearson

The evidence at trial revealed that on the afternoon of April 6, 1990, defendant was approached by an undercover officer on the corner of Eighth Avenue and 42nd Street in the Times Square area of Manhattan. At the officer’s request, defendant supplied two vials of crack, and she paid him with $10 of prerecorded "buy money.” The officer then radioed for backup, and defendant and a codefendant were arrested and charged with drug possession and sale.

As in Martinez, at defendant’s trial the People requested that the courtroom be closed during the undercover officer’s testimony, and defendant objected. By agreement of the parties, the only spectator in the courtroom prior to the hearing (a person apparently known to the prosecutor and the Judge) was asked to leave, and the courtroom was closed for the hearing

The officer, again, was the sole witness at the hearing. She testified that she was an active undercover officer and had been on duty in the area of West 42nd Street and Eighth Avenue approximately 25 times during the previous 30 days; that she was involved in ongoing investigations in that area, and would be returning to work there immediately after testifying; and that if she were to testify in open court her "cover could be blown and [she] could possibly get killed.” She further testified that she routinely enters courthouses through back entrances to avoid being "exposed” to potential future defendants who might be milling about the lobby. In opposing closure, defense counsel urged that the evidence was not sufficiently compelling to overcome defendant’s right to a public trial; that the undercover’s contemplated "buy-and-busts” were not the sort of ongoing investigation that required closure; and that more substantial proof of actual danger was required.

Noting that there had been only one spectator to that point, and putting aside any concern for jeopardizing ongoing buy- and-busts "because that’s not what the witness is talking about,” the trial court ruled that the courtroom should be closed because of the officer’s continuing active engagement in the area and consequent personal risk. "[S]he has reason to fear retaliation from people who might put two and two together realizing that she has been the person engaging in the undercover purchase of narcotics from those people who do business in that location.” In response to defense counsel’s argument, the trial court noted that the last time it conducted a Hinton hearing it denied the People’s motion to close the courtroom, and that closure was by no means automatic.

After the undercover officer testified in a closed courtroom, the remaining testimony (from the backup officer and two chemists) was taken in open court. Defendant was convicted as charged and sentenced to 5 to 10 years’ imprisonment. The Appellate Division affirmed.

Analysis

Analysis begins with several well-recognized propositions. The guarantee of a public trial (US Const 6th Amend; Civil Rights Law § 12; Judiciary Law § 4) is fundamental, but neither absolute nor inflexible. Trial courts unquestionably have discretionary authority to exclude the public, but must exercise that discretion "sparingly * * * and then, only when unusual circumstances necessitate it.” (People v Hinton, 31 NY2d 71, 76, cert denied 410 US 911.) As the case law makes plain, both the defendant and society at large have a vital stake in the concept of a public trial (see, e.g., Hinton, 31 NY2d, at 73; Waller v Georgia, 467 US 39).

In Hinton itself, the courtroom was closed for the testimony of an undercover agent on a representation that the undercover was still operating actively in the community; that other narcotics investigations were pending; and that other targets in these investigations were present in the courtroom, thus jeopardizing the agent’s life if his identity were exposed. Where "the very presence of other investigatory targets posed a threat to the agent’s life,” we concluded that the requisite unusual circumstances had been shown to justify closure (31 NY2d, at 75). Other examples of unusual circumstances mentioned in Hinton included the presence of gang members in the courtroom, and threats received by the witness.

In People v Jones (47 NY2d 409, cert denied 444 US 946), we overturned the trial court’s discretionary closure, which had been ordered as a matter of judicial notice that undercover narcotics work in New York City was dangerous. As this Court noted, a trial court’s own impressions of the general vicissitudes of undercover narcotics work do not suffice for closure. "There should have been a factual showing that an exception to the norm of a public trial was justified * * * That undercover work at times entails serious threats to the safety of agents was by no means sufficient to connect that threat to this witness.” (47 NY2d, at 415.)

Since Jones, our admonition that there should be a factual showing to support closure has resulted in "Hinton hearings” where — as in the cases before us — the undercover officer may, in a closed hearing, be examined and cross-examined. Since Jones, also, the United States Supreme Court has further particularized the standard for closure, under the Sixth Amendment, which we recognized in People v Kin Kan (78 NY2d 54, 58) as a four-pronged test:

"[1] the party seeking to close the hearing must advance an overriding interest that is likely to be prejudiced, [2] the closure must be no broader than necessary to protect that interest, [3] the trial court must consider reasonable alternatives to closing the proceeding, and [4] it must make findings adequate to support the closure” (Waller v Georgia, 467 US 39, 48, supra).

In Kin Kan, involving gang-related, large-scale drug trafficking, the prospective witness (an accomplice) testified that he was still involved as a confidential informant in an ongoing investigation, that he feared retaliation by defendant’s "people” (but not her family), and that he feared retaliation from persons connected with his continuing informant activity and from their friends and did not want to show his face in public. Even then, however, we agreed with the Appellate Division that the trial court had erred in barring defendant’s family from the courtroom: "as a matter of law under the governing legal principles * * * the delicate balancing of Kan’s individualized right to a public trial against the accomplice witness’s expressed fears of retaliation tips in favor of respondent Kan.” (78 NY2d, at 58.) The requisite "delicate balancing” echoes the Supreme Court’s caution in Waller that, in determining the issue of closure, "the balance of interests must be struck with special care.” (467 US, at 45.)

Applying these precedents to the facts at hand, we conclude that the People’s perfunctory showing in Martinez was insufficient to meet the standards for closure repeatedly insisted upon by this Court and the Supreme Court. We agree with defendant’s observation that, were such a showing accepted, we would in effect sanction a rule of per se closure for undercover officers, for the testimony established no more than the officer’s continuing activity as an undercover "in the Bronx area” — more than 41 square miles and 1.2 million residents — and "unparticularized impressions of the vicissitudes of undercover narcotics work in general.” (Jones, 47 NY2d, at 415.) No reference was made, for example, to associates of defendant or targets of investigation likely to be present in the courtroom, or to threats received. Indeed, no link was made, or even attempted, between the officer’s fear for his safety throughout the Bronx area and open-court testimony in this buy-and-bust case.

