text:
    Allstate Insurance Company et al., Appellants, v Tax Commission of the State of New York, Respondent.
    Decided May 8, 1986

      APPEARANCES OF COUNSEL

      Arnold B. Panzer for appellants.

      Robert Abrams, Attorney-General (Robert Hermann, Peter H. Schiff and Francis V. Dow of counsel) for respondent.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed, with costs. We agree with the Appellate Division that a declaratory judgment action is an inappropriate vehicle to resolve this controversy because a pure matter of law is not involved and the administrative process has already been commenced (see, Hewlett Assoc. v City of New York, 57 NY2d 356, 363; Harcel Liqs. v Evsam Parking, 48 NY2d 503, 506; Slater v Gallman, 38 NY2d 1).

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


source: Caselaw Access Project

license: Public Domain

text:
    The People of the State of New York, Respondent, v Michael Gasbarro, Appellant.
    Decided May 8, 1986

      APPEARANCES OF COUNSEL

      James F. Keefe for appellant.

      Seymour Meadow, District Attorney (Mary Dawn Herkenham of counsel), for respondent.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed for the reasons stated in the memorandum at the Appellate Division (114 AD2d 594). We would only add that People v Tindle (61 NY2d 752) does not compel a different result inasmuch as the prosecutor in that case actually made a recommendation that the court consider the severity of defendant’s criminal conduct in imposing sentence (cf. People v Torres, 67 NY2d 659, modfg 108 AD2d 680).

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


text:
    Lance Greninger, Respondent, v Joseph Illardi et al., Appellants.
    Submitted March 24, 1986;
    decided May 8, 1986
   Motion, treated as one seeking leave to appeal pursuant to CPLR 5602 (a) (1) (ii) from the judgment of Supreme Court for review of prior nonfinal orders of the Appellate Division, dismissed upon the ground that the orders sought to be reviewed involve the determination of liability on default by defendants (CPLR 5511; cf. James v Powell, 19 NY2d 249, 256, n 3, rearg denied 19 NY2d 862).

Motion, treated as one seeking leave to appeal from the judgment of Supreme Court to review that determination, dismissed upon the ground that it does not lie (CPLR 5602 [a]; see also, CPLR 5501 [b]).

Twenty dollars costs and necessary reproduction disbursements to respondent.


text:
    In the Matter of Harold Konigsberg, Appellant, v Thomas, A. Coughlin, III, Commissioner, New York State Department of Correctional Services, et al., Respondents.
    Submitted April 28, 1986;
    decided May 8, 1986
   Motion to vacate this court’s order of dismissal dated April 14, 1986 granted. [See, 67 NY2d 938.]


text:
    In the Matter of the Claim of Antonio Mareno, Appellant. Lillian Roberts, as Commissioner of Labor, Respondent.
    Decided May 8, 1986
   Appeal dismissed, without costs, by the Court of Appeals sua sponte, for untimeliness (see, Kings Park Classroom Teachers Assn. v Kings Park Cent. School Dist., 63 NY2d 742).


text:
    New York Higher Education Assistance Corporation, Respondent, v Peter N. Weissman, Appellant.
    Submitted March 24, 1986;
    decided May 8, 1986
   Insofar as movant’s submissions can be treated as a motion for leave to appeal from so much of the Appellate Division order of September 12, 1985 as dismissed defendant’s appeal, motion for leave to appeal denied. Insofar as the motion seeks leave to appeal from the Appellate Division order denying defendant permission to appeal to this court, motion dismissed upon the ground that the order does not finally determine the action within the meaning of the Constitution.


text:
    Howard S. Thomas, Jr., et al., Appellants, v Chamberlain, D’Amanda, Oppenheimer & Greenfield et al., Respondents.
    Decided May 8, 1986
    APPEARANCES OF COUNSEL

      Edwin M. Larkin for appellants.

      Alan L. Button for respondents.
   OPINION OF THE COURT

Appeal dismissed, without costs, by the Court of Appeals sua sponte, upon the ground that it does not lie as of right from the order of modification, absent dissent by at least two Justices or the direct involvement of a substantial constitutional question (CPLR 5601, as amended by L 1985, ch 300, §D.


text:
    The People of the State of New York, Respondent, v Pedro Bastidas, Also Known as Pedro Criollo, Appellant.
    Argued February 11, 1986;
    decided May 13, 1986

      APPEARANCES OF COUNSEL

      Abigail Everett and Philip L. Weinstein for appellant.

      Elizabeth Holtzman, District Attorney (Sarah G. Noll and Barbara D. Underwood of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

Notwithstanding that defendant’s earlier statement was given without Miranda warnings, his later statement made after such warnings cannot be said, as a matter of law, to have been given in violation of his right against compulsory self-incrimination. This follows from the findings of the Trial Judge, supported by the record and undisturbed by the Appellate Division, and, therefore, beyond our power of review, that defendant voluntarily accompanied the detective to the station house; that he was left unattended in the detective’s office from 8:00 p.m. to 3:00 a.m. while his earlier statement was being investigated; that he was given food, drink and, when he complained of the cold, a sweater; that he was permitted contact with a family member; and that when he testified he made no claim that he had been told he could not leave (People v Winchell, 64 NY2d 826; People v Williams, 63 NY2d 882; cf. People v Chapple, 38 NY2d 112).

Moreover, duress, like entrapment and extreme emotional disturbance, "does not serve to negate any facts of the crime which the State is to prove in order to convict” (Patterson v New York, 432 US 197, 207, affg People v Patterson, 39 NY2d 288). It is rather a separate issue in disproof of intent, the State being required in the first instance to prove the necessary intent. Penal Law § 40.00, which denominates duress an affirmative defense, is, therefore, constitutional (People v Patterson, supra; People v Laietta, 30 NY2d 68, 75).

The other issues raised by defendant are either unpreserved or lacking in merit.

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

Order affirmed in a memorandum.


text:
    Martin J. Mayblum et al., Appellants, v Roderick G. W. Chu, as Commissioner of Taxation and Finance and President of the State Tax Commission of the State of New York, et al., Respondents.
    Argued March 20, 1986;
    decided May 13, 1986
    APPEARANCES OF COUNSEL

      Jerome R. Halperin and Guy S. Halperin for appellants.

      Robert Abrams, Attorney-General (Frank J. Wenick, Robert Hermann and Richard G. Liskov of counsel), for respondents.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be modified to direct that the second decretal paragraph of the judgment read "is imposed by the statute upon the overall cooperative plan except as the Article exempts transfer of shares in the cooperative pursuant to a written subscription agreement entered into prior to March 28, 1983, the effective date of the Article,” and, as so modified, should be affirmed, with costs.

Plaintiffs in this declaratory judgment action seek to establish that the transfer of real property underlying a cooperative corporation plan (the Gerard Towers transaction) is the taxable event under Tax Law article 31-B and that, therefore, transfers under the plan are exempt from tax. Special Term granted judgment declaring the taxable event to be the transfer of shares of stock by the cooperative corporation, and the Appellate Division affirmed.

In interpreting article 31-B we are guided by what the Legislature intended. The necessary implication of section 1443 (6), which exempts from its tax on real property a transfer after the effective date of the act because made pursuant to a written contract entered into before its effective date, is that the transfer of shares as part of a cooperative plan (which is the only way a cooperative corporation can transfer an interest in real property) is taxable. That construction is supported by the exception in section 1440 (7) of transfers pursuant to a cooperative or condominium plan, and by section 1442 fixing the date of a transfer under a cooperative plan. That the latter section deals with payment of the tax is not inconsistent with construing the over-all transaction as taxable; it merely demonstrates that although for purpose of computation of the tax the cooperative conversion is treated as a single transfer, it is not to be so treated with respect to date of payment, just as it would not be so treated with respect to exemption from tax (§ 1443 [6]).

Finally, plaintiffs argue that the addition to Tax Law § 1440 (7) by Laws of 1984 (ch 900, § 4) of a sentence reading, "For purposes of this article, transfers pursuant to a cooperative plan shall include all transfers of stock in a cooperative corporation which owns real property”, coming as it did after Special Term’s decision in the instant case, must be construed as indicating that as originally enacted in 1983 the transfer of cooperative shares was not the taxable event. The argument would have greater force had Special Term not decided that under the 1983 enactment the transfer of shares was the taxable event. For, as we held in Matter of Eastern Milk Producers Coop. Assn. v State of New York Dept, of Agric. & Mkts. (58 NY2d 1097, 1101): "Amendment of a statute, without more, does not require a change in its judicial construction. In view of the fact that the statute in its original form can be so read, the amendment must be regarded as but a legislative amplification of its previous intent.” Clearly this was so here for the State Executive Department Memorandum which accompanied the bill that became chapter 900 stated that one of its purposes was to clarify the gains tax treatment of cooperative conversions (1984 McKinney’s Session Laws of NY, at 3457).

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

Order modified in accordance with the memorandum herein and, as so modified, affirmed, with costs to appellants.


text:
    The People of the State of New York, Respondent, v Venanzio Angelo Mascitti, Appellant.
    Decided May 13, 1986

      APPEARANCES OF COUNSEL

      Louis P. Iannini and Ronald S. Carlisi for appellant.

      Howard R. Relin, District Attorney (Robert Mastrocola of counsel), for respondent.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed for the reasons stated in the memorandum of the Appellate Division (115 AD2d 942). The proper definition of temporary innocent possession of a dangerous weapon is that contained in People v Almodovar (62 NY2d 126, 130).

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


text:
    In the Matter of Richard Flowers, Appellant, v Harold J. Smith, as Superintendent of Attica Correctional Facility, et al., Respondents.
    Decided May 13, 1986

      APPEARANCES OF COUNSEL

      Susan K. Jones and Norman P. Effman for appellant.

      Robert Abrams, Attorney-General (Lisa Margaret Smith, Robert Hermann and Peter H Schiff of counsel), for respondents.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed, without costs, for the reasons stated in the memorandum at the Appellate Division (115 AD2d 226).

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


text:
    Town of Somerset, Respondent, v Charles Perry et al., Appellants.
    Decided May 13, 1986

      APPEARANCES OF COUNSEL

      David A. Hoover for appellants.

      Thomas H Brandt for respondent.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (115 AD2d 313).

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


text:
    Northbrook Excess & Surplus Insurance Company, Respondent, v Chubb Group of Insurance Companies, Appellant.
    Decided May 13, 1986

      APPEARANCES OF COUNSEL

      Sol Zepnick for appellant.

