author: Jones, J.

text:
    [965 NE2d 944, 942 NYS2d 442]
    In the Matter of the Foreclosure of Tax Liens by Proceeding in Rem Pursuant to Article Eleven of the Real Property Tax Law, by Orange County Commissioner of Finance, Appellant. Jeanette Helseth et al., Respondents.
    Argued January 4, 2012;
    decided February 21, 2012

      POINTS OF COUNSEL

      David L. Darwin, County Attorney, Goshen (Matthew J. Noth-nagle of counsel), for appellant.
    I. The County gave respondents sufficient notice of the tax foreclosure proceeding. (NYCTL 1996-1 Trust v Jellerette, 48 AD3d 769; Matter of Clinton County [Miner], 39 AD3d 1015; Matter of Hamer v County of Tioga, 5 NY3d 136; Mullane v Central Hanover Bank & Trust Co., 339 US 306; Jones v Flowers, 547 US 220; Kennedy v Mossafa, 100 NY2d 1; McDowell v Grosz, 81 AD3d 1211; Matter of County of Sullivan [Spring Lake Retreat Ctr., Inc.], 39 AD3d 1095; Feggins v Department of Educ. of the City of N.Y., 2007 NY Slip Op 30323[U]; Matter of County of Clinton [Bouchard], 29 AD3d 79.) II. The lower courts’ requirement of an additional round of notices is inconsistent with the holdings of this Court and the United States Supreme Court. (Mennonite Bd. of Missions v Adams, 462 US 791; Congregation Yetev Lev D’Satmar v County of Sullivan, 59 NY2d 418; Sheehan v County of Suffolk, 67 NY2d 52; Matter of McCann v Scaduto, 71 NY2d 164; Matter of ISCA Enters, v City of New York, 77 NY2d 688; Kennedy v Mossafa, 100 NY2d 1; Matter of Hamer v County of Tioga, 5 NY3d 136; Jones v Flowers, 547 US 220.) III. The lower courts’ decisions in this case are inconsistent with prior case law, including federal case law. (Weigner v City of New York, 852 F2d 646, 488 US 1005; Matter of County of Clinton [Bouchard], 29 AD3d 79.) IV The lower courts’ decisions are contrary to prior case law, which made the redemption deadline identical to a statute of limitations. (Matter of City of Binghamton [Ritter], 128 AD2d 266;
      City of Peekskill v Perry, 272 App Div 940; Matter of Foreclosure of Tax Liens, 23 Misc 3d 1140[A], 2009 NY Slip Op 51206[U]; Matter of Elinor Homes Co. v St. Lawrence, 113 AD2d 25; Gibbs v St. Barnabas Hosp., 16 NY3d 74; Andrea v Amone, Hedin, Casker, Kennedy & Drake, Architects & Landscape Architects, PC. [Habiterra Assoc.], 5 NY3d 514; Miceli v State Farm Mut. Auto. Ins. Co., 3 NY3d 725.)

      Daniel E. Bertolino, PC., Upper Nyack (Jonathan B. Schloss of counsel), for respondents.
    I. Both lower court decisions were consistent with controlling case law which requires a municipality to give reasonable notice of a pending tax foreclosure sale. (Jones v Flowers, 547 US 220; Matter of Hamer v County of Tioga, 5 NY3d 136; Mennonite Bd. of Missions v Adams, 462 US 791; Kennedy v Mossafa, 291 AD2d 378, 100 NY2d 1; Congregation Yetev Lev D’Satmar v County of Sullivan, 59 NY2d 418; Facchin v Pekich, 232 AD2d 447; Matter of McCann v Seaduto, 71 NY2d 164.) II. Orange County’s unconscionable conduct unduly deprived Jeanette and Ola Helseth of their real property. (Jones v Flowers, 547 US 220.) III. Orange County’s hypothetical question is irrelevant; where release of a taxing authority’s interest is potentially available, the debtor must receive due process notice of such. (Weigner v City of New York, 852 F2d 646.)
   OPINION OF THE COURT

Jones, J.

In November 1997, Jeanette and Ola Helseth (the Helseths) purchased a four-acre parcel of land located in the Town of Warwick, Orange County, New York. The parcel was subdivided into two-acre lots and a home, in which the Helseths resided, was constructed on one of the lots; the other lot remained unimproved (the property). In 2000, following the sale of the improved lot, the Helseths moved to an apartment on Amity Road; and in 2002, they relocated to Sanfordville Road, placing the property on the market for sale through a real estate broker.

In April 2004, after learning from the landlord of their former Amity Road residence that they continued to receive mail at that location (including a real property tax bill), the Helseths filed a change of address form with the Town of Warwick Assessor, indicating the Sanfordville Road address as their then-current address. Moreover, in September 2005, the Helseths paid that year’s real property taxes at the Office of the Orange County Commissioner of Finance (the County), directly informing it of their Sanfordville Road address. Despite these attempts to amend their address for accurate reflection in the tax rolls, the Helseths did not receive any additional real estate property tax bills or correspondence. Indeed, according to the County, its records indicated that the Helseths resided at the prior Amity Road address.

Starting in January 2006, the Helseths failed to pay taxes on the property and in November of that year, the County, pursuant to Real Property Tax Law § 1122, filed a list of then-delinquent tax parcels (which included the property). In October 2007, the County filed a petition of tax foreclosure pursuant to Real Property Tax Law § 1123 for the delinquent parcels and an ensuing in rem tax foreclosure action was commenced. The County gave notice of the foreclosure action by publishing the notice in six newspapers for three nonconsecutive weeks over a two-month period; posting the notice in conspicuous locations at the Department of Finance office, the Orange County Clerk’s office and the Orange County courthouse; and by mailing the notice by regular first-class mail and certified mail, return receipt requested, to the Amity Road residence. The certified mailing was returned to the County as “unclaimed.”

The Helseths did not answer, exercise their right to redeem the property or otherwise appear in the foreclosure action and the County moved, on April 7, 2008, for a default judgment of foreclosure. Judgment was entered and a deed was recorded on August 7, 2008, conveying title to the County.

Following the judgment of foreclosure, a letter was sent by certified mail, return receipt requested, informing the Helseths that the County had acquired title to the property. The letter further advised them of the opportunity to repurchase the property “back from the County through the release of the County’s interest.” The certified mailing, which was again mailed to the Amity Road address, was returned as “not deliverable as addressed.”

The Helseths first learned of the underlying foreclosure action and a scheduled auction sale of the property when they were informed by their real estate broker that potential buyers had inquired about the lot. As a result, they moved by order to show cause to stay the sale of the property, but Supreme Court declined to sign a temporary restraining order, adjourning the matter to a date after the auction. Consequently, the Helseths appeared at the auction and submitted a winning bid of $150,000, paying a $15,000 deposit. However, they failed to remit the remaining balance and the County auctioned the property to another party.

Supreme Court subsequently ruled on the order to show cause, concluding that the County’s provision of notice for the foreclosure action satisfied constitutional due process. However, the court held that the County’s additional notice was inadequate, remarking that

“constitutional due process requirements attendant to one’s right to redeem property from a municipality following a tax lien foreclosure have not been met where, as here, the municipality sends notification to the property owner of his or her constitutionally protected right to redemption by only one means, certified mail, return receipt requested, where said mailing is returned as not deliverable as addressed, since such a notation, on its face, carries the indicia that the address is invalid. This is especially so where, as here, the presumptive status of the address to which notifications have been forwarded changes from one at which a recipient is attempting to avoid notification to that of an invalid address. Worthy of note but not a necessary factor in the determination reached herein is the fact that the notice of the right of redemption, even if received, failed to identify the very parcel to which it relates” (24 Misc 3d 204, 210-211 [Sup Ct 2009] [citations and internal quotation marks omitted]).

The Appellate Division unanimously affirmed, similarly concluding that “the [County] failed to provide adequate notice of the [Helseths’] opportunity to obtain a release of the [County’s] interest in their property after the expiration of the statutory redemption period pursuant to Local Law No. 7 (2001) of County of Orange” (73 AD3d 1053, 1054 [2d Dept 2010]). Because the certified mailing for the release and auction sale was returned as not deliverable, the court reasoned that the County “was obligated to take reasonable steps to ascertain a correct address for the [Helseths]” (id.). This Court granted leave to appeal (16 NY3d 704 [2011]), and we now reverse.

As an initial matter, both lower courts agreed—as do the Helseths—that the County provided adequate notice for the underlying foreclosure action. Thus, the sole issue before this Court is whether the County provided sufficient notice, in accord with constitutional due process, of the release option afforded pursuant to Local Law No. 7 (2001) of County of Orange, which provides in relevant part: “The Enforcing Officer may, prior to the public auction, permit the previous owner of record to purchase his or her parcel through a release of the County’s interest . . . All releases of the County’s interest must be approved by a majority vote of the County Legislature” (Orange County Local Law No. 7 § 5 [B] [1]).

