author: Smith, J. Wesley, J.

text:
    [679 NE2d 1035, 657 NYS2d 555]
    In the Matter of Joseph F. Gazza, Appellant, v New York State Department of Environmental Conservation, Respondent.
    Argued January 7, 1997;
    decided February 18, 1997

      POINTS OF COUNSEL

      Esseks, Hefter & Angel, Riverhead (Steven R. Angel and John M. Wagner of counsel), for appellant.

      Dennis C. Voceo, Attorney-General, New York City (Gregory J. Nolan, Barbara Gott Billet, Peter H. Schiff, John J. Sipos and Michael Belohlavek of counsel), for respondent.

      Bracken & Margolin, Islandia (John P. Bracken of counsel), James S. Burling and Stephen E. Abraham, of the California Bar, admitted pro hac vice, for Pacific Legal Foundation, amicus curiae.

      John A. Humbach, White Plains, for Audubon Council of New York State and others, amici curiae.

      Wilmer, Cutler & Pickering (William A. Butler, David A. Westbrook and James F. O’Reilly, of the District of Columbia Bar, admitted pro hac vice, of counsel), and James T.B. Tripp, New York City, for Environmental Defense Fund, amicus curiae.

   OPINION OF THE COURT

Smith, J.

The primary issue in this case is whether the denial of a building variance pursuant to environmental regulation effects an unconstitutional taking (US Const Fifth Amend; NY Const, art I, § 7) for which the landowner must be justly compensated. Petitioner argues that the denial of a variance due to legislation enacted to preserve wetlands is a taking despite the fact that the legislation was fully enacted and in force when he purchased the property. We disagree and affirm the dismissal of the petition.

Petitioner purchased property located in a residentially zoned district in the Village of Quogue, Town of Southampton, Suffolk County, for $100,000. Approximately 65% of the 43,500-square-foot parcel had previously been inventoried as tidal wetlands by the New York State Department of Environmental Conservation (DEC). As Supreme Court found, the purchase price reflected the fact that a variance would be required to build a residence on the property due to its incorporating tidal wetlands. Petitioner estimates that, assuming a variance were granted and a residence could be constructed on the property, the parcel would be worth $396,000.

Petitioner applied to the DEC for two setback variances from the requirements of 6 NYCRR 661.6 to enable him to construct a single-family home on the parcel. The first variance request was from the minimum 75-foot setback required between the tidal wetlands boundary and the dwelling. The second variance request was from the 100-foot setback required between the wetlands boundary and the planned septic system.

The matter was heard by an Administrative Law Judge (ALJ) who recommended that the application be denied. Nevertheless, the ALJ suggested the construction of a dock, catwalk, and/or a small parking lot as possible uses for the property. The Hearing Report of the ALJ was adopted as the decision in the matter by the DEC Commissioner.

In concluding that the petitioner had not sustained his burden of showing that the variances would have no adverse impact on the tidal wetlands contained on the property, the DEC concluded:

"The proposed project and all of the many alternatives that were considered require a variance from the development restrictions of 6 NYCRR 661.6. To receive the variance, the Applicant has the burden to show that, among other things, the granting of a variance would not have an undue adverse impact on the present or potential value of the tidal wetland (6 NYCRR 661.12 (a) [stc]). The record clearly demonstrates that the Applicant has not sustained this burden. The proposed project and any of the alternatives would eliminate or diminish several tidal wetland benefits, in particular, values related to flood control, wildlife habitat, marine food production and silt/organic material absorption. Exacerbating these impacts is the fact that losses would occur in one of the few functioning wetlands remaining in an otherwise developed area.”

Moreover, the DEC made findings of fact that the proposed construction of a sanitary system threatened both marine life and humans, that other contaminants threatened the area and that flooding problems would be increased.

Because the property was located in a residentially zoned area, none of the uses suggested by the ALJ and adopted by the DEC were allowable without a variance from the Town’s Zoning Board. Rather than apply for such a variance, petitioner filed this action pursuant to ECL 25-0404 and CPLR article 78.

In Supreme Court, petitioner did not contend that the DEC’S determination was not supported by substantial evidence. Rather, petitioner argued that the decision of respondent, the DEC, constituted a taking without just compensation of petitioner’s real property. A hearing was held to determine petitioner’s claim.

At the hearing, petitioner’s appraiser testified that the value of the property without the wetlands restriction would be $396,000. Respondent’s appraiser testified that under the wetlands restrictions, the property was still worth $80,000. There was also testimony from a local resident that in 1991 he offered petitioner $50,000 for the property, an offer that had not been withdrawn.

Supreme Court found that no taking had occurred and dismissed the proceeding. In so holding, the court found that petitioner had failed to demonstrate that his property had "but a bare residue of [its] value” due to the denial of a building permit and the application of the wetlands regulation. (Matter of Gazza v New York State Dept. of Envtl. Conservation,, 159 Misc 2d 591, 593.) The court held:

"The issue is whether petitioner offered sufficient proof to sustain his heavy burden of showing that the property, as restricted, has lost its economic value, or all but a bare residue of it. The answer is no. The whole focus of the testimony of his own real estate expert was that the property was not as valuable as it would be without the regulations. That is not enough, particularly when there was testimony from a real estate expert called by respondent to show the property, as restricted, had a value of approximately $80,000, which was not too much less than what petitioner 'paid’ for it ($100,000).” (Id., at 594.)

Supreme Court went on to explicate an alternative basis to deny petitioner relief. Citing Lucas v South Carolina Coastal Council (505 US 1003), Supreme Court concluded that because petitioner knew at the time he purchased the property that there were wetlands limitations, petitioner did not own an interest in the property which could be "taken” by the denial of the setback variances. The court noted that because his title was limited by the wetlands regulations, petitioner had no reasonable investment-backed expectation that he could build a residence there.

The Appellate Division affirmed the dismissal of the petition and noted that "[c]entral to this appeal is the fact that at the time he purchased the property, the petitioner knew of the wetland regulations that 'burdened’ it” (Matter of Gazza v New York State Dept. of Envtl. Conservation, 217 AD2d 202, 209). Petitioner argued that he was not bound by such knowledge since it was not until the variance was denied that he was made to suffer a regulatory taking. The Appellate Division disagreed and concluded:

"that where, as here, a landowner does not have a reasonable investment-backed expectation that he would be able to build a residence on his parcel, he cannot claim a regulatory taking when his application for a permit to allow the construction of a building is denied” (217 AD2d 202, 203, supra).

In other words, the Appellate Division, citing Lucas v South Carolina Coastal Council (supra) stated that at the time petitioner purchased this property, he did so knowing that wetlands restrictions were in place. He thus knew that he was purchasing property with limitations on its use. It followed that he took title to the property with restrictions and no compensation was warranted.

Petitioner appeals the determination of his claim that his property has been taken without compensation. He also argues that this Court should review its decision in de St. Aubin v Flacke (68 NY2d 66, 76) which stated that a "landowner who claims that land regulation has effected a taking of his property bears the heavy burden of overcoming the presumption of constitutionality that attaches to the regulation and of proving every element of his claim beyond a reasonable doubt.” He claims that this burden is so onerous that it denies him the equal protection of the law.

In 1973, the Legislature concluded that "tidal wetlands constitute one of the most vital and productive areas of our natural world, and that their protection and preservation are essential.” (L 1973, ch 790, § 1.) The Legislature also noted its concern that much of the State’s tidal wetlands had already been irreparably destroyed or despoiled and the remaining wetlands were in imminent danger of the same fate {id,.). Pursuant to these findings, the Legislature enacted the Tidal Wetlands Act and struck a balance between ecological and economic considerations by preserving and protecting tidal wetlands while permitting reasonable economic use and development (L 1973, ch 790; cf., Spears v Berle, 48 NY2d 254, 260 [discussing policy of Freshwater Wetlands Act enacted in 1975]).

To implement this policy, the Legislature directed the Commissioner of Environmental Conservation to inventory all tidal wetlands in the State of New York (ECL 25-0201). The Commissioner was also empowered to regulate the use of inventoried wetlands as well as the areas immediately adjacent thereto (ECL 25-0202, 25-0301, 25-0302; de St. Aubin v Flacke, 68 NY2d 66, 70, supra [tidal wetlands are "subject to rigorous regulation’ ”] [quoting Spears v Berle, 48 NY2d, at 260]).

The Legislature also enacted strict guidelines for the application and granting of permits to landowners desiring to conduct regulated activities in and around inventoried wetlands (ECL 25-0402, 25-0403). The applicant has the "burden of demonstrating that the proposed activity will be in complete accord with the policy and provisions” of the Tidal Wetlands Act (ECL 25-0402 [1]). Judicial review pursuant to CPLR article 78 is available to "[a]ny person aggrieved by the issuance, denial, suspension, or revocation of a permit” (ECL 25-0404). Here, the petitioner initiated an article 78 proceeding challenging the denial of his permit by the DEC.

As provided under section 25-0404:

"In the event that the court may find that the determination of the commissioner constitutes the equivalent of a taking without compensation, and the land so regulated otherwise meets the interest and objectives of this act, it may, at the election of the commissioner, either set aside the order or require the commissioner to acquire the tidal wetlands or such rights in them as have been taken, proceeding under the power of eminent domain” (ECL 25-0404).