      Robert L. Boydstun and Brian J. Isaac for respondent.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed, with costs, for the reasons stated in the opinion by Justice Leonard H. Sandler at the Appellate Division (113 AD2d 319). We add only that the language in defendant Chubb Group’s policy excluding from coverage the owner of a hired auto where the auto is otherwise covered, is contrary to other language in the Chubb policy stating that "[f]or any covered auto you don’t own, the insurance provided by this policy is excess over any other collectible insurance”, and is ineffective in the face of the Northbrook policy language providing that "if other valid and collectible insurance is available to any interest such interest shall not become an insured with respect to this coverage until all other applicable coverage available to them has been exhausted” (emphasis supplied). The driver of the accident vehicle was an "interest” covered by the Chubb policy. Nor is this case distinguishable from State Farm Fire & Cas. Co. v LiMauro (65 NY2d 369) and Allstate Ins. Co. v Farmers Ins. Group (67 NY2d 924) on the basis of the large premium paid for the Northbrook policy. Such premium, based on annual car sales by Chrysler Corporation, DRAG’S parent company, provided extraordinarily comprehensive coverage for a wide range of corporate liabilities, and it cannot therefore be determined whether the rate, insofar as applicable to cars owned and leased out by DRAG, reflected insurance of a reduced risk.

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


text:
    Robert Alford et al., Appellants, v City of New York et al., Respondents.
    Decided May 13, 1986

      APPEARANCES OF COUNSEL

      Stephen C. Glasser for appellants.

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Kristin M. Helmers of counsel), for respondents.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), appeal by claimants Cronley, Wilhelm, Panzarino and Campbell dismissed, without costs, upon the ground that said claimants are not aggrieved by the modification at the Appellate Division (former CPLR 5601 [a] [iii]) and no appeal lies as of right by said claimants from the unanimous order of the Appellate Division absent the direct involvement of a substantial constitutional question. On the appeal by the remaining claimants-appellants, order affirmed, with costs, for the reasons stated in the memorandum at the Appellate Division (115 AD2d 420). We add that claimants have not set forth any special circumstances warranting deviation from the provisions of General Municipal Law § 50-h. There is nothing in the record to support claimants’ allegations that the scheduling of the required examinations pursuant to General Municipal Law § 50-h was purposely delayed by respondents.

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


author: Titone, J.

text:
    National Life Insurance Company, Appellant, v Frank B. Hall & Co. of New York, Inc., Respondent.
    Argued March 24, 1986;
    decided May 13, 1986

      APPEARANCES OF COUNSEL

      Richard R. Lutz and Michael S. Belohlavek for appellant.

      Anthony Genovese, Michael F. Fitzgerald and Dennis J. Crossley for respondent.
   OPINION OF THE COURT

Memorandum.

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

We agree with the Appellate Division that the Statute of Limitations applicable to this action against an insurance broker for malpractice in the performance of contractual obligations is six years (see, Video Corp. v Flatto Assoc., 58 NY2d 1026), and that the limitation period commenced to run upon defendant’s failure to timely notify the fidelity insurers (see, Kassner & Co. v City of New York, 46 NY2d 544, 550; Davis v City of New York, 38 NY2d 257, 259) and not upon the insurers’ disclaimer of liability for late notification (see, Gilbert Props. v Millstein, 40 AD2d 100, 105, affd 33 NY2d 857). There is no basis for application of the continuous treatment doctrine inasmuch as this case does not involve an uninterrupted course of reliance and services related to the particular duty breached (cf. Richardson v Orentreich, 64 NY2d 896, 898-899). The policy considerations underlying adoption of the discovery rule for foreign objects and implanted objects (see, Flanagan v Mount Eden Gen. Hosp., 24 NY2d 427, 430-431; Martin v Edwards Labs., 60 NY2d 417, 427) do not call for the application of the rule here (cf. Goldsmith v Howmedica, Inc., 67 NY2d 120). In any event, it appears that the facts pertaining to the late notification were fully known or discoverable more than six years prior to commencement of the instant action when plaintiff started its lawsuit against the fidelity insurers in Federal court in September 1976 (see, Gilbert Props, v Millstein, supra, at p 104). Accordingly, the complaint was properly dismissed as untimely.

Titone, J.

(dissenting). The sole issue on this appeal is whether an action by an insured party against its insurance broker to recover for losses sustained because of untimely notification of loss to the insurers by the broker accrues at the time of the alleged "wrongdoing” or at the time the insurers disclaim liability. I cannot agree that such a cause of action accrues before any injury is suffered and, therefore, dissent.

"When limitations begin to run 'depends on a nice balancing of policy considerations’ ” (Martin v Edwards Labs., 60 NY2d 417, 425, quoting Victorson v Bock Laundry Mach. Co., 37 NY2d 395, 403). On the one hand, a defendant should not be called to defend a claim when the " ' "evidence has been lost, memories have faded, and witnesses have disappeared” ’ ” (Duffy v Horton Mem. Hosp., 66 NY2d 473, 476, quoting Flanagan v Mount Eden Gen. Hosp., 24 NY2d 427, 429, quoting Developments in the Law: Statutes of Limitations, 63 Harv L Rev 1177, 1185), while, on the other hand, a wronged party should not be deprived of his claim before he has had a reasonable chance to assert it (Martin v Edwards Labs., supra, p 425; Caffaro v Trayna, 35 NY2d 245, 250-252; Flanagan v Mount Eden Gen. Hosp., supra, pp 429-431).

The general rule is that the Statute of Limitations in an action sounding in contract accrues at the time of the breach (Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38; Kassner & Co. v City of New York, 46 NY2d 544, 550; Stage v Village of Owego, 39 NY2d 1017, affg on mem at App Div 48 AD2d 985; Victorson v Bock Laundry Mach. Co., supra, p 403; 1 Weinstein-Korn-Miller, NY Civ Prac ¶ 201.02, at 2-10). It is also axiomatic, however, that an action does not accrue until "all of the facts necessary to the cause of action have occurred so that the party would be entitled to relief in court” (Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 175; see, City of New York v State of New York, 40 NY2d 659; Sosnow v Paul, 36 NY2d 780). "The same test must be applied to a challenge that the action is stale as to a challenge that the action has been brought prematurely” (Schmidt v Merchants Desp. Transp. Co., 270 NY 287, 301). A cause of action is incomplete until the loss is suffered (McDermott v City of New York, 50 NY2d 211, 217; Cutro v Sheehan Agency, 96 AD2d 669). Therefore, where the breach and the loss suffered are not simultaneous, the cause of action does not accrue until the earliest date of injury (Martin v Dierck Equip. Co., 43 NY2d 583, 591; Brooklyn Union Gas Co. v Interboro Surface Co., 87 AD2d 833-834, appeal dismissed 57 NY2d 673, citing Ryan Ready Mixed Concrete Corp. v Coons, 25 AD2d 530; cf. Matter of Queensborough Community Coll. v State Human Rights Appeal Bd., 49 AD2d 766, affd 41 NY2d 926).

The question of when the injury occurs has presented difficulties. This court has held on numerous occasions that injury, no matter how insignificant and regardless of the injured party’s knowledge, in almost all cases, causes an action to accrue immediately (see, e.g., Fleishman v Lilly & Co., 62 NY2d 888, cert denied — US —, 105 S Ct 967; Thornton v Roosevelt Hosp., 47 NY2d 780; Schmidt v Merchants Desp. Transp. Co., supra; Video Corp. v Flatto Assoc., 85 AD2d 448, mod 58 NY2d 1026). Here, it is clear, however, that prior to October 1976 when the excess carriers denied liability based upon the defendant’s alleged failure to timely report plaintiff’s claims, plaintiff had sustained not even the smallest of damages. Through its alleged breach, defendant set in motion forces which later touched plaintiff’s property only through new, fortuitous conditions involving the intervening discretionary conduct of the insurance companies (see, Schmidt v Merchants Desp. Transp. Co., supra, p 300).

Thus, as this action would have been prematurely brought before the excess carriers denied liability and the action was brought within six years (CPLR 213 [2]) of the earliest injury suffered, all of the causes of action were timely (Video Corp. v Flatto Assoc., 58 NY2d 1026, supra).

Judges Meyer, Simons, Kaye, Alexander and Hancock, Jr., concur; Judge Titone dissents and votes to reverse in an opinion in which Chief Judge Wachtler concurs.

Order affirmed, with costs, in a memorandum.


text:
    The People of the State of New York, Appellant, v Emil L. Paluska, Respondent.
    Argued April 29, 1986;
    decided May 13, 1986
   Appeal dismissed upon the ground that the reversal by the Appellate Division was not "on the law alone or upon the law and such facts which, but for the determination of law, would not have led to reversal” (CPL 450.90 [2] [a]).


text:
    The People of the State of New York, Appellant, v Calvin Simpson, Respondent.
    Argued May 1, 1986;
    decided May 13, 1986
   Appeal dismissed upon the ground that the reversal by the Appellate Division was not "on the law alone or upon the law and such facts which, but for the determination of law, would not have led to reversal” (CPL 450.90 [2] [a]).


text:
    In the Matter of Larry B. Hameed, Appellant, v Harold J. Smith, as Superintendent of the Attica Correctional Facility, et al., Respondents.
    Submitted April 7, 1986;
    decided May 13, 1986
   Motion for an extension of the time within which to move to vacate this court’s order dated February 13, 1986 dismissing petitioner’s appeal denied. Motion to vacate order of dismissal dismissed for untimeliness (22 NYCRR 500.11 [g] [3]). [See, 67 NY2d 735.]

Motion for leave to appeal denied.

Judge Hancock, Jr., taking no part.


text:
    M. W. Zack Metal Company, Appellant, v International Navigation Corporation of Monrovia et al., Defendants, and Newcastle Protection and Indemnity Association et al., Respondents.
    Decided May 13, 1986
   Appeals dismissed, with costs, by the Court of Appeals sua sponte, upon the ground that no appeal lies as of right from the orders appealed from (NY Const, art VI, § 3; CPLR 5601).

Judge Alexander taking no part.


text:
    In the Matter of The New York Times Company, Appellant, et al., Petitioner, v State Division of Human Rights et al., Respondents.
    Decided May 13, 1986
   Appeal dismissed, without costs, by the Court of Appeals sua sponte, upon the ground that no substantial constitutional question is directly involved (see, CPLR 5514 [a]).


text:
    Novak & Co., Inc., Appellant, v New York City Housing Authority, Respondent. (And Another Title.)
    Decided May 13, 1986
   Appeal pursuant to CPLR 5601 (d) from the stipulation of settlement "so ordered” and entered as a judgment on December 30, 1985, dismissed, without costs, by the Court of Appeals sua sponte, upon the ground that the stipulation, being conditional, does not finally determine the action within the meaning of the Constitution (see, Cohen and Karger, Powers of the New York Court of Appeals § 14, at 60-65).


text:
    Yonkers City Post No. 1666, Veterans of Foreign Wars of the United States, Inc., Respondent-Appellant, v Josanth Realty Corporation, Defendant, Josephine Bottiglieri, as Executrix of Joseph Bottiglieri, Appellant-Respondent, and Metropolitan Title Guarantee Co. et al., Respondents.
    Argued April 29, 1986;
    decided May 29, 1986

      APPEARANCES OF COUNSEL

      Morton N. Wekstein for appellant-respondent.