The County argues that constitutional due process only required notice of the pending foreclosure action and not for each successive stage of the proceedings. The Helseths contend that when a municipality provides for a release or repurchase right by law, the landowner has a continued property interest entitled to additional, adequate notice. With respect to the mailed notice itself, it is asserted that it was deficient because its generic, pro forma language could not reasonably apprise the recipient of the matter at issue. Moreover, the County failed to conduct a reasonable search or investigation to ascertain an accurate address when the mailing was returned as not deliverable (see Matter of Hamer v County of Tioga, 5 NY3d 136 [2005]). We agree with the County and hold that it was only obligated to give singular notice of the foreclosure action as that was the underlying governmental action threatening the Helseths’ property interests.

It has been well established that “[b]oth the Federal and State Constitutions provide that the State may not deprive a person of property without due process of law” (Kennedy v Mossafa, 100 NY2d 1, 8-9 [2003]; see also US Const 14th Amend; NY Const, art I, § 6). Due process requires that notice be “reasonably calculated, under all the circumstances, to apprise” the parties whose rights are to be affected of the opportunity to appear and be heard (Mullane v Central Hanover Bank & Trust Co., 339 US 306, 314 [1950]; see Matter of McCann v Scaduto, 71 NY2d 164, 172 [1987]).

Contrary to the Helseths’ assertions, all that was constitutionally mandated of the County was the provision of reasonable notice of the governmental taking that would impair the rights of the interested or affected parties—i.e., the foreclosure action (see Sheehan v County of Suffolk, 67 NY2d 52, 59 [1986] [“Once taxpayers are provided with notice and an opportunity to be heard on the adjudicative facts concerning the valuation of properties subject to tax, as was done here, they have received all the process that is due”]). In Weigner v City of New York (852 F2d 646 [2d Cir 1988]), the United States Court of Appeals for the Second Circuit had occasion to consider this precise issue when it was presented with a tax lien foreclosure proceeding where a defaulting plaintiff contended that she did not receive adequate notice of her redemption and release options. The court specifically rejected that argument, holding that “due process only requires notice of the pendency of the action and an opportunity to respond. The City . . . was not required to send additional notices as each step in the foreclosure proceeding was completed or when each of the available remedies was about to lapse” (852 F2d at 652 [citations and internal quotation marks omitted]; see also Matter of County of Clinton [Bouchard], 29 AD3d 79, 82 [3d Dept 2006]). Thus, any subsequent juncture related to the underlying foreclosure, even one established by local law, does not impose a concomitant duty of notice, particularly when there is no further governmental taking at issue.

The release option in this appeal—a discretionary, permissive remedy made available to the Helseths after the property was lawfully foreclosed and conveyed to the County—did not establish or extend a property right entitled to due process protection as any property interests held by the Helseths were lawfully extinguished as of the expiration of their right to redemption and the entry of the judgment of foreclosure (see Sheehan, 67 NY2d at 59 [“Full forfeiture has already occurred upon the taxpayer’s failure to redeem the property”]; RPTL 1123 [8] [“In the event of failure to redeem or answer by any person having the right to redeem or answer, such person shall be in default and shall be barred and forever foreclosed from all his or her right, title and interest in and to the parcels described in such petition and a judgment in foreclosure may be taken by default as provided by this title”]). Rather, the release was simply an option to repurchase property then owned by the County. Put another way, the release option was a courtesy extended to the previous landowner, but its mere availability should not be equated with the establishment or guarantee of a property right. As reflected by the plain language of the local law and the mailed notice, a release option “may” be offered and “[t]he Finance Office cannot guarantee that the Legislature will approve the sale.”

The Helseths rely primarily on the United States Supreme Court’s decision in Jones v Flowers (547 US 220 [2006]) for the proposition that due process notice must be provided in any tax lien foreclosure sale of real property. In that case, by mutual agreement, the landowner timely paid his mortgage for 30 years and in return, the mortgage company paid real property taxes. However, after the mortgage was satisfied, the company ceased paying the real property taxes and the land fell into delinquency. The state issued notice to the landowner, informing him that the property would be subject to a public tax sale within two years if it was not redeemed. The notice, sent by certified mail, return receipt requested, was returned as unclaimed. Ultimately, the Supreme Court concluded that “when mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property” (547 US at 225).

However, Jones is factually distinguishable because in lieu of a foreclosure proceeding, the public tax sale constituted the governmental taking that required reasonable due process notice, whereas in this appeal, the County’s provision of a repurchase option was not the underlying taking or an extension of such action, but a subsequent, optional measure offered to the previous landowner well after title had been conveyed to the County. Thus, Jones does not expand a municipality’s obligations by imposing a duty of providing due process notice for a tax lien foreclosure sale, but instead comports with the well-settled rule that notice is only required for the governmental taking of private property that may impair the interested parties’ rights.

Because of our resolution of this appeal, we do not reach the Helseths’ remaining contentions pertaining to the adequacy of the mailed notice.

Accordingly, the order of the Appellate Division should be reversed, with costs, and that branch of respondents’ motion which was to allow them to pay back taxes and interest due for a release with respect to the property denied.

Chief Judge Lippman and Judges Cipakick, Gbaffeo, Read, Smith and Pigott concur.

Order reversed, etc.

       Although the Helseths failed to pay their real property taxes, they were aware of their obligation. Jeanette Helseth averred in an affidavit that “[although I knew that I owed the taxes, I always had the property for sale, and I thought that I would be able to pay the back taxes as soon as I sold it.”


source: Caselaw Access Project

author: Chief Judge Lippman.

license: Public Domain

text:
    [965 NE2d 934, 942 NYS2d 432]
    Federal Insurance Company, Respondent, v International Business Machines Corporation et al., Appellants.
    Argued January 10, 2012;
    decided February 21, 2012

      POINTS OF COUNSEL

      Jones Day, New York City (Thomas H. Sear, Howard F. Sidman, Victoria Dorfman and Caryn L. Wolfe of counsel), for appellants.
    I. This Court reviews a reversal of a summary judgment ruling de novo. (Two Guys from Harrison-NY. v S.F.R. Realty Assoc., 63 NY2d 396; Weingarten v Board of Trustees of N.Y. City Teachers’ Retirement Sys., 98 NY2d 575.) II. The Cooper v IBM Personal Pension Plan (US Dist Ct, SD 111, Civ 99-829-GPM) action alleged a wrongful act as defined in the Zurich policy. (Fieldston Prop. Owners Assn., Inc. v Hermitage Ins. Co., Inc., 16 NY3d 257; White v Continental Cas. Co., 9 NY3d 264; Teichman v Community Hosp. of W. Suffolk, 87 NY2d 514; United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229; Matter of Covert, 97 NY2d 68; Lumbermens Mut. Cas. Co. v Allstate Ins. Co., 51 NY2d 651; Sperling v Great Am. Indem. Co., 7 NY2d 442; Morgan v Greater N.Y. Taxpayers Mut. Ins. Assn., 305 NY 243; Block v Standard Ins. Co. of N.Y., 292 NY 270; Abrams v Great Am. Ins. Co., 269 NY 90.) III. The Appellate Division’s decision disregarded governing rules under New York law for construing insurance contracts. (Fieldston Prop. Owners Assn., Inc. v Hermitage Ins. Co., Inc., 16 NY3d 257; Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377; Rocon Mfg. v Ferraro, 199 AD2d 999; Teichman v Community Hosp. of W. Suffolk, 87 NY2d 514; United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229; Hartol Prods. Corp. v Prudential Ins. Co., 290 NY 44; Cammon v City of New York, 95 NY2d 583; People v Brown, 235 AD2d 344.)