Judicial review is a two-step process. As noted in de St. Aubin, "If the court finds that the permit denial is supported by substantial evidence, then a second determination is made in the same proceeding to determine whether the restriction constitutes an unconstitutional taking requiring compensation” (68 NY2d, at 70; see also, Spears v Berle, 48 NY2d, at 261).

Turning to the first step in the process, the DEC’s denial of the setback variances in this case is supported by substantial evidence. We have previously noted the findings and conclusions of the DEC which petitioner does not dispute.

It must next be "determined whether the wetlands act, coupled with the denial of the * * * permit, has placed such an onerous burden on the property that a taking must be deemed to have occurred” (Spears v Berle, 48 NY2d, at 261).

In Lucas, the Supreme Court stated:

"Where the State seeks to sustain regulation that deprives land of all economically beneficial use, we think it may resist compensation only if the logically antecedent inquiry into the nature of the owner’s estate shows that the proscribed use interests were not part of his title to begin with. This accords, we think, with our 'takings’ jurisprudence, which has traditionally been guided by the understandings of our citizens regarding the content of, and the State’s power over, the 'bundle of rights’ that they acquire when they obtain title to property” (505 US, at 1027).

Our courts have long recognized that a property interest must exist before it may be "taken” (United States v Willow Riv. Co., 324 US 499, 502-503; Bennett v Long Is. R. R. Co., 181 NY 431, 435). Neither may a taking claim be based upon property rights that have already been taken away from a landowner in favor of the public. For example, government may "assert a permanent easement that was a pre-existing limitation upon the landowner’s title” (Lucas v South Carolina Coastal Council, 505 US, at 1028-1029). Similarly, regulatory limitations that "inhere in the title itself” will bind a purchaser (id., at 1029). To paraphrase Supreme Court’s ruling, the purchase of a "bundle of rights” necessarily includes the acquisition of a bundle of limitations.

Under a State’s power of eminent domain, the legitimate exercise of police power to advance the general welfare may result in the redefinition of property interests in favor of the public. It is that redefinition of a landowner’s title that can serve as the basis of a takings claim. Indeed, the United States and New York State Constitutions both provide that a private party must be compensated when such interests are "taken” away so a landowner may look to the government for just compensation upon the destruction of a formerly owned property interest.

However, once taken, those property interests are no longer owned by the private landowner and may not be sold by such party. Rather, a promulgated regulation forms part of the title to property as a preexisting rule of State law. While the remaining property interests may still be freely transferred by the landowner, a purchaser’s title is necessarily limited to and by those property interests alone.

Of course, the State may exercise its police power of eminent domain only upon a showing of a valid legislative purpose. Thus, it has been recognized that a subsequent purchaser may attack previously enacted regulations that affect the purchased property as beyond government’s legitimate police power (see, e.g., Pennsylvania Coal Co. v Mahon, 260 US 393, 413 ["it always is open to interested parties to contend that the legislature has gone beyond its constitutional power”]). In Vernon Park Realty v City of Mount Vernon (307 NY 493), this Court held: "Purchase of property with knowledge of the restriction does not bar the purchaser from testing the validity of the zoning ordinance since the zoning ordinance in the very nature of things has reference to land rather than to owner [citation omitted]. Knowledge of the owner cannot validate an otherwise invalid ordinance” (307 NY, at 500-501).

While any party adversely affected by government action may attack such action as unconstitutional and illegitimate, petitioner does not claim that wetlands regulation is beyond the State’s power. Rather, petitioner simply claims that the property interest he had in building a dwelling on his land was taken by the State through the denial of the setback variance.

The determination of whether a property interest exists to support a taking claim is typically the threshold inquiry (see, Lucas v South Carolina Coastal Council, 505 US 1003, 1027, supra [addressing the "logically antecedent inquiry into the nature of the owner’s estate”]; Soon Duck Kim v City of New York, 90 NY2d 1, 6 [decided today]). In this case, the petitioner’s claim is based upon the denial of the setback variances. Petitioner had a reasonable expectation that the DEC would consider his request in accordance with the standards and purposes of the wetlands regulations generally and as applied to other landowners. The Legislature has expressly provided for judicial review of DEC action taken pursuant to a permit request (ECL 25-0404). Such action must state the "findings and reasons” upon which it is based (ECL 25-0403 [4]). The Commissioner may elect the remedy if a court finds that a DEC determination "constitutes the equivalent of a taking without compensation” (ECL 25-0404).

We have previously noted that the subject regulations were implemented to balance ecological and economic considerations (ECL 25-0102). The regulations of the DEC expressly provide that it must examine a permit request "taking into account the social and economic benefits which may be derived from the proposed activity” (6 NYCRR 661.9 [b] [1] [i]). In connection with its review of a permit request under its regulations, the DEC has the authority to "modify the application of any provisions in such a manner that the spirit and intent of the pertinent provisions shall be observed, that public safety and welfare are secured and substantial justice done” (6 NYCRR 661.11 [a]).

However, petitioner does not dispute that the DEC’s determination is supported by substantial evidence. Thus, whatever claim petitioner may have had that his application was not decided in accordance with DEC regulations, must fail.

Although petitioner’s permit application was entitled to due consideration, petitioner’s claim that the denial of his variance was a "taking” must fail because he never owned an absolute right to build on his land without a variance. As stated in French Investing Co. v City of New York (39 NY2d 587, 597), "[i]t is recognized that the 'value’ of property is not a concrete or tangible attribute but an abstraction derived from the economic uses to which the property may be put.” Since the enactment of the wetland regulations, the only permissible uses for the subject property were dependent upon those regulations which were a legitimate exercise of police power. Petitioner cannot base a taking claim upon an interest he never owned. The relevant property interests owned by the petitioner are defined by those State laws, enacted and in effect at the time he took title and they are not dependent on the timing of State action pursuant to such laws.

Although an analysis of the petitioner’s title is dispositive, it should be noted that petitioner’s taking claim would be infirm under the alternative analysis found by Supreme Court to which we now turn.

Any takings analysis involves the resolution of whether the government legislation is "supported by a substantial State interest and close nexus” (Manocherian v Lenox Hill Hosp., 84 NY2d 385, 399-400; see also, French Investing Co. v City of New York, 39 NY2d, at 596). There is no dispute that the protection of the State’s tidal wetlands is a legitimate governmental purpose and restrictions regarding the amount of setback from the edge of the wetlands for building are reasonably related to that purpose.

Once it has been established that the regulations at issue are a legitimate exercise of police power, we must next determine whether the regulations result in a taking of petitioner’s property by depriving the landowner of his property rights. Oftentimes, this question may be answered by examining the character of the government action (Penn Cent. Transp. Co. v New York City, 438 US 104, 124). For example, physical occupations have been ruled takings requiring compensation "no matter how minute the intrusion, and no matter how weighty the public purpose behind it” (Lucas v South Carolina Coastal Council, 505 US, at 1015; see also, Loretto v Teleprompter Manhattan CATV Corp., 458 US 419). A taking has also traditionally been found when the government requires land to be "left substantially in its natural state” (Lucas v South Carolina Coastal Council, 505 US, at 1018). As stated in Lucas: "when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking” (Lucas v South Carolina Coastal Council, 505 US, at 1019 [emphasis in original]; see also, Penn Cent. Transp. Co. v New York City, 438 US, at 127-128 [discussing cases where a taking was found under regulations that rendered property "wholly useless” or resulted in "complete destruction” of property interest]). Such circumstances have been characterized as a taking per se. The question becomes more complex when the government merely restricts certain uses for property.

The Supreme Court has noted that "government regulation — by definition — involves the adjustment of rights for the public good. Often this adjustment curtails some potential for the use or economic exploitation of private property” (Andrus v Allard, 444 US 51, 65). Courts have also recognized that regulatory power has constitutional limits (see, e.g., Lucas v South Carolina Coastal Council, 505 US, at 1014 ["the government’s power to redefine the range of interests included in the ownership of property [is] necessarily constrained by constitutional limits”]; Pennsylvania Coal Co. v Mahon, 260 US 393, 415, supra ["while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking”]).

However, the outer limit of regulation needed to support a takings determination has not been amenable to firm demarcation (see, Spears v Berle, 48 NY2d, at 262 ["courts have encountered difficulty in formulating a bright-line standard for differentiating permissible police power measures from overly vigorous and hence unconstitutional impositions”]; Lucas v South Carolina Coastal Council, 505 US, at 1015 ["we have generally eschewed any ' "set formula” ’ for determining how far is too far”] [citation omitted]). Accordingly, it has been necessary for courts to engage in " 'essentially ad hoc, factual inquiries’ ” when presented with takings claims (Loretto v Teleprompter Manhattan CATV Corp., 458 US, at 426; Lucas v South Carolina Coastal Council, 505 US, at 1015; Penn Cent. Transp. Co. v New York City, 438 US, at 124).