      Robert I. Eber for respondent-appellant.

      Matthew Dollinger for respondents.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, with costs, and the case remitted to it for further proceedings. Defendant Bottiglieri’s appeal should be dismissed upon the ground that he is not aggrieved by the modification at the Appellate Division (CPLR former 5601 [a] [iii]; Mulligan v Wetchler, 30 NY2d 951, dismissing appeal from 39 AD2d 102).

The dispute in this case involves a 100-by-100-foot parcel of property located on Yonkers Avenue in Yonkers, New York, which plaintiff purchased from defendant Josanth Realty Corporation in 1974. Plaintiff subsequently commenced this action against Josanth, its president (Bottiglieri) and its title insurance companies when it learned that it did not have clear title to the land described because in 1971 the State of New York had acquired a 1,488-square-foot portion of the parcel in fee and an additional 724-square-foot permanent easement in the remaining property from Josanth for the sum of $46,000. The courts below awarded plaintiff judgment against defendants for breach of the covenant against encumbrances contained in the deed and for breach of the warranty of title found in his policy of title insurance.

At the trial, plaintiff presented expert and documentary evidence of the before and after values of the property and the damages resulting from the defect. Defendants offered no evidence on damages and the only other evidence of value was the 1974 sale price and the State’s 1971 appropriation payment.

In making its award, the trial court apparently determined damages by multiplying the number of square feet involved by a square-foot value established by one of the expert’s comparables for an award of $19,800 and added an additional sum of $10,000 because the taking made the remaining land "less marketable”. The Appellate Division, finding no basis in the record for the $10,000 item of damages, modified the award by striking it. The court confirmed the $19,800 and modified the award of interest by calculating it from the earlier date of transfer.

The general rule is that damages for a breach of covenant against encumbrances or a breach of a warranty of title are measured by subtracting the value of the property after the defect is discovered from its value before the defect existed (Smirlock Realty Corp. v Title Guar. Co., 97 AD2d 208, 222, affd 63 NY2d 955; see also, Acme Theatres v State of New York, 26 NY2d 385; Diocese of Buffalo v State of New York, 24 NY2d 320). It appears that the courts ignored this rule and compensated plaintiff solely by granting direct damages for the property taken. Although the trial court’s additional award of $10,000 may have been an attempt to award consequential damages, that is not clearly so and in any event the award is not related to the evidence in the record.

Plaintiff contends that the courts below did not specifically reject its evidence and therefore they were bound to award the valuations and damages to which he testified. It is well established that even if only one party presents valid evidence on valuation the court need not accept that opinion if it provides a sufficient explanation for its decision and there is other evidence in the record to support the court’s determination (Lawyers Co-op. Pub. Co. v State of New York, 39 NY2d 760, affg on opn at 47 AD2d 122, 124; Matter of City of New York [A. & W. Realty Corp.], 1 NY2d 428, 432-433; Matter of Rochester Urban Renewal Agency v Phillips, 60 AD2d 752, 753). In the case before us both courts below failed to explain why they departed from the values offered by plaintiff’s expert or how they arrived at the measure of damages awarded. That they failed to do so "does not necessarily mean that adequate reasons for such a deviation do not exist” (Vic’s Automotive Servs. v State of New York, 91 AD2d 1115, 1116) but the case must be remitted to the Appellate Division for consideration of the facts and an explanation of how the damages have been ascertained when the proper rules for establishing damages are applied or for such further action on the record as it deems warranted.

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

On plaintiff’s appeal, order reversed, with costs, and case remitted to the Appellate Division, Second Department, for further proceedings in accordance with the memorandum herein. Appeal by defendant Bottiglieri dismissed.


text:
    The People of the State of New York, Respondent, v Juan Matias, Appellant.
    Argued May 1, 1986;
    decided May 29, 1986

      APPEARANCES OF COUNSEL

      Lisabeth Harrison and Philip L. Weinstein for appellant.

      Robert M. Morgenthau, District Attorney (Rona Feinberg and Joyce P. Adolfsen of counsel), for respondent.
   OPINION OF THE COURT

Order affirmed. We agree with the Appellate Division that the admission into evidence of the knife case, if error, was nonetheless harmless inasmuch as the jury heard the knife case described in testimony to which defendant did not object. Moreover, the evidence that defendant intentionally killed the victim, including the testimony of an eyewitness and defendant’s own admission, was overwhelming.

Concur: Chief Judge Wachtler and Judges Meyer, Simons, Kaye, Alexander and Hancock, Jr. Taking no part: Judge Titone.


text:
    Barbara Gilchrist, Individually and as Parent and Natural Guardian of John Gilchrist, an Infant, Appellant, v City of Troy, Defendant and Third-Party Plaintiff-Respondent. J. Gregory Crozier et al., Doing Business as Crozier, Kearns, Philippi, Architects, Third-Party Defendants-Respondents, et al., Third-Party Defendant. (And a Fourth-Party Action.)
    Decided May 29, 1986
    APPEARANCES OF COUNSEL

      Lawrence H. Long for appellant.

      Donald C. Bowes, Corporation Counsel (Donald J. Shanley of counsel), for City of Troy, respondent.

      Michelle I. Casserly for J. Gregory Crozier and others, respondents.
   OPINION OF THE COURT

Memorandum.

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

Plaintiffs nine-year-old son was struck in the face by a hockey puck while standing along the dasher boards during a hockey game at defendant’s rink. The rink was enclosed with a dasher board three and one-half feet high with a three-foot section of plexiglass mounted above the boards at both ends. The plexiglass extended from the blue line on one side around the ends of the rink, behind the goals, to the blue line on the other side. There was no plexiglass on the sides of the rink between the blue lines. Movable bleachers were located in this unprotected area on one side and the infant was struck when he was standing in front of the bleachers beside a section of the dasher boards that did not have the plexiglass above it.

Plaintiff contends that this case is distinguishable from our decision in Akins v Glens Falls City School Dist. (53 NY2d 325). She contends that the "practical realities” of the sport of hockey are such that a proprietor of a rink has a duty, in the exercise of reasonable care, to provide protective screening around the entire rink. We need not decide whether such a duty exists, however, for plaintiff offered no evidence of how the practical realities of the" sports of baseball and hockey differ and thus has failed to establish that the duty we defined in Akins is inapplicable (see, Ingersoll v Onondaga Hockey Club, 245 App Div 137, 139; but see, Benjamin v State of New York, 115 Misc 2d 71, 73, affd 96 AD2d 762).

Assuming, without deciding, that defendant breached its duty to provide a sufficient number of protected seats to accommodate as many spectators as reasonably may be expected to desire such seating at an ordinary game (Akins v Glens Falls City School Dist., supra, at pp 330-331; see, Zambito v Village of Albion, 100 AD2d 739), defendant’s negligence cannot be characterized as a direct cause of the injuries suffered by plaintiffs son. Because he was not sitting in the bleachers when the accident occurred, plaintiff cannot contend that but for the negligent placement of the bleachers the infant would not have been hit. Having made the decision to stand in an unprotected area, plaintiff’s son may not now be heard to complain that defendant’s seating arrangements were negligent when he has not asserted that there was no room to stand along the protected section of the dasher boards or that he was prevented from doing so.

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

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed, with costs, in a memorandum.


text:
    In the Matter of the Brooklyn Union Gas Company, Respondent-Appellant, v Commissioner of the Department of Finance of the City of New York, et al., Appellants-Respondents.
    Argued April 30, 1986;
    decided May 29, 1986

      APPEARANCES OF COUNSEL

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Gale Zareko, Stanley Buchsbaum and Anshel David of counsel), for appellants-respondents.

      Edward J. Walsh, Jr., Joseph P. Stevens and James F. Matthews for respondent-appellant.

      Robert Abrams, Attorney-General (Michael S. Buskus, Robert Hermann and Peter H. Schiff of counsel), in his statutory capacity pursuant to Executive Law § 71.

      Monte Engler and Robert S. Powers for Page Boy, Inc., and others, amici curiae.

      H. Richard Schumacher, Pearl Doherty and Steven M. Lieberman for Transcontinental Gas Pipe Line Corporation, amicus curiae.

   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, with costs, and the determinations of the Department of Finance of the City of New York reinstated. The question certified by the Appellate Division should not be answered, as it is unnecessary in view of this court’s grant of leave to appeal pursuant to CPLR 5602 (a) (2).

Petitioner is a public utility subject to both State and New York City taxes. From May 1, 1980 through November 30, 1982, it filed monthly New York City utility tax returns at the rate of 2.35% of its gross income reported as taxable. In January and June of 1983, petitioner submitted applications for refunds of any amounts paid in excess of 1% for the periods from December 1, 1981 through November 30, 1982 and May 1, 1980 through November 30, 1981, respectively, contending, insofar as here pertinent, that the city lacked authority, by virtue of General City Law § 20-b, to adopt a law which taxes its gross income at 2.35%.

After a hearing, the Department of Finance denied both claims. The Appellate Division, First Department, annulled the determination, one Justice dissenting, and remitted for further proceedings. We granted leave to appeal to respondents and the Appellate Division granted leave to appeal to petitioners, certifying the question whether its judgment was properly made.

Subsequent to the Appellate Division’s opinion in this case, legislation was enacted which explicitly provides that the City of New York may tax utilities at the rate of 2.35% of gross income retroactive to July 1, 1979 (L 1985, ch 912). Petitioner claims that such a retroactive tax is unconstitutional. We need not pass on the question because we find, without reference to the 1985 legislation, that, as a matter of statutory construction, New York City was authorized to impose the 2.35% rate.

While New York City’s tax authorization statute (Tax Law § 1201) has a cross reference to General City Law § 20-b, the city’s tax authorization did not derive from section 20-b but rather from a series of special enabling acts, culminating in section 1201, which successively amended a 1933 statute that originally authorized the tax. In 1959, the Legislature added language in the cross-reference provision, expressly indicating that New York City was not subject to the 1% rate ceiling imposed on other cities by virtue of General City Law § 20-b. In 1965, in a general statutory recodification, the language added in 1959 was not included in the revision which once again authorized a rate above 1%.