      Stroock & Stroock & Lavan LLP, New York City (Michael F. Perils, Richard R. Johnson, of the California bar, admitted pro hac vice, and Ernst H. Rosenberger of counsel), for respondent.
    I. A de novo standard of review applies to this Court’s review of the Appellate Division’s reversal of the trial court’s summary judgment ruling. (Two Guys from Harrison-N.Y. v S.F.R. Realty Assoc., 63 NY2d 396; Weingarten v Board of Trustees of N.Y. City Teachers' Retirement Sys., 98 NY2d 575.) II. Federal Insurance Company’s coverage position, and the decision of the Appellate Division, are consistent with the plain language of the fiduciary policy, controlling U.S. Supreme Court Employee Retirement Income Security Act precedent, and all legal authorities on point. (Security Mut. Life Ins. Co. of N.Y. v Rodriguez, 65 AD3d 1; Matter of Country Wide Ins. Co. [Russo], 201 AD2d 368; McGrail v Equitable Life Assur. Socy. of U. S., 292 NY 419; Katz v American Mayflower Life Ins. Co. of N.Y., 14 AD3d 195; Sanabria v American Home Assur. Co., 68 NY2d 866; County of Columbia v Continental Ins. Co., 83 NY2d 618; Bretton v Mutual of Omaha Ins. Co., 110 AD2d 46; Long Is. Light. Co. v Hartford Acc. & Indem. Co., 76 Misc 2d 832; Security Mut. Life Ins. Co. of N.Y. v Rodriguez, 65 AD3d 1.) III. IBM’s shifting arguments in favor of coverage, by contrast, require rewriting of the plain language of the fiduciary policy, violate New York canons of insurance policy construction, contradict the Employee Retirement Income Security Act and controlling U.S. Supreme Court case law, and are contrary to all fiduciary liability insurance coverage case law. (National Sec. Archive v United States Dept. of Defense, 880 F2d 1381; Cyprus Plateau Min. Corp. v Commonwealth Ins. Co., 972 F Supp 1379; Payroll Express Corp. v Aetna Cas. & Sur. Co., 659 F2d 285; American Home Assur. Co. v Merck & Co., Inc., 386 F Supp 2d 501; First State Underwriters Agency of New England Reins. Corp. v Travelers Ins. Co.,
      803 F2d 1308; Eagle Leasing Corp. v Hartford Fire Ins. Co., 540 F2d 1257; Varity Corp. v Howe, 516 US 489; In re Lehman Bros. Sec. & ERISA Litig., 683 F Supp 2d 294; Shaw v Delta Air Lines, Inc., 463 US 85; Gabel v Richards Spears Kibbe & Orbe, LLP, 615 F Supp 2d 241.)
   OPINION OF THE COURT

Chief Judge Lippman.

The question before the Court is whether the disputed language in an insurance policy extends coverage to alleged violations of the Employee Retirement Income Security Act of 1974 (ERISA) by defendant insureds, International Business Machines Corporation and the IBM Personal Pension Plan (collectively, IBM), acting in their capacity as the settlor of their employee benefit plans. We reaffirm fundamental principles of insurance contract interpretation and hold that the plain language of the policy does not cover such acts and, therefore, that the Appellate Division correctly held that plaintiff insurer Federal Insurance Company (Federal) is entitled to summary judgment and a declaration that it is not required to indemnify IBM in the manner requested.

Federal issued an excess insurance policy to IBM for the policy period from April 14, 1999 through April 14, 2000. The underlying policy (Zurich policy) was issued by Zurich American Insurance Company (Zurich) and it is limited to $25,000,000. A class action was filed against IBM, alleging that certain amendments to the benefit plans in 1995 and 1999 violated provisions of ERISA pertaining to age discrimination (see Cooper v IBM Personal Pension Plan, 2005 WL 1981501, 2005 US Dist LEXIS 17071 [SD 111 2005], revd in part 457 F3d 636 [7th Cir 2006], cert denied 549 US 1175 [2007]). The parties to the Cooper action reached a settlement, which included amounts designated to cover those plaintiffs’ attorneys’ fees. IBM made those payments and then sought reimbursement from Federal, maintaining that the limits of the underlying Zurich policy had been exhausted and coverage of the excess Federal policy was thereby triggered. Federal commenced the instant suit against IBM, alleging eight causes of action and requesting a declaration that the Federal policy “provides no coverage for, or duty to indemnify, any amount paid by IBM and the Plan in settlement of the Cooper Action which represents attorneys’ fees.” The parties filed cross motions for summary judgment. The Supreme Court denied plaintiff Federal’s motion and granted IBM’s motion. The Appellate Division reversed, holding that plaintiff was entitled to summary judgment (78 AD3d 763 [2d Dept 2010]). This Court granted IBM leave to appeal (16 NY3d 706 [2011]). We now affirm.

As is relevant to this appeal, the Federal policy is a “follow form” policy, meaning that it conforms to the terms and endorsements of the underlying Zurich policy (see e.g. Jefferson Ins. Co. of N.Y. v Travelers Indem. Co., 92 NY2d 363, 369 [1998]). A reviewing court must decide whether, “ ‘affording] a fair meaning to all of the language employed by the parties in the contract and leav[ing] no provision without force and effect’ ” (Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208, 222 [2002], quoting Hooper Assoc. v AGS Computers, 74 NY2d 487, 493 [1989]), there is a “reasonable basis for a difference of opinion” as to the meaning of the policy (Greenfield v Philles Records, 98 NY2d 562, 569 [2002]). If this is the case, the language at issue would be deemed to be ambiguous and thus interpreted in favor of the insured (see Breed v Insurance Co. of N. Am., 46 NY2d 351, 353 [1978] [recognizing “the general rule that ambiguities in an insurance policy are to be construed against the insurer”]). If not, then the policy will be found to be unambiguous, meaning that “the language it uses has ‘a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion’ ” (Greenfield, 98 NY2d at 569, quoting Breed, 46 NY2d at 355), and shall be applied as written, either in favor of or against coverage, depending entirely on the language used. In analyzing the meaning of an insurance policy provision, it is necessary to determine the “reasonable expectations of the average insured” (Cragg v Allstate Indem. Corp., 17 NY3d 118, 122 [2011]).

The disputed language (“any breach of the responsibilities, obligations or duties by an Insured which are imposed upon a fiduciary of a Benefit Program by [ERISA]”) appears in the first prong of the Zurich policy’s definition of “Wrongful Act.” The term “Wrongful Act” is defined, in its entirety, in endorsement No. 17 to the Zurich policy as

“1. any breach of the responsibilities, obligations or duties by an Insured which are imposed upon a fiduciary of a Benefit Program by the Employee Retirement Income Security Act of 1974, as amended, or by the common or statutory law of the United States, or ERISA equivalent laws in any jurisdiction anywhere in the world;
“2. any other matter claimed against an Insured solely because of such Insured’s service as a fiduciary of any Benefit Program; or
“3. any negligent act, error or omission in the Administration of any Benefit Program.”

Contrary to the Supreme Court’s holding in this case in which it granted IBM’s motion for summary judgment, IBM was not alleged to have breached fiduciary duties in the underlying Cooper action. There is no dispute in this case that under Lockheed Corp. v Spink (517 US 882, 890 [1996] [holding that “(p)lan sponsors() who alter the terms of a plan do not fall into the category of fiduciaries”]), IBM was not acting as an ERISA fiduciary in taking the actions that gave rise to the allegations in the Cooper suit. A straightforward reading of the initial language of the first prong of the “Wrongful Act” definition is that it covers violations of ERISA by an insured acting in its capacity as an ERISA fiduciary. As such, the actions alleged in the Cooper suit are not covered by the Zurich policy.

The definition of “Wrongful Act” in the Zurich policy explicitly refers to ERISA and specifically to duties imposed on fiduciaries by ERISA. Therefore the only reasonable approach to determining whether the disputed language in the policy requires the coverage demanded by IBM in this action is to determine whether or not IBM was acting in its capacity as an ERISA fiduciary in amending the plans. Under Lockheed, IBM was acting as a plan settlor and not as a fiduciary when it made the changes to the benefit plans that allegedly violated ERISA. The policy language is clear that coverage requires that the insured be acting in its capacity as an ERISA fiduciary in committing the alleged ERISA violation. We conclude that the average insured would reasonably interpret the disputed language in the definition of “Wrongful Act” to mean that coverage is limited to acts of an insured undertaken in its capacity as an ERISA fiduciary.

We have considered and reject IBM’s contentions to the contrary, certain of which we specifically address as follows. IBM maintains that the term “fiduciary” is undefined in the Zurich policy and therefore must be given its plain, ordinary meaning, which differs from the definition provided in ERISA. This argument appears to stem from the rule that “[t]he language employed in the contract of insurance must be given its ordinary meaning, such as the average policyholder of ordinary intelligence, as well as the insurer, would attach to it” (Morgan v Greater NY. Taxpayers Mut. Ins. Assn., 305 NY 243, 248 [1953] [internal quotation marks and citation omitted]). Under IBM’s reading of the policy, there is no requirement that the insured must have been acting in its capacity as an ERISA fiduciary in order for an act to be considered a “Wrongful Act” because the ordinary, plain meaning of the term “fiduciary” is not equivalent to the “artificial” definition of the term that appears in ERISA (see Mertens v Hewitt Associates, 508 US 248, 255 n 5 [1993] [describing ERISA’s definition of fiduciary as “artificial”]). IBM maintains that because it is alleged in the Cooper action to have violated certain ERISA provisions and because IBM is a fiduciary of the benefit plans (based on the plain meaning of the term), the actions alleged in the Cooper action are covered and therefore IBM is entitled to recover the attorneys’ fees from Federal. In other words, IBM’s actions would be covered by virtue of the fact that it was an insured and a plan fiduciary that allegedly violated certain ERISA provisions, regardless of the fact that, if the allegations are correct, it undoubtedly did so in its capacity as a plan settlor and not in its capacity as an ERISA fiduciary.