Courts have enunciated several tests to resolve the fact-intensive question of the impact of regulation upon a landowner (Andrus v Allard, 444 US, at 65 ["Formulas and factors have been developed in a variety of settings”]). Where a per se taking is not demonstrated, whether a taking has occurred may be determined by an examination of various factors such as those set forth in the Penn Central case: the economic impact of the regulation, the extent to which the regulation has interfered with reasonable investment-backed expectations, and the character of the governmental action (see, Lucas v South Carolina Coastal Council, 505 US, at 1019-1020, n 8). For example, an analysis of the regulation’s economic impact upon the landowner is one way to resolve the issue. Such impact may be reflected by the economic viability (Penn Cent. Transp. Co. v New York City, 438 US, at 138, n 36) or the "reasonable return” on the property post-regulation (id., at 136). Under such an analysis however, it is clear that the "mere diminution in the value of property, however serious, is insufficient to demonstrate a taking” (Concrete Pipe & Prods. of Cal. v Construction Laborers Pension Trust for S. Cal., 508 US 602, 645; see also, Penn Cent. Transp. Co. v New York City, 438 US, at 131 [cases "uniformly reject the proposition that diminution in property value, standing alone, can establish a 'taking’ ”]).

The Supreme Court in Penn Cent. Transp. Co. v New York City (438 US 104, supra) also noted that an examination of reasonable "investment-backed expectations” (id., at 124) may be particularly relevant. There is no such expectation that a government agency will act in a particular manner when it is not authorized to do so (see, e.g., Ruckelshaus v Monsanto Co., 467 US 986, 1006). Similarly, the mere fact that an agency may take such action does not necessarily give rise to a reasonable expectation when the agency chooses not to so act (id., at 1005 [" 'reasonable investment-backed expectation’ must be more than a 'unilateral expectation or an abstract need’ ”] [citation omitted]). Expectations may also be examined in light of the level of interference with permissible uses of the land by the subject regulation (Penn Cent. Transp. Co. v New York City, 438 US, at 136).

While such tests may be used as an aid in determining the merits of a takings claim, it has been noted that "[r]esolution of each case * * * ultimately calls as much for the exercise of judgment as for the application of logic” (Andrus v Allard, 444 US, at 65). The primary inquiry must always focus upon "the question of the severity of the impact of the law on appellants’ parcel” (Penn Cent. Transp. Co. v New York City , 438 US, at 136).

Furthermore, whatever the analysis used to determine the impact of regulation on a landowner, the fact that a regulation "deprives the property of its most beneficial use does not render it unconstitutional” (Goldblatt v Hempstead, 369 US 590, 592; Penn Cent. Transp. Co. v New York City, 438 US, at 130 [no taking shown merely because landowners are denied "the ability to exploit a property interest that they heretofore had believed was available for development”]). " 'Governmental action short of acquisition of title or occupancy has been held, if its effects are so complete as to deprive the owner of all or most of his interest in the subject matter, to amount to a taking’ ” (Ruckelshaus v Monsanto Co., 467 US 986, 1005, supra [quoting United States v General Motors Corp., 323 US 373, 378] [citation omitted]). Thus, a taking may be found only if an onerous burden forces property owners "alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole” (Armstrong v United States, 364 US 40, 49).

Supreme Court found, and there is support in the record for the conclusion that the economic value of the property had not been extinguished since it could still be used for recreational purposes and that petitioner’s reasonable expectations were reflected by his consideration of the inherent limitations on the property when he made the purchase offer for thousands less than its worth without the restrictions. Thus, his "reasonable” expectations were not affected when the property remained restricted. Petitioner argues that the finding of value does not take into account the fact that the nonresidential uses proposed by DEC that add value to his land may not be undertaken without a variance from the Village.

In such circumstances, we have stated that petitioner has the burden of showing that it is unreasonable to expect relief from a zoning restriction (de St. Aubin v Flacke, supra, 68 NY2d, at 76, 78-79). Although petitioner did not have to complete the application process to meet his burden on the issue, his conclusory assertion that the zoning variance would not be granted is insufficient when the record contains "ample and convincing” evidence to the contrary (Matter of Gazza v New York State Dept. of Envtl. Conservation, 217 AD2d 202, 212, supra). The Village Law provides that a variance may be granted if an applicant cannot realize a reasonable return without it (Village Law § 7-712-b [2] [b]). The value of the subject property was, at most, diminished as restricted by the regulations.

Here, no per se taking occurred. Moreover, even if petitioner’s "bundle of rights” included the "stick” he claims was taken, any burden resulting from the denial of the setback variances would not rise to the level of a taking (Lucas v South Carolina Coastal Council, 505 US, at 1030). Rather, the alleged diminution of value and limitation of property uses caused by the environmental regulations would fall well within constitutional boundaries.

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

Wesley, J.

(concurring). I agree that petitioner has not established a taking because the economic value of his property has not been extinguished. For the reasons set forth in my dissenting opinion in Matter of Anello v Zoning Bd. of Appeals (89 NY2d 535 [decided today]), however, I cannot agree that petitioner would otherwise be unable to establish a taking because he acquired the property after the enactment of the Tidal Wetlands Act. (ECL 25-0101 et seq.)

If, as the majority reaffirms, "a subsequent purchaser may attack previously enacted regulations that affect the purchased property as beyond government’s legitimate police power” (majority opn, at 614), then a subsequent purchaser should also be able to challenge an otherwise valid regulation if it results in a taking without compensation. There are many reasons why a prior owner might not have pursued a taking claim. For example, a prior owner may have lacked the financial resources to develop the property or to commence an action on a taking claim. Under the reasoning of the majority, the prior owner would nonetheless have had to keep abreast of regulatory enactments and, if an enactment appeared to deprive the property of its economic value, to challenge the statute. Otherwise, the property may have been rendered worthless without the government paying any compensation for the property. By conveying the property to another party who may be willing and able to develop it or to seek compensation for the taking of its value, the prior owner has instead, under the majority’s holding, ensured the destruction of the property’s economic value.

There is no need to create a rule of law that restricts the alienability of property in New York in this manner, when we all agree that petitioner has no taking claim for a different reason. Supreme Court determined, and the Appellate Division agreed, that petitioner had not met his burden of proving that the economic value of the property had been destroyed by the denial of a variance. I would affirm on that ground alone.

Chief Judge Kaye and Judges Bellacosa, Levine and Ciparick concur with Judge Smith; Judge Wesley concurs in result in a separate opinion; Judge Titone taking no part.

Order affirmed, with costs.

      1. 6 NYCRR 661.11 (a) provides that "[t]he burden of showing that a variance to such provisions should be granted shall rest entirely on the applicant.”

      . The Fifth Amendment to the United States Constitution provides in relevant part that "[n]o person shall * * * be deprived of * * * property, without due process of law; nor shall private property be taken for public use, without just compensation.” The Takings Clause of the Fifth Amendment applies to State action through the Fourteenth Amendment (Dolan v City of Tigard, 512 US 374, 383-384 [citing Chicago, Burlington & Quincy R. R. Co. v Chicago, 166 US 226]). Article I, § 7 of the New York State Constitution provides in part that "[p]rivate property shall not be taken for public use without just compensation.”

      . We conclude that whether the petitioner must prove his claim beyond a reasonable doubt or by a lesser standard such as a preponderance of the evidence, there has been no taking and we decline to review the de St. Aubin decision.

      . The entirely separate inquiry of whether an existing taking claim may be donated, sold, inherited or otherwise assigned is not before this Court. Petitioner does not base his claim on such grounds and we decline to reach the question.

      . We note that although the issue must be addressed in every taking claim, the absence of an extended discussion does not indicate an erroneous omission. A court is not required to list every consideration upon which its decision is based. The existence of a protectible property interest may be clear (see, Lucas v South Carolina Coastal Council, 505 US, at 1017, n 7).

      . We have noted that State law may be examined "whatever its source” (Soon Duck Kim v City of New York, 89 NY2d —, —, supra [decided today]). Thus, common-law principles and State statutes may be examined to determine the limits and rights of a landowner’s title.


source: Caselaw Access Project

author: Levine, J.

license: Public Domain

text:
    [679 NE2d 1044, 657 NYS2d 564]
    Northville Industries Corporation, Appellant, v National Union Fire Insurance Company of Pittsburgh, Pa., et al., Respondents, et al., Defendants.
    Argued and submitted February 6, 1997;
    decided March 25, 1997

      POINTS OF COUNSEL

      Paul, Weiss, Rifkind, Wharton & Garrison, New York City (Martin London, Maria T. Vullo and Michael P. Bowen of counsel), for appellant.

      Simpson Thacker & Bartlett, New York City (Barry R. Ostrager and David Woll of counsel), and Cozen and O’Connor (Sheldon Karasik and Peter M. Papasavas of counsel), for National Union Fire Insurance Company of Pittsburgh, Pa., respondent.

      Melito & Adolfsen, P. C., New York City (Ignatius John Melito and John Volpe of counsel), for Hartford Accident and Indemnity Company, respondent.

      Wilson, Elser, Moskowitz, Edelman & Dicker, New York City (Richard S. Oelsner and Sari B. Axelrod of counsel), for Continental Insurance Company and another, respondents.

      Mendes & Mount, L. L.P., New York City (Mary Ann D'Amato and George L. Maniatis of counsel), and Phelps, Dunbar, L. L. P. (Richard N. Dicharry and Stephen P. Hall, of the Louisiana Bar, admitted pro hac vice, of counsel), for London Market Insurers, respondent.