While the trial court, reading its ruling into the record, acknowledged that special care must be taken before a courtroom is closed to the public, its holding that "pending investigations or the officer’s safety would be jeopardized absent closing the courtroom” is supported only by the officer’s own assertion that he feared for his safety if the courtroom was not closed.

By contrast, the factual showing supporting closure in Pearson more closely approximates the standard reflected in the case law. In her testimony, the undercover officer identified a particular location — Port Authority in Manhattan, the site of defendant’s arrest — readily accessible from the Manhattan courthouse, at which she had functioned daily for a month, and to which she would return as an undercover that very day to complete her work with drug dealers. We cannot say that the trial court abused its discretion in concluding that, in these circumstances, testifying in an open courtroom might endanger the undercover officer’s safety.

Even assuming Waller’s first prong was satisfied by evidence that the People established an overriding interest justifying closure, defendant Pearson argues that his conviction should nonetheless be reversed because the trial court made no effort to meet Waller’s third prong — that the court "consider reasonable alternatives to closing the proceeding.” (Waller; 467 US, at 48.) Before this Court, defendant suggests that a court officer might have been stationed at the door to admit at least those persons who posed no threat to the officer’s safety, or defendant might have been asked to name family members or others who could have been admitted, or that the undercover might have testified in open court from behind a screen, as in United States v Lucas (932 F2d 1210, 1216-1217 [8th Cir], cert denied — US —, 112 S Ct 399, 116 L Ed 2d 348).

While it is surely the better practice, and indeed may be the required practice, for a trial court explicitly to consider whether closure is broader than necessary, to explore reasonable alternatives to closure, and to make findings adequate to support closure (see, Waller, 467 US, at 48), on the present record the court’s failure to consider the alternatives defendant now suggests was not error. Defendant’s sole objection and the entire argument before the trial court was concentrated on the sufficiency of the People’s showing for closure. There had been no unidentified spectators in the courtroom from the time the trial started, and defendant made no mention of particular friends or family he wished to have in attendance (see, by contrast, Kin Kan, 78 NY2d, at 58). Such measures as stationing a guard at the door, taking names and using a screen might well be investigated in future cases, but on this record the trial court did not err in failing to consider them.

Accordingly, in Martinez, the Appellate Division order should be reversed and a new trial ordered, and in Pearson the Appellate Division order should be affirmed.

Judges Simons, Titone, Hancock, Jr., Bellacosa, Smith and Levine concur.

In People v Martinez: On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order reversed and a new trial ordered.

In People v Pearson: Order affirmed.


source: Caselaw Access Project

author: Titone, J.

license: Public Domain

text:
    [626 NE2d 24, 605 NYS2d 208]
    Frank Pavia, Respondent, et al., Plaintiffs, v State Farm Mutual Automobile Insurance Company, Appellant.
    Argued October 12, 1993;
    decided November 18, 1993

      POINTS OF COUNSEL

      Rivkin, Radler & Kremer, Uniondale (Evan H. Krinick, John M. Denby and Evan S. Schwartz of counsel), for appellant.
    I. Plaintiffs failed to establish a prima facie case of insurance bad faith as a matter of law. (Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931; Brennan v Mead, 81 AD2d 821, 54 NY2d 811; Best Bldg. Co. v Employers’ Liab. Assur. Corp., 247 NY 451; Dawn Frosted Meats v Insurance Co. of N. Am., 99 AD2d 448, 62 NY2d 895; Meiselman v Allstate Ins. Co., 166 AD2d 562, 77 NY2d 808; Guarantee Ins. Co. v City of Long Beach, 106 AD2d 428; Dano v Royal Globe Ins. Co., 59 NY2d 827; United States Fid. & Guar. Co. v Copfer, 63 AD2d 847, 48 NY2d 871; Newham v Nationwide Mut. Ins. Co., 61 AD2d 1067; Knobloch v Royal Globe Ins. Co., 38 NY2d 471.) II. The trial court erred as a matter of law in determining that damages equal the difference between the excess judgment and the policy limits; rather, the extent of damages must be measured by actual economic injury as assessed by the jury. (Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931; Santulli v Englert, Reilly & McHugh, 78 NY2d 700; Kenford Co. v County of Erie, 108 AD2d 132, 73 NY2d 312; American List Corp. v U.S. News & World Report, 75 NY2d 38; Barnes v Brown, 130 NY 372; Rich-Haven Motor Sales v National Bank, 163 AD2d 288, 76 NY2d 709; Preston Co. v Funkhouser, 261 NY 140, 639, 290 US 163; Reid v Terwilliger, 116 NY 530; United States Trust Co. v O’Brien, 143 NY 284.) III. The trial court committed reversible error in charging the wrong standard of bad-faith liability, in failing to properly instruct the jury on the necessary elements of insurance bad faith, and in its charge concerning the eve of trial. (Izrailev v Ficarra Furniture, 70 NY2d 813; Sawyer v Dreis & Krump Mfg. Co., 67 NY2d 328; Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427; DiBlasi v Aetna Life & Cas. Ins. Co., 147 AD2d 93; Dawn Frosted Meats v Insurance Co. of N. Am., 99 AD2d 448, 62 NY2d 895; United States Fid. & Guar. Co. v Copfer, 48 NY2d 871; St. Paul Fire & Mar. Ins. Co. v United States Fid. & Guar. Co., 43 NY2d 977; Decker v Amalgamated Mut. Cas. Ins. Co., 35 NY2d 950; Crawford v Hospital of Albert Einstein Coll, of Medicine, 159 AD2d 304; Roldan v Allstate Ins. Co., 149 AD2d 20.) IV. The trial court applied an erroneous legal standard in rejecting State Farm’s request to exclude Mr. Pavia from the courtroom during the trial. (Helminski v Ayerst Labs., 766 F2d 208, 474 US 981; Matter of Daniel Aaron D., 49 NY2d 788; Maloney v Shoparama Inv. Assocs., 144 AD2d 112; Matter of Donna K., 132 AD2d 1004; Matter of Raymond Dean L., 109 AD2d 87; Matter of Cecilia R., 36 NY2d 317; Monteleone v Gestetner Corp., 140 Misc 2d 841; In re Richardson-Merrell, Inc. (Benedectin Prods. Liab. Litig.), 624 F Supp 1212, affd sub nom. In re Benedectin Litig., 857 F2d 290, cert denied sub nom. Hoffman v Merrell Dow Pharms., 488 US 1006.) V. State Farm was deprived of a fair trial by various rulings of the trial court. (Kulak v Nationwide Mut. Ins. Co., 40 NY2d 140; Nevins v Great Atl. & Pac. Tea Co., 164 AD2d 807; People v Kincey, 168 AD2d 231, 78 NY2d 955; Entelisano Agency v Felt, 135 AD2d 1096, 71 NY2d 804.)