IBM misapplies a general principle of insurance policy construction—that terms take on their plain, ordinary meaning—and the result is a strained and implausible interpretation of the provision at issue. Contrary to IBM’s argument, this does not amount to a prohibited implied exception to coverage (see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 311 [1984] [holding that “whenever an insurer wishes to exclude certain coverage from its policy obligations, it must do so ‘in clear and unmistakable’ language. Any such exclusions or exceptions from policy coverage must be specific and clear in order to be enforced. They are not to be extended by interpretation or implication, but are to be accorded a strict and narrow construction” (citations omitted)]). Rather, the disputed language in this case constitutes a clear expression of the parameters of coverage, easily understandable to the average insured. Moreover, if we were to endorse IBM’s view, because the first prong of the “Wrongful Act” definition refers not only to duties imposed by ERISA (or foreign equivalents) but also to duties imposed by common law and statutory law, it might, if not limited to claims for breach of fiduciary duties, cover almost every lawsuit imaginable, a result we find to be unreasonable.

IBM further argues that if the disputed language is ascribed the meaning which this Court now concludes it has, then it would be unnecessary for the “Wrongful Act” definition to contain both the first and second prongs because each provision would have an identical meaning. This is not the case, as the two provisions clearly serve different functions. The first prong refers to “any breach of the responsibilities, obligations or duties by an Insured which are imposed upon a fiduciary of a Benefit Program by [ERISA] . . . or by the common or statutory law of the United States, or ERISA equivalent laws in any jurisdiction anywhere in the world.” The second prong reads as follows: “any other matter claimed against an Insured solely because of such Insured’s service as a fiduciary of any Benefit Program.” Upon comparing these two provisions, it becomes apparent that the first requires a breach of a duty imposed by ERISA (or foreign ERISA-equivalent) or by other United States common or statutory law, in order for coverage to be triggered, whereas prong two plainly contains no such requirement. Prong two would extend coverage to an insured’s claims arising from liability incurred solely due to the insured’s position as a fiduciary. For instance, if the insured is named in an action solely due to its status as a fiduciary, even where the action does not allege that the insured actually breached any fiduciary duties, and the action results in a settlement or a judgment against the insured, it is possible that Zurich and Federal would be liable for funds spent to settle the suit or pay the judgment.

Finally, IBM makes much of the fact that Federal revised its own policy language in 2002 and that certain policies in other cases use language similar to the revised Federal language (see e.g. Cement & Concrete Workers Dist. Council Pension Fund v Ulico Cas. Co., 387 F Supp 2d 175, 181 n 2 [ED NY 2005], affd 199 Fed Appx 29 [2d Cir 2006] [“ ‘Wrongful Act’ is defined in . . . the . . . policy to mean: ‘any actual or alleged error or omission or breach of duty committed or alleged to have been committed by the Insureds, either jointly or severally, in the discharge of their fiduciary duties, obligations or responsibilities, including the violation of any Federal fiduciary standards’ ” (emphasis added)]). It is simply not the case that because the challenged provision could have been worded differently, it is ambiguous and must be construed in IBM’s favor. There are often many ways of effectively conveying the same meaning and the question is not simply whether the insurer could have phrased the provision differently. Rather, the issue is, in light of the reasonable expectations of the average policyholder, whether the provision, as written, is sufficiently clear and precise such that there is no room for reasonable disagreement about the scope of coverage. Because the Zurich policy is sufficiently clear on its face, we decline to speculate about Federal’s choice to revise its own policy, as we are not persuaded that any such change is material to our analysis of the disputed language in the Zurich policy.

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

Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur.

Order affirmed, with costs.

      . Under ERISA, a plan sponsor is
      “(i) the employer in the case of an employee benefit plan established or maintained by a single employer, (ii) the employee organization in the case of a plan established or maintained by an employee organization, or (iii) in the case of a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan” (29 USC § 1002 [16] [B]).

      . Regarding fiduciaries, the definition section of ERISA explains, in relevant part, that
      “a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan” (29 USC § 1002 [21] [A]).

      . A fiduciary is “[a] person who is required to act for the benefit of another person on all matters within the scope of their relationship; one who owes to another the duties of good faith, trust, confidence, and candor” or “[o]ne who must exercise a high standard of care in managing another’s money or property” (Black’s Law Dictionary [9th ed 2009], fiduciary; see also Roni LLC v Arfa, 18 NY3d 846, 848 [2011] [holding that “(a) fiduciary relationship arises ‘between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation.’ Put differently, ‘(a) fiduciary relation exists when confidence is reposed on one side and there is resulting superiority and influence on the other.’ Ascertaining the existence of a fiduciary relationship ‘inevitably requires a fact-specific inquiry’ ” (citations omitted)]).

      . According to IBM, the relevant language now reads as follows: “any breach of the responsibilities, obligations or duties imposed by ERISA upon fiduciaries of the Sponsored Plan in their capacity as such fiduciaries” (emphasis added).


text:
    [967 NE2d 652, 944 NYS2d 429]
    In the Matter of Town of Waterford, Appellant, v New York State Department of Environmental Conservation, Respondent.
    Argued February 14, 2012;
    decided March 22, 2012

      POINTS OF COUNSEL

      Dreyer Boyajian LLP, Albany (Craig M. Crist and Benjamin W. Hill of counsel), for appellant.
    The Third Department erred in expanding the scope of the Freedom of Information Law’s inter-agency/intra-agency exemption to include, for the first time, communications between federal and state agencies. (Matter of Newsday, Inc. v Empire State Dev. Corp., 98 NY2d 359; Matter of Gould v New York City Police Dept., 89 NY2d 267; Matter of Encore Coll. Bookstores v Auxiliary Serv. Corp. of State Univ. of N.Y. at Farmingdale, 87 NY2d 410; Matter of Capital Newspapers, Div. of Hearst Corp. v Whalen, 69 NY2d 246; Matter of Russo v Nassau County Community Coll., 81 NY2d 690; Matter of Hanig v State of N.Y. Dept. of Motor Vehs., 79 NY2d 106; Matter of Fink v Lefkowitz, 47 NY2d 567; Price v Price, 69 NY2d 8; Matter of Malta Town Ctr. I, Ltd. v Town of Malta Bd. of Assessment Review, 3 NY3d 563.)

      Eric T. Schneiderman, Attorney General, Albany (Paul Groenwegen, Barbara D. Underwood and Andrew D. Bing of counsel), for respondent.
    I. The records withheld by the Department of Environmental Conservation are deliberative materials subject to the exemption for “inter-agency or intra-agency materials” under Public Officers Law § 87 (2) (g). (Matter of Xerox Corp. v Town of Webster, 65 NY2d 131; Matter of McAulay v Board of Educ. of City of N.Y., 61 AD2d 1048, 48 NY2d 659; Matter of Auerbach v Board of Educ. of City School Dist. of City of N.Y., 86 NY2d 198; Matter of Sea Crest Constr. Corp. v Stubing, 82 AD2d 546; Matter of New York Times Co. v City of NY Fire Dept., 4 NY3d 477.) II. The undefined statutory term “inter-agency or intra-agency materials” does not incorporate the definition of “agency” in Public Officers Law § 86 (3). (Matter of Buffalo News v Buffalo Enter. Dev. Corp., 84 NY2d 488; Matter of News-day, Inc. v Empire State Dev. Corp., 98 NY2d 359; Matter of Justice v King, 60 AD3d 1452; Matter of Belmonte v Snashall, 2 NY3d 560; Matter of Sea Crest Constr. Corp. v Stubing, 82 AD2d 546; Matter of 124 Ferry St. Realty Corp. v Hennessy, 82 AD2d 981; Matter of New York Times Co. v City of N.Y. Fire Dept., 4 NY3d 477; Matter of Gould v New York City Police Dept., 89 NY2d 267; Matter of Russo v Nassau County Community Coll., 81 NY2d 690; Matter of Xerox Corp. v Town of Webster, 65 NY2d 131.) III. The federal case law cited by the Town of Waterford does not preclude application of the exemption in this case. (Department of Interior v Klamath Water Users Protective Assn., 532 US 1; Matter of John P. v Whalen, 54 NY2d 89; Matter of Buffalo News v Buffalo Enter. Dev. Corp., 84 NY2d 488; Matter of Fink v Lefkowitz, 47 NY2d 567; Ryan v Department of Justice, 617 F2d 781; Wu v National Endowment for Humanities, 460 F2d 1030; Soucie v David, 448 F2d 1067; Matter of Sea Crest Constr. Corp. v Stubing, 82 AD2d 546; Matter of New York Times Co. v City of N.Y. Fire Dept., 4 NY3d 477; Matter of Gould v New York City Police Dept., 89 NY2d 267.)
   OPINION OF THE COURT

Chief Judge Lippman.