      Kirkpatrick & Lockhart, L. L. P., New York City (John J. Sullivan; Peter J. Kalis and Kerrin M. McCormick, of the Pennsylvania Bar, admitted pro hac vice, of counsel), and Covington & Burling (William F. Greaney, of the District of Columbia Bar, admitted pro hac vice, of counsel), for Aluminum Company of America and others, amici curiae.

      Dennis C. Vacco, Attorney-General, Albany (Barbara G. Billet, Peter H. Schiff and Peter G. Crary of counsel), for State of New York, amicus curiae.

      O’Melveny & Myers, L. L. P., New York City (John L. Altieri, Jr., and Thomas J. DiResta of counsel), and Wiley, Rein & Fielding (Laura A. Foggan, Daniel E. Troy and Treg A. Julander, of the District of Columbia Bar, admitted pro hac vice, of counsel), for Insurance Environmental Litigation Association, amicus curiae.

   OPINION OF THE COURT

Levine, J.

Plaintiff is a Long Island-based corporation engaged in the bulk storage, distribution and sale of gasoline and other petroleum products. During the pertinent period, it owned and operated petroleum storage and distribution facilities in Holtsville and East Setauket, New York. Both terminals contained aboveground and belowground storage tanks, and networks of underground pipelines and pumps for transferral of liquid petroleum products. During the period in question plaintiff carried primary comprehensive general liability insurance policies with either defendants National Union Fire Insurance Co. of Pittsburgh, Pa., or Hartford Accident and Indemnity Company, and excess general liability policies with defendants Continental Insurance Company or Pacific Insurance Company (collectively referred to as the defendant insurers).

All of the foregoing liability insurance policies provided coverage for liability stemming from an "occurrence,” defined as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured” (emphasis supplied). Each policy also contained a pollution exclusion clause barring coverage for bodily injury or property damage "arising out of the discharge, dispersal, release or escape of * * * toxic chemicals, liquids * * * or other * * * pollutants into or upon land * * * but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental” (emphasis supplied).

In 1986 and 1987, plaintiff discovered that there had been a fortuitous release of gasoline from plaintiff’s Holtsville and East Setauket facilities into the groundwater, which had then migrated underneath neighboring properties. Plaintiff’s investigation disclosed that approximately 750,000 gallons of gasoline had been lost at the Holtsville terminal and 1.2 million gallons at East Setauket.

Owners of the affected neighboring properties brought suit against plaintiff. Defendant insurers disclaimed coverage under the pollution exclusion clauses in their respective policies. Plaintiff then brought this declaratory judgment action to establish the insurers’ obligation to defend and indemnify with regard to those lawsuits. On cross motions for summary judgment, Supreme Court ruled that, because it could not be determined initially whether the gasoline leakages occurred suddenly, defendants National Union Fire Insurance Company and Hartford Accident and Indemnity Company were required to defend and bear the investigation costs of the underlying actions. Based on the pleadings in the underlying complaints and the facts subsequently admitted by plaintiff, however, Supreme Court further held that the "sudden and accidental” exception to the exclusion of pollution coverage did not apply as to the East Setauket terminal discharge; hence defendant insurers had no duty to indemnify. The court held, however, that as to the claims arising from the Holtsville gasoline release, the facts were inconclusive as to whether at least at its outset the discharge was sudden; thus, the court denied summary judgment to defendant insurers on the issue of their duty to indemnify plaintiff for liability on the underlying claims.

The Appellate Division modified by ruling that the defendant insurers had no obligation to defend or indemnify because the sudden and accidental discharge exception in the pollution exclusion clauses of the policies did not apply, as a matter of law, to either the Holtsville or East Setauket discharges (218 AD2d 19). We granted plaintiff leave to appeal, and now affirm.

In Technicon Elecs. Corp. v American Home Assur. Co. (74 NY2d 66, rearg dismissed 74 NY2d 843, rearg denied 74 NY2d 893), we held that the identical language as in the pollution exclusion clauses of the policies issued to plaintiff here was unambiguous and that, for the sudden and accidental discharge exception to the exclusion of pollution coverage to apply, both contingencies included in the exception had to be satisfied. "Stated conversely, discharges that are either nonsudden or nonaccidental block the exception from nullifying the pollution exclusion” {id., at 75). We further held that, as a matter of law, the term "accidental” excludes any intentional discharge of a pollutant from qualifying for the exception. Because the complaint in the underlying action in Technicon alleged a knowing discharge, and the insured’s answer to that complaint admitted intentionally discharging waste, we ruled in that case that there was no accidental discharge. Therefore, we held that the exception to the pollution exclusion from coverage did not apply and the insurer had no duty to defend or indemnify against liability claims in the underlying suit {id.).

In the instant case, there is no allegation in the underlying complaints against plaintiff, nor evidence submitted by the defendant insurers, that the gasoline discharges at plaintiff’s Holtsville and East Setauket terminals were anything but unintentional and unknown to plaintiff before they were discovered in 1986 and 1987. Defendant insurers, thus, do not dispute that the discharges from both facilities were accidental, thereby satisfying one of the two elements of the exception to the exclusion of pollution coverage. The parties agree, therefore, that the dispositive issue before this Court is whether the discharges in question were also "sudden” within the meaning of that term in the pollution exclusion clauses of defendant insurers’ policies.

Plaintiff argues that, at least in the context of an inadvertent underground discharge of pollutants, the word "sudden” is ambiguous, which under familiar insurance law doctrine requires resolution of this issue against the insurers and in favor of plaintiff insured, construing the sudden and accidental discharge exception to apply. Plaintiff relies heavily on one common definition of sudden as "happening * * * unexpectedly” (Webster’s 9th New Collegiate Dictionary 1178 [1990] [emphasis supplied]). Plaintiff concedes that the meaning of sudden may also have a temporal element "manifesting abruptness * * * [or] brought about in a short time” (id.). Plaintiff, however, contends that in the context of an undiscovered underground leak of a pollutant the "unexpected” aspect of sudden should predominate, or at least render the term ambiguous.

Plaintiff’s argument ignores the juxtaposition of sudden with "accidental” in the pollution exclusion clause exception, and our unequivocal precedents that the two terms have separate meanings, each of which must be established for the exception to nullify the pollution coverage exclusion (see, Technicon Elecs. Corp. v American Home Assur. Co., supra; Powers Chemco v Federal Ins. Co., 74 NY2d 910). Furthermore, the term "accidental” includes not only an unintended event but also one "occurring unexpectedly or by chance” (Webster’s 9th New Collegiate Dictionary 49 [emphasis supplied]). This meaning of accidental is well recognized and has generally been applied in construing insurance policies (see, Nallan v Union Labor Life Ins. Co., 42 NY2d 884, 885; Johnson Corp. v Indemnity Ins. Co., 7 NY2d 222, 228; 70 NY Jur 2d, Insurance, § 1333, at 108), and cannot be disregarded in the context of the use of the term in a standard pollution exclusion clause.

It follows from the foregoing analysis that eliminating the temporal aspect from the meaning of sudden in the exception to the pollution coverage exclusion would render the sudden and accidental contingencies of the exception unavoidably redundant for unintended pollutant discharges. This redundancy is removed by including within the meaning of sudden in the pollution exclusion exception its temporal quality, as a discharge of the pollutant abruptly, precipitantly or brought about in a short time. Such a construction accords with the mandate of Technicon Elecs. Corp. v American Home Assur. Co. (supra), to give separate effect to the dual, sudden and accidental discharge requirements of the exception, and with the general principle that courts, in interpreting insurance policies, should strive to give "meaning * * * to every sentence, clause, and word of a contract of insurance” (69 NY Jur 2d, Insurance, § 701, at 91-92; see also, Hartford Acc. & Indem. Co. v U. S. Fid. & Guar. Co., 962 F2d 1484, 1489, cert denied sub nom. El Paso Natural Gas Co. v Hartford Acc. & Indem. Co., 506 US 955).

Applying the temporal element of sudden — as an abrupt happenstance — in the pollution exclusion clause exception also conforms to the commonsense meaning of the term and the reasonable expectations of a business person (see, Michaels v City of Buffalo, 85 NY2d 754, 757), since the exception exists in the context of an insurance contract which is universally recognized as intended to exclude damage from persistent pollution from the policy’s expansive basic coverage of "occurrence” which includes "continuous or repeated exposure to conditions.” As other courts have aptly observed, "[w]e cannot reasonably call 'sudden’ a process that occurs slowly and incrementally over a relatively long time, no matter how unexpected or unintended the process” (Shell Oil Co. v Winterthur Swiss Ins. Co., 12 Cal App 4th 715, 754, 15 Cal Rptr 2d 815, 841). "Try as I will, I cannot wrench the words 'sudden and accidental’ to mean 'gradual and accidental,’ which must be done in order to provide coverage in this case” (Dimmitt Chevrolet v Southeastern Fid. Ins. Corp., 636 So 2d 700, 706 [Fla] [Grimes, J., concurring]).