      Schapiro & Reich, Lindenhurst (Steven M. Schapiro of counsel), and Richard J. Sgarlato, P. G, Staten Island, for respondent and plaintiffs.
    I. Under any standard the jury instructians were proper and the evidence more than sufficient to sustain a finding of "bad faith” refusal to settle. (Peterson v Allcity Ins. Co., 472 F2d 71; Cappano v Phoenix Assur. Co., 28 NY2d 639; Brown v United States Fid. & Guar. Co., 314 F2d 675; Knobloch v Royal Globe Ins. Co., 38 NY2d 471; State of New York v Merchants Ins. Co., 109 AD2d 935; DiBlasi v Aetna Life & Cas. Ins. Co., 147 AD2d 93; Roldan v Allstate Ins. Co., 149 AD2d 20; Brassil v Maryland Cas. Co., 210 NY 235; New York Consol. R. R. Co. v Massachusetts Bonding & Ins. Co., 193 App Div 438, 233 NY 547; Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931.) II. So-called "demand letters” are proper and customarily used; simply adding a deadline does not change their character. (United States Fid. & Guar. Co. v Copfer, 48 NY2d 871; Grumbling v Medallion Ins. Co., 392 F Supp 717, 545 F2d 686; Dano v Royal Globe Ins. Co., 59 NY2d 827.) III. Since the Rosatos did not file bankruptcy and were not insolvent the measure of damages is the difference between the face value of policy and the excess judgment. (Knobloch v Royal Globe Ins. Co., 38 NY2d 471; Burlington Indus. v Eastern Express, 23 AD2d 841, 17 NY2d 803; Pacific Empls. Ins. Co. v Hoidale Co., 796 F Supp 1428; DiBlasi v Aetna Life & Cas. Ins. Co., 147 AD2d 93; Young v American Cas. Co., 416 F2d 906, 396 US 997; Henegan v Merchants Mut. Ins. Co., 31 AD2d 12; Levantino v Insurance Co. of N. Am., 102 Misc 2d 77; Roldan v Allstate Ins. Co., 149 AD2d 20; Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931.) IV. None of the "miscellaneous” urged by defendant require reversal of this jury verdict. (Carlisle v County of Nassau, 64 AD2d 15; Irrigation & Indus. Dev. Corp. v Indag, 37 NY2d 522; Varkonyi v S. A. Empresa De Viacao Airea Rio Grandense, 22 NY2d 333; Kulak v Nationwide Mut. Ins. Co., 40 NY2d 140; Feliberty v Damon, 72 NY2d 112.)

      Maloney & Porcelli, New York City (Joseph E. Porcelli of counsel), for National Association of Independent Insurers, amicus curiae.

    I. The facts adduced at trial did not constitute "bad faith” on the part of the insurer that would reach the standard set by this Court. (Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931; United States Fid. & Guar. Co. v Copfer, 48 NY2d 871; St. Paul Fire & Mar. Ins. Co. v United States Fid. & Guar. Co., 43 NY2d 977; Decker v Amalgamated Mut. Cas. Ins. Co., 35 NY2d 950; Roldan v Allstate Ins. Co., 149 AD2d 20; DiBlasi v Aetna Life & Cas. Ins. Co., 147 AD2d 93.) II. The measure of damages sanctioned by the trial court has no basis in contract law. (Halpin v Prudential Ins. Co., 48 NY2d 906; Walker v Sheldon, 10 NY2d 401.)

      Meyer, Suozzi, English & Klein, P. C, Mineóla (Joseph A. Suozzi and Michael A. Ciaffa of counsel), for New York State Insurance Association, amicus curiae.

    The Court below’s holding that an insurer may be held liable in bad faith upon evidence of conduct which did not involve "intentional or deceitfully undertaken actions” should be rejected. (Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931; Best Bldg. Co. v Employers’ Liab. Assur. Corp., 247 NY 451; Dawn Frosted Meats v Insurance Co. of N. Am., 99 AD2d 448, 62 NY2d 895; Pipoli v United States Fid. & Guar. Co., 38 AD2d 249, 31 NY2d 679; Colbert v Home Indem. Co., 35 AD2d 326; American List. Corp. v U.S. News & World Report, 75 NY2d 38; Kenford Co. v County of Erie, 73 NY2d 312; Roldan v Allstate Ins. Co., 149 AD2d 20; Philips v Republic Ins. Co., 65 NY2d 1000; Walker v Sheldon, 10 NY2d 401.)
   OPINION OF THE COURT

Titone, J.

In this action premised on the defendant insurer’s alleged bad-faith failure to accept a settlement offer made by plaintiff’s counsel in a personal injury action, the principal issue is whether the evidence adduced at trial was sufficient to establish "bad faith.” We conclude that the insurer’s failure to respond to plaintiff’s time-restricted demand for settlement within the full policy limits, at a time when the insured’s liability remained under investigation, was insufficient to establish a prima facie case of insurance bad faith. Moreover, there was nothing more in the conduct or inaction of the insurer that would qualify as bad faith under the circumstances of this case. Accordingly, we reverse and dismiss the complaint.