Petitioner Town of Waterford commenced this proceeding to challenge the Department of Environmental Conservation’s (DEC’s) denial of portions of its request for information under the Freedom of Information Law (FOIL). Specifically, the Town—a municipality that obtains its drinking water from the Hudson River—sought information relating to the Hudson River dredging project and the availability of alternative water supplies for local residents. The DEC denied access to certain records exchanged with the United States Environmental Protection Agency (EPA) by invoking the FOIL exemption for inter-agency or intra-agency materials (see Public Officers Law § 87 [2] [g]). We agree with the Town that this exemption is not applicable under the circumstances presented and therefore modify the determinations below.

In 1984, the EPA placed a 200-mile portion of the Hudson River, ranging from Hudson Falls south to Manhattan, on the National Priorities List due to the presence of polychlorinated biphenyls (PCBs). Since that time, the EPA, the DEC and the New York State Department of Health (DOH) have been engaged in a joint endeavor to address the hazards presented by the contamination. The EPA and DEC each have statutory responsibility for the site and they have addressed their enforcement efforts through a series of cooperative agreements. EPA functions as the lead agency for the remediation efforts. In addition, the DOH shares responsibility for the integrity of the water supply and the possible adverse effects on human health.

EPA approved a remediation plan in 2002 that required dredging the river to remove PCB-contaminated sediment. EPA and General Electric (GE) entered into a consent decree, under which GE agreed to perform the remedial action. In addition, EPA directed GE to prepare a “Water Supply Options Analysis” to address the potential contingency measures available to the Towns of Waterford and Halfmoon for the protection of their drinking water during the first phase of the dredging project, should the PCB levels in the water exceed the applicable limits.

Shortly after the options analysis was released, the Town made a FOIL request seeking certain records from the DEC. In particular, the Town sought (1) documents relating to the possible provision of alternative water supplies during the dredging project; (2) materials exchanged between the DEC, DOH and EPA concerning permissible PCB levels in a water supply; (3) documents relating to any modification, by DEC or any other state agency, to any applicable regulation governing the acceptable level of PCB exposure; and (4) materials received or submitted by DEC in response to GE’s “Water Supply Options Analysis.”

In response, the DEC provided a number of documents but withheld access to others, maintaining that they were exempt from disclosure under FOIL. Upon administrative appeal, the DEC released two additional records and determined that the remaining documents were properly withheld as inter-agency or intra-agency deliberative materials (see Public Officers Law § 87 [2] [g]) and that some of the records were also exempt from disclosure under state or federal law (see Public Officers Law § 87 [2] [a]).

The Town then commenced this CPLR article 78 proceeding, challenging the decision to withhold the remaining 344 records. Supreme Court concluded that the EPA was not an “agency” within the meaning of the Public Officers Law and directed the disclosure of several additional records that it found were not protected by Public Officers Law § 87 (2) (g).

The Appellate Division modified, finding that under the circumstances presented, including the legislative purpose of the FOIL exemption and the long-term collaborative relationship between the EPA and the state agencies on this project, communications between the federal and state agencies could be considered deliberative material subject to exemption as “intraagency or inter-agency” materials (77 AD3d 224, 232-233 [3d Dept 2010]). The Court therefore remitted to Supreme Court for in camera review to determine whether the documents were exempt from disclosure under Public Officers Law § 87 (2) (g). Two Justices dissented in relevant part and, noting the public policy in favor of disclosure, would have found that the inter-agency or intra-agency exemption should not be expanded to include materials exchanged with the federal agency about the dredging project. On remittal, Supreme Court reviewed the pertinent records and concluded that they qualified as inter-agency or intra-agency deliberative material and were properly withheld. The Town now appeals pursuant to CPLR 5601 (d) and (a) from the Supreme Court judgment, bringing up for review the prior Appellate Division order.

“It is settled that FOIL is based on the overriding policy consideration that ‘the public is vested with an inherent right to know and that official secrecy is anathematic to our form of government’ ” (Matter of Capital Newspapers, Div. of Hearst Corp. v Whalen, 69 NY2d 246, 252 [1987] [citation omitted]). As a result, we have required that FOIL “be liberally construed and its exemptions narrowly interpreted so that the public is granted maximum access to the records of government” (Capital Newspapers, 69 NY2d at 252). It is the agency’s burden to establish “that ‘the material requested falls squarely within the ambit of one of these statutory exemptions’ ” (Matter of News-day, Inc. v Empire State Dev. Corp., 98 NY2d 359, 362 [2002], quoting Matter of Fink v Lefkowitz, 47 NY2d 567, 571 [1979]).

At issue here is whether communications with the EPA, a federal agency, are within the statutory exemption for predecisional inter-agency or intra-agency materials (see Public Officers Law § 87 [2] [g]). Although the phrases “inter-agency” and “intra-agency” are not specifically defined in the statute, the Legislature did provide a definition for the term “agency.” For purposes of FOIL, “ ‘[a]gency’ means any state or municipal department, board, bureau, division, commission, committee, public authority, public corporation, council, office or other governmental entity performing a governmental or proprietary function for the state or any one or more municipalities thereof, except the judiciary or the state legislature” (Public Officers Law § 86 [3]).

By its plain terms, the statutory definition does not include federal agencies. Rather, the definition of “agency” is limited to state and municipal entities. DEC’s argument that the definition of “agency” should not be applied to the distinct phrases “inter-agency” and “intra-agency” is meritless, as there is nothing particular to either the context or usage of those phrases that would indicate a legislative intent to treat the term “agency,” as used in that section, separately from the rest of FOIL. Although the EPA would be an agency within the definition of that term as it is commonly understood, that fact is of no assistance to respondent when the term is clearly defined in the statute. Since the EPA is not an “agency” for purposes of FOIL, the inter-agency exemption does not apply to materials exchanged between these entities. To the extent that there is resonance to the argument that the exemption should apply in order to protect the pre-decisional joint deliberative process, that issue must be addressed to the Legislature.

DEC maintains that this Court has recognized that, in some situations, documents prepared by a party that is not an “agency” can be withheld under the intra-agency exemption. We have held that the purpose of the intra-agency exception is to allow individuals within an agency to exchange their views freely, as part of the deliberative process, without the concern that those ideas will become public (see Matter of New York Times Co. v City of N.Y. Fire Dept., 4 NY3d 477, 488 [2005]; Matter of Xerox Corp. v Town of Webster, 65 NY2d 131, 132 [1985]). In Xerox, we determined that real estate appraisal reports prepared by a private consulting firm at the agency’s request were exempt from disclosure as intra-agency material (see 65 NY2d at 133). We observed that “[i]t would make little sense to protect the deliberative process when such reports are prepared by agency employees yet deny this protection when reports are prepared for the same purpose by outside consultants retained by agencies” (Xerox, 65 NY2d at 133). Addressing a similar issue under the exemption for intra-agency materials in the federal Freedom of Information Act (5 USC § 552), the United States Supreme Court has observed that “the fact about the consultant that is constant in the typical cases is that the consultant does not represent an interest of its own, or the interest of any other client, when it advises the agency that hires it” (Department of Interior v Klamath Water Users Protective Assn., 532 US 1, 10-11 [2001]).

We reject respondent’s argument that the EPA is the equivalent of an outside consultant under the present circumstances. Here, EPA and DEC have a collaborative relationship and are presumably working together toward the same ameliorative goal. However, EPA was not retained by the DEC and does not function as its employee or agent. To the contrary, EPA is actually the lead agency for the dredging project. Moreover, unlike typical consultants, these agencies represent different constituencies and their interests may diverge. We note that this interpretation is consistent with that of the Committee on Open Government, which has determined both that the EPA cannot be characterized as a consultant “retained” by DEC (see Comm on Open Govt FOIL-AO-11985 [2000]) and that the definition of “agency” does not include federal agencies (see Comm on Open Govt FOIL-AO-12034 [2000]).

In conclusion, DEC has failed to meet its burden of showing that the requested material is covered by the statutory exemption.

Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be modified, with costs to petitioner, in accordance with this opinion and, as so modified, affirmed.

Judges Ciparick, Graffeo, Smith, Pigott and Jones concur; Judge Read taking no part.