Obviously the cross reference in the city’s tax authorization statutes to General City Law § 20-b was not a model of clarity. The apparently conflicting statutory provisions may, however, be harmonized in order to give effect to all of their parts (see, Matter of Burger King v State Tax Commn., 51 NY2d 614; McKinney’s Cons Laws of NY, Book 1, Statutes §§ 97, 98). Tax Law § 1201 may be read as fixing the rate ceiling for New York City at 2.35% and Tax Law § 1221 (and General City Law § 20-b) may be read as restricting the tax base for the city. So read, all of the provisions are given effect. If not so read, section 1221, which states that the rate is 2.35%, would be rendered a nullity, a construction that "is not permissible” (Matter of Albano v Kirby, 36 NY2d 526, 530).

Moreover, a minor, unexplained omission in connection with a general revision of a statute should not be construed as changing a long-standing rule in the absence of a clear manifestation of such intention (Schneider v Schneider, 17 NY2d 123, 127; McKinney’s Statutes § 153), particularly where, as here, an expressed intention of the revision was simply to "incorporate and preserve existing taxing powers” (1965 NY Legis Ann, at 434; see also, repeal note to the bill ["This act substantially continues those authorizations in article twenty-nine of the tax law”]).

Accordingly, the determinations of the Department of Finance properly fixed petitioner’s tax at the 2.35% rate and should be reinstated.

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

Order reversed, with costs, and the determinations of the Department of Finance of the City of New York reinstated in a memorandum. Question certified not answered as unnecessary.


text:
    John Pizzuti, Appellant, v Metropolitan Transit Authority, Respondent.
    Argued April 28, 1986;
    decided May 29, 1986

      APPEARANCES OF COUNSEL

      David S. J. Neufeld for appellant.

      Robert Bergen, Lester G. Freundlich and Susan E. Jaffee for respondent.
   OPINION OF THE COURT

Memorandum.

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

Petitioner brought this proceeding directly in the Appellate Division, pursuant to EDPL article 2, to challenge the taking of a 48-foot by 160-foot portion of his real property located in Bethpage, Long Island. The condemnation was made by respondent in connection with its project to electrify the main line of the Long Island Rail Road from Hicksville to Ronkonkoma. Insofar as here pertinent, the petition alleges that there has been a failure to comply with the State Environmental Quality Review Act (SEQRA) which, it is urged, deprives respondent of its right to condemn the property.

We agree with the Appellate Division, which confirmed the determination, that compliance with SEQRA is not subject to judicial review in a proceeding brought pursuant to EDPL 207. Although SEQRA and EDPL overlap in requiring that environmental effects be identified, they contemplate different procedures for judicial review (Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 418). By its terms, EDPL 207 expressly limits the scope of review to whether the proceeding was constitutional or within the agency’s jurisdiction; whether the agency made its determination and findings in accordance with the procedures set forth in EDPL article 2; and whether "a public use, benefit or purpose will be served by the proposed acquisition” (EDPL 207 [C] [4]). Whether there has been compliance with SEQRA can be judicially reviewed only in a separate CPLR article 78 proceeding commenced in Supreme Court (see, Sandpiper Constr. Co. v Siegel, 97 AD2d 539, lv denied 61 NY2d 608).

Petitioner also seeks review of a judgment of Supreme Court, Nassau County, which, in a separate proceeding, granted respondent permission to file an acquisition map. Contrary to petitioner’s argument, CPLR 5501 (a) does not permit this court to review orders and judgments rendered in different, though related, actions and proceedings.

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

Judgment affirmed, with costs, in a memorandum.


text:
    Heidi Associates, Respondent, v Lawyers Title Insurance Company, Appellant.
    Argued April 28, 1986;
    decided May 29, 1986

      APPEARANCES OF COUNSEL

      Arthur S. Linker and James M. Pedowitz for appellant.

      Richard L. Herzfeld and Jerome M. Leitner for respondent.

      Samuel Kirschenbaum for New York State Land Title Association, amicus curiae.

   OPINION OF THE COURT

Order reversed, with costs, defendant’s motion for summary judgment on the first cause of action of the complaint granted and plaintiff’s motion for summary judgment on said cause of action denied. Certified question answered in the negative. We agree with so much of the dissenting memorandum of Justice Ernst Rosenberger at the Appellate Division (112 AD2d 844, 847-850) as concluded that the in rem proceeding upon which plaintiffs claim is based is not a separate encumbrance from the tax liens to which the defendant title insurer had duly excepted. Given those exceptions in the commitment and title policy, Insurance Law § 1113 (a) (18), which defines title insurance generally, does not require a contrary conclusion.

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


text:
    First State Insurance Company, Appellant, v J & S United Amusement Corp. et al., Defendants, and Angel Ocasio, an Infant, by Magdalia Ocasio, His Mother and Natural Guardian, et al., Respondents
    Decided May 29, 1986

      APPEARANCES OF COUNSEL

      Seymour H. Metnick and Roy Schuchman for appellant.

      Aaron J. Broder and Robert F. Wood for respondents.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, with costs, and the matter remitted to that court for its exercise of discretion as to retention or dismissal of this action.

In this declaratory judgment action First State Insurance Company seeks judgment that it is not obligated either to defend or indemnify J & S United Amusement with respect to a tort action brought against it for the injuries suffered by Angel Ocasio. The tort action is presently being defended by attorneys provided by First State under a reservation of rights. Ocasio was injured when he fell under a ride known as a "swinging gym” at a street fair in New York City. At the time, he was 15 years of age and was assisting in the operation of the ride, which was owned by defendant McDaniel and operated by defendant J & S. The carnival policy issued by first State Insurance Company to J & S excluded any liability under the Workers’ Compensation Law, any injury to an employee arising out of employment and any injury caused or contributed to by a person employed in violation of the law as to age. Thus coverage of Ocasio’s injuries by First State’s policy turns on whether the relationship between him and J & S was one of employment.

The concluding paragraph of the Appellate Division’s memorandum suggests that resolution of that issue is available to First State in the underlying tort action between Ocasio and J & S through the remedy of special verdict at trial (CPLR 4111). However, First State is not a party to the underlying tort action, and the fact that it has provided J & S with counsel under a reservation of its right to disclaim coverage does not put it in privity with a party. To the contrary, the attorneys representing J & S, although paid by First State, are obligated to act in the interest of J & S (Public Serv. Mut. Ins. Co. v Goldfarb, 53 NY2d 392, 401; Hartford Acc. & Indent. Co. v Village of Hempstead, 48 NY2d 218, 228-229; Prashker v United States Guar. Co., 1 NY2d 584, 593). First State would, therefore, have no standing to request a special verdict in the tort action.

First State is not, however, without a forum in which to contest coverage. Because it is neither party to nor a participant in the tort action, the employment determination made in that action is not conclusive with respect to its obligation to indemnify (Utica Mut. Ins. Co. v Cherry, 38 NY2d 735, affg 45 AD2d 350, 355, n 3; Jewtraw v Hartford Acc. & Indem. Co., 284 App Div 312, 324-325, on later appeal 286 App Div 931, affg on basis of prior decision, affd without opn 2 NY2d 788). Not being precluded as to that issue, it can, therefore, defend on the basis of the policy exclusions any action for indemnity brought by J & S or any direct action brought pursuant to Insurance Law § 3420 (b) by the tort plaintiffs on their judgment if they recover one (Coleman v New Amsterdam Cas. Co., 247 NY 271, 275; McNamara v Allstate Ins. Co., 3 AD2d 295, 298; see, 12A Couch, Insurance § 45:887, at 534-536 [2d ed]; Ann., 27 ALR3d 350).

The general rule is that a declaratory judgment as to a carrier’s obligation to indemnify may be granted in advance of trial of the underlying tort action only if it can be concluded as a matter of law that there is no possible factual or legal basis on which the insurer may eventually be held liable under its policy (Spoor-Lasher Co. v Aetna Cas. & Sur. Co., 39 NY2d 875, 876; Bianco v Travelers Ins. Co., 99 AD2d 629; see, Colon v Aetna Life & Cas. Ins. Co., 66 NY2d 6, 10). Unless it can be said that on the facts of this case defense by First State of an indemnity action by J & S or a direct action by the tort plaintiffs is an inadequate remedy, the Appellate Division’s dismissal of the declaratory judgment action was the proper result, although ordered for the wrong reason.

The matter must, therefore, be remitted to the Appellate Division for the exercise of its discretion as to the adequacy of the alternative remedy available to First State. In that connection we note, in light of the arguments made to us, that on remittal the decision in favor of Aetna Casualty on its motion in this action for summary judgment declaring that its workers’ compensation policy was not in force on the day of Angel Ocasio’s accident, though not part of the record before the Appellate Division, may be considered by it in the exercise of discretion (see, Matter of Ordway, 196 NY 95; Hunter v New York, Ontario & W. R. R. Co., 116 NY 615, 621; Rossbach v Rosenblum, 260 App Div 206, 210, affd 284 NY 745; Schmidt v Magnetic Head Corp., 97 AD2d 151, 158, n 3; Richardson, Evidence § 30 [Prince 10th ed]; Fisch, NY Evidence § 1065 [2d ed]). Of course, in the exercise of discretion whether to permit the present action to continue the rights of the tort plaintiffs as well as those of First State must be considered.

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

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order reversed, with costs, and case remitted to the Appellate Division, First Department, for further proceedings in accordance with the memorandum herein.

       The Coleman and McNamara opinions, decided under Insurance Law § 167 (1) (b) and its predecessor, section 109, emphasized the statute’s reference to an action "under the terms of the policy.” The same language appears in Insurance Law § 3420 (a) (2), which is referred to in section 3420 (b). To be distinguished, of course, is the possibility that the tort plaintiffs, as parties to the tort action, may be precluded by the employment determination in that action (see, Hinchey v Sellers, 7 NY2d 287, 294-295, and its discussion of Fox v Employers’ Liab. Assur. Corp., 267 NY 609).


text:
    In the Matter of Jose Harris, Appellant, v Thomas A. Coughlin, III, as Commissioner of the New York State Department of Correctional Services, et al., Respondents.
    Submitted March 31, 1986;
    decided May 29, 1986
   Motion for leave to appeal denied upon the ground that an appeal lies as of right (CPLR 5601 [b] [1]).


text:
    Sylvia Bloom et al., as Members of the State Committee of the Liberal Party of the State of New York, Respondents, v James F. Notaro, Individually and as Secretary of the State Committee of the Liberal Party of the State of New York, et al., Appellants.
    Argued May 30, 1986;
    decided May 30, 1986
    APPEARANCES OF COUNSEL

      James D. Featherstonhaugh for appellants.

      Raymond B. Harding for respondents.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division, insofar as appealed from, should be reversed, without costs, and plaintiffs’ application for the appointment of a supervisor denied.