I.

At approximately 10:15 p.m. on the evening of April 19, 1985, then 16-year-old Carmine Rosato picked up 19-year-old plaintiff Frank Pavia and a second youth and began driving around the Bensonhurst section of Brooklyn in a vehicle owned by Rosato’s mother and insured by defendant State Farm Mutual Automobile Insurance Company with a $100,000 policy limit. Rosato, whose learner’s permit did not authorize nighttime driving, apparently attempted to negotiate a corner at an excessive speed, lost control of the vehicle when he encountered a double-parked car, and ultimately collided with a car owned and operated by Joseph Amerosa. The injuries sustained by plaintiff Pavia in the accident rendered him a hemiplegic.

In October 1985, Pavia commenced a personal injury action against the Rosatos and Mr. Amerosa. The record reveals that as early as March 1986 a line unit representative at State Farm responsible for a preliminary investigation of plaintiffs claim concluded that the Rosatos were 100% liable for the accident. By August 1986, a State Farm claims representative responsible for handling the case on a daily basis was in receipt of medical reports attesting to the severity of plaintiffs injuries. A physical examination of plaintiff conducted by State Farm’s physicians on April 27, 1987 confirmed those findings.

New developments in the case against the Rosatos surfaced on June 9, 1987 — the date that Carmine Rosato was deposed. Through Rosato’s testimony, State Farm was led to believe that the double-parked car may have been backing up, suggesting that Rosato’s quick maneuvering may have been justified under an "emergency defense”; that witnesses not previously identified could support this version of the incident; that Pavia failed to wear a seat belt; and that drugs were being used in the car that night, possibly supporting an assumption of the risk defense. By letter dated June 10, 1987, counsel retained for the Rosatos by State Farm acknowledged that the liability forecast was "extremely unfavorable,” but recommended that a further inquiry be conducted in light of these new leads.

On June 26, 1987, admittedly without having read Rosato’s deposition, plaintiffs counsel wrote to State Farm demanding the full $100,000 policy limit in settlement of the personal injury action and requiring acceptance of the offer within 30 days. The offer expired without response from State Farm. By this time, however, State Farm had embarked on a thorough investigation of the potential defenses illuminated by Rosato’s deposition. In fact, State Farm had hired an investigator to locate the supposed witnesses who would corroborate Rosato’s version of how the events leading to the accident unfolded. By November 1987, State Farm’s efforts to locate those witnesses were abandoned because the search had proved fruitless. On December 1, 1987, State Farm’s Claims Committee, whose members had the authority to offer payments in excess of $50,000, convened for the first time to discuss the reports generated by the claim representative assigned to the case. On December 16, 1987, the Committee authorized its counsel to offer plaintiff the full policy limits. This offer was conveyed to plaintiff’s attorney by counsel retained by State Farm on the Rosatos’ behalf on January 7, 1988 during a "settle or select” conference, but was rejected as "too late.”

The trial of the underlying personal injury action commenced in March 1988. The jury returned a plaintiff’s verdict in the amount of $6,322,000, attributing 85% of the fault to Carmine Rosato and 15% to codefendant Amerosa. Supreme Court reduced the verdict upon State Farm’s motion to $5,000,000 and the Appellate Division modified that judgment by further reducing the verdict to $3,880,000 upon plaintiff’s stipulation (154 AD2d 519).

The Rosatos subsequently assigned all causes of action they might have against State Farm to plaintiff by executing an assignment agreement, which included a covenant by plaintiff that he would not execute the excess portion of the judgment against the Rosatos. The Rosatos and plaintiff then commenced this action, alleging essentially that State Farm acted in bad faith by "failing] to accept [plaintiff’s] policy limits settlement offer within a reasonable time despite the clear liability and obvious damages exceeding the policy limits.”

At the ensuing trial on the bad-faith action, the jury was presented solely with the following question: "Did the defendant, 'State Farm’, act in gross disregard of the interests of Carmine Rosato and Joanne Rosato, their insured, in that there was a deliberate or reckless decision to disregard the interest of their insured?” The jury answered affirmatively, and Supreme Court entered an "excess” judgment against State Farm in the amount of $4,688,030 — the amount of the jury verdict in the underlying personal injury action as modified by the Appellate Division, less $110,000 already paid by State Farm and Amerosa’s insurer, plus interest and costs.

The Appellate Division affirmed, holding that the trial court properly charged the jury that, in order to find bad faith, State Farm must have acted in "gross disregard” of the Rosatos’ interests, and properly rejected the standard urged by State Farm — that bad faith required "an extraordinary showing of a disingenuous or dishonest failure” to carry out the insurance contract (see, Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 437, cert denied 410 US 931). The Court also rejected State Farm’s contention that the evidence adduced at trial was insufficient as a matter of law to present a jury-question on the "bad faith” issue, noting that State Farm "possessed the information necessary to accurately assess both the magnitude of Frank Pavia’s injuries and the Rosatos’ potential exposure well before the June 26, 1987 settlement offer was received” (Pavia v State Farm Mut. Auto. Ins. Co., 183 AD2d 189, 199). Despite our conclusion that the courts below properly applied the "gross disregard” standard, as a matter of law the finding of bad faith is not supported by this record.

II.

The notion that an insurer may be held liable for the breach of its duty of "good faith” in defending and settling claims over which it exercises exclusive control on behalf of its insured is an enduring principle, well settled in this State’s jurisprudence (see, Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, supra; Best Bldg. Co. v Employers’ Liab. Assur. Corp., 247 NY 451, 453; Brassil v Maryland Cas. Co., 210 NY 235, 241). The duty of "good faith” settlement is an implied obligation derived from the insurance contract (Gordon, supra, at 436-437). Naturally, whenever an insurer is presented with a settlement offer within policy limits a conflict arises between, on the one hand, the insurer’s interest in minimizing its payments and on the other hand, the insured’s interest in avoiding liability beyond the policy limits (Brown v United States Fid. & Guar. Co., 314 F2d 675, 678 [2d Cir] [construing New York law]). By refusing to settle within the policy limits, an insurer risks being charged with bad faith on the premise that it has "advanced its own interests by compromising those of its insured” (Gordon, supra, at 446 [Breitel, J., dissenting]), or even those of an excess insurance carrier who "alone [may be] placed at further risk due to the defendant’s intractable opposition to any settlement of the claim” (St. Paul Fire & Mar. Ins. Co. v United States Fid. & Guar. Co., 43 NY2d 977, 978).