The focus in determining whether the temporally sudden discharge requirement is met, for the purpose of nullifying the pollution coverage exclusion, is on the initial release of the pollutant, not on the length of time the discharge remains undiscovered, nor the length of time that damage to the environment continued as a result of the discharge, nor on the timespan of the eventual dispersal of the discharged pollutant in the environment (see, Hartford Acc. & Indem. Co. v U. S. Fid. & Guar. Co., 962 F2d, at 1491, supra; Johnson & Co. v Aetna Cas. & Sur. Co., 933 F2d 66, 72; Lumbermens Mut. Cas. Co. v Belleville Indus., 407 Mass 675, 681, 555 NE2d 568, 572; Shell Oil Co. v Winterthur Swiss Ins. Co., 12 Cal App 4th, at 754-757, 15 Cal Rptr 2d, at 841-842, supra).

On the other hand, the sudden discharge element of the pollution exclusion exception cannot be established merely by showing that the release of the pollutant had its onset at some particular point in time and, in that sense, the discharge could be said to have begun "abruptly.” As noted by Justice Thomas R. Sullivan at the Appellate Division, "since every dispersal of pollution begins with the abrupt entry of molecules of the offending substance into the surrounding environment, [under such a] strained construction of the exception, the suddenness requirement would be rendered meaningless” (218 AD2d, at 30, supra). Rather, the temporal aspect of the sudden discharge element would only be met by the discharge, abruptly or within a short timespan, of a significant quantity of the pollutant sufficient to have some potentially damaging environmental effect. When such a discharge was unintended and unexpected, the sudden and accidental exception in the pollution exclusion clause will have been satisfied. Coverage, however, would not necessarily be negated entirely if such a discharge continued undetected for some period of time, even though at some point continued release could no longer be deemed sudden or accidental for purposes of the duty to indemnify (see, Lumbermens Mut. Cas. Co. v Belleville Indus., supra, 407 Mass, at 681, n 6, 555 NE2d, at 572, n 6; Shell Oil Co. v Winterthur Swiss Ins. Co., 12 Cal App 4th, at 754-757, 15 Cal Rptr 2d, at 841-842, supra).

Once an insurer has satisfied its burden of establishing that the underlying complaint alleges damages attributable to the discharge or release of a pollutant into the environment, thereby satisfying the basic requirement for application of the pollution coverage exclusion provision, the burden shifts to the insured to demonstrate a reasonable interpretation of the underlying complaint potentially bringing the claims within the sudden and accidental discharge exception to exclusion of pollution coverage, or to show that extrinsic evidence exists that the discharge was in fact sudden and accidental. Shifting the burden to establish the exception conforms with an insured’s general duty to establish coverage where it would otherwise not exist, provides the insured with an incentive to strive for early detection that it is releasing pollutants into the environment and appropriately places the burden of proof on the party having the better and earlier access to the actual facts and circumstances surrounding the discharge (see, Borg-Warner Corp. v Insurance Co., 174 AD2d 24, 31, lv denied 80 NY2d 753; Aeroquip Corp. v Aetna Cas. & Sur. Co., 26 F3d 893, 894-895 [9th Cir]; Northern Ins. Co. v Aardvark Assocs., 942 F2d 189, 195 [3d Cir]).

In determining whether the underlying complaint can be read as even potentially bringing the claim within the sudden and accidental exception to the exclusion of pollution coverage, a court should not attempt to impose the duty to defend on an insurer through a strained, implausible reading of the complaint "that is linguistically conceivable but tortured and unreasonable” (State of New York v Amro Realty Corp., 936 F2d 1420, 1428 [2d Cir] [applying New York law]). Moreover, a court may look to judicial admissions in the insured’s responsive pleadings in the underlying tort action or other formal submissions in the current or underlying litigation to confirm or clarify the nature of the underlying claims (see, Technicon Elecs. Corp. v American Home Assur. Co., 74 NY2d, at 75, supra).

Plaintiff has failed here to sustain its burden of showing that the sudden and accidental exception to the pollution exclusion clauses in defendant insurers’ policies applies. There is an absence of any allegations in the underlying complaints from which any claim of an abrupt, environmentally significant discharge of pollutants could be inferred. Moreover, the allegations regarding the temporal aspects of the petroleum leakages actually describe them as having occurred continuously over a period of many years, suggesting the opposite of suddenness. This view of the underlying claims is confirmed by the affidavits submitted by plaintiff’s chief legal officer in support of its motion for summary judgment, in which the source of the East Setauket discharge was identified as a corrosion-based "pinhole” in an underground pipe, and the Holtsville discharge was described as having been "leaked” through a failed underground elbow joint sometime after installation in July 1976. Thus, under the allegations of the present underlying complaints and the present state of the record regarding plaintiff’s own version of the occurrences, the sudden and accidental discharge exception in the pollution exclusion provisions of defendant insurers’ policies does not apply, as a matter of law.

The Appellate Division therefore correctly declared that the defendant insurers are not obligated to defend or indemnify against the liability of plaintiff for the gasoline discharges at its Holtsville or East Setauket facilities.

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

Chief Judge Kaye and Judges Titone, Bellacosa, Smith, Ciparick and Wesley concur.

Order affirmed, with costs.


author: Bellacosa, J.

text:
    [679 NE2d 1049, 657 NYS2d 569]
    Eileen O’Hara, Respondent, v Bayliner et al., Appellants, et al., Defendants.
    Argued and submitted February 11, 1997;
    decided March 25, 1997

      POINTS OF COUNSEL

      Healy & Baillie, New York City (John G. Ingram and Julie A. Pateman of counsel), for Bayliner and others, appellants.

      Michael F. Harris, New York City, and John M. Guglielmo for Perko, Inc., and others, appellants.

      Michael J. Devereaux, New York City, for respondent.
   OPINION OF THE COURT

Bellacosa, J.

In 1990, plaintiff, at age 16, was seriously hurt as she entered about 3 feet of water from a Bayliner water-ski boat anchored approximately 15 feet offshore. Her injuries were caused by a cleat affixed to the boat. Plaintiff’s complaint alleges that the cleat was defectively designed and positioned, and that the boat was defectively manufactured due to the lack of nonskid material and a handrail. Defendants-appellants include the boat’s designer, manufacturer and distributor, and the designer, manufacturer and distributor of the cleat. Other defendants are plaintiff’s companion, who operated the boat, and his father, who owned the boat.

Supreme Court and the Appellate Division denied defendants’ (Bayliner and Perko) respective motions to dismiss. Our courts held that Federal admiralty law (which has no infancy tolling protection against its three-year Statute of Limitations) did not govern this tort action. Therefore, the New York courts held that New York State’s tolling provision against the running of the Statute of Limitations left plaintiff’s action timely (see, CPLR 214, 208). The Appellate Division granted defendants leave to appeal to our Court on a certified question. We now reverse, answer the question in the negative and grant the motion to dismiss the complaint, as barred by 46 USC, Appendix § 763a.

Despite a complicated procedural path, the dispositive issue for us to resolve in this case is relatively straightforward. We must decide whether Federal maritime law governs, based on pertinent United States Supreme Court precedents and principles. We conclude that it does and that the New York State Supreme Court applied an overly narrow test for resolving the threshold question. It reasoned that "[p]laintiff was injured on a pleasure boat, that is, a craft having no relationship to the traditional and most significant concern of admiralty jurisdiction — the protection of those engaged in commerce.” Additionally, the nisi prius court noted that "while Huntington Bay may constitute navigable waters, the boat was at rest very close to the shore, and the individuals on board were using it for purely recreational purposes.” The Appellate Division affirmed for the reasons stated by Supreme Court, with one Justice concurring and dissenting in part (224 AD2d 353).

We must first look to the test promulgated by the United States Supreme Court for determining the nature and classification of a maritime tort. Its teaching governs the exclusive, preemptive and applicable admiralty jurisdiction. Historically, "[i]f the wrong occurred on navigable waters, the action is within admiralty jurisdiction” (Executive Jet Aviation v City of Cleveland, 409 US 249, 253 [1972]). In that case, involving the crash-landing and sinking of a jet aircraft in Lake Erie, admiralty jurisdiction was found lacking. The United States Supreme Court concluded that admiralty jurisdiction applies when the wrongs (1) "occurred on navigable waters,” and (2) "bear a significant relationship to traditional maritime activity” (id., at 253, 268). The reasoning and test as to the second prong, which constitutes an extension of the more venerable "locality” rule, are deemed "far more consistent with the history and purpose of admiralty” (id., at 268). This reflected the United States Supreme Court’s "first clear departure from the strict locality test” (Sisson v Ruby, 497 US 358, 361).

In Foremost Ins. Co. v Richardson (457 US 668 [1982]), a case involving the collision of two pleasure boats on a river in Louisiana, the United States Supreme Court determined that "the Executive Jet requirement that the wrong have a significant connection with traditional maritime activity is not limited to the aviation context” (id., at 674). It definitively declared that Executive Jet’s "rationale in rejecting a strict locality rule also applies to the maritime context” (id., at 673). In Foremost, the Court stated that ”[b]ecause the 'wrong’ here involves the negligent operation of a vessel on navigable waters, * * * it has a sufficient nexus to traditional maritime activity to sustain admiralty jurisdiction” {id., at 674). Significantly, the Court focused on "[t]he potential disruptive impact of a collision between boats on navigable waters” {id., at 675). Pertinently to the problem before us, the United States Supreme Court expressly rejected the notion that admiralty jurisdiction applies only to commercial maritime activity, or, more specifically, "commercial” boats, as contrasted to "pleasure” boats {id., at 674-675).