Plaintiffs, members of the State Committee of the Liberal Party, instituted this action for the appointment of a supervisor to oversee the nominating convention of the party and other relief related to conducting that meeting. They asserted that such relief was necessary based on a history of confrontation with defendants, the chairman and secretary of the State Committee, at previous meetings. Special Term dismissed the complaint but the Appellate Division reversed to the extent of appointing a supervisor with full power to rule on all matters presented to the Committee. The appeal is here by leave of this court.

The New York State Legislature manifested an intent of general noninterference with the internal affairs of political parties when it authorized party committees to formulate their own rules and organize themselves. The courts should be most reluctant to interfere with the internal affairs of a political party. Plaintiffs, on this record, have not demonstrated any statutory or legal ground for judicial intervention.

Accordingly, the appointment of a supervisor by the Appellate Division was improper.

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

Motion for leave to appeal granted.

Order insofar as appealed from reversed, without costs, and plaintiffs’ application for appointment of a supervisor denied in a memorandum.


author: Meyer, J.

text:
    The People of the State of New York, Respondent, v James McDonald, Appellant.
    Argued May 27, 1986;
    decided July 3, 1986

      POINTS OF COUNSEL

      Edward J. Nowak, Public Defender (Brian Shiffrin of counsel), for appellant.
    I. Appellant was deprived of his right to effective assistance of conflict-free counsel when he was represented at trial by the same attorney who was also representing the corporation which was the victim of the alleged arson for which appellant was being prosecuted and where the trial court failed to make any inquiry as to whether appellant was aware of the risks of the conflict of interest inherent in such joint representation. (Gideon v Wainwright, 372 US 335; People v Gomberg, 38 NY2d 307; Wood v Georgia, 450 US 261; Glasser v United States, 315 US 60; People v Lombardo, 61 NY2d 97; People v Macerola, 47 NY2d 257; People v Baffi, 49 NY2d 820; People v Fioretti, 49 NY2d 976; People v Alicea, 61 NY2d 23; Holloway v Arkansas, 435 US 475.) II. The court below lacked jurisdiction to consider and grant the People’s cross appeal from the decision of the trial court modifying appellant’s conviction from one of arson in the third degree to one of attempted arson in the third degree. (People v Marra, 13 NY2d 18; People v Gersewitz, 294 NY 163; People v Reed, 276 NY 5; People v Zerillo, 200 NY 443; Feinstein v Bergner, 48 NY2d 234; Patrolmen’s Benevolent Assn. v City of New

      York, 41 NY2d 205; Sanders v Winship, 57 NY2d 391; Gaden v Gaden, 29 NY2d 80.) III. The trial court was correct in determining that the People’s proof was legally insufficient to establish the element of damage required for a conviction of arson in the third degree. (People v Simpson, 85 AD2d 306.)

      Howard R. Relin, District Attorney (Joan A. Psaila of counsel), for respondent.
    I. The court below properly found that, under the facts of this case, defendant received effective assistance of counsel. (Gideon v Wainwright, 372 US 335; People v Gomberg, 38 NY2d 307; People v Macerola, 47 NY2d 257; People v Lombardo, 61 NY2d 97; United States ex rel. Miller v Myers, 253 F Supp 55; People v Adams, 53 NY2d 241; People v Ballott, 20 NY2d 600; People v James, 110 AD2d 1037; People v De Mauro, 48 NY2d 892.) II. The court below had jurisdiction to consider and grant the People’s cross appeal. (People v Wright, 92 AD2d 722; People v Holmes, 72 AD2d 1; People v Dorta, 56 AD2d 607, 44 NY2d 930.) III. The court below properly reinstated the jury verdict finding defendant guilty of arson in the third degree. (People v Montanez, 41 NY2d 53; People v Serra, 104 AD2d 66; People v Woods, 99 AD2d 556; People v Wright, 92 AD2d 722.)
   OPINION OF THE COURT

Meyer, J.

An attorney’s concurrent representation of both a defendant charged with arson and the corporation whose building he is alleged to have damaged and whose corporate officer gives testimony tending to prove his guilt involves a conflict of interest which, absent inquiry by the court and the informed consent of the defendant, deprives the defendant of the effective assistance of counsel. The order of the Appellate Division should, therefore, be reversed and a new trial ordered.

I

Defendant, James McDonald, was indicted on charges of arson in the third degree for setting fire to a shed belonging to the Lyell Exchange Lumber Company (the company) in Rochester, New York. Throughout the pretrial and trial proceedings before the Monroe County Court, defendant was represented by retained counsel, Werner Lomker.

In an omnibus motion under CPL 210.30, Lomker sought to inspect the Grand Jury minutes; to dismiss the indictment as not supported by sufficient evidence to establish the crime charged (CPL 190.65 [1]); to suppress, because tainted by a showup, the identification of defendant by the sole eyewitness, Police Officer Evelyn Baez; and other relief. In support of dismissal, counsel attached the affidavit of Michael Lazzaro, the vice-president of the company, made some six months after the fire, attesting that he had inspected the shed on the night of the fire, that there was "some damage where the boards were pulled away from the support near the foundation” but that, in his opinion, "there existed no diminution of value or damage [to the shed] as a result of any fire,” and that, therefore, the company had made no insurance claim for property loss resulting from the fire. After review of the Grand Jury minutes the court denied so much of the motion as sought dismissal but ordered a Wade hearing as to the identification issue.

At the Wade hearing, the People produced evidence that defendant was seen by Officer Baez at about 2:00 a.m. from a distance of about 30 feet; that the area was lit by three street lamps; that Baez saw defendant walk briefly up and down the sidewalk adjacent to the lumberyard and then entered the yard, encircle a building and crouch alongside the corner of a shed from where flames then appeared; that defendant then ran in a northerly direction from the lumberyard; that Baez broadcast a description of him as a white male, with shoulder-length hair wearing dark pants and a white shirt; and that within 15 minutes of her broadcast, he was apprehended and returned in a marked patrol car to the scene of the fire, and there was identified by Baez as the perpetrator. Defense counsel cross-examined the two arresting officers and Baez as well, questioning her about the distance between her and defendant and about the lighting conditions, but never asked whether she knew of defendant’s arrest before she identified him at the crime scene. Then, to the surprise of the prosecutor, Lomker conceded that at trial Baez could not only identify defendant but also could testify to her crime-scene identification of him.

At trial the People presented the same evidence, plus the testimony of fire experts and of Dean Lazzaro, the secretary-treasurer of the company. The experts ruled out possible accidental causes of the fire and stated that the fire — which was quickly extinguished — had caused charring to the building’s clapboards at two separate locations. In their opinion, the charring, along with incidental damage caused by the efforts of fire fighters in pulling some boards away from the foundation, plus the company’s failure to repair the shed in the eight months since the fire, had diminished the value of the shed. Although Lazzaro acknowledged at the beginning of the prosecutor’s questioning that defense counsel "represents [our] company,” the Trial Judge made no effort to ascertain whether defendant was aware of that fact or whether he understood the risks involved in counsel’s representing both defendant and the company. Lazzaro’s testimony concerning the condition of the building after the fire was consistent with Michael Lazzaro’s pretrial affidavit, but he testified further that although defendant had been a lifelong family friend and a long-time employee of the company, he had quit his job about seven weeks before the fire, at a time when defendant and the company "were not on good terms because we had had some prior problems inside our establishment.” He identified those problems as including "theft and what have you” and stated that had defendant not resigned, he would have been fired.

Defense counsel began his cross-examination by acknowledging that "[i]t is very uncomfortable to call you Mr. Lazzaro”, and thereafter referred to the witness as "Dean.” His cross-examination focused on the lack of damage to the shed, but made no reference to defendant’s relationship with the company. The sole witness for the defense was an investigator, through whom defense counsel sought to impeach Officer Baez’s testimony by showing that the distance between her and defendant when she observed him apparently setting the fire was substantially greater than she had testified it was.

In summation the prosecutor argued that defendant had set the fire as "his way of getting back at the [company]” for his having had to resign "under a cloud for one reason or another.” The jury returned a verdict of guilty of arson in the third degree (Penal Law § 150.10 [1]), but on defense counsel’s motion to set aside the verdict, the Trial Judge, reasoning that the People had not proven beyond a reasonable doubt the element of damage to the building, modified the verdict (see, CPL 330.30 [1]; 330.50 [1]; 470.15 [2] [a]) by substituting the lesser included offense of attempted arson in the third degree (see, Penal Law §§ 110.00, 150.10 [1]). Judgment of conviction was then entered on the verdict as modified and defendant was sentenced as a predicate felon to a minimum of two and a maximum of four years in prison.

On appeal from the judgment of conviction, defendant was represented by the Monroe County Public Defender, who argued that defendant had been denied the effective assistance of trial counsel. The Appellate Division disagreed, holding that neither a conflict of interest nor the significant possibility thereof was demonstrated "merely by showing that defendant’s trial counsel also represented the lumber company” (115 AD2d 223, 224), that the fact that the company had made no claim for repair to the shed showed that the company’s interests did not conflict with defendant’s, and that Dean Lazzaro "evidenced no hostility of any kind toward the defendant” (id.). On the People’s cross appeal from the order modifying the jury verdict, the Appellate Division held the People’s evidence of damage sufficient to sustain the jury verdict and, therefore, vacated the judgment of conviction, reversed the Trial Judge’s order, reinstated the jury verdict and remitted the matter to the Monroe County Court for resentencing.

Defendant appeals by leave of a Judge of this court. He argues that he is entitled to a new trial because counsel’s representation of both himself and the company constitutes, per se, a conflict of interest, and that he was, therefore, denied the effective assistance of counsel. He argues also that the Appellate Division erred in reinstating the jury verdict because the People had no authority under CPL 450.20 (3) to cross-appeal to that court from the order modifying the jury verdict and because the evidence was legally insufficient to present a jury question concerning whether defendant had "intentionally damage[d]” the building within the meaning of Penal Law § 150.10 (1). We conclude (1) that the Appellate Division had jurisdiction under CPL 450.20 (3) of the People’s cross appeal, (2) that the evidence of damage to the shed was legally sufficient to sustain defendant’s conviction of arson in the third degree, but (3) that under the circumstances of this case defense counsel’s concurrent representation of defendant and the company constituted a conflict of interest which, in light of the Trial Judge’s failure to inquire into defendant’s knowledge of and consent to the potential risks involved, denied the defendant the effective assistance of counsel. We therefore reverse and order a new trial.