At the root of the "bad faith” doctrine is the fact that insurers typically exercise complete control over the settlement and defense of claims against their insureds, and, thus, under established agency principles may fairly be required to act in the insured’s best interests (see generally, 7C Appleman, Insurance Law and Practice § 4711 [Berdal ed]). On the other hand, a countervailing policy consideration exists in the courts’ understandable reluctance to expose insurance carriers to liability far beyond the bargained-for policy limits for conduct amounting to a mere mistake in judgment. Thus, established precedent clearly bars a "bad faith” prosecution for conduct amounting to ordinary negligence (see, Brennan v Mead, 54 NY2d 811, affg 81 AD2d 821; Best Bldg., supra, at 454-456; Roldan v Allstate Ins. Co., 149 AD2d 20). Indeed, in Gordon v Nationwide Mut. Ins. Co. (supra), this Court held that even where an insurer had withdrawn from its insured’s defense on the erroneous belief that the policy of insurance had lapsed, the error in judgment could not form the predicate for a bad-faith action (30 NY2d, at 431).

Beyond that principle, the courts have had some difficulty selecting a standard for actionable "bad faith” because of the need to balance the insured’s rightful expectation of "good faith” against the insurer’s equally legitimate contract expectations. Consequently, a divergence of authority has arisen concerning whether a bad-faith finding may be predicated on a showing of the insurer’s recklessness or "gross disregard” for the insured’s interests (see, Dano v Royal Globe Ins. Co., 59 NY2d 827, 830; DiBlasi v Aetna Life & Cas. Ins. Co., 147 AD2d 93; PJI 4:67 [1992 Supp]), or whether a heightened showing of intentionally harmful, dishonest or disingenuous motive is required (see, Gordon, supra; Crawford v Hospital of Albert Einstein Coll. of Medicine, 159 AD2d 304, 305 [1st Dept]; Kinnarney v Natale Auto Body, 157 AD2d 938, 938 [3d Dept]; Guarantee Ins. Co. v City of Long Beach, 106 AD2d 428, 428-429 [2d Dept]).

Faced squarely with the question for the first time, we reject defendant’s proposed requirement of a "sinister motive” on the part of the insurer (see, Cappano v Phoenix Assur. Co., 28 AD2d 639, 640), and hold instead that, in order to establish a prima facie case of bad faith, the plaintiff must establish that the insurer’s conduct constituted a "gross disregard” of the insured’s interests — that is, a deliberate or reckless failure to place on equal footing the interests of its insured with its own interests when considering a settlement offer (see, Lozier v Auto Owners Ins. Co., 951 F2d 251 [9th Cir]). In other words, a bad-faith plaintiff must establish that the defendant insurer engaged in a pattern of behavior evincing a conscious or knowing indifference to the probability that an insured would be held personally accountable for a large judgment if a settlement offer within the policy limits were not accepted.

The gross disregard standard, which was utilized by the trial court here, strikes a fair balance between two extremes by requiring more than ordinary negligence and less than a showing of dishonest motives. The former would remove the latitude that insurers must be accorded in investigating and resisting unfounded claims, while the latter would be all but impossible to satisfy and would effectively insulate insurance carriers from conduct that, while not motivated by malice, has the potential to severely prejudice the rights of its insured. The intermediate standard accomplishes the two-fold goal of protecting both the insured’s and the insurer’s financial interests.

III.

Having established the proper legal standard, we necessarily shift to the sufficiency of plaintiff’s proof in this case. Naturally, proof that a demand for settlement was made is a prerequisite to a bad-faith action for failure to settle (United States Fid. & Guar. Co. v Copfer, 48 NY2d 871, 873). However, evidence that a settlement offer was made and not accepted is not dispositive of the insurer’s bad faith. It is settled that an insurer "cannot be compelled to concede liability and settle a questionable claim” (St. Paul, supra, at 978) simply "because an opportunity to do so is presented” (Knobloch v Royal Globe Ins. Co., 38 NY2d 471, 479). Rather, the plaintiff in a bad-faith action must show that "the insured lost an actual opportunity to settle the * * * claim” (Copfer, supra, at 873) at a time when all serious doubts about the insured’s liability were removed (St. Paul, supra, at 978; DiBlasi, supra, at 98-99).

Bad faith is established only "where the liability is clear and the potential recovery far exceeds the insurance coverage” (DiBlasi, supra, at 98). However, it does not follow that whenever an injury is severe and the policy limits are significantly lower than a potential recovery the insurer is obliged to accept a settlement offer. The bad-faith equation must include consideration of all of the facts and circumstances relating to whether the insurer’s investigatory efforts prevented it from making an informed evaluation of the risks of refusing settlement. In making this determination, courts must assess the plaintiff’s likelihood of success on the liability issue in the underlying action, the potential magnitude of damages and the financial burden each party may be exposed to as a result of a refusal to settle. Additional considerations include the insurer’s failure to properly investigate the claim and any potential defenses thereto, the information available to the insurer at the time the demand for settlement is made, and any other evidence which tends to establish or negate the insurer’s bad faith in refusing to settle. The insured’s fault in delaying or ceasing settlement negotiations by misrepresenting the facts also factors into the analysis (see, Lozier v Auto Owners Ins. Co., 951 F2d 251, 254 [9th Cir 1991], supra; see also, 14 Couch, Insurance 2d § 51:137 [rev ed]).

Application of the aforementioned principles here leads us to the conclusion that plaintiffs have failed to establish a prima facie case of bad faith. Plaintiffs’ allegations of bad faith stem principally from defendant State Farm’s failure to abide by a settlement deadline unilaterally established by plaintiff Pavia’s counsel and its delay in ultimately offering the policy limits in settlement.