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

       This is not to say that a federal agency could never be deemed the equivalent of an outside consultant.


author: Graffeo, J.

text:
    [967 NE2d 671, 944 NYS2d 448]
    The People of the State of New York ex rel. Shaun McManus, Appellant, v Martin F. Horn, Commissioner of the New York City Department of Corrections, et al., Respondents.
    Argued February 7, 2012;
    decided March 22, 2012

      POINTS OF COUNSEL

      The Bronx Defenders, Bronx (V. Marika Meis of counsel), for appellant.
    Criminal Procedure Law § 520.10 (2) (b) requires that bail be set in “two or more forms” and, therefore, prohibits “cash-only” bail. (People v Finnegan, 85 NY2d 53; Leader v Maroney, Ponzini & Spencer, 97 NY2d 95; Sutherland v St. Lawrence County, 101 App Div 299; People v Torn, 110 App Div 676; People v Gillman, 125 NY 372; Badolato v Molinari, 106 Misc 342; People v Burton, 150 Misc 2d 214; People ex rel. Hardy v Sielaff, 79 NY2d 618; Bellamy v Judges in N.Y. City Crim. Ct., 41 AD2d 196.)

      Robert T. Johnson, District Attorney, Bronx (Stanley R. Kaplan and Joseph N. Ferdenzi of counsel), for respondent.
    I. Defendant’s claim of error is moot since he is no longer a pretrial detainee but has been convicted and sentenced; in the alternative, his claim has been forfeited by his guilty pleas. (People ex rel. Douglas v Vincent, 50 NY2d 901; People ex rel. Kaplan v Commissioner of Correction of City of N.Y., 60 NY2d 648; Matter of Kassebaum v al-Rahman, 212 AD2d 482; People ex rel. Griffin v Warden, Brooklyn House of Detention for Men, 40 AD2d 859; People ex rel. Wilson v Walsh, 270 AD2d 885; People ex rel. Greenstein v Sheriff of Schenectady County, 220. AD2d 190; People ex rel. Ferguson v Campbell, 186 AD2d 319; Sara-toga County Chamber of Commerce v Pataki, 100 NY2d 801; Matter of Grand Jury Subpoenas for Locals 17, 135, 257 & 608 of United Bhd. of Carpenters & Joiners of Am., AFL-CIO, 72 NY2d 307; Matter of Hearst Corp. v Clyne, 50 NY2d 707.) II. The Appellate Division, First Department, correctly upheld the habeas court’s denial of the writ, properly determining that CPL 520.10 (2) (a) and (b) do not limit a judge’s discretion to impose one form of bail. (People v Esquivel, 158 Misc 2d 720.)

      New York Civil Liberties Union Foundation, New York City (Taylor Pendergrass, Corey Stoughton and Arthur Eisenberg of counsel), for New York Civil Liberties Union and others, amici curiae.
    I. The context in which CPL 520.10 (2) was adopted supports an interpretation maximizing access to pretrial release by making two forms of bail available to defendants. (People v Litto, 8 NY3d 692; Cannon v University of Chicago, 441 US 677; Stack v Boyle, 342 US 1.) II. The statute should be interpreted to require two forms of bail to avoid unequal adverse consequences for the indigent and minorities. (People v Alston, 88 NY2d 519; Barker v Wingo, 407 US 514; Estelle v Williams, 425 US 501; Hurrell-Harring v State of New York, 15 NY3d 8.) III. The statute must be interpreted to require two forms of bail to avoid the unconstitutional implications of a “cash-only” bail regime. (Matter of Jacob, 86 NY2d 651; People ex rel. Fraser v Britt, 289 NY 614; People ex rel. Klein v Krueger, 25 NY2d 497; Matter of Restaino [State Commn. on Jud. Conduct], 10 NY3d 577; Matter of Sardino v State Commn. on Jud. Conduct, 58 NY2d 286; Kellman v District Director, U.S. Immigration & Naturalization Serv., 750 F Supp 625; People v Saffore, 18 NY2d 101; Tate v Short, 401 US 395.)
   OPINION OF THE COURT

Graffeo, J.

In this appeal, we consider whether CPL 520.10 (2) (b) prohibits a court from designating only one form of bail.

Petitioner Shaun McManus was on parole in January 2009 when he was arrested for arson in the third degree and related offenses stemming from two separate incidents involving the same victim. McManus was alleged to have assaulted the individual and set two of his automobiles on fire. Bail was set at $5,000, cash or bond, which McManus posted. The victim was granted a temporary order of protection.

McManus subsequently violated the order of protection by verbally abusing the victim and twice threatening him with weapons (a screwdriver and what appeared to be a handgun). At his arraignment on the new charges, bail was set at $1,500 for each incident, cash or bond. Because the Division of Parole filed a violation warrant with the Department of Corrections, McManus was not released on bail after arraignment.

Based on the first two incidents between McManus and the victim, McManus was indicted for two counts of arson in the third degree, four counts of aggravated harassment in the second degree, two counts of criminal mischief in the fourth degree and one count of assault in the third degree. Supreme Court ordered that bail be set at $20,000, “CASH ONLY.” A few days later, the People moved to increase the amount of cash bail to $50,000 but the court denied the application.

When the Division of Parole lifted its hold on McManus, he tried to secure a bail bond but was unable to do so because the court had designated bail as cash only. This prompted McManus to seek alteration of the bail ruling, arguing that setting one form of bail—such as cash-only bail—is prohibited under CPL 520.10 (2) (b), which he claimed requires a court to set a second permissible form of bail. Supreme Court disagreed and adhered to the $20,000 cash bail order.

McManus then commenced this CPLR article 70 proceeding for a writ of habeas corpus. A different justice dismissed the petition, concluding that CPL 520.10 (2) does not preclude a judge from setting a single form of bail (26 Misc 3d 317 [Sup Ct, Bronx County 2009]). The Appellate Division affirmed for the same reason (77 AD3d 571 [1st Dept 2010]). We granted leave to appeal (16 NY3d 768 [2011]) and now reverse.

As an initial matter, it is necessary to address whether this appeal became moot after McManus entered a guilty plea to arson in the fourth degree and other offenses. As a result of the plea, the legality of his pretrial detention is technically no longer germane since that custody was terminated (see e.g. People ex rel. Chakwin v Warden, N.Y. City Correctional Facility, Rikers Is., 63 NY2d 120, 125 [1984]). Nevertheless, the mootness exception applies under these circumstances because the propriety of cash-only bail is an important issue that is likely to recur and which typically will evade our review (see e.g. City of New York v Maul, 14 NY3d 499, 507 [2010]; Matter of Hearst Corp. v Clyne, 50 NY2d 707, 714-715 [1980]). We therefore decline to dismiss this appeal.

Section 520.10 of the Criminal Procedure Law delineates the authorized forms of bail and the methods by which bail may be set by a court. Nine categories of bail are permitted under subdivision (1) of the statute: (1) cash; (2) an insurance company bail bond; (3) a secured surety bond; (4) a secured appearance bond; (5) a partially-secured surety bond; (6) a partially-secured appearance bond; (7) an unsecured surety bond; (8) an unsecured appearance bond; and (9) by posting bail with a credit card or similar device (see CPL 520.10 [1] [a]-[i]).

Subdivision (2) of the statute specifies two distinct “methods of fixing bail.” The first option permits a court to “designate the amount of the bail without designating the form or forms in which it may be posted”—in such instance, the court merely declares a monetary sum. If this occurs, the accused can post either an unsecured surety bond or an unsecured appearance bond (see CPL 520.10 [2] [a]). The second option states that a “court may direct that the bail be posted in any one of two or more of the forms specified in subdivision one, designated in the alternative, and may designate different amounts varying with the forms” (CPL 520.10 [2] [b]).

McManus asserts that cash-only bail is illegal under CPL 520.10 (2) (b) because that statutory provision does not authorize a court to fix a single form of designated bail; he maintains that the subdivision instead requires that at least two forms of bail be ordered. In support of this claim, McManus relies on the language in subdivision (2) (b) referring to “any one of two or more of the forms” of bail enumerated in subdivision (1). The District Attorney contests that interpretation and asserts that a single form of bail is permissible because subdivision (2) (a) references a singular “form” of bail and the word “may” rather than “must” appears in paragraphs (a) and (b) of subdivision (2).

As the District Attorney observes, the reference to a single “form” of bail arguably suggests that the Legislature intended a court to have discretion to impose only one type of bail. Moreover, the use of the word “may” in conjunction with the reference to two or more bail alternatives could be interpreted to mean that other unspecified options—including a single form of bail—are not outlawed by CPL 520.10.

Both parties’ contentions have some degree of linguistic merit. However, in our view, defendant’s proposed construction is the better reading of the statute as it comports with the overall statutory structure and the legislative purpose that prompted the enactment of section 520.10 in the Criminal Procedure Law. Inclusion of the word “may” in both subdivisions was the simplest way for the Legislature to codify the two permissible methods for fixing bail: under subdivision (2) (a), a court may order a specific amount of bail without stating any particular bail form (in which case the accused may choose either an unsecured surety bond or an unsecured appearance bond); or, under subdivision (2) (b), a court may specify the forms of bail but the defendant is entitled to at least two alternative choices. The Legislature could not have used the word “must” in either provision because that would have defeated the court’s discretion to choose between the two options for fixing bail.