II

A defendant is denied the right to effective assistance of counsel guaranteed by the Sixth Amendment when, absent inquiry by the court and the informed consent of defendant, defense counsel represents interests which are actually in conflict with those of defendant (People v Mattison, 67 NY2d 462, 469-470; People v Lombardo, 61 NY2d 97, 102-103; People v Macerola, 47 NY2d 257, 264-265; People v Gomberg, 38 NY2d 307, 313-314; People v Wilkins, 28 NY2d 53, 55). Initially it is defense counsel’s burden to recognize the existence of a potential conflict of interest, to alert both the client and the court to the potential risks involved, and to obtain the client’s informed consent to counsel’s continued representation despite those risks (People v Lloyd, 51 NY2d 107, 111; People v Gomberg, 38 NY2d, at pp 313-314, supra; see, Code of Professional Responsibility EC 5-16, 5-19; DR 5-105 [C]; ABA Standards for Criminal Justice, Defense Function § 3.5 [a] [1971]). But the prosecutor is also obliged to alert the court when he or she possesses knowledge of facts from which apparent conflict can be inferred (People v Mattison, 67 NY2d, at p 469, supra), and the Trial Judge owes a duty independent of counsel " 'to protect the right of an accused to effective assistance of counsel’ ” (People v Mattison, 67 NY2d, at p 468, supra). And once so informed, or aware of facts from which it appears that conflicting interests arguably exist, the Trial Judge must conduct a record inquiry of each defendant whose representation is potentially conflict-ridden in order to ascertain whether he or she "has an awareness of the potential risks involved in that course and has knowingly chosen it” (People v Gomberg, 38 NY2d 307, 313-314, supra; People v Macerola, 47 NY2d 257, 263, supra). Thus, in Gomberg, we held that defense counsel’s joint representation of codefendants in a criminal prosecution created such a potential conflict of interest, and more recently, in People v Lombardo (61 NY2d 97, 102, supra) we recognize the potential for conflict in defense counsel’s representation of a defendant accused of a usurious loan scheme when he had previously represented the victim of the scheme who served as the prosecution’s chief witness.

Here, although the victim’s corporate officer, Dean Lazzaro, was not the People’s chief witness — a characterization more descriptive of Officer Baez — he nonetheless provided important evidence of defendant’s motive in setting fire to the company’s shed. Thus, as the People concede, when Lazzaro disclosed the fact that defense counsel represented his company, the Trial Judge should have perceived the arguable existence of conflicting loyalties on the part of defense counsel and conducted a Gomberg inquiry.

Though the Trial Judge erred in failing to do so, that error mandates reversal only if defendant has demonstrated that " 'a conflict of interest, or at least the significant possibility thereof, did exist’ ” (People v Lombardo, 61 NY2d, at p 103, supra; People v Macerola, 47 NY2d, at p 264, supra). The conflict must, however, be one which bears a substantial relation to "the conduct of the defense” (People v Lombardo, 61 NY2d, at p 103, supra). In Lombardo, for example, although a potential for conflict existed because defense counsel owed a continuing duty to protect the confidences of his former client — the victim who testified as the prosecution’s chief witness — we held, nonetheless, that counsel, having concluded that the victim’s cooperation with the prosecution amounted to a waiver of the attorney-client privilege, had "eliminated any significant possibility that the conduct of the defense would be affected by the attorney’s prior representation of [the victim/witness], and scrutiny of the attorney’s searching cross-examination of [the victim/witness] on defendant’s trial confirms that the attorney conducted the defense on the operational premise that he no longer owed any professional obligation to [the victim/witness]” (id., at p 103; see also, Olshen v McMann, 378 F2d 993, 994, cert denied 389 US 874, reh denied 389 US 964).

We cannot, however, reach that same conclusion on the present record, for it clearly demonstrates that defense counsel Lomker labored under an actual conflict in his representation of both defendant and the company. Initially, we note that the potential for conflict is far greater here, counsel’s representation of the accused and the victim being concurrent, than in Lombardo, where counsel had terminated his representation of the victim before the trial of the accused (see, People v Wilkins, 28 NY2d, at p 56, supra; but see, United States v Jeffers, 520 F2d 1256, 1263-1264, and n 13, cert denied 423 US 1066 [even though prior representation of witness has ended, the attorney may have a pecuniary interest in possible future business that may cause him to avoid vigorous cross-examination]). The only source of potential conflict in Lombardo was the attorney’s continuing obligation to protect client confidences or secrets even though the attorney-client relationship had terminated (Code of Professional Responsibility EC 4-6; DR 4-101 [B]). The victim of a crime, however, may well have an economic interest in the outcome of the criminal prosecution, creating duties on the part of his or her attorney which inherently conflict with the duties owed to the accused (see, State v Aguilar, 87 NM 503, 536 P2d 263 [victim sought payment of medical expenses from accused]; People v Coslet, 67 Ill 2d 127, 364 NE2d 67 [attorney’s representation of both accused in murder prosecution and the administrator of victim’s estate]; Code of Professional Responsibility EC 5-14 — 5-17, 5-19; DR5-105 [B]). The attorney’s economic interest in continuing representation of the victim, though not a legally cognizable duty, may also motivate a less than zealous defense of the accused even if the victim is not biased. As was stated in an often quoted passage in United States ex rel. Miller v Myers (253 F Supp 55, 57): "It takes no great understanding of human nature to realize that the individuals who had been burglarized might be less than happy and might go so far as to remove the attorney from their good graces if this defendant were acquitted or received a light sentence or were placed on probation. Moreover, if the case had gone to trial it might have meant an investigation involving the [victims] and even cross-examination of them on the stand. The entire situation could be very embarrassing for the lawyer who is naturally interested in having the legal business of the [victims], especially when they are much more able to compensate him for his services than the defendant. The circumstances here are such that an attorney cannot properly serve two masters.”

But perhaps the most pervasive source of conflict remains the victim (see, Castillo v Estelle, 504 F2d 1243, 1245; Unites States ex rel. Miller v Myers, 253 F Supp, at p 57, supra; People v Stoval, 40 Ill 2d 109, 112-113, 239 NE2d 441, 443; see also, Tucker v United States, 235 F2d 238, 240). The Fifth Circuit put the matter succinctly when it stated that "[t]he victim of a crime is not a detached observer of the trial of the accused, and his ’private attorney’ is likely to be restrained in the handling of that client/witness” (Castillo v Estelle, 504 F2d, at p 1245, supra).4 And more recently, speaking in the related context of an accomplice’s testimony against the defendant, we held in Mattison (67 NY2d, at p 470, supra) that the attorney’s decision whether and how best to impeach the credibility of a witness to whom he — or his law partner — owed a duty of loyalty "necessarily placed [the attorney] in a very awkward position, where prejudice to [defendant] need not be precisely delineated but must be presumed (see, People v Gomberg, 38 NY2d 307, 312, supra). ”

The People argue, nonetheless, that under the particular circumstances of this case, defendant has demonstrated neither an actual conflict nor the significant possibility of conflict. They point to the fact that the company disclaimed any economic interest in the outcome of the trial, providing both a pretrial affidavit in support of defendant’s motion to dismiss the indictment and trial testimony asserting that the shed had not been damaged and that no insurance claims had been filed. Thus, they suggest, Dean Lazzaro having testified favorably to defendant on the damage issue, counsel had no interest in attempting to impeach his credibility.

Although we decline to adopt the per se approach urged upon us by defendant, we also disagree with the People’s contention that under the circumstances of this case there was no conflict and on the present record find Mattison controlling. Despite the People’s efforts to portray a spirit of cooperation between defense counsel and the company, we cannot ignore the fact that Dean Lazzaro’s testimony concerning defendant’s employment relationship with the company was an integral part of the People’s case against him. Indeed, the prosecutor foreshadowed this evidence of motive in his opening statement and made full use of it in summation. Under these circumstances, defendant was entitled to be informed by the Trial Judge that his attorney’s representation of the company placed counsel in a "very awkward position” in deciding whether and how best to impeach Lazzaro’s trial testimony. That an attorney whose loyalty is undivided might have chosen not to impeach Lazzaro concerning defendant’s employment history because his testimony was otherwise favorable to defendant, or indeed that no basis for impeachment existed, is of no import. It was the prerogative of defendant rather than his counsel to decide whether he would accept the risk that counsel’s trial strategy was devised not in his interest, but in the interest of the company. Nor is this a case, such as Lemley v State (245 Ga 350, 264 SE2d 881), relied on by the People, where it was held that no conflict existed because both the witness and the accused gave the same testimony (compare also, United States v Fannon, 491 F2d 129, cert denied 419 US 1012 [no conflict where accused confirmed the testimony of accomplice/witness]; Circumstances Giving Rise to Conflict of Interest Between or Among Criminal Codefendants Precluding Representation by Same Counsel, Ann., 34 ALR3d 470, § 6 [d], at 486-490 [collecting similar cases]). We add that here, unlike Lombardo, defense counsel made no claim that his client’s cooperation with the People constituted a waiver of the attorney-client privilege. Legal ethics aside, he could not practically have done so without imperiling his status as the attorney for the company, from whose good graces he may have fallen because of his failure to protect his client’s confidences and secrets (Code of Professional Responsibility EC 4-1, 4-5; DR 4-101 [B]). Nor does it appear that counsel obtained the consent necessary to use a client’s confidences and secrets in a manner detrimental to his or her interest (Code of Professional Responsibility DR 4-101 [C] [2]). The court’s failure to conduct a Gomberg inquiry was, therefore, reversible error.

Ill

There remain for consideration defendant’s challenge to the legal sufficiency of the evidence to sustain the jury’s verdict and to the jurisdiction of the Appellate Division to hear and determine the People’s cross appeal from the order of the Trial Judge modifying the jury verdict.

The Appellate Division did not err in holding the evidence sufficient to present a jury question with respect to damage within the meaning of Penal Law § 150.10 (l). Slight burning or charring was sufficient under prior statute (Levy v People, 80 NY 327 ["burn somewhat the realty” (at p 332); "It matters not that it did not burn but a part of the edifice” (at p 334)]; People v Butler, 16 Johns 203 ["two or three of the kitchen stairs were, in part, consumed”]; 3 Wharton, Criminal Law § 346 [14th ed]; What Constitutes "Burning” to Justify Charge of Arson, Ann., 28 ALR4th 482). This was recognized when the present Penal Law was adopted, the Staff Notes of the Temporary State Commission on Revision of the Penal Law and the Criminal Code (Proposed New York Penal Law 1964) with respect to arson stating that the "burning” requirement of the prior statute "does not mean destruction or even substantial damage, for the slightest damage is sufficient” (id., at 349). Although the prior law was substantially changed to remove incongruities with respect to the intent required for the various degrees of arson (id., at 350), nothing in the legislative history or in the change from "burning a building” to "damages a building” suggests an intent to vary the quantum of proof required. Rather the change makes clear that proof of damage short of burning (including proof of "charring”) is sufficient to establish this element of the crime (see, Hechtman, Practice Commentaries, McKinney’s Cons Laws of NY, Book 39, Penal Law § 150.10, p 89).