However, defendant’s failure to respond to the letter and over-all delay under the circumstances of this case cannot serve as a basis for recovery. Permitting an injured plaintiff’s chosen timetable for settlement to govern the bad-faith inquiry would promote the customary manufacturing of bad-faith claims, especially in cases where an insured of meager means is covered by a policy of insurance which could finance only a fraction of the damages in a serious personal injury case. Indeed, insurers would be bombarded with settlement offers imposing arbitrary deadlines and would be encouraged to prematurely settle their insureds’ claims at the earliest possible opportunity in contravention of their contractual right and obligation of thorough investigation.

Here, plaintiffs time-limited settlement offer came at a relatively early point in the litigation. Moreover, at the time the 30-day settlement demand was made, there remained several significant questions about the insured’s liability, which defendant was entitled to investigate and explore. That defendant could have acted more expeditiously does not convert inattention into a gross disregard for the insured’s rights, particularly where, as here, there is no contention that the insurer failed to carry out an investigation, to evaluate the feasibility of settlement (cf., Knobloch, 38 NY2d 471, 480, supra), or to offer the policy limits before trial after the weakness of the insured’s litigation position was clearly and fully assessed.

The facts that State Farm’s preliminary liability forecasts were unfavorable and that the investigation ultimately proved those forecasts accurate certainly do not establish that the insurer was unjustified in engaging in further investigation and failing to effectuate an earlier settlement. On the contrary, State Farm’s failure to conduct the continuing inquiry could have constituted a breach of its obligation to investigate and defend its insured. Moreover, State Farm should not be penalized for the delay in processing the claim and offering the full policy limits in settlement which resulted from its pursuit of an investigation prompted by its insured’s representations which ultimately did not materialize (see, Brennan v Mead, 81 AD2d 821, affd 54 NY2d 811, supra; Pipoli v United States Fid. & Guar. Co., 38 AD2d 249, 250; Colbert v Home Indem. Co., 35 AD2d 326, 329).

By any view of the evidence, State Farm’s failure to promptly respond to the time-restricted demand did not amount to more than ordinary negligence — an insufficient predicate for a bad-faith action. Evident as it may be with hindsight that State Farm should have responded to the settlement offer by at least requesting an extension, its failure to do so was not evidence of willful neglect of the insured’s rights, but instead amounted to mistaken judgment or administrative delay in confirming what it had suspected it would do all along — settle for the policy limits. Thus, this record lacks any pattern or indicia of reckless or conscious disregard for the insured’s rights upon which we could uphold a bad-faith judgment.

We need not address State Farm’s remaining contentions.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the complaint dismissed.

Chief Judge Kaye and Judges Simons, Hancock, Jr., Bellacosa, Smith and Levine concur.

Order reversed, etc.


author: Levine, J.

text:
    [626 NE2d 29, 605 NYS2d 213]
    Seymour Gottlieb, Respondent-Appellant, v Kenneth D. Laub & Company, Inc., Appellant-Respondent.
    Argued October 12, 1993;
    decided November 23, 1993

      POINTS OF COUNSEL

      Davis Polk & Wardwell, New York City (Henry L. King of counsel), and Clarence S. Barasch for appellant-respondent.
    Section 198 (1-a) of the Labor Law does not apply to this contractual dispute over the amount of discretionary contingent compensation. (Mighty Midgets v Centennial Ins. Co., 47 NY2d 12; Williams v AGK Communications, 143 Misc 2d 845; People v Vetri, 309 NY 401; People v Grass, 257 App Div 1;
      People v Rowan, 179 Misc 225; Daley v Related Cos., 179 AD2d 55; Magness v Human Resource Servs., 161 AD2d 418; Klepner v Codata Corp., 139 Misc 2d 382, 150 AD2d 994; Maggione v Bero Constr. Corp., 106 Misc 2d 384; Falk v FFF Indus., 731 F Supp 134.)

      Bower & Gardner, New York City (Gerry E. Feinberg and Allen Hobbs of counsel), for respondent-appellant.
    I. Section 198 (1-a) of the Labor Law mandates a finding that Gottlieb is entitled to his attorney’s fees. (Matter of Erie County Agrie. Socy. v Cluchey, 40 NY2d 194; Matter of Carr v New York State Bd. of Elections, 40 NY2d 556; Matter of Schmidt v Roberts, 74 NY2d 513; People v Craig, 78 NY2d 616; Matter of First Coinvestors v Carr, 159 AD2d 209; Magness v Human Resource Servs., 161 AD2d 418; P & L Group v Garfinkel, 150 AD2d 663; Klepner v Codata Corp., 139 Misc 2d 382, 150 AD2d 994; Westheim v Elkay Indus., 166 AD2d 318; Gerlach v Horn & Hardart Co., 683 F Supp 342.) II. The lower court abused its discretion as a matter of law by applying the wrong criteria in improperly setting aside the jury’s finding of willfulness. (P & L Group v Garfinkel, 150 AD2d 663; Matter of Hull-Hazard, Inc. v Roberts, 136 AD2d 872, 74 NY2d 710; Matter of Cam-Ful Indus. [Roberts], 128 AD2d 1006; Matter of Valvo [Ross], 83 AD2d 344, 57 NY2d 116; United States v Pomponio, 429 US 10; Novik v Bartell Broadcasters, 66 Misc 2d 857, 39 AD2d 885, 32 NY2d 659; Jefferne, Inc. v Capanegro, 96 AD2d 577; Jamaica Sav. Bank v Sutton, 42 AD2d 856.)
   OPINION OF THE COURT

Levine, J.

Labor Law § 198 (1-a) provides in part that "[i]n any action instituted upon a wage claim by an employee * * * in which the employee prevails, the court shall allow such employee reasonable attorney’s fees”. The issue presented is whether this statutory entitlement to attorney’s fees applies to any wage claim action or only to those brought for violations of the wage payment law, article 6 of the Labor Law. As explained below, we conclude that the plain language, legislative history and purpose of section 198 (1-a) all indicate that the intent of the statute is that the attorney’s fees remedy provided therein is limited to wage claims based upon violations of one or more of the substantive provisions of Labor Law article 6.