In Sisson v Ruby (497 US 358 [1990], supra), the Supreme Court added that maritime jurisdiction obtained when a pleasure yacht was destroyed by fire while docked at a Lake Michigan marina, destroying the yacht and damaging the marina and several vessels moored nearby (id., at 360). The Supreme Court again invoked the "potentiality” linchpin and reasoned that "such a fire has a potentially disruptive impact on maritime commerce, as it can spread to nearby commercial vessels or make the marina inaccessible to such vessels” (id., at 362). In rejecting the argument that the "potential” effect on maritime commerce was minimal because no commercial vessels were docked at the marina when the fire occurred, the Supreme Court stated:

"We determine the potential impact of a given type of incident by examining its general character. The jurisdictional inquiry does not turn on the actual effects on maritime commerce of the fire on Sis-son’s vessel; nor does it turn on the particular facts of the incident in this case, such as the source of the fire or the specific location of the yacht at the marina, that may have rendered the fire on the [yacht] more or less likely to disrupt commercial activity. Rather, a court must assess the general features of the type of incident involved to determine whether such an incident is likely to disrupt commercial activity” {id., at 363 [emphasis in original]).

In light of the above explanation, the Sisson Court turned to the second half of the Foremost test, "under which the party seeking to invoke maritime jurisdiction must show a substantial relationship between the activity giving rise to the incident and traditional maritime activity” (id., at 364). The Court stated that the first step in this analysis involves defining the relevant activity (id.). Characterizing the "activity” by the "general conduct” from which the incident arose, as opposed to the "particular circumstances,” the Court concluded that it "need not ascertain the precise cause of the fire to determine what 'activity’ Sisson was engaged in; rather, the relevant activity was the storage and maintenance of a vessel at a marina on navigable waters” (id., at 364-365). The second inquiry of the maritime connection test, according to the Supreme Court, is whether the activity has the requisite relationship with traditional maritime activity. Building on its other modern enlargements of the maritime jurisdictional circumference, the Supreme Court rejected the contention that only pure navigation should be characterized as substantially related to traditional maritime activity. It tied its precedents together with a core, policy line: "The need for uniform rules of maritime conduct and liability is not limited to navigation, but extends at least to any other activities traditionally undertaken by vessels, commercial or noncommercial” (id., at 367). Sisson's application and holding thus wound up with the conclusion that "the storage and maintenance of a vessel at a marina on navigable waters is substantially related to 'traditional maritime activity’ given the broad perspective demanded by the second aspect of the [Executive Jet — Foremost\ test” (id., at 367).

Jerome B. Grubart, Inc. v Great Lakes Dredge & Dock Co. (513 US 527) rounds out the analysis for present purposes. There, the Supreme Court found admiralty jurisdiction over an action brought by a barge owner to limit its liability for damages resulting from the flooding of a freight tunnel running under a navigable river. The damage allegedly resulted from the negligent use of a crane on a barge to drive piles into a riverbed above the tunnel. The Court first determined that the locality test was met because the incident involved a "vessel” on navigable waters (id., 513 US, at 535). The "vessel” there was a barge fastened to the river bottom for use as a work platform (id.). The Court reasoned that "at other times it was used for transportation” (id., 513 US, at 535). The Court then applied its variation of the Sisson two-step analysis to determine whether the maritime nexus test was satisfied (id., 513 US, at 538-540). The Court resolved that the incident had a potential to disrupt maritime commerce, reasoning that "damaging a structure beneath the river bed could lead to a disruption in the water course itself’ and that "damaging a structure so situated could lead to restrictions on the navigational use of the waterway during required repairs” (id., 513 US, at 539). The Court finally concluded that the "activity giving rise to the incident” — "repair or maintenance work on a navigable waterway performed from a vessel” — had a substantial relationship to a traditional maritime activity (id., 513 US, at 539, 540). Owning up to "the difficulty of escaping the [admiralty] case law,” the Supreme Court in Grubart candidly observed that although "these cases do not say that every tort involving a vessel on navigable waters falls within the scope of admiralty jurisdiction no matter what, they do show that ordinarily that will be so” (id., 513 US, at 543).

The plain reading and application of these Supreme Court precedents leads to the inescapable conclusion that Federal admiralty jurisdiction governs the instant controversy. The binding force of the admiralty jurisprudence is illustratively manifest in consistent applications of the sweeping Executive Jet test, appreciated more fully together with its ensuing, ever-widening Supreme Court precedents (see, e.g., White v United States, 53 F3d 43 [security guard lost her balance when stepping on platform at end of gangway, on disembarking public vessel docked at pier at naval base]; Mink v Genmar Indus., 29 F3d 1543 [passenger slammed into deck of craft as it was being operated at a high rate of speed]; Butler v American Trawler Co., 887 F2d 20 [passenger injured while attempting to board docked ship]).

We now turn to our application of these principles and precedents. As Huntington Bay is surely a navigable body of water, the locality test, the first prong under Executive Jet and Foremost, is readily satisfied. The second prong, maritime connection, as applied by Grubart, involves another two-step inquiry (Jerome B. Grubart, Inc. v Great Lakes Dredge & Dock Co., 513 US 527, 538-540, supra). The first is whether the incident involved had the potential to disrupt maritime commerce (id.). Examining "general features” as required by Sis-son, the type of incident that occurred here is demonstratively "likely to disrupt commercial activity” (Sisson v Ruby, 497 US 358, 363, supra). No sustainable analysis or method to escape the force of the United States Supreme Court’s precedents, centering on potentiality of interference with maritime commerce, are present here. On the contrary, that key potentiality is plainly operative under the facts of this case, given the nature and manner of the accident, which resulted from an allegedly defective apparatus on the boat. "[0]ne of the purposes of admiralty law is to protect sailors from defective equipment while they are engaged in maritime activity” (Hassinger v Tideland Elec. Membership Corp., 781 F2d 1022, 1028). Therefore, placing a vessel into navigable water with a defect sufficiently carries the potential to disrupt maritime commerce by creating a hazardous situation to nearby vessels and all those engaged in maritime activity. Additionally, the existence of a dangerous and, possibly, injurious situation "could lead to restrictions on the navigational use of the waterway” (Jerome B. Grubart, Inc. v Great Lakes Dredge & Dock Co., 513 US 527, 539, supra). Thus, in light of the breadth of this prong of the test, this case qualifies as potentially disruptive of maritime commerce.

The second step addresses "whether the general character of the activity giving rise to the incident shows a substantial relationship to traditional maritime activity” (id., 513 US, at 539). The operation of boats in navigable waters plainly fits within the substantial relationship test (see, Foremost Ins. Co. v Richardson, 457 US 668, 674, supra), as does storing them at a marina (see, Sisson v Ruby, 497 US 358, 360, supra). Therefore, the factual allegations of this case — a vessel and incident on the navigable waters of Huntington Bay — neatly and easily fall within the United States Supreme Court’s sweeping maritime nexus prerequisite.

Concluding that the instant case is a Federal admiralty matter, we must then accept the Federal Statute of Limitations, which is designed to effectuate the congressional intent of a uniform standard (46 USC, Appendix § 763a; see, HR Rep No. 737, 96th Cong, 2d Sess 1-2, reprinted in 1980 US Code Cong & Admin News 3303; Mink v Genmar Indus., 29 F3d 1543, 1547, supra; Butler v American Trawler Co., 887 F2d 20, 22, supra). In Lerner v Karageorgis Lines (66 NY2d 479), the New York Court of Appeals noted that "[i]n maritime cases, State courts must apply Federal law 'to secure a single and uniform body of maritime law’ ” (id., at 484-485 [quoting Matter of Rederi (Dow Chem. Co.), 25 NY2d 576, 581, cert denied 398 US 939]). We further noted in Lerner that "[a] State court may not limit a party’s substantive rights by applying its own procedural rules if those rules would 'significantly affect the result of the litigation, i.e., would be outcome determinative’ ” (Lerner v Karageorgis Lines, supra, 66 NY2d, at 485 [quoting Matter of Rederi, supra, 25 NY2d, at 581]). With that guidance, we note that applying the New York State Statute of Limitations (see, CPLR 214) and its accompanying tolling provisions {see, CPLR 208) here would generate the sort of nonuniform procedural bar that we have disavowed.

The United States Supreme Court, moreover, has noted that although State courts are authorized to entertain maritime causes of action, "the extent to which state law may be used to remedy maritime injuries is constrained by a so-called 'reverse-Erie’ doctrine which requires that the substantive remedies afforded by the States conform to governing federal maritime standards” (Offshore Logistics v Tallentire, 477 US 207, 223; see, East Riv. S. S. Corp. v Transamerica Delaval, 476 US 858, 864 ["(w)ith admiralty jurisdiction comes the application of substantive admiralty law”]; but see, Yamaha Motor Corp. v Calhoun, 516 US 199, —, 116 S Ct 619, 623 [citations omitted] ["(t)he exercise of admiralty jurisdiction * * * 'does not result in automatic displacement of state law’ ”]).