We also reject defendant’s challenge to the jurisdiction of the Appellate Division. CPL 450.20 (3) grants the People the right to appeal to an intermediate appellate court from a criminal court "order setting aside a verdict, entered pursuant to section 330.30 or 370.10”. The reference to CPL 330.30 is to that section as a whole and encompasses the court’s authority either to "set aside or modify the verdict or any part thereof’. The Legislature cannot, therefore, be deemed to have intended to exclude from the People’s right of appeal those orders entered pursuant to CPL 330.30 that modify rather than completely set aside the jury verdict (People v Wright, 92 AD2d 722, further appeal at 112 AD2d 38, revd on other grounds 67 NY2d 749; People v Holmes. 72 AD2d 1; see, People v Dorta, 56 AD2d 607, appeal dismissed 44 NY2d 930). Indeed, so to construe the section would be inconsistent with the Legislature’s intent by its enactment to provide defendants with "an omnibus 'motion to set aside verdict’ ” (Temporary State Commission on Revision of Penal Law and Criminal Code, Proposed CPL 170.30, Staff Comment, at 238 [1967]; Bellacosa, Practice Commentary, McKinney’s Cons Laws of NY, Book 11A, CPL 330.30, p 46).

Accordingly, the order of the Appellate Division should be reversed and a new trial ordered.

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

Order reversed, etc.

      . The theory of counsel’s accompanying memorandum of law was that because Penal Law § 150.10 (1) required proof that defendant "intentionally damage[d]” the shed, he could not be convicted of arson in the third degree unless there had been a diminution in the value of the shed.

      . Earlier, in response to questioning by the court, Officer Nicholas Bianchi stated that he informed the police dispatcher, by radio, that he had apprehended defendant and was transporting him back to the lumberyard and that Baez, who carried a portable radio, could have heard the broadcast before she identified defendant.

      . Cf. Wood v Georgia (450 US 261 [defendant’s legal fees paid by his employer]); Judd, Conflicts of Interest — A Trial Judge’s Notes, 44 Fordham L Rev 1097, 1099-1102; Code of Professional Responsibility EC 5-1, 5-21, 5-22; DR 5-101 (A); 5-107 (A).

      . As is evident from our citation in People v Wilkins (28 NY2d 53, 56) of the Myers and Stoval rulings, we have long recognized the dangers inherent in an attorney’s cross-examination of his or her client. That no conflict was found in Wilkins, although the Legal Aid Society represented both the defendant and the complaining witness, resulted from the unique organization of the Society’s legal staff.

      . Defendant would have us rule that there is always a conflict when the same attorney represents both the accused and the victim. Our rejection of such a per se rule does not mean that defendant must specifically demonstrate prejudice, however, in order to obtain a reversal. It will be sufficient, absent the required inquiry and consent, that a substantial possibility of prejudice existed. We underscore the distinction between conflict and prejudice, however, because there is confusion in this regard in some of the cases on which defendant relies to support a per se rule. Thus, in People v Coslet (67 111 2d 127, 133, 364 NE2d 67, 70), the Illinois Supreme Court described People v Stoval (40 111 2d 109, 239 NE2d 441), relied on by defendant as making unnecessary allegation or proof of prejudice when an actual conflict is shown, and made a like ruling in People v Berland (74 111 2d 286, 385 NE2d 649). Similarly, Zurita v United States (410 F2d 477) merely ordered a hearing on petitioner’s coram nobis application. On remand, however, the District Court found that no conflict existed and in an unreported opinion (No. 71-1070, 7th Cir, Jan. 20, 1972, cited in United States v Jeffers, 520 F2d 1256,1260, n 3) the Seventh Circuit affirmed.

      . In light of that conclusion, we need not consider the effect of the company’s disclaimer of any economic interest in the outcome of the criminal prosecution, nor the inference to be drawn from defense counsel’s unanticipated concession, made at the close of the Wade hearing, that Officer Baez’s right to identify defendant at trial would be unrestricted (see, Holloway v Arkansas, 435 US 475, 489-490; and Geer, Representation of Multiple Criminal Defendants: Conflicts of Interests and the Professional Responsibilities of the Defense Attorney, 62 Minn L Rev 119, 128, 136 [discussing defenses "lost” by reason of divided loyalties]).

      . We must, of course, reach these issues, for if defendant is correct in asserting that the evidence was legally insufficient to convict him of arson in the third degree, either because the Trial Judge’s determination to. that effect is not appealable by the People or because, though appealable, the Appellate Division’s contrary determination is erroneous, the remedy would be not a new trial but an order dismissing the indictment with leave for the People to institute such proceedings as they deem appropriate respecting the lesser included attempt offense not charged in the indictment (see, People v Mayo, 48 NY2d 245, 253).

      . The statute provides that "[a] person is guilty of arson in the third degree when he intentionally damages a building or motor vehicle by starting a fire or causing an explosion.”

      . Because appealability goes to the subject matter jurisdiction of the court (see, e.g., People v Marra, 13 NY2d 18, 20, and cases there cited), which may be raised for the first time on appeal to this court (People v Ahmed, 66 NY2d 307, 310; People v Harper, 37 NY2d 96, 99), the fact that the defendant failed to move before the Appellate Division to dismiss the People’s appeal presents no obstacle to our consideration of the question.


text:
    Bernice Liss et al., Respondents, v Trans Auto Systems, Inc., et al., Appellants.
    Argued June 3, 1986;
    decided July 3, 1986

      POINTS OF COUNSEL

      Gerald Richman and Abraham L. Shapiro for Trans Auto Systems, Inc., and another, appellants.
    I. The majority of the court below erred, as a matter of law, in concluding that the determination of the Workers’ Compensation Board foreclosed the owner of the subject vehicle from raising the affirmative defense of workers’ compensation in the instant liability action where the owner and plaintiffs coemployee were denied standing to participate or be heard at the prior compensation proceeding. (O'Rourke v Long, 41 NY2d 219; Pigott v Field, 13 AD2d 350; Baker v Matthews, 8 AD2d 585; Pfeiffer v McCall, 11 AD2d 95; Lambiase v Schechter, 22 AD2d 648; Robbins v Master Diesel Corp., 34 AD2d 1021; Matter of Kane v City of Binghamton, 62 AD2d 1122; Kimbrough v C. F. L. Dev. Corp., 80 AD2d 737; Kenny v Bacolo, 61 NY2d 642; Ryan v New York Tel. Co., 62 NY2d 494.) II. The majority erred in determining that the rules of collateral estoppel would not operate here to deny conclusive effect to the compensation board’s finding. III. In any event Special Term correctly ruled that the motion to dismiss the affirmative defense of workers’ compensation and vacate the prior order of the court as lacking subject matter jurisdiction was nothing more than a motion to reargue and therefore untimely.

      Bernard Caesar and Lynn J. Hershkovits for Kenneth Fuld, appellant.
    I. The determination of the Workers’ Compensation Board cannot be binding upon anyone since even Major Watch Case Company did not have an opportunity to fully and fairly litigate the issues. (Pigott v Field, 13 AD2d 350; Ryan v New York Tel. Co., 62 NY2d 494; DeCoigne v Ludlum Steel Co., 251 App Div 662; Le Pochat v Pendelton, 187 Misc 296, 271 App Div 964; Lavin v Goldberg Bldg. Material Corp., 274 App Div 690, 304 NY 738; Maines v Cronomer Val. Fire Dept., 50 NY2d 535; Greene v Greene, 47 NY2d 447; O’Rourke v Long, 41 NY2d 219; Matter of Holcomb v Daily News, 45 NY2d 602; Heritage v Van Patten, 59 NY2d 1017.) II. A witness who is not a party cannot be bound by the determination in the proceeding to which he was not a party just because he was a witness. (Clemens v Apple, 65 NY2d 746; Gilberg v Barbieri, 53 NY2d 285; Schwartz v Public Administrator, 24 NY2d 65; Matter of Kasten v Zoning Bd., 47 AD2d 766; Ryan v New York Tel. Co., 62 NY2d 494; Matter of Roa v American Tr. Ins. Co., 96 AD2d 609.) III. The motion to dismiss the affirmative defense of workers’ compensation and to vacate the prior order of the court was improper since it was an untimely motion to reargue.

      Martin Diennor and Abraham Fuchsberg for respondents.
    I. The majority was correct in determining that the Workers’ Compensation Board had primary and exclusive jurisdiction to determine whether the workers’ compensation defense was applicable in this case. (O’Rourke v Long, 41 NY2d 219; O’Connor v Midiria, 55 NY2d 538; Orzechowski v Warner-Lambert Co., 92 AD2d 110; Gyory v Radgowski, 89 AD2d 867; Strickland v Washington, 466 US 668; Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Hill v Thompson, 61 NY2d 1018; Matter of Smith v Mallory Timers Co., 97 AD2d 571; Matter of Terwilliger v Green Fuel Economizer, 97 AD2d 572; Matter of Wilson v General Motors Corp., 298 NY 468.) II. The court below was correct in its determination that rules of collateral estoppel make the compensation determination binding on appellants. (Schwartz v Public Administrator, 24 NY2d 65; Ryan v New York Tel. Co., 62 NY2d 494; Marlow v Michael Moise, Inc., 40 AD2d 598.) III. The motion below was made timely. (Matter of Mulhausen v Ray, 89 Misc 2d 298;
      Wheelock v Wheelock, 3 AD2d 25, 4 NY2d 706; Matter ofHuie [Furman], 20 NY2d 568.)
   OPINION OF THE COURT

Titone, J.

The issue posed is whether a determination made in a workers’ compensation proceeding that a worker did not sustain injuries in the course of employment binds those defendants in a liability suit who were not parties to the compensation proceeding. We hold that it does not.

Plaintiff Bernice Liss had been employed by Major Watch Case Co. (Major) for 35 years. For the past 20 of those years, defendant Fuld, president of the company, picked up Liss at her home and transported her to work on most days in an automobile leased by Major from Trans Auto Systems, Inc. (Trans Auto) and Holiday Auto Lease Ltd. (Holiday). On October 22, 1981, during their regular ride to work, Fuld lost control of the car. In the resulting collision with a train pillar, plaintiff sustained severe injuries including a broken hip.

This action was commenced against Fuld, Trans Auto and Holiday. Major is not a party. In their answers, defendants asserted the affirmative defense of workers’ compensation coverage, arguing that the accident arose out of and in the course of plaintiff’s employment (Workers’ Compensation Law § 10 [1]). Defendants’ liability carrier denied no-fault benefits on this basis as well. The parties took no action with respect to the suit, pending the resolution of workers’ compensation proceedings.