Providing flexible bail alternatives to pretrial detainees—who are presumptively innocent until proven guilty beyond a reasonable doubt—is consistent with the underlying purpose of article 520. The legislation was intended to reform the restrictive bail scheme that existed in the former Code of Criminal Procedure in order to improve the availability of pretrial release (see e.g. Bellamy v Judges in N.Y. City Crim. Ct, 41 AD2d 196, 202 [1st Dept 1973], affd 32 NY2d 886 [1973]; Mem of Commn on Rev of Penal Law and Crim Code, Bill Jacket, L 1970, ch 996, at 10). Subsequent amendments further loosened those strictures (see Preiser, Practice Commentaries, McKinney’s Cons Laws of NY, Book 11A, CPL 520.10, at 51).

CPL 520.10 (2) (b) imposes no undue restriction on a court that believes a substantial personal undertaking “is necessary to secure [the defendant’s] court attendance” in future proceedings (CPL 510.30 [2] [a]). Here, the bail court evidently decided that $20,000 cash bail was warranted because McManus had flouted a judicial directive by repeatedly engaging in criminal conduct toward the subject of the temporary order of protection. A judge could reasonably conclude that a person who has already violated a judicial edict is more likely to ignore another command—such as an instruction to appear in court—and therefore impose stricter bail to encourage compliance with the court’s mandates. If a court believes that $20,000 cash bail is an effective method to achieve this objective, CPL 520.10 (2) (b) allows it to be ordered along with a second type of bail that, in effect, may be virtually indistinguishable from the cash option. For instance, the judge could order as an alternative a $200,000 partially-secured appearance bond requiring a monetary deposit of 10% (see CPL 500.10 [18]), or a $20,000 secured appearance bond that could be satisfied with (among other things) $20,000 in cash (see CPL 500.10 [17] [a]). Hence, there does not appear to have been a compelling need for the Legislature to authorize a single form of bail in CPL 520.10 (2) (b).

We also reject the District Attorney’s reliance on cases in which a court decides to order $1 cash bail. The District Attorney posits that there is no valid reason for an alternative type of bail in this situation. While this may be true from a practical standpoint, it fails to account for the underlying purpose of ordering $1 cash bail. A defendant who refrains from posting the $1 can receive credit for time served when there is some other reason that prevents his release from custody, such as an inability to post bail in an unrelated matter. Since $1 cash bail is ordered for the benefit of the accused, it is not surprising that no objection would be raised to the lack of an alternative form. In any event, it will take little judicial effort in such a situation to order another form of bail, which must now be done routinely to properly comply with the statute.

For these reasons, we hold that CPL 520.10 (2) (b) prohibits a court from fixing only one form of bail.

Accordingly, the order of the Appellate Division should be reversed, without costs, the proceeding converted to a declaratory judgment action and judgment granted declaring that CPL 520.10 (2) (b) prohibits the designation of one form of bail.

Chief Judge Lippman and Judges Cipabick, Read, Smith, Pigott and Jones concur.

Order reversed, etc.

      . Bail orders can be reviewed under CPLR article 70 only for an error of law (see e.g. People ex rel. Lazer v Warden, N.Y. County Men’s House of Detention, 79 NY2d 839, 840 [1992]; People ex rel. Parker v Hasenauer, 62 NY2d 777, 778-779 [1984]; People ex rel. Rosenthal v Wolfson, 48 NY2d 230, 232-233 [1979]; Preiser, Practice Commentaries, McKinney’s Cons Laws of NY, Book 11A, CPL 510.20, at 21).

      .  In light of the fact that McManus no longer needs affirmative habeas corpus relief, this proceeding is converted into a declaratory judgment action (see Matter of Blossom View Nursing Home v Novello, 4 NY3d 581, 584 n 1, 596 [2005]).


author: Pigott, J. Chief Judge Lippman (dissenting in part).

text:
    [967 NE2d 661, 944 NYS2d 438]
    The People of the State of New York, Respondent, v Sergio Rodriguez, Appellant.
    Argued February 8, 2012;
    decided March 22, 2012

      POINTS OF COUNSEL

      Center for Appellate Litigation, New York City (Susan H. Salomon and Robert S. Dean of counsel), for appellant.
    I. The prosecutor, in summation, violated the unsworn-witness rule by citing and characterizing, as spontaneous and reliable, the complainant’s identification of appellant, allegedly made as the complainant had entered the courtroom, not from the witness stand, and counsel, in this highly contested identification case, rendered ineffective assistance by failing to protest the prosecutor’s remarks. (People v Benevento, 91 NY2d 708; People v Baldi, 54 NY2d 137; Strickland v Washington, 466 US 668; People v Turner, 5 NY3d 476; People v Baker, 14 NY3d 266; People v Ashwal, 39 NY2d 105; People v Paperno, 54 NY2d 294; People v Moye, 52 AD3d 1, 12 NY3d 743; People v Smith, 173 AD2d 416; People v Carter, 37 NY2d 234.) II. Insofar as the Appellate Division’s corrective action ordered appellant resentenced so that his lawfully imposed concurrent sentences may be “restructured” to run consecutively, it would violate CPL 430.10 and Penal Law § 70.25 (2) and § 70.30 (1) (a), as well as double jeopardy and due process. (People v Richardson, 100 NY2d 847; People v Adkinson, 88 NY2d 561; People v Yannicelli, 40 NY2d 598; People v Carpenter, 19 AD3d 730; People v Romain, 288 AD2d 242; People v Williams, 87 NY2d 1014; People v DeValle, 94 NY2d 870; People v Laureano, 87 NY2d 640; People v Farrar, 52 NY2d 302; Matter of Roballo v Smith, 63 NY2d 485.)

      Cyrus R. Vance, Jr., District Attorney, New York City (Eleanor J. Ostrow and Hilary Hassler of counsel), for respondent.
    I. Defendant’s claim that his trial attorney’s representation was ineffective is not properly raised on direct appeal. In any event, that claim, which is based solely on the attorney’s failure to object to two of the prosecutor’s summation remarks, is meritless. (People v Rivera, 71 NY2d 705; People v Love, 57 NY2d 998; People v Jones, 55 NY2d 771; Lockhart v Fretwell, 506 US 364; Strickland v Washington, 466 US 668; Mickens v Taylor, 535 US 162; People v Benevento, 91 NY2d 708; People v Satterfield, 66 NY2d 796; People v Baldi, 54 NY2d 137; People v Henry, 95 NY2d 563.) II. Although the sentencing court’s imposition of consecutive sentences for attempted murder and assault was unlawful, the court could have imposed consecutive sentences for either of those counts and one of the robbery counts to arrive at the same aggregate sentence originally imposed. Thus, the case should be remanded to the trial court for resentencing. (People v Young, 94 NY2d 171; People v Day, 73 NY2d 208; Bozza v United States, 330 US 160; People v McKnight, 16 NY3d 43; People v Rosas, 8 NY3d 493; Matter of Licitra v Coughlin, 61 NY2d 450; Matter of Fludd v Goldberg, 51 AD3d 153; People v Rodney E., 11 NY2d 672; People v Richardson, 100 NY2d 847; People v Adkinson, 88 NY2d 561.)
   OPINION OF THE COURT

Pigott, J.

The issue on this appeal is whether CPL 430.10 precludes the Appellate Division from remitting a case for resentencing after concluding that the trial court imposed unlawful consecutive sentences on two of the counts. We conclude that it does not.

In the present case involving a particularly vicious attack, defendant was convicted of attempted murder in the second degree (Penal Law §§ 110.00, 125.25 [1]), assault in the first degree (Penal Law § 120.10 [1]), two counts of robbery in the first degree (Penal Law § 160.15 [1], [4]) and robbery in the second degree (Penal Law § 160.10 [1]). The trial court, noting defendant’s prior history of violence, imposed an aggregate sentence of 40 years, but, in the process of doing so, unlawfully imposed consecutive sentences on the counts of attempted second-degree murder (determinate term of 25 years) and first-degree assault (determinate term of 15 years). The trial court imposed concurrent sentences on the robbery counts.

On appeal, the People conceded the illegality of the consecutive sentences. The Appellate Division modified the judgment by directing that the attempted murder and assault convictions run concurrently and remanded the matter to the trial court for resentencing (79 AD3d 644 [1st Dept 2010]). In so doing, the Appellate Division observed that “the People seek resentencing only to realign which sentences are to run consecutively, not to disturb any of the individual sentences” (id. at 646), the intent presumably being to give the trial court the opportunity, should it elect to do so, to make certain of the remaining counts run consecutively to the required concurrent sentences.