Defendant Kenneth D. Laub & Company, a real estate brokerage corporation, employed plaintiff Seymour Gottlieb as a real estate salesman for some 17 years until his employment was terminated in 1987. The parties’ employment relationship was governed by a written agreement. Pursuant to that agreement, plaintiff was to receive as compensation a percentage of the commissions paid to defendant on the transactions in which he was involved. Plaintiff’s share of a commission varied with the extent of his involvement in the particular transaction. He was entitled to no other compensation.

Following the termination of his employment, plaintiff commenced this action to recover commissions due him from three transactions in which he had participated. Plaintiff did not allege a violation of any of the substantive provisions of article 6 of the Labor Law, but only a common-law contract cause of action and a second cause of action for a "violation of Labor Law section 198”, the costs and remedies provision of article 6, in which he demanded attorney’s fees and liquidated damages thereunder. The amount plaintiff is entitled to in commissions is not in dispute; whether section 198 (1-a) applies to plaintiff’s wage claim is the only issue.

After a trial and jury verdict in favor of plaintiff, Supreme Court held that section 198 (1-a) was applicable and awarded attorney’s fees to plaintiff. The court, however, granted defendant’s CPLR 4404 (a) motion and set aside, as against the weight of evidence, the jury finding that defendant acted willfully in withholding the commissions, the statutory requisite for an award of liquidated damages (Labor Law § 198 [1-a]), and disallowed that claim. In the event that plaintiff did not consent to a vacatur of the finding of willfulness, the court ordered that a new trial should be held on that issue.

Defendant appealed and plaintiff cross-appealed. The Appellate Division unanimously affirmed, holding that plaintiff was entitled to attorney’s fees under section 198 (1-a) (184 AD2d 429, 431). The Appellate Division subsequently granted defendant’s motion for leave to appeal on the issue of plaintiff’s entitlement to attorney’s fees and plaintiff’s cross motion for leave to appeal on the issue of willfulness, certifying the following question: "Was the order of the Supreme Court, as affirmed by this Court, properly made?” Thereafter, this Court granted plaintiff’s motion to limit the issues that defendant could raise on appeal to the applicability of Labor Law § 198 (81 NY2d 776). For the reasons that follow, we reverse that portion of the Appellate Division order holding that Labor Law § 198 (1-a) applies.

The attorney’s fees provision of section 198 was enacted (L 1967, ch 310) at the next session of the Legislature following the general recodification of the Labor Law regulating the payment of wages, by creation of a new Labor Law article 6 (L 1966, ch 548), sponsored by the Department of Labor (see, Mem of Indus Commr, June 3, 1966, Bill Jacket, L 1966, ch 548). The over-all objective of the 1966 legislation was to strengthen and clarify the substantive laws protecting the rights of employees to the payment of wages. As the Industrial Commissioner’s sponsoring memorandum stated, in outlining his reasons for recommending enactment:

"The wage payment provisions established by this bill compare favorably with those of any other state in the nation. Not only are the rights and obligations of employees and employers presented in a clear fashion, but the extension of the provisions for the prompt payment of wages, and the requirement for wage statements to be given to employees and for record-keeping provide increased wage protection to employees of the State” (id., at 4).

The statutory provision in the 1966 enactment of Labor Law article 6 which generally regulates payment of wages by employers and creates reciprocal rights of employees is Labor Law § 191. Except for manual workers, all other categories of employees entitled to statutory protection under Labor Law § 191 are limited by definitional exclusions of one form or another for employees serving in an executive, managerial or administrative capacity (see, Labor Law § 190 [5], [6], [7]).

Labor Law § 198 as originally enacted in 1966 as part of Labor Law article 6 provided as follows:

"§ 198. Costs, remedies
"1. In any action instituted upon a wage claim by an employee or the commissioner in which the employee prevails, the court may allow such employee in addition to ordinary costs, a reasonable sum, not exceeding fifty dollars for expenses which may be taxed as costs. No assignee of a wage claim, except the commissioner, shall be benefited by this provision.
"2. The remedies provided by this article may be enforced simultaneously or consecutively so far as not inconsistent with each other.” (Labor Law former § 198, as added by L 1966, ch 548 [emphasis supplied].)

Certainly nothing in the language of that enactment suggests that it was intended to provide any remedy whatsoever for the successful prosecution of a common-law civil action for contractually due remuneration on behalf of employees who in all other respects are excluded from wage enforcement protection under the recodified article 6 of the Labor Law. Moreover, nowhere in the very extensive legislative history of chapter 548 of the Laws of 1966 is there even a hint of a legislative intent to provide new remedies for claims falling outside the substantive provisions of article 6.

In 1967, the costs and remedies provisions of Labor Law article 6 as set forth in section 198 were amended to add a new subdivision (1-a) (L 1967, ch 310), the interpretation of which is the subject of this appeal:

"1-a. In any action instituted upon a wage claim by an employee or the commissioner in which the employee prevails, the court shall allow such employee reasonable attorney’s fees and, upon a finding that the employer’s failure to pay the wage required by this article was willful, an additional amount as liquidated damages equal to twenty-five percent of the total amount of the wages found to be due” (Labor Law § 198 [1-a]).

Plaintiff urges that the plain language of Labor Law § 198 (1-a) compels a conclusion that he is entitled to recover attorney’s fees upon prevailing on his common-law contract claim. Specifically, plaintiff argues that, under the pertinent definitions as set forth in section 190 of Labor Law article 6, he has established that he is an "employee” (Labor Law § 190 [2]) who has prevailed upon a "wage” (Labor Law § 190 [1]) claim against an "employer” (Labor Law § 190 [3]). Having satisfied all of the elements of section 198 (1-a) as defined in section 190 of the article, plaintiff contends, it necessarily follows that he is entitled to an award of attorney’s fees. Even assuming arguendo that plaintiff falls within the foregoing definitions, plaintiff’s argument must fail in the face of the statutory language and the legislative history of Labor Law article 6 and of section 198 (1-a) in particular, which together point definitively to the conclusion that the remedies provided in section 198 were intended to be limited to claims based upon substantive violations of the article.