A preliminary hearing was conducted before a workers’ compensation Judge at which plaintiff and Fuld testified. The attorneys for plaintiff, the workers’ compensation carrier and the no-fault carrier each actively participated. At the conclusion of the hearing, the Judge determined that there might be sufficient evidence to support a finding that the accident arose out of and in the course of employment. He recommended that plaintiff file a formal claim with the Workers’ Compensation Board and that a full hearing be held on the issue. Thereafter, plaintiff filed her claim.

At the ensuing hearing, plaintiff and Fuld were again the only witnesses. Only plaintiff’s attorney and the attorney for the workers’ compensation carrier were allowed to participate. An attorney for the no-fault carrier was present but was permitted only to observe.

Plaintiffs testimony established that she had been employed by Major for 35 years and that for the past 20 she had been driven to work by Fuld 80-85% of the time. She stated on cross-examination that she had no contractual arrangement with regard to the ride, that Fuld would pick her up on his way to work, and that she was carrying no work-related material on the day of the accident. Fuld testified that he had worked for Major for 20 years. He stated that about 18 years ago, he had begun driving plaintiff to work for the convenience of the company and that he has continued to do so 98-99% of the time.

As a result of the evidence presented at the hearing, the workers’ compensation Judge found that the accident did not arise out of and in the course of plaintiffs employment. The Board, therefore, closed the case (Workers’ Compensation Law § 25 [3] [b]) and the parties returned to the judicial forum.

Defendants then made a motion for summary judgment of dismissal (CPLR 3212) in this action, based upon the testimony at the workers’ compensation hearing and at the examinations before trial. They argued that the evidence conclusively proved that the accident arose out of and in the course of plaintiffs employment. Plaintiff made a cross motion to strike the affirmative defense of workers’ compensation coverage, contending that defendants should be precluded from asserting this position because of the workers’ compensation determination. Special Term denied both motions reasoning that summary judgment was inappropriate because the employment question raised factual issues and that defendants could not be precluded from relitigating an issue decided at a hearing in which they were not allowed to participate. That order was not appealed.

Eight months later, plaintiff made a motion to vacate the order (CPLR 5015 [a] [4]) "on the ground that it exceeded the reaches of the Court’s subject matter jurisdiction” and to strike the affirmative defense or, in the alternative, for an order granting leave to renew plaintiffs motion to strike the affirmative defense on the ground that questions of the availability of workers’ compensation are within the exclusive jurisdiction of the Workers’ Compensation Board. While Special Term stated that the motion was an untimely attempt to reargue the earlier motion, the court decided to recall its decision sua sponte in the interest of justice, and dismissed the affirmative defense of workers’ compensation coverage on the ground that only the employer could raise that defense. Defendants appealed.

The Appellate Division, First Department, affirmed on different grounds. All parties had agreed that the defense of workers’ compensation is available to defendants other than the employer (Heritage v Van Patten, 59 NY2d 1017; Naso v Lafata, 4 NY2d 585; Rauch v Jones, 4 NY2d 592; Compensation — Co-Employee’s Liability, Ann., 21 ALR3d 845, 868-871; see also, Kenny v Bacolo, 61 NY2d 642). The court reasoned that O’Rourke v Long (41 NY2d 219) and its progeny led to the conclusion that a finding of compensability or noncompensability by the Workers’ Compensation Board, the body charged with exclusive jurisdiction over factual issues upon which compensation depends, was final as to all parties to a civil suit evolving from the same accident. The dissent protested, first, that the untimely motion should not have been entertained at all and, second, that defendants could not be precluded from asserting a position they were never allowed to litigate. The Appellate Division granted leave to appeal and certified the following question: "Was the order of Supreme Court, as affirmed by this Court, properly made?”

Initially, it should be noted that, regardless of statutory time limits concerning motions to reargue, every court retains continuing jurisdiction to reconsider its prior interlocutory orders during the pendency of the action (Aridas v Caserta, 41 NY2d 1059, 1061; Hudson City Sav. Inst. v Burton, 99 AD2d 871, 872, appeal dismissed 62 NY2d 801). The Special Term Judge’s sua sponte decision to rescind his prior order was not an abuse of this discretionary power as a matter of law.

The remaining issue calls for analysis of the interplay between the concepts of jurisdiction and issue preclusion. On the one hand, the Workers’ Compensation Board has been said to be vested with primary jurisdiction over factual issues concerning compensation coverage. On the other hand, no one should be precluded from relitigating those issues in a court of law who has not had the opportunity to participate in the compensation hearing. We conclude that the Workers’ Compensation Board has primary jurisdiction, but not necessarily exclusive jurisdiction, in factual contexts concerning compensability.

In O’Rourke v Long (41 NY2d 219, 228, supra), we held that "where the availability of workmen’s compensation hinges upon the resolution of questions of fact or upon mixed questians of fact and law, the plaintiff may not choose the courts as the forum for the resolution of such questions”. The Workers’ Compensation Board thus has primary jurisdiction over the issue of the availability of coverage (Botwinick v Ogden, 59 NY2d 909, 911; Peckham v Peckham Materials Corp., 102 AD2d 884), and a plaintiff has no choice but to litigate this issue before the Board (Cunningham v State of New York, 60 NY2d 248, 252; McMillan v Notre Dame Residence Club, 33 Misc 2d 948, 951). If a plaintiff fails to do so, the court should not express an opinion as to the availability of compensation but remit the matter to the Board (ORourke v Long, supra; Gyory v Radgowski, 89 AD2d 867, 869). The Board must be given an opportunity to find plaintiff’s injuries the result of a compensable accident. The compensation claim is a jurisdictional predicate to the civil action (O’Rourke v Long, supra, at p 226; McMillan v Notre Dame Residence Club, supra, at p 951).

The Board’s decision finally determines the controversy between the parties to the hearing (Workers’ Compensation Law § 23; Werner v State of New York, 53 NY2d 346) who are normally the injured employee and the employer or his workers’ compensation carrier (Workers’ Compensation Law §25 [3] [a]). Thus, any party to the hearing who had the required notice and opportunity to be heard (Workers’ Compensation Law § 25 [3] [b]) will be precluded from relitigating issues necessarily decided by the administrative Judge (O’Connor v Midiria, 55 NY2d 538, 541; Werner v State of New York, supra; see, Restatement [Second] of Judgments § 27). As workers’ compensation is an exclusive remedy (Workers’ Compensation Law § 11), a determination by the Board that a plaintiff is entitled to compensation effectively precludes plaintiff from pursuing a civil remedy for his injuries even against defendants who were not parties to the hearing (O’Rourke v Long, supra, at pp 227-228; Gyory v Radgowski, supra). If, however, the Board finds the injuries outside the purview of the Workers’ Compensation Law, the employer who participated in the administrative hearing may not assert the affirmative defense of compensation coverage in the ensuing civil action (O’Rourke v Long, supra, at p 228; Gyory v Radgowski, supra, at p 869).

A more complex tug of policies presents itself when the Board finds the injuries not compensable and plaintiff seeks redress from a defendant who was not a party to the hearing. Plaintiff, having been forced to litigate the availability of compensation once, understandably wishes the determination of the Board to be final against the world. Defendant, not having had an opportunity to contest the issue, would like the court to address it de nova.

Here, defendants had no possible enforceable interest in a workers’ compensation award and, therefore, were not parties in interest in the compensation case (Matter of Roa v American Tr. Ins. Co., 96 AD2d 609, appeal dismissed 60 NY2d 860; Lotito v Salt City Playhouse, 66 AD2d 437, 439; Sands & Lamel, Insurance Law, 31 Syracuse L Rev 323, 327). It was not an abuse of the compensation Judge’s discretion to preclude participation by defendants at the hearing. Unless the Legislature expands the definition of parties in interest, the unfortunate result will be that a duplicative proceeding must be held and the issue of compensability adjudicated anew because defendants never had a "full and fair opportunity” to litigate the question (Kaufman v Lilly & Co., 65 NY2d 449, 455; Ryan v New York Tel. Co., 62 NY2d 494, 501; Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d 11, 17; Schwartz v Public Administrator, 24 NY2d 65, 72; Pielemeier, Due Process Limitations on the Application of Collateral Estoppel Against Nonparties to Prior Litigation, 63 BU L Rev 383).

It is clear that where a defendant was not afforded an opportunity to cross-examine witnesses or present evidence at the prior hearing, the outcome of the hearing cannot have preclusive effect on that party (Ryan v New York Tel. Co., supra; Gramatan Home Investors Corp. v Lopez, 46 NY2d 481, 486-487; Schwartz v Public Administrator, supra; Lambiase v Schechter, 17 NY2d 496, affg 22 AD2d 648, 649; Matter of Kane v City of Binghamton, 62 AD2d 1122, 1125; Pfeiffer v McCall, 11 AD2d 95, 96; see, Schroeder, Relitigation of Common Issues: The Failure of Non-Party Preclusion and an Alternative Proposal, 67 Iowa L Rev 917). It is of no moment that defendant Fuld testified at the hearing when he had no control over the direction of his own testimony, no opportunity to cross-examine, and no counsel to guide him (Matter of Kasten v Zoning Bd., 47 AD2d 766; but see, Marlowe v Michael Moise, Inc., 40 AD2d 598). It follows that since genuine questions of fact appear to exist as to the connection between plaintiff’s accident and her employment, defendants should be afforded the opportunity to prove the affirmative defense of compensation coverage (Kimbrough v C. F. L. Dev. Corp., 80 AD2d 737; Robbins v Master Diesel Corp., 34 AD2d 1021).

Furthermore, just as in Pigott v Field (13 AD2d 350), defendants were the only parties who would have favored a finding of compensability at the hearing. Plaintiff and the compensation carrier were of one mind on that issue. Thus, quite apart from defendants’ inability to participate in the hearing, there is another reason to deny issue preclusive effect. The prior hearing was nonadversarial in nature and defendants’ point of view was never presented (Ryan v New York Tel. Co., 62 NY2d 494, 501, supra; Schwartz v Public Administrator, 24 NY2d 65, 72, supra; Pigott v Field, supra).

While a separate judicial determination on the issue of whether plaintiff’s injuries occurred during the course of her employment may lead to an inconsistent result, plaintiff is not without a remedy. Pursuant to Workers’ Compensation Law § 123, she may seek to reopen her case before the Board for a new determination within seven years of the date of the accident (Cunningham v State of New York, 60 NY2d 248, 253, supra; O’Connor v Midiria, 55 NY2d 538, 541, supra; Werner v State of New York, 53 NY2d 346, 352, n 2, supra).

Accordingly, the order of the Appellate Division should be reversed, with costs, plaintiffs’ motion to strike the affirmative defense of workers’ compensation denied and the question certified answered in the negative.

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

Order reversed, etc.