Defendant argues before this Court that the Appellate Division’s remand order violates the dictates of CPL 430.10. That provision states that, “[e]xcept as otherwise specifically authorized by law, when the court has imposed a sentence of imprisonment and such sentence is in accordance with law, such sentence may not be changed, suspended or interrupted once the term or period of the sentence has commenced” (emphasis supplied). According to defendant, once the Appellate Division concluded that the imposition of the consecutive counts was illegal, its only authority was to make the two counts concurrent; it had no authority to remand the matter to the trial court.

While it is premature for us to take a position on whether the trial court may sentence defendant other than to make all sentences run concurrently, it is clear that CPL 430.10 does not preclude the Appellate Division remitting for resentence. That section, derived from prior amendments to former Code of Criminal Procedure § 470-a and former Penal Law § 2188 prohibiting trial courts from changing a lawfully-imposed sentence once the term had commenced, does not prohibit sentences from being either changed or modified as the result of a postjudgment motion or the appellate process (see Preiser, Practice Commentaries, McKinney’s Cons Laws of NY, Book 11 A, CPL 430.10 [referencing CPL 470.20]).

CPL 430.10’s language “[e]xcept as otherwise specifically authorized by law” limits its reach, particularly in light of the broad authority CPL 470.20 grants intermediate appellate courts to take corrective action upon a modification of a sentence. CPL 470.20 states, in pertinent part, that

“[u]pon reversing or modifying a judgment, sentence or order of a criminal court, an intermediate appellate court must take or direct such corrective action as is necessary and appropriate both to rectify any injustice to the appellant resulting from the error or defect which is the subject of reversal or modification and to protect the rights of the respondent. The particular corrective action to be taken or directed is governed in part by the following rules” (CPL 470.20 [emphasis supplied]).

CPL 470.20, in a proper case, authorizes the appellate court to “either reduce the total sentence ... or remit the case to the criminal court for re-sentence” (CPL 470.20 [3] [modification of judgment after trial on the ground of legal insufficiency]), or to “remit the case to the criminal court with a direction that the [criminal court] sentence the defendant accordingly” (CPL 470.20 [4] [upon modification of judgment reducing a conviction to one for a lesser included offense]). Indeed, in People v LaSalle (95 NY2d 827, 829 [2000]), we concluded that under its authority found in CPL 470.20, an intermediate appellate court may, “upon reversing or modifying a sentence, either . . . remit to the trial court for resentencing or . . . substitute its own legal sentence for the illegally imposed sentence.” This discretion lies with the appellate court.

Defendant misreads People v Yannicelli (40 NY2d 598 [1976]) as holding that CPL 430.10 limits the power of appellate courts. We held in Yannicelli that the sentencing court’s imposition, on remand, of an additional term of imprisonment was not “consistent with our prior determination,” in which we had affirmed an Appellate Division order remanding the case (id. at 599). We concluded that the previous remand had authorized resentencing only to correct the defect we had found in the earlier sentence. The sentencing court, in going beyond that authorization, had done what it was prohibited from doing by CPL 430.10—changing a lawful sentence after the term of the sentence had commenced. Yannicelli did not hold that section 430.10 would bar an appellate court from directing resentencing on all counts where the sentence on fewer than all of the counts was flawed.

The Appellate Division, having found that the trial court imposed an illegal sentence, possessed the authority to remit the matter to the trial court for resentencing. By choosing to remit this matter to Supreme Court, the Appellate Division left the determination of the proper resentence to the discretion of Supreme Court.

The dissent misconstrues our holding as going beyond the narrow issue of whether CPL 410.30 precludes the Appellate Division from remitting a case for resentencing in these circumstances (dissenting op at 672, 673). Since Supreme Court has not yet acted, it would be premature for us to address whether Penal Law § 70.25 (2) permits any of the remaining counts to run consecutively to the counts for which the Appellate Division determined that concurrent sentencing was required. If it is inclined to impose consecutive sentences, Supreme Court must resolve that issue and resentence defendant in the manner it deems appropriate at which juncture the legality of the actual sentence imposed will be ripe for judicial review.

We have considered defendant’s remaining claim of ineffective assistance of counsel and conclude that it is without merit because, viewing the record as a whole, defendant received meaningful representation (see People v Baldi, 54 NY2d 137 [1981]).

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

Chief Judge Lippman (dissenting in part).

Once the Appellate Division directed that the sentences for defendant’s attempted murder and assault convictions were to be served concurrently instead of consecutively (79 AD3d 644 [2010]), the defect in defendant’s sentence was corrected. CPL 430.10 precludes any additional restructuring of defendant’s now-lawful sentence and the Appellate Division’s remittal for the purpose of increasing the severity of the aggregate sentence was erroneous.

Each count for which defendant stands convicted carries its own sentence and the concurrent or consecutive nature of each term of imprisonment is an integral part of that sentence (see e.g. Penal Law § 70.25 [1] [“when multiple sentences of imprisonment are imposed on a person at the same time . . . the sentence or sentences imposed by the court shall run either concurrently or consecutively with respect to each other and the undischarged term or terms in such manner as the court directs at the time of sentence”]). Thus, defendant’s aggregate sentence is not greater than the sum of its component parts, entitled to some sort of enhanced legal protection; when the flaws in defendant’s individual sentences were cured, there was no basis for a plenary resentencing proceeding.

CPL 430.10 provides that “[e]xcept as otherwise specifically authorized by law, when the court has imposed a sentence of imprisonment and such sentence is in accordance with law, such sentence may not be changed, suspended or interrupted once the term or period of the sentence has commenced.” This case does not present the type of error that Supreme Court possesses the inherent authority to correct (see e.g. People v Richardson, 100 NY2d 847, 850-851 [2003]). The majority, however, emphasizes the prefatory phrase of CPL 430.10, “[e]xcept as otherwise specifically authorized by law,” and finds that CPL 470.20—the statute addressing the proper corrective action to be taken by the Appellate Division—supplies such authorization.

The generic language of CPL 470.20, in favor of crafting a fair and appropriate remedy, cannot be read to “specifically authorize [ ]” the Supreme Court, upon direction of the Appellate Division, to restructure a lawful sentence. Moreover, the majority is unclear as to the nature of the People’s “right” it purports to protect by this interpretation of the statute. Certainly, there is no right to a 40-year aggregate term. The sentence, as amended by the Appellate Division, might not have been the sentence Supreme Court tried to impose, but it is a lawful sentence and is not the appropriate subject of additional proceedings.

Although People v Yannicelli (40 NY2d 598, 601 [1976]) may be procedurally distinguishable, it remains that there, as here, “the sentences were invalid in only one respect.” And, more importantly, as in Yannicelli, “[t]he defect. . . did not infect all of the sentences” (40 NY2d at 602). The only problem with defendant’s sentence was the consecutive relationship between two offenses that were not committed through separate acts. Defendant’s sentences did not suffer from any additional defect. As a result, CPL 430.10 specifically precludes their further alteration by Supreme Court, and the Appellate Division’s remand to effectuate that resentencing constitutes unlawful corrective action (see CPL 470.10 [3]; 470.35 [2] [c]).

Notably, we recently exhibited our refusal to remit for plenary resentencing to correct a discrete error in People v Lingle (16 NY3d 621 [2011]). In that case, we recognized that neither the Appellate Division nor Supreme Court had the authority to reexamine the entirety of a defendant’s sentence once the particular legal error—there the mistake in failing to pronounce a term of postrelease supervision—had been corrected (see Lingle, 16 NY3d at 634-635). Similarly, here, the Appellate Division’s correction of the illegality precludes any additional modification of defendant’s now-lawful sentence.

People v LaSalle (95 NY2d 827 [2000]), cited by the majority, actually highlights the problem presented here. There, defendant was improperly sentenced to consecutive terms of imprisonment for offenses that arose from a single incident. The Appellate Division modified defendant’s sentence to correct the error by directing that the sentences were to run concurrently (see LaSalle, 95 NY2d at 828). When the People appealed, arguing that the only corrective action available to the Appellate Division was remittal to the trial court for resentencing, we observed that CPL 470.20 allowed the Appellate Division to choose either to remit or to impose its own legal sentence (see LaSalle, 95 NY2d at 829). Here, by contrast, the Appellate Division order seeks both to correct the illegality in defendant’s sentence and to remit to the trial court for further resentencing. This is not permitted.

Therefore, I would modify the Appellate Division order by striking the remittal to Supreme Court for resentencing.

Judges Graffeo, Read and Smith concur with Judge Pigott; Chief Judge Lippman dissents in part and votes to modify in a separate opinion in which Judges Ciparick and Jones concur.

Order affirmed.

       Although it is well settled that courts have the authority to correct mistakes or clerical errors, “a court cannot, in the guise of correcting an error, change or amend a sentence which is not defective. Indeed[,] . . . that is expressly prohibited by CPL 430.10” (People v Minaya, 54 NY2d 360, 364 [1981] [citation omitted]).