Plaintiffs position that Labor Law § 198 (1-a) should apply to his common-law contract claim first overlooks the statutory language of the section which refers to an employer’s "failure to pay the wage required by this article” (emphasis supplied), which clearly evinces a legislative intent to limit the remedies provided therein to violations of article 6. Although one might perhaps read the phrase "failure to pay the wage required by this article” to modify only the clause setting forth the liquidated damages remedy, the legislative history of section 198 (1-a) as well as other statutory language contained in section 198 not only fails to support that construction but dictates the opposite conclusion.

The legislative history for the statute — as set forth in the Bill Jacket of chapter 310 of the Laws of 1967 — reveals that the proponents and supporters of the 1967 legislation treated all of the remedies in Labor Law § 198 as addressing the same problem (i.e., employers’ violation of the wage laws), having the same objective (enhancing enforcement of the Labor Law’s substantive wage enforcement provisions), and providing cumulative remedies for wage claims brought thereunder. Thus, the State Industrial Commissioner’s sponsoring memorandum to the bill which became Labor Law § 198 (1-a) states as the sole purpose of the bill: "To assist the enforcement of the wage payment and minimum wage payment laws by imposing greater sanctions on employers for violation of those laws” (Mem of Indus Commr, Apr. 5, 1967, Bill Jacket, L 1967, ch 310 [emphasis supplied]). And, in a memorandum in support of the bill that became chapter 310 of the Laws of 1967 by the State AFL-CIO, the attorney’s fees and liquidated damages remedies of section 198 (1-a) are addressed collectively as "one more safeguard to assure employees of proper payment of wages under the law and would thus be a deterrent against abuses and violations” (Mem of New York State AFL-CIO, Bill Jacket, L 1967, ch 310 [emphasis supplied]).

Nor does the statutory language of Labor Law § 198, read as a whole, support plaintiffs expansive interpretation of the attorney’s fees remedy so as to apply to his common-law action for contractually due remuneration. First, that remedy as set forth in section 198 (1-a) tracks the additional $50 cost remedy of subdivision (1) of that section, included as part of the 1966 recodification of Labor Law article 6, to be awarded to a prevailing employee in "any action instituted upon a wage claim by an employee or the commissioner” (Labor Law § 198 [1]). As previously discussed, however, no one has ever suggested that the additional costs remedy of section 198 (1) was available in common-law contractual remuneration actions by persons otherwise unprotected by the substantive "wage laws” of Labor Law article 6. Second, all of the remaining provisions of Labor Law § 198 strongly suggest that the entire section was intended merely to afford procedural rules, including costs and cost-related remedies, to apply in actions brought for wage claims created under the substantive provisions of Labor Law article 6. Thus, section 198 (2) provides that "[t]he remedies provided by this article may be enforced simultaneously or consecutively” (emphasis supplied). Likewise, section 198 (3) provides that "an action to recover upon a liability imposed by this article must be commenced within six years” (emphasis supplied).

Accordingly, the statutory language and cumulative legislative history of Labor Law article 6 in general and section 198 (1-a) in particular convince us that the statutory remedy of an award of attorney’s fees to a prevailing employee, as well as the liquidated damages remedy where a willful failure to pay wages has been established, are limited to actions for wage claims founded on the substantive provisions of Labor Law article 6. Moreover, any doubts on the true meaning of the statutory language or legislative intent in the enactment of the attorney’s fees provision of Labor Law § 198 should be resolved in favor of a narrow construction. New York has traditionally followed the common-law rule disfavoring any award of attorney’s fees to the prevailing party in a litigation (see, Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21-22; see also, 24 NY Jur 2d, Costs in Civil Actions, § 158). Therefore, the appropriate canon of statutory construction to be applied in this case favors a narrow interpretation (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 301 [a]). Or, put another way:

"The common law is never abrogated by implication, but on the contrary it must be held no further changed than the clear import of the language used in a statute absolutely requires” (id., § 301 [b]).

An expansive interpretation of Labor Law § 198 (1-a) to permit recovery of attorney’s fees on a common-law contractual remuneration claim would not only violate the foregoing canons of statutory construction, but would afford a windfall remedy to litigants whom the Legislature consciously chose not to afford the protections and benefits of the wage payment regulatory provisions of the Labor Law. For all of the foregoing reasons, plaintiff’s claim that he is entitled to liquidated damages under section 198 (1-a) must also fail.

Accordingly, plaintiff’s appeal should be dismissed and, on defendant’s appeal, the order of the Appellate Division, insofar as appealed from, should be reversed, with costs, plaintiff’s cause of action based on Labor Law § 198 (1-a) dismissed, and the certified question answered in the negative.

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

Plaintiff’s appeal dismissed upon the ground that the Appellate Division did not have the power in these circumstances to grant leave to appeal to the plaintiff on a certified question (see, CPLR 5602 [b] [1]; Collins v McGinley, 78 NY2d 1002). On defendant’s appeal, order, insofar as appealed from, reversed, with costs, plaintiff’s cause of action based on Labor Law § 198 (1-a) dismissed, and certified question answered in the negative.

      . [2] Plaintiffs cross appeal must be dismissed. The Supreme Court ordered a new trial on the issue of willfulness in the event that plaintiff did not stipulate to the court’s setting aside of the jury’s finding of willfulness as against the weight of evidence. Plaintiff apparently has not so stipulated. Because the Appellate Division order affirms the grant of a new trial on the issue plaintiff seeks to appeal, the Appellate Division was not empowered to grant leave to plaintiff on a certified question (see, CPLR 5602 [b] [1]; Collins v McGinley, 78 NY2d 1002).

      . As previously noted, plaintiff did not plead any claim under Labor Law § 191 or any other substantive provision of article 6 in his complaint.