On a related aspect of this case, we are also satisfied that the exceptional Federal equitable tolling remedy is inapplicable to this case. Plaintiff and the partial dissent opinion at the Appellate Division mistakenly rely on Maxwell v Swain (833 F2d 1177) for the proposition that "[w]here suit has been filed within the period of limitation, a defendant has been put on notice of the claim, and service is effected within a reasonable time, there is little to be gained by refusing to toll the federal limitation because actual service of process was not achieved within the statutory period” (id., at 1178). The Maxwell court, however, expressly limited its holding tó a lawsuit filed in a State court lacking venue (id.). No such circumstance is present or proffered here.

"Federal courts have typically extended equitable relief only sparingly” (Irwin v Department of Veterans Affairs, 498 US 89, 96). The well-settled and limited circumstances for equitable tolling of the Statute of Limitations are summarized as follows: (1) the plaintiff timely filed the complaint in the wrong forum (see, Burnett v New York Cent. R. R. Co., 380 US 424; Herb v Pitcairn, 325 US 77; Maxwell v Swain, 833 F2d 1177, supra; see also, American Pipe & Constr. Co. v Utah, 414 US 538), (2) the defendant actively misled the plaintiff (see, Glus v Brooklyn E. Term., 359 US 231; Holmberg v Armbrecht, 327 US 392), or (3) the plaintiff in some extraordinary way had been prevented from complying with the limitations period (see, Osbourne v United States, 164 F2d 767).

This case does not qualify under any of these distinctly exceptional circumstances. In fact, Federal courts "have generally been much less forgiving in receiving late filings where the claimant failed to exercise due diligence in preserving his legal rights” (Irwin v Department of Veterans Affairs, 498 US 89, 96, supra [citing Baldwin County Welcome Ctr. v Brown, 466 US 147, 151]). The extraordinary Federal equitable tolling remedy is thus not available to the plaintiff in this matter.

Accordingly, the order of the Appellate Division should be reversed, with costs, motions by the Bayliner defendants and the Perko defendants to dismiss the complaint as against them granted, and the certified question answered in the negative.

Chief Judge Kaye and Judges Titone, Smith, Levine, Ciparick and Wesley concur.

Order reversed, etc.


author: Smith, J.

text:
    [679 NE2d 1055, 657 NYS2d 575]
    The People of the State of New York, Appellant, v Jody Robinson, Respondent.
    Argued February 11, 1997;
    decided March 27, 1997

      POINTS OF COUNSEL

      Howard R. Relin, District Attorney of Monroe County, Rochester (Loretta S. Courtney of counsel), for appellant.

      Edward J. Nowak, Public Defender of Monroe County, Rochester (James Eckert of counsel), for respondent.
   OPINION OF THE COURT

Smith, J.

The primary issue in this case is whether a defendant’s constitutional right to due process requires the admission of hearsay evidence consisting of Grand Jury testimony when the declarant has become unavailable to testify at trial. Under the circumstances of this case, where the hearsay testimony is material, exculpatory and has sufficient indicia of reliability, we hold that the trial court’s failure to admit such evidence was reversible error.

Defendant’s conviction stems from an incident which occurred on December 12, 1992 in an apartment in Rochester, New York. After an evening of dancing and drinks, defendant, his then fiancé, and the complainant went to the apartment where defendant and his fiancé lived together. Some time that evening, defendant allegedly had sex with the complainant without her consent while his fiancé was in the apartment. At trial, defendant claimed that the sex was consensual and occurred in his fiancé’s presence. The complainant disputed this account and testified that she continually screamed and fought against defendant’s efforts at intercourse. She also alleged that the defendant’s fiancé was absent from the room where the attack occurred and failed to respond to her cries for help. The trial testimony of the defendant and the complainant was consistent with their testimony before the Monroe County Grand Jury.

Defendant’s fiancé, in her testimony before the Grand Jury, corroborated defendant’s version of the evening’s events. She testified that all three were together in the same room, in varying states of undress, while her fiancé attempted to have sex with the complainant. She also testified that the complainant made no objection, "[Complainant] didn’t say no or stop. Otherwise if she had, you know, if he didn’t, I would have beat him up. He has a stick that he keeps in his room in case somebody breaks in and it sits right there. I’m not afraid of using it on anybody including him.” After hearing testimony from all three parties, the Grand Jury indicted defendant for sexual abuse in the first degree and sexual misconduct. The Grand Jury failed to indict defendant for rape in the first degree, the remaining charge submitted by the prosecution.

Defendant waived his right to a jury trial and was tried before the Bench. Prior to trial, defendant and his fiancé were married and defendant specified that his new wife would be a witness for him at trial. However, she left the jurisdiction before trial and refused to return to New York in defiance of an order that defendant secured pursuant to CPL 640.10. Thereafter, defendant made a motion for the admission of his estranged wife’s Grand Jury testimony on the grounds that the testimony was material and that she was an unavailable witness despite his due diligence in attempting to return her to New York to testify. The People opposed defendant’s motion. The Monroe County Court Judge determined that although defendant had made a good-faith effort to secure the witness, defendant had failed to establish that the subject Grand Jury testimony was sufficiently reliable to qualify as an exception to the usual proscription against the admission of hearsay.

The Appellate Division reversed the conviction and ordered a new trial as to count two of the indictment and otherwise dismissed the indictment without prejudice to the People to represent any appropriate charges under count one of the indictment. It affirmed the lower court’s conclusion that the defendant had made a good-faith effort to secure his witness. However, the appellate court reversed the lower court’s determination that the defendant had failed to establish that the Grand Jury testimony was sufficiently reliable to merit its admission at trial. A Judge of this Court granted leave to appeal the determination of the Appellate Division and we now affirm.

On this appeal, the People argue that the Grand Jury testimony must be excluded because it is not authorized by CPL 670.10, because it does not bear sufficient indicia of reliability or fall within any of the hearsay exceptions and because there has been no violation of due process. Defendant argues that he has a due process right to the introduction of the Grand Jury testimony and that it has been shown to be sufficiently reliable for admission.

Turning to the People’s first argument, CPL 670.10 authorizes the admission of testimony given previously at a trial, hearing on a felony complaint pursuant to CPL 180.60 or at a conditional examination conducted pursuant to CPL article 660 where "the witness is unable to attend [trial] by reason of death, illness or incapacity, or cannot with due diligence be found, or is outside the state or in federal custody and cannot with due diligence be brought before the court” (CPL 670.10 [1]).

CPL 670.10 lists only three proceedings for which former testimony may be admissible at trial. We have previously held that Grand Jury proceedings are not encompassed within the statute (see, People v Green, 78 NY2d 1029; People v Gonzalez, 54 NY2d 729; cf., People v Ayala, 75 NY2d 422 [testimony at Wade hearing did not fall within CPL 670.10]; People v Harding, 37 NY2d 130 [testimony at prior civil administrative hearing did not fall under CPL 670.10]). This Court in People v Harding (37 NY2d 130, supra) found that the statute was "exclusive” for the "three carefully worded and enumerated exceptions” provided therein (id., at 133-134; see also, People v Ayala, 75 NY2d, at 429 ["this court has already rejected the argument that the statutory terms and their fair import are not exclusive”]).

Nevertheless, we have held that certain considerations may support the admission of former testimony that falls beyond the reach of the statute. For example, this Court has sanctioned the admissibility of Grand Jury testimony at a later trial upon proof that the defendant, through violence, threats or chicanery, had caused the disappearance of the witness who gave the prior testimony (People v Geraci, 85 NY2d 359, 365-366). That determination rested upon "the public policy of reducing the incentive to tamper with witnesses” (id., at 368).

Defendant seeks to admit the Grand Jury testimony of another based upon his constitutional right to due process. In People v Gonzalez (54 NY2d 729, supra), this Court expressly left open the unpreserved objection that the defendant there "had a due process right to introduce” Grand Jury testimony (id., at 730 [citing Chambers v Mississippi, 410 US 284]). The same constitutional arguments regarding the accused’s right to present evidence, weighed against the limited statutory exceptions for the admission of former testimony, are squarely presented here.

"Few rights are more fundamental than that of an accused to present witnesses in his own defense” (Chambers v Missis sippi, 410 US 284, 302, supra). As stated by the Supreme Court in Washington v Texas (388 US 14):

"The right to offer the testimony of witnesses, and to compel their attendance, if necessary, is in plain terms the right to present a defense, the right to present the defendant’s version of the facts as well as the prosecution’s to the jury so it may decide where the truth lies. Just as an accused has the right to confront the prosecution’s witnesses for the purpose of challenging their testimony, he has the right to present his own witnesses to establish a defense. This right is a fundamental element of due process of law” (Washington v Texas, 388 US 14, 19, supra; see also, Chambers v Mississippi, 410 US 284, 294, supra ["The rights to confront and cross-examine witnesses and to call witnesses in one’s own behalf have long been recognized as essential to due process”]).

This constitutional right is limited in the Grand Jury context. In fact, "[b]ecause Grand Jury proceedings are conducted by the prosecutor alone, this function confers upon the prosecutor broad powers and duties, as well as wide discretion in presenting the People’s case. * * * In addition to providing legal instruction to the Grand Jury, the District Attorney determines what evidence to present to that body and what evidence should be excluded” (People v Huston, 88 NY2d 400, 406; see also, People v Lancaster, 69 NY2d 20, 25, cert denied 480 US 922). The People also have an opportunity to cross-examine a testifying defendant or any witness called by the Grand Jury at the defendant’s request. Furthermore, we have noted that in presenting a case to the Grand Jury, the People

"are not obligated to search for evidence favorable to the defense or to present all evidence in their possession that is favorable to the accused * * * even though such information undeniably would allow the Grand Jury to make a more informed determination. In the ordinary case, it is the defendant who, through the exercise of his own right to testify and have others called to testify on his behalf before the Grand Jury * * *, brings exculpatory evidence to the attention of the Grand Jury” (People v Lancaster, 69 NY2d, at 25-26).

Where the defendant seeks to admit Grand Jury testimony against the People, the party who conducted the original Grand Jury examination, considerations of constitutional dimension are raised notwithstanding the narrow confines of GPL 670.10. We conclude that, under the facts presented here, Grand Jury testimony adduced by the prosecution may be admitted at trial as an exception to the general prohibition against hearsay because the testimony meets certain standards for admissibility.

As stated in Rosario v Kuhlman (839 F2d 918), "A defendant has the constitutional right to introduce a secondary form of evidence such as prior testimony when two circumstances are present: first, the evidence bears sufficient indicia of reliability * * * and second, the witness who gave the original testimony is no longer available” (id., at 924 [citations omitted]). Moreover, the proffered testimony may not be extrinsic evidence on a collateral matter, but must be material to be admissible under the limited exception recognized here.

There is little dispute that the evidence at issue is material. As the only other person with any firsthand knowledge of the alleged events of that night, it is clear that defendant’s then fiancé was in a position to offer testimony that would have been not only "relevant and material” but also "vital to the defense” (Washington v Texas, 388 US 14, 16, supra). The Appellate Division recognized that the proffered Grand Jury testimony concerned the "central issue” in the case (224 AD2d 1001) and the Trial Judge expressly noted that "I don’t think there is any real disagreement that the testimony is material.” Moreover, the record supports the conclusion of both lower courts relating to the unavailability of the declarant despite defendant’s due diligence.

The remaining question concerns the reliability of the proffered hearsay testimony. We have noted that the absence of cross-examination "tend[s] to impair” the reliability of Grand Jury testimony (People v Geraci, 85 NY2d 359, 368, supra). However, our discussion of the "especially troubling” issue of the admissibility of Grand Jury testimony in People v Geraci (85 NY2d 359, supra) was precipitated by the fact that the subject hearsay evidence was proffered by the prosecution against the defendant who had no right of cross-examination before the Grand Jury (id., at 368). We are not persuaded that our inquiry into the "indicia of reliability” of former testimony must hinge upon the mere fact that the subject testimony was originally adduced upon direct examination. This single factor does not indicate that Grand Jury testimony is inherently unreliable when proffered against the prosecution.

Often, the issue of reliability is resolved when it is determined that the party against whom hearsay testimony is offered has had a full and fair opportunity to cross-examine the witness. Indeed, when parties have sought to admit former testimony under CPL 670.10, we have held that it is the full and fair opportunity for cross-examination rather than any measure of the fullness of cross-examination that serves as a baseline indicator for reliability (see, People v Arroyo, 54 NY2d 567, 574 ["it was only a fair opportunity to (cross-examine) which had to have been provided when the former testimony was given”], cert denied 456 US 979; Rosario v Kuhlman, 839 F2d 918, 924, supra ["Prior testimony where the same party has had a full and fair opportunity to cross-examine the witness is a reliable form of such evidence”]).

We remain cognizant of the intrinsic differences between the function of Grand Jury questioning and the purpose of cross-examination in an adversarial setting. As noted by the Trial Judge here, "[T]he Grand Jury proceeding, by its nature, is not designed and not actually in place to be a full, direct examination of witnesses that are called to testify.” It is upon such considerations that we decline to base any determination of reliability of Grand Jury testimony upon a mere opportunity to examine a witness. Nevertheless, here, defendant has shown that the prosecutor satisfied the essential purpose of cross-examination through his direct case (see, Ohio v Roberts, 448 US 56, 71 [Supreme Court noted that the purpose of cross-examination was "to challenge 'whether the declarant was sincerely telling what he believed to be the truth, whether the declarant accurately perceived and remembered the matter he related, and whether the declarant’s intended meaning is adequately conveyed by the language he employed’ ”] [citation omitted]).

The prosecutor explored the long-standing relationship between the witness and the complainant which the complainant corroborated. Similarly, the prosecutor questioned the witness about her relationship with the defendant which revealed any biases which might have affected her credibility. Indeed, some of the testimony adduced by the prosecutor was decidedly unfavorable to defendant’s position. For example, the prosecutor inquired about a letter that the witness had received from the defendant which encouraged her to "break [the complainant] down without getting the D.A. to accuse you of any wrong doing.” The Grand Jury was instructed that the testimony relating to that letter was to be considered "strictly as far as that might affect the credibility or believability of the witness.”

Other credibility related questions were asked of the witness concerning her flight from this State to North Carolina with the defendant when it became known that the complainant was going to press charges. The Grand Jury itself asked the witness pointed questions related to her sexual relationship with the defendant, the relative positioning of the persons involved, the precise acts performed, the state of undress of the complainant, the level of intoxication of each person and whether the incident was discussed or planned before it happened.

In this case, the prosecution exercised its full and fair opportunity to examine the witness it chose to call. The fact that some of the testimony could be viewed as unfavorable to the defendant is further indication of its reliability. Moreover, the specific, leading and probing questioning was sufficient to reveal any relevant, credibility influencing biases. As was the case in Ohio v Roberts (448 US 56, supra), the prosecutor’s "questioning clearly partook of cross-examination as a matter of form” {id., at 70 [emphasis in original]).

We note that it is only necessary to examine the "indicia of reliability” to ensure a level of trustworthiness for admissibility (Ohio v Roberts, 448 US 56, 66, supra). Resolution of the issue before us hinges upon reliability rather than credibility. Unless perjury is clear, which is not the case here, it is not for the court to determine that certain biases revealed by a witness would, as a matter of law, render testimony untrustworthy when it was adduced under circumstances which bear sufficient indicia of reliability (People v Settles, 46 NY2d 154, 170 ["If the proponent of the statement is able to establish this possibility of trustworthiness, it is the function of the jury alone to determine whether the declaration is sufficient to create reasonable doubt of guilt”]). Credibility is for the trier of fact to determine.

Here, the prosecutor’s direct examination accomplished the general goal of cross-examination, testing the accuracy of the declarant’s testimony. Thus, the Grand Jury testimony here contains sufficient indicia of reliability such that it was admissible upon defendant’s submission.

On appeal, a reviewing court must determine whether the erroneous exclusion of the proffered evidence was harmless. Constitutional error is harmless "only if it is harmless beyond a reasonable doubt” (People v Eastman, 85 NY2d 265, 276; cf., United States v Agurs, 427 US 97, 112 ["if the omitted evidence creates a reasonable doubt that did not otherwise exist, constitutional error has been committed”]). We have previously noted the materiality of the subject testimony and, thus, the exclusion of this evidence constitutes reversible error. 6 The order of the Appellate Division should be affirmed.

Chief Judge Kaye and Judges Titone, Bellacosa, Levine, Ciparick and Wesley concur.

Order affirmed.

      . Generally, the right to due process is guaranteed by the Federal and New York State Constitutions (see, US Const, 14th Amend, § 1; NY Const, art I, § 6). The Sixth Amendment of the United States Constitution, applicable to the States through the Fourteenth Amendment, expressly requires compulsory process for presenting witnesses in defendant’s favor in a criminal case (see also, Civil Rights Law § 12 which specifically requires compulsory process in New York State).

      . Other features of the Grand Jury process tend to weigh against a finding of reliability. For example, the evidentiary standards are more "relaxed” in the Grand Jury setting (People v Geraci, 85 NY2d 359, 368, supra). Moreover, Grand Juries are conducted "beyond public scrutiny” (People v Huston, 88 NY2d 400, 401, supra). The exposure to public view makes witnesses accountable for their statements, thereby encouraging true and complete testimony (see, Waller v Georgia, 467 US 39, 46). However, objections relating to secrecy and nonexistent evidentiary rulings are of little relevance when it is the defendant who seeks to use evidence adduced under such circumstances.

      . For example, the prosecutor frequently used prefatory phrases such as "Isn’t it true that” and "Isn’t it a fact,” common tools of cross-examination, in his questioning. Here, as in Ohio v Roberts (448 US 56, supra), the prosecutor’s "presentation was replete with leading questions, the principal tool and hallmark of cross-examination” (id., at 70-71).

      . Under this inquiry, also relevant is that testimony given before Grand Juries, as in the case of other proceedings such as those enumerated in CPL 670.10, requires the declarant to be under oath. Grand Jury testimony is elicited under oath in surroundings likely to impress the witness with the solemnity of the proceedings, and the sanction of perjury looms for false statements. Such circumstances are an indicator of reliability (People v Arroyo, 54 NY2d 567, 574, supra; Chambers v Mississippi, 410 US 284, 298, supra).

      . We note that the prosecution would be able to introduce "all or part of the rest” of any former testimony not included in defendant’s evidentiary submission (People v Arroyo, 54 NY2d 567, 577, supra ["Avoidance of distortion and half-truth demands no less”]).